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NEVADA		7372		88-0467845
(State Or Other Jurisdiction Of Incorporation Or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

R. Scott Beach, Esq. Day, Berry & Howard LLP One East Putnam Avenue Greenwich, Connecticut 06830		Robert Mintz, Esq. Hogan & Hartson L.L.P. 1200 Seventeenth Street, Suite 1500 Denver, Colorado 80202

Proposed

Proposed

Title of Each Class of

Amount to be

Maximum Offering

Maximum Aggregate

Amount of

Securities to be Registered

Registered(1)

Price per Share

Offering Price(2)

Registration Fee

Common stock, par value $.00001 per share

7,200,000

N/A

$7,200,000

$770.40

Contingent Value Rights(3)

7,200,000

N/A

N/A

N/A

(1)	This registration statement covers the maximum number of shares of common stock of Halo Technology Holdings, Inc. (“Halo”) and the maximum number of “contingent value rights” (“CVRs”) to be issued in connection with the merger transaction described within this registration statement, which number is obtained by subtracting the cash payment, if any, from $7,200,000 (the total merger consideration) divided by the product of the number of fully diluted shares (including in-the-money options) of InfoNow Corporation (“InfoNow”) multiplied by the closing value of Halo common stock, calculated as the greater of (x) the average closing price of Halo common stock as quoted on the Over-the-Counter Bulletin Board (OTCBB: HALO.OB) for the 20-consecutive trading days ending two days prior to the closing of the merger, or (y) $1.00. Each InfoNow stockholder will receive one CVR for each share of Halo common stock received.
(2)	Estimated solely for purposes of calculation of the registration fee in accordance with Rules 457(c) and (f) of the Securities Act of 1933, as amended (the “Securities Act”), based upon the total consideration to be paid to stockholders of InfoNow in connection with the transaction described in footnote (1) above.
(3)	One CVR represents the right to receive a cash payment, if any, from Halo. The value attributed to those rights, if any, is reflected in the market price of Halo’s common stock. A holder of a CVR is entitled to receive a cash payment on the 18-month anniversary date of closing of the merger equal to the amount by which the Halo common stock closing value exceeds the “then-current market value” of Halo common stock. The “then current market value” means volume-weighted average trading price of Halo common stock for the 20-consecutive trading days immediately preceding the CVR payment date. However, the CVRs will expire prior to the CVR payment date if during any consecutive 45-day trading period during which the trading volume of Halo’s common stock is not less than 200,000 per day, the Halo common stock price is 175% of the Halo common stock closing value. No separate compensation will be received by Halo for the issuance of the CVRs. The CVRs will be separately transferable from the Halo common stock.

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The information in this proxy statement/prospectus is not complete and may be changed. We may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where an offer or solicitation is not permitted.

	Sincerely,
	Jeffrey Peotter
	Chairman

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	1. To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of December 23, 2005, by and among Halo Technology Holdings, Inc., WTH Merger Sub Inc., a wholly owned subsidiary of Halo, and InfoNow Corporation, as described in more detail in the proxy statement/ prospectus that accompanies this notice.
	2. To consider and vote on a proposal to authorize the proxyholders to vote to adjourn or postpone the special meeting, in their sole discretion if necessary, for the purpose of soliciting additional votes for the adoption of the merger agreement.
	3. To transact such other business as may properly come before the special meeting.

	By Order of the Board of Directors:
	Jeffrey Peotter
	Chairman

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			Page
QUESTIONS AND ANSWERS ABOUT THE MERGER				1
SUMMARY OF THE PROXY STATEMENT/ PROSPECTUS				6
SELECTED FINANCIAL DATA				15
RISK FACTORS				17
	Risks Related to the Merger			17
	Risks Related to Halo’s Business			22
	Risk Factors Related to Halo’s Acquisition Strategy			26
	Additional Risk Factors Related to the Business of Halo’s Operating Subsidiaries			27
FORWARD-LOOKING STATEMENTS				35
THE SPECIAL MEETING OF INFONOW STOCKHOLDERS				36
	Date, Time and Place of the Special Meeting			36
	Matters to be Considered at the Special Meeting			36
	Shares Entitled to Vote			36
	Quorum			36
	Voting Rights; Vote Required for Approval			36
	Voting of Proxies; Revocation of Proxies			36
	Certain Beneficial Owners			37
	Other Business			37
	Quorum; Broker Abstentions and Broker Non-Votes			37
	Expenses of Solicitation			37
	Householding			38
	Assistance			38
	Board Recommendation			38
THE MERGER				39
	General Description of the Merger			39
	Background of the Merger			40
	Halo’s Reasons for the Merger			44
	InfoNow’s Reasons for the Merger			46
	InfoNow Board of Directors Recommendation			49
	Opinion of InfoNow’s Financial Advisors			49
	Completion and Effectiveness of the Merger			54
	Operations Following the Merger			55
	Interests of Certain Persons in the Merger			55
	Stockholder Agreement			56
	Security Ownership of Certain Beneficial Owners and Management of InfoNow			57
	Regulatory Matters			58
	Material U.S. Federal Income Tax Consequences of the Merger			59
	Accounting Treatment			63
	Restrictions on Sale of Shares by Affiliates of InfoNow and Halo			63
	Over-the-Counter Bulletin Board Listing of Halo Common Stock			63
APPRAISAL RIGHTS FOR INFONOW STOCKHOLDERS				63

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			Page
THE MERGER AGREEMENT				67
	The Merger			67
	Timing of Closing and Effective Time			67
	Merger Consideration			67
	Exchange Procedures			68
	Representations and Warranties			69
	Covenants			71
	Other Agreements			72
	Conditions to the Merger			73
	Termination			74
	Expenses			76
	Amendment, Extensions, Waivers			76
AGREEMENTS RELATING TO THE MERGER				76
	Contingent Value Rights Agreement			76
	Stockholder Agreement			86
	Ownership of Halo Following the Merger			86
CERTAIN INFORMATION CONCERNING HALO				87
	Historical Background			87
	The Acquisition of Warp Solutions			87
	The Upstream Merger and Name Change			87
	The Acquisition of Spider Software, Inc.			88
	Acquisition of Gupta Technologies, LLC			88
	Acquisition of Kenosia Corporation			88
	Acquisition of Five Enterprise Software Companies			88
	Acquisition of Empagio			90
	Acquisition of ECI			90
	Agreement to Acquire Unify Corporation			90
	Business of Halo			91
HALO MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION				95
	Recent Accounting Pronouncements			95
	Critical Accounting Policies			96
	Results of Operations			98
	Net Operating Loss Carryforwards			101
	Liquidity and Capital Resources			101
	Recent Developments			105
MANAGEMENT				110
	Directors and Executive Officers			110
	Other Executive Officers of Halo			111
EXECUTIVE COMPENSATION				112
	Compensation Committee and Compensation Report			112
	Summary Compensation Table			113
	Options Granted in Last Fiscal Year			114

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	Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values			114
	Long-Term Incentive Plan (“LTIP”) Awards Table			114
	Compensation of Directors			114
	Employment Contracts, Termination of Employment and Change in Control Arrangements			114
	Certain Relationships and Related Transactions			117
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT				119
DESCRIPTION OF PROPERTIES				124
LEGAL PROCEEDINGS				124
MARKET PRICE OF AND DIVIDENDS ON REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS				124
	Holders			125
	Dividends			125
	Securities Authorized for Issuance Under Equity Compensation Plans			126
CERTAIN INFORMATION CONCERNING THE MERGER SUB				126
CERTAIN INFORMATION CONCERNING INFONOW				127
	Description of Business			127
	Competition			135
	Employees			136
	Description of Property			137
	Legal Proceedings			137
INFONOW MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION				137
	General Information and Overview			137
	Critical Accounting Policies			140
	Results of Operations			144
	Liquidity and Capital Resources			147
COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS				149
	Size of Board of Directors			149
	Cumulative Voting			150
	Power to Call Special Stockholders Meeting			150
	Dissolution			150
	Removal of Directors			151
	Filling Vacancies on the Board of Directors			151
	Voting Requirements to Amend Charter Documents and Bylaws			151
	Inspection of Stockholders List			152
	Dividends			152
	Transactions Involving Officers or Directors			153
	Limitation of Liability of Directors and Indemnification			154
	Business Combinations/Reorganizations			155
	Appraisal or Dissenters’ Rights			157

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			Page
DESCRIPTION OF HALO SECURITIES				158
	Common Stock			158
	Preferred Stock			158
	Contingent Value Rights			160
ADDITIONAL INFORMATION				161
	Legal Matters			161
	Experts			161
	Stockholder Proposals			161
	Where You Can Find More Information			162
	Information if Proxies, Consents or Authorizations Are not to Be Solicited or in an Exchange Offer			163
MISCELLANEOUS				163
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES				F-1
EX-5.1: OPINION OF HALE LANE PEEK DENNISON AND HOWARD, A PROFESSIONAL CORPORATION
EX-23.2: CONSENT OF MAHONEY COHEN & COMPANY, CPA, P.C.
EX-23.3: CONSENT OF DELOITTE AND TOUCHE, LLP
EX-23.4: CONSENT OF Q ADVISORS LLC
EX-99.2: FORM OF INFONOW PROXY CARD

AGREEMENT AND PLAN OF MERGER, BY AND AMONG WARP TECHNOLOGY HOLDINGS, INC., OPERATING UNDER THE NAME HALO TECHNOLOGY HOLDINGS, WTH MERGER SUB AND INFONOW CORPORATION, DATED AS OF DECEMBER 23, 2005			ANNEX A
CONTINGENT VALUE RIGHTS AGREEMENT BY AND AMONG HALO TECHNOLOGY HOLDINGS, INC. AND [TRUSTEE] DATED AS OF           , 2006			ANNEX B
FAIRNESS OPINION OF Q ADVISORS LLC			ANNEX C
FORM OF STOCKHOLDER AGREEMENT			ANNEX D
DELAWARE GENERAL CORPORATION LAW SECTION 262			ANNEX E

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	Failure to complete the merger could negatively impact InfoNow’s and/or Halo’s stock price, future business, or operations.

	•	Halo may be required under certain circumstances to pay InfoNow a termination fee of $50,000;
	•	InfoNow may be required under certain circumstances to pay Halo a termination fee of $300,000;
	•	the price of Halo’s and/or InfoNow’s common stock may decline to the extent that the relevant current market price reflects a market assumption that the merger will be completed; and
	•	costs related to the merger, such as legal, accounting, certain financial advisory and financial printing fees, must be paid, even if the merger is not completed.

	Failure to satisfy or waive certain conditions could prevent the merger from occurring.

	•	the merger agreement must be adopted by the holders of a majority of the outstanding shares of InfoNow common stock as of the record date;
	•	there must not be any order, injunction or decree preventing the completion of the merger;
	•	this proxy statement/ prospectus must be declared effective by the SEC and no stop order suspending such effectiveness shall be in effect;

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	•	the average closing price of Halo’s common stock as reported on the OTC Bulletin Board for the 20-consecutive trading days ending two trading days prior to the closing of the merger must not be less than $1.00;
	•	all issued and outstanding shares of Halo’s series C preferred stock must convert to shares of Halo common stock; and
	•	should any holders of InfoNow common stock exercise dissenters rights with respect to the merger, the number of shares of common stock held by such holders shall not be more than ten percent of InfoNow’s common stock.

	Because the exchange ratio will not be determined until after the stockholder meeting, you must decide whether or not to approve the transaction before knowing the amount of stock and CVRs you will receive in the merger.

	The value of the Halo common stock that InfoNow stockholders receive in the merger may change between the date the exchange ratio is determined and the date these shares are issued to InfoNow stockholders.

	Halo will incur significant costs to achieve and may not be able to realize the anticipated savings, synergies or revenue enhancements from the merger.

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	•	Halo’s ability to effectively eliminate duplicative back office overhead and overlapping and redundant general and administrative functions and costs associated with operating as separate public companies;
	•	the anticipated utilization of cash resources on integration and implementation activities to achieve those cost savings, which could be greater than Halo currently expects and which could offset any such savings and other synergies resulting from the merger;
	•	increases in other expenses, operating losses or problems unrelated to the merger, which may offset the cost savings and other synergies from the merger or divert resources intended to be used in the integration plan; and
	•	Halo’s ability to avoid labor disruption in connection with the integration.

	Halo may not successfully integrate InfoNow into its business and operations.

	•	demands on management related to the significant increase in the size of the business for which they are responsible;
	•	diversion of management’s attention from the management of daily operations to the integration of operations, whether perceived or actual;
	•	management of employee relations across facilities;
	•	difficulties in the assimilation of different corporate cultures and practices, as well as in the assimilation and retention of broad and geographically dispersed personnel and operations;
	•	difficulties and unanticipated expenses related to the integration of departments, systems (including accounting systems), technologies, books and records, procedures and controls (including internal accounting controls, procedures and policies), as well as in maintaining uniform standards, including environmental management systems;
	•	expenses of any undisclosed or potential liabilities; and
	•	Halo’s ability to maintain its customers and InfoNow’s customers after the acquisition.

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	The costs of the merger and the costs of integrating Halo’s and InfoNow’s operations are substantial and will make it more difficult for the combined company to achieve profitability.

	The price of Halo common stock may be affected by factors different than those affecting the price of InfoNow common stock.

	The market price of Halo common stock may decline as a result of the merger.

	•	the premium offered by Halo relative to InfoNow’s stock price on the date the merger agreement was announced is not viewed favorably by the market;
	•	the integration of Halo and InfoNow is unsuccessful;
	•	Halo does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts; or
	•	the effects of the merger on Halo’s results are not consistent with the expectations of financial or industry analysts.

	The issuance of shares of Halo common stock in the merger will result in immediate dilution of Halo’s outstanding common stock.

	Halo’s relatively low trading volume may limit your ability to sell your shares of Halo common stock received in the merger.

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	Sales of substantial amounts of Halo’s common stock in the open market could depress Halo’s stock price.

	If the merger fails to qualify as a tax-free reorganization you will recognize gain or loss on the receipt of Halo shares in exchange for your InfoNow shares.

	Halo and InfoNow may waive one or more of the conditions to the merger without resoliciting InfoNow stockholder approval for the merger.

	The termination fee may discourage other companies from trying to acquire InfoNow.

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	Departure of key personnel or the failure to attract qualified employees may negatively impact the business of Halo after the consummation of the merger.

	General uncertainty related to the merger could harm Halo.

	Halo’s and InfoNow’s officers and directors have interests that may influence them to support or approve the merger.

	We have a limited operating history

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	We have a history of losses and negative working capital and may need additional financing in the near future

	We may not be able to borrow funds.

	If we fail to meet our obligations under our debt agreements our secured lender could foreclose on our assets.

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	Rapidly Changing Markets

	•	rapidly changing technologies;
	•	evolving and competing industry standards;
	•	changing customer needs;
	•	frequent new product introductions and enhancements;
	•	increased integration with other functions; and
	•	rapid product obsolescence.

	Rapidly Changing Technology

	Our Ability to Compete Successfully Will Depend, In Part, On Our Ability to Protect Our Intellectual Property Rights

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	Competition

	Development of Products

	We are Dependent on Key Personnel

	Managing Growth and Expansion

	We Expect to Pay No Cash Dividends

	Indemnification of Officers and Directors

	Halo May be Subject from Time to Time to Certain Legal Proceedings Which Could Be Material

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	Our Common Stock Is Subject To “Penny Stock” Restrictions Under Federal Securities Laws Which Could Reduce The Liquidity Of Our Common Stock

	Growth and Acquisition Risks

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	We May Not Be Able To Finance Future Acquisitions

	Financial Results May Vary Significantly from Quarter to Quarter

	•	fluctuations in demand for Halo’s products, upgrades to Halo’s products, or services;
	•	fluctuations in demand for Halo’s products due to the potential deteriorating economic conditions of Halo’s customer base;
	•	seasonality of purchases and the timing of product sales and shipments;
	•	unexpected delays in introducing new products and services or improvements to existing products and services;
	•	new product releases, licensing models or pricing policies by Halo’s competitors;
	•	acquisitions or mergers involving Halo’s competitors or customers;

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	•	impact of changes to Halo’s product distribution strategy and pricing policies;
	•	lack of order backlog;
	•	loss of a significant customer or distributor;
	•	changes in purchasing and/or payment practices by Halo’s distributors or other customers;
	•	a reduction in the number of independent software vendors (“ISVs”), who embed Halo’s products, or value-added resellers (or “VARs”), who sell and deploy Halo’s products;
	•	changes in the mix of domestic and international sales;
	•	impact of changes to Halo’s geographic investment levels and business models;
	•	gains or losses associated with discontinued operations; and
	•	changes in Halo’s business plan or strategy.

	Seasonality May Contribute to Fluctuations in Halo’s Quarterly Operating Results

	Halo Currently Operates Without a Backlog

	Our Efforts to Develop and Maintain Brand Awareness of Halo Products May Not be Successful

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	Halo must succeed in the Cross Platform Application Development Market if it is to Realize the Expected Benefits of its Linux Development

	•	coordinating software development operations in a rapid and efficient manner to ensure timely release of products to market;
	•	combining product offerings and support services quickly and effectively;
	•	successfully managing difficulties associated with transitioning current customers to new technologies;
	•	demonstrating to Halo customers the new technology will provide greater integration throughout the enterprise; and
	•	creating key alliances.

	•	General adoption of Web services as the preferred method of integrating data and applications; and
	•	Halo’s ability to position itself as a premier provider of cross platform application development tools for integrating enterprise data and information.

	Halo May Face Problems in Connection With Contractual or Licensing Arrangements

	Halo May Face Problems in Connection With Product Line Expansion

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	A Small Number of Distributors Account For a Significant Percentage of Halo’s Billings

	Halo Depends on an Indirect Sales Channel

	•	the emergence of a new platform resulting in the failure of independent software vendors to develop and the failure of value-added resellers to sell Halo’s products based on Halo’s supported platforms;
	•	pressures placed on the sales channel to sell competing products;
	•	Halo’s failure to adequately support the sales channel;
	•	consolidation of certain of Halo’s indirect channel partners;
	•	competing product lines offered by certain of Halo’s indirect channel partners; and
	•	business model or licensing model changes of Halo’s channel partners or their competitors.

	Halo May Not Be Able to Develop Strategic Relationships

	Halo Depends on Third-Party Technology in Its Products

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	We May be Unable to Protect Halo’s Intellectual Property and Proprietary Rights

	Halo Must Adapt to Rapid Technological Change

	•	developing and marketing, on a timely and cost-effective basis, new products or new product enhancements that respond to technological change, evolving industry standards or customer requirements;
	•	avoiding difficulties that could delay or prevent the successful development, introduction or marketing of these products; or

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	•	achieving market acceptance for its new products and product enhancements.

	Halo’s Software May Contain Errors or Defects

	Halo May Become Subject to Product or Professional Services Liability Claims

	Halo Competes with Microsoft while Simultaneously Supporting Microsoft Technologies

	Halo Faces Significant Competition From Other Companies

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	Halo is Susceptible to a Shift in the Market for Client/ Server Applications toward Server based thin client or Web-Based Applications

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	Halo Depends on International Sales and Operations

	•	foreign laws and business practices favoring local competition;
	•	dependence on local channel partners;
	•	compliance with multiple, conflicting and changing government laws and regulations;
	•	longer sales cycles;
	•	greater difficulty or delay in collecting payments from customers;
	•	difficulties in staffing and managing foreign operations;
	•	foreign currency exchange rate fluctuations and the associated effects on product demand and timing of payment;
	•	increased tax rates in certain foreign countries;
	•	difficulties with financial reporting in foreign countries;
	•	quality control of certain development, translation or localization activities; and
	•	political and economic instability.

	Fluctuations in the Relative Value of Foreign Currencies Can Affect Halo’s Business

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	Halo Must Continue to Hire and Retain Skilled Personnel

	•	those risks and uncertainties we discuss under the section entitled “Risk Factors” beginning on page 17 of this proxy statement/ prospectus.
	•	those risks and uncertainties we discuss or identify in our public filings with the SEC;
	•	changes in both companies’ businesses during the period between now and the completion of the merger; and
	•	the successful integration of InfoNow into Halo’s business subsequent to the completion of the merger.

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	•	The aggregate value of the Halo common stock paid to InfoNow stockholders in the merger will be determined by subtracting the total amount of cash paid in the merger (as described below), if any, from $7,200,000. The Halo common stock to be issued in the merger will be distributed to InfoNow stockholders in proportion to each stockholder’s ownership in InfoNow at the closing of the merger. The number of shares of Halo common stock to be issued in the merger will be determined based on a “Conversion Price” equal to the greater of (1) the average closing price of Halo common stock as quoted on the OTC Bulletin Board (OTCBB: HALO.OB) for the 20-consecutive trading days ending two trading days prior to the closing of the merger, and (2) $1.00.
	•	For each share of Halo common stock received, InfoNow stockholders will also receive one CVR. The CVRs will be payable on the 18-month anniversary of the closing date, subject to certain expiration provisions, and will entitle each CVR holder to an additional cash payment if the trading price of Halo’s common stock, based on a 20-day average, on the 18-month anniversary is less than the Conversion Price of Halo common stock at the closing of the merger.
	•	The total amount of cash paid in the merger to InfoNow stockholders, if any, will be the lesser of (1) InfoNow’s cash on hand, and (2) InfoNow’s net working capital determined no less than three days prior to closing of the merger. The lesser of the two amounts will be paid in cash by Halo to InfoNow’s stockholders in proportion to each stockholder’s ownership in InfoNow at the closing of the merger.
	•	Halo will not issue fractional shares of common stock. Instead, in lieu of any fractional share that you would otherwise receive, you will receive cash based on the Conversion Price of Halo common stock.
	•	FOR ILLUSTRATIVE PURPOSES ONLY. As of March 31, 2006, InfoNow’s net working capital, as defined in the merger agreement was approximately $941,000, cash on hand was $1,671,000 and Halo’s 20-day average common stock price was $1.399. Accordingly, if on the closing of the merger, InfoNow’s net working capital, cash on hand and Halo’s 20-day average common stock price remained the same, InfoNow stockholders would receive, in the aggregate, $941,000 in cash (which, on the same date, was the lesser of InfoNow’s net working capital and cash on hand), 0.4299 shares of Halo common stock (based on aggregate stock consideration of $6,259,000 and a Conversion Price of Halo common stock of $1.399 per share) and 4,473,910 CVRs. There can be no assurances that InfoNow’s actual cash on hand, InfoNow’s net working capital or Halo’s 20-day average common stock trading price will be the same as these illustrative figures used in this example on the date the merger consideration is determined.

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	•	the compatibility of InfoNow’s products and services with Halo’s business intelligence sphere and “software as a service” enterprise solutions business strategy;
	•	the economics of the software solutions industry, and the belief of the Halo board and management team that greater product variety and company size will increasingly be required for companies to compete successfully;
	•	the belief that the combination of InfoNow’s technology, products and services with Halo’s products, services and sales and marketing infrastructure should enable the combined company to expand the range of products and services offered to the combined company’s customers and increase sales;
	•	the Halo board’s belief that the addition of InfoNow’s operations to Halo could possibly increase the overall value and profitability of Halo;
	•	Halo management’s view of the financial condition, results of operations and businesses of Halo and InfoNow before and after giving effect to the merger and Halo management’s and the board of directors’ view of the merger’s potential effect on stockholder value;
	•	information concerning Halo’s and InfoNow’s respective businesses, historical financial performance and condition, operations, technology, products, customers, competitive positions, prospects and management;

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	•	current financial market conditions and the historical market prices and trading information of Halo common stock and InfoNow common stock;
	•	the financial and other terms of the merger, including the relationship between the market value of Halo common stock and InfoNow common stock;
	•	the belief after consulting with Halo’s internal and external legal advisors that the terms of the merger agreement, including the parties’ representations, warranties and covenants, and the conditions to their respective obligations, are fair and reasonable;
	•	the likelihood that the merger would be completed, including the limited conditions to the closing of the merger, as well as the experience and reputation of InfoNow;
	•	the potential impact of the merger on strategic partners, customers and employees of Halo (particularly the business intelligence sphere) and InfoNow;
	•	the likely reaction to the merger in the financial markets; and
	•	the results of the due diligence investigation of InfoNow.

	•	the possibility that the potential benefits set forth above may not be fully realized;
	•	the substantial costs of integrating the businesses of Halo and InfoNow and the transaction expenses arising from the merger;
	•	the difficulty of integrating InfoNow with Halo’s existing business intelligence operating sphere and the management effort required to complete the integration;
	•	the risk that InfoNow’s software to services revenue mix may not be viewed as favorably by the market as Halo’s resulting in a reduction of the value multiple for Halo’s stock;
	•	the risk that the premium offered relative to InfoNow’s current stock price may not be viewed favorably by the market;
	•	the effect of the public announcement of the merger on InfoNow’s customer relations;
	•	certain risks applicable to the merger and the business of the combined company as set forth under the section entitled “Risk Factors” beginning on page 17 of this proxy statement/prospectus; and
	•	the possibility that the merger might not be consummated, even if approved by Halo’s and InfoNow’s board of directors, resulting in a potential adverse effect on the market price of the Halo common stock.

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	•	the value of the merger consideration, which represents a premium of approximately 41.9%, 55.2% and 106.4% over the six-, three- and one-month average closing prices per share, respectively, for InfoNow’s common stock as quoted on the Nasdaq. The merger consideration represents a premium of approximately 114.1% over the last reported sales price per share for InfoNow’s common stock as reported on the Pink Sheets on December 23, 2005, the last trading day for InfoNow’s common stock prior to the announcement of the merger;
	•	because InfoNow stockholders will receive a CVR with each share of Halo common stock, which entitles the CVR holder to receive cash for any negative difference between Halo’s share price at the 18-month anniversary of the closing of the merger and the price of Halo’s common stock used in determination of the Conversion Price, subject to the expiration provisions described in the sections entitled “— General Description of the Merger” and “The Merger Agreement — Merger Consideration” beginning on pages 39 and 67 of this proxy statement/ prospectus, InfoNow stockholders have a form of downside protection against a decline in Halo’s stock price as measured on the 18-month anniversary of the closing of the merger;
	•	because a portion of the merger consideration may be paid in cash if InfoNow has positive cash and net working capital, as described in the sections entitled “— General Description of the Merger” and “The Merger Agreement — Merger Consideration” beginning on pages 39 and 67 of this proxy statement/ prospectus, InfoNow stockholders may realize immediate liquidity for a portion of their InfoNow holdings while retaining the ability to hold stock in a larger and more diversified technology holding company;
	•	the financial presentations of InfoNow’s financial advisors, Q Advisors, including their opinion as to the fairness, from a financial point of view, of the merger consideration to be paid to InfoNow stockholders pursuant to the merger agreement, as more fully described in the section entitled “— Opinion of InfoNow’s Financial Advisors” beginning on page 49 of this proxy statement/prospectus;
	•	InfoNow’s board of directors’ analysis and understanding of InfoNow’s “stand-alone” strategic alternative in the context of the increasingly competitive channel management and channel visibility software services and solutions, and InfoNow’s board of directors’ analysis of the business, operations, financial performance, earnings and prospects of InfoNow on a stand-alone basis, and InfoNow’s board of directors’ belief, based on its analysis and understanding, that the combined company would best maximize value for InfoNow’s shareholders in light of the risks and potential rewards associated with InfoNow continuing to operate on a stand-alone basis;
	•	InfoNow’s board of directors’ evaluation of InfoNow’s financial performance and future opportunities and prospects, including the risks related to achieving these prospects and current industry, economic and market conditions, including the recognition that InfoNow has experienced declining revenues and net losses;

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	•	the risk that the trading price of InfoNow stock would continue to decline;
	•	the fact that InfoNow had reviewed potential strategic alternatives and its financial advisors had contacted 71 parties regarding a potential strategic transaction with InfoNow, as described in the section entitled “— Background of the Merger” beginning on page 40 of this proxy statement/prospectus. In this process, no party expressed interest in pursuing a financing transaction, and three potential acquirers were identified. Ultimately, two of the three potentially interested parties dropped out of the process. In light of these developments, InfoNow’s board of directors considered the risk of losing the sole potential transaction;
	•	InfoNow’s board of directors’ belief that there are synergies likely to result in combining InfoNow’s business with that of Halo’s, including the ability to spread certain redundant costs associated with operating InfoNow as a separate public company, including duplicative corporate functions and accounting and legal fees associated with SEC reporting, over a broader base of portfolio companies;
	•	the opportunity for InfoNow stockholders to participate, as Halo stockholders, in a larger and more diversified company with diversified partnership opportunities and significant cash flow;
	•	the opportunity for InfoNow to have access to significantly greater financial and operational resources as part of Halo than InfoNow would otherwise have on a stand-alone basis;
	•	InfoNow’s board of directors’ understanding of the information concerning InfoNow’s and Halo’s respective businesses, financial performance, and condition, operations, capitalization and stock performance;
	•	because InfoNow will not be obligated to consummate the merger if the average closing price of Halo’s common stock as reported on the OTC Bulletin Board for the 20-consecutive trading days ending two trading days prior to the closing of the merger is less than $1.00, as described in the sections entitled “— General Description of the Merger” and “The Merger Agreement — Conditions to the Merger” beginning on pages 39 and 73 of this proxy statement/prospectus;
	•	the merger agreement provisions permitting InfoNow to engage in discussions with a third party that makes an unsolicited bona fide proposal to engage in a business combination or other transaction, provided that InfoNow’s board of directors determines in good faith, after consulting with outside counsel, that there is a reasonable probability that failure to take such action would result in InfoNow’s board of directors breaching its fiduciary duties under applicable law and determines in good faith, after receiving the advice from its financial advisor, that the proposal reasonably would be expected to result in a transaction that, if consummated, would be more favorable to InfoNow stockholders than the merger with Halo (see the section entitled “The Merger Agreement — Other Agreements — No Solicitation” beginning on page 72 of this proxy statement/prospectus);
	•	the merger agreement provisions permitting InfoNow’s board of directors to, under certain circumstances, withdraw, modify or change its recommendation with respect to the merger if InfoNow’s board of directors determines in good faith, after consulting with its outside counsel, that there is a reasonable probability that the failure to take such action would result in the InfoNow’s board of directors breaching its fiduciary duties under applicable law (see the section entitled “The Merger Agreement — Other Agreements — No Solicitation” beginning on page 72 of this proxy statement/prospectus);
	•	the structure of the transaction and the terms of the merger agreement, including the fact that the merger should qualify as a tax-free reorganization within the meaning of the Code if the stock portion of the consideration provided to InfoNow shareholders is at least $5,760,000. Assuming this condition is met, the merger is not expected to be taxable to InfoNow stockholders, other than with respect to the possible cash portion of the merger consideration and cash received by dissenting InfoNow stockholders, if any; and

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	•	the merger will offer stockholders of Halo the potential benefits described in the section entitled “— Halo’s Reasons for the Merger” beginning on page 44 of this proxy statement/prospectus.

	•	the possible disruption to InfoNow’s business that may result from the announcement of the transaction;
	•	the potential adverse effects of the public announcement of the merger on InfoNow’s sales and operating results; ability to retain key employees; the progress of some of InfoNow’s strategic initiatives; and InfoNow’s overall strategic position;
	•	the inherent difficulties of integrating diverse businesses and the risk that the cost savings, synergies and other benefits expected to be obtained in the merger might not be fully realized;
	•	the terms of the merger agreement regarding the restrictions on the operation of InfoNow’s business during the period between the signing of the merger agreement and the completion of the merger;
	•	the $300,000 termination fee to be paid to Halo if the merger agreement is terminated under circumstances specified in the merger agreement, which may discourage other parties that may otherwise have an interest in a business combination with, or an acquisition of, InfoNow, as described in the section entitled “The Merger Agreement — Termination” beginning on page 74 of this proxy statement/ prospectus);
	•	the terms of the merger agreement placing limitations on the ability of InfoNow to solicit alternative business combination transactions or engage in negotiations or discussions with, a third party interested in pursuing an alternative business combination transaction (see the section entitled “The Merger Agreement — Other Agreements — No Solicitation” beginning on page 72 of this proxy statement/prospectus);
	•	the amount of time it could take to complete the merger, including the fact that completion of the transaction depends on factors outside of InfoNow’s control;
	•	the transaction costs expected to be incurred in connection with the merger;
	•	the risk that, notwithstanding the likelihood of the merger being completed, the merger might not be completed and the effect of the resulting public announcement of termination of the merger agreement on:

	•	the market price of InfoNow common stock, and
	•	InfoNow’s ability to attract and retain customers and personnel;

	•	the fact that gains arising from the cash portion of the merger consideration, if any, could be taxable to InfoNow stockholders for U.S. federal income tax purposes; and
	•	the risks described in the section entitled “Risk Factors” beginning on page 17 of this proxy statement/prospectus.

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	Background of Proposed Transaction

	Comparable Public Company Analysis

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		Enterprise Value to Revenue Multiples
		LTM at				2005 Revenue
		September 30, 2005				Estimate
Comparable Companies
Low Comparable Group			0.4x				0.4x
High Comparable Group			2.4x				2.7x
Mean Comparable Group			1.3x				1.3x
Median Comparable Group			1.3x				1.2x
Proposed Transaction for InfoNow			0.5x				0.5x

	Comparable Transaction Analysis

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		Enterprise Value
		to LTM Revenue
Low			0.6x
High			4.8x
Mean			1.7x
Median			1.4x
Proposed Transaction for InfoNow			0.5x

	Contribution Analysis

		Percentage Contribution
		of InfoNow to				Implied Value
		Combined Company				per Share
Low			7.2	%		$	0.55
High			18.0	%		$	1.03
Proposed Transaction for InfoNow						$	0.71

	Premium Paid Analysis

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		Premium to Price				Premium to Price				Premium to Price
		per Share				per Share 5 days				per Share 10 Days
		at Announcement —				Prior to Announcement —				Prior to Announcement —
		Comparable Transactions				All 2005 Transactions				All 2005 Transactions
Low			7.7%				(not available	)			(not available	)
High			79.8%				(not available	)			(not available	)
Mean			39.6%				22.7	%			24.8	%
Proposed Transaction for InfoNow			101.9%				101.9	%			127.9	%

	Discounted Cash Flow Analysis

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		Amount and Nature of				Percent of Class				Shares Beneficially
Name and Address of Beneficial Owner		Beneficial Ownership				Beneficially Owned(1)				Owned(2)
Certain Beneficial Owners
Diker Management, LLC(3) 745 Fifth Avenue, Suite 1409 New York, New York 10151			921,975				9.17	%			921,975
Lloyd I. Miller, III(4) 4550 Gordon Drive Naples, Florida 34102			1,100,824				10.9	%			1,100,824
Executive Officers and Directors(5):
Michael W. Johnson(6)(7)			1,724,632				15.08	%			1,382,573
Jeffrey Peotter(6)(8)			227,858				2.25	%			70,000
Allan R. Spies(6)(9)			135,715				1.34	%			85,000
Duane Wentworth(6)(10)			106,042				1.04	%			96,042
Mark Geene(11)			564,750				5.32	%			564,750
Harry R. Herbst			16,072				0.16	%			—
Donald Kark(12)			702,865				6.54	%			688,865
James Medina(13)			107,606				1.06	%			107,606
All Executive Officers and Directors as a Group (8 persons):			3,585,540				27.47	%			2,994,836

(1)	Beneficial ownership is determined in accordance with the rules of the SEC, and generally includes voting power and/or investment power with respect to securities. Shares of common stock subject to options or warrants which are currently exercisable or exercisable within 60 days of March 31, 2006 are deemed outstanding for computing the percentage of the person holding such options or warrants but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, InfoNow believes that the persons named in the table above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.
(2)	Represents the number of shares of common stock set forth under the column “Amount and Nature of Beneficial Ownership” that the beneficial owner has the right to acquire through the exercise of warrants or options that are currently exercisable or that are exercisable within 60 days of March 31, 2006.
(3)	Diker Management, LLC reported on Schedule 13G filed with the SEC on February 10, 2006 that it shares voting and dispositive power over 921,975 shares beneficially owned by certain Diker Fund accounts it manages pursuant to investment advisory agreements. Diker GP, LLC also reported, on the same Schedule 13G, beneficial ownership of 826,748 shares. Charles M. Diker and Mark N. Diker, the managing members of each of Diker GP, LLC and Diker Management, LLC, each also reported, on the same Schedule 13G, beneficial ownership of 921,975 shares. Each of Diker GP, LLC, Charles M. Diker and Mark N. Diker shares the address of Diker Management, LLC stated in the table.

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(4)	Lloyd I. Miller, III reported on Schedule 13G filed with the SEC on March 28, 2006 that he has sole voting and dispositive power, as custodian, with respect to 19,000 of the shares reported and shared voting and dispositive power over 1,081,824 shares reported.
(5)	Unless otherwise noted, the business address for each named executive officer and director is 1875 Lawrence Street, Suite 1100, Denver, Colorado 80202, unless otherwise noted.
(6)	Michael Johnson, Jeffrey Peotter, Allan R. Spies, and Duane Wentworth have entered into a stockholder agreement whereby they agreed vote their shares together in favor of, among other things, the merger agreement and, as a group, they beneficially own 567,632 shares of the outstanding common stock of InfoNow, which represents beneficial ownership of approximately 5.6% of the outstanding common stock of InfoNow.
(7)	Includes 230,769 shares owned by Lost Angel Ventures, a limited liability company in which Michael Johnson and Lisa Johnson have shared voting and dispositive power. Of the shares reported as beneficially owned by Michael Johnson, 1,382,573 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger.
(8)	Of the shares reported as beneficially owned by Jeffrey Peotter, 70,000 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger.
(9)	Of the shares reported as beneficially owned by Allan Spies, 85,000 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger.

