CFI PROSERVICES INC
S-1/A, 1999-12-09
PREPACKAGED SOFTWARE
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   As filed with the Securities and Exchange Commission on December 9, 1999
                           Registration No. 333-90993


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               AMENDMENT NO. 1
                                      TO


                                    FORM S-1
             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              CFI PROSERVICES, INC.
             (Exact name of registrant as specified in its charter)

                                     OREGON
         (State or other jurisdiction of incorporation or organization)

                                      7389
            (Primary Standard Industrial Classification Code Number)

                                   93-0704365
                      (I.R.S. Employer Identification No.)

                              400 S.W. Sixth Avenue
                             Portland, Oregon 97204
                                 (503) 274-7280
    (Address, including zip code, and telephone number, including area code,
                  of registrant's principal executive offices)

                               Matthew W. Chapman
                      Chief Executive Officer and Chairman
                        400 S.W. Sixth Avenue, 2nd Floor
                             Portland, Oregon 97204
                                 (503) 274-7280
    (Address, including zip code, and telephone number, including area code,
                  of agent for service of process)

                        Copies of all correspondence to:

                                F. Scott Farleigh
                                 David R. Ludwig
                           Farleigh, Wada & Witt, P.C.
                       121 S.W. Morrison Street, Suite 600
                             Portland, Oregon 97204
                                 (503) 228-6044

Approximate  date of commencement or proposed sale to public:  from time to time
after this Registration Statement becomes effective.

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, check the following box. |X|

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) 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 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 this Form is a  post-effective  amendment filed pursuant to Rule 462(d) 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. |_|

                         Calculation of Registration Fee

<TABLE>
<CAPTION>

                                                            Proposed
     Title of Each Class of                                 Maximum             Proposed Maximum           Amount of
          Securities to               Amount to             Offering                Aggregate            Registration
          be Registered             be Registered        Price Per Unit          Offering Price               Fee(1)
<S>                                 <C>                  <C>                    <C>                      <C>
   Common Stock, No Par Value           90,000             $ 6.65625             $   599,062.50             $  166.54
   Common Stock, No Par Value           47,000             $12.00                $   564,000.00             $  156.79
   Common Stock, No Par Value         1,042,356            $12.34375             $12,866,581.88             $3,576.91
   Common Stock, No Par Value           30,000             $15.00                $   450,000.00             $  125.10
   Common Stock, No Par Value           40,000             $18.00                $   720,000.00             $  200.16
                                       -------                                      -----------               -------
              Total                   1,249,356                                  $15,199,644.38             $4,225.50

</TABLE>

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.


     1The registrant paid the registration fee at the time of the initial filing
of this registration statement.





<PAGE>



                                   PROSPECTUS

                              CFI PROSERVICES, INC.
                   (Doing Business As Concentrex Incorporated)

                        1,249,356 SHARES OF COMMON STOCK


           This Prospectus is part of a registration statement that covers up to
1,249,356  shares  of  our  common  stock.  Of  the  1,249,356  shares,  we  are
registering  for resale  90,000  shares we sold to two of the  selling  security
holders in May 1999. We are also  registering  1,159,356  shares that are or may
become issuable to the other security holders upon:

      o    The exercise of one Warrant  entitling the holder to purchase  17,000
           shares at an exercise price of $12.00 per share.
      o    The  exercise  of  four  Warrants  entitling  the  holders  or  their
           assignees  to  purchase  439,822  shares  at  an  exercise  price  of
           $12.34375 per share.
      o    The conversion of five 10%  Convertible  Subordinated  Discount Notes
           entitling the holders or their  assignees to convert those Notes into
           602,534 shares at a conversion price of $12.34375 per share.
      o    The  exercise  of Options  entitling  the holder to  purchase  30,000
           shares at an exercise price of $12.00 per share,  30,000 shares at an
           exercise price of $15.00 per share,  and 40,000 shares at an exercise
           price of $18.00 per share.

The holders of the Options,  Warrants, and Notes, and Options identified on page
56 of this  Prospectus as the selling  security  holders may offer and sell from
time to time,  following  issuance,  the registered common stock. For additional
information relating to sales of shares of common stock, you should refer to the
section entitled "Plan of Distribution" on page 59.

           The selling  security  holders will receive all of the proceeds  from
the sale of these  shares.  They may  offer and sell the  shares  on the  Nasdaq
National  Market  at  prevailing  market  prices  or  in  privately   negotiated
transactions  at prices  other than the market  price.  We will not  receive any
portion of those proceeds.  However,  if any of the selling security holders who
hold an Option or a Warrant  exercise  it (not  taking  into  account  "cashless
exercise"  rights),  then we will  receive  the  exercise  price.  If all of the
selling security  holders exercise all of the Options and the Warrants,  we will
receive in the aggregate $7,163,053.  If any of the selling security holders who
hold a Note convert it into our common  stock,  then the  conversion of the Note
will discharge the  indebtedness we owe to the selling  security holder who held
the Note.  As of October  15,  1999,  we owe the holders of the Notes a total of
$5,648,667.  If the holders of the Notes hold them for at least three years,  we
will owe them a total of  $7,437,535.  We will  bear all costs  relating  to the
registration of these shares.

           Our common stock is quoted on the National  Market tier of The Nasdaq
Stock  Market  under the symbol  "CCTX."  We are doing  business  as  Concentrex
Incorporated.  The last  reported  sale price of our  shares of common  stock on
November 12, 1999, was $7.625 per share.

THE SHARES OFFERED BY THIS PROSPECTUS  INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD
CAREFULLY CONSIDER THE "RISK FACTORS" DESCRIBED BEGINNING ON PAGE 3.


NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.




<PAGE>




The date of this Prospectus is December 9, 1999.


           You should  rely on the  information  contained  or  incorporated  by
reference in this Prospectus and any accompanying  supplements.  No one has been
authorized to provide you with any other information in respect to this offering
of shares.  You should not assume that the information in this Prospectus or any
supplement  is  current  as of any date  other  than  the date set  forth on the
document.


<PAGE>



                                TABLE OF CONTENTS

PROSPECTUS SUMMARY.................................................1

CAUTIONARY STATEMENT...............................................4

RISK FACTORS.......................................................4

USE OF PROCEEDS...................................................14

PRICE RANGE OF COMMON STOCK.......................................14

DIVIDEND POLICY...................................................14

CAPITALIZATION....................................................15

SELECTED FINANCIAL DATA...........................................15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS.........................17

BUSINESS..........................................................31

MANAGEMENT........................................................43

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT.......................................53

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................56

SELLING SECURITY HOLDERS..........................................56

PLAN OF DISTRIBUTION..............................................59

DESCRIPTION OF SECURITIES.........................................60

SHARES ELIGIBLE FOR FUTURE RESALE.................................62

LEGAL MATTERS.....................................................63

EXPERTS...........................................................63

AVAILABLE INFORMATION.............................................64

INDEX TO FINANCIAL STATEMENTS....................................F-1




                                                         i

<PAGE>



                               PROSPECTUS SUMMARY

           This summary highlights selected  information  contained elsewhere in
this prospectus and the documents that are incorporated  into this prospectus by
reference. It is not complete and it may not contain all of the information that
is important to you. To  understand  this  offering  fully,  you should read the
entire prospectus carefully.

CFI ProServices, Inc. (doing business
as Concentrex Incorporated)

Our Address and Telephone Number

               CFI    ProServices,    Inc.   (doing   business   as   Concentrex
               Incorporated),  400 S.W.  Sixth  Avenue,  Portland,  Oregon 97204
               ((503) 274-7280).

State and Year of Our Incorporation

               Oregon, 1978

Our Business

               We are a leading  provider of  technology  powered  solutions  to
               deliver  financial  services,  including  solutions for real-time
               back office accounting,  branch automation, loan origination, new
               account  opening,  call  centers,   cross-selling  products,  and
               electronic commerce.

               On May 17, 1999, we acquired MECA Software, L.L.C. MECA, which is
               located in Trumbull, Connecticut and which develops, markets, and
               sells  e-commerce  software and services  for  financial  service
               providers,  including  fulfillment  services,  technical support,
               training, and marketing.

               On August 13, 1999, we acquired ULTRADATA Corporation. ULTRADATA,
               which is located in  Pleasanton,  California  and which  provides
               real-time  information and management  software and solutions for
               relationship-oriented financial institutions.

               We began doing business under the name "Concentrex  Incorporated"
               on July 1, 1999. We previously  did business as CFI  ProServices,
               Inc.,  which will  remain  our legal name until our  shareholders
               change it. We  anticipate  that our  shareholders  will  formally
               approve changing our name to Concentrex  Incorporated at our next
               regularly  scheduled  shareholder meeting in May 2000. Our former
               Nasdaq trading symbol was "PROI."

Our Nasdaq National Market Trading Symbol

               "CCTX"

The Offering

Purpose of this Prospectus

               During 1999 we issued to the selling security  holders  described
               in this prospectus shares of our common stock,

                                                         1

<PAGE>



               Options,  Warrants,  and 10%  Convertible  Subordinated  Discount
               Notes.  As a  part  of  the  issuance  of  the  shares,  Options,
               Warrants,   and  the  Notes,  we  agreed  to  register  with  the
               Securities and Exchange  Commission the shares of common stock we
               issued to the selling  security  holders and the shares of common
               stock issuable upon their exercise of the Options or the Warrants
               or upon their  conversion  of the Notes into common  stock.  This
               prospectus  relates to the selling security  holders' sale of the
               common  stock  that we issued to them and that they will  receive
               following  their exercise of the Options and the Warrants and the
               conversion of the Notes.

Use of Proceeds

               We will not  receive  any  proceeds  from the sale of the  common
               stock under this  prospectus.  The selling  security holders will
               retain all of the proceeds  from the sale of the common stock for
               their own account.  However,  if the selling security holders who
               hold the  Options or the  Warrants  exercise  them,  then we will
               receive the  exercise  price from them.  If the selling  security
               holders  holding the Notes convert them into common  stock,  then
               the conversion of the Notes will discharge in full or in part the
               indebtedness we owe to them to the extent they convert such Notes
               into our common stock.

Method of Distribution

               The selling security holders may sell the common stock under this
               prospectus from time to time at the then prevailing prices on the
               Nasdaq National Market or in privately negotiated transactions at
               prices other than the market price.

Investment Risks

               Your  investment  in our common  stock  involves a high degree of
               risk. You should  carefully  consider the risk factors  described
               below  in  this  prospectus   prior  to  making  your  investment
               decision.

Number of Shares of Our Common Stock Outstanding as of October 15, 1999

               5,217,491

The Number of Shares of Common Stock Offered under this Prospectus

               1,249,356

Common Stock to be Outstanding After the
Selling Security Holders Sell All of the Shares
Offered Under this Prospectus

               6,376,847

Summary Financial Data

           The following  selected  financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Notes thereto included
elsewhere in this prospectus.  The selected financial data concerning Concentrex
set forth below

                                                         2

<PAGE>



are as of and for each of its most recent five years ended December 31, 1998, as
of and for the nine months ended  September 30, 1999,  for the nine months ended
September 30, 1998 and include pro forma information for the year ended December
31,  1998 and for the  nine  months  ended  September  30,  1999.  The  selected
financial  data for each of the three  years in the period  ended  December  31,
1998, have been derived from Concentrex's  consolidated financial statements for
such periods,  which were audited by Arthur Andersen,  LLP as indicated in their
report included  elsewhere in this prospectus.  The selected  financial data for
the years  ended  December  31,  1994 and 1995 have been  derived  from  audited
financial  statements not included in this  prospectus.  The selected  financial
data as of September  30, 1999 and for the nine months ended  September 30, 1999
and 1998 have been  derived from  Concentrex's  unaudited  financial  statements
included  elsewhere in this  prospectus and which, in the opinion of management,
include all significant,  normal, and recurring adjustments necessary for a fair
presentation  of the  financial  positions  and results of  operations  for such
unaudited periods.  The unaudited pro forma statement of operations data for the
year ended  December 31, 1998 and for the nine months ended  September  30, 1999
give  effect  to  the  acquisitions  of  MECA  Software,  L.L.C.  and  ULTRADATA
Corporation as if these transactions had occurred on January 1, 1998.

<TABLE>

<CAPTION>


                                             Nine Months Ended
                                               September 30,                       Year Ended December 31
                                         --------------------------- -------------------------------------------------------
                                         Pro Forma                   Pro Forma
                                           1999     1999(1)   1998    1998(1)   1998(2)     1997   1996(3)  1995(4)   1994
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
                                                                  (in thousands, except for per share data)
Consolidated Statement of Operations Data
<S>                                      <C>        <C>      <C>     <C>        <C>        <C>     <C>      <C>      <C>
      Revenue(5)
      Application software products      $  58,158  $58,158  $54,335 $  75,667  $ 75,667   $64,516 $52,936  $32,242  $29,195
      Information management products       21,105    5,551       --    30,359        --        --      --       --       --
      e-Commerce products                   12,686    8,678    3,959    17,129     5,822     4,991   4,113    1,869      361
      Ancillary products                    10,099    5,058    2,945    16,483     4,141     3,142   2,898    2,665    3,060
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
           Total Revenue                   102,048   77,445   61,239   139,637    85,630    72,649  59,947   36,776   32,616
      Cost of revenue                       40,708   29,569   21,688    53,218    29,423    27,041  20,844   11,672    9,646
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
      Gross profit                          61,340   47,876   39,551    86,419    56,207    45,608  39,103   25,104   22,970
      Operating expenses                    62,788   44,123   32,841    84,364    45,357    36,780  29,810   20,552   17,859
      Acquired in-process research and
      development and other charges         10,521   10,521       --     2,661     2,661        --   8,030    4,549       --
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------

      Income (loss) from operations        (11,969)  (6,768)   6,710      (606)    8,189     8,828   1,263        3    5,111
      Net income (loss)                    (17,402)  (9,148)   3,592    (9,874)    3,960     4,680     114      323    3,514
      Preferred Stock dividend                  69       69       72        95        95        95      97       97       97
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
      Net income (loss) applicable to
      common shareholders                $ (17,471) $(9,217) $ 3,520 $  (9,969) $  3,865   $ 4,585 $    17  $   226  $ 3,417
                                         =========  =======  ======= =========  ========   ======= ======== =======  =======
      Diluted net income(loss) per share $   (3.41) $ (1.81) $  0.68 $   (1.97) $   0.75   $  0.90 $    --  $  0.05  $  0.71
                                         =========  =======  ======= =========  ========   ======= ======== =======  =======
      Shares used in diluted per share
      calculations                           5,127    5,102    5,179     5,062     5,167     5,124    5,112   4,877    4,806
      Basic net income(loss) per share   $   (3.41) $ (1.81) $  0.70 $   (1.97) $   0.77   $  0.93 $     -- $  0.05  $  0.87
                                         =========  =======  ======= =========  ========   ======= ======== =======  =======
      Shares used in basic per share
      calculations                           5,127    5,102    5,005     5,062     5,012     4,919    4,763   4,369    3,922


</TABLE>

<TABLE>
<CAPTION>

                                                September 30, 1999
                                                ------------------
Consolidated Balance Sheet Data
<S>                                             <C>                             <C>        <C>     <C>      <C>      <C>
      Cash, cash equivalents, restricted cash,
        and short-term investments              $  1,071                        $ 3,795    $    20 $     -- $ 7,670  $ 7,958
      Working capital                                965                         16,972      7,187    2,792   8,759   10,336
      Property and equipment, net                  8,000                          4,534      5,211    4,805   2,968    2,579
      Total assets                               138,539                         56,781     57,542   46,845  36,587   27,487
      Short-term debt                              8,230                            261      5,605    2,896   3,915       --
      Long-term debt, less current portion        63,902                          5,693      2,232    2,810     423       --
      Convertible subordinated notes               5,619                             --         --       --      --       --
      Mandatory Redeemable Class A Preferred
        Stock                                        731                            738        746      754     761      764
      Shareholders' equity                        26,813                         30,632     25,943   20,238  18,169   16,591

</TABLE>


     1Results  for the nine months ended  September  30,  1999,  include  pretax
charges  totaling  $10.5  million  for the  value  of  in-process  research  and
development efforts at the date of acquisition pertaining to the acquisitions of
ULTRADATA Corporation in August 1999 ($5.2 million) and MECA Software, L.L.C. in
May 1999 ($3.8  million),  other  expenses  for name  change and  certain  costs
related to acquisitions required to be expensed ($0.6 million) and settlement of
an  arbitration  proceeding  ($0.9  million).  Excluding the impact of the $10.5
million charge, net income and diluted net income per share would have been $0.7
million and $0.13,  respectively.  The results of operations for the nine months
ended  September  30, 1999  include the results of the  operations  of ULTRADATA
Corporation,  MECA Software L.L.C. and Modern Computer  Systems,  Inc. since the
dates of acquisitions in August, May and January 1999,  respectively.  See notes
to the unaudited consolidated financial statements.

                                       3
<PAGE>

2Results for the year ended December 31, 1998,  include pretax charges  totaling
$3.0 million for the value of in-process research and development efforts at the
date of  acquisition  pertaining  to the  acquisition  of the assets of Mortgage
Dynamics,  Inc. in October 1998 ($1.0  million),  the remaining write off of the
goodwill and  associated  severance  charges  related to fisCAL  products  ($0.9
million),  the present  value of net future  lease  payments due with respect to
certain office space in Atlanta that Concentrex ceased using ($0.8 million), and
write off of the initial  investment  of  Concentrex  in a joint  venture  ($0.3
million).  Excluding the impact of these charges,  net income and net income per
share (diluted) would have been $5.7 million and $1.11, respectively.  See Notes
1, 2 and 7 of Notes to Consolidated Financial Statements.

3Results for the year ended  December 31, 1996,  include a pretax charge of $8.0
million for the value of in-process research and development efforts at the date
of acquisition  pertaining to five companies  acquired in April 1996.  Excluding
the impact of the acquired  in-process  research and  development  charges,  net
income and net  income per share  (diluted)  would  have been $5.2  million  and
$1.02,  respectively.  The results of operations for the year ended December 31,
1996,  include  the  results of these  companies'  operations  since the date of
acquisition  in  April  1996.  See Note 2 of  Notes  to  Consolidated  Financial
Statements.

4 Results for the year ended December 31, 1995,  include a pretax charge of $4.5
million.  The  charge  consists  of $3.7  million  for  the  value  of  Culverin
Corporation's (Culverin) in-process research and development efforts at the date
of acquisition and $0.8 million for  restructuring.  Excluding the impact of the
acquired  in-process  research and development and  restructuring  charges,  net
income and net  income per share  (diluted)  would  have been $3.1  million  and
$0.64,  respectively.  The year ended  December  31,  1995,  statement of income
includes the results of Culverin's  operations  since the date of acquisition in
November 1995. See Note 2 of Notes to Consolidated Financial Statements.

      5 During the quarter  ended  September  30, 1999,  Concentrex  reorganized
itself into four operating  product  lines:  Application  Software,  Information
Management,  e-Commerce  and Ancillary  Products.  Accordingly,  Concentrex  has
reclassified  its revenue data for all periods  included  above to reflect these
new operating  product  lines.  Total revenue did not change as a result of this
reclassification.

                              CAUTIONARY STATEMENT

           This prospectus and  information  incorporated by reference into this
prospectus contain forward-looking  statements.  Forward-looking  statements are
statements  about  the  future  that  contain  prospective   information.   Such
prospective  information  is subject to change and may be  affected by risks and
uncertainties  that may cause  actual  results  to differ  from  future  results
implied by the forward-looking  statements. In addition, risks and uncertainties
may cause historical  results to be a less accurate indicator of future results.
Important  risks that could cause actual results to differ from those implied by
the  forward-looking  statements  are  described  under  "Risk  Factors" in this
prospectus  and in various  sections  in our other  reports  filed with the SEC.
Investors  are  cautioned  not to place undue  reliance  on the  forward-looking
statements.

                                  RISK FACTORS

           WE EXPERIENCE SIGNIFICANT QUARTERLY FLUCTUATIONS IN OUR OPERATING
RESULTS.

           We  have  experienced,  and  expect  in  the  future  to  experience,
significant quarterly fluctuations in our results of operations. Various factors
cause these fluctuations, including, among others:

               o The size and timing of product orders and shipments.
               o The timing and market  acceptance  of our and our  competitors'
               new products and product enhancements.
               o Our  product  mix,  including  expenses of  implementation  and
               royalties related to certain products.
               o The timing of our completion of work under contracts  accounted
               for under the percentage of completion method.
               o Delays in our customers' purchases due to year 2000 concerns.
               o Customer order deferrals in anticipation of new products.
               o Aspects of our customers' purchasing  processes,  including the
               evaluation, decision-making and acceptance of products within the
               customers' organizations.

                                                         4

<PAGE>


               o Factors affecting the sale process for our products,  including
               the complexity of customer implementation of our products.
               o Federal and state regulatory events.
               o Competitive pricing pressures.
               o  Technological  changes in hardware,  platform,  networking  or
               communication technology.
               o Changes in our personnel.
               o The timing of our operating expenditures.
               o Specific economic conditions in the financial services industry
               and general economic conditions.

           We typically ship or install many of our products within three months
of  receipt  of an order.  As a result,  software  license  fees in any  quarter
substantially  depend on orders booked in that quarter or the previous  quarter.
We also  generally  recognize a  substantial  portion of our revenue in the last
month of each quarter,  with this revenue  concentrated in the last weeks of the
quarter.

           Seasonal  trends  affect our  results of  operations,  including  the
tendency of some customers to complete  purchases of our products in the quarter
ended  December 31 or not to implement new orders in the quarter ended March 31.
Our operating  expenses are based on anticipated  revenue  levels.  Since a high
percentage  of these  expenses are  relatively  fixed within a quarter,  a small
variation  in the timing of  recognition  of  specific  revenue  items can cause
significant variations in our quarterly operating results.

           Due to these factors,  in some future  quarter our operating  results
may be below the  expectations of public market analysts and investors.  In such
event,  the  price of our  common  stock  would  likely be  affected  adversely.
Accordingly,  we believe that  quarter-to-quarter  comparisons of our results of
operations should not be relied upon as an indication of future performance.

           WE ARE HIGHLY LEVERAGED.

           As of September  30, 1999 we had borrowed  approximately  $70 million
from a  consortium  of lenders.  We are highly  leveraged.  Our loan  agreements
contain financial  covenants that we must abide by. For example, we are required
to generate specific levels of earnings before interest, taxes, depreciation and
amortization  ("EBITDA") measured over four-quarter periods. We may from time to
time fail to comply with the  covenants in our loan  agreements.  Any failure to
comply with these covenants could have a material adverse effect on us unless we
are able to obtain waivers for noncompliance. There can be no assurance that our
lenders would grant waivers for  noncompliance,  which could lead to an event of
default under the loan agreements.

           Our loan  agreements  also contain  significant  restrictions  on our
activities.  For  example,  we must obtain the consent of our lenders  before we
purchase  or sell  significant  assets.  Additionally,  the  terms  of our  loan
agreements  prohibit us from incurring  additional  indebtedness  or issuing new
equity  securities  without the consent of the lenders.  These  restrictions may
make it difficult or impossible to raise additional funds if we need to do so.

           THE MARKET FOR OUR  PRODUCTS IS EVOLVING  AND OUR SUCCESS  DEPENDS ON
OUR DEVELOPMENT OF THAT MARKET.

           The  market  for   software   products   and  services  to  financial
institutions is evolving.  Our success, in large part, depends on the continuing
development  of this  market.  We believe  that our  existing  products  compete
effectively with our competitors'  products.  However,  we have licensed some of
our products to a limited  number of customers.  Some of our customers  also use
our products in only a part of their  organization.  A  significant  part of our
business   strategy   depends  on  financial   institutions'   adoption  of  new
technologies in handling  functions that they previously  performed  without the
use of  computers  or with more  rudimentary  software  applications.  We cannot
assure  you  that  banks  and  other  financial   institutions  will  adopt  new
technologies  required for, or that our products will otherwise  achieve,  broad
acceptance in this evolving market. In some instances, banks and other financial
institutions may be reluctant to consider  transitioning to some of our products
without first making

                                                         5

<PAGE>



significant  decisions  regarding  the  procurement  or upgrade of  computer  or
operating systems, including technology necessary to access and conduct business
on the Internet. If the market for our software solutions fails to develop or if
our  products  fail to  succeed in this  market,  then our  business,  operating
results, and financial condition would be materially adversely affected.  Market
acceptance  of our  products  also  depends on our  ability  to ensure  that our
products  operate  together and, when  appropriate,  are  integrated  across our
product lines and with the products of other major service providers and vendors
of hardware and software used in the  financial  services  industry.  As we move
toward offering  certain host processor  services,  certain other host processor
service  providers may be less willing to provide us with information  necessary
to assure  integration  of our products  with their  products.  In addition,  we
derive a significant part of our revenues from continued support of our software
after  the  initial  sale  and are in some  cases  based on  per-transaction  or
per-user pricing.  There can be no assurance that our customers will continue to
accept these pricing structures.

           THE ELECTRONIC  BANKING MARKET IS AT THE EARLY  DEVELOPMENT STAGE AND
OUR SUCCESS DEPENDS ON THE DEVELOPMENT OF THAT MARKET.

           The electronic banking market, and in particular the home banking and
bill paying portions of the market,  is at a very early stage of development and
is rapidly evolving. An increasing number of market entrants who have introduced
or are developing  competing products and services  characterize that market. As
is typical for a new and evolving  industry,  demand and market  acceptance  for
recently  introduced  products  and  services  are  subject  to a high  level of
uncertainty.  While the number of customers  using the Internet or  private-dial
connection as a vehicle for banking has grown rapidly, it remains limited and it
is not known whether these markets or our products will continue to develop such
that a sufficient  demand for our software will emerge and be  sustainable.  The
use of such  electronic  delivery  channels  by the  banking  community  and its
customers  will require broad  acceptance of new methods of conducting  business
and exchanging  information.  Banks and financial  institutions with established
methods of handling  funds may be  reluctant to accept  commercial  transactions
over the Internet. Moreover, concerns regarding the security and confidentiality
of Internet  transactions may inhibit the growth of Internet commerce  generally
and, as a result,  impact market  acceptance of our products.  Our business will
include  products and services  that have only  recently  been  developed in the
emerging  electronic  delivery market. The use of our products depends, in part,
on the continued  development  of an industry and  infrastructure  for providing
secure Internet access and carrying Internet traffic. The Internet may not prove
to be a viable commercial marketplace because of factors such as under capacity,
a reliable network backbone,  or timely  development of complementary  products.
There can be no assurance that commerce over the Internet will become  generally
adopted.  If the market fails to develop or develops more slowly than  expected,
the  infrastructure  for the Internet is not adequately  developed,  or our home
banking products and services do not achieve market  acceptance by a significant
number of  individuals,  businesses  and financial  institutions,  our business,
financial  condition,  and operating  results could be materially  and adversely
affected. As our product offerings become more diverse, the ability of banks and
financial institutions to offer these products may depend partly on deregulation
of the banking industry, which deregulation is difficult to predict.

           MARKET  ACCEPTANCE  OF OUR  PRODUCTS  DEPENDS  ON  THEIR  ABILITY  TO
INTEGRATE WITH OUR CUSTOMERS' HOST PROCESSOR SYSTEMS.

           Market  acceptance  of our products  depends on our ability to ensure
that each of our products  operate with each of our other  products and with the
products of other major  service  providers and vendors of hardware and software
used in the financial  services  industry (and, in  particular,  the products of
vendors  providing  processing  services  to  financial  institutions).  We have
developed  significant  expertise with most available host processor systems and
the methods  necessary to transfer data to and from such systems.  If we and the
provider  of  a  host  processor  system  share  information  regarding  product
technologies,   development  schedules,  and  enhancements,  then  we  both  can
integrate our products and systems.  In some cases,  providers of host processor
systems or processing services are or may become our competitors with respect to
one or more of our products. As such, we are not always able to obtain access to
host system  technology  necessary for  developing  optimal  third-party  system
integration.  There can be no assurance  that we will be able to  establish  and
maintain adequate

                                                         6

<PAGE>



relationships  with important  providers of host processor systems or processing
services in the future. Failure to do so could have a material adverse effect on
our business, results of operations and financial condition.

           THE MARKET FOR OUR CALL CENTER AND ELECTRONIC  COMMERCE  PRODUCTS MAY
NOT GROW OR MAY NOT GROW AS EXPECTED.

           We  anticipate  that the  market for our call  center and  electronic
commerce  products will expand rapidly over the next several years. We also have
expended  substantial  resources in the  development and improvement of our call
center and electronic commerce products. However, there can be no assurance that
our upgraded call center and electronic  commerce products will be released on a
timely basis or will achieve market acceptance upon release. If the market fails
to grow or grows more slowly than expected, our business, results of operations,
and financial condition could be adversely affected.

           WE MAY HAVE DIFFICULTY INTEGRATING OUR RECENT ACQUISITIONS OF OTHER
BUSINESSES AND VENTURES.

           One of our strategies has been to acquire  complementary  businesses,
products and  technologies  and to enter into new business  ventures,  including
minority equity investments and joint ventures.  Since 1994, we have acquired 15
businesses or companies. In 1999, we acquired three major businesses:

      o    Modern  Computer  Systems,  Inc., a company located in Minnesota that
           provides back office (host data  processing) and related  services to
           financial institutions.
      o    MECA Software, L.L.C., a company located in Connecticut that provides
           e-commerce   technology-   powered  solutions  for  the  delivery  of
           financial services.
      o    ULTRADATA Corporation,  a company located in California that provides
           real-time  information  and management  software and solutions  (host
           data processing) for relationship oriented financial institutions.

           Our acquisitions of companies, businesses, products, and technologies
have required the  dedication  of management  resources to achieve the strategic
objectives  of the  acquisitions  and  business  ventures.  We  cannot  give any
assurances (1) that we may overcome the difficulties  encountered in integrating
the  operations of those  acquisitions  or business  ventures that we previously
acquired  or that we may  acquire  in the  future,  (2) that we will  obtain the
specific  benefits  expected from  integration  of any  particular  acquisition,
including the addition of new products and  technologies  or increased sales and
growth of our customer  base, or (3) that we will realize any  anticipated  cost
savings.  The  difficulties  of combining the operations of acquired  businesses
have  been,  and the entry  into new  business  ventures  in the  future  can be
expected to be,  exacerbated  by the  necessity of  coordinating  geographically
separated  organizations.  The process of integrating operations has to a degree
caused, and may in the future cause, an interruption of, or loss of momentum in,
the activities of our business and operations, including those of the businesses
acquired  or  new  business  ventures  started.   Difficulties   encountered  in
connection with our acquisition of businesses,  products,  or technologies,  and
the commencement of new business  ventures,  could have an adverse effect on our
business,  results  of  operations,  and  financial  condition.  There can be no
assurance that integration of businesses,  products, or technologies  previously
acquired,  or business ventures entered into in the future, will be accomplished
without  having an adverse  impact on our business,  results of  operations  and
financial condition or that we will realize the benefits or strategic objectives
expected from those businesses and business ventures.

           WE MAY HAVE DIFFICULTY MANAGING OUR GROWTH.

           The  growth  in the  size  and  complexity  of our  business  and the
expansion  of our  product  lines  and our  customer  base have  placed  and are
expected  to  continue  to place a  significant  strain  on all  aspects  of our
business.  In  particular,  our  emphasis on selling to large  institutions  has
placed  significant  additional  demands on our installation and  implementation
operations. Our growing installed base also has placed additional demands on our

                                                         7

<PAGE>



customer support  operation.  Our intention to actively pursue  opportunities in
electronic  commerce will provide  additional  challenges to many aspects of our
operations.  Our future  operating  results will depend on our ability to expand
our support operations and  infrastructure  commensurate with our expanding base
of installed  products and on our ability to attract,  hire,  and retain skilled
personnel.  There can be no assurance that our personnel,  systems,  procedures,
and  controls  will be  adequate  to  support  our  operations.  Any  failure to
implement and improve our operational,  financial,  and management systems or to
expand,  train,  motivate,  or manage  personnel  could have a material  adverse
effect on our business, operating results, and financial condition. There can be
no assurance that we will be able to effectively  manage any future growth.  Our
failure to do so would have a material adverse effect on our business, operating
results,   and  financial   condition.   If  the  anticipated  growth  fails  to
materialize, then our operating results could be adversely affected.

           WE DEPEND ON KEY EMPLOYEES AND CONTRACT ENGINEERS.

           Our future  success  will  depend to a  significant  extent  upon the
contributions of our executive  officers and key sales,  engineering,  marketing
and technical personnel,  including independent contractors used by us primarily
in product development. We do not have "key person" life insurance on any of our
employees.  The loss of the services of one or more of our key  personnel  could
have a material adverse effect on our business, operating results, and financial
condition. We also believe our future success will depend in large part upon our
ability to attract and retain additional highly skilled personnel,  particularly
sales personnel,  systems  integrators,  and software engineers.  Because of the
sophistication  of our  products  and the  technology  environments  in which we
operate, our sales, engineering,  and other personnel generally require advanced
technical knowledge and sufficient training to perform competently.  Competition
for such personnel,  particularly qualified software development  engineers,  is
very intense and we have, at times, experienced difficulty in locating personnel
with the requisite level of expertise and experience.  There can be no assurance
that we will be successful in retaining the personnel we require in the future.

           OUR SUCCESS  WILL  DEPEND ON OUR ABILITY TO DEVELOP AND  SUCCESSFULLY
INTRODUCE NEW PRODUCTS AND PRODUCT ENHANCEMENTS.

           Our future  success will depend upon our ability,  on a timely basis,
to develop or acquire and  successfully  introduce  new products and to maintain
and  enhance  our  current  products  to meet  customers'  expanding  needs.  In
addition,  we must (1) identify emerging trends and technological changes in our
target markets, (2) develop and maintain competitive  products,  (3) enhance our
products by adding innovative  features that differentiate our products from our
competitors'  products,  and (4) develop and bring products to market quickly at
cost-effective  prices. In particular,  we believe our  software-based  products
must respond quickly to users' needs for broad  functionality and multi-platform
support and to advances in hardware and operating systems.  As a result of these
requirements, we will need to make substantial investments in design and product
development.  Any failure to anticipate or respond  adequately to  technological
and regulatory developments and customer requirements, or any significant delays
in  product   development   or   introductions,   could  result  in  a  loss  of
competitiveness  and could materially  adversely affect our business,  operating
results,  and  financial  condition.  There can be no assurance  that we will be
successful in developing and marketing new products or product enhancements that
respond to technological or regulatory changes,  evolving standards, or changing
customer requirements.

           In the past, we have  experienced  delays in the  introduction of new
products and product enhancements,  including the Windows version of our Deposit
Pro and Laser Pro products,  and in the  achievement  of market  acceptance  for
certain of our  products.  There can be no assurance  that we will  successfully
complete on a timely basis products  currently under development or that current
or future products will achieve market  acceptance.  If we are not successful in
developing new products and providing  product  enhancements in a timely manner,
including those that incorporate  regulatory changes into our products, it could
have a material adverse impact on our business, operating results, and financial
condition.  The pressures to get products to market are likely to increase as we
move into the electronic  commerce  market.  These  pressures could result in an
increase in the number of errors in our products which would require significant
time and effort to correct.

                                                         8

<PAGE>



           In addition,  the introduction or announcement of products  embodying
new technologies,  changes in industry  standards,  applicable  regulations,  or
customer requirements,  either by us or by one or more of our competitors, could
render our  existing  products  obsolete or  unmarketable.  There also can be no
assurance that the  introduction or announcement of new product  offerings by us
or one or more of our competitors will not cause customers to defer purchases of
existing  products.  Such deferment of purchases  could have a material  adverse
effect on our business, operating results, and financial condition.

           THE  SALES  AND  IMPLEMENTATION  OF  OUR  PRODUCTS  OFTEN  INVOLVE  A
SUBSTANTIAL LENGTH OF TIME AND THE EXPENDITURE OF SIGNIFICANT RESOURCES.

           The  license of our  software  products  generally  requires  that we
educate prospective customers regarding the use and benefits of our products. In
addition,  the implementation of our products involves a significant  commitment
of resources by  prospective  customers and can be associated  with  substantial
changes in  workflow,  processing,  or the  configuration  of hardware and other
software. Our product license and other fees are typically only a portion of the
customer's  related hardware,  software,  development,  training and integration
costs in  implementing  a system  containing  our  products.  The license of our
software  products can often  require a board-  level or  executive  decision by
prospective  customers.  For these and other reasons, the period between initial
indications  of interest by a customer in our product and the ultimate  sale and
implementation  of our  product  to the  customer  can often be  lengthy  (often
ranging  from three  months to in excess of one year) and is subject to a number
of  significant  delays  over  which we have  little or no  control.  Our actual
receipt of revenues from these projects can be even more  protracted.  Increases
in the size  and  complexity  of our  license  transactions  and  delays  in our
customers'  implementation  or upgrade of the necessary  computing  environments
could lengthen our sales and implementation cycle.

           THE MARKET FOR OUR PRODUCTS IS HIGHLY COMPETITIVE.

           The market for our  products  is  intensely  competitive  and rapidly
changing. A number of companies offer competitive products addressing certain of
our target markets, which include lending,  retail delivery,  connectivity,  and
host processing products.  With respect to our software  applications  products,
our principal competitors include:

      o     Bankers Systems, Inc.
      o     FormAtion Technologies, Inc. (a subsidiary of John H. Harland
            Company).
      o     Interlinq Software Corporation.
      o     Fair Isaac & Company, Inc.
      o     Affinity Technology Group, Inc.
      o     Great Lakes Forms, Inc.
      o     APPRO Systems, Inc.
      o     JetForm Corp.

           With respect to our information  management  products,  our principal
competitors include:

      o     Olivetti North America
      o     Broadway & Seymour, Inc.
      o     Early, Cloud & Company
      o     Footprint Software, inc. (both subsidiaries of International
            Business Machines Corporation ("IBM"))
      o     Electronica Data Systems Corporation
      o     Argo & Company
      o     FIserv, Inc.
      o     Edify Corporation
      o     Software Dynamics, Inc.


                                                         9

<PAGE>



           With  respect to our  electronic  commerce  products,  our  principal
competitors include:

      o     CheckFree Incorporated
      o     Visa Interactive
      o     Edify Corporation
      o     Online Resources & Communications Corporation
      o     GOLDPAC Products
      o     Politzer & Haney

           A number of our  prospective  and  existing  customers  also have the
internal capability to provide alternative solutions to our lending, operations,
or electronic  delivery products and may,  therefore,  be viewed as competitors.
These  alternatives  may include  internally  developed  software  and  hardware
solutions  or  methods  of  process  management  that  do not  involve  software
solutions.  Some  of  our  competitors  have  significantly  greater  financial,
technical,  sales, and marketing  resources than us. We believe that the primary
competitive  factors  in  this  market  include  product  quality,  reliability,
performance,  features  and  functions,  price,  vendor and product  reputation,
financial  stability,  time to market,  ease of use, the  interoperability  with
other applications or systems, and quality of support.  Although we believe that
we compete favorably in each of these categories, there can be no assurance that
competitors  will not develop products that are superior to our products or that
achieve greater market acceptance. Because of the rapidly evolving nature of the
industry,   many  of  our  collaborative   partners  are  current  or  potential
competitors.  Similarly,  a number of our current or potential  competitors have
established or may establish cooperative relationships among themselves and with
third parties that may present  additional  competition with products offered by
us. Our  competitors  may also be able to  undertake  more  extensive  marketing
campaigns,  adopt more  aggressive  pricing  policies,  utilize  more  extensive
distribution channels, and bundle competing products.

