InsPro Technologies Corp - FORM 10-K

Attached files

file	filename
EX-32.2 - EXHIBIT 32.2 - InsPro Technologies Corp	tv489087_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - InsPro Technologies Corp	tv489087_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - InsPro Technologies Corp	tv489087_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - InsPro Technologies Corp	tv489087_ex31-1.htm
EX-23.1 - EXHIBIT 23.1 - InsPro Technologies Corp	tv489087_ex23-1.htm
EX-21 - EXHIBIT 21 - InsPro Technologies Corp	tv489087_ex21.htm
EX-3.14 - EXHIBIT 3.14 - InsPro Technologies Corp	tv489087_ex3-14.htm
EX-3.13 - EXHIBIT 3.13 - InsPro Technologies Corp	tv489087_ex3-13.htm
EX-3.12 - EXHIBIT 3.12 - InsPro Technologies Corp	tv489087_ex3-12.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

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

For the transition period from to

Commission file number: 000-51701

INSPRO TECHNOLOGIES CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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

1510 Chester Pike
400 Baldwin Tower
Eddystone, Pennsylvania		19087
(Address of Principal Executive Offices)		(Zip Code)

(484) 654-2200

Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

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

Common Stock, par value $0.001 per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

¨ Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company x
	Emerging Growth Company o

If an emerging growth company, indicated by check mark if registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ¨ No x

The aggregate market value of common stock, par value $0.001 per share, held by non-affiliates at June 30, 2017 (the last business day of the registrant’s most recently completed second fiscal quarter) was $971,905. Such aggregate market value was computed by reference to the closing price of the common stock of the registrant on the Over-the-Counter Bulletin Board on June 30, 2016.

As of March 30, 2018, there were 41,543,655 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

Documents incorporated by reference

None.

TABLE OF CONTENTS

	Page

PART I
Item 1. Business	4
Item 1A. Risk Factors	7
Item 1B. Unresolved Staff Comments	7
Item 2. Properties	7
Item 3. Legal Proceedings	7
Item 4. Mine Safety Disclosures	7

PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	8
Item 6. Selected Financial Data	8
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	19
Item 8. Financial Statements and Supplementary Data	F-1
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	20
Item 9A. Controls and Procedures	20
Item 9B. Other Information	20

PART III
Item 10. Directors, Executive Officers and Corporate Governance	21
Item 11. Executive Compensation	28
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	36
Item 13. Certain Relationships and Related Transactions, and Director Independence	43
Item 14. Principal Accountant Fees and Services	44
Item 15. Exhibits and Financial Statement Schedules	46

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain of the statements contained in this Annual Report on Form 10-K, including in the Business description, the “Management’s Discussion and Analysis of Financial Condition and Results” and elsewhere in this report are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. The forward-looking statements herein include, among others, statements addressing management’s views with respect to future financial and operating results and costs associated with our operations and other similar statements. Various factors, including competitive pressures, market interest rates, regulatory changes, customer defaults or insolvencies, litigation, acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control, adverse resolution of any contract or other disputes with customers could cause actual outcomes and results to differ materially from those described in forward-looking statements.

The words “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” and similar expressions may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. While we believe that we have a reasonable basis for each forward-looking statement contained in this Annual Report on Form 10-K, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future about which we cannot be certain. Many factors, including general business and economic conditions, affect our ability to achieve our objectives. As a result of these factors, we cannot assure you that the forward-looking statements in this Annual Report on Form 10-K will prove to be accurate. In addition, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all. We may not update these forward-looking statements, even though our situation may change in the future.

PART I

Item 1.

Business.

Overview

InsPro Technologies Corporation (“InsPro Technologies”, “we”, “our”) is a technology company that provides InsPro Enterprise^TM, which is a software application, used by insurance companies and administrators in the insurance industry.

We acquired Atiam Technologies, L.P. on October 1, 2007. HBDC Acquisition, LLC, which changed its name to InsPro Technologies, LLC (“InsPro LLC”) on May 14, 2009, develops, sells and supports our InsPro Enterprise software application. InsPro Enterprise is a comprehensive, web-based insurance administration software application, which was introduced by Atiam Technologies, L.P. in 2004. InsPro Enterprise clients include insurance carriers and third party administrators. We market InsPro Enterprise as a licensed software application, and we realize revenue from the sale of the software licenses, application service provider fees, software maintenance fees and consulting and implementation services.

During 2005 through October 1, 2007 our operations were primarily that of our former Telesales business, which we effectively sold in 2009. Our former Telesales business is now classified as part of our discontinued operations.

InsPro Enterprise

Product Evolution and Development

InsPro LLC, and its predecessor, Systems Consulting Associates, Inc.(“SCA”), was founded in 1986 by Robert J. Oakes as a programming and consulting services company. In 1988, SCA entered into a long-term contract with Provident Mutual Insurance Company to develop, maintain, install, support and enhance IMACS, which was an insurance direct marketing and administration software system. IMACS was the precursor to InsPro Enterprise. InsPro Technologies dedicated four years, from 2001 to 2005, to developing its principal product, the initial version of InsPro Enterprise, which is a comprehensive, scalable and modular web-based insurance marketing, claims administration and policy servicing platform.

Product and Services

We offer both a licensed and an application service provider (“ASP”) use of InsPro Enterprise, which is used for insurance administration and marketing for group and individual insurance business lines. InsPro Enterprise efficiently processes agent, direct market, worksite and web site generated business.

During 2017, we earned $21,694,921 in revenue of which 38% was earned from Trustmark Insurance Company and 20% earned from various subsidiaries of Cap Gemini S.A.

InsPro Enterprise incorporates a modular design, which enables the customer to purchase only the functionality needed, thus minimizing the customer’s implementation cost and time necessary to implement InsPro Enterprise. InsPro Enterprise can be rapidly tailored to the requirements of a wide range of customers from the largest insurance companies and marketing organizations to small third party administrators, operating in environments ranging from a single server environment to mainframe installations. InsPro Enterprise currently supports a wide range of insurance distribution channels, including the Internet, traditional direct marketing, agent-generated, individual and group plans, worksite and association-booked business, and supports underwritten as well as guaranteed issue insurance products including long term care, Medicare supplement, critical illness, long and short term disability, whole and term life, comprehensive major, hospital indemnity and accidental death and dismemberment.

An InsPro Enterprise^TM software license entitles the purchaser a perpetual license to a copy of the InsPro Enterprise software installed at a single client location, which may be used to drive a production and model office instance of the application. The ASP Hosting Service enables a client to lease InsPro Enterprise, paying only for that capacity required to support its business. ASP hosting clients access an instance of InsPro Enterprise installed on our servers located at a third party’s site. The ASP Hosting Service can also enable a client to outsource its application management of its perpetually licensed InsPro Enterprise software to InsPro Technologies.

Software maintenance fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise Help Desk.

Consulting and implementation services are generally associated with the implementation of an InsPro Enterprise instance for either an ASP or licensed client, and cover such activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance plan set-up, client insurance document design and system documentation.

InsPro Enterprise software agreements with our clients often involve multiple elements. We allocate revenue to each element based on the relative fair value or the residual method, as applicable using vendor specific objective evidence to determine fair value, which is based on prices charged when the element is sold separately. Software revenue is recognized when persuasive evidence of an arrangement exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable and collectability is probable. Maintenance revenue, which pertains to post-contract customer support, including technical support and unspecified when-and-if available software upgrades, is recognized ratably over the maintenance agreement term. If fair value does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery of such element or (ii) when fair value of the undelivered element is established, unless the undelivered element is a service, in which case revenue is recognized as the service is performed once the service is the only undelivered element.

Sales, Marketing and Operations

InsPro Technologies markets its products and services directly to prospective insurance carriers and third party administrators via trade shows, advertising in industry publications and direct mail.

InsPro Technologies also provides professional services to its clients, which include InsPro system implementation, legacy system migration to InsPro Enterprise, InsPro Enterprise application management, web development, InsPro Enterprise help desk and 24x7 hosting service support.

InsPro Technologies utilizes several outside IT consulting firms, who assist us with InsPro Technologies’ implementation and post implementation services to our clients. Implementation services include assisting clients in setting up their insurance products in InsPro Enterprise, providing modifications to InsPro Enterprise’s functionality to support the client’s business, interfacing InsPro Enterprise with the client’s other systems, automation of client correspondence to their customers and data conversion from the client’s existing systems to InsPro Enterprise. Post implementation services include these same services to existing clients supporting their ongoing utilization of InsPro Enterprise.

Competition

The market for insurance policy administration systems and services is very competitive, rapidly evolving, highly fragmented and subject to technological change. Many of our competitors are more established than we are and have greater name recognition, a larger customer base and greater financial, technical and marketing resources than InsPro Technologies.

InsPro Technologies is focused on the group voluntary (workplace) life and health products, senior health, disability, affinity, long term care and association segments of the insurance industry. InsPro Technologies competes with companies such as Accenture (Accenture Life Insurance & Annuity Platform), Synnex Corporation (Concentrix/GIAS and Genelco Software Solutions), Computer Sciences Corporation (FutureFirst), EXLService Holdings (LifePro), Majesco, and Fiserv Inc. (ID3), as well as with such smaller enterprises as Management Data, Inc. and , Flexible Architecture, Simplified Technology, which is a privately held company that provides Fast Insurance Components. To compete we use best practice technologies and methods incorporated into InsPro Enterprise^TM, which provides customers with a user-friendly, flexible, modular and cost-effective insurance administrative software system. InsPro Enterprise’s modular design, scalability and ASP hosting service option makes InsPro Enterprise a compelling insurance administrative system for clients ranging from small third party administrators to the largest insurance carriers.

Employees

As of December 31, 2017 we had 62 full time and 1 part time employees for a total of 63 employees. None of our employees are members of any labor union and we are not a party to any collective bargaining agreement. We believe that the relationship between our management and our employees is good.

Intellectual Property and Proprietary Rights

We rely on a combination of trademark, copyright and trade secret laws in the United States and other jurisdictions as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand.

Corporate Information

We were incorporated under the laws of the state of Nevada on October 21, 2004 as Darwin Resources Corp. (“Darwin-NV”), an exploration stage company engaged in mineral exploration. On November 22, 2005, Darwin-NV merged with and into its newly-formed wholly-owned subsidiary, Darwin Resources Corp., a Delaware corporation (“Darwin-DE”), solely for the purpose of changing the company’s state of incorporation from Nevada to Delaware. On November 23, 2005, HBDC II, Inc., a newly-formed wholly-owned subsidiary of Darwin-DE, was merged with and into Health Benefits Direct Corporation, a privately-held Delaware corporation engaged in direct marketing and distribution of health and life insurance and related products primarily over the Internet, and the name of the resulting entity was changed from Health Benefits Direct Corporation to HBDC II, Inc. Following this merger, Darwin-DE changed its name to Health Benefits Direct Corporation and, as a result, HBDC II, Inc. became our wholly-owned subsidiary. We formed HBDC Acquisition, LLC on September 6, 2007 in connection with our acquisition of Atiam Technologies, L.P. on October 1, 2007. HBDC Acquisition, LLC, which changed its name to InsPro Technologies, LLC on May 14, 2009, develops, sells and supports our InsPro Enterprise^TM software application. On November 29, 2010, Health Benefits Direct Corporation changed its name to InsPro Technologies Corporation.

Our principal executive offices and the officers are located at 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania 19022. Our telephone number is (484) 654-2200. The web site of our wholly-owned subsidiary InsPro Technologies, LLC is www.inspro.com.

Investor Information

All periodic and current reports, registration statements and other material that we are required to file with the Securities and Exchange Commission (the “Commission”), including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities Exchange Act of 1934, may be obtained free of charge by writing to us at InsPro Technologies Corporation, 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania 19022 or e-mailing us at finance@inspro.com. Such documents are available as soon as reasonably practicable after electronic filing of the material with the Commission. Our Internet websites and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

The public may also read and copy any materials we have filed with the Commission at the Commission’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site, www.sec.gov, which contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission.

Item 1A.

Risk factors.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

ITEM 1B.

Unresolved Staff Comments.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 2.

PropertIES.

We do not own any real estate.

We lease approximately 17,567 square feet of space in Eddystone, Pennsylvania. We lease this office space under a lease agreement with BPG Officer VI Baldwin Tower L.P. The term of this lease, as amended, commenced on August 1, 2007, and will expire on January 31, 2019. The monthly rent was $24,887 per month commencing with InsPro Technologies’ occupancy of the new office space, which occurred in June 2012 through January 31, 2013. InsPro Technologies’ monthly rent increased to $25,619 per month February 1, 2013 through January 31, 2014, increased to $26,351 per month February 1, 2014 through January 31, 2015, increased to $27,082 per month February 1, 2015 through March 31, 2015, increased to $37,082 through January 31, 2016, increased to $37,814 per month February 1, 2016 through March 31, 2016, decrease to $27,814 per month from April 1, 2016 through January 31, 2017 increase to $28,546 per month from January 1, 2017 through January 31, 2018, and increase to $30,010 per month from January 1, 2018 through January 31, 2019.

Item 3.

legal proceedings.

From time to time we are involved in various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, are material to our business. We cannot assume that we will prevail in any litigation. Regardless of the outcome, any litigation may require us to incur significant litigation expense and may result in significant diversion of our attention.

Item 4.

MINE SAFETY DISCLOSURES.

Not applicable.

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock has been quoted on the OTCBB since December 6, 2010 under the symbol ITCC.OB, and from December 13, 2005 until December 3, 2010 under the symbol HBDT.OB. Prior to December 13, 2005, there was no active market for our common stock.

The following table sets forth the high and low bid prices for our common stock for the periods indicated, as reported by the OTCBB. The prices state inter-dealer quotations, which do not include retail mark-ups, mark-downs or commissions. Such prices do not necessarily represent actual transactions.

2016:
First quarter, ended March 31, 2016	$	0.045	$	0.031
Second quarter, ended June 30, 2016	$	0.042	$	0.025
Third quarter, ended September 30, 2016	$	0.100	$	0.038
Fourth quarter, ended December 31, 2016	$	0.090	$	0.023

2017:
First quarter, ended March 31, 2017	$	0.0724	$	0.028
Second quarter, ended June 30, 2017	$	0.065	$	0.035
Third quarter, ended September 30, 2017	$	0.04	$	0.025
Fourth quarter, ended December 31, 2017	$	0.070	$	0.025

2018:
First quarter, through March 30, 2018	$	0.065	$	0.030

Holders of Record

Based on information furnished by our transfer agent, as of March 30, 2018, we had approximately 109 holders of record of our common stock.

Dividends

We have not declared any cash dividends on our common stock during the last two fiscal years. We have no intention of paying cash dividends in the foreseeable future on our common stock.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

We have not issued any unregistered securities that were not previously disclosed on our quarterly reports on Form 10-Q or current reports on Form 8-K filed during the fiscal year.

ITEM 6.

Selected financial data

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The current operations of InsPro Technologies Corporation (the “Company”, “we”, “us” or “our”) consist of the operations of our InsPro Technologies, LLC subsidiary (“InsPro LLC”).

InsPro Enterprise^TM is a comprehensive, web-based insurance administration software application. InsPro Enterprise was introduced by Atiam Technologies L.P. in 2004. InsPro Enterprise clients include insurance carriers and third party administrators. We market InsPro Enterprise as a licensed software application, and we realize revenue from the sale of the software licenses, application service provider fees, software maintenance fees and professional services.

Critical Accounting Policies

Financial Reporting Release No. 60, which was released by the Commission, encourages all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Our consolidated financial statements include a summary of the significant accounting policies and methods used in the preparation of the consolidated financial statements. Management believes the following critical accounting policies affect the significant judgments and estimates used in the preparation of the consolidated financial statements.

Use of Estimates - Management’s Discussion and Analysis is based upon the Company’s consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of financial statements requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates in 2017 and 2016 include the allowance for doubtful accounts, valuation of stock-based compensation, the useful lives and valuation of property and equipment, and deferred revenue. Actual results may differ from these estimates under different assumptions or conditions.

The Company offers InsPro Enterprise^TM on both a licensed and an ASP basis. An InsPro Enterprise software license entitles the purchaser a perpetual license to a copy of the InsPro Enterprise software installed at a single client location or hosted by InsPro Technologies. Alternatively, ASP service enables a client to lease the InsPro Enterprise software, paying only for that capacity required to support their business. ASP and hosting clients access InsPro Enterprise installed on clients’ servers or on the Company’s servers located at a third party’s site.

The Company’s software maintenance fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise help desk.

The Company’s consulting and implementation services are generally associated with the implementation of InsPro Enterprise for either an ASP or licensed client, and cover such activity as InsPro Enterprise installation, configuration, modification of InsPro Enterprise functionality, client insurance plan set-up, client insurance document design and system documentation.

The Company’s revenue is generally recognized under FASB ASC 985-605 (“ASC 985-605”). For software arrangements involving multiple elements, which are license fees, professional services, ASP services and maintenance services, the Company allocates revenue to each element based on the relative fair value or the residual method, as applicable using vendor specific objective evidence to determine fair value, which is based on prices charged when the element is sold separately. Software revenue accounted for under ASC 985-605 is recognized when persuasive evidence of an arrangement exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable and collectability is probable. Revenue related to post-contract customer support (“PCS”), including technical support and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term. Under ASC 985-605, if fair value does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery of such element or (ii) when fair value of the undelivered element is established, unless the undelivered element is a service, in which case revenue is recognized as the service is performed once the service is the only undelivered element.

The Company recognizes revenue from software license agreements when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectability is probable. The Company considers fees relating to arrangements with payment terms extending beyond one year to not be fixed or determinable and revenue for these arrangements is recognized as payments become due from the customer. In software arrangements that include more than one InsPro Enterprise^TM module, the Company allocates the total arrangement fee among the modules based on the relative fair value of each of the modules.

License revenue allocated to software products generally is recognized upon delivery of the products or deferred and recognized in future periods to the extent that an arrangement includes one or more elements to be delivered at a future date and for which fair values have not been established. Revenue allocated to maintenance agreements is recognized ratably over the maintenance term and revenue allocated to training and other service elements is recognized as the services are performed.

Effective August 18, 2015, the Company entered into a five year software and services reseller agreement (the “Reseller Agreement”) with an unaffiliated 3^rd party (the “Reseller”) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the “Reseller Fee”). Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy during the term of the Reseller Agreement (each a “Refund Event”). The Reseller Fee was fully refundable if a Refund Event occurred before August 31, 2016. A Refund Event did not occur as of December 31, 2016, and as a result the Company recognized $500,000 of Reseller Fee as revenue in the year ended December 31, 2016. A Refund Event did not occur as of September 30, 2017, and as a result the Company recognized $500,000 of Reseller Fee as revenue in the year ended December 31, 2017. The Company shall refund the following amounts to the Reseller if a Refund Event occurs between the following dates; $1,500,000 between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019. As of December 31, 2017 the Company has recorded the $1,500,000 unearned portion of the Reseller Fee in deferred revenue ($500,000 included in current liabilities and $1,000,000 included in long term liabilities).

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09” or “ASC 606”), which provides guidance for revenue recognition. The standard's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under ASC 606. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contracts with customers. This guidance will be effective for the Company for the fiscal year ending December 31, 2018, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).

The aforementioned amendments are effective for public entities for annual reporting periods beginning after December 15, 2017, and for interim periods within that reporting period. The updated standard is effective for us in the first quarter of 2018.

The Company has completed its evaluation of the new standard and has assessed the impacts of adoption on the consolidated financial statements and disclosures based on the evaluation of our current customer contracts and arrangements and revenue streams, which are described below.

The Company offers InsPro Enterprise^TM on both a perpetual licensed and an ASP basis. The Company also offers various services to clients in connection with InsPro Enterprise. During the implementation of the new standard, we identified five broad revenue streams: 1) professional services, 2) sale of perpetual software licenses and sale of equipment, 3) ASP hosting revenue, 4) maintenance revenue, and 5) Reseller Fee.

Professional services consist of pre and post implementation services pertaining to InsPro Enterprise installation, configuration and modification of InsPro Enterprise functionality, client insurance plan set-up, client insurance document design and system documentation, training and data migration. Once these services are performed for a client they cannot be returned by the client to the Company and the Company cannot provide the same services to any other client without substantial rework needed to satisfy another client’s needs. We primarily recognize professional services revenue on a time and materials basis. Under the new standard, we elect to apply the "right to invoice" practical expedient outlined in ASC 606-10-55-18. The invoice amount represents the number of hours of time worked by each worker multiplied by the contractual bill rate for the type of work billed. As such, the Company will recognize revenue in the amount for which it has the right to invoice. Therefore, revenue recognition is deemed to be consistent under both the previous and new standard.

Sale of perpetual licenses entitles the purchaser a perpetual license to a copy of the InsPro Enterprise software installed at a single client location or hosted by InsPro Technologies. The Company also sells perpetual licenses to 3^rd party software and sells 3^rd party equipment to a client in connection with the client’s use of InsPro Enterprise software on hardware owned by the client. We recognize revenue on the sale of perpetual software licenses and sale of equipment when persuasive evidence of an arrangement exists, the software is delivered in accordance with all terms and conditions of the customer contracts (“Delivery Has Occurred”), the fee is fixed or determinable and collectability is probable. Historically the criteria Delivery Has Occurred has been the last criteria satisfied in terms of determining revenue recognition for sale of software licenses and sale of equipment. Therefore we have recognized sale of software licenses and sale of equipment revenue when Delivery Has Occurred. Under the new standard, we will recognize sale of software licenses and sale of equipment revenue at the point in time when control has transferred to the client, which typically is when Delivery Has Occurred. Therefore, revenue recognition is deemed to be consistent under both the previous and new standard.

ASP hosting enables a client to effectively lease the InsPro Enterprise software, paying only for that capacity required to support their business during the contacted time period. Hosting Service can also enable a client to outsource its application management of its perpetually licensed InsPro Enterprise software to the Company. ASP hosting clients access InsPro Enterprise installed on InsPro Technologies owned servers. Maintenance enables a client to periodic updates to their InsPro Enterprise software and access to customer support from the Company. We have recognized ASP hosting and maintenance revenue based on contractually defined fixed fees over the contract period on a straight line basis. Under the new standard we have determined the Company’ continuous service and support represent a series of performance obligations that are delivered over time on a stand-ready basis. Therefore, revenue recognition is deemed to be consistent under both the previous and new standard.

Effective August 18, 2015, the Company entered into a five year software and services reseller agreement (the “Reseller Agreement”) with an unaffiliated 3^rd party (the “Reseller”) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the “Reseller Fee”). Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy during the term of the Reseller Agreement (each a “Refund Event”). We have recognized Reseller Fee revenue whenever a portion of the Reseller Fee is no longer subject to refund as a result of a Refund Event and at which time no portion of the Reseller Fee is subject to refund the portion of the Reseller Fee not already recognized as revenue is recognized ratably over the duration of the Reseller Agreement. Under the new standard, the Company believes the contractual specific refund amounts and time frames pertaining to a Refund Event represent separate performance obligations over the duration of the Reseller Agreement, which the Reseller Agreement has contractually specified the prices for each separate performance deliverable. Therefore, revenue recognition is deemed to be consistent under both the previous and new standard.

We adopted the new standard effective January 1, 2018 to (i) all new contracts entered into after January 1, 2018 and (ii) all existing contracts for which all (or substantially all) of the revenue has not been recognized under legacy revenue guidance, using the modified retrospective transition method. The adoption of the new standard did not result in a change to the opening balance of accumulated deficit.

The disclosures in our notes to the consolidated financial statements related to revenue recognition will be significantly expanded under the new standard, specifically around the quantitative and qualitative information about performance obligations, changes in contract assets and liabilities, and disaggregation of revenue.