(10)	Of the shares reported as beneficially owned by Duane Wentworth, 80,000 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger.
(11)	Of the shares reported as beneficially owned by Mark Geene, 546,000 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger.
(12)	Of the shares reported as beneficially owned by Donald Kark, 670,115 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger. Don Kark’s address is 2789 Timberchase Trail, Highlands Ranch, Colorado 80126.
(13)	Of the shares reported as beneficially owned by James Medina, 95,106 shares are stock options with an exercise price in excess of $0.71 per share, which is greater than the consideration to be paid per share in the merger, if consummated. If the merger is consummated, such options will be cancelled at the closing of the merger.

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	•	a citizen or individual resident of the United States;
	•	a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States or any of its political subdivisions;
	•	an estate that is subject to U.S. federal income tax on its income regardless of the source of that income; or
	•	a trust that (i) is subject to the supervision of a court within the United States if one or more U.S. persons control all substantial decisions of the trust, or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

	•	is a dealer or broker in securities;
	•	is subject to the alternative minimum tax provisions of the Code;
	•	is a non-United States person or entity;
	•	is a financial institution, tax-exempt organization or insurance company;
	•	acquired InfoNow shares in connection with stock option or stock purchase plans or in other compensatory transactions;
	•	holds InfoNow shares as part of a hedge, appreciated financial position, straddle or conversion transaction;
	•	is an S corporation; or
	•	is a mutual fund.

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	The Merger

	•	InfoNow stockholders should not recognize any gain or loss upon their receipt of Halo common stock in exchange for InfoNow common stock pursuant to the merger;
	•	InfoNow stockholders will recognize gain, but not loss, as a result of the merger, equal to the lesser of (i) the excess, if any, of the fair market value of the Halo common stock, the amount of cash, and the fair market value of CVRs determined at the time of the merger received by them over their adjusted tax basis in their InfoNow common stock exchanged in the merger, or (ii) the amount of cash and the fair market value of CVRs determined at the time of the merger received by them in the merger. Because of the contingent nature of the CVRs, the determination of the amount of the fair market value of the CVRs received by an InfoNow stockholder is not clear. Under applicable Treasury Regulations, InfoNow stockholders will be required to value the CVRs at the time of the merger based on all available facts and circumstances. Any gain recognized will be capital gain and will be long-term capital gain if the InfoNow stockholder has held the shares of InfoNow common stock for more than one year at the time the merger is completed;
	•	the aggregate adjusted tax basis of the Halo common stock received by an InfoNow stockholder in the merger, including any fractional shares of Halo common stock an InfoNow stockholder is deemed to receive, should be the same as the aggregate adjusted tax basis of the shares of InfoNow stock surrendered in exchange therefor, increased by the amount of gain recognized by the InfoNow stockholder in the merger and reduced by the cash consideration and the fair market value of the CVRs received by the InfoNow stockholder in the merger;
	•	the holding period of the Halo common stock received by a InfoNow stockholder in the merger should include the period for which the InfoNow stock surrendered by such stockholder in exchange therefor was considered to be held;
	•	any cash payment received by a InfoNow stockholder for a fractional share of Halo common stock should be treated as if such fractional share had been issued in the merger and then redeemed by Halo. Such stockholder will recognize capital gain or loss on the deemed redemption in an amount equal to the difference between the amount of cash received and the holder’s adjusted tax basis allocable to such fractional share. Any capital gain or loss will be long-term capital gain or loss if the InfoNow stockholder has held the shares of InfoNow common stock for more than one year at the time the merger is completed; and
	•	Halo and InfoNow should not recognize gain or loss solely as a result of the merger.

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	•	furnish a correct taxpayer identification number and certify that you are not subject to backup withholding on the substitute Form W-9 or successor form included in the letter of transmittal to be delivered to you following the completion of the merger; or
	•	prove that you are otherwise exempt from backup withholding.

	Ownership of CVRs

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	•	Some or all of the capital loss otherwise recognized on a holder’s CVRs may be deferred until a later tax year. The amount deferred would be equal to the amount by which the fair market value of the Halo common stock owned exceeds the holder’s adjusted tax basis in the Halo common stock on the last trading day of the tax year in which the holder would otherwise recognize the capital loss.
	•	For holders who had a holding period in their InfoNow common stock of one year or less when they received their CVRs, some or all of the capital gain or loss otherwise recognizable upon a payment at or before maturity, lapse, sale, or exchange of the CVRs may be short term capital gain or loss instead of long term capital gain or loss.
	•	For holders who had a holding period of one year or less in their InfoNow common stock when they received their CVRs, some or all of the capital gain or loss otherwise recognizable on a disposition of Halo common stock may be short term instead of long term and some or all of such loss may be deferred.
	•	For holders who had a holding period in their InfoNow common stock of more than one year when they received their CVRs, any capital gain or loss recognized on the disposition of the Halo common stock received in exchange should be long-term capital gain or loss, though some or all of the capital loss otherwise recognizable on the disposition of Halo common stock may be deferred. In addition, some or all of the capital gain otherwise recognizable upon a payment at or before maturity, lapse, sale, or exchange of the CVRs may be short term instead of long term, but any capital loss recognized by such holders on CVRs will be long term, regardless of their holding period in the CVRs.
	•	Holders may not be able to deduct interest and carrying charges allocable to the CVRs or Halo common stock. These items will increase a holder’s tax basis in the CVRs and Halo common stock, respectively.
	•	For holders who are corporations, their holding period for Halo common stock will not include any day on which they also own CVRs. Therefore, the dividends received deduction may not be available for dividend income on Halo common stock.

	Possible Treatment of the CVRs as Debt Instruments

	Reporting Requirements

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	Dissenting Stockholders

	•	an effective registration statement under the Securities Act covering the resale of those shares;
	•	in accordance with Rules 144 and 145 under the Securities Act; or
	•	an opinion of counsel or under a “no action” letter from the SEC, that such sale will not violate or is otherwise exempt from registration under the Securities Act.

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	1. Before the vote is taken on the merger agreement at the InfoNow special meeting, you must deliver to InfoNow a written demand for appraisal of your shares. The requirement that you make written demand for appraisal is in addition to and separate from any proxy or vote abstaining from or voting against the merger. Under Section 262, voting against or failing to vote for the merger itself does not constitute a demand for appraisal.
	2. You must not vote in favor of the merger by proxy or in person. A vote in favor of the merger, whether by proxy or in person, will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demand for appraisal.
	3. You must be the record holder of the shares of InfoNow common stock on the date the written demand for appraisal is made and continue to hold the shares as record holder through the completion of the merger.

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	Cash and Stock Payment

	•	cash equal to the aggregate cash payment divided by the fully-diluted shares of InfoNow common stock outstanding at the closing of the merger;

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	•	a number of shares of Halo common stock calculated by the following equation:

	•	7,200,000 minus the aggregate cash payment

	•	the product of

	•	the fully diluted shares of InfoNow common stock

	•	the Conversion Price of Halo common stock.

	•	a number of CVRs equal to the number of shares of Halo common stock received.

	Contingent Value Rights

	Common Stock Options

	No Fractional Shares or CVRs

	Exchange Agent

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	Payment Procedures

	•	a stock certificate representing the number of whole shares of Halo common stock such holder has a right to receive pursuant to the merger;
	•	a certificate representing the number of CVRs that such holder has a right to receive pursuant to the merger; and
	•	after giving effect to any required tax withholdings, a check or wire transfer in the amount of the cash payment portion of the consideration payable, if any, to such holder plus unpaid dividends or distributions, if any, plus any cash payable in lieu of any fractional shares of Halo common stock and CVRs that such holder has a right to receive pursuant to the merger.

	•	corporate organization and good standing;
	•	corporate power and authority to enter into the merger agreement and, subject to receipt of InfoNow stockholder approval, to consummate the transactions contemplated thereby;
	•	absence of breach of contract and laws at the time of the merger, and as a result of the merger;
	•	the receipt of all third party and other governmental consents and filings required for the merger;

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	•	legal proceedings;
	•	the absence of broker’s fees, other than those specified in the merger agreement;
	•	compliance of documents filed with the SEC with applicable securities laws and accounting requirements;
	•	the absence of any change in accounting principles;
	•	material indebtedness, obligations, and liabilities;
	•	tax matters;
	•	compliance with applicable laws;
	•	accuracy of information supplied for use in this proxy statement/ prospectus and the registration statement of which it is a part;
	•	the absence of any material adverse effect, or any condition, event, change or occurrence that is reasonably likely to result in a material adverse effect, except as disclosed in Halo’s or InfoNow’s reports filed with the SEC;
	•	the absence of unlawful payments and contributions; and
	•	the receipt of permits necessary to conduct business.

	•	Halo’s capitalization;
	•	the adequacy of Halo’s financial resources;
	•	the absence of undisclosed liabilities;
	•	ownership of InfoNow common stock; and
	•	the inapplicability of takeover statutes.

	•	InfoNow’s capitalization and the absence of outstanding warrants or similar rights;
	•	employee benefit plans;
	•	the absence of contracts materially restricting any line of business of the surviving corporation;
	•	employment, consulting, and deferred compensation;
	•	validity of material contracts;
	•	environmental matters;
	•	properties and assets;
	•	insurance;
	•	transactions with affiliates of InfoNow;
	•	ownership of Halo common stock;
	•	the receipt of a fairness opinion from Q Advisors;
	•	intellectual property; and
	•	the accuracy of information provided in the merger agreement and compliance with the Delaware General Corporation Law with regard to notice of the stockholders meeting.

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	Conduct of the Business of InfoNow Prior to Completion of the Merger

	•	declare or pay dividends on, or make any distributions in respect of, its capital stock;
	•	make changes in its share capital, including by stock splits, combinations, and reclassifications;
	•	issue, deliver or sell shares of its capital stock or securities convertible into or exercisable for any shares;
	•	repurchase or redeem its capital stock or other securities, or rights to any securities;
	•	amend its governing documents;
	•	make individual capital expenditures of $100,000 in the aggregate;
	•	enter into any new line of business or material partnership;
	•	acquire or agree to acquire an entity through a merger, or by purchasing an equity interest in, or the assets of, such other entity;
	•	take action that may reasonably be expected to result in any of its representations and warranties in the merger agreement being untrue or in any of the conditions to the merger not being satisfied, or in violation this agreement, except as may be required by law;
	•	change its methods of accounting in effect at December 31, 2004, except to comply with applicable accounting rules or principles;
	•	enter into or change employee benefit plans, or increase compensation or severance for any employee, except as required by law or the merger agreement;
	•	hire a new employee at a salary greater than $100,000 or promote an employee to rank of senior vice president or higher;
	•	incur any indebtedness;
	•	dispose of any properties or assets, except in the ordinary course of business;
	•	settle any claim, action, or investigation against InfoNow in excess of $100,000;
	•	transfer or license, or amend, rights to InfoNow’s intellectual property, other than in the ordinary course of business; or
	•	commence material litigation, except in specified circumstances.

	Conduct of Halo’s Business Prior to Completion of the Merger

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	•	notify InfoNow of any change in the normal course of its or its subsidiaries businesses, or in the operation of its properties, and of complaints or investigations by government entities having a material adverse effect on Halo;
	•	notify InfoNow of any material transaction;
	•	not declare or pay dividends on, or make any distributions in respect of, its capital stock (other than dividends on Halo’s outstanding series C and series D preferred stock);
	•	make changes in its share capital, including by stock splits, combinations, and reclassifications;
	•	not repurchase or redeem its capital stock or other securities, or rights to any securities;
	•	not amend its governing documents (except to change its name to Halo Technology Holdings, Inc.); and
	•	not, and will not permit its subsidiaries to, agree to take any of the actions set forth directly above, or except as allowed in the merger agreement, take action that could reasonably be expected to interfere with the merger agreement.

	Compliance with Antitrust Laws

	No Solicitation

	•	solicit, initiate, encourage, or otherwise facilitate any inquiries that relate to any alternative acquisition proposal;
	•	participate in any discussions or negotiations regarding an alternative acquisition proposal, except as required by law; or
	•	withdraw approval or recommendation by the InfoNow board, or approve or recommend or permit InfoNow to enter into an agreement relating to an alternative acquisition proposal.

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	Other Covenants

	Stockholder Meeting

	Indemnification and Insurance

	•	approval and adoption of the merger agreement by holders of a majority of the outstanding shares of InfoNow common stock entitled to vote thereon;
	•	absence of any legal restraints or prohibitions preventing consummation of the merger; and
	•	effectiveness of the registration statement of which this proxy statement/ prospectus is a part and the absence of any stop order suspending such effectiveness.

	•	certain of the representations and warranties of InfoNow being true and correct in all respects, and the remaining representations and warranties being true and correct in all material respects, both as of the date of the merger agreement and the date of the closing of the merger;
	•	InfoNow’s performance in all material respects of all of its covenants and agreements under the merger agreement, except where failure to perform would not likely have a material adverse effect on InfoNow;

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	•	InfoNow’s having obtained consents from third parties that are necessary for the consummation of the merger, except as would not have a material adverse effect on InfoNow or the surviving corporation;
	•	absence of any change in the business, operations, condition (financial or otherwise), assets or liabilities of InfoNow that individually or in the aggregate has had or would likely have a material adverse effect on InfoNow;
	•	the stockholders agreement being in full force and effect; and
	•	to the extent appraisal rights are available, the number of shares of InfoNow common stock whose holders exercise appraisal rights does not exceed ten percent (10%) of InfoNow’s outstanding shares of common stock;

	•	certain of the representations and warranties of Halo and Merger Sub being true and correct in all respects, and the remaining representations and warranties being true and correct in all material respects, both as of the date of the merger agreement and the date of the closing of the merger;
	•	Halo’s performance in all material respects of all of its covenants and agreements under the merger agreement, except where failure to perform would not likely have a material adverse effect on Halo;
	•	Halo’s having obtained consents from third parties, other than governmental entities, which are required in connection with the merger under any loan agreement, note, mortgage, indenture or other agreement to which Halo is bound, except where failure to obtain such consent would not likely have a material adverse effect on Halo;
	•	absence of any change in the business, operations, condition (financial or otherwise), assets or liabilities of Halo that individually or in the aggregate has had or would likely have a material adverse effect on Halo;
	•	Halo’s having entered into a contingent value rights agreement with respect to the CVRs;
	•	the conversion of all of Halo’s issued and outstanding shares of series C preferred stock into shares of Halo common stock; and
	•	that the average closing price of Halo’s common stock as reported on the OTC Bulletin Board for the 20-consecutive trading days ending two days prior to the closing of the merger equaling or exceeding one dollar ($1.00).

	•	by mutual consent of Halo and InfoNow if the board of directors of each so determines by a majority vote;
	•	by either party, thirty (30) days after a request for regulatory approval is denied or withdrawn at the request of a governmental entity which must grant such approval, unless the denial or withdrawal request is due to failure of the party seeking to terminate the merger to observe the covenants and agreements of such party in the merger agreement;
	•	by either party, if the merger is not consummated by July 31, 2006, unless the failure to close by such date is due to the failure of the party seeking to terminate the merger to observe the covenants and agreements of such party in the merger agreement;

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	•	by either party, if the approval of the merger by the stockholders is not obtained because of the failure to obtain the required vote at InfoNow’s meeting of stockholders held for the purpose of voting on the approval of the merger agreement;
	•	by either party, if the other party has breached any representation or warranty in the merger agreement, if such breach has had or is likely to have a material adverse effect on the breaching party, and such breach is not cured within thirty (30) days of notice by the breaching party of the breach or such breach cannot be cured prior to the closing of the merger agreement;
	•	by Halo, if the management or board of directors of InfoNow fails to hold a stockholders meeting to consider the merger agreement, fails to recommend to its stockholders the approval of the merger agreement, fails to oppose a third party proposal that is inconsistent with the merger agreement, or violates the “No Solicitation” covenant of the merger agreement;
	•	by either party, if InfoNow agrees to enter into a superior proposal in compliance with the “No Solicitation” covenant of the merger agreement, provided that InfoNow complies with the “Termination Fee” requirements in the merger agreement; or
	•	by InfoNow, if the holders of series C preferred stock do not convert all such stock to Halo common stock prior to the InfoNow stockholders meeting.

	Effects of Termination

	Termination Fee

	•	an alternative acquisition proposal is made to InfoNow’s stockholders or is publicly announced, such proposal is not irrevocably and publicly withdrawn, and the merger agreement is then terminated by either party because the merger has not been consummated by July 31, 2006, due to the InfoNow stockholders meeting not occurring or the InfoNow stockholders failing to vote in favor of the adoption of the merger agreement;
	•	InfoNow’s board withdraws its recommendation, fails to call a stockholders meeting to consider the merger agreement, fails to oppose a third party proposal that is inconsistent with the merger agreement, or violates the “No Solicitation” clause of the merger agreement, and Halo terminates the agreement; or
	•	If InfoNow agrees to enter into a superior proposal in compliance with the “No Solicitation” clause of the merger agreement, and the merger agreement is terminated by either party.

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	•	Halo shall pay the registration statement filing fee; and
	•	The cost of printing the registration statement and proxy materials will be borne seventy-five percent (75%) by Halo and twenty-five percent (25%) by InfoNow.

	Contingent Value Rights

	Payment in Cash; No Interest

	Payment at Maturity Date

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Average Current								If you receive 1,000 CVRs
Market Values of								in the merger,
Halo Common				Payment				your CVR payments
Stock(1)				per CVR				would equal:
$	1.80			$	0.00			$	0.00
$	1.60			$	0.00			$	0.00
$	1.40			$	0.02			$	20.00
$	1.20			$	0.22			$	220.00
$	1.00			$	0.42			$	420.00
$	0.80			$	0.62			$	620.00
$	0.60			$	0.82			$	820.00
$	0.40			$	1.02			$	1,020.00

(1)	Average based on a 20-day trading period before and including the maturity date

	Payment Following an Event of Default

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	Payment Upon the Occurrence of a Disposition

	•	the direct or indirect sale, lease, conveyance, or other disposition (other than by way of merger or consolidation) in one or a series of related transactions, of all or substantially all of the properties or assets of Halo and its subsidiaries taken as a whole to any person; or
	•	the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any person becomes the beneficial owner, directly or indirectly, of more than 50% of the voting stock of Halo, measured by voting power rather than the number of shares,

	•	all of the shares of Halo common stock are exchanged solely for other publicly traded common stock of Halo or another person;
	•	the acquiror assumes Halo’s obligations relating to the CVRs; and
	•	the appropriate adjustments are made to the target price, the discounted target price, and the terms of the CVR Agreement to reflect such transaction and the economic benefits intended to be conferred on the CVRs under the CVR Agreement.

	•	in case Halo shall consolidate with or merge into any other person or convey, transfer, or lease its properties and assets substantially as an entirety to any person, the person formed by such consolidation or into which Halo is merged or the person that acquires by conveyance or transfer, or that leases, the properties and assets of Halo substantially as an entirety shall be a corporation, partnership, or trust organized and existing under the laws of the United States, any state thereof or the District of Columbia and shall expressly assume payment of amounts on all the CVRs and the performance of every covenant of the CVR Agreement on the part of Halo to be performed or observed;

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	•	immediately after giving effect to such transaction, no event of default shall have happened and be continuing; and
	•	Halo has delivered to the trustee an officer’s certificate stating that such consolidation, merger, conveyance, transfer, or lease complies with these requirements and that all conditions precedent provided for relating to such transaction have been complied with.

	Event of Default

	•	a default in the payment of all or any part of the amounts payable in respect of any of the CVRs as and when the same shall become due and payable following the maturity date, the disposition payment date, or otherwise;
	•	a material default in the performance, or material breach, of any material covenant or warranty of Halo relating to the CVRs (other than a payment default), and continuance of such material default or breach for a period of 30 days after written notice has been given, by registered or certified mail, to Halo by the trustee or to Halo and the trustee by the holders of at least 25% of the outstanding CVRs, specifying the material default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default”;
	•	a court with proper jurisdiction enters a decree or order for relief in respect of Halo in an involuntary case under any applicable bankruptcy, insolvency, or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, or sequestrator (or similar official) of Halo or for any substantial part of its property or ordering the winding up or liquidation of its affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or
	•	Halo commences a voluntary case under any applicable bankruptcy, insolvency, or similar law, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, or sequestrator (or similar official) of Halo or for any substantial part of its property, or make any general assignment for the benefit of creditors.

	•	Halo paid or deposited with the trustee a sum sufficient to pay all amounts that have become due other than by acceleration (with interest upon such overdue amount at 8% per annum to the date of such payment or deposit);
	•	Halo paid or deposited with the trustee a sum sufficient to cover reasonable compensation to the trustee, its agents, attorneys, and counsel, and all other expenses and liabilities incurred and all advances made by the trustee, except as a result of negligence or bad faith; and
	•	any and all events of default under the CVR Agreement, other than the nonpayment of the amounts that have become due by acceleration, have been cured, waived, or otherwise remedied as provided in the CVR Agreement.

	Automatic Extinguishment

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	Certification of Determinations

	Anti-Dilution; Disposition Adjustments

	Current Market Value Calculations

	•	the volume weighted mean of the sales prices, regular way, on the principal exchange on which such shares are then listed on such trading day, as quoted by Bloomberg LP;

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	•	if the shares are not then listed or admitted to trading on any securities exchange, the volume weighted mean of the sales prices over such trading day, as reported by Bloomberg LP or, if not so reported, as reported by a reputable quotation source designated by Halo; or
	•	if the shares are not then listed or admitted to trade on any securities exchange and no such reported sale price or bid and asked prices are available, the mean of the averages of the reported high and low and opening and closing bid and asked prices on such trading day, as quoted in The Wall Street Journal (Eastern Edition), or if The Wall Street Journal (Eastern Edition) shall cease to be published or its publication or general circulation is suspended, such other English language newspaper as is selected by Halo with general circulation in the City of New York, New York.

	Restrictions on Purchases by Halo and Affiliates

	•	offer to purchase, purchase, contract to purchase, purchase any option or contract to sell, sell any option or contract to purchase, grant any option, right, or warrant to sell, or otherwise acquire or purchase, directly or indirectly, any shares of Halo common stock or any securities convertible into or exercisable or exchangeable for shares of Halo common stock, or
	•	enter into any swap or other arrangement that acquires from another, in whole or in part, any of the economic consequences of ownership of the shares of Halo common stock,

	Issuance of the CVRs

	Temporary CVRs

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	Book Entry, Delivery, and Form

	•	Halo delivers to the security registrar a notice from DTC that it is unwilling or unable to continue to act as depositary or that it is no longer a clearing agency registered under the Exchange Act and,

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		in either case, a successor depositary is not appointed by Halo within 120 days after the date of such notice from DTC;
	•	Halo, in its sole discretion, determines that the global securities (in whole but not in part) should be exchanged for CVRs in certificated form and delivers a written notice to such effect to the security registrar; or
	•	an event of default has occurred and is continuing, and the security registrar has received a request from DTC to issue CVRs in certificated form.

	•	Halo will execute and the trustee will authenticate the global securities and the certificated CVRs upon receipt of an order from Halo;
	•	the CVR holder of a beneficial interest in a global security or a certificated CVR will not be charged a service charge for any registration of exchange, but Halo may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith;
	•	all global securities and certificated CVRs issued upon any registration of exchange of global securities or certificated CVRs will be the valid obligations of Halo, evidencing the same rights, and entitled to the same benefits under the CVR Agreement, as the global securities or certificated CVRs surrendered upon such exchange; and
	•	the trustee will authenticate the global securities and certificated CVRs in accordance with the applicable provisions of the CVR Agreement.

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	•	will not be entitled to have the CVRs represented by such global security registered in their names;
	•	will not receive or be entitled to receive physical delivery of CVRs in certificated form; and
	•	will not be considered to be the owners or holders of any CVRs under the CVR Agreement or such global security.

	•	a limited-purpose trust company organized under the Banking Law of the State of New York;
	•	a “banking organization” within the meaning of the Banking Law of the State of New York;
	•	a member of the Federal Reserve System;
	•	a “clearing corporation” within the meaning of the Uniform Commercial Code of the State of New York; and
	•	a “clearing agency” registered under the Exchange Act.

	Mutilated, Destroyed, Lost, and Stolen CVRs

	•	any mutilated CVR is surrendered to the trustee; or
	•	Halo and the trustee receive evidence to their satisfaction of the destruction, loss, or theft of any CVR and there is delivered to Halo and the trustee such security or indemnity as may be required by them to save each of them harmless.

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	Cancellation of CVRs

	Amendment of the CVR Agreement Without Consent of CVR Holders

	•	to convey, transfer, assign, mortgage, or pledge to the trustee as security for the CVRs any property or assets;
	•	to evidence the succession of another person to Halo and the assumption by any such successor of the covenants of Halo in the CVR Agreement and in the CVRs;
	•	to add to Halo’s covenants such further covenants, restrictions, conditions, or provisions as its board of directors and the trustee shall consider to be for the protection of CVR holders, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions, conditions, or provisions an event of default permitting the enforcement of all or any of the several remedies provided in the CVR Agreement, provided that in respect of any such additional covenants, restrictions, conditions, or provisions, such amendment may provide (i) for a particular grace period after default, (ii) an immediate enforcement upon such event of default, (iii) limit the remedies available to the trustee upon such event of default, or (iv) limit the right of the holders of a majority of the outstanding CVRs to waive an event of default;
	•	to cure any ambiguity, to correct or supplement any provision in the CVR Agreement that may be defective or inconsistent with any other provision in the CVR Agreement, or to make any other provisions with respect to matters or questions arising under the CVR Agreement, provided that such provisions shall not adversely affect the interests of the CVR holders; or
	•	to comply with SEC requirements to effect or maintain the qualification of the CVR Agreement under the Trust Indenture Act.

	Amendment of the CVR Agreement With Consent of CVR Holders

	•	to add, change, or eliminate any of the provisions of the CVR Agreement; or
	•	modify in any manner the rights of the CVR holders under the CVR Agreement;

	•	modify the definition of maturity date, disposition payment date, default payment date, current market value, valuation period, discounted target price, target price, default amount, or default interest rate or modify the anti-dilution provisions of the CVR Agreement or otherwise extend the maturity of the CVRs or reduce the amounts payable in respect of the CVRs;
	•	reduce the amount of the outstanding CVRs, the consent of whose holders is required for any such amendment; or

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	•	modify any of the provisions of the amendment section of the CVR Agreement, except to increase the percentage of outstanding CVRs required for an amendment or to provide that certain other provisions of the CVR Agreement cannot be modified or waived without the consent of each CVR holder affected by such modification or waiver.

	Termination of the CVR Agreement

	•	Halo delivers to the trustee all outstanding CVRs (other than CVRs replaced due to mutilation, destruction, loss, or theft) for cancellation;
	•	all outstanding CVRs have become due and payable and Halo irrevocably deposits with the trustee or the paying agent (if the paying agent is not Halo or one of its affiliates) cash sufficient to pay all amounts due and owing on all outstanding CVRs (other than CVRs replaced or CVRs held by Halo or any of its affiliates); or
	•	an automatic extinguishment has occurred; and

	•	for adoption and approval of the merger agreement, the merger and all agreements related to the merger and any actions related to or contemplated by the merger; and
	•	not in favor of any other proposal to acquire InfoNow (other than an unsolicited superior proposal, as defined in the merger agreement and described in the section entitled “The Merger Agreement — Other Agreements — No Solicitation” beginning on page 72 of this proxy statement/ prospectus), any reorganization, recapitalization, liquidation or winding up of InfoNow or any other extraordinary transaction involving InfoNow, any corporate action the consummation of which would frustrate the purposes of, or prevent or delay the consummation of the merger or other transactions contemplated by the merger agreement or any other related matters.

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	Warp Solutions Business

	Kenosia Business

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	Tesseract Business

	DAVID Business

	Process Business

	ProfitKey Business

	Foresight Business

	Empagio Business

	ECI Business

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	Sales and Marketing

	Software Product Development

	Intellectual Property and Proprietary Rights

	Competition

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	Raw Materials

	Dependence on Major Customers

	Research and Development

	Personnel

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	Revenue Recognition

	Business Combinations and Deferred Revenue

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	Product Development Costs

	Intangible assets and Goodwill

	•	Significant underperformance relative to expected historical or projected future operating results;
	•	Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
	•	Significant negative industry or economic trends.

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	Stock-Based Compensation

	Revenue

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	Cost of Revenue

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	Operating Expenses

	Research and Development

	Sales and Marketing

	General and Administrative

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	Interest Expense

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	Options Granted to Mark Finkel

	Series E Notes and Series E Subscription Agreements

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	Issuance of common stock in connection with the Acquisition of Empagio

	January 2006 Convertible Promissory Notes

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	January 2006 Subscription Agreements

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	•	the holder of the $500,000 principal amount September 2005 Note;
	•	the holder of the $500,000 principal amount October 2005 Note that is still outstanding;
	•	the holders of the $700,000 principal amount of Series E Notes;
	•	David Howitt, who made a $150,000 short term loan to Halo;
	•	the investor who had agreed to convert $67,500 in certain advisory fees due from Halo into a Series E Subscription Agreement.

	Acquisition of ECI

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	Acquisition Agreement for the Acquisition of Unify Corporation

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	Directors of Halo

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																			Long-Term Compensation
																			Awards								Payouts
							Annual Compensation
																			Restricted				Securities
															Other Annual				Stock				Underlying				LTIP				All Other
							Salary				Bonus				Compensation				Awards				Options/SAR				Payouts				Compensation
Executive Officer and Principal Position			Year				(US$)				(US$)				(US$)				(US$)				(#)				(US$)				(US$)
Rodney A. Bienvenu, Jr.(1)				2005				275,000				270,500				0				0				301,372				0				0
	Chairman & Chief Executive			2004				0				0				0				0				0				0				0
	Officer			2003				0				0				0				0				0				0				0
Ernest C. Mysogland(2)				2005				160,417				65,625				0				0				100,456				0				0
	Executive Vice President,			2004				0				0				0				0				0				0				0
	Chief Legal Officer, and			2003				0				0				0				0				0				0				0
	Secretary
Brian J. Sisko(3)				2005				67,436				0				94,000				0				0				0				0
	Chief Operating Officer			2004				0				0				0				0				0				0				0
				2003				0				0				0				0				0				0				0
Jeff Bailey(4)				2005				93,656				202,322				0				0				0				0				0
	Former Chief Financial			2004				0				0				0				0				0				0				0
	Officer			2003				0				0				0				0				0				0				0
Gus Bottazzi(5)				2005				106,667				0				500,000				0				187,520				0				0
	Former President and Director			2004				198,693				0				0				0				0				0				0
				2003				56,250				0				0				0				2,000				0				0

(1)	Rodney A. Bienvenu, Jr. Mr. Bienvenu was appointed Chief Executive Officer and Chairman of Halo on August 4, 2004. Mr. Bienvenu did not receive any compensation for fiscal 2004 or for fiscal 2003.
(2)	Ernest C. Mysogland. Mr. Mysogland was appointed Executive Vice President and Chief Legal Officer of Halo on August 4, 2004. Mr. Mysogland did not receive any compensation for fiscal 2004 or for fiscal 2003.
(3)	Brian J. Sisko. Mr. Sisko was appointed Chief Operating Officer of Halo in March 2005. Mr. Sisko did not receive any compensation for fiscal 2004 or for fiscal 2003. Amount under Other Annual Compensation includes consulting and transaction fees paid to or earned by Mr. Sisko during the fiscal year ended June 30, 2005 for his work as a consultant to Halo prior to March 2005 when he became Halo’s Chief Operating Officer.
(4)	Jeff Bailey. Mr. Bailey served as interim Chief Financial Officer of Halo from March 2005 through December 2005. Mr. Bailey did not receive any compensation for fiscal 2004 or for fiscal 2003. Bonus amounts include bonuses paid to Mr. Bailey in the fiscal year ended June 30, 2005, bonuses earned by Mr. Bailey due to the change in control of Gupta, and a performance bonus paid to Mr. Bailey in fiscal 2005, which related to the period prior to Halo’s acquisition of Gupta on January 31, 2005. Mr. Bailey continues to serve as Chief Executive Officer of Halo’s subsidiary, Gupta.
(5)	Gus Bottazzi. The compensation shown in this Summary Compensation Table represents the total compensation paid to Mr. Bottazzi for all executive positions held by him at Halo beginning April 15, 2003. As of June 30, 2005, Mr. Bottazzi was no longer employed with Halo. Amount under Other Annual Compensation represents the value of 200,000 shares of Series C Preferred Stock issued to Mr. Bottazzi pursuant to the terms of the Separation Agreement dated March 3, 2005.

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						Percent of Total
		Number of Securities				Options Granted to				Exercise or
		Underlying Options				Employees in Fiscal				Base Price
Name		Granted				Year				($/share)				Expiration Date
Rodney A. Bienvenu, Jr.			301,372				45	%			6.75				8/4/2014
Ernest C. Mysogland			100,456				15	%			6.75				8/4/2014
Gus Bottazzi			187,520.00				28	%			6.75				8/4/2014

										Number of Securities
										Underlying Unexercised								Value of Unexercised In the
		Shares Acquired								Options at 6/30/05 (#)($)								Money Options at 6/30/05(1)
		On Exercise				Value
Name		(#)				Realized				Exercisable				Non-Exercisable				Exercisable				Non-Exercisable
Rodney A. Bienvenu, Jr.			—				—				—				301,372				—				—
Ernest C. Mysogland			—				—				—				100,456				—				—
Gus Bottazzi			—				—				189,520				—				—				—

(1)	Calculated on the basis of $1.75 per share, the last reported bid price of the common stock on the over-the-counter market on June 30, 2005, less exercise price payable for such shares.

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	Convertible Promissory Notes and Effect on Previously Issued Convertible Notes

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														Percent of
						Amount and Nature of				Percent of				Outstanding Voting
Title of Class				Name and Address of Beneficial Owner(1)		Beneficial Ownership				Class				Securities(2)
	Common			Rodney A. Bienvenu, Jr.(3)			5,192,625				9.99	%			17.74	%
	Series C			Rodney A. Bienvenu, Jr.(3)			1,813,261				13.31	%			17.74	%
	Common			Ernest C. Mysogland(4)			4,679,873				9.99	%			15.96	%
	Series C			Ernest C. Mysogland(4)			1,813,261				13.31	%			15.96	%
	Common			Brian J. Sisko(5)			175,000				2.19	%			*
	Common			Jeff Bailey(6)			7,290				*				*
	Common			Gus Bottazzi(7)			603,863				7.18	%			2.12	%
	Common			John A. Boehmer(8)			13,124				*				*
	Common			David M. Howitt(9)			1,196,805				9.99	%			4.12	%
	Common			Mark J. Lotke(10)			13,124				*				*
	Common			Mark Finkel			—				—				—
	Common			All directors and executive officers as a group (9 persons)(11)			6,483,383				40.73	%			20.08	%
	Series C			All directors and executive officers as a group (9 persons)(11)			2,117,913				15.28	%			20.08	%
	Common			Asset Managers International Ltd.(12)			2,406,319				9.99	%			8.13	%
	Common			Manuel D. Ron(13)			2,389,781				9.99	%			8.13	%
	Series C			Asset Managers International Ltd.			1,000,000				7.22	%			8.13	%
	Series C			Manual D. Ron(13)			1,000,000				7.22	%			8.13	%
	Common			Carmignac Infotech(14)			627,828				7.46	%			2.20	%
	Common			Carmignac Technologies(15)			1,425,692				9.99	%			4.93	%
	Series C			Carmignac Technologies			707,000				5.10	%			4.93	%
	Common			Rajesh Varma(16)			2,053,520				17.45	%			7.28	%
	Series C			Rajesh Varma(16)			1,010,000				7.29	%			7.28	%
	Common			Carnegie Fund(17)			455,533				5.75	%			1.61	%
	Common			Mikael Kadri(18)			455,533				5.75	%			1.61	%
	Common			Viktor Rehnqvist(19)			455,533				5.75	%			1.61	%
	Common			Crestview Capital Master, LLC(20)			7,661,407				9.99	%			23.76	%

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														Percent of
						Amount and Nature of				Percent of				Outstanding Voting
Title of Class				Name and Address of Beneficial Owner(1)		Beneficial Ownership				Class				Securities(2)
	Common			Robert Hoyt(21)			7,661,407				9.99	%			23.76	%
	Series C			Crestview Capital Master, LLC			2,020,000				14.58	%			23.76	%
	Series C			Robert Hoyt(21)			2,020,000				14.58	%			23.76	%
	Common			CAMOFI Master LDC(22)			5,827,449				9.99	%			18.21	%
	Common			Richard Smithline(23)			5,827,449				9.99	%			18.21	%
	Series C			DCOFI Master LDC			2,000,000				14.43	%			18.21	%
	Series C			Richard Smithline(23)			2,000,000				14.43	%			18.21	%
	Common			Gibralt Capital Corporation(24)			472,873				5.88	%			1.66	%
	Common			John Ciampi(25)			472,873				5.88	%			1.66	%
	Common			Gupta Holdings, LLC(26)			4,384,316				9.99	%			14.36	%
	Common			Tom T. Gores(27)			11,429,770				19.98	%			39.33	%
	Common			Jerome N. Gold(28)			4,384,316				9.99	%			14.36	%
	Common			Robert J. Joubran(29)			4,384,316				9.99	%			14.36	%
	Common			Eva Kawalski(30)			4,384,316				9.99	%			14.36	%
	Series C			Gupta Holdings, LLC			2,020,000				14.83	%			14.36	%
	Series C			Tom T. Gores(27)			2,020,000				14.83	%			39.33	%
	Series C			Jerome N. Gold(28)			2,020,000				14.83	%			14.36	%
	Series C			Robert J. Joubran(29)			2,020,000				14.83	%			14.36	%
	Series C			Eva Kawalski(30)			2,020,000				14.83	%			14.36	%
	Common			ISIS Acquisition Partners II, LLC(31)			1,344,465				9.99	%			4.66	%
	Common			ISIS Acquisition Partners, LLC(32)			485,085				5.85	%			1.70	%
	Common			ISIS Capital Management, LLC(33)			4,621,541				25.83	%			15.76	%
	Series C			ISIS Capital Management, LLC(34)			1,813,261				13.31	%			15.94	%
	Common			Fortress Credit Corp.(35)			2,109,042				21.26	%			6.95	%
	Common			OXA Trade and Finance, Inc.(36)			917,425				9.99	%			3.19	%
	Common			Pogue Capital International Ltd.(37)			513,218				6.23	%			1.80	%
	Common			DCI Master LDC(38)			1,476,727				9.99	%			4.97	%
	Common			SEB Investments(39)			4,073,406				9.99	%			13.47	%
	Common			Tobias Hagstrom(40)			4,073,406				9.99	%			13.47	%
	Series C			SEB Investments			2,020,000				14.83	%			13.47	%
	Series C			Tobias Hagstrom(40)			2,020,000				14.83	%			13.47	%
	Common			Vision Opportunity Master Fund, Ltd.(41)			1,005,834				9.99	%			3.44	%
	Common			Mai N. Pogue(42)			1,459,052				16.59	%			5.09	%
	Common			Platinum Equity, LLC(43)			7,045,454				9.99	%			24.97	%
	Series D			Platinum Equity, LLC			7,045,454				100	%			24.97	%
	Series D			Tom T. Gores(27)			7,045,454				100	%			39.33	%

	*	Indicates less than one percent.

