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<SEC-DOCUMENT>0001181431-08-061897.txt : 20081117
<SEC-HEADER>0001181431-08-061897.hdr.sgml : 20081117
<ACCEPTANCE-DATETIME>20081114193829
ACCESSION NUMBER:		0001181431-08-061897
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20081114
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20081117
DATE AS OF CHANGE:		20081114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INFORMATION ANALYSIS INC
		CENTRAL INDEX KEY:			0000803578
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				541167364
		STATE OF INCORPORATION:			VA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-22405
		FILM NUMBER:		081193643

	BUSINESS ADDRESS:	
		STREET 1:		11240 WAPLES MILL RD #400
		CITY:			FAIRFAX
		STATE:			VA
		ZIP:			22030
		BUSINESS PHONE:		7033833000

	MAIL ADDRESS:	
		STREET 1:		2222 GALLOWS ROAD
		STREET 2:		SUITE 300
		CITY:			DUNN LORING
		STATE:			VA
		ZIP:			22027
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>rrd223595.htm
<DESCRIPTION>PRESS RELEASE 3Q 2008
<TEXT>


<html><head>
<title>Prepared By R.R. Donnelley Financial -- Form 8-K</title>
</head>
<body Bgcolor="white">

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<b>UNITED STATES </b></font></div>

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<b>SECURITIES AND EXCHANGE COMMISSION </b></font></div>

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<b>Washington, D.C. 20549 </b></font></div>

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<b>Form 8-K </b></font></div> <div><font Size="1">&nbsp;</font></div>

<div Align="center"><font Face="times New Roman" Size="4" Color="#000000">
<b>Current Report </b></font></div>

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<b>Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 </b></font></div>

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<b>Date of Report (Date of earliest event reported):&nbsp;&nbsp;11/14/2008 </b></font></div>




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<div Align="center"><font Face="times New Roman" Size="5" Color="#000000">
<b>INFORMATION ANALYSIS INC </b></font></div>

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<b>(Exact name of registrant as specified in its charter)</b></font></div>

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<b>Commission File Number:&nbsp;&nbsp;000-22405</b></font></div>

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<div Align="center"><font Face="times New Roman" Size="3" Color="#000000"><b>VA</b></font>
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</td>
<td Valign="bottom" Width="59%" Align="center">
<div Align="center"><font Face="times New Roman" Size="3" Color="#000000"><b>54-1167364</b></font>
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<div Style="margin-left:2%; Text-indent:-2%" Align="center"><font Face="times New Roman" Size="2" Color="#000000">
<b>(State or other jurisdiction of</b></font>
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</td>
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<div Align="center"><font Face="times New Roman" Size="2" Color="#000000"><b>(IRS Employer</b></font>
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<b>incorporation)</b></font>
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</td>
<td Valign="bottom" Align="center" Width="59%">
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<b>Identification No.)</b></font>
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</tr>

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<b>11240 Waples Mill Rd, Ste 201, Fairfax, VA 22030</b></font></div>


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<b>(Address of principal executive offices, including zip code)</b></font>
</div>

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<b>703-383-3000 </b></font>
</div>

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<b>(Registrant&#146;s telephone number, including area code)</b></font>
</div>



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<b> </b></font>
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<b>(Former name or former address, if changed since last report) </b></font>
</div>


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</div>




<div Align="left"><font Face="times New Roman" Size="2" Color="#000000">
<b>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:<BR><BR>
</b></font>


</div>



<div Align="left"><font Face="times New Roman" Size="2" Color="#000000">
<b>[&nbsp;&nbsp;]&nbsp;&nbsp;
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR><BR>

[&nbsp;&nbsp;]&nbsp;&nbsp;
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR><BR>


[&nbsp;&nbsp;]&nbsp;&nbsp;
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR><BR>


[&nbsp;&nbsp;]&nbsp;&nbsp;
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
</b>

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<p Align="center">





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<b>Item 2.02.&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Condition</b></font>
</div>

