1999

1998

ASSETS:

     Participant directed investments, at fair value:

          Mutual funds

$5,786,283

$4,228,494

          Securities of Employer

421,863

422,261

          Participant loans receivable

42,743

27,415

                    Total participant directed investments

6,250,889

4,678,170

     Employee Stock Ownership Plan investments, at fair value:

          Unallocated shares of Manatron, Inc. common stock

91,175

235,785

          Shares of Manatron, Inc. common stock allocated to participants

                    Total Employee Stock Ownership Plan investments

          Contributions receivable

                    Total Assets

7,530,736

5,733,939

LIABILITIES:

     Loan payable to bank

                    Total Liabilities

NET ASSETS AVAILABLE FOR BENEFITS

ESOP INVESTMENTS

Participant
  Directed 

Allocated

Unallocated

Total

ADDITIONS:

     Additions to net assets attributed to:

          Investment income:

               Net appreciation in fair value

                    of investments

$    841,703

$ 140,821

$ 12,514

$ 995,038

               Interest and dividends

1,141,962

140,821

12,514

1,295,297

          Contributions:

               Employee

727,195

-       

-       

727,195

               Employer

               Total additions

DEDUCTIONS:

     Deductions from net assets attributed to:

          Benefit payments

385,367

-       

-       

385,367

          Interest expense

               Total deductions

ALLOCATION OF 28,568 SHARES

)

               Change in net assets available

                    for benefits

)

NET ASSETS AVAILABLE FOR BENEFITS:

     Beginning of year

     End of year

ESOP INVESTMENTS

Participant
  Directed 

Allocated

Unallocated

      Total     

ADDITIONS:

     Additions to net assets attributed to:

          Investment income:

               Net appreciation in fair value

                    of investments

$634,913

$498,162

$166,121

$1,299,196

               Interest and dividends

863,579

498,162

166,121

1,527,862

          Contributions:

               Employee

584,124

-       

-       

584,124

               Employer

               Total additions

DEDUCTIONS:

     Deductions from net assets attributed to:

          Benefit payments

223,291

-       

-       

223,291

          Interest expense

               Total deductions

ALLOCATION OF 28,568 SHARES

)

               Change in net assets available

                    for benefits

NET ASSETS AVAILABLE FOR BENEFITS:
     Beginning of year, as previously reported

)

     Restatment (Note 8)

)

)

     Beginning of year, restated (Note 8)

)

     Change in net assets available for benefits

     End of year

(1)

DESCRIPTION OF PLAN

The following description of the Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan (the "Plan") provides only general information. Participants should refer to the Plan agreement, as amended, for a more complete description of the Plan's provisions.

General

The Plan was established in 1988, by Manatron, Inc. (the "Company" or "Sponsor") as the Manatron, Inc. Salary Deferral Plan. In 1995, the Company amended the Plan to include a leveraged employee stock ownership plan ("ESOP") feature, and renamed the Plan the Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan. The Plan is designed to comply with specific sections and regulations of the Internal Revenue Code of 1986, as amended (the "Code"), and is therefore subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA").

In connection with the 1995 amendment, the Plan purchased 142,858 shares of the Company's common stock for $500,000 from Allen F. Peat, former Chairman and Chief Executive Officer of the Company; using the proceeds of a bank borrowing (see Note 5). The bank borrowing is to be repaid quarterly over a period of five years by fully deductible Company contributions to the trust fund. As the Plan makes each payment of principal, an appropriate percentage of stock will be allocated to eligible employees' accounts in accordance with applicable regulations under the Code.

Overall responsibility for administering the Plan rests with the Plan Administrative Committee (the "Committee"), which is appointed by the Board of Directors of the Company. The Plan's Trustee, is responsible for the management and control of the Plan's assets and has discretionary responsibility for the investment and management of such assets.

Eligibility

The Plan is a defined contribution plan covering substantially all employees of the Company, ATEK Information Systems, Inc., Sabre Systems, Inc. and Specialized Data Systems, Inc. (together the "Employers"). Generally, an employee may become a participant in the Plan on the entry date following completion of one year of eligible service and having attained age 21, as described in the Plan.