	(1)	As used in this table, a beneficial owner of a security includes any person who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise has or shares (a) the power to vote, or direct the voting of, such security or (b) investment power which includes the power to dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the

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		beneficial owner of a security if that person has the right to acquire beneficial ownership of such security within 60 days.
	(2)	Considers Common Stock, Series C Preferred Stock and Series D Preferred Stock voting together as a single class, with the Common Stock entitled to one vote per share, the Series C Preferred Stock entitled to one vote per share of Series C Preferred Stock, and the Series D Preferred Stock entitled to one vote per share of Series D Preferred Stock.
	(3)	Rodney A. Bienvenu, Jr. Amount includes the securities or rights to acquire securities held or deemed to be held by ISIS Acquisition Partners II LLC (“IAP II”), ISIS Acquisition Partners LLC (“IAP”), and by ISIS Capital Management, LLC (“ISIS”) as described in notes 31, 32, 33 and 34 below. Mr. Bienvenu is a managing member of ISIS, and ISIS is the managing member of IAP and IAP II. Mr. Bienvenu may be deemed to have voting and investment power with respect to shares beneficially owned by IAP II, IAP and/or ISIS and disclaims beneficial ownership of such shares, except to the extent of his respective proportionate pecuniary interest therein. Amount also includes(i) vested options to acquire 46,084 shares of Common Stock at an exercise price of $1.08 per share, and (ii) vested options to acquire 525,000 shares of common stock at an exercise price of $1.19 per share.
	(4)	Ernest C. Mysogland. Amount includes the securities or rights to acquire securities held by ISIS Acquisition Partners II LLC (“IAP II”), ISIS Acquisition Partners LLC (“IAP”), and by ISIS Capital Management, LLC (“ISIS”) as described in notes 31, 32, 33 and 34 below. Mr. Mysogland is a managing member of ISIS, and ISIS is the managing member of IAP and IAP II. Mr. Mysogland may be deemed to have voting and investment power with respect to shares beneficially owned by IAP II, IAP and/or ISIS and disclaims beneficial ownership of such shares, except to the extent of his respective proportionate pecuniary interest therein. Amount also includes vested options to acquire 58,332 shares of common stock at an exercise price of $1.19 per share.
	(5)	Brian J. Sisko. Amount includes vested options to acquire 175,000 shares of common stock at an exercise price of $1.08 per share.
	(6)	Jeff Bailey. Amount includes vested options to acquire 7,290 shares of Common Stock at an exercise price of $1.08 per share.
	(7)	Gus Bottazzi. Amount includes (i) vested options to acquire 187,520 shares of Common Stock at an exercise price of $6.75 per share, (ii) vested options to acquire 2,000 shares of common stock at an exercise price of $25.00 per share, (iii) 304,652 shares of Series C Preferred Stock, convertible into 304,652 shares of Common Stock and (iv) Warrants to acquire 104,652 shares of Common Stock at $1.25 per share. Mr. Bottazzi was a director and President of the Company until March, 2005.
	(8)	John A. Boehmer. Amount includes vested options to acquire 13,124 shares of Common Stock at an exercise price of $1.08 per share.
	(9)	David M. Howitt. Amount includes amounts held by IAP II as described in note 31 below, to the extent of Mr. Howitt’s interest in IAP II. Amount also includes vested options to acquire 13,124 shares of Common Stock at an exercise price of $1.08 per share, and 406,901 shares of Common Stock issuable upon conversion of principal and interest under a convertible promissory note held by Mr. Howitt.

(10)	Mark J. Lotke. Amount includes vested options to acquire 13,124 shares of Common Stock at an exercise price of $1.08 per share.
(11)	Officers and Directors as a group. Amount includes shares held or deemed to be held by Messrs. Bienvenu, Mysogland and Howitt, without duplication, as described in notes 3, 4 and 7 above, and amounts held by Mr. Sisko and Mr. Bottazzi as described in notes 5 and 6 above.
(12)	Asset Managers International Ltd. Amount includes 1,000,000 shares of Series C Preferred Stock convertible into 1,000,000 shares of Common Stock, and warrants to acquire 1,389,781 shares of Common Stock at an exercise price of $1.25 per share.

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(13)	Manuel D. Ron. Amount includes securities or rights to acquire securities held by Asset Managers International Ltd. as described in note 12 above. Mr. Manuel D. Ron exercises voting and investment power over the shares held by this entity. Mr. Ron disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(14)	Carmignac Infotech. Amount includes 21,828 shares of Common Stock, 303,000 shares of Series C Preferred Stock convertible into 303,000 shares of Common Stock, and warrants to acquire 303,000 shares of Common Stock at an exercise price of $1.25 per share.
(15)	Carmignac Technologies. Amount includes 707,000 shares of Series C Preferred Stock convertible into 707,000 shares of Common Stock, and warrants to acquire 707,000 shares of Common Stock at an exercise price of $1.25 per share.
(16)	Rajesh Varma. Amount includes securities and rights to acquire securities held by Carmignac Infotech and Carmignac Technologies as described in notes 14 and 15. Mr. Rajesh Varma exercises voting and investment power over the shares held by these entities. Mr. Varma disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(17)	Carnegie Fund. Amount includes 341,149 shares of Common Stock, warrants to acquire 8,000 shares of Common Stock for an exercise price of $2.00 per share, and warrants to acquire 104,653 shares of Common Stock at an exercise price of $1.25 per share.
(18)	Mr. Mikael Kadri. Amount includes securities and rights to acquire securities held by Carnegie Fund as described in note 17. Mr. Kadri exercises voting and investment power over the shares held by this entity. Mr. Kadri disclaims beneficial ownership of these shares except to the extent of his pecuniary interests therein.
(19)	Mr. Viktor Rehnqvist. Amount includes securities and rights to acquire securities held by Carnegie Fund as described in note 17. Mr. Rehnqvist exercises voting and investment power over the shares held by this entity. Mr. Rehnqvist disclaims beneficial ownership of these shares except to the extent of his pecuniary interests therein.
(20)	Crestview Capital Master, LLC. Amount includes 2,020,000 shares of Series C Preferred Stock convertible into 2,020,000 shares of Common Stock, warrants to acquire 2,020,000 shares of Common Stock at an exercise price of $1.25 per share, subordinated debt convertible into 2,000,000 shares of Common Stock, and 1,621,407 shares of Common Stock at an exercise price of $1.25 per share.
(21)	Robert Hoyt. Amount includes securities or rights to acquire securities held by Crestview Capital Master, LLC as described in note 20. Mr. Robert Hoyt exercises voting and investment power over the shares held by this entity. Mr. Hoyt disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(22)	CAMOFI Master LDC. Amount includes 2,000,000 shares of Series C Preferred Stock convertible into 2,000,000 shares of Common Stock, warrants to acquire 2,000,000 shares of Common Stock at an exercise price of $1.25 per share, warrants to acquire 779,562 shares of Common Stock at an exercise price of $1.25 per share, subordinated debt convertible into 500,000 shares of Common Stock, warrants to acquire 500,000 shares of Common Stock at an exercise price of $1.25 per share, and 47,887 shares of Common Stock.
(23)	Richard Smithline. Amount includes securities or rights to acquire securities held by DCOFI Master LDC as described in note 22. Mr. Smithline exercises voting and investment power over the shares held by this entity. Mr. Smithline disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(24)	Gibralt Capital Corporation. Amount includes 234,497 shares of Common Stock, warrants to acquire 234,497 shares of Common Stock at an exercise price of $1.25 per share, and 3,879 additional shares of Common Stock.
(25)	John Ciampi. Amount includes the securities and rights to acquire securities held by Gibralt Capital Corporation as described in note 24. Mr. Ciampi exercises voting and investment power over

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	the shares held by this entity. Mr. Ciampi disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(26)	Gupta Holdings, LLC. Amount includes 2,020,000 shares of Series C Preferred Stock convertible into 2,020,000 shares of Common Stock, warrants to acquire 2,020,000 shares of Common Stock at an exercise price of $1.25 per share, warrants to acquire 292,336 shares of Common Stock at an exercise price of $1.25 per share, and 51,980 shares of Common Stock.
(27)	Tom T. Gores. Amount includes securities and rights to acquire securities held by Gupta Holdings, LLC as described in note 26, and Platinum Equity, LLC as described in note 45. Mr. Gores exercises voting and investment power over the shares held by these entities. Mr. Gores disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(28)	Jerome N. Gold. Amount includes securities and rights to acquire securities held by Gupta Holdings, LLC as described in note 26. Mr. Gold exercises voting and investment power over the shares held by this entity. Mr. Gold disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(29)	Robert J. Joubran. Amount includes securities and rights to acquire securities held by Gupta Holdings, LLC as described in note 26. Mr. Joubran exercises voting and investment power over the shares held by this entity. Mr. Joubran disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(30)	Eva Kawalski. Amount includes securities and rights to acquire securities held by Gupta Holdings, LLC as described in note 26. Ms. Kawalski exercises voting and investment power over the shares held by this entity. Ms. Kawalski disclaims beneficial ownership of the shares, except to the extent of her pecuniary interests therein.
(31)	ISIS Acquisition Partners II, LLC. Amount includes 389,114 shares of Common Stock, warrants to acquire 375,000 shares of Common Stock for an exercise price of $1.00 per share, 287,795 shares of Series C Preferred Stock convertible into 287,795 shares of Common Stock, and warrants to acquire 287,795 shares of Common Stock at an exercise price of $1.25 per share.
(32)	ISIS Acquisition Partners, LLC. Amount includes 240,553 shares of shares of Series C Preferred Stock convertible into 240,553 shares of Common Stock, and warrants to acquire 240,553 shares of Common Stock at an exercise price of $1.25 per share.
(33)	ISIS Capital Management, LLC (“ISIS”). Amount includes 1,284,913 shares of Series C Preferred Stock convertible into 1,284,913 shares of Common Stock, and warrants to acquire 1,284,913 shares of Common Stock at an exercise price of $1.25 per share. Amount also includes the securities or rights to acquire securities held by ISIS Acquisition Partners II LLC (“IAP II”) and by ISIS Acquisition Partners LLC (“IAP”) as described in footnotes 31 and 32. ISIS is the managing member of IAP and IAP II and has voting and investment power with respect to shares beneficially owned by IAP II and/or IAP.
(34)	ISIS Capital Management, LLC (“ISIS”). Amount includes 1,284,913 shares of Series C Preferred Stock. Amount also includes the Series C Preferred Stock held by ISIS Acquisition Partners II LLC (“IAP II”) and by ISIS Acquisition Partners LLC (“IAP”) as described in footnotes 31 and 32. ISIS is the managing member of IAP and IAP II and has voting and investment power with respect to shares beneficially owned by IAP II and/or IAP.
(35)	Fortress Credit Corp. Amount includes warrants to acquire 2,109,042 shares of Common Stock at an exercise price of $0.01 per share.
(36)	Oxa Trade and Finance, Inc. Amount includes 52,500 shares of Common Stock, warrants to acquire 50,000 shares of Common Stock for an exercise price of $1.00 per share, 313,958 shares of Series C Preferred Stock convertible into 313,958 shares of Common Stock, warrants to acquire 313,958 shares of Common Stock at an exercise price of $1.25 per share, 5,193 shares of Common Stock, and warrants to acquire 181,818 shares of Common Stock at $1.25 per share.
(37)	Pogue Capital International Ltd. Amount includes 88,348 shares of Common Stock, warrants to acquire 6,260 shares of Common Stock for an exercise price of $2.00 per share, 209,305 shares of

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	Series C Preferred Stock convertible into 209,305 shares of Common Stock, and warrants to acquire 209,305 shares of Common Stock at an exercise price of $1.25 per share.
(38)	DCI Master LDC. Amount includes warrants to acquire 363,636 shares of Common Stock, and 1,113,091 shares of Common Stock issuable upon the conversion of debt.
(39)	SEB Asset Management. Amount includes 2,020,000 shares of Series C Preferred Stock convertible into 2,020,000 shares of Common Stock, warrants to acquire 2,020,000 shares of Common Stock at an exercise price of $1.25 per share, and 33,406 shares of Common Stock.
(40)	Tobias Hagstrom. Amount includes securities and rights to acquire securities held by SEB Asset Management as described in note 39. Mr. Hagstrom exercises voting and investment power over the shares held by this entity. Mr. Hagstrom disclaims beneficial ownership of the shares, except to the extent of his pecuniary interests therein.
(41)	Vision Opportunity Master Fund, Ltd. Amount 1,005,834 shares of Common Stock issuable upon the conversion of debt.
(42)	Mai N. Pogue. Ms. Pogue, jointly with her husband, Gerald A. Pogue, owns 28,408 shares of Common Stock. In addition, the amount includes securities held by Oxa Trade and Finance, Inc. and Pogue Capital International as described in notes 36 and 37.
(43)	Platinum Equity, LLC. Amount includes 7,045,054 shares of Series D Preferred Stock, convertible into 7,045,054 shares of Common Stock.

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				Bid Price
Fiscal Year		Quarter Ended		Low				High
2004		March 31, 2004			17.00				31.00
		June 30, 2004			6.00				18.00
2005		September 30, 2004			3.00				8.00
		December 31, 2004			1.50				5.00
		March 31, 2005			1.51				5.00
		June 30, 2005			1.60				4.00
2006		September 30, 2005			.92				2.85
		December 31, 2005			1.10				1.75
		March 31, 2006			1.20				1.80

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Equity Compensation Plan

Information

Number of

Number of

Securities

Weighted-

Securities

to be Issued

Average

Remaining

Upon

Exercise

Available for

Exercise of

Price of

Future

Outstanding

Outstanding

Issuance

Options,

Options,

Under Equity

Warrants

Warrants

Compensation

and Rights

and Rights

Plans

Equity compensation plans approved by security holders

0

0

0

Equity compensation plans not approved by security holders

628,453

$

6.84

148,158

Total

628,453

$

6.84

148,158

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	•	A high-tech manufacturer and supplier of printing solutions came to InfoNow with a tough business challenge. The company’s sales representatives were compensated, in part, for sales fulfilled by channel partners, and spent, on average, one to two days a month collecting paperwork from distributors and resellers so they could substantiate commission credits. The company also had significant costs related to the opportunity costs of lost sales, back office costs related to the collection and reconciliation of sales data, costs associated with commission overpayments and errors, and the cost to morale of long lag times between sales and commission payments. With InfoNow’s Channel Insight, they have been able to automate portions of the process, with higher accuracy and faster turnaround times. In addition, their sales representatives can now focus more time and attention on selling versus collecting paperwork to substantiate commissions.
	•	Companies that sell through complex channels spend millions of dollars to generate new sales opportunities — through third party call centers, specific market promotions, and other broad based marketing programs. Without visibility into who their end customers are and what they are buying, these companies can struggle to effectively target these marketing campaigns and to measure the results of their efforts. In 2003, InfoNow deployed its Channel Insight Opportunity Generation module with a Fortune 50 high-tech manufacturer. Since then, InfoNow has deployed a business intelligence system that integrates sales data with other client- specific databases allowing them to perform deep research into partner selling patterns and end-customer buying patterns.
	•	Visa is the world’s largest consumer payment system, with over 1 million automatic teller machines, or ATMs, worldwide. Visa uses elements of InfoNow’s Channel Management Solution, including partner profiling, referral and locator applications, to help end customers find Visa ATMs around the globe. InfoNow manages Visa’s location database for member banks and provides a locator/ referral solution. This solution is available in English, Spanish, and Portuguese to Visa customers around the world. No matter where they are or what time it is, Visa’s customers can contact Visa via the Internet or wireless devices, enter an address or cross street location, and be referred to the Visa ATM closest to them.

	Company History

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	InfoNow’s Software and Services

	•	quickly and accurately assign sales commission credits for sales made through the channel;
	•	understand which partners are best at selling into particular market verticals or customer segments;
	•	execute marketing campaigns targeted to specific end customers; and
	•	track and measure the return on investment of marketing promotions in near real-time.

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	Sales Credit Assignment: This module allows companies to accurately credit their sales representatives and departments in a timely manner for sales made through the channel. With this solution, InfoNow processes sales transaction data and uses its clients’ assignment rules to automatically credit sales to appropriate team members. Sales credits can be allocated by territory, geography, named account, vertical market, customer segment, and many other criteria. InfoNow keeps a running tally of commission credits and provides on-line access to those reports. In addition, InfoNow provides an auditable trail of channel sales and commission credits for purposes of financial reporting.
	Opportunity Generation: This module helps companies grow revenues by creating targeted sales opportunities based on historical sales data. With this solution, InfoNow analyzes historical sales data to identify new sales opportunities, including up-sell and cross-sell opportunities with existing customers, as well as opportunities with new prospects that share market characteristics with current customers and would be likely to purchase specific products. Then, based on historical sales data, InfoNow identifies the most qualified partners to promote these products to targeted customers and prospects. InfoNow can also manage campaigns for its clients, by enrolling qualified partners, assigning and distributing targeted sales opportunities, providing continuous support to channel partners, and tracking partner results. InfoNow can wrap up each campaign with a detailed return-on-investment summary, to aid in future campaign planning.
	Customer Marketing Intelligence: This module enables companies to develop targeted marketing strategies aimed at specific market segments, such as small and medium businesses, or specific market verticals, such as healthcare or insurance providers. With this solution, InfoNow provides actionable data on end customers and product sales. InfoNow packages the data in any number of ways, including by product, partner, vertical market, customer segment, and customer purchase history and product inventory. InfoNow helps its clients build rich end customer profiles to use in trend analysis, profitability analysis, and product planning. They can use InfoNow’s data to design targeted marketing programs to specific customer segments, improve customer acquisition, up-sell current customers, and improve customer loyalty.
	Channel Performance: This module creates accurate pictures of channel partner capabilities and performance by analyzing their sales transaction data and identifying their sales experience. InfoNow

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	provides detailed information on each channel partner’s unique capabilities and areas of expertise. For each partner, InfoNow is able to tell what vertical markets and customer segments they sell to and which products they’re best at selling. InfoNow’s Channel Performance module also provides an automated means for updating and maintaining rich partner profile information in near-real time.
	Opportunity Tracking: This module gives companies up-to-date and accurate information about what happens to their channel sales leads. InfoNow tells them if and when those leads result in sales and which of their channel partners are making those sales. With this solution, InfoNow analyzes and packages sales data to provide clients with accurate and timely information on the success or failure of their channel sales campaigns. InfoNow provides a comprehensive view of a company’s channel business, so clients can track and measure the results of channel campaigns in near real-time. InfoNow gives clients the information they need to improve the return on investment of their lead generation efforts and to turn sales opportunities into loyal, repeat customers.
	Channel Inventory: InfoNow’s Channel Insight Inventory Module provides two levels of capability. The first level collects and processes inventory data from a client’s distributors and resellers and delivers timely information about product inventory levels at partner locations. Clients use this information to track channel inventory levels, rotate inventory to optimize channel sales, and understand the bottom line impact of various price protection scenarios. The second level of capability collects inventory data from partners and sales-in data (i.e., sales to the channel) from the client, and integrates it with the partners’ sales-out data (i.e., sales to end customers) processed by InfoNow’s Channel Insight Platform. It then compares sales-in, sales-out and inventory data, providing a highly accurate view of sales flow through the channel. Clients can use this information to reconcile partner inventory reports with sales transactions, balance inventory, support production planning, and support revenue recognition for purposes of financial reporting.

	Partner Profiling: InfoNow’s Partner Profiling solution enables clients to maintain up-to-date profiles on all of their partners. It includes self-service capabilities, based on client business rules, which enable channel partners to create and maintain their own profiles, including comprehensive information about products and services offered, training, certification levels, and partner program status. With this solution, InfoNow’s clients can ensure that their end customers are getting the most accurate, up-to-date information available about the products and services they offer through channel partners, while minimizing the time the client spends on maintaining partner profiles.
	Referral/ Locator: This application quickly and reliably refers prospects and customers to the selling partner best able to meet their individual needs. This rules-based tool allows clients to match customers with channel partners based on criteria the clients define, and presents end customers with precise and accurate location information and maps, which can include optional driving directions, for the most appropriate service and product providers in their area.
	Lead Management: This application uses client-specific business rules to route incoming opportunities to the most qualified channel partner, and then notifies the partner of the opportunity.

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	System timers and email alerts progress leads through the workflow. Partners can update the status of their leads through a Web interface. Tools are available to allow clients to manage and reroute leads that fail routing, help partners with the management of their leads and follow up on unresponsive partners. Also included are tools for loading batch leads into the system, the ability to manually enter leads into the system and reports to track lead status.
	Services: InfoNow also offers professional services, managed services, partner management services and system management services.
	Professional Services: InfoNow offers in-depth strategic consulting, implementation consulting, training and other technical services. InfoNow’s professional services team can assist clients with the design, implementation and integration of channel visibility and channel management solutions and provide training on the applications and capabilities of its software and services.
	Managed Services: InfoNow hosts and maintains its channel visibility and channel management software for clients in two separate data center facilities in Colorado. Clients can access the solution via the Internet through secured connections over virtual private networks or frame relay networks. InfoNow maintains the hardware and software necessary to link solutions to its clients’ Web sites, intranets, extranets, call centers, interactive voice response systems and/or wireless data devices. InfoNow’s managed services team handles the day-to-day requirements of running software applications, including security, scalability, load balancing, and network and system reliability, 24 hours a day, seven days a week. InfoNow’s managed services team offers expertise in the application, architecture, and delivery methods of individual client solutions.
	Partner Management Services: In support of its Channel Insight offering, InfoNow has relationships with many of the distributors and resellers in the high-tech market and will manage the collection of channel point-of-sale transaction data from these partners on the client’s behalf. This simplifies the data collection process and enables timely and efficient POS data processing with Channel Insight.
	System Management Services: InfoNow offers its clients software updates and maintenance releases. InfoNow also provides standard telephone support five days a week. In addition, InfoNow provides an urgent support program, offering support 24 hours a day, seven days a week.

	Software Development

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	Sales, Marketing and Alliances

	•	Technology Partners: InfoNow’s technology partners provide hardware, software, geographic and business demographic data, transaction-processing support and collocation facilities to InfoNow to ensure the reliability, scalability and performance of InfoNow solutions. Technology partners include companies such as Axess Communications, Acxiom, Business Objects, Hewlett Packard, SunGard Data Systems, Red Hat, Network Appliance, Oracle, MapQuest and TeleAtlas.
	•	Solution Partners: InfoNow’s solution partners offer complementary services to InfoNow’s solutions, and include companies such as Dun & Bradstreet.

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	Clients

	Intellectual Property

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	InfoNow’s Business Strategy

	•	Acquiring new clients: InfoNow plans to capture new channel management and channel visibility clients, expand its solutions with existing clients, and ensure the success of its strategic selling partnerships.
	•	Improving profitability: InfoNow expects to increase revenues through new sales from both direct and indirect sales channels, as well as client up sells. At the same time, InfoNow intends to increase efficiencies in client implementations and ongoing client support, and improve its technology and processes.
	•	Securing InfoNow’s competitive advantage: InfoNow will continue to enhance its solutions, deliver high quality client service, and proactively work with clients to capture the full value of Channel Insight.

	•	IT departments that elect to develop internal systems at their companies;
	•	location-based service providers such as MapInfo, MapQuest and Microsoft MapPoint;

	5	McKinesy Quarterly, 2002, Number 4, Technology.

	6	Customer Think Newsletter, October 7, 2003.

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	•	customer relationship management (CRM) or partner relationship management (PRM) software companies, such as Azerity, Blue Martini, Click Commerce, CMR, Comergent, iGINE, MarketSoft, Zyme and Onyx; and
	•	enterprise software companies such as Oracle, SAP and Siebel Systems.

	•	InfoNow’s domain knowledge: InfoNow has focused on helping channel-focused companies since 1995. InfoNow began by developing custom software applications for Fortune 1000 clients, and over the years InfoNow has worked with some of the top companies in the country. This experience has given InfoNow deep insight into the challenges of maximizing a complex, global business across multiple sales channels. The domain knowledge InfoNow has developed in channel management would not be easy to duplicate.
	•	First-to-market position with Channel Insight: InfoNow has been working on the development of this technology since 2001. InfoNow believes that no competitors can currently match the accuracy, depth and breadth of information InfoNow provides on end customers, nor can they provide the breadth of functionality to utilize end customer information to improve business processes.
	•	Patent-pending technology: InfoNow has applied for U.S. patent protection for its Channel Insight technology and algorithms. InfoNow expects completing the patent review process will take one to three years.
	•	Unique data assets: InfoNow has made significant investments in data assets, including databases, processing techniques and licenses, which would require time and expertise to replicate.
	•	Mission-critical applications: Given the business-critical nature of InfoNow’s solutions, the data and transaction information InfoNow compiles, and the benefits of InfoNow’s relationships with industry-leading companies to enhance future technology development, InfoNow believes it would be costly and inconvenient for clients to duplicate InfoNow’s functionality with an internal solution or to switch to a competitor.

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	Revenue Recognition

	•	The software license fee applies to all configured application software and related functionality used in the client’s application.
	•	The implementation fee applies to the configuration of a tailored, client-specific software interface to the system and the design and configuration of client business rules and databases.

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	•	The managed service fee applies to hosting and provision of the service, any reconfiguration or maintenance on the software necessary during the contract term, as well as performance of routine maintenance to client databases and core systems.
	•	The variable monthly fee includes charges for system usage in excess of contractual thresholds.
	•	A software maintenance fee (for clients utilizing a licensed model) includes updates to the client’s software.

	•	Variable fees included under this heading are pass-through charges for voice recordings, faxes, geocoding, and telecommunications charges, which are typically billed with an incremental administrative fee in addition to the direct charge InfoNow incur to provide these services.

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	Capitalized Software Product Development Costs

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	Technical Personnel Cost Allocation

		December 31, 2005				December 31, 2004
Staff related to the Cost of Revenues			54				67
Selling and Marketing			4				9
Product Development			9				10
General and Administrative			8				11
Total Employees			75				97

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				2005				2004				Change				% Change
Revenues:
Implementation and software license fees				$	1,589			$	1,587			$	2				0	%
Monthly service and software maintenance fees					7,098				9,215				(2,117	)			(23	)%
Other fees					76				77				(1	)			(1	)%
	Total revenues				8,763				10,879				(2,116	)			(19	)%
		Cost of Revenues			5,922				5,864				58				1	%
Gross margin					2,841				5,015				(2,174	)			(43	)%
Operating expenses:
Selling and marketing					1,144				2,024				(880	)			(43	)%
Product development					647				933				(286	)			(31	)%
General and administrative					2,833				2,767				66				2	%
	Total operating expenses				4,624				5,724				(1,100	)			(19	)%
Loss from operations					(1,783	)			(709	)			(1,074	)			(151	)%
Other income (expense):
Interest income					79				31				48				155	%
Interest expense					(4	)			(8	)			4				50	%
					75				23				52				226	%
Net loss				$	(1,708	)		$	(686	)		$	(1,022	)			(149	)%

	Comparison of the Year Ended December 31, 2005 with the Year Ended December 31, 2004

	Monthly Service Fees and Software Maintenance Fees: Monthly service fees and software maintenance fees were $7,098,000 during 2005, a decrease of $2,117,000, or 23%, from $9,215,000 in 2004. The decrease is primarily due to a $2,276,000 reduction in service fees related to the expiration and subsequent extension of the Channel Insight contract with InfoNow’s largest client. InfoNow also experienced an additional $816,000 reduction in monthly service fees as a result of other client contract and service terminations. The decreases in InfoNow’s monthly service fees related to the expiration and subsequent extension of the Channel Insight contract with InfoNow’s largest client and other client contract and service terminations were partially offset by increases in service fees totaling $855,000 primarily associated with new clients and new service activations, as well as increases in variable monthly fees as a result of increased system usage by certain of InfoNow’s clients. In addition, InfoNow experienced a $120,000 increase in service fee revenue associated with a client contract termination. Monthly service fees and software maintenance fees represented approximately 81% and 85% of total revenue during 2005 and 2004, respectively.
	Implementation and Software License Fees: Revenues generated from implementation and software license fees during the twelve months ended December 31, 2005 increased by $2,000, or 0.1%, to $1,589,000 from $1,587,000 during the twelve months ended December 31, 2004. The increase in implementation and software license fees is primarily attributable to a $274,000 increase in

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	implementation fee revenue associated with attaining higher levels of completion percentage on projects that expand existing client solutions, as well as the implementation of new client solutions in 2005 compared to 2004. The increase in implementation fee revenue associated with the increased completion percentage on client solution implementations and enhancements was partially offset by a $158,000 decrease in software license fees, which was primarily due to a reduction in the number of deals sold, that contained a license fee component. InfoNow also experienced a $114,000 increase in revenue deferrals associated with an increase in ASP contracts sold during 2005, which InfoNow is required to account for under SAB 104, as discussed above. Implementation and software license fees represented approximately 18% and 15% of total revenue during 2005 and 2004, respectively.
	Other Fees: Other fees decreased by $1,000, or 1%, to $76,000 during the twelve months ended December 31, 2005, from $77,000 during the twelve months ended December 31, 2004. The decrease in other revenues is primarily attributable to a decrease in the number of contracts with charges for voice recordings, faxes, geocoding and telecommunications charges, as well as a reduction in interactive voice response transaction volume and negotiated rate reductions in InfoNow’s telecommunications charges. Other fees represented approximately 1% of total revenue during 2005 and 2004.

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	•	$78,000 reduction in depreciation and amortization since many of InfoNow’s data center and corporate office assets have become fully depreciated without corresponding asset purchases;
	•	$63,000 increase in other assets and deferred charges mainly due to prepaid software license and insurance payments;
	•	$56,000 decrease in the allowance for bad debt primarily due to reversing previously recorded bad debt during 2005;
	•	$53,000 decrease in accounts payable and payroll related and other liabilities primarily due to paying down InfoNow’s accruals and trade accounts payable;
	•	$12,000 decrease in loss on asset dispositions;
	•	$502,000 decrease in accounts receivable mainly due to significant collections of trade accounts receivable during 2005;
	•	$424,000 increase in deferred revenue primarily due to cash received from clients who prepaid their annual service fees in accordance with their contract terms, as well as unearned revenue related to solutions sold during 2005 for which implementation has not yet been completed.

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		Payment Due by Period
						Less Than												After
Contractual Obligations		Total				1 Year				1-3 Years				4-5 Years				5 Years
Operating Leases		$	867			$	496			$	371			$	—			$	—
Minimum Royalties			129				12				24				24				69
Total Contractual Cash Obligation		$	996			$	508			$	395			$	24			$	69

	Recent Accounting Pronouncements

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Size of Board of Directors
Halo			InfoNow
	Under Nevada law, a corporation may provide in its articles of incorporation or bylaws for a fixed number of directors or a variable number of directors and for the manner in which the number of directors may be increased or decreased. Halo’s articles of incorporation and bylaws provide that the number of directors constituting the board shall be not less than one and not more than thirteen and the articles of incorporation state that the number of directors may from time to time be increased or decreased in such manner as will be provided by the bylaws.		Delaware law permits the board of directors of a Delaware corporation to change the authorized number of directors by amendment to the corporation’s bylaws or in the manner provided in the bylaws, unless the number of directors is fixed in the corporation’s certificate of incorporation, in which case a change in the number of directors may be made only by amendment to the certificate of incorporation. The InfoNow bylaws provide that the authorized number of directors constituting the board shall be not less than five and not more than nine, as shall be fixed from time to time by the board of directors.

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Halo			InfoNow
	Under Nevada law, cumulative voting in the election of directors is only available if the corporation’s articles of incorporation provide for such an election. Halo’s articles of incorporation do not provide for cumulative voting.		Under Delaware law, cumulative voting in the election of directors is not available unless specifically provided for in a corporation’s certificate of incorporation. The InfoNow certificate of incorporation does not provide for cumulative voting.

Power to Call Special Stockholders Meeting
Halo			InfoNow
	Nevada law provides that, unless otherwise provided in the corporation’s articles of incorporation or bylaws, the entire board of directors, any two directors or the president may call special meetings of stockholders. Halo’s bylaws provide that special meetings of stockholders may be called at any time by the holders of 10% of the voting shares of Halo, or by the president, or by the board of directors or a majority thereof.		Under Delaware law, a special meeting of stockholders may be called by the board of directors or any other person authorized to do so in the corporation’s certificate of incorporation or bylaws. The InfoNow bylaws provide that special meetings of stockholders may be called by the president of InfoNow and by the board of directors.
Dissolution
Halo			InfoNow
	Under Nevada law, if the directors recommend dissolution to the stockholders, the corporation must then notify each stockholder entitled to vote on dissolution and the stockholders entitled to vote must approve the dissolution. Action by the stockholders on such a matter is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action.		Under Delaware law, a dissolution must be approved by all the stockholders entitled to vote or the dissolution must be initiated by the board of directors and approved by the holders of a majority of the outstanding voting shares of the corporation.

Removal of Directors
Halo			InfoNow
	Under Nevada law, a director may be removed by the vote of the holders of not less than two-thirds of the voting power of the voting stock, subject to certain restrictions concerning cumulative voting. However, a Nevada corporation may include in its articles of incorporation a provision requiring the approval of a larger percentage of the voting power to remove a director. The Halo articles of		Under Delaware law, any director or the entire board of directors may be removed with or without cause by the holders of a majority of the shares entitled to vote unless the certificate of incorporation provides otherwise. InfoNow’s certificate of incorporation does not provide otherwise.

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incorporation do not provide for a larger percentage of voting power to remove a director.

Filling Vacancies on the Board of Directors
Halo			InfoNow
	Under Nevada law, all vacancies, including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, even though less than a quorum, unless otherwise provided in the articles of incorporation.      The Halo bylaws provide that vacancies may be filled by a majority of the remaining directors though less than a quorum.		Under Delaware law, vacancies on the board of directors and newly created directorships may be filled by a majority of the directors then in office, even though less than a quorum, unless otherwise provided in the certificate of incorporation or bylaws of the corporation or the certificate of incorporation directs that a particular class is to elect such director, in which case any other directors elected by such class, or a sole remaining director, shall fill such vacancy.
Voting Requirements to Amend Charter Documents and Bylaws
Halo			InfoNow
	Under Nevada law, any amendment to the articles of incorporation must be proposed by the board of directors and submitted to the stockholders for approval by the holders of a majority of the outstanding stock entitled to vote thereon, and if such amendments would adversely affect the shares of such class or series, the holders of the outstanding shares of such a class shall be entitled to vote as a class to approve the amendment. The articles of incorporation may require, in the case of any specified amendments, the vote of a larger proportion of the voting power of stockholders. Halo’s articles of incorporation do not require such a vote of a larger proportion of the voting power of stockholders.      Under Nevada law, unless otherwise prohibited by any bylaw adopted by the stockholders, directors may adopt, amend or repeal any bylaw, including any bylaw adopted by the stockholders. Nevada law also provides that the articles of incorporation may grant the authority to adopt bylaws exclusively to the directors. The Halo articles of incorporation and bylaws give both the Halo board and the shareholders the power to amend, alter or repeal the bylaws.		Unless otherwise specified in a Delaware corporation’s certificate of incorporation, an amendment to the certificate of incorporation requires the affirmative vote of a majority of the outstanding stock entitled to vote thereon. Furthermore, under Delaware law, the holders of the outstanding shares of a class are entitled to vote as a class upon any proposed amendment to the certificate of incorporation, whether or not entitled to vote thereon by the provisions of the corporation’s certificate of incorporation, if the amendment would increase or decrease the aggregate number of authorized shares of such class increase or decrease the par value of the shares of such class, or alter or change the powers, preferences or specific rights of the shares of such class so as to adversely affect them. InfoNow’s certificate of incorporation does not contain any provision modifying the statute with respect to amendments to the certificate of incorporation.      Delaware law provides that the power to amend the bylaws shall be with the stockholders, provided that a corporation may in its certificate of incorporation confer the power to amend the bylaws upon the directors. Delaware law also provides that granting the directors the power to amend the bylaws in no way impairs or limits the power to amend the bylaws conferred upon the stockholders by statute. The InfoNow certificate of incorporation expressly authorizes the board of directors to amend the bylaws.

