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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.)

Todd E. Wille President and Chief Executive Officer Unify Corporation 2101 Arena Blvd., Suite 100 Sacramento, California 95834 (916) 928-6400		Kevin A. Coyle, Esq. DLA Piper Rudnick Gray Cary US LLP 400 Capitol Mall, Suite 2400 Sacramento, California 95814 (916) 930-3200

Proposed

Proposed

Amount

Maximum

Maximum

Amount of

Title of Each Class of

to be

Offering Price

Aggregate Offering

Registration

Securities to be Registered

Registered

Per Share

Price

Fee

Common Stock, par value $0.00001 per share

14,619,070(1)

Not Applicable

$12,377,703(2)

$1,324.41(3)*

(1)	The number of shares being registered is based upon (x) an estimate of the maximum number of shares of common stock, par value $0.00001 per share, of Unify Corporation (“Unify”) presently outstanding or issuable or expected to be issued in connection with the merger of Unify Corporation and a wholly-owned subsidiary of the registrant including shares issuable upon the exercise of Unify options and warrants prior to the date the merger is expected to be consummated and multiplied by (y) the exchange ratio of 0.437 common shares, par value $0.00001 per share, of the registrant, for each share of common stock of Unify.
(2)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f) under the Securities Act of 1933, as amended. The proposed maximum aggregate offering price is the product of (x) $0.37 (the average of the high and low prices of Unify common stock, as quoted on the Over-The-Counter Bulletin Board on March 31, 2006), and (y) 33,453,250, the estimated maximum number of shares of Unify common stock that may be exchanged for the common shares of the registrant being registered.
(3)	Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.000107.

*	previously paid

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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,
	Steven D. Whiteman
	Chairman

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	1. To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of March 14, 2006, by and among Halo Technology Holdings, Inc., UCA Merger Sub Inc., a wholly-owned subsidiary of Halo, and Unify Corporation, as amended, 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 proxy holders to vote to adjourn or postpone the special meeting, in their sole discretion, 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:
	Steven D. Whiteman
	Chairman

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		Page
QUESTIONS AND ANSWERS ABOUT THE MERGER			1
SUMMARY OF THE PROXY STATEMENT/ PROSPECTUS			6
SELECTED FINANCIAL DATA			15
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS			15
RISK FACTORS			33
FORWARD-LOOKING STATEMENTS			49
THE SPECIAL MEETING OF UNIFY STOCKHOLDERS			50
THE MERGER			54
APPRAISAL RIGHTS FOR UNIFY STOCKHOLDERS			81
THE MERGER AGREEMENT			85
AGREEMENTS RELATING TO THE MERGER			93
CERTAIN INFORMATION CONCERNING HALO			94
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION			105
MANAGEMENT			120
EXECUTIVE COMPENSATION			123
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			131
DESCRIPTION OF PROPERTIES			136
LEGAL PROCEEDINGS			136
MARKET PRICE OF AND DIVIDENDS ON REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS			137
CERTAIN INFORMATION CONCERNING THE MERGER SUB			138
CERTAIN INFORMATION CONCERNING UNIFY			138
CERTAIN COMMON EQUITY AND RELATED STOCKHOLDER MATTERS			155
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			156
COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS			156
DESCRIPTION OF HALO SECURITIES			164
ADDITIONAL INFORMATION			166
MISCELLANEOUS			169
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES			F-1
EX-5.1: OPINION OF HALE LANE PEEK DENNISON AND HOWARD
EX-23.2: CONSENT OF MAHONEY COHEN & COMPANY, CPA, P.C.
EX-23.3: CONSENT OF ERNST & YOUNG LLP
EX-23.4: CONSENT OF GRANT THORTON LLP
EX-23.5: CONSENT OF DOUGLAS, CURTIS & ALLYN LLC

AGREEMENT AND PLAN OF MERGER, DATED AS OF MARCH 14, 2006, BY AND AMONG HALO TECHNOLOGY HOLDINGS, INC., UCA MERGER SUB, INC. AND UNIFY, INC			ANNEX A
OPINION OF DOUGLAS, CURTIS & ALLYN LLC			ANNEX B
FORM OF STOCKHOLDER AGREEMENT			ANNEX C
DELAWARE GENERAL CORPORATION LAW SECTION 262			ANNEX D

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Q:		As a Unify stockholder, what will I receive in the merger?
A:		If the merger is completed, you will receive 0.437 shares of Halo common stock for each share of Unify common stock you own as the merger consideration. Certain outstanding options to purchase shares of Unify common stock and outstanding warrants to purchase shares of Unify common stock will also be converted into the right to acquire shares of Halo common stock. The merger consideration is more fully described in the sections of this proxy statement/ prospectus titled “The Merger Agreement — Merger Consideration; Stock Payment” and “; Common Stock Options and Warrants” and in the merger agreement, which is attached to this proxy statement/prospectus as Annex A.
Q:		Will I receive any fractional shares of Halo common stock?
A:		No. In the event application of the exchange ratio to your Unify shares would result in any fractional shares, you will receive cash in lieu of any fractional shares in an amount equal to the fair market value of such fractional shares as of the closing date of the merger.
Q:		What are the principal risks relating to the merger?
A:		If all of the conditions to the merger are not met, the merger may not occur and Halo and Unify may lose the intended benefits of the merger. Even if the merger is completed, the anticipated benefits of combining Halo and Unify may not be realized. Halo may have difficulty integrating Unify and may incur substantial costs in connection with the integration. The merger may result in the loss of customers and/or a drop in Halo’s stock price. Halo may not be able to service its current debt obligations. If the merger fails to qualify as a tax-free reorganization, you will recognize a gain or loss on your Unify shares. These and other risks are explained in the section entitled “Risk Factors — Risks Related to the Merger” beginning on page 33 of this proxy statement/ prospectus.
Q:		Can the value of the transaction change between now and the time the merger is completed?
A:		Yes. While the exchange rate is fixed at 0.437 shares of Halo common stock for each share of Unify stock, the value of each share to you will be determined based on the Halo stock price from time to time. Each holder of Unify stock will receive 0.437 shares of Halo stock. We do not know what the Halo common stock will be worth at the time of closing or thereafter, and you should obtain a current quotation for Halo common stock before voting on the merger. See the sections entitled “The Merger Agreement — Merger Consideration; Stock Payment” and “; Common Stock Options and Warrants” beginning on page 85 of this proxy statement/ prospectus.
Q:		As a holder of options or warrants to purchase Unify common stock, what will I receive in the merger?
A:		Each outstanding option to acquire Unify common stock with a per share exercise price less than $1.00 (whether or not then vested) that remains outstanding immediately prior to consummation of the merger will be converted into an equivalent Halo stock option with the number of shares and option price adjusted to reflect the Exchange Ratio. Each outstanding warrant to acquire Unify common stock will be converted into a warrant to purchase the number of shares of Halo common stock determined by multiplying the number of Unify common shares covered by the option by the Exchange Ratio, with an exercise price per warrant share of Halo common stock of $1.836 irrespective of the Halo common stock price at the Effective Time of the merger. See the sections of this proxy statement/ prospectus titled “The Merger Agreement — Stock Payment” and “; Common Stock Options and Warrants” beginning on page 85 of this proxy statement/ prospectus and in the merger agreement, attached to this proxy statement/ prospectus as Annex A. Each outstanding option to acquire Unify common stock with an exercise price equal to or greater than $1.00 (whether or not then vested) that remains outstanding immediately prior to the consummation of the merger will be cancelled.
Q:		When and where will the special meeting take place?
A:		The Unify special meeting is scheduled to take place at       a.m., local time, on                     ,                     , 2006 at the                     ,                     ,                     ,                     .

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Q:		Who is entitled to vote at the special meeting?
A:		Holders of record of Unify common stock as of the close of business on                     , 2006, referred to as the record date, are entitled to vote at the special meeting. Each stockholder has one vote for each share of Unify common stock that the stockholder owns on the record date.
Q:		What vote is required to adopt the merger agreement?
A:		The affirmative vote of a majority of the shares of Unify common stock outstanding as of the record date is the only vote required to adopt the merger agreement. No vote is required of the Halo stockholders.
Q:		If my shares are held in “street name” by my broker or bank, will my broker or bank automatically vote my shares for me?
A:		No, your broker or bank will not be able to vote your shares without instructions from you. You should instruct your broker or bank to vote your shares by following the instructions your broker or bank provides. If you do not instruct your broker or bank, they will not have the discretion to vote your shares.
Q:		What is the effect of abstentions or broker non-votes?
A:		If you or your broker or bank attends the meeting or returns a proxy card but abstains from voting, or your broker or bank returns a proxy card indicating your broker or bank has no discretionary authority to vote the shares and has not been provided with instructions from you (which is called a broker non-vote), those shares will be counted for purposes of determining whether a quorum is present at the meeting. However, those shares will not be voted, and since adoption of the merger agreement requires the affirmative vote of a majority of Unify’s outstanding shares, abstentions and broker non-votes will have the same effect as a vote against adoption of the merger agreement.
Q:		How can I receive my own copy of this proxy statement/ prospectus even though one has already been delivered to my household?
A:		Some banks, brokers or nominees may participate in the practice of “householding,” which means that only one copy of this proxy statement/ prospectus may be sent to a household where multiple stockholders reside. If you would like to receive an additional copy of this proxy statement/ prospectus, Unify will promptly deliver a separate copy of this proxy statement/ prospectus, including the attached Annexes, to you if you send a written request to Unify Investor Relations, 2101 Arena Boulevard, Suite 100, Sacramento, California 95834 or call Unify Investor Relations at (916) 928-6400.
Q:		What are the material U.S. federal income tax consequences of the merger to U.S. holders of Unify common stock?
A:		The merger has been structured to qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Assuming the merger qualifies as a Code Section 368 reorganization, U.S. holders of Unify common stock will not recognize gain or loss for United States federal income tax purposes upon the exchange of shares of Unify common stock for Halo common shares.
		Tax matters are very complicated, and the tax consequences of the merger applicable to a particular stockholder will depend in part on each stockholder’s circumstances. Accordingly, we urge you to consult your own tax advisor for a full understanding of the tax consequences of the merger to you, including the applicability and effect of federal, state, local and foreign income and other tax laws.
		For more information, please see the section entitled “The Merger — Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 79 of this proxy statement/ prospectus.
Q:		Can the Merger Agreement be Terminated Before Closing?
A:		Yes, there are several ways the merger agreement can be terminated before closing, including if the merger is not consummated by September 30, 2006, and there are several conditions to closing

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		(including Halo raising an additional $2 million in equity funding), which, if not met, could result in termination of the merger agreement.
Q:		How does the Unify board of directors recommend that Unify stockholders vote?
A:		Unify’s board of directors recommends that Unify stockholders vote “FOR” the adoption of the merger agreement. Because consummation of the merger is conditioned on Halo raising at least $2 million in equity funding and because one of Unify’s directors, Robert J. Majteles, has an agreement with Special Situation Funds, a Unify investor that may provide that financing, Mr. Majteles abstained from voting on the merger. Other than Mr. Majteles’ abstention, the Unify board of directors recommendation was unanimous.
Q:		What do I need to do now?
A:		After carefully reading and considering the information contained in this proxy statement/ prospectus, please mail your signed proxy card in the enclosed return envelope as soon as possible so that your shares may be represented at the special meeting. You may also attend the special meeting and vote in person. If your shares are held in “street name” by your broker or bank, your broker or bank will vote your shares only if you provide instructions on how to vote. You should follow the directions provided by your broker or bank regarding how to instruct your broker or bank to vote your shares.
Q:		What if I do not vote, do not fully complete my proxy card or fail to instruct my broker?
A:		It is very important for you to vote. If you do not submit a proxy or instruct your broker how to vote your shares if your shares are held in street name, and you do not vote in person at the special meeting, the effect will be the same as if you voted “AGAINST” the adoption of the merger agreement. If you submit a signed proxy without specifying the manner in which you would like your shares to be voted, your shares will be voted “FOR” the adoption of the merger agreement. However, if your shares are held in “street name” and you do not instruct your broker how to vote your shares, your broker will not vote your shares, such failure to vote being referred to as a broker non-vote, which will have the same effect as voting “AGAINST” the adoption of the merger agreement. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares in order to ensure that your shares will be voted at the special meeting.
Q:		Can I change my vote after I have delivered my proxy?
A:		Yes. You may change your vote at any time before the vote takes place at the special meeting. To change your vote, you may (1) submit a new proxy card bearing a later date by mail, or (2) send a signed written notice bearing a date later than the date of the proxy to the Secretary of Unify stating that you would like to revoke your proxy. You may also change your vote by attending the special meeting and voting in person, although your attendance alone will not revoke your proxy. However, if you elect to vote in person at the special meeting and your shares are held by a broker, bank or other nominee, you must bring to the meeting a legal proxy from the broker, bank or other nominee authorizing you to vote the shares.
Q:		Will a proxy solicitor be used?
A:		No.
Q:		Do I need to attend the special meeting in person?
A:		No. It is not necessary for you to attend the special meeting to vote your shares if Unify has previously received your proxy, although you are welcome to attend.
Q:		Should I send in my stock certificates now?
A:		No. After the merger is completed,                     , acting the exchange agent, will send you instructions (including a letter of transmittal) explaining how to exchange your shares of Unify common stock for the appropriate number of shares of Halo common stock. Please do not send in your stock certificates with your proxy.

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Q:		When do you expect to complete the merger?
A:		We are working to complete the merger as promptly as practicable after the special meeting. However, because the merger is subject to closing conditions, we cannot predict the exact timing.
Q:		Will I have appraisal rights as a result of the merger?
A:		If you do not wish to participate in the merger and wish to exercise your appraisal rights, you must follow the requirements of Delaware law. A copy of the applicable Delaware statutory provision is included as Annex D to this proxy statement/ prospectus and a summary of this provision can be found in the section entitled “Appraisal Rights for Unify Stockholders” beginning on page 81 of this proxy statement/ prospectus. If more than 10% of the Unify stockholders elect to exercise appraisal rights, then Halo can elect to terminate the merger agreement.
Q:		How will Unify stockholders receive the merger consideration?
A:		Following the merger, you will receive a letter of transmittal and instructions on how to obtain the merger consideration in exchange for your Unify common stock. You must return the completed letter of transmittal and surrender your Unify shares of common stock as described in the instructions, and you will receive the merger consideration as soon as practicable after the exchange agent receives your completed letter of transmittal and Unify shares of common stock.
Q:		Who can I call with questions?
A:		If you have any questions about the merger, how to submit your proxy or other matters discussed in this proxy statement/ prospectus or if you need additional copies of this proxy statement/ prospectus or the enclosed proxy card, you should contact Unify Investor Relations at (916) 928-6288.

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	•	the possibility that the potential benefits of the merger may not be fully realized;
	•	the substantial costs of integrating the businesses of Halo and Unify and the transaction expenses arising from the merger;
	•	the difficulty of integrating Unify with Halo’s existing development tools and risk management operations and Halo management efforts required to complete the integration;
	•	the risk that the premium offered relative to Unify’s stock price at the time the merger agreement was executed may not be viewed favorably by the market;
	•	the effect of the public announcement of the merger on Unify’s customer relations;
	•	certain risks applicable to the merger and the business of the combined company as set forth under “Risk Factors” beginning on page 33; and
	•	the possibility that the merger might not be consummated, resulting in a potential adverse effect on the market price of the Halo common stock.

	•	the possible disruption to Unify’s business that may result from the announcement of the transaction;
	•	the potential adverse effects of the public announcement of the merger on Unify’s sales and operating results, ability to retain key employees, the progress of some of Unify’s strategic initiatives, and Unify’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 Unify’s business during the period between the signing of the merger agreement and the completion or termination of the merger;
	•	the $600,000 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, Unify, as described in the section entitled “The Merger Agreement — Termination” beginning on page 92 of this proxy statement/ prospectus);
	•	the terms of the merger agreement placing limitations on the ability of Unify 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 — No Solicitation” beginning on page 91 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 certain factors outside of Unify’s control;
	•	the transaction costs expected to be incurred in connection with the merger;

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	•	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 Unify common stock, and
	•	Unify’s ability to attract and retain customers and personnel; and

	•	the risks described in the section entitled “Risk Factors” beginning on page 33 of this proxy statement/ prospectus.

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	•	failure to complete the merger could negatively impact Unify’s and/or Halo’s stock price, future business, or operations;
	•	because the market price of Halo common shares will fluctuate, the value of the Halo common shares that will be issued in the merger will not be known until the closing of the merger;
	•	Halo will incur significant costs to achieve and may not be able to realize the anticipated savings, synergies or revenue enhancements from the merger;
	•	Halo may not successfully integrate Unify into its business and operations;
	•	the costs of the merger and the costs of integrating Halo’s and Unify’s operations are substantial and may make it more difficult for the combined company to achieve profitability;
	•	the market price of Halo common stock may decline as a result of the merger;
	•	the issuance of shares of Halo common stock in the merger will result in immediate dilution of Halo’s outstanding common stock;

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	•	Halo’s relatively low trading volume may limit your ability to sell your shares of Halo common stock received in the merger;
	•	Halo has a limited operating history, has a history of losses and negative working capital and may need additional financing in the near future;
	•	Halo may be unable to borrow funds;
	•	If Halo fails to meet its obligations under its debt agreements, its secured lender could foreclose on its assets;
	•	The markets for Halo’s products are highly competitive and rapidly changing;
	•	The technology Halo uses is rapidly changing;
	•	failure to manage anticipated growth and expansion could have a material adverse effect on Halo’s business;
	•	Halo expects to pay no cash dividends;
	•	Halo’s common stock is subject to the “penny stock” restrictions under federal securities laws, which could reduce the liquidity of the Halo common stock;
	•	Halo’s acquisition strategy may place substantial burdens on Halo’s management resources and financial controls; and
	•	Halo may not be able to successfully integrate all of its other recent acquisitions with Unify.

	•	the merger agreement must be adopted by the holders of a majority of the outstanding shares of Unify 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; and
	•	Counsel to Unify and tax counsel to Halo shall have delivered opinions dated as of the date of the registration statement, of which this prospectus is part, is declared effective, to the effect that the merger will constitute a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

	•	there shall have been no material adverse change in the business, operations, condition (financial or otherwise), assets or liabilities of either Unify or Halo;
	•	Halo must have received at least $2,000,000 in new money equity investments;
	•	certain holders of convertible promissory notes of Halo must have converted such promissory notes into shares of Halo common stock;
	•	the holders of all outstanding shares of Halo’s preferred stock must convert their shares of Halo preferred stock to shares of Halo common stock;

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	•	should any holders of Unify common stock exercise dissenters rights with respect to the merger, the number of shares of common stock held by such dissenting holders shall not be more than ten percent of Unify’s common stock; and
	•	Todd Wille and Halo must have entered into an employment agreement.

	•	by mutual consent of Halo and Unify if the board of directors of each company so determines by a vote of a majority of the members of its entire board;
	•	upon written notice to the other party 30 days after the date on which any request or application for a regulatory approval shall have been denied or withdraw at the request or recommendation of the governmental entity which must grant such 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;
	•	if the merger is not completed, through no fault of the terminating party, by September 30, 2006;
	•	if the approval of the stockholders of Unify required for the consummation of the merger is not obtained by reason of the failure to obtain the required vote at a duly held stockholders meeting;
	•	if the other party has breached any of its representations and warranties or failed to perform any of its covenants and the breach or failure, individually or in the aggregate, has had or is likely to have a material adverse effect on the non-breaching party and such failure or breach is not cured or curable within 30 days following receipt of written notice of such breach or failure, or such breach, by its nature, cannot be cured prior to the closing of the merger; or
	•	if Unify, after compliance with the terms of the merger agreement, accepts a superior proposal (as defined in the section entitled “The Merger Agreement — No Solicitation” beginning on page 91 of this proxy statement/ prospectus), provided that Unify pays Halo the termination fee under the merger agreement (see the section entitled “The Merger Agreement — Termination Fee” beginning on page 93 of this proxy statement/ prospectus).

	•	Unify or its board of directors fails to call and hold the Unify special meeting; fails to recommend the approval of the merger; fails to oppose a third party acquisition proposal under certain circumstances as defined in the merger agreement; or solicits, initiates, encourages inquiries or company acquisition proposals, or engages in negotiations or discussions regarding a company acquisition proposal (as defined in the sections entitled “The Merger Agreement — Termination Fee” and “— No Solicitation” beginning on pages 93 and 91, respectively, of this proxy statement/ prospectus).

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	•	deliver to Unify a written demand for appraisal of your shares in compliance with Delaware law before the vote on the merger;
	•	not vote in favor of the merger by proxy or in person. A proxy which is signed and does not contain voting instructions, unless revoked, will be voted in favor of the merger; and
	•	continuously hold your Unify common stock as record holder, from the date you make the demand for appraisal through the closing of the merger.

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	Unaudited Consolidated Condensed Halo and Unify Pro Forma Financial Statements

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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 3/31/2006		$	1.20
Estimated stock consideration						$	15,403,307
FMV of vested Unify options to be converted to Halo options(1)							721,610
FMV of vested Unify warrants to be converted to Halo warrants(2)							786,772
Estimated Transaction Costs Accrued							275,000
Total Purchase Price						$	17,186,689

(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 $721,610.
(2)	Unify’s number of shares underlying the warrants outstanding as of 1/31/06 was 2,703,991. These warrants were fully vested and are converted into 993,176 Halo warrants whose FMV was estimated to be $786,772.