Contributions and Vesting

The Plan provides for three different types of contributions:

ESOP Contribution - As previously described, each plan year, the Company will contribute the required loan payments to the ESOP trust. At the time of each payment, 7,142 shares of Company common stock held by the ESOP trust will be committed for release to plan participants. Released shares will be allocated to individual participant accounts based on the percentage of the individual participant's compensation to all eligible participants'

compensation for the plan year. Participants must be employed on the last day of the plan year to be eligible for Company contributions. The Company made discretionary contributions to the Plan of $50,000 in 1999 and 1998, which was used to purchase 7,315 and 12,500 shares of Company stock in 1999 and 1998, respectively.

Profit-Sharing Contribution - Each year the Company will decide whether to make a profit-sharing contribution to the Plan and the amount to be contributed. Participants must be employed on the last day of the plan year to be eligible for the Company contribution. The amount credited to a participant's profit-sharing account will be determined in the same manner as the ESOP contributions. There were no discretionary profit-sharing contributions in 1999 and 1998.

Elective Salary Deferral Contributions - Employees who participate in the Plan can elect to make voluntary pre-tax contributions in an amount between 1% and 15% of their annual compensation. Annual participant contributions are limited to the maximum amount permitted by the Code, $10,000 in 1999. The Company's matching contribution (currently 25% of participant's contribution up to 5% of eligible pay) is set forth in the Plan document and may be changed by resolution of the Company. The Company's matching contributions during 1999 and 1998 were approximately $110,000 and $90,000, respectively.

Vesting - Participants are 100% vested in rollovers, direct transfers, elective salary deferral contributions, matching contributions and non-elective contribution accounts. Vesting for ESOP and profit-sharing contribution accounts is determined by the years of vesting service. One year of vesting service is 1,000 hours or more of service in the plan year. Participants become 20% vested after three years of vesting service and continue to vest 20% annually until they are 100% vested.

Participant Loans

Participants of the Plan may borrow from their accounts a minimum of $1,000, up to a maximum equal to the lesser of $50,000 or 50% of their account balance. Loan transactions are treated as a transfer to (from) the related investment fund from (to) the Participant Loan Fund. Loan terms of the promissory notes range from one to five years or a reasonable period for the purchase of a primary residence. The promissory notes are secured by the balance in the participant's account and bear interest at the Bank's prime rate plus 1%. Principal and interest payments will be made ratably through payroll deductions. Currently there are seven loans outstanding with a total face value of approximately $43,000.

Net Investment Income

Investment income is allocated to participants based on the ratio of a participant's balance in each investment fund to total participant balances in the corresponding investment fund.

Forfeitures

After an employee terminates employment, any non-vested amounts in the participant's account will be forfeited. Forfeited amounts are allocated to all remaining participants in the same manner as investment income.

Distributions to Participants

Distributions to participants generally occur upon a participant's retirement or termination of employment. However, participants may defer distribution of their benefits until reaching age 70 1/2. Vested balances of retired or terminated participants will be distributed in a lump sum payment, annuity, installments or transfer.

Administrative Expense

The Plan is administered by the Company. Although not obligated to do so, the Company paid administrative expenses and trustee fees on behalf of the Plan totaling approximately $14,000 and $13,000 in 1999 and 1998, respectively .

Plan Termination

Although it has no current intent to do so, the Company reserves the right to terminate the Plan and trust, or to cease or suspend further contributions, at any time, subject to plan provisions and applicable provisions of ERISA. Upon termination of the Plan, all participant's accounts become fully vested and non-forfeitable.

(2)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The accompanying financial statements are presented on the accrual basis of accounting.

Investments

The quoted market price, as reported by the Trustee, was used to approximate the current value for all investments reported at fair value as reported by the trustee. Net appreciation (depreciation) in fair value of investments included in the Statement of Changes in Net Assets Available for Benefits is comprised of unrealized gains or losses resulting from changes in market prices and realized gains and losses on sales of investments.

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 amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

The Accounting Standards Executive Committee issued Statement of Position 99-3, "Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters" (SOP 99-3), which eliminates the requirement for a defined contribution plan to disclose participant-directed investment programs. As required by SOP 99-3, the Plan adopted SOP 99-3 for the 1999 financial statements and reclassified certain amounts in the 1998 financial statements to eliminate the participant-directed fund investment program disclosures.

Janus Growth and Income Fund - A growth and income fund that seeks to invest primarily in stocks that have earnings growth potential not recognized by the market and secondarily in stocks for their income potential.

Janus Mercury Fund - A growth fund that seeks to invest in growth stocks of larger well-established companies and/or smaller emerging growth companies that are experiencing an increasing demand for their products and services.