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Inspection of Stockholders List
Halo			InfoNow
	Under Nevada law, a corporation must allow stockholders of record who own or represent at least fifteen percent of a corporation’s shares the right, upon at least five days’ written demand, to inspect, in person or by an agent, during normal business hours, the books of account and financial records of the corporation, to make extracts therefrom and to conduct an audit of such records, except any corporation listed and traded on any recognized stock exchange or any corporation that furnishes to its stockholders a detailed, annual financial statement is exempt from this requirement.		Delaware law allows any stockholder to inspect the stockholder list for a purpose reasonably related to such person’s interest as a stockholder.
Dividends
Halo			InfoNow
	Except as otherwise provided in the corporation’s articles of incorporation, Nevada law authorizes a corporation to make distributions to its stockholders as authorized by its board of directors; provided, however, the corporation may not make such a distribution if (i) the corporation would not be able to pay its debts as they become due in the usual course of business, or (ii) unless otherwise specifically provided in the corporation’s articles of incorporation, the corporation’s total assets would be less than the sum of its total liabilities plus any amount owed, if the corporation were to be dissolved at the time of distribution, to stockholders with preferential rights superior to those receiving the distribution.		Subject to any restrictions contained in a corporation’s certificate of incorporation, Delaware law generally provides that a corporation may declare and pay dividends out of surplus or, when no surplus exists, out of net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year. Surplus is defined as net assets minus stated capital. Dividends may not be paid out of net profits if the capital of the corporation is less than the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.

Halo			InfoNow
	Under Nevada law, there is no corresponding provision with respect to loans or guarantees. A contract or transaction, under Nevada law, between a corporation and one or more of its directors or officers, or between a corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall not be void or voidable solely for that reason, or solely because		A Delaware corporation may lend money to, or guarantee any obligation incurred by, its officers or directors if, in the judgment of the board of directors, such loan or guarantee may reasonably be expected to benefit the corporation. With respect to any other contract or transaction between the corporation and one or more of its directors or officers, such transactions are neither void nor voidable if either:

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the director or officer was present at or participated in the meeting of the board or committee thereof that authorized the contract or transaction, or solely because his or her vote was counted for such purpose, if: • the interest of the officer or director is known to the board of directors or committee, and the board or committee approves the transaction in good faith without counting the vote of the interested director; • the interest of the officer or director is known to the stockholders, and they approve the transaction in good faith by a majority vote of stockholders holding a majority of the voting power; • the interest of the officer or director is not known to the officer or director at the time the transaction is brought before the board of directors of the corporation for action; or • the transaction is fair as to the corporation at the time it is authorized or approved.      The bylaws of Halo forbid a loan by the corporation to an officer or director unless it is first approved by the holders of two-thirds of the voting shares, and the corporation may not make a loan secured by its shares. However, loans below the amount of $25,000 may be made to officers or directors for moving expenses.		• the director’s or officer’s interest is made known to the disinterested directors or the stockholders of the corporation, who thereafter approve the transaction in good faith; or • the contract or transaction is fair to the corporation as of the time it is approved or ratified by either the board of directors, a committee thereof or the stockholders.

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Halo			InfoNow
	Under Nevada law, and except as provided in the corporation’s articles of incorporation, a director or officer; is not individually liable to the corporation or its stockholders for any damages as a result of any act or failure to act in his or her capacity as a director or officer; unless it is proven that such act or failure to act constituted a breach of fiduciary duties as a director or officer; and the breach of those duties involved intentional misconduct, fraud or a knowing violation of law. Such provisions, however, will not eliminate a director or officer’s liability to the corporation in the case of a judgment of ouster rendered against a corporation on account of the misconduct of the director or officer, a violation of Nevada state securities laws, or certain other violations of law.      Under Section 78.7502 of the Nevada Revised Statutes, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, except an action by or in the right of the corporation, by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with the action, suit or proceeding, but only if such person did not breach his or her fiduciary duties in a manner involving intentional misconduct, fraud or a knowing violation of law, or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred in connection with the defense or settlement of the action or suit if such person did not breach his or her fiduciary duties in a manner involving intentional misconduct, fraud or		Under Delaware law, a corporation may include in its certificate of incorporation a provision that would, subject to the limitations described below, eliminate or limit directors’ liability for monetary damages for breaches of their fiduciary duty of care. Under the Delaware law, a director’s liability cannot be eliminated or limited: • for breaches of the duty of loyalty, • for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, • for the payment of unlawful dividends or expenditure of funds for unlawful stock purchases or redemptions, or • for transaction from which such director derived an improper personal benefit.      Pursuant to InfoNow’s certificate of incorporation and under Delaware law, directors of InfoNow are not liable to InfoNow or its stockholders for monetary damages for breach of fiduciary duty, except for liability in connection with a breach of duty of loyalty, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, for dividend payments or stock repurchases illegal under Delaware law or any transaction in which a director has derived an improper personal benefit.

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a knowing violation of law or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation.      Nevada law further provides that indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court determines the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper. Nevada law provides for mandatory indemnification of a director, officer, employee or agent of a corporation to the extent that such person has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in this paragraph against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.      Halo’s articles of incorporation and bylaws provide for indemnification of directors and officers to the fullest extent permitted by Nevada law. The Halo bylaws also provide for the advancement of indemnified expenses.

Halo			InfoNow
	Sections 78.411 to 78.444 of the Nevada Revised Statutes, inclusive, restrict the ability of a resident domestic corporation to engage in any combination with an interested stockholder for three years after the interested stockholder’s date of acquiring the shares that cause such stockholder to become an interested stockholder unless the combination or the purchase of shares by the interested stockholder on the interested stockholder’s date of acquiring the shares that cause such stockholder to become an interested stockholder is approved by the board of directors of the resident domestic corporation before that date. If the combination was not previously approved, the interested stockholder may effect a combination after the three-year period only if such stockholder receives approval from a majority of the disinterested shares or the offer meets various fair price criteria. For purposes of the foregoing provisions, “resident domestic corporation” means a Nevada corporation that has		A provision of Delaware law prohibits certain transactions between a Delaware corporation and an “interested stockholder.” An “interested stockholder” for purposes of this Delaware law provision is a stockholder that is directly or indirectly a beneficial owner of fifteen percent or more of the voting power of the outstanding voting stock of a Delaware corporation, or its affiliate or associate. This provision prohibits certain business combinations between an interested stockholder and a corporation for a period of three years after the date the interested stockholder acquired its stock unless: • the business combination is approved by the corporation’s board of directors prior to the stock acquisition date; • the interested stockholder acquired at least 85% of the voting stock of the corporation in the transaction in which such stockholder became an interested stockholder; or

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200 or more stockholders and “interested stockholder” means any person, other than the resident domestic corporation or its subsidiaries, who is: • the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding voting shares of the resident domestic corporation; or • an affiliate or associate of the resident domestic corporation and at any time within three years immediately before the date in question was the beneficial owner, directly or indirectly, of ten percent or more of the voting power of the outstanding shares of the resident domestic corporation. The above provisions do not apply to any combination involving a resident domestic corporation: • whose original articles of incorporation expressly elect not to be governed by Sections 78.411 to 78.444 of Nevada law, inclusive; • which does not, as of the date of acquiring shares, have a class of voting shares registered with the SEC under Section 12 of the Securities Act, unless the corporation’s articles of incorporation provide otherwise; • whose articles of incorporation were amended to provide that the corporation is subject to the above provisions and which did not have a class of voting shares registered under Section 12 of the Securities Act on the effective date of such amendment, if the combination is with an interested stockholder whose date of acquiring shares is before the effective date of such amendment; or • that amends its articles of incorporation, approved by a majority of the disinterested shares, to expressly elect not to be governed by Sections 78.411 to 78.444 of Nevada law, inclusive. Such an amendment, however, would not become effective until 18 months after its passage and would apply only stock acquisitions occurring after the effective date of the amendment. The Halo articles of incorporation do not exempt Halo from the restrictions imposed by such provisions of Nevada law.      Sections 78.378 to 78.3793 of the Nevada Revised Statutes, inclusive, provide in effect that a		• the business combination is approved by a majority of the board of directors and the affirmative vote of two-thirds of disinterested stockholders.      InfoNow has expressly opted out of this provision through its certificate of incorporation, in accordance with such provision of Delaware law.

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person acquiring a controlling interest in an issuing corporation, and those acting in association with such person, obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders (excluding such acquiring and associated persons) approved at a special or annual meeting of stockholders. For purposes of the foregoing provisions, “issuing corporation” means a corporation organized in Nevada that has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada on the corporation’s stock ledger, and does business in Nevada directly or through an affiliate, and “controlling interest” means the ownership of outstanding voting shares enabling the acquiring person to exercise (either directly or in association with others) one-fifth or more but less than one-third, one-third but less than a majority, or a majority or more of the voting power of the issuing corporation in the election of directors. Accordingly, the provisions could require multiple votes with respect to voting rights in share acquisitions effected in separate stages.      The above provisions do not apply to an acquisition of a controlling interest if the articles of incorporation or bylaws of the issuing corporation in effect on the tenth day following the acquisition of such controlling interest provide either specifically or generally that the provisions do not apply to such acquisitions. The provisions are also inapplicable to shares acquired pursuant to a statutory merger (such as the merger) effected pursuant to Nevada law or by operation of law such as inheritance or the enforcement of a judgment or security interest.      Depending on the issuing corporation’s articles of incorporation and bylaws in effect on the tenth day following the applicable controlling interest acquisition, the issuing corporation may have rights to redeem the shares so acquired, and its stockholders may have dissenters’ rights with respect to the approval of voting rights equivalent to those described under “Appraisal or Dissenters’ Rights” below and set forth in Annex E.

Appraisal or Dissenters’ Rights
Halo			InfoNow
	A stockholder of a Nevada corporation, with certain exceptions, has the right to dissent from, and obtain payment of the fair value of his shares in the event of		Under the Delaware General Corporation Law, dissenters’ rights of appraisal are available to a stockholder of a corporation only in connection with some mergers or consolidations involving that corporation. Appraisal rights are not available

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• a merger or consolidation to which the corporation is a party, • consummation of a plan of exchange to which the corporation is a party as the corporation whose shares will be acquired, if the stockholder is entitled to vote on the plan and any corporate action taken pursuant to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution of the board of directors provides that voting or non-voting stockholders are entitled to dissent and obtain payment for their shares.      Under Nevada law, unless a corporation’s articles of incorporation provide otherwise, a stockholder does not have dissenters’ rights with respect to a plan of merger or share exchange, for cash and/or owner’s interests of the acquiring entity or a listed company, if the shares held by the stockholder are either registered on a national securities exchange, or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or held of record by 2,000 or more stockholders. A stockholder of record of a Nevada corporation may dissent as to less than all the shares registered in his name only if he dissents with respect to all shares beneficially owned by any one person and notifies the corporation in writing of the name and address of each person on whose behalf he asserts dissenters’ rights. In such event, the stockholder’s rights will be determined as if the shares to which he dissented and his other shares were registered in the names of different stockholders.		under the Delaware General Corporation Law if the corporation’s stock is either: • listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc., or • held of record by more than 2,000 stockholders; except that appraisal rights will be available if the merger or consolidation requires stockholders to exchange their stock for anything other than: • shares of the surviving corporation, • shares of another corporation that will be listed on a national securities exchange, designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 stockholders, or • cash in place of fractional shares      Additionally, no appraisal rights are available if the corporation is the surviving corporation, and no vote of its stockholders is required for the merger.

	•	are subject to the rights of the holders of Halo’s preferred stock, have equal ratable rights to dividends from funds legally available if and when declared by Halo’s board of directors;
	•	are entitled to share ratably in all of Halo’s assets available for distribution to holders of common stock in the event of a liquidation, dissolution or winding up of Halo’s affairs;
	•	do not have preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and
	•	are entitled to one non-cumulative vote per share on all matters on which stockholders may vote.

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	•	The Series C Stock is convertible into Halo common stock, at the option of the holder, at a conversion price (the “Series C Stock Applicable Conversion Price”) that will initially be equal to $1.00. Accordingly, the Series C Stock is convertible into Halo common stock at a one to one (1:1) ratio. However, the ratio is subject to adjustment pursuant to the anti-dilution protections extended to the holders of Series C Stock. Under the anti-dilution provisions, in the event Halo issues, at any time while shares of Series C Stock are still outstanding, shares of Halo common stock or any type of securities convertible or exchangeable for, or otherwise giving a right to acquire, shares of Halo common stock, at a price below the Series C Stock Applicable Conversion Price, then the Series C Stock Applicable Conversion Price will be adjusted to the price per share equal to the price per share paid for such Halo common stock in such subsequent financing. This full-ratchet anti-dilution protection on the Series C Stock will also be extended to any warrants received in connection with the Series C Subscription Agreements dated January 31, 2005 that are outstanding at such time. In addition to the full-ratchet protection, the Applicable Conversion Price will be equitably adjusted in the event of any stock split, stock dividend or similar change in Halo’s capital structure.
	•	If Halo’s market capitalization based on the shares of Halo common stock outstanding (including all shares of Halo common stock underlying the Shares of Series C Stock on an as converted basis) exceeds $50,000,000, the shares of Halo common stock underlying the Series C Stock are registered, and Halo has an average daily trading volume for 20 consecutive trading days of 100,000 shares per day, then Halo may require the holders of Series C Stock to convert the Series C Stock into Halo common stock at the then Series C Stock Applicable Conversion Price.
	•	The holders of shares of Series C Stock will be entitled to receive dividends, at a 6% annual rate, payable quarterly in arrears, either in cash, or at the election of Halo, in shares of Halo common stock. The dividends are preferred dividends, payable in preference to any dividends which may be declared on Halo common stock. Halo common stock delivered in payment of dividends will be valued at 90% of the average of the volume weighted average price for the 20 trading day period ending on the trading day immediately prior to the date set for payment of the dividend.
	•	Any unconverted and non-redeemed Shares of Series C Stock outstanding on the third anniversary of the initial issuance of the Series C Stock, will be automatically redeemed on that date, in cash, at $1.00 per share, plus all accrued but unpaid dividends thereon (subject to equitable adjustment for all stock splits, stock dividends, or similar events involving a change in the capital structure of Halo).
	•	In the event of any liquidation of Halo, the Series C Stock will receive an amount equal to the Series C Face Amount (as defined in the Certificate of Designations designating the Series C Stock), plus all accrued but unpaid dividends thereon, prior to any amounts being distributed to any junior series of Preferred Stock or to Halo common stock holders. After payment of all liquidation preferences to all holders of Preferred Stock, including the Series C Stock, the entire remaining available assets, if any, shall be distributed among the holders of Halo common stock, the holders of Series C Stock, and any other class or series of Preferred Stock entitled to participate with Halo common stock in a liquidating distribution, in proportion to the shares of Halo common stock then

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		held by them and the shares of Halo common stock which they then have the right to acquire upon conversion of such shares of Preferred Stock held by them.
	•	Holders of Series C Stock have the pre-emptive right to participate in offerings of Halo common stock, or securities convertible into or exercisable for Halo common stock, based on the holders’ pro-rata share, on an as-converted basis, of the number of shares of outstanding Series C Stock, plus the portion, if any, of such offering as to which other holders of Series C Stock have elected to not exercise this pre-emptive right.

	•	The Series D Stock will be convertible into Halo common stock, at the option of the holder, at a conversion price (the “Series D Stock Applicable Conversion Price”) that will initially be equal to $1.10. Accordingly, the Series D Stock is convertible into Halo common stock at a ratio equal to the quotient obtained by dividing the sum of the Series D Face Amount (as defined in the Certificate of Designations designating the Series D Stock) plus any accrued but unpaid dividends by the Series D Applicable Conversion Price, in effect at the time of conversion. However, the ratio is subject to adjustment pursuant to the anti-dilution protections extended to the holders of Series D Stock. Under the anti-dilution provisions, in the event Halo issues, at any time while shares of Series D Stock are still outstanding, shares of Halo common stock or any type of securities convertible or exchangeable for, or otherwise giving a right to acquire, shares of Halo common stock, at a price below the Series D Applicable Conversion Price, then the Series D Applicable Conversion Price will be adjusted to the price per share equal to the price per share paid for such Halo common stock in such subsequent financing. In addition to the full-ratchet protection, the Series D Applicable Conversion Price will be equitably adjusted in the event of any stock split, stock dividend or similar change in Halo’s capital structure.
	•	If Halo’s market capitalization based on the shares of Halo common stock outstanding (including all shares of Halo common stock underlying the Shares of Series D Stock on an as converted basis) exceeds $50,000,000, the shares of Halo common stock underlying the Series D Stock are registered, and Halo has an average daily trading volume for 20 consecutive trading days of 100,000 shares per day, then Halo may require the holders of Series D Stock to convert the Series D Stock into Halo common stock at the then Series D Stock Applicable Conversion Price.
	•	The holders of shares of Series D Stock will be entitled to receive dividends, at a 13% annual rate, payable quarterly in arrears beginning on March 21, 2006, either in cash, or at the election of Halo, in shares of Halo common stock. The dividends are preferred dividends, payable in preference to any dividends which may be declared on the Series A 8% Cumulative Convertible Preferred Stock, the Series B 10% Cumulative Convertible Preferred Stock, the Series C Convertible Preferred Stock and Halo common stock. Halo common stock delivered in payment of dividends will be valued at 90% of the average of the volume weighted average price for the 20 trading day period ending on the trading day immediately prior to the date set for payment of the dividend.
	•	Any unconverted and non-redeemed Shares of Series D Stock outstanding on the third anniversary of the initial issuance of the Series D Stock, will be automatically redeemed on that date, in cash, at an amount per share equal to the sum of the Series D Face Amount, as adjusted, plus all accrued but unpaid dividends thereon (subject to equitable adjustment for all stock splits, stock dividends, or similar events involving a change in the capital structure of Halo).

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161

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Reports, proxy statements and other information concerning may be Halo inspected at:		Reports, proxy statements and other information concerning InfoNow may be inspected at:
Halo Technology Holdings, Inc. Attn: Investor Relations 200 Railroad Avenue, Third Floor Greenwich, Connecticut 06830 Telephone: (203) 422-2950		InfoNow Corporation Attn: Investor Relations 1875 Lawrence Street, Suite 1100 Denver, Colorado 80202 Telephone: (303) 293-0212
Requests for documents relating to Halo should be directed to:		Requests for documents relating to InfoNow should be directed to:
Halo Technology Holdings, Inc. Attn: Investor Relations 200 Railroad Avenue, Third Floor Greenwich, Connecticut 06830 Telephone: (203) 422-2950		InfoNow Corporation Attn: Investor Relations 1875 Lawrence Street, Suite 1100 Denver, Colorado 80202 Telephone: (303) 293-0212

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163

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Warp Technology Holdings, Inc.
	Report of Independent Registered Public Accounting Firm			F-3
	Consolidated Balance Sheets as of June 30, 2005 and 2004			F-4
	Consolidated Statements of Operations for the Years Ended June 30, 2005 and 2004			F-5
	Consolidated Statements of Stockholders’ Equity			F-6
	Consolidated Statements of Cash Flows for the Years Ended June 30, 2005 and 2004			F-9
	Notes to Consolidated Financial Statements for the Year Ended June 30, 2005			F-10
	Consolidated Balance Sheets as of December 31, 2005 and June 30, 2005			F-36
	Consolidated Statements of Operations for the Three Months Ended December 31, 2005 and 2004 and the Six Months Ended December 31, 2005 and 2004			F-37
	Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2005 and 2004			F-38
	Notes to Consolidated Financial Statements for Period Ended December 31, 2005			F-40
Tesseract Corporation				F-63
	Report of Independent Registered Public Accounting Firm			F-64
	Balance Sheet as of June 30, 2005			F-65
	Statements of Income for the Years Ended June 30, 2005 and 2004			F-66
	Statements of Shareholder’s Deficit for the Years Ended June 30, 2005 and 2004			F-67
	Statements of Cash Flows for the Years Ended June 30, 2005 and 2004			F-68
	Notes to Financial Statements			F-69
Process Software, LLC and Affiliates				F-75
	Report of Independent Registered Public Accounting Firm			F-76
	Combined Balance Sheet as of June 30, 2005			F-77
	Combined Statements of Operations for the Years Ended June 30, 2005 and 2004			F-78
	Combined Statements of Member’s and Shareholder’s Equity for the Years Ended June 30, 2005 and 2004			F-79
	Combined Statements of Cash Flows for the Years Ended June 30, 2005 and 2004			F-80
	Notes to Combined Financial Statements			F-81
Unaudited Pro Forma Consolidated Financial Statements of Warp Technology Holdings, Inc.
Reflecting Acquisition of Tesseract, Process Software and Affiliates				F-89
	Pro Forma Consolidated Condensed Balance Sheet as of September 30, 2005			F-92
	Notes to Pro Forma Consolidated Condensed Balance Sheet			F-93
	Pro Forma Consolidated Condensed Statements of Operations for Three Months Ended September 30, 2005			F-95
	Pro Forma Consolidated Condensed Statements of Operations for Year Ended June 30, 2005			F-96
	Notes to Pro Forma Consolidated Condensed Statements of Operations			F-97
InfoNow Corporation				F-98
	Independent Auditors’ Report			F-99
	Balance Sheet as of December 31, 2005			F-100
	Statements of Operations for the Years Ended December 31, 2005 and 2004			F-101
	Statements of Stockholders’ Equity for the Years Ended December 31, 2005 and 2004			F-102
	Statements of Cash Flows for the Years Ended December 31, 2005 and 2004			F-103
	Notes to Financial Statements			F-104

F-1

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Table of Contents

Unaudited Pro Forma Consolidated Condensed Financial Statements of Halo Technology Holdings, Inc. Reflecting Acquisition of InfoNow Corporation				F-115
	Pro Forma Consolidated Condensed Balance Sheet as of December 31, 2005			F-117
	Notes to Pro Forma Consolidated Condensed Balance Sheet			F-118
	Pro Forma Consolidated Condensed Statements of Operations for the Six Months Ended December 31, 2005			F-120
	Pro Forma Consolidated Condensed Statements of Operations for the Year Ended June 30, 2005			F-121
	Notes to Pro Forma Consolidated Condensed Statements of Operations			F-122
Unaudited Pro Forma Consolidated Condensed Financial Statements of Halo Technology Holdings, Inc. Reflecting Acquisition of Unify and InfoNow				F-123
	Pro Forma Consolidated Condensed Balance Sheet as of December 31, 2005			F-126
	Notes to Pro Forma Consolidated Balance Sheet			F-127
	Pro Forma Consolidated Condensed Statements of Operations for the Six Months Ended December 31, 2005			F-130
	Pro Forma Consolidated Condensed Statements of Operations for Year Ended June 30, 2005			F-131
	Notes to Pro Forma Consolidated Condensed Statements			F-132

F-2

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F-3

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Table of Contents

			June 30, 2005				June 30, 2004
Assets
Current assets:
Cash and cash equivalents			$	1,548,013			$	115,491
Accounts receivable, net of allowance for doubtful accounts of $30,845 and $0 respectively				2,024,699				117,847
Prepaid expenses and other current assets				409,496				29,878
Total current assets				3,982,208				263,216
Property and equipment, net				223,025				36,312
Deferred financing costs, net				476,876
Intangible assets, net of accumulated amortization of $756,064 and $277,083				15,678,736				252,917
Goodwill				7,055,264				3,893,294
Investment and other assets				884,379
	Total assets		$	28,300,488			$	4,445,739
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	872,433			$	672,105
Accrued expenses				3,752,731				336,496
Deferred revenue				3,392,896				155,826
Deferred compensation								444,000
Due to ISIS				1,293,534				—
	Total current liabilities			9,311,594				1,608,427
Subordinate note				2,317,710				—
Senior note				6,446,750				—
Other long term liabilities				43,275				—
	Total liabilities			18,119,329				1,608,427
Commitments and contingencies				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				4
Cumulative convertible preferred stock, Series B; $.00001 par value; (2,915 shares issued and outstanding with liquidation value of $2,915,100 at June 30, 2004)				—				2,915,100
Shares to be issued, cumulative, convertible Preferred stock of Series B (393 shares June 30, 2004)				—				392,939
Series C Preferred Stock: $.00001 par value; 16,000,000 shares authorized, 14,193,095 issued and outstanding (Liquidation value — $14,193,095) at June 30, 2005				14,193,095				—
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				212,897
Common stock, $.00001 par value; 150,000,000 shares authorized, 3,110,800 and 971,115 shares issued and outstanding, respectively				31				10
Additional paid-in capital				59,431,331				40,122,777
Deferred compensation				(970,711	)			(891,833	)
Accumulated other comprehensive loss				(105,262	)			(4,990	)
Accumulated deficit				(62,580,224	)			(39,696,695	)
Total stockholders’ equity				10,181,159				2,837,312
	Total liabilities and stockholders’ equity		$	28,300,488			$	4,445,739

F-4

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Table of Contents

				Year Ended				Year Ended
				June 30, 2005				June 30, 2004
Revenue
	Licenses			$	2,986,752			$	705,697
	Services				2,137,170				176,424
		Total revenues			5,123,922				882,121
Cost of revenue
	Cost of licenses				151,051				340,267
	Cost of services				396,490				85,067
		Total cost of revenues			547,541				425,334
Gross Profit					4,576,381				456,787
Product development					1,589,099				811,725
Sales, marketing and business development					3,652,117				2,310,055
General and administrative (including non-cash compensation of $1,542,686 and $6,007,255, respectively)					4,988,765				8,468,385
Late filing penalty					1,033,500				—
Intangible impairment					62,917				—
Goodwill impairment					3,893,294				—
Loss before interest					(10,643,311	)			(11,133,378	)
Interest (expense) income					(4,631,683	)			63,073
Net loss before income taxes					(15,274,994	)			(11,070,305	)
Income taxes					(97,945	)			—
Net Loss				$	(15,372,939	)		$	(11,070,305	)
Computation of loss applicable to common shareholders
Net loss before beneficial conversion and preferred dividends				$	(15,372,939	)		$	(11,070,305	)
Beneficial conversion and preferred dividends					(7,510,590	)			(1,623,046	)
Loss attributable to common stockholders				$	(22,883,529	)		$	(12,693,351	)
Basic and diluted net loss per share attributable to common stockholders				$	(11.97	)		$	(16.58	)
Weighted-average number common shares — basic and diluted					1,912,033				765,510

F-5

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Table of Contents

		Canadian								Convertible								Convertible
		Convertible								Preferred								Preferred
		Preferred								Series B-2								Series B
		Shares				Amount				Shares				Amount				Shares				Amount
BALANCE — JUNE 30, 2003			15,000			$	15							$	—							$	—
Issuance of common stock to a Consultant
Conversion of Series A to Series B stock																			976				975,940
Issuance of Series B shares and Warrants																			3,706				3,705,780
Cost in connection with issuance
Warrant exchange program
Issuance of common stock
Cost in connection with issuance
Amortization of stock options
Forfeited stock options
Issuance of common stock to a Consultant
Issuance of common stock
Warrants issued to investors
Penalties on Series B stock																			73				73,115
Dividends on Series B stock																			60				60,000
Conversion of Series B stock																			(1,900	)			(1,899,735	)
Shares issued to employees
Beneficial Conversion
Foreign currency
Canadian conversion of preferred stock			(10,736	)			(11	)
Net Loss for the year ended June 30, 2004
BALANCE — JUNE 30, 2004			4,264				4				—				—				2,915				2,915,100
Canadian conversion of preferred stock			(2,554	)			(2	)
Issuance of Series B-2 shares											1,600				1,600
Conversion of Series B-2 shares											(1,600	)			(1,600	)
Issuance cost
Accrued dividends on Series B Stock
Stock dividends on Series B stock
Beneficial conversion
Warrants issued to consultant
Options issued to Isis
Amortization of stock options
Forfeiture of stock options
Issuance of common stock relating to settlements
Settlements with Mr. Beller and Dr Milch																			570				570,000
Mr. Bottazzi separation agreement
Conversion of Series B-2
Conversion of Series B																			(3,485	)			(3,485,100	)
Conversion of Series C debt
Conversion of Bridge loan
Issuance of Series C shares
Issuance cost for Series C shares
Dividends on Series C stock
Warrants issued to note holders
Warrants issued to investment bankers
Warrants issued to consulting firm
Foreign currency
Net Loss for the year ended June 30, 2005
BALANCE — JUNE 30, 2005			1,710			$	2				—			$	—				—			$	—

F-6

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Table of Contents

		Convertible Preferred
		Series C
										Shares to be				Common				Stock				Paid in				Deferred
		Shares				Amount				Issued Amount				Shares				Amount				Capital				Compensation
BALANCE — JUNE 30, 2003						$	—			$	—				672,626			$	7			$	37,659,644			$	(7,911,000	)
Issuance of common stock to a Consultant															50,000				1				949,999
Issuance of Series A stock and warrants, subsequently converted to Series B stock																							(60,000	)
Issuance of Series B shares and Warrants
Cost in connection with issuance																							(368,258	)
Warrant exchange program															44,373								658,858
Issuance of common stock															16,000				—				288,000
Cost in connection with issuance																							(28,000	)
Amortization of stock options																											3,203,483
Forfeited stock options																							(3,815,684	)			3,815,684
Issuance of common stock to a Consultant															50,000				1				949,999
Issuance of common stock															1,302								24,411
Warrants issued to investors																							285,193
Penalties on Series B stock											202,882
Dividends on Series B stock											190,057
Conversion of Series B stock															105,541				1				1,899,734
Shares issued to employees															20,537								305,881
Beneficial Conversion																							1,372,989
Foreign Currency
Canadian conversion of preferred stock															10,736								11
Net Loss for the year ended June 30, 2004
BALANCE — JUNE 30, 2004										$	392,939				971,115				10			$	40,122,777			$	(891,833	)
Canadian conversion of preferred stock															2,555								2
Issuance of Series B-2 shares
Conversion of Series B-2 shares											(559,053	)			827,874				8				2,159,045
Issuance cost																							(50,000	)
Accrued dividends on Series B Stock											166,114
Dividends on Series B stock																							2,105,350
Beneficial conversion																							5,026,230
Warrants issued to consultant																							96,000
Options issued to Isis																							1,052,919				(1,052,919	)
Amortization of stock options																											647,041
Forfeiture of stock options																							(327,000	)			327,000
Issuance of common stock relating to settlements															24,525								105,373
Settlements with Mr. Beller and Dr Milch																							40,430
Mr. Bottazzi separation agreement			200,000				200,000																300,000
Conversion of Series B															1,284,731				13				3,485,087
Conversion of Series C debt			8,559,750				8,559,750
Conversion of Bridge loan			2,433,345				2,433,345
Issuance of Series C shares			3,000,000				3,000,000
Issuance cost for series C share																							(180,000	)
Dividends on Series C stock											212,897
Warrants issued to note holders																							4,394,500
Warrants issued to investment bankers																							1,023,907
Warrants issued to consulting firm																							76,711
Foreign currency
Net Loss for the year ended June 30, 2005
BALANCE — JUNE 30, 2005			14,193,095			$	14,193,095			$	212,897				3,110,800			$	31			$	59,431,331			$	(970,711	)

F-7

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Table of Contents

										Annual
		Accumulated Other				Accumulated				Comprehensive
		Comprehensive Loss				Deficit				Income (Loss)				Totals
BALANCE — JUNE 30, 2003		$	18,773			$	(27,003,344	)		$				$	2,764,095
Issuance of common stock to a Consultant															950,000
Conversion of Series A to Series B stock															915,940
Issuance of Series B shares and Warrants															3,705,780
Cost in connection with issuance															(368,258	)
Warrant exchange program															658,858
Issuance of common stock															288,000
Cost in connection with issuance															(28,000	)
Amortization of stock options															3,203,483
Forfeited stock options															—
Issuance of common stock to a Consultant															950,000
Issuance of common stock															24,411
Warrants issued to investors															285,193
Penalties on Series B stock															275,997
Dividends on Series B stock							(250,057	)							—
Conversion of Series B stock															—
Shares issued to employees															305,881
Beneficial Conversion							(1,372,989	)							—
Foreign Currency			(23,763	)							(23,763	)			(23,763	)
Canadian Conversion of Preferred Stock															—
Net Loss for the year ended June 30, 2004							(11,070,305	)			(11,070,305	)			(11,070,305	)
BALANCE — JUNE 30, 2004			(4,990	)			(39,696,695	)			(11,094,068	)			2,837,312
Canadian conversion of preferred stock
Issuance of Series B-2 shares															1,600,000
Conversion of Series B-2 shares															(50,000	)
Issuance cost
Accrued dividends on Series B Stock							(166,114	)
Dividends on Series B stock							(2,105,350	)
Beneficial conversion							(5,026,230	)
Warrants issued to consultants															96,000
Options issued to Isis
Amortization of stock options															647,041
Forfeiture of stock options
Issuance of common stock relating to settlements															105,373
Settlements with Mr. Beller and Dr Milch															610,430
Mr. Bottazzi separation agreement															500,000
Conversion of Series B-2
Conversion of Series B
Conversion of Series C debt															8,559,750
Conversion of Bridge loan															2,433,345
Issuance of Series C shares															3,000,000
Issuance cost for series C shares															(180,000	)
Dividends on Series C stock							(212,897	)
Warrants issued to note holders															4,394,500
Warrants issued to investment bankers															1,023,907
Warrants issued to consulting firm															76,711
Foreign currency			(100,272	)							(100,272	)			(100,272	)
Net Loss for the year ended June 30, 2005							(15,372,939	)			(15,372,939	)			(15,372,939	)
BALANCE — JUNE 30, 2005		$	(105,262	)		$	(62,580,224	)		$	(15,473,211	)		$	10,181,159

F-8

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Table of Contents

			Year Ended				Year Ended
			June 30, 2005				June 30, 2004
Operating activities
Net loss			$	(15,372,939	)		$	(11,070,305	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization				991,717				241,017
Stock-based compensation, consulting and other fees				1,542,686				6,007,255
Non-cash interest expense				3,323,974				—
Goodwill and impairment charges				3,956,211				—
Changes in operating assets and liabilities net of effect of acquisition of business:
	Accounts receivable			610,869				(105,398	)
	Inventory			—				207,000
	Prepaid expenses and other			69,096				48,403
	Accounts payable and accrued expenses			230,837				63,956
	Deferred revenue			1,261,903				58,002
	Deferred compensation payable			—				(250,000	)
Net cash used in operating activities				(3,385,646	)			(4,800,070	)
Investing activities
Security deposits				—				28,115
Gupta acquisition net of cash acquired of $742,915				(15,007,085	)			—
Kenosia acquisition deposit				(801,750	)			—
Purchase of property and equipment				(40,610	)			(3,179	)
Net cash (used in) provided by investing activities				(15,849,445	)			24,936
Financing activities
Proceeds from issuance of preferred stock, net of issuance costs				12,191,500				4,682,320
Repayment of bridge loan				—				(120,000	)
Proceeds from subordinated notes				2,500,000				—
Proceeds from senior notes				6,075,000				—
Net cash provided by financing activities				20,766,500				4,562,320
Effect of exchange rate changes on cash				(98,887	)			(31,759	)
Net increase (decrease) in cash and cash equivalents				1,432,522				(244,573	)
Cash and cash equivalents — beginning of year				115,491				360,064
Cash and cash equivalents — end of year			$	1,548,013			$	115,491
Supplemental disclosure of cash flow Information:
Income tax paid			$	241,017			$	2,546
Interest paid			$	271,250			$	—

F-9

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Table of Contents

Note 1.	Organization, Merger, Description of Business and Basis of Presentation

Note 2.	Summary of Significant Accounting Policies

	Principles of Consolidation

F-10

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	Use of Estimates

	Property and Equipment

	Revenue Recognition

	Cost of Revenue

	Shipping and Handling Costs

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	Reclassification

	Cash Equivalents

	Intangible Assets and Goodwill

	•	Significant underperformance relative to expected historical or projected future operating results;
	•	Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
	•	Significant negative industry or economic trends.

	Concentration of Risk

	Cash

	Accounts Receivable

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	Product Development Costs

	Income Taxes

	Foreign Currency

	Deferred Financing Costs

	Loss Per Share

	Stock-Based Compensation

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		Year Ended				Year Ended
		June 30, 2005				June 30, 2004
Net loss, as reported		$	(15,372,939	)		$	(11,070,305	)
Add: Stock-based employee compensation expense included in reported net loss			454,000				3,203,483
Deduct: Stock-based employee compensation expense determined under fair value method for all awards			(828,173	)			(3,702,564	)
Net loss, pro forma			(15,747,112	)			(11,569,386	)
Beneficial conversion and preferred dividends			(7,510,590	)			(1,623,046	)
Net loss attributable to common stockholders — Proforma		$	(23,257,712	)		$	(13,192,432	)
Basic and diluted net loss per share attributable to common stockholders, as reported		$	(11.97	)		$	(16.58	)
Basic and diluted net loss per share attributable to common stockholders pro forma		$	(12.16	)		$	(17.23	)

		Year Ended				Year Ended
		June 30, 2005				June 30, 2004
Expected life			3 years				3 years
Risk-fee interest rate			3.00	%			2.13	%
Expected volatility			177.25	%			183	%
Dividend yield			0	%			0	%

	Fair Value of Financial Instruments

	Recent Accounting Pronouncement

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Note 3.	Property and Equipment

		June 30, 2005				June 30, 2004
Purchased software		$	78,088			$	84,283
Computer equipment			165,476				144,596
Furniture, fixtures and equipment			54,322				98,679
			297,886				327,558
Accumulated depreciation			(74,861	)			(291,246	)
		$	223,025			$	36,312

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Note 4.	Accrued Expenses

		June 30, 2005				June 30, 2004
Accrued professional fees		$	960,032			$	95,563
Accrued vendor costs			276,686				96,000
Accrued penalties on late registration			1,033,500				—
Accrued compensation expense			1,078,033				—
Other accrued expenses			404,480				144,933
		$	3,752,731			$	336,496

Note 5.	Stockholders’ Equity

	Common and Preferred Stock

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	Stock Options

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						Weighted-
						Average				Average
						Exercise				Fair Value
		Options				Price				of Grants
Options outstanding at June 30, 2003			76,996			$	25.00
Options cancelled			(31,793	)			23.00
Options granted			45,130				13.00			$	13.00
Options outstanding at June 30, 2004			90,333				22.00
Options cancelled			(131,592	)			13.05
Options granted			669,712				6.75			$	5.24
Options outstanding at June 30, 2005			628,453			$	6.84

Options Outstanding												Options Exercisable
								Weighted
								Average
								Remaining				Weighted								Weighted
				Number				Contractual Life				Average Exercise				Number				Average Exercise
Exercise Price				Outstanding				(in Years)				Price				Exercisable				Price
$	13				7,400				8.8			$	13				6,000			$	13
$	25				31,705				7.0			$	25				29,651			$	25
$	6.75				589,348				9.1			$	6.75				187,519			$	6.75

		Year Ended				Year Ended
		June 30, 2005				June 30, 2004
Expected life			3 years				3 years
Risk-fee interest rate			3.0	%			2.13	%
Expected volatility			177.25	%			183	%
Dividend yield			0	%			0	%

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	Warrants

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Note 6.	Gupta Technologies, LLC Acquisition

Cash		$	742,915
Accounts Receivables			2,489,517
Other current assets			393,126
Fixed assets			161,345
Intangibles			16,434,800
Goodwill			7,055,264
Other assets			71,093
Accounts Payable and accrued expenses			(3,047,893	)
Deferred Revenues			(1,975,167	)
		$	22,325,000

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		2005				2004
Revenue		$	13,890,560			$	16,675,544
Net loss			(14,122,849	)			(10,231,577	)
Loss per share		$	(7.39	)		$	(13.36	)

Note 7.	Acquired Intangible Assets

Amortized Intangible Assets:
Developed Technology				2,284,100
Customer Relationships				6,165,800
Contracts				7,547,200
	Total amortized intangible assets		$	15,997,100
	Accumulated amortization			756,064
	Net		$	15,241,036
Unamortized intangible assets:
Goodwill			$	7,055,264
Trade names			$	437,700
Estimated amortization expense:
For year ending June 30, 2006			$	1,815,000
For year ending June 30, 2007			$	1,815,000
For year ending June 30, 2008			$	1,627,000
For year ending June 30, 2009			$	1,610,000
For year ending June 30, 2010			$	1,610,000

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Note 8.	Series C Subscription Agreement.