Assets:
Unify’s historical assets		$	8,382,411
Write-up of intangible assets consisting of developed technologies and customer relationships			5,600,808
Write-up of goodwill			7,929,990
Liabilities:
Unify’s historical liabilities			(6,360,085	)
Adjustment of deferred revenue to fair market value			1,633,565
Total purchase price		$	17,186,689

		Estimated FMV				Estimated Life
Trade name		$	171,867				7 Years
Developed technology			2,234,270				7 Years
Customer relationships			3,437,338				7 Years
Total intangible assets acquired		$	5,843,475

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																							Pro Forma
											Pro Forma Adjustments												Adjustment
															Purchase								Purchase				Halo
			Halo(A)				Unify(B)				Conditions(C)				Accounting				InfoNow(H)				Accounting				Pro Forma
Assets
Current Assets:
Cash and cash equivalents			$	1,749,926			$	2,729,170			$	—			$	—			$	1,670,922			$	(6,410	)(I)		$	6,143,608
Marketable Securities				33,800				—				—				—				—				—				33,800
Accounts receivable, net of allowance for doubtful accounts				3,993,731				2,673,676				—				—				1,105,616				—				7,773,023
Due from Platinum Equity, LLC				465,000				—				—				—				—				—				465,000
Prepaid expenses and other current assets				873,006				618,100				—				—				432,040				—				1,923,146
Total current assets				7,115,463				6,020,946				—				—				3,208,578				(6,410	)			16,338,577
Property and equipment, net				288,335				301,585				—				—				327,692				—				917,612
Deferred financing costs, net				1,653,701				—				—				—				—				—				1,653,701
Intangible assets, net of accumulated amortization				24,302,862				242,667				—				5,600,808	(F)			792,352				1,765,103	(I)			32,703,791
Goodwill				31,517,696				1,405,111				—				7,929,990	(F)			—				4,279,766	(I)			45,132,563
Investment and other assets				168,179				412,103				—				—				—				—				580,282
	Total assets		$	65,046,236			$	8,382,411			$	—			$	13,530,798			$	4,328,622			$	6,038,459			$	97,326,526
Liabilities and stockholders’ equity
Current liabilities:
Current portion of senior notes payable			$	500,063			$	—			$	—			$	—			$	—			$	—			$	500,063
Accounts payable				1,929,685				160,764				—				—				1,227,462				—				3,317,911
Accrued expenses				6,091,890				1,325,816				(93,333	)(D)			275,000	(F)			308,924				275,000	(I)			8,183,297
Note payable to Platinum Equity, LLC				1,750,000				—				—				—				—				—				1,750,000
Notes payable				3,346,870				811,955				(3,225,000	)(D)			—				—				—				933,825
Deferred revenue				14,085,877				3,361,788				—				(1,633,565	)(F)			1,665,878				(474,775	)(I)			17,005,203
Due to ISIS				1,243,712				—				—				—				—				—				1,243,712
	Total current liabilities			28,948,097				5,660,323				(3,318,333	)			(1,358,565	)			3,202,264				(199,775	)			32,934,011
Subordinate notes payable				1,695,004				—				—				—				—				—				1,695,004
Senior notes payable				21,481,806				—				—				—				—				—				21,481,806
Other long term liabilities				42,499				699,762				—				—				148,087				(24,011	)(I)			866,337
	Total liabilities			52,167,406				6,360,085				(3,318,333	)			(1,358,565	)			3,350,351				(223,786	)			56,977,158
Commitments and contingencies				—				—				—				—				—				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				—				—				—				—				—				2
Series C Preferred Stock				13,362,688				—				(13,362,688	)(E)			—				—				—				—
Series D Preferred Stock				7,840,909				—				(7,840,909	)(E)			—				—				—				—
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				412,399				—				—				—				—				—				412,399
Shares of Common Stock to be issued for accrued interest on subordinate debt				104,167				—				—				—				—				—				104,167
Common stock				81				29,373				27	(D)			128	(F)			10,157				60	(I)			508
												212	(E)			(29,373	)(G)							(10,157	)(J)
Additional paid-in-capital				67,548,896				63,885,760				5,110,691	(D)			16,911,561	(F)			40,172,116				7,240,456	(I)			118,014,989
												21,203,385	(E)			(63,885,760	)(G)							(40,172,116	)(J)
Accumulated other comprehensive loss				(48,072	)			23,888				—				(23,888	)(G)			—				—				(48,072	)
Accumulated deficit				(76,342,240	)			(61,916,695	)			(1,792,385	)(D)			61,916,695	(G)			(39,204,002	)			39,204,002	(J)			(78,134,625	) )
Total stockholders’ equity				12,878,830				2,022,326				3,318,333				14,889,363				978,271				6,262,245				40,349,368
	Total liabilities and stockholders’ equity		$	65,046,236			$	8,382,411			$	—			$	13,530,798			$	4,328,622			$	6,038,459			$	97,326,526

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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 3/31/2006		$	1.20
Estimated stock consideration						$	15,403,307
FMV of vested Unify options to be converted to Halo options(1)							721,610
FMV of vested Unify warrants to be converted to Halo warrants(2)							786,772
Estimated transaction costs accrued							275,000
Total purchase price						$	17,186,689

(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 $721,610.

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(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 $786,772.

Assets:
Unify’s historical assets		$	8,382,411
Write-up of intangible assets consisting of developed technologies and customer relationships			5,600,808
Write-up of goodwill			7,929,990
Liabilities:
Unify’s historical liabilities			(6,360,085	)
Adjustment of deferred revenue to fair market value			1,633,565
Total purchase price		$	17,186,689

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 3/31/06		$	1,670,922
InfoNow net working capital as of 3/31/06		$	6,314
Lesser of two (to be paid in cash to InfoNow stockholders)						$	6,314				0	%
Total conversion value minus cash consideration (to be paid in Halo common shares)						$	7,133,019				100	%
Estimated value of InfoNow stock options with exercise price of $.71 or lower		$	107,593								100	%
Option conversion value allocated to cash						$	96				0	%
Option conversion value allocated to stock						$	107,497				100	%
Estimated transaction costs accrued							275,000
Total purchase price						$	7,521,926

*	The estimated purchase prices by category: cash $6,410; common stock $7,240,516 (6,033,763 shares); and transaction costs $275,000.

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Assets:
InfoNow’s historical assets		$	4,328,622
Write-up of intangible assets consisting of developed technologies and customer relationships			1,765,103
Recording of goodwill			4,279,766
Liabilities:
InfoNow’s historical liabilities ($24,011 of long-term liabilities)			(3,350,351	)
Adjustment of deferred revenue to fair market value ($24,011 long term)			498,786
Total purchase price		$	7,521,926

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												Pro Forma								Pro Forma				Halo
				Halo(K)				Unify(L)				Adjustments				InfoNow(Q)				Adjustments				Pro Forma
Revenue
	Licenses			$	4,556,387			$	3,443,802			$	—			$	—			$	—			$	8,000,189
	Services				12,230,196				4,365,229				—				6,490,580				—				23,086,005
		Total revenues			16,786,583				7,809,031				—				6,490,580				—				31,086,194
Cost of revenue
	Cost of license				925,872				355,207				239,386	(M)			—				104,770	(R)			1,625,235
	Cost of services				2,462,574				1,358,429				—				4,188,835				—				8,009,838
		Total cost of revenues			3,388,446				1,713,636				239,386				4,188,835				104,770				9,635,073
Gross Profit					13,398,137				6,095,395				(239,386	)			2,301,745				(104,770	)			21,451,121
Product development					4,294,336				2,067,715				—				448,295				—				6,810,346
Sales, marketing and business development					5,403,501				3,086,721				—				741,075				—				9,231,297
General and administrative					8,187,431				1,668,588				111,732	(N)			1,773,604				—				11,741,355
Amortization of intangibles					1,441,774				90,999				386,701	(M)			—				169,243	(R)			2,088,717
Loss before interest					(5,928,905	)			(818,628	)			(737,819	)			(661,229	)			(274,013	)			(8,420,594	)
Interest (expense) income					(6,592,164	)			23,720				(349,679	)(O)			63,311				—				(6,155,454	)
Loss before income taxes					(12,521,069	)			(794,908	)			(388,140	)			(597,919	)			(274,013	)			(14,576,048	)
Income taxes					(171,786	)			—				—	(P)			—				—	(S)			(171,786	)
Net Loss				$	(12,692,855	)		$	(794,908	)		$	(388,140	)		$	(597,919	)		$	(274,013	)		$	(14,747,834	)
Computation of loss applicable to Common Shareholders
Net loss before Preferred dividends				$	(12,692,855	)		$	(794,908	)		$	(388,140	)		$	(597,919	)		$	(274,013	)		$	(14,747,834	)
Preferred dividends					(1,069,162	)			—				—				—				—				(1,069,162	)
Loss attributable to common stockholders				$	(13,762,017	)		$	(794,908	)		$	(388,140	)		$	(597,919	)		$	(274,013	)		$	(15,816,996	)
Basic and diluted loss per share pro forma				$	(2.97	)																		$	(0.34	)
Weighted average shares outstanding pro forma					4,637,578																				46,570,238	(T)

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												Pro Forma								Pro Forma				Halo
				Halo(K)				Unify(L)				Adjustments				InfoNow(Q)				Adjustments				Pro Forma
Revenue
	Licenses			$	2,986,752			$	5,210,035			$	—							$	—			$	8,196,787
	Services				2,137,170				6,085,751				—				9,501,411				—				17,724,332
		Total revenues			5,123,922				11,295,786				—				9,501,411				—				25,921,119
Cost of revenue
	Cost of license				449,073				392,040				319,181	(M)			—				139,693	(R)			1,299,987
	Cost of services				396,490				1,290,641				—				6,177,554				—				7,864,685
		Total cost of revenues			845,563				1,682,681				319,181				6,177,554				139,693				9,164,672
Gross Profit					4,278,359				9,613,105				(319,181	)			3,323,857				(139,693	)			16,756,446
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				146,235	(N)			3,002,134				—				9,728,689
Amortization of intangibles					648,041				60,666				515,601	(M)			—				225,658	(R)			1,449,966
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	)			(981,017	)			(2,077,645	)			(365,351	)			(16,110,043	)
Interest (expense) income					(4,631,683	)			54,635				0	(O)			47,859				—				(4,529,189	)
Loss before income taxes					(15,274,994	)			(1,988,084	)			(981,017	)			(2,029,786	)			(365,351	)			(20,639,232	)
Income taxes					(97,945	)			(14,002	)			—	(P)			—				—	(S)			(111,947	)
Net Loss				$	(15,372,939	)		$	(2,002,086	)		$	(981,017	)		$	(2,029,786	)		$	(365,351	)		$	(20,751,179	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(15,372,939	)		$	(2,002,086	)		$	(981,017	)		$	(2,029,786	)		$	(365,351	)		$	(20,751,179	)
Beneficial conversion — Preferred dividends					(7,510,590	)			—				—				—				—				(7,510,590	)
Loss attributable to common stockholders				$	(22,883,529	)		$	(2,002,086	)		$	(981,017	)		$	(2,029,786	)		$	(365,351	)		$	(28,261,769	)
Basic and diluted loss per share pro forma				$	(11.97	)																		$	(0.64	)
Weighted average shares outstanding pro forma					1,912,033																				43,844,693	(T)

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			Nine Months
			Ended March 31,				Year Ended
			2006				June 30, 2005
Halo’s weighted average shares as reported on 10-QSB and 10-KSB				4,637,578				1,912,033
Common stock to be issued under Closing Conditions
	Convertible notes to be converted			2,654,666				2,654,666
	Preferred Series C and Series D to be converted			20,408,142				20,408,142
Common stock to be issued to Unify stockholders				12,836,089				12,836,089
Common stock to be issued to InfoNow stockholders				6,033,763				6,033,763
Weighted average shares pro forma				46,570,238				43,844,693

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

	•	Unify may be required under certain circumstances to pay Halo a termination fee of $600,000;
	•	the price of Halo’s and/or Unify’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 Unify 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;
	•	there shall have been no material adverse change in the business, operations, condition (financial or otherwise), assets or liabilities of either Unify or Halo;
	•	Halo must have received at least $2,000,000 in new money equity investments;
	•	certain holders of convertible promissory notes of Halo must have converted such promissory notes into shares of Halo common stock;

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	•	the holders of all outstanding shares of Halo’s preferred stock must convert their shares of Halo preferred stock to shares of Halo common stock;
	•	should any holders of Unify 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 Unify’s common stock; and
	•	Todd Wille and Halo must have entered into an employment agreement.

	Because the market price of Halo common shares will fluctuate, the value of the Halo common shares that will be issued in the merger will not be known until the closing of the merger.

	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 Unify 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 Unify’s customers after the acquisition.

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

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

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

	•	the premium offered by Halo relative to Unify’s stock price on the date the merger agreement was announced is not viewed favorably by the market;
	•	the integration of Halo and Unify 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.

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

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	Halo and Unify may waive one or more of the conditions to the merger without resoliciting Unify stockholder approval for the merger, which may result in the merger being less advantageous to the Unify stockholders.

	The contractual provision that requires Unify to pay a termination fee could adversely affect its financial condition and may discourage other companies from trying to acquire Unify.

	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’s post merger revenues, ability to retain key personnel, its stock price and operating results.

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	Halo’s and Unify’s officers and directors have interests different from the stockholders that may influence them to support or approve the merger.

	We have a limited operating history which may make it difficult to predict future results of operations.

	We have a history of losses and negative working capital and may need additional financing in the near future in order to continue operations.

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	We may not be able to borrow funds, which in turn could impair our ability to carry out our business plan.

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

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	A failure to adapt to rapidly changing markets and develop new technologies could harm our business.

	•	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.

	Failure to timely develop new products which achieve market acceptance could interfere with Halo’s customer relationships and adversely affect Halo’s business, financial condition and results of operations.

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	A failure by us to manage our growth and expansion could have a material adverse effect on our business.

	We do not anticipate declaring any cash dividends in the foreseeable future which could reduce the liquidity of your investment.

	Our obligations to indemnify our officers and directors may divert funds from our business operations.

	Our common stock is subject to “penny stock” restrictions under federal securities laws which could reduce the liquidity of our common stock.

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	Failure to manage the risks associated with our growth and acquisition strategy could have a material adverse effect on Halo’s operations and financial condition.

	We may be required to recognize impairment charges.

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	Failure to finance future acquisitions could limit our ability to implement our business plan.

	Financial results may vary significantly from quarter to quarter which could affect our ability to sustain our operations.

	•	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;
	•	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;

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	•	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 which can affect our periodic results.

	Our efforts to develop and maintain brand awareness of Halo products may not be successful. A lack of brand awareness could adversely affect Halo’s sales.

	Halo must succeed in the cross platform application development market if it is to realize the expected benefits of its Linux development.

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	•	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 product line expansion which could affect its future operations.

	A small number of distributors account for a significant percentage of Halo’s billings. The loss of one or more of such distributors could have a material adverse impact on Halo’s business.

	Halo depends on an indirect sales channel. A failure to grow its indirect sales or the loss of indirect channel partners could have an adverse effect on our business.

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	•	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 the strategic relationships necessary to succeed in its operations.

	The failure of Halo to maintain or obtain third-party software licenses could harm our business, operating results and financial condition.

	Halo may become subject to product or professional services liability claims which could divert a significant amount of our revenues from operations.

	Halo competes with Microsoft while simultaneously supporting Microsoft technologies. Our business may be harmed if Microsoft’s technology becomes more directly competitive with Halo.

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	A failure to remain competitive in our industry could have a material adverse effect on our sales.

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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.

	Halo’s dependence on international sales and operations subjects it to risks associated with foreign laws, staffing and currency.

	•	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;

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	•	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;
	•	foreign protectionist laws and business practices that favor local competition;
	•	failure of local laws to provide the same degree of protection against infringement of our intellectual property;
	•	quality control of certain development, translation or localization activities; and
	•	political and economic instability.

	Fluctuations in the relative value of foreign currencies can reduce our revenues or increase our costs.

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	•	those risks and uncertainties we discuss under “Risk Factors”;
	•	those risks and uncertainties we discuss or identify in our public filings with the Securities and Exchange Commission;
	•	changes in both companies’ businesses during the period between now and the completion of the merger; and
	•	the successful integration of Unify into Halo’s business subsequent to the completion of the merger.

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	•	the compatibility of Unify’s products and services with Halo’s technology, products and risk management solutions 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 Unify’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 Unify’s operations to Halo could possibly increase the overall value and profitability of Halo;
	•	information concerning Halo’s and Unify’s respective businesses, historical financial performance and condition, operations, technology, products, customers, competitive positions, prospects and management;
	•	current financial market conditions and the historical market prices and trading information of Halo common stock and Unify common stock;
	•	the financial and other terms of the merger, including the relationship between the market value of Halo common stock and Unify common stock;
	•	the belief 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 Unify;
	•	Halo management’s view of the financial condition, results of operations and businesses of Halo and Unify 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;
	•	the potential impact of the merger on strategic partners, customers and employees of Halo and Unify;
	•	the likely reaction to the merger in the financial markets; and
	•	the results of the due diligence investigation of Unify.

	•	the possibility that the potential benefits set forth above may not be fully realized;
	•	the substantial costs of integrating the businesses of Halo and Unify and the transaction expenses arising from the merger;
	•	the difficulty of integrating Unify with Halo’s existing development tools and risk management operating spheres and the management effort required to complete the integration;
	•	the risk that the premium offered relative to Unify’s stock price at the time the merger agreement was executed may not be viewed favorably by the market;
	•	the effect of the public announcement of the merger on Unify’s customer relations;

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	•	certain risks applicable to the merger and the business of the combined company as set forth under “Risk Factors” beginning on page 33; and
	•	the possibility that the merger might not be consummated, 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 represents a premium of approximately 65% over the last reported sales price per share for Unify’s common stock as reported on the Over the Counter Bulletin Board on March 13, 2006, the last trading day for Unify’s common stock prior to the announcement of the merger;
	•	Unify stockholders will retain the ability to hold stock in a larger and more diversified technology holding company;
	•	the financial presentations of Unify’s financial advisors, DCA, including their opinion as to the fairness, from a financial point of view, of the merger consideration to be paid to Unify stockholders pursuant to the merger agreement, as more fully described in the section entitled “The Merger — Opinion of Douglas Curtis & Allyn LLC” beginning on page 64 of this proxy statement/prospectus;
	•	Unify’s board of directors’ analysis and understanding of Unify’s “stand-alone” strategic alternative in the context of the increasingly competitive market for database and development tool products, and Unify’s board of directors’ analysis of the business, operations, financial performance, earnings and prospects for Unify on a stand-alone basis, and Unify’s board of directors’ belief, based on its analysis and understanding, that the combined company would best maximize value for Unify’s shareholders in light of the risks and potential rewards associated with Unify continuing to operate on a stand-alone basis;
	•	Unify’s board of directors’ evaluation of Unify’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 Unify has experienced declining revenues and net losses;
	•	the risk that the trading price of Unify stock may decline further;
	•	the fact that Unify had reviewed potential strategic alternatives as described in the section entitled “The Merger — Background of the Merger” beginning on page 54 of this proxy statement/prospectus. In this process, no party expressed interest in pursuing a financing transaction, and two potential acquirers were identified. Ultimately, one of the potentially interested parties dropped out of the process. In light of these developments, Unify’s board of directors considered the risk of losing the sole potential transaction;
	•	Unify’s board of directors’ belief there are synergies likely to result in combining Unify’s business with two of Halo’s subsidiaries, Gupta and DAVID, and the ability to spread certain redundant costs associated with operating Unify 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 Unify stockholders to participate, as Halo stockholders, in a larger and more diversified company with diversified partnership opportunities and significant cash flow;
	•	the opportunity for Unify to have access to significantly greater financial and operational resources as part of Halo than Unify would otherwise have on a stand-alone basis;

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	•	Unify’s board of directors’ understanding of the information concerning Unify’s and Halo’s respective businesses, financial performance, and condition, operations, capitalization and stock performance;
	•	Unify will not be obligated to consummate the merger unless Halo receives $2 million of new equity financing and Halo successfully converts all of its preferred stock and the majority of its convertible debt to common stock, as described in the sections entitled “The Merger Agreement — Conditions to the Merger” beginning on page 89 of this proxy statement/prospectus;
	•	the merger agreement provisions permitting Unify 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 Unify’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 Unify’s board of directors breaching its fiduciary duties under applicable law and determines in good faith, after receiving the advice from its legal advisor, that the proposal reasonably would be expected to result in a transaction that, if consummated, would be more favorable to Unify stockholders than the merger with Halo (see the section entitled “The Merger Agreement — No Solicitation” beginning on page 91 of this proxy statement/prospectus);
	•	the merger agreement provisions permitting Unify’s board of directors to, under certain circumstances, withdraw, modify or change its recommendation with respect to the merger if Unify’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 Unify’s board of directors breaching its fiduciary duties under applicable law (see the section entitled “The Merger Agreement — No Solicitation” beginning on page 91 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 Internal Revenue Code, as amended, meaning the merger is not expected to be taxable to Unify stockholders;
	•	the merger will offer stockholders of Halo the potential benefits described in the section entitled “The Merger — Halo’s Reasons for the Merger” beginning on page 58 of this proxy statement/prospectus;

	•	the possible disruption to Unify’s business that may result from the announcement of the transaction;
	•	the potential adverse effects of the public announcement of the merger on Unify’s sales and operating results; ability to retain key employees; the progress of some of Unify’s strategic initiatives; and Unify’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 Unify’s business during the period between the signing of the merger agreement and the completion of the merger;
	•	the $600,000 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, Unify, as described in the section entitled “The Merger Agreement — Termination” beginning on page 92 of this proxy statement/prospectus);
	•	the terms of the merger agreement placing limitations on the ability of Unify to solicit alternative business combination transactions or engage in negotiations or discussions with, a third party

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		interested in pursuing an alternative business combination transaction (see the section entitled “The Merger Agreement — No Solicitation” beginning on page 91 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 Unify’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 Unify common stock, and
	•	Unify’s ability to attract and retain customers and personnel; and

	•	the risks described in the section entitled “Risk Factors” beginning on page 33 of this proxy statement/prospectus.

