HTE INC, S-3, 1998-08-13

HTE INC
S-3, 1998-08-13
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 13, 1998

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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H.T.E., INC.
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C>
FLORIDA 59-2133858
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

1000 BUSINESS CENTER DRIVE
LAKE MARY, FLORIDA 32746
(407) 304-3235

(Address, including zip code, and telephone number, including
area code, or registrant's agent for service and principal executive offices)
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DENNIS J. HARWARD
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
H.T.E., INC.
1000 BUSINESS CENTER DRIVE
LAKE MARY, FLORIDA 32746
(407) 304-3235

(Name, address, including zip code, and telephone number,
including area code of agent for service)
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WITH COPIES TO:

<TABLE>
<S> <C>
CHARLES C. ZALL, ESQ. RANDOLPH H. FIELDS, ESQ.
SAUL, EWING, REMICK & SAUL LLP SANDRA C. GORDON, ESQ.
CENTRE SQUARE WEST GREENBERG TRAURIG, P.A.
1500 MARKET STREET, 38TH FLOOR 111 NORTH ORANGE AVENUE, SUITE 2000
PHILADELPHIA, PENNSYLVANIA 19102-2186 ORLANDO, FLORIDA 32801
(215) 972-7701 (407) 420-1000
</TABLE>

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock; par value
$.01 per share................... 6,382,500 $14.19 $90,567,675 $26,717.46
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</TABLE>

(1) Includes shares that may be sold to cover over-allotments.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices
reported on the Nasdaq National Market on August 10, 1998.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

PROSPECTUS (SUBJECT TO COMPLETION)
DATED AUGUST 13, 1998
5,550,000 SHARES

H.T.E., INC. LOGO

H.T.E., INC.

COMMON STOCK
---------------------

Of the 5,550,000 shares of Common Stock, $.01 par value, offered hereby,
1,997,702 are being sold by H.T.E., Inc. ("HTE" or the "Company") and 3,552,298
shares are being sold by certain selling shareholders (the "Selling
Shareholders"). The Company will not receive any of the proceeds from the sale
of shares by the Selling Shareholders. See "Principal and Selling Shareholders."
The Common Stock is quoted on the Nasdaq National Market under the symbol
"HTEI." On August 10, 1998, the last reported sale price of the Common Stock as
reported on the Nasdaq National Market was $14.00 per share. See "Price Range of
Common Stock."
---------------------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS(3)
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<S> <C> <C> <C> <C>
Per Share.................... $ $ $ $
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Total(4)..................... $ $ $ $
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</TABLE>

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by the Company, estimated to be $500,000.
(3) The Company will pay certain expenses of the Offering for the Selling
Shareholders, other than underwriting discounts and commissions, any
transfer taxes associated with transfer of the shares, and costs of counsel
to the Selling Shareholders.
(4) Certain Selling Shareholders have granted the Underwriters an option,
excercisable within 30 days of the date hereof, to purchase an aggregate of
up to 832,500 additional shares at the Price to Public less Underwriting
Discounts and Commissions, to cover over-allotments, if any. If all such
additional shares are purchased, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company, and Proceeds to Selling
Shareholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."
---------------------

The Common Stock is offered by the several Underwriters named herein when,
as and if received and accepted by them, and subject to their right to reject
orders in whole or in part and subject to certain other conditions. It is
expected that delivery of certificates for the shares will be made at the
offices of SG Cowen Securities Corporation, New York, New York, on or about
, 1998.
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SG COWEN
JANNEY MONTGOMERY SCOTT INC.
RAYMOND JAMES & ASSOCIATES, INC.
VOLPE BROWN WHELAN & COMPANY

, 1998
<PAGE> 3

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK.
SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING
AND MAY BID FOR, AND PURCHASE, SHARES OF COMMON STOCK IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE> 4

[INSIDE FRONT COVER]

ARTWORK -- THE FOLLOWING TEXT TO BE ARRANGED IN CIRCULAR FLOW-CHART FORMAT:

TOTAL ENTERPRISE SOLUTION(TM)

PUBLIC SAFETY & JUSTICE
- Computer Aided Dispatch
- FIRES(TM) Management System
- Fire Prevention
- Fire Resources Activity Tracking
- Emergency Medical Services
- CRIMES(TM) Management System
- Field Reporting
- Schedule Manager
- Jail System
- Court System
- Mobile Data
- Prosecutors System
- Crackdown(TM)
- Public Defenders System
- Probation System
- Return Of Service System

FINANCIALS
- - General Ledger
- - Accounts Payable
- - Project Accounting
- - Budgets
- - Applicant Tracking
- - Human Resources
- - Payroll/Personnel
- - Accounts Receivable
- - Fleet Management
- - Extended Reporting
- - Asset Management
- - Purchasing/Inventory
- - Cash Receipts

COMMUNITY SERVICES
- - Land/Parcel Management
- - Building Permits
- - Code Enforcement
- - Business Licenses
- - PARCSoft(TM)
- - Tax Billing & Collections
- - Field Plus
- - Planning & Zoning
- - Voter Registration
- - Appraisal Plus

UTILITIES
- - Customer Information System
- - Utility Marketing
- - Continuing Property Records
- - Asset Management II
- - Work Orders/Facility Management
- - Distribution Management
- - Contract Billing
- - Contract Management

EDUCATION
- - Student Administration
- - General Accounting
- - Human Resources
- - Payroll

HTE is a leading provider of enterprise-wide software applications to
public sector organizations and utilities. The Company's Total Enterprise
Solution(TM) currently includes more than 50 applications addressing five
functional areas: financial management, community services, public safety and
justice, education and utility management. The Company's products operate as
integrated suites or as stand-alone applications and function with a variety of
computer and network hardware, operating systems, database software and desktop
applications provided by other vendors. As part of its strategy to provide a
completely integrated solution to its customers, the Company also provides a
variety of related services, including consulting, implementation, education and
training, and the provision and configuration of hardware systems.
<PAGE> 5

FINANCIAL SYSTEMS MANAGEMENT

HTE's financial suite is designed specifically for government entities.
Applications adhere to fund accounting principles and provide integrated
financial management functions including general ledger, budgeting, purchasing,
payroll and asset management.
(Photo of office worker at PC terminal)

APPLICATIONS
- - Integrated Accounting
- - Extended Reporting
- - Accounts Receivable
- - Cash Receipts
- - Payroll/Personnel
- - Applicant Tracking
- - Purchasing/Inventory
- - Fleet Management
- - Asset Management I
- - Human Resources
(Sample page from financial management program)

UTILITY MANAGEMENT

HTE's utility application suite facilitates the management of electric,
water, gas and other services by automating tasks such as customer location
maintenance, meter reading, generation of service orders, bill processing and
refunds.
(Photo of rolls of electric cable)

APPLICATIONS
- - Customer Information System
- - Continuing Property Records
- - Work Orders/Facility Management
- - Distribution Management
- - Contact Management
- - Asset Management II
(Photo of gas meter reader)
(Sample page from utility management program)

[INSIDE FRONT COVER FOLD-OUT]
<PAGE> 6

EDUCATION SYSTEMS

Designed by school administrators, HTE education systems software
applications support the unique requirements of school districts. All
applications incorporate a variety of standard features and functions to provide
ease of use, customization capabilities and reporting flexibility.
(Photo of student in classroom)

APPLICATIONS
- - Student Administration
- - Human Resources
- - General Accounting
- - Payroll
(Sample page from education systems program)

[INSIDE FRONT COVER FOLD-OUT -- CONT'D]
<PAGE> 7

PUBLIC SAFETY & JUSTICE

From dispatch to adjudication, HTE's public safety and justice solution
offers integrated applications that provide real-time access to vital
information.
(Photo of police officer in patrol car)

APPLICATIONS
- - Computer Aided Dispatch IV
- - Computer Aided Dispatch III
- - CRIMES Records Management
- - Crackdown
- - FIRES Records Management
- - Fire Resources Activity Tracking
- - Fire Prevention
- - Emergency Medical Services
- - Mobile Data Systems
- - Integrated Mapping
- - Case Management
- - Citation Management
- - Jail System
- - Court System
- - Prosecutors System
- - Public Defenders System
- - Probation System
- - Return of Service System
(Sample page from public safety and justice program)
(Photo of judge in courtroom)

COMMUNITY SERVICES

HTE's community services system is based on a centralized land and location
database that provides common access to property information for business
licenses, building permits, planning and zoning activities, and tax billing and
collections. The applications generate all necessary documentation and improve
revenue tracking, processing and payment collection.
(Photo of building inspector)

APPLICATIONS
- - Land/Parcel Management
- - Building Permits
- - Code Enforcement
- - Business Licenses
- - Planning and Zoning
- - Tax Billing and Collections
- - Parks and Recreation
- - Tax Appraisal and Assessment
(Sample page from community services program)

[INSIDE FRONT COVER FOLD-OUT -- CONT'D]
<PAGE> 8

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and Consolidated Financial
Statements and Notes thereto appearing elsewhere in this Prospectus. As used in
this Prospectus, unless the context indicates otherwise, the terms "Company" and
"HTE" refer to H.T.E., Inc. and its subsidiaries. Unless otherwise indicated, or
the context otherwise requires, all information in this Prospectus (i) assumes
no exercise of the Underwriters' over-allotment option, and (ii) gives effect to
a two-for-one split of the Common Stock on June 18, 1998 (the "Stock Split").
The Company changed its fiscal year end from March 31 to December 31 effective
December 31, 1996.

THE COMPANY

The Company develops, markets, implements and supports fully integrated
enterprise-wide software applications designed specifically for public sector
organizations, including state, county and city governments and other municipal
agencies and for public and private utilities. For over 16 years, the Company
has strategically focused on providing software applications exclusively to
public sector organizations and utilities, and therefore has established itself
as a leading provider of software solutions to those markets. HTE's fully
integrated enterprise-wide software applications are designed to fulfill the
specific functional requirements of the public sector marketplace, such as
improvement of delivery of services, reduction of costs, enhancement of revenue
collection, operation within budgetary constraints, compliance with government
regulations and improvement of overall operating efficiencies. The Company's
Total Enterprise Solution currently includes more than 50 applications
addressing five functional areas: financial management, community services,
public safety and justice, education and utility management. The Company's
products operate as integrated suites or as stand-alone applications and
function with a variety of computer and network hardware, operating systems,
database software and desktop applications provided by other vendors. As part of
its strategy to provide a completely integrated solution to its customers, the
Company also provides a variety of related services, including consulting,
implementation, education and training, and the provision and configuration of
hardware systems.

The public sector marketplace is composed of state, county and city
governments, other municipal agencies and publicly owned utilities. Like many
private sector businesses, public sector organizations are facing increasing
pressure to improve delivery of services while striving to control and reduce
costs and generate additional revenues. In response, public sector organizations
are employing information technology ("IT") solutions in an effort to streamline
and automate administrative processes, improve timeliness and quality of
services and generally enhance operating efficiencies. In 1996, state and local
government agencies spent approximately $34.5 billion on IT and related
products, which is expected to grow to $45.0 billion by 2001 according to G2
Research, Inc. The estimated total for 2001 includes approximately $8.0 billion
for software, $12.3 billion for external services and $8.4 billion for hardware.
Certain IT issues facing state and local governments also impact utilities, many
of which are owned by municipalities. Consequently, utilities are under pressure
to retain their customer bases and focus their efforts on enhancing service
levels, improving operating practices and reducing costs. However, current
software solutions have not been able to meet the needs of public sector
organizations because they are typically not enterprise-wide, do not share
information among various public sector departments and are not designed
specifically for use by public sector organizations. As public sector
organizations reengineer their practices and strive to become more efficient,
they seek comprehensive, fully-functional solutions from a single source which
enable them to meet their particular needs.

Historically, local governments and utility companies utilized computerized
operations management systems principally based on mainframe and mini-computers
running customized proprietary software. These legacy systems have a limited
ability to operate with other software applications, systems and resources and
are often difficult and expensive to maintain, upgrade and modify. Budget
constraints and other factors have caused public sector organizations to lag
private sector companies in the adoption of newer, open-architecture
client/server systems. However, the need to integrate mission-critical functions
is now driving these

3
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organizations to replace their legacy systems and more recently acquired point
solutions with more technologically advanced, integrated and complete software
solutions.

HTE offers fully integrated enterprise-wide software solutions designed to
automate and integrate the operations of public sector organizations. The
applications in the Financial Management System are based on government fund
accounting and provide integrated financial management functions including
general ledger, budgeting, purchasing and asset management. The Community
Services System provides a centralized land and location database solution which
expedites access to property data, building permits, planning and zoning
processes, business license information, property appraisals and assessments,
and tax and billing collections. The Public Safety and Justice System offers a
complete solution from dispatch to adjudication through an integrated suite of
applications which provides immediate field access to vital information. The
Utility Management System facilitates electric, water, gas and other utility
services by automating tasks such as customer location maintenance, meter
reading maintenance, bill processing, delinquencies, penalties, refunds and
write-offs. The Education System provides integrated financial management
functions and scheduling functions for school districts (grades K through 12).
All of the Company's applications are designed to work together seamlessly and
allow users to share functions and eliminate redundant data and repetitive
tasks.

As part of HTE's strategy to provide a completely integrated solution to
its customers, the Company also provides a variety of related services,
including maintenance, system planning and implementation, project management,
education and training, the provision and configuration of hardware systems, and
custom applications analysis, design and development. The Company's focus on the
public sector and utility markets has allowed it to develop significant
expertise regarding public sector organizations and to design comprehensive
solutions that address the specific needs of these organizations. The Company
markets and sells its products primarily through a direct sales force operating
out of various locations. As of June 30, 1998, the Company had more than 1,600
customers in the U.S., Caribbean, United Kingdom and Canada, including
installations in all 50 states.

The Company's objective is to be the leading provider of enterprise-wide IT
solutions to the public sector and utility markets. The Company seeks to
accomplish this objective by: (i) promoting integrated enterprise-wide solutions
thereby enabling it to sell additional products to customers who have only a few
of the Company's applications or who prefer products which may be easily
integrated with other applications in the future; (ii) capitalizing on its
public sector and utilities expertise to enhance sales in existing markets and
expanding into new market segments, such as foreign governments and educational
institutions; (iii) aggressively pursuing acquisition opportunities in the
highly fragmented public sector vendor market; (iv) continuing to develop new
applications and incorporate new product functionality into business solutions
that can operate effectively regardless of the customer's platform preference;
and (v) increasing market penetration and expanding its geographic markets by
increasing the size of its sales force and augmenting its collaborative
relationships with customers.

RECENT ACQUISITIONS

In December 1997, the Company purchased the assets of Kb Systems, Inc.
("Kb") for $400,000 in cash and the payment of a continuing royalty on license
fees over a five-year period. For its fiscal year ended June 30, 1997, Kb had
revenues of approximately $1.4 million. As of the date of the acquisition, Kb
had approximately 150 customers. The Kb software applications have enabled the
Company to expand its penetration into governmental tax departments by adding
property appraisal and assessment applications to its traditional tax billing
and collection capability.

In January 1998, the Company purchased the assets of JALAN, Inc. ("JALAN")
for approximately $1.7 million in cash. For its fiscal year ended September 30,
1997, JALAN had revenues of approximately $2.5 million. As of the date of the
acquisition, JALAN had 18 employees and approximately 120 customers in 32
states. The JALAN software applications track inmate information for jails, case
status for courts, defendant case information for district attorneys' and public
defenders' offices, civil papers for sheriff departments, case information for
the probation system and claims for victim compensation.

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In April 1998, the Company completed a pooling of interests acquisition of
Phoenix Systems, LLC ("Phoenix") for 272,036 shares of Common Stock valued at
$3.0 million on or about the closing date. As of the date of the acquisition,
Phoenix had 22 employees and approximately 70 customers. The Phoenix software
applications encompass a complete suite of integrated Windows NT software
products targeted towards financial management and student administration for
school districts (grades K through 12).

In June 1998, the Company completed a pooling of interests acquisition of
UCS, Inc., ("UCS") for 1,120,000 shares of Common Stock valued at $15.0 million
as of the April 1998 agreement valuation date. For its fiscal year ended
December 31, 1997, UCS had revenues of approximately $10.0 million. As of the
date of the acquisition, UCS had approximately 130 employees in its Ft.
Lauderdale, Florida, Golden, Colorado and Vienna, Virginia offices and more than
200 customers throughout the United States. UCS is a leading mobile work force
automation provider of field-based reporting software. UCS's products and
services are utilized by federal, state, county and city government agencies, as
well as police and fire departments. UCS mobile data software enables law
enforcement officials to utilize HTE software through the entire criminal
justice process -- from the first point of contact with a suspect in the field
through the judicial system and throughout the incarceration period.

In July 1998, the Company entered into a letter of intent to acquire the
assets of Vanguard Management & Information Systems, Inc. ("Vanguard") for
$400,000 in cash and the payment of continuing royalties over a five-year
period. Subject to completion of due diligence and the execution of a definitive
purchase agreement, the acquisition is expected to close in the quarter ending
September 30, 1998. Vanguard provides professional management services and
software applications to trial courts and other judicial agencies. The Company
expects the acquisition to expand its justice system product line, enhance its
UNIX client/server offerings, and permit it to respond to proposals for large
scale court administration systems.

Over the past five years, the Company has supplemented its internal growth
with nine acquisitions, four of which have occurred since June 1997. The Company
intends to continue its growth strategy and expects growth from acquisitions to
complement internally generated growth. The Company views acquisitions as a
means of acquiring technology and industry expertise, thereby expanding the
variety of enterprise-wide software applications the Company offers for sale and
servicing, broadening its customer base and expanding internationally. The
Company believes that the public sector application vendor market is highly
fragmented with many small point solution companies and that the industry is
currently entering a period of consolidation. The Company intends to pursue
acquisition opportunities which accomplish its objective of becoming the leading
provider of enterprise-wide IT solutions to the public sector.

The Company's principal executive offices are located at 1000 Business
Center Drive, Lake Mary, Florida 32746 and its telephone number is (407)
304-3235.

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THE OFFERING

Common Stock offered:
By the Company.............................. 1,997,702 shares
By the Selling Shareholders................. 3,552,298 shares(1)

Common Stock to be outstanding after the
Offering...................................... 18,978,756 shares(1)(2)

Use of Proceeds............................... For working capital, other
general corporate purposes and
potential acquisitions. See
"Use of Proceeds."

Nasdaq National Market symbol................. HTEI
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(1) Includes 104,800 shares of Common Stock currently issuable upon exercise of
outstanding stock options, held by certain Selling Shareholders, which
options will be exercised concurrently with or immediately prior to the sale
of such shares. Does not include up to 832,500 shares of Common Stock
issuable upon exercise of the Underwriters' over-allotment option.
(2) Does not include 1,608,260 shares of Common Stock issuable upon exercise of
stock options outstanding as of June 30, 1998, of which 389,760 were
exercisable at that date.

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SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
JUNE 30, 1998
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ACTUAL AS ADJUSTED(3)
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(UNAUDITED)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $10,892 $37,369
Working capital............................................. 23,406 49,883
Total assets................................................ 57,573 84,050
Long term debt.............................................. -- --
Total stockholders' equity.................................. 33,116 59,593
</TABLE>

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(1) Prior to their acquisitions, certain businesses acquired by the Company were
taxed as S corporations. The pro forma net income (loss) reflects historical
data as adjusted for all income being taxed as if it were earned by a C
corporation.
(2) Pro forma net income (loss) per share is determined by dividing pro forma
net income (loss) by the pro forma weighted-average number of shares
outstanding during the period. Pro forma weighted-average number of shares
outstanding for all periods reported, except for the six months ended June
30, 1998, were determined assuming the conversion of the mandatorily
redeemable preferred stock and the mandatorily redeemable Class C common
stock into the Company's Common Stock as of the date it was first issued.
Common share equivalents included in the diluted calculation are computed
using the treasury stock method and consist of common stock which may be
issuable upon the exercise of outstanding stock options, when dilutive.
(3) Gives effect to the sale of 1,997,702 shares of Common Stock offered by the
Company hereby at an assumed offering price of $14.00 per share, the receipt
of proceeds from the exercise of 104,800 stock options exercised
concurrently with or immediately prior to the sale of such shares and the
application of the net proceeds therefrom, after deducting underwriting
discounts and estimated offering expenses.

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<PAGE> 13

RISK FACTORS

The shares offered hereby involve a high degree of risk. The following risk
factors should be considered carefully in addition to the other information in
this Prospectus before purchasing the shares of Common Stock offered hereby.
Except for the historical information contained herein, the discussion in this
Prospectus contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all forward-looking statements wherever
they appear in this Prospectus. The Company's actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include those discussed below, as well as those discussed
elsewhere herein. See "Special Note Regarding Forward-Looking Statements" on
page 54 of this Prospectus.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company's revenues and operating results are subject to quarterly and
other fluctuations resulting from a variety of factors, including the budgeting
and purchasing practices of its customers, the length of customer evaluation
processes for the Company's solutions and the timing of customer system
conversions. Because a substantial portion of revenues may not be generated
until the end of each quarter, the Company may not be able to adjust or reduce
spending in response to sales shortfalls or delays. In addition, the Company's
expense levels are based, in significant part, on the Company's expectations of
future revenues and are therefore relatively fixed in the short term. If
revenues fall below expectations, net income is likely to be adversely affected.
These factors can cause significant variations in operating results from quarter
to quarter. The Company believes that quarter to quarter comparisons of its
financial results are not necessarily meaningful and should not be relied upon
as an indication of future performance. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Overview."

RISKS ASSOCIATED WITH PUBLIC SECTOR MARKET

Substantially all of the Company's revenues to date have been attributable
to sales of software and services rendered to state, county and city
governments, other municipal agencies and publicly owned utilities. The Company
expects that sales to public sector customers will continue to account for
substantially all of the Company's revenues in the future. The sales cycle
associated with the purchase of the Company's products is typically complex,
lengthy and subject to a number of significant risks, including customers'
budgetary constraints and governmental acceptance reviews over which the Company
has little or no control.

For each contract with a public sector customer, the Company is typically
subject to a protracted procurement process. The process can include a detailed
written response to the demonstrations, the design of software that addresses
customer-specified needs, the integration of Company and third party products,
political influences, award protests initiated by unsuccessful bidders and
changes in budgets or appropriations which are beyond the Company's control.
Contracts with public sector customers are typically subject to procurement
policies which may be onerous and may include profit limitations and rights of
the agency to terminate for convenience or if funds are unavailable. Some public
sector customers require liquidated damages for defective products and/or for
delays or interruptions caused by system failures. Payments under some public
sector contracts are subject to achieving implementation milestones, and the
Company has had, and may in the future have, differences with customers as to
whether milestones have been achieved.

Government organizations require compliance with various legal and other
special considerations in the procurement process. The adoption of new or
modified procurement regulations could adversely affect the Company by
increasing costs to the Company of competing for sales or by impacting the
Company's ability to perform government contracts. Any violation (intentional or
otherwise) of these regulations could result in the imposition of fines, and/or
debarment from award of additional government contracts which could have a
material adverse effect on the Company. See "Business -- Industry Background."

8
<PAGE> 14

MANAGEMENT OF GROWTH

As a result of both acquisitions and successful operations, the Company has
recently experienced a period of significant revenue growth and an expansion in
the number of its employees, the scope of its operating and financial systems
and the geographic area of its operations. This growth has resulted in new and
increased responsibility for management personnel and has placed additional
demands upon the Company's operational, administrative and financial resources.
To accommodate recent growth, compete effectively and manage potential future
growth, the Company must continue to implement and improve information systems,
procedures and controls and expand, train, motivate and manage its staff. These
demands will require the addition of new management and other qualified
personnel. There can be no assurance that the Company's personnel, systems,
procedures and controls will be adequate to support the Company's future
operations or to integrate successfully operations and personnel of acquired
entities. Any failure to implement and improve the Company's operational,
financial and management systems, to integrate operations of acquired businesses
or to expand, train, motivate or manage employees could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business -- Employees," and "Management."

ABILITY TO RETAIN AND ATTRACT PERSONNEL

The Company's continued success will depend upon the availability and
performance of its key management, sales, marketing, customer support and
product development personnel. The loss of key management or technical personnel
could adversely affect the Company. The Company believes that its continued
success will depend in large part upon its ability to attract and retain such
personnel. The Company has at times experienced and continues to experience
difficulty in recruiting qualified personnel. Competition for qualified software
development, sales and other personnel is intense, and there can be no assurance
that the Company will be successful in attracting and retaining such personnel.
See "Business -- Employees" and "-- Sales and Marketing," and "Management."

ABILITY TO RESPOND TO TECHNOLOGICAL CHANGE

The Company's future success will depend significantly on its ability to
enhance its current products and develop or acquire and market new products
which keep pace with technological developments and evolving industry standards
as well as respond to changes in customer needs. The market for the Company's
products is characterized by rapid technological change, evolving industry
standards in computer hardware and software technology, changes in customer
requirements and frequent new product introductions and enhancements. The
introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete and unmarketable. As a
result, the Company's future success will depend, in part, upon its ability to
continue to enhance existing products and develop and introduce in a timely
manner or acquire new products that keep pace with technological developments,
satisfy increasingly sophisticated customer requirements and achieve market
acceptance. There can be no assurance that the Company will successfully
identify new product opportunities and develop and bring new products to market
in a timely and cost-effective manner, or that products, capabilities or
technologies developed by others will not render the Company's products or
technologies obsolete or noncompetitive. If the Company is unable to develop or
acquire on a timely and cost-effective basis new software products or
enhancements to existing products, or if such new products or enhancements do
not achieve market acceptance, the Company's business, operating results and
financial condition may be materially adversely affected. See
"Business -- Overview," and "-- Product Development."

RISKS ASSOCIATED WITH ACQUISITIONS

A fundamental element of the Company's strategy is to grow through
acquisitions. As part of its growth strategy, the Company evaluates the
acquisition of other companies, assets or product lines that would complement or
expand its business in attractive geographic or service markets or that would
broaden its customer relationships. There can be no assurance that the Company
will be able to identify suitable acquisition candidates available for sale at
reasonable prices, consummate any acquisition or successfully
9
<PAGE> 15

integrate any acquired business into the Company's operations. The success of
any completed acquisition will depend in large measure on the Company's ability
to integrate the operations of the acquired business with those of the Company
and otherwise to maintain and improve the results of operations of the acquired
business. Acquisitions may involve a number of special risks, including
diversion of management's attention, failure to retain key acquired personnel,
unanticipated events or circumstances, legal liabilities and amortization of
acquired intangible assets, some or all of which could have a material adverse
effect on the Company's business, financial condition and results of operations.
Although the Company conducts due diligence reviews of potential acquisition
candidates, the Company may not identify all material liabilities or risks
related to acquisition candidates.

The Company may elect to finance acquisitions with the proceeds of the
Offering, as well as with possible debt financing or through the issuance of
equity securities, or any combination of the foregoing. There can be no
assurance that the Company will be able to arrange adequate financing on
acceptable terms. If the Company were to consummate one or more significant
acquisitions in which the consideration consisted of stock, shareholders of the
Company could suffer dilution of their interests in the Company. Most of the
businesses that might become attractive acquisition candidates for the Company
are likely to have significant intangible assets, and acquisition of these
businesses, if accounted for as a purchase, would typically result in
substantial amortization charges to the Company, which would reduce future
earnings. In addition, such acquisitions could involve non-recurring
acquisition-related charges, such as write-offs or write-downs of acquired
research and development costs, which could have a material adverse effect on
the Company's results of operations for the accounting period in which such
charges are incurred. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Overview," and "Business -- Strategy."

COMPETITION

The Company believes it is a leading provider of integrated enterprise-wide
solutions for the public sector and utility markets. However, the Company faces
competition from a variety of software vendors that offer products and services
similar to those offered by the Company, and from companies offering to develop
custom software. Certain competitors have greater technical, marketing and
financial resources than the Company. The Company also competes with in-house IT
staffs.

