8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 25, 2005

ALLIN CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-21395	25-1795265
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

381 Mansfield Avenue, Suite 400, Pittsburgh, Pennsylvania	15220
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (412) 928-8800

N/A

(Former name or former address, if changed since last report.)

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 (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

1

Forward-Looking Statements

This Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to the safe harbors created thereby. These forward-looking statements are based on current expectations and projections about future events and financial trends. The words and phrases “will,” “intend,” “seek” and similar words or expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations or other characterizations of future events or circumstances are forward-looking statements. The forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. In addition, such statements could be affected by general industry and market conditions and growth rates, general domestic and international economic conditions, Allin Corporation’s ability to successfully integrate acquired businesses and assets and future events that may negatively impact the markets where Allin Corporation competes. Allin Corporation undertakes no obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

Item 1.01 Entry into a Material Definitive Agreement.

Item 2.01 Completion of Acquisition or Disposition of Assets.

Item 3.02 Unregistered Sale of Equity Securities.

Item 3.03 Material Modification to Right of Security Holders.

Item 5.03 Amendment to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On July 28, 2005, Allin Corporation (the “Company”) filed a Current Report on Form 8 – K under the above-listed Items describing, among other matters, the Company’s acquisition on July 26, 2005 of all of the outstanding equity interests of CodeLab Technology Group, Inc., a Delaware corporation (“CodeLab”), pursuant to a Stock Purchase Agreement among the Company, CodeLab and the equity interest holders of CodeLab. CodeLab provides information technology consulting services to customers primarily concentrated in the financial services industry. CodeLab also provides technical support services to facilitate its customers’ optimal usage of developed software applications. CodeLab’s corporate headquarters are located in Wakefield, Massachusetts.

The Company hereby files this amendment to its July 28, 2005 Current Report on Form 8-K to include the items required by Items 9.01(a) and (b) of Form 8-K, including audited financial statements of CodeLab for the years ended December 31, 2003 and 2004 and pro forma condensed consolidated financial information. The financial statements of CodeLab included in this Form 8-K/A were audited by Malin, Bergquist & Company LLP, independent accountants for the Company.

The information contained in this filing on Form 8–K/A should be read in conjunction with information set forth in the Company’s July 28, 2005 Current Report on Form 8–K and the Company’s historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10–K for the year ended December 31, 2004 and the Company’s Quarterly Report on Form 10–Q for the quarterly period ended June 30, 2005.

The Company’s acquisition of CodeLab is subject to various risks, including the risks set forth in the Company’s most recent Quarterly Report on Form 10-Q. There can be no assurance that the Company will be able to successfully integrate CodeLab’s business with the other businesses of the Company. The Company could have difficulty retaining and assimilating new personnel and assimilating the services of CodeLab into the Company’s overall operations. These difficulties could disrupt the Company’s business, distract its management and employees, increase expenses and adversely affect the Company’s business, results of operations and financial condition.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

Independent Auditors’ Report

Audited Balance Sheets of CodeLab Technology Group, Inc. as of December 31, 2003 and 2004

Audited Statements of Operations of CodeLab Technology Group, Inc. for the Years Ended December 31, 2003 and 2004

2

Audited Statements of Cash Flows of CodeLab Technology Group, Inc. for the Years Ended December 31, 2003 and 2004

Audited Statements of Changes in Shareholders’ Equity of CodeLab Technology Group, Inc. for the Years Ended December 31, 2003 and 2004

Notes to Audited Financial Statements of CodeLab Technology Group, Inc.

Unaudited Balance Sheets of CodeLab Technology Group, Inc. as of June 30, 2004 and 2005

Unaudited Statements of Operations of CodeLab Technology Group, Inc. for the Six Months Ended June 30, 2004 and 2005

Unaudited Statements of Cash Flows of CodeLab Technology Group, Inc. for the Six Months Ended June 30, 2004 and 2005

Notes to Unaudited Financial Statements of CodeLab Technology Group, Inc.

(b) Pro Forma Financial Information.

Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2005

Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 2004

Pro Forma Condensed Consolidated Statement of Operations for the Six Months Ended June 30, 2005

Notes to Pro Forma Condensed Consolidated Financial Statements

(d) Exhibits.

The following exhibits are filed herewith:

Exhibit No.	Description of Exhibit
3(I)	Certificate of Voting Powers, Designations, Preferences and Relative, Participating, Optional or Other Rights, and the Qualifications, Limitations or Restrictions Thereof, of the Series H Redeemable Preferred Stock of Allin Corporation filed with the Secretary of State of the State of Delaware on July 25, 2005 (incorporated by reference to Exhibit 3(I) to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
4.1	Form of Subscription Agreement by and among Allin Corporation and the Series H Preferred Stockholders (incorporated by reference to Exhibit 4.1 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
4.2	Registration Rights Agreement, dated July 26, 2005, by and among Allin Corporation and the Series H Preferred Stockholders (incorporated by reference to Exhibit 4.2 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
4.3	Form of Common Stock Warrant issued to the Series H Preferred Stockholders in connection with Exhibit 4.1 (incorporated by reference to Exhibit 4.3 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)

3

10.1	Stock Purchase Agreement, dated July 26, 2005, by and among Allin Corporation, CodeLab Technology Group, Inc., David Ritchie, John Francis, Mark Bramhall, and the other equity holders of CodeLab Technology Group, Inc. set forth on the signature pages thereto (incorporated by reference to Exhibit 10.1 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
99.1	Audited Financial Statements of CodeLab Technology Group, Inc. as and for the Years Ended December 31, 2003 and 2004
99.2	Unaudited Financial Statements of CodeLab Technology Group, Inc. as of and for the Six Months ended June 30, 2004 and 2005
99.3	Unaudited Pro Forma Condensed Consolidated Balance Sheet of Allin Corporation as of June 30, 2005; Unaudited Pro Forma Condensed Consolidated Statement of Operations of Allin Corporation for the Year Ended December 31, 2004; and Unaudited Pro Forma Condensed Consolidated Statement of Operations of Allin Corporation for the Six Months Ended June 30, 2005

⁽¹⁾ In the case of incorporation by reference to documents filed by the Registrant under the Exchange Act, the Registrant’s file number under the Exchange Act is 000-21395.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ALLIN CORPORATION
Dated: October 11, 2005	By:	/s/    DEAN C. PRASKACH
		Dean C. Praskach
		Chief Financial Officer (principal financial officer)

4

EXHIBIT INDEX

Exhibit No.	Description of Exhibit (1)
3(I)	Certificate of Voting Powers, Designations, Preferences and Relative, Participating, Optional or Other Rights, and the Qualifications, Limitations or Restrictions Thereof, of the Series H Redeemable Preferred Stock of Allin Corporation filed with the Secretary of State of the State of Delaware on July 25, 2005 (incorporated by reference to Exhibit 3(I) to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
4.1	Form of Subscription Agreement by and among Allin Corporation and the Series H Preferred Stockholders (incorporated by reference to Exhibit 4.1 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
4.2	Registration Rights Agreement, dated July 26, 2005, by and among Allin Corporation and the Series H Preferred Stockholders (incorporated by reference to Exhibit 4.2 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
4.3	Form of Common Stock Warrant issued to the Series H Preferred Stockholders in connection with Exhibit 4.1 (incorporated by reference to Exhibit 4.3 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
10.1	Stock Purchase Agreement, dated July 26, 2005, by and among Allin Corporation, CodeLab Technology Group, Inc., David Ritchie, John Francis, Mark Bramhall, and the other equity holders of CodeLab Technology Group, Inc. set forth on the signature pages thereto (incorporated by reference to Exhibit 10.1 to Allin Corporation’s Current Report on Form 8-K filed on July 28, 2005)
99.1	Audited Financial Statements of CodeLab Technology Group, Inc. as and for the Years Ended December 31, 2003 and 2004
99.2	Unaudited Financial Statements of CodeLab Technology Group, Inc. as of and for the Six Months ended June 30, 2004 and 2005
99.3	Unaudited Pro Forma Condensed Consolidated Balance Sheet of Allin Corporation as of June 30, 2005; Unaudited Pro Forma Condensed Consolidated Statement of Operations of Allin Corporation for the Year Ended December 31, 2004; and Unaudited Pro Forma Condensed Consolidated Statement of Operations of Allin Corporation for the Six Months Ended June 30, 2005

⁽¹⁾ In the case of incorporation by reference to documents filed by the Registrant under the Exchange Act, the Registrant’s file number under the Exchange Act is 000-21395.