	•	An aggregate of $8,475,000 of Series C Notes were sold to Investors under the Subscription Agreement.
	•	Most of the proceeds of the sale of the Series C Notes were used to fund a portion of the purchase price in the Gupta acquisition and the remainder of the proceeds were used for working capital purposes.
	•	The Series C Notes were unsecured and bore interest at the rate of 6% per annum.
	•	The Series C Notes were converted into a new series of Preferred Stock, the “Series C Stock” with a par value of $.00001 per share, and Warrants to acquire Common Stock.
	•	On March 31, 2005, all amounts due under the Series C Notes (principal and interest) automatically converted into (i) 8,559,750 shares of Series C Stock, and (ii) Warrants (the “Warrants”) to acquire 8,559,750 shares of Common Stock. The Company reserved for issuance 17,119,500 shares of Common stock to cover those shares of Common Stock issuable upon conversion of the Series C Stock and exercise of the Warrants.
	•	Since the Series C Notes were not converted by March 17, 2005, due to a delay in receiving approval required before effecting the Amendment to the Company’s Articles of Incorporation, the Company may be required to pay to the Investors a penalty in cash equal to ten percent (10%) of the principal amount of the Series C Notes. Accordingly, the Company anticipates that it will need to obtain a waiver or an acknowledgment that the penalties do not apply. The Company intends to work with the Investors to obtain waiver of this penalty or an acknowledgement that no penalty is due, and has received such waiver and acknowledgement from certain Investors. However, there is no assurance that the Company will receive sufficient waivers or acknowledgements from other Investors. As such the Company has accrued $647,500 for this penalty.

	•	The Series C Stock is convertible into Common Stock, at the option of the holder, at a conversion price (the “Applicable Conversion Price”) that is initially equal to $1.00. Accordingly, the Series C Stock is convertible into Common Stock at a one to one (1:1) ratio. However, the ratio is subject to adjustment pursuant to the anti-dilution protections extended to the holders of Series C Stock. Under the anti-dilution provisions, in the event the Company issues, at any time while shares of Series C Stock are still outstanding, shares of Common Stock or any type of securities convertible or exchangeable for, or otherwise giving a right to acquire, shares of Common Stock, at a price below the Applicable Conversion Price, then the Applicable Conversion Price will be adjusted to the price per share equal to the price per share paid for such Common Stock in such subsequent financing. This full-ratchet anti-dilution protection on the Series C Stock will also be extended to any warrants received in connection with the Subscription Agreement that are outstanding at such

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		time. In addition to the full-ratchet protection, the Applicable Conversion Price will be equitably adjusted in the event of any stock split, stock dividend or similar change in the Company’s capital structure.
	•	If the Company’s market capitalization based on the shares of Common Stock outstanding (including all shares of Common Stock underlying the Shares of Series C Stock on an as converted basis) exceeds $50,000,000, the shares of Common Stock underlying the Series C Stock are registered, and the Company has an average daily trading volume for 20 consecutive trading days of 100,000 shares per day, then the Company may require the holders of Series C Stock to convert the Series C Stock into Common Stock at the then Applicable Conversion Price.
	•	The holders of shares of Series C Stock will be entitled to receive dividends, at a 6% annual rate, payable quarterly in arrears, either in cash, or at the election of the Company, in shares of Common Stock. The dividends are preferred dividends, payable in preference to any dividends which may be declared on the Common Stock. Common Stock delivered in payment of dividends will be valued at 90% of the average of the volume weighted average price for the 20 trading day period ending on the trading day immediately prior to the date set for payment of the dividend. As of June 30, 2005 the Company has accrued $212,897 for dividends.
	•	Any unconverted and non-redeemed Shares of Series C Stock outstanding on the third anniversary of the initial issuance of the Series C Stock, will be automatically redeemed on that date, in cash, at $1.00 per share, plus all accrued but unpaid dividends thereon (subject to equitable adjustment for all stock splits, stock dividends, or similar events involving a change in the capital structure of the Company).

	The Warrants issued to the Investors upon conversion of their Series C Notes, allow the Investors to purchase an aggregate of 8,559,750 shares of Common Stock. The Warrants have an exercise price of $1.25 per share. The Warrants are exercisable over a five-year term.

Note 9.	Bridge Notes.

	•	Interest accrues at the annual rate of 12%.
	•	Contemporaneously with the closing of the Gupta Purchase Agreement, the Bridge Notes were automatically converted into Series C Notes.
	•	An aggregate of $2,409,253 of Series C Notes were issued upon conversion of the principal and accrued interest on the Bridge Notes.
	•	In accordance with their terms, these Series C Notes converted into 2,433,345 shares of Series C Preferred Stock and Warrants to acquire 2,433,345 shares of Common Stock. These warrants (the “Bridge Warrants”) have an exercise price of $1.25 per share and are exercisable for a period of five years from the date of issuance. The Company reserved sufficient common stock to issue upon conversion of these Series C shares and exercise of the Bridge Warrants.

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Note 10.	Senior Note and Warrant Purchase Agreement.

	•	Senior Notes with an aggregate principal amount of $6,825,000 were sold.
	•	The Senior Notes bear interest at an annual rate of 10%, with interest payments due quarterly in arrears.
	•	Most of the proceeds of the sale of the Senior Notes was used to fund a portion of the purchase price in the Gupta acquisition and the remainder of the proceeds was used for working capital purposes.
	•	The Senior Notes are due on July 31, 2005. The Senior Notes are not convertible.
	•	The Senior Notes are secured by a first priority security interest in the assets of the Company, including the equity interests of the Company in Gupta and the Company’s other subsidiaries.

Note 11.	Subordinated Note and Warrant Purchase Agreement.

	•	Subordinated Notes with an aggregate principal amount of $4,000,000 were issued of which $2,500,000 was sold for cash and $1,500,000 was issued to the Seller under the Purchase Agreement (the “Gupta Note”).
	•	The Subordinated Notes bear interest at an annual rate of 10%, with interest payments due quarterly in arrears. Interest is payable in registered shares of Common Stock of the Company, provided that until such shares are registered, interest shall be payable in cash.
	•	Most of the proceeds of the sale of the Subordinated Notes was used to fund a portion of the purchase price in the Gupta acquisition and the remainder of the proceeds was used for working capital purposes.
	•	The Subordinated Notes are due on January 31, 2007, other than the Gupta Note, which is due on January 31, 2006.

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	•	The Subordinated Notes are secured by a security interest in the assets of the Company, including the equity interests of the Company in Gupta and the Company’s other subsidiaries, subordinated only to the security interest granted to secure the Senior Notes.
	•	The Subordinated Noteholders have the right to convert all principal amounts due under the Subordinated Notes — other than the Gupta Note which is not convertible — into such number of Shares of Common Stock equal to the principal amount due under the Subordinated Notes divided by $1.00. Accordingly, an aggregate of 2,500,000 shares of Common Stock is issuable upon conversion of the Subordinated Notes.
	•	Under the Subordinated Note Agreement, the Subordinated Noteholders — other than the holder of the Gupta Note — also received warrants to purchase 2,500,000 shares of the Company’s Common Stock (the “Subordinated Lender Warrants”). The Warrants will have an exercise price of $1.25, and will be exercisable for a period of five years from the date of issuance. The proceeds from the Subordinated Note and the detachable warrants were allocated to the fair value of the warrants and the balance to the Senior Notes. Based on the fair market value, $2,125,000 was allocated to the warrants and the remainder of $375,000 was allocated to the Senior Notes. The discount to the note will be accreted over 24 months. For the period ended June 30, 2005 $442,708 was accreted and charged to interest expense.

Note 12.	Registration Rights.

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Note 13.	Separation Agreement.

Note 14.	Income Taxes

			June 30,
			2005				2004
			(In thousands)
Deferred tax liabilities:
	Differences between book and tax basis of goodwill		$	41				—
Deferred tax assets:
	Operating loss carryforwards		$	13,211			$	8,740
Net deferred tax asset			$	13,170			$	8,740
Valuation allowance			$	13,170			$	8,740

Note 15.	Commitments and Contingencies

	Legal Proceedings.

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	Leases

2006			$	519,389
2007				316,279
2008				227,848
2009				187,024
2010				80,152
	Total		$	1,330,693

Note 16.	Amendment to Articles of Incorporation.

Note 17.	Series C Certificate of Designations.

Note 18.	Geographic Information

		Year Ended June 30, 2005
		Product				Service				Total
North America		$	1,283,296			$	719,319			$	2,002,615
Europe, Africa and the Middle East			1,447,982				1,228,744				2,676,726
Asia Pacific			177,767				139,180				316,947
Latin America			77,707				49,927				127,634
Total		$	2,986,752			$	2,137,170			$	5,123,922

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		Year Ended June 30, 2004
		Product				Service				Total
North America		$	378,485			$	94,621			$	473,106
Europe, Africa and the Middle East			327,212				81,803				409,015
Total		$	705,697			$	176,424			$	882,121

Note 19.	Employee Benefit Plan

Note 20.	Related Party Transactions.

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Note 21.	Subsequent Events

	Acquisition of Kenosia Corporation “Kenosia”

	Credit Agreement

	•	Subject to the terms and conditions of the Credit Agreement, the Lenders agreed to make available to the Company a term loan facility in three Tranches, Tranches A, B and C, in an aggregate amount equal to $50,000,000.

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	•	The maximum amount of loans under Tranche A of the credit facility is $10,000,000. The purpose of amounts borrowed under Tranche A is to refinance certain of the Company’s existing debt and to pay certain costs and expenses incurred in connection with the closing under the Credit Agreement.
	•	The maximum amount of loans under Tranche B of the credit facility is $15,000,000. Amounts borrowed under Tranche B may be used only to partially fund the acquisition by the Company of one or more companies, the acquisition costs related thereto, and other costs and expenses incurred in connection with the Credit Agreement and to finance an agreed amount of working capital for the companies being acquired.
	•	The maximum amount of loans under Tranche C of the credit facility is $25,000,000. Amounts borrowed under Tranche C may be used only to partially fund the acquisition by the Company of one or more publicly-traded companies, the acquisition costs related thereto, and other costs and expenses incurred in connection with the Credit Agreement and to finance an agreed amount of working capital for the companies being acquired.
	•	The Company has borrowed $10,000,000 under Tranche A of the credit facility to pay-off its existing senior indebtedness, in the aggregate principal amount of $6,825,000, plus accrued interest thereon, as well as certain existing subordinated indebtedness, in the aggregate principal amount of $1,500,000. In addition, amounts borrowed under this Tranche A were used to pay certain closing costs, including the Lender’s legal fees, commitment fees, and other costs and expenses under the Credit Agreement.
	•	The obligation to repay the $10,000,000 principal amount borrowed at the closing, along with interest as described below, is further evidenced by the Note.
	•	Advances under Tranche B and Tranche C must be approved by the Lenders, and are subject to the satisfaction of all conditions precedent required by the Lenders including the condition that a default not occur under the loans as a result of the advance.
	•	The rate of interest (the “Interest Rate”) payable on the Loan for each calendar month (an “Interest Period”) is a floating percentage rate per annum equal to the sum of the “LIBOR” for that period plus the “Margin”. For theses purposes, LIBOR means for any Interest Period the rate offered in the London interbank market for U.S. Dollar deposits for the relevant Interest Period; provided, however, that for purposes of calculating the Interest Rate, LIBOR shall at no time be less than a rate equal to 2.65%. For these purposes, “Margin” means 9% per annum. Interest is due and payable monthly in arrears.
	•	Provided there has been no event of default under the Loan, an amount of interest equal to 4% per annum that would otherwise be paid in cash instead may be paid in kind (“PIK”) by such amount being added to the principal balance of the Loan on the last day of each month. Such PIK amount will then accrue interest and be due and payable on the same terms and conditions as the Loan. The Company may, at its option, elect to terminate the PIK interest arrangement and instead pay such amount in cash.
	•	If any sum due and payable under the credit facility is not paid on the due date therefore, the Company shall be liable to pay interest on such overdue amount at a rate equal to the then current Interest Rate plus 3% per annum.
	•	Principal amounts due under the Loans begin to be amortized eighteen months after the closing date of the Credit Agreement, with the complete Loan to be repaid in full no later than the Maturity Date which is four years after the closing.

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	•	A mandatory prepayment is required if, prior to the date which is 9 months after the Closing Date, (i) the Company has not borrowed under Tranche B, and (ii) the Company has not acquired (without the incurrence of any indebtedness) 100% of the equity interests of any new subsidiary which at the time of acquisition had a twelve month trailing EBITDA of greater than $1,000,000. If prepayments are required due to this reason, the amount of the prepayment is 85% of the “Excess Cash Flow” — which means, cash provided by operations by the Company and its subsidiaries determined quarterly less capital expenditures for such period, provided that the Company shall at all times be allowed to retain a minimum of $1,500,000 of cash for operating purposes. In addition, the Company must prepay the loan in full no later than the date which is 21 months after the Closing Date.
	•	The Credit Agreement contains certain financial covenants usual and customary for facilities and transactions of this type. In the event the Company completes further acquisitions, the Company and the Agent and lenders will agree upon modifications to the financial covenants to reflect the changes to the Company’s consolidated assets, liabilities, and expected results of operations in amounts to be mutually agreed to by the parties.
	•	The Company’s obligations are guaranteed by the direct and indirect subsidiaries of the Company, including, without limitation, Gupta Technologies, LLC, Kenosia Corporation, and Warp Solutions, Inc.
	•	The Company and its subsidiaries granted first priority security interests in their assets, and pledged the stock or equity interests in their respective subsidiaries, to the Agent as security for the financial obligations under the Credit Agreement and the Financing Documents. In addition, the Company has undertaken to complete certain matters, including the delivery of stock certificates in subsidiaries, and the completion of financing statements perfecting the security interests granted under the applicable state or foreign jurisdictions concerning the security interests and rights granted to the Lenders and the Agent.
	•	As additional security for the lenders making the loans under the Credit Agreement, certain subsidiaries of the Company have entered into Security Agreements with Fortress Credit. Corp. relating to their assets in the U.K., and have pledged their interests in the subsidiaries organized under English law, Gupta Technologies Limited and Warp Solutions Limited, by entering into a Mortgages of Shares with Fortress. Also, the Company’s subsidiary, Gupta Technologies, LLC (“Gupta”) and its German subsidiary, Gupta Technologies GmbH, have entered into a Security Trust Agreement with Fortress Credit Corp. granting a security interest in the assets of such entities located in Germany. Gupta has also pledged its interests in the German subsidiary under a Share Pledge Agreement with Fortress Credit Corp.
	•	Under the Intercreditor Agreement, the holders of the Company’s outstanding subordinated notes which were issued pursuant to that certain Subordinated Note and Warrant Purchase Agreement dated January 31, 2005, agreed to subordinate the payment terms and security interests of the subordinated notes to the payment terms and security interests of the senior lenders under the Credit Agreement.
	•	Pursuant to the Warrant Agreement, the Company agreed to issue warrants to acquire up to an aggregate of 7% of the fully diluted stock of the Company (as of the date of the Warrant Agreement) if the Lenders make all the advances under the total commitments of the credit facility. All warrants will have an exercise price of $0.01 per share. The exercise price and number of shares issuable upon exercise of each warrant are subject to adjustment as provided in the Warrant Agreement, including weighted average anti-dilution protection.

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	•	Warrants to acquire an aggregate of 5% of the fully diluted stock of the Company (2,109,042 shares of Common Stock, par value $.00001 per share) are issuable upon the Company receiving advances under Tranche A or B of the credit facility (“Tranche A/ B Available Shares”) in proportion to the amount of the advance compared with the total $25,000,000 in commitments under Tranche A and B.
	•	Since the Company borrowed $10,000,000 under Tranche A at the closing, warrants to acquire 40% of the Available Tranche A/ B Shares (843,617 shares of the Company’s Common Stock) were issued at closing to the Lenders. The warrants have an exercise price of $.01 per share, have a cashless exercise feature, and are exercisable until December 10, 2010. As further advances are made to the Company under Tranche B, the Company will issue additional warrants in proportion to the advances received. Additionally, if the unused total commitments attributable to Tranche A and Tranche B are cancelled in accordance with the Credit Agreement, warrants shall be used for the number of shares based on the Pro Rata Portion of the Total Commitments attributable to Tranche A or Tranche B which are cancelled.
	•	Warrants to acquire an aggregate of 2% of the fully diluted stock of the Company (843,617 shares of Common Stock) are issuable upon the Company receiving advances under Tranche C of the credit facility (“Tranche C Available Shares”) in proportion to the amount of the Tranche C advance compared with the total $25,000,000 in commitments under Tranche C.

	Lease of Office Space for Principal Executive Offices

	Agreements to Acquire Five Software Companies

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	Promissory Note and Warrant

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			December 31,				June 30,
			2005				2005
			(Unaudited)				(Audited)
ASSETS
Current Assets:
Cash and cash equivalents			$	1,844,373			$	1,548,013
Accounts receivable, net of allowance for doubtful accounts of $139,973 and $30,845 respectively				4,550,514				2,024,699
Due from Platinum Equity, LLC				465,000				—
Prepaid expenses and other current assets				925,460				409,496
Total current assets				7,785,347				3,982,208
Property and equipment, net				286,369				223,025
Deferred financing costs, net				1,529,036				476,876
Intangible assets, net of accumulated amortization of $1,950,503 and $756,064 respectively				24,604,981				15,678,736
Goodwill				28,730,708				7,055,264
Investment and other assets				193,190				884,379
	Total assets		$	63,129,631			$	28,300,488
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	1,832,028			$	872,433
Accrued expenses				6,825,837				3,752,731
Note payable to Bristol Technology, Inc.				500,000				—
Note and Working Capital Adjustment payable to Platinum Equity, LLC				2,750,000				—
Notes payable				1,591,770				—
Deferred revenue				11,263,432				3,392,896
Due to ISIS				1,293,717				1,293,534
	Total current liabilities			26,056,784				9,311,594
Subordinate notes payable				1,453,504				2,317,710
Senior notes payable				21,763,619				6,446,750
Other long term liabilities				52,972				43,275
	Total liabilities			49,326,879				18,119,329
Commitments and contingencies				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				2
Series C Preferred Stock: $.00001 par value; 16,000,000 shares authorized, 13,802,837 and 14,193,095 issued and outstanding (Liquidation value — $13,802,837 and $14,193,095) respectively				13,802,837				14,193,095
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				208,006				212,897
Series D Preferred Stock: $.00001 par value; 8,863,636 shares authorized, 7,045,454 issued and outstanding (Liquidation value — $7,750,000)				6,750,000				—
Shares of Common Stock to be issued for accrued dividends on Series D Preferred Stock				165,372
Shares of Common Stock to be issued for accrued interest on subordinated debt				41,667				—
Common stock: $.00001 par value; 150,000,000 shares authorized, 5,601,548 and 3,110,800 shares issued and outstanding respectively				56				31
Additional paid-in-capital				64,733,038				59,431,331
Deferred compensation				(874,123	)			(970,711	)
Accumulated other comprehensive loss				(71,087	)			(105,262	)
Accumulated deficit				(70,953,016	)			(62,580,224	)
Total stockholders’ equity				13,802,752				10,181,159
	Total liabilities and stockholders’ equity		$	63,129,631			$	28,300,488

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				Three Months Ended								Six Months Ended
				December 31,								December 31,
				2005				2004				2005				2004
				(Unaudited)
Revenue
	Licenses			$	1,504,493			$	85,311			$	2,819,062			$	211,616
	Services				3,866,219				21,328				5,759,979				52,904
		Total revenues			5,370,712				106,639				8,579,041				264,520
Cost of revenue
	Cost of licenses				154,766				39,730				200,500				53,758
	Cost of services				804,140				—				1,098,048				—
		Total cost of revenues			958,906				39,730				1,298,548				53,758
Gross Profit					4,411,806				66,909				7,280,493				210,762
Product development					1,560,236				35,657				2,516,793				112,723
Sales, marketing and business development					2,063,932				223,393				3,436,457				476,575
General and administrative (including non-cash compensation three months — 2005-$153,898; 2004-$127,145; six months — 2005-$273,226; 2004-$542,742)					3,663,824				251,019				5,466,182				1,218,383
Loss before interest					(2,876,186	)			(443,160	)			(4,138,939	)			(1,596,919	)
Interest expense					(2,257,705	)			(46,374	)			(3,553,807	)			(45,679	)
Loss before income taxes					(5,133,891	)			(489,534	)			(7,692,746	)			(1,642,598	)
Income taxes					(34,325	)			—				(86,488	)			—
Net Loss				$	(5,168,216	)		$	(489,534	)		$	(7,779,234	)		$	(1,642,598	)
Computation of loss applicable to common stockholders Net loss before beneficial conversion and preferred dividends				$	(5,168,216	)		$	(489,534	)		$	(7,779,234	)		$	(1,642,598	)
Beneficial conversion and preferred dividends					(373,379	)			(472,057	)			(593,558	)			(2,810,465	)
Loss attributable to common stockholders				$	(5,541,595	)		$	(961,591	)		$	(8,372,792	)		$	(4,453,063	)
Basic and diluted net loss per share attributable to common stockholders				$	(1.53	)		$	(0.99	)		$	(2.44	)		$	(4.59	)
Weighted-average number common shares — basic and diluted					3,624,747				971,115				3,425,127				971,115

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					Six Months Ended
					December 31,
					2005				2004
					(Unaudited)
Operating Activities
Net Loss					$	(7,779,234	)		$	(1,642,598	)
Adjustments to reconcile net loss to net cash used in operating activities:
		Depreciation and amortization				1,259,738				101,215
		Non cash compensation				273,226				542,742
		Non cash interest expense				2,425,544				—
		Loss on sales of property and equipment				3,270				—
		Changes in operating assets and liabilities, net of effects of acquired business:
			Accounts receivable			(488,535	)			33,199
			Prepaid expenses and other current assets			(359,403	)			15,631
			Accounts payable and accrued expenses			931,287				(228,506	)
			Deferred revenue			3,468,677				(132,370	)
			Deferred product cost			—				14,028
	Net cash used in operating activities					(265,430	)			(1,296,659	)
Investing activities
Purchase of property and equipment						(53,370	)			—
Advance to Gupta Holdings LLC						—				(1,000,000	)
Tesseract, Process and Affiliates acquisition, net of cash acquired of $632,899						(15,867,102	)			—
Kenosia acquisition, net of cash acquired of $6,125						(507,145	)
Proceeds from sales of property and equipment						1,689				—
	Net cash used in investing activities					(16,425,928	)			(1,000,000	)
Financing activities
Repayment of Bridge loan						—				950,100
Repayment of Subordinated notes						(1,500,000	)			—
Repayment of Senior notes						(6,825,000	)			—
Proceeds from Senior notes, net of issuance cost of $1,426,486						23,573,514				—
Proceeds from Promissory notes						1,700,000				—
Proceeds from issuance of preferred and common stock net of issuance costs						—				1,474,500
	Net cash provided by financing activities					16,948,514				2,424,600
Effects of exchange rates on cash						39,204				(22,784	)
Net increase in cash and cash equivalents						296,360				105,157
Cash and cash equivalents — beginning of period						1,548,013				115,491
Cash and cash equivalents — end of period					$	1,844,373			$	220,648
Supplemental disclosure of cash flow information:
Income tax paid					$	122,766			$	—
Interest paid					$	822,486			$	—

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Purchase price:
Cash		$	1,247,175
Transaction costs			67,845
Note Payable			500,000
Total purchase price			1,815,020
Fair Value of:
Assets acquired			(1,611,793	)
Liability assumed			386,025
Goodwill		$	589,252

Purchase price:
Cash		$	3,500,000
Advances to Platinum made prior to September 30, 2005			1,000,000
Promissory Note and Working Capital Adjustment			2,750,000
Series D Preferred Stock			6,750,000
Transaction costs			126,500
Total purchase price			14,126,500
Fair Value of:
Assets acquired			(4,600,357	)
Liability assumed			2,456,041
Goodwill		$	11,982,184

Purchase price:
Cash		$	12,000,000
Transaction costs			351,500
Total purchase price			12,351,500
Fair Value of:
Assets acquired			(7,855,827	)
Liability assumed			4,608,335
Goodwill		$	9,104,008

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Note 1.	Organization, Merger, Description of Business and Basis of Presentation

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	Basis of Presentation

Note 2.	Summary of Significant Accounting Policies

	Reclassification

	Loss Per Share

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	Stock-Based Compensation

		Three Months Ended								Six Months Ended
		December 31,								December 31,
		2005				2004				2005				2004
Net loss, as reported		$	(5,168,216	)		$	(489,534	)		$	(7,779,234	)		$	(1,642,598	)
Add: Stock-based employee compensation expense included in reported net loss			82,070				74,500				129,570				359,000
Deduct: Stock-based employee compensation expense determined under fair value method for all awards			(1,163,880	)			(77,480	)			(1,336,120	)			(370,210	)
Net loss, pro forma			(6,250,026	)			(492,514	)			(8,985,784	)			(1,653,808	)
Beneficial conversion and preferred dividends			(373,379	)			(472,057	)			(593,558	)			(2,810,465	)
Net loss attributable to common stockholders — Pro forma		$	(6,623,405	)		$	(964,571	)		$	(9,579,342	)		$	(4,464,273	)
Basic and diluted net loss per share attributable to common stockholders, as reported		$	(1.53	)		$	(0.99	)		$	(2.44	)		$	(4.59	)
Basic and diluted net loss per share attributable to common stockholders pro forma		$	(1.82	)		$	(0.99	)		$	(2.80	)		$	(4.60	)

	Recent Accounting Pronouncements

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Note 3.	Stockholders’ Equity

	Common and Preferred Stock

	Stock Options

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	Warrants

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Note 4.	Kenosia Acquisition

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Cash		$	6,125
Accounts receivables			312,750
Other current assets			15,000
Fixed assets			7,635
Intangibles			1,270,283
Goodwill			589,252
Accounts payable and accrued expenses			(10,979	)
Deferred revenues			(375,046	)
		$	1,815,020

Note 5.	Acquisition of Five Software Companies

	Foresight, Milgo, ProfitKey International and David Corporation Purchase Agreement

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Cash and cash equivalents		$	378,141
Accounts receivable			1,723,231
Other current assets			726,478
Fixed assets			73,023
Intangibles			4,843,800
Goodwill			9,104,008
Other assets			111,154
Accounts payable and accrued expenses			(2,003,805	)
Deferred revenue			(2,604,530	)
		$	12,351,500

	Tesseract Merger Agreement and Amendment

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Cash and cash equivalents		$	254,757
Accounts receivable			1,299
Other current assets			333,871
Fixed assets			3,830
Intangibles			4,006,600
Goodwill			11,982,184
Accounts payable and accrued expenses			(1,015,350	)
Deferred revenue			(1,422,282	)
Other long term liabilities			(18,409	)
		$	14,126,500

Note 6.	Unaudited Pro Forma Financial Information

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		Three Months Ended
		December 31,								Six Months Ended December 31,
		2005				2004				2005				2004
Revenue		$	7,606,852			$	9,581,947			$	15,478,083			$	19,421,400
Net loss		$	(5,401,586	)		$	(485,135	)		$	(6,915,745	)		$	(106,269	)
Beneficial Conversion and preferred dividends			(373,379	)			(472,057	)			(593,558	)			(2,810,465	)
Loss attributable to common stockholders			(5,774,965	)			(957,192	)			(7,509,303	)			(2,916,734	)
Basic and diluted net loss per share attributable to common stockholders		$	(1.59	)		$	(0.99	)		$	(2.19	)		$	(3.00	)
Weighted-average number of common shares			3,624,747				971,115				3,425,127				971,115

Note 7.	Credit Agreement

	•	Subject to the terms and conditions of the Credit Agreement, the Lenders agreed to make available to the Company a term loan facility in three Tranches, Tranches A, B and C, in an aggregate amount equal to $50,000,000.
	•	The maximum amount of loans under Tranche A of the credit facility is $10,000,000. The purpose of amounts borrowed under Tranche A is to refinance certain of the Company’s existing debt and to pay certain costs and expenses incurred in connection with the closing under the Credit Agreement.
	•	The maximum amount of loans under Tranche B of the credit facility is $15,000,000. Amounts borrowed under Tranche B may be used only to partially fund the acquisition by the Company of one or more companies, the acquisition costs related thereto, and other costs and expenses incurred in connection with the Credit Agreement and to finance an agreed amount of working capital for the companies being acquired.
	•	The maximum amount of loans under Tranche C of the credit facility is $25,000,000. Amounts borrowed under Tranche C may be used only to partially fund the acquisition by the Company of one or more publicly-traded companies, the acquisition costs related thereto, and other costs and

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		expenses incurred in connection with the Credit Agreement and to finance an agreed amount of working capital for the companies being acquired.
	•	The Company has borrowed $10,000,000 under Tranche A of the credit facility to pay-off its existing senior indebtedness, in the aggregate principal amount of $6,825,000, plus accrued interest thereon, as well as certain existing subordinated indebtedness, in the aggregate principal amount of $1,500,000. In addition, amounts borrowed under this Tranche A were used to pay certain closing costs, including the Lender’s legal fees, commitment fees, and other costs and expenses under the Credit Agreement amounting to $1,083,872. These closing costs have been deferred, and will be amortized over 4 years. $67,743 and $112,904 was amortized for the three and six months ended December 31, 2005, respectively. The remaining balance of $664,003 was used for working capital needs.
	•	The obligation to repay the $10,000,000 principal amount borrowed at the closing, along with interest as described below, is further evidenced by the Note.
	•	Advances under Tranche B and Tranche C must be approved by the Lenders, and are subject to the satisfaction of all conditions precedent required by the Lenders including the condition that a default not occur under the loans as a result of the advance.
	•	The rate of interest (the “Interest Rate”) payable on the Loan for each calendar month (an “Interest Period”) is a floating percentage rate per annum equal to the sum of the “LIBOR” for that period plus the “Margin”. For theses purposes, LIBOR means for any Interest Period the rate offered in the London interbank market for U.S. Dollar deposits for the relevant Interest Period; provided, however, that for purposes of calculating the Interest Rate, LIBOR shall at no time be less than a rate equal to 2.65%. For these purposes, “Margin” means 9% per annum. Interest is due and payable monthly in arrears.
	•	Provided there has been no event of default under the Loan, an amount of interest equal to 4% per annum that would otherwise be paid in cash instead may be paid in kind (“PIK”) by such amount being added to the principal balance of the Loan on the last day of each month. Such PIK amount will then accrue interest and be due and payable on the same terms and conditions as the Loan. The Company may, at its option, elect to terminate the PIK interest arrangement and instead pay such amount in cash. As of December 31, 2005, the Company accrued and expensed $279,136 in relation to the PIK interest.
	•	If any sum due and payable under the credit facility is not paid on the due date therefore, the Company shall be liable to pay interest on such overdue amount at a rate equal to the then current Interest Rate plus 3% per annum.
	•	Principal amounts due under the Loans begin to be amortized eighteen months after the closing date of the Credit Agreement, with the complete Loan to be repaid in full no later than the Maturity Date which is four years after the closing.
	•	A mandatory prepayment is required if, prior to the date which is 9 months after the Closing Date, (i) the Company has not borrowed under Tranche B, and (ii) the Company has not acquired (without the incurrence of any indebtedness) 100% of the equity interests of any new subsidiary which at the time of acquisition had a twelve month trailing EBITDA of greater than $1,000,000. If prepayments are required due to this reason, the amount of the prepayment is 85% of the “Excess Cash Flow” — which means, cash provided by operations by the Company and its subsidiaries determined quarterly less capital expenditures for such period, provided that the Company shall at all times be allowed to retain a minimum of $1,500,000 of cash for operating

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		purposes. In addition, the Company must prepay the loan in full no later than the date which is 21 months after the Closing Date.
	•	The Credit Agreement contains certain financial covenants usual and customary for facilities and transactions of this type. In the event the Company completes further acquisitions, the Company and the Agent and lenders will agree upon modifications to the financial covenants to reflect the changes to the Company’s consolidated assets, liabilities, and expected results of operations in amounts to be mutually agreed to by the parties.
	•	The Company’s obligations are guaranteed by the direct and indirect subsidiaries of the Company, including, without limitation, Gupta Technologies, LLC, Kenosia Corporation, and Warp Solutions, Inc.
	•	The Company and its subsidiaries granted first priority security interests in their assets, and pledged the stock or equity interests in their respective subsidiaries, to the Agent as security for the financial obligations under the Credit Agreement and the Financing Documents. In addition, the Company has undertaken to complete certain matters, including the delivery of stock certificates in subsidiaries, and the completion of financing statements perfecting the security interests granted under the applicable state or foreign jurisdictions concerning the security interests and rights granted to the Lenders and the Agent.
	•	As additional security for the lenders making the loans under the Credit Agreement, certain subsidiaries of the Company have entered into Security Agreements with Fortress Credit. Corp. relating to their assets in the U.K., and have pledged their interests in the subsidiaries organized under English law, Gupta Technologies Limited and Warp Solutions Limited, by entering into a Mortgages of Shares with Fortress. Also, the Company’s subsidiary, Gupta Technologies, LLC (“Gupta”) and its German subsidiary, Gupta Technologies GmbH, have entered into a Security Trust Agreement with Fortress Credit Corp. granting a security interest in the assets of such entities located in Germany. Gupta has also pledged its interests in the German subsidiary under a Share Pledge Agreement with Fortress Credit Corp.
	•	Under the Intercreditor Agreement, the holders of the Company’s outstanding subordinated notes which were issued pursuant to that certain Subordinated Note and Warrant Purchase Agreement dated January 31, 2005, agreed to subordinate the payment terms and security interests of the subordinated notes to the payment terms and security interests of the senior lenders under the Credit Agreement.
	•	Pursuant to the Warrant Agreement, the Company agreed to issue warrants to acquire up to an aggregate of 7% of the fully diluted stock of the Company (as of the date of the Warrant Agreement) if the Lenders make all the advances under the total commitments of the credit facility. All warrants will have an exercise price of $0.01 per share. The exercise price and number of shares issuable upon exercise of each warrant are subject to adjustment as provided in the Warrant Agreement, including weighted average anti-dilution protection.
	•	Warrants to acquire an aggregate of 5% of the fully diluted stock of the Company (2,109,042 shares of Common Stock, par value $.00001 per share) are issuable upon the Company receiving advances under Tranche A or B of the credit facility (“Tranche A/ B Available Shares”) in proportion to the amount of the advance compared with the total $25,000,000 in commitments under Tranche A and B.
	•	Since the Company borrowed $10,000,000 under Tranche A at the closing, warrants to acquire 40% of the Available Tranche A/ B Shares (843,617 shares of the Company’s Common Stock) were issued at closing to the Lenders. The warrants have an exercise price of $.01 per share, have a

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		cashless exercise feature, and are exercisable until December 10, 2010. As further advances are made to the Company under Tranche B, the Company will issue additional warrants in proportion to the advances received. Additionally, if the unused total commitments attributable to Tranche A and Tranche B are cancelled in accordance with the Credit Agreement, warrants shall be used for the number of shares based on the Pro Rata Portion of the Total Commitments attributable to Tranche A or Tranche B which are cancelled. The proceeds from the Tranche A were allocated to the fair value of the warrants and Tranche A. Based on the fair market value, $1,599,615 was allocated to the warrants and the remainder of $8,400,385 was allocated to Tranche A. The fair value of the warrants was determined by utilizing Black-Scholes method. The discount to Tranche A will be accreted over 48 months. For the three months and six months ended December 31, 2005, $99,975 and $166,625 respectively were accreted and charged to interest expense.
	•	On October 26, 2005, in connection with the acquisition of the five software companies (referred to as “Agreements to Acquire Five Software Companies” in Note 5 of the Notes to the Consolidated Financial Statements), the Company entered into Amendment Agreement No. 1 (“Amendment Agreement”) between the Company, Fortress Credit Opportunities I LP (“Lender”) and Fortress Credit Corp., as Agent (the “Agent”) relating to the Credit Agreement dated August 2, 2005 between the Company, Fortress Credit Corp., as original lender (together with any additional lenders, the “Original Lenders”), and the Agent. Pursuant to this Amendment Agreement, the Lender made a loan of $15,000,000 under Tranche B of the credit facility under the Credit Agreement. Additional information of this amendment is qualified in its entirety by reference to Amendment Agreement No. 1, which was previously filed as Exhibit 10.87 of the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on November 1, 2005.
	•	Since the Company borrowed $15,000,000 under Tranche B on October 26, 2005, warrants to acquire 60% of the Available Tranche A/ B Shares (1,265,425 shares of the Company’s Common Stock) were issued to the Lenders. The warrants have an exercise price of $.01 per share, have a cashless exercise feature, and are exercisable until December 10, 2010. Based on the fair market value, $1,892,415 was allocated to the warrants and the remainder of $13,107,585 was allocated to Tranche B. The fair value of the warrants was determined by utilizing Black-Scholes method. The discount to Tranche B will be accreted over 45 months. For the three months ended December 31, 2005, $89,024 was accreted and charged to interest expense.
	•	Warrants to acquire an aggregate of 2% of the fully diluted stock of the Company (843,617 shares of Common Stock) are issuable upon the Company receiving advances under Tranche C of the credit facility (“Tranche C Available Shares”) in proportion to the amount of the Tranche C advance compared with the total $25,000,000 in commitments under Tranche C.