The Company believes the market is highly fragmented with a large number of
competitors that vary in size, primary computer platforms and overall product
scope. The Company competes from time to time with (i) the consulting divisions
of national and regional accounting firms; (ii) companies which focus on
selected segments of the public sector and utilities markets including
PeopleSoft, Inc., Systems & Computer Technology Corp. and J.D. Edwards &
Company, Inc.; and (iii) a significant number of smaller private companies.
There can be no assurance that such competitors will not develop products or
offer services that are superior to the Company's products or services or that
achieve greater market acceptance.

The Company could face additional competition as other established and
emerging companies enter the public sector software application market and new
products and technologies are introduced. Increased competition could result in
price reductions, fewer customer orders, reduced gross margins and loss of
market share. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third-parties, thereby increasing the ability of their products to address the
needs of the Company's prospective customers. It is possible that new
competitors or alliances among current and new competitors may emerge and
rapidly gain significant market share. Further, competitive pressures could
require the Company to reduce the price of its software licenses and related
services. There can be no assurance that the Company will be able to compete
successfully against current and future competitors, and the failure to do so
would have a material adverse effect upon the Company's business, operating
results and financial condition. See "Business -- Overview" and
"-- Competition."

DEPENDENCE ON KEY SUPPLIERS AND STRATEGIC RELATIONSHIPS

The Company purchases certain key components of its products, including the
adapter code and certain application development tools, from single or limited
source suppliers. For certain of these components, there

10
<PAGE> 16

are relatively few suppliers. The Company currently has relatively few
agreements that would assure delivery of such components from such suppliers.
Generally, these contracts are terminable by either party upon 60 to 90 days
notice. Establishing additional or replacement suppliers for any of the numerous
components used in the Company's products, if required, may not be accomplished
or could involve significant additional costs. The ability of any of the
Company's suppliers to provide functional components in a timely manner, or the
inability of the Company to locate qualified alternative suppliers for
components at a reasonable cost, could adversely affect the Company's business,
financial condition and results of operations. The Company's success also
depends in part upon its alliances and relationships with leading hardware and
software vendors. A change in these relationships could have a material adverse
effect on its results of operations and financial condition while the Company
seeks to establish alternative relationships. In addition, substantially all of
the Company's hardware revenues are derived from the sale of IBM AS/400 systems
in connection with the Company's remarketer arrangements with IBM. Any change in
this relationship could have an adverse effect on the Company's financial
performance. The Company may need to establish additional alliances and
relationships in order to keep pace with changes in technology and there can be
no assurance such additional alliances will be established.

The Company relies primarily on distribution channels for sales of its
recently acquired line of field-based reporting software products. The Company
has established strategic marketing alliances with several large vendors for
these products. Other businesses that the Company may acquire in the future may
also sell their products primarily through similar marketing alliances or other
collaborative relationships. The maintenance of those alliances and the
establishment of additional alliances may be necessary for increased market
penetration for such products. Certain of the Company's competitors may have
already established such alliances with desired vendors who, as a result, may
have limited interests in creating alliances with the Company. There can be no
assurance that the Company will be able to negotiate any additional strategic
relationships, that such additional relationships will be available to the
Company on acceptable terms or that any such relationships, if established, will
be commercially successful. Failure to do so could have a material adverse
effect on the Company's business, financial condition and results of operations.

RISKS OF SOFTWARE DEFECTS AND PRODUCT LIABILITY

Software products as complex as those developed by the Company may contain
errors or defects, especially when first introduced or when new versions or
enhancements are released. Although the Company has not experienced material
adverse effects resulting from any such defects or errors to date, there can be
no assurance that material defects and errors will not be found after
commencement of product shipments. Any such defects could result in loss of
revenues or delay market acceptance.

The Company markets complex, mission-critical, enterprise-wide
applications. The Company's license agreements with its customers typically
contain provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective as
a result of existing or future federal, state or local laws or ordinances or
judicial decisions. Although the Company has not experienced any significant
product liability claims to date, the sale and support of software by the
Company may entail the risk of such claims, which may be substantial. A
successful product liability claim brought against the Company could have a
material adverse effect upon the Company's business, operating results and
financial condition. See "Business -- Product Development."

PROPRIETARY RIGHTS, RISKS OF INFRINGEMENT AND SOURCE CODE RELEASE

The Company regards certain features of its internal operations, software
and documentation as confidential and proprietary, and relies on a combination
of contract and trade secret laws and other measures to protect its proprietary
intellectual property. The Company owns no patents and, under existing copyright
laws, has only limited protection for its intellectual property. The Company
believes that, due to the rapid rate of technological change in the computer
software industry, trade secret and copyright protection are less significant
than factors such as the knowledge, ability and experience of the Company's
employees, frequent product enhancements and timeliness and quality of support
services.
11
<PAGE> 17

The Company provides its products to customers under exclusive licenses,
which generally are non-transferable and have a perpetual term. The Company
generally licenses its products solely for the customer's internal operations
and only on designated computers. In certain circumstances, the Company makes
enterprise-wide licenses available for select applications. Although the Company
currently provides object code to its customers and not source code, the Company
historically provided source code to its customers for several products. The
Company has escrowed and continues to escrow its source code for the benefit of
all customers. A misappropriation or other misuse of the Company's intellectual
property, including source codes previously delivered to customers, could have
an adverse effect on the Company. Further, there can be no assurance that third
parties will not assert infringement or misappropriation claims against the
Company in the future with respect to current or future products. Any claims or
litigation, with or without merit, could be time-consuming, result in costly
litigation, diversion of management's attention and cause product shipment
delays or require the Company to enter into royalty or licensing arrangements.
Such royalty or licensing arrangements, if required, may not be available on
terms acceptable to the Company, if at all. Litigation to defend and enforce the
Company's intellectual property rights could result in substantial costs and
diversion of resources and could have a material adverse effect on the Company's
business, financial condition and results of operations, regardless of the final
outcome of such litigation. The Company may be subject to additional risks as it
enters into transactions in countries where intellectual property laws are not
well developed or are poorly enforced. Legal protections of the Company's rights
may be ineffective in such countries. See "Business -- Intellectual Property,
Proprietary Rights and Licenses."

YEAR 2000 COMPLIANCE

Many installed computer systems and software products are coded to accept
only two digit entries in the date code field. These date code fields will need
to accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, in less than two years, computer systems and/or software
used by many organizations may need to be upgraded to comply with such "Year
2000" requirements. Significant uncertainty exists in the software industry
concerning the potential effects associated with such compliance. The Company
does not believe that it has material exposure to the Year 2000 issue with
respect to its own information systems. The Company believes that the current
versions of its products are Year 2000 compliant. The Company regularly runs
regression tests on its software, including tests of the Year 2000 rollover.
Based on the above, it is not expected that the Company's products will be
adversely affected by date changes in the year 2000. However, there can be no
assurance that the Company's products contain and will contain all features and
functionality considered necessary by customers, distributors, resellers and
systems integrators to be Year 2000 compliant. Notwithstanding that the Company
regularly provides free software upgrades to its customers and that recent
upgrades are Year 2000 compliant, certain customers of the Company may still be
running earlier, noncompliant versions of the Company's products. The Company is
in the process of informing customers of the need to migrate to current products
that management believes are Year 2000 compliant. Although the Company believes
that the information systems of its major vendors (insofar as they relate to the
Company's business) comply with Year 2000 requirements, there can be no
assurance that the Year 2000 issue will not affect the information systems of
the Company's major vendors as they relate to the Company's business, or that
any such impact of a major vendor's information system would not have a material
adverse effect on the Company. The Company has no contingency plan as such,
however the Company believes it should be able to identify alternative vendors
if the need arises. The Company anticipates that generally throughout the
software industry substantial litigation may be brought against software vendors
of non-compliant operating environments. Any such claims against the Company,
with or without merit, could have a material adverse effect on the Company's
business, operating results and financial condition. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000 Compliance."

12
<PAGE> 18

RISKS ASSOCIATED WITH INTERNATIONAL SALES

The Company has sold products to customers in Canada, the Caribbean, and
the United Kingdom. Management expects to augment its presence in international
markets. Accordingly, the Company's business, and its ability to expand its
operations internationally, is subject to the risks inherent in international
business activities, including, in particular, greater difficulty in
safeguarding its intellectual property, general economic and political
conditions in each country, foreign currency exchange rate fluctuations, overlap
of different tax structures, difficulty in staffing and managing an organization
spread over various countries (should the Company elect to establish a presence
in international markets rather than through independent sales representatives),
unexpected changes in regulatory requirements, compliance with a variety of
foreign laws and regulations, and longer accounts receivable payment cycles in
certain countries. Other risks associated with international operations include
import and export licensing requirements, trade restrictions and changes in
tariff rates. Any of the foregoing factors could have a material adverse effect
on the Company's ability to expand its international sales. In addition, the
Company must translate its software into foreign languages. To the extent that
the Company is unable to accomplish such translations in a timely manner, the
Company's ability to further penetrate international markets would be adversely
affected. The deeper exposure to international markets creates new areas with
which the Company is not familiar and places the Company in competition with new
vendors. There is no assurance the Company will be successful in its efforts to
compete in these international markets.

If the Company significantly expands its international business, it
anticipates that it will hedge exchange rate movements on either side of a
locked-in spot rate for movements within certain ranges on dollar-foreign
currency rates. Changes in the value of foreign currencies relative to the
dollar beyond the ranges hedged by the Company could affect its financial
condition and results of operations, and gains and losses on currency
translations could contribute to fluctuations in the Company's results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

POTENTIAL VOLATILITY OF STOCK PRICE

The market price of the Common Stock may be volatile and may be
significantly affected by factors such as actual or anticipated fluctuations in
the Company's operating results, announcements of technological innovations, new
products or new contracts by the Company or its competitors, developments with
respect to patents, copyrights or proprietary rights, conditions and trends in
the software and other technology industries, adoption of new accounting
standards affecting the software industry, changes in financial estimates by
securities analysts, general market conditions and other factors. In addition,
the stock market has from time to time experienced significant price and volume
fluctuations that have particularly affected the market prices for the common
stock of technology companies. These broad market fluctuations may adversely
affect the market price of the Common Stock. In the past, following periods of
volatility in the market price of a particular company's securities, securities
class action litigation has often been brought against the company. There can be
no assurance that such litigation will not occur in the future with respect to
the Company; such litigation could result in substantial costs and a diversion
of management's attention and resources, which could have a material adverse
effect upon the Company's business, operating results and financial condition.

CONTROL BY OFFICERS AND DIRECTORS

After the Offering, the present Directors and executive officers of the
Company and their affiliates will beneficially own approximately 33.0% of the
outstanding Common Stock. As a result, these shareholders would likely be able
to effectively control most matters requiring shareholder approval, including
the election of directors and approval of significant corporate transactions.
Such concentration of ownership may have the effect of delaying or preventing a
change in control of the Company. See "Management" and "Principal and Selling
Shareholders."

13
<PAGE> 19

BROAD MANAGEMENT DISCRETION AS TO USE OF PROCEEDS

Substantially all of the net proceeds to be received by the Company in
connection with the Offering will be allocated to working capital and be made
available for general corporate purposes and future acquisitions. Accordingly,
management will have broad discretion with respect to the expenditure of such
proceeds. Purchasers of shares of Common Stock offered hereby will be entrusting
their funds to the Company's management, upon whose judgment they must depend,
with limited information concerning the specific working capital requirements
and general corporate purposes to which the funds will ultimately be applied.
See "Use of Proceeds."

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have 18,978,756 shares
of Common Stock outstanding, substantially all of which will be freely tradeable
without restriction or further registration under the Securities Act other than
shares held by "affiliates" of the Company, as that term is defined in Rule 144
under the Securities Act. The Company, together with its executive officers and
directors, who in the aggregate will own or have the right to acquire 6,271,535
shares of Common Stock upon completion of the Offering, have agreed that they
will not directly or indirectly offer, sell or otherwise dispose of any shares
of Common Stock, or other securities convertible into, or exercisable or
exchangeable for, any shares of Common Stock without the prior written consent
of the Underwriters for a period of 90 days from the date of this Prospectus,
with the exception that the Company may issue shares of Common Stock in
connection with acquisitions that may be made in the future or pursuant to the
exercise of stock options. From time to time the Company may issue shares of
Common Stock to finance acquisitions and in respect thereof, may be required to
register the sale of such shares under the Securities Act. In such event, such
shares would be freely tradeable upon the effectiveness of any such registration
unless subject to other restrictions. Sales of a substantial number of shares of
Common Stock in the public market following this Offering, or the perception
that such sales might occur after the applicable restrictions thereupon lapse,
could have a material adverse effect on the market price of the Common Stock.

ABSENCE OF CASH DIVIDENDS

The Company has not paid cash dividends on its Common Stock in the past.
The Company presently intends to retain earnings for its business and does not
anticipate paying any cash dividends in the foreseeable future. See "Dividend
Policy."

EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS; ANTI-TAKEOVER EFFECTS

Certain provisions of Florida law and the Company's Articles of
Incorporation, as amended ("Amended Articles"), may deter or frustrate a
takeover attempt of the Company that a shareholder might consider in its best
interest. The Company is subject to the "affiliated transactions" and "control
share acquisition" provisions of the Florida Business Corporation Act. These
provisions require, subject to certain exceptions, that an "affiliated
transaction" be approved by the holders of two-thirds of the voting shares other
than those beneficially owned by an "interested shareholder" or by a majority of
disinterested directors. Voting rights must also be conferred on "control
shares" acquired in specified control share acquisitions, generally only to the
extent conferred by resolution approval by the shareholders, excluding holders
of shares defined as "interested shares." In addition, certain provisions of the
Company's Amended Articles or Bylaws, among other things, provide that (i) any
action required or permitted to be taken by the shareholders of the Company may
be effected only at an annual or special meeting of shareholders, and not by
written consent of the shareholders, (ii) the annual meeting of shareholders
shall be held on such date and at such time fixed from time to time by the Board
of Directors, provided that there shall be an annual meeting held every calendar
year, (iii) any special meeting of the shareholders may be called only by the
Chairman of the Board, or upon the affirmative vote of at least a majority of
the members of the Board of Directors, or upon the written demand of the holders
of not less than 50% of the votes entitled to be cast at a special meeting, (iv)
an advance notice procedure must be followed for nomination of directors and for
other shareholder proposals to be considered at annual shareholders' meetings,
and (v) the Company's Board of Directors be divided into
14
<PAGE> 20

three classes, each of which serves for different three-year periods. In
addition, the Company will be authorized to issue additional shares of Common
Stock and up to five million shares of preferred stock in one or more series,
having terms fixed by the Board of Directors without shareholder approval,
including voting, dividend or liquidation rights that could be greater than or
senior to the rights of holders of Common Stock. Issuance of additional shares
of Common Stock or new shares of Preferred Stock could also be used as an
anti-takeover device. See "Management."

USE OF PROCEEDS

The net proceeds from the sale of the 1,997,702 shares offered by the
Company hereby (at an assumed offering price of $14.00 per share and after
deducting the underwriting discount and estimated offering expenses payable by
the Company) are estimated to be approximately $26.0 million. The Company will
not receive any proceeds from the sale of Common Stock by Selling Shareholders.
See "Principal and Selling Shareholders." The Company intends to use net
proceeds from the sale of the shares offered by it for general corporate
purposes, working capital and potential acquisitions. The Company is not a party
to any definitive acquisition agreement, but has entered into a letter of intent
which contemplates an asset acquisition by the Company for a cash purchase price
of $400,000. Pending the application of the net proceeds of the Offering as
described above, the Company will invest the proceeds in short-term, investment
grade, interest-bearing securities.

PRICE RANGE OF COMMON STOCK

The Common Stock is traded on the Nasdaq National Market under the symbol
"HTEI." The following table sets forth, for the quarterly periods indicated, the
high and low sales prices of the Common Stock, as reported on the Nasdaq
National Market. The Common Stock was not publicly traded prior to June 11, 1997
and, therefore, there are no data prior to June 1997.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 1997
Second Quarter.............................................. $ 5.56 $ 5.13
Third Quarter............................................... 7.88 5.25
Fourth Quarter.............................................. 10.38 7.31
FISCAL YEAR ENDING DECEMBER 1998
First Quarter............................................... 11.31 8.75
Second Quarter.............................................. 17.88 11.00
Third Quarter (through August 10, 1998)..................... 17.63 13.50
</TABLE>

Such market quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not necessarily represent actual transactions.
The transfer agent for the Common Stock is Continental Stock Transfer and Trust
Company.

On August 10, 1998, the last sale price of the Common Stock as reported on
the Nasdaq National Market was $14.00 per share. As of June 30, 1998, there were
169 holders of record of the Common Stock. The Company estimates that
approximately 1,260 additional shareholders own Common Stock held for their
accounts at brokerage firms and financial institutions.

DIVIDEND POLICY

HTE has not paid cash dividends on its Common Stock in the past and does
not intend to pay cash dividends in the forseeable future. HTE presently intends
to retain earnings for use in its business with any future decision to pay cash
dividends dependent on its growth, profitability, financial condition and other
factors the Board of Directors may deem relevant.

15
<PAGE> 21

CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1998, on an actual basis, and as adjusted to reflect the issuance and sale
by the Company of 1,997,702 shares of Common Stock at an assumed offering price
of $14.00 per share, the receipt of proceeds from the exercise of 104,800 stock
options exercised concurrently with or immediately prior to the sale of such
shares and the receipt of the estimated net proceeds therefrom. See "Use of
Proceeds." This table should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1998
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity:
Common stock, $0.01 per value, 50,000,000 shares
authorized, 16,819,458 shares issued and outstanding,
actual; 18,921,960 shares issued and outstanding, as
adjusted(1)(2)......................................... $ 168 $ 189
Preferred stock, $0.01 par value, 5,000,000 shares
authorized; none issued and outstanding................ -- --
Additional paid-in capital................................ 28,309 54,765
Retained earnings......................................... 4,672 4,672
Cumulative translation adjustments........................ (33) (33)
------- -------
Total capitalization.............................. $33,116 $59,593
======= =======
</TABLE>

- ---------------

(1) Includes 104,800 shares of Common Stock currently issuable upon exercise of
outstanding stock options held by certain Selling Shareholders, which
options will be exercised concurrently with or immediately prior to the sale
of such shares.
(2) Does not include 1,608,260 shares of Common Stock issuable upon exercise of
stock options outstanding as of June 30, 1998, of which 389,760 were
exercisable at that date. See Note 8 of Notes to Consolidated Financial
Statements.

16
<PAGE> 22

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company as of and
for the year ended March 31, 1994, for the nine months ended December 31, 1995,
for the year ended December 31, 1996, for the six months ended June 30, 1997,
and as of and for the six months ended June 30, 1998, have been derived from
unaudited consolidated financial statements of the Company. In the Company's
opinion, such unaudited consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments (except for the
effect of the change in the estimated life of capitalized computer software
development costs during the year ended March 31, 1996), necessary for a fair
presentation of the financial position and results of operations for such
periods. The selected consolidated financial data of the Company as of March 31,
1995 and 1996, and for the year ended March 31, 1995, have been derived from
consolidated financial statements audited by Arthur Andersen LLP. The selected
consolidated financial data of the Company as of December 31, 1996 and 1997, and
for the years ended March 31, 1996 and December 31, 1997, and the nine months
ended December 31, 1996, have been derived from and are qualified by reference
to the Company's Consolidated Financial Statements audited by Arthur Andersen
LLP, independent certified public accountants, included elsewhere herein. The
selected consolidated financial data set forth below should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED SIX MONTHS ENDED
YEAR ENDED MARCH 31, DECEMBER 31, DECEMBER 31, JUNE 30,
--------------------------- ----------------- ----------------- -----------------
1994 1995 1996 1995 1996 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues:
Software licenses........... $ 6,397 $10,498 $11,575 $ 6,791 $10,869 $15,847 $26,762 $12,049 $19,801
Professional services....... 6,372 8,390 10,686 7,376 8,943 11,715 14,543 7,498 9,454
Hardware.................... 2,731 6,802 7,323 5,836 7,740 9,219 11,768 4,640 5,477
Maintenance and other....... 3,598 7,842 10,013 8,020 6,950 9,040 12,571 5,997 8,362
Resource management......... -- -- -- -- -- -- 448 -- 723
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues........ 19,098 33,532 39,597 28,023 34,502 45,821 66,092 30,184 43,817
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating expenses:
Cost of software licenses... 1,385 1,433 3,585 2,794 2,919 3,742 5,283 2,207 3,016
Cost of professional
services.................. 4,639 6,144 7,608 5,629 4,952 6,728 8,363 4,159 5,546
Cost of hardware............ 2,003 6,240 5,774 4,656 6,186 7,308 9,209 3,570 4,378
Cost of maintenance and
other..................... 2,093 5,092 4,233 3,168 2,705 3,598 5,984 2,877 4,400
Cost of resource
management................ -- -- -- -- -- -- 343 -- 467
Research and development.... 2,087 3,174 4,508 3,310 5,242 6,537 8,256 4,064 6,226
Sales and marketing......... 2,845 4,610 5,474 3,949 6,186 7,742 11,520 5,133 8,322
General and
administrative............ 4,579 5,565 6,764 5,006 5,830 7,702 10,925 5,488 7,063
------- ------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses............ 19,631 32,258 37,946 28,512 34,020 43,357 59,883 27,498 39,418
------- ------- ------- ------- ------- ------- ------- ------- -------
Operating income (loss)....... (533) 1,274 1,651 (489) 482 2,464 6,209 2,686 4,399
Interest expense (income)..... 135 104 127 70 191 248 (227) 126 (255)
------- ------- ------- ------- ------- ------- ------- ------- -------
Income (loss) before income
taxes....................... (668) 1,170 1,524 (559) 291 2,216 6,436 2,560 4,654
Provision (benefit) for income
taxes....................... (109) 139 211 (605) 581 1,397 2,482 803 2,145
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)............. (559) 1,031 1,313 46 (290) 819 3,954 1,757 2,509
Accretion and accrual of
dividends on mandatorily
redeemable preferred
stock....................... -- 84 184 138 1,003 1,049 1,308 1,308 --
------- ------- ------- ------- ------- ------- ------- ------- -------
Net income (loss)
attributable to
common
stockholders........ $ (559) $ 947 $ 1,129 $ (92) $(1,293) $ (230) $ 2,646 $ 449 $ 2,509
======= ======= ======= ======= ======= ======= ======= ======= =======
PRO FORMA OPERATIONS DATA:
Income (loss) before income
taxes....................... $ (668) $ 1,170 $ 1,524 $ (559) $ 291 $ 2,216 $ 6,436 $ 2,560 $ 4,654
Pro forma provision (benefit)
for income taxes............ (279) 508 593 (265) 158 956 2,463 1,005 1,756
------- ------- ------- ------- ------- ------- ------- ------- -------
Pro forma net income (loss)
(1)......................... $ (389) $ 662 $ 931 $ (294) $ 133 $ 1,260 $ 3,973 $ 1,555 $ 2,898
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

17
<PAGE> 23

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
--------------------------- ----------------- JUNE 30,
1994 1995 1996 1996 1997 1998
------- ------- ------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 902 $ 1,738 $ 1,143 $ 1,038 $18,634 $10,892
Working capital (deficit)................................... (2,516) (307) 782 387 24,387 23,406
Total assets................................................ 9,786 16,084 21,514 27,415 54,208 57,573
Long term debt.............................................. 150 75 -- 240 -- --
Total stockholders' equity (deficit)................ (206) 75 1,166 (175) 30,292 33,116
</TABLE>

- ---------------

(1) Prior to their acquisitions, certain businesses acquired by the Company were
taxed as S corporations. The pro forma net income (loss) reflects historical
data as adjusted for all income being taxed as if it were earned by a C
corporation.
(2) Pro forma net income (loss) per share is determined by dividing pro forma
net income (loss) by the pro forma weighted-average number of shares
outstanding during the period. Pro forma weighted-average number of shares
outstanding for all periods reported except for the six months ended June
30, 1998, were determined assuming the conversion of the mandatorily
redeemable preferred stock and the mandatorily redeemable Class C common
stock into the Company's Common Stock as of the date it was first issued.
Common share equivalents included in the diluted calculation are computed
using the treasury stock method and consist of Common Stock which may be
issuable upon the exercise of outstanding stock options, when dilutive.

18
<PAGE> 24

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's Consolidated Financial
Statements, including the Notes thereto, appearing elsewhere in this Prospectus.
This description contains certain forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ significantly from
the results discussed in the forward-looking statements as a result of certain
of the factors set forth under "Risk Factors" and elsewhere in this Prospectus.

OVERVIEW

The Company develops, markets, implements and supports fully integrated
enterprise-wide software applications designed specifically for public sector
organizations, including state, county and city governments and other municipal
agencies and for public and private utilities. For over 16 years, the Company
has strategically focused on providing software applications exclusively to
middle market public sector organizations and utilities, and has established
itself as a leading provider of software solutions to those markets. HTE's fully
integrated enterprise-wide software applications are designed to fulfill the
specific functional requirements of the public sector marketplace, such as
improvement of delivery of services, reduction of costs, enhancement of revenue
collection, operation within budgetary constraints, compliance with government
regulations and improvement of overall operating efficiencies. The Company's
Total Enterprise Solution currently includes more than 50 applications
addressing five functional areas: financial management, community services,
public safety and justice, education and utility management. The Company's
products operate as integrated suites or as stand-alone applications and
function with a variety of computer and network hardware, operating systems,
database software and desktop applications provided by other vendors. As part of
its strategy to provide a completely integrated solution to its customers, the
Company also provides a variety of related services, including consulting,
implementation, education and training, and the provision and configuration of
hardware systems.

The Company provides its software applications and business solutions to
customers in public sector and utility markets under license agreements and
service contracts. HTE's revenues are generated principally from (i) software
licenses that grant customers the right to use the Company's software products,
(ii) professional services derived from a variety of services related to the
implementation of the Company's software, including project management, custom
programming, consulting, conversion and education programs, systems planning and
integration and other services, (iii) sales of hardware such as computers, data
collection equipment, peripherals and related network and communications
products purchased from third-parties and sold by the Company to its software
customers, (iv) maintenance and other revenues which include revenues associated
with annual software maintenance and support services, and (v) resource
management revenues derived from IT outsourcing services designed to assume
total or partial control and responsibility of customers' information resources,
generally on a long-term basis.

The Company recognizes revenues from software licenses when the related
license agreement has been executed and the software has been shipped to the
customer, provided that no significant Company obligations remain related to the
software license and collection of the receivable is deemed probable. The
Company typically contracts professional services on a time and materials basis
and such revenues are recognized as services are performed. Hardware revenues
are recognized at the time the products are shipped. The Company drop-ships
hardware directly to the customer and does not carry hardware inventory.
Revenues from maintenance and other are recognized ratably over the term of the
applicable maintenance agreement. Resource management revenues are recognized
monthly as services are performed, according to the contractually agreed upon
rate.

The sales cycle for the Company's systems is typically six to 18 months
from initial contact to contract signing. The product delivery cycle varies
based on the customer's implementation plan. Complete product implementation
typically occurs within six to nine months, but can extend beyond nine months on
contracts involving significant and continuing customer service requirements,
particularly with enterprise-wide solutions.

19
<PAGE> 25

Accordingly, the product delivery cycle depends upon the combination of products
purchased and the defined implementation plan.

The Company accounts for costs related to computer software in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed." All costs
incurred to establish technological feasibility of a software product are
charged to research and development expense as incurred. Technological
feasibility is established when the Company has completed all planning,
designing, coding and testing activities that are necessary to establish that
the product can be produced to meet its design specifications, including
functions, features and technical performance requirements. Costs of producing
product masters incurred subsequent to establishing technological feasibility
are capitalized and are amortized on a straight-line basis over three years once
the product is available for general release to customers. The Company ceases
capitalization when the product is available for general release to customers.
Effective April 1, 1995, management changed the estimated useful life of
capitalized software development costs from 60 months to 36 months. As a result,
the Company recognized additional amortization expense of $1.3 million during
the year ended March 31, 1996. This change was reflected in the cost of software
licenses and resulted in an increase as a percentage of software license
revenues from 19.7% to 31.0% for the year ended March 31, 1996.

