InsPro Technologies Corp - FORM 10-Q

Attached files

file	filename
EX-32.1 - InsPro Technologies Corp	v222023_ex32-1.htm
EX-31.1 - InsPro Technologies Corp	v222023_ex31-1.htm
EX-32.2 - InsPro Technologies Corp	v222023_ex32-2.htm
EX-31.2 - InsPro Technologies Corp	v222023_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2011

¨ 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 333-123081

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.)

150 North Radnor-Chester Rd.

Radnor Financial Center, Suite B101

Radnor, Pennsylvania 19087

(Address of Principal Executive Offices) (Zip Code)

(484) 654-2200

(Registrant’s Telephone Number, Including Area Code)

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 Regulations S-T (232.405 of this chapter) during the preceding 12 months (or for shorter period that the Registrant was required to submit and post such files). Yes ¨ No ¨

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 definitions of “ large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ¨ No x

As of May 16, 2011, there were 41,543,655 outstanding shares of common stock, par value $0.001 per share, of the registrant.

INSPRO TECHNOLOGIES CORPORATION

Form 10-Q Quarterly Report

INDEX

PART I FINANCIAL INFORMATION
Item 1	Financial Statements	3

	Consolidated Balance Sheets as of March 31, 2011 (UNAUDITED) and December 31, 2010	3
	Consolidated Statements of Operations (UNAUDITED) for the three months ended March 31, 2011 and 2010	4
	Consolidated Statements of Changes in Shareholders' Deficit (UNAUDITED) for the three months ended March 31, 2011	5
	Consolidated Statements of Cash Flows (UNAUDITED) for the three months ended March 31, 2011 and 2010	6

	Notes to UNAUDITED Consolidated Financial Statements	7

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 4	Controls and Procedures	36

PART II OTHER INFORMATION

Item 1	Legal Proceedings	36

Item 6	Exhibits	37

	Signatures	38

Page 2

PART I.

FINANCIAL INFORMATION

Item 1. Financial Statements

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	March 31, 2011			December 31, 2010
	(Unaudited)			(1)
ASSETS
CURRENT ASSETS:
Cash	$	5,211,859		$	4,429,026
Accounts receivable, net		1,570,026			709,503
Tax receivable		3,615			6,455
Prepaid expenses		153,718			158,245
Other current assets		2,072			1,756
Assets of discontinued operations		278,313			63,301

Total current assets		7,219,603			5,368,286

Restricted cash		-			1,152,573
Property and equipment, net		548,401			613,618
Intangibles, net		520,102			606,785
Other assets		92,558			92,558

Total assets	$	8,380,664		$	7,833,820

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Note payable	$	-		$	17,311
Accounts payable		890,252			918,972
Accrued expenses		446,259			346,808
Current portion of capital lease obligations		143,379			158,138
Due to related parties		-			8,370
Deferred revenue		1,187,113			377,500

Total current liabilities		2,667,003			1,827,099

LONG TERM LIABILITIES:
Warrant liability		3,721,046			4,030,340
Capital lease obligations		136,428			165,612

Total long term liabilities		3,857,474			4,195,952

SHAREHOLDERS' EQUITY:
Preferred stock ($.001 par value; 20,000,000 shares authorized)
Series A convertible preferred stock; 3,437,500 shares authorized, 1,276,750 shares issued and outstanding (liquidation value $12,767,500)		2,864,104			2,864,104
Series B convertible preferred stock; 5,000,000 shares authorized, 2,797,379 shares issued and outstanding (liquidation value $8,392,137)		5,427,604			5,427,604
Common stock ($.001 par value; 300,000,000 shares authorized, 41,543,655 shares issued and outstanding)		41,543			41,543
Additional paid-in capital		36,781,793			36,764,016
Accumulated deficit		(43,258,857	)		(43,286,498	)

Total shareholders' equity		1,856,187			1,810,769

Total liabilities and shareholders' equity	$	8,380,664		$	7,833,820

(1) Derived from audited financial statements.

See accompanying notes to unaudited consolidated financial statements.

Page 3

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Three Months Ended March 31,
	2011			2010
	(Unaudited)			(Unaudited)

Revenues	$	2,342,869		$	1,249,635

Cost of revenues		1,658,861			1,758,408

Gross profit (loss)		684,008			(508,773	)

Selling, general and administrative expenses:
Salaries, employee benefits and related taxes		653,122			596,009
Advertising and other marketing		23,477			57,343
Depreciation and amortization		181,718			231,811
Rent, utilities, telephone and communications		97,448			75,243
Professional fees		104,537			347,997
Other general and administrative		125,415			143,114

		1,185,717			1,451,517

Loss from operations		(501,709	)		(1,960,290	)

Gain from discontinued operations		219,020			1,031,155

Other income (expense):
Gain on the change of the fair value of warrant liability		309,294			974,468
Interest income		8,301			2,085
Interest expense		(7,265	)		(50,372	)

Total other income (expense)		310,330			926,181

Net income (loss)	$	27,641		$	(2,954	)

Net income (loss) per common share - basic and diluted:
Loss from operations	$	(0.01	)	$	(0.03	)
Gain from discontinued operations		0.01			0.03
Net income (loss) per common share - basic and diluted	$	-		$	-

Weighted average common shares outstanding - basic and diluted		41,543,655			41,543,655

See accompanying notes to unaudited consolidated financial statements.