<div><font Size="1">&nbsp;</font>
</div>

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On November 14, 2008, Information Analysis Incorporated issued a press release reporting earnings and other financial results for its third quarter.  A copy of this press release, captioned "Information Analysis Inc. Reports Third Quarter Results", is attached as exhibit 99.1 to this Current Report on Form 8-K (the "8-K").  The information in this 8-K, including the exhibit, shall not be deemed filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.</font>
</div>

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<b>Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits</b></font>
</div>

<div><font Size="1">&nbsp;</font>
</div>

<div  align="left" Style="text-indent:4%"><font Face="times New Roman" Size="2" Color="#000000">
Press Release dated November 14, 2008, captioned:</div><div align="left" style="text-indent:4%">&nbsp;&nbsp;&nbsp;  "Information Analysis Inc. Reports Third Quarter Results"</font>
</div>

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<b>Signature(s) </b></font>
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized. </font>
</div>

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	<td Valign="top" Colspan="3" Width="53%"> <div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000"></font>
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	</td>
	<td> <font Size="1">&nbsp;</font>
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	<div Align="center"><font Face="times New Roman" Size="2" Color="#000000">
	</font>
	</div>
	</td>
	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font></td>
	<td Valign="top" Width="53%">
	<div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	INFORMATION ANALYSIS INC</font>
	</div>	</td>
</tr>
<tr><td>&nbsp;</td></tr>
<tr><td>&nbsp;</td></tr>
<tr>
	<td Valign="top" Colspan="3" Width="53%"> <div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	Date: November 14, 2008</font>
	</div>
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	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font>
	</td>
	<td> <font Size="1">&nbsp;</font>
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	</td>	<td Valign="top" Align="center" Width="3%">
	<div Align="center"><font Face="times New Roman" Size="2" Color="#000000">
	By:</font>
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	</td>
	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font></td>
	<td Valign="top" Width="53%">
	<div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	/s/&nbsp;&nbsp;&nbsp;&nbsp;Matthew Sands</font>
	</div>
	<hr Noshade Align="left" Color="#000000">
	</td>
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	<td> <font Size="1">&nbsp;</font></td>
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	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font></td>
	<td Valign="bottom" Width="53%">
	<div Style="margin-left:2%; Text-indent:-2%"><font Face="times New Roman" Size="2" Color="#000000">
	Matthew Sands</font>
	</div>
	</td>
</tr>

<tr>
	<td> <font Size="1">&nbsp;</font></td>
	<td Valign="bottom" Width="3%"><font Face="times New Roman" Size="1">&nbsp;</font></td>
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	<td Valign="bottom" Width="53%">
	<div><font Face="times New Roman" Size="2" Color="#000000">Controller</font>
	</div>
</td>
</tr>
<tr><td>&nbsp;</td></tr>
<tr><td>&nbsp;</td></tr>



</table></div>





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<hr  Size="3" Color="#cceeff" Width="100%" Align="center">

<p Align="center"><font Size="2">&nbsp;</font>
<div Align="center"><font Face="times New Roman" Size="3" Color="#000000">
<b>Exhibit Index </b></font>
</div>

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	<td Valign="top" Align="left">
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	<b>Exhibit&nbsp;No.</b></font>
	</div>
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	</td>
	<td Valign="top" Width="3%" Align="left"><font Face="times New Roman" Size="2">&nbsp;&nbsp;</font></td>
	<td Valign="top" Width="100%" Align="left">
	<div><font Face="times New Roman" Size="2" Color="#000000">
	<b>Description</b></font>
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	</td>
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	<td Valign="top" Align="left">
	<div Align="top"><font Face="times New Roman" Size="1" Color="#000000">
	EX-99.1</font>
	</div>