The Company derives substantially all of its revenues from domestic
operations. In November 1996, HTE established a presence in Canada through an
acquisition.

The Company's revenues and operating results are subject to quarterly and
other fluctuations resulting from a variety of factors, including the effect of
budgeting and purchasing practices of its customers, the length of the customer
evaluation process for the Company's solutions, the timing of customer system
conversions, and the Company's sales practices. Historically, the Company has
achieved its highest income in the fiscal quarter ended March 31 due to the
Company's sales practices. In 1996, the Company implemented a new sales and
marketing program and changed its fiscal year end to December 31, which the
Company believes will have the effect of moderating such fluctuations. Because
of these changes, the Company believes that historical quarterly operating data
should not be relied upon as an indicator of its future performance. However,
the Company has often recognized a substantial portion of its revenues during
the last month of each quarter. Since a significant portion of the Company's
operating expenses is relatively fixed, the Company may not be able to adjust or
reduce spending in response to sales shortfalls or delays. These factors can
cause significant variations in operating results from quarter to quarter. The
Company believes that quarter to quarter comparisons of its financial results
are not necessarily meaningful and should not be relied upon as an indication of
its future performance.

Recent Acquisitions

In December 1997, the Company purchased the assets of Kb for $400,000 in
cash and the payment of a continuing royalty on license fees over a five-year
period. For its fiscal year ended June 30, 1997, Kb had revenues of
approximately $1.4 million. As of the date of the acquisition, Kb had
approximately 150 customers. The Kb software applications have enabled the
Company to expand its penetration into governmental tax departments by adding
property appraisal and assessment applications to its traditional tax billing
and collection capability.

In January 1998, the Company purchased the assets of JALAN for
approximately $1.7 million in cash. For its fiscal year ended September 30,
1997, JALAN had revenues of approximately $2.5 million. As of the date of the
acquisition, JALAN had 18 employees and approximately 120 customers in 32
states. The JALAN software applications track inmate information for jails, case
status for courts, defendant case information for district attorneys' and public
defenders' offices, civil papers for sheriff departments, case information for
the probation system and claims for victim compensation.

In April 1998, the Company completed a pooling of interests acquisition of
Phoenix for 272,036 shares of Common Stock valued at $3.0 million on or about
the closing date. As of the date of the acquisition, Phoenix had 22 employees
and approximately 70 customers. The Phoenix software applications encompass a
complete

20
<PAGE> 26

suite of integrated Windows NT software products targeted towards financial
management and student administration for school districts (grades K through
12).

In June 1998, the Company completed a pooling of interests acquisition of
UCS for 1,120,000 shares of Common Stock valued at $15.0 million as of the April
1998 agreement valuation date. For its fiscal year ended December 31, 1997, UCS
had revenues of approximately $10.0 million. As of the date of the acquisition
UCS had approximately 130 employees in its Ft. Lauderdale, Florida, Golden,
Colorado and Vienna, Virginia offices and more than 200 customers throughout the
United States. UCS is a leading mobile work force automation provider of
field-based reporting software. UCS's products and services are utilized by
federal, state, county and city government agencies, as well as police and fire
departments. UCS mobile data software enables law enforcement officials to
utilize HTE software through the entire criminal justice process -- from the
first point of contact with a suspect in the field through the judicial system
and throughout the incarceration period.

In July 1998, the Company entered into a letter of intent to acquire the
assets of Vanguard for $400,000 in cash and the payment of continuing royalties
over a five-year period. Subject to completion of due diligence and the
execution of a definitive purchase agreement, the acquisition is expected to
close in the quarter ending September 30, 1998. Vanguard provides professional
management services and software applications to trial courts and other judicial
agencies. The Company expects the acquisition to expand its justice system
product line, enhance its UNIX client/server offerings, and permit it to respond
to proposals for large scale courts administration systems.

Future Acquisitions

Over the past five years, the Company has supplemented its internal growth
with nine acquisitions, four of which have occurred since June 1997. The Company
intends to continue its growth strategy and expects growth from acquisitions to
complement internally generated growth. The Company views acquisitions as a
means of acquiring technology and industry expertise thereby expanding the
variety of enterprise-wide software applications the Company offers for sale and
servicing, broadening its customer base and expanding internationally. The
Company believes that the public sector application vendor market is highly
fragmented with many small point solution companies and that the industry is
currently entering a period of consolidation. The Company intends to pursue
acquisition opportunities which help it to accomplish its objective of becoming
the leading provider of enterprise-wide IT solutions to the public sector.

21
<PAGE> 27

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain
revenues, income and expense items expressed as a percentage of the Company's
total revenues:

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997

Revenues

The Company's total revenues increased by 45% to $43.8 million for the six
months ended June 30, 1998, from $30.2 million for the six months ended June 30,
1997.

Software Licenses Revenues. Software licenses revenues increased by 64% to
$19.8 million for the six months ended June 30, 1998, from $12.0 million for the
six months ended June 30, 1997. As a percentage of total revenues, software
license revenues increased to 45.2% for the six months ended June 30, 1998, from
39.9% for the six months ended June 30, 1997. The dollar and percentage
increases resulted primarily from an increased number of software applications
available for sale and a continued investment in sales and marketing activities.

Professional Services Revenues. Professional services revenues increased
by 26% to $9.5 million for the six months ended June 30, 1998, from $7.5 million
for the six months ended June 30, 1997. As a percentage of total revenues,
professional services revenues decreased to 21.6% for the six months ended June
30, 1998, from 24.8% for the six months ended June 30, 1997. The dollar increase
in professional services was directly related to the increase in license fees
and service offerings. The decrease in professional services revenues as a
percentage of total revenues was primarily due to an increase in the sale of
products requiring less implementation services, along with an increased backlog
of services revenues associated with license fee bookings in the period.

Hardware Revenues. Hardware revenues increased by 18% to $5.5 million for
the six months ended June 30, 1998, from $4.6 million for the six months ended
June 30, 1997. As a percentage of total revenues, hardware revenues decreased to
12.5% for the six months ended June 30, 1998, from 15.4% for the six months
ended June 30, 1997. The dollar increase was primarily due to the increased
number of license fee contracts executed that required the installation of
hardware. The decrease in hardware revenues as a percentage of total
22
<PAGE> 28

revenues was primarily due to a larger number of sales of software licenses to
customers who did not require additional hardware.

Maintenance and Other Revenues. Maintenance and other revenues increased
by 39% to $8.4 million for the six months ended June 30, 1998, from $6.0 million
for the six months ended June 30, 1997. As a percentage of total revenues,
maintenance and other revenues decreased to 19.1% for the six months ended June
30, 1998, from 19.9% for the six months ended June 30, 1997. The dollar increase
was primarily due to maintenance contracts associated with new software
licenses, customer system upgrades and price increases in the fees charged for
annual maintenance. The decrease in maintenance and other revenues as a
percentage of total revenues was primarily due to the lag time between the sale
and booking of software licenses and the commencement of annual maintenance
contracts.

Resource Management Revenues. Resource management revenues were $723,000
or 1.6% of total revenues for the six months ended June 30, 1998. There were no
comparable revenues for the six months ended June 30, 1997 as this division
began operations in the fourth quarter of 1997.

Cost of Revenues

Cost of Software Licenses Revenues. Cost of software licenses includes
third party royalties and amortization of computer software development costs.
Cost of software licenses increased by 37% to $3.0 million for the six months
ended June 30, 1998, from $2.2 million for the six months ended June 30, 1997.
As a percentage of software license revenues, cost of software licenses
decreased to 15.2% for the six months ended June 30, 1998, from 18.3% for the
six months ended June 30, 1997. The dollar increase resulted primarily from an
increased number of third party software licenses sold, specifically module
enhancements such as report writers and imaging products. The decrease in the
cost of software licenses as a percentage of software license revenues was
primarily due to the growth of internal software licenses which exceeded the
growth of third party software licenses.

Cost of Professional Services Revenues. Cost of professional services
consists primarily of personnel costs and other costs related to the services
business. Cost of professional services increased by 33% to $5.5 million for the
six months ended June 30, 1998, from $4.2 million for the six months ended June
30, 1997. As a percentage of professional services revenues, cost of
professional services increased to 58.7% for the six months ended June 30, 1998,
from 55.5% for the six months ended June 30, 1997. The dollar increase was
directly related to increased professional services revenues. The increase in
cost of professional services as a percentage of professional services revenues
was primarily due to lower utilization rates resulting from an increased number
of non-billable consultants in training.

Cost of Hardware Revenues. Cost of hardware consists primarily of costs
payable to vendors for hardware. Cost of hardware increased by 23% to $4.4
million for the six months ended June 30, 1998, from $3.6 million for the six
months ended June 30, 1997. As a percentage of hardware revenues, cost of
hardware increased to 79.9% for the six months ended June 30, 1998, from 76.9%
for the six months ended June 30, 1997. The dollar increase was related to the
increased hardware sales in the period. The increase in the cost of hardware as
a percentage of hardware revenues was primarily due to the higher number of and
smaller size of new contracts signed.

Cost of Maintenance and Other Revenues. Cost of maintenance and other
consists primarily of seven days a week, 24 hours a day telephone support,
documentation and related administrative and personnel expenses. Cost of
maintenance and other increased by 53% to $4.4 million for the six months ended
June 30, 1998, from $2.9 million for the six months ended June 30, 1997. As a
percentage of maintenance and other revenues, cost of maintenance and other
increased to 52.6% for the six months ended June 30, 1998, from 48.0% for the
six months ended June 30, 1997. The dollar and percentage increases were
primarily due to investment in a new customer interaction software system and
increased personnel to enhance products and support a larger client base.

Cost of Resource Management Revenues. Cost of resource management consists
primarily of personnel, hardware and administrative costs associated with
managing data processing operations. Cost of resource management was $467,000
for the six months ended June 30, 1998. As a percentage of resource management
revenues, costs of resource management was 64.6% for the six months ended June
30, 1998. There were no
23
<PAGE> 29

comparable costs for the six months ended June 30, 1997, as this division began
operations in the fourth quarter of 1997.

Research and Development Expenses. Research and development expenses are
comprised primarily of salaries and a portion of the Company's overhead for its
in-house staff and amounts paid to outside consultants to supplement the product
development efforts of its in-house staff. Research and development expenses
increased by 53% to $6.2 million for the six months ended June 30, 1998, from
$4.1 million for the six months ended June 30, 1997. As a percentage of total
revenues, research and development increased to 14.2% for the six months ended
June 30, 1998, from 13.5% for the six months ended June 30, 1997. The dollar and
percentage increases were primarily due to increased staffing levels and
expenses for additional software and hardware required for the development of
additional products and platforms as well as maintenance and enhancements of
existing products.

Sales and Marketing Expenses. Sales and marketing expenses consist
primarily of salaries, commissions, travel related benefits and administrative
costs allocated to the Company's sales and marketing personnel. Sales and
marketing expenses increased by 62% to $8.3 million for the six months ended
June 30, 1998, from $5.1 million for the six months ended June 30, 1997. As a
percentage of total revenues, sales and marketing increased to 19.0% for the six
months ended June 30, 1998, from 17.0% for the six months ended June 30, 1997.
The dollar and percentage increases were attributable to the Company's continued
expansion of its direct sales force, increased marketing efforts, travel and
other expenses related to increased sales activity.

General and Administrative Expenses. General and administrative expenses
include the costs of corporate operations, finance and accounting, human
resources and other general operations of the Company. General and
administrative expenses increased by 29% to $7.1 million for the six months
ended June 30, 1998, from $5.5 million for the six months ended June 30, 1997.
As a percentage of total revenues, general and administrative expenses decreased
to 16.1% for the six months ended June 30, 1998, from 18.2% for the six months
ended June 30, 1997. The dollar increase was due to additional staffing,
additional facility related expenses and additional computer equipment and
software required to build the infrastructure to support the Company's growth.
The decrease in general and administrative expenses as a percentage of total
revenues was primarily due to leveraging of existing resources. In the period
ended June 30, 1998, the Company recorded a non-recurring charge of $237,000
related to the acquisitions of Phoenix and UCS. In the period ended June 30,
1997, the Company incurred non-recurring expenses of $300,000 related to the
relocation and closing of certain offices.

Provision for Income Taxes. The Company's income taxes have been recorded
on a quarterly basis based on the Company's anticipated annual tax rate.
However, during the six months ended June 30, 1998, the Company recorded a
non-recurring deferred income tax charge of $339,000 in connection with the
acquisitions of UCS and Phoenix. This provision recorded the deferred tax
liabilities of UCS and Phoenix due to changes in tax status on the acquisition
dates for federal income tax reporting purposes.

Year Ended December 31, 1997 Compared to Year Ended December 31, 1996

Revenues

The Company's total revenues increased by 44% to $66.1 million for the year
ended December 31, 1997, from $45.8 million for the year ended December 31,
1996.

Software Licenses Revenues. Software licenses revenues increased by 69% to
$26.8 million for the year ended December 31, 1997, from $15.8 million for the
year ended December 31, 1996. As a percentage of total revenues, software
license revenues increased to 40.5% for the year ended December 31, 1997, from
34.6% for the year ended December 31, 1996. The dollar and percentage increases
resulted from an increased number of applications available for sale and an
increased investment in sales and marketing.

Professional Services Revenues. Professional services revenues increased
by 24% to $14.5 million for the year ended December 31, 1997, from $11.7 million
for the year ended December 31, 1996. As a percentage of total revenues,
professional services revenues decreased to 22.0% for the year ended December
31, 1997, from 25.6% for the year ended December 31, 1996. The dollar increase
was primarily due to the Company's

24
<PAGE> 30

increased number of services offered. The decrease in professional services
revenues as a percentage of total revenues was primarily due to strong growth in
revenues from software licenses, along with an increase in related professional
services backlog.

Hardware Revenues. Hardware revenues increased by 28% to $11.8 million for
the year ended December 31, 1997, from $9.2 million for the year ended December
31, 1996. As a percentage of total revenues, hardware revenues decreased to
17.8% for the year ended December 31, 1997, from 20.1% for the year ended
December 31, 1996. The dollar increase resulted from the Company's expansion of
its third-party re-marketing sales through IBM. The decrease in hardware
revenues as a percentage of total revenues was primarily due to stronger growth
in software license revenues.

Maintenance and Other Revenues. Maintenance and other revenues increased
by 39% to $12.6 million for the year ended December 31, 1997, from $9.0 million
for the year ended December 31, 1996. As a percentage of total revenues,
maintenance and other revenues decreased to 19.0% for the year ended December
31, 1997, from 19.7% for the year ended December 31, 1996. The dollar increase
resulted from maintenance contracts associated with new software licenses,
customer system upgrades and price increases in the fees charged for annual
maintenance. The decrease in maintenance and other revenues as a percentage of
total revenues was primarily due to stronger growth in software license
revenues.

Resource Management Revenues. During 1997, the Company began offering the
resource management service that allows customers to turn over management of all
computer related functions. In October 1997, the Company signed its first
resource management contract with Seminole County, Florida. Resource management
revenues for the year ended December 31, 1997 were $448,000 or 0.7% of total
revenues.

Cost of Revenues

Cost of Software Licenses Revenues. Cost of software licenses increased by
41% to $5.3 million for the year ended December 31, 1997, from $3.7 million for
the year ended December 31, 1996. As a percentage of software license revenues,
cost of software licenses decreased to 19.7% for the year ended December 31,
1997, from 23.6% for the year ended December 31, 1996. The dollar increase
resulted from an increased number of software licenses. The decrease in the cost
of software licenses as a percentage of software license revenues was primarily
due to the growth of internal software licenses which exceeded the growth of
third party software licenses.

Cost of Professional Services Revenues. Cost of professional services
increased by 24% to $8.4 million for the year ended December 31, 1997, from $6.7
million for the year ended December 31, 1996. As a percentage of professional
services revenues, cost of professional services increased to 57.5% for the year
ended December 31, 1997, from 57.4% for the year ended December 31, 1996. The
dollar increase resulted from the growth in professional services revenues.

Cost of Hardware Revenues. Cost of hardware increased by 26% to $9.2
million for the year ended December 31, 1997, from $7.3 million for the year
ended December 31, 1996. As a percentage of hardware revenues, cost of hardware
decreased to 78.3% for the year ended December 31, 1997, from 79.3% for the year
ended December 31, 1996. The dollar increase is directly related to the
increased hardware sales. The decrease in the cost of hardware revenues as a
percentage of hardware revenues was primarily due to slightly improved margins
on the larger hardware transactions.

Cost of Maintenance and Other Revenues. Cost of maintenance and other
increased by 66% to $6.0 million for the year ended December 31, 1997, from $3.6
million for the year ended December 31, 1996. As a percentage of maintenance and
other revenues, cost of maintenance and other increased to 47.6% for the year
ended December 31, 1997, from 39.8% for the year ended December 31, 1996. The
dollar increase was primarily due to investment in new customer support
processes, increased personnel to enhance products and additional computer
equipment required to handle graphical user interfaces. The increase in the cost
of maintenance and other revenues as a percentage of maintenance and other
revenues was primarily due to costs related to building infrastructure to
accommodate the growth in client base.

25
<PAGE> 31

Cost of Resource Management Revenues. Cost of resource management was
$343,000 for the year ended December 31, 1997. As a percentage of resource
management revenues, cost of resource management was 76.6% for the year ended
December 31, 1997. There were no comparable costs for the year ended December
31, 1996, as this division began operations in the fourth quarter of 1997.

Research and Development Expenses. Research and development expenses
increased by 26% to $8.3 million for the year ended December 31, 1997, from $6.5
million for the year ended December 31, 1996. As a percentage of total revenues,
research and development expenses decreased to 12.5% for the year ended December
31, 1997, from 14.3% for the year ended December 31, 1996. The dollar increase
was primarily due to increased staffing levels and associated costs and expenses
related to additional software and hardware required to enable the development
of additional products and platforms. The decrease in research and development
expenses as a percentage of total revenues was primarily due to revenues growing
at a faster rate than research and development expenditures.

Sales and Marketing Expenses. Sales and marketing expenses increased by
49% to $11.5 million for the year ended December 31, 1997, from $7.7 million for
the year ended December 31, 1996. As a percentage of total revenues, sales and
marketing expenses increased to 17.4% for the year ended December 31, 1997, from
16.9% for the year ended December 31, 1996. The dollar and percentage increases
were attributable to the Company's continued expansion of its direct sales
force, increased marketing efforts, travel and other expenses related to
increased sales activity.

General and Administrative Expenses. General and administrative expenses
increased by 42% to $10.9 million for the year ended December 31, 1997, from
$7.7 million for the year ended December 31, 1996. As a percentage of total
revenues, general and administrative expenses decreased to 16.5% for the year
ended December 31, 1997, from 16.8% for the year ended December 31, 1996. The
dollar increase was due to additional staffing, space, computer equipment and
software required to build the infrastructure to support the Company's growth.
The decrease in general and administrative expenses as a percentage of total
revenues was primarily due to the leveraging of existing resources.

Nine Months Ended December 31, 1996 Compared to Nine Months Ended December 31,
1995

Revenues

The Company's total revenues increased by 23% to $34.5 million for the nine
months ended December 31, 1996, from $28.0 million for the nine months ended
December 31, 1995.

Software Licenses Revenues. Software licenses revenues increased by 60% to
$10.9 million for the nine months ended December 31, 1996, from $6.8 million for
the nine months ended December 31, 1995. As a percentage of total revenues,
software license revenues increased to 31.5% for the nine months ended December
31, 1996, from 24.2% for the nine months ended December 31, 1995. The dollar and
percentage increases resulted primarily from an increased number of applications
available for sale combined with the benefits of an increased investment in
sales and marketing.

Professional Services Revenues. Professional services revenues increased
by 21% to $8.9 million for the nine months ended December 31, 1996, from $7.4
million for the nine months ending December 31, 1995. As a percentage of total
revenues, professional services revenues decreased to 25.9% for the nine months
ended December 31, 1996, from 26.3% for the nine months ended December 31, 1995.
The dollar increase was primarily due to the increase in the number of its
service offerings. The decrease in professional services revenues as a
percentage of total revenues was primarily due to the impact of a large contract
that ended in the year ended December 31, 1995.

Hardware Revenues. Hardware revenues increased by 33% to $7.7 million for
the nine months ended December 31, 1996, from $5.8 million for the nine months
ended December 31, 1995. As a percentage of total revenues, hardware revenues
increased to 22.4% for the nine months ended December 31, 1996, from 20.9% for
the nine months ended December 31, 1995. The dollar and percentage increases
were primarily due to the Company's expansion of its third party remarketing
sales through IBM.

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Maintenance and Other Revenues. Maintenance and other revenues decreased
by 13% to $7.0 million for the nine months ended December 31, 1996, from $8.0
million for the nine months ended December 31, 1995. As a percentage of total
revenues, maintenance and other revenues decreased to 20.2% for the nine months
ended December 31, 1996, from 28.6% for the nine months ended December 31, 1995.
The dollar and percentage decreases were primarily due to a large support
contract in the nine months ended December 31, 1995.

Cost of Revenues

Cost of Software Licenses Revenues. Cost of software licenses increased by
5% to $2.9 million for the nine months ended December 31, 1996, from $2.8
million for the nine months ended December 31, 1995. As a percentage of software
license revenues, cost of software licenses decreased to 26.9% for the nine
months ended December 31, 1996, from 41.1% for the nine months ended December
31, 1995. Excluding the charge related to the acceleration of amortization of
computer software development costs of $1.0 million during the nine months ended
December 31, 1995, the increase was $1.1 million or 62% in the nine months ended
December 31, 1996 compared to the nine months ended December 31, 1995. This
change was primarily due to increased costs related to third party public safety
products.

Cost of Professional Services Revenues. Cost of professional services
decreased by 12% to $5.0 million for the nine months ended December 31, 1996,
from $5.6 million for the nine months ended December 31, 1995. As a percentage
of professional services revenues, cost of professional services decreased to
55.4% for the nine months ended December 31, 1996, from 76.3% for the nine
months ended December 31, 1995. The dollar and percentage decreases resulted
from minimizing non-billable travel and other administrative costs as this line
of business expanded.

Cost of Hardware Revenues. Cost of hardware increased by 33% to $6.2
million for the nine months ended December 31, 1996, from $4.7 million for the
nine months ended December 31, 1995. As a percentage of hardware revenues, cost
of hardware increased to 79.9% for the nine months ended December 31, 1996, from
79.8% for the nine months ended December 31, 1995. The dollar increase is
directly related to increased sales of hardware.

Cost of Maintenance and Other Revenues. Cost of maintenance and other
decreased by 15% to $2.7 million for the nine months ended December 31, 1996,
from $3.2 million for the nine months ended December 31, 1995. As a percentage
of maintenance and other revenues, cost of maintenance and other decreased to
38.9% for the nine months ended December 31, 1996, from 39.5% for the nine
months ended December 31, 1995. The dollar and percentage decreases were
primarily due to a large support contract in 1995.

Research and Development Expenses. Research and development expenses
increased by 58% to $5.2 million for the nine months ended December 31, 1996,
from $3.3 million for the nine months ended December 31, 1995. As a percentage
of total revenues, research and development expenses increased to 15.2% for the
nine months ended December 31, 1996, from 11.8% for the nine months ended
December 31, 1995. The dollar increase was primarily due to increased staffing
levels and associated costs. The increase in research and development expenses
as a percentage of total revenues was primarily due to increased staffing levels
and expenses for additional software and hardware required for the development
of additional products and platforms as well as maintenance and enhancements of
existing products.

Sales and Marketing Expenses. Sales and marketing expenses increased by
57% to $6.2 million for the nine months ended December 31, 1996, from $3.9
million for the nine months ended December 31, 1995. As a percentage of total
revenues, sales and marketing expenses increased to 17.9% for the nine months
ended December 31, 1996, from 14.1% for the nine months ended December 31, 1995.
The dollar and percentage increases were attributable to the Company's expansion
of its direct sales force, increased marketing efforts, travel and other
expenses related directly to increased sales activity.

General and Administrative Expenses. General and administrative expenses
increased by 17% to $5.8 million for the nine months ended December 31, 1996,
from $5.0 million for the nine months ended

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<PAGE> 33

December 31, 1995. As a percentage of total revenues, general and administrative
expenses decreased to 16.9% for the nine months ended December 31, 1996, from
17.9% for the nine months ended December 31, 1995. The dollar increase was
primarily due to additional staffing in finance and accounting, human resources
and contract administration required to support the Company's growth. The
decrease in general and administrative expenses as a percentage of total
revenues was primarily due to better leveraging of resources compared to growth
in revenues.

Year Ended March 31, 1996 Compared to Year Ended March 31, 1995

Revenues

The Company's total revenues increased by 18% to $39.6 million for the year
ended March 31, 1996, from $33.5 million for the year ended March 31, 1995.

Software Licenses Revenues. Software licenses revenues increased by 10% to
$11.6 million for the year ended March 31, 1996, from $10.5 million for the year
ended March 31, 1995. As a percentage of total revenues, software license
revenues decreased to 29.2% for the year ended March 31, 1996, from 31.3% for
the year ended March 31, 1995. The dollar increase resulted from new software
licenses. The decrease in software licenses revenues as a percentage of total
revenues was primarily due to increased professional services compared to growth
in software license sales.

Professional Services Revenues. Professional services revenues increased
by 27% to $10.7 million for the year ended March 31, 1996, from $8.4 million for
the year ended March 31, 1995. As a percentage of total revenues, professional
services revenues increased to 27.0% for the year ended March 31, 1996, from
25.0% for the year ended March 31, 1995. The dollar increase resulted from the
Company's expansion of its professional services business. The increase in
professional services revenues as a percentage of total revenues was primarily
due to increased professional services compared to growth in software license
sales.

Hardware Revenues. Hardware revenues increased by 8% to $7.3 million for
the year ended March 31, 1996, from $6.8 million for the year ended March 31,
1995. As a percentage of total revenues, hardware revenues decreased to 18.5%
for the year ended March 31, 1996, from 20.3% for the year ended March 31, 1995.
The dollar amount increased as the Company entered into a new remarketing
agreement with IBM. The decrease in hardware revenues as a percentage of total
revenues was primarily due to a larger proportional increase in software license
revenues.

Maintenance and Other Revenues. Maintenance and other revenues increased
by 28% to $10.0 million for the year ended March 31, 1996, from $7.8 million for
the year ended March 31, 1995. As a percentage of total revenues, maintenance
and other revenues increased to 25.3% for the year ended March 31, 1996, from
23.4% for the year ended March 31, 1995 as a result of new software licenses and
customer system upgrades.

Cost of Revenues

Cost of Software Licenses Revenues. Cost of software licenses increased by
150% to $3.6 million for the year ended March 31, 1996, from $1.4 million for
the year ended March 31, 1995. As a percentage of software licenses revenues,
cost of software licenses increased to 31.0% for the year ended March 31, 1996,
from 13.7% for the year ended March 31, 1995. Excluding the charge related to
the acceleration of amortization of computer software development costs of $1.3
million during the year ended March 31, 1995, the dollar increase was $822,000,
or 57.4%, in the year ended March 31, 1996 compared to the year ended March, 31
1995. The change was primarily due to additional costs associated with third
party products.

Cost of Professional Services Revenues. Cost of professional services
increased by 24% to $7.6 million for the year ended March 31, 1996, from $6.1
million for the year ended March 31, 1995. As a percentage of professional
services revenues, cost of professional services decreased to 71.2% for the year
ended March 31, 1996, from 73.2% for the year ended March 31, 1995. The dollar
increase resulted from the Company's expansion of its professional services to
offer full service in this area. The percentage decrease was primarily due to
improved operating efficiencies.

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Cost of Hardware Revenues. Cost of hardware decreased by 8% to $5.8
million for the year ended March 31, 1996, from $6.2 million for the year ended
March 31, 1995. As a percentage of hardware revenues, cost of hardware decreased
to 78.8% for the year ended March 31, 1996, from 91.7% for the year ended March
31, 1995. The dollar decrease was due to a new remarketing agreement with IBM
offset by a large hardware sale in the year ended March 31, 1995. The percentage
decrease was due to the lower margin on hardware in the prior year from a large
contract compared to normal hardware margins.