Page 4

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2011

(Unaudited)

	Series A Preferred Stock, $.001 Par Value				Series B Preferred Stock, $.001 Par Value				Common Stock, $.001 Par Value									Total
	Number of Shares		Amount		Number of Shares		Amount		Number of Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Shareholders' Equity

Balance - December 31, 2010		1,276,750	$	2,864,104		2,797,379	$	5,427,604		41,543,655	$	41,543	$	36,764,016	$	(43,286,498	)	$	1,810,769

Amortization of deferred compensation														17,777					17,777

Net income for the period																27,641			27,641

Balance - March 31, 2011		1,276,750	$	2,864,104		2,797,379	$	5,427,604		41,543,655	$	41,543	$	36,781,793	$	(43,258,857	)	$	1,856,187

See accompanying notes to unaudited consolidated financial statements.

Page 5

INSPRO TECHNOLOGIES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Three Months Ended March 31,
	2011			2010
	(Unaudited)			(Unaudited)
Cash Flows From Operating Activities:
Net income (loss)	$	27,641		$	(2,954	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		181,718			231,811
Stock-based compensation and consulting		17,777			3,000
Loss on change of fair value of warrant liability		(309,294	)		(974,468	)
Gain (loss) on the disposal of equipment of discontinued operations		-			6,000
Changes in assets and liabilities:
Accounts receivable		(860,523	)		392,563
Tax receivable		2,840			7,486
Prepaid expenses		4,527			(70,785	)
Other current assets		(316	)		(5,002	)
Other assets		-			(42,611	)
Accounts payable		(28,720	)		476,734
Accrued interest on related secured note from related party		-			35,329
Accrued expenses		99,451			(239,909	)
Due to related parties		(8,370	)		-
Deferred revenue		809,613			259,000
Assets of discontinued operations		(215,012	)		(930,035	)

Net cash used in operating activities		(278,668	)		(853,841	)

Cash Flows From Investing Activities:
Purchase of property and equipment		(29,816	)		(110,363	)

Net cash used in investing activities		(29,816	)		(110,363	)

Cash Flows From Financing Activities:
Payments on note payable		(17,313	)		(7,595	)
Gross proceeds from capital leases		-			134,335
Payments on capital leases		(43,943	)		(33,113	)
Restricted cash in connection with letters of credit		1,152,573			(587	)
Gross proceeds from sales of preferred stock and warrants		-			1,107,000

Net cash provided by financing activities		1,091,317			1,200,040

Net increase in cash		782,833			235,836

Cash - beginning of the period		4,429,026			1,403,653

Cash - end of the period	$	5,211,859		$	1,639,489

Supplemental Disclosures of Cash Flow Information
Cash payments for interest	$	7,265		$	15,043
Non cash financing activities:
Accrued Interest on related party note	$	-		$	35,329

See accompanying notes to unaudited consolidated financial statements.

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, the consolidated financial statements do not include all of the information and footnotes required by US GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended December 31, 2010 and notes thereto and other pertinent information contained in the Annual Report on Form 10-K of InsPro Technologies Corporation (the “Company”, “we”, “us” or “our”) as filed with the Securities and Exchange Commission (the “Commission”).

The consolidated financial statements of the Company include the Company and its subsidiaries. All material inter-company balances and transactions have been eliminated.

The results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results for the full fiscal year ending December 31, 2011.

Organization

InsPro Technologies Corporation was incorporated under the laws of the state of Nevada on October 21, 2004 as Darwin Resources Corp., (“Darwin-NV”). 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 (“HBDC”), and the name of the resulting entity was changed from Health Benefits Direct Corporation to HBDC II, Inc. Following the merger, Darwin-DE changed its name to Health Benefits Direct Corporation. On November 29, 2010, Health Benefits Direct Corporation changed its name to InsPro Technologies Corporation. Our current operations consist of our InsPro Technologies LLC subsidiary (“InsPro Technologies”).

InsPro Technologies is a provider of comprehensive, web-based insurance administration software applications. InsPro Technologies’ flagship software product is InsPro, which was introduced in 2004. InsPro Technologies offers InsPro Enterprise (“InsPro”) on a licensed and an Application Service Provider (“ASP”) basis. InsPro 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. InsPro Technologies realizes revenue from the sale of software licenses, application service provider fees, software maintenance fees and professional services. We acquired InsPro Technologies on October 1, 2007.

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

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 2011 and 2010 include the allowance for doubtful accounts, stock-based compensation, the useful lives of property and equipment and intangible assets, warrant liability and revenue recognition.

Cash and cash equivalents

The Company considers all liquid debt instruments with original maturities of 3 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. At March 31, 2011 and December 31, 2010, the Company has established, based on a review of its outstanding balances, an allowance for doubtful accounts in the amount of $0.

Accounts receivable from the two largest InsPro Technologies clients accounted for 30% and 17%, respectively, of the Company’s total accounts receivable balance at March 31, 2011.

Fair value of financial instruments

The carrying amounts of financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses and capital leases approximated fair value as of March 31, 2011 and December 31, 2010, because of the relatively short-term maturity of these instruments and their market interest rates.

Property and equipment

Property and equipment are carried at cost. The cost of repairs and maintenance are 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.

Intangible assets

Intangible assets consist of assets acquired in connection with the acquisition of InsPro Technologies and costs incurred in connection with the development of the Company’s software. See Note 4 – Intangible Assets.

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

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.

Warrant Liability

For the three months ended March 31, 2011, the Company recorded a gain on the change in fair value of derivative liability of $309,294 to mark to market for the decrease in fair value of the warrants during the three months ended March 31, 2011.