Results of Operations for the Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Revenues

For the year ended December 31, 2017 (“2017”) and 2016 (“2016”) our revenues include the following:

	For the Year Ended December 31,					Increase (Decrease)
	2017		2016			Dollars			Percentage

Professional services, gross	$	11,749,129	$	13,961,722		$	(2,212,593	)		-15.8	%
Stock-based fees paid to client		-		(1,299,963	)		1,299,963			-100.0	%
ASP and hosting revenue		7,690,976		6,826,292			864,684			12.7	%
Sales of software licenses		143,728		10,000			133,728			1337.3	%
Maintenance revenue		1,611,088		1,740,721			(129,633	)		-7.4	%
Reseller fee revenue		500,000		500,000			-			0.0	%
Sale of equipment		-		20,126			(20,126	)		-100.0	%
Sub-leasing and other revenue		-		72,030			(72,030	)		-100.0	%

Total	$	21,694,921	$	21,830,928		$	(136,007	)		-0.6	%

In 2017 our professional services revenue, gross decreased primarily as a result of lower post implementation services to a former client and a large existing client partially offset by higher implementation services to the Company’s largest client as measured by 2017 revenue. Implementation services included assisting clients in setting up their insurance products in InsPro Enterprise^TM, providing modifications to InsPro Enterprise’s functionality to support the client’s business, interfacing InsPro Enterprise with the client’s other systems, automation of client correspondence to their customers and data conversion from the client’s existing systems to InsPro Enterprise. Post implementation services include these same services to existing clients supporting their ongoing utilization of InsPro Enterprise.

On April 4, 2016, the Company entered into an agreement with the Company’s largest client, which among other things, included a provision that the Company issue within 30 days to the client a warrant to purchase in aggregate a total of 2,000,000 shares of the Company’s Series B Preferred Stock, which is immediately exercisable (the “2016 Series B Warrant”). The 2016 Series B Warrant has a three year term, a cashless exercise provision and an exercise price of $3.00 per share. On May 4, 2016 the Company issued the 2016 Series B Warrant to the client. The fair value of the 2016 Series B Warrants was estimated on April 4, 2016, which was the date of the agreement with the client, to be $1,299,963 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 503%, risk-free interest rate: 0.38%, expected life in years: 3 based on the contract life of the 2016 Series B Warrant, and assumed dividend yield: 0%.

In 2017 our ASP revenue increased as a result of increased fees primarily from the Company’s second largest client as measured by 2017 revenue as a result of this client’s growth in policies processed on InsPro Enterprise. ASP hosting service enables a client to either lease InsPro Enterprise software, paying only for that capacity required to support their business, or for a client to outsource the operation of their licensed InsPro Enterprise installation to the Company. ASP hosting clients access InsPro Enterprise installed on clients’ servers or on the Company’s servers located at a third party’s site.

In 2017 we earned $143,728 of license fee revenue from the Company’s second largest client as measured by 2017 revenue. The license agreement with this client included a provision for an additional license fee as a result of the client’s policy counts exceeding a contractual threshold. In 2016 we earned $10,000 of license fee revenue, which included the resale of third party software to an InsPro Enterprise client.

In 2017 our maintenance revenue decreased primarily as a result of the loss of fees from two former clients.

In 2017 and 2016 we earned $500,000 of reseller fee revenue from the Company’s second largest client as measured by 2017 revenue. Effective August 18, 2015, the Company entered into a 5 year software and services reseller agreement (the “Reseller Agreement”) with an unaffiliated third party (the “Reseller”) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the “Reseller Fee”). Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company material breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation, seeks protection under bankruptcy, or materially breaches the Reseller Agreement during the term of the Reseller Agreement (each a “Refund Event”). The Reseller Fee was fully refundable if a Refund Event occurred before August 31, 2016. A Refund Event did not occur as of September 30, 2016 and 2017, and as a result the Company recognized $500,000 of Reseller Fee as revenue in 2017 and 2016. The Company shall refund the following amounts to the Reseller if a Refund Event occurs between the following dates; $1,500,000 between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019.

In 2016 we sold equipment to a client as part of their implementation of InsPro Enterprise.

In 2016 other revenue consists of reimbursements of office and administrative expenses pertaining to various agreements with related and unrelated parties pertaining to our former Radnor office.

Cost of Revenues

Our cost of revenues consisted of the following:

	For the Year Ended December 31,				Increase (Decrease)
	2017		2016		Dollars			Percentage

Compensation, employee benefits and related taxes	$	6,194,794	$	7,519,551	$	(1,324,757	)		-17.6	%
Professional fees		6,713,060		10,317,169		(3,604,109	)		-34.9	%
Depreciation		248,292		382,876		(134,584	)		-35.2	%
Rent, utilities, telephone and communications		378,301		443,348		(65,047	)		-14.7	%
Other cost of revenues		308,376		407,261		(98,885	)		-24.3	%

	$	13,842,823	$	19,070,205	$	(5,227,382	)		-27.4	%

In 2017 our salaries, employee benefits and related taxes component of cost of revenues decreased as compared to 2016 primarily as a result of decreased employee staffing as a result of cost cutting initiatives.

In 2017 our professional fees component of cost of revenues decreased primarily as a result of decreased utilization of several outside consulting firms, which were assisting us with modifications to InsPro Enterprise’s functionality and new clients’ implementations of InsPro Enterprise^™.

In 2017 our depreciation expense component of cost of revenues decreased as a result of certain assets having been fully depreciated in accordance with the original depreciation schedule for these assets.

In 2017 our rent, utilities, telephone and communications expense decreased as compared to 2016 primarily due to lower rented space pertaining to our Eddystone office.

In 2017 our other cost of revenues component of cost of revenues decreased primarily due to lower travel expenses. Other cost of revenues consisted of the cost of 3^rd party licensed software and equipment resold to clients, computer processing incurred primarily to provide ASP hosting services, hardware and software, travel and entertainment, and office expenses.

Gross Profit

As a result of the aforementioned factors, we reported a gross profit of $7,852,098 in 2017, as compared to $2,760,723 in 2016. The results from operations in 2017 were favorably impacted by lower employee and IT consulting staffing as compared to 2016 primarily as a result of the implementation of cost reduction initiatives.

Selling, General and Administrative Expenses

Our selling, general and administrative expense consisted of the following:

	For the Year Ended December 31,				Increase (Decrease)
	2017		2016		Dollars			Percentage

Compensation, employee benefits and related taxes	$	3,986,164	$	3,337,346	$	648,818			19.4	%
Advertising and other marketing		35,127		140,552		(105,425	)		-75.0	%
Depreciation		100,622		118,587		(17,965	)		-15.1	%
Rent, utilities, telephone and communications		227,102		405,032		(177,930	)		-43.9	%
Professional fees		838,624		709,383		129,241			18.2	%
Other general and administrative		878,341		762,666		115,675			15.2	%

	$	6,065,980	$	5,473,566	$	592,414			10.8	%

In 2017 our salaries, employee benefits and related taxes increased primarily due to severance and other costs associated with the resignation of Mr. Oakes in the second quarter of 2017, the termination of an InsPro executive and bonuses paid to employees in the fourth quarter of 2017.

In 2017 our advertising and other marketing expenses decreased as a result of reduced marketing activities.

In 2017 our depreciation expense decreased as a result of certain assets having been fully depreciated in accordance with the original depreciation schedule for such assets.

In 2017 our rent, utilities, telephone and commissions decreased due the elimination of our former Radnor office.

In 2017 our professional fees increased primarily due to executive recruiting costs incurred in 2017.

In 2017 our other cost of revenues increased primarily due to bad debt expense partially offset by lower travel and insurance expenses. Other cost of revenues consisted of bad debt expense, computer processing incurred primarily for corporate purposes, management, sales and marketing travel, corporate insurance and office expenses.

Operating income from continuing operations before income taxes

As a result of the aforementioned factors, we reported income from continuing operations before income taxes of $1,786,118 in 2017, as compared to a loss of $2,712,843 in 2016.

Other income (expenses)

Interest expense decreased in 2017 primarily due to lower interest on capital leases. Interest expense is attributable to interest on the Company’s notes payable for premium financing on a portion of the Company’s insurance coverages and capital leases.

Income tax expense

The effective tax rate for 2017 differed from the U.S. federal statutory rate primarily due to net operating losses carried forward from prior years. In computing the Company’s federal alternative minimum taxable income the deduction of the Company’s NOLs are limited to 90% of the Company’s NOLs without regard to alternative minimum tax. In computing the Company’s Pennsylvania taxable income in 2017 the deduction of the Company’s Pennsylvania NOLs are limited to 30% of the Company’s taxable income.

Income from discontinued operations

Results from discontinued operations were as follows:

	For the Year Ended December 31,				Increase (Decrease)
	2017		2016		Dollars			Percentage
Revenues:
Commission and other revenue from carriers	$	8,078	$	10,016	$	(1,938	)		-19.3	%
Transition policy commission pursuant to the Agreement		49,447		88,006		(38,559	)		-43.8	%

		57,525		98,022		(40,497	)		-41.3	%

Operating expenses:
Other general and administrative		32,963		27,867		5,096			18.3	%

		32,963		27,867		5,096			18.3	%

Income from discontinued operations before income taxes	$	24,562	$	70,155	$	(45,593	)		-65.0	%

Revenues and income from discontinued operations decreased due to the declines in our discontinued telesales call center produced agency business.

Net income (loss)

As a result of these factors discussed above, we reported net income of $1,622,420, or $0.04 per share basic and $0.01 on a fully diluted basis in 2017 as compared to a net loss of $2,667,937, or $0.06 net loss per share on a basic and fully diluted basis in 2016.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2017, we had a cash balance of $5,017,539 and working capital of $1,189,360.

Net cash used in operations was $240,880 in 2017 as compared to net cash provided by operations of $175,243 in 2016. Impacting our cash flow from operations was our net income of $1,622,420 in 2017 as compared to our net loss of $2,667,937 in 2016 and:

Decreases in accounts receivable of $790,428 in 2017, which are primarily the result of faster collections of billings to clients for professional services.

Decreases in accounts payable of $3,975,331 in 2017, which are primarily the result of payments of amounts to outside IT consulting firms that were incurred prior to 2017. Accounts payable as of December 31, 2017 was $1,484,704.

Increases in accrued expenses of $690,080 in 2017, which are primarily the result of accrued severance expense pertaining to the resignation of Mr. Oakes and the termination of another executive, which occurred in 2017.

Increases in income taxes payable from continuing and discontinued operations of $170,000 in 2017, which are the result of the Company not making any estimate income tax payments during 2017.

In addition to cash used in operating activities, we incurred non-cash gain and expenses, which were included in our net loss, including:

Recorded depreciation expense of $348,914 and $501,463 in 2017 and 2016, respectively.

Recorded stock-based compensation expense of $144,948 and $222,142 in 2017 and 2016, respectively.

Recorded stock based fees to client as a reduction to revenue of $1,299,963 in 2016.

Net cash used by investing activities in 2017 was $20,065 as compared to $34,351 in 2016.

Net cash provided by financing activities in 2017 was $2,116,867 as compared to cash used in financing activities in 2016 of $377,568.

On April 20, 2017, the Company completed a private placement (the “Private Placement”) with The Co-Investment Fund II, L.P. (“Co-Investment”), which hold more than 5% of our common stock. Donald Caldwell, who is the chairman of the board of directors of the Company and former CEO, is the CEO for Cross Atlantic Capital Partners, Inc., which is the managing partner of Co-Investment. The Company issued and Co-Investment purchased 1,000,000 shares of our Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Preferred Stock”) at a per share price of $2.00 for an aggregate total investment of $2,000,000 pursuant to the terms of a securities purchase agreement (the “Purchase Agreement”). The Company intends to use the net proceeds of the Private Placement for working capital purposes.

The Company agreed, pursuant to the terms of the Purchase Agreement, that for a period of 90 days after the effective date of the Purchase Agreement, the Company shall not, subject to certain exceptions, offer, sell, grant any option to purchase, or otherwise dispose of any equity securities or equity equivalent securities, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, capital stock and other securities of the Company. In addition, pursuant to the Purchase Agreement, the Company was permitted to sell up to an additional 500,000 shares of Series C Preferred Stock to other existing stockholders within 90 days following the Closing on substantially the same terms and conditions described above and as set forth in the Purchase Agreement.

The Purchase Agreement also provides for a customary participation right for Co-Investment, subject to certain exceptions and limitations, which grants Co-Investment the right to participate in any future capital raising financings of the Company occurring from the effective date of the Purchase Agreement until 24 months after the effective date of the Purchase Agreement. Co-Investment may participate in such financings at a level based on Co-Investment’s ownership percentage of the Company on a fully-diluted basis prior to such financing.

On May 11, 2017, the Company completed a private placement (the “Second Private Placement”) with Azeez Enterprises, L.P., which hold more than 5% of our Series C Preferred Stock, and John Scarpa, who holds more than 5% of our Series B Preferred Stock. Michael Azeez is a member of the Board and is the managing partner of Azeez Enterprises, L.P. The Company issued and each of Azeez Enterprises, L.P. and Mr. Scarpa purchased 75,000 shares of our Series C Convertible Preferred Stock at a per share price of $2.00 for an aggregate total investment of $300,000 pursuant to the terms of a securities purchase agreement at essentially the same terms as those contained in the Purchase Agreement.

The Company incurred $12,154 of legal expenses incurred in connection with the Private Placement and the Second Private Placement.

On July 17, 2017 the Company filed a registration statement for a rights offering (the “Rights Offering”) on form S-1/A, which the Commission declared effective on July 20, 2017, to distribute to shareholders excluding residents of California at no charge, one non-transferable subscription right for each 9,651 shares of our Common Stock, 483 shares of our Series A Preferred Stock, 483 shares of our Series B Preferred Stock and 483 shares of our Series C Preferred Stock owned as of July 17, 2017, the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks, or other nominees on shareholders’ behalf, as a beneficial owner of such shares. The Rights Offering was designed to give all of the holders of the Company’s capital stock the opportunity to participate in an equity investment in the Company on the same economic terms as the 2017 Private Placements. The basic subscription right entitled the holder to purchase one unit (“Subscription Unit”) at a subscription price of $50. A subscription right consisted of 25 shares of Series C Preferred Stock. In the event that a holder of a Subscription Unit purchases all of the basic Subscription Units available to the holder then pursuant to their basic subscription right, the holder will have the option to choose to subscribe for a portion of any Subscription Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights. The Rights Offering expired on August 29, 2017. Effective with the expiration of the Rights Offering and the subscription rights, which occurred on August 29, 2017, holders of subscription rights exercised in aggregate 167 basic subscription rights and 4,000 over subscription rights for a total of 4,167 Subscription Units. As a result of the exercise of 4,167 Subscription Units the Company received $208,350 in gross proceeds and issued effective on August 29, 2017, in aggregate 104,175 shares of Series C Preferred Stock. Effective with the expiration of the Rights Offering all unexercised subscription rights expired. The Company incurred $90,009 of legal and other expenses as a result of the Rights Offering.

On February 2, 2016 the Company filed a registration statement for a rights offering on Form S-1/A, which the Commission declared effective on February 5, 2016, to distribute to shareholders excluding residents of Arizona and California at no charge, one non-transferable subscription right for each 16,615 shares of our Common Stock, 831 shares of our Series A Preferred Stock and 830 shares of our Series B Preferred Stock owned as of January 31, 2016, the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks, or other nominees on shareholders’ behalf, as a beneficial owner of such shares. The basic subscription right entitled the holder to purchase one unit (“Subscription Unit”) at a subscription price of $240. A Subscription Unit consisted of 80 shares of Series B Preferred Stock and a warrant to purchase 800 shares of Common Stock that expires on November 20, 2017 at an exercise price of $0.15 per share. Effective with the expiration of the subscription rights, which occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription rights and 0 over subscription rights for a total of 17 Subscription Units. The Company received $4,080 in gross proceeds as a result of the exercise of Subscription Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March 14, 2016 in aggregate 1,360 shares of Series B Preferred Stock and warrants to purchase in aggregate 13,600 shares of Common Stock that expires on November 20, 2017 at an exercise price of $0.15 per share. Effective with the expiration of the subscription rights all unexercised subscription rights expired.

Payments on notes payable pertain to notes payable, which we entered into in order to finance two of the Company’s corporate insurance premiums.

InsPro LLC has entered into various capital lease obligations to purchase equipment used for operations.

Off-Balance Sheet Arrangements

We do not currently have any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet or other contractually narrow or limited purposes.

Liquidity and Other Considerations

During the year ended December 31, 2017, the Company’s net income was $1,622,420 and cash used in operations was $240,880, which included the reduction of accounts payable in the amount of $3,975,331. As of December 31, 2017, the Company had $5,017,539 of cash, working capital of $1,189,360, which included accounts payable of $1,484,704, and the Company’s shareholder equity was $384,493. During 2016, the Company implemented cost reduction initiatives, which resulted in the reduction of expenses in 2016 as compared to 2015. During 2017, the Company implemented additional cost reduction initiatives, which resulted in the reduction in cost of revenues of $5,227,382 in 2017 as compared to 2016. During the second quarter of 2017 the Company obtained $2,300,000 of cash from existing stockholders, which is described in Note 5 – Transactions with Related Parties. During the third quarter of 2017 the Company obtained $208,350 of cash from existing stockholders as a result of a rights offering, which is described in Note 6 – Stockholders Equity (Deficit) – Series C Preferred Stock.

Our liquidity needs for the next 12 months and beyond are principally for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on the foregoing, management believes the Company has sufficient funds to finance its operations over the next twelve months.

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

FINANCIAL STATEMENTS

TABLE OF CONTENTS

	Page Number

INSPRO TECHNOLOGIES CORPORATION

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets at December 31, 2017 and December 31, 2016	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2017 and December 31, 2016	F-4
Consolidated Statements of Changes in Shareholders' (Deficit) Equity for the Years Ended December 31, 2017 and December 31, 2016	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017 and December 31, 2016	F-6
Notes to Consolidated Financial Statements	F-7 to F-36

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Shareholders of InsPro Technologies Corporation.

Opinion on the Financial Statements

We have audited the accompanying Consolidated Balance Sheet of InsPro Technologies Corporation (the Company) as of December 31, 2017 and the related Consolidated Statement of Operations, Changes in Shareholders’ (Deficit) Equity, and Cash Flows for the year ended December 31, 2017, and the related Notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and the results of its operations and its cash flows for the year ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.

The financial statements as of December 31, 2016, were audited by D’Arelli Pruzansky, P.A., who sold its audit practice to Assurance Dimensions, Inc. as of May 3, 2017, and whose report dated March 30, 2017, expressed an unmodified opinion on those statements

/s/ Assurance Dimensions

Coconut Creek, Florida
March 30, 2018

We have served as the Company’s auditor since 2017.

F-2

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31, 2017			December 31, 2016
ASSETS

CURRENT ASSETS:
Cash	$	5,017,539		$	3,161,617
Accounts receivable, net		1,543,389			2,333,817
Prepaid expenses		360,975			225,439
Other current assets		-			30,520
Assets of discontinued operations		3,806			8,636

Total current assets		6,925,709			5,760,029

Property and equipment, net		269,994			512,960

Total assets	$	7,195,703		$	6,272,989

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Notes payable	$	45,793		$	39,194
Accounts payable		1,484,704			5,460,035
Accrued expenses		1,126,596			436,516
Current portion of capital lease obligations		143,855			188,025
Deferred revenue		2,765,401			2,285,140
Income tax payable		167,670			-
Income tax payable on discontinued operations		2,330			-

Total current liabilities		5,736,349			8,408,910

LONG TERM LIABILITIES:
Deferred revenue		1,000,000			1,500,000
Capital lease obligations		74,861			153,139

Total long term liabilities		1,074,861			1,653,139

Total liabilities		6,811,210			10,062,049

COMMITMENTS AND CONTINGENCIES: (See Note 9)

SHAREHOLDERS' EQUITY (DEFICIT):
Preferred stock ($.001 par value; 20,000,000 shares authorized) Series A convertible preferred stock; 3,437,500 shares designated, 1,276,750 shares issued and outstanding (liquidation value $12,767,500)		1,277			1,277
Series B convertible preferred stock; 11,000,000 shares designated, 5,307,212 shares issued and outstanding (liquidation value $15,921,636)		5,307			5,307
Series C convertible preferred stock; 4,000,000 shares designated, 1,254,175 shares issued and outstanding (liquidation value $6,270,875)		1,254			-
Common stock ($.001 par value; 500,000,000 shares authorized, 41,543,655 shares issued and outstanding)		41,543			41,543
Additional paid-in capital		65,365,386			62,815,507
Accumulated deficit		(65,030,274	)		(66,652,694	)

Total shareholders' equity (deficit)		384,493			(3,789,060	)

Total liabilities and shareholders' equity (deficit)	$	7,195,703		$	6,272,989

See accompanying notes to audited consolidated financial statements.

F-3

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Year Ended December 31,
	2017			2016

Revenues	$	21,694,921		$	21,830,928

Cost of revenues		13,842,823			19,070,205

Gross profit		7,852,098			2,760,723

Selling, general and administrative expenses		6,065,980			5,473,566

Operating income (loss) from continuing operations		1,786,118			(2,712,843	)

Other income (expense):
Gain on the sale of equipment		5,380			-
Interest expense		(23,640	)		(25,249	)

Total other income (expense)		(18,260	)		(25,249	)

Income (loss) from continuing operations before income taxes		1,767,858			(2,738,092	)

Provision for income taxes from continuing operations		167,670			-

Net income (loss) from continuing operations		1,600,188			(2,738,092	)

Income from discontinued operations before income taxes		24,562		$	70,155

Provision for income taxes from discontinued operations		2,330			-

Net income from discontinued operations		22,232			70,155

Net income (loss)	$	1,622,420		$	(2,667,937	)

Net income (loss) per common share - basic:
Income (loss) from operations per common share	$	0.04		$	(0.06	)
Income from discontinued operations per common share		-			-
Net income (loss) per common share	$	0.04		$	(0.06	)

Net income (loss) per common share - fully diluted:
Loss from operations per common share	$	0.01		$	(0.06	)
Income from discontinued operations per common share		-			-
Net income (loss) per common share	$	0.01		$	(0.06	)

Weighted average common shares outstanding - basic		41,543,655			41,543,655
Weighted average common shares outstanding - fully diluted		189,895,315			41,543,655

See accompanying notes to audited consolidated financial statements.

F-4

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED DECEMBER 31, 2017 and 2016

	Series A Preferred Stock,				Series B Preferred Stock,				Series C Preferred Stock,				Common Stock, $.001
	$.001 Par Value				$.001 Par Value				$.001 Par Value				Par Value
	Number of Shares		Amount		Number of Shares		Amount		Number of Shares		Amount		Number of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders' Equity (Deficit)
Balance - December 31, 2015		1,276,750	$	1,277		5,305,852	$	5,306		-	$	-		41,543,655	$	41,543	$	61,289,323	$	(63,984,757	)	$	(2,647,308	)

Amortization of deferred compensation																		74,762					74,762

Net loss for the period																				(2,667,937	)		(2,667,937	)

Preferred stock and warrants issued in rights offering						1,360		1										4,079					4,080

Warrants issued to client as compensation																		1,299,963					1,299,963

Warrants amended to extend the expiration date issued to executives as compensation																		147,380					147,380

Balance - December 31, 2016		1,276,750	$	1,277		5,307,212	$	5,307		-	$	-		41,543,655	$	41,543	$	62,815,507	$	(66,652,694	)	$	(3,789,060	)

Amortization of deferred compensation																		126,344					126,344

Net loss for the period																				1,622,420			1,622,420

Preferred stock and warrants issued in rights offering		-		-		-		-		104,175		104						118,235					118,339

Preferred stock issued in private placements										1,150,000		1,150						2,286,696					2,287,846

Warrants issued to an executive as compensation																		18,604					18,604

Balance - December 31, 2017		1,276,750	$	1,277		5,307,212	$	5,307		1,254,175	$	1,254		41,543,655	$	41,543	$	65,365,386	$	(65,030,274	)	$	384,493

See accompanying notes to consolidated financial statements.