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	•	a draft of the merger agreement dated March 9, 2006, together with certain of the exhibits and schedules thereto;
	•	historical and projected earnings, other operating data and other historical financial information of Unify and Halo;
	•	Unify’s and Halo’s quarterly reports on Form 10-Q or Form 10-QSB, as the case may be, and annual reports on Form 10-K or Form 10-KSB, as the case may be, and a draft of Unify’s quarterly report on Form 10-Q for the quarter ended January 31, 2006;
	•	certain internal financial projections, analyses and forecasts prepared by management of Unify and Halo;
	•	publicly-reported historical price and trading activity for Unify’s and Halo’s common stock, and similar publicly available information for certain other publicly-traded companies;
	•	the views of the senior managements of Unify and Halo regarding the business, financial condition, and results of operations and prospects of their respective companies;
	•	publicly-available financial terms of certain recent business combinations in the software industry; and
	•	such other information, financial studies, analyses, investigations and financial criteria as DCA considered relevant.

	(i) the accuracy and completeness of all the financial, accounting, legal, tax and other information discussed with or reviewed by DCA;
	(ii) the internal financial forecasts prepared by the management of Unify and Halo have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of Unify and Halo and that such forecasts will be realized in the amounts and time periods contemplated thereby;
	(iii) All representations and warranties contained in the Agreement and Plan of Merger, including the disclosure schedules attached thereto, are true and correct;
	(iv) All representations made and information provided by, as well as interviews conducted with, the management of Unify and Halo are true and correct and contain no omissions of material facts or information;
	(v) Each party will perform all of the covenants required by the Agreement and Plan of Merger;

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	(vi) Conditions precedent to the merger have not been waived;
	(vii) There are no material changes in Unify’s or Halo’s assets, financial condition, results of operations, business or prospects;
	(viii) There are no material changes to the Agreement and Plan of Merger, including exhibits and schedules thereto, from the draft version as of March 9, 2006 provided to DCA prior to DCA issuing its opinion as of March 10, 2006;
	(ix) Unify’s and Halo’s technology, intellectual property rights and source code are adequate and capable of being used for the purpose intended and will continue to produce the revenues forecast by management on a pro forma basis for the separate companies and combined entity;
	(x) Unify and Halo remain going concerns for all periods relevant to this analysis;
	(xi) All debt, other than that owed to Fortress and approximately $1.1 million of subordinated debt, will be paid, retired or converted into Halo common stock prior to close;
	(xii) Sufficient liquidity will exist in Halo shares to prevent share price erosion resulting from increased trading volume;
	(xiii) The acquisition of InfoNow by Halo has not closed by the time this transaction closes and the effect thereof has not been considered in DCA’s fairness opinion analysis; and
	(xiv) Performance by the parties of all conditions precedent to effect the Merger including (among other obligations):

	a. the required registration statement shall have been declared effective
	b. certain Unify stockholder agreements shall have been executed

	c.	receipt by Halo of at least $2,000,000 in new equity investment on terms described to DCA prior to the effective time of the Merger

	d. conversion of each share of all classes of Halo preferred stock into common stock, and
	e. execution of mutually acceptable employment agreements with certain Unify employees.

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	•	there is no mechanism in the merger agreement to protect Unify stockholders against downward movement in Halo’s share price between signing the merger agreement and closing the merger;
	•	the ability of Halo and Unify to access additional debt and/or equity capital;
	•	the ability of Unify and Halo to meet forecasted results;
	•	risks that certain customers or suppliers may elect not to do business with the combined company;
	•	the dilutive impact that Halo’s future acquisitions may have on earnings per share (EPS);
	•	potential adverse impact on the market perception of the combined company due to the diversity of its business model;
	•	the limited trading market for Halo common stock;
	•	Halo’s significant debt load and Halo’s ability to maintain covenant compliance;
	•	ability to maintain Sarbanes-Oxley compliance;
	•	the potential loss of key management or employees; and
	•	the ability of the combined company to achieve NASDAQ listing.

	•	Premium paid analysis
	•	Comparable public company analysis
	•	Analysis of selected merger and acquisition transactions
	•	Discounted cash flow and terminal value analysis
	•	Pro Forma ownership and contribution analysis

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	•	a premium of approximately 80% based on the comparable public company analysis;
	•	a premium of approximately 15% based on the analysis of selected merger and acquisition transactions; and
	•	a premium of approximately 50% based on the discounted cash flow analysis.

	•	identification of appropriate public companies in the software development tools and vertical software applications sectors;
	•	compilation of appropriate operating and financial statistics;
	•	identification of the five companies within the initial group with the most similar operating statistics to relevant Unify operating statistics, including total enterprise value, market capitalization, last twelve month revenue, gross margin, EBITDA margin, EBIT margin and net income margin, estimated long term growth rate, and one-, two- and three-year total revenue growth;
	•	if multiple companies had the same number of similarities, the company(s) with revenues that most closely approximated Unify’s revenues were selected in the comparison set;
	•	the analyses were weighted in accordance with Unify’s percentage of UBS (Unify Business Solutions) and IRM (Insurance Risk Management) revenues contained in the draft of Unify’s most recent quarterly report on Form 10-Q for the quarter ended January 31, 2006 reviewed by DCA; and
	•	the “median” of the various ratios or multiples were selected for comparison because the median most closely approximates the center point of the array and reduces the effect of outlying data points.

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	•	Borland Software Corp.
	•	NetIQ Corp.
	•	Quovadx, Inc.
	•	NetManage, Inc
	•	IDI Global, Inc.

	•	Misys plc
	•	S1 Corp.
	•	Sapiens International Corp. NV
	•	Sirius Financial Solutions plc
	•	Healthaxis, Inc.

Premium of

Proposed

Transaction

Value to

Median

Applicable

Implied

Comparable Public Company Analysis — Premium

Multiple

Unify Metric*

Implied Value

Value

TEV/LTM of Comparable Software Development Tools Companies

0.8

x

$

9,789

=

$

8,043

TEV/LTM of Comparable Vertical Application Software Companies

0.9

x

$

793

=

$

701

Total

=

$

8,744

Control Premium Adjustment

x

(1 + 29.8%

)

Adjusted Total

=

$

11,887

79.6%

*	Unify gross revenues for UBS and IRM.

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	•	identification of appropriate merger and acquisition transactions in the software development tools and vertical software applications sectors;
	•	compilation of appropriate operating and financial statistics;
	•	identification of the five companies within the initial group with the most similarities to relevant Unify operating statistics, including total enterprise value, market capitalization, last twelve month revenue, gross margin, EBITDA margin, EBIT margin and net income margin, estimated long term growth rate, and one-, two- and three-year total revenue growth;
	•	if multiple companies had the same number of similarities, the company(s) with revenues that most closely approximated Unify’s revenues were selected in the comparison set;
	•	the analyses were weighted in accordance with Unify’s percentage of UBS and IRM revenues contained in its draft quarterly report on Form 10-Q for the quarter ended January 31, 2006; and
	•	the “median” of the various ratios or multiples were selected for comparison because the median most closely approximates the center point of the array and reduces the effect of outlying data points.

	•	UGS Corp.
	•	Plumtree Software, Inc.
	•	Segue Software, Inc.
	•	NEON Systems, Inc.
	•	Persistence Software, Inc.

	•	Vertex Financial Services
	•	Financial Models Company, Inc.
	•	DAOU Systems, Inc.
	•	UCA Services, Inc.
	•	InteliData Technologies, Corp.

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		Software Development Tools Sector				Vertical Software Application Sector
		(5 comparable companies)				(5 comparable companies)
Selected Merger Transactions — Multiples		TEV/LTM Revenue				TEV/LTM Revenue
Median			1.8				1.5
Unify*			2.0				2.0

*	TEV for Unify based on proposed merger transaction value. LTM Revenue for Unify based on draft quarterly report on Form 10-Q for the quarter ended January 31, 2006.

Premium of

Proposed

Transaction

Value to

Median

Applicable

Implied

Implied

Selected Merger Transactions — Premiums

Multiple

Unify Metric*

Value

Value

TEV/ LTM of Comparable Software Development Tools Companies M&A Transactions

1.8

x

$

9,789

=

$

17,380

TEV/ LTM of Comparable Vertical Application Software Companies M&A Transactions

1.5

x

$

793

=

$

1.211

Total

=

$

18,591

14.8%

*	Unify gross revenues for UBS and IRM.

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	Projected Financial Information of Halo

		Projections
		Fiscal Year				Fiscal Year
		2006(1)				2007(1)
		(in thousands)
Total Revenues		$	26,364			$	40,748
Estimated EBITDA(2)		$	4,361			$	9,815

(1)	Halo’s fiscal year ends of June 30 of each year presented.
(2)	Estimated EBITDA as provided to DCA represented EBITDA from Halo operating subsidiaries only; it does not include any of the parent (Halo) cost and other corporate and acquisition expenses.

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		Twelve Months Ended
		June 30,
		2006				2007
		(in thousands)
Reconciliation of projected net income to EBITDA
Net loss as projected		$	(9,696	)		$	(3,473	)
Corporate costs and other			7,595				4,279
Net income (loss) — portfolio companies			(2,101	)			806
Depreciation			84				197
Amortization			1,621				3,247
Interest expense			4,614				5,336
Provision for income taxes			143				229
Estimated EBITDA(1)		$	4,361			$	9,815

(1)	Estimated EBITDA as provided to DCA represented EBITDA from Halo operating subsidiaries only; it does not include any of the parent (Halo) cost and other corporate and acquisition expenses.

	Projected Financial Information of Unify

				Projections
				Fiscal Year				Fiscal Year
				2006(1)				2007(1)
				(in thousands)
Revenues:
	Total Revenues			$	10,400			$	11,164
	Cost of Revenues				2,443				2,394
		Gross Margin			7,957				8,770
Expenses:
	Product Development				2,740				2,740
	Selling, General and Administrative				6,482				6,158
		Total Expenses			9,222				8,898
Income (Loss) from Operations					(1,265	)			(128	)
Other Income/Exp, net					17
Provision for income taxes					—				—
		Net Income (Loss)			(1,248	)			(128	)
Estimated EBITDA					(1,093	)			192

(1)	Unify’s fiscal year ends on April 30 of each year presented.

	Assumptions

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	Todd Wille Employment Agreement

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	Treehouse Capital Agreement

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	•	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 Unify (other than an unsolicited superior proposal, as defined in the merger agreement and described in the section entitled “The Merger Agreement — No Solicitation” beginning on page 91 of this proxy statement/prospectus), any reorganization, recapitalization, liquidation or winding up of Unify or any other extraordinary transaction involving Unify, 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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			Amount and Nature
			of Beneficial				Percent of Class				Shares
Name and Address of Beneficial Owner			Ownership				Beneficially Owned(1)				Beneficially Owned(2)
Certain Beneficial Owners
Diker Management, LLC(3)(7)				3,463,517				11.73	%			0
	745 Fifth Avenue, Suite 1409 New York, New York 10151
Special Situations Funds(4)(7)				8,608,135				29.67	%			0
	527 Madison Ave, Suite 2600 New York, New York 10022
Executive Officers and Directors(5):
Steven D. Whiteman				254,905				0.86	%			131,666
Robert J. Majteles				30,057				0.10	%			0
Tery R. Larrew				222,211				0.75	%			59,722
Richard M. Brooks				24,750				0.08	%			6,250
Todd E. Wille				782,894				2.61	%			450,000
Frank Verardi				348,193				1.17	%			191,250
David M. Glende				473,955				1.59	%			378,875
Daniel S. Romine(6)				1,002,531				3.39	%			39,062
Steven D. Bonham				41,666				0.14	%			41,666
All Executive Officers and Directors as a Group (9 persons):				3,181,162				10.69	%			1,298,491

(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 23, 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, Unify 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 23, 2006.

(3)

As the sole general partner of the Diker Funds, Diker GP, has the power to vote and dispose of the shares of the common stock owned by the Diker Funds and, accordingly, may be deemed the beneficial owner of such shares. Pursuant to investment advisory agreements, Diker Management serves as the investment manager of the Diker Funds. Accordingly, Diker Management may be deemed the beneficial owner of shares held by the Diker Funds. Charles M. Diker and Mark N. Diker are the managing members of each of Diker GP and Diker Management, and in that capacity direct their operations. Therefore, Charles M. Diker and Mark N. Diker may be beneficial owners of shares beneficially owned by Diker GP and Diker Management. The Reporting Persons disclaim all

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	beneficial ownership, however, as affiliates of a Registered Investment Adviser, and in any case disclaim beneficial ownership except to the extent of their pecuniary interest in the shares.
(4)	AWM Investment Company, Inc. is a hedge fund management firm based in New York. The firm is owned by David Greenhouse and Austin Marxe. They manage the Special Situations Fund III, L.P., Special Situations Cayman Fund L.P., Special Situations Private Equity Fund, L.P., and Special Situations Tech. Fund, L.P.
(5)	The business address for each named executive officer and director is 2101 Arena Blvd, Suite 100, Sacramento, California 95834.
(6)	Daniel Romine owns 481,734 shares of the common stock of Unify and Carrie Romine owns 481,735 shares of common stock of Unify. Daniel and Carrie Romine are husband and wife and shares held by one of them are deemed beneficially owned by the other.
(7)	Diker Management, LLC and Special Situations Funds have entered into a stockholder agreement whereby they agreed to vote their shares together in favor of, among other things, the merger agreement and, as a group, they beneficially own 12,071,652 shares of the common stock of Unify, which represents beneficial ownership of approximately 41.09% of the common stock of Unify.

	General

	•	a non-United States person or entity;
	•	a financial institution;
	•	a tax-exempt organization;
	•	an S corporation or other pass-through entity;
	•	an insurance company;
	•	a mutual fund;
	•	a dealer in securities or foreign currencies;
	•	a trader in securities who elects the mark-to-market method of accounting for your securities;
	•	a shareholder subject to the alternative minimum tax provisions of the Code;
	•	a person that has a functional currency other than the U.S. dollar;

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	•	a holder of options, or a shareholder who acquired Unify common stock pursuant to employee stock options or otherwise as compensation;
	•	a broker-dealer; or
	•	a shareholder who holds Unify common stock or shares as part of a hedge against currency risk, straddle or a constructive sale or conversion transaction.

	•	you will not recognize gain or loss when you exchange your Unify common stock solely for Halo common stock, except to the extent of any cash received in lieu of a fractional share of Halo;
	•	your aggregate tax basis in the Halo common stock that you receive in the merger (including any fractional share interest you are deemed to receive and exchange for cash) will equal your aggregate tax basis in the Unify common stock you surrender; and
	•	your holding period for the Halo common stock that you receive in the merger will include your holding period for the shares of Unify common stock that you surrender in the exchange.

	•	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
	•	are otherwise exempt from backup withholding.

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	1. Before the vote is taken on the merger agreement at the Unify special meeting on                     , 2006, you must deliver to Unify 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. A proxy which is signed and does not contain voting instructions will, unless revoked, be voted in favor of the approval and adoption of the merger agreement. Any demand must reasonably inform Unify of the identity of the stockholder and the stockholder’s intention to demand appraisal of his, her or its shares, and should specify the stockholder’s mailing address and the number of shares registered in the stockholder’s name for which the stockholder is demanding appraisal.
	All demands for appraisal should be delivered before the vote on the merger is taken at the Unify special meeting to the following address: Unify Corporation, Attention: Investor Relations, 2101 Arena Boulevard, Suite 100, Sacramento, California 95834, and should be executed by, or on behalf of, the record holder of the shares of Unify common stock. A stockholder’s failure to make the written demand prior to the taking of the vote on the approval and adoption of the merger agreement at the special meeting of stockholders will constitute a waiver of appraisal rights.
	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 Unify 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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	Stock Payment

	Common Stock Options and Warrants

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	Exchange Agent

	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; and
	•	cash in lieu of any fractional shares.

	•	capitalization;
	•	corporate organization and good standing;

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	•	corporate power and authority to enter into the merger agreement and, subject to receipt of Unify stockholder approval, to consummate the transactions contemplated thereby;
	•	absence of breach of corporate governance documents, certain contracts, 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;
	•	accuracy of financial statements and compliance with the filing requirements of the SEC and certain accounting principals and requirements and the absence of any change in accounting principles;
	•	the absence of broker’s fees, other than those specified in the merger agreement;
	•	the existence of legal proceedings;
	•	material indebtedness, obligations, and liabilities;
	•	tax matters;
	•	Unify’s employee benefit plans;
	•	certain Unify contracts and Unify’s property and assets, including intellectual property;
	•	compliance with laws, including environmental laws and the absence of unlawful payments and contributions;
	•	accuracy of information supplied in the merger agreement or for use in this proxy statement/ prospectus and the registration statement of which it is a part;
	•	the receipt of a fairness opinion with respect to the merger; and
	•	ownership of Halo securities;

	•	capitalization;
	•	corporate organization and good standing;
	•	corporate power and authority to enter into the merger agreement and consummate the transactions contemplated thereby;
	•	the receipt of all third party and other governmental consents and filings required for the merger;
	•	adequacy of financial resources to consummate the merger;
	•	the absence of broker’s fees, other than those specified in the merger agreement;
	•	the existence of legal proceedings;
	•	accuracy of financial statements and compliance with the filing requirements of the SEC and certain accounting principals and requirements and the absence of any change in accounting principles;
	•	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;
	•	material indebtedness, obligations, and liabilities;
	•	tax matters;
	•	Halo’s employee benefit plans;
	•	compliance with laws, including the absence of unlawful payments and contributions;

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	•	accuracy of information supplied in the merger agreement or for use in this proxy statement/ prospectus and the registration statement of which it is a part;
	•	the absence of any state takeover statute or similar statue or regulation; and
	•	ownership of Unify common stock.

	Conduct Of Unify’s Business 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, or sell shares of its capital stock or securities convertible into or exercisable for any shares;
	•	amend its certificate of incorporation, bylaws or other similar governing documents;
	•	repurchase or redeem its capital stock or other securities, or rights to any securities;
	•	amend its governing documents;
	•	make individual capital expenditures in excess of $50,000 in the aggregate;
	•	enter into any new line of business or material partnership, joint development agreements or strategic alliances;
	•	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 the merger agreement, except as may be required by law;
	•	change its methods of accounting in effect at April 30, 2005, except to comply with applicable accounting rules or principles;
	•	enter into or change employee benefit plans, or increase compensation or severance for any employee, director or officer, 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, except for draw downs from the existing line of credit in the ordinary course of business consistent with past practice;
	•	dispose of any properties or assets, except in the ordinary course of business;
	•	settle any claim, action, or investigation against Unify in excess of $50,000;
	•	transfer or license, or amend, rights to Unify’s intellectual property, other than in the ordinary course of business; or
	•	commence material litigation, except in specified circumstances.

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	Conduct Of Halo’s Business Prior To Completion of The Merger

	•	notify Unify 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 Unify 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 other than as contemplated by the merger agreement;
	•	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.);
	•	not modify its operating model in any material respect;
	•	not acquire or agree to acquire any business or entity if the acquisition or related announcement would adversely affect the timing of the merger or the preparation and distribution of the proxy materials and registration statement;
	•	not change its method of accounting in effect at June 30, 2005, except to comply with applicable accounting rules and principles;
	•	not sell, lease, license, encumber or dispose of any material properties or assets, except in the ordinary course of business consistent with past practice; 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.

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

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	•	the entry by Halo and Todd Wille into an employment agreement; and
	•	Counsel to Unify and tax counsel to Halo shall have delivered opinions dated as of the date the registration statement, of which this prospectus is part, is declared effective, to the effect that the merger will constitute a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended.

	•	certain of the representations and warranties of Unify 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;
	•	Unify’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 Unify;
	•	Unify’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 Unify or the surviving corporation;
	•	absence of any change in the business, operations, condition (financial or otherwise), assets, or liabilities of Unify that individually or in the aggregate has had or would likely have a material adverse effect on Unify;
	•	each stockholder agreement being in full force and effect; and
	•	to the extent appraisal rights are available, the number of shares of Unify common stock whose holders exercise appraisal rights does not exceed ten percent (10%) of Unify’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 will have received at least $2,000,000 in new money equity investments;
	•	the conversion of all of Halo’s issued and outstanding shares of preferred stock into shares of Halo common stock; and
	•	the holders of certain convertible promissory notes of Halo will have converted such notes into shares of Halo common stock.

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	Compliance with Antitrust Laws

	•	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; or
	•	withdraw approval or recommendation by the Unify board, or approve or recommend or permit Unify to enter into an agreement relating to an alternative acquisition proposal.