	</td>
	<td Valign="top" Width="3%" Align="left"><font Face="times New Roman" Size="2">&nbsp;&nbsp;</font></td>
	<td Valign="top" Width="100%" Align="left">
	<div><font Face="times New Roman" Size="2" Color="#000000">
	Press Release dated November 14, 2008</font>
	</div>
		</td>
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</body></html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>rrd223595_26533.htm
<DESCRIPTION>PRESS RELEASE DATED NOVEMBER 14, 2008
<TEXT>
<HTML>
<HEAD>
<TITLE>For additional information contact:</TITLE>
</HEAD>
<BODY LINK="#0000ff" VLINK="#800080">
<B><FONT SIZE=3><P>Exhibit 99.1</P>
</B>
<P>&#9;For additional information contact:</P>
<P>&#9;&#9;Richard S. DeRose (703) 293-7901</P>
<P>&#9;For  release:  November 14, 2008</P>
<P>&#9;&#9;</P>
<P> </P>
<B><P ALIGN="CENTER">Information Analysis Inc. Reports Third Quarter Results</P>
</B><P ALIGN="CENTER"></P>
<P>FAIRFAX, VIRGINIA - Information Analysis Inc. (IAIC:OTCBB) today reported results for its third fiscal quarter ended September 30, 2008.  Revenues were $1,596,000, compared to $2,635,000 reported in the third quarter 2007.  The information technology services company reported a net loss of $71,000, or $(0.01) per share basic and diluted, compared to net income of $95,000 or $0.01 per share basic and diluted, in the third quarter 2007.</P>
<P>For the nine months ended September 30, 2008, IAI's revenues were $5,042,000, compared to revenues of $7,797,000 for the same period in 2007.  The Company reported a net loss of $269,000, or ($0.02) per share basic and diluted, compared to net income of  $207,000, or $0.02 per share basic and diluted, reported for the comparable 2007 period.  </P>
<P>&quot;In spite of this year's downturn, we believe the company is financially healthy and can recover in this difficult national economic environment.  Our investment in sales and marketing continues in order to improve our rate of growth and profitability,&quot; said Sandor Rosenberg, Chairman and Chief Executive Officer of IAI. &quot;There are still a number of bid opportunities outstanding for new business and we have been adding strategic partners to improve our bid pipeline.&quot;</P>
<P>&quot;We continue to pursue merger and acquisition opportunities.&quot; </P>
</FONT>
<B><FONT SIZE=3><P>About Information Analysis Incorporated</P>
</B><P>Information Analysis Incorporated (www.infoa.com), headquartered in Fairfax, Virginia, is an information technology services company.  The Company is a web solution provider and software conversion specialist, modernizing legacy systems and extending their reach to the internet world. </P>
<B><P>Additional information for investors   </P>
</B><P>This release may contain forward-looking statements regarding the Company's business, customer prospects, or other factors that may affect future earnings or financial results.  Such statements involve risks and uncertainties which could cause actual results to vary materially from those expressed in the forward-looking statements.  Investors should read and understand the risk factors detailed in the Company's 10-KSB for the fiscal year ended December 31, 2007and in other filings with the Securities and Exchange Commission.</P>
</FONT><FONT FACE="Arial" SIZE=3><P ALIGN="CENTER"></P>
</FONT><FONT FACE="Arial" SIZE=2><P ALIGN="CENTER">&nbsp;</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=534>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Information Analysis Incorporated</B></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Statements of Operations</B></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="40%" VALIGN="BOTTOM" COLSPAN=3>
<FONT SIZE=2><P ALIGN="CENTER">Three months ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<I><FONT SIZE=2><P>(in thousands, except per share data; unaudited)</I></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="CENTER">2008</U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="CENTER">2007</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Revenue:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Professional fees</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,261 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,688 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Software sales</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   335 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   947 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Total revenue</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">1,596 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">2,635 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Cost of goods sold and services provided:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Cost of professional fees</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">870 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,272 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Cost of software sales</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   235 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   749 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Total cost of sales</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">1,105 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">2,021 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Gross margin</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">491 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">614 </FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Selling general &amp; administrative expense</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   568 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   527 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>(Loss) income from operations</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(77)</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">87 </FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Other income, net</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">       6 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">       8 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>(Loss) income before income taxes</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(71)</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">95 </FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Provision for income taxes</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">      -- </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">      -- </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Net (loss) income</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">    (71</U>)<U> </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     95 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Earnings (loss) per common share:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Basic</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  (0.01</U>)<U> </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  0.01 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Diluted</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  (0.01</U>)<U> </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  0.01 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Shares used in calculating earnings per share:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Basic</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,196,760 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,196,760 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Diluted</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,196,760 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,414,922 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
</TABLE>
<FONT SIZE=3>
<P>&#9;&#9;</P>
</FONT><FONT SIZE=2><P>&nbsp;</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=534>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Information Analysis Incorporated</B></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Statements of Operations</B></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="40%" VALIGN="BOTTOM" COLSPAN=3>