           WE DERIVE A SIGNIFICANT  PORTION OF OUR REVENUE FROM A LIMITED NUMBER
OF PRODUCTS.

           A significant portion of our revenue is derived from a limited number
of products.  Revenue  from our Laser Pro and Deposit Pro  products  represented
approximately  52 percent of our total  revenue for the year ended  December 31,
1998.  Although we believe  that these  products  will  continue to  represent a
significant  percentage of our revenue for the near term,  an important  part of
our business strategy depends upon our ability to continue to develop and market
our  other  products.  This  percentage  also is likely  to  decrease  as we add
products from our recent acquisitions to our product lines. However, there is no
assurance  that we will  realize the same  revenue  levels  that these  products
produced  for their former  owners.  A decline in demand or prices for our Laser
Pro or Deposit Pro products, whether as a result of new product introductions by
our competitors,  price  competition,  technological  change,  or failure of our
products to address customer requirements,  could have a material adverse effect
on our business,  results of operations, and financial condition. The failure of
the financial services industry in general to adopt new or modified technologies
to  improve  and  simplify  business  processes  (in  particular,  the  products
developed  by us),  or our  failure to support  this  industry  transition  with
products that effectively address customer  requirements,  would have a material
adverse effect on our business, results of operations, and financial condition.

         WE DERIVE SUBSTANTIALLY ALL OF OUR REVENUE FROM FINANCIAL INSTITUTIONS.

           We derive substantially all of our revenue from licenses and services
to banks, credit unions, thrifts, and other financial  institutions.  Our future
growth  depends on  increased  sales to the  financial  services  industry.  The
success of our customers is intrinsically  linked to economic  conditions in the
financial  services industry,  which in turn are subject to intense  competitive
pressures and are affected by overall economic conditions.  We also believe that
the license of our products is  relatively  discretionary  and often  requires a
significant  commitment  of  capital if  accomplished  by  large-scale  hardware
purchases or commitments. As a result, although we believe that our products can
be  of  substantial  assistance  to  financial  institutions  in  a  competitive
environment, instability or

                                                        10

<PAGE>



downturns in the financial services environment could disproportionately  affect
the demand for our products and services,  which may cause existing or potential
customers  to exit  the  industry  or  delay,  cancel,  or  reduce  any  planned
expenditures  for  technology  solutions,  including  those  offered  by us. The
financial  services industry is currently  experiencing  consolidation  that may
affect  demand for our  products.  The  financial  services  industry  is highly
regulated and changes in regulations  affecting the financial  services industry
or our products  could have a significant  effect on us. These and other factors
adversely   affecting  the  financial   services  industry  and  its  purchasing
capabilities  could have a material  adverse effect on our business,  results of
operations, and financial condition.

           OUR  CUSTOMERS  MAY DELAY OR DEFER  PURCHASES OF OUR  PRODUCTS  UNTIL
AFTER 1999 IN RESPONSE TO YEAR 2000 CONCERNS.

           Our  customers are regulated  financial  institutions  located in the
United States,  including  banks,  credit unions,  and thrifts.  These financial
institutions  are  experiencing  enhanced  regulatory  oversight with respect to
their preparedness for the year 2000. In response to pressure from regulators or
concerns  about  integration of new products into their  existing  systems,  our
customers may delay or defer purchases of our products until after March 2000.

           OUR BUSINESS INVOLVES RISKS RELATED TO WARRANTY AND PRODUCT LIABILITY
CLAIMS.

           Our software products are highly complex and sophisticated and could,
from time to time,  contain  design  defects or  software  errors  that could be
difficult  to detect and correct or that we discover  only after a customer  has
installed and used a product.  In addition,  implementation  of our products may
involve a significant amount of customer-specific  customization and may involve
integration with systems  developed by third parties.  Although our business has
not been materially  adversely affected by any such errors to date, there can be
no assurances that  significant  errors will not be found in our products in the
future.  Such  errors  could give rise to  warranty  or other  liability  claims
against us, cause delays in product  introduction and shipments,  require design
modifications,  result in loss of or delay in market  acceptance of our products
or loss of existing customers, any of which could adversely affect our business,
results of operations, and financial condition.

           Our products enable our customers to comply with a variety of complex
and  changing  federal  and state  laws and  regulations.  Should  documentation
generated by our products result in a customer's  violation of such requirements
due to a product defect,  the customer,  or possibly the governmental  authority
whose requirements were not met, could claim that we are responsible. We provide
a compliance  warranty on certain of our products  that limits our  liability to
$1,000,000 per customer per year and further limits our liability for all of our
customers to an  aggregate of  $2,500,000  per year per  occurrence  of a common
defect.  There  can  be  no  assurance  that  these  contract  limits  would  be
enforceable,  or that claims  would be covered by or would not exceed the limits
of our insurance  policy.  Further,  there can be no assurance  that this policy
will be renewed or will remain  priced  within our capacity to pay the premiums.
If our contract  limits are found to be  unenforceable  or our insurance  policy
does  not  adequately  cover  claims,  then our  results  of  operations  may be
materially and adversely affected.  In addition,  there can be no assurance that
we will be able to correct  claimed or actual product defects in a timely manner
or at all.

          PROTECTION OF OUR PROPRIETARY TECHNOLOGY IS LIMITED AND MAY BE COSTLY.

           Our  success  and  ability  to  compete  depends  in  part  upon  our
proprietary  technology,   including  our  software.  We  rely  primarily  on  a
combination  of copyright,  trade secret,  and trademark  laws,  confidentiality
procedures,  and contractual  provisions to protect our proprietary  rights.  We
also believe that factors such as know-how  concerning  the  financial  services
industry  and the kinds of  software  products  that we  license  as well as the
technological  and creative skills of our personnel,  new product  developments,
frequent product  enhancements,  name recognition,  and reliable product service
are essential for us in establishing and maintaining a technology

                                                        11

<PAGE>



leadership  position.  We may  from  time to time  seek  patent  protection  for
innovations  related to certain of our software  products,  although we have not
generally sought patent protections for our software. There has been an increase
in the number of patents  related to  software  that have been issued or applied
for in the United States and,  accordingly,  the risk of patent infringement for
software  companies can be expected to increase.  There can be no assurance that
others  will not  develop  technologies  that are  similar  or  superior  to our
technology.  We have, with a small number of customers,  provided limited access
and  restricted  rights to the source  code of  certain  products.  Despite  our
efforts to protect our proprietary rights,  other parties may attempt to reverse
engineer,  copy,  or otherwise  engage in  unauthorized  use of our  proprietary
information.  There  can be no  assurance  that such  unauthorized  use will not
occur.  Monitoring unauthorized use of our proprietary information is difficult.
We are unable to determine  the extent to which piracy of our software  products
exists;  in any event,  software  piracy  could  occur.  If we license  software
products  in foreign  countries  (which we have done only on a limited  basis to
date), then we may experience  greater risks of software piracy because the laws
of certain foreign countries do not provide meaningful protection against piracy
of  software.  There  can be no  assurance  that  our  means of  protecting  our
proprietary rights will be adequate.

           Certain  technology or proprietary  information  incorporated  in our
products is licensed from third parties, generally on a non-exclusive basis. The
termination of any such licenses, or the failure of the third-party licensors to
adequately  maintain  or update  their  products,  could  result in delay in our
ability to ship  certain  of our  products  while we seek to locate  alternative
technology.  Any required  replacement licenses could prove costly. While it may
be  necessary  or  desirable  in the  future  to obtain  rights  to third  party
technology,  there  can  be no  assurance  that  we  will  be  able  to do so on
commercially reasonable terms or at all.

           In the future, we may receive notices claiming that we are infringing
the proprietary rights of third parties.  There can be no assurance that we will
not become the  subject of  infringement  claims or legal  proceedings  by third
parties with respect to current or future products,  services,  or technologies.
We expect that  software  product  developers  will  increasingly  be subject to
infringement  claims as the number of products and  competition  in our industry
grows and the functionality and scope of products overlaps.  Furthermore,  there
can be no  assurance  that  employees  or  third  parties  have  not  improperly
disclosed  confidential or proprietary  information to us. Any such claims, with
or without  merit,  could be time  consuming  and  expensive  to defend,  divert
management's  attention and  resources,  cause product and shipment  delays,  or
require us to pay money  damages or enter into royalty or licensing  agreements.
Such royalty or licensing agreements, if required, may not be available on terms
acceptable  to us or at all.  In the  event of a  successful  claim  of  product
infringement  against us and  failure  of us or our  licensors  to  license  the
infringing or similar  technology on reasonable terms, our business,  results of
operations, and financial condition could be adversely affected. In addition, we
may initiate  claims against third parties for  infringement  of our proprietary
rights or to establish the validity of our  proprietary  rights.  Any such claim
could be time  consuming,  result  in  costly  litigation,  and have a  material
adverse effect on our business, results of operations, and financial condition.

         ANTI-TAKEOVER CONSIDERATIONS COULD MAKE AN ACQUISITION BY A THIRD PARTY
DIFFICULT  AND REDUCE A  SHAREHOLDER'S  CHANCES OF  OBTAINING A PREMIUM FROM THE
SALE OF THE SHAREHOLDER'S SHARES IN A CHANGE OF CONTROL.

           Certain   provisions   of  our  Amended  and  Restated   Articles  of
Incorporation  (the  "Articles"),  including the  classified  Board of Directors
currently in effect,  could delay the removal of incumbent  directors  and could
make more difficult a merger,  tender offer, or proxy contest involving us, even
if such event would be  beneficial  to the  interests  of the  shareholders.  In
addition,  we have 5,000,000 shares of authorized Series Preferred Stock. We may
issue  shares of such  Series  Preferred  Stock in the  future  without  further
shareholder  approval  and upon such terms and  conditions,  having such rights,
privileges, and preferences, as the Board of Directors may determine. The rights
of the holders of common stock will be subject to, and may be adversely affected
by, the rights of the holders of any Series  Preferred  Stock that may be issued
in  the  future.  The  issuance  of  Series  Preferred  Stock,  while  providing
flexibility  in  connection  with  possible  acquisitions  and  other  corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from acquiring, a majority of

                                                        12

<PAGE>



our outstanding  voting stock.  The Articles also provide that certain  business
combinations  must  be  approved  by  holders  of at  least  75  percent  of the
outstanding shares of common stock.

         SALES OF PRIVATELY HELD SHARES COULD NEGATIVELY AFFECT OUR STOCK PRICE.

           Future sales of a substantial  number of restricted  shares of common
stock in the public market,  or the issuance of shares of common stock, upon the
exercise of options or otherwise, could affect adversely the market price of our
common  stock.  Upon  completion  of this  offering and based upon the number of
shares  outstanding  as of  October  15,  1999,  we will  have an  aggregate  of
6,376,847  shares  of  common  stock   outstanding,   assuming  no  exercise  of
outstanding  options  we  issued  to our  officers,  directors,  and  employees.
Substantially all of such shares will be freely saleable without  restriction or
further  registration  under the  Securities  Act of 1933,  except that  518,286
shares of common stock held by affiliates  are  "restricted  securities" as that
term is  defined in Rule 144 under the  Securities  Act  ("Restricted  Shares").
Restricted Shares may be sold in the public market only if registered or if they
qualify  for an  exemption  from  registration  under Rule 144,  144(k),  or 701
promulgated  under the Securities Act. In addition,  we have filed  registration
statements  under the Securities Act  registering  shares of common stock issued
and  issuable  upon  exercise of options  granted  pursuant to our stock  option
plans, stock option agreements,  and employee stock purchase plan. As of October
15,  1999,  we have  reserved  1,839,091  shares  of common  stock for  issuance
pursuant to our stock option plans, stock option agreements,  and employee stock
purchase  plan.  Of this amount,  1,374,801  shares were subject to  outstanding
options,  765,818 of which were subject to options that were  exercisable  as of
October 15, 1999.

           OUR STOCK PRICE MAY BE ADVERSELY AFFECTED BY MARKET VOLATILITY.

           On November 12, 1999,  the last  reported  sales price for our common
stock on the Nasdaq  National  Market,  was  $7.625  per share.  There can be no
assurance  that the trading price of our common stock will not decline below the
recent trading prices.  Future  announcements  concerning us or our competitors,
technological  innovations,  new product introductions,  government regulations,
market  conditions  in our  industries,  or changes  in  earnings  estimates  by
analysts  may  cause  the  trading  price  of  the  common  stock  to  fluctuate
substantially.

           The trading price of our common stock on the Nasdaq  National  Market
has been and may continue to be subject to wide  fluctuations in response to our
financial  performance,  market conditions in the software industry, new product
introductions by us or by our competitors or planned capital raising activities,
as well as factors  that may have no  relevance  to us or our markets  including
general  economic,  political  and market  conditions,  such as  recessions.  In
addition,  historical trading volumes of our common stock on the Nasdaq National
Market have been  consistently  low,  which we believe has  amplified,  and will
continue to amplify, the volatility in the trading prices of our common stock.

           WE DO NOT PLAN TO PAY DIVIDENDS AND DIVIDEND PAYMENTS ARE RESTRICTED.

           We do not intend to pay cash dividends in the foreseeable  future. We
cannot pay cash dividends without the consent of our lenders.

           THE EXERCISE OF OUTSTANDING OPTIONS WILL RESULT IN FURTHER DILUTION.

           If  holders  of  outstanding  options to  purchase  our common  stock
exercise those options,  then there will be further dilution. In connection with
future capital-raising activities or the acquisition of products,  technologies,
or businesses,  we may issue  additional  equity or convertible debt securities.
Future  issuances of additional  equity or  convertible  debt  securities  could
result in additional dilution to our shareholders.



                                                        13

<PAGE>



                                 USE OF PROCEEDS

           This  prospectus  relates  to the  shares  of common  stock  that the
selling security holders may offer from time to time. We will not receive any of
the proceeds from the sale of the common stock the selling  security holders may
offer.

           However, we will receive cash proceeds to the extent that the selling
security  holders who hold Options or Warrants  exercise  them. If they exercise
all of the Options and Warrants,  then we will receive  $7,163,053.  Each Option
and Warrant contains  "cashless  exercise" rights. If the holders of the Options
and Warrants  exercise  these  rights,  we will not receive any cash but will be
required to issue  substantially fewer shares of common stock. We will use these
proceeds for general corporate  purposes,  including for working capital. If all
of the selling  security  holders who hold Notes convert their Notes into common
stock,  then the conversion of the Notes will discharge in full the indebtedness
that we owe to them.  As of October 15, 1999,  we owe the holders of the Notes a
total of  $5,648,667.  If the  holders of the Notes hold them for at least three
years, we will owe them a total of $7,437,535.

                           PRICE RANGE OF COMMON STOCK

           Our common stock trades  publicly on the Nasdaq National Market under
the  trading  symbol  CCTX.  The table  below  sets forth the high and low sales
prices for our common stock for the periods  indicated as reported by the Nasdaq
National Market.

                                                High          Low

                1997
                    First Quarter               $20.88        $14.00
                    Second Quarter              $20.25        $14.25
                    Third Quarter               $18.75        $13.50
                    Fourth Quarter              $16.50        $10.00
                1998
                    First Quarter               $16.69        $12.25
                    Second Quarter              $17.88        $14.50
                    Third Quarter               $16.38        $ 9.38
                    Fourth Quarter              $13.13        $10.00
                1999
                    First Quarter               $13.69        $11.00
                    Second Quarter              $18.00        $ 9.25
                    Third Quarter               $13.38        $ 9.69

           On November 12, 1999,  the last reported  sales price reported on the
Nasdaq  National  Market for the common stock was $7.625 per share.  On the same
date, there were approximately 295 holders of record of the common stock.

                                                  DIVIDEND POLICY

           We have not declared or paid any cash  dividends on our common stock.
We  currently  intend to retain any future  earnings  to finance  the growth and
development of our business and, therefore,  do not currently  anticipate paying
any cash dividends on our common stock in the foreseeable future.



                                                        14

<PAGE>



                                 CAPITALIZATION

           The following table sets forth the capitalization of Concentrex as of
September  30, 1999,  as adjusted to give effect to the receipt by Concentrex of
the estimated net proceeds from the exercise of the Options and the Warrants and
the  conversion  of the Notes into common  stock.  This table  should be read in
conjunction  with  Concentrex's  Consolidated  Financial  Statements  and  Notes
thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>


                                                                                         September 30, 1999
                                                                                     --------------------------
                                                                                       Actual       As Adjusted
                                                                                     -----------    -----------
                                                                                            (in thousands)
<S>                                                                                  <C>            <C>
      Current portion of long-term debt and other current liabilities                $  2,834       $    2,834
      Long-term liabilities and debt, less current portion                             63,902           63,902
      Convertible Subordinated Notes                                                    5,619               --
      Mandatory Redeemable Class A Preferred Stock                                        731              731

      Shareholders' equity
          Series Preferred Stock 5,000,000 shares authorized, none issued
           and outstanding                                                                 --               --
           Common stock, no par value; 10,000,000 shares authorized, 5,217,491
                shares issued and outstanding actual; and 6,229,523 shares issued
                and outstanding as adjusted(1)                                         25,087           37,744
           Retained earnings                                                            1,726            1,726
                                                                                     -----------    -----------
      Total shareholders' equity                                                       26,813           39,470
                                                                                     -----------    -----------
           Total capitalization                                                      $ 99,899       $  106,937
                                                                                     ===========    ===========
<FN>
      (1)Excludes 1,374,801 shares of common stock issuable pursuant to exercise
of stock  options  outstanding  at  September  30, 1999,  at a weighted  average
exercise  price of $11.34 per share,  765,495  of which were  exercisable  as of
September 30, 1999.

</FN>

</TABLE>

                             SELECTED FINANCIAL DATA

           The following  selected  financial data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements and Notes thereto included
elsewhere in this prospectus.  The selected financial data concerning Concentrex
set  forth  below are as of and for each of its most  recent  five  years  ended
December 31, 1998, as of and for the nine months ended  September 30, 1999,  for
the nine months ended  September 30, 1998 and include pro forma  information for
the year ended  December 31, 1998 and the nine months ended  September 30, 1999.
The  selected  financial  data for each of the three  years in the period  ended
December 31, 1998, have been derived from  Concentrex's  consolidated  financial
statements  for such  periods,  which were  audited by Arthur  Andersen,  LLP as
indicated in their report included  elsewhere in this  prospectus.  The selected
financial  data for the years ended December 31, 1994 and 1995 have been derived
from audited financial statements not included in this prospectus.  The selected
financial data as of September 30, 1999 and for the nine months ended  September
30,  1999 and 1998 have  been  derived  from  Concentrex's  unaudited  financial
statements  included  elsewhere in this  prospectus and which, in the opinion of
management, include all significant, normal, and recurring adjustments necessary
for a fair presentation of the financial positions and results of operations for
such unaudited periods. The unaudited pro forma statement of operations data for
the year ended  December  31, 1998 and for the nine months ended  September  30,
1999 give effect to the  acquisitions  of MECA  Software,  L.L.C.  and ULTRADATA
Corporation as if these transactions had occurred on January 1, 1998.


                                                        15

<PAGE>

<TABLE>


<CAPTION>


                                             Nine Months Ended
                                               September 30,                       Year Ended December 31
                                         --------------------------- -------------------------------------------------------
                                         Pro Forma                   Pro Forma
                                           1999     1999(1)   1998    1998(1)   1998(2)     1997   1996(3)  1995(4)   1994
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
                                                                  (in thousands, except for per share data)
Consolidated Statement of Operations Data
<S>                                      <C>        <C>      <C>     <C>        <C>        <C>     <C>      <C>      <C>
      Revenue(5)
      Application software products      $  58,158  $58,158  $54,335 $  75,667  $ 75,667   $64,516 $52,936  $32,242  $29,195
      Information management products       21,105    5,551       --    30,359        --        --      --       --       --
      e-Commerce products                   12,686    8,678    3,959    17,129     5,822     4,991   4,113    1,869      361
      Ancillary products                    10,099    5,058    2,945    16,483     4,141     3,142   2,898    2,665    3,060
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
           Total Revenue                   102,048   77,445   61,239   139,637    85,630    72,649  59,947   36,776   32,616
      Cost of revenue                       40,708   29,569   21,688    53,218    29,423    27,041  20,844   11,672    9,646
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
      Gross profit                          61,340   47,876   39,551    86,419    56,207    45,608  39,103   25,104   22,970
      Operating expenses                    62,788   44,123   32,841    84,364    45,357    36,780  29,810   20,552   17,859
      Acquired in-process research and
      development and other charges         10,521   10,521       --     2,661     2,661        --   8,030    4,549       --
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------

      Income (loss) from operations        (11,969)  (6,768)   6,710      (606)    8,189     8,828   1,263        3    5,111
      Net income (loss)                    (17,402)  (9,148)   3,592    (9,874)    3,960     4,680     114      323    3,514
      Preferred Stock dividend                  69       69       72        95        95        95      97       97       97
                                         ---------  -------  ------- ---------  --------   ------- -------- -------  -------
      Net income (loss) applicable to
      common shareholders                $ (17,471) $(9,217) $ 3,520 $  (9,969) $  3,865   $ 4,585 $    17  $   226  $ 3,417
                                         =========  =======  ======= =========  ========   ======= ======== =======  =======
      Diluted net income(loss) per share $   (3.41) $ (1.81) $  0.68 $   (1.97) $   0.75   $  0.90 $    --  $  0.05  $  0.71
                                         =========  =======  ======= =========  ========   ======= ======== =======  =======
      Shares used in diluted per share
      calculations                           5,127    5,102    5,179     5,062     5,167     5,124    5,112   4,877    4,806
      Basic net income(loss) per share   $   (3.41) $ (1.81) $  0.70 $   (1.97) $   0.77   $  0.93 $     -- $  0.05  $  0.87
                                         =========  =======  ======= =========  ========   ======= ======== =======  =======
      Shares used in basic per share
      calculations                           5,127    5,102    5,005     5,062     5,012     4,919    4,763   4,369    3,922


</TABLE>

<TABLE>
<CAPTION>

                                                September 30, 1999
                                                ------------------
Consolidated Balance Sheet Data
<S>                                             <C>                             <C>        <C>     <C>      <C>      <C>
      Cash, cash equivalents, restricted cash,
        and short-term investments              $  1,071                        $ 3,795    $    20 $     -- $ 7,670  $ 7,958
      Working capital                                965                         16,972      7,187    2,792   8,759   10,336
      Property and equipment, net                  8,000                          4,534      5,211    4,805   2,968    2,579
      Total assets                               138,539                         56,781     57,542   46,845  36,587   27,487
      Short-term debt                              8,230                            261      5,605    2,896   3,915       --
      Long-term debt, less current portion        63,902                          5,693      2,232    2,810     423       --
      Convertible subordinated notes               5,619                             --         --       --      --       --
      Mandatory Redeemable Class A Preferred
        Stock                                        731                            738        746      754     761      764
      Shareholders' equity                        26,813                         30,632     25,943   20,238  18,169   16,591

</TABLE>


     1Results  for the nine months ended  September  30,  1999,  include  pretax
charges  totaling  $10.5  million  for the  value  of  in-process  research  and
development efforts at the date of acquisition pertaining to the acquisitions of
ULTRADATA Corporation in August 1999 ($5.2 million) and MECA Software, L.L.C. in
May 1999 ($3.8  million),  other  expenses  for name  change and  certain  costs
related to acquisitions required to be expensed ($0.6 million) and settlement of
an  arbitration  proceeding  ($0.9  million).  Excluding the impact of the $10.5
million charge, net income and diluted net income per share would have been $0.7
million and $0.13,  respectively.  The results of operations for the nine months
ended  September  30, 1999  include the results of the  operations  of ULTRADATA
Corporation,  MECA Software L.L.C. and Modern Computer  Systems,  Inc. since the
dates of acquisitions in August, May and January 1999,  respectively.  See notes
to the unaudited consolidated financial statements.

                                       16
<PAGE>

2Results for the year ended December 31, 1998,  include pretax charges  totaling
$3.0 million for the value of in-process research and development efforts at the
date of  acquisition  pertaining  to the  acquisition  of the assets of Mortgage
Dynamics,  Inc. in October 1998 ($1.0  million),  the remaining write off of the
goodwill and  associated  severance  charges  related to fisCAL  products  ($0.9
million),  the present  value of net future  lease  payments due with respect to
certain office space in Atlanta that Concentrex ceased using ($0.8 million), and
write off of the initial  investment  of  Concentrex  in a joint  venture  ($0.3
million).  Excluding the impact of these charges,  net income and net income per
share (diluted) would have been $5.7 million and $1.11, respectively.  See Notes
1, 2 and 7 of Notes to Consolidated Financial Statements.

3Results for the year ended  December 31, 1996,  include a pretax charge of $8.0
million for the value of in-process research and development efforts at the date
of acquisition  pertaining to five companies  acquired in April 1996.  Excluding
the impact of the acquired  in-process  research and  development  charges,  net
income and net  income per share  (diluted)  would  have been $5.2  million  and
$1.02,  respectively.  The results of operations for the year ended December 31,
1996,  include  the  results of these  companies'  operations  since the date of
acquisition  in  April  1996.  See Note 2 of  Notes  to  Consolidated  Financial
Statements.

4 Results for the year ended December 31, 1995,  include a pretax charge of $4.5
million.  The  charge  consists  of $3.7  million  for  the  value  of  Culverin
Corporation's (Culverin) in-process research and development efforts at the date
of acquisition and $0.8 million for  restructuring.  Excluding the impact of the
acquired  in-process  research and development and  restructuring  charges,  net
income and net  income per share  (diluted)  would  have been $3.1  million  and
$0.64,  respectively.  The year ended  December  31,  1995,  statement of income
includes the results of Culverin's  operations  since the date of acquisition in
November 1995. See Note 2 of Notes to Consolidated Financial Statements.

      5 During the quarter  ended  September  30, 1999,  Concentrex  reorganized
itself into four operating  product  lines:  Application  Software,  Information
Management,  e-Commerce  and Ancillary  Products.  Accordingly,  Concentrex  has
reclassified  its revenue data for all periods  included  above to reflect these
new operating  product  lines.  Total revenue did not change as a result of this
reclassification.


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

           The  consolidated  financial  statements  and notes should be read in
conjunction  with the following  discussion.  This discussion  contains  certain
forward-looking  statements  that  involve  risks  and  uncertainties,  such  as
statements of Concentrex's plans, objectives,  expectations and intentions.  The
cautionary statements made in this discussion should be read as being applicable
to all related forward-looking statements wherever they appear in this document.
Concentrex's  actual results could differ  materially from those discussed here.
Factors  that  could  cause or  contribute  to such  differences  include  those
discussed  elsewhere in this document,  as well as in Concentrex's other filings
with the Securities and Exchange Commission.

                      NINE MONTHS ENDED SEPTEMBER 30, 1999,
              COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1998

      Concentrex  completed  three  acquisitions  during the nine  months  ended
September 30, 1999.  Concentrex acquired Modern Computer Systems,  Inc. (MCS) as
of  January  1,  1999,  MECA  Software,  L.L.C.  (MECA)  as of May 17,  1999 and
ULTRADATA Corporation  (ULTRADATA) as of August 13, 1999. All three acquisitions
were  accounted  for as  purchases  and have been  reflected  in the  results of
operations for the nine months ended  September 30, 1999 since their  respective
acquisition dates.

Revenue

           Total revenue increased $16.2 million, or 26.5%, to $77.4 million for
the nine  months  ended  September  30, 1999  compared  to $61.2  million in the
comparable period in 1998.

           Concentrex  has increased  the  percentage of its service and support
revenue.   Concentrex   believes  that  service  and  support  revenue  is  more
predictable and recurring than is software license revenue.  Service and support
revenue accounted for 44.5% and 38.1% of Concentrex's  total revenue in the nine
months ended September 30, 1999 and 1998, respectively.


                                                        17

<PAGE>

           During  the  third  quarter  ended  September  30,  1999,  Concentrex
reorganized itself into four product lines:  Application  Software,  Information
Management,  e-Commerce  and Ancillary  Products.  Accordingly,  Concentrex  has
reclassified  its  operating  revenue  data for all periods  included  herein to
reflect the new product lines.  Total revenue did not change as a result of this
reclassification.

                                              Revenue By Product Line
                                                  (in $millions)

                                              Nine Months Ended Sept. 30,
                                                   1999          1998
Application Software
      Software License Revenue                    $34.9          $33.8
      Service and Support Revenue                  23.2           20.5
                                                   ----           ----
                                                   58.1           54.3



Information Management
      Software License Revenue                      1.6             --
      Service and Support Revenue                   4.0             --
                                                   ----           ----
                                                    5.6             --

e-Commerce
      Software License Revenue                      1.4            1.1
      Service and Support Revenue                   7.2            2.9
                                                   ----           ----
                                                    8.6            4.0

Ancillary Products                                  5.1            2.9
                                                   ----           ----

Total Revenue                                     $77.4          $61.2
                                                   ====           ====

           Application  Software Product Line. The Application  Software product
line includes the lending,  branch automation and connectivity software products
and support services previously provided by CFI ProServices, Inc.

           Total revenue in the Application Software product line increased $3.8
million,  or 7.0%, to $58.1 million in the nine months ended  September 30, 1999
from $54.3  million in the nine months ended  September  30,  1998.  Application
Software  license revenue  increased $1.1 million,  or 3.3%, to $34.9 million in
the nine months ended  September  30, 1999 from $33.8 million in the nine months
ended September 30, 1998. The increase was primarily due to higher revenues from
Concentrex's  mortgage  origination  products,  offset  in part by lower  branch
automation  license  revenue.  Service  and support  revenue in the  Application
Software product line increased $2.7 million,  or 13.2%, to $23.2 million in the
nine months ended September 30, 1999 from $20.5 million in the nine months ended
September 30, 1998. The increase is primarily due to higher maintenance  revenue
from a larger base of installed  products.  Service and support revenue consists
primarily  of  recurring  software  support  charges and revenue  from  training
customers in the use of Concentrex's products. Substantially all of Concentrex's
software  customers  subscribe to its support  services,  which  provide for the
payment of annual or quarterly maintenance fees.

           Information  Management  Product  Line.  The  Information  Management
product  line  includes  the  core  ("host")  processing  products  acquired  by
Concentrex  from  ULTRADATA  in  August  1999  and  from  MCS in  January  1999.
Concentrex  had no  Information  Management  revenue  in the nine  months  ended
September  30,  1998.  Revenue  for the nine  months  ended  September  30, 1999
consists of revenue from ULTRADATA and MCS since their acquisition dates.

           Total  revenue in the  Information  Management  product line was $5.6
million in the nine months ended  September  30,  1999.  License fee revenue was
$1.6 million in the nine months ended  September  30, 1999.  Service and support
revenue was $4.0 million in the nine months ended September 30, 1999.

     e-Commerce  Product  Line.  The  e-Commerce  product line includes the home
banking and bill payment products  previously sold by CFI ProServices,  Inc. and
the professional  services and technical  support services acquired from MECA in
May 1999.

           Total revenue in the  e-Commerce  operating  segment  increased  $4.6
million,  or 119%,  to $8.6 million in the nine months ended  September 30, 1999
from $4.0  million in the nine months  ended  September  30,  1998.   e-Commerce
license  revenue  increased $0.3 million,  or 28.9%, to $1.4 million in the nine
months  ended  September  30, 1999 from $1.1  million in the nine  months  ended
September 30, 1998.  Service and support revenue in the e- Commerce product line
increased  $4.3  million,  or 154%,  to $7.2  million in the nine  months  ended
September  30, 1999 from $2.9  million in the nine months  ended  September  30,
1998. The increase was primarily due to the

                                                        18

<PAGE>



acquisition of MECA's  technical  support  operations in May 1999 whose revenues
are  included  since the  acquisition,  and to a 96.6%  increase in revenue from
Concentrex's on-line bill payment services.

           Ancillary  Products Product Line. The Ancillary Products product line
includes  preprinted  forms,  font cartridges and modems  previously sold by CFI
ProServices, Inc., license revenue from a personal financial management software
product  acquired from MECA in May 1999 and fulfillment  services  acquired from
MECA. Concentrex  anticipates that revenue from MECA's legacy personal financial
management  software  product  will decline in future  periods  because it is no
longer being actively marketed.  Total revenue in the Ancillary Products product
line increased  $2.2 million,  or 71.7% to $5.1 million in the nine months ended
September  30, 1999 from $2.9  million in the nine months  ended  September  30,
1998. The increases were primarily due to the  acquisition of MECA's  operations
in May 1999.

Cost of Revenue

           Cost of  revenue  primarily  consists  of  amortization  of  software
development costs,  royalty payments,  compliance  warranty insurance  premiums,
software   production   costs,   costs  of   product   support,   training   and
implementation,  costs of software customization,  materials costs for forms and
supplies and bill payment processing costs.

           Cost of revenue  increased $7.8 million,  or 36.3%,  to $29.6 million
for the nine months ended  September 30, 1999,  respectively,  compared to $21.7
million in the same period in 1998.  The increase is primarily  attributable  to
the   acquisitions  of  ULTRADATA  and  MECA  in  1999.  The  increase  is  also
attributable  to  higher  amortization  of  software  development  costs  and to
additional  personnel  required  to  support  the  increased  installed  base of
customers,  higher  implementation costs associated with the increased number of
large  financial  institution  projects,  and increased  royalties and materials
costs associated with increased revenues. As the breadth of Concentrex's product
offerings  has  expanded,  the  complexity  and cost of  providing  high quality
customer service and support has increased.

           Amortization of software development costs increased $0.9 million, to
$2.7  million,  for the first  nine  months of 1999  from $1.9  million  for the
comparable period in 1998. Concentrex  capitalized no software development costs
in the nine months ended  September 30, 1999 as compared to $1.1 million for the
comparable  period  in  1998.  Capitalized  software  development  costs  net of
accumulated amortization were $6.0 million at September 30, 1999.

           As a  result  of  Concentrex's  acquisitions,  costs  resulting  from
royalty  payments  are  expected to increase in future  periods.  Concentrex  is
obligated to pay royalties  ranging from 3% to 18% of revenue related to certain
products  acquired  in  various  acquisitions  since  June  1994.  In  addition,
Concentrex is obligated to pay  MicroBilt  Corporation a fixed amount per OnLine
Branch  Automation  customer  converted to  Concentrex's  products.  The royalty
obligations generally extend three to five years from the acquisition date.

           Gross margin was 61.8% for the nine months ended  September  30, 1999
compared  to 64.6% in the same  period in 1998.  Operating  margin  declined  to
(8.9%) for the nine months ended  September  30, 1999 compared to 11.0% in 1998.
The decreases in operating  margin are primarily due to the in-process  research
and development and other acquisition-related charges incurred during the second
and  third  quarters  of  1999  in  connection   with  the  MECA  and  ULTRADATA
acquisition.  Concentrex  also recorded a $0.9 million charge in the nine months
ended  September  30, 1999 with respect to an  arbitration  award  relating to a
customer dispute.  Operating margins,  excluding these charges,  would have been
4.9% in the nine months ended September 30, 1999.

Operating Expenses

     Sales  and  Marketing.  Sales and  marketing  expenses  decreased  to $13.5
million,  or 17.4% of revenue,  for the nine  months  ended  September  30, 1999
compared to $14.1 million, or 23.0% of revenue, for the nine

                                                        19

<PAGE>



months ended  September 30, 1998. The percentage  decreases  resulted  primarily
from the ULTRADATA  acquisition  in August 1999 and the MECA  acquisition in May
1999, which contributed revenue without commensurate sales and marketing costs.

           Product  Development.  Product development  expenses include costs of
maintaining and enhancing existing products and developing new products. Product
development  expenses  were $17.0  million,  or 22.0% of  revenue,  for the nine
months ended September 30, 1999 compared to $10.5 million,  or 17.1% of revenue,
for the nine months ended September 30, 1998. The increases in dollar amount and
percentage of revenue were  principally the result of increased  staffing in the
development areas of Concentrex due to the MECA and ULTRADATA acquisitions.

           Concentrex  believes  that  the  current  development  cycle  for its
compliance-related  products in the  Application  Software  product line,  which
typically  have  relatively  long lives,  was completed in the second quarter of
1998  and,  accordingly,   there  should  be  a  significant  reduction  in  the
capitalization of software development costs in future periods.  Concentrex will
continue  to  commit  significant  resources  to  product  development  efforts.
Concentrex anticipates that with the completion of the current development cycle
of  its   compliance-related   products,   and  the   consequent   reduction  in
capitalization of costs,  product development costs will have a material adverse
effect in future periods on operating margin and net income.

           General and  Administrative.  General and  administrative  costs were
$12.1 million,  or 15.6% of revenue,  for the first nine months of 1999 compared
to $7.4 million,  or 12.1% of revenue for the same period in 1998. The increases
in  dollar  amount  and in  percentages  are  principally  due to the  MECA  and
ULTRADATA acquisitions.

           Amortization  of Goodwill.  Amortization of goodwill was $1.5 million
for the nine months ended  September  30, 1999  compared to $0.9 million for the
comparable  period in 1998.  The  increase is due  principally  to the  goodwill
resulting from the ULTRADATA acquisition.

           Acquired    In-Process    Research   and    Development   and   Other
Acquisition-Related  Costs. In connection with the acquisition of MECA in May of
1999 and of  ULTRADATA  in August  1999,  Concentrex  recorded  expense  of $3.8
million in the second  quarter of 1999 and of $5.2 million in the third  quarter
of 1999 for in- process research and development efforts in process at the dates
of acquisition.  The values assigned to the in- process research and development
efforts were determined by independent  appraisal and represent those efforts in
process at the dates of  acquisition  that had not yet  reached  the point where
technological  feasibility  had been  established  and  that had no  alternative
future  uses.  Accounting  rules  require  these costs be expensed as  incurred.
Concentrex  believes  these  research  and  development  efforts  will result in
commercially  viable products within the next nine months, at an additional cost
of approximately $1.2 million.

           Concentrex  also  expensed  $0.6  million of other  costs,  primarily
accrued bonus costs, in connection with the ULTRADATA acquisition.

Non-Operating Expenses

           Net  interest  expense was $1.7  million  for the nine  months  ended
September 30, 1999 compared to $0.1 million in the comparable  1998 period.  The
increases  in net  interest  expense are  attributable  to the debt  incurred by
Concentrex in connection  with the financing of the ULTRADATA and refinancing of
the MECA transactions.

Provision For Income Taxes

           The effective  tax rate for the nine months ended  September 30, 1999
was 9.8% compared to 44% for the same period in 1998. The tax provision for 1999
results from the effects of non-deductible  in-process  research and development
charges  incurred  in the  second  and  third  quarters  of  1999,  and from the
significant  increase in the  non-deductible  amortization  of goodwill from the
ULTRADATA acquisition.

                                                        20

<PAGE>



1998 Compared to 1997 and 1996

           Revenue.  Total revenue  increased $13.0 million,  or 17.9%, to $85.6
million  in 1998 from $72.6  million  in 1997.  Total  revenue  increased  $12.7
million, or 21.2%, in 1997 from $59.9 million in 1996.