F-5

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year Ended December 31,
	2017			2016
Cash Flows From Operating Activities:
Net income (loss)	$	1,622,420		$	(2,667,937	)
Less: income from discontinued operations		(22,232	)		(70,155	)
Net income (loss) from continuing operations		1,600,188			(2,738,092	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		348,914			501,463
Stock-based compensation		144,948			222,142
Stock based fees paid to client as a reduction to revenue		-			1,299,963
(Gain) on the sale of used equipment		(5,380	)		-
Changes in assets and liabilities:
Accounts receivable		790,428			1,625,620
Prepaid expenses		(42,570	)		78,886
Other current assets		30,520			14,434
Accounts payable		(3,975,331	)		49,889
Accrued expenses		690,080			(60,572	)
Deferred revenue		(19,739	)		(895,221	)
Income tax payable		167,670			-

Net cash (used in) provided by continuing operations		(270,272	)		98,512

Income from discontinued operations		22,232			70,155
Changes in assets of discontinued operations		4,830			6,576
Changes in liabilities of discontinued operations		2,330			-
Net cash provided by discontinued operations		29,392			76,731

Net cash (used in) provided by operating activities		(240,880	)		175,243

Cash Flows From Investing Activities:
Purchase of property and equipment		(25,445	)		(34,351	)
Proceeds from the sale of equipment		5,380			-

Net cash used in investing activities		(20,065	)		(34,351	)

Cash Flows From Financing Activities:
Gross proceeds from sale of preferred stock		2,508,350			-
Fees paid in connection with sale of preferred stock		(102,163	)		-
Gross proceeds from sale of preferred stock and warrants		-			4,080
Payments on notes payable		(86,367	)		(112,905	)
Payments on capital leases		(202,953	)		(268,743	)

Net cash provided by (used in) financing activities		2,116,867			(377,568	)

Net increase (decrease) in cash		1,855,922			(236,676	)

Cash - beginning of the period		3,161,617			3,398,293

Cash - end of the period	$	5,017,539		$	3,161,617

Supplemental Disclosures of Cash Flow Information
Cash payments for interest	$	23,640		$	25,249

Non cash investing and financing activities:
Acquisition of equipment acquired through capital leases	$	80,505		$	232,135

See accompanying notes to audited consolidated financial statements.

F-6

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

InsPro Technologies Corporation (the “Company”, “ITCC”, “we”, “us” or “our”) is a technology company that provides software applications for use by insurance administrators in the insurance industry. Our business focuses primarily on our InsPro Enterprise^TM software application, which was introduced in 2004.

The Company offers InsPro Enterprise on both a licensed and an application service provider (“ASP”) basis. InsPro Enterprise is an insurance administration and marketing system that supports group and individual business lines, and efficiently processes agent, direct market, worksite and web site generated business. InsPro Technologies' clients include insurance carriers and third party administrators. The Company realizes revenue from the sale of software licenses, application service provider fees, hosting fees, software maintenance fees and consulting and implementation services.

Basis of presentation and principles of consolidation

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP“). The consolidated financial statements of the Company include the Company and its wholly-owned subsidiaries. All material inter-company balances and transactions have been eliminated.

Use of estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Significant estimates in 2017 and 2016 include the allowance for doubtful accounts, stock-based compensation, the useful lives and valuation of property and equipment, valuation of deferred tax assets and deferred revenue.

Cash and cash equivalents

The Company had no cash equivelents during the two years ended December 31, 2017. The Company considers all liquid debt instruments with original maturities of three months or less to be cash equivalents.

Accounts receivable

The Company has a policy of establishing an allowance for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. As of December 31, 2017 and 2016, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amount of $11,675 and $0, respectively.

Fair value of financial instruments

The carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, notes payable and capital lease obligations approximated fair value as of December 31, 2017, and December 31, 2016, because of the relatively short-term maturity of these instruments and their market interest rates.

F-7

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company follows Financial Accounting Standards Board (“FASB”) ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements.

Property and equipment

Property and equipment are carried at cost. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. In accordance with Statement of Financial Accounting Standards ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

Impairment of long-lived assets

The Company periodically reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record an impairment charge for the years ended December 31, 2017 and 2016.

Income taxes

The Company accounts for income taxes pursuant to the provisions of ASC 740-10, ”Accounting for Income Taxes,” which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized.

The Company follows the provisions of ASC 740 -10 related to, Accounting for Uncertain Income Tax Positions. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits.

F-8

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company has adopted ASC 740-10-25 Definition of Settlement, which provides guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits and provides that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The Company has not yet filed its tax returns for the tax year ended December 31, 2017. As of December 31, 2017, the tax years ended December 31, 2016, 2015 and 2014 are still subject to audit.

Income (loss) per common share

The Company's weighted average common shares outstanding used in computing fully diluted net income (loss) per common share include the following:

	Year Ended December 31,
	2017		2016

Common stock		41,543,655		41,543,655
Conversion of series A convertible preferred stock issued and outstanding into common stock		25,535,000		-
Conversion of series B convertible preferred stock issued and outstanding into common stock		106,144,240		-
Conversion of series C convertible preferred stock issued and outstanding into common stock		16,672,420		-

Shares used in computing fully diluted net income (loss) per share		189,895,315		41,543,655

The Company’s issued and outstanding convertible preferred stock is convertible into common stock at a ratio of 20 common shares for each preferred share.

Revenue recognition

Revenue for the year ended December 31, 2016, include a reduction in the amount of $1,299,963 for stock based fees paid to a client. See Note 6 - Stockholders’ Equity (Deficit) – Series B Preferred Stock Warrants.

The Company offers InsPro Enterprise^TM on both a licensed and an ASP basis. An InsPro Enterprise software license entitles the purchaser a perpetual license to a copy of the InsPro Enterprise software installed at a single client location or hosted by InsPro Technologies. Alternatively, ASP hosting service enables a client to lease the InsPro Enterprise software, paying only for that capacity required to support their business. ASP and hosting clients access InsPro Enterprise installed on InsPro Technologies owned servers located at InsPro Technologies’ offices or at a third party’s site.

The Company’s software maintenance fees apply to both licensed and ASP clients. Maintenance fees cover periodic updates to the application and the InsPro Enterprise help desk.

F-9

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The Company’s revenue is generally recognized under Accounting Standards Codification 985-605, Software Revenue Recognition. For software arrangements involving multiple elements, which are the sale of software licenses, professional services, ASP services and maintenance services, the Company allocates revenue to each element based on the specific objective evidence of selling price of each deliverable, which is based on prices charged when the element is sold separately. Software revenue accounted for under ASC 985-605 is recognized when persuasive evidence of an arrangement exists, the software is delivered in accordance with all terms and conditions of the customer contracts, the fee is fixed or determinable and collectability is probable. Revenue related to post-contract customer support (“PCS”), including technical support and unspecified when-and-if available software upgrades, is recognized ratably over the PCS term. Under ASC 985-605, if fair value does not exist for any undelivered element, revenue is not recognized until the earlier of (i) delivery of such element or (ii) when fair value of the undelivered element is established, unless the undelivered element is a service, in which case revenue is recognized as the service is performed once the service is the only undelivered element.

Effective August 18, 2015, the Company entered into a five year software and services reseller agreement (the “Reseller Agreement”) with an unaffiliated third party (the “Reseller”) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the “Reseller Fee”). Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy during the term of the Reseller Agreement (each a “Refund Event”). The Reseller Fee was fully refundable if a Refund Event occurred before August 31, 2016. A Refund Event did not occur as of December 31, 2016, and as a result the Company recognized $500,000 of Reseller Fee as revenue in the year ended December 31, 2016. A Refund Event did not occur as of September 30, 2017 and December 31, 2017, and as a result the Company recognized $500,000 of Reseller Fee as revenue in the year ended December 31, 2017. The Company shall refund the following amounts to the Reseller if a Refund Event occurs between the following dates; $1,500,000 between September 1, 2017 and August 31, 2018, and $1,000,000 between September 1, 2018 and August 31, 2019. As of December 31, 2017 the Company has recorded the $1,500,000 unearned portion of the Reseller Fee in deferred revenue ($500,000 included in current liabilities and $1,000,000 included in long term liabilities).

F-10

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The unearned portion of the Company’s revenue, which is revenue collected but not yet recognized as earned, has been included in the consolidated balance sheet as a liability for deferred revenue.

See Note 2 - Discontinued Operations - Revenue Recognition for Discontinued Operations.

Cost of revenues

Cost of revenues includes direct labor and associated costs for employees and independent contractors performing InsPro Enterprise™ design, development, implementation and testing together with customer management, training and technical support, as well as a portion of facilities costs. For the years ended December 31, 2017 and 2016, cost of revenues consisted of the following:

	For the Year Ended December 31,
	2017		2016

Compensation, employee benefits and related taxes	$	6,194,794	$	7,519,551
Professional fees		6,713,060		10,317,169
Depreciation		248,292		382,876
Rent, utilities, telephone and communications		378,301		443,348
Other cost of revenues		308,376		407,261
	$	13,842,823	$	19,070,205

Selling, general and administrative expenses

Selling, general and administrative expenses include all selling, marketing, and other expenses not classified as cost of revenues. The following table discloses selling, general and administrative expenses as reported in the statement of operations.

	For the Year Ended December 31,
	2017		2016

Compensation, employee benefits and related taxes	$	3,986,164	$	3,337,346
Advertising and other marketing		35,127		140,552
Depreciation		100,622		118,587
Rent, utilities, telephone and communications		227,102		405,032
Professional fees		838,624		709,383
Other general and administrative		878,341		762,666
	$	6,065,980	$	5,473,566

Advertising and other marketing

Advertising and other marketing costs are expensed as incurred and are reported in selling, general and administrative expenses. See the previous table under selling, general and administrative expenses for advertising and other marketing expenses reported in the statement of operations.

F-11

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Concentrations of credit risk

The Company maintains its cash and restricted cash in bank deposit accounts, which exceed the federally insured limits as provided through the Federal Deposit Insurance Corporation (“FDIC”). As of December 31, 2017 and 2016, the Company had $5,254,967 and $3,195,018 of cash in United States bank deposits, of which $500,926 and $500,930 was federally insured and $4,754,926 and $2,694,088 was not federally insured, respectively.

The following table lists the percentage of the Company’s accounts receivable balance from the Company’s InsPro Enterprise™ clients representing 10% or more of the accounts receivable balances as of the periods listed below.

	December 31, 2017			December 31, 2016

Client #1		52	%		30	%
Client #2		10	%		12	%
Client #3		-			13	%

The following table lists the percentage of the Company’s revenue earned from the Company’s InsPro Enterprise clients representing 10% or more of the revenue earned in each of the periods listed below.

	For the Year Ended December 31,
	2017			2016

Client #1		38	%		30	%
Client #2		20	%		16	%
Client #3		-			14	%

Stock-based compensation

The Company accounts for stock based compensation transactions using a fair-value-based method and recognizes compensation cost for share-based payments to employees based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied.

Non-employee stock based compensation

The cost of stock based compensation awards issued to non-employees for services are recorded at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, based on their grant-date fair value from the beginning of the fiscal period in which the recognition provisions are first applied.

Recent accounting pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB"), which are adopted by the Company as of the specified effective date. Unless otherwise discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s consolidated financial statements upon adoption.

F-12

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

F-13

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Effective August 18, 2015, the Company entered into a five year software and services reseller agreement (the “Reseller Agreement”) with an unaffiliated 3^rd party (the “Reseller”) whereby the Company granted the Reseller the exclusive right to market InsPro Enterprise to prospective clients for their administration of long term care insurance products for an initial fee of $2,500,000 (the “Reseller Fee”). Pursuant to the Reseller Agreement, the Reseller Fee is fully or partially refundable to the Reseller in the event that the Company materially breaches the Reseller Agreement or the Company becomes insolvent, goes into liquidation or seeks protection under bankruptcy during the term of the Reseller Agreement (each a “Refund Event”). We have recognized Reseller Fee revenue whenever a portion of the Reseller Fee is no longer subject to refund as a result of a Refund Event and at which time no portion of the Reseller Fee is subject to refund the portion of the Reseller Fee not already recognized as revenue is recognized ratably over the duration of the Reseller Agreement. Under the new standard, the Company believes the contractual specific refund amounts and time frames pertaining to a Refund Event represent separate performance obligations over the duration of the Reseller Agreement, which the Reseller Agreement has contractually specified the prices for each separate performance deliverable. Therefore, revenue recognition is deemed to be consistent under both the previous and new standard.

In February 2016, the FASB issued ASU No. 2016-02 Leases (Topic 842) (“ASU 2016-02”), which requires all leases with a term greater than 12 months to be recognized on the balance sheet, while lease expenses would continue to be recognized in the statement of operations in a manner similar to current accounting guidance. The new standard establishes a right-of-use model (ROU) asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations. ASU 2016-02 is effective for the Company at the beginning of fiscal year 2019 and early adoption is permitted. Entities must adopt ASU 2016-02 on a modified retrospective basis whereby it would be applied at the beginning of the earliest comparative year. The new standard is effective for us in the first quarter of 2019 and we do not plan to early adopt. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements. We believe our current lease for our Eddystone office, which was extended for a 1 year term that expires on January 31, 2019, would continue to be accounted for as an operating lease under the new standard. We may enter into a new lease for office space, which may have a term greater than 12 months, in the future.

F-14

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

In June 2016, the FASB issued ASU No. 2016-13 “Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”).” For most financial assets, such as trade and other receivables, loans and other instruments, this standard changes the current incurred loss model to a forward-looking expected credit loss model, which generally will result in the earlier recognition of allowances for losses. The new standard is effective for the Company at the beginning of fiscal year 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of the effective date. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15 “Classification of Certain Cash Receipts and Cash Payments (Topic 230)” (“ASU 2016-15”), which provides guidance for eight specific cash flow issues with the objective of reducing the existing diversity in practice. ASU 2016-15 is effective retrospectively for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. Early adoption is permitted. The new standard is effective for the Company at the beginning of fiscal year 2018. We are currently evaluating the impact of adopting this ASU on our consolidated financial statements and do not expect adoption to have a material impact.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business ("ASU 2017-01"). ASU 2017-01 clarifies the definition of a business with the objective of addressing whether transactions involving in-substance nonfinancial assets, held directly or in a subsidiary, should be accounted for as acquisitions or disposals of nonfinancial assets or of businesses. ASU 2017-01 will be effective for the Company’s fiscal year beginning December 1, 2018 and subsequent interim periods. The adoption of ASU 2017-01 is not expected to have a material effect on the Company’s consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Accounting for Goodwill Impairment ("ASU 2017-04"). ASU 2017-04 removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 will be effective for the Company’s fiscal year beginning December 1, 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 is not expected to have a material effect on the Company’s consolidated financial statements.

Liquidity

During the year ended December 31, 2017, the Company’s net income was $1,622,420 and cash used in operations was $240,880, which included the reduction of accounts payable in the amount of $3,975,331. As of December 31, 2017, the Company had $5,017,539 of cash, working capital of $1,189,360, which included accounts payable of $1,484,704, and the Company’s shareholder equity was $384,493. During 2016, the Company implemented cost reduction initiatives, which resulted in the reduction of expenses in 2016 as compared to 2015. During 2017 the Company implemented additional cost reduction initiatives, which resulted in the reduction in cost of revenues of $5,227,382 in 2017 as compared to 2016. During the second quarter of 2017 the Company obtained $2,300,000 of cash from existing stockholders, which is described in Note 5 – Transactions with Related Parties. During the third quarter of 2017 the Company obtained $208,350 of cash from existing stockholders as a result of a rights offering, which is described in Note 6 – Stockholders Equity (Deficit) – Series C Preferred Stock.

Our liquidity needs for the next twelve months and beyond are principally for the funding of our operations, payments on capital leases and the purchase of property and equipment. Based on the forgoing, management believes the Company has sufficient funds to finance its operations over the next twelve months.

F-15

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 2 – DISCONTINUED OPERATIONS

The Company has classified its former telesales call center and external agent produced agency business as discontinued operations. During the first quarter of 2009, the Company ceased the direct marketing and sale of health and life insurance and related products to individuals and families in its telesales call center. The Company also determined to discontinue selling health and life insurance and related products to individuals and families through its non employee agents. On February 20, 2009, the Company entered into and completed the sale of the agency business to an unaffiliated third party, pursuant to the terms of a client transition agreement.

Revenue Recognition for Discontinued Operations

Our discontinued operations generate revenue primarily from transition policy commissions pursuant to the client transition agreement and renewal commissions paid to the Company by insurance companies based upon the insurance policies sold to consumers by the Company’s telesales call center.

We recognize commissions and other revenue from carriers after we receive notice that the insurance carrier has received payment of the related premium. The Company recognizes as revenue commission payments received in connection with the client transition agreement upon the Company’s notification of such amounts.

The financial position of discontinued operations was as follows:

	December 31, 2017		December 31, 2016

Accounts receivable	$	3,806	$	8,636
Net current assets of discontinued operations	$	3,806	$	8,636

Income tax payable on discontinued operations	$	2,330	$	-

The results of discontinued operations do not include any allocated or common overhead expenses. The results of operations of discontinued operations were as follows:

	For the Year Ended December 31,
	2017		2016
Revenues:
Commission and other revenue from carriers	$	8,078	$	10,016
Transition policy commission pursuant to the Agreement		49,447		88,006

		57,525		98,022

Operating expenses:
Other general and administrative		32,963		27,867

		32,963		27,867

Income from discontinued operations before income taxes	$	24,562	$	70,155

F-16

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	Useful Life (Years)	December 31, 2017			December 31, 2016
Computer equipment and software	3	$	4,590,221		$	4,419,412
Office equipment	4.6		145,228			158,732
Office furniture and fixtures	6.7		-			189,857
Leasehold improvements	5.4		81,933			94,620
			4,817,382			4,862,621

Less accumulated depreciation			(4,547,388	)		(4,349,661	)

		$	269,994		$	512,960

The following table discloses depreciation expense as reported in the statement of operations.

	For the Year Ended December 31,
	2017		2016

Depreciation included in cost of revenues	$	248,292	$	382,876
Depreciation included in selling, general and administrative		100,622		118,587
Total depreciation	$	348,914	$	501,463

NOTE 4 – NOTES PAYABLE

Notes payable as of December 31, 2017, consist of two notes payable for insurance premium financing on one of the Company’s insurance policies. The first note commenced on May 3, 2017, has an annual interest rate of 7.99% and consists of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3, 2017 and ending on April 3, 2018. The second note commenced on September 28, 2017, has an annual interest rate of 8.99% and consists of 10 monthly payments of principal and interest of $4,920 per month commencing on September 28, 2017 and ending on July 28, 2018. The balance on these notes payable is $45,793 at December 31, 2017.

Notes payable as of December 31, 2016, consist of two notes payable for insurance premium financing on two of the Company’s insurance policies. The first note commenced on April 28, 2016, has an annual interest rate of 8.75% and consists of 11 monthly payments of principal and interest of $7,456 per month commencing on May 28, 2016 and ending on March 28, 2017. The second note commenced on May 3, 2016, has an annual interest rate of 7.99% and consists of 11 monthly payments of principal and interest of $4,358 per month commencing on June 3, 2016 and ending on April 3, 2017. The balance on these notes payable is $39,194 at December 31, 2016.

F-17

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 5 – TRANSACTIONS WITH RELATED PARTIES

Private Placements to Existing Stockholders

On April 20, 2017, the Company completed a private placement (the “Private Placement”) with The Co-Investment Fund II, L.P. (“Co-Investment”), which holds more than 5% of our common stock. Donald Caldwell, who is the chairman of the board of directors of the Company (the “Board”) and former CEO, is the CEO for Cross Atlantic Capital Partners, Inc., which is the managing partner of Co-Investment. The Company issued and Co-Investment purchased 1,000,000 shares of our Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Preferred Stock”), at a per share price of $2.00 for an aggregate total investment of $2,000,000 pursuant to the terms of a securities purchase agreement (the “Purchase Agreement”). The Company intends to use the net proceeds of the Private Placement for working capital purposes.

On May 11, 2017, the Company completed a private placement (the “Second Private Placement”) with Azeez Enterprises, L.P., which holds more than 5% of our Series C Preferred Stock, and John Scarpa, who holds more than 5% of our Series B Preferred Stock. Michael Azeez is a member of the Board and is the managing partner of Azeez Enterprises, L.P. The Company issued and both Azeez Enterprises, L.P. and Mr. Scarpa purchased 75,000 shares each, of our Series C Convertible Preferred Stock at a per share price of $2.00 for an aggregate total investment of $300,000 pursuant to the terms of a securities purchase agreement at essentially the same terms as those contained in the Purchase Agreement.

See Note 6 - Shareholders’ Equity (Deficit) – Series C Preferred Stock.

F-18

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT)

Common Stock

As of December 31, 2017 and 2016, the Company was authorized to issue 500,000,000 shares of common stock with a par value of $0.001 per share (“Common Stock”). As of December 31, 2017 and 2016, the Company had 41,543,655 shares of its Common Stock issued and outstanding.

The Company has reserved shares of Common Stock, on an as-if-converted basis, as follows:

	December 31, 2017		December 31, 2016

Exercise of options issued and outstanding to purchase common stock		825,000		4,000,000
Issuance of common shares available under the 2010 Equity Compensation Plan		28,171,980		24,996,980
Exercise of warrants issued and outstanding to purchase common stock		120,000		25,098,330
Conversion of series A convertible preferred stock issued and outstanding into common stock		25,535,000		25,535,000
Exercise of warrants to purchase series A convertible preferred stock issued and outstanding and converted into common stock		500,000		7,600,000
Conversion of series B convertible preferred stock issued and outstanding into common stock		106,144,240		106,144,240
Exercise of warrants to purchase series B convertible preferred stock issued and outstanding and converted into common stock		65,000,000		65,000,000
Conversion of series C convertible preferred stock issued and outstanding into common stock		25,083,500		-

Total common stock reserved for issuance		251,379,720		258,374,550

The above table includes common stock reserved for non exercisable stock options and common stock reserved for the issuance of stock options in the future under the Company’s 2010 Equity Compensation Plan.

Series A Convertible Preferred Stock

As of December 31, 2017 and 2016, the Company’s board of directors has designated 3,437,500 shares of Series A Convertible Preferred Stock with a par value of $0.001 per share (“Series A Preferred Stock”). As of December 31, 2017 and 2016, the Company had 1,276,750 shares of its Series A Preferred Stock issued and outstanding. As of December 31, 2017 and 2016, the Company has reserved 25,000 and 380,000 shares of Series A Preferred Stock for the exercise of warrants issued and outstanding to purchase its Series A Preferred Stock, respectively.

F-19

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

The Series A Preferred Stock is entitled to vote as a single class with the holders of the Company’s common stock, with each share of Series A Preferred Stock having the right to 20 votes. Upon the liquidation, sale or merger of the Company, each share of Series A Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series A Preferred Stock original issue price or $12,767,500, subject to certain customary adjustments, or (B) the amount such share of Series A Preferred Stock would receive if it participated pari passu with the holders of common stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares of Series A Preferred stock times $10.00. Each share of Series A Preferred Stock becomes convertible into 20 shares of common stock, subject to adjustment and at the option of the holder of the Series A Preferred Stock. For so long as any shares of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series A Preferred Stock is required to approve (Y) any amendment to the Company’s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series A Preferred Stock or (Z) any amendment to the Company’s certificate of incorporation to create any shares of capital stock that rank senior to the Series A Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series A Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series A Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series A Preferred Stock with an amount per share equal to two and a half (2.5) times the Series A Preferred Stock original issue price or $12,767,500 in aggregate for all issued and outstanding Series A Preferred Stock.

Series A Preferred Stock is junior to Series B Convertible Preferred Stock par value $0.001 per share (“Series B Preferred Stock”) and Series C Preferred Stock as it pertains to liquidation preferances.