Note 8.	Promissory Notes

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Note 9.	Registration Rights

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Note 10.	Series C Subscription Agreement

Note 11.	Commitments and Contingencies

	Legal Proceedings

	Lease of Office Space for Principal Executive Offices

Note 12.	Acquisition of InfoNow

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Note 13.	Employment Agreement and Related Agreements with Mark Finkel

Note 14.	Subsequent Events

	Options Granted to Mark Finkel

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	Convertible Promissory Notes and Effect on Previously Issued Convertible Notes

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	Issuance of Common Stock in connection with the Acquisition of Empagio, Inc.

	Convertible Promissory Notes in the Principal Amount of $1,375,000

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	Acquisition of Executive Consultants, Inc.

	•	At the Closing, Halo shall make available for delivery to the ECI Stockholders $603,571 in cash and cash equivalents and 330,668 Halo Shares.
	•	Not later than thirty (30) days after the Closing Date, Halo shall calculate the Net Working Capital as of the Closing Date and shall provide Sellers with a written copy of such calculation. Such calculation shall be definitive and binding upon the parties unless Sellers shall give Halo written notice of any objection to such calculation within thirty (30) days after the receipt thereof (an “Objection Notice”). If Sellers deliver an Objection Notice, the parties shall negotiate in good faith to resolve all disputes regarding the Net Working Capital. If the parties can not resolve such a

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		dispute they shall mutually agree upon a nationally or regionally recognized accounting firm to determine the Net Working Capital, whose decision, absent manifest error, shall be binding upon the parties.

	•	To the extent the Net Working Capital as of the Closing Date is less than $0 (the amount of any such difference referred to as the “Purchase Price Reduction Amount”), the Purchase Price, shall be reduced, dollar for dollar and share for share (based on the per share closing valuation), by the Purchase Price Reduction Amount. To the extent the Net Working Capital as of the Closing Date is greater than $0 (the amount of any such difference referred to as the “Purchase Price Increase Amount”) the Purchase Price, shall be increased, dollar for dollar and share for share (based on the per share closing valuation), by such amount. The amount due under the Net Working Capital adjustment shall be paid within five (5) business days of the final determination of the Purchase Price Reduction Amount or Purchase Price Increase Amount, as the case may be, by wire transfer of immediately available funds and transfer of Halo Shares. To the extent the calculation of Net Working Capital results in a Purchase Price Reduction Amount, the Sellers shall be responsible for this amount, although the Sellers may make arrangements among the ECI Stockholders to allocate this obligation pro rata among all ECI Stockholders.

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Report of Independent Registered Public Accounting Firm			F-64
Balance Sheet as of June 30, 2005			F-65
Statements of Income for the years ended June 30, 2005 and 2004			F-66
Statements of Shareholder’s Deficit for the years ended June 30, 2005 and 2004			F-67
Statements of Cash Flows for the years ended June 30, 2005 and 2004			F-68
Notes to Financial Statements			F-69

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			June 30,
			2005
ASSETS
Current assets:
	Cash		$	825,104
	Accounts receivable, net of allowance for doubtful accounts of $2,809			126,630
	Prepaid expenses and other current assets			89,036
Total current assets				1,040,770
Property and equipment, net of accumulated depreciation of $193,316				6,120
Intangible assets, net of accumulated amortization of $1,225,918				94,302
Due from affiliates				3,198,463
Total assets			$	4,339,655
LIABILITIES AND SHAREHOLDER’S DEFICIT
Current liabilities:
	Accounts payable		$	226,856
	Other accrued liabilities			368,186
	Due to affiliates			156,041
	Loan payable			82,174
	Note payable			72,442
	Deferred revenue-current portion			4,649,081
Total current liabilities				5,554,780
Deferred revenue-long-term portion				101,734
Total liabilities				5,656,514
Commitments
Shareholder’s deficit:
	Common stock, $.01 par value, 1,000 shares authorized, 100 shares issued and outstanding at June 30, 2005			1
	Additional paid in capital			1,805,469
	Accumulated deficit			(3,122,329	)
Total shareholder’s deficit				(1,316,859	)
Total liabilities and member’s deficit			$	4,339,655

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			Years Ended June 30,
			2005				2004
Revenues:
	Products		$	762,585			$	127,604
	Services			9,136,808				10,649,571
Total revenues				9,899,393				10,777,175
Cost of revenues:
	Cost of products			85,647				128,767
	Cost of services			1,522,840				1,637,651
Total cost of revenues				1,608,487				1,766,418
Gross profit				8,290,906				9,010,757
Operating expenses:
	Selling, general, and administrative expenses			2,974,832				3,570,116
	Research and development expenses			1,803,455				1,671,009
	Depreciation and amortization			200,174				256,093
	Management fees to Platinum Equity, LLC			2,575,000				2,400,000
Total operating expenses				7,553,461				7,897,218
Income from operations				737,445				1,113,539
Other income (expense):
	Interest income			258,018				237,204
	Interest expense			(102,354	)			(85,853	)
	Other income (expense), net			12,000				(10,127	)
Income before provision (benefit) for income taxes				905,109				1,254,763
Provision (benefit) for income taxes				(2,281	)			43,066
Net income			$	907,390			$	1,211,697
Earnings per share			$	9,073.90			$	12,116.97
Weighted-average number of common shares				100				100

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															Accumulated
			Common Stock												Other								Total
											Paid in				Comprehensive				Accumulated				Shareholder’s
			Shares				Amount				Capital				(Loss)				Deficit				Deficit
Balance at July 1, 2003				100			$	1			$	496,419			$	(53,253	)		$	(3,921,436	)		$	(3,478,269	)
	Contributions							—				500,000				—				—				500,000
	Distributions							—				—				—				(1,319,980	)			(1,319,980	)
	Unrealized holding gain arising during the year							—				—				38,423				—				38,423
	Reclassification adjustment for realized loss							—				—				14,830				—				14,830
	Net income							—				—				—				1,211,697				1,211,697
Balance at June 30, 2004								1				996,419				—				(4,029,719	)			(3,033,299	)
	Contributions							—				809,050				—				—				809,050
	Net income							—				—				—				907,390				907,390
Balance at June 30, 2005							$	1			$	1,805,469			$	—			$	(3,122,329	)		$	(1,316,859	)

F-67

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Table of Contents

				Year Ended June 30
				2005				2004
OPERATING ACTIVITIES
Net income				$	907,390			$	1,211,697
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization				200,174				256,093
	Loss on sale of investments				—				14,830
	Provision for bad debt				2,810				(26,711	)
	Changes in operating assets and liabilities:
		Accounts receivable			55,097				289,950
		Due from affiliates			(258,018	)			(237,204	)
		Prepaid expenses and other assets			(11,869	)			(20,770	)
		Accounts payable			2,232				(220,309	)
		Other accrued liabilities			(105,951	)			(141,873	)
		Due to affiliates			1,927				(118,649	)
		Deferred revenue			(543,360	)			132,418
Net cash provided by operating activities					250,432				1,139,472
INVESTING ACTIVITIES
Purchases of property and equipment					(3,760	)			(5,589	)
Proceeds from sale of securities					—				1,282,307
Net cash (used in) provided by investing activities					(3,760	)			1,276,718
FINANCING ACTIVITIES
Shareholder distributions					—				(1,319,965	)
Shareholder contributions					809,050				500,000
Repayments of note payable					(1,271,256	)			(500,000	)
Repayments of loan payable					(410,870	)			—
Net cash used in financing activities					(873,076	)			(1,319,965	)
Net (decrease) increase in cash					(626,404	)			1,096,225
Cash at beginning of year					1,451,508				355,283
Cash at end of year				$	825,104			$	1,451,508
Supplemental disclosures of cash flow information
Cash paid for income taxes				$	22,080			$	43,066
Cash paid for interest				$	102,354			$	85,853

F-68

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Table of Contents

1.	Organization and Nature of Business

2.	Summary of Significant Accounting Policies

	Use of Estimates

	Cash

	Concentration of Credit Risk and Certain Other Risks

	Fair Value of Financial Instruments

F-69

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Table of Contents

	Comprehensive Income

Net income		$	1,211,697
Unrealized holding gain during the year			38,423
Reclassification adjustment for realized loss			14,830
Comprehensive income		$	1,264,950

	Marketable Securities

	Property and Equipment

	Intangible Assets

	Earnings Per Share

	Revenue Recognition

F-70

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Table of Contents

	Cost of Revenue

	Impairment of Long-Lived Assets

	Income Taxes

	Shipping and Handling Costs

F-71

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Table of Contents

	Advertising Expense

	Research and Development and Software Development Costs

	New Accounting Pronouncements

3.	Property and Equipment

Computer Equipment		$	199,436
Less accumulated depreciation			(193,316	)
Property and equipment, net		$	6,120

4.	Intangible Assets

		Gross Carrying				Accumulated
		Amount				Amortization				Net
Customer relationships		$	1,320,220			$	1,225,918			$	94,302

5.	Related Party Transactions

	Note Receivable, Management Fees and Expense Reimbursements

F-72

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Table of Contents

	Transactions with Affiliates

6.	Notes and Loans Payable

7.	Commitments

	Leases

2006		$	471,345
2007			392,790
Total minimum lease payments		$	864,135

8.	Employee Benefits

9.	Subsequent Event

F-73

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Table of Contents

F-74

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Report of Independent Registered Public Accounting Firm			F-76
Combined Balance Sheet as of June 30, 2005			F-77
Combined Statements of Operations for the years ended June 30, 2005 and 2004			F-78
Combined Statements of Member’s and Shareholder’s Equity for the years ended June 30, 2005 and 2004			F-79
Combined Statements of Cash Flows for the years ended June 30, 2005 and 2004			F-80
Notes to Combined Financial Statements			F-81

F-75

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Table of Contents

F-76

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Table of Contents

			June 30,
			2005
ASSETS
Current assets:
	Cash and cash equivalents		$	983,630
	Accounts receivable, net of allowances of $112,281			1,546,015
	Due from affiliates			22,138
	Prepaid expenses and other assets			322,782
Total current assets				2,874,565
Property and equipment, net of accumulated depreciation of $2,411,177				101,540
Other assets				111,154
Goodwill				1,642,760
Intangible assets, net of accumulated amortization of $7,307,910				5,992,090
Total assets			$	10,722,109
LIABILITIES AND MEMBER’S AND SHAREHOLDER’S EQUITY
Current liabilities:
	Accounts payable and accrued expenses		$	1,214,904
	Deferred revenues — current portion			5,688,873
	Due to Platinum Equity, LLC			2,259,460
Total current liabilities				9,163,237
Deferred revenues — long term				20,323
Commitments
Member’s and shareholder’s equity:
	Member’s equity			2,026,293
	Common stock			120,000
	Paid in capital			3,672,736
	Accumulated deficit			(4,280,480	)
Total member’s and shareholder’s equity				1,538,549
Total liabilities and member’s and shareholder’s equity			$	10,722,109

F-77

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Table of Contents

			Year Ended				Year Ended
			June 30				June 30
			2005				2004
Revenues:
	Products		$	2,463,329			$	2,578,529
	Service			13,654,402				15,364,931
Total revenues				16,117,731				17,943,460
Cost of revenues:
	Cost of products			684,046				830,834
	Cost of services			1,785,936				2,127,438
Total cost of revenues				2,469,982				2,958,272
Gross profit				13,647,749				14,985,188
Operating expenses:
	Engineering and development			3,412,322				3,780,801
	Selling and marketing			1,613,641				2,126,612
	General and administrative			3,873,562				4,025,906
	Depreciation and amortization			1,611,512				1,543,197
	Management fees to Platinum Equity, LLC			2,916,046				4,509,677
Total operating expenses				13,427,083				15,986,193
Income (loss) from operations				220,666				(1,001,005	)
Other income (expense):
	Interest income, net			(35,924	)			17,488
	Other expense, net			(2,248	)			(84,938	)
Income (loss) before provision for taxes				182,494				(1,068,455	)
	Provision for Income taxes			22,707				6,900
Net income (loss)			$	159,787			$	(1,075,355	)

F-78

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Table of Contents

							David								Foresight																Accumulated
							Common Stock								Common Stock																Other
			Member’s																				Paid in				Accumulated				Comprehensive
			Equity				Shares				Amount				Shares				Amount				Capital				Deficit				Loss				Totals
Balance at June 30, 2003			$	1,003,019				10			$	—				12,000,000			$	120,000			$	3,568,394			$	(3,406,637	)		$	(109,986	)		$	1,174,790
	Contributions							—								—				—				104,342												104,342
	Distributions to Shareholder							—				—				—				—								(135,000	)							(135,000	)
	Distributions to Member			(6,251	)			—				—				—				—																(6,251	)
	Unrealized holding gain arising during the year																															41,039				41,039
	Reclassification adjustment for realized loss																															68,947				68,947
Net loss				(684,038	)																							(391,317	)							(1,075,355	)
Balance at June 30, 2004				312,730				10				—				12,000,000				120,000				3,672,736				(3,932,954	)			—				172,512
	Contributions			1,306,250								—				—				—				—												1,306,250
	Distributions to Shareholder											—				—				—								(100,000	)							(100,000	)
	Net income (loss)			407,313																								(247,526	)							159,787
Balance at June 30, 2005			$	2,026,293				10				—				12,000,000			$	120,000			$	3,672,736			$	(4,280,480	)		$	—			$	1,538,549

F-79

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Table of Contents

				Year Ended				Year Ended
				June 30, 2005				June 30, 2004
Operating activities
Net income (loss)				$	159,787			$	(1,075,355	)
Adjustments to reconcile net income (loss) to cash used in operating activities:
	Depreciation and amortization				1,611,512				1,543,197
	Loss on sale of securities								68,947
	Changes in operating assets and liabilities:
		Accounts receivable			251,954				333,473
		Due from affiliate			14,907				(3,387	)
		Prepaid expenses and other assets			103,102				70,293
		Other assets			35,600				13,093
		Accounts payable and accrued expenses			401,571				(467,159	)
		Due to affiliates			(3,519,528	)			(547,820	)
		Deferred revenue			(790,071	)			(668,804	)
Net cash used in operating activities					(1,731,166	)			(733,522	)
Investing activities
Purchases of property and equipment					(61,912	)			(170,789	)
Sale of marketable securities					—				451,117
Net cash (used in) provided by investing activities					(61,912	)			280,328
Financing activities
Stockholder’s and member’s distributions					(100,000	)			(141,251	)
Member’s contribution					1,306,250				104,342
Net cash provided by (used in) in financing activities					1,206,250				(36,909	)
Net decrease in cash and cash equivalents					(586,828	)			(490,103	)
Cash and cash equivalents at beginning of year					1,570,458				2,060,561
Cash and cash equivalents at end of year				$	983,630			$	1,570,458
Supplemental disclosure of cash flow information:
	Cash paid for income taxes			$	22,707			$	6,900
	Cash paid for interest			$	35,770			$	40,042

F-80

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Table of Contents

1.	Organization and Nature of Business

2.	Summary of Significant Accounting Policies

	Use of Estimates

	Concentrations of Credit Risk and Major Customers

F-81

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Table of Contents

	Cash and Cash Equivalents

	Income Taxes

	Property and Equipment

	Engineering and Development and Software Development Costs

	Goodwill and Intangible Assets

F-82

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Table of Contents

	•	Significant underperformance relative to expected historical or projected future operating results;
	•	Significant changes in the manner of use of the acquired assets or the strategy for the overall business; and
	•	Significant negative industry or economic trends.

	Revenue Recognition

	Deferred Revenue

F-83

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Table of Contents

	Cost of Revenue

	Impairment of Long-Lived Assets

	Comprehensive Income

Net loss		$	(1,075,355	)
Unrealized holding gain arising during the year			41,039
Reclassification adjustment for realized loss			68,947
Comprehensive loss		$	(965,369	)

	Marketable Securities

	Fair Value of Financial Instruments

	Shipping and Handling Costs

F-84

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Table of Contents

	Advertising Expense

	Recent Accounting Pronouncements

3.	Property and Equipment

		June 30,
		2005
Computer equipment		$	1,482,510
Furniture and fixtures			757,409
Leasehold improvements			272,798
			2,512,717
Less accumulated depreciation and amortization			2,411,177
		$	101,540

4.	Intangible Assets

		Amortization				June 30
		Period (in
		Years)				2005
Customer relationships			10			$	10,000,000
Technology — core and developed			8				3,300,000
							13,300,000
Less accumulated amortization							7,307,910
						$	5,992,090

F-85

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Table of Contents

Year ending June 30:
2006		$	1,413,000
2007			1,413,000
2008			1,344,000
2009			1,000,000
2010			822,000
		$	5,992,000

5.	Related Party Transactions

	Management Fees and Expense Reimbursements

	Transactions with Affiliates

6.	Lease Commitments

Year ending June 30:
2006		$	668,735
2007			572,488
2008			379,620
		$	1,620,843

F-86

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Table of Contents

David Corporation, No par value:
	Authorized — 10,000,000 shares
	Issued and outstanding — 10 shares		$	—
Foresight Software, Inc., $0.01 par value:
	Authorized — 15,000,000 shares
	Issued and outstanding — 12,000,000			120,000
			$	120,000

8.	Employee Benefit Plan

9.	Segment Information

		Year Ended June 30, 2005
		Process				David				ProfitKey				Foresight				Total
Revenue
Products		$	917,839			$	391,266			$	491,815			$	662,409			$	2,463,329
Service			8,320,292				1,887,756				2,395,812				1,050,542				13,654,402
Total		$	9,238,131			$	2,279,022			$	2,887,627			$	1,712,951			$	16,117,731
Depreciations and Amortization		$	1,567,496			$	25,200			$	13,570			$	5,246			$	1,611,512
Net income (loss)		$	260,989			$	(372,312	)		$	146,324			$	124,786			$	159,787
Total Assets		$	9,155,899			$	745,134			$	446,310			$	374,766			$	10,772,109

		Year Ended June 30, 2004
		Process				David				ProfitKey				Foresight				Total
Revenue
Products		$	1,467,192			$	415,942			$	414,510			$	280,885			$	2,578,529
Service			9,574,852				2,013,645				2,388,011				1,388,423				15,364,931
Total		$	11,042,044			$	2,429,587			$	2,802,521			$	1,669,308			$	17,943,460
Depreciations and Amortization		$	1,486,779			$	27,357			$	23,411			$	5,650			$	1,543,197
Net income (loss)		$	(644,418	)		$	101,770			$	(39,620	)		$	(493,087	)		$	(1,075,355	)
Total Assets		$	10,735,257			$	1,299,345			$	674,089			$	555,469			$	13,264,160

F-87

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Table of Contents

10.	Subsequent Event

F-88

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Table of Contents

F-89

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Table of Contents

F-90

---

Table of Contents

F-91

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Table of Contents

															Pro Forma Adjustments
																							Process and
																			Tesseract				Affiliate
											Process and								Purchase				Purchase				WARP
			WARP(A)				Tesseract(B)				Affiliates(C)				Financing				Accounting				Accounting				Pro Forma
			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	751,033			$	369,075			$	947,953			$	14,704,906	(D)		$	(3,500,000	)(G)		$	(12,000,000	)(H)		$	1,272,967
Accounts receivable, net				2,129,875				64,673				1,677,514				—				—				—				3,872,062
Due from Platinum Equity, LLC and Affiliates				—				3,266,430				124,183				—				(3,275,685	)(G)			—				114,928
Prepaid expenses and other current assets				443,217				72,534				249,195				—				—				—				764,946
Total current assets				3,324,125				3,772,712				2,998,845				14,704,906				(6,775,685	)			(12,000,000	)			6,024,903
Property and equipment, net				246,688				4,339				79,618				—				—				—				330,645
Deferred financing cost, net				1,325,110				—				—				295,094	(F)			—				—				1,620,204
Intangible assets, net				16,462,587				47,150				5,638,961				—				3,919,650	(G)			(891,481	)(H)			25,176,867
Goodwill				7,601,420				—				1,642,765				—				12,094,214	(G)			6,998,535	(H)			28,336,934
Investment and other assets				1,086,360				—				111,154				—				(1,000,000	)(G)			—				197,514
	Total assets		$	30,046,290			$	3,824,201			$	10,471,343			$	15,000,000			$	8,238,179			$	(5,892,946	)		$	61,687,067
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	997,060			$	169,432			$	312,678			$	—			$	—			$	—			$	1,479,170
Accrued expenses				3,579,633				407,048				833,740				—				84,000	(G)			266,000	(H)			5,170,421
Due to Platinum Equity, LLC and Affiliates				—				153,537				1,356,897				—				(153,537	)(G)			(1,039,123	)(H)			317,774
Note payable to Bristol Technology, Inc.				500,000				—				—				—				—				—				500,000
Note payable				254,128				—				—				—				2,750,000	(G)			—				3,004,128
Deferred revenue				4,098,187				3,532,063				5,694,951				—				(1,681,030	)(G)			(2,879,758	)(H)			8,764,413
Due to ISIS				1,293,701				—				—				—				—				—				1,293,701
	Total current liabilities			10,722,709				4,262,080				8,198,266				—				999,433				(3,652,881	)			20,529,607
Subordinated notes payable				1,083,336				—				—				—				—				—				1,083,336
Senior notes payable				8,467,035				—				—				13,107,585	(D,E)			—				—				21,574,620
Other long term liabilities				41,602				50,867				33,012				—				—				—				125,481
	Total liabilities			20,314,682				4,312,947				8,231,278				13,107,585				999,433				(3,652,881	)			43,313,044
Commitments and Contingencies				—				—				—				—				—				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				—				—				—				—				—				2
Series C Preferred Stock				13,936,644				—				—				—				—				—				13,936,644
Series D Preferred Stock				—				—				—				—				6,750,000	(G)			—				6,750,000
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				211,636				—				—				—				—				—				211,636
Shares of Common Stock to be issued for accrued interest on subordinated debt				42,500				—				—				—				—				—				42,500
Common stock				35				1				120,000				—				(1	)(I)			(120,000	)(I)			35
Additional paid-in capital				61,885,439				1,805,469				3,672,736				1,892,415	(E)			(1,805,469	)(I)			(3,672,736	)(I)			63,777,854
Deferred compensation				(870,562	)			—				—				—				—				—				(870,562	)
Accumulated other comprehensive loss				(62,664	)			—				—				—				—				—				(62,664	)
(Accumulated deficit) retained earnings				(65,411,422	)			(2,294,216	)			(4,259,470	)			—				2,294,216	(I)			4,259,470	(I)			(65,411,422	)
Member’s equity				—				—				2,706,799				—				—				(2,706,799	)(I)			—
	Total stockholders’ equity			9,731,608				(488,746	)			2,240,065				1,892,415				7,238,746				(2,240,065	)			18,374,023
	Total liabilities and stockholders’ equity		$	30,046,290			$	3,824,201			$	10,471,343			$	15,000,000			$	8,238,179			$	(5,892,946	)		$	61,687,067

F-92

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Table of Contents

Cash			$	3,500,000
Advances to Platinum made prior to September 30, 2005				1,000,000
Promissory note and Working Capital Adjustment				2,750,000
Series D Preferred Stock (6,136,363 shares)				6,750,000
Transaction costs				84,000
	Total purchase price		$	14,084,000

Assets:
Tesseract’s historical assets			$	3,824,201
Write-up of intangibles assets consisting of trade names, developed technologies and customer relationships				3,919,650
Write-up of goodwill				12,094,214
Forgiveness of receivables due from Platinum				(3,275,685	)
Liabilities:
Tesseract’s historical liabilities				(4,312,947	)
Adjustment of deferred revenues to fair market value				1,681,030
Forgiveness of payables to Platinum				153,537
	Total purchase price		$	14,084,000

F-93

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Table of Contents

Cash			$	12,000,000
Transaction costs				266,000
	Total purchase price		$	12,266,000

Assets:
Process and Affiliates’ historical assets			$	10,471,343
Write-down of intangibles assets consisting of developed technologies and customer relationships				(891,481	)
Increase in goodwill				6,998,535
Liabilities:
Process and Affiliates’ historical liabilities				(8,231,278	)
Adjustment of deferred revenues to fair market value				2,879,758
Forgiveness of payables to Platinum				1,039,123
	Total purchase price		$	12,266,000

F-94

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Table of Contents

												Process and				Pro Forma				WARP
				WARP(J)				Tesseract(K)				Affiliates(L)				Adjustment				Pro Forma
				(Unaudited)
Revenue
	Licenses			$	1,314,569			$	56,250			$	877,518			$	—			$	2,248,337
	Services				1,893,760				2,144,550				3,129,265				(1,929,564	)(P)			5,238,011
		Total revenue			3,208,329				2,200,800				4,006,783				(1,929,564	)			7,486,348
Cost of revenue
	Cost of licenses				45,734				—				232,505				—				278,239
	Cost of services				293,908				268,526				373,969				—				936,403
		Total cost of revenue			339,642				268,526				606,474				—				1,214,642
Gross Profit					2,868,687				1,932,274				3,400,309				(1,929,564	)			6,271,706
Product development					956,557				162,500				636,011				—				1,755,068
Sales, marketing and business development					1,372,525				51,194				355,697				—				1,779,416
General and administrative					1,315,926				818,388				1,064,075				—				3,198,389
Amortization of intangibles					486,432				47,151				366,610				(118,274	)(O)			781,919
Platinum management fees					—				50,000				(317,130	)			267,130	(Q)			—
Income (Loss) before interest					(1,262,753	)			803,041				1,295,046				(2,078,420	)			(1,243,086	)
Interest (expense) income					(1,296,102	)			25,101				203,533				(653,488	)(R,S,T)			(1,720,956	)
Net Income (loss) before income taxes					(2,558,855	)			828,142				1,498,579				(2,731,908	)		$	(2,964,042	)
Income taxes					52,163				30				2,061				—	(U)			54,254
Net Income (loss)				$	(2,611,018	)		$	828,112			$	1,496,518			$	(2,731,908	)		$	(3,018,296	)
Computation of loss applicable to common shareholders
Net Income (loss) before beneficial conversion and preferred dividends				$	(2,611,018	)		$	828,112			$	1,496,518			$	(2,731,908	)		$	(3,018,296	)
Beneficial conversion and preferred dividends					(220,179	)			—				—				—				(220,179	)
Income (Loss) attributable to common stockholders				$	(2,831,197	)		$	828,112			$	1,496,518			$	(2,731,908	)		$	(3,238,475	)
Basic and diluted net loss per share				$	(0.88	)														$	(1.01	)
Weighted-average shares outstanding				$	3,209,597																3,209,597

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												Process and				Pro Forma				WARP
				WARP(J)				Tesseract(M)				Affiliates(N)				Adjustment				Pro Forma
				(Unaudited)
Revenue
	Licenses			$	2,986,752			$	762,585			$	2,463,329			$	—			$	6,212,666
	Services				2,137,170				9,136,808				13,654,402				(4,560,788	)(P)			20,367,592
		Total revenue			5,123,922				9,899,393				16,117,731				(4,560,788	)			26,580,258
Cost of revenue
	Cost of licenses				151,051				85,647				684,046				—				920,744
	Cost of services				396,490				1,522,840				1,785,936				—				3,705,266
		Total cost of revenue			547,541				1,608,487				2,469,982				—				4,626,010
Gross Profit					4,576,381				8,290,906				13,647,749				(4,560,788	)			21,954,248
Product development					1,589,099				1,803,455				3,412,322				—				6,804,876
Sales, marketing and business development					3,652,117				239,348				1,613,641				—				5,505,106
General and administrative					4,042,702				2,747,054				4,072,574				—				10,862,330
Amortization of intangibles					946,063				188,603				1,412,500				(419,155	)(O)			2,128,011
Platinum management fees					—				2,575,000				2,916,046				(5,491,046	)(Q)			—
Late filing penalty					1,033,500				—				—				—				1,033,500
Intangible impairment					62,917				—				—				—				62,917
Goodwill impairment					3,893,294				—				—				—				3,893,294
Income (Loss) before interest					(10,643,311	)			737,446				220,666				1,349,413				(8,335,786	)
Interest (expense) income					(4,631,683	)			167,663				(38,172	)			(2,416,074	)(R,S,T)			(6,918,266	)
Net Income (loss) before income taxes					(15,274,994	)			905,109				182,494				(1,066,661	)			(15,254,052	)
Income taxes (benefit)					97,945				(2,281	)			22,707				—	(U)			118,371
Net Income (loss)				$	(15,372,939	)		$	907,390			$	159,787			$	(1,066,661	)		$	(15,372,423	)
Computation of loss applicable to common shareholders
Net Income (loss) before beneficial conversion and preferred dividends				$	(15,372,939	)		$	907,390			$	159,787			$	(1,066,661	)		$	(15,372,423	)
Beneficial conversion and preferred dividends					(7,510,590	)			—				—				—				(7,510,590	)
Income (Loss) attributable to common stockholders				$	(22,883,529	)		$	907,390			$	159,787			$	(1,066,661	)		$	(22,883,013	)
Basic and diluted net loss per share				$	(11.97	)														$	(11.97	)
Weighted-average shares outstanding					1,912,033																1,912,033

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						Three Months
		Year Ended				Ended
		June 30,				September 30,
Note		2005				2005
(R)		$	1,869,197			$	516,769
(S)			73,773				18,443
(T)			473,104				118,276
		$	2,416,074			$	653,488

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		Page
Independent Auditors’ Report			F-99
Balance Sheet — December 31, 2005			F-100
Statements of Operations — Years Ended December 31, 2005 and 2004			F-101
Statements of Stockholders’ Equity — For the Years Ended December 31, 2005 and 2004			F-102
Statements of Cash Flows — Years Ended December 31, 2005 and 2004			F-103
Notes to Financial Statements			F-104

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		December 31,
		2005
		(In thousands, except
		share information)
ASSETS
Current assets:
Cash and cash equivalents		$	3,032
Accounts receivable:
Billed, net of allowance of $10			873
Unbilled			14
Prepaid expenses and other current assets			376
Total current assets			4,295
Property and equipment, net			331
Other assets and deferred charges			467
Total assets		$	5,093
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	670
Payroll related liabilities			310
Other liabilities			52
Short-term deferred revenues			1,934
Total current liabilities			2,966
Long-term deferred revenues			84
Deferred rent			63
Commitments and contingencies (Note 6)			—
Stockholders’ equity:
Preferred stock, $.001 par value; 1,712,335 shares authorized Series A Convertible, 213,483 shares authorized, none issued and outstanding			—
Series B Convertible Participating Preferred Stock, 550,000 shares authorized none issued and outstanding			—
Common stock, $.001 par value; 40,000,000 shares authorized; 10,055,398 issued and outstanding			10
Additional paid-in capital			40,146
Accumulated deficit			(38,176	)
Total stockholders’ equity			1,980
Total liabilities and stockholders’ equity		$	5,093

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		Years Ended
		December 31,
		2005				2004
		(In thousands, except per
		share information)
Revenues:
Service and other fees		$	7,174			$	9,292
Implementation and software license fees			1,589				1,587
Total revenues			8,763				10,879
Cost of revenues			5,922				5,864
Gross margin			2,841				5,015
Operating expenses:
Selling and marketing			1,144				2,024
Product development			647				933
General and administrative			2,833				2,767
Total operating expenses			4,624				5,724
Loss from operations			(1,783	)			(709	)
Other income (expense):
Interest income			79				31
Interest expense			(4	)			(8	)
			75				23
Net loss		$	(1,708	)		$	(686	)
Net loss per common share:
Basic		$	(.17	)		$	(.07	)
Fully diluted		$	(.17	)		$	(.07	)
Weighted average common shares outstanding:
Basic			10,055				9,920
Fully diluted			10,055				9,920

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		Preferred Stock								Common Stock
																		Additional				Accumulated
		Shares				Amount				Shares				Amount				Paid-in Capital				Deficit
		(In thousands, except share information)
Balances, December 31, 2003			—			$	—				9,640,499			$	10			$	39,602			$	(35,782	)
Common shares issued upon exercise of options			—				—				404,232				—				534				—
Net income			—				—				—				—				—				(686	)
Balances, December 31, 2004			—				—				10,044,731				10				40,136				(36,468	)
Common shares issued upon exercise of options			—				—				10,667				—				10				—
Net loss			—				—				—				—				—				(1,708	)
Balances, December 31, 2005			—			$	—				10,055,398			$	10			$	40,146			$	(38,176	)

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		Years Ended
		December 31,
		2005				2004
		(In thousands)
Cash flows provided by (used in) operating activities:
Net loss		$	(1,708	)		$	(686	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			318				396
Allowance for bad debt expense (recovery)			(25	)			31
Loss on asset disposition			1				13
Changes in operating assets and liabilities:
Accounts receivable			564				62
Other current assets			102				134
Other assets and deferred charges			(42	)			(11	)
Accounts payable			320				93
Payroll related and other liabilities			(249	)			31
Deferred revenue			628				204
Net cash provided by (used in) operating activities			(91	)			267
Cash flows from investing activities:
Purchase of property and equipment			(196	)			(266	)
Capitalized software costs			(399	)			—
Net cash used in investing activities			(595	)			(266	)
Cash flows from financing activities:
Proceeds from exercise of options			10				534
Principal payments on debt obligations			(56	)			(70	)
Net cash provided by (used in) financing activities			(46	)			464
Net increase (decrease) in cash and cash equivalents			(732	)			465
Cash and cash equivalents, beginning of year			3,764				3,299
Cash and cash equivalents, end of year		$	3,032			$	3,764
Supplemental cash flow information:
Cash paid for interest		$	2			$	8

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			Twelve Months Ended
			December 31,
			2005				2004
			(In thousands, except
			per share amounts)
Net loss
	As reported		$	(1,708	)		$	(686	)
	Add: Stock-based employee compensation expense included in reported net income, net of tax effect of $0			—				—
	Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of tax effect of $0			(830	)			(3,444	)
	Pro forma		$	(2,538	)		$	(4,130	)
Net loss per share:
	Basic and diluted-as reported		$	(.17	)		$	(.07	)
	Basic and diluted-pro forma		$	(.25	)		$	(.42	)

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			Twelve Months
			Ended December 31,
			2005				2004
			(In thousands, except
			per share amounts)
Net loss available for common shareholders(A)			$	(1,708	)		$	(686	)
Weighted average common shares outstanding(B)				10,055				9,920
Dilutive effect of employee stock based compensation				—				—
Common stock and common stock equivalents(C)				10,055				9,920
Loss per share:
	Basic (A/B)		$	(.17	)		$	(.07	)
	Diluted (A/C)		$	(.17	)		$	(.07	)

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		December 31,
		2005
Computer equipment		$	4,245
Furniture and fixtures			405
Leasehold improvements			237
Computer software			1,099
			5,986
Less accumulated depreciation and amortization			(5,655	)
Property and equipment, net		$	331

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		Shares				Weighted Average
		Under Option				Exercise Price
Balance, December 31, 2003			5,499,009			$	2.46
Granted			1,134,633			$	2.55
Exercised			(404,232	)			1.32
Canceled			(1,408,690	)			4.20
Balance, December 31, 2004			4,820,720			$	2.07
Granted			1,552,100			$	0.81
Exercised			(10,667	)			0.98
Canceled			(693,944	)			3.19
Balance, December 31, 2005			5,668,209			$	1.59

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		Options Outstanding												Options Exercisable
						Weighted
						Average				Weighted								Weighted
						Remaining				Average								Average
		Number				Contractual				Exercise				Number				Exercise
Range of Exercise Prices		Outstanding				Life (Years)				Price				Exercisable				Price
$0.51 to $.97			1,679,670				8.9			$	0.80				1,159,878			$	0.92
$1.00 to $1.98			2,652,932				4.2				1.38				2,642,196				1.38
$2.11 to $2.95			930,217				5.6				2.47				926,050				2.47
$3.00 to $16.19			405,390				6.9				4.11				405,390				4.11
$0.55 to $16.19			5,668,209				6.0			$	1.59				5,133,514			$	1.69

5.	Income Taxes:

Deferred Tax Assets Net operating loss carryforwards				$	5,829
	Other Accruals				286
		Total deferred tax assets			6,115
Deferred Set Up and Implementation					(50	)
Net Deferred Tax Assets					6,065
Valuation allowance					(6,065	)
Net Asset				$	—

		2005				2004
Federal Tax “expected” expense (benefit)			(581	)			(234	)
State Tax “expected” expense (benefit)			(52	)			(21	)
Permanent Items			3				8
Stock Option Benefit			—				(43	)
Other			—				—
Valuation Allowance			630				290
Income Tax Benefit			—				—

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Year Ended December 31,
2006		$	496
2007			370
		$	866

		2005 Quarter Ended
		March 31(1)				June 30(1)				September 30(1)				December 31(1)
		(In thousands, except per share information)
Revenues:
Service and other fees		$	1,748			$	1,729			$	1,969			$	1,728
Implementation and software license fees			524				441				353				271
Total revenues			2,272				2,170				2,322				1,999
Gross margin			539				907				874				521
Net income (loss)		$	(1,109	)		$	(23	)		$	1			$	(577	)
Basic earnings (loss) per common share		$	(0.11	)		$	—			$	—			$	(0.06	)
Fully diluted earnings (loss) per common share		$	(0.11	)		$	—			$	—			$	(0.06	)

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		2004 Quarter Ended
		March 31				June 30				September 30				December 31(1)
Revenues:
Service and other fees		$	2,313			$	2,422			$	2,462			$	2,095
Implementation and software license fees			686				400				187				314
Total revenues			2,999				2,822				2,649				2,409
Gross margin			1,684				1,454				1,104				773
Net income (loss)		$	114			$	98			$	(355	)		$	(543	)
Basic earnings (loss) per common share		$	0.01			$	0.01			$	(0.04	)		$	(0.05	)
Fully diluted earnings (loss) per common share		$	0.01			$	0.01			$	(0.04	)		$	(0.05	)

(1)	Reflects the impact of a $222,000 per month reduction in service fees related to the Channel Insight contract with the Company’s largest client, effective November 1, 2004.