           Software  license  revenue  accounted  for 57.5%,  55.8% and 56.6% of
total revenue, respectively, in 1998, 1997 and 1996. Service and support revenue
accounted for 35.4%,  37.8% and 37.3% of total revenue,  respectively,  in 1998,
1997 and 1996.

                                              Revenue By Product Line
                                                  (in $millions)

                                       1998       1997      1996
                                       ----       ----      ----
Application Software
      License Revenue                  $47.6      $38.3     $31.1
      Service & Support Revenue         28.1       26.2      21.8
                                        ----       ----      ----
                                        75.7       64.5      52.9

Information Management
      License Revenue                     --         --        --
      Service & Support Revenue           --         --        --
                                        ----       ----      ----
                                          --         --        --

e-Commerce
      License Revenue                    1.6        2.2       2.8
      Service & Support Revenue          4.2        2.8       1.3
                                       -----      -----     -----
                                         5.8        5.0       4.1

Ancillary Products                       4.1        3.1       2.9
                                       -----      -----     -----

Total Revenue                          $85.6      $72.6     $59.9
                                        ====       ====      ====

           Application  Software  Product Line. Total revenue in the Application
Software  product line increased  $11.2 million,  or 17.3%,  to $75.7 million in
1998 from $64.5 million in 1997.

           Application  Software  license  revenue  increased  $9.3 million,  or
24.3%, to $47.6 million in 1998 from $38.3 million in 1997. The increase was led
by Laser Pro lending suite products,  mortgage products,  connectivity  products
and Deposit Pro, and was offset in part by declines in Encore! Branch automation
revenue.  The increase in lending products  license revenue  resulted  primarily
from sales of Laser Pro  Closing  (particularly  of  Concentrex's  Windows-based
product),  Laser Pro Mortgage and  customization.  Sales of fisCAL  Analyzer and
fisCAL  Online  declined  substantially  in 1998.  Concentrex  was not  actively
marketing the fisCAL products in 1998.  Concentrex in the fourth quarter of 1998
accrued  related  severance  costs  calculated in accordance  with  pre-existing
employment agreements. See Note 1 of Notes to Consolidated Financial Statements.
Concentrex  subsequently redesigned the fisCAL products and re-released them for
sale in the second quarter of 1999.

           Branch  automation  revenue  declined in 1998 compared to 1997 and in
1997  compared to 1996.  Increased  revenues in 1998 from Deposit  Pro,  Encore!
Desktop and  Flextran  were offset by decreased  revenue  from  Encore!  Teller,
Encore!  Platform  and OnLine  branch  automation  products.  Branch  automation
revenue for 1997 also included results from  Concentrex's  RPxpress!  remittance
processing division, which was sold in September 1997.


                                                        21

<PAGE>



           Application  Software  license  revenue  increased  $7.1 million,  or
23.0%,  in 1997 from $31.1  million  in 1996.  The  increase  was led by lending
products and Encore!  branch  automation  products,  and was offset in part by a
decline in call center product revenue. The increase in lending products license
revenue  resulted  primarily  from sales of Laser Pro Closing  (particularly  of
Concentrex's Windows-based product to large banks), Laser Pro Mortgage and Laser
Pro Application Manager. The decrease in branch automation revenue resulted from
declines in revenues  from  OnLine  branch  automation  products,  Deposit  Pro,
Encore!  Call  Center and Pro Active  CRA,  and was offset in part by  increased
revenue from Encore! Teller and Encore! Platform.

           The declines in OnLine  branch  automation  revenues in 1998 and 1997
reflect a decreased  emphasis on the older DOS-based product and a transition to
Concentrex's  Windows-based Encore! branch automation products.  The decrease in
Deposit Pro  revenues in 1997  reflects  the  one-time  spike in demand when the
Windows  version of the product was  released in mid-1996.  Encore!  Call Center
revenues  were  adversely  affected in 1997 when the  product was  substantially
rewritten and from the lack of an installed reference site.

           No significant  price changes for software  products  occurred during
the periods presented.

           Service and support  revenue in the  Application  Software  operating
segment  increased  $1.8  million,  or 7.0%, to $28.1 million in 1998 from $26.2
million in 1997.  Service and support revenue increased $4.4 million,  or 20.3%,
in 1997 from $21.8 million in 1996.  These  increases  resulted  primarily  from
increases  in the  installed  base of  Concentrex's  products,  by  Concentrex's
acquisition of new products and by an increase,  effective in the fourth quarter
of 1998, in service and support pricing for certain lending products.

           Information  Management Product Line. Concentrex had no revenues from
the Information  Management product line in 1998, 1997 or 1996. All such revenue
resulted from the acquisitions of MCS and ULTRADATA in 1999.

           e-Commerce  Product Line.  Total revenue from the e-Commerce  product
line increased $0.8 million, or 16.6%, to $5.8 million in 1998 from $4.9 million
in 1997. The increase was led by service and support revenues, and was offset in
part by lower license revenue.

           License  revenue  from the  e-Commerce  product line  decreased  $0.6
million,  or 26.5%,  to $1.6 million in 1998 from $2.2 million in 1997.  License
revenue  decreased  $0.6 million,  or 21.7%,  in 1997 from $2.8 million in 1996.
Encore!  Personal Branch revenues were adversely  affected in 1997 as Concentrex
transitioned the home banking product from a UNIX to a Windows NT environment.

           Service and support revenue in the e-Commerce  product line increased
$1.4  million,  or 50.5%,  to $4.2  million  in 1998 from $2.8  million in 1997.
Service and support revenue  increased $1.5 million,  or 113%, in 1997 from $1.3
million in 1996. The increases  primarily resulted from an increase in end users
of Concentrex's Encore! Personal Branch home banking software and from increased
on-line bill payment services revenue.

           Ancillary  Products Product Line. Revenue from the Ancillary Products
product line increased $1.0 million, or 31.8%, to $4.1 million in 1998 from $3.1
million  in 1997.  Revenue  increased  $0.2  million,  or 8.5% in 1997 from $2.9
million  in 1996.  The  increases  were  primarily  due to higher  sales of font
cartridges and modems, offset in part by declines.

Cost of Revenue

           Cost of revenue  primarily  consists of  amortization  of  internally
developed  and  purchased  software,   royalty  payments,   compliance  warranty
insurance  premiums,  software  production  costs,  costs  of  product  support,
training and implementation,  costs of software  customization,  materials costs
for forms and supplies, and bill payment processing costs.


                                                        22

<PAGE>



Cost of  revenue  increased  $2.4  million,  or 8.9%,  to $29.4  million in 1998
compared to 1997.  Cost of revenue  increased $6.2 million,  or 29.8%,  to $27.0
million for 1997 compared to $20.8 million in 1996. Of the 1997  increase,  $2.6
million resulted from additional amortization of software development costs. The
remainder  of the  increase  in 1997  and the  increase  in 1998  are  primarily
attributable to higher  implementation  costs associated with the growing number
of large  financial  institution  projects,  additional  personnel  required  to
support the increased  installed  base of customers and increased  royalties and
materials  costs  associated  with  increased   revenues.   As  the  breadth  of
Concentrex's  product lines have expanded,  the complexity and cost of providing
high quality customer service and support has increased both in absolute dollars
and as a percentage of revenue.

           Software  amortization was $2.6 million in 1998, $4.5 million in 1997
and  $1.9  million  in 1996.  During  1998,  1997,  and  1996  several  software
development  projects reached commercial  feasibility.  As a result,  Concentrex
began to amortize certain product development costs that had been capitalized in
prior periods.  In addition,  Concentrex  recorded  amortization  as a result of
software acquired in connection with the Mortgage Dynamics,  Inc. acquisition in
October 1998 and the 1996  acquisitions.  The increase in amortization  costs in
1997 also resulted from  accelerated  amortization  for certain  products  being
replaced  by  new  products  or  which  management   concluded  were  no  longer
technologically viable.

           As a result of  acquisitions,  costs associated with royalty payments
will  increase in future  periods.  Concentrex  is  obligated  to pay  royalties
ranging  from 3 percent to 18 percent  of  revenue  related to certain  products
acquired in various  acquisitions  since June 1994.  In addition,  Concentrex is
obligated  to pay  MicroBilt  Corporation  a fixed  amount per  OnLine  customer
converted to Concentrex's  products.  The royalty  obligations  generally extend
three to five years from the acquisition date.

           Concentrex's  gross margin was 65.6%,  62.8% and 65.2% in 1998,  1997
and 1996, respectively.  The increase in 1998 is primarily attributable to lower
software   amortization   than  in  1997   and  from   improved   implementation
efficiencies.  The  decline  in  gross  margin  from  1996 to 1997 is  primarily
attributable  to three  factors:  increased  software  amortization,  a shift in
product  mix to more  projects  and  increased  royalty  expenses  for  products
acquired through acquisitions.  Concentrex expects all three factors to continue
in future  periods,  which may continue to adversely  affect  gross  margin.  In
particular,  software  amortization  is expected to increase in 1999 compared to
1998.

Operating Expenses

           Sales and Marketing.  Sales and marketing expenses increased to $19.2
million,  or 22.4% of revenue,  in 1998  compared to 1997.  Sales and  marketing
expenses  increased to $15.7 million,  or 21.6% of revenue,  in 1997 compared to
$12.7  million,  or 21.2 percent of revenue,  in 1996.  The  increases in dollar
amount in 1998 and 1997  resulted from  increased  commissions  associated  with
increased   revenues,   salary  increases,   additional   personnel  and  higher
advertising costs.

           Product  Development.  Product development  expenses include costs of
enhancing  existing  products and developing new products.  Product  development
expenses were $14.9 million,  or 17.4% of revenue,  in 1998,  $11.5 million,  or
15.9% of  revenue,  in 1997 and $10.6  million,  or 17.7% of  revenue,  in 1996.
Increases  in dollar  amount of product  development  expenses  were largely the
result of increased staffing in the development areas of Concentrex,  additional
costs  for  integrating  acquired  products  and  accelerating   development  of
Concentrex's home banking products.

           Product  development  expenses in each of 1998,  1997,  and 1996 were
offset in part by capitalization  of software  development  efforts.  Concentrex
capitalized $1.0 million of software  development costs in 1998, $5.0 million in
1997 and $5.2 million in 1996.  Capitalized  software  development costs, net of
accumulated amortization, were $8.3 million as of December 31, 1998, compared to
$9.9  million as of December  31,  1997.  Concentrex  believes  that the current
development  cycle for its  compliance-related  products,  which  typically have
relatively  long  lives,  was  completed  in the  second  quarter  of 1998  and,
accordingly, there should be a significant

                                                        23

<PAGE>



reduction in the capitalization of software development costs in future periods.
No software  development  costs were capitalized in the third or fourth quarters
of 1998. Concentrex  anticipates that its capitalized software development costs
existing as of December 31,  1998,  will be fully  amortized  over the next four
years.

           Concentrex will continue to commit  significant  resources to product
development  efforts.  Concentrex  anticipates  that with the  completion of the
current development cycle of its compliance-related products, and the consequent
reduction  in  capitalization  of costs,  product  development  cost will have a
material adverse effect in future periods on operating margin and net income.

           General and Administrative.  General and administrative expenses were
$10.0 million, or 11.7% of revenue in 1998, $8.3 million, or 11.4% of revenue in
1997,  and $5.4 million,  or 9.0% of revenue,  in 1996.  The increases in dollar
amounts  in 1998  and  1997  are  due  principally  to  additional  systems  and
infrastructure  costs necessary to accommodate  revenue growth.  The increase in
dollar amount in 1997 was also due to increased bad debt expense.  Consolidation
of the general and  administrative  functions of the companies acquired in April
1996 was the principal  reason for the relatively low level of these expenses as
a percentage of revenue in 1996.

Amortization of Intangibles

           Intangibles  include  acquisition   payments  assigned  to  goodwill,
noncompetition  agreements  and customer  lists.  These costs are amortized over
periods  ranging from five to seven years.  Amortization of intangibles was $1.2
million, $1.3 million and $1.0 million in 1998, 1997, and 1996, respectively.

Acquired In-Process Research and Development and Other Charges

           In  connection  with  its  acquisition  of  the  assets  of  Mortgage
Dynamics,  Inc. in October  1998,  Concentrex  recorded a pretax  charge of $1.0
million  for  research  and  development  efforts  in process at the date of the
acquisition.  In the fourth quarter of 1998,  Concentrex also recorded aggregate
other pretax  charges of $2.0  million  consisting  of the present  value of the
remaining liability for certain leased office space Concentrex ceased using, the
remaining  goodwill  associated  with the fisCAL  credit  analysis  products and
related  severance costs, and Concentrex's  initial  investment in Lori Mae. See
Notes 1, 2, and 7 of Notes to Consolidated Financial Statements.

           In connection  with its  acquisitions of six companies in April 1996,
Concentrex recorded pretax charges of $8.0 million in the second quarter of 1996
for research and development efforts in process at the date of acquisition.

           The  values  assigned  to the  in-process  research  and  development
efforts were determined by independent appraisals and represent those efforts in
process  at the  dates of  acquisition  that had not  reached  the  point  where
technological  feasibility  had been  established  and  that had no  alternative
future uses.  Accounting rules require that these costs be expensed as incurred.
At December 31, 1998,  Concentrex believes that acquired in-process research and
development  efforts  related to the  acquisitions  will result in  commercially
viable products during 1999 at an additional cost of approximately $350,000.

Income from Operations

           Income from operations in 1998 was $8.2 million,  or 9.6% of revenue,
compared to $8.8 million, or 12.2% of revenue, in 1997 and $1.3 million, or 2.1%
of revenue,  in 1996.  Excluding  the impact of the $2.6  million  charge in the
fourth  quarter of 1998 and of the $8.0 million  charge in the second quarter of
1996,  operating income would have been $10.8 million,  or 12.7% of revenue,  in
1998 and $9.3 million, or 15.5% of revenue, in 1996.



                                                        24

<PAGE>



Non-Operating Income (Expense)

           Non-operating income (expense),  which consists primarily of interest
income and expense,  was a net expense of $0.7 million in 1998 compared to a net
expense of $0.3 million in 1997 and net non-operating income of $18,000 in 1996.
Non-operating  expense  in 1998  included  a $0.4  million  charge  representing
Concentrex's initial investment in Lori Mae. See Note 1 of Notes to Consolidated
Financial  Statements.  Interest paid on outstanding balances under Concentrex's
bank line of credit was the principal cause of the net expense in 1997.

           In September  1997,  Concentrex  completed  the sale of its RPxpress!
remittance  processing division.  On an annual basis, the remittance  processing
revenues and expenses were both approximately $1.0 million.  Concentrex received
10 percent of the sales  price in cash with the  remainder  to be paid in yearly
installments with interest at 8.5% per annum over four years. In connection with
the sale, Concentrex recorded a non-operating gain of $0.6 million.

           In  February  1997  Concentrex's  Board of  Directors  elected not to
proceed with a planned  follow-on stock offering of  Concentrex's  common stock.
Concentrex took a $0.5 million non-operating charge in the first quarter of 1997
as a result of the cancellation. Concentrex's Board of Directors determined that
the stock  price at which  Concentrex  would be required to offer the shares was
too low and would unfairly dilute the investment of existing shareholders.

Provision for Income Taxes

           The effective  tax rate for 1998 was 44.3%  compared to 45.5% in 1997
and 43.0% in 1996,  excluding  the effect of $3.0  million in pretax  charges in
1998  and  $8.0  million  in  pretax  charges  resulting  from  the  April  1996
acquisitions.  The difference  between federal and state statutory tax rates and
Concentrex's  effective tax rates in 1998, 1997, and 1996 results primarily from
increased amortization of nondeductible intangibles related to acquisitions.

Market Risk

Concentrex   has  not  entered  into  any   significant   derivative   financial
instruments.  Concentrex  may be exposed to future  interest rate changes on its
debt. During 1999,  Concentrex has incurred significant  indebtedness related to
acquisitions.  A  hypothetical  10% increase in interest  rates on  Concentrex's
current level of debt would increase cash interest expense by approximately $0.6
million  per  year.  Concentrex  has  purchased  an  interest  rate  cap  for  a
substantial  portion of its  long-term  debt.  The interest rate cap will become
effective if the prime rate of interest exceeds 10% per year.

Liquidity and Capital Resources

           Working  capital  increased $9.8 million to $17.0 million at December
31,  1998  from $7.2  million  at  December  31,  1997.  The  increase  resulted
principally from enhanced efforts by Concentrex to improve cash collections, and
from a net  reduction  in  short-term  debt of $5.3  million  and an increase in
long-term  debt  of  $4.0  million  in  connection  with  a   renegotiation   of
Concentrex's bank line of credit facility.

           Net cash provided by operations was $11.0 million in 1998 compared to
$5.4 million in 1997. The increase was  principally due to a charge for acquired
research and development efforts and other charges taken in 1998,  decreased net
accounts receivable and prepaid expenses, and increased customer deposits. These
changes were offset in part by decreases in deferred revenues,  depreciation and
amortization, deferred income taxes, and income taxes payable.

           Net cash  used in  investing  activities  in 1998  was  $6.1  million
compared  to  $7.9  million  in  1997,   used  primarily  to  the  reduction  in
capitalization of software  development costs in 1998 and offset in part by cash
paid

                                                        25

<PAGE>



for the MDI acquisition. Expenditures for property and equipment of $1.7 million
in 1998 were primarily  attributable to investments in infrastructure  necessary
to accommodate Concentrex's growth.

           Net  cash  used  in  financing  activities  of $1.3  million  in 1998
resulted  principally  from a total of $2.0 million of repayment on Concentrex's
bank line of credit  facility and on  acquisition-related  debt.  These payments
were offset in part by $0.8 million in proceeds  from  issuance of common stock,
primarily upon exercise of stock options.

           Net cash provided by operations  was $5.0 million for the nine months
ended  September  30, 1999 compared to $6.2 million for the same period in 1998.
Working  capital  decreased  to $1.0  million at  September  30, 1999 from $17.0
million at December  31,  1998.  The decrease  occurred  because of  liabilities
assumed in the MECA and ULTRADATA  acquisitions  and because of additional  debt
incurred to finance those acquisitions.

           Net cash used in investing  activities was $66.6 million for the nine
months ended September 30, 1999 compared to $2.5 million used in the same period
in 1998.  The increase was  primarily due to the  acquisition  of MCS in January
1999 and of ULTRADATA in August 1999.

           Net cash provided by financing  activities  was $58.9 million for the
nine months ended  September 30, 1999 compared to net use of $1.2 million in the
same period in 1998. Net cash provided by financing  activities in 1999 resulted
from the sale of 90,000  shares of common stock in May 1999,  the  incurrence of
debt to finance the ULTRADATA  acquisition  in August 1999, and the refinance of
debt in connection with the MECA acquisition in May 1999.

           Days sales outstanding (DSO's) in accounts receivable, including both
billed and unbilled accounts  receivable,  was 105 days at each of September 30,
1999 and 1998.  Concentrex's  project-oriented  business often requires unbilled
accounts  receivable  and  milestone  billings,  both of which often have longer
collection cycles.  Unbilled accounts  receivable were $8.7 million, or 25.0% of
total accounts  receivable,  at September 30, 1999 compared to $6.9 million,  or
25.0% of total accounts receivable, at September 30, 1998.

           In  connection  with  the MECA and  ULTRADATA  acquisitions  in 1999,
Concentrex  substantially increased its outstanding debt. See Note 7 of Notes to
Consolidated Financial Statements for CFI ProServices,  Inc. for the nine months
ended  September 30, 1999 and 1998. At September  30, 1999,  Concentrex  had the
following debt under its Financing Agreement:

                                      Gross          Stated Interest Rate At
                                     Amount          September 30, 1999

Revolving Line of Credit             $ 5.4 million          9.25%
3-year Term A Loan                   $35.0 million         10.25%
3-year Term B Loan                   $30.0 million         13.25%
                                      ------------
      Total                          $70.4 million
                                      ============

     In  connection  with the  ULTRADATA  acquisition,  the Company  also issued
convertible  subordinated  notes. See Note 7 of Notes to Consolidated  Financial
Statements for the nine months ended September 30, 1999 and 1998.

     Concentrex is subject to restrictive  covenants under its loan  agreements.
See "Risk Factors - We Are Highly Leveraged."

           Future cash requirements could include, among other things, purchases
of  companies,  products or  technologies,  expenditures  for internal  software
development,  capital  expenditures  necessary to the expansion of the business,
and  installment  payments  on debt  related  to  acquisitions.  Available  cash
resources  include cash generated by  Concentrex's  operations  plus a revolving
line of credit up to $15.0  million,  subject  to  borrowing  base  restrictions
related to accounts receivable of Concentrex and its subsidiaries.


                                                        26

<PAGE>



           From  time to time  Concentrex  receives  contract  claims  from  its
customers and other parties,  including  requests for full or partial refunds of
moneys paid,  and  initiates  contract  claims  against its  customers and other
parties, including claims for payment of unpaid invoices.  Although there can be
no assurance that such claims, either alone or in the aggregate, will not have a
material  adverse  effect on  Concentrex's  results of  operations  or financial
position,  Concentrex believes that as of the date of this filing no such claims
will have such an effect.

           Concentrex believes that funds expected to be generated from existing
operations  and  borrowings  under its  revolving  line of credit  will  provide
Concentrex with sufficient funds to finance its current  operations for at least
the next 12 months.  Concentrex  may  require  additional  funds to support  its
working capital requirements,  future acquisitions or for other purposes and may
seek to raise  such  additional  funds  through  one or more  public or  private
financings of debt or equity,  or from other sources.  No assurance can be given
that  additional  financing  will be available  or,  that,  if  available,  such
financing   will  be  obtainable  on  terms   favorable  to  Concentrex  or  its
shareholders.

Quarterly Results of Operations and Seasonality

           The  following   table   presents   unaudited   quarterly   financial
information  for each of the 11 quarters  beginning March 31, 1997 and ending on
September  30,  1999.  The  information  has  been  prepared  by us  on a  basis
consistent with our audited  financial  statements  appearing  elsewhere in this
prospectus.  The information includes all necessary adjustments (consisting only
of normal recurring  adjustments) that management considers necessary for a fair
presentation of the unaudited  quarterly  results when read in conjunction  with
the consolidated  financial statements and the notes thereto appearing elsewhere
in this prospectus.  These operating  results are not necessarily  indicative of
results that may be expected for any subsequent periods. See "Risk Factors -- We
Experience Significant Quarterly Fluctuations in Our Operating Results."

<TABLE>

<CAPTION>

                                                                       Quarter Ended
                           ---------------------------------------------------------------------------------------------------------
                           Sept. 30  June. 30  Mar. 31    Dec. 31   Sept. 30 Jun. 30  Mar. 31   Dec. 31   Sept. 30  Jun. 30 Mar. 31
                           1999(1)   1999(2)   1999       1998(3)   1998     1998     1998      1997      1997      1997    1997
                           ---------------------------------------------------------------------------------------------------------
                                                             (in thousands except per share data)
<S>                        <C>       <C>       <C>        <C>       <C>      <C>       <C>      <C>       <C>       <C>     <C>
Revenues                   $29,563   $27,829   $20,053    $24,390   $23,186  $19,002   $19,051  $20,875   $17,894   $17,880 $16,002

Gross Profit                18,000    17,570    12,306     16,656    15,413   11,835    12,303   12,459    10,908    11,870  10,373

Operating Expenses          17,752    15,514    10,857     12,517    12,423   10,022    10,396    9,406     9,765     9,156   8,453

Acquired In-Process
   Research and Develop-
   ment and Other Charges    6,721     3,800         -      2,661         -        -         -        -         -         -       -
                           ---------------------------------------------------------------------------------------------------------

Operating Income (Loss)     (6,473)   (1,744)    1,449      1,479     2,990    1,813     1,907    3,053     1,143     2,714   1,920

Net Interest Income
   (Expense)                (1,572)     (162)       (9)       (30)      (38)     (39)      (51)     (92)      (89)      (91)    (19)

Income (Loss) Before
   Income Tax               (7,880)   (1,882)    1,443      1,030     2,888    1,698     1,828    2,917     1,672     2,586   1,414

Provision (Benefit) for
   Income Taxes              1,134      (926)      621        661     1,271      747       804    1,412       735     1,138     622
                           ---------------------------------------------------------------------------------------------------------

Net Income (Loss)          $(9,014)  $  (956)  $   822    $   368   $ 1,617  $   951   $ 1,024  $ 1,505   $   937   $ 1,448 $   792
                           =========================================================================================================

Net Income (Loss)
   Applicable to Common
   Shareholders            $(9,037)  $  (979)  $   799    $   345   $ 1,593  $   927   $ 1,000  $ 1,481   $   913   $ 1,424 $   768
                           =========================================================================================================

Net Income (Loss) Per
   Share Diluted           $ (1.74)  $ (0.19)  $  0.16    $  0.07   $  0.31  $  0.18   $  0.19  $  0.29   $  0.18   $  0.28 $  0.15
                           =========================================================================================================

Net Income (Loss) Per
   Share Basic             $ (1.74)  $ (0.19)  $  0.16    $  0.07   $  0.32  $  0.19   $  0.20  $  0.30   $  0.19   $  0.29 $  0.16
                           =========================================================================================================


</TABLE>
                                                                 27

<PAGE>


      1Excluding  in-process  research and development and other charges of $6.7
million,  net loss  applicable to common  shareholders  and diluted net loss per
share would have been $2.9 million and $0.56, respectively.

     2Excluding  in-process  research and  development and other charges of $3.8
million, net income applicable to common shareholders and diluted net income per
share would have been $1.1 million and $0.21, respectively.

      3Excluding  in-process  research and development and other charges of $3.0
million, net income applicable to common shareholders and diluted net income per
share would have been $2.2 million and $0.43, respectively.

Year 2000

           The Year 2000 issue  identifies  problems  that may arise in computer
equipment and software,  as well as embedded electronic systems,  because of the
way these  systems are  programmed  to interpret  certain  dates that will occur
around the change in century.  In the computer  industry  this is primarily  the
result of computer programs being designed and developed using or reserving only
two digits in date fields  (rather  than four  digits) to identify  the century,
without  considering  the  ability of the program to  properly  distinguish  the
upcoming  century  change  in the Year  2000.  In  addition,  the Year 2000 is a
special-case  leap year,  and some  programs may drop  February  29th from their
internal  calendars.  Likewise,  other dates may present problems because of the
way the digits are interpreted.  Because  Concentrex's  business is based on the
licensing of applications  software,  Concentrex's business would be impacted if
its products or its internal  systems  experience  problems  associated with the
century  change.  This issue also  potentially  affects  the  internal  software
systems used by Concentrex in its operations.

           Concentrex has completed its survey of internal computer systems,  as
well as critical third party software and systems used by Concentrex,  regarding
Year  2000  compliance  status.  The  scope of the Year  2000  readiness  effort
included  addressing (1)  information  technology such as software and hardware,
(2)  non-information   systems  or  embedded  technology  contained  in  various
equipment, safety systems, facilities and utilities and (3) readiness of mission
critical third-party suppliers. Concentrex has communicated with its significant
suppliers and vendors to understand their ability to continue providing services
and products through the millennium  change and to determine the extent to which
Concentrex may be vulnerable in the event of a failure by them or their services
and  products.  With  respect to mission  critical  systems,  Concentrex  sought
statements of compliance  from each vendor either through direct  response or by
reference  to  information  posted  on  an  electronic  bulletin  board  or in a
government database.

           Internal  Systems.  Some of the computer programs and systems used by
Concentrex  require  date-sensitive  information  to accurately  and  adequately
process  information  critical to Concentrex's  business.  Inaccuracies or other
errors in this information could have a material, adverse effect on Concentrex's
business.  Furthermore,  non-compliance  in these  programs could cause a system
failure or interruption,  either of which could also materially adversely affect
Concentrex.  In addition to computer software, some machines and devices used by
Concentrex  and others may  contain  embedded  technology  that is not Year 2000
compliant, which could result in a malfunction or failure of such devices.

           The  review  and  assessment  of  Concentrex's  internal  systems  is
complete.  Concentrex's  internal accounting system,  including those components
used for  Concentrex's  invoicing  and bill payment,  has been  evaluated by the
vendor and has been  represented to be Year 2000 compliant.  Concentrex plans to
routinely  backup its financial data through the end of 1999 and has developed a
contingency plan with respect to the accounting system.  Concentrex  anticipates
that its customer  support and call tracking  system will be Year 2000 compliant
after  installation  of an update  scheduled  to occur in the fourth  quarter of
1999. The cost of the update is estimated to be immaterial.

           Concentrex has completed a survey of its software  vendors.  The bulk
of  Concentrex's  vendors  have  already  provided  compliant  versions of their
software. Concentrex continues to monitor all material third party

                                                        28

<PAGE>



software not indicated to be Year 2000  compliant and believes that few vendors,
if any, will not provide compliant versions by the end of 1999.

           Concentrex has received representations that its phone and voice mail
systems became Year 2000 compliant through upgrades completed during 1999. As to
its phone  service  providers,  Concentrex  has offices  located at 12 disparate
geographical locations all served by different local phone service providers and
Concentrex contracts with two long distance carriers.  Consequently,  Concentrex
can shift  telecommunications  through any of these  locations  should any other
location be down.  Further,  neither  Concentrex's base software nor updates are
provided  exclusively  via  downloading.  Virtually  all  of  Concentrex's  base
software and updates are provided to customers through magnetic media.

           Based on  information  gathered to date,  Concentrex is not presently
aware  of  any  Year  2000  issue  that  could  materially  affect  Concentrex's
operations,  either  self-originated or caused by third-party service vendors or
providers.  Management  believes  that  all  mission  critical  systems  will be
compliant  by the  Year  2000.  Nevertheless,  there  can be no  assurance  that
Concentrex will not experience  some operating  difficulties as a result of Year
2000 issues. If they occur, these difficulties could require Concentrex to incur
unanticipated   costs  to  remedy  the  problems  and,  either  individually  or
collectively, have a material adverse effect on Concentrex's business operations
and financial results.  Concentrex has not yet determined the cost of completing
its  investigation  or the cost of any  modification or remediation  that may be
required to correct Year 2000 issues. Costs incurred to date to assess Year 2000
issues have not been  significant  and have been funded  through  operating cash
flows.  Concentrex has developed  contingency plans for its significant  systems
that can be  implemented  on or after  January  1, 2000 in the event of a system
failure resulting from the century change.

           Company Developed Software. Concentrex develops software programs for
use by financial  institutions to automate  various  transactions and processes.
These programs often are highly  dependent upon historical or dynamic  financial
and other data that,  if the  programs are not able to  distinguish  between the
Year 2000 and other  century-end  years,  could be misreported or misinterpreted
and cause significant  resulting calculation errors. This data is often acquired
from  other  systems  that  may  or may  not be  Year  2000  compliant,  further
exacerbating  the problem.  Concentrex's  financial  institution  customers  are
subject to regulatory  scrutiny;  any such errors could subject them to civil or
regulatory action, or both, resulting in large fines, penalties or other costs.

           Additional  consequences  of the Year  2000  issue  for  Concentrex's
financial  institution  customers  may include  systems  failures  and  business
process  interruption,  including,  among other things, a temporary inability to
process  transactions,  satisfy  regulatory  obligations,  or engage in  similar
normal  business  activities.  In  addition,  the impact of Year 2000 issues may
severely impair the ability of Concentrex's  customers to purchase  Concentrex's
products or to make payments on software or services previously purchased.

           Concern over Year 2000 issues is permeating  the  financial  services
industry,  and  management  expects that the  resolution of these  concerns will
continue to absorb a substantial  portion of financial  institution  information
technology budgets and attention in the near term (with an associated  decreased
focus on other business  initiatives,  including purchase decisions with respect
to  Concentrex's  software).  Year  2000  issues  faced by its  customers  could
materially and adversely affect  Concentrex's  operations and financial  results
through the Year 2000.

           The Federal Financial Institutions  Examination Council (the "FFIEC")
has issued a series of  Statements  beginning  in June 1996  requiring  that the
various  financial  institutions  regulated  by FFIEC  member  agencies  provide
assurance that they will be capable of conducting  business as usual in 2000 and
into  the  21st  century.  To  this  end,  and  among  other  obligations,  each
institution is required to survey its systems and operations (including software
and vendor supplied services), determine any deficiencies,  remediate to correct
deficiencies, test mission critical third party software and services to confirm
their Year 2000  readiness  after  remediation,  and develop  contingency  plans
against the event that a mission  critical item,  service or process fails to be
Year 2000  compliant.  Further  information  on the FFIEC  mandate  and  related
matters can be found at the FFIEC's website,

                                                        29

<PAGE>



www.ffiec.gov/y2k.  In support of its customers'  obligations resulting from the
FFEIC's  Statements,  Concentrex  has  made the Year  2000  issue a  significant
priority and assigned a task force with  responsibility for an ongoing effort to
minimize Year 2000-related risks relative to Concentrex's products.

           Concentrex  has completed its review of all of its software  products
for Year 2000 compliance,  and has determined that most of Concentrex's standard
software  products are Year 2000 compliant.  Concentrex has not undertaken,  and
does not  intend to  undertake,  a review  of the many  customized  versions  of
software  products that it has provided  customers.  Concentrex  has developed a
plan to  discontinue  some of its standard  products prior to December 31, 1999,
and the  Year  2000  issue  has  been  one of the  factors  considered  in those
decisions. For those products that will not continue to be offered,  generally a
Year 2000 compliant replacement product currently exists.

           For standard  products that will continue to be offered,  but are not
currently Year 2000 compliant,  Concentrex has developed and executed a plan for
resolving  such  compliance-related  issues.  A matrix  describing  Concentrex's
product  compliance  (including a  comprehensive  definition  to determine  such
compliance) has been communicated to Concentrex's customers and is available for
review on  Concentrex's  website.  The  financial  impact of making the required
changes to the software  programs is not expected to be material to Concentrex's
consolidated financial position, results of operations or cash flows. Concentrex
acquired all of the equity interests in MECA in May 1999 and ULTRADATA in August
1999. The products of both organizations are Year 2000 compliant.

           Information on Concentrex's  website is provided to customers for the
sole purpose of assisting  them in planning for the  transition to the Year 2000
and includes Concentrex's definition of Year 2000 compliance, product compliance
status, and, in the case of the Laser Pro Closing/Lending product, includes test
guides.  This  information  is updated at least  quarterly so that  Concentrex's
customers can access current  information on the Year 2000 compliance  status of
Concentrex's  products.  The matrix does not provide  certification of Year 2000
compliance  and customers are cautioned that they should  independently  confirm
Year 2000 compliance of Concentrex's products.

           Concentrex has developed a standard Year 2000 compliance warranty and
is offering it to customers with respect to those products that will continue to
be offered into the next century.  This warranty is consistent with Concentrex's
standard product warranties, extends no indemnities, and maintains the liability
cap applying otherwise in its licenses.

           Financial  institutions,  financial institution  regulators,  and the
many vendors  supplying  the  financial  services  industry have not developed a
consistent and  comprehensive  definition of what constitutes  "compliance" with
the Year 2000.  This,  coupled  with the  different  combinations  of  software,
firmware, and hardware used by customers may lead to disputes against Concentrex
regarding the  operation of its  software.  The outcome of such disputes and the
impact on Concentrex are not estimable at this time.

Quarterly Results

           Concentrex has experienced,  and expects in the future to experience,
significant  quarterly   fluctuations  in  its  results  of  operations.   These
fluctuations may be caused by various factors, including, among others: the size
and timing of product orders and shipments;  the timing and market acceptance of
new  products  and  product  enhancements   introduced  by  Concentrex  and  its
competitors;  Concentrex's product mix, including expenses of implementation and
royalties related to certain products; the timing of Concentrex's  completion of
work under  contracts  accounted for under the percentage of completion  method;
customer  order  deferrals  in  anticipation  of new  products;  aspects  of the
customers'  purchasing  process,  including the evaluation,  decision-making and
acceptance of products  within the customers'  organizations;  the sales process
for Concentrex's products,  including the complexity of customer  implementation
of Concentrex's products;  the number of working days in a quarter;  federal and
state  regulatory  events,   including  regulatory  requirements  for  financial
institutions  with  respect to the Year  2000;  competitive  pricing  pressures;
technological changes in hardware platform, networking or communication

                                                        30

<PAGE>



technology;  changes in company personnel;  the timing of Concentrex's operating
expenditures;  specific economic  conditions in the financial  services industry
and general economic conditions.

           Concentrex's business has experienced, and is expected to continue to
experience,  some degree of  seasonality  due to its  customers'  budgeting  and
buying cycles.  Concentrex's  strongest revenue quarter in any year is typically
its fourth  quarter  and its weakest  revenue  quarter is  typically  its second
quarter.  Customers'  purchases  are  tied  closely  to  their  internal  budget
processes.  For some of  Concentrex's  customers,  budgets  are  approved at the
beginning of the year and budgeted  amounts often must be utilized by the end of
the year. In addition,  Concentrex's  incentive sales compensation plan provides
for increases in commission percentages as sales people approach or exceed their
annual  sales  quotas.  As a result of these  two  factors,  Concentrex  usually
experiences  increased  sales  orders in the last  quarter.  This pattern may be
altered  in 1999 as Year 2000  issues,  including  regulatory  requirements  and
internal business process decisions, affect customers' buying decisions.

                                                     BUSINESS

Overview

           Concentrex  Incorporated  is a leading  provider of  knowledge  based
software to the financial  services industry.  We offer technology  solutions in
three key product lines:  information  management,  software  applications,  and
e-commerce.  We also  provide a series of  ancillary  products,  which  form our
fourth product line. We combine our technology,  banking, and legal expertise to
deliver knowledge-based solutions that enable financial institutions to simplify
key business processes, improve productivity, strengthen customer relationships,
and  maintain  compliance  with both  internal  business  policies  and external
government  regulations.  Measured at the holding company level,  there are over
5,000 financial institutions using one or more of our products,  ranging in size
from the very largest commercial banks to independent  community banks, thrifts,
and credit unions.

           Information management is the core or "host" processing function that
serves  as  the  software  backbone  of a  financial  institution.  It  includes
functions such as loan  accounting,  account  processing,  general  ledger,  and
similar enterprise-wide systems. The key data of a financial institution resides
within the information  management  system.  Concentrex entered this business in
1999 through two acquisitions.  We acquired Modern Computer Systems, Inc. (MCS),
in  January  1999,  which  provided  an  in-house  PC-based  solution  for small
commercial  banks and small  credit  unions.  In August  1999 we  completed  the
acquisition of ULTRADATA Corporation (ULTRADATA), a public company that produced
real-time information  management software for larger credit unions. In addition
to our software,  our information  management  operating unit also redistributes
software  and  hardware  from  other  providers  in order to  provide a complete
information management solution.

     Software  applications,  the second key  product  line,  formed the core of
Concentrex when it was known as CFI  ProServices.  These  applications  focus on
loan origination and branch  automation.  We offer  Windows(TM)- based solutions
for teller  functions,  new account opening,  cross selling,  call centers,  and
origination of consumer,  commercial,  and real estate loans. The three products
within this operating unit consist of lending, sales, and service, and mortgage.