Cost of Maintenance and Other Revenues. Cost of maintenance and other
decreased by 17% to $4.2 million for the year ended March 31, 1996, from $5.1
million for the year ended March 31, 1995. As a percentage of maintenance and
other revenues, cost of maintenance and other decreased to 42.3% for the year
ended March 31, 1996, from 64.9% for the year ended March 31, 1995. The dollar
and percentage decreases were primarily due to a corporate restructuring in the
earlier period to build an infrastructure to support future growth.

Research and Development Expenses. Research and development expenses
increased by 42% to $4.5 million for the year ended March 31, 1996, from $3.2
million for the year ended March 31, 1995. As a percentage of total revenues,
research and development expenses increased to 11.4% for the year ended March
31, 1996, from 9.5% for the year ended March 31, 1995. The dollar and percentage
increases were primarily due to increased staffing levels and associated costs.

Sales and Marketing Expenses. Sales and marketing expenses increased by
19% to $5.5 million for the year ended March 31, 1996, from $4.6 million for the
year ended March 31, 1995. As a percentage of total revenues, sales and
marketing expenses increased to 13.8% for the year ended March 31, 1996, from
13.7% for the year ended March 31, 1995. The dollar increase was attributable to
travel and other expenses related directly to increased sales activity.

General and Administrative Expenses. General and administrative expenses
increased by 22% to $6.8 million for the year ended March 31, 1996, from $5.6
million for the year ended March 31, 1995. As a percentage of total revenues,
general and administrative expenses increased to 17.1% for the year ended March
31, 1996, from 16.6% for the year ended March 31, 1995. The dollar and
percentage increases were due to additional staffing and related expenses in
finance and accounting, human resources and contract administration required to
support the Company's growth.

LIQUIDITY AND CAPITAL RESOURCES

Prior to 1997, the Company funded its operations primarily through cash
generated from operations, supplemented by borrowings under a bank line of
credit and the private sale of equity securities. On June 11, 1997, the Company
completed its initial public offering of Common Stock (the "IPO"). The Company
received $22.6 million from the IPO, net of issuance costs. Cash flow (used in)
provided by operating activities was $(3.2 million) and $2.1 million for the six
months ended June 30, 1998 and 1997, on net income of $2.5 million and $1.8
million, respectively. Cash flow provided by operating activities was $4.7
million and $2.9 million for the years ended December 31, 1997 and 1996, on net
income of $4.0 million and $819,000 respectively. Cash flow provided by (used
in) operating activities was $1.8 million and $(488,000) for the nine months
ended December 31, 1996 and 1995, on net (loss) income of $(290,000) and
$46,000, respectively. Cash flow provided by operating activities was $721,000
and $1.8 million for the fiscal years ended March 31, 1996 and 1995, on net
income of $1.3 million and $1.0 million, respectively.

Cash used in investing activities (capital expenditures, software
development investments and acquisitions) totaled $3.6 million and $1.4 million
during the six months ended June 30, 1998 and 1997, respectively. Cash used in
investing activities totaled $6.6 million and $3.3 million for the years ended
December 31, 1997 and 1996. Cash used in investing activities totaled $2.6
million for each of the nine months ended December 31, 1996 and 1995. Cash used
in investing activities totaled $3.4 million and $2.6 million in the fiscal
years ended March 31, 1996 and 1995, respectively. In 1997, the Company made
significant investments in leasehold improvements related to its new
headquarters facility in Lake Mary, Florida, and also acquired the assets of Kb.
The increase in restricted cash in 1997 reflects cash held in escrow related to
the JALAN acquisition. The JALAN acquisition was closed in January 1998. Capital
expenditures were primarily
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<PAGE> 35

comprised of the Company's investments in equipment and related software
associated with increased staffing. In addition, the Company made significant
investments in upgrading internal systems. The Company continues to capitalize
between $2.6 million and $2.7 million on an annual basis related to software
development efforts for additional products and platforms.

Net cash used in financing activities was $901,000 in the six months ended
June 30, 1998, reflecting the payment of the amounts due to stockholders related
to the UCS acquisition, partially offset by the net proceeds from the Employee
Stock Purchase Plan, compared to cash provided of $15.8 million in the
comparable 1997 period, related primarily to the proceeds from the IPO, offset
partially by the repayment of a line of credit and payment of dividends on the
mandatorily redeemable preferred stock. Net cash provided by financing
activities was $19.5 million in the year ended December 31, 1997, compared to
$341,000 in the comparable 1996 period. In 1997, net proceeds from the IPO of
$22.6 million were partially offset by repayment of long-term debt, payment of
accrued dividends on mandatorily redeemable preferred stock and pay-off of a
note payable to related parties. Cash flow provided by financing activities was
$914,000 for the nine months ended December 31, 1996, relating primarily to the
issuance of capital stock which raised $252,000 and net borrowings of $662,000,
compared to cash provided of $2.2 million for the nine months ended December 31,
1995. For the 12-month period ended March 31, 1996, net cash provided by
financing activities was $2.1 million comprised of $2.0 million in net borrowing
under the line of credit offset by repayments under capital leases and related
party advances. For fiscal year ended March 31, 1995, net cash provided was $1.6
million consisting of $2.8 million from the issuance of preferred stock offset
by repayments under capital leases and the line of credit along with shareholder
distributions.

In August 1998, the Company entered into a Revolving Line of Credit
Agreement (the "Loan Agreement") with SunTrust Bank, Central Florida, National
Association (the "Bank"), under which the Bank extended a line of credit of up
to a maximum borrowing amount of $15.0 million with an expiration date of June
30, 2000, subject to review by June 30, 1999. Borrowings under the Loan
Agreement are collateralized by first liens on accounts receivable, inventory,
equipment, furniture, furnishings, fixtures and intellectual property. The line
of credit bears interest at LIBOR plus 1.7% per annum. Under the terms of the
Loan Agreement, the Company is required to comply with certain financial
covenants. Borrowings under the Loan Agreement may be made for financing
operations and interim acquisition financing. There are no borrowings currently
outstanding under this line.

The Company believes its cash balances, cash generated from operations and
this Offering, and borrowings available under the Loan Agreement will satisfy
the Company's working capital and capital expenditure requirements for at least
the next 12 months. In the longer term, the Company may require additional
sources of liquidity to fund future growth. Such sources of liquidity may
include additional equity offerings or debt financings.

INFLATION

The Company believes that inflation has not had a material impact on the
Company's operating results and does not expect inflation to have a material
impact on the Company's operating results in 1998.

RECENT ACCOUNTING PRONOUNCEMENTS

In October 1997, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
97-2, "Software Revenue Recognition" ("SOP 97-2"), later amended by Statement of
Position 98-4 ("SOP 98-4"). SOP 97-2 and SOP 98-4 require companies to defer
revenue and profit recognition if four required criteria of a sale are not met.
In addition, SOP 97-2 and SOP 98-4 require that revenue be allocated to multiple
element arrangements. SOP 97-2 and SOP 98-4 are effective for all transactions
entered into in fiscal years beginning after December 15, 1997. The Company has
adopted the provisions of SOP 97-2, as amended, effective January 1, 1998 and
such adoption did not have a material impact on the Company's operating results
or financial position.

In June 1997, the FASB issued Statements of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"), and No. 131,
"Disclosures about Segments of an Enterprise and
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<PAGE> 36

Related Information" ("SFAS 131"). The Company adopted these statements
effective in 1998. SFAS 130 establishes standards for reporting comprehensive
income and SFAS 131 establishes standards for reporting information about
operating segments. The Company does not expect that the adoption of SFAS 130
and SFAS 131 will have a material impact on the Company's operating results or
financial position.

YEAR 2000 COMPLIANCE

Risks Associated with the Year 2000. Many currently installed computer
systems and software products are coded to accept only two digit entries in the
date code field. These date code fields will need to accept four digit entries
to distinguish 21st century dates from 20th century dates. As a result, in less
than two years, computer systems and software used by many companies will need
to be upgraded to comply with such "Year 2000" requirements. Significant
uncertainty exists in the software industry concerning the potential effects
associated with such compliance. There are several aspects to the Year 2000
issues as follows:

Impact on Revenues. The Company believes that the purchasing patterns of
customers and potential customers may be affected by Year 2000 issues in a
variety of ways. Many companies are expending significant resources to correct
or patch their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase software products
such as those offered by the Company. Conversely, Year 2000 issues may cause
other companies to accelerate purchases of software to replace non-Year 2000
compliant applications, causing a short-term increase in demand for the
Company's products. There is no assurance that such increase in demand will be
realized. Either of the foregoing could have a material adverse effect upon the
Company's business, operating results and financial condition.

Year 2000 Compliance. The Company believes that the current versions of
its products are Year 2000 compliant. The Company regularly runs regression
tests on its software, including tests of the Year 2000 rollover. Based on the
above, it is not expected that the Company's products will be adversely affected
by date changes in the year 2000. However, there can be no assurance that the
Company's products contain and will contain all features and functionality
considered necessary by customers, distributors, resellers and systems
integrators to be Year 2000 compliant. Notwithstanding that the Company
regularly provides free software upgrades to its customers and that these recent
upgrades are Year 2000 compliant, certain customers of the Company may still be
running earlier, noncompliant versions of the Company's products. The Company is
in the process of informing customers of the need to migrate to current products
that management believes are Year 2000 compliant. The Company anticipates that
generally throughout the software industry substantial litigation may be brought
against software vendors of noncompliant operating environments. The Company
believes that any such claims against the Company, with or without merit, could
have a material adverse effect on the Company's business, operating results and
financial condition.

Internal Systems. The Company has also reviewed its internal systems for
Year 2000 compliance and is in the process of upgrading to Year 2000 compliant
versions from third party software vendors, modifying certain systems, and
planning to replace certain systems with new third party software, which the
Company expects to complete prior to January 1, 2000. In addition to making its
own systems Year 2000 ready, the Company has also begun to contact its key
suppliers and vendors to determine the extent to which the systems of such
suppliers and vendors are Year 2000 compliant and the extent to which the
Company could be affected by the failure of such third parties to be Year 2000
compliant. The Company has appointed its Manager of Quality Assurance to oversee
all activities associated with Year 2000 compliance issues. A standing committee
meets on a monthly basis to review appropriate activities. Management does not
believe that the cost to bring its software products and internal systems into
Year 2000 compliance will have a material adverse effect on the Company's
results of operations or financial condition. However, delays in upgrading some
systems to Year 2000 compliance, or a failure to fully identify all Year 2000
dependencies in the Company's systems and in the systems of its suppliers,
vendors, and financial institutions could have material adverse consequences,
including delays in the delivery or sale of products.

Expenses Related to Year 2000 Compliance. The Company has not incurred
significant expense in becoming Year 2000 compliant as this has been achieved as
a part of regular upgrades to its internal operating systems. Future costs
related to Year 2000 compliance are not expected to have a material adverse
effect on the Company's results of operations or financial condition.
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BUSINESS

OVERVIEW

As of June 30, 1998, the Company had over 1,600 customers in the U.S.,
Caribbean, United Kingdom and Canada, including installations in all 50 U.S.
states. The Company markets and sells its products through a direct sales force.
The Company's focus on the public sector and utilities industries has allowed it
to develop significant expertise and to design feature-rich solutions that
address the specific needs of these organizations.

INDUSTRY BACKGROUND

The public sector marketplace is composed of state, county and city
governments, other agencies and publicly owned utilities. The local government
market comprises over 3,000 counties and over 19,000 municipalities in the U.S.,
not including school districts, townships and special governmental districts.
The utility market includes approximately 1,800 water, gas and electric
utilities, each serving between 25,000 and 500,000 consumers. With respect to
public safety agencies, there are approximately 50,000 police, fire and
emergency service agencies in the U.S. In 1996, state and local government
agencies spent approximately $35.0 billion on IT and related products which is
expected to grow to over $45.0 billion in 2001 according to G2 Research, Inc.
This total for 2001 includes approximately $8.0 billion for software, $12.3
billion for external services and $8.4 billion for hardware.

The public sector marketplace is currently undergoing significant
organizational and business changes. Recently, the federal government has ceded
additional program and funding responsibilities to state and local governments,
resulting in a growing requirement at the local level to fill the gap between
increasing constituent demands and limited resources. Like many private sector
businesses, public sector organizations face increasing pressure to improve
delivery of services while striving to control and reduce costs and generate
additional revenues. In response, public sector organizations are employing IT
solutions in an effort to streamline and automate administrative intensive
processes, improve timeliness and quality of services and generally enhance
operating efficiencies. In addition, public sector organizations are seeking to
use IT to create new sources of revenues and enhance existing revenue
collection.

Certain IT issues facing state and local governments also impact utilities,
many of which are owned by municipalities. In addition, recent deregulation in
the utility market has resulted in greater competition among utilities.
Consequently, utilities are under pressure to retain their customer bases and
focus their efforts on enhancing service levels, improving operating practices
and reducing costs. Specifically, utilities seek to ensure timely and effective
utilization of inventory, equipment and human resources, along with improved
customer service levels. Utilities must also comply with government regulations
covering environmental, worker health and safety and other matters.

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Historically, local governments and utility companies utilized computerized
operations management systems principally based on mainframe and mini-computers
running customized proprietary software. These legacy systems have limited
ability to operate with other software applications, systems and resources and
are often difficult and expensive to maintain, upgrade and modify. Budget
constraints and other factors have caused public sector organizations to lag
private sector companies in the adoption of newer, open-architecture
client/server systems. However, the need to integrate mission-critical functions
is now driving these organizations to replace their legacy systems and more
recently acquired point solutions with more technologically advanced, integrated
and complete software solutions.

While there are an increasing number of software vendors seeking to target
the public sector, current solutions provided by these vendors have not been
able to meet the needs of public sector organizations. Because these solutions
typically are not enterprise-wide, they lack the ability to share information
among the multitude of agencies and departments within a public sector
organization. In addition, these vendors are frequently private sector providers
with little public sector expertise which offer general software products that
often do not fulfill the specific functional requirements of the public sector
marketplace, such as complying with government fund accounting, procurement and
budgeting processes. Consequently, many of these solutions must be highly
customized and become difficult and costly to implement, use and modify. As
public sector organizations reengineer their practices and strive to become more
efficient, they typically seek comprehensive, fully-functional solutions from a
single source which enable them to meet their particular needs.

THE HTE TOTAL ENTERPRISE SOLUTION

The Company's fully integrated enterprise-wide software solutions enable
public sector organizations and utilities to improve delivery of services,
reduce costs, enhance revenue collection, operate successfully within budgetary
constraints, comply with government regulations and improve overall operating
efficiencies. As part of its strategy to provide a completely integrated
solution to its customers, the Company also provides a variety of related
services, including consulting, implementation, education and training and the
provision and configuration of hardware systems. HTE's Total Enterprise Solution
is based on more than 16 years of public sector and utility expertise and
consists of a suite of software applications, as well as a wide range of
customer services, support and training. The Company's Total Enterprise Solution
provides the following:

Integrated Enterprise-Wide Solutions and Depth of Functionality. HTE
offers a Total Enterprise Solution, currently consisting of more than 50
applications, which provides feature-rich systems for financial management,
community services, public safety and justice, education and utility
management. HTE's products operate as stand-alone applications or as
integrated suites which provide users with a consistent graphical user
interface and the ability to easily access data and share information among
multiple departments and agencies. The Company's applications are based
upon proven technologies and are designed to function in mission-critical
environments.

Adaptability/Flexibility/Scalability. HTE solutions are readily
adaptable to meet a customer's initial needs and are designed with
sufficient flexibility to respond to a customer's specific system
refinements and ongoing changes once the system is fully in service. The
scalability of the Company's software applications and the customer's
ability to migrate within the Company's suite of products allow customers
to accommodate growth and expand application functionality. In addition,
the Company offers several application programming interfaces to enable
customers to develop customized reporting and satisfy unique requirements.

Ease of Implementation and Use. The Company leverages its public
sector expertise and the integrated nature of its software products to
provide a rapid and cost effective implementation of its software with
minimal need for customization. In addition, HTE's software solutions
provide for centralized system administration, thereby simplifying system
management and reducing the need for in-house system administrators and
third party services. These characteristics reduce the expense and
disruption associated with the implementation and maintenance of
enterprise-wide IT solutions.

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STRATEGY

The Company's objective is to be the leading provider of enterprise-wide IT
solutions to the public sector and utility marketplace. Principal elements of
the Company's strategy include:

Promote Integrated Enterprise-Wide Solutions. HTE believes that the
fully integrated suite of comprehensive applications comprising the
Company's Total Enterprise Solution provides significant opportunities with
its existing customer base as well as with new customers. The Company
believes a substantial opportunity exists to sell additional products to
current customers who are using only one or a few of the Company's
applications. HTE also intends to offer its suite of applications to
potential new customers that are currently looking for a point solution,
such as a single department-based application, but prefer products which
may be easily integrated with other applications in the future. HTE will
continue to devote significant resources to marketing strategies which
target customers seeking enterprise-wide software solutions.

Capitalize on Public Sector and Utilities Expertise. For over 16
years, the Company has focused exclusively on the public sector and utility
markets, and had over 1,600 customers at June 30, 1998. The Company
believes this focus has resulted in the development of a core expertise and
understanding of the unique operational requirements of the public sector,
such as emergency services and government fund accounting. The Company
intends to capitalize on its knowledge and experience to enhance sales in
existing markets and expand into new market segments, such as foreign
governments and educational institutions. The Company believes the size and
geographic breadth of its customer base offers significant leverage with
regard to new business, since references from existing customers often
result in future sales opportunities.

Complement Growth through Strategic Acquisitions. Over the past five
years, the Company has supplemented its internal growth with nine
acquisitions. The Company intends to accelerate its growth through
acquisitions. The Company views acquisitions as a means of increasing its
technological capabilities, broadening its customer base and expanding its
international presence. The Company believes that the public sector
software application vendor market is highly fragmented, and is entering a
period of consolidation. The Company intends to pursue acquisition
opportunities which will help it accomplish its objective of becoming the
leading provider of enterprise-wide information solutions to the public
sector. See "Management's Discussion of Financial Condition and Results of
Operations -- Recent Acquisitions."

Continue to Deliver New Technology and Platform - Independent
Applications. The Company intends to continue to serve its customers by
maintaining its reputation for proven and effective use of recent advances
in technology. The Company will continue to develop new applications and
incorporate new functionality, such as Internet integration, object-based
technology, decision support and wireless communications into its software
products. In addition, the Company recognizes that individual customers
prefer a variety of hardware and operating system platforms, including the
AS/400, Windows NT and UNIX. As such, the Company's development efforts
focus on providing suites of business solutions which can operate
effectively regardless of the customer's platform preference.

Expand Sales Force and Marketing Initiatives. The Company intends to
increase its penetration of the public sector and utility markets by
expanding the distribution of its products. To accomplish this expansion,
the Company is actively increasing the size of its direct sales force and
is currently implementing a new multi-phased sales approach combining
targeted marketing programs with field sales operations. In addition, the
Company intends to continue to build collaborative relationships with
customers in order to develop new applications and assist customers in
keeping pace with technology and in maintaining compliance with government
regulations.

HTE'S INTEGRATED SOFTWARE PRODUCTS

HTE offers fully integrated enterprise-wide software solutions designed to
automate and integrate the operations of public sector and utility
organizations. The Company has designed its products based on the

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premise that complete application integration is essential for the effective
sharing of information across an organization. Offering enterprise-wide
integration, the Company's software applications share functions and eliminate
redundant data and repetitive tasks. Transactions are processed by a single
application, and the information is immediately ready for use by other
interfaced applications. The license fee for a typical sale ranges from
approximately $80,000 to $500,000, depending on hardware configurations, number
of users and applications licensed. Additional revenues are generated from
providing related professional and maintenance services and required hardware.

The following is a representative sampling of the Company's applications
and the principal benefits of the integrated application system, followed by a
more detailed discussion of some of these applications:

FINANCIAL MANAGEMENT SYSTEMS -- 12 APPLICATIONS

- A comprehensive integrated financial reporting system designed to monitor
organizational goals and performance.

- Eliminates redundant data entry and centralizes and minimizes record
management and retrieval of historical information through interfacing
modules.

- Complies with Governmental Accounting, Auditing, and Financial Reporting
("GAAFR") and Government Finance Officers Association ("GFOA") standards.

- Streamlines IRS reporting and offers custom budgeting tools.

COMMUNITY SERVICES SYSTEMS -- 12 APPLICATIONS

- A centralized information system which expedites access to property data,
building permits, business licenses, code enforcement proceedings,
planning and zoning processes, property appraisal and assessment, and tax
billing and collections.

- Generates all documentation and improves revenue tracking, processing and
payment collection.

- Routes projects to various agencies and promotes communication among
agencies.

- Maintains voter records and tracks voting history.

- Manages community parks and recreational facilities.

PUBLIC SAFETY AND JUSTICE SYSTEMS -- 20 APPLICATIONS

- A complete suite of applications which provides critical information to
users in emergency situations through mobile computing technologies.

- Integrates police, fire and emergency medical service reporting and
communications with state and federal information systems and facilitates
sharing of vital information.

- Increases personnel safety and provides for better public service by
allowing police and emergency personnel to access databases by mobile
connections.

- Promotes effective management of time, staff and facilities involved in
the administration of justice.

UTILITY MANAGEMENT SYSTEMS -- 6 APPLICATIONS

- A broad utility management system designed to handle a full range of
services including bill processing, equipment management and customer
service information.

- Provides immediate access to customer information and work orders and
tracks assets and resources.

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EDUCATION SYSTEMS -- 4 APPLICATIONS

- An integrated suite of student administration and financial applications
designed to meet the unique requirements of school districts (grades K
through 12).

- Complies with state and federal reporting requirements.

- Centralizes storage of employee and student information for quick
retrieval.

- Automates the creation of course catalogs, class schedules, reports,
financial statements and other documents to increase efficiency and
improve accuracy.

Financial Management Systems

The Company's financial management products provide key financial
management and accounting functions for public sector organizations. HTE's
Integrated Financial System ("INFISYS") and Government Management and Budgetary
Accounting ("GMBA") software applications represent the core of HTE's Financial
Management System. These applications are based on fund accounting and are
designed to take full advantage of open systems. These two applications have
similar functionality but serve different tiers of the market.

GMBA System. Targeted at smaller local governments and agencies, GMBA
integrates general ledger, budgeting, accounts payable, projects/grants
management, and investment tracking. GMBA is compliant with GAAFR and GFOA
standards and offers interactive processing, multiple security levels, and
extensive reporting capabilities.

INFYSIS System. Targeted at larger organizations, INFISYS integrates
general ledger, budgeting, accounts payable, projects/grants management,
and investment tracking. Offers built-in extended reporting features with
flexible charts-of-accounts.

Extended Reporting. Creates user-defined financial reports which may
be downloaded to desktop business applications.

Accounts Receivable. Tracks all charges, produces invoices, and
generates statements. Features fee and penalty processing, third party
billing, write-offs, aging control, and automatic charges.

Cash Receipts. Offers rapid, accurate control over all cash
transactions and deposits and provides centralized cash collection of
multiple payment types.

Payroll/Personnel. Provides a flexible, user-defined system for
meeting specialized public sector payroll requirements. Features automated
accrual tracking, direct deposit, Equal Employment Opportunity Commission
reporting, and easy data entry capabilities.

Applicant Tracking. Tracks the recruitment process from requisition
through employee selection.

Purchasing/Inventory. Features inventory control, vendor quote
history, account security and inventory allocation for specific projects
and offers bar code scanning capability. Creates purchase orders and
provides inventory requisition and bid processing.

Fleet Management. Tracks and reports equipment maintenance, related
parts, fuel and labor costs. Features automated scheduling of maintenance
and integrates with automated refueling systems.

Asset Management I. Provides information relating to capital
inventory and tracks depreciable and nondepreciable assets and supports bar
coding capability.

Asset Management II. Allows users access to construction-related
accounting procedures in addition to the capabilities of Asset Management
I.

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Community Services Systems

The Company's community services applications provide a centralized land
and location database solution which expedites access to property data, building
permits, code enforcement proceedings, planning and zoning processes, business
license information, voter registration, appraisal and assessment, and tax
billing and collections. The system also manages community parks and
recreational facilities.

Land/Parcel Management. Eliminates duplication of information across
applications by managing a shared database of land and location data for
utilization by all HTE land-based applications. Features a street
dictionary with locations of liens and stores property valuations for
unlimited years. Offers user-defined property use, zoning and jurisdiction.

Building Permits. Automates the permitting process by tracking plan
approval, storing structure specifications and assessing and processing
fees. Offers inspection scheduling and a comprehensive voice response
solution, enabling contractors to request or cancel inspections and receive
inspection results by remote access. Offers mobile, pen-enabled graphical
user interface software applications that allow building inspectors to
easily supply and receive timely, accurate information while working in the
field.

Code Enforcement. Organizes, processes and tracks all complaints and
code violations. Offers mobile, pen-enabled software applications that
allow code enforcement inspectors to supply and receive timely, accurate
information while working in the field.

Business Licenses. Generates various types of licenses, assesses fees
and penalties, processes renewals and offers contractor licensing and
certification.

Planning and Zoning. Manages planning and zoning projects through
review and approval processes. Enables users to track reviews, create
meeting and project documents, generate notice letters and specify project
conditions.

Tax Billing and Collections. Provides flexible billing and
collections for single or multiple taxing entities. Uses property
information from HTE's Land Management database and information updated
from appraisal district or assessor's office to process tax bills.
Automatically calculates penalties, interest, collection fees and discounts
and maintains special payment plans.

Parks and Recreation Applications. Offers automation and management
of parks and recreational facilities by government organizations. Maintains
schedules of parks or facility use and manages membership and mailing
lists. Application modules available include activity registration and
tournament scheduling.

Property Appraisals and Assessments. Automates the property appraisal
and assessment process. Features user defined property data items and
valuation calculations. Also available is a field software module for
appraisers' use during reassessment field visits.

Public Safety and Justice Systems

The public safety and justice applications offer police, fire, emergency
services, courts and jail entities a complete public safety/justice solution
through an integrated suite of applications which provides immediate
in-the-field access to vital information. Such dispatch information includes
locations, equipment and personnel response recommendations and current status
of events or incidents. Applications allow for mobile collection of incident
data mandated by state and federal regulatory agencies and promote greater
safety of public service personnel. Critical communication links for rapid
information dissemination in emergency situations are facilitated by the
integration of mobile data computers, emergency-911 operations, state and
federal computers, and alarm panels.

Computer Aided Dispatch IV ("CAD IV"). Computer aided dispatch
software provides dispatchers with up to 30 live task areas for dispatch,
incident and unit status, database inquiry and National Crime Information
Center access. Also provides integrated mapping. CAD IV functions
independently or

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with HTE's CRIMES Management System, FIRES Management System and Emergency
Medical Services applications to provide a complete public safety solution.

Computer Aided Dispatch III ("CAD III"). Provides quick, accurate
equipment and personnel response recommendations and tracks the status of
police, fire and emergency medical service unit responses. Provides
routing, hazard, and hydrant information, address verification and
duplicate call detection. Interfaces with emergency-911 phone systems and
state computer systems.

CRIMES Management. Tracks details for uniform crime reporting. Links
all related information concerning victim, suspect, property, and evidence
without redundant data entry. Includes extensive narrative and
cross-referencing capabilities, automatic warnings for active warrants and
a master name index. Provides mobile, pen-enabled software application that
allows police officers to easily supply and receive timely, accurate
information related to accidents, incidents, warrants, arrests and
dispatch.

Crackdown. Provides investigative tool for law enforcement
intelligence units, narcotics investigators and organized crime bureaus by
offering event-oriented investigation history with automatic cross
referencing. Supports direct connection to National Crime Information
Center and state systems. Protects sensitive information while allowing
multiple authorized users access to the application.