5

MALIN, BERGQUIST & COMPANY, LLP,

Certified Public Accountants

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors

Allin Corporation

Pittsburgh, Pennsylvania

We have audited the accompanying balance sheets of CodeLab Technology Group, Inc. (a Delaware corporation) as of December 31, 2004 and 2003 and the related statements of operations, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CodeLab Technology Group, Inc. as of December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Malin, Bergquist & Company, LLP

Pittsburgh, Pennsylvania

October 5, 2005

EX-99.1

Exhibit 99.1

CODELAB TECHNOLOGY GROUP, INC.

BALANCE SHEETS

(Dollars in thousands)

	December 31, 2003			December 31, 2004
ASSETS
Current assets:
Cash and cash equivalents	$	7		$	124
Accounts receivable, net of allowance for doubtful accounts of $3 and $0		289			602
Unbilled receivables		21			34
Prepaid expenses		17			106
Total current assets		334			866
Equipment, furniture and vehicles, at cost		91			143
Less—accumulated depreciation		(46	)		(62	)
		45			81
Other assets		10			27
Total assets	$	389		$	974

The accompanying notes are an integral part of these financial statements.

1

CODELAB TECHNOLOGY GROUP, INC.

BALANCE SHEETS

(Dollars in thousands)

	December 31, 2003			December 31, 2004
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank line of credit	$	43		$	—
Accounts payable		63			292
Loan and note payable		85			—
Accrued compensation and payroll taxes		157			103
Deferred revenue		32			12
Current portion of deferred income tax liability		5			121
Total current liabilities		385			528
Non-current protion of deferred tax liability		—			26
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $.01 per share - authorized 300,000 shares, 37,900 and 37,400 shares outstanding		—			—
Additional paid-in-capital		1			1
Treasury stock at cost, 38,400 and 38,900 common shares		(69	)		(84	)
Retained earnings		72			503
Total shareholders’ equity		4			420
Total liabilities and shareholders’ equity	$	389		$	974

The accompanying notes are an integral part of these consolidated statements.

2

CODELAB TECHNOLOGY GROUP, INC.

STATEMENTS OF OPERATIONS

(Dollars in thousands)

	Year Ended December 31, 2003		Year Ended December 31, 2004
Revenue:
Consulting services and other	$	1,323	$	2,216
Sale of technology		—		1,844
Total revenue		1,323		4,060
Cost of sales:
Consulting services and other		368		847
Sale of technology		—		1,296
Total cost of sales		368		2,143
Gross profit:
Consulting services and other		955		1,369
Sale of technology		—		548
Total gross profit		955		1,917
Selling, general & administrative expenses:
Depreciation		21		29
Loss on disposal of assets		—		30
Other selling, general & administrative expenses		847		1,083
Total selling, general & administrative expenses		868		1,142
Income from operations		87		775
Interest income		—		(1	)
Interest expense		10		9
Income before provision for income taxes		77		767
Provision for income taxes		10		286
Net income	$	67	$	481

The accompanying notes are an integral part of these financial statements.

3

CODELAB TECHNOLOGY GROUP, INC.

STATEMENTS OF CASH FLOWS

(Dollars in thousands)

	Year Ended December 31, 2003			Year Ended December 31, 2004
Cash flows from operating activities:
Net income	$	67		$	481
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation		21			29
Provision for deferred income taxes		4			142
Loss from disposal of assets		—			30
Changes in certain assets and liabilities:
Accounts receivable		(202	)		(313	)
Unbilled receivables		(3	)		(13	)
Prepaid expenses		30			(89	)
Other assets		—			(27	)
Accounts payable		3			229
Accrued compensation and payroll taxes		128			(54	)
Deferred revenue		(21	)		(20	)
Net cash flows provided by operating activities		27			395
Cash flows from investing activities:
Capital expenditures		(11	)		(85	)
Net cash flows used for investing activities		(11	)		(85	)
Cash flows from financing activities:
Loan and note borrowing (repayment)		58			(85	)
Repayment of line of credit		(57	)		(43	)
Repurchase of common stock		(64	)		(15	)
Payment of dividends		—			(50	)
Net cash flows used for financing activities		(63	)		(193	)
Net change in cash and cash equivalents		(47	)		117
Cash and cash equivalents, beginning of period		54			7
Cash and cash equivalents, end of period	$	7		$	124

The accompanying notes are an integral part of these financial statements.

4

CODELAB TECHNOLOGY GROUP, INC.

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in thousands)

	Common Stock					Additional Paid-In Capital		Treasury Stock					Retained Earnings			Total Shareholders’ Equity
	Shares		Par Value					Shares		Cost
Balance, December 31, 2002	69,900		$	1		$	1	$	6,400	$	(5	)	$	5		$	2
Purchase of common stock from shareholders	(32,000	)		(1	)		—		32,000		(64	)		—			(65	)
Net income	—			—			—		—		—			67			67
Balance, December 31, 2003	37,900			—			1		38,400		(69	)		72			4
Purchase of common stock from shareholders	(500	)		—			—		500		(15	)		—			(15	)
Dividends on common stock	—			—			—		—		—			(50	)		(50	)
Net income	—			—			—		—		—			481			481
Balance, December 31, 2004	37,400		$	—		$	1	$	38,900	$	(84	)	$	503		$	420

The accompanying notes are an integral part of these financial statements.

5

CodeLab Technology Group, Inc.

Notes to Financial Statements

1. Organization and Nature of Operations

CodeLab Technology Group, Inc., (“the Company”), a Delaware corporation, provides information technology consulting services to customers primarily concentrated in the financial services industry. The Company also provides technical support services to facilitate its customers’ optimal usage of developed software applications. The Company’s corporate headquarters are located in Wakefield, Massachusetts. Services are provided to customers primarily in the northeastern United States.

2. Summary of Significant Accounting Policies

Information concerning certain of the Company’s accounting policy regarding income taxes is included in Note 7 – Income Taxes. Following is a summary of other significant accounting policies affecting the Company’s financial statements.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

Consulting:

The Company recognizes revenue on time and materials contracts at contractually agreed upon rates. For these types of contracts, the Company recognizes revenue as the services are performed. In some cases, the Company invoices customers prior to performing the service, resulting in deferred revenue being reported on the accompanying balance sheets.

For the majority of consulting engagements, the Company provides a specific level of service each month for which it bills a standard monthly amount. The Company recognizes revenue for these engagements in monthly installments over the billable portion of the contract.

For fixed-price contracts, the Company recognizes revenue using the proportional performance method. The Company uses estimated labor-to-complete to measure the proportional performance.

Software Technology:

The Company recognizes revenue from sale of software technology in accordance with Statements of Position 97-2 and 98-9, Software Revenue Recognition, issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants. Revenue is recognized when there is evidence of an arrangement, the product has been delivered, fees are fixed and determinable, collection is probable and when all other significant obligations have been fulfilled.