     We were an early player in the area of home  banking,  a key element of our
third  product  line e-  commerce,  entering the market in 1992 and enabling the
first Internet  transaction between a financial  institution and its customer in
1994.  We also  own a bill  payment  service,  which  serves  its  home  banking
customers.  In May 1999 we acquired MECA Software L.L.C. (MECA), which had begun
the personal  financial  management  software  business  with its Managing  Your
Money(TM)  product and which recently has focused on research and development of
Internet solutions for larger financial institutions.  We have combined the MECA
operation with our existing home banking software  applications and bill payment
service to form our e-commerce  product line.  Through this product line,  along
with our other areas,  we offer home banking  software and the ability to host a
bank's  website,  and are in the  process of  web-enabling  versions of our loan
origination, new account opening and various other software products. Relying on
technology  developed  by MECA,  we also  intend to offer a  financial  Internet
portal

                                                        31

<PAGE>



link that will enable financial  institutions to offer their customers a variety
of other financial products, such as insurance and brokerage services.

     Our  ancillary  products  consist  of fonts,  preprinted  forms,  and other
products  related to our principal  product lines but not themselves a principal
operating  focus.  This area also includes some older software  products that we
have acquired through  acquisitions,  such as the  Windows(TM)-based  version of
MECA's Managing Your Money(TM) software.

           We generate recurring revenue from software  maintenance  agreements.
In 1998,  prior to the acquisitions  described  above,  service and support fees
accounted  for  approximately  35% of total  revenue.  Substantially  all of our
customers  subscribe  to service and support  programs,  which  provide  ongoing
product  enhancements  and  updates  to  facilitate   compliance  with  changing
regulations. We anticipate that the software acquired with our 1999 purchases of
MCS, MECA and ULTRADATA will increase our recurring revenue.

     Prior to 1995,  the vast majority of our revenues were  generated  from the
license  of  standard  versions  of our loan  origination  and  account  opening
software applications. These products were usually not customized except through
a separate  contract  with the  customer.  Since that time,  we have  derived an
increasing  percentage  of revenue  from  projects  that are of  greater  scope,
including  implementation of projects for new information  management  customers
and from sales to large  financial  institutions.  We believe  that the  project
business will continue to contribute a significant  percentage of total revenue.
These  projects  usually  involve a greater sales effort over a longer period of
time,  and  require  customization  or  implementation  services,  resulting  in
prolonged  acceptance  testing.  This project  oriented  business tends to cause
growth in unbilled accounts  receivable  resulting from the use of percentage of
completion  accounting and deferred payment terms, and also results in increased
collection  times for our billed accounts  receivable.  These factors,  in turn,
result in higher  days  sales  outstanding  (DSOs)  in the  Concentrex  accounts
receivables.

The Financial Services Industry

           The  financial  services  industry  is  undergoing  a period of rapid
change characterized by consolidation,  changing regulations,  focus on Internet
delivery of financial services in addition to traditional branch delivery, and a
desire to offer new types of  financial  services.  In response to this  rapidly
changing  market,  commercial  banks  are  consolidating  in  order  to  achieve
operational  efficiencies  and  increased  revenues.  In addition,  all types of
financial institutions are embracing technological solutions that enable them to
automate  operations,  redirect  routine  transactions  to  more  cost-effective
channels  such as electronic  banking and call centers,  and develop new service
and sales delivery channels with new products.  Further, as the consolidation of
large institutions  continues,  the community bank and credit union sectors have
shown renewed vitality, including an increasing number of new start-up community
banks and thrifts.

           Consolidation.  Consolidation  continues  at a rapid pace  within the
financial  services  industry,  particularly  among large banks. We believe that
this trend is leading to an increasingly  two-tiered  market  consisting of very
large,  multi-bank holding companies and smaller community banks,  thrifts,  and
credit unions.
Both sizes of organizations face unique challenges.

           Large  banks  that have  grown  through  acquisition  must  integrate
disparate host processing  systems,  which often lack the flexibility  needed to
easily use and deliver  information  across  different  systems.  Bank  customer
service   representatives   often  are  limited  in  their   ability  to  access
comprehensive  customer information on one screen, which limits their ability to
cross-sell  products and services.  Banks must also be able to support  customer
transactions in a number of channels,  such as electronic  banking and telephone
call  centers.  Accordingly,  large  banks  increasingly  find it  necessary  to
centralize  data from several  disparate  host  processing  systems.  Interstate
banking presents these  institutions  with additional and costly  administrative
and  legal  complexities  relating  to  compliance  with  complex  and  changing
regulatory requirements across states. We believe

                                                        32

<PAGE>



large  institutions  will  increasingly  look to outside  providers for critical
functions that can be implemented within the overall technology  strategy of the
institution,  such as the  loan  origination  and  branch  automation  solutions
offered by us.

           Smaller community  institutions,  including both commercial banks and
credit unions, face similar operational  difficulties.  Lacking the economies of
scale of larger banks,  smaller  institutions find it increasingly  necessary to
exploit  technological  solutions  that enable them to reduce  operating  costs,
generate  additional  revenues  from  existing  customers  and focus on specific
market niches. In addition,  compliance with regulatory requirements can be more
burdensome to these smaller  institutions given their resource  limitations.  We
believe that these  institutions  will continue to look toward outside providers
like us to obtain the technology they need.

           Changing  Regulations.  Financial  institutions  in the United States
remain highly  regulated  with respect to compliance  and other  matters.  These
regulations  exist at the federal,  state,  and local level,  and an institution
must  comply with each  level.  Requirements  include  complex  disclosures  for
consumer  loans,  substantive  rules covering the decision making for all loans,
filing  and  type  size   requirements   for   documents,   constraints  on  the
relationships  an  institution  can form with respect to related  products  like
title insurance on a home mortgage, privacy rules for the use of information and
the ability to provide it even to  affiliates,  and  limitations on interest and
other charges that an  institution  can impose.  Even as  commercial  banks have
gained greater  ability to have offices in multiple  states,  the new interstate
banking laws have imposed additional constraints on the rules for lending across
state lines.  To understand and remain in compliance  with the numerous  complex
and  changing  regulations,   a  regulated  financial  institution  must  invest
significant resources in developing a compliance infrastructure.  We believe our
long-standing  expertise at providing software that incorporates compliance with
various regulatory constraints will continue to set us apart in this market.

           Adding  Internet  Delivery  Channels.  Financial  institutions of all
sizes are  increasingly  recognizing that the value-added role of branch offices
lies not in their  traditional  capacity as a  transaction  processor,  but as a
sales  channel  for  financial  products  and  services.  A study by a financial
services  consulting  firm  estimates  that the  average  cost of a call  center
transaction  is 35 percent of a branch  transaction,  an ATM  transaction  is 10
percent of a branch transaction,  and a home banking transaction is 5 percent of
a branch  transaction.  In order to make these new delivery channels  attractive
and  user-friendly,  we believe that consumers  require  access to  consolidated
information and services that are consistent  across all delivery  channels.  To
accomplish  this,  institutions  will need  software,  such as the middleware we
provide,  to connect its  products to each other and to the various host systems
they  use.   Further,   we  believe  the  market  will  require  most  financial
institutions to add some type of Internet access for their customers, creating a
significant opportunity for us and similar providers of such software.

           Because  regulatory   requirements  are  often  triggered  simply  by
interaction between a financial  institution and its customer,  institutions are
still subject to compliance  regulations  as they migrate their sales efforts to
new delivery channels, such as online banking.  Increasingly,  these regulations
extend  beyond  simple  disclosure  or form content  requirements,  and focus on
customer data collection and analysis as well as internal  business  procedures.
This  collection and analysis must be obtained from, and available to,  multiple
delivery channels.  Data collection and analysis is complicated by the emergence
of new channels for  interacting  with  customers  and potential  customers.  We
believe that financial  institutions  will continue to benefit from our products
and services,  especially its newer generation of Internet products and services
because such  institutions  must still comply with the large  regulatory  burden
even if a  service  is  delivered  online  rather  than in  person.  Indeed,  we
anticipate  that due to privacy and related  concerns the regulatory  burden may
well increase as financial institutions move services onto the Internet.

           New Financial Services Products.  Recognizing the profit potential in
expanding their product offerings,  financial institutions are no longer content
to offer solely the loan and deposit account  products they  traditionally  have
sold to  customers.  They  also seek to add other  types of  financial  services
products, such as brokerage and insurance.  Such combinations of services are no
longer rare among  larger  institutions.  Financial  reform  recently  passed by
Congress may make this even easier for large institutions to provide.

                                                        33

<PAGE>



           The  products  sold by  credit  unions  and  thrifts  have  been less
regulated  than those sold by other  financial  institutions.  Credit  unions in
particular,  have  demonstrated  an ability to sell a wide  variety of financial
services through cooperative  efforts. We believe that most community banks will
not have the  resources  needed  to offer  such  combinations  of  services  and
products on their own. As these products become an increasing focus of community
banks,  we believe that a market  opportunity  for service  center  offerings to
multiple  institutions will exist. We have opened a service center to offer home
banking to its customers  including  community banks, so that such banks are not
required to maintain such hardware and software in-house. We believe that it can
fulfill the needs of community  banks to offer more products to their  customers
by adding  additional  financial  service  products  to our service  center.  We
believe that this will enhance our recurring revenues.

The Concentrex Solutions

           We offer solutions tailored to the various market segments and market
needs of financial  institutions.  Although  regulatory  and  technology  issues
facing  financial  institutions  overlap a great deal,  the approach  taken by a
particular institution, and therefore the correct solution for that institution,
depends on the size and type of institution.

           Each of the solutions  offered by us include a  significant  focus on
the regulatory issues facing financial  institutions of all types.  Particularly
in the area of loan  origination and new account  opening,  we believe we have a
competitive  advantage  by  virtue  of our  ability  to  incorporate  regulatory
compliance  into the  software  solution.  Further,  as lending  and new account
opening become more common on the Internet,  we believe that this advantage will
increase.

           A key aspect to our success  has been and will likely  continue to be
our  ability  to build our  technology,  regulatory  and  financial  institution
expertise  into our  solutions  and to  integrate  these  solutions so that they
function  effectively  together.  We rely on a variety  of  knowledge-based  and
technical core competencies. Our vertical market focus on the financial services
industry  has  enabled  us  to  develop  specialized   knowledge  and  expertise
pertaining to business processes and regulations affecting the industry.

           Large Financial  Institutions.  For large commercial  banks, we offer
solutions  that  fit  within  the  overall  strategic  technology  plan  of  the
institution.  Large banks develop and implement their own technology  plans, but
rely on suppliers  like us for key  elements  such as loan  origination,  branch
automation,  call  centers,  and e- commerce  products  and  services.  We offer
solutions in each of these areas and  segregate  our sales force to address this
market.

           Our  software  applications  and  e-commerce  products  enable  large
financial  institutions to use data among disparate and often  incompatible host
processor  platforms.  Our ability to  integrate  among and between our suite of
products also allows large institutions to work with fewer vendors, specifically
ones that provide comprehensive software solutions.

           Credit  Unions.  The credit union  market,  unlike  large  banks,  is
characterized by real-time processing.  The August 1999 acquisition of ULTRADATA
with its  competitive  information  management  solution  and 420  credit  union
customers  allows us to be a player in this market.  We will continue to support
this  market,   including  offering  expanded  capabilities  through  our  other
solutions for  commercial  loans.  Credit unions are now entering the commercial
loan market,  and this expansion  presents an opportunity  for us to rely on our
other  solutions to enhance our presence in the credit union market.  Similarly,
we will enhance our home banking  product with the  expertise of our  e-commerce
division.

           Community   Banks  and  Thrifts.   The  community   bank  and  thrift
marketplace  offers  several  opportunities  for our solutions.  First,  we will
continue to sell our traditional software applications to all sizes of banks and
thrifts,  including lending,  mortgage,  sales and service, and e-commerce.  For
these  solutions  we will rely on our  ability to connect  these  products  to a
variety of host processing systems used by community banks and thrifts.

                                                        34

<PAGE>



Where  possible,  we will attempt to form alliances with other host companies to
augment the offerings of those companies with our solutions.  We have grown, and
expect to continue to grow,  in  significant  part  through the sale of software
applications.

           In  addition to our  traditional  software  applications,  we plan to
offer our real time host processing to community  banks and thrifts.  We plan to
augment  the  ULTRADATA  solution  to meet the  needs of  commercial  banks  and
thrifts,  and believe that the  real-time  nature of that system will give it an
advantage over our competitors'  batch  processing  systems offered to community
banks.  Further,  we will offer this  information  management  solution  tightly
coupled with the other software  applications already marketed by us, especially
our e- commerce solutions.

           Concentrex  products  provide  a  number  of  benefits  to  financial
institutions by addressing regulatory  requirements,  system connectivity issues
and internal  business process  challenges  faced by such  institutions in their
increasingly competitive business environment. Using Concentrex solutions, these
institutions  are able to  simplify  sales and  service  processes  and  improve
productivity through reduced operating costs and expanded capacity.  The ability
to view an entire customer account relationship on-screen,  for example, enables
financial  institutions  to  cross  sell  their  products  to  customers  and to
strengthen  relationships  with their  customers  at each  point of contact  and
across multiple delivery channels.

           With respect to each of its solutions,  we offer  implementation  and
training services and customer support.  Essentially all customers  subscribe to
these  services,  and we derive a  substantial  portion of our revenue  from the
relationship  created  when a  financial  institution  selects  and  installs  a
Concentrex product.

The Concentrex Strategy

           Our strategic objective is to be the leading full service provider of
innovative  technology  solutions that enable our customers to succeed. In doing
so, we strive to  achieve  rapid,  predictable,  and  consistent  growth in both
revenues  and  earnings.  We intend to achieve this  objective by combining  our
expertise in regulatory issues, banking and technology.  Primary elements of our
strategy include:

           Product Quality.  Financial  institutions require that their software
and  hardware  solutions  function at very high levels of quality.  We have been
able to meet the demands of some of the largest  institutions in the country and
believe that a significant  focus on product  quality is a necessary  element of
our success.  Further, as systems become more complex and the  interrelationship
among  systems  becomes  more  critical,  we believe  our ability to develop and
implement  systems  with  high  quality  standards  will  become  a  competitive
advantage.

           Integration of Solutions.  Financial  institutions are no longer able
to run disparate  systems that do not  communicate  with each other. We have set
about  a  process  of  integrating  our  solutions  so  that  they  are  able to
communicate  effectively among  themselves,  creating an advantage for financial
institutions   that  purchase  a  suite  of  solutions   rather  than  just  one
application. For example, the branch automation and e-commerce solutions contain
modules that will collect the data needed for our loan  origination  software to
enable it to produce  required loan documents in compliance with applicable laws
and regulations. Each of our solutions for loan origination, teller, new account
opening,  and home  banking  rely on the same  general  system  setup,  enabling
customers  to add new  solutions  quickly  once  they have set up any of the key
Concentrex software applications.  Our acquisition strategy has not been focused
on a traditional  "roll-up" of competing solutions.  Instead, we have sought the
best solution we can develop or acquire for each aspect of the market needs, and
then  proceeded to  integrate  that  solution  with the other  software  already
acquired or developed.  We believe this approach to integration best satisfies a
market's need.  Further,  we believe this approach enhances our ability to cross
sell additional products into our customer base.

     Integration  of  Concentrex.  We do not operate as a series of  independent
business  units,  but as an  integrated  company.  We believe this is a critical
factor in order to enable us to integrate products, and to present

                                                        35

<PAGE>



an  integrated  image and  reality to our  customers.  Because  we believe  that
financial  institutions are looking for a smaller number of key vendors, we feel
that it is critical not to have competing  units, but rather to focus efforts on
integration of solutions for and at our various customers.  Further, this allows
us to leverage our various corporate functions,  technology research,  sales and
marketing efforts.

           Legal and Industry Knowledge. We are focused on a very large vertical
market:  software solutions for the financial  services industry.  To serve that
market,  we have developed an extensive base of knowledge about the industry and
the forces that shape it. This  includes  knowledge  of the key  functions  that
software must perform,  such as teller transactions,  and key areas of extensive
regulation, such as loan origination.  Further, through our 1999 acquisitions of
MCS and ULTRADATA,  we now have  expertise in the back office "host"  processing
world of information management,  giving us a comprehensive understanding of the
various  technology  needs of a  financial  institution.  We  believe  that this
knowledge  base,  especially  in  the  regulatory  area,  is a  key  competitive
advantage  over  companies  that  solely  focus  on the  technology  aspects  of
financial institutions.

           Customer  Support  and  Implementation.  The  license  or  sale  of a
Concentrex  product  includes  customer support services and, in most instances,
implementation services. This creates an ongoing relationship with the customer,
including updates and enhancements of the software. This enables us to achieve a
recurring  revenue stream in addition to our revenues from initial sales, and we
believe that a continued  focus on this aspect of our business will enable us to
improve our predictability of revenues.  Further, the nature of both information
management and e-commerce  solutions requires an even tighter  relationship with
customers,   and  we  have  entered  these  markets  in  part  to  improve  that
relationship. Finally, the most critical aspect of our ability to make new sales
is the quality of references from existing  customers.  We believe our growth in
both revenues and absolute numbers of financial institution  customers,  to over
5,000  banks,  thrifts,  and credit  unions,  reflects a high level of  customer
satisfaction.  We intend to  continue  to monitor  and  improve  our  customers'
satisfaction.

           Strength of the Sales Force. Unlike many of our competitors,  we sell
nearly  all our  products  directly,  rather  than  through  third  party  sales
channels.  We have  invested  significantly  in the creation of our direct sales
force, which is organized so that field sales personnel cover major accounts and
general  accounts  and  telephone  sales  personnel  cover  smaller  institution
customers.  Further,  we have  created  telephone  sales  groups  and  marketing
programs to support our field sales  force.  We believe that the strength of our
sales  force  enables us to create  direct  relationships  with  customers,  and
insulates us from  shifting  priorities  of third party  distributors.  Further,
since third party  distributors  may represent  other products that compete with
us,  use  of a  direct  sales  force  enables  us to  increase  our  success  at
cross-selling additional products to our existing customers.

           Adherence to Concentrex  Values. We have adopted and enforce a values
statement that we use to help manage and unify our various offices and operating
units.  Further, we recognize that our markets are fiercely  competitive and not
all of our competitors  share our positive values.  We believe that adherence to
our  values  including  honesty  and  integrity,   continuous  improvement,  and
embracing  change - enables us to maintain  and enhance our  relationships  with
customers and Concentrex partners.

Products

           Information   Management   Products.   Beginning  in  1999  with  our
acquisition  of MCS, we began offering  hardware and software  solutions for the
back  office  accounting  needs of  community  banks and  credit  unions,  often
referred  to as "host"  systems.  The system runs on  Intel-based  PCs using SCO
UNIX,  which  means that the core  system  for a small bank or credit  union can
operate on a standard PC. We have  connected our banking  system to our loan and
new account opening  software,  and offer it as a low-cost in-house solution for
smaller  community  banks.  In August 1999,  we  completed  the  acquisition  of
ULTRADATA, adding host processing solutions for medium to large credit unions.

           Information management solutions provide the institution-wide  "core"
processing  that a  financial  institution  requires  in  order to  operate.  It
includes functions such as loan accounting, account processing, general

                                                        36

<PAGE>



ledger, and data retrieval of customer information. The systems connect to other
software applications,  such as e- commerce and loan origination.  The ULTRADATA
information management system is a scalable solution offered both as an in-house
implementation  and as a service  bureau in which we operate  the system for its
financial  institutions  customers'  use.  It  operates on either HP 9000 or IBM
RS/6000 UNIX operating systems,  and is being ported to Windows (TM)-NT. We also
plan to augment the system to meet the needs of community  banks for a real-time
information management system.

           Software Applications:  Lending Products. Concentrex lending products
automate  processes  at nearly every step in the lending  process for  consumer,
commercial,  and  residential  real estate  lending  lines of business.  General
business  functions  automated  by  Concentrex  lending  solutions  include loan
application  and  analysis,  loan  closing,   portfolio  analysis  and  workflow
management,  and risk management.  We also offer  connectivity for interfaces to
credit scoring and reporting  systems and remote printing of loan documents.  We
engineer  our lending  products  to operate  with  common  user  interfaces  and
databases.

           Software   Applications:   Mortgage  Products.   Concentrex  mortgage
products  improve the consistency of the loan process,  speed  origination,  and
increase  capacity  for their  users.  Among  their  functions,  these  products
automate the complex analyses  necessary for ensuring optimal mortgage loan pool
sales, speed the process of preparing mortgage loans for sale faster than manual
methods,  and allow  lenders  to take  advantage  of higher  near term  delivery
prices.

           Software  Applications:  Sales  and  Service.  Concentrex  sales  and
service  products  automate the customer  service,  sales,  and account  opening
functions for the branch  platform,  teller  station and telephone  call center.
These  products  provide  a common  view of the  entire  customer  relationship,
enabling service personnel to leverage selling opportunities.

           E-commerce Solutions. We offer online banking through Internet access
to provide  account  inquiry  and  transaction  capabilities.  Our home  banking
products  provide  dozens  of  functions,  including  account  balance,  account
history,  bill  payment,  and online loan  applications.  We have also created a
service bureau  deployment option that provides  financial  institutions with an
inexpensive  method of initiating  home banking  services with their  customers.
This is  accomplished  by  allowing  these  customers  to  interface  with their
financial  institution through a Concentrex maintained and monitored website. We
plan to  expand  the  capabilities  of our home  banking  solution  for both our
in-house and service  bureau  customers with added  functionality  and access to
financial portals.



                                                        37

<PAGE>


<TABLE>
<CAPTION>

Products by Product Group

Software Applications

           Lending Products.


                              Date Introduced/
Product                       Acquired               Description                      Benefits to Customer

<S>                           <C>                    <C>                              <C>
Laser Pro Lending             Released 1986          Integrated, modular loan         Standardizes lending policies
                                                     processing systems for           and products, streamlines
                                                     consumer, commercial,            processing, incorporates a
                                                     SBA, real estate home equity     national database of
                                                     and agricultural loans,          regulations
                                                     including available module
                                                     for geocoding to assist in
                                                     analyzing fair lending and
                                                     CRA compliance

Application Manager           Acquired 1996          Processes applications for       Speeds the loan application
                                                     indirect consumer lending        and approval process for
                                                                                      indirect lenders

                  Mortgage Products.


                              Date Introduced/
Product                       Acquired               Description                      Benefits to Customer

LP Mortgage                   Acquired 1996          Provides mortgage                Improves consistency of loan
                                                     origination, processing and      processes, speeds origination,
                                                     servicing capabilities           increases capacity

SMarT                         Acquired 1998          Comprehensive risk and           Automates complex analyses
                                                     pipeline management system       necessary for ensuring
                                                     that automates secondary         optimal mortgage loan pool
                                                     mortgage marketing               sales
                                                     functions from registration
                                                     through delivery of loans

DocSMarT                      Acquired 1998          Automates the labor               Speeds process of preparing
                                                     intensive functions              mortgage loans for sale faster
                                                     performed after a mortgage       than manual methods,
                                                     loan is closed                   allowing lenders to take
                                                                                      advantage of higher near term
                                                                                      delivery prices

</TABLE>

                                                        38

<PAGE>

<TABLE>
<CAPTION>


                  Sales and Service.


                              Date Introduced/
Product                       Acquired               Description                      Benefits to Customer

<S>                           <C>                    <C>                              <C>
Encore! Teller                Acquired 1995          Automates the teller station     Improves productivity and
                                                     by providing comprehensive       facilitates sales referrals
                                                     transaction automation,
                                                     electronic journaling,
                                                     store-and-forward
                                                     capabilities, simplified
                                                     balancing, and access to the
                                                     customer database

Encore! Platform              Acquired 1995          Provides sales and service       Opens accounts, enables
                                                     capabilities, including          cross-selling and customer
                                                     account opening screens,         information requests
                                                     customer/product matching,
                                                     customer contact histories,
                                                     letter and fulfillment
                                                     generation, and institution
                                                     and product information

Encore! Call Center           Acquired 1994          Integrates in a common and       Enables cross-selling and
                                                     consistent format customer,      improves service
                                                     product and internal
                                                     procedure information

Deposit Pro                   Acquired 1990          Automates and ensures            Speeds account opening,
                                                     regulatory compliance in the     ensures compliance with
                                                     account opening and              regulations, improves the
                                                     cross-selling processes for      consistency of new account
                                                     checking, savings,               policies and practices
                                                     certificates of deposit, and
                                                     IRA accounts

Encore! Desktop               Released 1996          Windows-based system that        Allows customized
                                                     graphically links each user      arrangements of modules and
                                                     to CFI software and other        access to customer
                                                     business applications            information

e-Commerce


                              Date Introduced/
Product                       Acquired               Description                      Benefits to Customer


CCTX On Line Banking          Released 1993          System that allows               Provides Internet access,
                                                     institutions to provide          strengthens customer
                                                     personal consumer and small      relationships, extends
                                                     business Internet  banking       institution branding, increases
                                                     with in house or service         customer convenience
                                                     bureau options

</TABLE>

                                                        39

<PAGE>

<TABLE>
<CAPTION>


                              Date Introduced/
Product                       Acquired               Description                      Benefits to Customer

<S>                           <C>                    <C>                              <C>
Vendor Payment System         Acquired 1993          On-line bill payment and         Low-cost Internet bill
                                                     bill presentment system          payment and presentment
                                                                                      capability

Information Management


                              Date Introduced/
Product                       Acquired               Description                      Benefits to Customer

Ultrafis                      Acquired 1999          Real time enterprise wide        Provides easy access to
                                                     engine for transaction           information and enhances
                                                     processing, accounting,          customer service, cross-
                                                     administration, database         selling, transaction efficiency
                                                     management and                   and accounting controls
                                                     information access

BankServ                      Acquired 1999          PC Based --Back office           Automates back room
                                                     "host" processing software       accounting and servicing
                                                     for community banks              functions
                                                     including applications
                                                     available for bulk account
                                                     storage, voice response and
                                                     account inquiry

CuServ                        Acquired 1999          PC Based Back office "host"      Automates back room
                                                     processing software for          accounting and servicing
                                                     credit unions including          functions
                                                     applications available for
                                                     bulk account storage, voice
                                                     response  and account
                                                     inquiry
</TABLE>


Product Development and New Products

           We ensure that our products meet customer  requirements by conducting
primary research,  tracking customer calls and requests for enhancements,  doing
competitive  analysis,  working with industry trade groups,  and holding product
user and focus group meetings.  We also incorporate knowledge learned during the
sales and installation process into development of new and enhanced products and
processes.

           We  continue  to  invest  significantly  in our  product  development
efforts.  During the past four years we have  focused a  considerable  amount of
that  investment on converting our products from the DOS  environment to Windows
(TM). That effort is now complete, and essentially all of our products have been
either  rewritten or significantly  enhanced during that process.  We are in the
process of  "sunsetting"  the DOS  versions  of our  products,  and plan to have
completed  that task by the end of 2000.  At that time we will  support only the
Windows  (TM)  version,  or other  newer  versions  of our  products,  including
browser-based  products.  The redevelopment  effort also has included  increased
focus  on the  use of  software  components  that  can be  re-used  in  multiple
products,  such as calculation modules and credit bureau communication  modules.
We  intend  to  continue  enhancement  of our  products  in terms of both  added
features  and  increased  use of  components,  which  will  enable  us to remain
competitive and will enhance our goal of product integration. We also have begun
investments  in  service  centers  for  customers  who do not have the desire or
capacity to install the solutions in-house at the financial institution.


                                                        40

<PAGE>



           We have made significant  investments in e-commerce technology,  both
in terms of internal  development  and the recent purchase of MECA. We also have
focused on web-enabling our existing product lines, such as loan origination and
new account  opening  software,  and will continue to invest in technology  that
enables our suite of solutions to work with and on the Internet.

           We  believe  that  market  acceptance  of our  products  is  based in
significant  part on the  ability of the  products to share  information  with a
financial  institution's  host  processor  system or with the  vendor  providing
processing services to such institution.  This is particularly true for software
applications  that  require  information  from the host or that need to  provide
information  to the host,  including  loan  origination,  new  account  opening,
account servicing,  and home banking.  We have developed  significant  expertise
with most available host processor systems and the methods necessary to transfer
data to and from such systems.  However, many of the companies that provide host
software  are  unwilling  to allow  connections  with  software  other  than the
solution  developed or selected by the host.  We have been able to overcome this
in many instances  through our market presence and pressure on the host system's
vendor from  individual  customers.  We also  believe  that the market  trend is
toward open systems,  and we have initiated  efforts to focus  attention on that
issue,  including positioning our own information management division as an open
system alternative.

Service and Support

           Substantially   all  of  our  customers   subscribe  to   maintenance
agreements under which we provide periodic product updates  reflecting  evolving
regulations,  product enhancements and toll-free telephone support.  Maintenance
fees  consist of  per-item  or  per-user  charges or are  calculated  based on a
percentage of the current product list price or of the size of the customer.

           We provide training to our customers, and account for this revenue as
service  and  support  fees.  Software  service  and  support  fees  have  grown
significantly  over the last three years.  For the year ended December 31, 1998,
such fees were $30.3 million,  or 35.4% of our total revenue. We anticipate that
our new e- commerce and  information  management  divisions  will  increase that
percentage over time.

           We  install,  implement  and  customize  our  software  solutions  at
customer sites,  particularly at larger institutions,  and at the time we sell a
host system for information management.  As our sales to larger institutions and
our sales of  information  management  solutions  each  increase,  we anticipate
demand for our customization  services to increase.  Revenue from these services
is accounted for as software license fees.

Customers

           We have licensed our software to over 5,000 financial institutions in
the United States. Our target customer base includes  commercial banks,  thrifts
and credit unions.  No customer  accounted for 10% or more of our total revenues
in 1998, 1997 or 1996.

           Our largest accounts include Bank of America (formerly  NationsBank),
Union Planters Bank, NCR Corporation, Banc One, PNC Bank, Citicorp Mortgage, and
Central Carolina Bank & Trust.

Sales and Marketing

           We sell our products through three experienced, national direct sales
teams.  One field  sales team is devoted  exclusively  to the top 200  financial
institutions  in the  United  States.  The  second  team  focuses  on all  other
accounts.  The third national team specializes in selling the latest  processing
products.  All three teams are  supported  by our  marketing  group,  with sales
people who specialize in the sale of lending,  retail, and e-commerce  products.
Our product  specialists  on our  telemarketing  team,  telemarketing  personnel
contact  institutions for lead generation and  qualification,  and sales support
personnel are  responsible for direct sales  campaigns,  trade media support and
advertisements.

                                                        41

<PAGE>



           We have a number of third-party reseller and co-marketing  alliances,
including  agreements  with some of the largest  host  processors  and  hardware
vendors. For example, we have a relationship with IBM whose sales team resells a
large  portion of our product  line.  Third-party  resellers,  such as NCR,  and
co-marketing  alliances  provide  access  to  institutions  with  which we would
otherwise have no relationship. We also have many endorsement relationships with
the associations that serve the financial institutions.  The associations assist
with  marketing and promotion of our products.  One of our strategic  objectives
has been to provide value to the business  partners.  We have also been a leader
in  promoting  an open  systems  environment  throughout  the  industry  serving
financial  institutions.  As  part of our  commitment,  these  partnerships  are
supported by a team of sales and account relationship managers.

Legal Network

           We maintain a network of independent  legal counsel in all 50 states,
Puerto Rico,  Guam, and the District of Columbia.  This network,  as well as our
internal  legal staff,  keeps us informed of changes in state and federal  laws,
changes in state and local documentation  requirements,  pending legislation and
court  actions  affecting  financial  institution  practices,  as well as  other
information required to maintain regulatory compliance.  Our management believes
that the  quality of this  information,  our ability to  effectively  manage the
continuous  information  flow  provided  by the  network  participants,  and our
capability to integrate this information  into our software  products provide us
with a significant competitive advantage.

           We utilize legal counsel in all jurisdictions,  other than Louisiana,
under  agreements  that are  terminable at will by either party and that provide
for compensation based on an hourly rate. We have entered into a long-term legal
services  agreement  with a Louisiana  law firm  pursuant to which it pays legal
fees based upon sales of our products in Louisiana.

Acquisitions

           To  remain  competitive  and  to  meet  the  changing  needs  of  our
customers,  we pursue  acquisitions of products,  technologies and businesses as
one part of our growth strategy. We continuously evaluate acquisition candidates
that provide opportunities to expand our customer base, cross-sell products, and
broaden  our  product   offerings   with  proven   solutions  in  a  timely  and
cost-effective  manner. Since 1994 we have made 16 acquisitions and believe that
to date we have  achieved our  objectives of growth and  broadening  our product
offerings through this acquisition  program. We intend to continue such activity
in the future,  although we do not anticipate material  acquisitions in the near
term as we complete the integration of our 1999 acquisitions.

Employees

           As of September 30, 1999, we had 1,023 full-time  employees.  Of this
number, 280 were engaged in product groups (primarily product development),  293
in  customer  service  and  support,   106  in  sales  and  marketing,   161  in
implementation and training, 21 in technology,  research and development and 162
in general and administrative functions.

Description of Property

           Our  corporate  headquarters  are  located in  Portland,  Oregon in a
leased facility consisting of approximately 79,800 feet of office space occupied
under  leases that  expire in 2003.  Annual  lease  payments  for our  corporate
headquarters  are  approximately  $1,300,000,  with provisions for  inflationary
increases. We also lease office space in Atlanta,  Georgia (52,678 square feet);
Dayton, Ohio (15,151 square feet);  Burnsville,  Minnesota (18,392 square feet);
Englewood Cliffs, New Jersey (6,148 square feet);  Houston,  Texas (7,565 square
feet); Denver, Colorado (4,470 square feet);  Charleston,  South Carolina (2,500
square feet);  McLean,  Virginia  (2,680 square  feet);  Pleasanton,  California
(60,242  square feet);  Jericho,  New York (1,140  square  feet);  and Trumbull,
Connecticut (92,000 square feet). These leases expire in 2000, 2006, 2000, 2002,
2002, 2004, 2003, 2001, 2007,

                                                        42

<PAGE>



2002,  and 2003,  respectively.  Annual  lease  payments  for  these  additional
facilities,  in aggregate, are approximately $2.9 million. We believe the office
space currently under lease is adequate to meet our needs for the next year.

Legal Proceedings

           We are involved in routine legal matters  incidental to our business.
We  believe  that  the  resolution  of  any  such  matters  that  are  currently
outstanding  will not have a  material  effect  on our  financial  condition  or
results of operation.  However,  no assurance  can be given that the  concurrent
resolution of several of such matters in manners  adverse to us would not have a
material adverse effect on our financial condition or results of operations.

                                                    MANAGEMENT

Directors and Executive Officers



           The executive  officers and directors of CFI  ProServices,  Inc., dba
Concentrex Incorporated (the "Company") as of November 15, 1999, are as follows:

Name                            Age        Position

Matthew W. Chapman              49         Chairman, Chief Executive Officer,
                                           and Director

Robert P. Chamness              47         President, Chief Operating Officer,
                                           and Director

Robert T. Jett                  55         Executive Vice President, Product
                                           Development Division, Secretary, and
                                           Director

Michael J. Clement              52         Senior Vice President, Customer
                                           Support & Quality Assurance Division

Daniel C. Larlee                47         Senior Vice President, Technology &
                                           Research Division and Chief
                                           Technology Officer

Lois M. Roberts                 54         Senior Vice President, Sales,
                                           Marketing & Customer Services
                                           Division

Eric T. Wagner                  50         Senior Vice President, Custom
                                           Products Division

Kurt W. Ruttum                  40         Vice President, Finance &
                                           Administration Division, Chief
                                           Financial Officer, and Treasurer

Jeffrey P. Strickler            42         Vice President, Legal, Risk
                                           Management & Corporate Development
                                           Division, General Counsel, and
                                           Assistant Secretary

Zenon S. Piotrowski             43         Vice President, Standard Products
                                           Division

Kathleen Bromage                42         Vice President, e-Commerce Division

Eran S. Ashany                  36         Director

Frank E. Brawner                66         Director

J. Kenneth Brody                76         Director


                                                        43

<PAGE>



L. B. Day                       55         Director

Lorraine O. Legg                60         Director



     Mr.  Chapman has served as the  Company's  Chief  Executive  Officer  since
February 1988 and as its Chairman since February 1991. Mr. Chapman was President
of the Company from August 1987 to April 1992 and became a director in September
1987.  Prior to joining the  Company,  Mr.  Chapman  was outside  counsel to the
Company,  and was a founding  partner of the law firm of Farleigh,  Wada & Witt,
P.C.  Mr.  Chapman has  previously  served as a faculty  member of the  American
Bankers  Association  National  Graduate  Compliance School and the Credit Union
National Association  Regulatory Compliance School. Mr. Chapman is a director of
Microchip  Technology,   Incorporated,  a  Chandler,  Arizona  manufacturer  and
supplier  of  programmable  microchips.  Mr.  Chapman  is also a Trustee  of the
University of Portland.

           Mr. Chamness has served as President and Chief  Operating  Officer of
the Company since July 1995 and served as Executive  Vice  President and General
Counsel of the Company from April 1993 until he was  appointed as President  and
Chief  Operating  Officer.  From 1985 to March 1993, Mr.  Chamness was a partner
with the law  firm of  McKenna  &  Fitting,  Los  Angeles,  California,  and its
predecessor. From 1990 to 1994, Mr. Chamness served as the Chair of the Consumer
Financial Services  Committee of the American Bar Association.  Mr. Chamness has
authored  numerous  compliance  manuals for the  American  Bankers  Association,
including manuals relating to the Truth in Savings Act and consumer lending.

     Mr.  Jett has served as  Executive  Vice  President  and  Secretary  of the
Company  since April 1984.  Mr. Jett is  responsible  for  managing  the Product
Development  Division.  Prior to  joining  the  Company,  he  managed  the legal
department of Evans Products Company, a diversified manufacturing company.

           Mr.  Clement  joined the  Company  in October  1984 and has served as
Senior Vice  President,  Customer  Support & Quality  Assurance  Division  since
January 1998. From January 1993 until October 1995, Mr. Clement served as Senior
Vice President of Customer  Service.  From October 1995 until May 1996 he served
as Senior Vice President of the Standard  Products  Group.  From June 1996 until
January 1998 he served as Vice  President of the  Electronic  Products  Delivery
Group.  Prior to joining the Company,  Mr. Clement was a Regional Vice President
for Evans Financial Corp., a mortgage banking company.

           Mr.  Larlee  joined  the  Company in April  1992 as its  Director  of
Technology  and  became a Vice  President  and Chief  Technology  Officer of the
Company in  September  1994.  In January  1998,  Mr.  Larlee  was  elected  Vice
President,  Technology  & Research  Division  and Chief  Technology  Officer and
promoted to Senior Vice President in January 1999. From May 1989 until he joined
the Company,  Mr. Larlee was Director of Technology for World Trade Services,  a
software  and  data  processing  services  provider  to  businesses  engaged  in
international trade.

           Ms. Roberts joined the Company in May 1993 as its Operations Software
Product  Manager and was elected  Vice  President  of  Marketing  and  Corporate
Communications  in October 1995. In January 1998, Ms. Roberts was elected Senior
Vice President,  Sales, Marketing & Customer Services Division. Prior to joining
the Company in 1993, Ms. Roberts served as the President of Quickor Net, Inc., a
privately held data processing company located in Portland, Oregon.

           Mr.  Wagner  joined the Company as Senior Vice  President in November
1995 in connection  with the Company's  acquisition of Culverin  Corporation,  a
developer and distributor of financial  institution  sales and service  delivery
software products  ("Culverin").  In January 1998, Mr. Wagner was elected Senior
Vice President,  Product & Corporate Integration  Division,  with responsibility
for  managing  CFI's  Retail  Delivery  Products  Group and  integration  of the
Company's  products and corporate  organization.  Mr. Wagner joined  Culverin in
1979,  and served as its President  and Director  until its  acquisition  by the
Company.