The Company determined the fair value of the warrant liability at March 31, 2011 was $3,721,046. The fair value was determined using the Black Scholes Option Pricing Model based on the following assumptions: dividend yield: 0%, risk free rate: 0.17% and the following:

Warrant Issue Date	Warrant Exercise Price		Aggregate Number of Warrants		Expected Term (Years) of Warrants		Volatility			Fair Value

1/15/2009	$	0.15		26,666,667		2.8		475	%	$	1,599,820
3/26/2010		0.15		7,380,000		4.0		483	%		442,799
9/30/2010		0.15		18,000,010		4.5		484	%		1,080,000
11/29/2010		0.15		2,000,000		4.7		485	%		120,000
12/22/2010	$	0.15		7,973,780		4.7		486	%		478,427
										$	3,721,046

A summary of the Company's warrant liability activity and balances as of and for year ended December 31, 2010 are as follows:

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

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

Income taxes

The Company accounts for income taxes under the liability method. Under this method, deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

Earnings (loss) per common share

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Diluted loss per common share is not presented because it is anti-dilutive. The Company's common stock equivalents at March 31, 2011, include the following:

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

Revenue recognition

InsPro Technologies offers InsPro on a licensed and an ASP basis. An InsPro software license entitles the purchaser a perpetual license to a copy of the InsPro software installed at a single client location.

Alternatively, ASP hosting service enables a client to lease the InsPro software, paying only for that capacity required to support their business. ASP clients access InsPro installed on InsPro Technologies owned servers located at InsPro Technologies’ offices or at a third party’s site.

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

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

InsPro Technologies’ consulting and implementation services are generally associated with the implementation of an InsPro instance for either an ASP or licensed client, and cover such activity as InsPro installation, configuration, modification of InsPro functionality, client insurance document design and system documentation.

InsPro Technologies’ revenue is generally recognized under ASC 985-605. For software arrangements involving multiple elements, 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 collectibility 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 collectibility 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 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.

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

Cost of Revenues

Cost of revenues includes direct labor and associated costs for employees and independent contractors performing InsPro design, development, implementation, testing together with customer management, training and technical support, as well as facilities, equipment and software costs.

Advertising and other marketing

Advertising and other marketing costs are expensed as incurred.

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

Concentrations of credit risk

The Company maintains its cash in bank deposit accounts, which exceed the federally insured limits as provided through the Federal Deposit Insurance Corporation (“FDIC”). In 2010 the FDIC insurance coverage limit has been permanently increased to $250,000 per depositor, per institution as a result of the Dodd-Frank Wall Street and Consumer Protection Act. Beginning December 31, 2010, the FDIC has implemented a new temporary insurance category to provide unlimited FDIC insurance coverage for funds held in noninterest-bearing transaction accounts at insured banks. This temporary category will remain in effect through December 31, 2012.

At March 31, 2011, the Company had $5,211,859 of cash in United States bank deposits, of which $1,996,980 was federally insured and $3,214,879 exceeded federally insured limits.

The following table lists the percentage of the Company’s revenue, which was earned from the Company’s two largest InsPro clients.

	For the Three Months ended March 31,
	2011			2010

Largest InsPro client		35	%		32	%
Second largest InsPro client		16	%		28	%

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.

Registration rights agreements

The Company classifies as liability instruments the fair value of registration rights agreements when such agreements (i) require it to file, and cause to be declared effective under the Securities Act, a registration statement with the Commission within contractually fixed time periods, and (ii) provide for the payment of liquidating damages in the event of its failure to comply with such agreements and such failure is probable. Registration rights with these characteristics are accounted for as derivative financial instruments at fair value and contracts that are (a) indexed to and potentially settled in an issuer's own stock and (b) permit gross physical or net share settlement with no net cash settlement alternative are classified as equity instruments.

At March 31, 2011, 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 March 31, 2011.

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

Recent accounting pronouncements

In April 2009, the FASB issued guidance in the Fair Value Measurements and Disclosures Topic of the Codification on determining fair value when the volume and level of activity for an asset or liability have significantly decreased and identifying transactions that are not orderly. The guidance emphasizes that even if there has been a significant decrease in the volume and level of activity, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants. The guidance provides a number of factors to consider when evaluating whether there has been a significant decrease in the volume and level of activity for an asset or liability in relation to normal market activity. In addition, when transactions or quoted prices are not considered orderly, adjustments to those prices based on the weight of available information may be needed to determine the appropriate fair value. The guidance is effective for interim or annual reporting periods ending after June 15, 2009, and shall be applied prospectively. We adopted this guidance effective for the quarter ending June 30, 2009. There is no impact of the adoption on our financial statements as of March 31, 2011.

In April 2009, FASB issued guidance in the Financial Instruments Topic of the Codification on interim disclosures about fair value of financial instruments. The guidance requires disclosures about the fair value of financial instruments for both interim reporting periods, as well as annual reporting periods. The guidance is effective for all interim and annual reporting periods ending after June 15, 2009 and shall be applied prospectively. The adoption of this guidance had no impact on our financial statements as of March 31, 2011.

In May 2009, FASB issued guidance in the Subsequent Events Topic of the Codification. The guidance is intended to establish general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statements are issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. The guidance is effective for interim or annual financial periods ending after June 15, 2009 and is required to be adopted prospectively. We adopted this guidance effective for the quarter ending June 30, 2009. The adoption of this guidance had no impact on our financial statements as of March 31, 2011, other than the additional disclosure.

In June 2009, the FASB issued guidance which will amend the Consolidation Topic of the Codification. The guidance addresses the effects of eliminating the qualifying special-purpose entity (QSPE) concept and responds to concerns over the transparency of enterprises’ involvement with variable interest entities (VIEs). The guidance is effective beginning on January 1, 2010. We do not expect the adoption of this guidance to have an impact on our financial statements.