<FONT SIZE=2><P ALIGN="CENTER">Nine months ended September 30,</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<I><FONT SIZE=2><P>(in thousands, except per share data; unaudited)</I></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="CENTER">2008</U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="CENTER">2007</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Revenue:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Professional fees</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">4,093 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">5,365 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Software sales</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   949 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">2,432 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Total revenue</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">5,042 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">7,797 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Cost of goods sold and services provided:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Cost of professional fees</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">3,027 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">4,093 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Cost of software sales</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   681 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">1,931 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Total cost of sales</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">3,708 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">6,024 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Gross margin</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,334 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,773 </FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Selling general &amp; administrative expense</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">1,618 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">1,586 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>(Loss) income from operations</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(284)</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">187 </FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Other income, net</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     15 </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     20 </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>(Loss) income before income taxes</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(269)</FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">207 </FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Provision for income taxes</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">      -- </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">      -- </U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Net (loss) income</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  (269</U>)<U> </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">   207 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Earnings (loss) income per common share:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Basic</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  (0.02</U>)<U> </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  0.02 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Diluted</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  (0.02</U>)<U> </U></FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">  0.02 </U></FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM" COLSPAN=2>
<FONT SIZE=2><P>Shares used in calculating earnings per share:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Basic</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,196,760 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,196,760 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Diluted</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,196,760 </FONT></TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">11,408,401 </FONT></TD>
</TR>
<TR><TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="51%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
</TABLE>
<FONT SIZE=3>
<P>&nbsp;</P>
</FONT><FONT SIZE=2><P>&nbsp;</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=651>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Information Analysis Incorporated</B></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<B><FONT SIZE=2><P ALIGN="CENTER">Balance Sheets</B></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">As of</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="CENTER">As of</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<I><FONT SIZE=2><P>(in thousands; unaudited)</I></FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="CENTER">September 30, 2008</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="CENTER">December 31, 2007</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>ASSETS</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Current assets:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Cash and cash equivalents</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,101</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,223</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Accounts receivable, net </FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,154</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">1,560</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Prepaid expenses</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">520</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">463</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Other assets</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">4</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">4</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Other receivables</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">            1</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">            3</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>          Total current assets</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">2,780</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">3,253</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Fixed assets, net</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">63</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">79</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Other assets</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">            9</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">            9</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>          Total assets</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     2,852</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     3,341</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>LIABILITIES &amp; STOCKHOLDERS' EQUITY</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Current liabilities:</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Accounts payable</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">519</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">721</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Deferred revenues</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">438</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">394</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Accrued payroll and related liabilities</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">213</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">258</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Other accrued liabilities</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">25</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">46</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  Income taxes payable</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">            3</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">            3</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>         Total liabilities</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     1,198</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     1,422</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Common stock, par value $0.01, 30,000,000 shares authorized;</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">&nbsp;</TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>  12,839,376 shares issued, 11,196,760 outstanding</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">128</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">128</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Additional paid in capital</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">14,549</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">14,546</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Accumulated deficit</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(12,093)</FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">(11,825)</FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>Less treasury stock; 1,642,616 shares at cost</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">       (930)</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">       (930)</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>         Total stockholders' equity</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     1,654</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     1,919</U></FONT></TD>
</TR>
<TR><TD WIDTH="55%" VALIGN="BOTTOM">
<FONT SIZE=2><P>         Total liabilities and stockholders' equity</FONT></TD>
<TD WIDTH="4%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="20%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     2,852</U></FONT></TD>
<TD WIDTH="3%" VALIGN="BOTTOM">
<FONT SIZE=2><P ALIGN="RIGHT">$</FONT></TD>
<TD WIDTH="19%" VALIGN="BOTTOM">
<U><FONT SIZE=2><P ALIGN="RIGHT">     3,341</U></FONT></TD>
</TR>
</TABLE>
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