                                                        44

<PAGE>



     Mr. Ruttum joined the Company in November 1997 as Vice President, Finance &
Administration  Division and Chief Financial Officer. In January 1999 Mr. Ruttum
was appointed  Treasurer of the Company.  From October 1996 until November 1997,
Mr.   Ruttum  was  Vice   President   and  General   Counsel  for  Phoenix  Gold
International,  Inc., a manufacturer of car audio equipment.  From February 1997
until  November  1997,  Mr.  Ruttum also  served as  Secretary  of Phoenix  Gold
International, Inc. Mr. Ruttum was an attorney with the law firm Tonkon Torp LLP
in  Portland,  Oregon,  where he  emphasized  corporate  finance and  securities
matters, from 1986 through August 1996.

           Mr. Strickler joined the Company in August 1994 as Corporate Counsel.
He was elected General Counsel and Assistant  Secretary in January 1996 and Vice
President,  Legal, Risk Management and Corporate Development  Division,  General
Counsel and Assistant Secretary in January 1998. From January 1991 until joining
the Company,  Mr. Strickler served as Corporate Counsel for Cadre  Technologies,
Inc., a developer and manufacturer of software  development  automation products
formerly  located in Beaverton,  Oregon.  Mr. Strickler was an attorney with the
law firm Perkins Coie in Portland, Oregon from 1985 to January 1991.

     Mr.  Piotrowski  joined  the  Company  in March 1995 and has served as Vice
President of the Standard  Products  Division of the Company since October 1997.
Prior to joining the Company,  Mr.  Piotrowski  was a Senior  Consultant  in the
Finance Industry Group at Lexmark International, Inc.

           Ms.  Bromage  joined the Company in May 1999 as Vice President of the
Company's  newly formed e- Commerce  division in  connection  with the Company's
acquisition  of MECA  Software,  L.L.C.  She  served  as MECA's  Executive  Vice
President and Chief  Financial  Officer.  Prior to joining  MECA,  she served as
Senior Vice President and Director of Business Planning,  Financial Analysis and
Management  Reporting  for  Shawmut  National  Bank.  She was  employed by Price
Waterhouse as an Audit Manager in its Financial Services Industry group prior to
her employment with Shawmut National Bank.

           Mr.  Ashany has been  employed  by Allen & Company  Incorporated,  an
investment banking company, since August 1988, and has been a Vice President and
Director of that firm since September 1990 and February 1995, respectively.  Mr.
Ashany is also a director  of Eco-Bat  Technologies,  plc,  a lead  smelter  and
battery recycler with operations in the United Kingdom,  Germany, France, Italy,
and Austria.

           Mr.  Brawner  served as the Chief  Executive  Officer  of the  Oregon
Bankers  Association  and the  Independent  Community  Banks of Oregon from 1975
until  his  retirement  in 1998.  He  became  President  of the  Oregon  Bankers
Association  in 1992.  From  1991  through  1998,  Mr.  Brawner  also  served as
Executive Vice President of the Oregon Mortgage Bankers Association. Mr. Brawner
has also served as Secretary of the Northwest  Intermediate  Banking Schools and
as a member of the Board of Directors of the Pacific  Coast  Banking  School and
the Oregon Society of Association Executives.

     Mr.  Brody has served as a  director  of the  Company  since May 1990 and a
consultant  to the Company  since 1988.  Since 1984, he has been the Chairman of
ComPix  Incorporated,  a manufacturer of infrared thermal analysis devices.  Mr.
Brody is also a Director of the U.S. Navy Memorial  Foundation.  From 1992 until
December 1996, he served as a consultant to First Portland  Corporation and as a
member of the management  committee of Intercoastal  Manufacturing,  Co., a golf
cart parts sales and services company.

           Mr.  Day has been  President  and a director  of L.B.  Day & Company,
Inc., a consulting  firm which  provides  organization  development,  design and
planning  services to clients at senior and executive  levels,  since 1995. From
1983 to 1994,  he served as Vice  President  and then  President  of  Day-Floren
Associates,  Inc.,  a consulting  firm  specializing  in strategic  planning for
high-technology  companies.  Mr.  Day is a  director  of  Microchip  Technology,
Incorporated,  a Chandler,  Arizona  manufacturer  and supplier of  programmable
microchips.


                                                        45

<PAGE>



           Ms. Legg has served as President and Chief  Executive  Officer of TIS
Financial Services,  Inc., an asset securitization and management company, since
its  formation  in 1984.  Ms. Legg also  serves as  President,  Chief  Executive
Officer  and a  director  of TIS  Mortgage  Investment  Company,  a real  estate
investment  trust.  Prior to her  involvement  with TIS, Ms. Legg served as Vice
President and  Treasurer of Boise  Cascade  Corp, a Fortune 500 forest  products
manufacturer,  and in various  management roles with affiliates of Boise Cascade
Corp.  From 1967  through  1970,  Ms.  Legg was Vice  President  of the  Federal
National  Mortgage  Association,  and  was a  principal  architect  of the  GNMA
mortgage-backed security. Ms. Legg also serves as Chairman of The Planned Giving
Foundation, Inc., a charitable organization.

Board of Directors and Committees

           The Company's Amended and Restated Articles of Incorporation  provide
that the Board of  Directors  will be fixed as provided  by the Bylaws,  but the
number of directors cannot be less than three. The Company's Bylaws provide that
the Board of Directors will consist of not less than three and no more than nine
directors.  The Articles and Bylaws also provide that at any time when the Board
of  Directors  consist of six or more  members,  in lieu of electing  the entire
Board of Directors annually,  the board will be divided into three classes, with
the method of  classification  made by the director then serving as the Chairman
of the Board of  Directors.  Members of each of the three  classes of  directors
generally  are  elected to serve a three year term,  with the terms of office of
each class ending in successive years.

           The Board of Directors  currently  consist of eight directors divided
into three classes. Matthew W. Chapman and Frank E. Brawner comprise the Class 1
directors,  whose term will continue until the 2000 annual shareholders meeting.
Ron S. Ashany, Robert P. Chamness,  and L.B. Day comprise the Class 2 directors,
whose term will continue until the 2001 annual shareholders  meeting. J. Kenneth
Brody,  Robert T. Jett,  and  Lorraine O. Legg  comprise  the Class 3 directors,
whose term will continue until the 2002 annual shareholders meeting.

     The  Board  of  Directors   has  five  standing   committees:   the  Audit,
Compensation,  Nominating,  Executive, and Proxy Committees. The Audit Committee
is comprised of Mr. Ashany (who serves as the Chair), Mr. Brawner, and Ms. Legg.
The  Audit  Committee  reviews  the  results  and  scope of the  audit and other
services provided by the Company's independent auditors.

     The  Compensation  Committee  is  comprised of Mr. Brody (who serves as the
Chair), Mr. Ashany, and Ms. Legg. This committee administers the Company's stock
option plans and approves stock option grants and contributions to the Company's
employee benefit plans.

     The  Nominating  Committee  is  comprised  of Ms.  Legg (who  serves as the
Chair), Mr. Brody, Mr. Chamness,  and Mr. Chapman.  This committee recommends to
the Board of Directors nominees for election as directors.

     The  Executive  Committee is  comprised  of Mr.  Chapman (who serves as the
Chair),  Mr. Brody, and Ms. Legg. This committee is empowered to exercise all of
the authority of the Board of Directors in the management of the Company, except
as otherwise may be provided by law.

     The Proxy  Committee is comprised of Mr. Chapman (who serves as the Chair),
Mr.  Chamness,  and Mr. Jett.  This committee votes  shareholder  proxies at the
annual  shareholder  meetings  and  at  any  special  shareholder  meetings,  if
appointed by shareholders in a written proxy.

Board Compensation

           In accordance  with the terms of the Outside  Directors  Compensation
and Stock  Option  Plan,  all outside  directors  receive an annual  retainer of
$7,000 for  serving as  members  of the Board of  Directors  and $1,000 for each
Board of Directors meeting attended. They also receive stock options to purchase
4,000 shares per year,

                                                        46

<PAGE>



granted on the first business day following the annual meeting of  shareholders,
with an exercise  price equal to the fair market value of the  Company's  common
stock at the close of trading on the last  trading day prior to the  issuance of
the option.  All options granted under the Outside  Directors  Compensation  and
Stock Option Plan are fully vested upon grant. The annual retainer and number of
options granted are pro rated for service during a partial year.

     During  1998,  the  Company  paid J.  Kenneth  Brody the sum of $12,000 for
services as a consultant. Mr. Brody has served the Company as a consultant since
1988. The Company has retained Mr.  Brody's  services as a consultant in 1999 at
approximately the same level of business for the same level of compensation.

     During 1998,  the Company paid L.B. Day the sum of $29,770.25  for services
as a consultant.  Mr. Day has served the Company as a consultant since 1991. The
Company has not retained, and does not expect to retain, Mr. Day's services as a
consultant in 1999.

Executive Compensation

           Compensation  Summary.  Shown  below is  information  concerning  the
annual and long-term  compensation for services in all capacities to the Company
for the years ended December 31, 1998, 1997, and 1996, of the following persons:
(i) the chief executive officer of the Company as of December 31, 1998, and (ii)
the other four most  highly  compensated  executive  officers of the Company who
were serving in that capacity as of December 31, 1998. The individuals described
in (i) and (ii) above are referred to as the "Named Executive Officers."

<TABLE>
<CAPTION>

                                            Summary Compensation Table
                                                                                Long Term
                                                                                Compensation
                                                Annual Compensation             Awards

                                                                                Securities     All Other
                                                                                Underlying     Compensation
Name and Principal Position           Year     Salary ($)1       Bonus ($)      Options (#)    ($)2
- ---------------------------           ----     -----------       ---------      -----------    -------------
<S>                                   <C>      <C>               <C>              <C>          <C>
Matthew W. Chapman, Chairman          1998     226,000           226,000          30,000       11,180
  and Chief Executive Officer         1997     205,000                --              --       11,180
                                      1996     172,500           172,500         100,000       10,750

Robert P. Chamness, Director,         1998     203,150           192,993          25,000       12,800
  President and Chief Operating       1997     184,500                --              --       12,800
  Officer                             1996     152,000           121,600          50,000       12,250

Robert T. Jett, Director, Executive   1998     180,000           108,000          15,000       12,800
  Vice President and Secretary        1997     162,500                --              --       12,800
                                      1996     137,000            78,090          50,000       10,939

Lois M. Roberts, Senior Vice          1998     160,000            80,000          16,000       12,800
  President                           1997     138,750                --           5,000        3,915
                                      1996     100,000            39,600          10,000        2,468

Eric T. Wagner, Senior Vice           1998     160,000            80,000              --        3,980
  President                           1997     150,000                --              --        3,980
                                      1996     120,000             1,200              --        2,437

<FN>
     1Includes  amounts  deferred by  executive  officers  under the  Company's
401(k) profit sharing plan.

      2Stated  amounts  include Company  contributions  to the Company's  401(k)
profit  sharing  plan,  life  insurance  premiums,  and parking  and  automobile
allowance  as  described  in  section   entitled   Description   of  "All  Other
Compensation" Amounts.
</FN>
</TABLE>

                                                        47

<PAGE>

<TABLE>
<CAPTION>


                                  Description of "All Other Compensation" Amounts

      Name                           1998       1997      1996       Description
      ----                           ----       ----      ----       -----------
<S>                                  <C>        <C>       <C>        <C>
      Matthew W. Chapman             $3,200     $3,200    $3,000     401(k) Plan contribution
                                        780        780       550     Life insurance premium
                                      7,200      7,200     7,200     Parking and automobile allowance

      Robert P. Chamness               3,200      3,200     3,000    401(k) Plan contribution
                                         780        780       550    Life insurance premium
                                       8,820      8,820     8,700    Parking and automobile allowance

      Robert T. Jett                   3,200      3,200     1,689    401(k) Plan contribution
                                         780        780       550    Life insurance premium
                                       8,820      8,820     8,700    Parking and automobile allowance

      Lois M. Roberts                  3,200      3,200     2,044    401(k) Plan contribution
                                         780        715       424    Life insurance premium
                                       8,820         --        --    Parking and automobile
                                                                     allowance

      Eric T. Wagner                    3,200     3,200     2,437    401(k) Plan contribution
                                          780       780        --    Life insurance premium

</TABLE>

           Stock Options  Granted.  The  following  table  contains  information
concerning  the grant of stock  options under the  Company's  1995  Consolidated
Stock Option Plan (the "1995 Plan") to the named executive officers in 1998.

<TABLE>
<CAPTION>

                                         Option Grants in Last Fiscal Year


                                                                                                    Potential Realizable
                                                                                                   Value At Assumed Annual
                                                                                                    Rates of Stock Price
                                                                                                      Appreciation for
                                                                                                         Individual
                                                    Individual Grants                                Grants Option Term1
                              -------------------------------------------------------------    -------------------------------
                                Number of        %of Total
                                Securities        Options
                                Underlying      Granted to       Exercise
                                 Options       Employees in       Price        Expiration
           Name                  Granted2       Fiscal Year      ($/Sh.)          Date              5% ($)          10% ($)
- --------------------------    -------------- ----------------- ------------  --------------    ----------------- -------------
<S>                           <C>            <C>               <C>           <C>               <C>               <C>
Matthew W. Chapman                    30,000               14%       $12.25          1/9/08             $231,117      $585,699
Robert P. Chamness                    25,000               12%       $12.25          1/9/08             $192,597      $488,082
Robert T. Jett                        15,000                7%       $12.25          1/9/08             $115,558      $292,849
Lois M. Roberts                       16,000              7.5%       $12.25          1/9/08             $123,262      $312,373
Eric T. Wagner                            --                --           --              --                   --            --

</TABLE>

                                                        48

<PAGE>

      1These   calculations  are  based  on  certain  assumed  annual  rates  of
appreciation  as  required  by rules  adopted  by the  Securities  and  Exchange
Commission  requiring additional  disclosure  regarding executive  compensation.
Under these rules,  an assumption is made that the shares  underlying  the stock
options  shown in this  table  could  appreciate  at rates of 5  percent  and 10
percent  per annum on a  compounded  basis over the  ten-year  term of the stock
options.  Actual gains,  if any, on stock option  exercises are dependent on the
future  performance  of the  Company's  Common  Stock and overall  stock  market
conditions.  There can be no assurance that amounts reflected in this table will
be achieved.

      2The option  grants listed above all vest 20 percent per year on each of
the five anniversary dates following the date of grant.

           Option   Exercises  and  Holdings.   The  following   table  provides
information  concerning  the  exercise of options  during  1998 and  unexercised
options  held as of  December  31,  1998,  with  respect to the named  executive
officers.

<TABLE>
<CAPTION>

                                  Aggregated Option Exercises in Last Fiscal Year
                                         and Fiscal Year-end Option Values


                                                                          Number of
                                 Shares                             Securities Underlying             Value of Unexercised
                                Acquired                             Unexercised Options              In-The-Money Options
                                   On            Value                  At FY-End (#)                    At FY-End ($)1
                                Exercise        Realized                Exercisable/                      Exercisable/
           Name                   (#)             ($)                   Unexercisable                     Unexercisable
- --------------------------    ------------    ------------    ---------------------------------    ---------------------------
<S>                           <C>             <C>             <C>                                  <C>
Matthew W.                              --              --             40,000 / 90,000                       -- / --
Chapman
Robert P. Chamness                      --              --            128,000 / 77,000                    $173,500 / --
Robert T. Jett                          --              --             20,000 / 45,000                       -- / --
Lois M. Roberts                         --              --             7,625 / 27,600                      $1,951 / --
Eric T. Wagner                          --              --                 -- / --                           -- / --

<FN>
     1Market value of the  underlying  securities at December 31, 1998,  $11.625
per share, minus the exercise price of the unexercised options.
</FN>
</TABLE>

Compensation Committee Interlocks and Insider Participation

     During 1998, the Compensation Committee was comprised of Eran S. Ashany, J.
Kenneth Brody (Chair) and Lorraine O. Legg, none of whom was otherwise  employed
by the Company.

           In 1997,  the Company  formed  Lori Mae,  L.L.C.,  an Oregon  limited
liability company ("Lori Mae"), with Pacific Securitization,  Inc., a California
corporation   involved  in  asset   securitization.   The  Company  and  Pacific
Securitization, Inc. each own 50 percent of the Lori Mae. Lori Mae was formed to
acquire  and  securitize  standardized  small  business  loans and credit  lines
originated by the Company's client banks and other regulated

                                                        49

<PAGE>



financial  institutions.  Lorraine  Legg,  a member  of the  Company's  Board of
Directors, owns a 39.25 percent interest in Pacific Securitization, Inc.

Stock Performance Graph



           The  Securities  and Exchange Commission requires that the registrant
include in this  registration  statement  a  line-graph  presentation  comparing
cumulative  five-year  shareholder returns on an indexed basis,  assuming a $100
initial investment and reinvestment of dividends,  of (a) the registrant,  (b) a
broad-based  equity  market  index  and  (c)  an  industry-specific  index.  The
following  graph  includes  the  required  information  from  December 31, 1993,
through the end of the last fiscal year  (December  31, 1998).  The  broad-based
market  index used is the Russell  2000 market  index  ("Russell  2000") and the
industry-specific  index  used is the  Standard  &  Poors  Computer  Software  &
Services Index. [GRAPHIC OMITTED]



<TABLE>
<CAPTION>

                                          Annual Percentage Return
                                                Years Ended

                                12/31/94      12/31/95    12/31/96     12/31/97      12/31/98
<S>                             <C>           <C>         <C>          <C>           <C>
Company/Index
CFI ProServices, Inc.            (6.09)         10.19      (4.20)      (14.04)         (5.10)
S&P Software & Services          18.21          40.53      55.46        39.30          81.19
Russell 2000                     (1.82)         28.44      16.49        22.36          (2.55)

</TABLE>

<TABLE>
<CAPTION>

                                        Base                                 Indexed Returns
                                       Period                                    Years Ended
Company/Index                         12/31/93       12/31/94      12/31/95      12/31/96      12/31/97      12/31/98
                                                     --------      --------      --------      --------      --------
<S>                                  <C>             <C>           <C>           <C>           <C>           <C>
CFI ProServices, Inc.                $100.00          $ 93.91       $103.48        $99.13       $ 85.22        $80.87
S&P Software & Services               100.00           118.21        166.12        258.25        359.75        651.84
Russell 2000                          100.00            98.18        126.10        146.90        179.74        175.16

</TABLE>


                                                        50

<PAGE>



Employment   Contracts,   Termination  of  Employment,   and   Change-in-Control
Arrangements

           The Company  entered into an Employment  Agreement (the  "Agreement")
with Eric T. Wagner on November 21, 1995, when it acquired Culverin Corporation.
The Agreement  expires on November 20, 2000.  The agreement  provided Mr. Wagner
with an initial annual base salary of $120,000,  with  adjustments made annually
as determined by the Company's President,  and incentive compensation based upon
the  achievement  of certain  performance  objectives  (determined in the manner
described under "Report of the  Compensation  Committee on Executive  Management
Compensation  Incentive  Compensation").  In the  event  that the  Agreement  is
terminated by the Company for convenience or by Mr. Wagner for good reason, then
Mr.  Wagner is  entitled to  severance  in an amount not more than the amount he
would have received  during the remaining  term of the  Agreement,  but not less
than the lesser of (1) the amount he  received  during the twelve  month  period
immediately  preceding the  termination or (2) the amount he would have received
during the remaining term of the Agreement.

           The Company has entered into Executive  Retention  Agreements with 13
officers of the Company,  including the Named Executive Officers.  The Executive
Retention  Agreements  provide  favorable  severance  benefits  for the officers
should their  positions be diminished or terminated  due to a change in control.
Specifically,  they  authorize,  upon the occurrence of a  change-in-control,  a
severance  payment to the  officer of a single  payment in cash equal to one and
one half times the officer's  annual  compensation,  including  base,  bonus and
incentive  compensation  (three times  annual  compensation  for nine  executive
officers,  including all of the Named Executive Officers), at the rate in effect
immediately  prior to termination or at the rate in effect  immediately prior to
the change in control of the  Company,  whichever  is greater.  The officers may
also receive certain other benefits in the event of a change in control,  all of
which are described in the Executive Retention Agreement.

Report of the Compensation Committee on Executive Management Compensation

     Executive Compensation Principles. In administering the Company's executive
compensation  management  program,  the Compensation  Committee is guided by the
following principles:

           1. The  principal  purpose of the program is to  attract,  retain and
motivate key employees.

           2. The program is based upon the  achievement of measurable  results,
both short term and long term.

           3. The  program  must,  therefore,  be  composed  of  short-term  and
long-term elements based upon short-term and long-term goals.

           4. A principal  purpose of the program is to maximize the interest of
the shareholders.

           5. Meaningful stock ownership by key employees and stock  performance
are important components of the plan.

           6. The base elements of the plan should be comparable to compensation
paid  by  like   companies  for  like   responsibilities,   but  should  provide
opportunities for superior rewards based upon exceptional results.


                                                        51

<PAGE>



           7. Exceeding plan goals should materially increase rewards.

           8. The plan  should  reward not only  Company  performance,  but also
excellent individual performance.

           9. The plan should provide internal equity.

           Elements of the  Program.  The primary  elements of the  compensation
program are the short-term components of base pay and incentive compensation and
the long-term component of stock options.

           Base Pay. The Company's executive compensation is based on the annual
Financial  Plan prepared by Company  management  and reviewed and adopted by its
Board of  Directors.  The Plan provides the  benchmark  for the  measurement  of
performance.

           Surveys of companies in  comparable  industries  are then used to set
base pay. In establishing 1998 base pay, the Compensation  Committee relied upon
a report by Arthur Andersen LLP, which included  certain  published  surveys and
Arthur  Andersen  LLP  internal  data.  Some of the  companies  included in such
surveys are also included in the industry  specific index used by the Company in
its stock performance  graph.  This process resulted in increases  averaging ten
percent from 1997 to 1998.

           Incentive Compensation.  A critical principle here is the greater the
responsibility  and  ability to affect  results,  the higher the  proportion  of
salary paid as incentive compensation.  For 1998, the incentive compensation for
the Company's  Named  Executive  Officers was based upon the achievement of Plan
Performance  Objectives,  consisting of Personal  Objectives  and Financial Plan
Objectives.  Personal  Objectives for each of the Named Executive Officers other
than the  Chief  Executive  Officer  were set by the  Chief  Executive  Officer.
Personal Objectives for the Chief Executive Officer were set by the Compensation
Committee.

           For 100 percent achievement of Plan Performance  Objectives,  each of
the Named Executive  Officers was to receive a percentage of his/her base salary
as set forth below (the "Plan Bonus Amount"):

                Matthew W. Chapman              100% of base salary
                Robert P. Chamness                95% of base salary
                Robert T. Jett                    60% of base salary
                Lois M. Roberts                   50% of base salary
                Eric T. Wagner                         50% of base salary

           Entitlement  to incentive  compensation  begins upon  achievement  of
least 70 percent of Plan  Performance  Objectives,  provided  that no  incentive
compensation  may be awarded unless the Company  achieves at least 70 percent of
the Financial  Plan  Objectives.  In the event the Company  achieves  between 70
percent and 100 percent of the Financial Plan  Objectives,  the Named  Executive
Officers  would be entitled to receive a  proportional  amount of the  incentive
compensation  they would be entitled to receive for achieving 100 percent of the
Plan Performance Objectives (3-1/3 percent for each one percent increase between
70 percent and 100 percent of the Financial Plan Objectives).  In the event that
the Company  achieves in excess of 100 percent of the Financial Plan Objectives,
the Named  Executive  Officers may be awarded an  additional  bonus in an amount
equal to one percent (two percent for the Named Executive  Officers who are also
Directors  of the  Company)  of such  officer's  Plan Bonus  Amount for each one
percent  that  the  Company's  financial   performance  exceeds  Financial  Plan
Objectives; provided, however, that in no event shall any incentive compensation
be paid with  respect to financial  performance  in excess of 120 percent of the
Company's Financial Plan Objectives.

           While the Company's  program is intended to provide  competitive base
pay for its  executives,  it is  designed  to provide  higher  than  competitive
rewards for outstanding performance.


                                                        52

<PAGE>



           The  Company   achieved  100  percent  of  the  1998  Financial  Plan
Objectives.  As a result, the Board of Directors determined that full bonuses be
paid to the Named  Executive  Officers  under this  bonus  plan  related to 1998
performance.

           Stock Option Plans.  Stock options  provide the long-term  element of
the  compensation  program.  The  Compensation  Committee also  administers  the
Company's  stock option  plans.  The largest  number of stock option  shares are
granted to those executive officers of the Company who are in a position to most
significantly  advance  the  Company's  long-term  goals.  Except in the case of
initial  hires,  such grants are made  annually,  following  annual  focal point
reviews and salary adjustments.  Most of the Company's option agreements include
a five-year  vesting  schedule,  which furthers  retention of key executives.  A
stock  option  grant is intended to  encourage  substantial  stock  ownership by
executive  officers  and to make the  risks and  rewards  of stock  ownership  a
principal  determinant in the motivation  and  performance of management.  Stock
ownership and prospective stock ownership related to the stock ownership program
are  intended  to  insure  the  unity of the  interests  of  management  and the
shareholders.

           Since its  inception,  the Company has followed a policy of extending
stock options to a broad base of employees below the executive  management level
for the  purpose of  strengthening  employee  loyalty to and  identity  with the
Company,  and motivating employee interest in the Company's success. The Company
has never repriced its stock options.

           Company  Performance  and CEO  Compensation.  For  1998,  Matthew  W.
Chapman's base salary, as approved by the Compensation Committee,  was $226,000.
The base  salary was  determined  using the same  method as for other  executive
officers as  discussed  above under "Base Pay." As  discussed  under the heading
"Incentive  Compensation"  above,  the Company  achieved 100 percent of the 1998
Financial Plan  Objectives and Mr. Chapman  achieved 100 percent of his personal
objectives (as determined by the Company's Board of Directors).  Therefore,  Mr.
Chapman received a bonus in the amount of $226,000 related to 1998 performance.

           Deductibility  Limitations  under Section 162(m) of Internal  Revenue
Code.   The  Company  has  not  adopted  a  policy  with  respect  to  executive
compensation in excess of $1,000,000 a year and has not paid such  compensation.
The  Company  will  continue  to  review   existing   limitations   on  the  tax
deductibility of such compensation.

           Compensation Committee:

           J. Kenneth Brody (Chair)     Eran S. Ashany          Lorraine O. Legg

                                     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                                               OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners and Management

           The  following  table sets  forth,  as of October 15,  1999,  certain
information  furnished to the Company with respect to ownership of the Company's
common  stock of (i) each  director,  (ii) the "Named  Executive  Officers"  (as
defined under "Executive Compensation"), (iii) all persons known by the Company,
based  upon  review of  Schedules  13D and 13G  filed  with the  Securities  and
Exchange  Commission,  to be  beneficial  owners of more than five of its common
stock,  and (iv) all current  executive  officers and directors as a group.  The
Company had 5,217,491 shares issued and outstanding on October 15, 1999.


                                                        53

<PAGE>



                                                 Common Stock(1)  Percent
                                                                  of Shares
Name and Address of Beneficial Owner            Number of Shares  Outstanding
- ------------------------------------            ----------------  -----------

Brown Capital Management, Inc.2                 673,700              12.9%
809 Cathedral Street
Baltimore, Maryland 21201

Becker Capital Management, Inc.3                474,300               9.1%
1211 S.W. Fifth Avenue, Suite 2185
Portland, Oregon 97204

Brinson Partners, Inc.4                         465,600               8.9%
209 South Lasalle Street
Chicago, Illinois 60604

Wellington Management Company, LLC5             420,000               8.0%
75 State Street
Boston, Massachusetts 02109

Levine Leichtman Capital Partners II, L.P.6     344,186               6.6%
355 North Maple Drive
Beverly Hills, California 90210

Matthew W. Chapman7,8                           337,190               6.4%

Robert P. Chamness9                             170,000               3.2%

Robert T. Jett10                                160,180               3.1%

Eran S. Ashany11                                 78,000               1.5%

J. Kenneth Brody12                               27,000              *

Lois M. Roberts13                                15,287              *

Eric T. Wagner14                                 10,704              *

Lorraine O. Legg15                               20,868              *

Frank E. Brawner16                                5,293              *

L. B. Day17                                       4,663              *

All directors and executive officers            994,258              17.5%
as a group (16 persons)18


      *  Less than one percent.

      1Applicable percentage of ownership is based on 5,217,491 shares of common
stock outstanding as of October 15, 1999.  Beneficial ownership is determined in
accordance  with the  rules  of the  Securities  and  Exchange  Commission,  and
includes  voting and investment  power with respect to shares.  Shares of common
stock subject to options or warrants currently exercisable or exercisable within
60 days after October 15, 1999, are deemed

                                                        54

<PAGE>



outstanding  for computing the  percentage  ownership of the person holding such
options or warrants, but are not deemed outstanding for computing the percentage
of any other person.

      2 Brown  Capital  Management,  Inc.  ("Brown")  is an  investment  adviser
registered  with the  Securities  and Exchange  Commission  under the Investment
Advisers Act of 1940, as amended. As of June 30, 1999, Brown, in its capacity as
investment adviser, may be deemed to have beneficial ownership of 673,700 shares
of common stock of CFI ProServices,  Inc. that are owned by numerous  investment
advisory  clients,  none of which is known to have such interest with respect to
more than five percent of the class. As of June 30, 1999,  Brown had sole voting
power with respect to 622,900 shares and sole dispositive  power with respect to
all 673,700 shares.

      3 Becker  Capital  Management,  Inc.  ("Becker") is an investment  adviser
registered  with the  Securities  and Exchange  Commission  under the Investment
Advisers  Act of 1940,  as amended.  As of December  31,  1998,  Becker,  in its
capacity as investment  adviser,  may be deemed to have beneficial  ownership of
474,300  shares  of  common  stock of CFI  ProServices,  Inc.  that are owned by
numerous  investment  advisory  clients,  none of which  is  known to have  such
interest with respect to more than five percent of the class. As of December 31,
1998,  Becker had sole voting and dispositive  power with respect to all 474,300
shares.

      4 Brinson Partners Inc.  ("Brinson") is an investment  adviser  registered
with the Securities and Exchange Commission under the Investment Advisers Act of
1940,  as  amended.  As of  December  31,  1998,  Brinson,  in its  capacity  as
investment adviser, may be deemed to have beneficial ownership of 465,600 shares
of common stock of CFI ProServices,  Inc. that are owned by numerous  investment
advisory  clients,  none of which is known to have such interest with respect to
more than five percent of the class. As of December 31, 1998, Brinson had shared
voting and dispositive power with respect to all 465,600 shares.

      5 Wellington  Management  Company,  LLP ("WMC") is an  investment  adviser
registered  with the  Securities  and Exchange  Commission  under the Investment
Advisers Act of 1940, as amended.  As of December 31, 1998, WMC, in its capacity
as investment  adviser,  may be deemed to have  beneficial  ownership of 420,000
shares of  common  stock of CFI  ProServices,  Inc.  that are owned by  numerous
investment  advisory clients,  none of which is known to have such interest with
respect to more than five percent of the class. As of December 31, 1998, WMC had
shared voting power with respect to 97,900 shares and shared  dispositive  power
with respect to all 420,000 shares.

      6Levine Leichtman  Capital Partners II, L.P.  ("Levine") has shared voting
power and shared  dispositive  power with respect to all 344,186 shares.  Levine
holds a Note entitling it to convert that Note into 216,912 shares (assuming the
full accreted value of the Note). As of October 15, 1999,  Levine is entitled to
convert the Note into 164,906  shares based on the Note's  accreted  value as of
that date.  On that  basis,  Levine is the  beneficial  owner of 292,180  shares
representing 5.6% of the Company's common stock.

      7 The address for such person is 400 S.W. Sixth Avenue,  Portland,  Oregon
97204.

      8 Includes  66,000 shares  issuable  upon exercise of options  exercisable
within 60 days of October 15, 1999.  Also  includes 287 shares  allocated to Mr.
Chapman's  account under the CFI ProServices,  Inc.,  Employee Savings and Stock
Ownership  Plan (the  "ESSOP").  Mr.  Chapman has shared voting and  dispositive
power with respect to such 287 shares.

      9 Includes  155,000 shares  issuable upon exercise of options  exercisable
within 60 days of October 15, 1999.  Also  includes 439 shares  allocated to Mr.
Chamness's  account  under  the  ESSOP.  Mr.  Chamness  has  shared  voting  and
dispositive power with respect to such 439 shares.

      10 Includes  33,000 shares  issuable upon exercise of options  exercisable
within 60 days of October 15, 1999.  Also  includes 436 shares  allocated to Mr.
Jett's account under the ESSOP. Mr. Jett has shared voting and dispositive power
with respect to such 436 shares.

      11 Includes  78,419  shares held in the name of Allen  Investments  III, a
venture capital investment partnership. Mr. Ashany is an officer and director of
Allen  &  Company  Incorporated  ("ACI"),  and  the  general  partner  of  Allen
Investments III, but he disclaims  beneficial  ownership of those 78,419 shares.
Of the  remaining  13,500  shares,  3,500 are owned of record by Mr.  Ashany and
12,000 are issuable to Mr. Ashany upon exercise of options exercisable within 60
days of  October  15,  1999.  Does not  include  shares  held of record by other
officers and directors of ACI.

      12 Includes  12,000 shares  issuable upon exercise of options  exercisable
within 60 days of October 15, 1999.

      13 Includes  14,625 shares  issuable upon exercise of options  exercisable
within 60 days of October 15, 1999.  Also  includes 279 shares  allocated to Ms.
Roberts'  account under the ESSOP. Ms. Roberts has shared voting and dispositive
power with respect to such 279 shares.

      14 Includes 444 shares  allocated to Mr. Wagner's account under the ESSOP.
Mr.  Wagner has shared  voting and  dispositive  power with  respect to such 444
shares.

      15 Includes  12,384 shares  issuable upon exercise of options  exercisable
within 60 days of October 15, 1999.

      16 Includes  5,293 shares  issuable upon  exercise of options  exercisable
within 60 days of October 15, 1999.

      17 Includes  4,663 shares  issuable upon  exercise of options  exercisable
within 60 days of October 15, 1999.

      18 Includes  472,413 shares issuable upon exercise of options  exercisable
within 60 days of October 15, 1999. Also includes 3,559 shares  allocated to the
executive officers' accounts under the ESSOP. The executive officers have shared
voting and dispositive power with respect to such 3,559 shares.


                                                        55

<PAGE>



                                  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

           The Company  engaged the  services of  Michaels  Printing,  Inc.  for
purposes  of  printing  and  related  services,  for which the  Company  paid an
aggregate of approximately  $130,000 during 1998. Robert T. Jett, Executive Vice
President,  Secretary and a member of the Board of Directors of the Company,  is
the brother of Michael  Jett,  an equity  owner of Michaels  Printing,  Inc. The
Company  believes that the terms and conditions under which printing orders have
been made with Michaels Printing, Inc. have been based on competitive prices for
similar services  available within the Portland  metropolitan  area. The Company
continued this business relationship in 1999.

           Pursuant to a Stock Sale and  Purchase  Agreement  (the  "Agreement")
entered into by the Company in  connection  with its  acquisition  of all of the
issued and  outstanding  common stock of Culverin  Corporation in November 1995,
Eric  Wagner,  a former  Culverin  shareholder  and a Named  Executive  Officer,
received  $1,177,877  cash paid in installments  through  December 31, 1998, and
10,704  shares of the Company's  common stock on January 1, 1998.  Certain other
contingent  payments will be made on an annual basis through  December 31, 2000.
The contingent payments will be equal to specified  percentages of the Company's
revenues  (as  such  term  is  defined  in the  Agreement)  attributable  to the
licensing of certain products in each fiscal year during such period. Contingent
payments made through  December 31, 1998,  total $785,203 and were made in cash.
Contingent  payments  earned  in 1999 and 2000  may be  made,  at the  Company's
option, either in cash or in combination of cash and the Company's common stock.
The  aggregate  payments to be made by the Company  pursuant to the Agreement to
all  former  Culverin   shareholders,   including  Mr.  Wagner,   cannot  exceed
$10,000,000.

           The  Company has  pledged a  certificate  of deposit in the amount of
$200,000  with a bank,  securing  a loan by the bank to  Robert P.  Chamness  in
connection with construction of Mr. Chamness' principal  residence.  The loan is
scheduled to be repaid upon the sale of Mr. Chamness' current residence.

           The   Company   entered   into  an   amendment   to  an   Employment,
Confidentiality and Invention Agreement with Paul Harrison dated May 27, 1999 in
connection with the Company's acquisition of MECA Software,  L.L.C. Mr. Harrison
resigned as the Company's Senior Vice President effective as of October 1, 1999.
The amended  agreement  requires that the Company continue Mr. Harrison's annual
base salary of $300,000 and employment  benefits  through  December 31, 2000 and
pay him lump sum payments of $543,344 by January 31, 2000 and of  $1,281,733  by
January 31, 2001.

           In connection  with the Company's  acquisition  of MECA,  the Company
assumed a Severance,  Confidentiality  and  Invention  Agreement  with  Kathleen
Bromage,  the Company's  Vice  President,  e-Commerce  Division.  That agreement
provides that, if the Company  terminates Ms.  Bromage's  employment for reasons
other than for "cause,"  then the Company is required to continue Ms.  Bromage's
base salary and fringe benefits for 12 months after such termination. "Cause" is
defined  generally  to include an act of  dishonesty,  conduct  injurious to the
Company, incompetence, gross insubordination,  violation of an agreement between
Ms. Bromage and the Company, or conviction of certain crimes. The agreement also
contains provisions regarding  non-competition and non-solicitation of employees
and customers.

                                             SELLING SECURITY HOLDERS


     The common stock we are  registering  for sale pursuant to this  prospectus
consists of 90,000 shares we issued to two of the selling  security  holders and
1,159,356 shares issuable to the other security holders upon (1) the exercise of
Options  entitling the holder to purchase  30,000 shares at an exercise price of
$12.00 per share,  30,000 shares at an exercise  price of $15.00 per share,  and
40,000 shares at an exercise price of $18.00 per share,  (2) the exercise of the
one Warrant  entitling the holders or their  assignees to purchase 17,000 shares
at an exercise price of $12.00 per share,  (3) the exercise of the four Warrants
entitling  the  holders or their  assignees  to  purchase  439,822  shares at an
exercise  price of $12.34375 per share,  and (4) the  conversion of the five 10%
Convertible  Subordinated  Discounted  Notes  entitling  the  holders  or  their
assignees to convert those Notes into 602,539 shares



                                                        56

<PAGE>



at a conversion  price of $12.34375  per share  (assuming  the maximum  accreted
value of the Notes).  This  registration  statement also covers an  undetermined
number of additional shares as may become issuable as a result of adjustments in
the respective exercise price of the Options and the Warrants and the conversion
price of the Notes to prevent  dilution  in  accordance  with Rule 416 under the
Securities Act of 1933. We will not receive any proceeds from the sale of shares
of common stock by the selling security holders.