Each share of Series A Preferred Stock is convertible into 20 shares of Common Stock, subject to adjustment and at the option of the holder of the Series A Preferred Stock.

Series B Convertible Preferred Stock

As of December 31, 2017 and 2016, the Company’s board of directors has designated 11,000,000 shares of Series B Preferred Stock. As of December 31, 2017 and 2016, the Company had 5,307,212 of its Series B Preferred Stock issued and outstanding. As of December 31, 2017 and 2016, the Company has reserved 3,250,000 shares of Series B Preferred Stock for the exercise of warrants issued and outstanding to purchase its Series B Preferred Stock.

F-20

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

The Series B Preferred Stock is entitled to vote as a single class with the holders of the Company’s common and preferred stock, with each share of Series B Preferred Stock having the right to 20 votes. Upon the liquidation, sale or merger of the Company, each share of Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to the Series B Preferred Stock original issue price or $15,921,636 as of December 31, 2017 and 2016, subject to certain customary adjustments, or (B) the amount such share of Series B Preferred Stock would receive if it participated pari passu with the holders of common and preferred stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares of Series B Preferred stock times $3.00. Each share of Series B Preferred Stock becomes convertible into 20 shares of common stock, subject to adjustment and at the option of the holder of the Series B Preferred Stock. For so long as any shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series B Preferred Stock is required to approve (Y) any amendment to the Company’s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series B Preferred Stock or (Z) any amendment to the Company’s certificate of incorporation to create any shares of capital stock that rank senior to the Series B Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series B Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series B Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series B Preferred Stock with an amount per share equal to the Series B Preferred Stock original issue price in aggregate or $15,921,636 in aggregate, for all issued and outstanding Series B Preferred Stock.

Series B Preferred Stock is senior to Series A Preferred Stock, and junior to Series C Preferred Stock, as it pertains to liquidation preferances.

Each share of Series B Preferred Stock is convertible into 20 shares of Common Stock, subject to adjustment and at the option of the holder of the Series B Preferred Stock.

2016

The basic subscription right entitled the holder to purchase one unit (“Subscription Unit”) at a subscription price of $240. A Subscription Unit consisted of 80 shares of Series B Preferred Stock and a warrant to purchase 800 shares of Common Stock that expires on November 20, 2017 at an exercise price of $0.15 per share. In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights.

F-21

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

Effective with the expiration of the subscription rights, which occurred on March 14, 2016, holders of subscription rights exercised in aggregate 17 basic subscription rights and 0 over subscription rights for a total of 17 Subscription Units. The Company received $4,080 in gross proceeds as a result of the exercise of Subscription Units. As a result of the exercise of 17 Subscription Units the Company issued effective on March 14, 2016 in aggregate 1,360 shares of Series B Preferred Stock and of warrants to purchase in aggregate 13,600 shares of Common Stock that expires on November 20, 2017 at an exercise price of $0.15 per share (the “2016 Warrants”). Effective with the expiration of the subscription rights all unexercised subscription rights expired.

The Company allocated $451 of the $4,080 proceeds received as a result of the rights offering, which represent the fair value of the 2016 Warrants, to additional paid in capital using a Black-Scholes option pricing model with the following assumptions: expected volatility of 259%, a risk-free interest rate of 0.51%, an expected term of 1.7 years and 0% dividend yield. The remaining $3,629 of the proceeds received was allocated to the Series B Preferred Stock.

Series C Preferred Stock

As of December 31, 2017 and 2016, the Board has designated 4,000,000 and 0 shares of Series C Preferred Stock, respectively. As of December 31, 2017 and 2016, the Company had 1,254,175 and 0 of its Series C Preferred Stock issued and outstanding.

The Series C Preferred Stock is entitled to vote as a single class with the holders of the Company’s Common Stock and preferred stock, with each share of Series C Preferred Stock having the right to 20 votes.

Upon the liquidation, sale or merger of the Company, each share of Series C Preferred Stock is entitled to receive an amount equal to the greater of (A) a liquidation preference equal to two and a half (2.5) times the Series C Preferred Stock original issue price, or $6,270,875 in aggregate, subject to certain customary adjustments, or (B) the amount such share of Series C Preferred Stock would receive if it participated pari passu with the holders of Common Stock on an as-converted basis. The liquidation preference is calculated by taking the product of the issued and outstanding shares of Series C Preferred Stock times $5.00.

Series C Preferred Stock is senior to Series A Preferred Stock and to Series B Preferred Stock as it pertains to liquidation preferances.

Each share of Series C Preferred Stock is convertible into 20 shares of Common Stock, subject to adjustment and at the option of the holder of the Series C Preferred Stock.

For so long as any shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the Series C Preferred Stock is required to approve (Y) any amendment to the Company’s certificate of incorporation or bylaws that would adversely alter the voting powers, preferences or special rights of the Series C Preferred Stock or (Z) any amendment to the Company’s certificate of incorporation to create any shares of capital stock that rank senior to the Series C Preferred Stock. In addition to the voting rights described above, for so long as 1,000,000 shares of Series C Preferred Stock are outstanding, the vote or consent of the holders of at least two-thirds of the shares of Series C Preferred Stock is required to effect or validate any merger, sale of substantially all of the assets of the Company or other fundamental transaction, unless such transaction, when consummated, will provide the holders of Series C Preferred Stock with an amount per share equal to two and a half (2.5) times the Series C Preferred Stock original issue price, or $6,270,875, in aggregate for all issued and outstanding Series C Preferred Stock.

F-22

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

In connection with the Private Placement, the Board approved a Certificate of Designation of Series C Convertible Preferred Stock of the Company (the “Certificate of Designation”) setting forth the rights, preferences and limitations of the Series C Preferred Stock. The Company’s board of directors has designated 4,000,000 shares of Series C Preferred stock. On April 19, 2017, the Company filed the Certificate of Designation with the Secretary of State of the State of Delaware.

The Company recorded the $2,300,000 of proceeds received as a result of the Private Placement and Second Private Placement (collectively the “2017 Private Placements”) less $12,154 of legal expenses incurred in connection with the 2017 Private Placements to Series C Preferred Stock in the amount of $1,150 and additional paid in capital in the amount of $2,286,696. See Note 5 – Transactions With Related Parties.

On July 17, 2017 the Company filed a registration statement for a rights offering (the “Rights Offering”) on form S-1/A, which the Commission declared effective on July 17, 2017, to distribute to shareholders excluding residents of California at no charge, one non-transferable subscription right for each 9,651 shares of our Common Stock, 483 shares of our Series A Preferred Stock, 483 shares of our Series B Preferred Stock and 483 shares of our Series C Preferred Stock owned as of July 17, 2017, the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks, or other nominees on shareholders’ behalf, as a beneficial owner of such shares. The Rights Offering was designed to give all of the holders of the Company’s capital stock the opportunity to participate in an equity investment in the Company on the same economic terms as the 2017 Private Placements.

The basic subscription right entitled the holder to purchase one unit (“Subscription Unit”) at a subscription price of $50. A Subscription Unit consisted of 25 shares of Series C Preferred Stock. In the event that a holder of a subscription right purchases all of the basic Subscription Units available to the holder then pursuant to their basic subscription right, the holder will have the option to choose to subscribe for a portion of any Subscription Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights. The subscription rights expired on August 29, 2017.

Effective with the expiration of the Rights Offering, which occurred on August 29, 2017, holders of subscription rights exercised in aggregate 167 basic subscription rights and 4,000 over subscription rights for a total of 4,167 Subscription Units. As a result of the exercise of 4,167 Subscription Units the Company received $208,350 in gross proceeds and issued effective on August 29, 2017, in aggregate 104,175 shares of Series C Preferred Stock. Effective with the expiration of the Rights Offering all unexercised subscription rights expired. The Company incurred $90,011 of legal and other expenses as a result of the Rights Offering. As a result of the Rights Offering the Company recorded $104 to Series C Preferred Stock, which is the par value of the 104,175 shares issued, and $118,237 to additional paid in capital.

Stock Options

2016

On March 31, 2016, the Company granted two executives of the Company options to purchase a total of 1,000,000 shares of the Company’s Common Stock, which vest as follows: 250,000 shares of Common Stock on March 31 of each year from 2017 to 2020. Such options have a five year term and an exercise price of $0.10 per share, which exceeded the $0.04 closing price of one share of the Company’s Common Stock as quoted on the OTCBB on March 31, 2016. The fair value of the options granted was estimated on the date of the grant to be $40,000 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 724%, risk-free interest rate: 0.38%, expected life in years: 5 based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining to these options in salaries, commission and related taxes of $7,500 in the year ended December 31, 2016.

F-23

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

On May 20, 2016, the Company granted to an executive of the Company options to purchase a total of 500,000 shares of the Company’s Common Stock, which vest as follows: 125,000 shares of Common Stock on May 20 of each year from 2017 to 2020. Such options have a five year term and an exercise price of $0.10 per share, which exceeded the $0.04 closing price of one share of the Company’s Common Stock as quoted on the OTCBB on May 20, 2016. The fair value of the options granted was estimated on the date of the grant to be $16,000 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 710%, risk-free interest rate: 0.32%, expected life in years: 5 based on the contract life of the option grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining to these options in salaries, commission and related taxes of $2,664 in the year ended December 31, 2016.

During the year ended December 31, 2016, 475,000 options, which were previously granted to directors and a former employee of the Company, expired in accordance with the terms of such stock options.

The Company recorded compensation expense pertaining to employee stock options and warrants in the amount of $222,142 for the year ended December 31, 2016, which included $74,762 of expense pertaining to stock options and $147,380 of expense pertaining to the amendment of warrants to purchase Series A Preferred Stock. See Note 6 – Stockholders Equity (Deficit) – Series A Preferred Stock Warrants.

2017

During the year ended December 31, 2017, options for 3,175,000, which were previously granted to former executives of the Company, expired in accordance with the terms of such stock options.

The Company recorded compensation expense pertaining to employee stock options and warrants to purchase Series A Preferred Stock in the amount of $144,948 for the year ended December 31, 2017, which included $126,344 of expense pertaining to stock options and $18,604 of expense pertaining to the amendment of warrants to purchase Series A Preferred Stock. See Note 6 – Stockholders’ Equity (Deficit) – Series A Preferred Stock Warrants – 2017.

The value of equity compensation expense not yet expensed pertaining to unvested equity compensation was $12,350 as of December 31, 2017, which will be recognized over a weighted average 2.8 years in the future.

As of December 31, 2017, there were 30,000,000 shares of our Common Stock authorized to be issued under the 2010 Equity Compensation Plan, of which 28,171,980 shares of our common stock remain available for future stock option grants.

F-24

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

A summary of the Company’s outstanding stock options as of and for the years ended December 31, 2017 and 2016 are as follows:

	Number			Weighted				Weighted
	Of Shares			Average		Weighted		Average		Aggregate
	Underlying			Exercise		Average		Remaining		Intrinsic
	Options			Price		Fair Value		Contractual Life		Value (1)
								(in years)
Outstanding at December 31, 2015		2,975,000		$	0.90	$	0.54		2.5	$	0.00

For the period ended December 31, 2016
Granted		1,500,000			0.10		0.04
Exercised		-			-		-
Expired		(475,000	)		3.58		2.94

Outstanding at December 31, 2016		4,000,000			0.10		0.06		3.4		0.00

For the period ended December 31, 2017
Granted		-			-		-
Exercised		-			-		-
Expired		(3,175,000	)		0.10		0.04

Outstanding at December 31, 2017		825,000		$	0.10	$	0.10		3.0	$	-

Outstanding and exercisable at December 31, 2017		383,333		$	0.10	$	0.10		2.9	$	-

(1)

The aggregate intrinsic value is based on the $0.048 closing price as of December 31, 2017 for the Company’s Common Stock.

Common Stock Warrants

2016

On March 14, 2016, the 2016 Warrants were issued in connection with the rights offering in 2016. See Note 6 – Stockholders Equity (Deficit) – Series B Convertible Preferred Stock. The Company determined the 2016 Warrants qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company’s stock.

2017

During the year ended December 31, 2017, warrants to purchase 24,978,330 common shares expired in accordance with the terms of such warrants.

Outstanding common stock warrants as of December 31, 2017, have a weighted average remaining contractual life of 0.2 years.

F-25

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

A summary of the status of the Company's outstanding common stock warrants as of and for the years ended December 31, 2017 and 2016 are as follows:

				Weighted
	Common			Average
	Stock			Exercise
	Warrants			Price

Outstanding and exercisable at December 31, 2015		25,084,730			0.15

For the year ended December 31, 2016
Issued		13,600			0.15
Exercised		-			-
Expired		-			-
Outstanding and exercisable at December 31, 2016		25,098,330		$	0.15

For the year ended December 31, 2017
Issued		-			-
Exercised		-			-
Expired		(24,978,330	)		0.15
Outstanding and exercisable at December 31, 2017		120,000		$	0.15

Series A Preferred Stock warrants

2016

On March 31, 2016, the Company amended and restated a warrant to purchase a total of 150,000 shares of the Company’s Series A Preferred Stock originally granted to Mr. Robert J. Oakes on August 18, 2010, and also amended and restated a warrant to purchase a total of 150,000 shares of the Company’s Series A Preferred Stock originally granted to Mr. Anthony R. Verdi on September 14, 2011 (collectively the “Original Warrants”). Immediately prior to March 31, 2016, the Original Warrants had an expiration date of September 14, 2016 and the Original Warrants were amended and restated to have an expiration date of September 14, 2017 (as amended, the “Amended and Restated Warrants”). The Amended and Restated Warrants are fully exercisable and have an exercise price of $4.00 per share. The fair value of the amendment to the Amended and Restated Warrants was estimated on the date of the amendment to be the difference between the value of the Amended and Restated Warrants immediately before and after the change in the expiration date. The fair value of the Amended and Restated Warrants was estimated on the date of the amendment before the change in the expiration date to be $2,224 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 111%, risk-free interest rate: 0.38%, expected life in years: 0.5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The fair value of the Amended and Restated Warrants was estimated on the date of the amendment after the change in the expiration date to be $149,605 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 263%, risk-free interest rate: 0.38%, expected life in years: 1.5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining to the Amended and Restated Warrant in salaries, commission and related taxes of $147,380 in the year ended December 31, 2016.

F-26

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

2017

On August 16, 2017, the Company granted to David J. Medlock a warrant to purchase 25,000 shares of the Company’s Series A Preferred Stock. This warrant is immediately exercisable, has a five year term and an exercise price of $4.00 per share. The fair value of these warrants granted were estimated on the date of the grant to be $18,604 using the Black-Scholes option-pricing model based on the following assumptions: expected volatility: 261%, risk-free interest rate: 1.03%, expected life in years: 5 based on the contract life of the warrant grant, and assumed dividend yield: 0%. The Company recorded compensation expense pertaining to this warrant in salaries, commission and related taxes of $18,604 in the year ended December 31, 2017.

During the year ended December 31, 2017, warrants to purchase 380,000 shares of the Company’s Series A Preferred Stock, which were previously granted to Mr. Oakes, Mr. Verdi and a former executive of the Company, expired in accordance with the terms of such warrants.

Outstanding warrants to purchase the Company’s Series A Preferred Stock as of December 31, 2017, have a remaining contractual life of 4.9 years.

A summary of the status of the Company's outstanding Series A Preferred Stock warrants as of and for the years ended December 31, 2017 and 2016 are as follows:

				Weighted
	Preferred			Average
	Stock			Exercise
	Warrants			Price

Outstanding and exercisable at December 31, 2015		380,000			4.00

For the year ended December 31, 2016
Granted		-			-
Exercised		-			-
Expired		-			-
Outstanding and exercisable at December 31, 2016		380,000		$	4.00

For the year ended December 31, 2017
Granted		25,000			4.00
Exercised		-			-
Expired		(380,000	)		4.00
Outstanding and exercisable at December 31, 2017		25,000		$	4.00

Series B Preferred Stock Warrants

2016

On April 4, 2016, the Company entered into an agreement with an existing client, which among other things, included a provision that the Company issue a warrant to the client to purchase 2,000,000 shares of the Company’s Series B Preferred Stock, which is immediately exercisable (the “2016 Series B Warrants”). The 2016 Series B Warrants have a three year term, a cashless exercise provision and an exercise price of $3.00 per share. On May 4, 2016 the Company issued the 2016 Series B Warrant to the client. The fair value of the 2016 Series B Warrants was estimated on April 4, 2016, which was the date of the agreement with the client, to be $1,299,963 using the Black-

F-27

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

Scholes option-pricing model based on the following assumptions: expected volatility: 503%, risk-free interest rate: 0.38%, expected life in years: 3 based on the contract life of the 2016 Series B Warrants, and assumed dividend yield: 0%. The Company determined the 2016 Series B Warrants qualify for a scope exception under ASC 815 as they were determined to be indexed to the Company’s stock. The Company recorded the fair value of the 2016 Series B Warrant as an increase to additional paid in capital and a reduction to revenue during the year ended December 31, 2016, in the amount of $1,299,963.

Outstanding Series B Warrants as of December 31, 2017, have a remaining contractual life of 1.6 years.

A summary of the status of the Company's outstanding Series B Preferred Stock warrants as of and for the years ended December 31, 2017 and 2016 are as follows:

			Weighted
	Preferred		Average
	Stock		Exercise
	Warrants		Price

Outstanding and exercisable at December 31, 2015		1,250,000	$	3.00

For the year ended December 31, 2016
Granted		2,000,000		3.00
Exercised		-		-
Expired		-		-
Outstanding and exercisable at December 31, 2016		3,250,000	$	3.00

For the year ended December 31, 2017
Granted		-		-
Exercised		-		-
Expired		-		-
Outstanding and exercisable at December 31, 2017		3,250,000	$	3.00

Registration and Participation Rights

In connection with the Company’s acquisition of Atiam Technologies L. P., the Company and certain owners of Atiam Technologies L.P. entered into a registration rights agreement.

In connection with the Company’s 2008 private placement, the Company and the participating investors also entered into a Registration Rights Agreement (the “2008 Registration Rights Agreement”). Under the terms of the 2008 Registration Rights Agreement, the Company agreed to prepare and file with the SEC, a registration statement on Form S-1 covering the resale of the shares and the warrant shares, which was filed with the SEC on February 1, 2008 and declared effective by the SEC on April 22, 2008. Subject to limited exceptions, the Company also agreed to use its reasonable best efforts to keep the registration statement effective under the Securities Act until the date that all of the registrable securities covered by the registration statement have been sold or may be sold without volume restrictions pursuant to Rule 144(b)(i)) promulgated under the Securities Act. The 2008 Registration Rights Agreement also provides for payment of partial damages to the investors under certain circumstances relating to failure to file or obtain or maintain effectiveness of the registration statement, subject to adjustment.

F-28

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 6 – SHAREHOLDERS’ EQUITY (DEFICIT) (continued)

In connection with the Company’s 2009 private placement, the Company and the participating investor also entered into a Registration Rights Agreement (the “2009 Registration Rights Agreement”). Under the terms of the 2009 Registration Rights Agreement, the Company agreed to prepare and file with the SEC, within 30 days following the receipt of a demand notice of a holder of registrable securities, a registration statement on Form S-1 covering the resale of the shares and the warrant shares. Subject to limited exceptions, the Company also agreed to use its reasonable best efforts to cause the registration statement to be declared effective under the Securities Act, and to use its reasonable best efforts to keep the registration statement effective under the Securities Act until the date that all of the registrable securities covered by the registration statement have been sold or may be sold without volume restrictions pursuant to Rule 144(b)(i) promulgated under the Securities Act. In addition, if the Company proposes to register any of its securities under the Securities Act in connection with the offering of such securities for cash, the Company shall, at such time, promptly give each holder of registrable securities notice of such intent, and such holders shall have the option to register their registrable securities on such additional registration statement. The 2009 Registration Rights Agreement also provides for payment of partial damages to the investor under certain circumstances relating to failure to file or obtain or maintain effectiveness of the Registration Statement, subject to adjustment.

In connection with the Company’s 2010 private placement, the Company and the participating investors also entered into a Registration Rights Agreement (the “2010 Registration Rights Agreement”), which provided the investors with demand and “piggyback” registration rights on substantially the same terms as the 2009 Registration Rights Agreement.

In connection with Co-Investment’s note conversion, the Company and Co-Investment also entered into a Registration Rights Agreement, in substantially the same form as the 2010 Registration Rights Agreement.

In connection with the private placements that occurred during 2012, 2013, 2015 and 2017, the Company and the participating investors also entered into registration rights agreements, in substantially the same form as the 2010 Registration Rights Agreement.

As of December 31, 2017, the Company has not received a demand notice in connection with any registration rights agreement. As of December 31, 2017, the Company does not believe that it is probable that the Company will incur a penalty in connection with the Company’s registration rights agreements. Accordingly no liability was recorded as of December 31, 2017.

F-29

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 7 – CAPITAL LEASE OBLIGATIONS

InsPro LLC has entered into several capital lease obligations to purchase equipment used for operations. InsPro LLC has the option to purchase the equipment at the end of the lease agreements for one dollar. The underlying assets and related depreciation were included in the appropriate fixed asset category, and related depreciation account.

Property and equipment includes the following amounts for leases that have been capitalized:

		December 31, 2017			December 31, 2016
	Useful Life (Years)
Computer equipment and software	3	$	1,656,731		$	1,576,226
Leasehold improvements	3		15,011			15,011

			1,671,742			1,591,237
Less accumulated depreciation			(1,454,084	)		(1,260,944	)
		$	217,658		$	330,293

Future minimum payments required under capital leases as of December 31, 2017 are as follows:

2018	$	158,949
2019		63,145
2020		17,562

Total future payments		239,656
Less amount representing interest		20,940

Present value of future minimum payments		218,716
Less current portion		143,855

Long-term portion	$	74,861

NOTE 8 – DEFINED CONTRIBUTION 401(k) PLAN

The Company implemented a 401(k) plan on January 1, 2007. Eligible employees contribute to the 401(k) plan. Employees become eligible after attaining age 19 and after 3 months of employment with the Company. The employee may become a participant of the 401(k) plan on the first day of the month following the completion of the eligibility requirements. Effective January 1, 2007 the Company implemented an elective contribution to the plan of 25% of the employee’s contribution up to 4% of the employee’s compensation (the “Contribution”). The Contributions are subject to a vesting schedule and become fully vested after one year of service, retirement, death or disability, whichever occurs first. The Company made contributions of $67,181 and $79,080 for the years ended December 31, 2017 and 2016, respectively.

F-30

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 9 – COMMITMENTS AND CONTINGENCIES

Employment Agreements

On October 9, 2017 the Company and Mr. David M. Anderson entered into a written employment agreement (the “Employment Agreement”) for an initial one-year term, which term shall be automatically extended for successive one-year terms unless either the Company or Mr. Anderson provides notice of non-renewal prior to the expiration of the then current term. Pursuant to the Employment Agreement, Mr. Anderson will receive a base salary of $380,000 per year. Mr. Anderson is eligible to receive an annual bonus for each calendar year, commencing with the 2018 calendar year, based on individual and corporate performance goals established by the Company’s Board. The target annual bonus is 100% of Mr. Anderson’s base salary, but for any calendar year may range from 0% to 100% of his base salary based on the Board’s determination of the level of achievement of the applicable performance goals. Mr. Anderson is eligible to participate in the Company’s employee benefit plans as in effect from time to time on the same basis as generally made available to other senior executives of the Company. Mr. Anderson is also eligible to receive a bonus in connection with a change in control of the Company, which bonus amount depends upon the net proceeds available for distribution to the Company’s stockholders.