For arrangements containing multiple elements, such as software technology revenue, installation services, hosting, hardware and maintenance and where vendor-specific objective evidence of fair value (VSOE) exists for all undelivered elements, the Company accounts for the delivered elements in accordance with the “residual method” prescribed by SOP No. 98-9. Revenue from professional services is generally recognized as the services are provided, where a separate earnings process exists. When professional services are not considered to be a separate element of the agreement, professional service revenue is recognized ratably over the remaining life of the agreement. Revenue from hosting and maintenance contracts is recognized ratably over the lives of the contracts.

Deferred revenue consists of fees collected in advance of reaching all above criteria for revenue recognition and fees for future services to be provided that were billed and collected prior to the balance sheet date.

6

CodeLab Technology Group, Inc.

Notes to Financial Statements

Software Development Costs

Costs related to research and development of new software products are charged to expenses as incurred. Software development costs are capitalized beginning when a product’s technological feasibility has been established, which to date has been when the Company has a working model of the software and ending when a product is available for release. Substantially all development costs are incurred prior to establishing a working model. As a result, the Company has not capitalized any software development costs as of December 31, 2003 and 2004 as such costs have not been significant.

Cash and Cash Equivalents

The Company considers all certificates of deposit with a maturity of three months or less and money market funds to be cash equivalents. The Company maintains demand and money market accounts at two domestic banks. From time to time, account balances may exceed the maximum available Federal Deposit Insurance Corporation coverage. As of December 31, 2004, account balances exceeded the maximum available coverage.

Market Risk Sensitive Instruments

The Company currently has not invested in derivative financial instruments or other market rate sensitive instruments.

Accounts Receivable and Unbilled Receivables

The Company records accounts receivable based upon billing for services and products. Unbilled receivables are recorded when labor-based services have been provided prior to the end of the period and invoicing has not occurred. The Company evaluates the extension of credit to potential customers based on financial or other information and any special circumstances regarding the potential engagement. Payment for services or products is normally due immediately upon billing, although alternate terms may be included in contracts or proposals as agreed upon by the Company and the customer. Accounts receivable are not normally collateralized. The Company does not routinely charge interest on past due accounts receivable, but does notify customers that it may implement such charges. In these instances, interest income is recognized as payments are received. As of December 31, 2003 and 2004, the Company’s risk of loss for accounts receivable and unbilled receivables was limited to the amounts recorded on the Balance Sheets as of those dates.

Allowances on accounts receivable are recorded when circumstances indicate collection is doubtful for particular accounts receivable. Accounts receivable are written off if reasonable collection efforts prove unsuccessful. Bad debt expense is reflected in other selling, general and administrative expenses on the Statements of Operations when allowances on accounts receivable are recorded or when accounts written off exceed available allowances.

As of December 31, 2004, one significant customer comprised 78% of the Company’s accounts receivable. As of December 31, 2003, another significant customer comprised 72% of the Company’s accounts receivable.

Property and Equipment

Property and equipment are recorded at cost. The Company provides for depreciation using accelerated and straight-line methods over the estimated useful lives of the assets. The estimated useful lives of property and equipment are five years. Expenditures for ordinary maintenance and repairs, which do not extend the lives of the applicable assets, are charged to expense as incurred, while renewals and improvements that materially extend the lives of the applicable assets are capitalized and depreciated. Depreciation expense is included in selling, general, and administrative expenses on the Consolidated Statements of Operations. Depreciation expense for the periods ended December 31, 2003 and 2004 was $21,000, and $29,000, respectively.

7

CodeLab Technology Group, Inc.

Notes to Financial Statements

Stock-Based Compensation

The Company generally grants stock options to its employees for a fixed number of shares with an exercise price equal to the fair value of the shares on the date of grant. As allowed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), the Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB No. 25”), and related interpretations in accounting for stock awards to employees.

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment (“SFAS No. 123R”). This standard requires expensing of stock options and other share-based payments and supersedes SFAS 123, which had allowed companies to choose between expensing stock options and showing only pro forma disclosure. SFAS No. 123R is effective for the Company as of January 1, 2006. All of the Company’s outstanding options were cancelled in July 2005 in connection with the acquisition of the Company by Allin Corporation (“Allin”). The Company does not anticipate that new options will be granted in the future. Consequently, the Company does not believe that SFAS No. 123R will impact the Company. See Note 11 – Subsequent Events for additional information regarding the acquisition of the Company.

Year ended December 31 (Dollars in thousands, except per share data)	2003		2004
As reported:
Stock-based employee compensation cost, net of tax	$	—	$	—
Net income		67		481
Pro forma
Stock-based employee compensation cost, net of tax	$	1	$	1
Net income		66		480

Supplemental Disclosure of Cash Flow Information

Cash payments for income taxes were $5,000, and $4,000 during the years ended December 31, 2003 and 2004, respectively. Cash payments for interest were $3,000 and $9,000 during the years ended December 31, 2003 and 2004, respectively. Cash payments of dividends were $50,000 during the year ended December 31, 2004. There were no cash payments of dividends during the year ended December 31, 2003.

3. Stock Based Compensation

Stock options awarded under the Company’s 2000 Stock Incentive Plan (the “Stock Plan”) are exercisable based on prices established at the grant date. Stock options granted to employees of the Company normally vest at one third of the award per year for three years on the anniversaries of the grant dates, except for 100 options, of which 50 vested upon issuance in 2004 and 50 which will vest in 2005. A total of 4,817 non-vested stock options were outstanding as of December 31, 2004, with 1,351 and 1,600 scheduled to vest in 2005 and 2006, respectively, unless forfeited earlier. Rights to purchase shares for awards made to date under the Stock Plan expire ten years from the date of grant or earlier if an option holder ceases to be employed by the Company. All of the Company’s outstanding options were cancelled in July 2005 in connection with the acquisition of the Company by Allin.

8

CodeLab Technology Group, Inc.

Notes to Financial Statements

Summary of Stock Option Activity for the Stock Plan from 2003 through 2004:

	2003			2004
	Number of Options	Weighted- Average Exercise Price		Number of Options	Weighted- Average Exercise Price
January 1
Outstanding	5,402	$	2.00	7,402	$	2.00
Exercisable	1,167	$	2.00	2,968	$	2.00
Granted	2,000	$	2.00	2,900	$	4.00
Forfeitures	—		—	—		—
Exercised	—		—	—		—
Expired	—		—	—		—
December 31
Outstanding	7,402	$	2.00	10,302	$	2.56
Exercisable	2,968	$	2.00	5,485	$	2.02

Summary of Information on Fair Value of Option Grants:

The fair value of option grants are estimated on the dates of grant using the Black-Scholes option pricing model. The following are weighted averages of assumptions for 2003 and 2004 grants under the Stock Plan.

	2003		2004
Risk free interest rate	3.6	%	4.6	%
Expected dividend yield	0.0	%	0.0	%
Expected life of options	10	yrs.	10	yrs.

Options exercisable at December 31, 2004		5,485
Weighted average fair value of options granted during 2003	$	0.61
Weighted average fair value of options granted during 2004	$	1.48

Summary of Information for Stock Options Outstanding or Exercisable at December 31, 2004:

Information for the Stock Plan at December 31, 2004:	Number of Options Outstanding	Number of Options Exercisable	Weighted- Average Contractual Life
Exercise Price:
$2.00	7,402	5,435	7.5 years
$4.00	2,900	50	9.6 years
	10,302	5,485	8.1 years

4. Line of Credit

In June 2004, the Company and Eastern Bank entered into a Business Preferred Line of Credit Agreement (the “Loan Agreement”) under which Eastern Bank agreed to extend the Company a revolving credit loan. The maximum borrowing availability under the Loan Agreement is $50,000. The Loan Agreement replaced a previous agreement which had included a maximum borrowing availability of $100,000. There was a principal balance of $43,000 outstanding under the Loan Agreement as of December 31, 2003. There was no balance outstanding under the Loan Agreement as of December 31, 2004.

9

CodeLab Technology Group, Inc.