In August 2009, the FASB issued Accounting Standards Update No. 2009-05, “Measuring Liabilities at Fair Value” (ASU 2009-05). ASU 2009-05 amends the Fair Value Measurements and Disclosures Topic of the FASB Accounting Standards Codification by providing additional guidance clarifying the measurement of liabilities at fair value. ASU 2009-05 is effective for us for the reporting period ending December 31, 2010. We do not expect the adoption of ASU 2009-05 to have an impact on our financial statements.

In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1. (See EITF 09-1 effective date below).

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INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-14 to have a material effect on the financial position, results of operations or cash flows of the Company.

In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations or cash flows of the Company.

In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167. (See FAS 167 effective date below).

In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166. (See FAS 166 effective date below).

In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.

In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.

Page 14

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

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

In February 2010, the FASB issued ASU 2010-09, which addresses certain implementation issues related to an entity’s requirement to perform and disclose subsequent events procedures. The ASU (i) exempts entities that file their financial statements with, or furnish them to, the Commission from disclosing the date through which subsequent events procedures have been performed and (ii) clarifies the circumstances in which an entity’s financial statements would be considered restated and in which the entity would therefore be required to update its subsequent events evaluation since the originally issued or available to be issued financial statements. ASU 2010-09 became effective immediately upon issuance, and the Company adopted its disclosure requirements within the Form 10-K for the year ended December 31, 2010.

In April 2010, the FASB issued ASU 2010-17, Revenue Recognition – Milestone Method (Topic 605): Milestone Method of Revenue Recognition (“ASU 2010-17”). ASU 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. Consideration that is contingent on achievement of a milestone in its entirety may be recognized as revenue in the period in which the milestone is achieved only if the milestone is judged to meet certain criteria to be considered substantive. Milestones should be considered substantive in their entirety and may not be bifurcated. An arrangement may contain both substantive and nonsubstantive milestones, and each milestone should be evaluated individually to determine if it is substantive. ASU 2010-17 is effective on a prospective basis for milestones achieved in fiscal years, and interim periods within those years, beginning on or after June 15, 2010, with early adoption permitted. We adopted this guidance effective for the quarter ending June 30, 2010 and it did not have a material impact on our consolidated financial statements.

In July 2010, the FASB issued ASU No. 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. ASU 2010-20 requires additional disclosures about the credit quality of a company’s loans and the allowance for loan losses held against those loans. Company will need to disaggregate new and existing disclosures based on how it develops its allowance for loan losses and how it manages credit exposures. Additional disclosure is also required about the credit quality indicators of loans by class at the end of the reporting period, the aging of the past due loans, information about troubled debt restructurings, and significant purchases and sales of loans during the reporting period by class. The new guidance is effective for interim and annual periods beginning after December 15, 2010. The Company anticipates that adoption of these additional disclosures will not have a material effect on its financial position of results of operations.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Page 15

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 2 – DISCONTINUED OPERATIONS

The Company has classified its former telesales call center and external (ISG) agent produced agency business (the “Agency Business”), its former Insurint business, and its leased offices located in New York and Florida as discontinued operations.

The financial position of discontinued operations was as follows:

	March 31, 2011			December 31, 2010

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

The results of discontinued operations were as follows:

	For the Three Months Ended March 31,
	2011			2010
Revenues:
Commission and other revenue from carriers	$	63,189		$	149,646
Transition policy commission pursuant to the Agreement		194,661			350,332
Gain on the sale of Insurint		-			578,569
Gain on disposal of property and equipment		-			6,000
Lead sale revenue		-			103
Insurint revenue		-			53,130
Sub-lease revenue		150,142			257,951

		407,992			1,395,731

Operating expenses:
Salaries, employee benefits and related taxes		11,133			167,388
Rent, utilities, telephone and communications		161,704			(11,387	)
Professional fees		(1,961	)		86,211
Other general and administrative		18,096			122,364

		188,972			364,576

Gain (loss) from discontinued operations	$	219,020		$	1,031,155

On February 20, 2009, the Company entered into and completed the sale of the Agency Business to eHealth Insurance Services, Inc., an unaffiliated third party, pursuant to the terms of a Client Transition Agreement (the “Agreement”).

Page 16

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	Useful Life (Years)	At March 31, 2011			At December 31, 2010
Computer equipment and software	3	$	1,169,538		$	1,139,721
Office equipment	4.6		194,360			194,360
Office furniture and fixtures	6.7		191,363			191,363
Leasehold improvements	9.8		34,034			34,034
			1,589,295			1,559,478

Less accumulated depreciation			(1,040,894	)		(945,860	)

		$	548,401		$	613,618

For the three months ended March 31, 2011 and 2010, depreciation expense was $95,034 and $93,004, respectively.

NOTE 4 – INTANGIBLE ASSETS

Intangible assets consisted of the following:

	Useful Life (Years)	At March 31, 2011			At December 31, 2010
InsPro Technologies intangible assets acquired	4.7	$	2,097,672		$	2,097,672
Software development costs for external marketing	2		174,296			174,296
			2,271,968			2,271,968

Less: accumulated amortization			(1,751,866	)		(1,665,183	)

		$	520,102		$	606,785

For the three months ended March 31, 2011 and 2010, amortization expense was $86,684 and $138,807 respectively.