FIRES Management. Tracks fire or emergency medical service incidents.
Automatically audits data for accuracy and consistency and adheres to
regulatory requirements. Accommodates organizations that do not have
state-mandated reporting requirements.

Fire Resources Activity Tracking. Tracks both scheduled and emergency
activities for resources such as personnel, equipment, hydrants and
emergency transportation units.

Fire Prevention. Records fire prevention information about
commercial, industrial and multi-family dwellings. Maintains information
such as hydrant location, shutoffs for utilities, location of hazardous
materials and emergency contact information.

Emergency Medical Services. Tracks all information related to
incidents involving emergency medical response and adheres to state
reporting standards. Integrates with HTE's FIRES Management, Computer Aided
Dispatch, and Accounts Receivable applications to provide a complete
emergency medical services solution.

Mobile Data Systems. Works with other HTE mobile-enabled public
safety software applications and the mobile data network to provide
wireless communication between field personnel and the dispatch center.
Provides direct access to information in state and federal law enforcement
databases.

Integrated Mapping. Provides custom digitized pictorial reference of
an agency's jurisdiction by displaying streets and major land features on
individual workstations.

Case Management. Provides a centralized system for managing municipal
court cases, including event tracking and payment collection.

Citation Management. Centralizes citation entry, maintenance and
payment collection.

Enterprise Field Reporting. A portable software solution for public
safety that automates the entire reporting process and speeds up every
aspect of report management, from the field to the office. Easy-to-use
report applications, combined with wireless communications technology,
provide a system of fully integrated modules that work together to share
information and eliminate redundant data entry.

Jail System. Delivers a comprehensive jail management and inmate
tracking solution that provides the information required to manage jails of
virtually all sizes and complexity.

Court System. A multi-jurisdictional case management system that
tracks the progress of each case through arraignment to final disposition.

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Prosecutor's System. A case tracking and management solution that
supports the prosecutor's office in all aspects of a case. The solution
captures the basic information from the police report or other initiating
sources enabling the assigned attorney to follow the progress of the case.

Probation System. A probation management solution that tracks the
case from pretrial to final compliance, including word processing that
automates court orders, recommendations, letters, contact forms and
notices.

Public Defender System. A case tracking, document processing and
management reporting solution that streamlines case tracking from initial
incident to final disposition.

Return of Service System. A civil paper process management system
that supports the civil department in serving court papers in a timely
manner. The system allows quick responses to court inquiries, tracks funds
and property from auctions and provides docket information for legal record
keeping.

Utility Management Systems

The Company offers a suite of integrated products designed to handle a full
range of utility services including electric, water, gas and waste removal. The
flexibility of these programs lets customers tailor applications to meet
specific business needs. HTE's Customer Information System ("CIS") is capable of
interfacing with software systems which run on open systems platforms and with
various databases for engineering purposes such as plant maintenance.

Customer Information System. Facilitates electric, water and gas
utility services by automating tasks such as customer location maintenance,
meter reading maintenance, bill processing, delinquencies, penalties,
refunds and write-offs. Accommodates requirements of public, private and
cooperative utilities. Interfaces with other HTE software applications such
as INFISYS to provide a complete utility solution.

Continuing Property Records. Offers multiple depreciation methods,
mass asset records and detailed asset reporting. Provides construction
assembly standards, estimating, costing and unitization through an
interface to HTE's Work Orders/Facility Management application. Acts as a
subsidiary ledger for asset accounts in HTE's accounting software.

Work Orders/Facility Management. Provides a complete facility
management and maintenance solution by offering complaint tracking and
request processing. Allows departments to send or receive requests,
schedule jobs and track costs.

Distribution Management. Tracks detailed information related to
utility equipment. Links meters and transformers to calculate fault
currents and transformer loads in conjunction with CIS.

Contact Management. Directs and handles customer calls and integrates
information with CIS and Work Orders/Facility Management to improve
customer service operations.

Education Systems

The Company offers a suite of software applications to support the unique
requirements of school administrators (grades K through 12). Applications
incorporate a variety of standard features and functions to provide ease of use,
customization capabilities, and reporting flexibility across applications.

Student Administration. Provides school administrators with each
student's status, including attendance records, grade reports and
transcripts. Provides fully computerized or arena scheduling and online
schedule maintenance. Stores home room assignment and generates photo ID
cards with student schedule.

General Accounting. Offers a fully integrated, multi-user fund and
encumbrance accounting system that includes general ledger, accounts
payable, revenues, purchase orders, requisitions, 1099 processing, and
state reporting. Also includes a comprehensive budget building module.

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Payroll. Provides a complete payroll management system that meets
federal and state requirements while addressing the needs of school
districts. Supports direct deposit into multiple accounts, payroll
encumbrance, teacher substitute distributions, supplements and balloon
checks. Generates assignment notification letters, staff directories, photo
IDs, tenure lists and other reports.

Human Resources. Manages a wide range of employee data specific to
school districts, including certification, assignments, benefits, academic
history, and attendance information. Offers multiple-level salary
schedules, academic and professional leave history. Generates assignment
notification letters, staff directories, photo IDs, tenure lists and other
reports.

SERVICES

Implementation Support Program. HTE offers its customers an Implementation
Support Program with an initial system order or with a significant upgrade to an
existing system. The Implementation Support Program provides a variety of
project management and consulting services to assist in implementation and
deployment of HTE's enterprise solutions. The Company offers a variety of
site-specific technical and consulting services to assist in all phases of the
implementation process. HTE may also provide assistance in integrating its
products with the customer's existing software.

Professional Consulting Services. The Company offers professional
consulting services that extend beyond standard maintenance contracts. These
services include project management, hardware and software installation,
classroom education, on-site training, conversion planning and programming
services. Additional services include custom applications analysis, design,
development, training and deployment for most of HTE's applications.
Professional consulting services are priced separately.

Education and Training. HTE offers education and training services that
provide customers with a formalized program to ensure that applications are
implemented and utilized in an efficient and cost-effective manner. Customers
are also offered a variety of software installation, technical support and user
training services, both on-site and in HTE's training center. Customized
education and training programs are also available to meet a customer's specific
development needs. Education and training services are priced separately.

HARDWARE

As part of its Total Enterprise Solution, the Company is able to provide
the hardware necessary for its customers to run the Company's software. The
Company has value-added reseller relationships with hardware vendors under which
it resells those vendors' hardware to its own customers on a drop-ship basis.
Substantially all of the Company's revenues from hardware sales to date have
been derived from IBM products. The Company believes its ability to provide
hardware is an important element in enabling it to offer a comprehensive
solution to its customers, and differentiates it from many of its smaller
competitors.

CUSTOMER SERVICE

For ongoing support, HTE offers its customers a Comprehensive Support
Program. The Company provides product enhancements and updates that maintain a
customer's software and documentation. The Comprehensive Support Program also
includes hotline telephone support, which is available 24 hours per day, seven
days per week. As a separately priced option, customers can extend this support
to personal computers, networks and operating systems. During fiscal 1997, the
Company expanded its support services to include a Customer Care Program whereby
customers are called at predetermined time schedules to identify needs for
service, support or new product offerings.

Through the HTE User Group ("HUG"), the Company involves its customers and
end-users to help identify new functions and product features that would offer
the greatest additional benefits. HUG is an independent non-profit organization
formed by users of HTE's products. HUG hosts an annual meeting that is attended
by thousands of members for purposes of exchanging information, viewing new
product demonstrations by the Company, and providing the Company with product
feedback and recommendations for

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additional enhancements or updates. If there is sufficient support for a
particular enhancement or update, the Company pursues its development and
incorporates it as a standard feature in the next iteration of the applicable
software. For isolated recommendations, the Company contacts the customer to
explore a customized enhancement or upgrade at agreed upon professional fees.

SALES AND MARKETING

The Company sells its products primarily through a direct sales force. As
of June 30, 1998, the Company had 98 employees in its sales and marketing
organization, including sales representatives, pre-sale consultants, sales
support representatives, sales management, proposal specialists, product
demonstrators and systems hardware specialists. The Company employs a variety of
business development and marketing activities to communicate directly with
current and prospective customers. These activities include exhibiting at trade
shows, holding seminars for clients and prospective clients on technology and
industry issues, marketing through targeted mail campaigns and publishing
SOLUTIONS magazine (a semi-annual Company publication).

The Company has implemented a new sales strategy which includes
sophisticated prospect development and sales cycle management processes. HTE
uses a combination of prospective client databases, targeted marketing campaigns
and field sales methodologies to identify potential candidates for its Total
Enterprise Solution systems. The Company believes this process accounts for a
large percentage of the Company's new accounts and reduces the time spent by
field sales representatives prospecting unqualified leads. Prospective HTE
customers are monitored through a comprehensive prospect management system that
segments the sales cycle into several phases, each with multiple measurement
points, to assess properly the prospective client base.

HTE believes a strong local presence is an important factor in addressing
the needs of local governments and establishing long-term relationships.
Therefore, the Company has decentralized much of its client development,
customer service and customer account responsibilities. As a result, HTE has 18
sales offices throughout the U.S. and one in Canada.

An aspect of the Company's sales and marketing strategy is to build and
maintain strong business alliances that the Company believes play a role in the
successful marketing of its software products. These alliances are with software
and hardware vendors and technology consulting firms, some of which are active
in the selection and implementation of IT systems for organizations that
comprise the Company's principal customer base. HTE maintains strategic
relationships with companies such as International Business Machines
Corporation, Microsoft Corporation, Motorola, Inc., TRW Inc., Lockheed Martin
Corporation, AT&T Corporation, Hewlett-Packard Company, Oracle Corporation, and
Seagull Technology, Inc. The Company believes that its sales and marketing
efforts are enhanced by the worldwide presence of many of these companies. HTE
has conducted several joint marketing and sales programs with these vendors,
including seminars, direct mail campaigns and trade show appearances.

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CUSTOMERS

The Company provides fully integrated, enterprise-wide software solutions
to state, city and county governments, utilities, transportation authorities,
parks and recreation departments, and police, fire and emergency personnel. As
of June 30, 1998, the Company had over 1,600 customers, including installations
in all 50 U.S. states. The following is a representative list of current
licensees and users of one or more of the Company's applications. No customer
accounted for more than 5% of total revenues of the Company in 1997 or for the
six months ended June 30, 1998.

<TABLE>
<CAPTION>
NUMBER OF PUBLIC
CUSTOMER APPLICATIONS FINANCIAL COMMUNITY SAFETY UTILITY
CUSTOMER NAME SINCE PURCHASED MANAGEMENT SERVICES AND JUSTICE MANAGEMENT EDUCATION
------------- -------- ------------ ---------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Arlington Heights, IL.......... 1995 19 - - - -
Bend, OR....................... 1989 23 - - - -
Bossier City, IA............... 1991 23 - - - -
Bristol Township, PA........... 1995 3 -
Broomfield, CO................. 1985 16 - - - -
Caribbean Utilities Company,
Ltd., Grand Cayman Islands... 1997 14 - - -
Citizens Utilities Company,
VT........................... 1997 9 - - -
Clayton County Communications,
GA........................... 1990 9 -
Davidson County, NC............ 1996 9 - - -
East Hartford, CT.............. 1997 3 -
Escambia Utility Authority,
FL........................... 1984 10 - -
Farmington Public Schools,
CT........................... 1998 6 -
Ft. Lauderdale, FL............. 1998 3 - -
Government of Bahamas, Nassau,
BA........................... 1993 4 - -
Guelph Hydro, Ontario, CN...... 1994 15 - - -
Kansas Highway Patrol, KS...... 1994 2 -
Kingsport, TN.................. 1989 27 - - - -
Lumberton, NC.................. 1994 12 - - -
Missouri City, TX.............. 1996 31 - - - -
Montrose, CO................... 1996 3 -
Opelika, AL.................... 1993 28 - - - -
Paducah, KY.................... 1994 28 - - - -
Rio Rancho, NM................. 1995 22 - - - -
Sarasota County Utility, FL.... 1997 11 - - -
Sierra Vista, AZ............... 1994 13 - - -
Stockton, CA................... 1988 19 - - - -
University of Michigan Public
Safety, MI................... 1987 8 - -
Westport, CT................... 1995 4 -
Wisconsin State Patrol, WI..... 1984 3 -
</TABLE>

PRODUCT DEVELOPMENT

HTE's product development efforts are focused on the enhancement of its
existing products and expansion of its enterprise system. As of June 30, 1998,
HTE had 141 employees engaged full-time in product development. HTE plans to
continue to enhance its applications to meet the evolving needs of the public
sector and utility markets. In particular, HTE intends to develop additional
functionality on existing application modules and to create new modules.

Additionally, HTE seeks to improve and expand its object development
environment, with three fundamental objectives: (i) reduction of the time and
cost in developing new applications; (ii) continued user empowerment with an
emphasis on ease-of-use; and (iii) increased flexibility to modify base products
in order to suit specific customer requirements. The Company incorporates a
System Change Program whereby the Company distributes guidelines for standards
and conventions to its users (usually at a HUG annual meeting) and encourages
product users to submit suggestions for product changes. If sufficient demand
exists for product enhancement, the Company strives to develop the enhancement
for incorporation as a standard
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feature in the next release of the applicable software. With respect to
proposals for enhancements that have generated limited interest among HTE
product users, the Company offers customized development of the enhancement for
a fee. All product development enhancements of applications, regardless of
scope, are created using HTE's published guidelines for standards and
conventions.

HTE plans to continue to add new products and services, both through
internal development and potential acquisitions, to leverage the Company's core
technologies and expertise. In the development of new applications, the Company
strives to allow customers to utilize existing systems while at the same time
allowing customers to take advantage of advances in network systems, platforms,
databases and other relevant technologies. The Company's gross development
expenditures were $7.3 million, $7.2 million, and $11.0 million for the year
ended March 31, 1996, the nine months ended December 31, 1996, and the year
ended December 31, 1997, respectively.

COMPETITION

The Company believes the market is highly fragmented with a large number of
competitors that vary in size, primary computer platforms and overall product
scope. Within its markets, the Company competes from time to time with (i)
consulting divisions of national and regional accounting firms; (ii) companies
which focus on selected segments of the public sector and utility markets
including PeopleSoft, Inc., Systems & Computer Technology Corp. and J.D. Edwards
& Company, Inc.; and (iii) a significant number of smaller private companies.
While HTE's products are designed for the public sector, competitors' products
are currently adapted for use by the public sector. There can be no assurance
that such competitors will not develop products or offer services that are
superior to the Company's products or services or that achieve greater market
acceptance.

The Company could face additional competition as other established and
emerging companies enter the Company's public sector software application market
and new products and technologies are introduced. Increased competition could
result in price reductions, fewer customer orders, reduced gross margins and
loss of market share, any of which could materially adversely affect the
Company's business, operating results and financial condition. In addition,
current and potential competitors may make strategic acquisitions or establish
cooperative relationships among themselves or with third-parties, thereby
increasing the ability of their products to address the needs of the Company's
prospective customers. Accordingly, it is possible that new competitors or
alliances among current and new competitors may emerge and rapidly gain
significant market share. Further, competitive pressures could require the
Company to reduce the price of its software licenses and related services, which
could materially adversely affect the Company's business, operating results and
financial condition. There can be no assurance that the Company will be able to
compete successfully against current and future competitors, and the failure to
do so would have a material adverse effect upon the Company's business,
operating results and financial condition.

INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND LICENSES

The Company regards certain features of its internal operations, software
and documentation as confidential and proprietary, and relies on a combination
of contract and trade secret laws and other measures to protect its proprietary
intellectual property. The Company has no patents and, under existing copyright
laws, has only limited protection. The Company believes that, due to the rapid
rate of technological change in the computer software industry, trade secret and
copyright protection are less significant than factors such as knowledge,
ability and experience of the Company's employees, frequent product enhancements
and timeliness and quality of support services.

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From time to time, the Company licenses software from third parties for use
with its products. Typically, the Company resells such third party software
products as an integrated part of one or more of the applications included in
HTE's Total Enterprise Solution. The Company believes that no such license
agreement to which it is presently a party is material and that if any such
license agreement were to terminate for any reason, the Company would be able to
obtain another license or otherwise acquire other comparable technology or
software on terms that would not be materially adverse to the Company.

EMPLOYEES

As of June 30, 1998, the Company employed 693 people, including 98 in sales
and marketing, 141 in product development, 305 in customer support and field
services, 37 in professional services and 112 in administration. The Company's
success will depend in large part upon its ability to continue to attract and
retain qualified employees. None of the Company's employees is represented by a
labor union or is subject to a collective bargaining agreement. The Company
believes that its relations with its employees are good.

FACILITIES

The Company leases facilities in various locations. The Company's
headquarters is located in Lake Mary, Florida, and occupies approximately 90,000
square feet. Administrative, marketing, product development and customer support
and service operations are located in this space. The initial lease term for the
headquarters expires in 2007, and may be renewed by HTE for up to three
consecutive renewal terms of five years each. In connection with the lease, HTE
entered into an agreement pursuant to which it may, at its option during the
term of the lease, lease additional space comprising approximately 27,000 to
40,000 gross square feet.

The Company also occupies approximately 9,000 square feet of space in Ft.
Lauderdale, Florida, pursuant to a lease expiring in November 1999, 5,000 square
feet in each of Golden, Colorado and Vienna, Virginia under leases expiring in
May 2000 and February 2000, respectively, and approximately 3,000 square feet of
office space in Southbury, Connecticut, for a one year renewable term.

The Company also leases an aggregate of approximately 19,000 square feet of
office space in approximately 19 locations which are used for sales offices.

LEGAL PROCEEDINGS

From time to time, the Company is involved in litigation relating to claims
arising out of its operations in the normal course of business. The Company is
not a party to any legal proceedings the adverse outcome of which, individually
or in the aggregate, would have a material adverse effect on the Company's
business, results of operations or financial position.

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<PAGE> 50

MANAGEMENT

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dennis J. Harward......................... 42 Chief Executive Officer, President and
Chairman of the Board
Jack L. Harward........................... 66 Executive Vice President, Assistant
Secretary, Assistant Treasurer and Director
O.F. Ramos................................ 40 Executive Vice President and Director
L.A. Gornto, Jr........................... 55 Executive Vice President, Secretary and
General Counsel
Daniel E. Catan........................... 43 Vice President, Chief Marketing Officer
Susan D. Falotico......................... 35 Vice President, Treasurer and Chief
Financial Officer
Charlotte B. Hill......................... 43 Vice President -- Research and Development
Ronald E. Goodrow......................... 47 Vice President -- Operations
Brian B. Heafy............................ 37 Vice President -- Human Resources and
Organizational Development
Bernard B. Markey(1)...................... 33 Director
Raymond Ambrose(1)........................ 51 Director
</TABLE>

- ---------------

(1) Member of the Audit Committee and the Compensation Committee.

Mr. Dennis J. Harward founded the Company in 1981 and has served as its
President and Chief Executive Officer, Chairman of the Board and a Director
since inception of the Company. From 1978 to 1980, he was employed by
Southeastern Academy, a private educational institution, where he was
responsible for developing its initial management information systems
environment and implementing "mid-range" relational database systems. From 1980
through 1981, he was employed as a consultant at an oil and gas company where he
was responsible for coordinating large-scale conversion of applications to a
relational database environment. Dennis J. Harward is the son of Jack L.
Harward.

Mr. Jack L. Harward joined the Company in 1983 and since that time has
served as an Executive Vice President and a Director of the Company. During
November 1997, he was appointed Assistant Secretary and Assistant Treasurer. Mr.
Harward also serves as the Chief Operating Officer of HTE-Bellamy, Ltd., a
wholly-owned subsidiary of the Company. From 1978 to 1983, Mr. Harward was
employed by Seminole County, Florida, where he served as Information Systems
Director. From 1974 to 1978, Mr. Harward was responsible for systems
development-information technology management at Pepsi-Cola, Inc. Jack L.
Harward is the father of Dennis J. Harward.

Mr. O. F. Ramos joined the Company in June 1998 and was appointed to the
Board of Directors in August 1998. He currently serves as Executive Vice
President of the Company and President of HTE-UCS, Inc., a wholly owned
subsidiary of HTE. From 1986 to 1998, Mr. Ramos served as the President and CEO
of UCS. As the co-founder of UCS, he was responsible for the corporate direction
and financial development of UCS, Inc. and for overseeing operations. Prior to
1986, Mr. Ramos served in various engineering and management capacities at
Motorola, Inc. where he was responsible for the development of diverse software
and hardware projects for several platforms.

Mr. L. A. Gornto, Jr. joined the Company in January 1997, serves as an
Executive Vice President, Secretary and General Counsel, and oversees mergers
and acquisitions. From January 1997 until November 1997, he served as the
Company's Chief Financial Officer. Since 1988, Mr. Gornto has been engaged in
the private practice of law in central Florida and provided legal services to
the Company as General Counsel. From 1985 to 1987, Mr. Gornto served as Senior
Vice President -- Finance and Chief Financial Officer of Jerrico, Inc., formerly
a publicly-traded company and holding company of Long John Silvers, a seafood
restaurant chain. From 1977 to 1985, he was engaged in the private practice of
law and also served as a

45
<PAGE> 51

management consultant. From 1968 to 1977, he served as Executive Vice President
and Chief Financial Officer and a director of Red Lobster Restaurants, a seafood
restaurant chain and formerly a subsidiary of General Mills, Inc. Mr. Gornto is
an attorney-at-law and certified public accountant licensed in the states of
Florida and Georgia.

Mr. Daniel E. Catan joined the Company in July 1996 and currently serves as
a Vice President and Chief Marketing Officer. From 1990 to 1996, he was employed
by Atlanta Centennial Olympic Properties as its Vice President of Marketing,
where he was responsible for creating sponsorship packages to raise revenues for
the 1996 Summer Olympic Games. Mr. Catan was also responsible for managing the
sales negotiation and sponsor support departments. From 1977 to 1990, he was
employed by IBM Corporation, a computer manufacturer, in its Sales, Marketing
and Business Management Department where he was responsible for developing sales
personnel, managing field business units, creating its software and services
business unit and national cross-industry strategies and producing the launch of
the AS/400 system in the Southeast.

Ms. Susan D. Falotico joined the Company in 1995 and serves as Vice
President, Treasurer and Chief Financial Officer. From 1995 to November 1997,
Ms. Falotico served as the Company's Vice President -- Controller and Chief
Accounting Officer. From 1988 to 1995, Mrs. Falotico served as Controller of the
Newtrend Division of EDS, Inc., a systems integration company, where she headed
the Financial Accounting and Corporate Planning Department. From 1986 to 1988,
Ms. Falotico was a Financial Analyst for ISI, a division of Mars, Inc., a food
company, where she was responsible for monthly financial reporting and for
coordinating a $70 million budget.

Ms. Charlotte B. Hill joined the Company in February 1997 and currently
serves as its Vice President -- Research and Development. From 1979 to 1996, Ms.
Hill was employed by IBM Corporation, and ISSC, a wholly-owned subsidiary of
IBM. During the period 1991 to 1996, Ms. Hill served as a Consulting and
Services Executive responsible for profit and loss, revenue growth, strategy
development, and management of field systems integration. From 1984 to 1992, Ms.
Hill served in various sales and technical management capacities.

Mr. Ronald E. Goodrow joined the Company in 1988, and currently serves as
its Vice President -- Operations. From 1978 to 1988, he was employed by GCC
Beverage Corporation, where he was Vice President of Information Systems. From
1970 to 1978, he was Vice President of Dynamic Control Corporation (Baxter
Travenol), a healthcare company.

Mr. Brian B. Heafy joined the Company in August 1994 and currently serves
as Vice President, Human Resources & Organizational Development. From 1994 to
1998, Mr. Heafy served as the Company's Director of Public Safety and Justice
Systems division, where he was responsible for consolidating three operating
groups into one and for improving customer satisfaction, revenue growth and
profit. From 1990 to 1994, Mr. Heafy served as Manager of Information Services
for the City of Coral Springs, Florida. His major responsibilities included the
successful implementation of a multi-million dollar information technology
project. From 1987 to 1990, Mr. Heafy served as Program Manager for CACI, Inc.,
Federal division. Prior to 1987, Mr. Heafy served in various technical
management and staff capacities with the United States Marine Corps.

Mr. Bernard B. Markey has been a Director of the Company since 1995. Mr.
Markey has been employed since 1988 with Meridian Venture Partners, a
privately-held venture capital fund and has been a General Partner of the fund
since 1995. Mr. Markey also serves on the Board of Directors of several
privately-held companies.

Mr. Raymond Ambrose was appointed as a member of the Company's Board of
Directors in November 1997. Since 1984, Mr. Ambrose has been the President of
Air Orlando, Inc., Orlando, Florida, an aviation company with aircraft charter,
maintenance, sales and flying school divisions. From 1981 until 1987, Mr.
Ambrose served as the Mayor of the City of Altamonte Springs, Florida. From 1971
until 1981, Mr. Ambrose was employed by the Altamonte Springs Police Department
as a Rank Lieutenant.

The Company's Articles of Incorporation provide for the Board of Directors
to have a minimum of three and a maximum of nine directors, which number is
fixed from time to time by the Board of Directors. The
46
<PAGE> 52

number of directors is currently fixed at six. The Articles of Incorporation
further provide that the members of the Board be divided into three classes, as
nearly equal in number as possible, to serve in staggered terms of office for
three years. The number of members comprising the Board presently is five.
Messrs. Jack L. Harward and Raymond Ambrose are Class II directors whose terms
expire at the 2001 Annual Meeting of Shareholders. Messrs. Dennis J. Harward and
Bernard B. Markey are Class III directors whose terms expire at the 1999 Annual
Meeting of Shareholders. Mr. O.F. Ramos is a Class I director. There is one
vacancy in Class I which, pursuant to the Company's Articles of Incorporation,
may be filled by majority vote of the Board of Directors. The Company is
actively searching for a qualified individual to fill that position. The term of
the Class I directors expires at the 2000 Annual Meeting of Shareholders or
until their successors were duly elected and qualified. The Company's officers
serve at the discretion of the Board of Directors and are elected by the Board
annually.

For a description of employment and change of control severance agreements
between the Company and each of Dennis J. Harward and Jack L. Harward, see Note
11 of Notes to the Company's Consolidated Financial Statements.

47
<PAGE> 53

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of July 31, 1998, with respect to (i) each
director and executive officer of the Company, (ii) the directors and executive
officers of the Company as a group, (iii) each person known by the Company to be
the beneficial owner of more than 5% of the Company's Common Stock, and (iv)
each Selling Shareholder.

The Selling Shareholders consist of the following categories of persons:
(i) BancBoston Ventures, Inc., a venture capital investor that has held its
shares since November 1994; (ii) various institutional and individual limited
partners of a venture capital partnership that held its shares from March 1995
until it recently distributed such shares to its partners (a total of 8
investors selling 798,380 shares); (iii) two former shareholders of Phoenix
selling a total of 220,000 shares received in connection with the Company's
acquisition of Phoenix in April 1998; (iv) former shareholders and options
holders of UCS who received their shares in connection with the Company's
acquisition of UCS in June 1998, representing a total of 49 persons selling a
total of 351,694 shares, excluding 273,098 shares that are held by Mr. Ramos, an
officer of the Company and former principal shareholder of UCS; and (v) certain
directors and officers of the Company selling a total of 1,069,792 shares,
including the 273,098 shares being sold by Mr. Ramos, referenced above.

Except as otherwise noted, and subject to community property laws where
applicable, each named beneficial owner has sole voting and investment power
over the shares shown. To the knowledge of the Company, none of the Selling
Shareholders has had within the past three years any material relationship with
the Company or any of its predecessor or affiliates, except as set forth in the
footnotes to the following table.