Notes to Financial Statements

Borrowings were permitted under the Loan Agreement for general working capital purposes. The Company has from time to time borrowed and subsequently repaid amounts under the revolving credit loan. Loans made under the Loan Agreement bear interest at the Eastern Bank Base Rate of interest. The applicable rate as of December 31, 2004 was 6.25%. Over the years ended December 31, 2003 and 2004, the applicable rates of interest on the line of credit ranged from 5.00% to 6.25%. Payments on the line of credit were to be made on the twentieth day of each month. Monthly payments were required to include all accrued interest, bank charges, balances exceeding the credit line limit and the greater of 2% of the outstanding principal balance or $250. Interest expense related to the line of credit was $2,000 and $1,000, respectively, during the years ended December 31, 2003 and 2004.

The Loan Agreement was personally guaranteed by David Ritchie, the major stockholder in the Company prior to its acquisition by Allin in July 2005. Eastern Bank’s commitment under the Loan Agreement was subject to there being no material adverse changes in the Company’s financial condition, the Company having no material contingent liabilities, and the Company not changing its basic services, entering into a merger or other significant acquisition, dissolving or selling substantial assets. The Loan Agreement was terminated in August 2005 following the Company’s acquisition by Allin. The Company paid the then outstanding principal and interest in July 2005 in anticipation of the acquisition. See Note 11– Subsequent Events for information concerning the acquisition of the Company by Allin.

5. Financial Risks and Fair Value of Financial Instruments

Market Risk

During the normal course of business, the Company is exposed to several types of market risk which include, but are not limited to, interest rate risk, foreign currency exchange rate risk and collectibility of accounts receivable. The Company manages these risks by assessing their possible impact on a regular basis. The Company does not currently anticipate any material losses from any of these market risks. The Company currently does not invest excess funds in derivative financial instruments or other market rate sensitive instruments for any purpose. The Company does not purchase goods subject to commodity price risk.

Foreign Currency Exchange Rate Risk

The Company does not currently invest excess funds in derivative financial instruments or other market rate sensitive instruments for the purpose of managing its foreign currency exchange rate risk. Upon the completion of the Company’s implementation of two data centers in European locations for a customer in November 2004 and February 2005, the Company began to incur costs for internet hosting centers denominated in Euros. However, the Company does not believe the impact of foreign currency exchange associated with these costs was material during the year ended December 31, 2004.

Trading Risk

The Company does not undertake any trading activities involving commodity contracts accounted for at fair value.

Interest Rate Risk

In the ordinary course of business, the Company is exposed to risks that increases in interest rates may adversely affect funding costs associated with any balance, which may be outstanding from time to time, of variable rate debt. There was no variable rate debt outstanding as of December 31, 2004. The revolving credit loan bears interest at Eastern Bank’s base interest rate. The Company does not believe interest rate risk had a material impact on its results of operations during the years ended December 31, 2003 and 2004.

Accounts Receivable/Accounts Payable

Accounts receivable and accounts payable carrying amounts approximate the fair values of the accounts receivable and accounts payable balances at December 31, 2004, respectively.

10

CodeLab Technology Group, Inc.

Notes to Financial Statements

6. Lease Commitments

The Company leased office space in Wakefield, Massachusetts under an operating lease that expired on March 31, 2005. The Company commenced occupancy of new office space within the same building on April 1, 2005 under an amendment to the operating lease. The lease, as amended, does not include an automatic renewal provision or any specification of rental costs beyond the lease term, which expires on March 31, 2008. Under the office lease, the Company is subject to additional occupancy costs for an allocated share of the excess of the landlord’s operating expenses, including maintenance and repairs, property management costs, property-related taxes, security, insurance and utilities over base operating expenses, as defined in the lease agreement, as amended. The base rental cost is also subject to annual escalation based on the consumer price index, subject to limitations specified in the lease.

The Company leases an automobile under an operating lease that will expire on June 4, 2006. The automobile is used by the Company’s Chief Executive Officer, who was also a holder of a majority equity interest in the Company prior to its acquisition by Allin in July 2005.

Minimum future annual lease commitments for these non-cancelable operating leases are as follows:

Minimum Future Lease Payments (Dollars in thousands)	As of December 31, 2004		Under Office Lease Amendment
2005	$	20	$	42
2006		4		56
2007		—		56
2008		—		14
Total	$	24	$	168

Lease and occupancy costs incurred by the Company were $71,000 and $87,000 for the years ended December 31, 2003 and 2004, respectively.

7. Income Taxes

The Company records current and deferred provisions for or benefits from income taxes and deferred tax assets and liabilities in accordance with the requirements of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS No. 109”). SFAS No. 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases using enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Valuation allowances will reduce deferred tax assets if there is material uncertainty as to the ultimate realization of the deferred tax benefits.

The provision for income taxes is comprised of the following for the years ended December 31, 2003 and 2004:

Year ended December 31 (Dollars in thousands)	2003		2004
Current
Federal	$	—	$	109
State		6		35
Total current		6		144
Deferred		4		142
Total income tax provision	$	10	$	286

11

CodeLab Technology Group, Inc.

Notes to Financial Statements

A reconciliation of income taxes computed at the statutory federal income tax rate of 34% to the provision for income taxes reflected in the Statements of Operations is as follows for the years ended December 31, 2003 and 2004:

Year ended December 31 (Dollars in thousands)	2003			2004
Estimated provision for income taxes at federal statutory rate	$	26		$	261
State income tax expense, net of federal benefit		4			23
Change in estimates and other		(20	)		2
Provision for income taxes	$	10		$	286

The components of the deferred tax liabilities, as of December 31, 2003 and 2004, are as follows:

Deferred Tax Liabilities (Dollars in thousands)	December 31, 2003		December 31, 2004
Equipment, furniture and vehicles	$	5	$	26
Cash basis tax reporting method		—		121
Deferred tax liabilities:	$	5	$	147

The Company changed from the accrual to the cash basis method of accounting for tax purposes in 2004. The current and non-current portions of the deferred tax liabilities are $121,000 and $26,000, respectively.

Cash payments for income taxes were approximately $5,000 and $4,000 during the periods ended December 31, 2003 and 2004, respectively.

8. Significant Customers

A significant portion of the Company’s revenue for the years ended December 31, 2003 and 2004 was derived from a small number of customers. Furthermore, these major customers listed below are concentrated in the financial services industry. A loss of a significant customer or a significant decline in the level of services provided in a future period could significantly negatively impact the Company’s future results of operations and financial condition.

During the year ended December 31, 2003, three significant customers accounted for $304,000, $235,000 and $189,000 of the Company’s revenue. These three significant customers represented 23%, 18% and 14%, respectively, of the Company’s 2003 revenue.

During the year ended December 31, 2004, one significant customer accounted for $3,017,000, or 74%, of the Company’s revenue. Revenue derived from this significant customer includes all of the Sale of technology revenue included on the Statement of Operations for the year ended December 31, 2004.

The Company sold “intellectual property” to this Fortune 100 company in April 2004. The technology was fully functional at the sale date and there were no undelivered services in connection with the sale. The 2004 revenue and cost of sales for the sale of intellectual property were $1,844,000 and $1,296,000, respectively. There was a separately priced support agreement in connection with the sale. The revenue for this agreement is being recognized ratably over the eighteen month term of the agreement. The total revenue for the agreement is $472,000. The support agreement calls for two payments of $236,000 in October 2004 and October 2005. As of December 31, 2004, deferred revenue recorded in connection with the agreement was $10,000.

12

CodeLab Technology Group, Inc.

Notes to Financial Statements

9. Related Party Transactions

Note Payable

The Company’s Balance Sheet as of December 31, 2003 included a note payable to a former shareholder of the Company with a principal balance of $64,000. The note is related to the Company’s purchase of 20,000 shares of the Company’s common stock from the shareholder on July 15, 2003. The note balance was retired during the year ended December 31, 2004.