Amortization expense subsequent to the period ended March 31, 2011 is as follows:

2011	$	260,051
2012		260,051

	$	520,102

Page 17

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 5 – SHAREHOLDERS’ EQUITY

Stock Options

During the three months ended March 31, 2011, 425,000 options previously granted to Warren Musser, the vice chairman of the Company’s board of directors, expired in accordance with the terms of the stock options.

The Company recorded compensation expense pertaining to director and employee stock options as follows:

	For the period ended March 31,
	2011		2010

Salaries, commission and related taxes	$	17,777	$	3,000

A summary of the Company's outstanding stock options as of and for the three months ended March 31, 2011 are as follows:

	Number			Weighted
	Of Shares			Average		Weighted
	Underlying			Exercise		Average
	Options			Price		Fair Value

Outstanding at December 31, 2010		6,590,000		$	0.24	$	0.30

For the period ended March 31, 2011
Granted		-			-		-
Exercised		-			-		-
Expired		(425,000	)		2.70		0.77

Outstanding at March 31, 2011		6,165,000		$	0.07	$	0.27

Outstanding and exercisable at March 31, 2011		3,965,000		$	0.79	$	0.46

Page 18

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 5 – SHAREHOLDERS’ EQUITY (continued)

The following information applies to options outstanding at March 31, 2011:

Options Outstanding								Options Exercisable
Exercise Price		Number of Shares Underlying Options		Weighted Average Remaining Contractual Life		Exercise Price		Number Exercisable		Exercise Price

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

As of March 31, 2011, there were 30,000,000 shares of our common stock authorized to be issued under the Company’s 2010 Equity Compensation Plan, of which 22,406,980 shares of our common stock remain available for future stock option grants.

The total intrinsic value of stock options outstanding and exercisable as of March 31, 2011 was $0.

The value of equity compensation expense not yet expensed pertaining to unvested equity compensation was $180,383 as of March 31, 2011, which will be recognized over a weighted average 4.5 years in the future.

Page 19

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 5 – SHAREHOLDERS’ EQUITY (continued)

Common Stock Warrants

On January 10, 2011, warrants to purchase 1,175,000 shares of the Company’s common stock at an exercise price of $1.50 per share expired in accordance with the terms of the warrants.

A summary of the status of the Company's outstanding common stock warrants as of and for the three months ended March 31, 2011 are as follows:

				Weighted
	Common			Average
	Stock			Exercise
	Warrants			Price

Outstanding at December 31, 2010		93,162,344			0.24

For the period ended March 31, 2011
Granted		-			-
Exercised		-			-
Expired		(1,175,000	)		1.50
Outstanding at March 31, 2011		91,987,344			0.24

Exercisable at March 31, 2011		91,987,344		$	0.24

The following information applies to common stock warrants outstanding at March 31, 2011:

Exercise Price		Expiration Date	Weighted Average Remaining Life		Common Stock Warrants

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

Page 20

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 5 – SHAREHOLDERS’ EQUITY (continued)

Preferred Stock warrants

A summary of the status of the Company's outstanding preferred stock warrants as of and for the period ended March 31, 2011 are as follows:

			Weighted
	Preferred		Average
	Stock		Exercise
	Warrants		Price

Outstanding at December 31, 2010		150,000		4.00

For the period ended March 31, 2011
Granted		-		-
Exercised		-		-
Expired		-		-
Outstanding at March 31, 2011		150,000		0.00

Exercisable at March 31, 2011		150,000	$	4.00

Outstanding preferred stock warrants at March 31, 2011 have a remaining contractual life of 4.4 years.

NOTE 6 – CAPITAL LEASE OBLIGATIONS

InsPro Technologies has entered into several capital lease obligations to purchase equipment used for operations. The Company has the option to purchase the equipment at the end of the lease agreement 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 as of March 31, 2011 and December 31, 2010:

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

Page 21

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 6 – CAPITAL LEASE OBLIGATIONS

Future minimum payments required under capital leases at March 31, 2011 are as follows:

2011	$	126,413
2012		99,209
2013		37,420
2014		30,757
2015		12,815

Total future payments		306,614
Less amount representing interest		26,807

Present value of future minimum payments		279,807
Less current portion		143,379

Long-term portion	$	136,428

NOTE 7 – 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 6 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 contribution (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 $11,633 and $10,024 for the three months ended March 31, 2011 and 2010.

NOTE 8 – RESTRICTED CASH, COMMITMENTS AND CONTINGENCIES

Restricted Cash and Operating Leases

Lease Termination, Termination of Letters of Credit, Reclassification of Restricted Cash

On January 4, 2011, the Company and FG2200, LLC, agreed to amend their lease whereby the Company paid to FG2200, LLC $16,300 as consideration to shorten the expiration of the lease to February 28, 2011, and to amend the security deposit provisions of the lease. The amendment amended the security deposit whereby the Company’s existing $1,000,000 letter of credit, which served as the security deposit for the lease, expired on January 14, 2011, and was replaced by a $160,300 cash payment from the Company to FG2200, LLC, which consisted of $16,300 consideration for amending the Lease and a $150,000 security deposit.

Page 22

INSPRO TECHNOLGIES CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2011

NOTE 8 – RESTRICTED CASH, COMMITMENTS AND CONTINGENCIES (continued)

On January 14, 2011, the Company’s $1,000,000 letter of credit was terminated by the issuing bank at the request of the Company and the restrictions on the restricted cash, which served as collateral and was included in restricted cash, were eliminated on that date.

On February 5, 2011, the Company’s $151,503 letter of credit was terminated by the issuing bank at the request of the Company and the restrictions on the restricted cash, which served as collateral and was included in restricted cash, were eliminated on that date.