	Other Covenants

	Stockholder Meeting

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	Indemnification and Insurance

	•	by mutual consent of Halo and Unify 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 September 30, 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;
	•	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 Unify’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 either party, if the other party has breached any covenant or agreement 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 Unify 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; or
	•	by either party, if Unify agrees to enter into a superior proposal in compliance with the “No Solicitation” covenant of the merger agreement, provided that Unify complies with the “Termination Fee” requirements in the merger agreement.

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	•	if (i) an alternative acquisition proposal is made or intended to be made directly to Unify’s stockholders or is otherwise publicly announced, (ii) such proposal is not irrevocably and publicly withdrawn, and (iii) the merger agreement is then terminated by either party because the merger has not been consummated by September 30, 2006, due to the Unify stockholders meeting not occurring due to such proposal or the Unify stockholders failing to vote in favor of the adoption of the merger agreement;
	•	Unify’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 Unify 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.

	•	Halo shall pay the registration statement filing fee; and
	•	The cost of printing the registration statement and proxy materials will be borne one-half (50%) by Halo and one-half (50%) by Unify.

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	Warp Solutions Business

	Kenosia Business

	Tesseract Business

	DAVID Business

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	Process Business

	ProfitKey Business

	Empagio Business

	ECI Business

	Sales and Marketing

	Software Product Development

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	Intellectual Property and Proprietary Rights

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	Competition

	•	product functionality, technology, integration, performance and price;
	•	industry-specific products and industry-expert service;
	•	ease of use and installation;
	•	cost benefits;
	•	sales and marketing efforts;
	•	support efforts; and
	•	new products.

	•	Gupta — Gupta’s primary competitors are Oracle, Microsoft, Sybase, Borland, and MySQL.
	•	Warp Solutions — Warp Solution’s primary competitor is Cisco.
	•	Kenosia — Kenosia’s primary competitors are Interactive Edge, Vision Chain, Decisions Made Easy, Proclarity and Verisync.
	•	DAVID — DAVID’s primary competitors are Valley Oak Systems, CSC RiskMaster, ATS, Guidewire and CS Stars.
	•	Process — Process’s primary competitors are HP, Microsoft, Sun, Lotus and Sendmail, Brightmail, Barracuda and MailFrontier.
	•	Empagio(including the former Tesseract and ECI) — Empagio’s primary competitors are Ultimate Software, Hewitt, Accenture/ Savista, ADP, Employease and Kronos.
	•	ProfitKey — ProfitKey’s primary competitors are Epicor, Global Shop, Infor, Made 2 Manage, Intuitive, E2 and Exact Software.

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	Raw Materials

	Dependence on Major Customers

	Research and Development

	Personnel

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	Revenue Recognition

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	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.

	Stock-Based Compensation

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	Revenue

	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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	•	Funding the continued development of our products;
	•	Sales and marketing efforts;
	•	improving and extending our services and the technologies used to deliver these services to our customers;
	•	pursuing other strategic acquisitions and alliances, including the anticipated completion of the InfoNow and Unify acquisitions, for which we have entered into agreements, described under the headings “Certain Information concerning Halo; Agreement to Acquire InfoNow”, and “The Merger”; and
	•	making possible investments in businesses, products and technologies.

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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

	Commercial Lease

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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				161,436				0				0				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				0				0				187,520				0				500,000
	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.

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(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 Salary 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 All Other 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.

						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				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 Finkel			—				—				—
	Common			Gordon O. Rapkin(10)			45,000				*				*
	Common			John L. Kelly(10)			45,000				*				*
	Common			All directors and executive officers as a group (10 persons)(11)			6,560,239				41.71	%			20.35	%
	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	%

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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			Viktor Rehnqvist(19)			455,533				5.75	%			1.61	%
	Common			Crestview Capital Master, LLC(20)			7,661,407				9.99	%			23.76	%
	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

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		dispose, or to direct the disposition of, such security. In addition, a person is deemed to be the 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)	Each of Gordon O. Rapkin and John L. Kelly. Amount includes vested options to acquire 45,000 shares of Common Stock at an exercise price of $1.19 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 43. 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

	Company Overview

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	Insurance Risk Management

	Unify Business Solutions

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	Products

	Business Applications

	Java 2 Enterprise Edition Application Development Platform

	Rapid Application Development Tools

	•	ACCELL/ Webtm — enables our customers with existing ACCELL/ SQL applications to convert them into fully featured graphical Web-based applications without rewriting the application or modifying the source code.
	•	ACCELL/ SQLtm — is our powerful 4GL-based rapid application development software for developing client/server applications. ACCELL/ SQL connects to Unify, Oracle, Sybase and Informix databases creating a fast application performance environment.
	•	ACCELL/ IDStm — powerful 4GL-based rapid application development software for applications that connect to Unify’s DataServer ELS database.

	Database Management Product Line

	•	DataServer® — A high performance enterprise relational database management system with minimal maintenance and memory requirements. It can quickly accommodate the growth of user requirements over time, making it an attractive choice for mission critical applications. DataServer makes it easy for developers to create graphical applications and migrate existing database applications to enterprise network and Internet environments.
	•	DataServer® ELS — A high performance, embeddable database. Its small footprint and proven reliability make it an industry favorite for embedded applications that require relational databases.

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	Graphical Client/ Server Solution

	Customers

	Sales, Marketing and Distribution

	Customer Support and Professional Services

	Customer Support and Maintenance

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	Consulting

	Education

	Product Development

	Intellectual Property

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	Critical Accounting Policies

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	Revenue Recognition

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	Valuation of Other Investments

	Deferred Tax Asset Valuation Allowance

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	Recently Issued Accounting Standards

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				Three Months								Nine Months
				Ended								Ended
				January 31,								January 31,
				2006				2005				2006				2005
Revenues:
	Software licenses				42.5	%			49.2	%			44.1	%			46.1	%
	Services				57.5	%			50.8	%			55.9	%			53.9	%
		Total revenues			100.0	%			100.0	%			100.0	%			100.0	%
Cost of revenues:
	Software licenses				3.9	%			3.2	%			4.5	%			3.1	%
	Services				26.2	%			11.8	%			17.4	%			12.6	%
		Total cost of revenues			30.1	%			15.0	%			21.9	%			15.7	%
Gross profit					69.9	%			85.0	%			78.1	%			84.3	%
Operating expenses:
	Product development				31.2	%			22.7	%			26.5	%			24.7	%
	Selling, general and administrative				67.8	%			85.2	%			62.1	%			80.5	%
		Total operating expenses			99.0	%			107.9	%			88.6	%			105.2	%
		Loss from operations			(29.1	)%			(22.9	)%			(10.5	)%			(20.9	)%
Other income, net					0.6	%			1.1	%			0.3	%			0.4	%
		Loss before income taxes			(28.5	)%			(21.8	)%			(10.2	)%			(20.5	)%
Provision for income taxes					0.0	%			0.1	%			0.0	%			0.1	%
		Net loss			(28.5	)%			(21.9	)%			(10.2	)%			(20.6	)%

	Revenues

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	Cost of Revenues

	Product Development

	Selling, General and Administrative

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	Provision for Income Taxes

		Years Ended April 30,
		2005				2004				2003
Revenues:
Software licenses			46.0	%			51.2	%			48.4	%
Services			54.0				48.8				51.6
Total revenues			100.0				100.0				100.0
Cost of revenues:
Software licenses			3.0				5.0				2.2
Services			11.8				10.9				9.3
Total cost of revenues			14.8				15.9				11.5
Gross profit			85.2				84.1				88.5
Operating expenses:
Product development			24.9				25.1				33.7
Selling, general and administrative			81.6				65.7				52.6
Write-down of other investments			0.0				1.5				1.6
Total operating expenses			106.5				92.3				87.9
Income (loss) from operations			(21.3	)			(8.2	)			0.6
Other income (expense), net			0.4				(0.2	)			0.1
Income (loss) before income taxes			(20.9	)			(8.4	)			0.7
Provision (benefit) for income taxes			0.0				0.1				0.3
Net income (loss)			(20.9	)%			(8.5	)%			1.0	%

	Total Revenues

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	Cost of Revenues

	Operating Expenses

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		Payments Due by Period
						1 Year				2-3				4-5				After 5
Contractual Obligations		Total				or Less				Years				Years				Years
Short-term borrowings		$	675			$	675			$	—			$	—			$	—
Long-Term Debt			130				125				5				—				—
Capital Lease Obligations			12				7				5				—				—
Other Long-Term Liabilities			68				—				—				—				68
Operating Leases			2,135				958				1,168				9				—
Total Contractual Cash Obligations		$	3,020			$	1,765			$	1,178			$	9			$	68

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Number of Shares

Number of Shares

Remaining Available for

to be Issued Upon

Weighted-Average

Future Issuance Under

Exercise of

Exercise Price of

Equity Compensation

Outstanding

Outstanding

Plans (Excluding

Options, Warrants

Options, Warrants

Shares Reflected in

and Rights

and Rights

Column (a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by stockholders(1)

1,924,310

$

0.42

1,320,295

Equity compensation plans not approved by stockholders:

Director Restricted Stock Plan(2)

365,284

$

0.94

134,716

Non-Registered Options(3)

308,957

$

0.44

0

(1)	Comprised of shares reserved for future issuance under the Purchase Plan (496,376 shares) and the Option Plan (823,919 shares). Since April 30, 2005, an additional 258,308 shares have been granted under the Option Plan and the Purchase Plan.
(2)	There are 500,000 shares authorized under the Director Restricted Stock Plan, of which 365,284 shares were awarded and outstanding on April 30, 2005. Since April 30, 2005, an additional 115,403 shares have been granted to Unify’s non-employee directors.
(3)	In fiscal 2003, the board of directors authorized the issuance of non-registered non-plan stock options for individual senior level executive recruitment.

	Material Features of Director Restricted Stock Plan

	Material Features of Individual Non-Registered Stock Options

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	•	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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	•	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.

	•	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.

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	•	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
	•	the business combination is approved by a majority of the board of directors and the affirmative vote of two-thirds of disinterested stockholders.

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	•	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.

	•	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 eighteen 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.

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	•	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.

	•	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.

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	•	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.

	•	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.

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	•	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 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

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		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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Reports, proxy statements and other information concerning may be Halo inspected at:		Reports, proxy statements and other information concerning Unify may be inspected at:
Halo Technology Holdings, Inc. Attn: Investor Relations 200 Railroad Avenue, Third Floor Greenwich, Connecticut 06830 Telephone: (203) 422-2950		Unify Corporation Attn: Investor Relations 2101 Arena Blvd., Suite 100 Sacramento, California 95834 Telephone: (916) 928-6400
Requests for documents relating to Halo should be directed to:		Requests for documents relating to Unify should be directed to:
Halo Technology Holdings, Inc. Attn: Investor Relations 200 Railroad Avenue, Third Floor Greenwich, Connecticut 06830 Telephone: (203) 422-2950		Unify Corporation Attn: Investor Relations 2101 Arena Blvd., Suite 100 Sacramento, California 95834 Telephone: (916) 928-6400

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169

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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 March 31, 2006 and June 30, 2005			F-37
	Consolidated Statements of Operations for the Three Months Ended March 31, 2006 and 2005 and the Nine Months Ended March 31, 2006 and 2005			F-38
	Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2006 and 2005			F-39
	Notes to Consolidated Financial Statements for Period Ended March 31, 2006			F-42
Gupta Technologies, LLC
	Report of Independent Auditors			F-72
	Consolidated Balance Sheet as of December 31, 2004			F-73
	Consolidated Statements of Operations for the years ended December 31, 2004 and 2003			F-74
	Consolidated Statements of Member’s Equity			F-75
	Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003			F-76
	Notes to Consolidated Financial Statements			F-77
Tesseract Corporation				F-85
	Report of Independent Registered Public Accounting Firm			F-86
	Balance Sheet as of June 30, 2005			F-87
	Statements of Income for the Years Ended June 30, 2005 and 2004			F-88
	Statements of Shareholder’s Deficit for the Years Ended June 30, 2005 and 2004			F-89
	Statements of Cash Flows for the Years Ended June 30, 2005 and 2004			F-90
	Notes to Financial Statements			F-91
Process Software, LLC and Affiliates				F-97
	Report of Independent Registered Public Accounting Firm			F-98
	Combined Balance Sheet as of June 30, 2005			F-99
	Combined Statements of Operations for the Years Ended June 30, 2005 and 2004			F-100
	Combined Statements of Member’s and Shareholder’s Equity for the Years Ended June 30, 2005 and 2004			F-101
	Combined Statements of Cash Flows for the Years Ended June 30, 2005 and 2004			F-102
	Notes to Combined Financial Statements			F-103
Unaudited Pro Forma Consolidated Financial Statements of Warp Technologies Holdings, Inc.
Reflecting Acquisition of Tesseract, Process Software and Affiliates				F-111
	Pro Forma Consolidated Condensed Statements of Operations for Three Months Ended September 30, 2005			F-115
	Pro Forma Consolidated Condensed Statements of Operations for Year Ended June 30, 2005			F-116
	Notes to Pro Forma Consolidated Condensed Statements of Operations			F-117

F-1

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Unify Corporation				F-118
	Report of Grant Thornton LLP, Independent Registered Public Accounting Firm			F-119
	Report of Ernst & Young LLP, Independent Registered Public Accounting Firm			F-120
	Consolidated Balance Sheets as of April 30, 2005 and April 30, 2004			F-121
	Consolidated Statements of Operations for the Years Ended April 30, 2005, 2004 and 2003			F-122
	Consolidated Statements of Stockholders’ Equity			F-123
	Consolidated Statements of Cash Flows for the Years Ended April 30, 2005, 2004 and 2003			F-124
	Notes to Consolidated Financial Statements for the Year Ended April 30, 2005			F-125
	Condensed Consolidated Balance Sheets as of January 31, 2006 and April 30, 2005			F-144
	Condensed Consolidated Statements of Operations for the Three Months Ended January 31, 2006 and 2005 and the Nine Months Ended January 31, 2006 and 2005			F-145
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 2006 and 2005			F-146
	Notes to Condensed Consolidated Financial Statements for the Period Ended January 31, 2006			F-147
Unaudited Pro Forma Consolidated Condensed Financial Statements of Halo Technologies Holdings
Reflecting Acquisition of Unify Corporation				F-156
	Pro Forma Consolidated Condensed Balance Sheet as of December 31, 2005			F-158
	Notes to Pro Forma Consolidated Condensed Balance Sheet			F-159
	Pro Forma Consolidated Condensed Statements of Operations for the Six Months Ended December 31, 2005			F-161
	Pro Forma Consolidated Condensed Statements of Operations for the Year Ended June 30, 2005			F-162
	Notes to Pro Forma Consolidated Condensed Statements of Operations			F-163
Unaudited Pro Forma Consolidated Condensed Financial Statements of Halo Technologies Holdings
Reflecting Acquisition of Unify and InfoNow				F-164
	Pro Forma Consolidated Condensed Balance Sheet as of December 31, 2005			F-167
	Notes to Pro Forma Consolidated Balance Sheet			F-168
	Pro Forma Consolidated Condensed Statements of Operations for the Six Months Ended December 31, 2005			F-171
	Pro Forma Consolidated Condensed Statements of Operations for Year Ended June 30, 2005			F-172
	Notes to Pro Forma Consolidated Condensed Statements			F-173

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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				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				449,073				340,267
	Cost of services				396,490				85,067
		Total cost of revenues			845,563				425,334
Gross Profit					4,278,359				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)					4,690,743				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

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		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
Accrued dividends on Series B Stock
Conversion of Series B-2 shares											(1,600	)			(1,600	)
Issuance cost
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				—			$	—				—			$	—

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		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
Accrued dividends on Series B Stock											166,114
Conversion of Series B-2 shares											(559,053	)			827,874				8				2,159,045
Issuance cost																							(50,000	)
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	)

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										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
Accrued dividends on Series B Stock							(166,114	)
Conversion of Series B-2 shares															—
Issuance cost															(50,000	)
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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			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			$	—

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

Note 2.	Summary of Significant Accounting Policies

	Principles of Consolidation

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	Use of Estimates

	Property and Equipment

	Revenue Recognition

	Cost of Revenue

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	Operating Segments

	Shipping and Handling Costs

	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.

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	Concentration of Risk

	Cash

	Accounts Receivable

	Product Development Costs

	Income Taxes

	Foreign Currency

	Deferred Financing Costs

	Loss Per Share

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	Stock-Based Compensation

		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		$	(23,257,702	)		$	(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	%

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	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

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

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		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	%

	Warrants

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Note 6.	Gupta Technologies, LLC Acquisition

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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

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

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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

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

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		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 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).

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	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.

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.

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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.
	•	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.

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Note 12.	Registration Rights.

Note 13.	Separation Agreement.

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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.

	Leases

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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

		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

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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.
	•	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.
	•	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.
	•	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

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		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 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.

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	•	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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			March 31,
			2006				June 30, 2005
			(Unaudited)				(Audited)
ASSETS
Current Assets:
Cash and cash equivalents			$	1,749,926			$	1,548,013
Marketable securities				33,800				—
Accounts receivable, net of allowance for doubtful accounts of $176,260 and $30,845 respectively				3,993,731				2,024,699
Due from Platinum Equity, LLC				465,000				—
Prepaid expenses and other current assets				873,006				409,496
Total current assets				7,115,463				3,982,208
Property and equipment, net				288,335				223,025
Deferred financing costs, net				1,653,701				476,876
Intangible assets, net of accumulated amortization of $2,759,621 and $756,064 respectively				24,302,862				15,678,736
Goodwill				31,517,696				7,055,264
Investment and other assets				168,179				884,379
	Total assets		$	65,046,236			$	28,300,488
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of senior notes payable			$	500,063			$	—
Note payable to Platinum Equity, LLC				1,750,000				—
Notes payable				3,346,870				—
Accounts payable				1,929,685				872,433
Accrued expenses				6,091,890				3,752,731
Deferred revenue				14,085,877				3,392,896
Due to ISIS				1,243,712				1,293,534
	Total current liabilities			28,948,097				9,311,594
Subordinate notes payable				1,695,004				2,317,710
Senior notes payable				21,481,806				6,446,750
Other long term liabilities				42,499				43,275
	Total liabilities			52,167,406				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, 13,362,688 and 14,193,095 issued and outstanding (Liquidation value — $13,362,688 and $14,193,095) respectively				13,362,688				14,193,095
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				412,399				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)				7,840,909				—
Shares of Common Stock to be issued for accrued interest on subordinated debt				104,167				—
Common stock: $.00001 par value; 150,000,000 shares authorized, 8,141,962 and 3,110,800 shares issued and outstanding respectively				81				31
Additional paid-in-capital				67,548,896				59,431,331
Deferred compensation				—				(970,711	)
Accumulated other comprehensive loss				(48,072	)			(105,262	)
Accumulated deficit				(76,342,240	)			(62,580,224	)
Total stockholders’ equity				12,878,830				10,181,159
	Total liabilities and stockholders’ equity		$	65,046,236			$	28,300,488

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				Three Months Ended								Nine Months Ended
				March 31,								March 31,
				2006				2005				2006				2005
				(Unaudited)
Revenue
	Licenses			$	1,737,325			$	1,610,615			$	4,556,387			$	1,822,231
	Services				6,470,217				730,427				12,230,196				783,331
		Total revenues			8,207,542				2,341,042				16,786,583				2,605,562
Cost of revenue
	Cost of licenses				402,848				148,384				925,872				258,809
	Cost of services				1,364,526				154,277				2,462,574				154,277
		Total cost of revenues			1,767,374				302,661				3,388,446				413,086
Gross Profit					6,440,168				2,038,381				13,398,137				2,192,476
Product development					1,777,543				616,652				4,294,336				729,375
Sales, marketing and business development					1,967,044				1,322,358				5,403,501				1,798,933
General and administrative (including non-cash compensation three months — 2006-$403,600; 2005-$890,206; nine months — 2006-$676,823; 2005-$1,432,948)					4,485,547				1,888,664				9,629,205				3,050,380
Late filing penalty					—				1,033,500				—				1,033,500
Loss before interest					(1,789,966	)			(2,822,793	)			(5,928,905	)			(4,419,712	)
Interest expense					(3,038,357	)			(2,452,004	)			(6,592,164	)			(2,497,683	)
Loss before income taxes					(4,828,323	)			(5,274,797	)			(12,521,069	)			(6,917,395	)
Income taxes					85,298				50,000				171,786				50,000
Net Loss				$	(4,913,621	)		$	(5,324,797	)		$	(12,692,855	)		$	(6,967,395	)
Computation of loss applicable to common shareholders
Net loss before beneficial conversion and preferred dividends				$	(4,913,621	)		$	(5,324,797	)		$	(12,692,855	)		$	(6,967,395	)
Beneficial conversion and preferred dividends					(475,604	)			(4,487,230	)			(1,069,162	)			(7,297,694	)
Loss attributable to common stockholders				$	(5,389,225	)		$	(9,812,027	)		$	(13,762,017	)		$	(14,265,089	)
Basis and diluted net loss per share attributable to common stockholders				$	(0.75	)		$	(4.12	)		$	(2.97	)		$	(9.96	)
Weighted-average number common shares — basic and diluted					7,147,300				2,383,662				4,637,578				1,431,615

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					Nine Months Ended March 31,
					2006				2005
					(Unaudited)
Operating Activities
Net Loss					$	(12,692,855	)		$	(6,967,395	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Depreciation and amortization				2,104,211				464,714
		Provision for doubtful accounts				54,464				—
		Non cash compensation				676,823				1,432,948
		Non cash interest expense				4,322,268				1,683,326
		Loss on disposal of property and equipment				3,270				—
		Changes in operating assets and liabilities, net of effects of acquired business:
			Accounts receivable			316,904				149,510
			Prepaid expenses and other current assets			(295,514	)			25,865
			Accounts payable and accrued expenses			(70,594	)			413,583
			Deferred revenue			6,247,359				831,937
			Deferred product cost			—				14,028
	Net cash provided by (used in) operating activities					666,336				(1,951,484	)
Investing activities
Purchase of property and equipment						(88,974	)			(24,010	)
Purchase of marketable securities						(40,577	)			—
Gupta acquisition, net of cash acquired $742,915						—				(15,007,085	)
Tesseract, Process and Affiliates acquisition, net of cash acquired of $632,898						(16,048,141	)			—
ECI acquisition, net of cash acquired of $20,871						(557,700	)			—
Kenosia acquisition, net of cash acquired of $6,125						(507,145	)			—
Cash proceeds from Empagio, Inc. seller						36,224				—
Proceeds from sales of property and equipment						1,689				—
	Net cash used in investing activities					(17,204,624	)			(15,031,095	)
Financing activities
Deferred financing cost in connection with senior notes						(1,726,486	)			—
Repayment of subordinated notes						(1,500,000	)			—
Repayment of senior notes						(6,825,000	)			—
Repayment of Promissory notes						(550,000	)			—
Repayment of Bristol Technology, Inc. note						(500,000	)			—
Repayment of Platinum Equity, LLC note						(1,000,000	)			—
Proceeds from subordinated notes						—				2,500,000
Proceeds from senior notes						25,000,000				6,075,000
Proceeds from Promissory notes						3,775,000				—
Proceeds from issuance of preferred and common stock, net of issuance costs						—				9,371,500
	Net cash provided by financing activities					16,673,514				17,946,500
Effects of exchange rates on cash						66,687				1,109
Net increase in cash and cash equivalents						201,913				965,030
Cash and cash equivalents — beginning of period						1,548,013				115,491
Cash and cash equivalents — end of period					$	1,749,926			$	1,080,521
Supplemental disclosure of cash flow information:
Income tax paid					$	145,008			$	—
Interest paid					$	1,458,993			$	—

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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	)
Liabilities 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	)
Liabilities assumed			2,456,041
Goodwill		$	11,982,184

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

Purchase price:
1,438,455 Common shares issued		$	1,869,992
Cash received from seller			(36,224	)
Transaction costs			15,000
Total purchase price			1,848,768
Fair Value of:
Assets acquired			(561,236	)
Liabilities assumed			449,057
Goodwill		$	1,736,589

Purchase price:
Cash		$	578,571
330,688 Common shares issued			558,863
Transaction costs			15,000
Total purchase price			1,152,434
Fair Value of:
Assets acquired			(274,765	)
Liabilities assumed			172,731
Goodwill		$	1,050,400

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

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	Basis of Presentation

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Note 2.	Summary of Significant Accounting Policies

	Reclassification.