Transactions with Equity Investee

During the years ended December 31, 2003 and 2004, respectively, revenue of $235,000 and $150,000 was recognized from technology service-based arrangements with an entity in which the Company owns a minority, non-controlling interest. During the years ended December 31, 2003 and 2004, respectively, payments of $32,000 and $50,000 were made to this entity.

The net income and net equity of the investee is not significant.

10. Defined Contribution Plan

The Company maintains a profit-sharing plan with a 401(k) feature (the “CodeLab 401(k) Plan”). The CodeLab 401(k) Plan is a defined contribution plan covering all employees of the Company meeting the CodeLab 401(k) Plan’s eligibility requirements. Under the CodeLab 401(k) Plan, participants are eligible to contribute various percentages, up to 15%, of their compensation. The Company may make discretionary contributions to the plan. The Company has incurred expense for discretionary contributions to the CodeLab 401(k) Plan of $25,000 and $58,000, respectively, for the years ended December 31, 2003 and 2004.

11. Subsequent Event

On July 26, 2005, all of the issued and outstanding equity interests of the Company were acquired by Allin, a Delaware corporation, pursuant to the terms of a Stock Purchase Agreement (the “Purchase Agreement”) among the Company, Allin, the shareholders of the Company and certain holders of options to purchase the Company’s capital stock. Allin, a technology company based in Pittsburgh, Pennsylvania, provides Microsoft-focused information technology and interactive media-based consulting and systems integration services. The Company will operate as a wholly-owned subsidiary of Allin. The Company’s senior management is expected to remain with the Company.

In consideration for all of the issued and outstanding capital stock of the Company, as well as the termination of all option agreements to purchase the Company’s capital stock, Allin delivered to the former shareholders and option holders of the Company purchase consideration consisting of cash and Allin common stock, as follows: (i) a cash payment of $2,500,000, reduced by a holdback amount of $100,000 which shall be adjusted based on the results of a sales and use tax audit of the Company which was pending as of the closing date, and an adjustment for working capital pursuant to the terms of the Purchase Agreement; and (ii) 500,000 shares of Allin’s common stock.

13

EX-99.2

Exhibit 99.2

CODELAB TECHNOLOGY GROUP, INC.

BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

	June 30, 2004			June 30, 2005
ASSETS
Current assets:
Cash and cash equivalents	$	54		$	524
Accounts receivable		230			475
Unbilled receivables		67			157
Prepaid expenses		233			141
Total current assets		584			1,297
Equipment, furniture and vehicles, at cost		88			185
Less—accumulated depreciation		(44	)		(81	)
		44			104
Other assets		37			27
Total assets	$	665		$	1,428

The accompanying notes are an integral part of these financial statements.

1

CODELAB TECHNOLOGY GROUP, INC.

BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

	June 30, 2004			June 30, 2005
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Bank line of credit	$	—		$	16
Accounts payable		77			132
Loan and note payable		64			—
Accrued compensation and payroll taxes		25			3
Deferred revenue		—			345
Income taxes payable		174			252
Current portion of deferred income tax liability		48			33
Total current liabilities		388			781
Non-current protion of deferred tax liability		5			29
Commitments and contingencies
Shareholders’ equity:
Common stock, par value $.01 per share - authorized 300,000 shares, 37,900 and 37,400 shares outstanding		—			—
Additional paid-in-capital		1			1
Treasury stock at cost, 38,400 and 38,900 common shares		(69	)		(84	)
Retained earnings		340			701
Total shareholders’ equity		272			618
Total liabilities and shareholders’ equity	$	665		$	1,428

The accompanying notes are an integral part of these consolidated statements.

2

CODELAB TECHNOLOGY GROUP, INC.

STATEMENTS OF OPERATIONS

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30, 2004		Six Months Ended June 30, 2005
Revenue:
Consulting services and other	$	639	$	1,381
Sale of technology		1,844		—
Total revenue		2,483		1,381
Cost of sales:
Consulting services and other		114		394
Sale of technology		1,296		—
Total cost of sales		1,410		394
Gross profit:
Consulting services and other		525		987
Sale of technology		548		—
Total gross profit		1,073		987
Selling, general & administrative expenses:
Depreciation		11		19
Loss on disposal of assets		20		—
Other selling, general & administrative expenses		485		595
Total selling, general & administrative expenses		516		614
Income from operations		557		373
Interest income		—		(2	)
Interest expense		6		1
Income before provision for income taxes		551		374
Provision for income taxes		233		168
Net income	$	318	$	206

The accompanying notes are an integral part of these financial statements.

3

CODELAB TECHNOLOGY GROUP, INC.

STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30, 2004			Six Months Ended June 30, 2005
Cash flows from operating activities:
Net income	$	318		$	206
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation		11			19
Provision for deferred income taxes		47			(85	)
Loss from disposal of assets		20			—
Changes in certain assets and liabilities:
Accounts receivable		59			127
Unbilled receivables		(46	)		(122	)
Prepaid expenses		(231	)		(44	)
Other assets		(10	)		—
Accounts payable		14			(160	)
Accrued compensation and payroll taxes		(132	)		(101	)
Income taxes payable		174			252
Deferred revenue		(32	)		333
Net cash flows provided by operating activities		192			425
Cash flows from investing activities:
Capital expenditures		(31	)		(41	)
Net cash flows used for investing activities		(31	)		(41	)
Cash flows from financing activities:
Loan and note borrowing (repayment)		(21	)		—
Borrowing (repayment) for line of credit		(43	)		16
Payment of dividends		(50	)		—
Net cash flows used for financing activities		(114	)		16
Net change in cash and cash equivalents		47			400
Cash and cash equivalents, beginning of period		7			124
Cash and cash equivalents, end of period	$	54		$	524

The accompanying notes are an integral part of these financial statements.

4

CodeLab Technology Group, Inc.

Notes to Interim Financial Statements

1. Organization and Nature of Operations

CodeLab Technology Group, Inc., (“the Company”), a Delaware corporation, provides information technology consulting services to customers primarily concentrated in the financial services industry. The Company also provides technical support services to facilitate its customers’ optimal usage of developed software applications. The Company’s corporate headquarters are located in Wakefield, Massachusetts. Services are provided to customers primarily in the northeastern United States.

2. Summary of Significant Accounting Policies

The information contained in these financial statements and notes for the six-month periods ended June 30, 2004 and 2005 should be read in conjunction with the Company’s audited financial statements and notes for the years ended December 31, 2003 and 2004, included above in this amended Report on Form 8-K by Allin Corporation. The accompanying unaudited Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules and regulations of the Securities and Exchange Commission. These interim statements do not include all of the information and footnotes required for complete financial statements. It is management’s opinion that all adjustments (including all normal recurring accruals) considered necessary for a fair presentation have been made. However, results for these interim periods are not necessarily indicative of results to be expected for the full year.

Information concerning certain of the Company’s accounting policy regarding income taxes is included in Note 4 – Income Taxes. Following is a summary of other significant accounting policies affecting the Company’s financial statements.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

Consulting:

The Company recognizes revenue on time and materials contracts at contractually agreed upon rates. For these types of contracts, the Company recognizes revenue as the services are performed. In some cases, the Company invoices customers prior to performing the service, resulting in deferred revenue being reported on the accompanying balance sheets.

For the majority of consulting engagements, the Company provides a specific level of service each month for which it bills a standard monthly amount. The Company recognizes revenue for these engagements in monthly installments over the billable portion of the contract.

For fixed-price contracts, the Company recognizes revenue using the proportional performance method. The Company uses estimated labor-to-complete to measure the proportional performance.

Software Technology:

The Company recognizes revenue from sale of software technology in accordance with Statements of Position 97-2 and 98-9, Software Revenue Recognition, issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants. Revenue is recognized when there is evidence of an arrangement, the product has been delivered, fees are fixed and determinable, collection is probable and when all other significant obligations have been fulfilled.