<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO SHARES OWNED AFTER
THE OFFERING(1) OFFERED(2) THE OFFERING
------------------- ---------- -------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER NUMBER PERCENT
- ----------------------------------------------- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Dennis J. Harward(2)(3)(4)..................... 3,713,798 22.0% 371,379 3,342,419 17.6%
Jack L. Harward(2)(3)(5)....................... 2,505,154 14.8% 250,515 2,254,639 11.9%
Bernard B. Markey(3)(6)........................ 28,117 * -- 28,117 *
Raymond Ambrose(3)(7).......................... 5,000 * -- 5,000 *
O.F. Ramos(2)(3)(8)............................ 546,422 3.2% 273,098 273,324 1.4%
L.A. Gornto, Jr.(2)(3)(9)...................... 212,000 1.3% 70,000 142,000 *
Ronald E. Goodrow(2)(3)(10).................... 169,600 1.0% 84,800 84,800 *
Daniel E. Catan(3)(11)......................... 122,028 * 20,000 102,028 *
Susan D. Falotico(3)(12)....................... 11,763 * -- 11,763 *
Charlotte B. Hill(3)(13)....................... 23,205 * -- 23,205 *
Brian B. Heafy(3)(14).......................... 4,240 * -- 4,240 *
All executive officers and directors as a group
(11 persons)................................. 7,341,327 43.5% 1,069,792 6,271,535 33.0%
BancBoston Ventures, Inc.
175 Federal Street, 10th Floor
Boston, Massachusetts 02110.................. 1,112,432 6.6% 1,112,432 -- --
CoreStates Holdings, Inc.
First Union Capital Partners
One First Union Center, 4th Floor
Charlotte, NC 28288-0732..................... 416,391 2.5% 416,391 -- --
First Maryland Bancorp
121 West Market Street
Mail Code 401-610
York, PA 17401............................... 36,208 * 36,208 -- --
</TABLE>

48
<PAGE> 54

<TABLE>
<CAPTION>
SHARES OF SHARES OF
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO SHARES OWNED AFTER
THE OFFERING(1) OFFERED(2) THE OFFERING
------------------- ---------- -------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER NUMBER PERCENT
- ----------------------------------------------- --------- ------- ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Summit Bancorp
750 Walnut Avenue
Cranford, NJ 07016........................... 54,312 * 54,312 -- --
The Philadelphia Municipal
Employees Retirement System
Two Penn Center Plaza, 20th Floor
Philadelphia, PA 19102....................... 90,520 * 90,520 -- --
PNC Bank, Delaware
222 Delaware Avenue, 18th Floor
Wilmington, DE 19899......................... 36,208 * 36,208 -- --
NatWest Group Holdings Corporation
175 Water Street
New York, NY 10038........................... 90,520 * 90,520 -- --
George P. Keeley
16 Manchester Court
The Highlands
Berwyn, PA 19312............................. 30,394 * 30,394 -- --
Raymond R. Rafferty, Jr.
64 Rosemont Avenue
Rosemont, PA 19010........................... 87,654 * 43,827 43,827 *
Robert W. Nelson(15)........................... 283,468 1.7% 183,468 100,000 *
William K. North(16)........................... 172,846 1.0% 112,846 60,000 *
George A. Sheehy(17)........................... 136,018 * 110,000 26,018 *
David N. Way(18)............................... 136,018 * 110,000 26,018 *
Certain Employees (49) of HTE-UCS, Inc.(19).... 116,906 * 55,380 61,526 *
---------
3,552,298(2)
</TABLE>

- ---------------

* Less than 1%

(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof either from the
exercise of options or from the conversion of a security.
(2) Does not include a total of 832,500 additional shares of Common Stock that
the Underwriters may purchase to cover over-allotments pursuant to an option
granted to the Underwriters by certain Selling Shareholders, exercisable for
up to 30 days after the date of this Prospectus. Those Selling Shareholders
and their respective shares subject to the Underwriters' over-allotment
option are as follows: Dennis J. Harward -- 349,068 shares; Jack L.
Harward -- 349,068 shares; O.F. Ramos -- 81,964 shares; L.A. Gornto (G & S
Partnership) -- 10,000 shares; and Ronald E. Goodrow -- 42,400 shares, of
which 31,800 shares are subject to an outstanding stock option.
(3) Unless otherwise noted, the address of each such executive officer, director
and over 5% shareholder is H.T.E., Inc., 1000 Business Center Drive, Lake
Mary, Florida 32764.
(4) Mr. D. Harward has been President, Chief Executive Officer and Chairman of
the Board of the Company since 1981.
(5) Mr. J. Harward has been Executive Vice President and a Director of the
Company since 1983.
(6) Mr. Markey is a Director of the Company and a general partner of the limited
partnership referred to above that distributed shares of Common Stock to its
limited partners.
(7) Includes 5,000 shares Mr. Ambrose holds jointly with his wife.

49
<PAGE> 55

(8) Mr. Ramos, a Director of the Company since August 1998, has been Executive
Vice President of the Company and President of HTE-UCS, Inc. since June
1998 and prior to that date was the President, Chief Executive Officer, a
Director and a principal (51.5%) shareholder of UCS. Includes 30,268 shares
of Common Stock held in escrow for 180 days following the June 1, 1998
closing of the UCS acquisition, pursuant to the terms and conditions of an
escrow agreement.
(9) Includes 106,000 shares of Common Stock held by G & S Investment Group
Limited Partnership (the "G & S Partnership") in which Mr. Gornto is the
general partner and he and his spouse are the limited partners, and 106,000
shares of Common Stock that Mr. Gornto may acquire within 60 days upon
exercise of stock options. Mr. Gornto has been Executive Vice President,
Secretary and General Counsel for the Company since January 1997, and Chief
Financial Officer from January 1997 to November 1997. Prior to January
1997, Mr. Gornto provided legal services to the Company. The sale of the
70,000 shares of Common Stock will be made by the G & S Partnership.
(10) Includes 116,600 shares of Common Stock that Mr. Goodrow may acquire within
60 days upon exercise of stock options. Mr. Goodrow has been employed by
the Company since 1988 and is currently Vice President -- Operations.
(11) Includes 121,200 shares of Common Stock that Mr. Catan may acquire within
60 days upon exercise of stock options. Mr. Catan has been Vice President
and Chief Marketing Officer since July 1996.
(12) Includes 10,600 shares of Common Stock that Ms. Falotico may acquire within
60 days upon exercise of stock options.
(13) Includes 21,200 shares of Common Stock that Ms. Hill may acquire within 60
days upon exercise of stock options. Ms. Hill has been Vice
President -- Research and Development for the Company since February 1997.
(14) Represents shares of Common Stock that Mr. Heafy may acquire within 60 days
upon exercise of stock options.
(15) Mr. Nelson has been Vice President -- Marketing and Chief Marketing Officer
with HTE-UCS, Inc. since June 1998 and was Vice President of Marketing and
a principal (26.7%) shareholder of UCS. Includes 15,710 shares of Common
Stock held in escrow for 180 days following the June 1, 1998 closing of the
UCS acquisition, pursuant to the terms and conditions of an escrow
agreement.
(16) Mr. North has been Vice President -- Research of HTE-UCS, Inc. since June
1998 and was a principal (16.3%) shareholder of UCS. Includes 9,578 shares
of Common Stock held in escrow for 180 days following the June 1, 1998
closing of the UCS acquisition, pursuant to the terms and conditions of an
escrow agreement.
(17) Mr. Sheehy has been Vice President of HTE-Phoenix Systems LLC since April
1998 and formerly held the same position with, and was a 50% equity owner
of Phoenix prior to HTE's acquisition of that company. Includes 13,602
shares of Common Stock held in escrow for 240 days following the April 1,
1998 closing of the acquisition of Phoenix pursuant to the terms of an
escrow agreement.
(18) Mr. Way has been President of HTE-Phoenix Systems LLC since April 1998 and
formerly held the same position with, and was a 50% equity owner of Phoenix
prior to HTE's acquisition of that company. Includes 13,602 shares of
Common Stock held in escrow for 240 days following the April 1, 1998
closing of the acquisition of Phoenix pursuant to the terms of an escrow
agreement.
(19) Represents shares of the Company's Common Stock received by various UCS
optionholders (employees) in connection with the acquisition of UCS by the
Company, which shares in the aggregate represent less than 1% of the issued
and outstanding shares of Common Stock of the Company. Excludes shares of
Common Stock beneficially owned by Messrs. Ramos, Nelson and North, who are
identified individually in the foregoing table.

50
<PAGE> 56

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement dated as
of the date hereof (the "Underwriting Agreement"), the Company and the Selling
Shareholders have agreed to sell to each of the Underwriters named below (the
"Underwriters"), and each of the Underwriters, for whom SG Cowen Securities
Corporation, Janney Montgomery Scott Inc., Raymond James & Associates, Inc. and
Volpe Brown Whelan & Company, LLC are acting as representatives (together, the
"Representatives"), has severally agreed to purchase from the Company and the
Selling Shareholders the respective number of shares of Common Stock set forth
opposite the name of such Underwriter below at the public offering price less
the underwriting discounts and commissions set forth on the cover page of this
Prospectus:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
NAME COMMON STOCK
---- ------------
<S> <C>
SG Cowen Securities Corporation.............................
Janney Montgomery Scott Inc.................................
Raymond James & Associates, Inc.............................
Volpe Brown Whelan & Company, LLC...........................

----------
Total............................................. 5,550,000
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters are committed to purchase all of the shares of Common Stock offered
hereby (other than those covered by the over-allotment option described below),
if any of such shares are purchased.

The Underwriters propose to offer the shares of Common Stock, in part,
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and, in part, to certain dealers at such price
less a concession not in excess of $ per share. The Underwriters may
allow and such dealers may reallow a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the Representatives.

Certain Selling Shareholders have granted the Underwriters an option,
exercisable for up to 30 days after the date of this Prospectus, to purchase up
to an aggregate of 832,500 additional shares of Common Stock to cover
over-allotments, if any. The Selling Shareholders who have granted the option
are Dennis J. Harward, Jack L. Harward, O.F. Ramos and Ronald E. Goodrow, each
of whom is an executive officer and/or Director of the Company. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by each of them, as shown in the foregoing table, bears to the
5,550,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover the over-allotments in connection with the sale of the
5,550,000 shares of Common Stock offered hereby.

The Company and the Selling Shareholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act, and to contribute to payments that the Underwriters may be
required to make in respect thereof.

The Company, its Directors and executive officers and certain Selling
Shareholders have agreed not to offer, sell, contract to sell or otherwise
dispose of any shares of Common Stock or any securities convertible

51
<PAGE> 57

into or exercisable or exchangeable for, or any rights to purchase or acquire,
Common Stock for a period of 90 days following the date of this Prospectus,
without the prior written consent of SG Cowen Securities Corporation (which
consent may be given without notice to the Company's shareholders or other
public announcement), except for shares that may be issued by the Company with
respect to acquisitions and exercise of options under employee benefit plans.

The Representatives have informed the Company and the Selling Shareholders
that the Underwriters do not intend to confirm sales in excess of 5% of the
shares offered hereby to accounts over which the Underwriters exercise
discretionary authority.

In order to facilitate this offering, the Underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
Common Stock. Specifically, the Underwriters may over-allot in connection with
this Offering, creating a short position in the Common Stock for their own
account. In addition, to cover over-allotments or to stabilize the price of the
Common Stock, the Underwriters may bid for, and purchase, shares of the Common
Stock in the open market. The Underwriters may also reclaim selling concessions
allowed to an underwriter or a dealer for distributing the Common Stock in this
Offering, if the Underwriters repurchase previously distributed Common Stock in
transactions to cover their short positions, in stabilization transactions or
otherwise. Finally, the Underwriters may bid for, and purchase, shares of the
Common Stock in market making transactions. These activities may stabilize or
maintain the market price of the Common Stock above market levels that may
otherwise prevail. The Underwriters are not required to engage in these
activities and may end any of these activities at any time.

The Underwriters and dealers may engage in passive market making
transactions in the Common Stock in accordance with Rule 103 of Regulation M
promulgated by the Commission. In general, a passive market maker may not bid
for, or purchase, the Common Stock at a price that exceeds the highest
independent bid. In addition, the net daily purchases made by any passive market
maker generally may not exceed 30% of its average daily trading volume in the
Common Stock during a specified two-month prior period or 200 shares, whichever
is greater. A passive market maker must identify passive market making bids as
such on the Nasdaq electronic inter-dealer reporting system. Passive market
making may stabilize or maintain the market price of the Common Stock above
independent market levels. Underwriters and dealers are not required to engage
in passive market making and may end passive market making activities at any
time.

The foregoing contains a summary of the principal terms of the Underwriting
Agreement and does not purport to be complete. Reference is made to the copy of
the Underwriting Agreement that is on file as an exhibit to the Registration
Statement of which this Prospectus is a part.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Greenberg Traurig, P.A., Orlando, Florida. Certain legal matters
relating to the Offering will be passed upon for the Underwriters by Saul,
Ewing, Remick & Saul LLP, Philadelphia, Pennsylvania.

EXPERTS

The Consolidated Financial Statements included in this Prospectus and
elsewhere in the registration statement of which this Prospectus is a part have
been audited by Arthur Andersen LLP, independent certified public accountants,
as set forth in their report. In that report, Arthur Andersen LLP states that
with respect to UCS, its opinion is based on the reports of other independent
certified public accountants, PricewaterhouseCoopers LLP (formerly Price
Waterhouse LLP). The financial statements referred to above have been included
herein in reliance upon the authority of Arthur Andersen LLP as experts in
accounting and auditing.

The financial statements of UCS not separately presented in this Prospectus
have been audited by PricewaterhouseCoopers LLP, independent certified public
accountants, whose reports thereon appear herein. Such financial statements, to
the extent they have been included in the financial statements of HTE as a
result

52
<PAGE> 58

of a pooling of interest transaction, have been so included in reliance on their
reports given on the authority of PricewaterhouseCoopers LLP as experts in
auditing and accounting.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). The
Company has filed with the Commission a registration statement on Form S-3 under
the Securities Act with respect to the shares of Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
registration statement and the exhibits and schedules thereto, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements contained in this Prospectus concerning the provisions of
any document are not necessarily complete and, in each instance, reference is
hereby made to the copy of the document filed as an exhibit to the registration
statement or otherwise filed with the Commission. Each such statement is
qualified in its entirety by such reference.

The registration statement described above, its exhibits and schedules, and
the reports, proxy statements, and other information that the Company files with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at 7 World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can also be obtained at
prescribed rates from the Commission's Public Reference Section at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a web site, the address of which is http:/www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission.

The Company's Common Stock is listed on the Nasdaq National Market, and
reports, proxy statements, and other information concerning the Company can also
be inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.

The Company will furnish without charge, upon written or oral request, to
any person, including any beneficial owner, to whom this Prospectus is
delivered, a copy of any information that has been incorporated in this
Prospectus by reference (other than exhibits to such documents that are not
specifically incorporated by reference into the information that this Prospectus
incorporates). Requests should be directed to Investor Relations, H.T.E., Inc.,
1000 Business Center Drive, Lake Mary, Florida 32746, telephone number (407)
304-3235.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed with the Commission pursuant to the Exchange
Act are incorporated herein by reference:

1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;

2. The Company's Quarterly Reports on Form 10-Q for the three months
ended March 31, 1998 and the six months ended June 30, 1998;

3. All Current Reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since December 31, 1997, consisting of the
Company's Current Reports on Form 8-K filed February 12, 1998, June 12,
1998 and amendment thereto filed on June 24, 1998;

4. The Company's Definitive Proxy Statement for the 1998 Annual
Shareholder's Meeting filed on April 17, 1998 pursuant to Section 14 of the
Exchange Act; and

5. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A and any amendments to such descriptions
in such Registration Statement.

53
<PAGE> 59

In addition, all other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the Offering shall be deemed
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents.

Any statement contained in a document incorporated or deemed to be
incorporated herein by reference, or contained in this Prospectus, shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified shall not
be deemed to constitute a part of this Prospectus except as so modified, and any
statement so superseded shall not be deemed to constitute a part of this
Prospectus.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act, and Section 21E of the Exchange
Act, with respect to the Company's business, financial condition and results of
operations. When used in this Prospectus, the words "may," "will," "intends,"
"plans," "expects," "anticipates," "estimates," and similar expressions are
intended to identify forward-looking statements. The forward-looking statements
included herein are subject to risks and uncertainties. The Company's actual
results could differ materially from those discussed in the forward-looking
statements. Factors that could cause or contribute to such differences include,
but are not limited to, those discussed in "Risk Factors," as well as those
discussed elsewhere in this Prospectus. Investors are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to publicly release any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

54
<PAGE> 60

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports of Independent Certified Public Accountants......... F-2
Consolidated Balance Sheets................................. F-4
Consolidated Statements of Operations....................... F-5
Consolidated Statements of Stockholders' (Deficit) Equity... F-6
Consolidated Statements of Cash Flows....................... F-8
Notes to Consolidated Financial Statements.................. F-9
</TABLE>

F-1
<PAGE> 61

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To H.T.E., Inc.:

We have audited the accompanying consolidated balance sheets of H.T.E.,
Inc. (a Florida corporation) and subsidiaries as of December 31, 1996 and 1997,
and the related consolidated statements of operations, stockholders' (deficit)
equity and cash flows for the year ended March 31, 1996, the nine months ended
December 31, 1996, and the year ended December 31, 1997, which give retroactive
effect to the merger with UCS, Inc. on June 1, 1998, which has been accounted
for as a pooling of interests. 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 did not audit the financial
statements of UCS, Inc., which statements reflect total assets constituting 10
percent and five percent, as of December 31, 1996 and 1997, respectively, and
total revenues constituting 24 percent, 17 percent and 15 percent, for the year
ended March 31, 1996, the nine months ended December 31, 1996, and the year
ended December 31, 1997, respectively, of the related consolidated totals. Those
statements were audited by other auditors whose reports thereon have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for UCS, Inc., is based solely upon the reports of the other auditors.

We conducted our audits in accordance with generally accepted auditing
standards. 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 and the reports of the other auditors provide a
reasonable basis for our opinion.

In our opinion, based upon our audits and the reports of the other
auditors, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of H.T.E., Inc. and its
subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for the year ended March 31, 1996, the nine
months ended December 31, 1996, and the year ended December 31, 1997, after
giving retroactive effect to the merger with UCS, Inc. as described in Note 1 to
the consolidated financial statements, all in conformity with generally accepted
accounting principles.

/s/ ARTHUR ANDERSEN LLP

Orlando, Florida
August 3, 1998

F-2
<PAGE> 62

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Stockholders of UCS, Inc.:

In our opinion, the balance sheet and the related statements of operations
and stockholders' equity and of cash flows (not presented separately herein),
present fairly, in all material respects, the financial position of UCS, Inc. at
December 31, 1995, and the results of its operations and its cash flows for the
year in conformity with generally accepted accounting principles. 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 audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

/s/ Price Waterhouse LLP

Miami, Florida
September 4, 1996

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Stockholders of UCS, Inc.:

In our opinion, the balance sheet and the related statements of operations
and stockholders' equity and of cash flows (not presented separately herein),
present fairly, in all material respects, the financial position of UCS, Inc. at
December 31, 1996, and the results of its operations and its cash flows for the
period April 1, 1996 through December 31, 1996 in conformity with generally
accepted accounting principles. 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 audit. We conducted our audit
of these statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP

Miami, Florida
July 7, 1998

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and
Stockholders of UCS, Inc.:

In our opinion, the balance sheet and the related statements of operations
and stockholders' equity and of cash flows (not presented separately herein),
present fairly, in all material respects, the financial position of UCS, Inc. at
December 31, 1997, and the results of its operations and its cash flows for the
year in conformity with generally accepted accounting principles. 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 audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above. We have not audited the financial statements of UCS, Inc. as of any date
or for any period subsequent to December 31, 1997.

/s/ Price Waterhouse LLP

Miami, Florida
April 10, 1998

F-3
<PAGE> 63

H.T.E., INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
1996 1997 1998
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 1,038 $18,634 $10,892
Restricted cash........................................... -- 1,574 --
Trade accounts receivable, less allowance of $520, $617
and $617 for doubtful accounts at December 31, 1996 and
1997, and June 30, 1998, respectively (Note 4).......... 18,086 22,822 31,257
Deferred income taxes (Note 10)........................... 667 751 755
Other current assets...................................... 663 1,405 2,662
------- ------- -------
Total current assets................................ 20,454 45,186 45,566
------- ------- -------
EQUIPMENT, FURNITURE AND FIXTURES, net (Note 2)............. 1,969 3,257 3,876
------- ------- -------
OTHER ASSETS:
Computer software development costs, net of accumulated
amortization of $6,312, $8,361 and $9,133 at December
31, 1996 and 1997, and June 30, 1998, respectively...... 3,817 4,297 5,211
Other intangible assets, net (Note 3)..................... 1,045 1,271 2,658
Deposits.................................................. 130 197 262
------- ------- -------
4,992 5,765 8,131
------- ------- -------
$27,415 $54,208 $57,573
======= ======= =======
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 3,009 $ 3,134 $ 3,469
Accrued liabilities....................................... 4,314 5,235 4,103
Line of credit (Note 4)................................... 2,306 -- --
Deferred revenue.......................................... 10,378 12,430 14,588
Current portion of notes payable to related parties (Note
3)...................................................... 60 -- --
------- ------- -------
Total current liabilities........................... 20,067 20,799 22,160
------- ------- -------
LONG-TERM LIABILITIES:
Notes payable to related parties, less current portion
(Note 3)................................................ 240 -- --
Due to stockholders....................................... 1,064 1,213 --
Other long-term liabilities............................... 66 173 227
Deferred income taxes (Note 10)........................... 1,731 1,731 2,070
------- ------- -------
Total long-term liabilities......................... 3,101 3,117 2,297
------- ------- -------
COMMITMENTS AND CONTINGENCIES
(Notes 9, 11 and 12)
MANDATORILY REDEEMABLE PREFERRED STOCK, 7% cumulative
convertible preferred stock (including accrued dividends
of $433 at December 31, 1996), $.0002 par value, 2,000,000
shares authorized and 1,769,494 shares issued and
outstanding at December 31, 1996, 0 shares authorized,
issued and outstanding at December 31, 1997 and June 30,
1998 (Note 5)............................................. 4,303 -- --
------- ------- -------
MANDATORILY REDEEMABLE CLASS C COMMON STOCK, $.0002 par
value, 200,000 shares authorized and 63,600 issued and
outstanding at December 31, 1996, 0 shares authorized,
issued and outstanding at December 31, 1997 and June 30,
1998 (Notes 3 and 6)...................................... 119 -- --
------- ------- -------
STOCKHOLDERS' (DEFICIT) EQUITY (Note 7)
Common stock--
Class A, $.0002 par value, 4,000,000 shares authorized
and 3,530,557 shares issued and outstanding at December
31, 1996, 0 shares authorized, issued and outstanding
at December 31, 1997 and June 30, 1998................. 1 -- --
Class B, $.01 par value, 200,000 authorized at December
31, 1996, 0 shares authorized at December 31, 1997 and
June 30, 1998, none issued and outstanding............. -- -- --
Common stock, $.01 par value, 50,000,000 shares
authorized, 1,082,536, 16,472,792 and 16,819,458 shares
issued and outstanding as of December 31, 1996 and
1997, and June 30, 1998, respectively.................. 11 165 168
Preferred stock, $.01 par value, 5,000,000 shares
authorized, none issued and outstanding................. -- -- --
Additional paid-in capital................................ 342 27,999 28,309
Accumulated (deficit) earnings............................ (524) 2,122 4,672
Cumulative translation adjustment......................... (5) 6 (33)
------- ------- -------
Total stockholders' (deficit) equity................ (175) 30,292 33,116
------- ------- -------
$27,415 $54,208 $57,573
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

F-4
<PAGE> 64

H.T.E., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS
NINE MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, DECEMBER 31, DECEMBER 31, -----------------
1996 1996 1997 1997 1998
---------- ------------ ------------ ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES:
Software licenses....................................... $11,575 $10,869 $26,762 $12,049 $19,801
Professional services................................... 10,686 8,943 14,543 7,498 9,454
Hardware................................................ 7,323 7,740 11,768 4,640 5,477
Maintenance and other................................... 10,013 6,950 12,571 5,997 8,362
Resource management..................................... -- -- 448 -- 723
------- ------- ------- ------- -------
Total revenues.................................... 39,597 34,502 66,092 30,184 43,817
------- ------- ------- ------- -------
OPERATING EXPENSES:
Cost of software licenses............................... 3,585 2,919 5,283 2,207 3,016
Cost of professional services........................... 7,608 4,952 8,363 4,159 5,546
Cost of hardware........................................ 5,774 6,186 9,209 3,570 4,378
Cost of maintenance and other........................... 4,233 2,705 5,984 2,877 4,400
Cost of resource management............................. -- -- 343 -- 467
Research and development................................ 4,508 5,242 8,256 4,064 6,226
Sales and marketing..................................... 5,474 6,186 11,520 5,133 8,322
General and administrative.............................. 6,764 5,830 10,925 5,488 7,063
------- ------- ------- ------- -------
Total operating expenses.......................... 37,946 34,020 59,883 27,498 39,418
------- ------- ------- ------- -------
OPERATING INCOME.......................................... 1,651 482 6,209 2,686 4,399
OTHER EXPENSE (INCOME):
Interest expense........................................ 127 191 175 127 2
Interest income......................................... -- -- (402) (1) (257)
------- ------- ------- ------- -------
Total other expense (income)...................... 127 191 (227) 126 (255)
------- ------- ------- ------- -------
INCOME BEFORE INCOME TAXES................................ 1,524 291 6,436 2,560 4,654
TAXES:
Deferred tax provision related to acquisitions.......... -- -- -- -- 339
Provision for income taxes (Note 10).................... 211 581 2,482 803 1,806
------- ------- ------- ------- -------
NET INCOME (LOSS)......................................... 1,313 (290) 3,954 1,757 2,509
ACCRETION AND ACCRUAL OF
DIVIDENDS ON MANDATORILY
REDEEMABLE PREFERRED STOCK.............................. 184 1,003 1,308 1,308 --
------- ------- ------- ------- -------
NET INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCKHOLDERS.................................. $ 1,129 $(1,293) $ 2,646 $ 449 $ 2,509
======= ======= ======= ======= =======
PRO FORMA INCOME DATA (Unaudited)
Income before income taxes.............................. $ 1,524 $ 291 $ 6,436 $ 2,560 $ 4,654
Pro forma provision for income taxes.................... 593 158 2,463 1,005 1,756
------- ------- ------- ------- -------
PRO FORMA NET INCOME...................................... $ 931 $ 133 $ 3,973 $ 1,555 $ 2,898
======= ======= ======= ======= =======
NET INCOME (LOSS) PER SHARE
Basic................................................... $ 0.14 $ (0.16) $ 0.21 $ 0.05 $ 0.15
======= ======= ======= ======= =======
Diluted................................................. $ 0.12 $ (0.16) $ 0.20 $ 0.05 $ 0.14
======= ======= ======= ======= =======
PRO FORMA NET INCOME PER SHARE (Unaudited)
Basic................................................... $ 0.01 $ 0.28 $ 0.13 $ 0.17
------- ------- ------- -------
Diluted................................................. $ 0.01 $ 0.27 $ 0.13 $ 0.17
======= ======= ======= =======
</TABLE>