The Company leases certain real and personal property under non-cancelable operating leases. Rent expense was $255,783 and $311,794 for the three months ended March 31, 2011 and 2010, respectively.

NOTE 9 – SUBSEQUENT EVENTS

Management has evaluated the effects of all events subsequent to March 31, 2011 through the date which the financial statements were available to be issued and has concluded that all events requiring adjustment to or disclosure in the financial statements have been made.

Page 23

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this Quarterly Report on Form 10-Q, including in the “Management’s Discussion and Analysis or Plan of Operation (“MD&A”) 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 (the “Exchange Act”). 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 the Company’s operations and other similar statements. Various factors, including competitive pressures, market interest rates, changes in insurance carrier mix, regulatory changes, customer and insurance carrier defaults or insolvencies, 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 and insurance carriers, or the loss of one or more key insurance carrier relationships, 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 Quarterly Report on Form 10-Q, 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 and the risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, affect our ability to achieve our objectives. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q 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.

We qualify all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.

Page 24

Item 2. 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 our InsPro Technologies, LLC subsidiary (“InsPro Technologies”).

InsPro is a comprehensive, web-based insurance administration software application. InsPro was introduced by Atiam Technologies, L.P. (now our InsPro Technologies, LLC subsidiary) in 2004. InsPro clients include health insurance carriers and third party administrators. Unlike our Insurint platform, we market InsPro 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 Securities and Exchange Commission (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 or Plan of Operation is based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these estimates, including those related to allowances for doubtful accounts receivable and long-lived assets such as intangible assets. Management bases these estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Significant estimates in 2011 and 2010 include the allowance for doubtful accounts, stock-based compensation, the useful lives of property and equipment and intangible assets, accrued expenses pertaining to abandoned facilities, warrant liability and revenue recognition. Actual results may differ from these estimates under different assumptions or conditions.

InsPro Technologies offers InsPro on a licensed and an application service provider (“ASP”) basis. An InsPro software license entitles the purchaser a perpetual license to a copy of the InsPro 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 the InsPro software, paying only for that capacity required to support their business. ASP clients access an instance of InsPro installed on InsPro Technologies’ servers located at InsPro Technologies’ offices or at a third party’s site.

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

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

Page 25

InsPro Technologies revenue is generally recognized under ASC 985-605. For software arrangements involving 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 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 collectibility 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.

We recognize revenues from software license agreements when persuasive evidence of an agreement exists, delivery of the software has occurred, the fee is fixed or determinable, and collectibility is probable. We consider 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 module, we allocate the total arrangement fee among the modules based on the relative fair value of each of the modules.

We review the carrying value of property and equipment and intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to the undiscounted cash flows that the asset or asset group is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property, if any, exceeds its fair market value.

Page 26

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2010

Revenues

For the three months ended March 31, 2011 (“First Quarter 2011”), we earned revenues of $2,342,869 compared to $1,249,635 for the three months ended March 31, 2010 (“First Quarter 2010”), an increase of $1,093,234 or 88%. Revenues include the following:

	For the Three Months Ended March 31,
	2011		2010

Professional services	$	1,350,973	$	555,890
ASP revenue		454,418		359,745
Sales of software licenses		335,000		125,000
Maintenance revenue		197,538		200,000
Sub-leasing revenue		4,940		9,000

Total	$	2,342,869	$	1,249,635

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

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

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

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

Page 27

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

Cost of Revenues

Our cost of revenues for First Quarter 2011 was $1,658,861 as compared to $1,758,408 for First Quarter 2010 for an decrease of $99,547 or 6% as compared to First Quarter 2010. Cost of revenues consisted of the following:

	For the Three Months Ended March 31,
	2011		2010

Salaries, employee benefits and related taxes	$	1,057,248	$	987,402
Professional fees		390,371		504,518
Rent, utilities, telephone and communications		81,305		75,516
Other cost of revenues		129,937		190,972
	$	1,658,861	$	1,758,408

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

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

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

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

Gross Profit

As a result of the aforementioned factors, we reported a gross profit of $684,008 in First Quarter 2011 as compared to a gross loss of $508,773 in First Quarter 2010.

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses for First Quarter 2011 was $1,185,717 as compared to $1,451,517 for First Quarter 2010 for a decrease of $265,800 or 18% as compared to First Quarter 2010. Selling, marketing and administrative expenses consisted of the following:

	For the Three Months Ended March 31,
	2011		2010

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

In First Quarter 2011 we incurred salaries, employee benefits and related taxes of $653,122 as compared to $596,009 for First Quarter 2010, an increase of $57,113 or 10%. Salaries, commission and related taxes consisted of the following:

	For the Three Months Ended March 31,
	2011		2010

Salaries, wages and bonuses	$	495,542	$	476,049
Share based employee and director compensation		17,777		3,000
Commissions to employees		44,889		25,056
Employee benefits		29,443		29,812
Payroll taxes		50,721		38,205
Severance and other compensation		3,750		4,106
Directors’ compensation		11,000		19,781

Total	$	653,122	$	596,009

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

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

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

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

Advertising and other marketing in First Quarter 2011 was $23,477 as compared to $57,343 in First Quarter 2010. The decrease is the result of a non recurring finders’ fee payable to a third party in the First Quarter of 2010 pertaining to signing of a new client.