In addition, the Employment Agreement also provides for certain payments and benefits in the event of a termination of his employment under specific circumstances. If, during the term of the Employment Agreement, his employment is terminated by the Company other than for “cause” or death, or by Mr. Anderson for “good reason” (each as defined in the Employment Agreement), he would be entitled to (1) continuation of his base salary at the rate in effect immediately prior to the termination date for 12 months following the termination date, (2) a lump sum payment equal to a pro-rata portion of his annual bonus as calculated based on the number of days worked in the year in which termination occurs, which bonus will be paid at the same time as bonuses are paid to other employees of the Company, and (3) if Mr. Anderson is eligible for and timely elects to receive continued health coverage under the Company’s health plan under COBRA, reimbursement of the cost of continuing coverage of the applicable benefit plans under COBRA until the earlier of (A) the date on which Mr. Anderson first becomes covered by any other equally advantageous health plan and (B) 12 months following the termination date.

Mr. Anderson’s receipt of the termination payments and benefits is contingent upon execution of a general release of any and all claims arising out of or related to his employment with the Company and the termination of his employment.

The Employment Agreement also provides for a monthly allowance equal to $5,000 per month, starting in October 2017 through October 31, 2018, to assist in offsetting Mr. Anderson’s commuting expense to and from his home in North Carolina and for his temporary living expenses in Pennsylvania. The Employment Agreement also provides for a reimbursement of his out of pocket relocation expenses incurred through October 31, 2018, up to $25,000.

The Employment Agreement also provides for Mr. Anderson to receive a cash bonus payment as defined in the Employment Agreement (“Bonus Payment”) upon a change of control and the completion of a purchase or acquisition of the Company during the term of the Employment Agreement. The Bonus Payment ranges from $200,000 to $5,150,000 depending on the net proceeds received from the purchase or sale of the Company.

F-31

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)

The Employment Agreement also provides for a grant of restricted stock to Mr. Anderson (“Restricted Stock Grant”) in the event that the Company sells newly issued stock or the stockholders of the Company sell their stock that represents 10% or more of the fully-diluted outstanding stock of the Company during the term of the Employment Agreement (a “Qualifying Event”). The Restricted Stock Grant will be of the same class of the Company’s stock as issued or sold in the Qualified Event. The number of shares in the Restricted Stock Grant will be determined based on 3% of the excess of the enterprise value of the Company as defined in the Employment Agreement over $30,000,000. The Restricted Stock Grant will vest annually in three substantially equal installments starting on the first anniversary of the Restricted Stock Grant. The Restricted Stock Grant shall become fully vested upon a change of control, or Mr. Anderson’s termination without cause, or his resignation for good reason as defined in the Employment Agreement.

On March 31, 2008, Anthony R. Verdi, our Chief Financial Officer, was also appointed to the position of Chief Operating Officer, effective April 8, 2008. Mr. Verdi was appointed to the board on June 20, 2008 and was appointed our Principal Executive Officer on May 18, 2011 through January 26, 2015.

Mr. Verdi’s amended and restated employment agreement automatically renewed for a one year term on March 31, 2015, and, if not terminated, will automatically renew for one year periods. His annual base salary was $225,000 per year from March 31, 2008 through May 30, 2011 and was then increased by the board of directors to $250,000 effective June 1, 2011, again increased to $300,000 effective November 1, 2015 and again increased to $325,000 effective October 1, 2017. He is entitled to receive such bonus compensation as a majority of our board of directors may determine from time to time.

If we terminate Mr. Verdi’s employment for cause or Mr. Verdi terminates his employment agreement without good reason, Mr. Verdi will be entitled to receive (i) all accrued and unpaid salary and vacation pay through the date of termination and (ii) continued participation for one month in our benefit plans. Otherwise if we terminate Mr. Verdi’s employment or Mr. Verdi terminates his employment agreement for good reason including his permanent disability he will be entitled to receive 18 months’ base salary at the then current rate, payable in accordance with our usual practices, continued participation for 18 months in our benefit plans and payment, within a commercially reasonable time and on a prorated basis, of any bonus or other payments earned in connection with our bonus plan existing at the time of termination. In addition, if Mr. Verdi’s employment is terminated in accordance with the foregoing sentence within two months prior to, or 24 months following, a change in control (as described in the employment agreement), Mr. Verdi will be entitled to receive 18 months’ base salary at the then current rate upon the date of termination, regardless of our usual practices, and all stock options held by Mr. Verdi at the date of termination will immediately become 100% vested and all restrictions on such options will lapse.

F-32

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)

If Mr. Verdi’s employment is terminated due to a permanent disability we may credit any such amounts against any proceeds paid to Mr. Verdi with respect to any disability policy maintained and paid for by us for Mr. Verdi’s benefit. If Mr. Verdi dies during the term of his employment agreement, the employment agreement will automatically terminate and Mr. Verdi’s estate or beneficiaries will be entitled to receive (i) three months’ base salary at the then current rate, payable in a lump sum and (ii) continued participation for one year in our benefit plans.

Mr. Robert Oakes resigned as an executive employee effective June 30, 2017. Pursuant to Mr. Oakes’ employment agreement, Mr. Oakes will be entitled to receive; (i) continuation of his $300,000 per year base salary for a period of 12 months in accordance with the Company's normal payroll practices, less any applicable income tax withholding required under federal or state law, and subject to Section 409A of the Internal Revenue Code of 1986, as amended, and applicable guidance issued there under, and (ii) continuation for a period of 18 months after the date of termination of the benefits under benefit plans extended from time to time by the Company to its senior executives. As of December 31, 2017, the Company recorded a severance accrual connection with Mr. Oakes termination in the amount of $327,529, which is recorded in selling, general and administrative expenses and accrued liabilities.

Pursuant to Mr. Oakes’ employment agreement, he is subject to non-competition and non-solicitation covenants during the term of his employment agreement and for a period of one year following his termination.

As of December 31, 2017, the Company recorded a severance accrual connection with an executive’s termination effective December 31, 2017, in the amount of $103,882, which is recorded in selling, general and administrative expenses and accrued liabilities. Pursuant to this executive’s employment agreement, the executive is subject to non-competition and non-solicitation covenants during the term of his employment agreement and for a period of six months following his termination.

As of December 31, 2017, the Company has employment agreements with Mr. Medlock and another executive that will automatically renew for a one year term in 2018. These employment agreements provide that these executives will be compensated at an aggregate annual base salary of $429,000. These agreements may be terminated by the Company for “cause” (as such term is defined in the agreements) and without “cause” upon 30 days’ notice. These agreements may be terminated by the Company without “cause”, in which case the terminated employee will be entitled to their base salary for a period of six months. In the event of termination without cause or for good reason, these executives would receive their then current base annual salary for a period of six months, plus unpaid accrued employee benefits, which is primarily accrued vacation, less all applicable taxes. In the event of the voluntary termination of any of these executives’, death or disability, they or their estate would receive unpaid accrued employee benefits, less all applicable taxes. These agreements also contain non-competition and non-solicitation provisions for the duration of the agreements plus a period of six months after termination of employment.

F-33

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)

Operating Leases

On July 7, 2006, the Company entered into a lease agreement with Radnor Properties-SDC, L.P. (the “Landlord”) for the lease of 7,414 square feet of office space located in Radnor Financial Center, Building B, 150 Radnor-Chester Road, Radnor, Pennsylvania. The term of the lease commenced on November 1, 2006, which was the date the Company, with the Landlord’s prior consent, assumed possession of the premises and the date the Landlord tendered possession of the premises to the Company following the substantial completion of the improvements required to be made by the Landlord under the lease agreement, and will expire on the last day of the 125^th month following the commencement of the lease term, which is March 31, 2017. The annual rent increases every 12 months, starting at approximately $161,592 plus a proportionate share of the Landlord’s building expenses after the second month and ending at approximately $258,378 plus a proportionate share of the Landlord’s building expenses. Under the terms of the lease agreement, rent is waived for the first five months of the lease term with respect to 5,238 square feet and for the first twelve months for the remaining 2,176 square feet. The lease expired on March 31, 2017, in accordance with the terms of the lease.

The Company paid the Landlord a security deposit of $110,000 under the lease (the “Security Deposit”) during the third quarter of 2006, which is accounted for as a deposit in other assets. The Company will not earn interest on the Security Deposit. The Security Deposit will decrease and the Landlord will return to the Company $10,000 on the third anniversary of the commencement date of the lease and on each anniversary thereafter until the required Security Deposit has been reduced to $20,000. The Security Deposit will be returned to the Company 30 days after the end of the lease provided the Company has complied with all provisions of the lease. The balance of the Security Deposit is $0 and $30,000 as of December 31, 2017 and 2016, respectively.

On September 14, 2007, InsPro LLC entered into a lease agreement with BPG Officer VI Baldwin Tower L.P. (“BPG”) for approximately 5,524 square feet of office space at Baldwin Towers in Eddystone, Pennsylvania. On March 26, 2008, and again on December 2, 2008, the Company and BPG agreed to amend the lease to increase the leased office space by 1,301 and 6,810 square feet, respectively (as amended the “BPG Lease”). The original term of the lease commenced on October 1, 2007 and expired on January 31, 2013. The annual rent increases every 12 months, starting at approximately $102,194 plus a proportionate share of landlord’s building expenses and ending at approximately $286,335 plus a proportionate share of landlord’s building expenses.

On March 15, 2012, InsPro LLC and BPG agreed to amend the BPG Lease to extend its term to January 31, 2017, and after BPG completes certain building improvements InsPro Technologies will move from its current location to another floor of the same building and lease 17,567 square feet of furnished office space from BPG. Effective April 1, 2015, InsPro LLC and BPG agreed to amend the BPG Lease to lease 6,810 square feet of furnished office space from BPG on another floor of the same building. The Company’s monthly rent shall be $24,887 per month commencing with InsPro Technologies’ occupancy of the new office space, which occurred in June 2012 through January 31, 2013. InsPro Technologies’ monthly rent increased to $25,619 per month February 1, 2013 through January 31, 2014, increased to $26,351 per month February 1, 2014 through January 31, 2015, increased to $27,082 per month February 1, 2015 through March 31, 2015, increased to $37,082 through January 31, 2016, will increase to $37,814 per month February 1, 2016 through March 31, 2016, and will decrease to $27,814 per month from April 1, 2016 through January 31, 2017. On June 9, 2016, InsPro LLC and BPG entered into a sixth amendment to the Lease Agreement whereby InsPro LLC and BPG agreed to amend the Lease Agreement to extend the term through January 31, 2018 for 17,567 of rentable square feet at a monthly cost of $28,546 for the period February 1, 2017 through January 31, 2018. On June 7, 2017, InsPro LLC and BPG entered into a seventh amendment to the Lease Agreement whereby InsPro LLC and BPG agreed to amend the Lease Agreement to extend the term through January 31, 2019 for 17,567 of rentable square feet at a monthly cost of $30,010 for the period February 1, 2018 through January 31, 2019.

The Company leases certain real and personal property under non-cancelable operating leases. Rent expense was $403,831 and $613,250 for the years ended December 31, 2017 and 2016, respectively.

F-34

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 9 – COMMITMENTS AND CONTINGENCIES (continued)

Future minimum payments required under operating leases and service agreements at December 31, 2017 are as follows:

2018	$	679,864
2019		338,278
2020		38,926
thereafter		-

Total	$	1,057,068

NOTE 10 - INCOME TAXES

The Company has net operating loss carry forwards for federal income tax purposes of approximately $48,900,000 at December 31, 2017, the unused portion of which expires in years 2026 through 2037. The Company accounts for income taxes under Accounting Standards Codification 740, Income Taxes “ASC 740”. ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and the tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax losses and tax credit carry forwards. ASC 740 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. Internal Revenue Code Section 382 “IRC 382” places a limitation on the amount of taxable income that can be offset by carry forwards after a change in control (generally greater than a 50 percent change in ownership). The issuance of the Company’s Series A Preferred Stock on January 15, 2009 resulted in a change of control as defined under IRC 382.

Components of income taxes for the years ending December 31 were as follows:

	For the Year Ended December 31,
	2017		2016

Federal	$	28,000	$	-
State		142,000		-

	$	170,000	$	-

The table below summarizes the differences between the Company’s effective tax rate and the statutory federal rate as follows for the periods ended December 31, 2017 and 2016:

	For the Year Ended December 31,
	2017			2016

U.S. statutory rate		35.0	%		35.0	%
State income taxes		6.5			3.0
Amortization/impairment of acquisition related assets		(0.3	)		0.2
Stock based compensation		3.6			(3.2	)
Stock based fees paid to client		0.0			(18.5	)
Other permanent differences		1.7			(0.6	)
Valuation allowance		(36.8	)		(15.9	)
		9.70	%		0.00	%

F-35

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2017 and 2016

NOTE 10 - INCOME TAXES (continued)

Deferred tax assets and liabilities are provided for significant income and expense items recognized in different years for tax and financial reporting purposes. The components of the net deferred tax assets for the years ended December 31, 2017 and 2016 were as follows:

	2017			2016
Deferred tax assets:
Net operating loss carry forward	$	14,201,084		$	19,227,610
Depreciation		67,099			88,909
Compensation expense		123,093			64,230
Accrued expense		41,681			-
Deferred revenue		449,500			686,297
All Miscellaneous Other		3,386			2,874
Total deferred tax asset		14,885,843			20,069,920

Deferred tax liabilities		-			-
Net deferred tax asset		14,885,843			20,069,920
Less: valuation allowance		(14,885,843	)		(20,069,920	)
	$	-		$	-

The Company has fully reserved the deferred tax asset in excess of the deferred tax liabilities due to the limitation on taxable income that can be offset by net operating loss carry forwards in future periods under IRC section 382 as a result of changes in control and substantial uncertainty of the realization of any tax assets in future periods. The valuation allowance was decreased by $5,184,077 from the prior year.

On December 22, 2017 the Tax Cuts and Jobs Act (H.R. 1) was signed into law. This act includes, among other items, a permanent reduction to the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. The new bill reduced the blended tax rate for the Company from 38% to 29%. The change in the blended tax rate reduced the 2017 net operating loss carry forward deferred tax assets by approximately $4,407,232.

NOTE 11 – SUBSEQUENT EVENTS

Expiration of Warrants

On March 14, 2018, warrants to purchase 120,000 common shares expired in accordance with the terms of such warrants.

F-36

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

NONE.

Item 9A.

Controls and Procedures.

Disclosure Controls and Procedures.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Under the supervision of our Principal Officer and Chief Financial Officer, our management conducted an assessment of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on that assessment, the Principal Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective for their intended purposes as of December 31, 2017.

Internal Control over Financial Reporting.

The Company’s internal control over financial reporting is a process to provide reasonable assurance that the information required to be disclosed by the Company in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and is accumulated and communicated to management, including the Company’s principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required recording and disclosure.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of December 31, 2017 management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in “Internal Control — Integrated Framework,” issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on that assessment, our Principal Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting was effective as of December 31, 2017.

Changes in internal control over financial reporting.

There were no changes in the Company’s internal control over financial reporting during the quarter and year ended December 31, 2017, that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Item 9B.

OTHER INFORMATION.

NONE.

PART III

Item 10.

Directors, executive officers and corporate governance.

Directors of the Registrant

David M. Anderson, 56, has served as one of our directors since November, 2017 and has served as our Chief Executive Officer since October 9, 2017. From January, 2017 through May, 2017, Mr. Anderson served as Senior Vice President and head of US individual life reinsurance at SCOR Global Life Americas, a division of Scor SE. From September, 2012 through September, 2016, Mr. Anderson served as the Chairman, President and Chief Executive Officer at TIAA-CREF Life Insurance Company, a division of TIAA. From January, 2012 through September, 2012, Mr. Anderson served as Interim Head of HR at TIAA, and from August, 2010 through January, 2011 as Senior Managing Director – Enterprise Integration at TIAA. From January, 2009 through July, 2010, Mr. Anderson served as Senior Vice President – Centralized Services at Thrivent Financial. Mr. Anderson’s experience as an executive in the insurance and financial services fields qualifies him to be a member of our board of directors.

Michael Azeez, 60, has served as one of our directors since December, 2011. Mr. Azeez is a managing member of Azeez Investors, LLC. Mr. Azeez co-founded Unitel in 1988 and served its President from 1988 until 2002. Mr. Azeez served in various executive positions at American Cellular Network Corporation from 1982 until 1988 and his positions included Vice President, General Manager of various divisions and as assistant to the President. Mr. Azeez is a member of the board of directors of Acrometis Strategic Software Services, which provides software solutions to insurance companies for workers compensation claims management. Mr. Azeez is a member of the board of directors of the Friends of Yemin Orde. Mr. Azeez is the Chairman and founder of the Sam Azeez Museum of Woodbine Heritage. Mr. Azeez’s significant executive and business development experience in the telecommunications industry and his civic service for various non-profit organizations qualifies him to be a member of our board of directors.

Donald R. Caldwell, 71, has served as one of our directors and as one of the Co-Chairmen of our board of directors from April 2008 through November 24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer from January 26, 2015 through October 9, 2017. Mr. Caldwell founded Cross Atlantic in 1999, and presently serves as its Chairman and Chief Executive Officer and serves on its Audit and Nominating and Governance committees. He has served as a director at Rubicon Technology, Inc. since 2001 and chairs its Compensation Committee. He served on the board of directors at Diamond Management & Technology Consultants, Inc. (NASDAQ) from 1994 until its sale to PriceWaterhouse in 2010 and served as a member of its Compensation Committee, Audit Committee and as the lead Director since 2006. Mr. Caldwell has been a director of Quaker Chemical Corporation (NYSE:KWR), a provider of process chemicals and chemical specialties, since 1997 and was appointed as lead director in May 2016. He also serves as Chairman of Quaker’s Executive Committee and a member of its Compensation and Audit Committees. He is a member of the Compensation Committee and a director of Voxware, Inc., a supplier of voice driven solutions. Mr. Caldwell has been a director, Chairman of the Audit Committee and member of the Compensation Committee of Lighting Gaming, Inc. since 2005. Mr. Caldwell was a director of Amber Road, Inc. (NYSE:AMBR) and served on the Nominating and Governance Committee and Compensation Committee from 2005 until his resignation on December 31, 2016. Mr. Caldwell was a director and member of the Risk Management Committee and Chairman of the Audit Committee of Fox Chase Bancorp, Inc. (NASDAQ:FXCB), a stock holding company of Fox Chase Bank, from October 2014 until it was acquired by Univest Corporation of Pennsylvania on July 1, 2016. Mr. Caldwell was a director of Kanbay International, Inc. from 1999 through 2007 when it was purchased by Capgemini. From 1996 to 1999, Mr. Caldwell was President and Chief Operating Officer and a director of Safeguard Scientifics, Inc. Mr. Caldwell was a Certified Public Accountant in the State of New York. Mr. Caldwell’s experience serving as a director and officer of numerous public companies qualifies him to be a member of our board of directors.

John Harrison, 74, has served as one of our directors since November 2005. He is a founding Partner and Executive Director of The Keystone Equities Group, Inc., a full service investment banking group and a registered NASD broker-dealer founded in 2003. Mr. Harrison also is a Managing Director of Covenant Partners, a hedge fund that invests in direct marketing services companies. In 1999, Mr. Harrison became a founding Partner of Emerging Growth Equities, Ltd., a full service investment banking and brokerage firm focused on raising capital for emerging technology companies addressing high-growth industry sectors. From 1985 to 2000, Mr. Harrison served as President of DiMark, a direct marketing agency that was subsequently acquired by Harte-Hanks in 1996. He also has held senior management positions with CUNA Mutual, RLI Insurance and CNA Insurance where he directed their direct marketing practice. Mr. Harrison was Chairman of Professional Insurance Marketing Association (PIMA) and Chairman of the DMA Financial Services Council. Mr. Harrison’s extensive experience in the financial and insurance sectors qualifies him to be a member of our board of directors.

Kenneth M. Harvey, 56, has served as a director since May 2014. Mr. Harvey has served as a director of Amber Road, Inc. (NYSE: AMBR), a provider of cloud-based global trade management solutions, since 2008. From 1989 until 2011, Mr. Harvey was employed by HSBC—Global Bank, serving as Chief Information Officer/Chief Operating Officer from 2008 to 2011 and as group general manager and Chief Information Officer from 2004 to 2007. He was president of HSBC Technology and Services, a wholly-owned subsidiary of HSBC, from 2003 to 2004. Since 2012, Mr. Harvey served as a Director of CLS Group Holdings AG. From 2012 to 2014 he was the Chairman of the Technology and Operations Committee and from 2014 Mr. Harvey has served as Chairman of the Board and a member of the Chairman’s Committee, which serves as the Compensation and Compliance Committees. Mr. Harvey also serves on the Senior Advisory Board of Oliver Wyman; a global management consulting firm. Mr. Harvey also served as director of CLS Bank International since 2011, and served as a director of Kanbay, Inc. from 2004 until 2007 and Vertical Networks, Inc. from 2002 until 2004. Mr. Harvey’s experience as an executive in the information technology field qualifies him to be a member of our board of directors.

Alan Krigstein, 65, has served as a director since June 2014. Mr. Krigstein was Executive Vice President and Chief Financial Officer of Independence Blue Cross, a health insurer organization and independent licensee of the Blue Cross and Blue Shield Association from 2009 through 2017. Mr. Krigstein previously served as Senior Vice President and Chief Financial Officer of AmeriHealth Mercy Family of Companies from 1994 to 2009. Mr. Krigstein also serves as trustee and member of the audit committee of Plan Investment Fund, Inc., a mutual fund company that is open only to members and licensees of the Blue Cross and Blue Shield Association and certain related organizations, from 2011 to the present. Mr. Krigstein’s experience as an executive in the health insurance field qualifies him to be a member of our board of directors.

Robert J. Oakes, 59, served as one of our directors from August 2008 through March 26, 2018. He has served as the President and CEO of our InsPro Technologies, LLC subsidiary since our acquisition of the subsidiary on October 1, 2007 through January 26, 2015 and as our Vice Chairman from January 26, 2015 through March 26, 2018. Mr. Oakes resigned as an executive of the Company and InsPro Technologies, LLC effective June 30, 2017, however Mr. Oakes remains Vice Chairman and a director. From 1986 until 2007 Mr. Oakes was President and Chief Executive Officer of the general partner of Atiam Technologies L.P. (now known as InsPro Technologies, LLC), a software development and servicing company that developed, expanded and serviced products to serve the insurance and financial services markets. Mr. Oakes founded InsPro Technologies, LLC under the name “Atiam” in 1986 and led the company’s effort to design and develop its flagship product, InsPro Enterprise. InsPro Enterprise is a state-of-the-art Insurance, Marketing, Administration and Claim System that provides end-to-end insurance processing, technology and support, for a broad range of life, health and disability products. Mr. Oakes’ experience in the development of our flagship product and his management of InsPro Technologies, LLC through January 26, 2015, qualified him to be a member of our board of directors.

Sanford Rich, 60, has served as one of our directors since April 2006. Mr. Rich is currently the Executive Director at New York City Board of Education Retirement System since January 2016. Mr. Rich was Chief of Negotiations and Restructuring at the Pension Benefit Guaranty Corporation, a U.S. government agency, from November 2012 to January 2016. He is a director and the Audit Committee Chairman at Aspen Group Inc., an online for profit university. Mr. Rich served as director and Chief Executive Officer at In the Car, LLC from October 2011 to November 2012. Mr. Rich was a FINRA Registered Managing Director with Whitemarsh Capital Advisors LLC, a broker-dealer, from February 2009 through December 2014. Mr. Rich served as a director, audit committee chairman and Commission qualified audit committee financial expert of Interclick, Inc. from 2007 to 2010. From 1995 to May 2008, Mr. Rich was director, Senior Vice President and Portfolio Manager at GEM Capital Management Inc. From 1993 to 1995, Mr. Rich was a Managing Director of High Yield Finance, Capital Markets & North American Loan Syndicate, Sales and Trading at Citicorp Securities. From 1985 to 1993, he served as Managing Director of Debt Capital Markets at Merrill Lynch. From 1978 to 1985, Mr. Rich held various Analyst positions in numerous companies, including Cypress Capital Management, Inc. (Vice President and Analyst from 1983 to 1985), FIAMCO (Distressed/High Yield Bond Analyst from 1981 to 1983), Progressive Corporation (Financial Analyst from 1980 to 1981) and Prescott, Ball and Turben (Distressed/High Yield Bond Analyst from 1978 to 1980). Mr. Rich’s 30+ years of experience in the financial sector qualifies him to be a member of our board of directors.