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

F-5
<PAGE> 65

H.T.E., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
CLASS A NOTES
COMMON STOCK COMMON STOCK ADDITIONAL ACCUMULATED CUMULATIVE RECEIVABLE
--------------- --------------- PAID-IN (DEFICIT) TRANSLATION FROM
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT STOCKHOLDERS TOTAL
------ ------ ------ ------ ---------- ----------- ----------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1995.. 1,061 $ 11 3,392 $ 1 $ 113 $ (50) $ -- $ -- $ 75
Issuance of common
stock.................. -- -- 136 -- 224 -- -- -- 224
Stock issued in
connection with UCS
merger................. 22 -- -- -- -- -- -- -- --
Accretion of mandatorily
redeemable preferred
stock to redemption
value.................. -- -- -- -- -- 26 -- -- 26
Accrual of mandatorily
redeemable preferred
stock dividends........ -- -- -- -- -- (210) -- -- (210)
Advances on notes
receivable from
stockholders........... -- -- -- -- -- -- -- (262) (262)
Net income............... -- -- -- -- -- 1,313 -- -- 1,313
Adjustment for difference
in fiscal years........ -- -- -- -- -- (47) -- -- (47)
------ ---- ------ ----- ------- ------ ----- ---- -------
BALANCE, MARCH 31, 1996.. 1,083 11 3,528 1 337 1,032 -- (262) 1,119
Issuance of common
stock.................. -- -- 3 -- 5 -- -- -- 5
Accretion of mandatorily
redeemable preferred
stock to redemption
value.................. -- -- -- -- -- (838) -- -- (838)
Accrual of mandatorily
redeemable preferred
stock dividends........ -- -- -- -- -- (165) -- -- (165)
Advances on notes
receivable from
stockholders........... -- -- -- -- -- -- -- (1) (1)
Forgiveness of notes
receivable from
stockholders........... -- -- -- -- -- (263) -- 263 --
Translation adjustment... -- -- -- -- -- -- (5) -- (5)
Net loss................. -- -- -- -- -- (290) -- -- (290)
------ ---- ------ ----- ------- ------ ----- ---- -------
BALANCE, DECEMBER 31,
1996................... 1,083 11 3,531 1 342 (524) (5) -- (175)
Stock issued in
connection with UCS
merger................. 13 -- -- -- -- -- -- -- --
Accretion of mandatorily
redeemable preferred
stock to redemption
value.................. -- -- -- -- -- (1,117) -- -- (1,117)
Accrual of mandatorily
redeemable preferred
stock dividends........ -- -- -- -- -- (191) -- -- (191)
Compensation due to sale
of stock............... -- -- -- -- 65 -- -- -- 65
Conversion of mandatorily
redeemable preferred
stock.................. 3,539 35 -- -- 4,952 -- -- -- 4,987
Conversion of mandatorily
redeemable Class C
common stock........... 127 1 -- -- 137 -- -- -- 138
Conversion of Class A
common stock........... 7,061 71 (3,531) (1) (70) -- -- -- --
Proceeds from sale of
common stock........... 4,650 47 -- -- 22,573 -- -- -- 22,620
Translation adjustment... -- -- -- -- -- -- 11 -- 11
Net income............... -- -- -- -- -- 3,954 -- -- 3,954
------ ---- ------ ----- ------- ------ ----- ---- -------
BALANCE, DECEMBER 31,
1997................... 16,473 $165 -- $ -- $27,999 $2,122 $ 6 $ -- $30,292
====== ==== ====== ===== ======= ====== ===== ==== =======
</TABLE>

F-6
<PAGE> 66

H.T.E., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY -- (CONTINUED)
(AMOUNTS IN THOUSANDS)

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

F-7
<PAGE> 67

H.T.E., INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(NOTE 14)

<TABLE>
<CAPTION>
NINE MONTHS SIX MONTHS ENDED
YEAR ENDED ENDED YEAR ENDED JUNE 30,
MARCH 31, DECEMBER 31, DECEMBER 31, -------------------
1996 1996 1997 1997 1998
---------- ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................... $ 1,313 $ (290) $ 3,954 $ 1,757 $ 2,509
Adjustments to reconcile net income to net cash
provided by (used in) operating activities
Depreciation and amortization........................ 3,200 2,381 3,226 1,592 2,430
Accretion of mandatorily redeemable Class C common
stock charged to interest expense.................. -- 7 19 19 --
Loss on disposal of equipment, furniture and
fixtures........................................... 3 6 -- -- --
Gain on forgiveness of accounts payable.............. (210) -- -- -- --
Compensation due to sale of stock.................... -- -- 65 65 --
Deferred income taxes................................ 145 237 (84) (38) 335
Changes in operating assets and liabilities--
Decrease (increase) in assets--
Trade accounts receivable -- net................... (5,410) (5,085) (4,736) (1,036) (8,296)
Other current assets............................... (253) (124) (544) (952) (1,257)
Deposits........................................... 29 (61) (67) (114) (65)
Increase (decrease) in liabilities--
Accounts payable and accrued liabilities........... 1,735 1,410 980 (957) (797)
Deferred revenue................................... 340 3,404 1,802 1,763 1,902
Other liabilities.................................. (171) (105) 107 20 54
------- ------- ------- ------- -------
Net cash provided by (used in) operating
activities..................................... 721 1,780 4,722 2,119 (3,185)
------- ------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................... (671) (505) (2,091) (302) (1,194)
Proceeds from sale of investments...................... -- 119 -- -- --
Change in restricted cash.............................. -- -- (1,574) -- 1,574
Cash paid for acquisitions............................. (6) (375) (361) -- (1,792)
Computer software development costs.................... (2,693) (1,856) (2,616) (1,091) (2,205)
------- ------- ------- ------- -------
Net cash used in investing activities............ (3,370) (2,617) (6,642) (1,393) (3,617)
------- ------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of preferred stock.......... -- 247 -- -- --
Payment of dividends on preferred stock................ -- -- (624) (624) --
Net proceeds from issuance of common stock............. 224 5 22,620 19,056 312
Net proceeds (repayments) under line of credit......... 1,970 336 (2,306) (2,306) --
Repayments of long-term debt........................... (75) (83) -- -- --
Repayments of obligations under capital leases......... (149) (23) (34) (17) --
Net repayments of notes payable to related parties..... (50) (50) (300) -- --
Increase (decrease) in due to stockholders............. 396 483 149 (329) (1,213)
Advances on notes receivable from stockholders......... (262) (1) -- -- --
------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities..................................... 2,054 914 19,505 15,780 (901)
------- ------- ------- ------- -------
Effect of foreign currency exchange rate changes on cash
and cash equivalents................................... -- (5) 11 21 (39)
------- ------- ------- ------- -------
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS................................... (595) 72 17,596 16,527 (7,742)
CASH AND CASH EQUIVALENTS, beginning of period........... 1,738 966 1,038 1,038 18,634
------- ------- ------- ------- -------
CASH AND CASH EQUIVALENTS, end of period................. $ 1,143 $ 1,038 $18,634 $17,565 $10,892
======= ======= ======= ======= =======
SUPPLEMENTAL SCHEDULES OF CASH
FLOW INFORMATION
Cash paid for interest................................. $ 128 $ 187 $ 111 $ 116 $ 5
Cash paid for income taxes............................. 160 14 1,940 1,129 2,661
</TABLE>

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

F-8
<PAGE> 68

H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

The accompanying consolidated financial statements include the accounts of
H.T.E., Inc. (HTE) a Florida corporation, and its wholly-owned subsidiaries, HTE
Public Safety Illinois, Inc. (PSI), a Florida corporation, HTE-Software
Management, Inc. (SMI), a Florida corporation, HTE-Programmed For Success, Inc.
(PFS), a Florida corporation, Bellamy Software Ltd. (Bellamy), a Canadian
corporation, HTE-Kb Systems, Inc. (Kb Systems), a Florida corporation and
HTE-UCS, Inc. (UCS), a Florida corporation (collectively, the Company). HTE
develops, markets, implements and supports fully-integrated enterprise-wide
software applications designed specifically for public sector and utility
organizations, including state, county and city governments, other municipal
agencies, and publicly and privately owned utilities. The Company is also
engaged in remarketing IBM hardware systems to run in concert with their
application software. The effect of the Company's foreign operations on the
accompanying consolidated financial statements was not material.

On June 1, 1998, the Company acquired UCS, Inc., in exchange for 1,120,000
shares of the Company's common stock valued at approximately $15 million as of
the April 1998 agreement valuation date. UCS, Inc. is a mobile work force
automation provider of field-based reporting software. The acquisition has been
accounted for as a pooling of interests. Therefore, the consolidated financial
statements include the results of operations of UCS, Inc. for all periods
presented.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly owned domestic and foreign subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.

Change in Fiscal Year

The Company changed its fiscal year end from March 31 to December 31
effective with the year ended December 31, 1996. As a result, the fiscal period
ended December 31, 1996, presented herein is a nine-month period.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.

Restricted cash

Restricted cash represents cash held in escrow in connection with the
JALAN, Inc. acquisition further discussed in Note 13.

F-9
<PAGE> 69
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

Trade Accounts Receivable

Included in trade accounts receivable at December 31, 1996 and 1997, are
unbilled receivables of $4,252 and $7,898, respectively. The following table
reflects the activity in the allowance for doubtful accounts for the year ended
March 31, 1996, the nine months ended December 31, 1996 and the year ended
December 31, 1997:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1996 1997
--------- ------------ ------------
<S> <C> <C> <C>
Balance at the beginning of the period.............. $ 285 $ 300 $ 520
Provision........................................... 139 320 200
Write-offs.......................................... (124) (100) (103)
----- ----- -----
Balance at the end of the period.................... $ 300 $ 520 $ 617
===== ===== =====
</TABLE>

Equipment, Furniture and Fixtures

Equipment, furniture and fixtures are recorded at cost. Depreciation and
amortization are recorded for financial statement purposes on a straight-line
basis over the estimated useful lives of the assets. Repair and maintenance
costs which do not extend the useful lives of the related assets are expensed as
incurred.

The estimated useful lives of equipment, furniture and fixtures are as
follows:

<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Equipment................................................... 3-10
Office furniture and fixtures............................... 5-10
Leasehold improvements...................................... 5-10
</TABLE>

Depreciation and amortization expense related to equipment, furniture and
fixtures and leasehold improvements of $324, $350 and $643 is included in
general and administrative expenses on the accompanying statements of operations
for the year ended March 31, 1996, the nine months ended December 31, 1996 and
the year ended December 31, 1997, respectively.

Computer Software Development Costs

All costs incurred to establish the technological feasibility of a computer
software product to be sold, leased or otherwise marketed are charged to
research and development expense as incurred. Technological feasibility of a
computer software product is established when the Company has completed all
planning, designing, coding and testing activities that are necessary to
establish that the product can be produced to meet its design specifications
including functions, features and technical performance requirements.

Costs of producing product masters incurred subsequent to establishing
technological feasibility are capitalized and are amortized on a straight-line
basis over three years once the product is available for general release to
customers. Such capitalized costs are reported at the lower of unamortized cost
or net realizable value.

The Company ceases capitalization of computer software costs when the
product is available for general release to customers. Costs of maintenance and
customer support are charged to expense when the related revenue is recognized
or when those costs are incurred, whichever occurs first.

Effective April 1, 1995, management changed the estimated useful life of
capitalized computer software development costs from 60 months to 36 months. The
effect of this change in accounting estimate was to

F-10
<PAGE> 70
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

reduce net income by approximately $798, net of the related tax benefit of $532,
or $0.07 per diluted share for the year ended March 31, 1996.

Amortization expense related to computer software development costs of
$2,831, $1,947 and $2,296 is included in cost of software license fees in the
accompanying consolidated statements of operations for the year ended March 31,
1996, the nine months ended December 31, 1996 and the year ended December 31,
1997, respectively.

Other Intangible Assets

Other intangible assets consisted of the following as of December 31, 1996
and 1997:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
DESCRIPTION 1996 1997
- ----------- ------------ ------------
<S> <C> <C>
Goodwill.................................................... $ 401 $ 401
Purchased software.......................................... 387 706
Customer lists.............................................. 386 580
------ ------
1,174 1,687
Less -- Accumulated amortization............................ (129) (416)
------ ------
$1,045 $1,271
====== ======
</TABLE>

Goodwill represents amounts paid in excess of the fair market value of net
tangible and identifiable intangible assets purchased in the acquisitions of SMI
and Bellamy and is amortized using the straight-line method over a period of 60
months. Customer lists represent identifiable intangible assets purchased in
connection with the acquisitions of Bellamy and Kb Systems, Inc. and are
amortized over a period of 60 months. Purchased software represents identifiable
intangible assets purchased in connection with the acquisitions of PFS, Bellamy
and Kb Systems, Inc. and is amortized using the straight-line method over a
period of 36 months. Amortization expense related to goodwill and customer lists
of $23, $38 and $158 is included in general and administrative expenses in the
accompanying statements of operations for the year ended March 31, 1996, the
nine months ended December 31, 1996 and the year ended December 31, 1997,
respectively. Amortization expense related to the purchased software of $22, $46
and $129 is included in the cost of software license fees in the accompanying
consolidated statements of operations for the year ended March 31, 1996, the
nine months ended December 31, 1996 and the year ended December 31, 1997,
respectively.

Deferred Revenue and Revenue Recognition

Deferred revenue represents advance payments by customers for software
licenses, maintenance and professional services. Revenue from software licenses
is recognized when a contract has been executed, the product has been shipped,
all significant contractual obligations related to the software licenses have
been satisfied, uncertainty surrounding customer acceptance becomes
insignificant and collection of the related receivable is probable. Maintenance
revenue is deferred and recognized ratably over the service period. Professional
services include system planning and implementation, project management and
training and education services and are recognized as the work is performed. As
the functionality of the hardware is not dependent on any other services
provided by the Company, hardware sales are recognized upon shipment.

During 1997, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 97-2, "Software Revenue Recognition," which
is effective for transactions entered into in fiscal years beginning after
December 15, 1997, and supersedes SOP 91-1. The AICPA subsequently issued SOP
98-4, which deferred for one year the effective date of certain provisions of
SOP 97-2 with respect to

F-11
<PAGE> 71
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

vendor-specific objective evidence. Management does not anticipate that the
implementation of the guidance set forth in SOP 97-2, as amended by SOP 98-4,
will have a material impact on its current revenue recognition policies.

Income Taxes and Pro Forma Provision for Income Taxes

The Company accounts for income taxes using an asset and liability approach
in accordance with Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes," which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, the Company considers all expected future
events other than enactments of changes in the tax law or rates. Changes in the
tax law or rates will be recognized in the future years in which they occur.

As noted above, the consolidated financial statements include the results
of operations of UCS, Inc. for all periods presented. UCS, Inc. was an S
corporation, and therefore no tax provision was reflected in its results of
operations. The pro forma provision for income taxes includes the tax impact of
UCS, Inc.'s operations, as adjusted for elimination of intercompany
transactions, based on the appropriate statutory rate.

Significant Concentrations

Financial instruments which potentially expose the Company to
concentrations of credit risk consist primarily of accounts receivable from
governmental entities. To minimize this risk, the Company generally requires a
significant cash deposit upon contract signing. In addition, the Company
maintains reserves for potential credit losses.

Substantially all of the Company's hardware revenues are derived from the
sale of IBM AS/400 systems in connection with the Company's Industry Remarketing
agreement with IBM. Any change in this relationship could potentially have an
adverse effect on the Company's financial performance.

Stock-Based Compensation

The Company measures compensation expense for stock-based compensation
granted to employees in accordance with APB Opinion No. 25, "Accounting for
Stock Issued to Employees." The Company has elected to adopt only the disclosure
requirements of SFAS No. 123, "Accounting for Stock-Based Compensation," which
are presented in Note 8.

Foreign Currency Translation

The functional currency of the Company's foreign subsidiary is the Canadian
dollar. The financial statements of the Company's foreign subsidiary have been
translated into U.S. dollars in accordance with SFAS No. 52. Accordingly, assets
and liabilities of foreign operations are translated at period-end rates of
exchange, with any resulting translation adjustments reported as a separate
component of stockholders' (deficit) equity. Income statement accounts are
translated at average exchange rates for the period and gains and losses from
foreign currency transactions are included in net income.

F-12
<PAGE> 72
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

Net Income (Loss) Per Share

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share." The Company adopted SFAS No. 128 in 1997 and, as a
result, restated all prior period income per share data presented. The following
disclosures comply with the requirements of SFAS No. 128 (amounts in thousands):

<TABLE>
<CAPTION>
YEAR NINE MONTHS YEAR
ENDED ENDED ENDED
MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1996 1997
--------- ------------ ------------
<S> <C> <C> <C>
Basic weighted-average shares outstanding........... 7,873 8,144 12,677
Common shares applicable to:
Stock options..................................... -- 51 442
Mandatorily redeemable preferred stock............ 3,271 -- --
------ ------ ------
Diluted weighted-average shares outstanding......... 11,144 8,195 13,119
====== ====== ======
</TABLE>

Common share equivalents included in the diluted calculation related to
stock options are computed using the treasury stock method and consist of common
stock which may be issuable upon the exercise of outstanding common stock
options, when dilutive. Common share equivalents included in the diluted
calculation related to mandatorily redeemable preferred stock are computed using
the if converted method assuming conversion at the later of the beginning of
each period or the date issued, when dilutive.

All share and per share information in the consolidated financial
statements have been adjusted to give effect to the 53-for-one stock split and
par value restatement (related to the Company's mandatorily redeemable preferred
stock, mandatorily redeemable Class C common stock and Class A common stock),
which was effective on June 10, 1997. Additionally, the share and per share
information in the consolidated financial statements have been further adjusted
to give effect to the two-for-one common stock split which was effective on June
18, 1998.

Pro Forma Net Income Per Share (Unaudited)

Pro forma net income per share is determined by dividing pro forma net
income by the pro forma weighted-average number of shares outstanding during the
period. The basic and diluted pro forma weighted-average number of shares
outstanding during the periods presented, except for the six months ended June
30, 1998, which is not pro forma, assume the conversion of the mandatorily
redeemable preferred stock shares and the mandatorily redeemable Class C common
stock into Class A common stock as of the date such stock was first issued.

Carrying Value of Long-Lived Assets

The Company reviews the carrying value of all long-lived assets, including
equipment, furniture and fixtures, computer software development costs, and
other intangible assets, whenever events or changes in circumstances indicate
that the carrying value may not be recoverable through projected undiscounted
future operating cash flows. Although no impairment is indicated at December 31,
1997, the assessment of recoverability will be impacted if estimated projected
undiscounted operating cash flows are not achieved.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles 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, as well as

F-13
<PAGE> 73
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Fair Value of Financial Instruments

The carrying amounts of the Company's financial assets and liabilities,
including cash and cash equivalents, accounts receivable, accounts payable,
notes payable to related parties and line of credit at December 31, 1996 and
1997, approximate fair value because of the short maturity of these instruments.

Recent Accounting Pronouncements

In June 1997, the FASB issued Statements of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS 130) and No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS 131). SFAS 130
establishes standards for reporting and display of comprehensive income and its
components and SFAS 131 establishes standards for reporting information about
operating segments. The provisions of these statements become effective for
fiscal years beginning after December 31, 1997. As these statements pertain to
disclosure and informational requirements, they will have no impact on the
Company's operating results or financial position. Comprehensive income has not
been reported for the periods included in the accompanying consolidated
financial statements due to the immaterial nature of the related adjustments.

Reclassifications

Certain prior-year balances have been reclassified in order to conform to
the current-period financial statement presentation.

Interim Financial Information (Unaudited)

The accompanying consolidated balance sheet as of June 30, 1998, the
accompanying consolidated statements of operations and cash flows for the six
months ended June 30, 1997 and 1998, and the accompanying consolidated statement
of stockholders' (deficit) equity for the six months ended June 30, 1998,
included herein have been prepared by the Company and are unaudited. The
information furnished in the unaudited financial statements referred to above
includes all adjustments which are, in the opinion of management, necessary for
a fair presentation of such financial statements. These adjustments are all of a
normal, recurring nature. The results of operations for the six months ended
June 30, 1998, are not necessarily indicative of the results to be expected for
the entire fiscal year.

2. EQUIPMENT, FURNITURE AND FIXTURES

Equipment, furniture and fixtures consisted of the following as of December
31, 1996 and 1997:

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Equipment................................................... $ 3,489 $ 4,593
Office furniture and fixtures............................... 850 900
Leasehold improvements...................................... 102 1,018
------- -------
4,441 6,511
Less -- Accumulated depreciation and amortization........... (2,472) (3,254)
------- -------
$ 1,969 $ 3,257
======= =======
</TABLE>

F-14
<PAGE> 74
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

3. BUSINESS COMBINATIONS

During the year ended March 31, 1996, the Company created PFS as a
wholly-owned subsidiary. In September 1995, PFS purchased the net assets of
Programmed-For-Success, Inc. by paying $6 in cash and issuing a note payable for
$100. The assets purchased consisted of equipment, furniture and fixtures,
miscellaneous deposits and purchased software. As part of the purchase, PFS also
assumed various customer service liabilities. Additionally, the Company entered
into an employment agreement with the owner of Programmed-For-Success, Inc. for
a period of at least one year.

On November 1, 1996, the Company acquired all of the outstanding common
stock of Bellamy by paying cash of $375, issuing notes payable totaling $300 and
by issuing 63,600 shares of mandatorily redeemable Class C common stock of the
Company (see Note 6) valued at $1.76 per share. The value of the mandatorily
redeemable Class C common stock at the acquisition date was determined based on
an appraisal of the fair market value of the Company on that date. The assets
purchased consisted primarily of investments, accounts receivable, equipment,
furniture and fixtures, prepaid expenses, purchased software and other
intangible assets. Additionally, the Company assumed various liabilities
including accounts payable and accrued expenses, certain customer service
liabilities, deferred taxes and a bank loan payable. The acquisition has been
accounted for as a purchase in the accompanying consolidated financial
statements. Accordingly, Bellamy's operating results are included in the
consolidated results of operations for the period subsequent to its acquisition.
Goodwill of $289 was recognized in connection with the purchase. The notes
payable issued in connection with the Bellamy acquisition are included in notes
payable to related parties on the accompanying consolidated balance sheet as of
December 31, 1996, since the former owners are now employees of the Company. The
notes bear interest at 10 percent per annum and were repaid during 1997.

During the year ended December 31, 1997, the Company created Kb Systems as
a wholly-owned subsidiary. In December 1997, Kb Systems purchased the net assets
of Kb Systems, Inc. for $400 in cash. As of December 31, 1997, $300 had been
paid by the Company. The remaining $100 was paid in March 1998 upon receipt by
the Company of evidence of satisfaction of certain liabilities of Kb Systems,
Inc. The assets purchased consisted principally of purchased software and other
intangible assets. As part of the purchase, HTE also assumed limited customer
service liabilities. Additionally, the Company entered into a royalty agreement
with Kb Systems, Inc., for a period of five years. This acquisition has been
accounted for as a purchase in the accompanying consolidated financial
statements.

Revenues, net income and earnings per share presented on a pro forma basis,
as if the acquisitions had occurred at the beginning of each period presented,
are as follows (unaudited):

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
Revenues.................................................... $36,305 $67,136
Net income (loss)........................................... (216) 3,985
Basic earnings per share.................................... (0.03) 0.31
Diluted earnings per share.................................. (0.03) 0.30
</TABLE>

The earnings per share information above was calculated using the pro forma
weighted-average shares outstanding during the periods presented as described in
Note 1.

4. LINE OF CREDIT

On January 16, 1997, the Company refinanced its existing line of credit
(LOC) with a commercial bank in which the bank agreed to make available a
principal amount equal to a percentage of qualified accounts receivable not to
exceed $6,000. The LOC extends through June 30, 1998, at which time the entire
unpaid principal balance and any accrued interest is payable in full. In
accordance with the agreement, the LOC bears

F-15
<PAGE> 75
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

interest at the bank's prime rate plus 1.25 percent and is collateralized by the
Company's accounts receivable, inventory, intangible assets and equipment. At
December 31, 1996, borrowings of $2,306 were outstanding under the line of
credit. There were no borrowings outstanding under the line of credit at
December 31, 1997. The line of credit contains financial covenants which require
the Company to maintain certain financial ratios. As of December 31, 1997, the
Company was either in compliance with or had received appropriate waivers for
all debt covenants. The Company intends to refinance this line of credit during
1998.

5. MANDATORILY REDEEMABLE PREFERRED STOCK

Effective October 31, 1994, the Company authorized 200,000 shares of
mandatorily redeemable preferred stock. The preferred stock had full voting
rights and was convertible into common stock at any time based on a formula
defined in the Company's Articles of Incorporation. Annual dividends, which were
cumulative, were computed at seven percent per annum and totaled $268 and $433
as of March 31 and December 31, 1996, respectively. For the year ended March 31,
1996, the nine months ended December 31, 1996 and the year ended December 31,
1997, the amount of accretion related to the preferred stock totaled $(26), $838
and $1,117, respectively, which is reflected as an (decrease) increase in
mandatorily redeemable preferred stock, with the offset going to accumulated
(deficit) earnings. The accretion related to the preferred stock was determined
based on the liquidation preference as of March 31, 1996, the formula value as
of December 31, 1996, and the initial public offering (IPO) price during the
year ended December 31, 1997. As further described in Note 7, the mandatorily
redeemable preferred stock was converted to common stock during 1997 in
connection with the IPO, at which time $624 of accumulated dividends were paid.

6. MANDATORILY REDEEMABLE CLASS C COMMON STOCK

On November 1, 1996, the Company issued 63,600 shares of mandatorily
redeemable Class C common stock as partial consideration in connection with the
acquisition of Bellamy (see Note 3). As further described in Note 7, all
outstanding shares of mandatorily redeemable Class C common stock were converted
into 127,200 shares of common stock during 1997 in connection with the IPO.

7. STOCKHOLDERS' (DEFICIT) EQUITY

During the periods ended March 31 and December 31, 1996, the Company made
advances to its principal common stockholders evidenced by notes receivable
which were unsecured, non-interest bearing and had no specified maturity date.
Effective December 31, 1996, notes receivable from stockholders of $263 were
forgiven by the Company. The forgiveness of the notes receivable from
stockholders was reflected as a distribution to stockholders resulting in an
increase to the accumulated deficit as of December 31, 1996.

On June 10, 1997, the Company's IPO registration statement on Form S-1 was
declared effective by the U.S. Securities and Exchange Commission. Concurrent
with the effectiveness of the registration statement, the Company completed a
recapitalization pursuant to which (i) the number of authorized shares of the
Company's Class A common stock and mandatorily redeemable preferred stock were
increased to 4,000,000 and 2,000,000, respectively, (ii) all outstanding shares
of mandatorily redeemable preferred stock, mandatorily redeemable Class C common
stock and Class A common stock were split 53-for-one and exchanged
simultaneously on a two-for-one basis for shares of the Company's newly
authorized common stock, (iii) the Company paid in cash all accrued dividends on
the mandatorily redeemable preferred stock to the date of the stock splits and
exchanges described above and (iv) following the exchanges described above, the
mandatorily redeemable preferred stock, Class A common stock, Class B common
stock and mandatorily redeemable Class C common stock were canceled, retired and
eliminated from the shares the Company is authorized to issue (the
Recapitalization).

F-16
<PAGE> 76
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

The Company sold a total of 4,650,000 shares of common stock in the IPO,
3,900,000 of which were sold in June 1997, and 750,000 of which were sold in
July 1997, when the underwriters exercised their over-allotment option. Proceeds
received by the Company were approximately $22,620, net of offering costs of
$2,955.

The common stock issued in conjunction with the UCS, Inc. acquisition has
been reflected as outstanding for all periods presented.

8. STOCK COMPENSATION PLANS

EMPLOYEE STOCK OPTIONS

On July 1, 1996, the Company granted options to an employee to purchase
106,000 shares of the Company's common stock. The options are exercisable
beginning January 1, 1997, at $0.91 per share, which approximated the fair
market value of the stock at the date of grant. The options expire the earlier
of five years from the date of grant or seven months from the employee's date of
termination.

EXECUTIVE INCENTIVE PLAN

The Company's 1997 Executive Incentive Compensation Plan (the Executive
Incentive Plan) was adopted by the Board of Directors and approved by the
stockholders in January 1997. The purpose of the Executive Incentive Plan is to
attract and retain key employees and consultants of the Company, to provide an
incentive for them to achieve long-range performance goals and to enable them to
participate in the long-term growth of the Company. The Executive Incentive Plan
authorizes the grant of stock options (incentive and nonstatutory), stock
appreciation rights and restricted stock to employees and consultants of the
Company. The Company has reserved an aggregate of 1,908,000 shares (subject to
adjustment for stock splits and similar capital changes) of common stock for
grants under the Executive Incentive Plan. The exercise price of each option
equals the market price of the Company's stock on the date of grant and an
option's maximum term is 10 years. Some options have been granted with immediate
vesting, although most of the options granted to-date provide vesting schedules
of four or five years.