	Segment

	Loss Per Share

	Stock-Based Compensation

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		Three Months Ended March 31,								Nine Months Ended March 31,
		2006				2005				2006				2005
Net loss, as reported		$	(4,913,621	)		$	(5,324,797	)		$	(12,692,855	)		$	(6,967,395	)
Add: Stock-based employee compensation expense included in reported net loss			331,772				47,500				461,342				406,500
Deduct: Stock-based employee compensation expense determined under fair value method for all awards			(331,772	)			(49,400	)			(1,667,892	)			(419,610	)
Net loss, pro forma			(4,913,621	)			(5,326,697	)			(13,899,405	)			(6,980,505	)
Beneficial conversion and preferred dividends			(475,604	)			(4,487,230	)			(1,069,162	)			(7,297,694	)
Net loss attributable to common stockholders — Pro forma		$	(5,389,225	)		$	(9,813,927	)		$	(14,968,567	)		$	(14,278,199	)
Basic and diluted net loss per share attributable to common stockholders, as reported		$	(0.75	)		$	(4.12	)		$	(2.97	)		$	(9.96	)
Basic and diluted net loss per share attributable to common stockholders pro forma		$	(0.75	)		$	(4.12	)		$	(3.23	)		$	(9.97	)

		Three Months Ended				Nine Months Ended
		March 31, 2006				March 31, 2006
Expected volatility			160.88	%			160.72	%
Expected dividend yield			—	%			—	%
Expected risk-free interest rate			4.12	%			4.20	%
Expected term of options			4 years				4 years
Maximum contractual term			7 years				7 years
Range of estimated forfeitures			—	%			—	%

	Recent Accounting Pronouncements

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Note 3.	Stockholders’ Equity

	Common and Preferred Stock

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	Stock Options

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	Warrants

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Note 4.	Kenosia Acquisition

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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	•	The Series D Stock will be convertible into Common Stock, at the option of the holder, at a conversion price (the “Applicable Conversion Price”) that will initially be equal to $1.10. Accordingly, the Series D Stock is convertible into Common Stock at a ratio equal to the quotient obtained by dividing the sum of the Series D Face Amount plus any accrued but unpaid dividends by the 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 the Company issues, at any time while shares of Series D 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. 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 D Stock on an as converted basis) exceeds $50,000,000, the shares of Common Stock underlying the Series D 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 D Stock to convert the Series D Stock into Common Stock at the then 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 the Company, in shares of 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 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.

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	•	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 the Company).
	•	In the event of any liquidation of the Company, the Series D Stock will receive an amount equal to the Series D Face Amount, plus all accrued but unpaid dividends thereon, prior to any amounts being distributed to any other series of Preferred Stock or to the Common Stock holders. After payment of all liquidation preferences to all holders of Preferred Stock, including the Series D Stock, the entire remaining available assets, if any, shall be distributed among the holders of Common Stock, the holders of Series D Stock, and any other class or series of Preferred Stock entitled to participate with the Common Stock in a liquidating distribution, in proportion to the shares of Common Stock then held by them and the shares of Common Stock which they then have the right to acquire upon conversion of such shares of Preferred Stock held by them.

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

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Note 6.	Acquisition of Empagio

Accounts receivable		$	163,706
Prepaid			2,530
Intangibles			395,000
Goodwill			1,736,589
Accounts payable and accrued expenses			(338,842	)
Notes payable			(66,452	)
Deferred revenue			(43,763	)
		$	1,848,768

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Note 7.	Acquisition of Executive Consultants, Inc.

Cash and cash equivalents		$	20,871
Accounts receivable			139,414
Prepaid			2,480
Intangibles			112,000
Goodwill			1,050,400
Accounts payable and accrued expenses			(172,731	)
		$	1,152,434

Note 8.	Unaudited Pro Forma Financial Information

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		Three Months Ended March 31,								Nine Months Ended March 31,
		2006				2005				2006				2005
Revenues		$	8,718,184			$	11,030,586			$	27,698,275			$	35,901,761
Net loss			(5,024,561	)			(4,454,829	)			(11,018,774	)			(5,001,859	)
Beneficial Conversion and preferred dividends			(475,604	)			(4,487,230	)			(1,069,162	)			(7,297,694	)
Loss attributable to common stockholders			(5,500,165	)			(8,942,059	)			(12,087,936	)			(12,299,553	)
Basic and diluted net loss per share attributable to common stockholders		$	(0.73	)		$	(2.15	)		$	(2.03	)		$	(3.84	)
Weighted-average number common shares			7,555,879				4,152,805				5,961,445				3,200,758
Supplemental Disclosure: (1)
Deferred revenue fair value reduction(2)		$	1,622,661			$	672,162			$	4,684,516			$	672,162
Revenues		$	10,340,845			$	11,702,748			$	32,382,791			$	36,573,923
Net loss			(3,401,900	)			(3,782,667	)			(6,334,258	)			(4,329,697	)
Beneficial Conversion and preferred dividends			(475,604	)			(4,487,230	)			(1,069,162	)			(7,297,694	)
Loss attributable to common stockholders			(3,877,504	)			(8,269,897	)			(7,403,420	)			(11,627,391	)
Basic and diluted net loss per share attributable to common stockholders		$	(0.51	)		$	(1.99	)		$	(1.24	)		$	(3.63	)

(1)	As more fully described in Business Combinations and Deferred Revenue under Critical Accounting Policies, the purchase accounting rules normally causes the deferred revenues of the acquired software companies to decrease substantially. To supplement our consolidated financial information, the Company believes the above pro forma information is helpful to an overall understanding of our past financial performance and prospects for the future.
(2)	As part of the purchase price allocations for the acquisitions, the Company estimated the fair value of underlying obligations which resulted in reduction of the deferred revenues of the acquired companies. These reductions are added back to the revenues to show pro forma results of operations.

Note 9.	Credit Agreement

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	•	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 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. In addition, the Company paid $642,614 in consulting and other fees in connection with the credit facility and in connection with the Tranche B described below. These closing costs have been deferred, and will be amortized over 4 years. For the three and nine months ended March 31, 2006, $121,634 and $251,784 respectively were amortized. 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

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		such amount in cash. As of March 31, 2006, the Company accrued and expensed $532,770 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 on August 2, 2006, with the complete Loan to be repaid in full no later than the Maturity Date which is four years after the closing. The repayment due within one year is $1,373,063 as of March 31, 2006. $873,000 for the fair value of the warrants issued in connection of this loan will also be accreted within one year. Net of these two amounts, $500,063, is classified under “Current portion of senior note payable” on the Consolidated Balance Sheet.
	•	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. These financial covenants include Total Debt to EBITDA, Cash Interest Coverage Ratio, and Fixed Charge Covenant Ratio as defined. 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 is in compliance with all covenants under the Credit Agreement.
	•	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 Amendment Agreement described below adds TAC/ Halo, LLC, Process Software, LLC, David Corporation, Profitkey International, LLC, and Foresight Software, Inc. to this guarantee.
	•	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

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		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 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 nine months ended March 31, 2006, $99,975 and $266,600 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

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		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 and nine months ended March 31, 2006, $118,275 and $207,299 respectively were 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 10.	Notes Payable and 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 the Company;
	•	the investor who had agreed to convert $67,500 in certain advisory fees due from the Company into a Series E Subscription Agreement.

Note 11.	Registration Rights

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Note 12.	Series C Subscription Agreement.

Note 13.	Commitments and Contingencies

	Lease of Office Space for Principal Executive Offices

Note 14.	Acquisition of InfoNow

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Note 15.	Acquisition of Unify Corporation

F-68

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Note 16.	Employment Agreement and Related Agreements with Mark Finkel

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Note 17.	Subsequent Events

	Amendments to Articles of Incorporation

	Change of Company Name and Trading Symbol

	Amendment to Note Held by Platinum Equity

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	Commercial Lease

F-71

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	Mahoney Cohen & Company, CPA, P.C.

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			2004
ASSETS
Current assets:
	Cash and cash equivalents		$	354,875
	Accounts receivable, net of allowances of $74,095			3,292,195
	Due from affiliates			13,380
	Prepaid expenses and other current assets			415,265
Total current assets				4,075,715
Property and equipment, net				156,691
Other long-term assets				72,556
Intangible assets, net				4,198,002
Total assets			$	8,502,964
LIABILITIES AND MEMBER’S DEFICIT
Current liabilities:
	Accounts payable		$	531,131
	Accrued compensation and related benefits			1,069,872
	Other accrued liabilities			593,938
	Due to Platinum Equity, LLC and affiliates			1,659,283
	Deferred revenues			4,863,480
Total current liabilities				8,717,704
Commitments and contingencies
Member’s deficit				(214,740	)
Total liabilities and member’s deficit			$	8,502,964

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			Years Ended December 31,
			2004				2003
Revenues:
	Products		$	6,847,490			$	6,486,921
	Services			8,960,306				9,401,735
Total revenues				15,807,796				15,888,656
Cost of revenues:
	Cost of products			214,536				268,152
	Cost of services			885,151				1,005,487
	Amortization of developed technology			395,400				395,400
Total cost of revenues				1,495,087				1,669,039
Gross margin				14,312,709				14,219,617
Operating expenses:
	Selling, general, and administrative expenses			7,910,077				7,963,236
	Selling, general, and administrative expenses incurred from affiliates			106,578				216,752
	Research and development expenses			2,631,304				2,676,542
	Depreciation and amortization			994,433				1,064,410
	Management fees to Platinum Equity, LLC			3,319,042				7,513,090
Total operating expenses				14,961,434				19,434,030
Loss from operations				(648,725	)			(5,214,413	)
Other income (expense):
	Interest income			2,467				8,028
	Foreign exchange (loss) gain			(62,094	)			199,310
	Other income, net			15,990				54,333
Loss before provision for income taxes				(692,362	)			(4,952,742	)
Provision for income taxes				287,675				302,850
Net loss			$	(980,037	)		$	(5,255,592	)

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													Accumulated
													Other				Total
					Member’s				Retained				Comprehensive				Member’s
					Capital				Earnings				(Loss)Income				Equity
Balance at January 1, 2003					$	2,420,343			$	1,194,932			$	(24,690	)		$	3,590,585
	Comprehensive loss:
		Net loss				—				(5,255,592	)			—				(5,255,592	)
		Unrealized gain from foreign currency translation:
			Foreign currency translation adjustment-current period			—				—				238,679				238,679
			Reclassification adjustment to statement of operations			—				—				70,609				70,609
														309,288				309,288
		Comprehensive loss																(4,946,304	)
		Contribution				2,000,000				—				—				2,000,000
Balance at December 31, 2003					$	4,420,343			$	(4,060,660	)		$	284,598			$	644,281
	Comprehensive loss:
		Net loss				—				(980,037	)			—				(980,037	)
		Unrealized gain from foreign currency translation:
			Foreign currency translation adjustment-current period			—				—				111,577				111,577
			Reclassification adjustment to statement of operations			—				—				9,439				9,439
														121,016				121,016
		Comprehensive loss																(859,021	)
Balance at December 31, 2004					$	4,420,343			$	(5,040,697	)		$	405,614			$	(214,740	)

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				Year Ended December 31
				2004				2003
OPERATING ACTIVITIES
Net loss				$	(980,037	)		$	(5,255,592	)
Adjustments to reconcile net loss to net cash used in operating activities:
	Depreciation				55,133				125,110
	Amortization of intangible assets				1,334,700				1,334,700
	Loss on disposal of property and equipment				983				4,670
	Changes in operating assets and liabilities:
		Accounts receivable			(249,857	)			917,948
		Prepaid expenses and other assets			(196,502	)			62,188
		Accounts payable and accrued liabilities			1,270				(66,011	)
		Due to affiliates			192,565				1,386,000
		Deferred revenues			(592,068	)			(677,261	)
Net cash used in operating activities					(433,813	)			(2,168,248	)
INVESTING ACTIVITIES
Purchases of property and equipment					(83,633	)			(107,955	)
Net cash used in investing activities					(83,633	)			(107,955	)
FINANCING ACTIVITY
Member contributions					—				2,000,000
Effect of currency translation on cash					135,576				303,869
Net (decrease) increase in cash and cash equivalents					(381,870	)			27,666
Cash and cash equivalents at beginning of year					736,745				709,079
Cash and cash equivalents at end of year				$	354,875			$	736,745
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes				$	207,868			$	432,510
Cash paid for interest				$	11			$	829

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1.	Organization and Description of Business

2.	Summary of Significant Accounting Policies

	Basis of Presentation

	Use of Estimates

	Cash and Cash Equivalents

	Concentration of Credit Risk and Certain Other Risks

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	Fair Value of Financial Instruments

	Comprehensive Income

	Property and Equipment

	Intangible Assets

		December 31, 2004
		Gross
		Carrying				Accumulated				Intangible
		Amount				Amortization				Assets, Net
Customer relationships		$	6,575,002			$	3,620,800			$	2,954,202
Developed technology			2,768,000				1,524,200				1,243,800
		$	9,343,002			$	5,145,000			$	4,198,002

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Customer relationships		$	939,300
Developed technology			395,400
		$	1,334,700

	Revenue Recognition

	Cost of Revenue

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	Impairment of Long-lived Assets

	Income Taxes

	Translation of Foreign Currency

	Shipping and Handling Costs

	Advertising Expense

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	Research and Development and Software Development Costs

	New Accounting Pronouncements

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3.	Property and Equipment

Computer equipment		$	307,365
Machinery and equipment			49,085
Furniture and fixtures			43,679
Construction in progress			75,934
			476,063
Accumulated depreciation and amortization			(319,372	)
Property and equipment, net		$	156,691

4.	Related-Party Transactions

	Management Fees and Expense Reimbursements

	Transactions with Affiliates

5.	Commitments and Contingencies

	Legal Proceedings

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	Leases

2005		$	480,000
2006			382,000
2007			204,000
2008			126,000
2009			111,000
Thereafter			28,000
Total minimum lease payments		$	1,331,000

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		Year Ended December 31, 2004
		Product				Service				Total
North America		$	1,832,330			$	3,263,782			$	5,096,112
Europe, Africa and the Middle East			4,238,583				4,904,882				9,143,465
Asia Pacific			582,009				613,425				1,195,434
Latin America			194,568				178,217				372,785
Total		$	6,847,490			$	8,960,306			$	15,807,796

		Year Ended December 31, 2003
		Product				Service				Total
North America		$	1,766,839			$	3,813,486			$	5,580,325
Europe, Africa and the Middle East			3,803,731				4,815,686				8,619,417
Asia Pacific			773,397				572,824				1,346,221
Latin America			142,954				199,739				342,693
Total		$	6,486,921			$	9,401,735			$	15,888,656

F-84

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Report of Independent Registered Public Accounting Firm			F-86
Balance Sheet as of June 30, 2005			F-87
Statements of Income for the years ended June 30, 2005 and 2004			F-88
Statements of Shareholder’s Deficit for the years ended June 30, 2005 and 2004			F-89
Statements of Cash Flows for the years ended June 30, 2005 and 2004			F-90
Notes to Financial Statements			F-91

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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	)

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				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

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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

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	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

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	Cost of Revenue

	Impairment of Long-Lived Assets

	Income Taxes

	Shipping and Handling Costs

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	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

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	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

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F-96

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Report of Independent Registered Public Accounting Firm			F-98
Combined Balance Sheet as of June 30, 2005			F-99
Combined Statements of Operations for the years ended June 30, 2005 and 2004			F-100
Combined Statements of Member’s and Shareholder’s Equity for the years ended June 30, 2005 and 2004			F-101
Combined Statements of Cash Flows for the years ended June 30, 2005 and 2004			F-102
Notes to Combined Financial Statements			F-103

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			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

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			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	)

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							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

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				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

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1.	Organization and Nature of Business

2.	Summary of Significant Accounting Policies

	Use of Estimates

	Concentrations of Credit Risk and Major Customers

F-103

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	Cash and Cash Equivalents

	Income Taxes

	Property and Equipment

	Engineering and Development and Software Development Costs

	Goodwill and Intangible Assets

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	•	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

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	Deferred Revenue

	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

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	Shipping and Handling Costs

	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

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		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

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

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6.	Lease Commitments

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

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

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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

10.	Subsequent Event

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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 (see break out below)				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

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

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Assets:
	Process and Affiliates’ historical assets		$	10,471,343
	Write-down of intangibles assets consisting of developed technologies and customer relationships (see break out below)			(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

		Estimated FMV				Estimated Life
Trade name		$	141,000				7.18 Years
Developed technology			1,900,000				7.18 Years
Customer relationships			1,925,800				7.18 Years
Total intangible assets acquired		$	3,966,800

		Estimated FMV				Estimated Life
Trade name		$	101,520				6.75 Years
Developed technology			1,531,560				7.55 Years
Customer relationships			3,114,400				7.58 Years
Total intangible assets acquired		$	4,747,480

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												Process and				Pro Forma				WARP
				WARP(A)				Tesseract(B)				Affiliates(C)				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								7,167,575
		Total revenue			3,208,329				2,200,800				4,006,783								9,415,912
Cost of revenue
	Cost of licenses				163,028				—				232,505				116,945	(F)			512,478
	Cost of services				293,908				268,526				373,969				—				936,403
		Total cost of revenue			456,936				268,526				606,474				116,945				1,448,881
Gross Profit					2,751,393				1,932,274				3,400,309				(116,945	)			7,967,030
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					369,138				47,151				366,610				(235,220	)(F)			547,679
Platinum management fees					—				50,000				(317,130	)							(267,130	)
Income (Loss) before interest					(1,262,753	)			803,041				1,295,046				118,274				953,608
Interest (expense) income					(1,296,102	)			25,101				203,533				(653,488	)(I,J,K)			(1,720,956	)
Net Income (loss) before income taxes					(2,558,855	)			828,142				1,498,579				(535,214	)		$	(767,348	)
Income taxes					52,163				30				2,061				—	(L)			54,254
Net Income (loss)				$	(2,611,018	)		$	828,112			$	1,496,518			$	(535,214	)		$	(821,602	)
Computation of loss applicable to common shareholders
Net Income (loss) before preferred dividends				$	(2,611,018	)		$	828,112			$	1,496,518			$	(535,214	)		$	(821,602	)
Preferred dividends					(220,179	)			—				—				—				(220,179	)
Income (Loss) attributable to common stockholders				$	(2,831,197	)		$	828,112			$	1,496,518			$	(535,214	)		$	(1,041,781	)
Basic and diluted net loss per share				$	(0.88	)														$	(0.32	)
Weighted-average shares outstanding					3,209,597																3,209,597