     We do not have a material  relationship  with any of the  selling  security
holders  within the past three years except U.S.  Bancorp  Libra,  a division of
U.S. Bancorp Investments, Inc. and RCG Capital Markets Group, Inc. On August 13,
1999, we issued to U.S. Bancorp Investments,  Inc., in partial consideration for
services as our  financial  advisor and  placement  agent in 1999,  a Warrant to
purchase  58,000 shares of our common  stock.  U.S.  Bancorp Libra  subsequently
transferred  a part of its interest in that Warrant to certain of its  employees
(or  entities  controlled  by such  employees)  to  purchase up to 34,800 of the
58,000 shares. We also have agreed to issue to U.S. Bancorp  Investments,  Inc.,
in consideration for investor relations  services,  a second Warrant to purchase
17,000 shares of our common stock. U.S. Bancorp  Investments,  Inc. also holds a
Note  entitling it to convert that Note into 114,482  shares.  On September  15,
1999,  we  also  agreed  to  issue  to  RCG  Capital  Markets  Group,  Inc.,  in
consideration  for  investor  relations  services,  Options to purchase  100,000
shares of our common stock.



           The following  table sets forth  information  as of October 15, 1999,
relating to the  beneficial  ownership of our common stock,  without taking into
account any  adjustments in the exercise price of the Warrants or the conversion
price of the Notes, by each selling security holder. The numbers and percentages
of  shares  beneficially  owned set  forth in the  footnotes  below are based on
5,217,491  shares  outstanding at October 15, 1999, and have been  determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934. Under this
rule,  beneficial ownership includes any shares as to which a person has sole or
shared voting or dispositive  power or may,  within 60 days of October 15, 1999,
acquire such power.

<TABLE>

<CAPTION>


                                          Common Stock Owned         Common Stock          Common Stock Owned After
      Selling Security Holders             Prior to Offering         Being Offered               the Offering
                                                                                           Number          Percentage
<S>                                       <C>                        <C>                   <C>             <C>
Levine Leichtman Capital                        344,186                 344,186               --                --
Partners II, L.P.1
Ableco Holdings LLC2                            190,911                 190,911               --                --
Bay Star Capital, L.P.3                         162,684                 162,684               --                --
U.S. Bancorp Investments, Inc.4                 154,682                 154,682               --                --
RCG Capital Markets Group,                      100,000                 100,000               --                --
Inc.5
David C. Grove                                   85,000                 45,000              40,000              *
Foothill Partners, III, L.P.2                   63,637                  63,637                --                --
Soundshore Holdings Ltd.3                       54,228                  54,228                --                --
Soundshore Opportunity Holding                  54,228                  54,228                --                --
Fund Ltd.3
Ragen Mackenzie Incorporated,                   45,000                  45,000                --                --
as Custodian for David C. Grove,
IRA



                                                        57

<PAGE>




Ravich Revocable Trust of 19896                 11,600                  11,600                --                --
Jeff Benjamin6                                   4,930                   4,930                --                --
Robert Okun6                                     4,930                   4,930                --                --
Upchurch Living Trust U/A/D                      4,930                   4,930                --                --
December 14, 19906
Alan Schrager6                                   1,740                   1,740                --                --
Tom Koch6                                        1,160                   1,160                --                --
Eben P. Perison6                                 1,160                   1,160                --                --
Caroline Sykes6                                  1,160                   1,160                --                --
Mark Fein6                                        580                     580                 --                --
Morrish Community Property                        580                     580                 --                --
Trust6
Jean Smith6                                       580                     580                 --                --
Forbes Burtt6                                     580                     580                 --                --
Steven F. Mayer6                                  580                     580                 --                --
Jeff Kirt6                                        290                     290                 --                --
      TOTAL                                    1,289,356               1,249,356            40,000              *

</TABLE>


      *  Less than one percent.

      1Levine  Leichtman  Capital  Partners  II, L.P.  (Levine)  holds a Warrant
entitling it to purchase  127,274  shares.  It also holds a Note entitling it to
convert such Note into 216,912  shares  (assuming the full accreted value of the
Note). As of October 15, 1999,  Levine is entitled to convert the Note into only
164,906 shares based on the Note's accreted value as of that date.

      2This selling security holder holds a Warrant entitling it to purchase the
number of shares opposite its name.

      3This selling  security  holder holds a Note  entitling it to convert that
Note into the number of shares  opposite its name  (assuming  the full  accreted
value of the Note). As of October 15, 1999, Bay Star Capital,  L.P.,  Soundshore
Holdings  Ltd.,  and  Soundshore  Opportunity  Holding Fund Ltd. are entitled to
convert their Notes into only 123,679, 41,226, and 41,226 shares,  respectively,
based on the Notes' accreted value as of that date.

      4U.S.  Bancorp  Investments,  Inc.  (US) holds a Warrant  entitling  it to
purchase  58,000 shares (34,800 shares of which it transferred to certain of its
employees or entities controlled by such employees),  a second Warrant entitling
it to purchase 17,000 shares,  and a Note entitling it to convert that Note into
114,482 shares (assuming the full accreted value of the Note). As of October 15,
1999,  US is entitled to convert the Note into only 86,576  shares  based on the
Note's accreted value as of that date.

      5RCG Capital  Markets  Group,  Inc.  (RCG) holds  Options  entitling it to
purchase 100,000 shares. Of such Options,  only 30,000 are currently exercisable
and  30,000  and  40,000  become  exercisable  in 2000 and  2002,  respectively,
provided RCG continues to provide services to us.

      6US  transferred  its right  under  one of its  Warrants  to this  selling
security holder to purchase the number of shares opposite such selling  security
holder's name.

           Information  relating to the selling security holders may change from
time to time in which case new  information  will be set forth in supplements to
this prospectus. In addition, the per share exercise price of the

                                                        58

<PAGE>



Options and the  Warrants and the  conversion  price of the Notes are subject to
adjustment  under certain  circumstances.  Accordingly,  the number of shares of
common  stock  issuable  upon  exercise of the Options and the  Warrants and the
conversion of the Notes may increase or decrease.

                                               PLAN OF DISTRIBUTION

           The selling  security  holders,  following  issuance,  may sell their
shares of common stock in transactions  from time to time while the registration
statement of which this prospectus is a part remains  effective.  We have agreed
to keep the  registration  statement  effective for seven years (or such shorter
period if all of the shares have been sold or disposed of prior to such time).

           The selling  security  holders may sell shares on the Nasdaq National
Market, in privately negotiated  transactions,  or otherwise, at any price. They
may  sell  such  shares  by  one  or  more  of the  following  methods,  without
limitation:

                (a) A block  trade in which a broker or dealer so  engaged  will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;

                (b)  Purchases by a broker or dealer as principal  and resale by
such broker or dealer for its account pursuant to this prospectus;

                (c)   Ordinary brokerage transactions and transactions in which
the broker solicits purchasers;

                (d)   Privately negotiated transactions;

                (e)   Short sales; and

                (f)  Face-to-face  transactions  between  sellers and purchasers
without a broker-dealer.

           In  effecting  sales,  brokers  or  dealers  engaged  by the  selling
security  holders may arrange for other brokers or dealers to participate.  Such
brokers or  dealers  may  receive  commissions  or  discounts  from the  selling
security  holders in amounts to be  negotiated  that are not  expected to exceed
those customary in the types of transactions involved.  Broker-dealers may agree
with the  selling  security  holders to sell a  specified  number of shares at a
stipulated price per share and, to the extent such broker-dealer is unable to do
so acting as agent for the selling  security  holders,  to purchase as principal
any  unsold  shares  at the price  required  to  fulfill  the  broker-  dealer's
commitment to the selling security holders. Broker-dealers who acquire shares as
principal may thereafter  resell such shares.  The selling  security holders may
also sell shares in accordance  with Rule 144 under the  Securities  Act of 1933
rather than pursuant to this prospectus.

           In connection with distributions of shares or otherwise,  the selling
security  holders may enter into hedging  transactions  with  broker-dealers  or
other   financial   institutions.   In   connection   with  such   transactions,
broker-dealers or other financial  institutions may engage in short sales of our
common  stock in the  course of  hedging  the  positions  they  assume  with the
holders.  The  selling  security  holders  may sell our common  stock  short and
deliver shares to close out such short  positions.  The selling security holders
may enter  into  options  or other  transactions  with  broker-dealers  or other
financial institutions that require the delivery to such broker-dealers or other
financial   institutions  of  the  shares  offered  hereby,  which  shares  such
broker-dealers  or other  financial  institutions  may resell  pursuant  to this
prospectus. The selling security holders may pledge shares to a broker-dealer or
other  financial  institution  and, upon default,  such  broker-dealer  or other
financial  institution  may effect sales of the pledged shares  pursuant to this
prospectus.  The selling  security  holders and any brokers and dealers  through
whom sales of the shares are made may be deemed to be "underwriters"  within the
meaning of the  Securities  Act of 1933,  and the  commissions  or discounts and
other   compensation   paid  to  such  persons  may  regarded  as  underwriters'
compensation.

                                                        59

<PAGE>



           We will pay all  expenses  of  registration  (including  the fees and
expenses of up to three counsel for the selling  security  holders)  incurred in
connection with this offering.  However,  the selling  security holders will pay
all underwriting discounts, brokerage commissions, and similar expenses incurred
by them.

           We have agreed to indemnify  certain persons,  including the holders,
their  directors,  officers,  partners,  legal  counsel  and  accountants,  each
underwriter (if any), and controlling  persons,  against certain  liabilities in
connection  with  this  prospectus  or the  registration  statement  to which it
relates, including liabilities arising under the Securities Act of 1933.

           To comply with certain states'  securities  laws, if applicable,  the
shares may be sold in any such jurisdictions only through registered or licensed
brokers or  dealers.  The shares  may not be sold in certain  states  unless the
seller meets the applicable state notice and filing requirements.

                                             DESCRIPTION OF SECURITIES

           The  Registration  Statement  of  which  this  prospectus  is a  part
registers up to 1,249,356 shares of common stock.  The following  description of
the  Company's  common  stock is  qualified  in all respects by reference to the
Company's Amended and Restated Articles of Incorporation (the "Articles"), which
have been filed as an exhibit to the Registration Statement.

Common Stock

           The Articles  authorize  the issuance of up to  10,000,000  shares of
common stock, no par value. As of October 15, 1999,  there were 5,217,491 shares
of common stock  outstanding held of record by approximately  295  shareholders.
Holders of the  common  stock are  entitled  to  receive  dividends  when and as
declared by the Board of Directors out of any funds lawfully  available therefor
and, in the event of  liquidation  or  distribution  of assets,  are entitled to
participate  ratably in the  distribution of such assets remaining after payment
of liabilities,  in each case subject to any preferential  rights granted to any
series of Preferred  Stock that may then be  outstanding.  The common stock does
not have any preemptive rights or redemption or sinking fund provisions.  All of
the issued and outstanding  shares of common stock are, and all shares of common
stock to be outstanding upon completion of this offering will be, fully paid and
nonassessable. Holders of common stock are entitled to one vote per share on all
matters  to be  voted  upon by the  shareholders.  The  Company  does  not  have
cumulative voting in the election of directors,  which means that the holders of
more than 50 percent of the shares voting can elect all directors.  The Articles
provide for staggered terms for directors whenever the Board is comprised of six
or more  members,  meaning  that at each  election  of the  Board of  Directors,
one-third of the  Company's  directors  will be elected for  staggered  terms of
three years.

Provisions Affecting Acquisition of the Company

           The Articles provide that any Business Combination (as defined below)
must be  approved by the vote of at least 75 percent of the  outstanding  common
stock,  with such  approving  votes to include at least 51 percent of the common
stock  held by persons  other than the Major  Shareholder  (as  defined  below),
unless the proposed  Business  Combination  (a) is approved by a majority of the
directors  ("Continuing   Directors")  who  are  unaffiliated  with  such  Major
Shareholder and who were directors before such Major Shareholder  became a Major
Shareholder or who were designated  (before initial election as a director) as a
Continuing Director by a two-thirds vote of the Continuing Directors,  or (b) is
solely  between  the Company and any  corporation  in which the Company  owns 50
percent or more of the voting  stock or  interest  and the  shareholders  of the
Company retain their proportionate  voting and equity interests in the surviving
entity.  The  Articles  define a  "Business  Combination"  as (1) any  merger or
consolidation   (whether  in  a  single  transaction  or  a  series  of  related
transactions)  of the Company or any  subsidiary of the Company with or into any
person or entity  which,  together  with  affiliates  or  associates or group of
persons that have agreed to act together,  is or becomes the beneficial owner of
five percent or more of the Company's voting stock (a "Major Shareholder"),  (2)
any sale, exchange, shareholder distribution, pledge,

                                                        60

<PAGE>



mortgage (or use of other security device to create a lien upon) or lease of all
or  substantially  all of the assets of the Company or a  subsidiary  to a Major
Shareholder,   whether  in  a  single   transaction   or  a  series  of  related
transactions,  (3) any purchase,  exchange,  lease, or other  acquisition by the
Company or any of our subsidiaries of all or substantially  all of the assets of
a Major  Shareholder,  whether  in a single  transaction  or a series of related
transactions,  (4) any issuance of any  securities  of the Company (or warrants,
options  or other  rights to  purchase  the same) to,  the  reclassification  or
recapitalization  of the  securities of the Company owned by, or the exchange of
securities of the Company with, a Major  Shareholder,  (5) any other transaction
with a Major  Shareholder for which approval of the  shareholders is required by
law or by any agreement between the Company and any national securities exchange
or rule of any such exchange or Nasdaq,  and (6) any contract or other agreement
providing for any of the foregoing.

           The  determination  of whether a  proposed  business  combination  is
within  the  scope  of the  Articles  is made by a  two-thirds  majority  of the
Continuing  Directors  whose  determination  is  conclusive  and binding for all
purposes of the Articles.

           The  Articles  also  provide  that  if and  for so  long  as a  Major
Shareholder  exists,  a resolution  to  voluntarily  dissolve the Company may be
adopted only upon the consent of all shareholders, or the affirmative vote of at
least  two-thirds  of the total  number  of the  Continuing  Directors,  and the
affirmative  vote of the  holders  of at least 75  percent  of the shares of the
Company entitled to vote thereon.

           The  Articles  also  provide  that,   notwithstanding  the  foregoing
provisions,  the requisite vote necessary to approve a Business Combination with
a Major Shareholder  increases to 95 percent unless the terms of the transaction
are such that all of the  Company's  shareholders  are to receive as a result of
the Business  Combination  the same amount,  kind,  and  composition  of cash or
securities  payment on a  per-share  basis in exchange  for their  shares as was
received  by any other  former  shareholder  of the  Company  whose  shares were
acquired during the preceding 12 month period by the Major Shareholder with whom
the Business Combination is to be consummated.

           The  provisions  of  the  Articles  requiring   staggered  terms  for
directors,  supermajority  approval of the Business Combinations involving Major
Shareholders  and providing for  supermajority  voting to amend such provisions,
may not be amended without approval of the holders of at least 75 percent of the
Company's outstanding common stock.

           The foregoing  provisions  of the Articles,  as well as the staggered
terms for directors and the availability of 5,000,000 shares of Series Preferred
Stock for issuance without shareholder approval, may deter any potential hostile
offers or other  efforts to obtain  control of the Company that are not approved
by the  Board of  Directors  and  could  thereby  deprive  the  shareholders  of
opportunities  to realize a premium on their common stock and could make removal
of incumbent  management more difficult.  At the same time, these provisions may
have the effect of  inducing  any  persons  seeking  control of the Company or a
business combination with the Company to negotiate terms acceptable to the Board
of Directors.

State Legislation

           Oregon law provides that upon  authorization  of the common stock for
quotation on the Nasdaq National Market, certain "business combinations" between
the  Company  as an  Oregon  corporation  and an  "interested  shareholder"  are
prohibited  for a three-year  period  following  the date that such  shareholder
became an interested shareholder,  unless (1) the corporation has elected in its
articles of incorporation not to be governed by the Oregon business  combination
law (the Company has not made such an  election),  (2) the business  combination
was approved by the Board of Directors of the corporation before the other party
to  the  business  combination  became  an  interested  shareholder,   (3)  upon
consummation  of the  transaction  that made it an interested  shareholder,  the
interested  shareholder  owned at least 85 percent  of the  voting  stock of the
corporation outstanding at the commencement of the transaction (excluding voting
stock owned by directors who are also officers or held in employee benefit plans
in which the employees do not have a confidential  right to tender or vote stock
held by the

                                                        61

<PAGE>



plan), or (4) the business combination was approved by the Board of Directors of
the  corporation  and  ratified by 66 2/3 percent of the voting  stock which the
interested  shareholder  did not own. The three-year  prohibition  also does not
apply to certain  business  combinations  proposed by an interested  shareholder
following the announcement or notification of certain extraordinary transactions
involving  the  corporation  and  a  person  who  has  not  been  an  interested
shareholder  during  the  previous  three  years  or who  became  an  interested
shareholder with the approval of a majority of the corporation's directors.

           The term  "business  combination"  for  purposes of the Oregon law is
defined  generally  to  include  mergers  or  consolidations  between  an Oregon
corporation and an "interested  shareholder,"  transactions  with an "interested
shareholder"   involving  the  assets  or  stock  of  the   corporation  or  its
majority-owned  subsidiaries  and  transactions  which  increase  an  interested
shareholder's  percentage ownership of stock. The term "interested  shareholder"
is defined  generally as those  shareholders who become  beneficial owners of 15
percent or more of an Oregon corporation's voting stock.

           The Company is subject to the Oregon  Control Share Act (the "Control
Share  Act"),  which  generally  provides  that a person  (the  "Acquiror")  who
acquires voting stock of an Oregon corporation in a transaction which results in
such Acquiror holding more than each of 20 percent, 33 percent, or 50 percent of
the total  voting  power of such  corporation  (a "Control  Share  Acquisition")
cannot vote the shares it acquires in the Control  Share  Acquisition  ("control
shares")  unless  voting  rights are  accorded to such  control  shares by (1) a
majority  of each  voting  group  entitled  to vote,  and (2) the  holders  of a
majority of the outstanding voting shares,  excluding the control shares held by
the Acquiror and shares held by the Company's officers and inside directors. The
term "Acquiror" is broadly defined to include persons acting as a group.

           The Acquiror  may,  but is not required to,  submit to the Company an
"Acquiring  Person  Statement"  setting  forth  certain  information  about  the
Acquiror  and its plans with  respect to the  Company.  The  Statement  may also
request that the Company  call a special  meeting of  shareholders  to determine
whether  the voting  rights  will be  restored  to the  control  shares.  If the
Acquiror does not request a special meeting of shareholders, the issue of voting
rights of  control  shares  will be  considered  at the next  annual or  special
meeting of  shareholders.  If the Acquiror's  control shares are accorded voting
rights and represent a majority or more of all voting power, shareholders who do
not vote in favor of the  restoration  of such voting rights will have the right
to receive the  appraised  "fair value" of their  shares,  which may not be less
than the highest price paid per share by the Acquiror for the control shares.

           A corporation may provide in its articles of incorporation and bylaws
that the statutory  provisions  described above do not apply to its shares.  The
Articles  and Bylaws of the Company do not  contain  such a  provision,  and the
statutory provisions described above will apply to acquisitions of shares of the
Company's voting stock.

Transfer Agent and Registrar

           The Transfer  Agent and Registrar for the common stock is ChaseMellon
Shareholder Services of Seattle, Washington.

                                         SHARES ELIGIBLE FOR FUTURE RESALE

           Future  sales of  substantial  amounts of common  stock in the public
market could adversely affect the market price of the common stock.

           Upon completion of this offering,  the Company will have  outstanding
an  aggregate  of  6,376,847  shares of common  stock,  assuming  no exercise of
outstanding options the Company issued to its officers, directors, and employee,
the exercise of the Option and Warrants  described in this  prospectus,  and the
conversion  of the Notes  also  described  in this  prospectus,  based on shares
outstanding as of October 15, 1999. Substantially all of such

                                                        62

<PAGE>



shares will be freely saleable without restriction or further registration under
the  Securities  Act of 1933 and any shares  purchased  by  "affiliates"  of the
Company as that term is defined in Rule 144 under the Securities Act of 1933 are
subject to certain limitations and restrictions described below.

           As of October 15,  1999,  there were a total of  1,374,801  shares of
common stock subject to  outstanding  options under the Company's  option plans,
765,818 of which were vested and  exercisable.  Holders of stock  options  could
exercise these options and sell certain of the shares issued upon exercise.

           In  general,  under Rule 144 as  currently  in  effect,  a person (or
persons whose shares are  aggregated) who has  beneficially  owned shares for at
least two years  (including  the  holding  period of any prior  owner  except an
affiliate) is entitled to sell in "broker's  transactions"  or to market makers,
within  any  three-month  period,  a number of shares  that does not  exceed the
greater  of (i) one  percent  of the  number  of shares  of  common  stock  then
outstanding  (approximately  64,668 shares  immediately  after this offering) or
(ii) generally, the average weekly trading volume in the common stock during the
four calendar weeks  preceding the required filing of a Form 144 with respect to
such sale.  Sales under Rule 144 are generally  subject to the  availability  of
current public information about the Company. Under Rule 144(k), a person who is
not deemed to have been an affiliate of the Company at any time during the three
months preceding a sale, and who has  beneficially  owned the shares proposed to
be sold for at least three years, is entitled to sell such shares without having
to comply with the manner of sale,  public  information,  volume  limitation  or
notice filing  provisions of Rule 144.  Under Rule 701 of the  Securities Act of
1933, persons who purchased shares upon exercise of options granted prior to the
effective date of the Company's public offering are entitled to sell such shares
in reliance on Rule 144,  without  having to comply with the holding  period and
notice  filing  requirements  of Rule  144 and,  in the case of  non-affiliates,
without  having to comply  with the public  information,  volume  limitation  or
notice filing provisions of Rule 144.

                                                   LEGAL MATTERS

           The validity of the issuance of the common stock  offered  hereby has
been passed upon for us by Farleigh, Wada & Witt, P.C., Portland, Oregon.

                                                      EXPERTS

     The  consolidated  financial  statements  of  CFI  ProServices,   Inc.  and
subsidiaries  as of  December  31,  1998 and 1997 and for the three year  period
ended December 31, 1998 and the financial  statement  schedule  included in this
registration  statement  have been audited by Arthur  Andersen LLP,  independent
public accountants,  as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.

     The financial  statements of ULTRADATA  Corporation  as of and for the year
ended  December  31, 1998,  included in this  registration  statement  have been
audited  by  Deloitte & Touche  LLP,  independent  auditors,  as stated in their
report appearing  herein,  and have been so included in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.

           The balance sheet of ULTRADATA  Corporation  as of December 31, 1997,
and the related statements of operations,  stockholders'  equity, and cash flows
for each of the years in the two year period ended December 31, 1997,  have been
included in this registration statement in reliance upon the report of KPMG LLP,
independent  auditors,  and  upon  the  authority  of said  firm as  experts  in
accounting and auditing.

           The financial statements of MECA Software,  L.L.C. as of December 31,
1997 and 1998 and for each of the two years in the  period  ended  December  31,
1998 included in this Prospectus have been so included in reliance on the report
(which contains  explanatory  paragraphs relating to the extensive  transactions
with related  parties as described in Note 8 to the financial  statements and to
the Company's ability to continue as a going concern as

                                                        63

<PAGE>



described in Note 2 to the financial statements) of PricewaterhouseCoopers  LLP,
independent  accountants,  given on the  authority  of said firm as  experts  in
auditing and accounting.


                                               AVAILABLE INFORMATION

            We are subject to the  informational  requirements of the Securities
Exchange Act of 1934, as amended,  and in accordance  therewith  files  reports,
proxy  statements,  and  other  information  with the  Securities  and  Exchange
Commission.  Reports, proxy statements, and other information filed by us may be
inspected  and  copied at the  public  reference  facilities  maintained  by the
Securities and Exchange Commission at 450 Fifth Street, N.W.,  Washington,  D.C.
20549, and at the Securities and Exchange  Commission's regional offices located
at 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center,  7th Floor,  New York,  New York 10048.  Copies of such materials may be
obtained from the website that the Securities and Exchange Commission  maintains
at http://www.sec.gov.

           We  have  filed  with  the  Securities  and  Exchange   Commission  a
registration  statement on Form S-1 (herein,  together with all  amendments  and
exhibits,  referred to as the "Registration Statement") under the Securities Act
with  respect to the common  stock  offered  hereby.  This  prospectus  does not
contain all of the information set forth in the Registration Statement,  certain
parts of which are omitted in accordance  with the rules and  regulations of the
Securities and Exchange Commission. For further information, reference is hereby
made to the  Registration  Statement.  Any  person  to whom this  prospectus  is
delivered  may  obtain  a copy of this  Registration  Statement,  including  the
exhibits  thereto,  without charge upon written or oral request to the Secretary
of Concentrex,  at 400 S.W.  Sixth Avenue,  Portland,  Oregon 97204,  telephone:
(503) 274-7280.

           Our common stock is listed on the Nasdaq  National  Market.  Reports,
proxy statements,  and other information  concerning Concentrex can be inspected
at the offices of the Nasdaq National Market, 1735 K Street,  N.W.,  Washington,
D.C. 20006-1506.


                                                        64

<PAGE>


<TABLE>
<CAPTION>


                                           INDEX TO FINANCIAL STATEMENTS

PROFORMA  FINANCIAL  STATEMENTS  FOR CFI  PROSERVICES,  INC.,  d/b/a  CONCENTREX
INCORPORATED FOR THE PERIODS ENDED SEPTEMBER 30, 1999 AND DECEMBER 31, 1998.

<S>                                                                                                            <C>
Proforma Unaudited Statement of Operations for the Year Ended December 31, 1998................................F-3
Proforma Unaudited Statement of Operations for the Nine Months Ended September 30, 1999........................F-5
Notes to Proforma Unaudited Financial Statements...............................................................F-7

CONSOLIDATED FINANCIAL STATEMENTS FOR CFI PROSERVICES, INC. AND SUBSIDIARIES AS OF
DECEMBER 31, 1998 AND 1997 AND FOR THE THREE YEARS ENDED DECEMBER 31, 1998, 1997, AND
1996:

Report of Independent Public Accountants.......................................................................F-10
Consolidated Balance Sheets as of December 31, 1998 and 1997...................................................F-11
Consolidated Statements of Income for the Three Years Ended December 31, 1998, 1997, and 1996..................F-12
Consolidated Statements of Shareholders' Equity for the Three Years Ended December 31, 1998, 1997,
      and 1996.................................................................................................F-13
Consolidated Statements of Cash Flows for the Three Years Ended December 31, 1998, 1997, and 1996..............F-14
Notes to Consolidated Financial Statements.....................................................................F-16
Report of Independent Public Accountants on Financial Statement Schedule.......................................F-31
Valuation and Qualifying Accounts for the Years Ended December 31, 1998, 1997, and 1996........................F-32

CONSOLIDATED FINANCIAL STATEMENTS FOR CFI PROSERVICES, INC. AND SUBSIDIARIES AS OF
SEPTEMBER 30, 1999 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998:

Consolidated Balance Sheets as of September 30, 1999 (Unaudited), and December 31, 1998........................F-34
Unaudited Consolidated Statements of Operations for the Nine Months Ended September 30, 1999 and 1998..........F-36
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 1999 and 1998..........F-37
Notes to Unaudited Financial Statements........................................................................F-39

FINANCIAL STATEMENTS FOR ULTRADATA  CORPORATION AS OF DECEMBER 31, 1998 AND 1997
AND FOR THE THREE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996:

Independent Auditors' Report...................................................................................F-45
Independent Auditors' Report...................................................................................F-46
Balance Sheets as of December 31, 1998 and 1997................................................................F-47
Statements of Operations for the Three Years Ended December 31, 1998, 1997, and 1996...........................F-48
Statements of Stockholders' Equity for the Three Years Ended December 31, 1998, 1997, and 1996.................F-49
Statements of Cash Flows for the Three Years Ended December 31, 1998, 1997, and 1996...........................F-50
Notes to Financial Statements..................................................................................F-51

FINANCIAL  STATEMENTS FOR ULTRADATA  CORPORATION AS OF JUNE 30, 1999 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1999 AND 1998:

Balance Sheet as of June 30, 1999 (Unaudited) and December 31, 1998............................................F-61
Unaudited Statements of Operations for the Six Months Ended June 30, 1999 and 1998.............................F-62
Unaudited Statement of Cash Flows for the Six Months Ended June 30, 1999 and 1998..............................F-63
Notes to Unaudited Financial Statements........................................................................F-64



                                                      F-1

<PAGE>



FINANCIAL STATEMENTS FOR MECA SOFTWARE, L.L.C. AS OF DECEMBER 31, 1997 AND 1998 AND
FOR THE TWO YEARS ENDED DECEMBER 31, 1997 AND 1998:

Report of Independent Accountants..............................................................................F-66
Balance Sheet as of December 31, 1997 and 1998.................................................................F-67
Statement of Operations for the Years Ended December 31, 1997 and 1998.........................................F-68
Statement of Changes in Members' Equity (Deficit) for the Years Ended December 31, 1997 and 1998...............F-69
Statement of Cash Flows for the Years Ended December 31, 1997 and 1998.........................................F-70
Notes to Financial Statements, December 31, 1997 and 1998 .....................................................F-71



FINANCIAL STATEMENTS FOR MECA SOFTWARE, L.L.C. AS OF MARCH 31, 1999 AND FOR THE
THREE MONTHS ENDED MARCH 31, 1999 AND 1998:

Balance Sheet as of March 31, 1999 (Unaudited) and December 31, 1998...........................................F-79
Unaudited Statements of Operations for the Three Months Ended March 31, 1999 and 1998..........................F-80
Unaudited Statement of Cash Flows for the Three Months Ended March 31, 1999 and 1998...........................F-81
Notes to Unaudited Interim Financial Statements................................................................F-82



</TABLE>
                                                      F-2

<PAGE>


<TABLE>
<CAPTION>

                                              CFI PROSERVICES, INC.,
                                            dba CONCENTREX INCORPORATED
                                    PROFORMA UNAUDITED STATEMENT OF OPERATIONS
                                       FOR THE YEAR ENDED DECEMBER 31, 1998
                                       (in thousands, except per share data)


                                                                                  Pro Forma
                                     Concentrex      MECA LLC     ULTRADATA       Adjustments        Pro Forma
<S>                                      <C>        <C>         <C>               <C>                <C>
Revenue
      Application software               $75,667    $        -- $         --      $          --      $  75,667
      Information management                  --             --       30,359                 --         30,359
      e-Commerce                           5,821         11,307           --                 --         17,129
      Ancillary products                   4,142         12,341           --                 --         16,483
                                       ---------    -----------    ---------         ----------      ---------
           Total Revenue                  85,630         23,648       30,359                 --        139,637

Cost of Revenue                           29,423         10,648       12,725                422 (a)(b)   53,218
                                       ---------    -----------    ---------         ----------      ---------

           Gross Profit                   56,207         13,000       17,634               (422)        86,419

Operating Expenses
      Sales and marketing                 19,204            513        4,853                (3) (a)     24,567
      Product development                 14,913          9,257        6,024               (56) (a)     30,138
      General and administrative          10,012         10,803        5,908              (823) (a)     25,900
      Amortization of goodwill             1,228         17,333           --           (14,802) (c)       3,759
      Acquired in-process research
         and development and other
         charges                           2,661             --           --                 --          2,661
                                       ---------    -----------    ---------         ----------      ---------
           Total Operating Expenses       48,018         37,906       16,785            (15,684)        87,025
                                       ---------    -----------    ---------         ----------      ---------

           Income (loss) from
               Operations                  8,189        (24,906)         849             15,262           (606)

Non-operating Income (Expense)
      Interest expense                      (454)          (613)        (312)           (10,714) (d)   (12,093)
      Interest income                        295            131           40                 --            466
      Equity in losses attributable to
         joint venture                      (670)            --           --                 --           (670)
      Other, net                              83             --          664                 --            747
                                       ---------    -----------    ---------         ----------      ---------
           Total Non-operating
              Income (Expense)              (746)          (482)         392            (10,714)       (11,550)
                                       ---------    -----------    ---------         ----------      ---------

Income (loss) before Income Taxes          7,443        (25,388)       1,241              4,548        (12,156)

Provision (Benefit) for Income Taxes       3,483             --           22             (5,787) (e)    (2,282)
                                       ---------    -----------    ---------         ----------      ---------

Net Income (Loss)                          3,960        (25,388)       1,219             10,335         (9,874)

Preferred Stock Dividend                      95             --           --                 --             95
                                       ---------    -----------    ---------         ----------      ---------

Net Income (Loss) Applicable to


   Common Shareholders                  $  3,865       $(25,388)    $  1,219           $ 10,335       $ (9,969)
                                         =======         ======      =======            =======        =======

                                                      F-3

<PAGE>


Basic Net Income (Loss) Per Share      $    0.77                                                     $   (1.97)
                                        ========                                                      ========
Shares Used in Calculating Basic
   Net Income (Loss) Per Share             5,012                                                         5,062  (f)
                                         =======                                                       =======
Diluted Net Income (Loss) Per Share    $    0.75                                                      $  (1.97)
                                        ========                                                       =======
Shares Used in Calculating Diluted
   Net Income (Loss) Per Share             5,167                                                         5,062  (f)
                                         =======                                                       =======

</TABLE>

    The accompanying notes are an integral part of this pro forma statement.

                                                      F-4

<PAGE>

<TABLE>
<CAPTION>


                                              CFI PROSERVICES, INC.,
                                            dba CONCENTREX INCORPORATED
                                    PROFORMA UNAUDITED STATEMENT OF OPERATIONS
                                   FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
                                       (in thousands, except per share data)


                                     Pro Forma                                    Pro Forma
                                     Concentrex      MECA LLC     ULTRADATA       Adjustments         Pro Forma
<S>                                  <C>            <C>           <C>             <C>                 <C>
Revenue
      Application software           $    58,158    $       --    $       --      $          --       $  58,158
      Information management               5,551            --         15,554                --          21,105
      e-Commerce                           8,678          4,008            --                --          12,686
      Ancillary products                   5,059          5,041            --                --          10,099
                                         -------         ------    ----------       -----------       ---------
           Total Revenue                  77,445          9,049        15,554                --         102,048

Cost of Revenue                           29,569          4,076        6,557                506 (a)(b)   40,708
                                          ------         ------      -------          ---------        --------

           Gross Profit                   47,876          4,973        8,997               (506)        61,340

Operating Expenses
      Sales and marketing                 13,498            631        2,757                (2) (a)     16,884
      Product development                 17,004          1,918        2,588               (21) (a)     21,489
      General and administrative          12,115          2,427        6,862               (77) (a)     21,327
      Amortization of goodwill             1,506             --           --             1,582  (c)      3,088
      Acquired in-process research and
         development and other charges    10,521             --           --                 --         10,521
                                         -------     ----------   ----------        -----------       --------
           Total Operating Expenses       54,644          4,976       12,207              1,482         73,309
                                          ------         ------      -------            -------       --------

           Loss from Operations           (6,768)            (3)      (3,210)            (1,988)       (11,969)

Non-operating Income (Expense)
      Interest expense                    (1,957)          (217)         (99)            (6,697)  (d)   (8,970)
      Interest income                        214             48           30                 --            292
      Other, net                             192             --          321                 --            513
                                       ---------    -----------      -------        -----------         ------
           Total Non-operating
              Income (Expense)            (1,551)          (169)         252             (6,697)        (8,165)
                                       ---------       --------      -------            -------          -----

Loss before Income Taxes                  (8,319)          (172)      (2,958)            (8,685)       (20,134)

Provision (Benefit) for Income Taxes         829             --           --             (3,561)   (e)  (2,732)
                                      ----------    -----------     --------           --------         -------

Net Loss                                  (9,148)          (172)      (2,958)            (5,124)       (17,402)

Preferred Stock Dividend                      69             --           --                 --             69
                                     -----------    -----------    ---------         ----------      ---------

Net loss Applicable to Common
   Shareholders                       $   (9,217)    $     (172)  $   (2,958)           $(5,124)      $(17,471)
                                       =========      =========    =========             ======        =======

Basic Net Loss Per Share             $     (1.81)                                                   $    (3.41)
                                      ==========                                                     =========


                                                      F-5

<PAGE>



Shares Used in Calculating Basic
   Net Loss Per Share                      5,102                                                         5,127  (f)
                                       =========                                                      ========
Diluted Net Loss Per Share           $     (1.81)                                                   $    (3.41)
                                      ==========                                                     =========
Shares Used in Calculating Diluted
   Net Loss Per Share                      5,102                                                         5,127  (f)
                                      ==========                                                     =========

</TABLE>

    The accompanying notes are an integral part of this pro forma statement.

                                                      F-6

<PAGE>



                             CFI PROSERVICES, INC.,
                          d/b/a Concentrex Incorporated

                NOTES TO PROFORMA UNAUDITED FINANCIAL STATEMENTS
                                 (In Thousands)

           The  accompanying  unaudited pro forma  financial  statements for the
periods ended  September 30, 1999, and December 31, 1998,  have been prepared to
present the effect of the purchase by CFI  ProServices,  Inc.,  d/b/a Concentrex
Incorporated  ("Concentrex")  and  MoneyScape  Holdings,  Inc.  of 99%  and  1%,
respectively,  of all the Members' equity in MECA Software,  L.L.C.  ("MECA") on
May  17,  1999,   and  100%  of  the  common  stock  of  ULTRADATA   Corporation
("ULTRADATA")  on August 13, 1999.  Both  acquisitions  have been  accounted for
using the purchase accounting method.

           The pro forma statements assume that both purchases were effective at
the beginning of 1998 for the Pro Forma  Statements of Operations.  Concentrex's
September 30, 1999 historical  balance sheet reflects the purchases of both MECA
and ULTRADATA.

           The proforma  financial  statements  have been prepared  based on the
historical  financial  statements of Concentrex adjusted to reflect the purchase
of MECA and  ULTRADATA.  In  addition,  certain  historical  amounts of MECA and
ULTRADATA have been  reclassified to conform to Concentrex's  presentation.  The
pro forma  financial  statements  may not be  indicative  of the  results of the
operations  that actually  would have occurred if the  transactions  had been in
effect as of the  beginning  of the  respective  periods nor do they  purport to
indicate  the  results of the future  operations  of  Concentrex.  The pro forma
financial  statements  should be read in conjunction with the audited  financial
statements and notes thereto of MECA and ULTRADATA.