L.J. Rowell, 85, has served as one of our directors since April 2006. He is a past President (1984-1996), Chief Executive Officer (1991-1996) and Chairman of the Board (1993-1996) of Provident Mutual Life Insurance Company, where he also held various other executive and committee positions from 1980 until his retirement in 1996. Mr. Rowell served on the board of directors of the PMA Group from 1992 until 2009. Mr. Rowell served on the board of directors of the Southeast Pennsylvania Chapter of the American Red Cross, the American College, The Foundation at Paoli, and The Milton S. Hershey Medical Center. Mr. Rowell also has served on the Board of Trustees of The Pennsylvania State University as a business and industry trustee since 1992. In 1991, he served as the Chairman of the Major Business Division for the United Way of Southeastern Pennsylvania. Mr. Rowell also has served as Chairman of The American Red Cross Ad Blood Campaign and has previously served on its Major Contributions Donor Campaign. Mr. Rowell’s extensive experience in the health insurance industry and his civic service for various health care organizations qualifies him to be a member of our board of directors.

Paul Soltoff, 63, had served as one of our directors from November 2005 through March 1, 2018. He is currently Managing Partner of RobPet, LLC since 2015, and Managing Partner of Paul Soltoff Advisors, LLC since 2016. He served as Chairman and Chief Executive Officer of Acquirgy, Inc. from 2009 to 2014. He served as Chairman and Chief Executive Officer of SendTec, Inc. from its inception in February 2000 through 2009. From 1997 until February 2000, Mr. Soltoff served as Chief Executive Officer of Soltoff Direct Corporation, a specialized direct marketing consulting company. From September 2004 until October 2005, Mr. Soltoff served as a director of theglobe.com. Mr. Soltoff’s experience as an officer and director in the Internet marketing sector qualified him to be a member of our board of directors.

Frederick C. Tecce, 81, has served as one of our directors since August 2016 and he previously served as one of our directors from August 2, 2007 through August 14. 2012. He has also served on the board of several publicly traded companies as well as numerous privately held companies. In addition, he served on the Board of Independence Blue Cross for 2 different terms. On a day to day basis, he serves as Of Counsel to the law firm of Buchanan Ingersoll and Rooney as well as being Of Counsel and Partner to Cross Atlantic Capital Partners. In addition to his pursuits in the private sector, Mr. Tecce has also served in the public sector where he was appointed by Pennsylvania Governor Tom Ridge to serve on the transition team. His board experience includes being an active member of the Board of the $50 billion Public School Employees Retirement Systems (PSERS), where he held the title of chairman of the Finance Committee for 6 years until his retirement in 2001. Mr. Tecce also served in the federal sector as a member of the Federal Judicial Nominating Committee. He has served in a management position in several for-profit businesses, some of which he has founded. Mr. Tecce’s numerous legal, business and government experiences qualify him to be a member of our board of directors.

Anthony R. Verdi, 69, has served as one of our directors since June 2008, as our Chief Financial Officer and Assistant Secretary since November 2005, as our Chief Operating Officer since April 2008, as Acting Principal Executive Officer from June 20, 2008 through May 18, 2011 and as Principal Executive Officer from May 18, 2011 through January 26, 2015. From 2001 until November 2005, Mr. Verdi provided consulting services to life, health and property and casualty insurance company agency and venture capital clients. Mr. Verdi served as Chief Operating Officer of Provident American Corporation and Chief Financial Officer of HealthAxis, Inc. From January 1990 until December 1998, Mr. Verdi served as Chief Financial Officer of Provident American Corporation. From July 1986 until January 1990, he was the Vice President and Controller of InterCounty Hospitalization and Health Plans, a nonprofit group medical insurer. From April 1971 until July 1986, he served in various finance and accounting capacities for the Academy Insurance Group, ultimately serving as the Assistant Controller. Mr. Verdi’s extensive experience in the health insurance industry and his financial and accounting background qualifies him to be a member of our board of directors.

Edmond J. Walters, 56, has served as one of our directors since April 2008. Mr. Walters is Founder and was the Chief Executive Officer of eMoney Advisor, a wealth planning and management solutions provider for financial advisors that Mr. Walters founded in 2000 and is now a wholly-owned subsidiary of Commerce Bancorp. Prior to forming eMoney Advisor in 2000, Mr. Walters spent more than 20 years in the financial services industry, advising high net worth clients. From 1983 to 1992 he was associated with Kistler, Tiffany & Company in Wayne, PA. In 1992, Walters helped found the Wharton Business Group, a financial advising firm, in Malvern, PA. Mr. Walters’ 20+ years of experience in the financial sector qualify him to be a member of our board of directors.

The Board has determined that Messrs. Azeez, Harrison, Harvey, Krigstein, Rich, Rowell, Tecce and Walters are “independent” directors and that Mr. Soltoff was “independent” during the time he served on the Board as defined by Rule 4200(a)(15) of the NASDAQ listing standards and as defined by Rule 10A-3(b)(1)(ii) promulgated by the Commission.

Executive Officers of the Registrant

The following table sets forth the name, age and title of persons currently serving or who have served as our executive officers during 2017. Our executive officers are appointed by, and serve at the discretion of, our board of directors.

Name	Age	Position
David M. Anderson	56	Principal Executive Officer of InsPro Technologies Corporation and InsPro Technologies, LLC
Donald R. Caldwell	71	Principal Executive Officer and Chairman of the board of directors of InsPro Technologies Corporation and InsPro Technologies, LLC
Mark Daley	64	Chief Revenue Officer of InsPro Technologies, LLC
David J. Medlock	35	Senior Vice President – Development, Solutions Architecture and Technical Services
Anthony R. Verdi	69	Chief Financial Officer, Chief Operating Officer and Assistant Secretary
Robert J. Oakes	59	Vice Chairman of the board of directors InsPro Technologies Corporation

David M. Anderson has served as our Chief Executive Officer since October 9, 2017. From January, 2017 through May, 2017, Mr. Anderson served as Senior Vice President and head of US individual life reinsurance at SCOR Global Life Americas, a division of Scor SE. From September, 2012 through September, 2016, Mr. Anderson served as the Chairman, President and Chief Executive Officer at TIAA-CREF Life Insurance Company, a division of TIAA. From January, 2012 through September, 2012, Mr. Anderson served as Interim Head of HR at TIAA, and from August, 2010 through January, 2011 as Senior Managing Director – Enterprise Integration at TIAA. From January, 2009 through July, 2010, Mr. Anderson served as Senior Vice President – Centralized Services at Thrivent Financial.

Donald R. Caldwell served as one of our directors and as one of the Co-Chairman of our board of directors from April 2008 through November 24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer from January 26, 2015 to October 9, 2017. Mr. Caldwell founded Cross Atlantic in 1999, and presently serves as its Chairman and Chief Executive Officer. He has served as a director at Rubicon Technology, Inc. since 2001 where he chairs the Compensation Committee; and at Diamond Management & Technology Consultants, Inc. (NASDAQ) from 1994 until its sale to PriceWaterhouse in 2010, and where he served as a member of their Compensation Committee, Audit Committee and as the lead Director since 2006. Mr. Caldwell is a director and a member of the Compensation and Audit Committees and Chairman of the Executive Committee of Quaker Chemical Corporation (NYSE), and a member of the Compensation Committee and the board of Voxware, Inc. , a supplier of voice driven solutions. Mr. Caldwell has been a director, Chairman of the Audit Committee and member of the compensation committee of Lighting Gaming, Inc. since 2005. Mr. Caldwell has been a director of Amber Road, Inc. (NYSE: AMBR) since 2005. Mr. Caldwell has been a director and member of the audit committee of Fox Chase Bancorp, Inc. (NASDAQ: FXCB), a stock holding company of Fox Chase Bank, since October of 2014. Mr. Caldwell was a director of Kanbay International, Inc. from 1999 through 2007 when it was purchased by Capgemini. From 1996 to 1999, Mr. Caldwell was President and Chief Operating Officer and a director of Safeguard Scientifics, Inc. Mr. Caldwell was a Certified Public Accountant in the State of New York.

Mark Daley served as our Chief Revenue Officer from June 2014 through March 2017. From 2006 through June 2014 Mr. Daley served as Vice President of iGATE Global Solutions. From 2002 through 2005 Mr. Daley served as Senior Consultant in the Step Solutions Group of Milliman, Inc. From 1998 through 2002 Mr. Daley served as Executive Vice President and Chief Operating Officer of e-Nable Corporation. From 1997 through 1998 Mr. Daley served as Principal of Daley and Associates. From 1992 through 1997 Mr. Daley served as President of Securallicance/AFS.

David J. Medlock has served as our Senior Vice President – Development, Solutions Architecture and Technical Services since August 2017, as Vice President Development and Solutions Architecture from July 2015 through August 2017, as Vice President Application Development from December 2014 through July 2015, as Director of Information Technology from August 2014 through December 2014 and as a non-employee independent consultant to the Company from April 2014 to July 2014. From June 2013 to March 2014 he worked independently as a Systems Implementation Program Manager. From November 2011 to June 2013 he served as Senior Technical Consultant for the TriZetto Group.

Anthony R. Verdi has served as our Chief Financial Officer and Assistant Secretary since November 2005, as our Chief Operating Officer since April 2008, as Acting Principal Executive Officer from June 20, 2008 through May 18, 2011 and as Principal Executive Officer from May 18, 2011 through January 26, 2015. From 2001 until November 2005, Mr. Verdi has provided consulting services to life, health and property and casualty insurance company agency and venture capital clients. From December 1998 until March 2001, Mr. Verdi served as Chief Operating Officer of Provident American Corporation and Chief Financial Officer of HealthAxis, Inc. From January 1990 until December 1998, Mr. Verdi served as Chief Financial Officer of Provident American Corporation. From July 1986 until January 1990, he was the Vice President and Controller of InterCounty Hospitalization and Health Plans, a nonprofit group medical insurer. From April 1971 until July 1986, he served in various finance and accounting capacities for the Academy Insurance Group, ultimately serving as the Assistant Controller.

Robert Oakes served as the President and Chief Executive Officer of our InsPro Technologies, LLC subsidiary since our acquisition of it on October 1, 2007 through January 26, 2015 and as our Vice Chairman from January 26, 2015 through March 26, 2018. Mr. Oakes resigned as an executive of the Company and InsPro Technologies, LLC effective June 30, 2017, however Mr. Oakes remains Vice Chairman and a director. From 1986 until 2007 Mr. Oakes was President and Chief Executive Officer of the general partner of Atiam Technologies L.P., a software development and servicing company that developed, expanded and serviced products to serve the insurance and financial services markets. Mr. Oakes founded Atiam in 1986 and led the company’s effort to design and develop its flagship product, InsPro Enterprise.

Board Leadership Structure and Risk Oversight

The role of Chief Executive Officer and Chairman of the board were separate positions through January 26, 2015, were combined into a single position with Mr. Caldwell’s appointment as Chief Executive Officer on January 26, 2015, and became separate positions on October 9, 2017, with the appointment of Mr. Anderson as Chief Executive Officer. We believe it is the Chief Executive Officer’s responsibility to oversee the Company’s operations and the Chairman’s responsibility to coordinate the appropriate functioning of the board.

The audit committee is primarily responsible for overseeing the Company’s risk management processes on behalf of the full board. The audit committee receives reports from management at least quarterly regarding the Company’s assessment of risks. In addition, the Audit Committee regularly meets with management to discuss the Company’s policies with respect to risk assessment and risk management, the Company’s major financial risk exposures and the steps management has taken to monitor and mitigate these exposures. The audit committee reports regularly to the full board of directors, which also considers the Company’s risk factors. While the board oversees the Company’s risk management, company management is responsible for day-to-day risk management processes. We believe this division of responsibilities is the most effective approach for addressing the risks facing our Company and that our board leadership structure supports this approach.

Code of Business Conduct and Ethics

We adopted an amended and restated Code of Business Conduct and Ethics on January 29, 2008. Our Code of Business Conduct and Ethics, in accordance with Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K, applies globally to our corporate directors, executive officers, senior financial officers and other employees. Our Code of Business Conduct and Ethics is intended to promote honest and ethical conduct, full and accurate reporting, and compliance with laws as well as other matters. A printed copy of our Code of Business Conduct and Ethics may be obtained free of charge by writing to us at InsPro Technologies Corporation, 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania 19022.

Corporate Governance and Committees

Our board of directors currently is composed of Messrs. Anderson, Azeez, Caldwell, Harrison, Harvey, Krigstein, Rich, Rowell, Tecce, Verdi and Walters. Mr. Caldwell is the Chairman of our board of directors. Directors serve until the next annual meeting of stockholders, until their successors are elected or appointed or qualified, or until their resignation or removal. Our executive officers are appointed by, and serve at the discretion of, our board of directors. Our board of directors has established an audit committee, a compensation committee and a nominating and governance committee. Pursuant to our bylaws, our board of directors may from time to time establish other committees to facilitate the management of our business and operations.

Audit Committee

The members of our audit committee are Messrs. Caldwell, Rich and Rowell. Mr. Rich became chairman of the committee effective upon his appointment by the board on January 26, 2015. Mr. Caldwell became chairman of the committee effective upon his appointment to the board on April 1, 2008 through January 26, 2015. Our board of directors has determined that Mr. Rich is an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the Commission. Although our common stock is not listed on NASDAQ and, as a result, we are not subject to NASDAQ’s listing standards, we voluntarily strive to comply with such standards with the exception of Mr. Caldwell’s membership on the audit committee. Our board of directors, in applying the above-referenced standards, has affirmatively determined that each of Messrs. Rich and Rowell are “independent”. Mr. Caldwell is not “independent” whereas NASDAQ rule 4200(a)(15), specifies that each member of the audit committee must be “independent”.

Compensation Committee

The members of our compensation committee are Messrs. Harrison, Rich and Tecce. Mr. Harrison chairs the committee.

Nominating and Governance Committee

The members of our nominating and governance committee are Messrs. Rowell, Harrison and Walters. Mr. Rowell chairs the committee. This committee is responsible for recommending qualified candidates to the board of directors for election as directors, including the slate of directors that the board proposes for election by stockholders at annual meetings. While the committee does not have a formal diversity “policy,” the committee recommends candidates based upon many factors, including the diversity of their business or professional experience, the diversity of their background and their array of talents and perspectives. We believe that the committee’s existing nominations process is designed to identify the best possible nominees for the board, regardless of the nominee’s gender, racial background, religion or ethnicity. The committee identifies candidates through a variety of means, including recommendations from members of the board and suggestions from our management, including our Chairman and Principal Executive Officer. In addition, the committee considers candidates recommended by third parties, including stockholders. Stockholders wishing to recommend director candidates for consideration by the committee may do so by writing our Secretary and giving the recommended candidate’s name, biographical data and qualifications.

The Nominating and Corporate Governance Committee operates under a formal charter adopted by the board that governs its duties and standards of performance. Copies of the Nominating and Corporate Governance Committee charter can be obtained free of charge by writing to us at InsPro Technologies Corporation, 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania 19022.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of our common stock to file reports of beneficial ownership and changes in beneficial ownership of our common stock and any other equity securities with the Commission. Executive officers, directors, and persons who own more than 10% of our common stock are required by Commission regulations to furnish us with copies of all Section 16(a) forms they file.

Based solely on our review of the copies of Forms 3, 4 and 5 furnished to us, or representations from certain reporting persons that no Forms 3, 4 or 5 were required to be filed by such persons, we believe that all of our executive officers, directors and persons who own more than ten percent of our common stock complied with all Section 16(a) filing requirements applicable to them.

Item 11.

Executive Compensation

Summary Compensation Table

The following table summarizes the compensation paid to, awarded to or earned during the fiscal years ended December 31, 2017 and 2016 by our Principal Executive Officer and each of our three other most highly compensated executive officers whose total salary and bonus exceeded $100,000 for services rendered to us in all capacities during 2017 and 2016. The executive officers listed in the table below are referred to in this report as our “named executive officers”. There were no non-equity incentive plan compensation or non-qualified deferred compensation earnings for any of the named executive officers for the fiscal years ended December 31, 2017 and December 31, 2016.

Name and Principal Position	Fiscal Year	Salary ($)		Bonus ($) (6)		Stock Awards ($) (7)		Option Awards ($) (9)		All Other Compensation ($) (8)		Total ($)

Donald R. Caldwell (1)	2017		1		-		-		-		7,554		7,555
Chief Executive Officer,	2016		1		-		-		-		9,370		9,371
Chairman of the Board of Directors

David M. Anderson (5)	2017		87,803		-		-		-		24,195		111,998
Chief Executive Officer	2016		-		-		-		-		-		-

Anthony R. Verdi (2)	2017		306,250		50,000		-		-		15,702		371,952
Chief Financial Officer & Chief	2016		300,000		-		-		-		16,296		316,296
Operating Officer

Robert J. Oakes (3)	2017		75,000		50,000		-		-		372,337		497,337
Vice Chairman & Founder of InsPro Technologies, LLC	2016		300,000		50,000		-		-		18,764		368,764

Mark Daley (4)	2017		47,101		-		-		-		127,252		174,353
Chief Revenue Officer of	2016		250,000		-		-		-		6,894		256,894
InsPro Technologies, LLC

David J. Medlock
Senior Vice President - Development	2017		229,402		22,500		-		18,604		12,346		282,852
Solutions Architecture & Technical Services	2016		220,000		22,500		-		-		12,595		255,095
InsPro Technologies, LLC

(1) Mr. Caldwell has served as one of our directors and as one of the Co-Chairman of our board of directors from April 2008 through November 24, 2009, as our Chairman since November 24, 2009 and as our Chief Executive Officer from January 26, 2015, to October 9, 2017. Mr. Caldwell’s compensation received subsequent to October 9, 2017, was that of a non-employee director and is included in the tables and disclosures with all other non employee directors. Mr. Caldwell has assigned all of his compensation to the Co-Investment Fund II, L.P.

(2) Mr. Verdi was appointed as our Chief Financial Officer on November 10, 2005, Chief Operating Officer on April 1, 2008, interim Principal Executive Officer on June 20, 2008 and Principal Executive Officer on May 18, 2011 and effective January 26, 2015 serves as Chief Financial Officer.

(3) Mr. Oakes was appointed as President of our subsidiary InsPro Technologies, LLC on October 1, 2007 concurrently with the closing of our acquisition of InsPro and from January 26, 2015 through March 26, 2018 served as Vice Chairman of our board of directors. Mr. Oakes resigned as an employee effective June 30, 2017, and his compensation received subsequent to his resignation as a non-employee director is included in the tables and disclosures with all other non employee directors.

(4) Mr. Daley was appointed Chief Revenue Officer of our subsidiary InsPro Technologies, LLC on June 2, 2014. Mr. Daley’s employment terminated effective March 8, 2017, and all amounts owed to Mr. Daley pursuant to his employment agreement were paid to him during 2017.

(5) Mr. Anderson was appointed Chief Executive Officer on October 9, 2017.

(6) Mr. Oakes received a $50,000 bonus in 2017 as consideration for his agreement to delay the effective date of his resignation until June 30, 2017. Mr. Verdi received a discretionary bonus of $50,000 in 2017 and Mr. Oakes received a discretionary bonus of $50,000 in 2016, which were both approved by the Company’s Board. Mr. Medlock received a $22,500 bonus as part of a stay bonus arrangement in 2016 and 2017.

(7) There were no stock awards or stock option awards to any of the named executive officers for the fiscal years ended December 31, 2017 and December 31, 2016.

(8) All other compensation paid to our named executive officers in the fiscal year ended December 31, 2017 consisted of the following:

Name	Payments for Auto and Equipment ($) (a)		Company Paid Health, Life and Disabilitly Insurance ($) (b)		Severance ($)		Company Matching of Employee 401(k) Contributions $ (c)		Post Employment Consulting Fees $ (d)		Reimbursement of Personal Expenses $ (e)		Board of Directors Meeting Fees $ (f)		Total ($)

Donald R. Caldwell		-		-		-		-		-		-		7,554		7,554

David M. Anderson		139		-		-		-		-		24,056		-		24,195

Anthony R. Verdi		12,600		619		-		2,483		-		-		-		15,702

Robert J. Oakes		150		13,835		300,000		752		57,600		-		-		372,337

Mark Daley		100		1,680		125,000		472		-		-		-		127,252

David J. Medlock		600		9,221		-		2,525		-		-		-		12,346

(a) Payments for auto and equipment represent monthly allowances for auto, cell phones and other equipment.

(b) Company-paid health, life and disability insurance represent the cost of company-paid insurance premiums covering the named executive officers and, in the case of health insurance premiums, their dependents. The Company paid approximately 71% of the health insurance and 100% of the life and disability insurance premiums for the named executive officers. Health insurance premiums vary based on several factors, including the coverage selected and the age of the named executive officer and the number of their covered dependents.

(c) Company matching of employee 401(k) contributions represents 25% of the employee’s contribution up to 4% of the employee’s compensation, which were fully vested for Messrs. Daley, Verdi, Oakes and Medlock.

(d) Mr. Oakes received monthly consulting fees of $9,600 in the months of July through December 2017, as a non-employee for sales and marketing management and advisory services.

(e) Mr. Anderson monthly received $5,000 as a personal living allowance in the months of October, November and December and a one-time reimbursement of $9,056 for his personal legal expenses incurred by him as a result of negotiating his employment agreement with the Company in accordance with his employment agreement.

(f) Mr. Caldwell received board and committee meeting fees at the rates specified in the Company’s non employee director compensation plan during from January 1 through October 9, 2017. Mr. Caldwell has assigned all of his compensation to the Co-Investment Fund II, L.P.

(9) Option awards to our named executive officers in the fiscal years ended December 31, 2017 and 2016 consisted of a warrant granted to Mr. Medlock to purchase 25,000 shares of the Company’s Series A convertible preferred stock as listed in the following:

Name	Fiscal Year		Fair Value at Date of Grant ($)		Number of Options Granted (#)		Option Exercise Price ($)		Closing Stock Price on the Date of Grant ($)		Date of Grant		Expected Volatility			Risk Free Interest Rate			Expected Life in Years		Assumed Dividend Yield

Donald R. Caldwell		2017		-		-		-		-		-		-			-			-		-
		2016		-		-		-		-		-		-			-			-		-

David M. Anderson		2017		-		-		-		-		-		-			-			-		-
		2016		-		-		-		-		-		-			-			-		-

Anthony R. Verdi		2017		-		-		-		-		-		-			-			-		-
		2016		-		-		-		-		-		-			-			-		-

Robert J. Oakes		2017		-		-		-		-		-		-			-			-		-
		2016		-		-		-		-		-		-			-			-		-

Mark Daley		2017		-		-		-		-		-		-			-			-		-
		2016		-		-		-		-		-		-			-			-		-

David J. Medlock		2017		18,604		25,000		4.000		0.038		8/16/2017		261	%		1.030	%		5.000		-
		2016		-		-		-		-		-		-			-			-		-

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information for the outstanding equity awards held by our named executive officers for the year ended December 31, 2017. There have been no stock awards granted in 2017.

		Option Awards
		Number of Securities Underlying Unexercised Options (#)		Number of Securities Underlying Unexercised Options (#)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options		Option Exercise Price		Option Expiration
Name		Exercisable		Unexercisable		(#)		($)		Date

Donald R. Caldwell			-		-		-		-		-

David M. Anderson			-		-		-		-		-

Anthony R. Verdi			-		-		-		-		-

Robert J. Oakes			-		-		-		-		-

Mark Daley			-		-		-		-		-

David J. Medlock	(a)		25,000		-		-		4.00		8/16/2022
	(b)		133,333		66,667		-		0.10		3/27/2020

(a)

Warrant to purchase 25,000 shares of the Company’s Series A convertible preferred stock

(b)

An option to purchase 200,000 shares of the Company’s common stock.