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												Process and				Pro forma				Halo
				Halo(J)				Tesseract(D)				Affiliates(E)				Adjustment				Pro forma
Revenue
	Licenses			$	2,986,752			$	762,585			$	2,463,329			$	—			$	6,212,666
	Services				2,137,170				9,136,808				13,654,402				—				24,928,380
		Total revenue			5,123,922				9,899,393				16,117,731				—				31,141,046
Cost of revenue
	Cost of licenses				449,073				85,647				684,046				467,782	(F)			1,686,548
	Cost of services				396,490				1,522,840				1,785,936				—				3,705,266
		Total cost of revenue			845,563				1,608,487				2,469,982				467,782				5,391,814
Gross Profit					4,278,359				8,290,906				13,647,749				(467,782	)			25,749,233
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					648,041				188,603				1,412,500				(886,937	)(F)			1,362,207
Platinum management fees(Q)					—				2,575,000				2,916,046				—				5,491,046
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				419,155				(9,266,043	)
Interest (expense) income					(4,631,683	)			167,663				(38,172	)			(2,416,074	)(I,J,K)			(6,918,266	)
Net Income (loss) before income taxes					(15,274,994	)			905,109				182,494				(1,996,919	)			(16,184,309	)
Income taxes					97,945				(2,281	)			22,707				—	(L)			118,371
Net Income (loss)				$	(15,372,939	)		$	907,390			$	159,787			$	(1,996,919	)		$	(16,302,680	)
Computation of loss applicable to common shareholders
Net Income (loss) before beneficial conversion and preferred dividends				$	(15,372,939	)		$	907,390			$	159,787			$	(1,996,919	)		$	(16,302,680	)
Beneficial conversion and preferred dividends					(7,510,590	)			—				—				—				(7,510,590	)
Income (Loss) attributable to common stockholders				$	(22,883,529	)		$	907,390			$	159,787			$	(1,996,919	)		$	23,813,270
Basic and diluted net loss per share				$	(11.97	)														$	(12.45	)
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
(I)		$	1,869,197			$	516,769
(J)			73,773				18,443
(K)			473,104				118,276
		$	2,416,074			$	653,488

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Report of Grant Thornton LLP, Independent Registered Public Accounting Firm			F-119
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm			F-120
Consolidated Balance Sheets as of April 30, 2005			F-121
Consolidated Statements of Operations for the Years Ended April 30, 2005, 2004 and 2003			F-122
Consolidated Statements of Stockholders’ Equity			F-123
Consolidated Statements of Cash Flows for the Years Ended April 30, 2005, 2004 and 2003			F-124
Notes to Consolidated Financial Statements			F-125

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	/s/ GRANT THORNTON LLP

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	/s/ ERNST & YOUNG LLP

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		April 30,				April 30,
		2005				2004
		(In thousands, except
		share data)
ASSETS
Current assets:
Cash and cash equivalents		$	3,675			$	6,606
Accounts receivable, net of allowances of $195 in 2005, and $175 in 2004			2,519				2,650
Accounts receivable-related party			92				198
Prepaid expenses and other current assets			656				543
Total current assets			6,942				9,997
Property and equipment, net			429				338
Other investments			214				214
Goodwill and intangible assets			1,739				—
Other assets, net of allowances of $178 in 2005, and $357 in 2004			166				194
Total assets		$	9,490			$	10,743
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	739			$	523
Current portion of long term debt			102				146
Current portion of long term debt-related party			64				—
Other accrued liabilities			1,336				1,340
Accrued compensation and related expenses			721				812
Deferred revenue			3,220				3,360
Total current liabilities			6,182				6,181
Long term debt, net of current portion			31				—
Royalty payable			514				—
Accrued support obligations			124				—
Other long term liabilities			72				70
Commitments and contingencies			—				—
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares issued or outstanding			—				—
Common stock, $0.001 par value; 40,000,000 shares authorized; 28,442,657 and 27,273,920 shares outstanding in 2005 and 2004			28				27
Additional paid-in capital			63,588				63,205
Accumulated other comprehensive income			73				18
Accumulated deficit			(61,122	)			(58,758	)
Total stockholders’ equity			2,567				4,492
Total liabilities and stockholders’ equity		$	9,490			$	10,743

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		Years Ended April 30,
		2005				2004				2003
		(In thousands, except per share data)
Revenues:
Software licenses		$	5,205			$	6,111			$	5,895
Services			6,098				5,814				6,278
Total revenues			11,303				11,925				12,173
Cost of revenues:
Software licenses			336				595				263
Services			1,328				1,299				1,133
Total cost of revenues			1,664				1,894				1,396
Gross profit			9,639				10,031				10,777
Operating expenses:
Product development			2,814				2,996				4,108
Selling, general and administrative			9,225				7,840				6,391
Write-down of other investments			—				175				200
Total operating expenses			12,039				11,011				10,699
Income (loss) from operations			(2,400	)			(980	)			78
Other income (expense), net			44				(27	)			3
Income (loss) before income taxes			(2,356	)			(1,007	)			81
Provision (benefit) for income taxes			8				3				(38	)
Net income (loss)		$	(2,364	)		$	(1,010	)		$	119
Net income (loss) per share:
Basic		$	(0.09	)		$	(0.05	)		$	0.01
Diluted		$	(0.09	)		$	(0.05	)		$	0.01
Shares used in computing net income (loss) per share:
Basic			27,777				21,558				20,939
Diluted			27,777				21,558				21,693

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														Note				Accumulated
		Common Stock								Additional				Receivable				Other								Total				Comprehensive
										Paid-In				from				Comprehensive				Accumulated				Stockholders’				Income
		Shares				Amount				Capital				Stockholder				Income (Loss)				Deficit				Equity				(Loss)
		(In thousands, except share data)
Balances at April 30, 2002			20,338,663			$	20			$	59,088			$	(60	)		$	(210	)		$	(57,867	)		$	971
Comprehensive income
Net income			—				—				—				—				—				119				119			$	119
Translation adjustments			—				—				—				—				167				—				167				167
Total comprehensive income																														$	286
Exercise of stock options			90,849				—				17				—				—				—				17
Issuance of common stock under employee stock purchase plan			478,308				1				104				—				—				—				105
Stock-based compensation			258,196				—				130				—				—				—				130
Balances at April 30, 2003			21,166,016			$	21			$	59,339			$	(60	)		$	(43	)		$	(57,748	)		$	1,509
Comprehensive loss
Net loss			—				—				—				—				—				(1,010	)			(1,010	)		$	(1,010	)
Translation adjustments			—				—				—				—				61				—				61				61
Total comprehensive loss																														$	(949	)
Issuance of common stock			5,665,500				6				3,702				—				—				—				3,708
Issuance of common stock warrants			—				—				32				—				—				—				32
Exercise of stock options			114,308				—				28				—				—				—				28
Issuance of common stock under employee stock purchase plan			228,096				—				64				—				—				—				64
Stock-based compensation			100,000				—				40				—				—				—				40
Repayment of note receivable from stockholder			—				—				—				60				—				—				60
Balances at April 30, 2004			27,273,920			$	27			$	63,205			$	—			$	18			$	(58,758	)		$	4,492
Comprehensive loss
Net loss			—				—				—				—				—				(2,364	)			(2,364	)		$	(2,364	)
Translation adjustments			—				—				—				—				55				—				55				55
Total comprehensive loss																														$	(2,309	)
Issuance of common stock			520,833				1				249				—				—				—				250
Costs related to private placement			—				—				(93	)			—				—				—				(93	)
Issuance of common stock warrants			—				—				3				—				—				—				3
Net exercise of common stock warrants			68,016				—				—				—				—				—				—
Exercise of stock options			269,170								83				—				—				—				83
Issuance of common stock under employee stock purchase plan			268,162				—				101				—				—				—				101
Stock-based compensation			42,556								40				—				—				—				40
Balances at April 30, 2005			28,442,657			$	28			$	63,588			$	—			$	73			$	(61,122	)		$	2,567

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		Years Ended April 30,
		2005				2004				2003
		(In thousands)
Cash flows from operating activities:
Net income (loss)		$	(2,364	)		$	(1,010	)		$	119
Reconciliation of net income (loss) to cash provided by (used in) operating activities:
Depreciation			186				165				233
Write-down of other investments			—				178				200
Amortization			30				—				—
Fulfillment of support obligations			(99	)			—				—
Employee stock based expense			40				40				130
Non employee stock based expense			3				44				—
Changes in operating assets and liabilities:
Accounts receivable			427				(240	)			1,092
Prepaid expenses and other current assets			(123	)			(244	)			66
Accounts payable			138				(35	)			(79	)
Accrued compensation and related expenses			(113	)			134				(79	)
Other accrued liabilities			(296	)			588				(632	)
Deferred revenue			(196	)			299				(608	)
Net cash provided by (used in) operating activities			(2,367	)			(81	)			442
Cash flows from investing activities:
Acquisition, net of cash acquired			(504	)			—				—
Purchases of property and equipment			(208	)			(210	)			(178	)
Increase in other investments			—				—				(3	)
Decrease (increase) in other assets			4				(19	)			15
Net cash used in investing activities			(708	)			(229	)			(166	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net			92				3,788				122
Borrowings under debt obligations			1,681				295				—
Principal payments under debt obligations			(1,694	)			(349	)			(240	)
Payable to minority interest stockholders			—				—				(309	)
Collection of notes receivable from stockholder			—				60				—
Net cash provided by (used in) financing activities			79				3,794				(427	)
Effect of exchange rate changes on cash			65				92				188
Net increase (decrease) in cash and cash equivalents			(2,931	)			3,576				37
Cash and cash equivalents, beginning of year			6,606				3,030				2,993
Cash and cash equivalents, end of year		$	3,675			$	6,606			$	3,030
Supplemental noncash investing and financing activities:
Common stock issued in acquisition		$	250			$	—			$	—
Supplemental cash flow information:
Cash paid (received) during the year for:
Interest			(42	)			2				3
Income taxes		$	6			$	(112	)		$	(52	)

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Note 1.	The Company and Summary of Significant Accounting Policies

	The Company

	Basis of Presentation

	Use of Estimates

	Cash Equivalents

	Fair Value of Financial Instruments

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	Concentrations of Credit Risk and Credit Evaluations

	Allowance for Doubtful Accounts

														Additions
						Additions								(Deductions):
		Balance at				Charged to				Deductions:				Transfers				Balance
		Beginning				Operating				Write-offs				Between				at End
		of Period				Expenses				of Accounts				Accounts				of Period
		(In thousands)
Allowance for doubtful accounts receivable:
Year ended April 30, 2003		$	318			$	44			$	(162	)		$	52			$	252
Year ended April 30, 2004			252				(79	)			1				1				175
Year ended April 30, 2005			175				27				(7	)			—				195
Allowance for long-term accounts and notes receivable — reflected in other assets:
Year ended April 30, 2003		$	1,296			$	(117	)		$	(831	)		$	—			$	348
Year ended April 30, 2004			348				45				(36	)			—				357
Year ended April 30, 2005			357				—				(179	)			—				178

	Other Investments

	Property and Equipment

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	Capitalized Software

	Long-Lived Assets

	Goodwill

	Intangible Assets

	Revenue Recognition

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	Warranties and Indemnification

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	Stock-Based Compensation

		Year Ended April 30,
		2005				2004				2003
Net income (loss) as reported		$	(2,364	)		$	(1,010	)		$	119
Add: stock-based employee compensation included in reported net loss			40				40				130
Less: stock-based employee compensation expense, determined under fair value method for all awards			(583	)			(288	)			(519	)
Pro forma net income (loss)		$	(2,907	)		$	(1,258	)		$	(270	)
Net income(loss) per share (basic and diluted), as reported		$	(0.09	)		$	(0.05	)		$	0.01
Net income(loss) per share (basic and diluted), pro forma		$	(0.10	)		$	(0.06	)		$	(0.01	)

	Income Taxes

	Earnings (Loss) Per Share

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	Comprehensive Income (Loss)

	Segment Reporting

	Recently Issued Accounting Standards

	Reclassifications

Note 2.	Acquisition

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Current assets		$	142
Property and equipment, net			27
Goodwill			1,070
Technology based intangible			200
Customer based intangible			164
Total assets		$	1,603
Current liabilities		$	512
Long-term liabilities			636
Shareholders’ equity			455
Total liabilities and shareholders’ equity		$	1,603

		Year Ended April 30,
		2005				2004
		Unaudited
		(In thousands, except
		per share data)
Total revenues		$	11,973			$	12,190
Net income (loss)			(2,568	)			(1,592	)
Basic net income (loss) per share			(0.09	)			(0.07	)
Diluted net income (loss) per share			(0.09	)			(0.07	)

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Note 3.	Property and Equipment

		2005				2004
Equipment		$	3,111			$	3,001
Furniture and leasehold improvements			896				846
			4,007				3,847
Less accumulated depreciation and amortization			(3,578	)			(3,509	)
Property and equipment, net		$	429			$	338

Note 4.	Other Investments

		2005				2004
Arango Software International, Inc.		$	175			$	175
Unify Japan KK			39				39
		$	214			$	214

Note 5.	Goodwill and Intangible Assets

		Gross								Net
		Carrying				Accumulated				Carrying				Estimated
		Amount				Amortization				Amount				Useful Life
Infinite Lives:
Goodwill		$	1,405			$	—			$	1,405				—
Finite Lives:
Technology-based			200				(17	)			183				3 years
Customer-related			164				(14	)			150				3 years
Total		$	1,769			$	(31	)		$	1,738

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April 30		Amount
2006		$	121
2007			121
2008			91
Total		$	333

Note 6.	Credit Facility

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Note 7.	Long-Term Debt

		April 30,				April 30,
		2005				2004
Unsecured note payable to a related party, due September 15, 2005 and bears no interest		$	64			$	—
Note payable to a financial institution, accruing interest at prime plus 2.0%, not to be less than 4% per annum (actual interest rate at April 30, 2005 was 8.25%), payable in monthly installments through October 2006			118				146
Capital lease payable, payable in monthly installments through August 2007			15				—
			197				146
Less current portion			(102	)			(146	)
Less current portion-related party			(64	)			—
		$	31			$	—

Note 8.	Other Long Term Liabilities

Note 9.	Maintenance Contracts

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		Year Ended				Year Ended				Year Ended
		April 30,				April 30,				April 30,
		2005				2004				2003
Deferred maintenance revenue beginning balance		$	3,081			$	2,846			$	2,932
Deferred maintenance revenue recognized during period			(5,462	)			(5,497	)			(5,547	)
Deferred maintenance revenue of new maintenance contracts			5,230				5,732				5,461
Deferred maintenance revenue ending balance		$	2,849			$	3,081			$	2,846

Note 10.	Stockholders’ Equity

	Preferred Stock

	Stock Option Plan

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						Weighted
						Average
		Number of				Exercise
		Shares				Price
Outstanding at April 30, 2002			2,112,602			$	1.38
Granted (weighted average fair value of $0.27)			922,000				0.46
Exercised			(90,849	)			0.19
Cancelled/expired			(269,285	)			1.87
Outstanding at April 30, 2003			2,674,468				1.05
Granted (weighted average fair value of $0.46)			620,500				0.51
Exercised			(114,308	)			0.24
Cancelled/expired			(208,105	)			1.81
Outstanding at April 30, 2004			2,972,555				0.92
Granted (weighted average fair value of $0.47)			1,259,500				0.47
Exercised			(269,170	)			0.31
Cancelled/expired			(1,120,505	)			0.55
Outstanding at April 30, 2005			2,842,380				0.92

		Options Outstanding												Options Exercisable
						Average				Weighted								Weighted
						Remaining				Average								Average
		Number				Contractual				Exercise				Number				Exercise
Range of Exercise Prices		Outstanding				Life (Years)				Price				Outstanding				Price
$0.12 - 0.18			208,598				0.67			$	0.12				208,598			$	0.12
0.25 - 0.25			355,520				6.64				0.25				349,686				0.25
0.26 - 0.26			445,875				6.55				0.26				382,436				0.26
0.27 - 0.43			353,020				8.66				0.39				128,602				0.38
0.44 - 0.54			359,416				9.76				0.48				22,290				0.45
0.55 - 0.55			548,270				7.17				0.55				416,656				0.55
0.64 - 19.69			571,681				5.04				3.11				428,905				3.90
0.12 - 19.69			2,842,380				6.61				0.92				1,937,173				1.12

	Stock Purchase Plan

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	Restricted Stock

	Private Placement

	Note Receivable from Stockholder

Note 11.	Income Taxes

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		2005				2004				2003
Domestic		$	(1,670	)		$	(1,334	)		$	(292	)
Foreign			(686	)			327				373
Total income (loss) before income taxes		$	(2,356	)		$	(1,007	)		$	81
Foreign taxes		$	—			$	9			$	(37	)
Federal and state income taxes			8				(6	)			(1	)
Provision (benefit) for income taxes		$	8			$	3			$	(38	)

		2005				2004				2003
Computed tax expense (benefit)		$	(801	)		$	(352	)		$	28
Increases (reductions) in tax expense resulting from:
Foreign taxes			—				(105	)			(168	)
Increase (decrease) in valuation allowance for deferred tax assets			710				573				279
Expiration of net operating loss carryforwards			—				—				—
Other			99				(113	)			(177	)
Provision (benefit) for income taxes		$	8			$	3			$	(38	)

		2005				2004
Deferred tax assets:
Net operating loss carryforwards		$	16,923			$	15,635
Capital loss carryforward			1,724				—
Foreign tax credits			100				360
Deferred revenue			840				990
Reserves and other accruals			114				1,905
Allowance for losses on accounts receivable			50				150
Other			105				103
Total deferred tax assets			19,855				19,143
Valuation allowance			(19,855	)			(19,143	)
Net deferred tax assets		$	—			$	—

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Note 12.	Other Income (Expenses)

		2005				2004				2003
Interest income		$	59			$	16			$	28
Interest expense			(26	)			(68	)			(27	)
Foreign currency exchange loss			(3	)			22				(5	)
Other			14				3				7
Other income (expenses), net		$	44			$	(27	)		$	3

Note 13.	Earnings per Share

		2005				2004				2003
Net Income (Loss) (Numerator):
Net income (Loss), basic and diluted		$	(2,364	)		$	(1,010	)		$	119
Shares (Denominator):
Weighted average shares of common stock outstanding, basic			27,777				21,558				20,939
Effect of dilutive securities (stock options)			—				—				754
Weighted average shares of common stock outstanding, diluted			27,777				21,558				21,693
Per Share Amount:
Net income (loss) per share, basic		$	(0.09	)		$	(0.05	)		$	0.01
Effect of dilutive securities			—				—				—
Net income (loss) per share, diluted		$	(0.09	)		$	(0.05	)		$	0.01

Note 14.	Related Party Transactions

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	Transaction with an Officer

	Transaction with a Director

Note 15.	Employee Retirement Plan

Note 16.	Commitments and Contingencies

	Operating Leases

Years Ending April 30,
2006		$	1,079
2007			957
2008			871
2009			16
2010			6
Thereafter			—
		$	2,929

	Litigation

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Note 17.	Subsequent Events

Note 18.	Segment Information

		2005				2004				2003
Total net revenues:
UBS — Americas(3)		$	5,879			$	6,361			$	7,430
UBS — Europe			5,410				5,564				4,743
Insurance Risk Management Division(2)			14				—				—
Total net revenues		$	11,303			$	11,925			$	12,173
Operating income (loss):
UBS — Americas(2)		$	(2,829	)		$	(2,036	)		$	(596	)
UBS — Europe(3)			747				1,056				674
Insurance Risk Management Division			(318	)			—				—
Total operating income (loss)			(2,400	)			(980	)			78
Interest income(4)			59				16				28
Interest expense(4)		$	26			$	68			$	27
Identifiable assets:
UBS — Americas		$	1,786			$	1,994			$	1,818
UBS — Europe			2,518				3,271				2,609
Insurance Risk Management Division			1,721				—				—
Subtotal identifiable assets			6,025				5,265				4,427
Corporate assets(5)			5,205				7,221				3,857
Elimination of inter-company balances			(1,740	)			(1,743	)			(1,609	)
Total assets		$	9,490			$	10,743			$	6,675
Depreciation expense(6)		$	186			$	165			$	233
Capital expenditures(6)		$	208			$	210			$	178

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(1)	The Company allocates revenues to operating segments based on the location of the country where the license is installed or service is delivered. There were no transfers between segments during the periods presented. The accounting policies of the segments are the same as those described in Note 1.
(2)	Following the acquisition, the Company entered into two contracts which required deferral of license revenue until customer acceptance. The April 2005 Balance Sheet reflects deferred revenue of $157,000 for these contracts.
(3)	Americas operating income (loss) is net of corporate product development and general and administrative expenses.
(4)	Interest income and interest expense were primarily attributable to corporate assets located in the Americas for the periods presented. Interest income and interest expense in the Americas and Europe were not significant in those periods.
(5)	Corporate assets are located in the Americas and consist primarily of cash equivalents, investments, purchased technology and related maintenance contracts, property and equipment and intercompany receivables from Europe.
(6)	The majority of the Company’s capital expenditures are incurred for product development (which occurs exclusively in the Americas) and for corporate infrastructure. Consequently, capital expenditures and depreciation expense were primarily attributable to the Americas in the periods presented.