5

CodeLab Technology Group, Inc.

Notes to Interim Financial Statements

For arrangements containing multiple elements, such as software technology revenue, installation services, hosting, hardware and maintenance and where vendor-specific objective evidence of fair value (VSOE) exists for all undelivered elements, the Company accounts for the delivered elements in accordance with the “residual method” prescribed by SOP No. 98-9. Revenue from professional services is generally recognized as the services are provided, where a separate earnings process exists. When professional services are not considered to be a separate element of the agreement, professional service revenue is recognized ratably over the remaining life of the agreement. Revenue from hosting and maintenance contracts is recognized ratably over the lives of the contracts.

Deferred revenue consists of fees collected in advance of reaching all above criteria for revenue recognition and fees for future services to be provided that were billed and collected prior to the balance sheet date.

Software Development Costs

Costs related to research and development of new software products are charged to expenses as incurred. Software development costs are capitalized beginning when a product’s technological feasibility has been established, which to date has been when the Company has a working model of the software and ending when a product is available for release. Substantially all development costs are incurred prior to establishing a working model. As a result, the Company has not capitalized any software development costs as of June 30, 2004 and 2005 as such costs have not been significant.

Cash and Cash Equivalents

The Company considers all certificates of deposit with a maturity of three months or less and money market funds to be cash equivalents. The Company maintains demand and money market accounts at two domestic banks. From time to time, account balances may exceed the maximum available Federal Deposit Insurance Corporation coverage. As of June 30, 2005, account balances exceeded the maximum available coverage.

Accounts Receivable and Unbilled Receivables

The Company records accounts receivable based upon billing for services and products. Unbilled receivables are recorded when labor-based services have been provided prior to the end of the period and invoicing has not occurred. The Company evaluates the extension of credit to potential customers based on financial or other information and any special circumstances regarding the potential engagement. Payment for services or products is normally due immediately upon billing, although alternate terms may be included in contracts or proposals as agreed upon by the Company and the customer. Accounts receivable are not normally collateralized. The Company does not routinely charge interest on past due accounts receivable, but does notify customers that it may implement such charges. In these instances, interest income is recognized as payments are received. As of June 30, 2004 and 2005, the Company’s risk of loss for accounts receivable and unbilled receivables was limited to the amounts recorded on the Balance Sheets as of those dates.

Allowances on accounts receivable are recorded when circumstances indicate collection is doubtful for particular accounts receivable. Accounts receivable are written off if reasonable collection efforts prove unsuccessful. Bad debt expense is reflected in other selling, general and administrative expenses on the Statements of Operations when allowances on accounts receivable are recorded or when accounts written off exceed available allowances.

As of June 30, 2005, two significant customers comprised 80% and 10%, respectively, of the Company’s accounts receivable. As of June 30, 2004, three significant customers comprised 49%, 14% and 13%, respectively, of the Company’s accounts receivable.

Stock-Based Compensation

The Company generally grants stock options to its employees for a fixed number of shares with an exercise price equal to the fair value of the shares on the date of grant. As allowed under Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), the Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB No. 25”), and related interpretations in accounting for stock awards to employees.

6

CodeLab Technology Group, Inc.

Notes to Interim Financial Statements

In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment (“SFAS No. 123R”). This standard requires expensing of stock options and other share-based payments and supersedes SFAS 123, which had allowed companies to choose between expensing stock options and showing only pro forma disclosure. SFAS No. 123R is effective for the Company as of January 1, 2006. All of the Company’s outstanding options were cancelled in July 2005 in connection with the acquisition of the Company by Allin Corporation (“Allin”). The Company does not anticipate that new options will be granted in the future. Consequently, the Company does not believe that SFAS No. 123R will impact the Company. See Note 7 – Subsequent Events for additional information regarding the acquisition of the Company.

Six Months ended June 30 (Dollars in thousands, except per share data)	2004		2005
As reported:
Stock-based employee compensation cost, net of tax	$	—	$	—
Net income		318		206
Pro forma
Stock-based employee compensation cost, net of tax	$	—	$	1
Net income		318		205

Supplemental Disclosure of Cash Flow Information

Cash payments for income taxes were $2,000 and $135,000 during the six-month periods ended June 30, 2004 and 2005, respectively. Cash payments for interest were $6,000 during the six-month period ended June 30, 2004. There were no cash payments for interest during the six-month period ended June 30, 2005. Cash payments of dividends were $50,000 during each of the six-month periods ended June 30, 2004 and 2005.

3. Line of Credit

In June 2004, the Company and Eastern Bank entered into a Business Preferred Line of Credit Agreement (the “Loan Agreement”) under which Eastern Bank agreed to extend the Company a revolving credit loan. The maximum borrowing availability under the Loan Agreement is $50,000. The Loan Agreement replaced a previous agreement which had included a maximum borrowing availability of $100,000. There was a principal balance of $16,000 outstanding under the Loan Agreement as of June 30, 2005. There was no balance outstanding under the Loan Agreement as of June 30, 2004.

Borrowings were permitted under the Loan Agreement for general working capital purposes. The Company has from time to time borrowed and subsequently repaid amounts under the revolving credit loan. Loans made under the Loan Agreement bear interest at the Eastern Bank Base Rate of interest. The applicable rate as of June 30, 2005 was 6.25%. Payments on the line of credit were to be made on the twentieth day of each month. Monthly payments were required to include all accrued interest, bank charges, balances exceeding the credit line limit and the greater of 2% of the outstanding principal balance or $250. Interest expense related to the line of credit was $1,000 and $-0-, respectively, during the six-month periods ended June 30, 2004 and 2005.

The Loan Agreement was personally guaranteed by David Ritchie, the major stockholder in the Company prior to its acquisition by Allin in July 2005. Eastern Bank’s commitment under the Loan Agreement was subject to there being no material adverse changes in the Company’s financial condition, the Company having no material contingent liabilities, and the Company not changing its basic services, entering into a merger or other significant acquisition, dissolving or selling substantial assets. The Loan Agreement was terminated in August 2005 following the Company’s acquisition by Allin. The Company paid the then outstanding principal and interest in July 2005 in anticipation of the acquisition. See Note 7– Subsequent Events for information concerning the acquisition of the Company by Allin.

7

CodeLab Technology Group, Inc.

Notes to Interim Financial Statements

4. Income Taxes

The Company records current and deferred provisions for or benefits from income taxes and deferred tax assets and liabilities in accordance with the requirements of Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes (“SFAS No. 109”). SFAS No. 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases using enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Valuation allowances will reduce deferred tax assets if there is material uncertainty as to the ultimate realization of the deferred tax benefits.

The provision for income taxes is comprised of the following for the six-month periods ended June 30, 2004 and 2005:

Six Months ended June 30 (Dollars in thousands)	2004		2005
Current
Federal	$	144	$	198
State		40		55
Total current		184		253
Deferred		49		(85	)
Total income tax provision	$	233	$	168

A reconciliation of income taxes computed at the statutory federal income tax rate of 34% to the provision for income taxes reflected in the Statements of Operations is as follows for the six-month periods ended June 30, 2004 and 2005:

Six Months ended June 30 (Dollars in thousands)	2004		2005
Estimated provision for income taxes at federal statutory rate	$	180	$	130
State income tax expense, net of federal benefit		50		36
Change in estimates and other		3		2
Provision for income taxes	$	233	$	168

The components of the deferred tax liabilities, as of June 30, 2004 and 2005, are as follows:

Deferred Tax Liabilities (Dollars in thousands)	June 30, 2004		June 30, 2005
Equipment, furniture and vehicles	$	5	$	29
Cash basis tax reporting method		48		33
Deferred tax liabilities:	$	53	$	62

The Company utilizes the cash basis method of accounting for tax purposes in 2004 and 2005. The current and non-current portions of the deferred tax liabilities are $48,000 and $33,000, respectively.