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											Purchase
											Accounting				Halo
			Halo(A)				InfoNow(B)				Adjustments				Pro Forma
ASSETS
Current Assets:
Cash and cash equivalents			$	1,844,373			$	3,031,708			$	(1,349,447	)(C)		$	3,526,634
Accounts receivable, net of allowance for doubtful accounts				4,550,514				887,361				—				5,437,875
Due from Platinum Equity, LLC				465,000				—				—				465,000
Prepaid expenses and other current assets				925,460				376,029				—				1,301,489
Total current assets				7,785,347				4,295,098				(1,349,447	)			10,730,998
Property and equipment, net				286,369				330,467				—				616,836
Deferred financing costs, net				1,529,036				—				—				1,529,036
Intangible assets, net of accumulated amortization				24,604,981				466,681				2,090,774	(C)			27,162,436
Goodwill				28,730,708				—				2,876,285	(C)			31,606,993
Investment and other assets				193,190				—				—				193,190
	Total assets		$	63,129,631			$	5,092,246			$	3,617,612			$	71,839,489
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	1,832,028			$	670,008				—			$	2,502,036
Accrued expenses				6,825,837				362,023				275,000	(C)			7,462,860
Note payable to Bristol Technology, Inc				500,000				—				—				500,000
Note payable to Platinum Equity, LLC				2,750,000				—				—				2,750,000
Notes payable				1,591,770				—				—				1,591,770
Deferred revenue				11,263,432				1,933,656				(551,092	)(C)			12,645,996
Due to ISIS				1,293,717				—				—				1,293,717
	Total current liabilities			26,056,784				2,965,687				(276,092	)			28,746,379
Subordinate notes payable				1,453,504				—				—				1,453,504
Senior notes payable				21,763,619				—				—				21,763,619
Other long term liabilities				52,972				146,794				(24,011	)(C)			175,755
	Total liabilities			49,326,879				3,112,481				(300,103	)			52,139,257
Commitments and contingencies				—				—				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				—				—				2
Series C Preferred Stock				13,802,837				—				(13,802,837	)(F)			—
Series D Preferred Stock				6,750,000				—				—				6,750,000
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				208,006				—				—				208,006
Shares of Common Stock to be issued for accrued dividends on Series D Preferred Stock				165,372				—				—				165,372
Shares of Common Stock to be issued for accrued interest on subordinate debt				41,667				—				—				41,667
Common stock				56				10,157				43	(C)			237
												(10,157	)(D)
Additional paid-in-capital				64,733,038				40,145,725				5,897,437	(C)			84,433,174
												138	(E)
												(40,145,725	)(D)
												13,802,699	(E)
Deferred compensation				(874,123	)			—				—				(874,123	)
Accumulated other comprehensive loss				(71,087	)			—				—				(71,087	)
Accumulated deficit				(70,953,016	)			(38,176,117	)			38,176,117	(D)			(70,953,016	)
Total stockholders’ equity				13,802,752				1,979,765				3,917,715				19,700,232
	Total liabilities and stockholders’ equity		$	63,129,631			$	5,092,246			$	3,617,612			$	71,839,489

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Estimated number of InfoNow shares to be acquired			10,055,398
Conversion price		$	0.71
Total conversion value		$	7,139,333								100	%
InfoNow cash balance as of 12/31/05		$	3,031,708
InfoNow net working capital as of 12/31/05		$	1,329,411
Lesser of two (to be paid in cash to InfoNow stockholders)						$	1,329,411				19	%
Total conversion value minus cash consideration (to be paid in Halo common shares)						$	5,809,922				81	%
Estimated value of InfoNow stock options with exercise price of $.71 or lower		$	107,593								100	%
Option conversion value allocated to cash							20,036				19	%
Option conversion value allocated to stock							87,558				81	%
Estimated transaction costs accrued							275,000
Total purchase price						$	7,521,927

*		The estimated purchase prices by category: cash $1,349,447; 4,304,730 shares of common stock par value $0.00001, $5,897,480; and transaction costs $275,000.

Assets:
InfoNow’s historical assets		$	5,092,246
Write-up of intangible assets consisting of developed technologies and customer relationships			2,090,774
Recording of goodwill			2,876,285
Liabilities:
InfoNow’s historical liabilities ($24,011 of long-term liabilities)			(3,112,481	)
Adjustment of deferred revenue to fair market value ($24,011 long term)			575,103
Total purchase price		$	7,521,927

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												Pro Forma				Halo
				Halo(E)				InfoNow(F)				Adjustments				Pro Forma
Revenue
	Licenses			$	2,819,062			$	—			$	—			$	2,819,062
	Services				5,759,979				4,320,659				(402,721	)(G)			9,677,917
		Total revenues			8,579,041				4,320,659				(402,721	)			12,496,979
Cost of revenue
	Cost of license				200,500				—				—				200,500
	Cost of services				1,098,048				2,925,688				—				4,023,736
		Total cost of revenues			1,298,548				2,925,688				—				4,224,236
Gross Profit					7,280,493				1,394,971				(402,721	)			8,272,743
Product development					2,516,793				271,691				—				2,788,484
Sales, marketing and business development					3,436,457				509,090				—				3,945,547
General and administrative					4,271,743				1,234,991				—				5,506,734
Amortization of intangibles					1,194,439				—				182,675	(H)			1,377,114
Loss before interest					(4,138,939	)			(620,801	)			(585,396	)			(5,345,136	)
Interest (expense) income					(3,553,807	)			45,714				—				(3,508,093	)
Net loss before income taxes					(7,692,746	)			(575,087	)			(585,396	)			(8,853,229	)
Income taxes					(86,488	)			—				—	(I)			(86,488	)
Net Loss				$	(7,779,234	)		$	(575,087	)		$	(585,396	)		$	(8,939,717	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(7,779,234	)		$	(575,087	)		$	(585,396	)		$	(8,939,717	)
Beneficial conversion — Preferred dividends					(593,558	)			—				—				(593,558	)
Loss attributable to common stockholders				$	(8,372,792	)		$	(575,087	)		$	(585,396	)		$	(9,533,275	)
Basic and diluted loss per share pro forma				$	(2.44	)										$	(0.44	)
Weighted average shares outstanding pro forma					3,425,127												21,532,694	(J)

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												Pro Forma				Halo
				Halo(E)				InfoNow(F)				Adjustments				Pro Forma
Revenue
	Licenses			$	2,986,752			$	—			$	—			$	2,986,752
	Services				2,137,170				9,501,411				(551,092	)(G)			11,087,489
		Total revenues			5,123,922				9,501,411				(551,092	)			14,074,241
Cost of revenue
	Cost of license				151,051				—				—				151,051
	Cost of services				396,490				6,177,554				—				6,574,044
		Total cost of revenues			547,541				6,177,554				—				6,725,095
Gross Profit					4,576,381				3,323,857				(551,092	)			7,349,146
Product development					1,589,099				865,067				—				2,454,166
Sales, marketing and business development					3,652,117				1,534,301				—				5,186,418
General and administrative					4,042,702				3,002,134				—				7,044,836
Amortization of intangibles					946,063				—				365,351	(H)			1,311,414
Late filing penalty					1,033,500				—				—				1,033,500
Intangible impairment					62,917				—				—				62,917
Goodwill impairment					3,893,294				—				—				3,893,294
Loss before interest					(10,643,311	)			(2,077,645	)			(916,443	)			(13,637,399	)
Interest (expense) income					(4,631,683	)			47,859				—				(4,583,824	)
Net loss before income taxes					(15,274,994	)			(2,029,786	)			(916,443	)			(18,221,223	)
Income taxes					(97,945	)			—				—	(I)			(97,945	)
Net Loss				$	(15,372,939	)		$	(2,029,786	)		$	(916,443	)		$	(18,319,168	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(15,372,939	)		$	(2,029,786	)		$	(916,443	)		$	(18,319,168	)
Beneficial conversion — Preferred dividends					(7,510,590	)			—				—				(7,510,590	)
Loss attributable to common stockholders				$	(22,883,529	)		$	(2,029,786	)		$	(916,443	)		$	(25,829,758	)
Basic and diluted loss per share pro forma				$	(11.97	)										$	(1.29	)
Weighted average shares outstanding pro forma					1,912,033												20,019,600	(J)

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		Six Months Ended				Year Ended
		December 31, 2005				June 30, 2005
Halo’s weighted average shares as reported on 10Q and 10K			3,425,127				1,912,033
Common stock to be issued to InfoNow stockholders			4,304,730				4,304,730
Preferred Series C to be converted as closing condition			13,802,837				13,802,837
Weighted average shares pro forma			21,532,694				20,019,600

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																							Pro Forma
											Pro Forma Adjustments												Adjustment
															Purchase								Purchase				Halo
			Halo(A)				Unify(B)				Conditions(C)				Accounting				InfoNow (J)				Accounting				Pro Forma
Assets
Current Assets:
Cash and cash equivalents			$	1,844,373			$	2,729,170			$	2,000,000	(D)		$	—			$	3,031,708			$	(1,349,447	)(K)		$	8,255,804
Accounts receivable, net of allowance for doubtful accounts				4,550,514				2,673,676				—				—				887,361				—				8,111,551
Due from Platinum Equity, LLC				465,000				—				—				—				—				—				465,000
Prepaid expenses and other current assets				925,460				618,100				—				—				376,029				—				1,919,589
Total current assets				7,785,347				6,020,946				2,000,000				—				4,295,098				(1,349,447	)			18,751,944
Property and equipment, net				286,369				301,585				—				—				330,467				—				918,421
Deferred financing costs, net				1,529,036				—				—				—				—				—				1,529,036
Intangible assets, net of accumulated amortization				24,604,981				242,667				—				6,466,116	(G)			466,681				2,090,774	(K)			33,871,219
Goodwill				28,730,708				1,405,111				—				9,609,706	(G)			—				2,876,285	(K)			42,621,809
Investment and other assets				193,190				412,103				—				—				—				—				605,293
	Total assets		$	63,129,631			$	8,382,411			$	2,000,000			$	16,075,822			$	5,092,246			$	3,617,612			$	98,297,722
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable			$	1,832,028			$	160,764				—				—			$	670,008				—			$	2,662,800
Accrued expenses				6,825,837				1,325,816				(30,417	)(E)			275,000	(G)			362,023				275,000	(K)			9,033,259
Note payable to Bristol Technology, Inc				500,000				—				—				—				—				—				500,000
Note payable to Platinum Equity, LLC				2,750,000				—				—				—				—				—				2,750,000
Notes payable				1,591,770				811,955				(1,095,885	)(E)			—				—				—				1,307,840
Deferred revenue				11,263,432				3,361,788				—				(1,633,565	)(G)			1,933,656				(551,092	)(K)			14,374,219
Due to ISIS				1,293,717				—				—				—				—				—				1,293,717
	Total current liabilities			26,056,784				5,660,323				(1,126,302	)			(1,358,565	)			2,965,687				(276,092	)			31,921,835
Subordinate notes payable				1,453,504				—				—				—				—				—				1,453,504
Senior notes payable				21,763,619				—				—				—				—				—				21,763,619
Other long term liabilities				52,972				699,762				—				—				146,794				(24,011	)(K)			875,517
	Total liabilities			49,326,879				6,360,085				(1,126,302	)			(1,358,565	)			3,112,481				(300,103	)			56,014,475
Commitments and contingencies				—				—				—				—				—				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				—				—				—				—				—				2
Series C Preferred Stock				13,802,837				—				(13,802,837	)(F)			—				—				—				—
Series D Preferred Stock				6,750,000				—				(6,750,000	)(F)			—				—				—				—
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				208,006				—				—				—				—				—				208,006
Shares of Common Stock to be issued for accrued dividends on Series D Preferred Stock				165,372				—				—				—				—				—				165,372
Shares of Common Stock to be issued for accrued interest on subordinate debt				41,667				—				—				—				—				—				41,667
Common stock				56				29,373				16	(D)			128	(G)			10,157				43	(K)			460
												9	(E)			(29,373	)(H)							(10,157	)(L)
												208	(F)
Additional paid-in-capital				64,733,038				63,885,760				1,999,984	(D)			19,456,585	(G)			40,145,725				5,897,437	(K)			115,301,847
												2,147,924	(E)			(63,885,760	)(H)							(40,145,725	)(L)
												20,552,629	(F)			514,250	(I)
Deferred compensation				(874,123	)			—				—				(514,250	)(I)			—				—				(1,388,373	)
Accumulated other comprehensive loss				(71,087	)			23,888				—				(23,888	)(H)			—				—				(71,087	)
Accumulated deficit				(70,953,016	)			(61,916,695	)			(1,021,631	)(E)			61,916,695	(H)			(38,176,117	)			38,176,117	(L)			(71,974,647	)
Total stockholders’ equity				13,802,752				2,022,326				3,126,302				17,434,387				1,979,765				3,917,715				42,283,247
	Total liabilities and stockholders’ equity		$	63,129,631			$	8,382,411			$	2,000,000			$	16,075,822			$	5,092,246			$	3,617,612			$	98,297,722

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Estimated number of Unify shares to be acquired			29,373,201
Exchange Ratio			0.437
Estimated number of Halo shares to be issued			12,836,089
Halo stock price as of 12/31/05		$	1.37
Estimated stock consideration						$	17,585,442
FMV of vested Unify options to be converted to Halo options(1)							848,062
FMV of vested Unify warrants to be converted to Halo warrants(2)							1,023,209
Estimated transaction costs accrued							275,000
Total purchase price						$	19,731,713

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(1)	Unify’s number of shares underlying the options outstanding as of 1/31/06 was 2,703,991, of which 2,406,374 options had an exercise price of less than $1.00, and of which 1,498,008 options were vested. These options are converted into 654,622 Halo options whose FMV is estimated to be $848,062.
(2)	Unify’s number of shares underlying the warrants outstanding as of 1/31/06 was 2,272,715. These warrants were fully vested and are converted into 993,176 Halo warrants whose FMV was estimated to be $1,023,209.

Assets:
Unify’s historical assets		$	8,382,411
Write-up of intangible assets consisting of developed technologies and customer relationships			6,466,116
Write-up of goodwill			9,609,706
Liabilities:
Unify’s historical liabilities			(6,360,085	)
Adjustment of deferred revenue to fair market value			1,633,565
Total purchase price		$	19,731,713

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Estimated number of InfoNow shares to be acquired			10,055,398
Conversion price		$	0.71
Total conversion value		$	7,139,333								100%
InfoNow cash balance as of 12/31/05		$	3,031,708
InfoNow net working capital as of 12/31/05		$	1,329,411
Lesser of two (to be paid in cash to InfoNow stockholders)						$	1,329,411				19%
Total conversion value minus cash consideration (to be paid in Halo common shares)							5,809,922				81%
Estimated value of InfoNow stock options with exercise price of $.71 or lower		$	107,593								100%
Option conversion value allocated to cash							20,036				19%
Option conversion value allocated to stock							87,558				81%
Estimated transaction costs accrued							275,000
Total purchase price						$	7,521,927

*	The estimated purchase prices by category: cash $1,349,447; 4,304,730 shares of common stock par value $0.00001, $5,897,480; and transaction costs $275,000.

Assets:
InfoNow’s historical assets		$	5,092,246
Write-up of intangible assets consisting of developed technologies and customer relationships			2,090,774
Recording of goodwill			2,876,285
Liabilities:
InfoNow’s historical liabilities			(3,112,481	)
Adjustment of deferred revenue to fair market value ($24,011 long term)			575,103
Total purchase price		$	7,521,927

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												Pro Forma								Pro Forma				Halo
				Halo(M)				Unify(N)				Adjustments				InfoNow(T)				Adjustments				Pro Forma
Revenue
	Licenses			$	2,819,062			$	2,275,286			$	—			$	—			$	—			$	5,094,348
	Services				5,759,979				2,807,768				(1,193,759	)(O)			4,320,659				(402,721	)(U)			11,291,926
		Total revenues			8,579,041				5,083,054				(1,193,759	)			4,320,659				(402,721	)			16,386,274
Cost of revenue
	Cost of license				200,500				216,367				—				—				—				416,867
	Cost of services				1,098,048				1,031,564				—				2,925,688				—				5,055,300
		Total cost of revenues			1,298,548				1,247,931				—				2,925,688				—				5,472,167
Gross Profit					7,280,493				3,835,123				(1,193,759	)			1,394,971				(402,721	)			10,914,107
Product development					2,516,793				1,367,097				—				271,691				—				4,155,581
Sales, marketing and business development					3,436,457				2,022,744				—				509,090				—				5,968,291
General and administrative					4,271,743				1,096,414				105,719	(P)			1,234,991				—				6,708,867
Amortization of intangibles					1,194,439				60,666				479,199	(Q)			—				182,675	(V)			1,916,979
Loss before interest					(4,138,939	)			(711,798	)			(1,778,677	)			(620,801	)			(585,396	)			(7,835,611	)
Interest (expense) income					(3,553,807	)			29,531				(1,021,631	)(R)			45,714				—				(4,500,193	)
Loss before income taxes					(7,692,746	)			(682,267	)			(2,800,308	)			(575,087	)			(585,396	)			(12,335,804	)
Income taxes					(86,488	)			—				-(S	)			—				-(W	)			(86,488	)
Net Loss				$	(7,779,234	)		$	(682,267	)		$	(2,800,308	)		$	(575,087	)		$	(585,396	)		$	(12,422,292	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(7,779,234	)		$	(682,267	)		$	(2,800,308	)		$	(575,087	)		$	(585,396	)		$	(12,422,292	)
Beneficial conversion — Preferred dividends					(593,558	)			—				—				—				—				(593,558	)
Loss attributable to common stockholders				$	(8,372,792	)		$	(682,267	)		$	(2,800,308	)		$	(575,087	)		$	(585,396	)		$	(13,015,850	)
Basic and diluted loss per share pro forma				$	(2.44	)																		$	(0.30	)
Weighted average shares outstanding pro forma					3,425,127																				43,958,571	(X)

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												Pro Forma								Pro Forma				Halo
				Halo(M)				Unify(N)				Adjustments				InfoNow(T)				Adjustments				Pro Forma
Revenue
	Licenses			$	2,986,752			$	5,210,035			$	—			$	—			$	—			$	8,196,787
	Services				2,137,170				6,085,751				(1,633,565	)(O)			9,501,411				(551,092	)(U)			15,539,675
		Total revenues			5,123,922				11,295,786				(1,633,565	)			9,501,411				(551,092	)			23,736,462
Cost of revenue
	Cost of license				151,051				392,040				—				—				—				543,091
	Cost of services				396,490				1,290,641				—				6,177,554				—				7,864,685
		Total cost of revenues			547,541				1,682,681				—				6,177,554				—				8,407,776
Gross Profit					4,576,381				9,613,105				(1,633,565	)			3,323,857				(551,092	)			15,328,686
Product development					1,589,099				2,825,834				—				865,067				—				5,280,000
Sales, marketing and business development					3,652,117				6,231,706				—				1,534,301				—				11,418,124
General and administrative					4,042,702				2,537,618				191,660	(P)			3,002,134				—				9,774,114
Amortization of intangibles					946,063				60,666				958,397	(Q)			—				365,351	(V)			2,330,477
Late filing penalty					1,033,500				—				—				—				—				1,033,500
Intangible impairment					62,917				—				—				—				—				62,917
Goodwill impairment					3,893,294				—				—				—				—				3,893,294
Loss before interest					(10,643,311	)			(2,042,719	)			(2,783,622	)			(2,077,645	)			(916,443	)			(18,463,741	)
Interest (expense) income					(4,631,683	)			54,635				(1,021,631	)(R)			47,859				—				(5,550,820	)
Loss before income taxes					(15,274,994	)			(1,988,084	)			(3,805,254	)			(2,029,786	)			(916,443	)			(24,014,561	)
Income taxes					(97,945	)			(14,002	)			—	(S)			—				—	(W)			(111,947	)
Net Loss				$	(15,372,939	)		$	(2,002,086	)		$	(3,805,254	)		$	(2,029,786	)		$	(916,443	)		$	(24,126,508	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(15,372,939	)		$	(2,002,086	)		$	(3,805,254	)		$	(2,029,786	)		$	(916,443	)		$	(24,126,508	)
Beneficial conversion — Preferred dividends					(7,510,590	)			—				—				—				—				(7,510,590	)
Loss attributable to common stockholders				$	(22,883,529	)		$	(2,002,086	)		$	(3,805,254	)		$	(2,029,786	)		$	(916,443	)		$	(31,637,098	)
Basic and diluted loss per share pro forma				$	(11.97	)																		$	(0.75	)
Weighted average shares outstanding pro forma					1,912,033																				42,445,477	(X)

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			Six months ended				Year ended
			December 31, 2005				June 30, 2005
Halo’s weighted average shares as reported on 10Q and 10K				3,425,127				1,912,033
Common stock to be issued under Closing Conditions
	Equity to be raised			1,600,000				1,600,000
	Convertible notes to be converted			944,334				944,334
	Preferred Series C and Series D to be converted			20,848,291				20,848,291
Common stock to be issued to Unify stockholders				12,836,089				12,836,089
Common stock to be issued to InfoNow stockholders				4,304,730				4,304,730
Weighted average shares pro forma				43,958,571				42,445,477

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	(a) Cancellation of Company Common Stock. Each share of Company Common Stock that is owned directly by the Company or by Parent or any of their wholly-owned Subsidiaries, if any, shall automatically be cancelled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.
	(b) Conversion of Company Common Stock. Subject to Sections 2.1(e) and 2.2(e), each issued and outstanding share of Company Common Stock (other than shares to be cancelled in accordance with Section 2.1(a) and shares exercising appraisal rights in accordance with Section 2.1(g)) at the Effective Time shall be converted into the right to receive (i) the Stock Payment and (ii) the Cash Payment. The aggregate of (i) all Stock Payments and all Cash Payments made with respect to each issued and outstanding share of Company Common Stock; (ii) the Per Common Stock Option Closing Merger Consideration made with respect to each Company Stock Option; (iii) any cash in lieu of a fractional share as provided in Section 2.2(e); and (iv) the Contingent Value Rights issued under Section 2.1(f) shall constitute the “Merger Consideration.”

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	As of the Effective Time and without any action on the part of the holders thereof, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate or certificates that immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “Certificates”) shall cease to have any rights with respect thereto, except the right to receive (i) the Merger Consideration and (ii) certain dividends and other distributions in accordance with Section 2.2(c).
	(c) Conversion of Common Stock of Merger Sub. Each issued and outstanding share of common stock, no par value per share, of Merger Sub shall be converted into and become one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.
	(d) Common Stock Options. At the Effective Time, each outstanding Common Stock Option under the InfoNow 1990 Stock Option Plan, as amended, and the InfoNow 1999 Stock Option Plan, as amended, or any stock option agreements to which the Company is a party, whether or not vested, shall be converted into the right to receive the Per Common Stock Option Closing Merger Consideration; provided that, the Per Common Stock Option Closing Merger Consideration shall be paid to the Common Stock Option Holders part in Parent Common Stock and part in cash in the following proportions: (x) the amount of the Per Common Stock Option Merger Consideration payable to any Common Stock Option Holder in cash shall be an amount (expressed as a percentage) equal to the Aggregate Cash Payment divided by $7,200,000 and (y) the remainder of the Per Common Stock Option Merger Consideration payable to any Common Stock Option Holder in Parent Common Stock shall be an amount (i) valued at the Parent’s Conversion Price and (ii) equal to the difference between the applicable Per Common Stock Option Closing Merger Consideration and the amount of cash paid under the foregoing clause (x). All other outstanding options and warrants to purchase Company Common Stock shall be cancelled at the Effective Time.
	(e) Adjustments to Stock Payment and Contingent Value Rights for Organic Changes. The number of shares of Parent Common Stock to be issued and the Contingent Value Rights to be issued and any other applicable numbers or amounts shall be adjusted to reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into or exercisable or exchangeable for Parent Common Stock or Company Common Stock), extraordinary dividend, reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Parent Common Stock or Company Common Stock occurring or having a record date on or after the date hereof and prior to the Effective Time.
	(f) Contingent Value Rights. At the Effective Time, as part of the Merger Consideration, Parent shall, pursuant the Contingent Value Rights Agreement, issue a CVR in respect of each share of Parent Common Stock issued in the Merger.
	(g) Appraisal Rights. Notwithstanding any provision of this Agreement to the contrary, shares of Company Common Stock which are issued and outstanding immediately prior to the Effective Time and which are held by a holder who has not voted such shares in favor of the Merger and who has or may properly demand appraisal rights in the manner provided by Section 262 of the DGCL (“Dissenting Shares”) shall not be converted into a right to receive a portion of the Merger Consideration unless and until the holder of such shares becomes ineligible for such appraisal rights. The holders thereof shall be entitled only to such rights as are granted by Section 262 of the DGCL. Each holder of Dissenting Shares who becomes entitled to payment for such shares pursuant to Section 262 of the DGCL shall receive payment therefor from the Parent in accordance with the DGCL; provided, however, that (a) if any such holder of Dissenting Shares shall have failed to establish entitlement to appraisal rights as provided in Section 262 of the DGCL, (b) if any such holder of Dissenting Shares shall have effectively withdrawn demand for appraisal of such shares or lost the right to appraisal and payment for shares under Section 262 of the DGCL or (c) if neither any holder of Dissenting Shares nor the Surviving Corporation shall have filed a petition demanding a determination of the value of all Dissenting Shares within the time provided in Section 262 of the DGCL, such holder shall forfeit the right to appraisal of such shares and each such share shall be

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treated as if it had been, as of the Effective Time, converted into a right to receive the applicable portion of the Merger Consideration, without interest thereon, as provided in Section 2.1(b) of this Agreement. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of any shares of Company Common Stock, and Parent shall have the right to direct all negotiations and proceedings with respect to such demands. The Company shall not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands with respect to any holder of Dissenting Shares before the Effective Time.

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	(i) No certificates or scrip representing fractional shares of Parent Common Stock shall be issued upon the surrender for exchange of Certificates or Common Stock Options, no dividend or distribution of Parent shall relate to such fractional share interests and such fractional share interests will not entitle the owner thereof to vote or to any rights of a stockholder of Parent.
	(ii) As promptly as practicable following the Effective Time, Parent shall pay to each former holder of Company Common Stock or Common Stock Options an amount in cash equal to the product obtained by multiplying (A) the fractional share interest to which such former holder (after taking into account all shares of Company Common Stock or Common Stock Options held at the Effective Time by such holder) would otherwise be entitled by (B) Parent’s Conversion Price.
	(iii) As soon as practicable after the determination of the amount of cash, if any, to be paid to holders of Company Common Stock or Common Stock Options with respect to any fractional share interests, the Exchange Agent will make available such amounts to such holders of Company Common Stock subject to and in accordance with the terms of Section 2.2(c).

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	“Tax or Taxes” means any tax (including any income tax, capital gains tax, payroll, employment or withholding tax, value-added tax, franchise tax, sales or use tax, property tax, net worth tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency, or other fee, and any related charge or amount (including any fine, penalty, interest, or addition to tax), imposed, assessed, or collected by or under the authority of any Taxing Authority or payable pursuant to any tax-sharing agreement or any other contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee.
	“Tax Return” means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Taxing Authority in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any law, regulation or other legal requirement relating to any Tax.
	“Taxing Authority” means any:

	(i) nation, state, county, city, town, village, district, or other jurisdiction of any nature;
	(ii) federal, state, local, municipal, foreign, or other government;
	(iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal);
	(iv) multi-national organization or body; or
	(v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

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	(a) declare or pay any dividends on, or make other distributions in respect of, any of its capital stock;
	(b) (i) split, combine or reclassify any shares of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (ii) repurchase, redeem or otherwise acquire, any shares of the capital stock of the Company, or any securities convertible into or exercisable for any shares of the capital stock of the Company;
	(c) issue, deliver or sell, or authorize or propose the issuance, delivery or sale of, any shares of its capital stock or any securities convertible into or exercisable for, or any rights, warrants or options to acquire, any such shares, or enter into any agreement with respect to any of the foregoing, other than issuances, deliveries or sales in the ordinary course consistent with past practices;
	(d) amend its certificate of incorporation, bylaws or other similar governing documents;
	(e) make individual capital expenditures of $100,000 in the aggregate;
	(f) enter into any new line of business or any material partnership arrangements, joint development agreements or strategic alliances;
	(g) acquire or agree to acquire, by merging or consolidating with, or by purchasing an equity interest in or the assets of, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof;
	(h) take any action that is intended or may reasonably be expected to result in any of its representations and warranties set forth in this Agreement being or becoming untrue or in any of the conditions to the Merger set forth in Article VII not being satisfied, or in a violation of any provision of this Agreement, except, in every case, as may be required by applicable law;
	(i) change its methods of accounting in effect at December 31, 2004, except for changes effected to comply with Statement of Financial Accounting Standards No. 86, and except as required by changes in GAAP or regulatory accounting principles;
	(j) (i) except as required by applicable law or this Agreement or to maintain qualification pursuant to the Code, adopt, amend, renew or terminate any Plan or any agreement, arrangement, plan or policy between the Company and one or more of its current or former directors or officers, (ii) increase in any manner the compensation of any director, executive officer or other employee who is a party to a contract relating to employment or severance referenced in Section 3.11 of this Agreement, or pay any benefit not required by any plan or agreement as in effect as of the date hereof (except for the granting of stock options, stock appreciation rights, restricted shares, restricted share units or performance units or shares granted in the ordinary course consistent with past

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	practices), (iii) enter into, modify or renew any contract, agreement, commitment or arrangement providing for the payment of compensation or benefits to any director, executive officer or employee who is a party to a contract relating to employment or severance referenced in Section 3.11 of this Agreement, (iv) enter into, modify or renew any contract, agreement, commitment or arrangement providing for the payment of compensation or benefits to any employee who is not a director or executive officer or who is not a party to a contract relating to employment or severance referenced in Section 3.11 of this Agreement, other than normal annual cash increases in pay, consistent with past practice and not exceeding five percent on average of all employees’ base salary or wage, and ordinary course offer letters and stock option agreements to new hires permitted under the immediately following clause, (v) hire any new employee at an annual compensation in excess of $100,000, or (vi) promote any employee to a rank of senior vice president or more senior rank;
	(k) incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity;
	(l) sell, lease, license, encumber or otherwise dispose of any of the Company’s properties or assets, except in the ordinary course of business consistent with past practice, or enter into a lease, relocate, open or close any office;
	(m) propose or enter into any contract, agreement or commitment relating to the settlement of any legal, administrative, arbitration or other proceeding, claim, action or governmental or regulatory investigation of any nature against the Company in excess of $100,000;
	(n) Transfer or license to any person or entity or otherwise extend, amend or modify any rights to the Company Intellectual Property (including rights to resell or relicense the Company Intellectual Property) or enter into grants to future patent rights, other than transactions entered into in the ordinary course of business consistent with past practices;
	(o) Commence any material litigation other than (i) for the routine collection of bills, (ii) for software piracy, or (iii) in such cases where the Company in good faith determines that failure to commence suit would result in the material impairment of a valuable aspect of the Company’s business, provided that the Company consults with the Parent prior to the filing of such a suit (except that the Company shall not require the approval of, and shall not be required to consult with, Parent with respect to any claim, suit or proceeding by the Company against Parent or any of its affiliates; and
	(p) agree or commit to do any of the actions set forth in (a)-(o) above.

	(a) shall notify the Company of any emergency or other change in the normal course of its or its Subsidiaries’ respective businesses or in the operation of its or its Subsidiaries’ respective properties and of any complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any Governmental Entity if such emergency, change, complaint, investigation or hearing would likely have a Material Adverse Effect on Parent;
	(b) shall notify the Company of any material transaction;

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	(c) shall not declare or pay any dividends on, or make other distributions in respect of, any of its capital stock (other than dividends on the Series C Preferred Stock and the Series D Preferred Stock);
	(d) shall not (i) split, combine or reclassify any shares of its capital stock or issue, authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (ii) repurchase, redeem or otherwise acquire, any shares of the capital stock of Parent, or any securities convertible into or exercisable for any shares of the capital stock of Parent;
	(e) amend its certificate of incorporation, bylaws or other similar governing documents (other than an amendment to change the name of the Parent to “Halo Technology Holdings, Inc.”); or
	(f) shall not, and shall not permit any of its Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing actions or take any action that would result in any of the conditions to the Merger set forth in Article VII not being satisfied, or, except as otherwise allowed hereunder, that could reasonably be expected to prevent, impede, interfere with or significantly delay the transactions contemplated hereby.

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	“Company Acquisition Proposal” means any bona fide inquiry, proposal or offer relating to any (i) merger, consolidation, business combination, or similar transaction involving the Company, (ii) sale, lease or other disposition, directly or indirectly, by merger, consolidation, share exchange or otherwise, of any assets of the Company in one or more transactions, (iii) issuance, sale, or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase such securities, or securities convertible into such securities) of the Company, (iv) liquidation, dissolution, recapitalization or other similar type of transaction with respect to the Company, (v) tender offer or exchange offer for Company securities; in the case of (i), (ii), (iii), (iv) or (v) above, which transaction would result in a third party (or its shareholders) acquiring more than twenty percent (20%) of the voting power of the Company or the assets representing more than twenty percent (20%) of the net income, net revenue or assets of the Company on a consolidated basis, (vi) transaction which is similar in form, substance or purpose to any of the foregoing transactions, or (vii) public announcement of an agreement, proposal, plan or intention to do any of the foregoing, provided, however, that the term “Company Acquisition Proposal” shall not include the Merger and the transactions contemplated thereby.
	“Company Superior Proposal” means any offer not solicited by the Company, or by other persons in violation of the first sentence of Section 5.4(a), and made by a third party to consummate a tender offer, exchange offer, merger, consolidation or similar transaction which would result in such third party (or its shareholders) owning, directly or indirectly, more than fifty percent (50%) of the Company Shares then outstanding (or of the surviving entity in a merger) or all or substantially all of the assets of Company, and otherwise on terms which the Board of Directors of the Company determines in good faith (based on its consultation with a financial advisor and other such matters that it deems relevant) would, if consummated, result in a transaction more favorable to the Company’s stockholders than the Merger and, in the reasonable good faith judgment of the Board of Directors of the Company after consultation with its financial advisor, the persons or entity making such Company Superior Proposal has the financial means to conclude such transaction.

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	(i) prepare and file with the SEC as soon as is practicable the Proxy Materials and the Registration Statement, and shall use all reasonable best efforts to cause the Proxy Materials and the Registration Statement to comply with the rules and regulations promulgated by the SEC, to cause the Registration Statement to qualify as a resale registration statement with respect to shares of Parent Common Stock of Persons who are “affiliates” within the meaning of Rule 145 under the Securities Act, to respond promptly to any comments of the SEC or its staff, and to have the Proxy Materials cleared by the SEC under the Exchange Act and the Registration Statement declared effective by the SEC under the Securities Act as promptly as practicable after it is filed;
	(ii) as soon as reasonably practicable take all such action as may be required under state blue sky or securities laws of every jurisdiction of the United States in which any registered holder of Company Common Stock has an address of record on the record date for determining the stockholders entitled to notice of and to vote and the Company Stockholders Meeting; provided, however, that Parent shall not be required (A) to qualify to do business as a foreign corporation in any jurisdiction in which it is not now qualified or (B) to file a general consent to service of process in any jurisdiction;
	(iii) cooperate with one another in order to lift any injunctions or remove any other impediment to the consummation of the transactions contemplated herein;
	(iv) cooperate with one another in obtaining opinions of Hogan & Hartson, L.L.P., counsel to the Company, and Day, Berry and Howard, tax counsel to Parent, dated as of the date the Registration Statement is declared effective satisfying the requirements of Item 601 of Regulation S-K promulgated under the Securities Act and opinions of Hogan & Hartson, L.L.P. and Day, Berry and Howard, dated as of the Effective Time, to the effect that the Merger qualifies as a reorganization under the provisions of Section 368(a) of the Code. In connection therewith, each of the Company and Parent shall deliver to Hogan & Hartson L.L.P. and Day, Berry and Howard representation letters in customary form and shall deliver any such letters obtained to Hogan & Hartson L.L.P. and Day, Berry and Howard; and
	(v) use all reasonable best efforts to (x) prepare the Contingent Value Rights Agreement in accordance with the terms of this Agreement and in a form, and containing terms and conditions, customary for the issuance of Contingent Value Rights in transactions of the type contemplated by this Agreement and reasonably satisfactory to the Company; (y) register the Contingent Value Rights with the SEC under the Registration Statement; and (z) issue the Contingent Value Rights at the Closing in accordance with Article II.