Compensation Committee Interlocks and Insider Participation

No members of our compensation committee are currently, or have been, employed by us as officers or employees. None of our executive officers currently serve, or in the past three years have served, as a member of the board of directors, compensation committee or other board committee performing equivalent functions of another entity that has one or more executive officers serving on our board or compensation committee.

Employment, Severance and Other Agreements

David M. Anderson

The Employment Agreement also provides for a monthly allowance equal to $5,000 per month, starting in October 2017 through October 31, 2018, to assist in offsetting Mr. Anderson’s travel commuting to and from his home in North Carolina and for his temporary living expenses in Pennsylvania. Furthermore the Employment Agreement also provides for a reimbursement of his out of pocket relocation expenses incurred through October 31, 2018, up to $25,000.

Pursuant to the Employment Agreement, Mr. Anderson has also agreed to customary restrictions with respect to the disclosure and use of the Company’s confidential information, and has agreed that work product or inventions developed or conceived by him while employed with the Company relating to its business is the Company’s property. In addition, during the term of his employment and for the 18 month period following his termination of employment for any reason, other than his termination without “cause” or his resignation for “good reason” (each as defined in the Employment Agreement), Mr. Anderson has agreed not to (1) perform services on behalf of a competing business which was the same or similar to the types services he was authorized, conducted, offered or provided to the Company, (2) solicit, seek to employ, or seek to retain any of the Company’s employees, independent contractors or outside agents of the Company, or (3) make any written or oral statements that are maliciously false or defamatory about the Company.

Donald R. Caldwell

Our board of directors appointed Mr. Caldwell Chief Executive Officer and Chairman of our board of directors on January 26, 2015, with an annual salary of $1. Mr. Caldwell resigned as Chief Executive Officer on October 9, 2017 and as an employee effective with the appointment of Mr. Anderson as the Company’s Chief Executive Officer.

Anthony R. Verdi

Pursuant to an amended and restated employment agreement Mr. Verdi serves as our Chief Financial Officer and Chief Operating Officer. His amended and restated employment agreement automatically renewed for a one year term on March 31, 2017, and, if not terminated, will automatically renew for one year periods. His annual base salary was $225,000 per year from March 31, 2008 through May 30, 2011 and was then increased by the board of directors to $250,000 effective June 1, 2011, increased to $300,000 effective November 1, 2015 and increased to $325,000 effective October 1, 2017. He is entitled to receive such bonus compensation as a majority of our board of directors may determine from time to time.

In the event of Mr. Verdi’s termination without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee benefits, which is primarily accrued vacation, plus the continuation of his employee benefits for a period of 18 months, less all applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.

David J. Medlock

Pursuant to an employment agreement Mr. Medlock serves as our Senior Vice President of Development, Solutions Architecture and Technical Services. His employment agreement automatically renewed for a one year term on March 27, 2018, and, if not terminated, will automatically renew for one year periods. His annual base salary was $180,000 per year from March 27, 2015 through July 1, 2015, was then increased to $210,000 effective July 1, 2015, was then increased to $220,000 effective November 1, 2015, was then increased to $235,000 effective August 16, 2017, and was then increased to $240,000 effective October 1, 2017. He is entitled to receive such bonus compensation programs available to executive employees of the Company and InsPro Technologies, LLC.

In the event of Mr. Medlock’s termination without cause or for good reason, he or his estate would receive his then current base annual salary, plus unpaid accrued employee benefits, which is primarily accrued vacation, for a period of 6 months, less all applicable taxes. In the event of his voluntary termination, death or disability, he or his estate would receive unpaid accrued employee benefits, plus the continuation of his employee benefits for a period of one month, less all applicable taxes.

Pursuant to a letter agreement dated January 27, 2015, Mr. Medlock was entitled to receive retention bonuses in the amount of $22,500, $22,500 and $45,000 payable to him on January 31, 2016, 2017 and 2018, respectively, net of applicable taxes.

Robert J. Oakes

Pursuant to an amended and restated employment agreement with InsPro Technologies, LLC, Mr. Oakes served as Vice Chairman of the board of directors. Pursuant to his employment agreement, his annual base salary was $250,000 per year through September 30, 2011. On April 7, 2011, Mr. Oakes received an increase in his base compensation pursuant to his employment agreement to $300,000 retroactive to July 1, 2010, upon InsPro Technologies, LLC achievement of one calendar quarter of positive operating cash flow, which occurred during the calendar quarter ended March 31, 2011. Mr. Oakes was entitled to bonus compensation equal to 100% of the InsPro Technologies, LLC’s net income up to a maximum of $100,000 in 2010 and $100,000 in 2011. Mr. Oakes is entitled to such fringe benefits as are available to other executives of the Company. Mr. Oakes employment agreement was automatically extended for an additional one year term on March 25, 2014 and annually, automatically extended each year through March 25, 2017. On April 19, 2017, Mr. Oakes provided written notice of his resignation effective May 19, 2017. The Company and Mr. Oakes subsequently agreed to extend the effective date of his resignation to be June 30, 2017.

Pursuant to Mr. Oakes employment agreement Mr. Oakes’s or his estate will receive his $300,000 base annual salary, plus the continuation of his employee benefits for a period of 12 months, less all applicable taxes. Also pursuant to Mr. Oakes employment agreement, he is subject to a non-competition and non-solicitation provision for a period starting June 30, 2017 through June 30, 2018.

Mark Daley

Mr. Daley served as InsPro Technologies, LLC’s Chief Revenue Officer from June 2, 2014 until March 8, 2017. His employment agreement commenced for a one year term on November 15, 2015, was automatically renewed on November 15, 2016, and was terminated effective March 8, 2017. His annual base salary was $200,000 per year from June 2, 2014 through January 31, 2015 and was then increased by the board of directors to $250,000 effective February 1, 2015. Pursuant to his employment agreement, his annual base salary was $250,000 per year.

As a result of Mr. Daley’s termination without cause or for good reason, he or his estate will receive his then current base annual salary, plus unpaid accrued employee benefits, which is primarily accrued vacation, for a period of six months, less all applicable taxes during 2017.

Mr. Daley was entitled to variable incentive compensation based on a percentage of new sales pursuant to a written variable compensation arrangement with InsPro Technologies, LLC.

Pursuant to Mr. Daley’s employment agreement, he was subject to a non-competition and non-solicitation provision during the term of his employment agreement and for a period of six months following his termination.

Compensation of Directors

The following table sets forth information concerning the compensation of all individuals who served on our board of directors during the fiscal year ended December 31, 2017. There were no option awards and no non-equity incentive plan compensation or nonqualified deferred compensation earnings paid to any of our directors for the year ended December 31, 2017. Directors who are employees receive no additional or special compensation for serving as directors. All compensation for Messrs. Caldwell, Oakes and Verdi is included in the Summary Compensation Table with the exception of Mr. Caldwell’s compensation as a non employee director subsequent to October 9, 2017. Mr. Caldwell was appointed Chief Executive Officer of the Company on January 26, 2015 until his resignation as Chief Executive Officer in conjunction with the appointment of David M. Anderson as Chief Executive Officer on October 9, 2017. Messrs. Tecce and Caldwell have assigned all of their compensation to The Co-Investment Fund II, L.P. Messrs. Tecce and Caldwell are stockholders, directors and officers of Co-Invest II Capital Partners, Inc., which is the general partner of Co-Invest Management II, L.P., which is the general partner of The Co-Investment Fund II, L.P.

Name		Fees Earned or Paid in Cash ($) (1)		Stock Awards ($)		Option Awards ($)		Total ($)

Michael Azeez			3,000		-		-		3,000

Donald R. Caldwell	(2)		2,000		-		-		2,000

John Harrison			4,500		-		-		4,500

Kenneth Harvey			6,000		-		-		6,000

Alan Krigstein	(3)		1,500		-		-		1,500

Robert J. Oakes	(4)		3,000		-		-		3,000

Sanford Rich			8,000		-		-		8,000

L.J. Rowell			7,500		-		-		7,500

Paul Soltoff			6,000		-		-		6,000

Frederick Tecce			6,000		-		-		6,000

Edmond Walters			1,500		-		-		1,500

(1)

Represents board and committee meeting fees paid to our directors under our Non-Employee Director Compensation Plan.

(2)

Messrs. Caldwell and Tecce have assigned all of their board compensation to The Co-Investment Fund II, L.P.

(3)

Mr. Krigstein had assigned his equity compensation to Independence Blue Cross, LLC and he had declined all cash compensation through October 30, 2017.

(4)

Mr. Oakes became a non-employee director of the Company effective with his June 30, 2017 resignation as an employee.

The following table sets forth information concerning the aggregate number of options and warrants available, which are options or warrants issued, outstanding and exercisable, for non-employee directors as of December 31, 2017.

	Aggregate Number of Options/Warrants Available as of December 31, 2017

Michael Azeez (b)		30,000

Donald Caldwell (a)		-

John Harrison (b)		30,000

Kenneth Harvey (b)		300,000

Alan Krigstein (c)		-

Robert J. Oakes		-

Sanford Rich (b)		30,000

L.J. Rowell (b)		30,000

Paul Soltoff (b)		30,000

Frederick Tecce (a)		-

Edmond Walters (b)		30,000

(a)

Messrs. Caldwell and Tecce have assigned all of their board compensation to The Co-Investment Fund II, L.P.

(b)

Represents warrants to purchase shares of the Company’s Series B Convertible Preferred Stock.

(c)

Mr. Krigstein has assigned his equity compensation to Independence Blue Cross, LLC.

Director Compensation Plan

Directors who are employees receive no additional or special compensation for serving as directors. Non- employee directors receive the following compensation under the terms of our Non Employee Director Compensation Plan, which was amended on December 13, 2011, to remove all equity compensation and annual cash retainer components from the plan and to increase the per Board meeting cash fee effective January 2, 2012:

The compensation of the Company’s non-employee directors is as follows:

$1,500 meeting fee for each director for each meeting of the Board attended in person or via conference telephone.

$500 meeting fee for each committee member for each meeting of a committee of the Board, attended in person or via conference telephone.

We also purchase directors’ and officers’ liability insurance for the benefit of our directors and officers as a group. We also reimburse our non-employee directors for their reasonable out-of-pocket expenses incurred in attending meetings of our board of directors or its committees in accordance with the Company’s expense reimbursement policies in effect from time to time. No fees are payable to directors for attendance at specially called meetings of the board.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table shows information known by us with respect to the beneficial ownership of our common stock, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock as of March 29, 2018, for each of the following persons:

our directors;

our named executive officers;

all of our directors, director nominees and executive officers as a group; and

each person or group of affiliated persons or entities known by us to beneficially own 5% or more of our common stock, Series A Convertible Preferred Stock or Series B Convertible Preferred Stock.

The number of shares beneficially owned, beneficial ownership and percentage ownership are determined in accordance with the rules of the Commission. Under these rules, beneficial ownership includes (i) any shares as to which the individual or entity has sole or shared voting power or investment power and (ii) any shares that an individual or entity has the right to acquire beneficial ownership of within 60 days of March 29, 2018 through the exercise of any warrant, stock option or other right. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares underlying options and warrants that are exercisable within 60 days of March 29, 2018 are considered to be outstanding. To our knowledge, except as indicated in the footnotes to the following table and subject to community property laws where applicable, the persons named in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them. The following table is based on 25,084,730 shares of Common Stock, 1,276,750 shares of Series A Convertible Preferred Stock, 5,307,212 shares of Series B Convertible Preferred Stock, and 1,254,175 shares of Series C Convertible Preferred Stock outstanding as of March 29, 2018. Unless otherwise indicated, the address of all individuals and entities listed below is InsPro Technologies Corporation, 1510 Chester Pike, 400 Baldwin Tower, Eddystone, Pennsylvania 19022.

Name of Beneficial Owner	Number of Shares Beneficially Owned			Title of Class	Percent of Shares Beneficially Owned
Directors and Executive Officers:

David M. Anderson		-		Common Stock		*

Michael Azeez		10,766,660	(4)(5)	Common Stock		21.2	%
		463,333	(4)(7)	Series B Preferred Stock		8.7	%
		75,000	(4)	Series C Preferred Stock		6.1	%
Donald R. Caldwell		95,901,690	(1)(2)	Common Stock		77.2	%
		1,250,000	(2)	Series A Preferred Stock		97.9	%
		1,887,186	(2)(3)	Series B Preferred Stock		35.2	%
		1,000,000	(2)	Series C Preferred Stock		80.8	%

Name of Beneficial Owner	Number of Shares Beneficially Owned			Title of Class	Percent of Shares Beneficially Owned

Mark Daley		-		Common Stock		*
		-		Series A Preferred Stock		*

David J. Medlock		633,333	(25)	Common Stock		1.5	%
		25,000	(26)	Series A Preferred Stock		1.9	%

Robert J. Oakes		6,026,813	(6)	Common Stock		12.7	%
		1,250		Series A Preferred Stock		*
		300,000	(10)	Series B Preferred Stock		5.4	%

John Harrison		770,000	(9)(14)	Common Stock		1.8	%
		1,250		Series A Preferred Stock		*
		30,000	(7)	Series B Preferred Stock		*

Kenneth Harvey		6,000,000	(11)	Common Stock		12.6	%
		300,000	(10)	Series B Preferred Stock		5.4	%

Alan Krigstein		-		Common Stock		*

L. J. Rowell		815,600	(14)	Common Stock		1.9	%
		30,000	(7)	Series B Preferred Stock		*

Paul Soltoff		805,000	(13)(14)	Common Stock		1.9	%
		1,250		Series A Preferred Stock		*
		30,000	(7)	Series B Preferred Stock		*

Sanford Rich		715,000	(13)(14)	Common Stock		1.7	%
		1,250		Series A Preferred Stock		*
		30,000	(7)	Series B Preferred Stock		*

Frederick Tecce		95,390,694	(1)(2)	Common Stock		91.5	%
		1,250,000	(2)	Series A Preferred Stock		97.9	%
		1,887,186	(2)(3)	Series B Preferred Stock		35.2	%
		1,000,000	(2)	Series C Preferred Stock		35.2	%

Name of Beneficial Owner	Number of Shares Beneficially Owned			Title of Class	Percent of Shares Beneficially Owned
Anthony R. Verdi		6,085,000	(15)	Common Stock		12.8	%
		1,250		Series A Preferred Stock		*
		300,000	(10)	Series B Preferred Stock		5.4	%

Edmond Walters		5,771,613	(21)	Common Stock		12.2	%
		196,666	(7)	Series B Preferred Stock		3.7	%

All directors and executive officers as a group (12 persons)		133,893,623	(1)(2)(4)(5)(6)(9) (11)(13)(14)(15) (16)(17)(18) (21)(25)	Common Stock		96.6	%
		1,281,250	(26)	Series A Preferred Stock		98.4	%
		3,567,185	(2)(4)(22)	Series B Preferred Stock		55.3	%
		1,075,000	(2)(4)	Series C Preferred Stock		86.8	%

Holders of More than Five Percent of Our Common Stock, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock:

The Co-Investment Fund II, L. P.		95,390,594	(16)	Common Stock		91.5	%
		1,250,000		Series A Preferred Stock		97.9	%
		1,887,186	(3)	Series B Preferred Stock		35.2	%
		1,000,000		Series C Preferred Stock		80.8	%


Independence Blue Cross		50,600,000	(17)	Common Stock		54.9	%
		2,530,000	(7)	Series B Preferred Stock		47.4	%

Azeez Investors, LLC		5,666,660	(5)	Common Stock		12.0	%
		283,333		Series B Preferred Stock		5.3	%

Name of Beneficial Owner	Number of Shares Beneficially Owned			Title of Class	Percent of Shares Beneficially Owned

Azeez Enterprises, LP		4,500,000	(20)	Common Stock		9.8	%
		150,000		Series B Preferred Stock		2.8	%
		75,000		Series C Preferred Stock		6.1	%

John Scarpa		4,500,000	(25)	Common Stock		10.1	%
		150,000		Series B Preferred Stock		2.8	%
		75,000		Series C Preferred Stock		6.1	%

Scarpa Family Trust, 2005		4,333,340	(18)	Common Stock		8.9	%
		366,667		Series B Preferred Stock		6.9	%

Trustmark Insurance Company		40,000,000	(23)	Common Stock		49.1	%
		2,000,000	(24)	Series B Preferred Stock		27.4	%

Bruce L. Evans		3,562,255	(8)	Common Stock		8.2	%
		95,925	(12)	Series C Preferred Stock		7.7	%

Alvin H. Clemens		2,292,080	(19)	Common Stock		7.1	%

* Less than 1%

(1)

Includes 13,157,970 shares of common stock; 25,000,000 shares underlying 1,250,000 shares of Series A Convertible Preferred Stock, which are convertible, at the sole option of the holder, into twenty shares of our common stock per share of Series A Convertible Preferred Stock; 36,543,720 shares underlying 1,827,186 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock; and 20,000,000 shares underlying 1,000,000 shares of Series C Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series C Convertible Preferred Stock, which are beneficially owned by Co-Investment, designee of Cross Atlantic Capital Partners, Inc. Also includes 1,200,000 shares underlying warrants which are exercisable within 60 days of March 29, 2018, to purchase 60,000 shares of Series B Convertible Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock, which are beneficially owned by Co-Investment.

(2)

Represents securities owned by Co-Investment, the designee of Cross Atlantic Capital Partners, Inc., of which Frederick Tecce is the managing director and of which Donald R. Caldwell is managing partner. Mr. Caldwell is also a shareholder, director and officer of Co-Invest II Capital Partners, Inc., which is the general partner of Co-Invest Management II, L.P., which is the general partner of Co-Investment. Mr. Caldwell and Mr. Tecce both disclaim beneficial ownership of these securities, except to the extent of their pecuniary interest therein.

(3)

Includes 60,000 underlying shares underlying warrants which are exercisable within 60 days of March 29, 2018, which are beneficially owned by Co-Investment.

(4)

Includes securities owned by Azeez Investors, LLC and Azeez Enterprises, LP. Mr. Azeez is a managing member of Azeez Investors, LLC and Azeez Enterprises, LP. Mr. Azeez disclaims beneficial ownership of these securities, except to the extent of his pecuniary interest therein.

(5)

Includes 5,666,660 shares underlying 283,333 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(6)

Includes 25,000 shares underlying 1,250 shares of Series A Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series A Convertible Preferred Stock. Includes 6,000,000 shares underlying a warrant which is exercisable within 60 days of March 29, 2018, to purchase 300,000 shares of Series B Convertible Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(7)

Includes 30,000 underlying shares for warrants, which are exercisable within 60 days of March 29, 2018.

(8)

Includes 1,766,000 shares underlying 88,300 shares of Series C Convertible Preferred Stock, which are convertible, at the sole option of the holder, into twenty shares of our common stock per share of Series C Convertible Preferred Stock. Includes 149,010 shares of common stock and 152,500 shares underlying 7,625 shares of Series C Convertible Preferred Stock, which are convertible, at the sole option of the holder, into twenty shares of our common stock per share of Series C Convertible Preferred Stock, which are beneficially owned by Kathryn M. Evans, wife of Bruce M. Evans.

(9)

(10)

Includes 300,000 shares underlying warrants, which are exercisable within 60 days of March 29, 2018.

(11)

Includes 6,000,000 shares underlying a warrant which is exercisable within 60 days of March 29, 2018, to purchase 300,000 shares of Series B Convertible Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(12)

Includes 7,625 shares of Series C Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series C Convertible Preferred Stock, which are beneficially owned by Kathryn M. Evans, wife of Bruce M. Evans.

(13)

(14)

Includes 600,000 shares underlying a warrant which is exercisable within 60 days of March 29, 2018, to purchase 30,000 shares of Series B Convertible Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(15)

Includes 3,000,000 shares underlying a warrant which is exercisable within 60 days of March 29, 2018, to purchase 150,000 shares of Series A Convertible Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series A Convertible Preferred Stock. Includes 6,000,000 shares underlying a warrant which is exercisable within 60 days of March 29, 2018, to purchase 300,000 shares of Series B Convertible Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(16)

Includes 25,000,000 shares underlying 1,250,000 shares of Series A Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series A Convertible Preferred Stock. Includes 37,743,720 shares underlying 1,887,186 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock. Also includes 1,200,000 shares underlying warrants which are exercisable within 60 days of March 29, 2018, to purchase 60,000 shares of Series B Convertible Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock, which are beneficially owned by Co-Investment. Includes 20,000,000 shares underlying 1000,000 shares of Series C Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series C Convertible Preferred Stock.

(17)

Includes 50,000,000 shares underlying 2,500,000 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock. Also includes 600,000 shares underlying warrants which are exercisable within 60 days of March 29, 2018, to purchase 30,000 shares of Series B Convertible Preferred Stock, which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(18)

Includes 3,666,670 shares underlying warrants which are exercisable within 60 days of March 29, 2018. Includes 7,333,340 shares underlying 366,667 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(19)

Includes 1,000,000 shares of common stock held by The Clemens-Beaver Creek Limited Partnership, of which Alvin H. Clemens is the general partner. Also includes 100,000 shares held by Mr. Clemens’s minor children.

(20)

Includes 1,500,000 shares underlying warrants which are exercisable within 60 days of March 29, 2018. Includes 3,000,000 shares underlying 150,000 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock. Also includes 1,500,000 shares underlying 75,000 shares of Series C Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series C Convertible Preferred Stock.

(21)

Includes 3,333,320 shares underlying 166,666 shares of Series B Convertible Preferred Stock, which are convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock. Includes 600,000 shares underlying a warrant which is exercisable within 60 days of March 29, 2018, to purchase 30,000 shares of Series B Convertible Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(22)

Includes 1,170,000 shares underlying warrants which are exercisable within 60 days of March 29, 2018.

(23)

Includes 40,000,000 shares underlying a warrant which is exercisable within 60 days of June 30, 2016, to purchase 2,000,000 shares of Series B Convertible Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series B Convertible Preferred Stock.

(24)

Includes 2,000,000 shares underlying warrants, which are exercisable within 60 days of June 30, 2016.

(25)

Includes 133,333 shares underlying options which are exercisable within 60 days of March 29, 2018. Includes 500,000 shares underlying a warrant which is exercisable within 60 days of June 30, 2016, to purchase 25,000 shares of Series A Convertible Preferred Stock which are also convertible, at the sole option of the holder, into 20 shares of our common stock per share of Series A Convertible Preferred Stock. Excludes 66,667 shares underlying options which are not exercisable within 60 days of March 29, 2018.

(26)

Includes 25,000 shares underlying warrants which are exercisable within 60 days of March 29, 2018.

Equity Compensation Plan Information

The following table shows certain information concerning our common stock to be issued in connection with our equity compensation plans as of December 31, 2017:

EQUITY COMPENSATION PLAN

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants, Convertible Preferred Stock and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants, Convertible Preferred Stock and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in the first Column)
Equity compensation plans approved by security holders		825,000	$	0.10		28,171,980
Equity compensation plans not approved by security holders(1)(2)(3)		25,500,000	$	0.15		0

Total(1)(2)(3)		26,325,000	$	0.15		28,171,980

(1)

On August 16, 2017, the board of directors of the Company granted a warrant to purchase 25,000 shares of Series A Preferred Stock to an executive of the Company. This warrant will expire on August 16, 2022.