           Statements of Operations.  The pro forma adjustments to the Pro Forma
Unaudited  Statements of Operations for the nine months ended September 30, 1999
and the year ended December 31, 1998, consist of the following:

           a.  Depreciation  expense and loss on  disposal  of fixed  assets was
reduced in the amounts  shown below as a result of the reduction in the carrying
value of MECA's fixed assets acquired:

<TABLE>
<CAPTION>

                                                Nine months ended            Year ended
                                                September 30, 1999        December 31, 1998

<S>                                             <C>                       <C>
Depreciation Expense                                  $  (204)                $     (989)
Loss on disposal of fixed assets                          (25)                      (488)
                                                      -------                  ---------
                                                      $  (229)                 $  (1,477)
                                                       ======                   =========

Classification on Statement of Operations:
Cost of Revenue                                       $  (129)                 $    (595)
Sales and Marketing                                        (2)                        (3)
Product Development                                       (21)                       (56)
General and Administrative                                (77)                      (823)
                                                      -------                   --------
                                                      $  (229)                  $ (1,477)
                                                       =======                   =======
</TABLE>


           b.   Cost of Revenue.  Cost of Revenue was adjusted as follows:

<TABLE>
<CAPTION>

                                                                Nine months ended               Year ended
                                                                September 30, 1999        December 31, 1998
<S>                                                             <C>                       <C>
                To record purchased software amortization
                   related to ULTRADATA                                   $635                     $1,017
                                                                           ===                      =====
</TABLE>


                                                      F-7

<PAGE>



           c.   Amortization.  Amortization of goodwill was adjusted as follows:
<TABLE>
<CAPTION>


                                                                Nine months ended               Year ended
                                                                September 30, 1999        December 31, 1998
<S>                                                             <C>                       <C>
                To record goodwill amortization related
                   to ULTRADATA                                         $1,582                    $2,531
                To record reversal of a write off of
                   existing goodwill by MECA during 1998                    --                   (17,333)
                                                                      --------                    ------
                                                                        $1,582                  $(14,802)
                                                                         =====                    ======
</TABLE>


     d. Interest Expense.  Interest expense was adjusted to reflect the increase
in debt to finance the ULTRADATA  acquisition and refinance the MECA acquisition
as follows:
<TABLE>
<CAPTION>


                                                                Nine months ended               Year ended
                                                                September 30, 1999        December 31, 1998
<S>                                                             <C>                       <C>
                To record interest expense related to term
                   loans at 10% to 13%                                  $4,625                   $  7,400
                To record interest expense related to the
                   revolving credit facility                                96                        153
                To record interest accreted on convertible
                   subordinated notes at 10%                               347                        555
                To record amortization of deferred loan
                   costs and debt discount                               1,629                      2,606
                                                                         -----                      -----
                                                                        $6,697                    $10,714
                                                                         =====                     ======
</TABLE>


           e. Pro Forma.  The pro forma  adjustments to provision  (benefit) for
income  taxes were made to bring the total tax  benefit to the amount that would
have been recorded based on an effective rate for the year calculated  using the
combined pro forma loss.

           f. Share Calculation. Shares used in the calculation of pro forma net
income  (loss) per share have been  adjusted  to  reflect  the 50,000  shares of
common stock issued in the purchase of MECA.

                                                      F-8

<PAGE>





                                                      F-9

<PAGE>



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders of CFI ProServices, Inc.

     We  have  audited  the  accompanying  consolidated  balance  sheets  of CFI
ProServices,  Inc. (an Oregon  corporation,  d/b/a Concentrex  Incorporated) and
subsidiaries  as of  December  31, 1998 and 1997,  and the related  consolidated
statements of income, shareholders' equity, and cash flows for each of the three
years in the period  ended  December  31,  1998.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

      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 provide a reasonable basis for our opinion.

      In our opinion,  the consolidated  financial  statements referred to above
present  fairly,  in  all  material  respects,  the  financial  position  of CFI
ProServices,  Inc. and  subsidiaries  as of December 31, 1998 and 1997,  and the
results of their  operations and their cash flows for each of the three years in
the period  ended  December  31,  1998 in  conformity  with  generally  accepted
accounting principles.


ARTHUR ANDERSEN LLP
Portland, Oregon
January 22, 1999

                                                      F-10

<PAGE>


<TABLE>
<CAPTION>

                             CFI PROSERVICES, INC.,
                          d/b/a Concentrex Incorporated
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in thousands)
                                                                                                    December 31,
                                                                                             1998                  1997
ASSETS
Current Assets:
<S>                                                                                     <C>                   <C>
      Cash and cash equivalents                                                         $  3,589              $        20
      Investments                                                                            206                       --
      Receivables, net of allowances of $2,600 and $2,880                                 29,701                   32,059
      Inventory                                                                              249                      297
      Deferred tax asset                                                                   1,341                    1,307
      Prepaid expenses and other current assets                                            1,604                    1,928
                                                                                         -------                  -------
           Total Current Assets                                                           36,690                   35,611

Property and Equipment, net of accumulated depreciation of $9,947 and $7,855               4,534                    5,211
Software Development Costs, net of accumulated amortization of $3,368 and $735             8,277                    9,856
Purchased Software Costs, net of accumulated amortization of $19                             211                       --
Other Intangibles, net of accumulated amortization of $4,763 and $3,227                    6,190                    5,689
Other Assets, including deferred taxes                                                       879                    1,175
                                                                                        --------                  -------
      Total Assets                                                                       $56,781                  $57,542
                                                                                          ======                   ======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
      Accounts payable                                                                  $  1,986              $     2,119
      Accrued expenses                                                                     8,017                    5,362
      Deferred revenues                                                                    5,300                   12,498
      Customer deposits                                                                    3,681                    1,715
      Bank line of credit                                                                     --                    5,310
      Current portion of long-term debt                                                      261                      295
      Income taxes payable                                                                   473                    1,125
                                                                                        --------                  -------
           Total Current Liabilities                                                      19,718                   28,424

Deferred Tax Liability                                                                        --                      197
Commitments and Contingencies
Long-Term Debt, less current portion                                                       5,693                    2,232
                                                                                         -------                  -------
           Total Liabilities                                                              25,411                   30,853

Mandatory Redeemable Class A Preferred Stock                                                 738                      746

Shareholders' Equity:
      Series preferred stock, 5,000,000 shares authorized, none issued and outstanding        --                       --
      Common stock, no par value, 10,000,000 shares authorized and 5,032,977 and
           4,925,423 shares issued and outstanding                                        19,689                   18,865
      Retained earnings                                                                   10,943                    7,078
                                                                                          ------                   ------
           Total Shareholders' Equity                                                     30,632                   25,943
                                                                                          ------                   ------
           Total Liabilities and Shareholders' Equity                                   $ 56,781              $    57,542
                                                                                          ======                   ======

</TABLE>

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

                                                      F-11

<PAGE>

<TABLE>
<CAPTION>


                             CFI PROSERVICES, INC.,
                          d/b/a Concentrex Incorporated
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Dollars in thousands, except per share data)

                                                                       Years Ended December 31,
                                                                           1998        1997          1996

REVENUE
<S>                                                                      <C>          <C>          <C>
      Software license fees                                              $49,202      $40,475      $33,935
      Service and support                                                 30,352       27,466       22,336
      Other                                                                6,076        4,708        3,676
                                                                         -------      -------      -------
           Total Revenue                                                  85,630       72,649       59,947

COST OF REVENUE                                                           29,423       27,041       20,844
                                                                          ------       ------       ------
      Gross profit                                                        56,207       45,608       39,103

OPERATING EXPENSES
      Sales and marketing                                                 19,204       15,709       12,725
      Product development                                                 14,913       11,549       10,615
      General and administrative                                          10,012        8,263        5,425
      Amortization of intangibles                                          1,228        1,259        1,045
      Acquired in-process research and development and other charges       2,661           --        8,030
                                                                         -------  -----------      -------
           Total Operating Expenses                                       48,018       36,780       37,840
                                                                          ------       ------       ------

           Income From Operations                                          8,189        8,828        1,263

NON-OPERATING INCOME (EXPENSE)
      Interest expense                                                     (454)        (456)        (251)
      Interest income                                                        295          170          271
      Canceled stock offering costs                                           --        (487)           --
      Gain on sale of operating division                                      --          628           --
      Equity in losses attributable to joint venture                       (670)        (148)           --
      Other, net                                                              83           52          (2)
                                                                       ---------    ---------    ---------
           Total Non-operating Income (Expense)                            (746)        (241)           18
                                                                         -------      -------    ---------

INCOME BEFORE PROVISION FOR INCOME TAXES                                   7,443        8,587        1,281
PROVISION FOR INCOME TAXES                                                 3,483        3,907        1,167
                                                                         -------      -------      -------
NET INCOME                                                                 3,960        4,680          114
PREFERRED STOCK DIVIDEND                                                      95           95           97
                                                                        --------    ---------    ---------
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS                            $  3,865     $  4,585   $       17
                                                                         =======      =======    =========
BASIC NET INCOME PER SHARE                                              $   0.77     $   0.93   $       --
                                                                        ========     ========   ==========
DILUTED NET INCOME PER SHARE                                            $   0.75     $   0.90   $       --
                                                                         =======     ========   ==========

</TABLE>


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

                                                      F-12

<PAGE>

<TABLE>
<CAPTION>


                             CFI PROSERVICES, INC.,
                          d/b/a Concentrex Incorporated
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (Dollars in thousands)

                                                             Common Stock
                                                                                        Retained
                                                     Shares           Amount            Earnings          Total

<S>                                                  <C>            <C>                <C>              <C>
BALANCES, DECEMBER 31, 1995                          4,496,136        $15,693           $  2,476          $18,169
      Issuance of Common Stock                         328,837          1,420                 --            1,420
      Tax benefits from stock transactions                  --            632                 --              632
      Net income applicable to common
           shareholders                                     --             --                 17               17
                                                     ---------      ---------          ---------        ---------

BALANCES, DECEMBER 31, 1996                          4,824,973         17,745              2,493           20,238
      Issuance of Common Stock                         100,450            724                 --              724
      Tax benefits from stock transactions                  --            396                 --              396
      Net income applicable to common
           shareholders                                     --             --              4,585            4,585
                                                     ---------      ---------          ---------        ---------

BALANCES, DECEMBER 31, 1997                          4,925,423         18,865              7,078           25,943
      Issuance of Common Stock                         107,554            768                 --              768
      Tax benefits from stock transactions                  --             56                 --               56
      Net income applicable to common
           shareholders                                     --             --              3,865            3,865
                                                     ---------      ---------          ---------        ---------

BALANCES, DECEMBER 31, 1998                          5,032,977        $19,689            $10,943          $30,632
                                                     =========      =========          =========        =========
</TABLE>


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

                                                      F-13

<PAGE>

<TABLE>
<CAPTION>


                                              CFI PROSERVICES, INC.,
                                           d/b/a Concentrex Incorporated
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (Dollars in thousands)

                                                                          Years Ended December 31,
                                                                           1998         1997          1996

<S>                                                                       <C>          <C>        <C>
Cash flows from operating activities:
      Net income applicable to common shareholders                        $3,865       $4,585     $     17
      Adjustments to reconcile net income applicable to common
           shareholders to cash provided by operating activities:
           Depreciation and amortization                                   6,805        8,540        4,731
           Write-off of in-process research and development and
                other charges                                              2,661           --        8,030
           Gain on sale of property and equipment                             --           --         (10)
           Gain on sale of operating division                                 --        (628)           --
           Deferred income taxes                                           (586)           87      (1,328)
           Interest accreted on mandatory redeemable preferred stock          95           95           97
           Interest accreted on note payable                                  93           93           --
           Gain on sale of equity/debt investments                            --           --        (156)
      Equity in losses attributable to joint venture                         670          148           --
      (Increase) decrease in assets, net of effects from purchase of
           businesses:
           Receivables, net                                                2,749      (9,135)      (6,580)
           Income taxes receivable                                            --           --          229
           Inventories, net                                                   48        (141)           59
           Prepaid expenses and other assets                                 612        (269)        (325)
      Increase  (decrease)  in  liabilities,  net of effects  from  purchase  of
           businesses:
           Drafts payable                                                     --        (425)          425
           Accounts payable                                                (133)        (765)        1,167
           Accrued expenses                                                   52      (1,186)        2,079
           Deferred revenues                                             (7,307)        2,053        2,069
           Customer deposits                                               1,966          846        (609)
           Other current liabilities                                          --           --        (338)
           Income taxes payable                                            (596)        1,475          678
                                                                         -------      -------     --------
                Net cash provided by operating activities                 10,994        5,373       10,235

Cash flows from investing activities:
      Expenditures for property and equipment                            (1,680)      (2,713)      (2,721)
      Software development costs capitalized                             (1,054)      (4,994)      (5,204)
      Investment in joint venture                                          (304)        (322)           --
      Purchase of investments                                              (206)           --           --
      Proceeds from sale/maturity of investments                              --           --        2,982
      Issuance of note receivable                                          (391)           --           --
      Proceeds from long-term note receivable                                189           --           --
      Proceeds from sale of operating division                                --           87           --
      Proceeds from sale of property and equipment                            --           --           19
      Cash paid for acquisition of Mortgage Dynamics, Inc.               (2,668)           --           --

</TABLE>

                                                      F-14

<PAGE>

<TABLE>
<CAPTION>


                             CFI PROSERVICES, INC.,
                          d/b/a Concentrex Incorporated
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                             (Dollars in thousands)

<S>                                                                   <C>          <C>         <C>
      Cash paid for acquisition of Online and COIN Division, net of
           cash received                                                      --           --      (2,277)
      Cash paid for acquisition of Input Creations, Inc.                      --           --      (2,107)
      Cash paid for other acquisitions                                        --           --        (812)
      Other assets                                                            --           --            8
                                                                      ----------   ----------  -----------
           Net cash used in investing activities                         (6,114)      (7,942)     (10,112)

Cash flows from financing activities:
      Net proceeds from (payments on) line of credit                     (1,310)        3,719        1,591
      Payments on notes payable                                               --           --      (7,280)
      Payments on long-term debt                                           (666)      (1,751)        (328)
      Payments on mandatory redeemable preferred stock                     (103)        (103)        (104)
      Proceeds from issuance of common stock                                 768          724        1,154
                                                                        --------      -------     --------
           Net cash provided by (used in) financing activities           (1,311)        2,589      (4,967)
                                                                         -------       ------      -------
Increase (decrease) in cash and cash equivalents                           3,569           20      (4,844)

Cash and cash equivalents:
      Beginning of period                                                     20           --        4,844
                                                                      ----------   ----------  -----------
      End of period                                                   $    3,589   $       20  $        --
                                                                         =======     ========   ==========

</TABLE>


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

                                                      F-15

<PAGE>



                                               CFI PROSERVICES, INC.,
                                            d/b/a Concentrex Incorporated
                                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

     CFI ProServices,  Inc., dba Concentrex  Incorporated,  and its subsidiaries
(the "Company") develops,  sells, and services customer service software used by
financial institutions.  The Company combines its technology,  banking and legal
expertise to deliver knowledge-based software solutions that enable institutions
to simplify  key sales and service  business  processes,  improve  productivity,
strengthen  customer  relationships,  and maintain compliance with both internal
business  policies  and external  government  regulations.  Although  most sales
historically  have been to commercial banks within the United States,  today the
Company  actively  markets its products to most types of financial  institutions
domestically and, for the non-compliance oriented software, internationally. The
Company has been in business since 1978.

Basis of Consolidation

         Effective  December 31, 1997, the Company's  wholly owned  subsidiaries
(other than The Genesys  Solutions  Group,  Inc.  ("Genesys") and Vendor Payment
Systems,  Inc.  ("VPS")) were dissolved and their assets were distributed to the
Company.  Genesys is an inactive  subsidiary and its assets were  distributed to
the Company effective December 31, 1997. Genesys was dissolved in 1998.

         The  consolidated  financial  statements  include  the  accounts of the
Company's wholly owned subsidiaries:  Genesys, Texas/Southwest Technology Group,
Inc.,  Culverin  Corporation,  Online  Financial  Systems,  Inc.,  COIN  Banking
Systems,  Inc., and VPS. All  intercompany  transactions  and balances have been
eliminated.  A cash  investment  in VPS was  included  in other  assets  and was
accounted  for  using the  equity  method  until  April  1996  when the  Company
purchased the remaining  outstanding VPS common stock.  The Company made certain
acquisitions  in April 1996 and October  1998 (see Note 2).  These  acquisitions
have been included in the  consolidated  financial  statements since the date of
acquisition.

Cash and Cash Equivalents

         Cash and cash equivalents include cash and short-term  investments with
maturity dates of three months or less at the time of acquisition.

Investments

         Statement of Financial  Accounting Standards (SFAS) No. 115 "Accounting
for Certain  Investments in Debt and Equity Securities"  requires the Company to
classify  and  account  for its  security  investments  as  trading  securities,
securities  available for sale or securities  held to maturity  depending on the
Company's intent to hold or trade the securities at time of purchase. Securities
available  for sale are stated on the balance  sheet at their fair market value,
which  approximates  cost.  Securities  held to maturity are stated at amortized
cost. There were no unrealized  holding gains or losses at December 31, 1998 and
1997. The Company uses the specific  identification  method for  determining the
cost to use in computing realized gains and losses.



                                                      F-16

<PAGE>



                                                  Years Ended December 31,
                                                1998     1997    1996
                                                  (In thousands)

Proceeds from sale of debt securities           $   --   $   --  $2,982
Realized gains on sales of debt securities           --       --      156

Inventory

         Inventory consists primarily of printed bank forms and supplies, and is
stated at the lower of cost or market,  with cost  determined  on the  first-in,
first-out (FIFO) method.

Property and Equipment

         Property and equipment is stated at cost. Depreciation is computed on a
straight-line  basis over the estimated  useful lives of the individual  assets,
which are three years for computer  equipment  and  software,  and five to seven
years for furniture, fixtures and other equipment.  Expenditures for repairs and
maintenance are charged to current operations, and costs related to renewals and
improvements  that  add  significantly  to  the  useful  life  of an  asset  are
capitalized.  When depreciable  properties are retired or otherwise disposed of,
the cost and related accumulated  depreciation are removed from the accounts and
the resulting gain or loss is reflected in income.

Software

         The costs of internally  developed  software which meet the criteria in
SFAS No. 86,  "Accounting for the Costs of Computer  Software To Be Sold, Leased
or  Otherwise  Marketed,"  are  capitalized.  These  costs  are  amortized  on a
straight-line  basis over  estimated  economic  lives ranging from three to five
years.

         Purchased   software  is   capitalized  at  cost  and  amortized  on  a
straight-line basis over the estimated economic life of three years.  Generally,
contracts for purchased  software require royalties to be paid based on revenues
generated by the related software.

                                                    Years Ended December 31,
                                                  1998     1997    1996
                                                         (In thousands)

Amortization of internally developed software     $2,633   $3,465  $1,194
Amortization of purchased software                       19  1,079      693

         During  1998,  1997 and 1996,  several  software  development  projects
reached  commercial  feasibility.  As a result,  the  Company  began to amortize
certain product  development  costs which had been capitalized in prior periods.
In addition,  the Company recorded amortization as a result of software acquired
in connection with the 1998 and 1996 acquisitions.  The increase in amortization
costs in 1997 also resulted from  accelerated  amortization for certain products
being  replaced by new  products or which  management  concluded  were no longer
technologically viable.

Intangibles

         The  Company's  intangibles  consist  primarily  of  amounts  paid  for
goodwill,   noncompetition  agreements  and  customer  lists.  These  costs  are
amortized on a  straight-line  basis over  estimated  economic  lives of five to
seven years.  The Company  believes these useful lives are appropriate  based on
the factors  influencing  acquisition  decisions.  These factors include product
life,  profitability  and general  industry  outlook.  The  Company  reviews its
intangible  assets  for asset  impairment  at the end of each  quarter,  or more
frequently when events or changes in

                                                      F-17

<PAGE>



circumstances  indicate  that the  carrying  amount  of  intangibles  may not be
recoverable.  To perform that review,  the Company estimates the sum of expected
future undiscounted cash flows from operating  activities.  If the estimated net
cash  flows  are less  than the  carrying  amount of  intangibles,  the  Company
recognizes an impairment  loss in an amount  necessary to write the  intangibles
down to fair value as determined by the expected  discounted  future cash flows.
In 1998 the  Company  wrote off  $877,000,  reflecting  the  remaining  goodwill
associated with its fisCAL credit analysis  products and related severance costs
calculated in accordance with pre-existing  employment contracts.  These charges
are  included in the acquired  in-process  research  and  development  and other
charges in the Company's Statement of Income for 1998.

Investment in Joint Venture

         In November 1997, the Company made a 50% investment in Lori Mae, L.L.C.
(Lori Mae), a company  designed to securitize small business loans originated by
community  banks.  The  Company  uses  the  equity  method  to  account  for its
investment  in this joint  venture.  In 1998,  the Company wrote off its initial
investment  in Lori Mae in the  amount  of  $352,000  due to lack of  acceptable
market demand for Lori Mae's initial product. This charge, in addition to losses
attributable to the joint venture, are included in equity in losses attributable
to joint venture in the Company's  Statement of Income for 1998. At December 31,
1998, the net investment in Lori Mae was $0.

Revenue Recognition

         License revenues are derived from three kinds of transactions:

         o         Licenses with no follow-on obligations on the part of the
                   Company are recognized upon shipment.

         o        Licenses  which  require  installation  and  training  by  the
                  Company  prior to use are  recognized  upon  completion of the
                  installation and training.

         o        Licenses which include  significant  amounts of tailoring and,
                  occasionally,  customization are recognized on a percentage of
                  completion  basis  as  the  tailoring  and  customization  are
                  performed. Estimates of efforts to complete a project are used
                  in  the  percentage  of  completion  calculation.  Due  to the
                  uncertainties  inherent  in these  estimates,  actual  results
                  could differ from those estimates.

         If the license agreement obligates the Company to provide post-contract
support  at no  additional  cost to the  customer,  the  revenue  related to the
post-contract support is recognized ratably over the support period. Returns and
exchanges are infrequent and are recorded as reductions in license  revenue when
the obligation to accept the return or conduct the exchange becomes known.

         Revenues  for  consulting,   custom  programming  and  training,  where
separately contracted for, are recognized as the related services are performed.
Other revenues include sales of preprinted forms and font cartridges,  which are
recognized  upon shipment.  Amounts  received in advance for service and support
contracts are deferred and recognized  ratably over the support period.  Amounts
in excess of invoiced  minimums for service and support  charges  based on usage
are  estimated and  recognized in the period in which usage occurs.  Included in
receivables at December 31, 1998 and 1997 are unbilled receivables of $7,697,000
and $3,824,000, respectively. These primarily relate to percentage of completion
contracts and contracts with deferred payment terms.

         During  1997 and 1998,  Statements  of  Position  (SOP)  97-2 and 98-9,
"Software  Revenue  Recognition,"  were  released and became  effective  for the
Company for the year ended December 31, 1998. SOP 97-2 and SOP 98-9 did not have
a material impact on the Company's financial statements.



                                                      F-18

<PAGE>



Income Taxes

         The Company  accounts for income taxes in accordance with SFAS No. 109,
"Accounting For Income Taxes." This  pronouncement  requires deferred tax assets
and  liabilities  to be valued  using the  enacted  tax rates  expected to be in
effect when the temporary differences are recovered or settled.

Advertising Cost

         Advertising   costs  are  expensed  as   incurred.   These  costs  were
$1,406,000,  $1,241,000 and $950,000 for the years ended December 31, 1998, 1997
and 1996, respectively.

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 at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses during the reporting periods.
Actual results could differ from those estimates.

Earnings Per Share

         Basic  earnings per share (EPS) and diluted EPS are computed  using the
methods  prescribed  by  SFAS  No.  128,  "Earnings  per  Share."  Basic  EPS is
calculated  using the weighted  average number of common shares  outstanding for
the period and diluted  EPS is computed  using the  weighted  average  number of
common shares and dilutive common equivalent shares outstanding.  Following is a
reconciliation of basic EPS and diluted EPS:

<TABLE>
<CAPTION>


                                                     Year Ended December 31,
                           1998                               1997                               1996
                           ----                               ----                               ----
                                                   (In thousands, except per share data)
                                       Per                                Per                                Per
                                      Share                              Share                              Share
Basic EPS         Income   Shares   Amount           Income   Shares   Amount           Income   Shares   Amount
- ---------         ------   ------   ------           ------   ------   ------           ------   ------   ------
<S>               <C>      <C>      <C>              <C>      <C>      <C>              <C>      <C>      <C>
Income available
to common
shareholders      $3,865   5,012    $0.77            $4,585   4,919    $0.93            $17      4,763    $0.00
                                     ====                               ====                               ====

Effect of
Dilutive
Securities
Stock Options             -   155                           --   205                       --       349
                   --------------                     --------------                     ----    ------

Diluted EPS

Income available
to common
shareholders      $3,865   5,167    $0.75            $4,585   5,124    $0.90            $17      5,112    $0.00
                                     ====                               ====                               ====

</TABLE>


         The  number of  options to  purchase  shares of common  stock that were
excluded from the table above (as the effect would have been anti-dilutive) were
787,184, 94,500 and 10,000 for the years ended December 31, 1998, 1997 and 1996,
respectively.



                                                      F-19

<PAGE>



Supplementary Cash Flow Information

         The Company made the following cash payments:

                                        Years Ended December 31,
                                      1998         1997         1996
                                                 (in thousands)

Interest and preferred dividends    $   554      $   517      $   148
Income taxes                          4,751        2,294        1,597

         Noncash investing and financing activities were as follows:
<TABLE>
<CAPTION>

                                                                                 Years Ended December 31,
                                                                           1998         1997           1996
                                                                                      (in thousands)

<S>                                                                      <C>          <C>          <C>
Tax benefit from exercise of nonqualified stock options                  $    56      $   396      $   632
MicroBilt Financial Services Division acquisition (Note 2):
      Issuance of note payable                                                --           --        3,500
Input Creations, Inc. acquisition (Note 2):
      Issuance of long term debt                                              --           --        1,533
Other acquisitions (Note 2):
      Issuance of long term debt                                              --           --        1,182
      Issuance of notes payable                                               --           --        1,170
      Issuance of Common Stock                                                --           --          266
Note receivable received in connection with the sale of remittance
      processing division                                                     --          788           --
Increase in goodwill for accrued acquisition related contingent royalties  1,085        1,140           --
Decrease in goodwill and increase in deferred tax asset related to            --          389           --
      acquired net operating losses
Reclassification of bank line of credit to long term debt                  4,000           --           --
</TABLE>

Reclassifications

      Certain  reclassifications in the financial statements and notes have been
made  to  prior  year   financial   statements   to  conform  with  the  current
presentation.

Comprehensive Income

      SFAS No. 130, "Reporting  Comprehensive Income," establishes standards for
reporting and display of  comprehensive  income.  Comprehensive  income includes
charges  or  credits  to  equity  that did not  result  from  transactions  with
shareholders.  SFAS No.  130 became  effective  during  1998.  As net income and
comprehensive  income were identical in 1998, 1997 and 1996 SFAS No. 130 did not
have an impact on the Company's financial statements.

Segment Reporting

     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information," requires the Company to report certain information about operating
segments.  SFAS No. 131 became  effective for the Company's  year ended December
31,  1998.  The Company  provides  integrated  PC-based  software  to  financial
institutions  for,  among  other  things,   use  in  branch   automation,   loan
origination, new account opening and electronic banking. The

                                                      F-20

<PAGE>



Company  classifies  its  products  primarily  as lending,  retail  delivery and
connectivity.  These products constitute the Company's suite of products and are
sold to the same  types  of  customer  through  similar  distribution  channels.
Accordingly,  the Company believes it operates in one segment.  License revenues
from lending,  retail  delivery and  connectivity  products were $31.0  million,
$15.6 million and $2.5 million,  respectively,  in 1998,  $22.2  million,  $16.9
million  and $1.4  million,  respectively,  in 1997,  and $15.4  million,  $17.1
million and $1.4 million, respectively, in 1996.

      Virtually all of the Company's  sales are made in the United  States.  The
remaining sales are made to customers located in Latin America.

Recent Pronouncement

      SFAS  No.  133,   "Accounting  for  Derivative   Instruments  and  Hedging
Activities,"  becomes effective for the Company's year ending December 31, 2001.
The Company  does not believe  that SFAS No. 133 will have a material  impact on
its financial statements.

2.    ACQUISITIONS

      In October 1998, the Company acquired  substantially  all of the assets of
Mortgage Dynamics,  Inc. (MDI). The acquisition was accounted for as a purchase.
The purchase price was $2,668,000 in cash plus certain contingent royalties tied
to future revenue production. In conjunction with this acquisition,  the Company
recorded approximately  $1,518,000 of goodwill, which is being amortized ratably
over a seven  year  period;  $230,000  of  purchased  software,  which  is being
amortized ratably over a three year period; and $991,000 of acquired  in-process
research and development,  determined by independent appraisal, all of which was
expensed in 1998.  The  technological  feasibility  of the acquired  technology,
which has no  alternative  future  use,  had not been  established  prior to the
purchase. Pro forma results for 1998 and 1997 reflecting the MDI acquisition are
not materially different from the Company's reported results for such years.

      In April 1996,  the Company  acquired  all of the capital  stock of OnLine
Financial  Communication  Systems,  Inc. (OnLine) and COIN Banking Systems, Inc.
(COIN) (formerly subsidiaries of MicroBilt  Corporation),  and substantially all
of the  assets  of  Input  Creations,  Inc.  (Input),  Pathways  Software,  Inc.
(Pathways) and The Halcyon Group, Inc. (Halcyon). All of these acquisitions were
accounted for as purchases.  The combined purchase prices totaled  approximately
$13,600,000 plus certain contingent  royalties tied to future revenue production
or to  software  conversions.  The  $13,600,000  included  $5,196,000  of  cash,
$7,385,000 in notes payable and other long-term liabilities,  $266,000 of common
stock and approximately  $700,000 of other assumed  liabilities.  In conjunction
with these  acquisitions,  the  Company  recorded  approximately  $4,300,000  of
goodwill  which  is  being  amortized  ratably  over a  seven  year  period  and
$8,030,000  of acquired  in-process  research  and  development,  determined  by
independent  appraisal,  all of which was  expensed in 1996.  The  technological
feasibility of the acquired technology, which has no alternative future use, had
not been established prior to the purchase.

      In November 1995, the Company acquired all of the outstanding common stock
of Culverin  Corporation  (Culverin),  a software  company with  headquarters in
Dayton, Ohio. The initial purchase price consisted of $3,888,000 in cash paid in
installments  through  November  1996;  cash of $50,000 and 33,341 shares of the
Company's  common  stock,  valued at $13.50  per  share and  discounted  40% for
restrictions  on trading,  which were delivered on January 1, 1998; and expenses
of  $531,000.  In  addition,  the Company  will make annual  contingent  royalty
payments  through  2000 of between 2% and 14% of revenues  generated by Culverin
products, depending on the amount of such revenues in each year. The transaction
has been  accounted  for as a purchase  and the excess of the  initial  purchase
price over the value of the identifiable assets,  $1,969,000,  has been recorded
as an intangible asset, amortized on a straight-line basis over seven years.

      Annual  contingent  royalty payments earned are recorded as an addition to
intangible assets and amortized on a straight line basis over the remaining life
of the original seven-year period.

                                                      F-21

<PAGE>



3.    PROPERTY AND EQUIPMENT

         The major  categories  of property  and  equipment  are  summarized  as
follows:

                                      Years Ended December 31,
                                        1998                1997
                                            (in thousands)

Computer hardware and software         $10,630            $  9,546
Furniture and fixtures                   3,293               3,008
Leasehold improvements                     558                 512
                                      --------              ------
                                        14,481              13,066
Less- accumulated depreciation           9,947               7,855
                                       -------             -------
                                      $  4,534            $  5,211
                                       =======             =======

         Depreciation expense was as follows:

                                         Years Ended December 31,
                                        1998      1997       1996
                                             (in thousands)

Depreciation expense                   $2,381    $2,230     $1,799
                                        =====     =====      =====

4.       ACCRUED EXPENSES

         Accrued expenses consist of the following:

                                          Years Ended December 31,
                                          1998              1997
                                               (in thousands)

Accrued royalties                        $1,766                  $1,958
Accrued commissions                         960                   1,080
Accrued bonuses and profit sharing        2,095                   392
Other                                     3,196                   1,932
                                          -----                   -----
                                         $8,017                   $5,362
                                          =====                    =====

5.       EMPLOYEE BENEFIT PLANS

         The Company  created a profit  sharing plan (the "Plan") on February 1,
1989,  under the  provisions  of Section  401(k) of the Internal  Revenue  Code.
Employer  contributions  to the Plan are made at the  discretion of the Board of
Directors and were as follows:

                                             Years Ended December 31,
                                             1998      1997       1996
                                                 (in thousands)

Employer contributions                       $856      $468       $327
                                              ===       ===        ===

         The  Board of  Directors  has  approved  an  officers'  bonus  plan and
employee  profit  sharing  plan.  The  amount and timing of the bonus and profit
sharing  payments are at the Board's  discretion.  The expense  associated  with
these plans was as follows:

                                                      F-22

<PAGE>


                                             Years Ended December 31,
                                             1998      1997       1996
                                                 (in thousands)

Bonus and profit sharing expense             $2,735    $850       $2,298
                                              =====     ===        =====

         Through  December 31, 1998, the Company had a qualified  employee stock
purchase  plan (ESPP) which  allowed  qualified  employees to direct up to seven
percent of monthly  base pay for  purchases  of stock.  The  purchase  price for
shares  purchased under the plan was 85 percent of the lesser of the fair market
value at the  beginning  or end of the plan  year.  The ESPP will  terminate  in
accordance with its terms during 1999.

6.       LINE OF CREDIT AND LONG-TERM DEBT

Line of Credit

         The Company may borrow up to the lesser of $10,000,000 or 50 percent of
accounts  receivable,  as  defined  under the terms of a  committed,  unsecured,
revolving bank line of credit agreement.  At the Company's  option,  interest on
outstanding  borrowings  may  be at  the  bank's  published  reference  rate  or
alternative  rates  specified in the  agreement.  The interest rate in effect at
December  31, 1998 was 6.7 percent.  The line of credit  expires on May 1, 2000.
The agreement  contains  covenants which require the Company to maintain certain
financial  ratios and prohibits the Company from incurring  other debts or liens
outside the ordinary  course of business.  The Company is in compliance with the
covenants at December 31, 1998. The Company pays an annual commitment fee of 0.2
percent  on the  average  unused  balance.  Borrowings  under  the line  totaled
$4,000,000 at December 31, 1998 and $5,310,000 at December 31, 1997.

Long-Term Debt

         At  December  31,  1998  and  1997,  long-term  debt  consisted  of the
following:

<TABLE>
<CAPTION>


                                                                                           Years Ended December 31,
                                                                                           1998              1997
                                                                                              (in thousands)

<S>                                                                                        <C>               <C>
Note payable, in relation to Culverin acquisition, payment of $3,690 in 1996 with the
      balance due January 1998                                                             $   -             $50
Note payable, in relation to Halcyon acquisition, with imputed interest at 8 percent, due
      in quarterly installments of $50, including interest, payable through 2001             449             605
Note payable, assumed in the Halcyon acquisition, in monthly installments of $6,
      including interest imputed at 8.5 percent, with final payment due October 2004         307             346
Guaranteed royalties to be paid in relation to Input acquisition, with imputed interest at
      6 percent, payable through March 2001                                                1,148             1,426
TSTG non-compete payments through April 1999                                                  50             100
Long-term portion of line of credit                                                        4,000                   --
                                                                                           -----             --------
                                                                                           5,954             2,527
Less current portion of long-term debt                                                     (261)              (295)
                                                                                           ------            ------
Long-term debt                                                                             $5,693            $2,232
                                                                                           =====              =====
</TABLE>



                                                      F-23

<PAGE>



      Payouts under long-term debt are as follows (in thousands):

           Years Ending December 31,
           1999                             $   261
           2000                               4,230
           2001                               1,295
           2002                                  55
           2003                                  59
           Thereafter                            54
                                              -----
                                             $5,954
                                              =====

7.       COMMITMENTS AND CONTINGENCIES

Operating Leases

         The Company leases  facilities and equipment  under  operating  leases,
with terms from one to 10 years,  payable in monthly  installments.  Total lease
expense was as follows:

                                             Years Ended December 31,
                                             1998      1997       1996
                                                 (in thousands)


Lease expense                                $2,980    $2,786     $2,131
                                              =====     =====      =====

         Future minimum lease payments are as follows (in thousands):

                  Years Ending December 31,

                  1999              $   2,833
                  2000                  2,863
                  2001                  1,838
                  2002                  1,749
                  2003                  1,293
                  Thereafter              506
                                      --------
                                    $  11,082
                                       ======

         In 1998, the Company  recorded a loss of $793,000 for the present value
of net future lease payments due with respect to certain office space in Atlanta
that the Company  ceased  using.  The loss was included in other  charges on the
Statement of Income for 1998.

Contingencies

         The Company is  involved in routine  legal  matters  incidental  to its
business.  The Company believes that the resolution of any such matters that are
currently outstanding will not have a material effect on its financial condition
or results of operations. However, no assurance can be given that the concurrent
resolution  of several of such matters in manners  adverse to the Company  would
not have a material  adverse  effect on the  Company's  financial  condition  or
results of operations.



                                                      F-24

<PAGE>



8.       INCOME TAXES

The provision (benefit) for income taxes is as follows:

                                             Years Ended December 31,
                                             1998      1997       1996
                                                 (in thousands)

Current tax provision:
      Federal                                $3,667       $3,443       $2,223
      State                                     402          377          272
                                             ------       ------       ------
                                              4,069        3,820        2,495
Deferred tax provision (benefit)              (586)           87      (1,328)
                                             ------      -------      -------
Total provision                              $3,483       $3,907       $1,167
                                              =====        =====        =====

         The  reconciliation  of the  statutory  Federal  income tax rate to the
Company's effective income tax rate is as follows:
<TABLE>
<CAPTION>


                                                                           Years Ended December 31,
                                                                         1998         1997         1996
<S>                                                                      <C>          <C>          <C>
Federal statutory rate                                                   34.0%        34.0%        34.0%
State income taxes net of Federal benefit                                 4.8          4.2          6.8
Disallowance of meals and entertainment expenses                          1.4          1.1          6.0
Purchase accounting adjustments, including amortization of intangibles    5.5          5.7         47.6
Change in valuation allowance                                            (0.1)        (0.2)        10.9
Other                                                                     1.2          0.7        (14.1)
                                                                        -----        -----         ----
                                                                         46.8%        45.5%        91.2%
                                                                         ====         ====         ====
</TABLE>


         Deferred tax assets and  (liabilities)  are  comprised of the following
components:

<TABLE>
<CAPTION>

                                                                                          Year Ended December 31,
                                                                                           1998                    1997
                                                                                              (in thousands)

<S>                                                                                    <C>                         <C>
Current deferred tax asset:
         Allowance for doubtful accounts                                                    $844                   $950
         Current portion of net operating loss carryforwards                                 164                   177
         Severance and other accruals                                                        281                   20
         Other                                                                                52                   160
                                                                                            ----                   ---
                  Total current deferred tax asset                                        $1,341                   $1,307
                                                                                           =====                    =====
Long-term deferred tax asset (liability):
         In-process technology acquired                                                   $2,660                   $2,477
         Depreciation                                                                      (160)                   (154)
         Intangibles amortization                                                            702                   651
         Capitalized software                                                            (3,145)                   (3,746)
         Net operating loss and credit carryforwards                                         475                   714
         Other                                                                              (77)                         33
                                                                                        --------                   --------
Gross long-term deferred tax asset (liability)                                               455                   (25)
         Valuation allowance                                                               (100)                     (172)
                                                                                         -------                   -------
Total long-term deferred tax asset (liability)                                          $    355                   $  (197)
                                                                                         =======                    =======

</TABLE>


                                                      F-25

<PAGE>


The  increase   (decrease)  in  the  valuation  allowance  was  as  follows  (in
thousands):

                                             Years Ended December 31,
                                             1998      1997       1996

Increase (decrease) in valuation allowance   $(72)     $(17)      $140
                                              ====      ====       ===

         At December 31, 1998, for Federal tax return  reporting  purposes,  the
Company had approximately $1,272,000 of regular and alternative minimum tax loss
carryovers  that expire at various dates through 2010. In addition,  at December
31, 1998, the Company had $152,000 of general  business  credit  carryovers that
expire at various dates through 2007. The general business credit carryovers may
not be used to offset  taxes  payable  until the tax loss  carryovers  are fully
utilized.  In 1997, based on management's  estimate of realization,  the Company
recorded  an increase in  deferred  tax assets and a  corresponding  decrease in
goodwill of $389,000  relating to net  operating  losses  acquired in connection
with a prior acquisition.