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	(i) The Company shall, upon request, furnish Parent with all information concerning the Company and its directors, officers and stockholders and such other matters as may be reasonably necessary in connection with any statement, filing, notice or application made by or on behalf of Parent to any Governmental Entity in connection with the Merger or the other transactions contemplated by this Agreement
	(ii) Parent, Merger Sub and the Company shall promptly advise each other upon receiving any communication from any Governmental Entity whose consent or approval is required for consummation of the transactions contemplated by this Agreement.

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	(a) Stockholder Approvals. This Agreement and the Merger shall have been approved and adopted by the affirmative vote of the holders of at least a majority of the outstanding shares of the Company Common Stock entitled to vote thereon.

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	(b) No Injunctions or Restraints; Illegality. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Merger or any of the other transactions contemplated by this Agreement shall be in effect. No statute, rule, regulation, order, injunction or decree shall have been enacted, entered, promulgated or enforced by any Governmental Entity which prohibits, restricts or makes illegal consummation of the Merger.
	(c) Registration Statement. The Registration Statement shall have been declared effective in accordance with the provisions of the Securities Act and no stop order suspending such effectiveness shall have been issued and remain in effect.

	(a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement that are qualified as to materiality or words of similar import shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date; provided, however, that for purposes of this paragraph, all such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct in all material respects or true and correct in all respects, as the case may be, either individually or in the aggregate, will likely have a Material Adverse Effect on the Company. Parent shall have received a certificate signed on behalf of the Company by each of the Interim Chief Executive Officer and the Interim Chief Financial Officer of the Company to the foregoing effect.
	(b) Performance of Covenants and Agreements of the Company. The Company shall have performed in all material respects all covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, except where failure to perform would not likely have a Material Adverse Effect on Company. Parent shall have received a certificate signed on behalf of the Company by each of the Interim Chief Executive Officer and the Interim Chief Financial Officer of the Company to such effect.
	(c) Consents under Agreements. The consent, approval or waiver of each person whose consent or approval shall be required in order to permit the succession by the Surviving Corporation pursuant to the Merger to any obligation, right or interest of the Company under any Company Contract shall have been obtained except for those, the failure of which to obtain, will not likely have a Material Adverse Effect on the Company or the Surviving Corporation.
	(d) No Material Adverse Change. There shall have been no changes in the business, operations, condition (financial or otherwise), assets or liabilities of the Company (regardless of whether or not such events or changes are inconsistent with the representations and warranties given herein) that individually or in the aggregate has had or would likely have a Material Adverse Effect on the Company.
	(e) Stockholder Agreements. Each Stockholder Agreement shall remain in full force and effect.
	(f) Dissenter or Appraisal Rights. To the extent available to the holders of the Company Common Stock in connection with the Merger, holders of not more than ten (10%) of the Company Common Stock shall have exercised and not withdrawn prior to the Effective Time dissenter’s or appraisal rights.

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	(a) Representations and Warranties. The representations and warranties of Parent and Merger Sub set forth in this Agreement that are qualified as to materiality or words of similar import shall be true and correct in all respects, and those not so qualified shall be true and correct in all material respects, as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date; provided, however, that for purposes of this paragraph, such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct in all material respects or true and correct in all respects, as the case may be, either individually or in the aggregate, will likely have a Material Adverse Effect on Parent. The Company shall have received a certificate signed on behalf of both Parent and Merger Sub by each of the President or any Executive Vice President and the Chief Financial Officer or Treasurer of Parent to the foregoing effect.
	(b) Performance of Covenants and Agreements of Parent. Parent shall have performed in all material respects all covenants and agreements required to be performed by it under this Agreement at or prior to the Closing Date, except where failure to perform would not likely have a Material Adverse Effect on Parent. The Company shall have received a certificate signed on behalf of both Parent by each of the President or any Executive Vice President and the Chief Financial Officer or Treasurer of Parent to such effect.
	(c) Consents under Agreements. The consent or approval or waiver of each person (other than the Governmental Entities referred to in Section 7.1(b)) whose consent or approval shall be required in connection with the transactions contemplated hereby under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument to which Parent is a party or is otherwise bound shall have been obtained, except where failure to obtain such consent, approval or waiver would not likely have a Material Adverse Effect on Parent.
	(d) No Material Adverse Change. There shall have been no changes in the business, operations, condition (financial or otherwise), assets or liabilities of the Parent regardless of whether or not such events or changes are inconsistent with the representations and warranties given herein) that individually or in the aggregate has had or would likely have a Material Adverse Effect on Parent.
	(e) Contingent Value Rights. Parent shall have entered into the Contingent Value Rights Agreement with respect to the CVRs.
	(f) Conversion of Series C Preferred Stock. All issued and outstanding shares of Series C Preferred Stock of the Parent shall have converted to shares of Parent Common Stock.
	(g) Parent Closing Date Price. The Parent Closing Date Price shall equal or exceed one dollar ($1.00).

	(a) by mutual consent of Parent and the Company in a written instrument, if the Board of Directors of each so determines by a vote of a majority of the members of its entire Board;

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	(b) by either Parent or the Company upon written notice to the other party (i) 30 days after the date on which any request or application for a regulatory approval shall have been denied or withdrawn at the request or recommendation of the Governmental Entity which must grant such regulatory approval, unless within the 30-day period following such denial or withdrawal the Parties agree to file, and have filed with the applicable Governmental Entity, a petition for rehearing or an amended application; provided, however, that no party shall have the right to terminate this Agreement pursuant to this Section 8.1(b), if such denial or request or recommendation for withdrawal shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants and agreements of such party set forth herein;
	(c) by either Parent or the Company if the Merger shall not have been consummated on or before July 31, 2006, unless the failure of the Closing to occur by such date shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants and agreements of such party set forth herein;
	(d) by either Parent or the Company (provided that the terminating party is not in breach of its obligations under Section 6.3 hereof) if the approval of the stockholders of the Company hereto required for the consummation of the Merger shall not have been obtained by reason of the failure to obtain the required vote at a duly held Company Stockholders Meeting or at any adjournment or postponement thereof;
	(e) by either Parent or the Company (provided that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained herein that, individually or in the aggregate, would give the other party the right to terminate this Agreement) if there shall have been a breach of any of the representations or warranties set forth in this Agreement on the part of the other party, if such breach, individually or in the aggregate, has had or is likely to have a Material Adverse Effect on the breaching party, and such breach shall not have been cured within 30 days following receipt by the breaching party of written notice of such breach from the other party hereto or such breach, by its nature, cannot be cured prior to the Closing;
	(f) by either Parent or the Company (provided that the terminating party is not then in breach of any representation, warranty, covenant or other agreement contained herein that, individually or in the aggregate, would give the other party the right to terminate this Agreement) if there shall have been a breach of any of the covenants or agreements set forth in this Agreement on the part of the other party, if such breach, individually or in the aggregate, has had or is likely to have a Material Adverse Effect on the breaching party, and such breach shall not have been cured within 30 days following receipt by the breaching party of written notice of such breach from the other party hereto or such breach, by its nature, cannot be cured prior to the Closing;
	(g) by Parent, if the management of the Company or its Board of Directors, for any reason, (i) fails to call and hold a Company Stockholders Meeting to consider and approve this Agreement and the transactions contemplated hereby, (ii) fails to recommend to stockholders the approval of this Agreement and the transactions contemplated hereby, (iii) fails to oppose any third party proposal that is inconsistent with the transactions contemplated by this Agreement other than as expressly permitted by Section 5.4 of this Agreement, or (iv) violates Section 5.4 of this Agreement;
	(h) by Parent or the Company if the Company has complied with Section 5.4 above, and has given written notice to Parent that the Company has agreed to enter into a Company Superior Proposal; provided, however, that such termination under this Section 8.1(h) shall not be effective unless and until the Company shall have complied with breakup fee provisions of Section 8.2 below.
	(i) by Company, if all of the holders of the Series C Preferred Stock do not convert all such stock to Parent Common Stock prior to the Company Stockholders Meeting;

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	(a)	if to Parent and Merger Sub, to:

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	(b)	if to Company, to:

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	WARP TECHNOLOGY HOLDINGS, INC.,
	operating under the name
	HALO TECHNOLOGY HOLDINGS

	By:	/s/ Ernest Mysogland

	Name: Ernest (JR) Mysogland

	Title:	Executive Vice President

	WTH MERGER SUB, INC.

	By:	/s/ Ernest Mysogland

	Name: Ernest (JR) Mysogland

	Title:	President and Sole Director

	INFONOW CORPORATION

	By:	/s/ Jeffrey D. Peotter

	Name: Jeffrey D. Peotter

	Title:	Chairman of the Board of Directors

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	(1) An aggregate cash payment equal to the lesser of (a) the Company’s cash balance at closing or (b) the amount of the Company’s positive Net Working Capital (defined as Current Assets minus Current Liabilities (excluding Deferred Revenue and Prepaid Service Fees and including accruals for management severance obligations and transaction related expenses)) as measured two (2) days prior to close of the Merger (the “Cash Consideration”).
	(2) An aggregate number of shares of Parent stock calculated as (i) $7.2 million, plus (ii) the aggregate exercise price of the Company’s outstanding stock options, minus (iii) the amount of the Cash Consideration (the “Stock Consideration”). The Stock Consideration will be calculated using Parent’s 20-day average stock trading price measured two (2) days prior to close of the Merger (subject to a minimum price of $1.00).

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	•	A draft of the Agreement dated December 22, 2005 and drafts of Exhibits, thereto;
	•	Certain publicly available information for the Company, including its annual reports filed on Form 10-K for each of the years ended December 31, 2003 and 2004, and its quarterly reports filed on Form 10-Q for each of the quarters ended March 31, June 30 and September 30, 2005 and certain other relevant financial and operating data furnished to Q Advisors by the Company’s management;
	•	Certain relevant financial and operating data for Parent furnished to Q Advisors by Parent management;
	•	Certain financial forecasts, reports and other information concerning the both the Company (the “Company Forecasts”), and Parent (the “Parent Forecasts”);
	•	Discussions we have had with certain members of management of the Company and Parent concerning the historical and current business operations, financial conditions and prospects of the Company and Parent, respectively, and such other matters we deemed relevant;
	•	Certain operating results and implied purchase price multiples for the Company compared to certain operating results and trading statistics of certain publicly traded companies we deemed relevant;
	•	Certain operating results for the Company compared to certain operating results and trading statistics of certain publicly traded companies we deemed relevant, and the reported price and trading histories of the shares of common stock of the Company;
	•	Certain financial terms of the Merger as compared to the financial terms of certain selected business combinations we deemed relevant;
	•	Certain Company Forecasts and cash flows projected to be generated by the Company on a stand-alone basis to determine the present value of the discounted cash flows;
	•	Certain Company Forecasts of its future projected cash expenditures;
	•	Certain pro forma financial effects of the Merger; and
	•	Such other information, financial studies, analyses and investigations and such other factors that we deemed relevant for the purposes of this opinion.

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	Very truly yours,
	Q ADVISORS LLC
	By: Q Consulting & Advisors, Inc., Manager

	By:	/s/ Robert W. Kaufman

	Robert W. Kaufman

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	Warp Technology Holdings, Inc.

	By:

	Name: Ernest C. Mysogland
	Title:   Executive Vice President
	Stockholder

	By:

	Its:

	Shares Owned:

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	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

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	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given,

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	provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

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Item 20.	Indemnification of Directors and Officers

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Item 21.	Exhibits.

Exhibit No.				Description of Exhibit
	2	.1(*)		Agreement and Plan of Merger, by and among Warp Technology Holdings, Inc., operating under the name Halo Technology Holdings, WTH Merger Sub, Inc. and InfoNow Corporation, dated as of December 23, 2005, excluding exhibits and schedules thereto (included as Annex A to the proxy statement/ prospectus in this Registration Statement).
	3	.1(1)		Articles of Incorporation of Warp Technology Holdings, Inc.
	3	.2(1)		Bylaws of Halo Technology Holdings, Inc.
	3	.3(2)		Form of the Articles of Merger of Abbott Mines Limited and Warp Technology Holdings, Inc.
	3	.4(6)		Form of Certificate of Amendment to Articles of Incorporation of Warp Technology Holdings, Inc. filed with the Secretary of State of the State of Nevada on September 12, 2003.
	3	.6(7)		Form of Certificate Of Designations, Preferences And Rights Of Series A 8% Cumulative Convertible Preferred Stock Of Warp Technology Holdings, Inc. as filed with the Secretary of State of the State of Nevada on October 1, 2003.
	3	.7(7)		Form of Certificate Of Designations, Preferences And Rights Of Series B 10% Cumulative Convertible Preferred Stock Of Warp Technology Holdings, Inc. as filed with the Secretary of State of the State of Nevada on October 1, 2003.
	3	.8(10)		Certificate of Designations, Preferences, and Rights of Series B-2 Preferred Stock, as filed with the Secretary of State of the State of Nevada on August 4, 2004.
	3	.9(12)		Certificate of Change Pursuant to Nevada Revised Statutes Sec. 78.209, effecting 100 for 1 reverse split effective November 18, 2004, as filed with the Secretary of State of the State of Nevada on November 8, 2004.
	3	.10(16)		Certificate of Amendment to Articles of Incorporation of Warp Technology Holdings, Inc., as filed with the Secretary of State of the State of Nevada on March 31, 2005.
	3	.11(17)		Certificate of Designations of Series C Stock of Warp Technology Holdings, Inc.
	3	.12(26)		Certificate of Designation for Nevada Profit Corporation, designating Series D Preferred Stock, as filed with the Secretary of State of the State of Nevada, effective October 26, 2005.
	3	.13(35)		Certificate of Amendment to Articles of Incorporation of Halo Technology Holdings, Inc., as filed with the Secretary of State of the State of Nevada, effective April 2, 2006.
	4	.1(1)		Specimen Certificate Representing shares of Common Stock, $.00001 par value per share, of Warp Technology Holdings, Inc.
	4	.2(13)		Form of Bridge Note issued October 13, 2004 by the Company.
	4	.3(14)		Form of Amended and Restated Subordinated Secured Promissory Note.
	4	.4(14)		Form of Senior Secured Promissory Note.
	4	.5(14)		Form of Initial Warrant and Additional Warrant.
	4	.6(14)		Form of Subordinated Secured Promissory Note.
	4	.7(14)		Form of Warrant.
	4	.8(14)		Form of Convertible Promissory Note.
	4	.9(19)		$1,000,000 Promissory Note, dated July 6, 2005, to Bristol Technology, Inc.
	4	.10(20)		Form of Promissory Note.
	4	.11(20)		Warrant Certificate, Form of Fact of Warrant Certificate, Warrants to Purchase Common
	4	.12(24)		Stock of Warp Technology Holdings, Inc. Form of Promissory Note first issued October 21, 2005.

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Exhibit No.				Description of Exhibit
	4	.13(24)		Form of Warrant, first issued October 21, 2005, to purchase shares of Common Stock, par value $0.00001 per share, of the Company.
	4	.14(31)		Form of Note first issued January 11, 2006.
	4	.15(32)		Form of Note first issued January 27, 2006.
	5	.1(*)		Opinion of Hale Lane Peek Dennison and Howard, a Professional Corporation.
	8	.1(**)		Form of Opinion of Hogan & Hartson L.L.P. regarding tax matters.
	8	.2(**)		Form of Opinion of Day, Berry & Howard LLP regarding tax matters.
	10	.3(3)		Form of the Financial Consulting Agreement dated March 5, 2002 between Warp Solutions, Inc. and Lighthouse Capital, Inc.
	10	.4(3)		Form of the Financial Consulting Agreement dated May 16, 2002 between the Company and Lighthouse Capital, Inc.
	10	.5(3)		Form of Master Distributor Agreement between Macnica Networks Company and Warp Solutions, Inc. dated as of August 1, 2002.
	10	.6(3)		Form of Master Distributor Agreement between CDI Technologies, Inc. and Warp Solutions, Inc. dated as of September 1, 2002.
	10	.7(4)		Put and Call Agreement dated as of December   , 2002 by and among Warp Technology Holdings, Inc. and all of the Shareholders of Spider Software Inc.
	10	.8(5)		The Warp Technology Holdings, Inc. 2002 Stock Incentive Plan.
	10	.9(5)		Form of Stock Option Grant agreement for options granted pursuant to The Warp Technology Holdings, Inc. 2002 Stock Incentive Plan.
	10	.10(5)		Form of Strategic Alliance Agreement dated as of April 7, 2003 between Mirror Image Internet, Inc. and Warp Solutions, Inc.
	10	.11(5)		Form of iMimic/OEM Software License Agreement dated April 2003 between iMimic Networking, Inc. and Warp Technology Holdings, Inc.
	10	.12(6)		Form of Consulting Agreement between Warp Technology Holdings, Inc. and Dr. David Milch dated as of August 1, 2003.
	10	.13(8)		Form of Consulting Agreement between Warp Technology Holdings, Inc. and Mr. Steven Antebi which was executed by the parties thereto on December 23, 2003.
	10	.14(8)		Form of Employment Agreement between Warp Technology Holdings, Inc. and Mr. Malcolm Coster which was executed by the parties thereto on November 17, 2003.
	10	.15(9)		Form of Consulting Agreement between Warp Technology Holdings, Inc. and Mr. Noah Clark which was executed by the parties thereto on March 29, 2004.
	10	.16(10)		Series B-2 Preferred Stock Purchase Agreement entered into as of August 4, 2004 between and among Warp Technology Holdings, Inc. and the Persons listed on Schedule 1.01 thereto.
	10	.17(10)		Stockholders Agreement, dated as of August 4, 2004, between and among Warp Technology Holdings, Inc., the holders of the Series B-2 Preferred Stock and such other Stockholders as named therein.
	10	.18(11)		Form of Employment Agreement for Ron Bienvenu and Warp Technology Holdings, Inc. made as of August 4, 2004.
	10	.20(11)		Form of Employment Agreement for Ernest Mysogland and Warp Technology Holdings, Inc. made as of August 4, 2004.
	10	.22(11)		Form of Incentive Stock Option Agreement for Ron Bienvenu to purchase an aggregate of 15,068,528 shares of Common Stock of Warp Technology Holdings, Inc., par value $0.00001 per share.
	10	.24(11)		Form of Incentive Stock Option Agreement for Ernest Mysogland to purchase an aggregate of 5,022,843 shares of Common Stock of Warp Technology Holdings, Inc., par value $0.00001 per share.
	10	.26(11)		Form of Consulting Agreement between Warp Technology Holdings, Inc. and ISIS Capital Management, LLC which was executed by the parties thereto on August 4, 2004.

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Exhibit No.				Description of Exhibit
	10	.27(11)		Form of Stock Option Agreement between Warp Technology Holdings, Inc. and ISIS Capital Management, LLC which was executed by the parties thereto on August 4, 2004.
	10	.30(13)		Letter agreement dated September 13, 2004 between Warp Technology Holdings, Inc. and Griffin Securities, Inc. for Griffin to act on a best efforts basis as a non-exclusive financial advisor and placement agent for the Client in connection with the structuring, issuance, and sale of debt and equity securities for financing purposes.
	10	.31(13)		Purchase Agreement Assignment and Assumption as of October 13, 2004, by and between ISIS Capital Management, LLC and Warp Technology Holdings, Inc.
	10	.32(13)		Financial Advisory/Investment Banking Agreement dated September 20, 2004 between Warp Technology Holdings, Inc. and Duncan Capital LLC.
	10	.33(14)		Amendment No. 2 to Extension Agreement by and between the Company and Gupta Holdings, LLC.
	10	.34(14)		Amendment No. 3 to Extension Agreement by and between the Company and Gupta Holdings, LLC.
	10	.35(14)		Amendment to Membership Interest Purchase Agreement made and entered into as of January 31, 2005, by and between Warp Technology Holdings, Inc. and Gupta Holdings, LLC.
	10	.36(14)		Form of Series C Subscription Agreement entered into January 31, 2005 by and between Warp Technology Holdings, Inc. and the Investors as identified therein.
	10	.37(14)		Investors’ Agreement entered into the 31st day of January, 2005 by and among Warp Technology Holdings, Inc., and the persons listed on Exhibit A thereto.
	10	.38(14)		Senior Note and Warrant Purchase Agreement, as of January 31, 2005, by and among Warp Technology Holdings, Inc. and the Purchasers identified therein.
	10	.39(14)		Subordinated Note and Warrant Purchase Agreement, as of January 31, 2005, by and among Warp Technology Holdings, Inc. and the Purchasers identified therein.
	10	.40(14)		Senior Security Agreement, dated as of January 31, 2005, between Warp Technology Holdings, Inc. and Collateral Agent (as defined therein).
	10	.41(14)		Senior Security Agreement, dated as of January 31, 2005, between Warp Solutions Inc. and Collateral Agent (as defined therein).
	10	.42(14)		Senior Security Agreement, dated as of January 31, 2005, between Gupta Technologies, LLC and Collateral Agent (as defined therein).
	10	.43(14)		Senior Guaranty, dated as of January 31, 2005, between Warp Solutions, Inc. and Collateral Agent (as defined therein).
	10	.44(14)		Senior Guaranty, dated as of January 31, 2005, between Gupta Technologies, LLC and Collateral Agent (as defined therein).
	10	.45(14)		Subordinated Security Agreement, dated as of January 31, 2005, between Warp Technology Holdings, Inc. and Collateral Agent (as defined therein).
	10	.46(14)		Subordinated Subsidiary Security Agreement, dated as of January 31, 2005, between Warp Solutions, Inc. and Collateral Agent (as defined therein).
	10	.47(14)		Subordinated Subsidiary Security Agreement, dated as of January 31, 2005, between Gupta Technologies, LLC and Collateral Agent (as defined therein).
	10	.48(14)		Subordinated Guaranty, dated as of January 31, 2005, between Warp Solutions, Inc. and Collateral Agent (as defined therein).
	10	.49(14)		Subordinated Guaranty, dated as of January 31, 2005, between Gupta Technologies, LLC and Collateral Agent (as defined therein).
	10	.50(14)		Intercreditor and Subordination Agreement dated as of January 31, 2005, by and among: the Subordinated Noteholders, the Senior Noteholders, Warp Technology Holdings, Inc., Warp Solutions, Inc., Gupta Technologies, LLC, and the Collateral Agent (as such terms are defined therein).

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Exhibit No.				Description of Exhibit
	10	.51(14)		Collateral Agency Agreement made as of January 31, 2005 by and among the Collateral Agent (as defined therein) and the Noteholders (as defined therein).
	10	.52(14)		Post Closing Agreement, dated as of January 31, 2005, by and among the Credit Parties and the Collateral Agent (as such terms are defined therein).
	10	.53(15)		Separation Agreement, dated as of March 3, 2005, by and between Warp Technology Holdings, Inc. and Gus Bottazzi.
	10	.54(18)		Letter Agreement dated October 31, 2003 by and between Gupta Technologies, LLC and Jeffrey L. Bailey.
	10	.55(18)		Letter Agreement dated August 4, 2004 by and between Gupta Technologies, LLC and Jeffrey Bailey, as amended January 1, 2005.
	10	.56(18)		Premium International Distribution Agreement dated January 1, 2004 by and between ADN Distribution, GmbH and Gupta Technologies, LLC.
	10	.57(18)		Premium International Distribution Agreement dated March 1, 2005 by and between Scientific Computers and Gupta Technologies, LLC.
	10	.58(18)		Premium International Distribution Agreement dated January 1, 2004 by and between NOCOM AB and Gupta Technologies, LLC, as amended January 1, 2005.
	10	.59(18)		Premium International Distribution Agreement dated October 1, 2003 by and between Sphinx CST and Gupta Technologies, LLC, as amended October 1, 2004.
	10	.60(18)		Premium International Distribution Agreement dated March 24, 2004 by and between Xtura B.V. and Gupta Technologies, LLC.
	10	.61(18)		OEM Software License Agreement dated September 29, 1994 by and between United Parcel Service General Services Co. and Gupta Technologies, LLC, as amended September 8, 1995, September 30, 1999, December 21, 1999, March 23, 2001, and December 31, 2004.
	10	.62(18)		Service Agreement dated March 27, 2002 by and between Offshore Digital Services Inc., DBA Sonata and Gupta Technologies, LLC, as amended March 28, 2003, July 21, 2003, and March 28, 2004.
	10	.63(18)		Services Agreement dated September 20, 2004 by and between CodeWeavers, Inc. and Gupta Technologies, LLC.
	10	.64(18)		OEM Product Agreement dated September 20, 2004 by and between CodeWeavers, Inc. and Gupta Technologies, LLC.
	10	.65(18)		Qt Commercial License Agreement for Enterprise Edition dated as of December 15, 2004 by and between Trolltech Inc. and Gupta Technologies, LLC.
	10	.66(18)		OEM License Agreement dated January 1, 2004 by and between Graphics Server Technologies, L.P. and Gupta Technologies, LLC.
	10	.67(18)		Shrinkwrap software license agreement with Data Techniques, Inc. for the ImageMan software product.
	10	.68(18)		Shrinkwrap software license agreement with Rogue Wave Software Inc. for the Rogue Wave Stingray software product.
	10	.69(18)		Lease Agreement dated July 19, 2001 by and between Westport Joint Venture and Gupta Technologies, LLC, together with amendments thereto.
	10	.70(18)		Stock Purchase Agreement by and among Warp Technology Holdings, Inc., Bristol Technology, Inc. and Kenosia, dated June 10, 2005.
	10	.71(19)		Pledge and Security Agreement by and among the Company, Kenosia, and Bristol Technology, Inc. dated July 6, 2005.
	10	.72(20)		Credit Agreement dated August 2, 2005 between Warp Technology Holdings, Inc., the Subsidiaries of Warp Technology Holdings, Inc., Fortress Credit Corp., as Original Lender and Agent.
	10	.73(20)		Agreement regarding issuance of warrant certificates dated as of August 2, 2005 between Warp Technology Holdings, Inc., and Fortress Credit Corp.

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Exhibit No.				Description of Exhibit
	10	.74(20)		Security Agreement dated as of August 2, 2005 between Warp Technology Holdings, Inc. and Fortress Credit Corp.
	10	.75(20)		Stock Pledge Agreement dated as of August 2, 2005 between Warp Technology Holdings, Inc. and Fortress Credit Corp.
	10	.76(20)		Pledge Agreement dated as of August 2, 2005 between Warp Technology Holdings, Inc. and Fortress Credit Corp.
	10	.77(20)		Intercreditor and Subordination Agreement dated as of August 2, 2005 between Warp Technology Holdings, Inc, the Subsidiaries of Warp Technology Holdings, Inc., the Financial Institutions, the Holders of Subordinated Notes and Fortress Credit Corp.
	10	.78(20)		Deed dated August 1, 2005 between Gupta Technologies, LLC and Fortress Credit Corp.
	10	.79(20)		Deed dated August 2, 1005 between Gupta Technologies Limited and Fortress Credit Corp.
	10	.80(20)		Deed dated August 2, 2005 between Warp Technology Limited and Fortress Credit Corp.
	10	.81(20)		Deed dated August 2, 1005 between Gupta Technologies, LLC and Fortress Credit Corp.
	10	.82(20)		Deed dated August 2, 2005 between Warp Solutions, Inc. and Fortress Credit Corp.
	10	.83(20)		Security Trust Agreement dated August   , 2005 between Fortress Credit Corp., Fortress Credit Opportunities I LP, Finance Parties and Security Grantors.
	10	.84(21)		Share Pledge Agreement dated August 2, 2005 between Gupta Technologies LLC, Fortress Credit Corp., Fortress Credit Opportunities I LP and Finance Parties.
	10	.85(21)		Commercial Lease dated as of August 29, 2005 by and between Railroad Avenue LLC and Warp Technology Holdings, Inc.
	10	.86(22)		Purchase Agreement dated as of September 12, 2005 by and between Warp Technology Holdings, Inc., Platinum Equity, LLC, Energy TRACS Acquisition Corp. and Milgo Holdings, LLC.
	10	.87(22)		Merger Agreement dated as of September 12, 2005 by and between Warp Technology Holdings, Inc., TAC/Halo, Inc., Tesseract and Platinum Equity, LLC.
	10	.88(23)		Promissory Note dated September 20, 2005 whereby Warp Technology Holdings, Inc. promises to pay to the order of DCI Master LDC in the principal amount of $500,000.
	10	.89(23)		Warrant to purchase 181,818 shares of Common Stock, par value $0.00001 per share, issued to DCI Master LDC.
	10	.90(25)		Halo Technology Holdings 2005 Equity Incentive Plan.
	10	.91(25)		Form of Employee Incentive Stock Option Agreement under Halo Technology Holdings 2005 Equity Incentive Plan.
	10	.92(25)		Form of Non-Qualified Stock Option Agreement under Halo Technology Holdings 2005 Equity Incentive Plan.
	10	.93(25)		Fiscal 2006 Halo Senior Management Incentive Plan 10.93(25).
	10	.94(26)		Amendment No. 1 to Merger Agreement, dated as of October 26, 2005 among Platinum Equity, LLC, Warp Technology Holdings, Inc., TAC/Halo, Inc., TAC/HALO, LLC and Tesseract.
	10	.95(26)		Investor’s Agreement, dated October 26, 2005 by and among Warp Technology Holdings, Inc. and Platinum Equity, LLC.
	10	.96(26)		Promissory Note of Warp Technology Holdings, Inc. dated October 26, 2005 in the amount of $1,750,000.
	10	.97(26)		Amendment Agreement No. 1 between Warp Technology Holdings, Inc., Fortress Credit Opportunities I LP and Fortress Credit Corp. dated October 26, 2005.
	10	.98(26)		Intercreditor and Subordination Agreement between Warp Technology Holdings, Inc., the Subsidiaries of Warp Technology Holdings, Inc., the Financial Institutions listed in Part 2 of Schedule 1, the Holdings of Subordinated Notes listed in Part 3 of Schedule 1 and Fortress Credit Corp., dated October 26, 2005.

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Exhibit No.				Description of Exhibit
	10	.99(26)		Pledge Agreement between Warp Technology Holdings, Inc. and Fortress Credit Corp. dated October 26, 2005 regarding Process Software, LLC.
	10	.100(26)		Pledge Agreement between Warp Technology Holdings, Inc. and Fortress Credit Corp. dated October 26, 2005 regarding ProfitKey International, LLC.
	10	.101(26)		Pledge Agreement between Warp Technology Holdings, Inc. and Fortress Credit Corp. dated October 26, 2005 regarding and TAC/Halo, LLC.
	10	.102(26)		Stock Pledge Agreement between Warp Technology Holdings, Inc. and Fortress Credit Corp. dated October 26, 2005 regarding DAVID Corporation.
	10	.103(26)		Stock Pledge Agreement between Warp Technology Holdings, Inc. and Fortress Credit Corp. dated October 26, 2005 regarding Foresight Software, Inc.
	10	.104(26)		Security Agreement between Process Software, LLC and Fortress Credit Corp. dated October 26, 2005.
	10	.105(26)		Security Agreement between ProfitKey International, LLC and Fortress Credit Corp. dated October 26, 2005.
	10	.106(26)		Security Agreement between TAC/Halo, LLC and Fortress Credit Corp. dated October 26, 2005.
	10	.107(26)		Security Agreement between Foresight Software, Inc. and Fortress Credit Corp. dated October 26, 2005.
	10	.108(26)		Security Agreement between DAVID Corporation and Fortress Credit Corp. dated October 26, 2005.
	10	.109(27)		Merger Agreement, dated as of December 19, 2005, by and among Warp Technology Holdings, Inc., EI Acquisition, Inc., Empagio, and certain stockholders of Empagio.
	10	.110(28)		Agreement and Plan of Merger, dated as of December 23, 2005 by and among Warp Technology Holdings, Inc., WTH Merger Sub, Inc., and InfoNow.
	10	.111(29)		Employment Agreement with Mark Finkel.
	10	.112(29)		Non-Competition Agreement with Mark Finkel.
	10	.113(29)		Confidentiality Agreement with Mark Finkel.
	10	.114(30)		Form of Agreement Regarding Warrants.
	10	.115(31)		Subscription Agreement entered into January 11, 2006.
	10	.116(32)		Subscription Agreement first entered into January 27, 2006.
	10	.117(33)		Merger Agreement, dated as of January 30, 2006, by and among Warp Technology Holdings, Inc., ECI Acquisition, Inc., ECI, and certain stockholders of ECI.
	10	.118(34)		Merger Agreement, dated as of March 14, 2006, by and among Warp Technology Holdings, Inc., operating under the name Halo Technology Holdings, UCA Merger Sub, Inc., and Unify Corporation.
	10	.119(34)		Form of Stockholder Agreement, dated March 14, 2006, by and among Warp Technology Holdings, Inc., operating under the name Halo Technology Holdings, and the persons listed on Schedule I thereto.
	10	.120(36)		Amendment and Consent, dated as of March 31, 2006 between Warp Technology Holdings, Inc. and Platinum Equity, LLC.
	21	.1(34)		Subsidiaries of Halo Technology Holdings, Inc.
	23	.1(*)		Consent of Hale Lane Peek Dennison and Howard, a Professional Corporation (contained in Exhibit 5.1).
	23	.2(*)		Consent of Mahoney Cohen & Company, CPA, P.C.
	23	.3(*)		Consent of Deloitte & Touche, LLP, Independent Auditors.
	23	.4(*)		Consent of Q Advisors LLC.
	23	.5(**)		Consent of Hogan & Hartson L.L.P. (contained in Exhibit 8.1).
	23	.6(**)		Consent of Day, Berry & Howard LLP (contained in Exhibit 8.2).

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Exhibit No.				Description of Exhibit
	99	.1(*)		Opinion of Q Advisors LLC regarding the fairness of the merger consideration (included as Annex C to the proxy statement/ prospectus forming a part of this registration statement).
	99	.2(*)		Form of InfoNow Proxy Card.

	(1)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Registration Statement on Form SB-2 (File No. 333-46884).
	(2)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed by the Company on September 3, 2002.
	(3)	Incorporated herein by reference to the exhibits to the Annual Report on Form 10-KSB filed by the Company on October 7, 2002.
	(4)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on January 27, 2003.
	(5)	Incorporated by reference to the exhibits to the Quarterly Report on Form 10-QSB filed by Warp Technology Holdings, Inc. on February 14, 2003.
	(6)	Incorporated by reference to the exhibits to the Annual Report on Form 10-KSB filed by Warp Technology Holdings, Inc. on October 14, 2003.
	(7)	Incorporated by reference to the exhibits to 3.6 to the Quarterly Report on Form 10-QSB filed by Warp Technology Holdings, Inc. on November 14, 2003.
	(8)	Incorporated by reference to the exhibits to the Quarterly Report on Form 10-QSB filed by Warp Technology Holdings, Inc. on February 12, 2004.
	(9)	Incorporated by reference to the exhibits to the Quarterly Report on Form 10-QSB filed by Warp Technology Holdings, Inc. on May 17, 2004.

(10)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on August 20, 2004.
(11)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Annual Report on Form 10-KSB, filed on October 13, 2004.
(12)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on November 12, 2004.
(13)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Quarterly Report on Form 10-QSB, filed on November 15, 2004.
(14)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on February 4, 2005.
(15)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on March 9, 2005.
(16)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on April 1, 2005.
(17)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on April 4, 2005.
(18)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Registration Statement on Form S-2 (File Number 333-123864).
(19)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on July 11, 2005.
(20)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on August 16, 2005.
(21)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on September 2, 2005.

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(22)	Incorporated herein by reference to the exhibits to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on September 16, 2005.
(23)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on September 26, 2005.
(24)	Incorporated herein by reference to the second of Warp Technology Holdings, Inc.’s Current Reports on Form 8-K filed on October 27, 2005.
(25)	Incorporated herein by reference to the third of Warp Technology Holdings, Inc.’s Current Reports on Form 8-K filed on October 27, 2005.
(26)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on November 1, 2005.
(27)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on December 23, 2005.
(28)	Incorporated herein by reference to the second of Warp Technology Holdings, Inc.’s Current Reports on Form 8-K filed on December 27, 2005.
(29)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on January 4, 2006.
(30)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on January 6, 2006.
(31)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on January 18, 2006.
(32)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on February 2, 2006.
(33)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on February 3, 2006.
(34)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on March 20, 2006.
(35)	Incorporated herein by reference to Warp Technology Holdings, Inc.’s Current Report on Form 8-K filed on March 31, 2006.
(36)	Incorporated herein by reference to Halo Technology Holdings, Inc.’s Current Report on Form 8-K filed April 3, 2006.

	(*)	Filed herewith.

(**)	To be filed in a subsequent amendment hereto.

2.	Financial Statement Schedules.

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	HALO TECHNOLOGY HOLDINGS, INC.

	By:	/s/ Rodney A. Bienvenu, Jr.

	Rodney A. Bienvenu, Jr.
	Chief Executive Officer
	(principal executive officer)

Name				Title		Date
/s/ Rodney A. Bienvenu, Jr. Rodney A. Bienvenu, Jr.				Chief Executive Officer, Director, Chairman of Board of Directors (principal executive officer)		April 13, 2006
/s/ Mark Finkel Mark Finkel				Chief Financial Officer (principal financial officer)		April 13, 2006
/s/ Takeshi Taniguchi Takeshi Taniguchi				Controller		April 13, 2006
/s/ John A. Boehmer John A. Boehmer				Director		April 13, 2006
/s/ David M. Howitt David M. Howitt				Director		April 13, 2006

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