(2)

Includes warrants issued as compensation on May 22, 2014, which were not part of an equity compensation plan that was approved by security holders, to Messrs. Harvey, Oakes and Verdi to purchase in aggregate 300,000 shares of Series B Convertible Preferred Stock, par value $0.001 per share (“Series B Preferred Stock”), at an exercise price equal to $3.00 per share for a period of five years from the grant date of the warrants. Also includes warrants issued as compensation on May 22, 2014, which were not part of an equity compensation plan that was approved by security holders, to Messrs. Adamsky, Azeez, Caldwell, Harrison, Rich, Rowell, Soltoff and Walters to each purchase in aggregate 30,000 shares of Series B Preferred Stock at an exercise price equal to $3.00 per share for a period of five years from the grant date of the warrants. Messrs. Adamsky and Caldwell have assigned all of their board compensation including the aforementioned warrants to The Co-Investment Fund II, L.P. Also includes warrants issued as compensation on August 14, 2014, which were not part of an equity compensation plan that was approved by security holders, to Mr. Krigstein to purchase in aggregate 30,000 shares of Series B Preferred Stock at an exercise price equal to $3.00 per share until May 22, 2019. Mr. Krigstein has assigned the aforementioned warrants to Independence Blue Cross, LLC. All of the aforementioned warrants are immediately exercisable and non-transferrable. Each share of Series B Preferred Stock is convertible into 20 shares of common stock, subject to adjustment, at the option of the holder of the Series B Preferred Stock. Also includes warrants granted on November 13, 2015 to two executives of the Company who each received warrants to purchase 40,000 shares of the Company’s Series A Preferred Stock, which were immediately exercisable and will expire on March 27, 2020.

(3)

Assumes the warrants to purchase 25,000 shares of Series A Preferred Stock at an exercise price equal to $4.00 per share are converted into 20 shares of common stock for each share of Series A Preferred Stock, or 500,000 shares of common stock in aggregate, with an exercise price of $0.20 per common stock share. Also assumes the warrants to purchase in aggregate 1,250,000 shares of Series B Preferred Stock at an exercise price equal to $3.00 per share are converted into 20 shares of common stock for each share of Series B Preferred Stock, or 25,000,000 shares of common stock in aggregate, with a weighted average exercise price of $0.15 per common stock share.

A description of the material terms of our equity compensation plans can be found in Note 6 – Shareholders’ Deficit – Stock Options and in the notes to the consolidated financial statements contained in Item 7 of this Annual Report on Form 10-K.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Transactions With Related Persons

From the beginning of our fiscal year preceding until the date of this Annual Report on Form 10-K, there has been no transaction, nor is there any transaction currently proposed, to which we were, are, or would be a participant, in which the amount involved exceeded or would exceed the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years and in which any of our directors or executive officers, any holder of more than 5% of our common stock or any member of the immediate family of any of these persons or entities had or will have a direct or indirect material interest, other than the transactions listed below.

On April 20, 2017, the Company completed a private placement (the “Private Placement”) with The Co-Investment Fund II, L.P. (“Co-Investment”), which hold more than 5% of our common stock. Donald Caldwell, who is the chairman of the board of directors of the Company (the “Board”) and former CEO, is the CEO for Cross Atlantic Capital Partners, Inc., which is the managing partner of Co-Investment. The Company issued and Co-Investment purchased 1,000,000 shares of our Series C Convertible Preferred Stock, par value $0.001 per share (“Series C Preferred Stock”), at a per share price of $2.00 for an aggregate total investment of $2,000,000 pursuant to the terms of a securities purchase agreement (the “Purchase Agreement”). The Company intends to use the net proceeds of the Private Placement for working capital purposes.

On May 11, 2017, the Company completed a private placement (the “Second Private Placement”) with Azeez Enterprises, L.P., which hold more than 5% of our Series C Preferred Stock, and John Scarpa, who holds more than 5% of our Series B Preferred Stock. Michael Azeez is a member of the Board and is the managing partner of Azeez Enterprises, L.P. The Company issued and both Azeez Enterprises, L.P. and Mr. Scarpa purchased 75,000 shares each, of our Series C Convertible Preferred Stock at a per share price of $2.00 for an aggregate total investment of $300,000 pursuant to the terms of a securities purchase agreement at essentially the same terms as those contained in the Purchase Agreement.

Effective with the expiration of the Rights Offering, which occurred on August 29, 2017, Mr. Bruce L. Evans and his wife Kathryn M. Evans collectively exercised in aggregate 127 basic subscription rights and 3,700 over subscription rights for a total 3,827 Subscription Units. As a result of the exercise of 3,827 Subscription Units the Company received $191,850 in gross proceeds and issued effective on August 29, 2017, in aggregate 95,925 shares of Series C Preferred Stock. As a result of the aforementioned exercise, Mr. and Mrs. Evans collectively beneficially own more than 5% of our common stock and our Series C Preferred Stock.

Director Independence

Although our common stock is not listed on NASDAQ and, as a result, we are not subject to NASDAQ’s listing standards, we voluntarily strive to comply with such standards. As required under the NASDAQ listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by a company’s board of directors. Our board of directors, in applying the standards for independence as defined by Rule 4200(a)(15) of the NASDAQ listing standards and Rule 10A-3(b)(1)(ii) promulgated by the Commission, has affirmatively determined that Messrs. Azeez, Harrison, Harvey, Krigstein, Rich, Rowell, Tecce and Walters are “independent” directors and that Mr. Soltoff was an “independent” director during the time he served on our board of directors.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

A summary of the fees of Assurance Dimensions, Inc. for 2017 and of D’Arelli Pruzansky, P.A. for the year ended December 31, 2016 are set forth below:

	2017 Fees		2016 Fees

Audit Fees (1, 2)	$	-	$	87,500
Audit Fees (1, 3)		87,500		-

Audit Related Fees (4)		2,500		-
Tax Fees		-		-
All Other Fees		-		-
Total Fees	$	88,000	$	87,500

(1)

On May 11, 2017, the Company formally engaged Assurance Dimensions, Inc. to serve as the Company’s independent registered public accounting firm. The engagement was due to the merger of the Company’s existing certifying accountant, D’Arelli Pruzansky, P.A., and Assurance Dimensions, Inc. The decision to engage Assurance Dimensions, Inc. as our independent registered public accounting firm was approved by the Company’s Audit Committee on May 11, 2017.

(2)

Audit fees of D’Arelli Pruzansky, P.A. for the fiscal year ended December 31, 2016 were for professional services rendered for the 2016 audit and our 2016 interim quarterly reviews of our consolidated financial statements, which are normally provided in connection with statutory and regulatory filings or engagements.

(3)

Audit fees of Assurance Dimensions, Inc., for the fiscal year ended December 31, 2017 were for professional services rendered for the 2017 audit and our 2017 interim quarterly reviews of our consolidated financial statements, which are normally provided in connection with statutory and regulatory filings or engagements.

(4)

Audit-related fees of Assurance Dimensions, Inc. for the fiscal year ended December 31, 2017 were for professional services rendered for the review of the Company’s registration statement on Form S-1.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors.

The audit committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The audit committee approved 100% of the audit related fees for the Company’s registration statement on Form S-1 in 2017.

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Form 10-K:

1. Financial Statements. See Financial Statements on page 19 of this Annual Report on Form 10-K.

2. Financial Statement Schedules. None, as all information required in these schedules is included in the consolidated financial statements or the notes thereto.

3. Exhibits. The Exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10-K. Where so indicated by footnote, exhibits which were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated below.

Exhibit Number		Description

2.1		Agreement and Plan of Merger, dated November 23, 2005, among Darwin Resources Corp., Health Benefits Direct Corporation, and HBDC II, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

2.2		Agreement and Plan of Merger, dated as of September 21, 2007, by and among the Company, HBDC Acquisition, LLC, System Consulting Associates, Inc. and the shareholders of System Consulting Associates, Inc. party thereto (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 26, 2007).

3.1		Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 22, 2005).

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 3, 2007).

3.3		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

3.4		Certificate of Merger of HBDC II, Inc. with and into Health Benefits Direct Corporation (incorporated by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

3.5		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form SB-2, filed with the Commission on February 1, 2008).

3.6		Certificate of Designation with respect to shares of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 21, 2009).

3.7		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009).

3.8		Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 1, 2010).

Exhibit Number		Description
3.9		Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 23, 2010).

3.10		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).

3.11		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.11 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).

3.12**		Certificate of Amendment to Certificate of Incorporation filed August 20, 2014.

3.13**		Certificate of Amendment to Certificate of Incorporation filed August 25, 2015.

3.14**		Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock.

3.15		Certificate of Designation of Series C Convertible Preferred Stock of InsPro Technologies Corporation, filed with the Secretary of State of the State of Delaware on April 19, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on April 20, 2017).

4.1		Securities Purchase Agreement, dated March 30, 2007, by and between the Company and the Investors party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 30, 2007).

4.2		Registration Rights Agreement, dated March 30, 2007, by and between the Company and the Investors party thereto (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 30, 2007).

4.3		Registration Rights Agreement, dated October 1, 2007, by and between Health Benefits Direct Corporation and Computer Command and Control Company (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 4, 2007).

4.4		Registration Rights Agreement, dated October 1, 2007, by and among the Company and Robert J. Oakes, Jeff Brocco, Tim Savery and Lisa Roetz (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 4, 2007).

4.5		Securities Purchase Agreement, dated March 31, 2008, by and between the Company and the Investor party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.6		Securities Purchase Agreement, dated March 31, 2008, by and between the Company and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.7		Form of Registration Rights Agreement, dated March 31, 2008, by and among the Company and the Investors party thereto (incorporated by reference from Exhibit 4.4 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

Exhibit Number		Description
4.8		Form of Registration Rights Agreement, dated March 31, 2008, by and among the Company and the Investors party thereto (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.9		Board Representation Agreement, dated March 31, 2008, between the Company and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.5 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.10		Securities Purchase Agreement, dated January 14, 2009, by and between the Company and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on January 21, 2009).

4.11		Registration Rights Agreement, dated January 14, 2009, by and between the Company and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on January 21, 2009).

4.12		Preferred Warrant (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on January 21, 2009).

4.13		Form of Subscription Rights Certificate (incorporated by reference from Exhibit 4.18 to the Registrant’s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).

4.14		Form of Warrant (incorporated by reference from Exhibit 4.19 to the Registrant’s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).

4.15		Securities Purchase Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.16		Registration Rights Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.17		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.18		Board Representation Agreement, dated September 30, 2010, by and between Health Benefits Direct Corporation and Independence Blue Cross (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.19		Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.20		Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.21		Note Conversion Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2010).

4.22		Registration Rights Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2010).

Exhibit Number		Description
4.23		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2010).

4.24		Securities Purchase Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 26, 2012).

4.25		Registration Rights Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 26, 2012).

4.26		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 26, 2012).

4.27		Form of Warrant (incorporated by reference to Exhibit 4.33 to the Registrant’s Registration Statement on Form S-1, filed with the Commission on February 1, 2013)

4.28		Securities Purchase Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.29		Registration Rights Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.30		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.35		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.36		Securities Purchase Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.37		Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.38		Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.39		Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.40		Securities Purchase Agreement, dated October 6, 2015, by and among InsPro Technologies Corporation and the Investor party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2015).

4.41		Registration Rights Agreement, dated October 6, 2015, by and among InsPro Technologies Corporation and the Investor party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2015).

Exhibit Number		Description
4.42		Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2015).

10.1		Health Benefits Direct Corporation Compensation Plan for Directors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 20, 2006).

10.2		Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 17, 2006).

10.3		Securities Contribution Agreement, dated September 9, 2005, among Health Benefits Direct Corporation, Marlin Capital Partners I, LLC, Scott Frohman, Charles A. Eissa, Platinum Partners II LLC and Dana Boskoff (incorporated by reference to Exhibit 10.22 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

10.4		Health Benefits Direct Corporation 2008 Equity Compensation Plan (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on March 31, 2008).

10.5		Health Benefits Direct Corporation 2008 Equity Compensation Plan Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on March 28, 2008).

10.6		Agreement to Transfer Partnership Interests, dated October 1, 2007, by and among HBDC Acquisition, LLC and the former partners of BileniaTech, L.P. (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on October 4, 2007).

10.7		Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 3, 2007).

10.8		Amendment 2008-1 to Amended and Restated Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 31, 2008).

10.9		Client Transition Agreement, between Health Benefits Direct Corporation, HBDC II, Inc. and eHealthInsurance Services, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009).

10.10		Health Benefits Direct Corporation 2010 Equity Compensation Plan (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).

10.11		InsPro Technologies Corporation Amended and Restated Compensation Policy for Non-Employee Directors (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 16, 2011).

10.12		Amended and Restated Loan and Security Agreement, dated as of December 2, 2014, by and among the Company, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 8, 2014).

Exhibit Number		Description
10.13		Secured Convertible Promissory Note Purchase Agreement, dated as of January 30, 2015, by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.14		Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.15		Security Agreement, dated as of January 30, 2015, by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.16		Subordination Agreement, dated as of January 30, 2015, by and among The Co-Investment Fund II, L.P., Silicon Valley Bank, InsPro Technologies Corporation, InsPro Technologies, LLC and Atiam Technologies L.P. (incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.17		Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on March 30, 2015)

10.18		Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on March 30, 2015)

10.19		Amended and Restated Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on March 30, 2015)

10.20		Employment Agreement by and between InsPro Technologies Corporation and David M. Anderson, dated October 9, 2017. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 13, 2017).

14		Amended and Restated Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 4, 2008).

21**		Subsidiaries of InsPro Technologies Corporation

23.1**		Consent of Assurance Dimensions, Inc.

31.1**		Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certificate of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Principal Executive Officer Certification pursuant to 18 U.S.C Section 1350, as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Principal Financial Officer Certification pursuant to 18 U.S.C Section 1350, as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

** Filed herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INSPRO TECHNOLOGIES CORPORATION

	By:	/s/ Anthony R. Verdi
		Anthony R. Verdi
		Chief Financial Officer (Principal Financial and Accounting Officer)

We, the undersigned officers and directors of InsPro Technologies Corporation, hereby severally constitute and appoint Anthony R. Verdi our true and lawful attorney with full power to him to sign for us and in our names in the capacities indicated below, the Annual Report on Form 10-K filed herewith and any and all subsequent amendments to said Annual Report, and generally to do all such things in our names and on our behalf in our capacities as officers and directors to enable InsPro Technologies Corporation to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorney, or any of them, to said Annual Report and any and all amendments thereto.

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

/s/ David M. Anderson	Chief Executive Officer	March 30, 2018
David M. Anderson	(Principal Executive Officer)

/s/ Anthony R. Verdi	Chief Financial Officer	March 30, 2018
Anthony R. Verdi	(Principal Financial and Accounting Officer)

/s/ Donald R. Caldwell	Chairman of the Board of Directors	March 30, 2018
Donald R. Caldwell

/s/ Michael Azeez	Director	March 30, 2018
Michael Azeez

/s/ John Harrison	Director	March 30, 2018
John Harrison

/s/ Kenneth Harvey	Director	March 30, 2018
Kenneth Harvey

/s/ Alan Krigstein	Director	March 30, 2018
Alan Krigstein

/s/ Sanford Rich	Director	March 30, 2018
Sanford Rich

	Director
L.J. Rowell

/s/ Frederick Tecce	Director	March 30, 2018
Frederick Tecce

	Director
Edmond Walters

EXHIBIT INDEX

Exhibit Number		Description

2.1		Agreement and Plan of Merger, dated November 23, 2005, among Darwin Resources Corp., Health Benefits Direct Corporation, and HBDC II, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

2.2		Agreement and Plan of Merger, dated as of September 21, 2007, by and among the Company, HBDC Acquisition, LLC, System Consulting Associates, Inc. and the shareholders of System Consulting Associates, Inc. party thereto (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 26, 2007).

3.1		Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 22, 2005).

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 3, 2007).

3.3		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

3.4		Certificate of Merger of HBDC II, Inc. with and into Health Benefits Direct Corporation (incorporated by reference to Exhibit 3.4 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

3.5		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.5 to the Registrant’s Registration Statement on Form SB-2, filed with the Commission on February 1, 2008).

3.6		Certificate of Designation with respect to shares of Series A Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 21, 2009).

3.7		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.7 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009).

3.8		Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 1, 2010).

3.9		Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 23, 2010).

3.10		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.10 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).

3.11		Certificate of Amendment to Certificate of Incorporation (incorporated by reference to Exhibit 3.11 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).

Exhibit Number		Description
3.12**		Certificate of Amendment to Certificate of Incorporation filed August 20, 2014.

3.13**		Certificate of Amendment to Certificate of Incorporation filed August 25, 2015.

3.14**		Certificate of Amendment to Certificate of Designation with respect to shares of Series B Preferred Stock.

3.15		Certificate of Designation of Series C Convertible Preferred Stock of InsPro Technologies Corporation, filed with the Secretary of State of the State of Delaware on April 19, 2017 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on April 20, 2017).

4.1		Securities Purchase Agreement, dated March 30, 2007, by and between the Company and the Investors party thereto (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 30, 2007).

4.2		Registration Rights Agreement, dated March 30, 2007, by and between the Company and the Investors party thereto (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 30, 2007).

4.3		Registration Rights Agreement, dated October 1, 2007, by and between Health Benefits Direct Corporation and Computer Command and Control Company (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 4, 2007).

4.4		Registration Rights Agreement, dated October 1, 2007, by and among the Company and Robert J. Oakes, Jeff Brocco, Tim Savery and Lisa Roetz (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 4, 2007).

4.5		Securities Purchase Agreement, dated March 31, 2008, by and between the Company and the Investor party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.6		Securities Purchase Agreement, dated March 31, 2008, by and between the Company and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.7		Form of Registration Rights Agreement, dated March 31, 2008, by and among the Company and the Investors party thereto (incorporated by reference from Exhibit 4.4 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.8		Form of Registration Rights Agreement, dated March 31, 2008, by and among the Company and the Investors party thereto (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.9		Board Representation Agreement, dated March 31, 2008, between the Company and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.5 to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 31, 2008).

4.10		Securities Purchase Agreement, dated January 14, 2009, by and between the Company and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on January 21, 2009).

Exhibit Number		Description
4.11		Registration Rights Agreement, dated January 14, 2009, by and between the Company and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on January 21, 2009).

4.12		Preferred Warrant (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on January 21, 2009).

4.13		Form of Subscription Rights Certificate (incorporated by reference from Exhibit 4.18 to the Registrant’s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).

4.14		Form of Warrant (incorporated by reference from Exhibit 4.19 to the Registrant’s Registration Statement on Form S-1, filed with the Commission on December 31, 2009).

4.15		Securities Purchase Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.16		Registration Rights Agreement, dated September 30, 2010, by and among Health Benefits Direct Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.17		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.18		Board Representation Agreement, dated September 30, 2010, by and between Health Benefits Direct Corporation and Independence Blue Cross (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.19		Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.20		Form of Addendum and Certificate of Adjustment to Warrant (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 1, 2010).

4.21		Note Conversion Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2010).

4.22		Registration Rights Agreement, dated December 22, 2010, by and between InsPro Technologies Corporation and The Co-Investment Fund II, L.P. (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2010).

4.23		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 23, 2010).

4.24		Securities Purchase Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 26, 2012).

4.25		Registration Rights Agreement, dated November 20, 2012, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 26, 2012).

Exhibit Number		Description
4.26		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on November 26, 2012).

4.27		Form of Warrant (incorporated by reference to Exhibit 4.33 to the Registrant’s Registration Statement on Form S-1, filed with the Commission on February 1, 2013)

4.28		Securities Purchase Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.29		Registration Rights Agreement, dated September 12, 2013, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.30		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.35		Form of Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 12, 2013).

4.36		Securities Purchase Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.37		Registration Rights Agreement, dated September 18, 2015, by and among InsPro Technologies Corporation and the Investors party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.38		Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on September 24, 2015).

4.39		Securities Purchase Agreement, dated October 6, 2015, by and among InsPro Technologies Corporation and the Investor party thereto (incorporated by reference from Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2015).

4.40		Registration Rights Agreement, dated October 6, 2015, by and among InsPro Technologies Corporation and the Investor party thereto (incorporated by reference from Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2015).

4.41		Form of Warrant (incorporated by reference from Exhibit 4.3 to the Registrant’s Current Report on Form 8-K, filed with the Commission on October 7, 2015).

10.1		Health Benefits Direct Corporation Compensation Plan for Directors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 20, 2006).

10.2		Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on January 17, 2006).

Exhibit Number		Description
10.3		Securities Contribution Agreement, dated September 9, 2005, among Health Benefits Direct Corporation, Marlin Capital Partners I, LLC, Scott Frohman, Charles A. Eissa, Platinum Partners II LLC and Dana Boskoff (incorporated by reference to Exhibit 10.22 to the Registrant’s Current Report on Form 8-K filed with the Commission on November 30, 2005).

10.4		Health Benefits Direct Corporation 2008 Equity Compensation Plan (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on March 31, 2008).

10.5		Health Benefits Direct Corporation 2008 Equity Compensation Plan Form of Nonqualified Stock Option Grant (incorporated by reference to the Registrant’s Current Report on Form 8-K filed with the Commission on March 28, 2008).

10.6		Agreement to Transfer Partnership Interests, dated October 1, 2007, by and among HBDC Acquisition, LLC and the former partners of BileniaTech, L.P. (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Commission on October 4, 2007).

10.7		Amended and Restated Employment Agreement, dated November 27, 2007, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the Commission on December 3, 2007).

10.8		Amendment 2008-1 to Amended and Restated Employment Agreement, dated March 31, 2008, between Health Benefits Direct Corporation and Anthony R. Verdi (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the Commission on March 31, 2008).

10.9		Client Transition Agreement, between Health Benefits Direct Corporation, HBDC II, Inc. and eHealthInsurance Services, Inc. (incorporated by reference to Exhibit 10.31 to the Registrant’s Annual Report on Form 10-K filed with the Commission on March 31, 2009).

10.10		Health Benefits Direct Corporation 2010 Equity Compensation Plan (incorporated by reference to Exhibit 10.27 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010, filed with the Commission on March 31, 2011).

10.11		InsPro Technologies Corporation Amended and Restated Compensation Policy for Non-Employee Directors (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 16, 2011).

10.12		Amended and Restated Loan and Security Agreement, dated as of December 2, 2014, by and among the Company, InsPro Technologies, LLC, Atiam Technologies L.P. and Silicon Valley Bank (incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K, filed with the Commission on December 8, 2014).

10.13		Secured Convertible Promissory Note Purchase Agreement, dated as of January 30, 2015, by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.14		Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

Exhibit Number		Description
10.15		Security Agreement, dated as of January 30, 2015, by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P. (incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.16		Subordination Agreement, dated as of January 30, 2015, by and among The Co-Investment Fund II, L.P., Silicon Valley Bank, InsPro Technologies Corporation, InsPro Technologies, LLC and Atiam Technologies L.P. (incorporated by reference to Exhibit 10.4 to the Registrants Current Report on Form 8-K, filed with the Commission on February 3, 2015)

10.17		Secured Convertible Promissory Note Purchase Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.1 to the Registrants Current Report on Form 8-K, filed with the Commission on March 30, 2015)

10.18		Form of Secured Convertible Promissory Note due June 30, 2016 (incorporated by reference to Exhibit 10.2 to the Registrants Current Report on Form 8-K, filed with the Commission on March 30, 2015)

10.19		Amended and Restated Security Agreement by and among InsPro Technologies Corporation, InsPro Technologies, LLC and The Co-Investment Fund II, L.P., dated as of March 27, 2015 (incorporated by reference to Exhibit 10.3 to the Registrants Current Report on Form 8-K, filed with the Commission on March 30, 2015)

10.20		Employment Agreement by and between InsPro Technologies Corporation and David M. Anderson, dated October 9, 2017. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on October 13, 2017).

14		Amended and Restated Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 4, 2008).

21**		Subsidiaries of InsPro Technologies Corporation

23.1**		Consent of Assurance Dimensions, Inc.

31.1**		Certificate of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2**		Certificate of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Principal Executive Officer Certification pursuant to 18 U.S.C Section 1350, as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Principal Financial Officer Certification pursuant to 18 U.S.C Section 1350, as adapted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS**		XBRL Instance Document

101.SCH**		XBRL Taxonomy Extension Schema Document

101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**		XBRL Taxonomy Extension Label Linkbase Document

101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

** Filed herewith

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