Cash payments for income taxes were $2,000 and $135,000 during the six-month periods ended June 30, 2004 and 2005, respectively.

8

CodeLab Technology Group, Inc.

Notes to Interim Financial Statements

5. Significant Customers

A significant portion of the Company’s revenue for the six-month periods ended June 30, 2004 and 2005 was derived from a small number of customers. Furthermore, the Company’s major customers are concentrated in the financial services industry. A loss of a significant customer or a significant decline in the level of services provided in a future period could significantly negatively impact the Company’s future results of operations and financial condition.

During the six-month period ended June 30, 2004, one significant customer accounted for $1,978,000, or 80%, of the Company’s revenue. Revenue derived from this significant customer includes all of the Sale of technology revenue included on the Statement of Operations for the six-month period ended June 30, 2004.

The Company sold “intellectual property” to this Fortune 100 company in April 2004. The technology was fully functional at the sale date and there were no undelivered services in connection with the sale. The 2004 revenue and cost of sales for the sale of intellectual property were $1,844,000 and $1,296,000, respectively. There was a separately priced support agreement in connection with the sale. The revenue for this agreement is being recognized ratably over the eighteen month term of the agreement. The total revenue for the agreement is $472,000. The support agreement calls for two payments of $236,000 in October 2004 and October 2005. As of June 30, 2004 and 2005, the Company recognized unbilled receivables of $67,000 and $146,000, respectively, in connection with the agreement.

During the six-month period ended June 30, 2005, three significant customers respectively accounted for $688,000, $339,000 and $167,000, or 50%, 25% and 12%, of the Company’s revenue.

6. Related Party Transactions

Note Payable

The Company’s Balance Sheet as of June 30, 2004 included a note payable to a former shareholder of the Company with a principal balance of $64,000. The note is related to the Company’s purchase of 20,000 shares of the Company’s common stock from the shareholder on July 15, 2003. The note balance was retired during the second half of 2004.

Transactions with Equity Investee

During the six-month period ended June 30, 2004, revenue of $150,000 was recognized from technology service-based arrangements with an entity in which the Company owns a minority, non-controlling interest. There was no revenue recognized in connection with this entity during the six-month period ended June 30, 2005.

The net income and net equity of the investee is not significant.

7. Subsequent Event

On July 26, 2005, all of the issued and outstanding equity interests of the Company were acquired by Allin, a Delaware corporation, pursuant to the terms of a Stock Purchase Agreement (the “Purchase Agreement”) among the Company, Allin, the shareholders of the Company and certain holders of options to purchase the Company’s capital stock. Allin, a technology company based in Pittsburgh, Pennsylvania, provides Microsoft-focused information technology and interactive media-based consulting and systems integration services. The Company will operate as a wholly-owned subsidiary of Allin. The Company’s senior management is expected to remain with the Company.

In consideration for all of the issued and outstanding capital stock of the Company, as well as the termination of all option agreements to purchase the Company’s capital stock, Allin delivered to the former shareholders and option holders of the Company purchase consideration consisting of cash and Allin common stock, as follows: (i) a cash payment of $2,500,000, reduced by a holdback amount of $100,000 which shall be adjusted based on the results of a sales and use tax audit of the Company which was pending as of the closing date, and an adjustment for working capital pursuant to the terms of the Purchase Agreement; and (ii) 500,000 shares of Allin’s common stock.

9

EX-99.3

Exhibit 99.3

PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following Pro Forma Condensed Consolidated Financial Statements of Allin Corporation (the “Company”) are based on its historical financial statements, adjusted to give effect to its July 26, 2005 acquisition of all of the outstanding equity interests of CodeLab Technology Group, Inc. (“CodeLab”). Upon closing , in consideration for all of the issued and outstanding capital stock of CodeLab, as well as the termination of all option agreements to purchase CodeLab’s capital stock, the Company delivered to the former shareholders and option holders of CodeLab purchase consideration consisting of cash and common stock of the Company, as follows: (i) a cash payment of $2,500,000, reduced by a holdback amount of $100,000 which shall be adjusted based on the results of a sales and use tax audit of CodeLab which was pending as of the closing date, and an adjustment for working capital pursuant to the terms of the Purchase Agreement; and (ii) 500,000 shares of the Company’s common stock.

The Purchase Agreement also provides for annual payments of contingent consideration to be paid to the former shareholders and option holders of CodeLab for each of the three annual periods ending July 31, 2006, 2007 and 2008, consisting of a combination of cash and shares of the Company’s common stock. The Purchase Agreement provides, however, that the Company may at its sole option elect to pay the annual contingent payments in all cash. The annual contingent payments consisting of cash and shares in the three annual periods ending July 31, 2006, 2007 and 2008 will be calculated pursuant to a negotiated formula, as specifically set forth in the Purchase Agreement, that is based upon an agreed to multiple of the net operating profit of CodeLab’s business, determined on an accrual basis before deductions for income taxes, interest, depreciation and amortization, in the relevant annual period, and subject to further adjustments as set forth in the Purchase Agreement, including potential setoffs by the Company for certain indemnification claims. The total annual contingent payments shall not exceed $5,600,000 in any or all of the three annual periods ending July 31, 2006, 2007 and 2008, and shall be made by the Company not later than 120 days following the end of such annual period.

The Pro Forma Condensed Consolidated Statements of Operations for the year ended December 31, 2004 and for the six months ended June 30, 2005 assume that the acquisition of CodeLab occurred on January 1, 2004. The Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2004 also assumes that the Company’s November 2004 acquisitions of the Computer Resources division of McCrory & McDowell LLC (“Computer Resources”) and Accounting Technology Professionals, L.L.C. d/b/a Jimary Business Systems (“Jimary Business Systems”) also occurred on January 1, 2004. The Pro Forma Condensed Consolidated Financial Statements also assume that the Company’s July 26, 2005 issuance of Series H Redeemable Preferred Stock and warrants occurred on January 1, 2004.

The pro forma condensed consolidated financial information reflects the purchase method of accounting for the acquisition of CodeLab, and accordingly is based on estimated purchase accounting adjustments that are subject to further revision upon completion of appraisals and other studies of the fair value of assets and liabilities. Final purchase accounting adjustments will also differ from the pro forma adjustments presented herein and described in the accompanying notes due to the results of operations of CodeLab from July 1, 2005 to the date of acquisition.

There were no intercompany sales or expenses recorded between the Company, CodeLab, Computer Resources and Jimary Business Systems during the periods presented.

The pro forma condensed consolidated financial information reflects certain assumptions described above and in Notes to Pro Forma Condensed Consolidated Financial Statements below. The pro forma financial information does not purport to present what the Company’s results of operations would actually have been if the acquisitions of CodeLab, Computer Resources and Jimary Business Systems had occurred on the assumed date, as specified above, or to project the Company’s financial condition or results of operations for any future period.

The pro forma condensed consolidated financial information should be read in conjunction with the Company’s historical consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10–K for the year ended December 31, 2004 and the Company’s Quarterly Report on Form 10–Q for the quarterly period ended June 30, 2005 and the financial statements and notes thereto of CodeLab filed herewith.