A summary of the status of the Company's outstanding stock options, each of
which is fixed with respect to number of shares and exercise price, including
employee stock options discussed above, as of December 31, 1996 and 1997, and
changes during the periods ending on those dates are presented below:

<TABLE>
<CAPTION>
1996 1997
-------------------------- ----------------------------
WEIGHTED-AVERAGE WEIGHTED-AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------- ---------------- --------- ----------------
<S> <C> <C> <C> <C>
Outstanding at beginning of year.... -- $ -- 106,000 $0.91
Granted........................... 106,000 $0.91 1,061,000 $4.83
Exercised......................... -- $ -- -- $ --
Forfeited......................... -- $ -- -- $ --
------- ---------
Outstanding at end of year.......... 106,000 $0.91 1,167,000 $4.47
======= =========
Options exercisable at year end..... -- $ -- 339,200 $3.52
Weighted-average fair value of
options granted during the year... $0.55 $1.35
</TABLE>

F-17
<PAGE> 77
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

The following table summarizes information about fixed stock options
outstanding at December 31, 1997:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------------------------------ ------------------------------------
NUMBER WEIGHTED- WEIGHTED- NUMBER WEIGHTED-
RANGE OF OUTSTANDING AT AVERAGE AVERAGE EXERCISABLE AT AVERAGE
EXERCISE DECEMBER 31, REMAINING EXERCISE DECEMBER 31, EXERCISE
PRICES 1997 CONTRACTUAL LIFE PRICE 1997 PRICE
- -------------- ------------------- --------------------- -------------- ------------------- --------------
<S> <C> <C> <C> <C> <C>
$0.91 106,000 8.5 $0.91 106,000 $0.91
$4.72 1,007,000 9.0 $4.72 233,200 $4.72
$5.94 to $8.57 54,000 9.7 $6.94 -- $ --
</TABLE>

EMPLOYEE STOCK PURCHASE PLAN

The Company adopted an Employee Stock Purchase Plan (ESPP) on July 23,
1997, which was approved by the stockholders in May 1998. The ESPP is effective
as of September 1, 1997, and is designed to qualify as an employee stock
purchase plan under Section 423 of the Internal Revenues Code of 1986, as
amended. Four hundred thousand shares are reserved for issuance over the term of
the ESPP, subject to periodic adjustment for changes in the outstanding common
stock occasioned by stock splits, stock dividends, recapitalizations or other
similar changes. The ESPP qualifies as a non-compensatory plan under APB Opinion
No. 25; therefore, the ESPP is not expected to have any effect on the results of
operations.

Under the terms of the ESPP, employees can choose each year to have up to
25 percent of their annual base earnings withheld to purchase the Company's
common stock. The purchase price of the stock is 85 percent of the lower of its
beginning of period or end of period market price. To date, approximately 80
percent of the Company's employees participate in the ESPP. No shares were sold
under the ESPP in 1997. As of December 31, 1997, there were 40,120 purchase
rights outstanding. These purchase rights were all granted in the initial
offering period in 1997, were exercisable at year-end and had a weighted-average
exercise price of $6.59. The weighted-average fair value of purchase rights
granted during 1997 under the ESPP was $1.90. All outstanding purchase rights at
December 31, 1997, were exercised in January 1998.

The fair value of options granted during the fiscal years ended December
31, 1996 and 1997, reported below has been estimated at the date of grant using
a Black-Scholes option pricing model. The Black-Scholes option valuation model
was developed for use in estimating the fair value of traded options that have
no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions, including
the expected stock price volatility. The Company's options have characteristics
significantly different from those of traded options, and changes in the
subjective assumptions can materially affect the fair value estimate. The fair
value of each option grant was estimated on the date of grant based on the
following weighted-average assumptions for options granted during 1996 and 1997:

<TABLE>
<CAPTION>
STOCK OPTION PLAN ESPP
-------------------------------- ------------
NINE MONTHS ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1997
----------------- ------------ ------------
<S> <C> <C> <C>
Expected life (in years)..................... 10 10 .3
Weighted-average risk-free interest rate..... 7.05% 6.74% 5.21%
Volatility................................... 45.4% 45.4% 45.4%
Dividend yield............................... -- -- --
</TABLE>

F-18
<PAGE> 78
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

Had compensation cost for the Company's stock-based compensation plans been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method under SFAS No. 123, the Company's net income
and earnings per share would have been reduced to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1997
----------------- ------------
<S> <C> <C>
Net income (loss) attributable to common stockholders
As reported........................................... $(1,293) $2,646
Pro forma............................................. (1,328) 2,180
Basic earnings per share
As reported........................................... $ (0.16) $ 0.21
Pro forma............................................. (0.16) 0.17
Diluted earnings per share
As reported........................................... $ (0.16) $ 0.20
Pro forma............................................. (0.16) 0.16
</TABLE>

The effects of applying SFAS No. 123 on pro forma disclosures of net income
and earnings per share for fiscal 1997 and 1996 are not likely to be
representative of the pro forma effects on net income and earnings per share in
future years.

9. EMPLOYEE RETIREMENT PLAN

The Company has established an employee retirement savings plan that covers
substantially all employees who have met certain service and age requirements.
Employees may contribute from two percent to 10 percent of their annual
compensation to the plan as limited by Internal Revenue Service regulations. The
Company will match contributions up to three percent of each individual's
compensation. Contributions made by the Company totaled $515, $384 and $616 for
the year ended March 31, 1996, the nine months ended December 31, 1996 and the
year ended December 31, 1997, respectively, and are included in general and
administrative expenses in the accompanying consolidated statements of
operations.

10. INCOME TAXES

The provision for income taxes is as follows for the year ended March 31,
1996, the nine months ended December 31, 1996 and the year ended December 31,
1997:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1996 1997
--------- ------------ ------------
<S> <C> <C> <C>
Current:
Federal........................................... $ 40 $284 $2,126
State............................................. 26 60 440
---- ---- ------
66 344 2,566
Deferred............................................ 145 237 (84)
---- ---- ------
$211 $581 $2,482
==== ==== ======
</TABLE>

Included in the current federal portion of the provision for income taxes
for the nine months ended December 31, 1996, and the year ended December 31,
1997, are foreign taxes of $33 and $53, respectively, arising from the
operations of Bellamy.

F-19
<PAGE> 79
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

The provision for income taxes differs from the amount computed by applying
the U.S. federal corporate tax rate of 34 percent to income before provision for
income taxes for the year ended March 31, 1996, nine months ended December 31,
1996 and year ended December 31, 1997, as follows:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1996 1997
--------- ------------ ------------
<S> <C> <C> <C>
U.S. federal income tax rate........................ 34.00% 34.00% 34.00%
UCS taxed as an S corporation..................... (27.52) 158.57 .29
State taxes....................................... 3.63 3.63 4.62
Tax-exempt interest............................... -- -- (2.03)
Meals and entertainment........................... 2.40 2.87 .67
Foreign tax rate.................................. -- -- .20
Other............................................. 1.34 .59 .81
------ ------ -----
Effective tax rate.................................. 13.85% 199.66% 38.56%
====== ====== =====
</TABLE>

Deferred income taxes consisted of the following as of December 31, 1997:

<TABLE>
<CAPTION>
CURRENT NONCURRENT TOTAL
------- ---------- -------
<S> <C> <C> <C>
Tax assets:
Accrued liabilities..................................... $439 $ -- $ 439
Allowance for doubtful accounts......................... 238 -- 238
Deferred lease commitment............................... -- 67 67
Other................................................... 74 32 106
---- ------- -------
Total assets.................................... 751 99 850
---- ------- -------
Tax liabilities:
Basis difference in fixed assets........................ -- (203) (203)
Capitalized software development costs.................. -- (1,494) (1,494)
Other intangible assets................................. -- (133) (133)
---- ------- -------
Total liabilities............................... -- (1,830) (1,830)
---- ------- -------
Net deferred tax asset (liability)........................ $751 $(1,731) $ (980)
==== ======= =======
</TABLE>

Deferred income taxes consisted of the following as of December 31, 1996:

<TABLE>
<CAPTION>
CURRENT NONCURRENT TOTAL
------- ---------- -------
<S> <C> <C> <C>
Tax assets:
Cumulative change in tax accounting method.............. $ 34 $ -- $ 34
Accrued liabilities..................................... 431 -- 431
Allowance for doubtful accounts......................... 196 -- 196
Deferred lease commitment............................... -- 25 25
Other................................................... 6 10 16
---- ------- -------
Total assets.................................... 667 35 702
---- ------- -------
Tax liabilities:
Basis difference in fixed assets........................ -- (204) (204)
Capitalized software development costs.................. -- (1,394) (1,394)
Other intangible assets................................. -- (168) (168)
---- ------- -------
Total liabilities............................... -- (1,766) (1,766)
---- ------- -------
Net deferred tax asset (liability)........................ $667 $(1,731) $(1,064)
==== ======= =======
</TABLE>

F-20
<PAGE> 80
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

11. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases office space, furniture, automobiles and equipment under
certain long-term noncancellable operating lease agreements with varying terms
and conditions.

Future aggregate minimum rental payments under these agreements are as
follows as of December 31, 1997:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
- ------------------------ -------
<S> <C>
1998........................................................ $ 2,766
1999........................................................ 2,245
2000........................................................ 1,587
2001........................................................ 1,479
2002........................................................ 1,317
Thereafter.................................................. 5,008
-------
$14,402
=======
</TABLE>

In April 1996, the Company entered into a lease agreement for its corporate
headquarters office in Lake Mary, Florida, under a 10-year, noncancelable
operating lease which began on May 1, 1997. The lease agreement also provides
the Company with three five-year renewal options. The Company expenses the total
estimated cash payments on a straight-line basis over the life of the lease. The
cumulative difference between the amount expensed and the amount actually paid
is included in other long-term liabilities on the accompanying consolidated
balance sheets at December 31, 1996 and 1997. Rent expense under operating
leases totaled approximately $1,392, $1,129 and $2,359 for the year ended March
31, 1996, the nine months ended December 31, 1996 and the year ended December
31, 1997, respectively.

PRODUCT ROYALTY AGREEMENTS

The Company has entered into several product royalty agreements with
various entities who have sold their application rights or product designs to
the Company. The majority of these agreements are similar in nature in that they
each state that royalties shall be paid on the basis of applicable software
license revenues collected by the Company. However, each agreement may have a
different percentage upon which the product royalty is based. The Company
accrues these product royalties as the applicable software license revenues are
recognized. The Company has recorded $370 and $611 as accrued liabilities for
product royalties as of December 31, 1996 and 1997, respectively. Royalty
expense was approximately $163, $263 and $325 for the year ended March 31, 1996,
nine months ended December 31, 1996 and the year ended December 31, 1997,
respectively, and is included in cost of software licenses. As discussed further
below, royalty expense for the year ended March 31, 1996, was reduced due to the
forgiveness of an account payable which was offset against royalty expense in
that year.

During the year ended March 31, 1996, an account payable for outstanding
product royalties under an application development agreement with IBM, which
totaled $210 as of March 31, 1995, was forgiven. In consideration of this
forgiveness of debt, the agreement was amended to provide for a five percent
royalty on software license fees of the "work orders" application for a period
of two years beginning April 1996 and a 10 percent royalty on software license
fees of the "courts" application for a period of three years beginning April
1996. This forgiveness was recorded as a reduction in royalty expense in the
accompanying consolidated statement of operations for the year ended March 31,
1996.

F-21
<PAGE> 81
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL AGREEMENTS

Effective February 1997, the Company entered into employment agreements
with Dennis J. Harward, the Company's President, Chief Executive Officer and
Chairman of the Board and Jack L. Harward, the Company's Executive Vice
President. Each of the agreements is for a term of three years, and
automatically renews for successive one-year periods. In the event either
executive is terminated without "Cause," the Company must pay to such executive
any unpaid base salary, any accrued but unpaid incentive compensation through
the date of termination and continue to pay the executive's base salary for a
period of 12 months as well as continue to provide the executive with incentive
compensation and the other benefits under the agreement for the same period.
Additionally, upon termination without "Cause" the Company must pay to each
executive a single lump sum payment equal to the value of the portion of his
benefits under any savings, pension, profit sharing or deferred compensation
plans.

The Company has also entered into severance agreements with Dennis J.
Harward and Jack L. Harward that will become effective on, and provide for
continued employment or retention following, a "Change in Control" (as defined)
of the Company. Such agreements generally provide that upon (i) termination by
the Company of the executive's employment for any reason other than death,
mental or physical incapacity, illness, disability or "Cause" (as defined), (ii)
termination by the executive for "Good Reason" (generally defined as the
diminution of the executive's duties or other breach by the Company of the
agreement), or (iii) termination by the executive during a 30-day period
commencing one year after the "Change in Control," he will receive, in addition
to base salary, bonus and other compensation accrued through the date of
termination, a lump sum cash payment equal to 2.5 times his then-existing base
salary and incentive compensation.

PRODUCT LIABILITY

The Company markets to its customers complex, mission-critical,
enterprise-wide applications. The Company's license agreements with its
customers typically contain provisions designed to limit the Company's exposure
to potential product liability claims. It is possible, however, that the
limitation of liability provisions contained in the Company's license agreements
may not be effective as a result of existing or future federal, state or local
laws or ordinances or unfavorable judicial decisions. Although the Company has
not experienced any significant product liability claims to date, the sale and
support of software by the Company may entail the risk of such claims, which may
be substantial. A successful product liability claim brought against the Company
could have a material adverse effect upon the Company's business, operating
results and financial condition.

12. LITIGATION

The Company is involved in various legal actions arising in the normal
course of business, as both a claimant and a defendant. While it is not possible
to determine with certainty the outcome of these matters, in the opinion of
management, the eventual resolution of these claims and actions outstanding will
not have a material adverse effect on the Company's financial position or
operating results.

13. SUBSEQUENT EVENTS

In January 1998, the Company purchased the net assets of JALAN, Inc. for
$1,723. The assets purchased consisted of equipment, furniture and fixtures,
miscellaneous deposits and purchased software. As part of the purchase, HTE also
assumed various customer service liabilities. Additionally, the Company entered
into a consulting agreement with the former owners of JALAN, Inc. This
acquisition was accounted for as a purchase.

F-22
<PAGE> 82
H.T.E., INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH AND DECEMBER 31, 1996 AND DECEMBER 31, 1997

In April 1998, the Company purchased Phoenix Systems, LLC (Phoenix), in
exchange for 272,036 shares of the Company's common stock valued at
approximately $3 million on or about the closing date. The acquisition was
accounted for as a pooling of interests, although the Company did not restate
the results of prior periods due to the financial immateriality of Phoenix's
historical operations.

As discussed in Note 1, in June 1998 the Company acquired UCS, Inc. in a
transaction accounted for as a pooling of interests.

In July 1998, the Company entered into a letter of intent to acquire the
assets of Vanguard Management & Information Systems, Inc. for $400 in cash and
the payment of continuing royalties over a five-year period. The Company expects
the acquisition to close during the third quarter of 1998 and intends to account
for it as a purchase.

14. SUPPLEMENTAL NONCASH TRANSACTIONS

The Company includes depreciation on certain equipment in the costs
capitalized as computer software development costs. During the year ended March
31, 1996, the nine months ended December 31, 1996 and the year ended December
31, 1997, depreciation of $86, $88 and $160, respectively, was capitalized as
computer software development costs.

During the year ended March 31, 1996, PFS purchased the net assets of
Programmed-For-Success, Inc. (the PFS Acquisition). PFS paid $6 in cash and
issued a note payable of $100 in connection with the PFS Acquisition. During the
nine months ended December 31, 1996, the Company purchased all of the
outstanding common stock of Bellamy (the Bellamy Acquisition). The Company paid
$375 in cash, issued notes payable with an aggregate value of $300 and issued
63,600 shares of mandatorily redeemable Class C common stock with a value of
$112 in connection with the Bellamy Acquisition.

In December 1997, the Company purchased net assets of Kb Systems, Inc. for
$400 plus legal costs of $61. As of December 31, 1997, $100 of the purchase
price remained unpaid pending satisfactory resolution of certain matters related
to Kb Systems, Inc.

The acquisitions discussed above in this note had the following noncash
effect of increasing the following assets and liabilities during the year ended
March 31, 1996, the nine months ended December 31, 1996 and the year ended
December 31, 1997:

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1996 1996 1997
--------- ------------ ------------
<S> <C> <C> <C>
Trade accounts receivable........................... $ -- $124 $ --
Other current assets................................ -- 121 198
Equipment, furniture and fixtures................... 20 158 --
Purchased software.................................. 130 257 319
Other intangible assets............................. -- 386 194
Goodwill established due to recognition of deferred
income taxes (included in other intangible
assets)........................................... -- 289 --
Deposits............................................ 1 -- --
Accounts payable.................................... -- 123 --
Accrued liabilities................................. -- -- 100
Deferred revenue.................................... 45 128 250
Notes payable to related parties.................... 100 300 --
Long-term debt...................................... -- 8 --
Deferred income taxes (long-term liability)......... -- 289 --
Mandatorily redeemable Class C common stock......... -- 112 --
</TABLE>

F-23
<PAGE> 83

[INSIDE BACK COVER]

GROUP PHOTO OF INDIVIDUALS

- Industry expertise

- Proven products

- Integrated, cost-effective systems

- Commitment to long-term partnerships

- Dependability

[LOGO]

MORE THAN SOFTWARE(TM)...
<PAGE> 84

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY OF THE
UNDERWRITERS OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE SECURITIES OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION TO SUCH
PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

---------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................ 3
Risk Factors...................... 8
Use of Proceeds................... 15
Price Range of Common Stock....... 15
Dividend Policy................... 15
Capitalization.................... 16
Selected Consolidated Financial
Data............................ 17
Management's Discussion and
Analysis
of Financial Condition and
Results of Operations........... 19
Business.......................... 32
Management........................ 45
Principal and Selling
Shareholders.................... 48
Underwriting...................... 51
Legal Matters..................... 52
Experts........................... 52
Available Information............. 53
Incorporation of Certain Documents
by Reference.................... 53
Special Note Regarding
Forward-Looking Statements...... 54
Index To Financial Statements..... F-1
</TABLE>

- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
5,550,000 SHARES

H.T.E., INC. LOGO
H.T.E., INC.
COMMON STOCK
------------------------------
PROSPECTUS
------------------------------
SG COWEN

JANNEY MONTGOMERY SCOTT INC.

RAYMOND JAMES
& ASSOCIATES, INC.

VOLPE BROWN WHELAN
& COMPANY
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 85

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The Company estimates that expenses in connection with the Offering
described in this registration statement (other than underwriting and brokerage
discounts, commissions and fees and legal fees incurred by the Selling
Shareholders, if any, which shall be payable by such Selling Shareholders) will
be as follows:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee......... $ 26,717
National Association of Securities Dealers, Inc. filing
fee....................................................... 9,556
Nasdaq additional listing fee............................... 17,500
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Printing Expenses........................................... *
Blue Sky Fees............................................... *
Miscellaneous Expenses...................................... *
--------
Total............................................. $500,000*
========
</TABLE>

- ---------------

* Estimated

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Registrant has authority under Section 607.0850 of the Florida Business
Corporation Act to indemnify its directors and officers to the extent provided
in such statute. The Registrant's Amended and Restated Articles of Incorporation
provide that the Registrant may indemnify its executive officers and directors
to the fullest extent permitted by law either now or hereafter. The Registrant
has also entered into an agreement with each of its directors and certain of its
officers wherein it has agreed to indemnify each of them to the fullest extent
permitted by law.

The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of nonmonetary relief will remain available under Florida law. In addition, each
director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (b)
deriving an improper personal benefit from a transaction; (c) voting for or
assenting to an unlawful distribution; and (d) willful misconduct or a conscious
disregard for the best interests of the Registrant in a proceeding by or in the
right of the Registrant to procure a judgment in its favor or in a proceeding by
or in the right of a shareholder. The statute does not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "1933 Act") may be permitted to directors, officers or
controlling persons of Registrant, pursuant to the foregoing provisions or
otherwise, Registrant has been advised that, in the opinion of the Securities
and Exchange Commission (the "Commission"), such indemnification is against
public policy as expressed in the 1933 Act, and is therefore unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of Registrant in the successful defense of any
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933 Act
and will be governed by the final adjudication of such issue.

II-1
<PAGE> 86

ITEM 16. EXHIBITS

The Exhibits to this Registration Statement are listed in the Index to
Exhibits on Page II-4.

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and obtained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offer in of such securities at the time shall be deemed to be
the initial bona fide public offering thereof.

II-2
<PAGE> 87

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Mary, State of Florida on August 11, 1998.

H.T.E., Inc.

By: /s/ DENNIS J. HARWARD
------------------------------------
Dennis J. Harward
Chairman of the Board, President
and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Dennis J. Harward and L. A. Gornto, Jr.,
and each of them, his true and lawful attorney-in-fact, each acting alone, with
full powers of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments, including
any post-effective amendments, to this Registration Statement and to sign any
additional Registration Statements pursuant to Rule 462(b) of the Securities Act
of 1933, and to file the same, with exhibits thereto, and other documents to be
filed in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite,
necessary or advisable to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on August 11, 1998 by the following
persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>

/s/ DENNIS J. HARWARD Chairman of the Board, President, Chief
- ----------------------------------------------------- Executive Officer and Director (principal
Dennis J. Harward executive officer)

/s/ JACK L. HARWARD Executive Vice President and Director
- -----------------------------------------------------
Jack L. Harward

/s/ L. A. GORNTO, JR. Executive Vice President, General Counsel and
- ----------------------------------------------------- Secretary
L. A. Gornto, Jr.

/s/ SUSAN D. FALOTICO Vice President, Chief Financial Officer
- ----------------------------------------------------- (principal financial officer)
Susan D. Falotico

/s/ BERNARD B. MARKEY Director
- -----------------------------------------------------
Bernard B. Markey

/s/ RAYMOND AMBROSE Director
- -----------------------------------------------------
Raymond Ambrose
</TABLE>

II-3
<PAGE> 88

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1.0 -- Underwriting Agreement*
5.1 -- Opinion of Greenberg Traurig, P.A.
23.1 -- Consent of Greenberg Traurig, P.A. (contained in its opinion
filed as Exhibit 5.1 hereto).
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of PricewaterhouseCoopers LLP
24.1 -- Power of Attorney is included in the Signatures section of
this Registration Statement.
27.1 -- Financial Data Schedule for the year ended March 31, 1996
(For SEC use only).
27.2 -- Financial Data Schedule for the nine months ended December
31, 1996 (For SEC use only).
27.3 -- Financial Data Schedule for the year ended December 31, 1997
(For SEC use only).
27.4 -- Financial Data Schedule for the six months ended June 30,
1997 (For SEC use only).
</TABLE>

- ---------------

* To be filed by amendment.

II-4

<PAGE> 1
Exhibit 5.1

August 13, 1998

H.T.E., Inc.
1000 Business Center Drive
Lake Mary, Florida 32746

Gentlemen:

You have requested our opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement") of H.T.E., Inc. (the
"Company") relating to 5,550,000 shares (the "Shares") of the Company's Common
Stock, $.10 par value (the "Common Stock") to be sold pursuant to a secondary
offering as set forth therein:

(a) 1,997,702 Shares to be issued by the Company;

(b) 4,384,798 Shares (including 832,500 Shares which the Underwriters have
the option to purchase to cover over-allotments) held by or issuable to Selling
Shareholders (as defined in the Registration Statement), which shares represent
the following:

(a) 4,248,198 Shares held by Selling Shareholders, and

(b) an aggregate of 136,600 Shares issuable to certain Selling
Shareholders upon exercise of stock options.

We have made such examination of the corporate records and proceedings of
the Company and have taken such further action as we deemed necessary or
appropriate to the rendering of our opinion herein.

Based on the foregoing, we are of the opinion that the 1,997,702 Shares,
when issued by the Company as contemplated by the Registration Statement, will
be legally issued, fully paid and non-assessable. Further, we are of the opinion
that the 4,248,198 Shares referenced above were legally issued, fully paid and
non-assessable. In addition, we are of the opinion that the 136,600 Shares
underlying the stock options, when paid for and issued as contemplated by their
respective governing instruments, will be legally issued, fully paid and
non-assessable.

We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the
reference to our firm under the heading "Legal Matters" therein.

Sincerely,

/s/ GREENBERG TRAURIG, P.A.

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

As independent certified public accountants, we hereby consent to the use
of our report (and to all references to our Firm) included in this Registration
Statement.

/s/ Arthur Andersen LLP
-----------------------------

Orlando, Florida
August 11, 1998

<PAGE> 1
Exhibit 23.3

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the use in this Prospectus constituting part of this
Registration Statement on Form S-3 of H.T.E., Inc. of our reports dated April
10, 1998, July 7, 1998 and September 4, 1996, relating to the financial
statements of UCS, Inc. (not presented separately herein), which appear in such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.

/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP

Miami, Florida
August 11, 1998

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF H.T.E., INC. FOR THE YEAR ENDED DECEMBER 31, 1997, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 18,634
<SECURITIES> 0
<RECEIVABLES> 22,822
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,186
<PP&E> 3,257
<DEPRECIATION> 0
<TOTAL-ASSETS> 54,208
<CURRENT-LIABILITIES> 20,799
<BONDS> 0
0
0
<COMMON> 165
<OTHER-SE> 30,127
<TOTAL-LIABILITY-AND-EQUITY> 54,208
<SALES> 0
<TOTAL-REVENUES> 66,092
<CGS> 0
<TOTAL-COSTS> 59,883
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (227)
<INCOME-PRETAX> 6,436
<INCOME-TAX> 2,482
<INCOME-CONTINUING> 3,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,954
<EPS-PRIMARY> .21
<EPS-DILUTED> .20

</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF H.T.E., INC. FOR THE NINE MONTHS ENDED DECEMBER 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,038
<SECURITIES> 0
<RECEIVABLES> 18,086
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,454
<PP&E> 1,969
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,415
<CURRENT-LIABILITIES> 20,067
<BONDS> 0
4,303
0
<COMMON> 131
<OTHER-SE> (187)
<TOTAL-LIABILITY-AND-EQUITY> 27,415
<SALES> 0
<TOTAL-REVENUES> 34,502
<CGS> 0
<TOTAL-COSTS> 34,020
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191
<INCOME-PRETAX> 291
<INCOME-TAX> 581
<INCOME-CONTINUING> (290)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (290)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)

</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF H.T.E., INC. FOR THE YEAR ENDED MARCH 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 1,143
<SECURITIES> 0
<RECEIVABLES> 13,274
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,670
<PP&E> 1,750
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,514
<CURRENT-LIABILITIES> 14,888
<BONDS> 0
3,054
0
<COMMON> 12
<OTHER-SE> 1,154
<TOTAL-LIABILITY-AND-EQUITY> 21,514
<SALES> 0
<TOTAL-REVENUES> 39,597
<CGS> 0
<TOTAL-COSTS> 37,946
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127
<INCOME-PRETAX> 1,524
<INCOME-TAX> 211
<INCOME-CONTINUING> 1,313
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,313
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.12

</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF H.T.E., INC. FOR THE SIX MONTHS ENDED JUNE 30, 1997,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 17,565
<SECURITIES> 0
<RECEIVABLES> 19,122
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,007
<PP&E> 1,922
<DEPRECIATION> 0
<TOTAL-ASSETS> 45,884
<CURRENT-LIABILITIES> 18,550
<BONDS> 0
0
0
<COMMON> 84
<OTHER-SE> 24,457
<TOTAL-LIABILITY-AND-EQUITY> 45,884
<SALES> 0
<TOTAL-REVENUES> 30,184
<CGS> 0
<TOTAL-COSTS> 27,498
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126
<INCOME-PRETAX> 2,560
<INCOME-TAX> 803
<INCOME-CONTINUING> 1,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,757
<EPS-PRIMARY> .05
<EPS-DILUTED> .05

</TABLE>