		2005				2004				2003
Total net revenues:
Americas		$	4,101			$	3,872			$	5,668
International Distributors			1,779				2,489				1,762
Subtotal Americas			5,879				6,361				7,430
United Kingdom			1,388				1,485				1,489
Central Europe — Germany, Benelux, Others			1,775				1,532				1,262
France			2,247				2,547				1,992
Subtotal Europe			5,410				5,564				4,743
Insurance Risk Management Division			14				—				—
Total net revenues		$	11,303			$	11,925			$	12,173
Long-lived assets:
Americas		$	78			$	64			$	100
Europe			107				100				102
Insurance Risk Management Division			1,762				—				—
Corporate Assets			601				582				649
Total long-lived assets		$	2,548			$	746			$	851

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Note 19.	Quarterly Results of Operations (Unaudited)

		Quarter Ended
		July 31,				October 31,				January 31,				April 30,
		(In thousands, except per share data)
Year ended 2005:
Total revenues		$	2,733			$	2,810			$	2,987			$	2,773
Gross margin		$	2,286			$	2,363			$	2,540			$	2,450
Net loss		$	(474	)		$	(634	)		$	(651	)		$	(605	)
Net loss per share, basic		$	(0.02	)		$	(0.02	)		$	(0.02	)		$	(0.02	)
Net loss per share, diluted		$	(0.02	)		$	(0.02	)		$	(0.02	)		$	(0.02	)
Year ended 2004:
Total revenues		$	3,301			$	2,804			$	2,644			$	3,176
Gross margin		$	2,895			$	2,375			$	2,116			$	2,645
Net income (loss)		$	(144	)		$	61			$	(470	)		$	(457	)
Net income (loss) per share, basic		$	(0.01	)		$	0.00			$	(0.02	)		$	(0.02	)
Net income (loss) per share, diluted		$	(0.01	)		$	0.00			$	(0.02	)		$	(0.02	)

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		January 31,				April 30,
		2006				2005
		(Unaudited)				(Audited)
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	2,729			$	3,675
Accounts receivable, net			2,674				2,611
Prepaid expenses & other current assets			502				656
Contracts in progress			116				—
Total current assets			6,021				6,942
Property and equipment, net			301				429
Other investments			214				214
Goodwill and intangible assets, net			1,648				1,739
Other assets, net			198				166
Total assets		$	8,382			$	9,490
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	161			$	739
Short-term borrowings and current portion of long-term debt			812				166
Other accrued liabilities			724				1,336
Accrued compensation and related expenses			598				721
Deferred revenue			3,365				3,220
Total current liabilities			5,660				6,182
Other long-term liabilities			700				741
Commitments and contingencies			—				—
Stockholders’ equity:
Common stock			29				28
Additional paid-in capital			63,886				63,588
Accumulated other comprehensive income			24				73
Accumulated deficit			(61,917	)			(61,122	)
Total stockholders’ equity			2,022				2,567
Total liabilities and stockholders’ equity		$	8,382			$	9,490

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		Three Months								Nine Months
		Ended								Ended
		January 31,								January 31,
		2006				2005				2006				2005
		(In thousands, except per share data)
Revenues:
Software licenses		$	1,029			$	1,469			$	3,444			$	3,934
Services			1,393				1,518				4,365				4,596
Total revenues			2,422				2,987				7,809				8,530
Cost of Revenues:
Software licenses			95				96				355				264
Services			634				351				1,359				1,077
Total cost of revenues			729				447				1,714				1,341
Gross profit			1,693				2,540				6,095				7,189
Operating Expenses:
Product development			755				678				2,068				2,110
Selling, general and administrative			1,641				2,544				4,846				6,866
Total operating expenses			2,396				3,222				6,914				8,976
Loss from operations			(703	)			(682	)			(819	)			(1,787	)
Other income, net			15				34				24				35
Loss before income taxes			(688	)			(648	)			(795	)			(1,752	)
Provision for income taxes			—				3				—				7
Net loss		$	(688	)		$	(651	)		$	(795	)		$	(1,759	)
Net loss per share:
Basic		$	(0.02	)		$	(0.02	)		$	(0.03	)		$	(0.06	)
Dilutive		$	(0.02	)		$	(0.02	)		$	(0.03	)		$	(0.06	)
Shares used in computing net loss per share:
Basic			29,148				27,692				29,065				27,606
Dilutive			29,148				27,692				29,065				27,606

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		Nine Months Ended
		January 31,
		2006				2005
		(In thousands)
Cash flows from operating activities:
Net loss		$	(795	)		$	(1,759	)
Reconciliation of net loss to net cash used in operating activities:
Depreciation			148				130
Loss on disposal of equipment			17				—
Amortization			101				—
Fulfillment of support obligations			(158	)			—
Employee stock based expense			120				40
Stock based expense for acquisition earn-out payment			122				—
Changes in operating assets and liabilities:
Accounts receivable			(153	)			(299	)
Prepaid expenses and other current assets			135				(150	)
Contracts in progress			(116	)			—
Accounts payable			(578	)			(186	)
Accrued compensation and related expenses			(112	)			(109	)
Other accrued liabilities			(449	)			(189	)
Deferred revenue			183				(169	)
Net cash used in operating activities			(1,535	)			(2,691	)
Cash flows from investing activities:
Purchases of property and equipment			(38	)			(176	)
Decrease in other assets			—				43
Net cash used in investing activities			(38	)			(133	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net			57				31
Borrowings/payments under line of credit, net			675				—
Borrowings under debt obligations			144				126
Principal payments under debt obligations			(200	)			(128	)
Net cash provided by financing activities			676				29
Effect of exchange rate changes on cash			(49	)			104
Net decrease in cash and cash equivalents			(946	)			(2,691	)
Cash and cash equivalents, beginning of period			3,675				6,606
Cash and cash equivalents, end of period		$	2,729			$	3,915
Supplemental cash flow information:
Cash received during the period for:
Interest		$	84			$	29
Income taxes		$	—			$	14

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1.	Basis of Presentation

	Revenue Recognition

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	Recently Issued Accounting Standards

2.	Stock Compensation Information

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		Three Months Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
Net loss as reported		$	(688	)		$	(651	)		$	(795	)		$	(1,759	)
Add: stock-based employee compensation included in reported net loss			120				—				242				40
Less: stock-based employee compensation expense, determined under fair value method for all awards			(24	)			(238	)			(213	)			(398	)
Pro forma net loss		$	(592	)		$	(889	)		$	(766	)		$	(2,117	)
Net loss per share (basic and diluted), as reported		$	(0.02	)		$	(0.02	)		$	(0.03	)		$	(0.06	)
Net loss per share (basic and diluted), pro forma		$	(0.02	)		$	(0.03	)		$	(0.03	)		$	(0.08	)

3.	Goodwill and Intangible Assets

		Gross								Net
		Carrying				Accumulated				Carrying				Estimated
January 31, 2006		Amount				Amortization				Amount				Useful Life
Infinite Lives:
Goodwill		$	1,405			$	—			$	1,405				—
Finite Lives:
Technology-based			200				(67	)			133				3 years
Customer-related			164				(54	)			110				3 years
Total		$	1,769			$	(121	)		$	1,648

		Gross								Net
		Carrying				Accumulated				Carrying				Estimated
April 30, 2005		Amount				Amortization				Amount				Useful Life
Infinite Lives:
Goodwill		$	1,405			$	—			$	1,405				—
Finite Lives:
Technology-based			200				(16	)			184				3 years
Customer-related			164				(14	)			150				3 years
Total		$	1,769			$	(30	)		$	1,739

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FYE
April 30,		Amount
2006 (remaining three months)		$	31
2007			121
2008			91
Total		$	243

4.	Credit Facility

5.	Borrowings

		January 31,				April 30,
		2006				2005
Unsecured note payable to a related party, bears no interest		$	—			$	64
Note payable, bears no interest, payable in installments through March 15, 2006			96				—
Notes payable to a financial institution, accruing interest at prime plus 2.5%, not to be less than 4% per annum (actual interest rate at January 31, 2006 was 9.75%), payable in monthly installments through September 2006			34				118
Short-term borrowings, accruing interest at prime plus 2.0%, not to be less than 4% per annum (actual interest rate at January 31, 2006 was 9.25%), payable in full by June 5, 2006			675				—
Capital lease payable, payable in monthly installments through August 2007			12				15
			817				197
Less current portion			(812	)			(166	)
		$	5			$	31

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6.	Other Long-Term Liabilities

		January 31,				April 30,
		2006				2005
Long-term debt, net of current portion		$	5			$	31
Royalty payable			506				514
Accrued support obligations			121				124
Other long-term liabilities			68				72
		$	700			$	741

7.	Maintenance Contracts

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		Three Months Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
Balances, beginning of period		$	1,888			$	2,202			$	2,849			$	3,068
Amount recognized during the period			(1,304	)			(1,387	)			(3,886	)			(4,153	)
Amount of new maintenance contracts			2,398				2,392				4,019				4,292
Balances, end of period		$	2,982			$	3,207			$	2,982			$	3,207

8.	Comprehensive Loss

		Three Months								Nine Months Ended
		Ended January 31,								January 31,
		2006				2005				2006				2005
Net loss		$	(688	)		$	(651	)		$	(795	)		$	(1,759	)
Foreign currency translation gain			(2	)			13				(49	)			60
Total comprehensive loss		$	(690	)		$	(638	)		$	(844	)		$	(1,699	)

9.	Earnings (Loss) Per Share

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		Three Months Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
Net loss (Numerator):
Net loss		$	(688	)		$	(651	)		$	(795	)		$	(1,759	)
Shares (Denominator):
Weighted average shares of common stock outstanding, basic			29,148				27,692				29,065				27,606
Weighted average common equivalent shares outstanding			—				—				—				—
Weighted average shares of common stock outstanding, diluted			29,148				27,692				29,065				27,606
Per Share Amount:
Net loss per share, basic		$	(0.02	)		$	(0.02	)		$	(0.03	)		$	(0.06	)
Effect of dilutive securities			—				—				—				—
Net loss per share, diluted		$	(0.02	)		$	(0.02	)		$	(0.03	)		$	(0.06	)

10.	Segment Information

		Three Months Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
Total net revenues:
UBS-Americas		$	1,403			$	1,954			$	4,829			$	5,724
UBS-Europe			702				1,033				2,201				2,806
Insurance Risk Management Division			317				—				779				—
Total net revenues		$	2,422			$	2,987			$	7,809			$	8,530
Operating Income (loss):
UBS-Americas		$	82			$	(220	)		$	258			$	(1,223	)
UBS-Europe			(58	)			(462	)			215				(564	)
Insurance Risk Management Division			(727	)			—				(1,292	)			—
Total operating loss		$	(703	)		$	(682	)		$	(819	)		$	(1,787	)
Interest income		$	33			$	14			$	92			$	41
Interest expense		$	3			$	6			$	8			$	18

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		Three Months Ended								Nine Months Ended
		January 31,								January 31,
		2006				2005				2006				2005
Total net revenues:
Americas		$	796			$	912			$	2,529			$	2,958
International Distributors			335				401				1,595				1,261
Central Europe — Germany, Benelux, Others			272				641				705				1,505
United Kingdom			270				359				937				1,093
France			432				674				1,264				1,713
Insurance Risk Management Division			317				—				779				—
Total net revenues		$	2,422			$	2,987			$	7,809			$	8,530

11.	Subsequent Event

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										Pro Forma Adjustments
														Purchase				Halo
		Halo(A)				Unify(B)				Conditions(C)				Accounting				Pro Forma
ASSETS
Current Assets:
Cash and cash equivalents		$	1,749,926			$	2,729,170			$	—			$	—			$	4,479,096
Marketable Securities			33,800				—				—				—				33,800
Accounts receivable, net of allowance for doubtful accounts			3,993,731				2,673,676				—				—				6,667,407
Due from Platinum Equity, LLC			465,000				—				—				—				465,000
Prepaid expenses and other current assets			873,006				618,100				—				—				1,491,106
Total current assets			7,115,463				6,020,946				—				—				13,136,409
Property and equipment, net			288,335				301,585				—				—				589,920
Deferred financing costs, net			1,653,701				—				—				—				1,653,701
Intangible assets, net of accumulated amortization			24,302,862				242,667				—				5,600,808	(F)			30,146,336
Goodwill			31,517,696				1,405,111				—				7,929,990	(F)			40,852,797
Investment and other assets			168,179				412,103				—				—				580,282
Total assets		$	65,046,236			$	8,382,411			$	—			$	13,530,798			$	86,959,445
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of senior notes payable		$	500,063			$	—			$	—			$	—			$	500,063
Accounts payable			1,929,685				160,764				—				—				2,090,449
Accrued expenses			6,091,890				1,325,816				(93,333	)(D)			275,000	(F)			7,599,373
Note payable to Platinum Equity, LLC			1,750,000				—				—				—				1,750,000
Notes payable			3,346,870				811,955				(3,225,000	)(D)			—				933,825
Deferred revenue			14,085,877				3,361,788				—				(1,633,565	)(F)			15,814,100
Due to ISIS			1,243,712				—				—				—				1,243,712
Total current liabilities			28,948,097				5,660,323				(3,318,333	)			(1,358,565	)			29,931,522
Subordinate notes payable			1,695,004				—				—				—				1,695,004
Senior notes payable			21,481,806				—				—				—				21,481,806
Other long term liabilities			42,499				699,762				—				—				742,261
Total liabilities			52,167,406				6,360,085				(3,318,333	)			(1,358,565	)			53,850,593
Commitments and contingencies			—				—				—				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)			2				—				—				—				2
Series C Preferred Stock			13,362,688				—				(13,362,688	)(E)			—				—
Series D Preferred Stock			7,840,909				—				(7,840,909	)(E)			—				—
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock			412,399				—				—				—				412,399
Shares of Common Stock to be issued for accrued interest on subordinate debt			104,167				—				—				—				104,167
Common stock			81				29,373				27	(D)			128	(F)			448
											212	(E)			(29,373	)(G)
Additional paid-in-capital			67,548,896				63,885,760				5,110,691	(D)			16,911,561	(F)			110,774,533
											21,203,385	(E)			(63,885,760	)(G)
Accumulated other comprehensive loss			(48,072	)			23,888				—				(23,888	)(G)			(48,072	)
Accumulated deficit			(76,342,240	)			(61,916,695	)			(1,792,385	)(D)			61,916,695	(G)			(78,134,625	)
Total stockholders’ equity			12,878,830				2,022,326				3,318,333				14,889,363				33,108,852
Total liabilities and stockholders’ equity		$	65,046,236			$	8,382,411			$	—			$	13,530,798			$	86,959,445

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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 3/31/06		$	1.20
Estimated stock consideration						$	15,403,307
FMV of vested Unify options to be converted to Halo options(1)							721,610
FMV of vested Unify warrants to be converted to Halo warrants(2)							786,772
Estimated Transaction Costs Accrued							275,000
Total Purchase Price						$	17,186,689

(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 $721,610.
(2)	Unify’s number of shares underlying the warrants outstanding as of 1/31/06 was 2,703,991. These warrants were fully vested and are converted into 993,176 Halo warrants whose FMV was estimated to be $786,772.

Assets:
Unify’s historical assets		$	8,382,411
Write-up of intangible assets consisting of developed technologies and customer relationships			5,600,808
Write-up of goodwill			7,929,990
Liabilities:
Unify’s historical liabilities			(6,360,085	)
Adjustment of deferred revenue to fair market value			1,633,565
Total purchase price		$	17,186,689

		Estimated FMV				Estimated Life
Trade name		$	171,867				7 Years
Developed technology			2,234,270				7 Years
Customer relationships			3,437,338				7 Years
Total intangible assets acquired		$	5,843,475

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												Pro Forma				Halo Pro
				Halo(H)				Unify(I)				Adjustments				Forma
Revenue
	Licenses			$	4,556,387			$	3,443,802			$	—			$	8,000,189
	Services				12,230,196				4,365,229				—				16,595,425
		Total revenues			16,786,583				7,809,031				—				24,595,614
Cost of revenue
	Cost of license				925,872				355,207				239,386	(K)			1,520,465
	Cost of services				2,462,574				1,358,429				—				3,821,003
		Total cost of revenues			3,388,446				1,713,636				239,386				5,341,468
Gross Profit					13,398,137				6,095,395				(239,386	)			19,254,146
Product development					4,294,336				2,067,715				—				6,362,051
Sales, marketing and business development					5,403,501				3,086,721				—				8,490,222
General and administrative					8,187,431				1,668,588				111,732	(J)			9,967,751
Amortization of intangibles					1,441,774				90,999				386,701	(K)			1,919,474
Loss before interest					(5,928,905	)			(818,628	)			(737,819	)			(7,485,352	)
Interest (expense) income					(6,592,164	)			23,720				349,679	(L)			(6,218,765	)
Loss before income taxes					(12,521,069	)			(794,908	)			(388,140	)			(13,704,117	)
Income taxes					(171,786	)			—				—	(M)			(171,786	)
Net Loss				$	(12,692,855	)		$	(794,908	)		$	(388,140	)		$	(13,875,903	)
Computation of loss applicable to Common Shareholders
Net loss before Preferred dividends				$	(12,692,855	)		$	(794,908	)		$	(388,140	)		$	(13,875,903	)
Preferred dividends					(1,069,162	)			—				—				(1,069,162	)
Loss attributable to common stockholders				$	(13,762,017	)		$	(794,908	)		$	(388,140	)		$	(14,945,065	)
Basic and diluted loss per share pro forma				$	(2.97	)										$	(0.37	)
Weighted average shares outstanding pro forma					4,637,578												40,536,575	(N)

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												Pro Forma				Halo Pro
				Halo(H)				Unify(I)				Adjustments				Forma
Revenue
	Licenses			$	2,986,752			$	5,210,035			$	—			$	8,196,787
	Services				2,137,170				6,085,751				—				8,222,921
		Total revenues			5,123,922				11,295,786				—				16,419,708
Cost of revenue
	Cost of license				449,073				392,040				319,181	(K)			1,160,294
	Cost of services				396,490				1,290,641				—				1,687,131
		Total cost of revenues			845,563				1,682,681				319,181				2,847,425
Gross Profit					4,278,359				9,613,105				(319,181	)			13,572,283
Product development					1,589,099				2,825,834				—				4,414,933
Sales, marketing and business development					3,652,117				6,231,706				—				9,883,823
General and administrative					4,042,702				2,537,618				146,235	(J)			6,726,555
Amortization of intangibles					648,041				60,666				515,601	(K)			1,224,308
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	)			(981,017	)			(13,667,047	)
Interest (expense) income					(4,631,683	)			54,635				0	(L)			(4,577,048	)
Loss before income taxes					(15,274,994	)			(1,988,084	)			(981,017	)			(18,244,095	)
Income taxes					(97,945	)			(14,002	)			—	(M)			(111,947	)
Net Loss				$	(15,372,939	)		$	(2,002,086	)		$	(981,017	)		$	(18,356,042	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(15,372,939	)		$	(2,002,086	)		$	(981,017	)		$	(18,356,042	)
Beneficial conversion — Preferred dividends					(7,510,590	)			—				—				(7,510,590	)
Loss attributable to common stockholders				$	(22,883,529	)		$	(2,002,086	)		$	(981,017	)		$	(25,866,632	)
Basic and diluted loss per share pro forma				$	(11.97	)										$	(0.68	)
Weighted average shares outstanding pro forma					1,912,033												37,810,930	(U)

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			Nine Months
			Ended March 31,				Year Ended
			2006				June 30, 2005
Halo’s weighted average shares as reported on 10-QSB and 10-KSB				4,637,578				1,912,033
Common stock to be issued under Closing Conditions
	Convertible notes to be converted			2,654,666				2,654,666
	Preferred Series C and Series D to be converted			20,408,142				20,408,142
Common stock to be issued to Unify stockholders				12,836,089				12,836,089
Weighted average shares pro forma				40,536,475				37,810,930

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																							Pro Forma
											Pro Forma Adjustments												Adjustment
															Purchase								Purchase				Halo
			Halo(A)				Unify(B)				Conditions(C)				Accounting				InfoNow(H)				Accounting				Pro Forma
Assets
Current Assets:
Cash and cash equivalents			$	1,749,926			$	2,729,170			$	—			$	—			$	1,670,922			$	(6,410	)(I)		$	6,143,608
Marketable Securities				33,800				—				—				—				—				—				33,800
Accounts receivable, net of allowance for doubtful accounts				3,993,731				2,673,676				—				—				1,105,616				—				7,773,023
Due from Platinum Equity, LLC				465,000				—				—				—				—				—				465,000
Prepaid expenses and other current assets				873,006				618,100				—				—				432,040				—				1,923,146
Total current assets				7,115,463				6,020,946				—				—				3,208,578				(6,410	)			16,338,577
Property and equipment, net				288,335				301,585				—				—				327,692				—				917,612
Deferred financing costs, net				1,653,701				—				—				—				—				—				1,653,701
Intangible assets, net of accumulated amortization				24,302,862				242,667				—				5,600,808	(F)			792,352				1,765,103	(I)			32,703,791
Goodwill				31,517,696				1,405,111				—				7,929,990	(F)			—				4,279,766	(I)			45,132,563
Investment and other assets				168,179				412,103				—				—				—				—				580,282
	Total assets		$	65,046,236			$	8,382,411			$	—			$	13,530,798			$	4,328,622			$	6,038,459			$	97,326,526
Liabilities and stockholders’ equity
Current liabilities:
Current portion of senior notes payable			$	500,063			$	—			$	—			$	—			$	—			$	—			$	500,063
Accounts payable				1,929,685				160,764				—				—				1,227,462				—				3,317,911
Accrued expenses				6,091,890				1,325,816				(93,333	)(D)			275,000	(F)			308,924				275,000	(I)			8,183,297
Note payable to Platinum Equity, LLC				1,750,000				—				—				—				—				—				1,750,000
Notes payable				3,346,870				811,955				(3,225,000	)(D)			—				—				—				933,825
Deferred revenue				14,085,877				3,361,788				—				(1,633,565	)(F)			1,665,878				(474,775	)(I)			17,005,203
Due to ISIS				1,243,712				—				—				—				—				—				1,243,712
	Total current liabilities			28,948,097				5,660,323				(3,318,333	)			(1,358,565	)			3,202,264				(199,775	)			32,934,011
Subordinate notes payable				1,695,004				—				—				—				—				—				1,695,004
Senior notes payable				21,481,806				—				—				—				—				—				21,481,806
Other long term liabilities				42,499				699,762				—				—				148,087				(24,011	)(I)			866,337
	Total liabilities			52,167,406				6,360,085				(3,318,333	)			(1,358,565	)			3,350,351				(223,786	)			56,977,158
Commitments and contingencies				—				—				—				—				—				—				—
Stockholders’ equity:
Preferred stock (Canadian subsidiary)				2				—				—				—				—				—				2
Series C Preferred Stock				13,362,688				—				(13,362,688	)(E)			—				—				—				—
Series D Preferred Stock				7,840,909				—				(7,840,909	)(E)			—				—				—				—
Shares of Common Stock to be issued for accrued dividends on Series C Preferred Stock				412,399				—				—				—				—				—				412,399
Shares of Common Stock to be issued for accrued interest on subordinate debt				104,167				—				—				—				—				—				104,167
Common stock				81				29,373				27	(D)			128	(F)			10,157				60	(I)			508
												212	(E)			(29,373	)(G)							(10,157	)(J)
Additional paid-in-capital				67,548,896				63,885,760				5,110,691	(D)			16,911,561	(F)			40,172,116				7,240,456	(I)			118,014,989
												21,203,385	(E)			(63,885,760	)(G)							(40,172,116	)(J)
Accumulated other comprehensive loss				(48,072	)			23,888				—				(23,888	)(G)			—				—				(48,072	)
Accumulated deficit				(76,342,240	)			(61,916,695	)			(1,792,385	)(D)			61,916,695	(G)			(39,204,002	)			39,204,002	(J)			(78,134,625	)
Total stockholders’ equity				12,878,830				2,022,326				3,318,333				14,889,363				978,271				6,262,245				40,349,368
	Total liabilities and stockholders’ equity		$	65,046,236			$	8,382,411			$	—			$	13,530,798			$	4,328,622			$	6,038,459			$	97,326,526

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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 3/31/2006		$	1.20
Estimated stock consideration						$	15,403,307
FMV of vested Unify options to be converted to Halo options(1)							721,610
FMV of vested Unify warrants to be converted to Halo warrants(2)							786,772
Estimated transaction costs accrued							275,000
Total purchase price						$	17,186,689

(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 $721,610.