Depreciation and amortization expense consisted of the following:

	For the Three Months Ended March 31,
	2011		2010

Amortization of intangibles acquired as a result of the InsPro acquisition	$	86,684	$	117,020
Amortization of software and website development for external marketing		-		21,787
Depreciation expense		95,034		93,004

Total	$	181,718	$	231,811

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

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

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

In First Quarter 2011 we incurred rent, utilities, telephone and communications expense of $97,448 as compared to $75,243 in First Quarter 2010. The increase is primarily attributable to increased utilities and telecommunications costs.

In First Quarter 2011 we incurred professional fees of $104,537 as compared to $347,997 in First Quarter 2010. The decrease in professional fees is attributable to legal costs incurred in connection with settled litigation with certain shareholders in the First Quarter of 2010 and to a lesser extent costs incurred in connection with the Company’s rights offering incurred in the First Quarter 2010.

In First Quarter 2011 we incurred other general and administrative expenses of $125,415 as compared to $143,114 in First Quarter 2010. The decrease is the result of lower computer processing costs as a result of cost cutting initiatives. Other general and administrative expense includes office expenses, travel and entertainment pertaining to sales and marketing activities, corporate insurance costs and computer hardware and software costs.

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Loss from operations

As a result of the aforementioned factors, we reported a loss from operations of $501,709 in First Quarter 2011 as compared to a loss from operations of $1,960,290 in First Quarter 2010.

Gain on discontinued operations

Results from discontinued operations were as follows:

	For the Three Months Ended March 31,
	2011			2010
Revenues:
Commission and other revenue from carriers	$	63,189		$	149,646
Gain recognized upon the execution of the Agreement		-			-
Transition policy commission pursuant to the Agreement		194,661			350,332
Gain on the sale of Insurint		-			578,569
Gain on disposal of property and equipment		-			6,000
Lead sale revenue		-			103
Insurint revenue		-			53,130
Sub-lease revenue		150,142			257,951

		407,992			1,395,731

Operating expenses:
Salaries, employee benefits and related taxes		11,133			167,388
Lead, advertising and other marketing		-			-
Depreciation and amortization		-			-
Rent, utilities, telephone and communications		161,704			(11,387	)
Professional fees		(1,961	)		86,211
Loss on impairment of property and equipment		-			-
Loss on impairment of intangible assets		-			-
Other general and administrative		18,096			122,364
(Gain) on disposal of property and equipment		-			-

		188,972			364,576

Gain from discontinued operations	$	219,020		$	1,031,155

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For First Quarter 2011 we earned revenues in discontinued operations of $407,992 compared to $1,395,731 in the First Quarter 2010, a decrease of $987,739 or 71%. Revenues include the following:

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

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

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

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

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

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

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

In First Quarter 2011 we earned sub-lease revenue of $150,142 as compared to $257,951 in First Quarter 2010 relating to the sub-lease of a portion of our Florida office and our former New York sales office. The decline in Sub-lease revenue is the result of the elimination of sub-lease revenue from our former New York sales office and lower sub-lease revenue from our former Deerfield Beach office. Our leases for our former New York sales office and our former Deerfield Beach office expired on December 31, 2010 and February 28, 2011, respectively. Sub-lease revenue on both offices included base rent, additional rent pertaining to utilities and occupancy costs and certain telephony, technology and facility services provided by us to certain of our sub-tenants.

Total operating expenses of discontinued operations for First Quarter 2011 was $188,972 as compared to $364,576 for First Quarter 2010 for a decrease of $175,604 or 48% as compared to First Quarter 2010. The primary reason for the decrease is attributable to the sale of Insurint and the cessation of activities for Insurint subsequent to March 31, 2010.

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Gain from discontinued operations

As a result of the aforementioned factors, we reported a gain from discontinued operations of $219,020 or $0.01 gain from discontinued operations basic and $0.00 diluted per share in First Quarter 2011 as compared to a gain from discontinued operations of $1,031,155 or $0.03 gain from discontinued operations basic and diluted per share in First Quarter 2010.

Other income (expenses)

In First Quarter 2011 we recognized a gain on change in fair value of warrants liabilities of $309,294 as compared to a gain of $974,468 in the First Quarter 2010. The gain in both First Quarter 2011 and First Quarter 2010 represents the mark to market adjustments for the change in fair value of warrants, which contain provisions that adjust the exercise price of these warrants in the event we issue our common stock or other securities convertible into our common stock at price lower than the exercise price of these warrants.

Interest income is attributable to interest-bearing cash deposits. The decrease in interest income is the result of a decline in interest rates and a decline in cash balances.

Interest expense of is lower in First Quarter 2011 as compared to the First Quarter of 2010 as a result of the repayment of our secured promissory note with the Co-Investment Fund II, L. P., A Delaware limited partnership (“Co-Investment”), in the fourth quarter of 2010 and the elimination of interest expense on the Secured Note.

Net income (loss)

As a result of these factors discussed above, we reported a net income of $27,641 or $0.00 loss basic and diluted per share and in First Quarter 2011 as compared to a net loss of $2,954 or $0.00 loss basic and diluted per share in First Quarter 2010.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2011, we had a cash balance of $5,211,859 and working capital of $4,552,600.

Net cash used by operations was $278,668 in First Quarter 2011 as compared to $853,841 in First Quarter 2010. The improvement in cash flow from operations was the result of Increases in deferred revenue of $809,613, which is primarily the result of the collection of an deposit on a license fee payment and to a lesser extent the collection of annual maintenance fees in First Quarter 2011 partially offset by the recognition of license fee revenue in the First Quarter 2011, which was collected prior to 2011. Also impacting the improvement in our cash flow from operations was our net income of $27,641 in the First Quarter of 2011 as compared to our net loss of $2,954 in the First Quarter of 2010 and:

Increases in accounts receivable of $860,523 in 2011, which is primarily the result of increases in InsPro billings especially for professional services and delays in payments from certain of InsPro’s clients.