1

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF JUNE 30, 2005

(Unaudited)

(Dollars in thousands)

	Consolidated Allin Corporation			CodeLab Technology Group, Inc.			Pro Forma Adjustments for Acquisition of CodeLab Technology Group, Inc.			Note	Pro Forma Consolidated
ASSETS:
Current Assets:
Cash and cash equivalents	$	1,808		$	524		$	(284	)	(1)(5)	$	2,048
										(6)(9)
Accounts and note receivable		2,427			475							2,902
Unbilled receivable		102			157							259
Inventory		76			—							76
Prepaid Expenses		188			141							329
Costs and estimated gross margins in excess of billings		293			—							293
Deferred income tax asset		138			—							138
Total current assets		5,032			1,297							6,045
Property and equipment, net		161			104							265
Goodwill and intangible assets		2,104			—			1,626		(2)(7)		3,730
										(8)
Other assets		8			27							35
Total assets	$	7,305			1,428						$	10,075
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Bank line of credit	$	—		$	16		$				$	16
Accounts payable		824		$	132							956
Accrued liabilities		673			3			204		(3)(6)		880
Income taxes payable		—			252			(118	)	(10)		134
Current portion of deferred tax liability		—			33							33
Deferred revenue		259			345							604
Total current liabilities		1,756			781							2,623
Non-current portion of deferred tax liability					29							29
Non-current portion of dividends on preferred stock		2,592			—							2,592
Shareholders’ equity:
Preferred stock		6,726			—			1,910		(5)		8,636
Common stock		70			—			5		(1)		75
Other equity		39,481			(83	)		388		(1)(4)		39,786
										(5)(6)
(Accumulated deficit) retained earnings		(43,320	)		701			(1,047	)	(4)(7)		(43,666	)
										(8)(9)
										(10)
Shareholder’s equity		2,957			618							4,831
								(659	)
Total liabilities and shareholders’ equity	$	7,305			1,428						$	10,075

The accompanying notes are an integral part of these financial statements.

2

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2004

(Unaudited)

(Dollars in thousands, except per share data)

	Consolidated Allin Corporation			2004 Acquistions of Computer Resources and Jimary Business Systems Note (1)		CodeLab Technology Group, Inc.		Pro Forma Adjustments for Acquisitions			Note	Pro Forma Consolidated
Revenue	$	12,566		$	1,683	$	4,060	$				$	18,309
Cost of sales		6,028			821		2,143						8,992
Gross profit		6,538			862		1,917						9,317
Selling, general & administrative		6,219			607		1,142		329		(2)(3)		8,297
Income from operations		319			255		775						1,020
Interest expense (income), net		36			17		8		9		(4)		70
Income before income tax (benefit) provision		283			238		767						950
(Benefit) provision for income taxes		(1	)		—		286		(199	)	(6)		86
Net income		284			238		481						864
Accertion and dividends on preferred stock		740			—		—		300		(5)		1,040
Net (loss) income attributable to common shareholders	$	(456	)	$	238	$	481					$	(176	)
Net (loss) earnings per common share - basic and diluted	$	(0.07	)									$	(0.02	)
Weighted average shares outstanding - basic and diluted		6,967,339											7,467,339

The accompanying notes are an integral part of these financial statements.

3

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2005

(Unaudited)

(Dollars in thousands, except per share data)

	Consolidated Allin Corporation			CodeLab Technology Group, Inc.			Pro Forma Adjustments for Acquisition of CodeLab Technology Group, Inc.			Note	Pro Forma Consolidated
Revenue	$	6,912		$	1,381		$				$	8,293
Cost of sales		3,099			394							3,493
Gross profit		3,813			987							4,800
Selling, general & administrative		3,875			614			126		(3)		4,615
(Loss) income from operations		(62	)		373							185
Interest expense (income), net		4			(1	)						3
(Loss) income before income tax (benefit) provision		(66	)		374							182
(Benefit) provision for income taxes		—			168			(118	)	(6)		50
Net (loss) income		(66	)		206							132
Accertion and dividends on preferred stock		377			—			150		(5)		527
Net (loss) income attributable to common shareholders	$	(443	)	$	206						$	(395	)
Net (loss) earnings per common share - basic and diluted	$	(0.06	)	$							$	(0.05	)
Weighted average shares outstanding - basic and diluted		6,967,339										7,467,339

The accompanying notes are an integral part of these financial statements.

4

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in thousands, except per share data)

The pro forma adjustments to the condensed consolidated balance sheets are as follows:

(1) To record the purchase price consideration for the Company’s acquisition of CodeLab, including a cash payment of $2,400, the issuance of 500,000 shares of the Company’s common stock to certain selling CodeLab equity interest holders valued at $0.34 per share resulting in a credit to shareholder’s equity of $17. The number of shares and valuation placed on the common stock issued corresponds to that utilized in the actual acquisition.

(2) To record the estimated excess purchase price of approximately $2,081 to be assigned to intangible assets. An independent appraisal to establish fair values for identified intangible assets, expected to include customer-related and non-competition assets, is currently in process. The Company anticipates the appraisal will be completed prior to the Company’s next quarterly report.

(3) To record an estimated liability of $129 for professional, legal and accounting fees incurred or expected to be incurred in connection with the acquisition. Such fees have been added to the Company’s estimated investment in CodeLab in estimating the excess purchase price.

(4) To reflect elimination of CodeLab’s equity balance of $618 as of June 30, 2005.

(5) To record the net proceeds of $2,500 from the issuance of 250 shares of the Company’s Series H Redeemable Preferred Stock and related warrants. Such proceeds were utilized in connection with the acquisition of CodeLab. Proceeds of $1,910 and $590, respectively, were allocated to the Series H preferred stock and the related warrants based on a pro-ration of their respective estimated intrinsic values.

(6) To reflect the accrual of $300 and $150 of dividends on Series H preferred stock for the year ended December 31, 2004 and the six months ended June 30, 2005, respectively. To reflect the disbursement of $225 and $150 of dividends on Series H preferred stock for the year ended December 31, 2004 and the six months ended June 30, 2005, respectively.

(7) To record estimated amortization of $77 related to intangible assets recorded in connection with the acquisitions of Computer Resources and Jimary Business Systems, including customer lists and a non-competition agreement, for the portion of 2004 prior to the Company’s acquisition of the businesses.

(8) To record estimated amortization related to intangible assets recorded in connection with the acquisition of CodeLab, which are expected to include customer-related and non-competition assets. Estimated amortization expense is $252 for the year ended December 31, 2004 and $126 for the six months ended June 30, 2005.

(9) To reflect foregone interest income of $9 based on estimated money market rates on $453 of the Company’s working capital assumed to have been utilized earlier for cash consideration related to the Jimary Business Systems acquisition. Interest income is estimated to have been foregone for 10.5 months of 2004.

(10) To reflect a reduction in the current federal income tax liability of $118, due to the Company’s net operating loss carryforwards which may be utilized to partially offset the CodeLab federal income tax provision.

5

NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in thousands, except per share data)

The pro forma adjustments to the condensed consolidated statements of operations are as follows:

(1) The results of operations for Computer Resources and Jimary Business Systems for the year ended December 31, 2004 reflect the portion of 2004 prior to their acquisition by the Company.

(2) To record estimated amortization expense of $77 related to intangible assets recorded in connection with the acquisitions of Computer Resources and Jimary Business Systems, including customer lists and a non-competition agreement, for the portion of 2004 prior to the Company’s acquisition of the businesses.

(3) To record estimated amortization expense related to intangible assets recorded in connection with the acquisition of CodeLab, expected to include customer-related and non-competition assets. Estimated amortization expense is $252 for the year ended December 31, 2004 and $126 for the six months ended June 30, 2005.

(4) To reflect foregone interest income of $9 based on estimated money market rates on $453 of the Company’s working capital assumed to have been utilized earlier for cash consideration related to the Jimary Business Systems acquisition. Interest income is estimated to have been foregone for 10.5 months of 2004.

(5) To reflect the accrual of $300 and $150 of dividends on Series H preferred stock for the year ended December 31, 2004 and the six months ended June 30, 2005, respectively.

(6) To reflect a reduction in the federal income tax provision, due to the Company’s net operating loss carryforwards which may be utilized to partially offset the CodeLab federal income tax provision. The pro forma adjustments are $199 and $118, respectively, for the year ended December 31, 2004 and the six months ended June 30, 2005.

6