Munder Small Company Growth Fund - A growth fund that seeks to invest in smaller, emerging growth companies that have the potential for faster earnings growth than established companies.

The fair value of individual investments that represent 5% or more of the Plan's total net assets as of December 31, are as follows:

1999

1998

Manatron Stock Fund

$ 421,863

$ 422,261

Guaranteed Investment Contract Fund

382,357

382,774

Fidelity Magellan Fund

1,462,258

1,094,749

Fidelity Worldwide Fund

N/A     

508,443

Fidelity Puritan Fund

798,942

748,818

Munder Small Company Growth Fund

N/A     

419,614

Munder Index 500 Fund

1,045,206

877,103

Janus Worldwide Investment Fund

777,552

N/A     

Janus Mercury Investment Fund

685,473

N/A     

ESOP Investment in Manatron Common
     Stock

1,188,325

*

984,990

*

* Nonparticipant-directed

(4)

NET APPRECIATION IN FAIR VALUE OF INVESTMENTS

The following table summarizes the net appreciation in fair value by investment (including investments purchased and sold, as well as those held during the year) for the years ended December 31:

Mutual Funds

$   767,764

$   353,304

Securities of Employer

(5)

LOAN PAYABLE

In connection with the stock purchase described in Note 1, the Plan entered into a $500,000 term loan agreement with the Trustee. The borrowing is collateralized by the unallocated shares of ESOP stock and is guaranteed by the Company. The lender has no rights against shares once they are allocated under the ESOP. The loan agreement provides for quarterly principal payments of $25,000 over five years. The loan bears interest at the prime rate of the lender, which at December 31, 1999 was 8.50%. A summary of future debt maturities is as follows:

Year

Amount

2000

50,000

(6)

TAX STATUS

The Plan obtained its latest determination letter dated August 22, 1996, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan Sponsor and the Plan's legal counsel believe that the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe that the Plan was qualified and the related trust was tax-exempt as of the financial statement date.

(7)

MERGER OF PLANS

Effective January 1, 2000, the Proval Corporation 401(k) Profit Sharing Plan merged into the Manatron, Inc. Employee Stock Ownership and Salary Deferral Plan.

(8)

RESTATEMENT

Net assets of the Plan have been restated to remove certain ESOP share activity from the participant-directed net assets that had already been included in the ESOP investments in the accompanying statements of net assets available for plan benefits. The restatement reduced previously reported net assets available for benefits by approximately $153,000 at January 1, 1998 and reduced the previously reported change in net asset available for benefits by approximately $345,000 and $371,000 in 1999 and 1998, respectively. The change in net assets is reflected in employee contributions and net appreciation of investments in the accompanying statements of changes in net assets available for plan benefits. Individual participants' account balances were not impacted by this misstatement.

Identity of
Party Involved

Description of
                    Investment                   

Number of
    Shares   

Fair
    Value   

Participant DirectedInvestments:

     *Manatron, Inc.

Manatron, Inc. Common Stock Fund

66,175

$421,863

     *Comerica, Inc.

Guaranteed Investment Contract

380,130

382,357

Munder Intermediate Bond Fund

8,124

73,604

Fidelity Magellan Fund

10,702

1,462,258

Fidelity Puritan Fund

41,983

798,942

Munder Small Company Growth Fund

19,004

339,032

Munder Index 500 Fund

33,760

1,045,206

Janus Growth & Income Fund

5,290

221,859

Janus Worldwide Investment Fund

10,173

777,552

Janus Mercury Investment Fund

15,646

685,473

Participant Loan

     Balances:
       *Comerica, Inc.

Participant Loans Receivable

Interest at rates
ranging from 8.75%
to 9.50%, maturing
at various dates
through 2004.

Total Participant

     Directed Investments

Employee Stock Ownership

     Plan Investments:

       *Comerica, Inc.

Manatron, Inc. Common Stock

186,404

Total assets held for investment purposes

   * Indicates a party-in-interest.

23

Consent of Arthur Andersen LLP dated August 31, 2000.

Dated:   September 6, 2000

MANATRON, INC. EMPLOYEE STOCK OWNERSHIP
AND SALARY DEFERRAL PLAN


By: /s/ Paul R. Sylvester

Exhibit

                         Document

23

Consent of Arthur Andersen LLP dated August 31, 2000.