Increases in accounts payable and accrued expenses of $70,731 in First Quarter 2011, which is primarily the result of an increase in accrued payroll expense, which will be paid in the second quarter of 2011.

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Increases in net assets of discontinued operations of $215,012, which is primarily the result of the payment of lease payments pertaining to abandoned leases and the return of security deposits to the Company’s landlords and sub-tenants all pertaining to our former New York and Florida offices.

In addition to cash used in operating activities we incurred the following non cash gain and expenses in 2011, which were included in our net income (loss), including:

Recorded depreciation and amortization expense of $181,718 and $231,811 in 2011 and 2010, respectively.

Recorded stock-based compensation and consulting expense of $17,777 and $3,000 in 2011 and 2010, respectively.

Recognized a gain on change in fair value of warrants liabilities of $309,294 and $974,468 in 2011 and 2010, respectively.

We recorded a gain of $6,000 on the disposal of property and equipment of discontinued operations in First Quarter 2010.

Net cash used by investing activities in the First Quarter 2011 was $29,816 as compared to $110,363 in the First Quarter 2010. Investing activities pertain to the purchase of property and equipment supporting current and future operations.

Net cash provided by financing activities in the First Quarter 2011 was $1,091,317 as compared to $1,200,040 in the First Quarter 2010.

During the first quarter of 2011 the letters of credit pertaining to the former leases for our Florida and New York offices, which were collateralized with assets in the form of a money market account and certificate of deposit and classified as restricted cash as of December 31, 2010, were terminated as a result of the expiration of these leases. As a result of the termination of these letters of credit the restrictions on the money market account and certificate of deposit were lifted, and $1,152,573 was reclassified from restricted cash to cash during the first quarter of 2011.

During the first quarter of 2010 we received $1,107,000 in gross proceeds as a result of the exercise of subscription units pertaining to our rights offering, which was completed on March 26, 2010.

On January 14, 2010 we filed a prospectus for a rights offering on form S-1/A, which the Commission declared effective on January 22, 2010, to distribute to shareholders at no charge, one non-transferable subscription right for each 12,256 shares of our common stock and 613 shares of our preferred stock owned as of January 1, 2010, the record date, either as a holder of record or, in the case of shares held of record by brokers, dealers, custodian banks or other nominees on shareholders’ behalf, as a beneficial owner of such shares. This rights offering was designed to give all of the holders of the Company’s common stock the opportunity to participate in an equity investment in the Company on the same economic terms as our 2009 private placement.

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The basic subscription right entitled the holder to purchase one unit (“Subscription Unit”) at a subscription price of $1,000. A Subscription Unit consisted of 250 shares of Series A preferred stock and a five-year warrant to purchase 5,000 shares of common stock at an exercise price of $0.20 per share. In the event that a holder of a Subscription Unit purchased all of the basic Subscription Units available to the holder then pursuant to their basic subscription right, the holder had the option to choose to subscribe for a portion of any Subscription Units that were not purchased by all other holders of Subscription Units through the exercise of their basic subscription rights.

Effective with the expiration of the subscription rights, which occurred on March 26, 2010, holders of subscription rights exercised in aggregate 1,061 basic subscription rights and 46 over subscription rights for a total 1,107 Subscription Units. As a result of the exercise of 1,107 Subscription Units we issued effective on March 26, 2010 in aggregate 276,750 shares of Series A preferred stock and five-year warrants to purchase in aggregate 5,535,000 shares of common stock at an exercise price of $0.20 per share. The Series A preferred stock issued in 2010 have the same terms as the Series A Preferred stock issued in 2009.

Of the 1,107 Subscription Units exercised Co-Investment exercised 1,000 basic subscription rights for $1,000,000 and on March 26, 2010, the Company issued to Co-Investment 250,000 shares of Series A preferred stock and five-year warrants to purchase in aggregate 5,000,000 shares of common stock at an exercise price of $0.20 per share.

Effective with the expiration of the subscription rights all unexercised subscription rights expired.

InsPro Technologies 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.

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Item 4T. Controls and Procedures

(a) Evaluation of 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 Chief Executive 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 the results of such assessment, management have concluded that the our disclosure controls and procedures as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by us 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 our principal executive and principal financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required 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.

(b) Change in Internal Control over Financial Reporting.

There have not been any changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

We are involved in various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, will harm our business. We cannot assure 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.

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Item 6. Exhibits

Exhibit No.		Description

31.1		Chief Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification *
31.2		Chief Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification *
32.1		Chief Executive Officer’s Section 1350 Certification †
32.2		Chief Financial Officer’s Section 1350 Certification †

* Filed herewith.

† Furnished herewith.

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SIGNATURES

Pursuant to the requirements 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.

Date: May 16, 2011	INSPRO TECHNOLOGIES CORPORATION

	By:	/s/ ANTHONY R. VERDI
		Anthony R. Verdi
		Chief Financial Officer and Chief Operating Officer
		(Principal Executive and Financial Officer)

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EXHIBIT INDEX

Exhibit No.		Description

31.1		Principal Executive Officer’s Rule 13a-14(a)/15d-14(a) Certification *
31.2		Chief Financial Officer’s Rule 13a-14(a)/15d-14(a) Certification *
32.1		Principal Executive Officer’s Section 1350 Certification †
32.2		Chief Financial Officer’s Section 1350 Certification †

* Filed herewith.

† Furnished herewith.

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