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(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 $786,772.

Assets:
Unify’s historical assets		$	8,382,411
Write-up of intangible assets consisting of developed technologies and customer relationships			5,600,808
Write-up of goodwill			7,929,990
Liabilities:
Unify’s historical liabilities			(6,360,085	)
Adjustment of deferred revenue to fair market value			1,633,565
Total purchase price		$	17,186,689

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 3/31/06		$	1,670,922
InfoNow net working capital as of 3/31/06		$	6,314
Lesser of two (to be paid in cash to InfoNow stockholders)						$	6,314				0	%
Total conversion value minus cash consideration (to be paid in Halo common shares)						$	7,133,019				100	%
Estimated value of InfoNow stock options with exercise price of $.71 or lower		$	107,593								100	%
Option conversion value allocated to cash						$	96				0	%
Option conversion value allocated to stock						$	107,497				100	%
Estimated transaction costs accrued							275,000
Total purchase price						$	7,521,926

*	The estimated purchase prices by category: cash $6,410; common stock $7,240,516 (6,033,763 shares); and transaction costs $275,000.

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Assets:
InfoNow’s historical assets		$	4,328,622
Write-up of intangible assets consisting of developed technologies and customer relationships			1,765,103
Recording of goodwill			4,279,766
Liabilities:
InfoNow’s historical liabilities ($24,011 of long-term liabilities)			(3,350,351	)
Adjustment of deferred revenue to fair market value ($24,011 long term)			498,786
Total purchase price		$	7,521,926

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												Pro Forma								Pro Forma				Halo
				Halo(K)				Unify(L)				Adjustments				InfoNow(Q)				Adjustments				Pro Forma
Revenue
	Licenses			$	4,556,387			$	3,443,802			$	—			$	—			$	—			$	8,000,189
	Services				12,230,196				4,365,229				—				6,490,580				—				23,086,005
		Total revenues			16,786,583				7,809,031				—				6,490,580				—				31,086,194
Cost of revenue
	Cost of license				925,872				355,207				239,386	(M)			—				104,770	(R)			1,625,235
	Cost of services				2,462,574				1,358,429				—				4,188,835				—				8,009,838
		Total cost of revenues			3,388,446				1,713,636				239,386				4,188,835				104,770				9,635,073
Gross Profit					13,398,137				6,095,395				(239,386	)			2,301,745				(104,770	)			21,451,121
Product development					4,294,336				2,067,715				—				448,295				—				6,810,346
Sales, marketing and business development					5,403,501				3,086,721				—				741,075				—				9,231,297
General and administrative					8,187,431				1,668,588				111,732	(N)			1,773,604				—				11,741,355
Amortization of intangibles					1,441,774				90,999				386,701	(M)			—				169,243	(R)			2,088,717
Loss before interest					(5,928,905	)			(818,628	)			(737,819	)			(661,229	)			(274,013	)			(8,420,594	)
Interest (expense) income					(6,592,164	)			23,720				349,679	(O)			63,311				—				(6,155,454	)
Loss before income taxes					(12,521,069	)			(794,908	)			(388,140	)			(597,919	)			(274,013	)			(14,576,048	)
Income taxes					(171,786	)			—				—	(P)			—				—	(S)			(171,786	)
Net Loss				$	(12,692,855	)		$	(794,908	)		$	(388,140	)		$	(597,919	)		$	(274,013	)		$	(14,747,834	)
Computation of loss applicable to Common Shareholders
Net loss before Preferred dividends				$	(12,692,855	)		$	(794,908	)		$	(388,140	)		$	(597,919	)		$	(274,013	)		$	(14,747,834	)
Preferred dividends					(1,069,162	)			—				—				—				—				(1,069,162	)
Loss attributable to common stockholders				$	(13,762,017	)		$	(794,908	)		$	(388,140	)		$	(597,919	)		$	(274,013	)		$	(15,816,996	)
Basic and diluted loss per share pro forma				$	(2.97	)																		$	(0.34	)
Weighted average shares outstanding pro forma					4,637,578																				46,570,238	(T)

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												Pro Forma								Pro Forma				Halo
				Halo(K)				Unify(L)				Adjustments				InfoNow(Q)				Adjustments				Pro Forma
Revenue
	Licenses			$	2,986,752			$	5,210,035			$	—							$	—			$	8,196,787
	Services				2,137,170				6,085,751				—				9,501,411				—				17,724,332
		Total revenues			5,123,922				11,295,786				—				9,501,411				—				25,921,119
Cost of revenue
	Cost of license				449,073				392,040				319,181	(M)			—				139,693	(R)			1,299,987
	Cost of services				396,490				1,290,641				—				6,177,554				—				7,864,685
		Total cost of revenues			845,563				1,682,681				319,181				6,177,554				139,693				9,164,672
Gross Profit					4,278,359				9,613,105				(319,181	)			3,323,857				(139,693	)			16,756,446
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				146,235	(N)			3,002,134				—				9,728,689
Amortization of intangibles					648,041				60,666				515,601	(M)			—				225,658	(R)			1,449,966
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	)			(981,017	)			(2,077,645	)			(365,351	)			(16,110,043	)
Interest (expense) income					(4,631,683	)			54,635				—	(O)			47,859				—				(4,529,189	)
Loss before income taxes					(15,274,994	)			(1,988,084	)			(981,017	)			(2,029,786	)			(365,351	)			(20,639,232	)
Income taxes					(97,945	)			(14,002	)			—	(P)			—				—	(S)			(111,947	)
Net Loss				$	(15,372,939	)		$	(2,002,086	)		$	(981,017	)		$	(2,029,786	)		$	(365,351	)		$	(20,751,179	)
Computation of loss applicable to Common Shareholders
Net loss before beneficial conversion — Preferred dividends				$	(15,372,939	)		$	(2,002,086	)		$	(981,017	)		$	(2,029,786	)		$	(365,351	)		$	(20,751,179	)
Beneficial conversion — Preferred dividends					(7,510,590	)			—				—				—				—				(7,510,590	)
Loss attributable to common stockholders				$	(22,883,529	)		$	(2,002,086	)		$	(981,017	)		$	(2,029,786	)		$	(365,351	)		$	(28,261,769	)
Basic and diluted loss per share pro forma				$	(11.97	)																		$	(0.64	)
Weighted average shares outstanding pro forma					1,912,033																				43,844,693	(T)

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			Nine Months
			Ended March 31,				Year Ended
			2006				June 30, 2005
Halo’s weighted average shares as reported on 10-QSB and 10-KSB				4,637,578				1,912,033
Common stock to be issued under Closing Conditions
	Convertible notes to be converted			2,654,666				2,654,666
	Preferred Series C and Series D to be converted			20,408,142				20,408,142
Common stock to be issued to Unify stockholders				12,836,089				12,836,089
Common stock to be issued to InfoNow stockholders				6,033,763				6,033,763
Weighted average shares pro forma				46,570,238				43,844,693

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	A. The respective Boards of Directors of Parent, Merger Sub and the Company (i) have approved and have declared advisable the merger of Merger Sub with and into the Company (the “Merger”), upon the terms and subject to the conditions set forth herein and (ii) have determined that the Merger and the other transactions contemplated hereby are consistent with, and in furtherance of, their respective business strategies and goals.
	B. The Parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to set forth various conditions to the Merger.
	C. For federal income tax purposes, it is intended that the Merger will qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code” or “IRC”), and the Parties to this Agreement intend to adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations; and

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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(f)) at the Effective Time shall be converted into the right to receive 0.437 of one share of Parent Common Stock (the “Exchange Ratio”). The shares of Parent Common Stock issued in exchange for Company Common Stock, together with the Substitute Options and the Substitute Warrants, constitutes the “Merger Consideration.” 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

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	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 and Warrants.

	(i) Prior to the Effective Time, each outstanding Company Stock Option that (1) has an exercise price of less than $1.00 per share, and (2) is unexercised as of the Effective Date shall become and represent an option to purchase (a “Substitute Option”) the number of shares of Parent Common Stock (rounded down to the nearest full share) determined by multiplying (X) the number of shares of Company Common Stock subject to such Company Stock Option immediately prior to the Effective Time by (Y) the Exchange Ratio, at an exercise price per share of Parent Common Stock equal to the result of dividing (A) the exercise price of such Company Stock Option by (B) the Exchange Ratio and rounding the result up to the nearest tenth of one cent. All other outstanding options to purchase Company Common Stock shall be cancelled at the Effective Time. All Substitute Options shall contain substantially the same terms and conditions as the applicable Company Stock Option.
	(ii) Prior to the Effective Time, each outstanding and unexercised warrant to purchase shares of Company Common Stock (each, a “Company Warrant”) shall become and represent a warrant to purchase (a “Substitute Warrant”) the number of shares of Parent Common Stock (rounded down to the nearest full share) determined by multiplying (X) the number of shares of Company Common Stock subject to such Company Warrant immediately prior to the Effective Time by (Y) the Exchange Ratio, on such other terms and subject to such other conditions as are set forth in the form of Substitute Warrant attached hereto as Exhibit B.

	(e) Adjustments to Exchange Ratio. The Exchange Ratio 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) 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 treated as if it had been, as of the Effective Time, converted into a right to receive the applicable

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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, 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 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 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 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),

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	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 $50,000 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 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 April 30, 2005, 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 Company Plan or any agreement, arrangement, plan or policy between the Company and one or more of its current or former directors

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	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 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 material indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an accommodation become responsible for the material obligations of any other individual, corporation or other entity, except for draw downs from the Company’s existing line of credit in the ordinary course of business consistent with past practice;
	(l) sell, lease, license, encumber or otherwise dispose of any of the Company’s material properties or assets, except in the ordinary course of business consistent with past practice, or enter into a material 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 $50,000;
	(n) Transfer or license to any person or entity or otherwise extend, amend or modify any material 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 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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	(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;
	(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.”);
	(f) shall not modify its operating model in any material respect;
	(g) shall not acquire or agree to acquire any business or entity if the acquisition or announcement of the agreement for an acquisition would adversely affect the timing of the Merger or the preparation and distribution of the Proxy Materials and Registration Statement;
	(h) shall not take any action that is intended or may reasonably be expected to result 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) shall not change its methods of accounting in effect at June 30, 2005, 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) shall not sell, lease, license, encumber or otherwise dispose of any of Parents or any of Parent’s Subsidiaries’ material properties or assets, except in the ordinary course of business consistent with past practice; and
	(k) shall not agree or commit to do any of the actions set forth in (a) — (j) above 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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	(i) prepare and file with the SEC as soon as is practicable the Proxy Materials and the Registration Statement registering the Parent Common Stock be issued in exchange for Company Common Stock and issuable upon exercise of the Substitute Options and the Substitute Warrants, 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; and
	(iv) cooperate with one another in obtaining opinions of DLA Piper Rudnick Gray Cary US LLP, counsel to the Company, and Day, Berry and Howard, tax counsel to Parent, dated as of the

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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 DLA Piper Rudnick Gray Cary US LLP 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 DLA Piper Rudnick Gray Cary US LLP and Day, Berry and Howard representation letters dated as of the date of such opinions in form and substance satisfactory to such counsel.

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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.

	6.5	Employees.

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	6.6	Subsequent Financial Statements.

	6.7	Additional Agreements.

	6.8	Advice of Changes.

	6.9	Current Information.

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	6.10	Execution of the Certificate of Merger.

	6.11	Indemnification and Insurance.

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	6.12	Takeover Statute.

	6.13	Accountants’ “Comfort” Letters.

	6.14	Additional Reports.

	6.15	Termination of Employee Stock Purchase Plan

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	6.16	Stockholders Agreement.

	7.1	Conditions to Each Party’s Obligation To Effect the Merger.

	(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.
	(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.
	(d) Employment Agreements. Parent and Todd Wille shall have entered into a mutually acceptable employment agreement in substantially the form attached hereto as Exhibit C.

	7.2	Conditions to Obligations of Parent.

	(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 Chief Executive Officer and the 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 Chief Executive Officer and the 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

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	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 Parent.
	(e) Stockholder Agreements. Each Stockholder Agreement shall remain in full force and effect.
	(f) Dissenter’s 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.

	7.3	Conditions to Obligations of the Company.

	(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) Additional Investment. Parent shall have received at least $2,000,000 in new money equity investment between the date hereof and the Effective Time.

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	(f) Capitalization. On or prior to the Effective Time (i) the holders of outstanding shares of the Parent’s Preferred Stock shall have converted such shares of preferred stock into common stock of Parent and (ii) the holders of convertible promissory notes of Parent listed on Schedule 7.3(f) shall have converted such promissory notes into shares of Common Stock of Parent.

	8.1	Termination.

	(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;
	(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 September 30, 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 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 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

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	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.

	8.2	Effect of Termination; Termination Fee.

	8.3	Amendment.

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	8.4	Extension; Waiver.

	9.1	Nonsurvival of Representations, Warranties and Agreements.

	9.2	Expenses.

	9.3	Notices.

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

	(b)	if to Company, to:

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	9.4	Interpretation.

	9.5	Counterparts.

	9.6	Entire Agreement.

	9.7	Governing Law.

	9.8	Enforcement of Agreement.

	9.9	Severability.

	9.10	Publicity.

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	9.11	Assignment; Limitation of Benefits.

	9.12	Additional Definitions.

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

	By:	/s/ Ernest (JR) Mysogland

	Name:        Ernest (JR) Mysogland

	Title:	Executive Vice President

	UCA MERGER SUB, INC.

	By:	/s/ Ernest (JR) Mysogland

	Name:        Ernest (JR) Mysogland

	Title:	President and Sole Director

	UNIFY CORPORATION

	By:	/s/ Todd E. Wille

	Name:        Todd E. Wille

	Title:	Chief Executive Officer

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	(e) Opinion of Counsel to Company. The Parent shall have received from DLA Piper Rudnick Gray Cary US LLP, counsel to the Company, an opinion dated as of the date the Registration Statement is declared effective, in the form mutually agreed to by the parties to the effect that the Merger will constitute a reorganization under the provisions of Section 368(a) of the Code.

	(f) Opinion of Tax Counsel to Parent. The Company shall have received from Day, Berry & Howard LLP, tax counsel to the Parent, an opinion dated as of the date the Registration Statement is declared effective, in the form mutually agreed to by the parties to the effect that the Merger will constitute a reorganization under the provisions of Section 368(a) of the Code.

3.	Miscellaneous.

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	PARENT:
	HALO TECHNOLOGY HOLDINGS, INC.

	By:	/s/ Ernest C. Mysogland

	Name:        Ernest C. Mysogland

	Title:	Executive Vice President

	MERGER SUB:
	UCA MERGER SUB, INC.

	By:	/s/ Ernest C. Mysogland

	Name:        Ernest C. Mysogland

	Title:	President and Sole Director

	COMPANY:
	UNIFY CORPORATION

	By:	/s/ Todd Wille

	Name:        Todd Wille

	Title:	President and Chief Executive Officer

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B-2

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	Warp Technology Holdings, Inc.
	By: Ernest C. Mysogland
	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, dated as of March 14, 2006, by and among Halo Technology Holdings, Inc., UCA Merger Sub, Inc. and Unify, Inc., excluding exhibits and schedules thereto as amended by Amendment No. 1 dated May 24, 2006 (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 DLA Piper Rudnick Gray Cary US LLP 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, 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 Warp Technology Holdings, Inc. and Gupta Holdings, LLC.
	10	.34(14)		Amendment No. 3 to Extension Agreement by and between Warp Technology Holdings, Inc. 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, the Company, Warp Solutions, Inc., Gupta Technologies, LLC, and the Collateral Agent (as such terms are defined therein).
	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).

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Exhibit No.				Description of Exhibit
	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 Warp Technology Holdings, Inc., 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.
	10	.74(20)		Security Agreement 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	.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 Technologies 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	.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.
	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.

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Exhibit No.				Description of Exhibit
	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.
	10	.121(37)		Commercial Lease dated as of May 1, 2006 by and between 200 Railroad Avenue LLC and Halo Technology Holdings, Inc.
	10	.122(39)		Form of Consent Agreement entered into by certain Series C Preferred Stockholders and Halo Technology Holdings, Inc.
	21	.1(38)		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 Ernst & Young LLP, Independent Registered Public Accounting Firm.
	23	.4(*)		Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm.
	23	.5(*)		Consent of Douglas, Curtis & Allyn LLC.
	23	.6(**)		Consent of DLA Piper Rudnick Gray Cary US LLP (contained in Exhibit 8.1).

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Exhibit No.				Description of Exhibit
	23	.7(**)		Consent of Day, Berry & Howard LLP (contained in Exhibit 8.2).
	99	.1(**)		Opinion of Douglas, Curtis & Allyn LLC regarding the fairness of the merger consideration (included as Annex B to the proxy statement/ prospectus forming a part of this registration statement).
	99	.2(**)		Form of Unify 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 Warp Technology Holdings, Inc. on September 3, 2002.
	(3)	Incorporated herein by reference to the exhibits to the Annual Report on Form 10-KSB filed by Warp Technology Holdings, Inc. 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 herein 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 herein 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 herein 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 herein 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 herein 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.

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(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.
(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 on April 3, 2006.
(37)	Incorporated herein by reference to Halo Technology Holdings, Inc.’s Current Report on Form 8-K filed on May 5, 2006.
(38)	Incorporated herein by reference to the exhibits to the Quarterly Report on Form 10-QSB filed by Halo Technology Holdings, Inc. on May 15, 2006.
(39)	Incorporated herein by reference to Halo Technology Holdings, Inc.’s Current Report on Form 8-K filed on May 19, 2006.

	(*)	Filed herewith.

(**)	Previously filed.

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2.	Financial Statement Schedules.

Item 22.	Undertakings.

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	HALO TECHNOLOGY HOLDINGS, INC.

	By:	/s/ Ernest C. Mysogland

	Ernest C. Mysogland
	Executive Vice President, Chief Legal Officer and Secretary

Name				Title		Date
*   Rodney A. Bienvenu, Jr.				Chief Executive Officer, Director, Chairman of Board of Directors		May 31, 2006
*   Mark Finkel				President, Chief Financial Officer		May 31, 2006
*   Takeshi Taniguchi				Controller, Chief Accounting Officer		May 31, 2006
*   John A. Boehmer				Director		May 31, 2006
*   David M. Howitt				Director		May 31, 2006
John L. Kelly				Director
Gordon O. Rapkin				Director
*By		/s/ Ernest C. Mysogland, attorney-in-fact

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