         Current  federal tax law limits the net  operating  loss and tax credit
carryovers  available  to be used in any  given  year in the  event  of  certain
circumstances including significant changes in ownership interests.  The Company
is limited to using  approximately  $430,000 of net operating loss carryovers in
any one year.

9.       PREFERRED STOCK

         The Company is  redeeming  the 10,300  outstanding  shares of mandatory
redeemable  Class A preferred  stock at $262.14 per share over a 28-year  period
ending in the year 2018. The present value of the remaining payments,  which are
due quarterly,  has been recorded as the carrying value at December 31, 1998 and
1997.  The  carrying  value is adjusted as payments are made and  dividends  are
accrued on the shares yet to be redeemed. The rate used to calculate the present
value was 13 percent per annum, which approximated the Company's  borrowing rate
at the time  redemption  commenced.  At  December  31,  1998,  there  were 7,410
outstanding shares remaining to be redeemed.

         The repayment  schedule for the mandatory  redeemable Class A preferred
stock at December 31, 1998 is as follows (in thousands):

Years Ended December 31,

1999                                                                     $   103
2000                                                                         103
2001                                                                         103
2002                                                                         103
2003                                                                         103
Thereafter                                                                 1,428
                                                                           -----
Total future payments                                                      1,943
Less- Amount representing dividends                                        1,205
                                                                           -----
Present value of future payments                                             738
Less- Current portion                                                         --
                                                                        --------
Long-term mandatory redeemable preferred stock                          $    738
                                                                         =======



                                                      F-26

<PAGE>



10.      STOCK OPTIONS AND DIRECTOR COMPENSATION

         At  December  31,  1998,  the Company had five stock  option  plans:  a
Consolidated  Plan, a  nonqualified  stock  option  plan,  two plans for outside
directors and the ESPP.

         Under the Consolidated Plan, options,  which consist of incentive stock
options and nonqualified  stock options,  generally vest ratably over five years
and generally  expire ten years from the date of grant.  The exercise  price for
incentive  stock options  granted under the plan is set at the fair market value
at the grant date. The exercise price for nonqualified  options may be set below
the fair market value at the grant date, but, to this date, no options have been
granted with an exercise price less than fair market value at the grant date.

         Under the nonqualified stock option plan, available to officers and key
employees,  the vesting  period and exercise  price,  which may be set below the
fair  market  value at the date of grant,  are  determined  by the  Compensation
Committee  of the Board of  Directors.  No  options  have been  granted  with an
exercise price less than fair market value at the date of grant.

         The  Company has two stock  option  plans for  outside  directors:  the
Restated  Outside  Director  Restricted Stock Plan (the Restricted Plan) and the
Restated Outside Director  Compensation and Stock Option Plan (the  Compensation
Plan). The Compensation  Plan was approved by the shareholders of the Company in
May 1994 and  provides  for  outside  directors  to be paid  $5,000 per year and
allows for the  issuance of stock  options.  A total of 50,000  shares of Common
Stock were reserved for issuance under the Restricted Plan and the  Compensation
Plan, of which 15,400 shares were reserved under the Restricted  Plan and 34,600
were  reserved  under the  Consolidated  Plan.  As of December 31, 1998,  28,600
shares had been issued under the Restricted Plan and are no longer restricted.

         Under the ESPP 67,000  shares of Common Stock were  reserved,  of which
64,354 shares had been issued as of December 31, 1998.

         Below is a table  showing the  activity  for the  aforementioned  stock
option plans for the past three years:

<TABLE>
<CAPTION>
                                                                                Weighted
                                                                                 Average               Total
                                                                 Shares         Exercise             Exercise
                                                              Subject to         Price Per             Price
                                                                Options            Share
                                                                                                 (in thousands)

<S>                                                          <C>               <C>               <C>
Balances, December 31, 1995                                    824,682           $  7.23          $   5,962
Options granted                                                290,500             14.52              4,219
Options exercised                                             (273,183)             3.63               (991)
Options lapsed                                                  (10,179)            9.92               (101)
                                                               --------           ------           --------

Balances, December 31, 1996                                     831,820           10.93              9,089
Options granted                                                 118,000           18.40              2,172
Options exercised                                                (79,804)           5.52               (441)
Options lapsed                                                   (86,713)         13.45             (1,167)
                                                               ---------        -------            -------

Balances, December 31, 1997                                     783,303           12.32               9,653
Options granted                                                 214,293           12.39               2,655
Options exercised                                                (51,680)         10.43                (539)
Options lapsed                                                   (30,490)         13.74                (419)
                                                               ---------        -------            --------

Balances, December 31, 1998                                     915,426         $12.40           $11,350
                                                                =======          =====            ======

</TABLE>


                                                      F-27

<PAGE>



         For all five plans at December 31, 1998,  there were 987,591  shares of
unissued stock reserved for issuance under the plans,  of which 2,655 shares are
reserved  under the ESPP and options for the purchase of 69,510 shares  remained
available for future grants.  Options to purchase  437,026,  361,873 and 250,990
shares of common stock were  exercisable  at December  31, 1998,  1997 and 1996,
respectively.  These exercisable options had weighted average exercise prices of
$10.71, $9.91 and $8.27 at December 31, 1998, 1997 and 1996, respectively.

         The  Financial  Accounting  Standards  Board  issued SFAS No.123  which
defines a fair value based method of accounting for an employee stock option and
similar  equity  instrument  and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans.  However, it also
allows an entity to continue to measure  compensation cost for those plans using
the method of accounting  prescribed by APB 25. Entities electing to remain with
the  accounting  in APB 25 must make pro forma  disclosures  of net  income  and
earnings per share,  as if the fair value based method of accounting  defined in
SFAS 123 had been adopted.

         The Company has  elected to account  for its  stock-based  compensation
plans under APB 25; however, the Company has computed,  for pro forma disclosure
purposes, the value of all options granted during 1998, 1997, and 1996 using the
Black-Scholes  options  pricing  model  as  prescribed  by SFAS  123  using  the
following weighted average assumptions for grants:

                                   For the Years Ended December 31,
                                   1998        1997           1996

Risk-free interest rate              6.0%         6.3%         6.0%
Expected dividend yield              0.0%         0.0%         0.0%
Expected lives (years)               7.5          6.9          4.7
Expected volatility                 59.4%        60.7%        62.8%

         Using the Black-Scholes methodology, the total value of options granted
during  1998,  1997  and  1996  was   $1,215,000,   $1,286,000  and  $1,854,000,
respectively,  which  would be  amortized  on a pro forma basis over the vesting
period of the options (typically five years). The weighted average fair value of
options granted during 1998, 1997 and 1996 was $8.36 per share, $11.51 per share
and $7.39 per share,  respectively.  The number of shares  issued under the ESPP
was 22,383,  20,646 and 11,338 for the years ended  December 31, 1998,  1997 and
1996, respectively, and the related weighted average purchase price and weighted
average  fair value of shares  issued were $10.20 and $5.83,  respectively,  for
1998,  $13.71  and  $6.55,  respectively,   for  1997,  and  $13.71  and  $6.61,
respectively, for 1996.

         If the Company had accounted for its stock-based  compensation plans in
accordance  with SFAS 123,  the  Company's  net  income and net income per share
would approximate the pro forma disclosures below:

<TABLE>
<CAPTION>

                                                           For the Years Ended December 31,
                                                          (in thousands, except per share data)
                                                1998                      1997                       1996
                                                ----                      ----                       ----
                                           As        Pro             As         Pro            As         Pro
                                           Reported  Forma           Reported   Forma          Reported   Forma

<S>                                        <C>       <C>             <C>        <C>            <C>        <C>
Net income (loss)                          $ 3,865   $ 3,363         $ 4,585    $ 3,563        $    17    $(979)
Net income (loss) per share - basic        $  0.77   $  0.68         $  0.93    $  0.72        $  0.00    $(0.21)
Net income(loss) per share - diluted       $  0.75   $  0.66         $  0.90    $  0.71        $  0.00    $(0.21)

</TABLE>

         The effects of applying SFAS 123 in this pro forma  disclosure  are not
indicative of future amounts. Additional awards are anticipated in future years.



                                                      F-28

<PAGE>



         The  following  table  summarizes   information   about  stock  options
outstanding at December 31, 1998:

<TABLE>
<CAPTION>

                           Options Outstanding                                  Options Exercisable

                                             Weighted
                              Number          Average         Weighted           Number of       Weighted
              Range of     Outstanding      Remaining          Average              Shares        Average
         Exercise Prices           at       Contractual        Exercise         Exercisable       Exercise
              Per Share       12/31/98      Life (years)          Price         at 12/31/98          Price

<S>      <C>               <C>              <C>               <C>               <C>              <C>
         $  1.00 -   4.99  118,449          3.0               $  1.63           118,449          $  1.63
         $10.00 - 14.99    499,877          7.1               $12.44            199,877          $12.61
         $15.00 - 15.00    200,000          7.1               $15.00              80,000         $15.00
         $16.13 - 20.00      87,100         8.1               $19.49              28,700         $18.46
         $24.25 - 24.25      10,000         2.3               $24.25              10,000         $24.25

</TABLE>

<TABLE>
<CAPTION>

11.      SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         QUARTER ENDED1                     March 31,         June 30,           September 30,     December 31,
(In thousands, except per share data)           1998             1998              1998              1998
- -------------------------------------       ------------      ----------         ------------      ----------
<S>                                         <C>               <C>               <C>              <C>
Revenue                                       $19,051           $19,002           $23,186          $24,391
Gross profit                                   12,303            11,835            15,413           16,656
Net income applicable to common
         shareholders                           1,000               927             1,593              345
Net income per share - basic                $    0.20         $    0.19         $    0.32        $    0.07
Net income per share - diluted              $    0.19         $    0.18         $    0.31        $    0.07

         QUARTER ENDED                      March 31,         June 30,           September 30,     December 31,
(In thousands, except per share data)           1997             1997              1997              1997
- -------------------------------------       ------------      ----------         ------------      ----------

Revenue                                       $16,002           $17,880           $17,894          $20,873
Gross profit                                   10,374            11,870            10,907           12,457
Net income applicable to common
         shareholders                             768             1,424               912            1,481
Net income per share - basic                $    0.16         $    0.29         $    0.19        $    0.30
Net income per share - diluted              $    0.15         $    0.28         $    0.18        $    0.29

</TABLE>


         1The  results in the  fourth  quarter of 1998  reflect  pretax  charges
totaling $3,013,000 for the value of in-process research and development efforts
at the date of acquisition pertaining to MDI (see Note 2) and other charges (see
Note 1 and Note 7).

12.      SUBSEQUENT EVENTS, INCLUDING EVENTS SUBSEQUENT TO DATE OF AUDITORS'
         REPORT

         Effective  January 1, 1999, the Company acquired  substantially  all of
the assets of Modern Computer  Systems,  Inc. and certain  related  corporations
(collectively,  "MCS").  MCS offers hardware and software solutions for the back
office  accounting  needs of community banks and credit unions.  The acquisition
was accounted for as a purchase. The purchase price was $6.0 million in cash and
$650,000 of common stock.


                                                      F-29

<PAGE>


         Events Subsequent to Date of Auditors' Report (unaudited)
         ---------------------------------------------------------

         Effective  May 17, 1999 the Company and  MoneyScape  Holdings,  Inc. (a
wholly owned subsidiary of Concentrex) acquired 99% and 1%, respectively, of the
equity in MECA  Software,  L.L.C.  ("MECA")  in  exchange  for 50,000  shares of
Concentrex  common stock.  The acquisition was accounted for as a purchase.  The
net purchase price  approximated $12.3 million and consisted of the common stock
issued, assumption of net liabilities and accrued acquisition costs.

     Effective August 13, 1999 Concentrex acquired all of the outstanding common
stock of ULTRADATA  Corporation  ("ULTRADATA").  ULTRADATA provides  information
management   software  and   solutions   for   relationship-oriented   financial
institutions.  The  acquisition  was accounted  for as a purchase,  resulting in
approximately $55.6 million goodwill,  intangibles and purchased  software.  The
purchase price was $66.3 million,  including  acquisition-related  expenses. The
Company also incurred  significant  debt in connection with the financing of the
ULTRADATA acquisition and refinancing of the MECA acquisition.

                                                      F-30

<PAGE>



        Report of Independent Public Accountants on Financial Statement Schedule
To the Board of Directors and Shareholders of CFI ProServices, Inc.

We have audited in accordance with generally  accepted auditing  standards,  the
consolidated  financial  statements of CFI  ProServices,  Inc., d/b/a Concentrex
Incorporated, included in this registration statement and have issued our report
thereon dated January 22, 1999.  Our audits were made for the purpose of forming
an opinion on those  statements  taken as a whole.  The Valuation and Qualifying
Accounts  schedule is the  responsibility  of the  Company's  management  and is
presented  for  purposes  of  complying   with  the   Securities   and  Exchange
Commission's  rules  and  is  not  part  of  the  basic  consolidated  financial
statements.  This schedule has been subjected to the auditing procedures applied
in our  audits  of the  basic  consolidated  financial  statements  and,  in our
opinion, fairly states, in all material respects, the financial data required to
be set forth therein in relation to the basic consolidated  financial statements
taken as a whole.



                                                     ARTHUR ANDERSEN LLP

Portland, Oregon
January 22, 1999

                                                      F-31

<PAGE>


<TABLE>
<CAPTION>

                                               CFI PROSERVICES, INC.,
                                             dba CONCENTREX INCORPORATED
                                          VALUATION AND QUALIFYING ACCOUNTS
                                    YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996

                                                     Additions
                                    Balance at       Charged to                                   Balance
                                    Beginning         Costs and                                   at End
                                      of Year         Expenses         Deductions1       Other2   Of Year
<S>                                 <C>              <C>               <C>               <C>      <C>
Year ended December 31, 1996
   Allowance for doubtful
   accounts and sales returns       $   290          $2,147            $(1,514)          $380     $1,303
                                     ======           =====             =======           ===      =====

   FASB 109 Valuation               $     49         $   140           $      --         $  --    $   189
                                     =======          ======            ===========       ======   ======

   Amortization of Intangibles:
       Purchased software           $1,176           $   693           $   (640)         $  --    $1,229
       Software development
          costs                       2,514            1,194             (1,123)             --     2,585
       Intangibles                       410           1,045                   --            --     1,455
                                      ------           -----             ----------       ------   -----
                                    $4,100           $2,932            $(1,763)          $  --    $5,269
                                     =====            =====             =======           ======   =====

Year ended December 31, 1997
   Allowance for doubtful
      accounts and sales returns    $1,303           $4,808            $(3,231)          $   --   $2,880
                                     =====            =====             =======           =======  =====

   FASB 109 Valuation               $   189          $     --          $     (17)        $    --  $   172
                                     ======           =========         =========         =======  ======
   Amortization of Intangibles:
   Purchased software               $1,229           $1,079            $(2,308)          $     -- $    --
   Software development costs         2,585            3,465             (5,315)                --     735
   Intangibles                        1,455            1,772                  --                --  3,227
                                      -----            -----             -----------       -------  -----

                                    $5,269           $6,316            $(7,623)          $     -- $3,962
                                     =====            =====             =======           ======== =====
Year ended December 31, 1998
   Allowance for doubtful
      accounts and sales returns    $2,880           $2,005            $(2,285)          $     -- $2,600
                                     =====            =====             =======           ======== =====

   FASB 109 Valuation               $   172          $     --          $     (72)        $     -- $   100
                                     ======           ========          =========         ======== ======

   Lease Loss Accrual               $     --         $   793           $      --         $     -- $   793
                                     ========         ======            ===========       ======== ======

   Amortization Of Intangibles:
      Purchased software            $     --         $     19          $      --         $     -- $     19
     Software development costs            735           2,633                   --               --  3,368
   Intangibles                        3,227            2,102                (566)               --  4,763
                                      -----            -----             --------          -------  -----

                                    $3,962           $4,754            $   (566)         $     -- $8,150
                                     =====            =====                =====          ======== =====

<FN>

         1Represents write-off of receivables, fully amortized intangibles, and,
in 1998, goodwill associated with a 1996 acquisition. Also includes reduction in
FASB 109 valuation account credited to income tax expense.

         2Includes  allowance  for  doubtful  accounts  recorded  as part of the
acquisition of Microbilt Financial Products Division in April 1996.
</FN>
</TABLE>

                                                      F-32

<PAGE>





                                                      F-33

<PAGE>


<TABLE>
<CAPTION>

                                               CFI PROSERVICES, INC.,
                                             dba CONCENTREX INCORPORATED
                                             CONSOLIDATED BALANCE SHEETS
                                               (Dollars in thousands)


                                                                September 30, 1999        December 31, 1998
                                                                      (Unaudited)
<S>                                                              <C>                         <C>
ASSETS
Current Assets:
      Cash and cash equivalents                                  $          --               $      3,589
      Restricted cash                                                      866                         --
      Investments                                                          205                        206
      Receivables, net of allowances of $3,445 and $2,600               34,807                     29,701
      Inventory                                                            999                        249
      Deferred tax asset                                                 1,920                      1,341
      Prepaid expenses and other current assets                          3,642                      1,604
                                                                     ---------                    -------
           Total Current Assets                                         42,439                     36,690

Property and equipment, net of accumulated depreciation
   of $11,985 and $9,947                                                 8,000                      4,534
Software development costs, net of accumulated amortization
   of $4,837 and $3,368                                                  5,998                      8,277
Purchased software costs, net of accumulated amortization of
   $448 and $19                                                          8,163                        211
Goodwill, net of accumulated amortization of $6,621 and $4,763          58,771                      6,190
Deferred tax asset                                                       9,862                        355
Other assets                                                             5,306                        524
                                                                     ---------                   --------
           Total Assets                                               $138,539                    $56,781
                                                                       =======                     ======

LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities:
      Drafts payable                                               $       547               $         --
      Accounts payable                                                   4,350                      1,986
      Accrued expenses                                                  14,344                      8,017
      Deferred revenues                                                 10,206                      5,300
      Customer deposits                                                  3,797                      3,681
      Line of credit                                                     5,396                         --
      Current portion of long-term debt                                  2,531                        261
      Other current liabilities                                            303                         --
      Income taxes payable                                                  --                        473
                                                                  ------------                   --------
           Total Current Liabilities                                    41,474                     19,718

Commitments and Contingencies
Long-term Debt, less current portion                                    63,026                      5,693
Other Long-term Liabilities                                                876                         --

Convertible Subordinated Notes                                           5,619                         --

Mandatory Redeemable Class A Preferred Stock                               731                        738

                                      F-34
<PAGE>

                             CFI PROSERVICES, INC.,
                           dba CONCENTREX INCORPORATED
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                             (Dollars in thousands)

Shareholders' Equity:
      Series preferred stock, 5,000,000 shares authorized, none
         issued and outstanding                                             --                         --
      Common stock, no par value, 10,000,000 shares authorized,
         5,135,552 and 5,032,977 shares issued and outstanding          25,087                     19,689
      Retained earnings                                                  1,726                     10,943
                                                                     ---------                     ------
           Total Shareholders' Equity                                   26,813                     30,632
                                                                      --------                     ------
           Total Liabilities and Shareholders' Equity                 $138,539                    $56,781
                                                                       =======                     ======
</TABLE>

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

                                                      F-35

<PAGE>

<TABLE>
<CAPTION>


                                               CFI PROSERVICES, INC.,
                                             dba CONCENTREX INCORPORATED
                                   UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (Dollars in thousands, except per share data)

                                                                                      Nine Months Ended
                                                                                        September 30,
                                                                                     1999       1998

<S>                                                                                  <C>       <C>
Revenue
      Application software products                                                  $58,158   $54,335
      Information management products                                                  5,551       --
      e-Commerce products                                                              8,678     3,959
      Ancillary products                                                               5,058     2,945
                                                                                     -------   -------
           Total Revenue                                                              77,445    61,239
Cost of Revenue                                                                       29,569    21,688
                                                                                      ------    ------
           Gross Profit                                                               47,876    39,551
Operating Expenses
      Sales and marketing                                                             13,498    14,054
      Product development                                                             17,004    10,467
      General and administrative                                                      12,115     7,430
      Goodwill amortization                                                            1,506       890
      Acquired in-process research and development and other charges                  10,521        --
                                                                                      ------   -------
           Total Operating Expenses                                                   54,644    32,841
                                                                                      ------    ------
           Income (Loss) from Operations                                              (6,768)    6,710
Non-operating Income (Expense)
      Interest expense                                                                (1,957)     (337)
      Interest income                                                                    214       209
      Other, net                                                                         192      (168)
                                                                                     -------   -------
           Total Non-operating Expense                                                (1,551)     (296)
                                                                                      ------   -------
Income (Loss) before Income Taxes                                                     (8,319)    6,414
Provision for Income Taxes                                                               829     2,822
                                                                                     -------   -------
Net Income (Loss)                                                                     (9,148)    3,592
Preferred Stock Dividend                                                                  69        72
                                                                                     -------   -------
Net Income (Loss) Applicable to Common Shareholders                                  $(9,217)  $ 3,520
                                                                                      ======   =======
Basic Net Income (Loss) Per Share                                                    $ (1.81)  $  0.70
                                                                                      ======    ======
Diluted Net Income (Loss) Per Share                                                  $ (1.81)  $  0.68
                                                                                      ======    ======
</TABLE>



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

                                                      F-36

<PAGE>


<TABLE>
<CAPTION>

                                               CFI PROSERVICES, INC.,
                                             dba CONCENTREX INCORPORATED
                                   UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (Dollars in thousands)

                                                                             Nine Months Ended September 30,
                                                                                1999                 1998

<S>                                                                          <C>                 <C>
Cash flows from operating activities:
      Net income (loss) applicable to common shareholders                    $  (9,217)          $    3,520
      Adjustments to reconcile net income (loss) applicable to common
         shareholders to cash provided by operating activities:
           Depreciation and amortization                                         6,549                4,889
           Interest accreted on mandatory redeemable preferred stock                71                   72
           Interest accreted on notes payable                                      140                   70
           Amortization of debt discount and deferred loan costs                   311                   --
           Equity in losses attributable to joint venture                           --                  248
           Write off of in process research and development                      9,000                   --
           Expense for stock warrants issued                                       124                   --
           Expense for ESSOP shares issued                                         955                   --
           (Increase) decrease in assets, net of effects from purchase of
              businesses:
                Receivables, net                                                 1,129                4,779
                Inventories, net                                                  (114)                  25
                Prepaid expenses and other assets                                 (494)                 351
           Increase (decrease) in liabilities,  net of effects from
              purchase of businesses:
                Drafts payable                                                     547                   --
                Accounts payable                                                   850                (415)
                Accrued expenses                                                (3,255)              (1,593)
                Deferred revenues                                                1,351               (5,560)
                Customer deposits                                               (2,710)                  69
                Other current liabilities                                          186                   --
                Income taxes payable                                              (473)                (255)
                                                                              --------               -------
                      Net cash provided by operating  activities                 4,950                6,200

Cash flows from investing activities:
      Expenditures for property and equipment                                   (2,058)              (1,216)
      Software development costs capitalized                                        --               (1,054)
      Investment in joint venture                                                   --                 (510)
      Proceeds from long-term note receivable                                      115                  235
      Cash paid for acquisition of Modern Computer Systems, Inc., net
           of cash received                                                     (5,591)                  --
      Cash received in acquisition of MECA Software, L.L.C.                        965                   --
      Cash paid for acquisition of ULTRADATA Corporation, net
           of cash received                                                    (59,940)                  --
      Cash paid for TDS                                                            (98)                  --
                                                                             ---------           ----------
           Net cash used in investing activity                                 (66,607)              (2,545)

Cash flows from financing activities:
      Net proceeds from (payments on) line of credit                              1,396              (1,310)
      Payments on long-term debt                                                (7,645)                (579)
      Proceeds from long-term debt                                              65,000                   --
      Proceeds from issuance of convertible subordinated notes                   5,550                   --

                                      F-37
<PAGE>

                             CFI PROSERVICES, INC.,
                           dba CONCENTREX INCORPORATED
           UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                             (Dollars in thousands)

      Payment of deferred loan costs                                            (5,071)                  --
      Payments on mandatory redeemable preferred stock                             (78)                 (78)
      Proceeds from issuance of common stock                                       927                  767
      Repurchase of common stock                                                (1,145)                  --
                                                                                ------            ---------
           Net cash provided by (used in) financing activities                  58,934               (1,200)
                                                                                ------               ------

Increase (decrease) in cash and cash equivalents                                (2,723)               2,455

Cash and cash equivalents, including restricted cash:
      Beginning of period                                                        3,589                   20
                                                                               -------             --------
      End of period                                                          $     866           $    2,475
                                                                              ========               ======

</TABLE>


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

                                                      F-38

<PAGE>



                              CFI PROSERVICES, INC.
                          d/b/a CONCENTREX INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (Tabular amounts in thousands, except per share amounts or as
                              otherwise indicated)
                                   (Unaudited)

1.    BASIS OF PRESENTATION

     The financial  information included herein for the nine month periods ended
September 30, 1999 and 1998 is unaudited; however, such information reflects all
adjustments  consisting only of normal recurring  adjustments  which are, in the
opinion  of  management,  necessary  for a fair  presentation  of the  financial
position,  results of  operations  and cash flows for the interim  periods.  The
financial  information  as of  December  31,  1998 is derived  from the  audited
financial  statements of CFI ProServices,  Inc.,  d/b/a Concentrex  Incorporated
("Concentrex" or the "Company").  The interim consolidated  financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto included in this registration statement. The results of operations
for the interim periods presented are not necessarily  indicative of the results
to be  expected  for the full  year.  Certain  prior  period  amounts  have been
reclassified to conform to current presentation.

2.    SUPPLEMENTAL CASH FLOW INFORMATION

      Supplemental disclosure of cash flow information is as follows:

<TABLE>
<CAPTION>


                                                                       Nine Months Ended September 30,
                                                                             1999       1998
<S>                                                                    <C>             <C>
Cash paid during the period for income taxes                           $    1,976      $3,076
Cash paid during the period for interest and dividends                      2,526         346

</TABLE>

Noncash investing and financing activities were as follows:

<TABLE>
<CAPTION>


                                                                       Nine Months Ended September 30,
                                                                           1999            1998
<S>                                                                     <C>             <C>
Tax benefit from exercise of nonqualified stock options                 $    --         $   56
Increase in goodwill for accrued acquisition related
   contingent royalties                                                     396            461
Reclassification of bank line of credit to long-term debt                    --          4,000
Issuance of common stock in connection with
   acquisition of Modern Computer Systems, Inc.                             650             --
Issuance of common stock in connection with
   acquisition of MECA Software, L.L.C.                                     569             --
Assumption of debt in connection with acquisition of
   MECA Software, L.L.C.                                                  7,500             --
Fair value of stock warrants issued in connection with financings         1,667             --
Fair value of stock options converted in connection with
   acquisition of ULTRADATA Corporation                                   1,651             --

</TABLE>

3.       EARNINGS PER SHARE

         Following is a  reconciliation  of basic earnings per share ("EPS") and
diluted EPS:


                                                      F-39

<PAGE>

<TABLE>
<CAPTION>

Nine Months Ended September 30,                      1999                                 1998
- -------------------------------                      ----                                 ----

                                                                Per                                Per
                                                               Share                               Share
Basic EPS                                  Loss      Shares    Amount     Income      Shares       Amount
<S>                                       <C>        <C>    <C>           <C>         <C>         <C>
Net income (loss) applicable to common
   shareholders                           $(9,217)   5,102  $  (1.81)     $ 3,520      5,005      $  0.70
                                                            =========                             =======
Effect of dilutive securities:
   Stock options                                        --                               174
                                          ----------------                ------------------

Diluted EPS
Net income (loss) applicable to common
   shareholders                           $(9,217)   5,102  $  (1.81)     $ 3,520      5,179      $  0.68
                                                            =========                             =======

</TABLE>

      The number of options and warrants to purchase  shares of common stock and
the assumed conversion of convertible subordinated notes that were excluded from
the table above (as the effect would have been anti-dilutive) were 2,377,346 and
298,700 for the nine months ended September 30, 1999 and 1998, respectively.

4.    STOCK REPURCHASE

      During  January  1999  the  Company's  Board  of  Directors  authorized  a
repurchase  of up to $5.0  million of the  Company's  common  stock.  During the
quarter ended March 31, 1999 the Company repurchased 88,200 shares of its common
stock for $1.1  million.  The  Company  did not  repurchase  any  shares  during
subsequent quarters.

5.    CLASSIFICATION OF REVENUE

      During the three months ended September 30, 1999, the Company  reorganized
itself into four product lines:  Application Software,  Information  Management,
e-Commerce and Ancillary Products.  Prior period revenues have been reclassified
for all periods included herein to reflect the new product lines. Total revenues
did not change as a result of this classification.

6.    ACQUISITIONS

      Effective  January 1, 1999 the Company acquired  substantially  all of the
assets of  Modern  Computer  Systems,  Inc.  and  certain  related  corporations
(collectively,  MCS).  MCS offers  hardware and software  solutions for the back
office  accounting  needs of community banks and credit unions.  The acquisition
was  accounted  for as a purchase,  resulting in  approximately  $7.0 million of
goodwill,  intangibles  and  purchased  software.  The  purchase  price was $6.0
million in cash and  $650,000 of common  stock.  The Company is still  obtaining
certain data related to the acquisition,  and,  accordingly,  the purchase price
allocation  remains  open.  The  operations  of MCS have  been  included  in the
Company's  results of  operations  since  January  1,  1999.  The 1998 pro forma
results  reflecting the MCS  acquisition  are not materially  different from the
Company's reported results for the nine months ended September 30, 1998.

      Effective May 17, 1999 the Company and MoneyScape Holdings, Inc. (a wholly
owned subsidiary of Concentrex) acquired 99% and 1%, respectively, of the equity
in MECA  Software,  L.L.C.  ("MECA") in exchange for 50,000 shares of Concentrex
common stock. The acquisition was accounted for as a purchase.  The net purchase
price  approximated  $12.3  million and  consisted of the common  stock  issued,
assumption of net liabilities  and accrued  acquisition  costs.  The liabilities
assumed included $7.5 million of debt owed to certain former members of MECA and
was repaid by the Company from proceeds from bank borrowings. The purchase price
was allocated to the estimated fair value of the assets acquired, which included
the expensing of $3.8 million of  in-process  research and  development  and the
recognition of  approximately a $9.9 million  deferred tax asset.  The excess of
the fair  value  of the  assets  acquired  over  cost  (negative  goodwill)  was
allocated to reduce acquired  non-current assets. The Company is still obtaining
certain data related to the  acquisition,  and  accordingly,  the purchase price
allocation

                                                      F-40

<PAGE>



remains open. The operations of MECA have been included in the Company's results
of operations since May 17, 1999.

      Effective  August 13,  1999  Concentrex  acquired  all of the  outstanding
common  stock  of  ULTRADATA  Corporation   ("ULTRADATA").   ULTRADATA  provides
information   management   software  and  solutions  for   relationship-oriented
financial  institutions.  The  acquisition  was  accounted  for  as a  purchase,
resulting in approximately $53.6 million of goodwill,  intangibles and purchased
software.  The purchase price was $66.3 million,  including  acquisition-related
expenses.  The purchase  price was allocated to the estimated  fair value of the
assets  acquired,  which  included the  expensing of $5.2 million of  in-process
research and development. The Company is still obtaining certain data related to
the acquisition,  and, accordingly,  the purchase price allocation remains open.
The  operations  of ULTRADATA  have been  included in the  Company's  results of
operations since August 13, 1999.

     Unaudited pro forma results of operations,  including  results of ULTRADATA
and MECA (MCS results are not considered  significant and are therefore,  to the
extent that they are not already included in the actual results, not included in
the unaudited pro forma  information) for the nine month periods ended September
30, 1999 and 1998, assuming such acquisitions  occurred at the beginning of 1998
and includes in process research and development charge related to the ULTRADATA
and MECA acquisitions in the periods when incurred.


                                              Nine Months Ended
                                                September 30,
                                        ------------------------------

                                              1999              1998
                                         --------------     -------------
Total revenues                       $          102,048 $         102,041

Net loss applicable to common
     shareholders                    $         (17,471) $         (5,585)

Loss per share - Basic               $           (3.41) $          (1.10)

Loss per share - Diluted             $           (3.41) $          (1.10)


7.    FINANCING EVENTS

      On May 14, 1999 the Company sold 90,000  shares of its common stock to one
investor for gross proceeds of $900,000.  The proceeds of the issuance were used
to repay liabilities acquired in the MECA acquisition.

      On May 17, 1999 the Company entered into two lending agreements (the "USNB
Lending Agreements") with U.S. Bank National Association ("USNB"). On August 13,
1999 the USNB Lending  Agreements were terminated,  and all amounts  outstanding
were  repaid,  upon  completion  of the  financing  described  in the  following
paragraphs.  The first USNB Lending Agreement was for a revolving line of credit
in an amount not to exceed $5.0  million (the  "Revolving  Line") to be used for
working capital.  The Company drew $4.0 million on the Revolving Line on May 17,
1999 and used the  proceeds to pay off all amounts  owing on a previous  line of
credit  with Bank of  America;  the Bank of  America  credit  facility  with the
Company was simultaneously terminated. The second USNB Lending Agreement was for
a  revolving  line of credit  in an amount  not to  exceed  $15.0  million  (the
"Acquisition  Line") to be used for acquisitions.  The Company drew $8.3 million
on the Acquisition Line on May 17, 1999 and used the proceeds to pay off certain
liabilities assumed in connection with the acquisition of MECA on that date. The
Company  drew an  additional  $2.7 million on the  Acquisition  Line to purchase
shares of ULTRADATA common stock in open market  transactions during the quarter
ended June 30, 1999.

      On  August  13,  1999 the  Company  and its  subsidiaries  entered  into a
financing   agreement  (the  "Financing   Agreement")   with  Foothill   Capital
Corporation ("Foothill") and certain other parties (collectively, the "Lenders")

                                                      F-41

<PAGE>



for three  credit  facilities  aggregating  $80 million.  The credit  facilities
provided under the Financing Agreement terminate on August 13, 2002.

      The first credit  facility  under the  Financing  Agreement is a revolving
credit  facility (the  "Foothill  Revolver")  for up to $15 million,  subject to
borrowing base  restrictions  related to accounts  receivable of the Company and
its  subsidiaries.  The Foothill Revolver bears interest at an annual rate equal
to the prime rate plus 1.0%.  On August 13, 1999 the Company  drew $1.7  million
under the Foothill  Revolver in connection with the ULTRADATA  acquisition.  The
interest rate on the Foothill Revolver at August 13, 1999 was 9.0% and was 9.25%
at September 30, 1999.

      The second credit  facility  under the Financing  Agreement is a term loan
for $35 million (the "Term A Loan") that bears  interest at an annual rate equal
to the prime rate plus 2.0%. The Term A Loan has scheduled quarterly prepayments
of  principal  beginning  in the  second  quarter of 2000 that are  expected  to
aggregate  $19  million  over  the  term of the  loan;  the  expected  remaining
principal  of $16  million is due on August  13,  2002.  On August 13,  1999 the
Company drew $35 million under the Term A Loan in connection  with the ULTRADATA
acquisition.  The interest  rate on the Term A Loan at August 13, 1999 was 10.0%
and was 10.25% at September 30,1999.

      The third credit facility under the Financing Agreement is a term loan for
$30 million  (the "Term B Loan") that bears  interest at an annual rate equal to
the prime  rate  plus  5.0%.  The Term B Loan has no  scheduled  prepayments  of
principal. The Term B Loan is due in full on August 13, 2002. On August 13, 1999
the  Company  drew $30  million  under  the Term B Loan in  connection  with the
ULTRADATA  acquisition.  The interest rate on the Term B Loan at August 13, 1999
was 13.0% and was 13.25% at September 30, 1999.

      In  connection  with the credit  facilities  provided  under the Financing
Agreement, the Company issued to the Lenders warrants (the "Lender Warrants") to
purchase  up to  381,822  shares  of the  common  stock  of the  Company,  which
represents  5.0% of the fully diluted common stock of the Company.  The exercise
price of the Lender  Warrants  is $12.34 per share.  The  Company  has agreed to
register for resale the shares of common  stock  issuable  upon  exercise of the
Lender  Warrants.  The Lender Warrants are exercisable  through August 13, 2004.
The Company also issued  warrants to purchase  58,000  shares of common stock to
the debt  placement  agent in connection  with  obtaining the credit  facilities
under the Financing  Agreement.  The warrants issued to the debt placement agent
have the same terms as the Lender Warrants.  The Company recorded the fair value
of the warrants as debt discount and deferred loan costs as appropriate.

      On August 13, 1999 the Company  also issued 10%  Convertible  Subordinated
Discount Notes (the "Subordinated  Notes") in the aggregate original face amount
of $7.4 million (with original issue discount of $1.9 million). The Subordinated
Notes are  generally  non-callable  by the  Company  through  August  13,  2002.
Interest at 10% per annum accretes on the Subordinated  Notes through August 13,
2002 and then becomes payable in cash by the Company if the  Subordinated  Notes
are not redeemed or converted by that date. The Subordinated Notes are initially
convertible into 602,534 shares of the Company's common stock at the election of
the holders.  The actual number of shares into which the Subordinated  Notes are
convertible  depends  upon the date of  conversion  and the  amount of  interest
accreted  on  the  Subordinated  Notes  through  the  date  of  conversion.  The
conversion price of the Subordinated Notes is initially $12.34 per share. If the
average  closing  price of the  Company's  common  stock for the 10 trading days
ending on August 12, 2000 is less than $12.34 per share,  the  conversion  price
will be reduced at that time to equal such average price. The Subordinated Notes
are due on August 13, 2004 if not previously converted by that date. The Company
received gross proceeds of $5.5 million upon issuance of the Subordinated Notes,
all of which was used in connection the ULTRADATA acquisition.

      At September 30,1999 and December 31,1998, long-term debt consisted of the
following:

<TABLE>
<CAPTION>

                                                                     September 30,     December 31,
                                                                           1999           1998

<S>                                                                   <C>              <C>
Term A Loan                                                           $   35,000       $       --
Term B Loan                                                               30,000               --
Debt discount related to fair value of warrants                           (1,387)              --


                                                      F-42

<PAGE>



Note payable, in relation to Halcyon  acquisition,  with imputed
     interest at 8%, due in quarterly installments of $50,
     including interest, payable through 2001                                299              449
Note payable, assumed in the Halcyon acquisition, in monthly
     installments of $6, including interest imputed at 8.5%,
     with final payment due October 2004                                     276              307
Guaranteed royalties to be paid in relation to Input acquisition,
     with imputed interest at 6%, payable through March 2001                 913            1,148
TSTG non-compete payments through April 1999                                  --               50
Note payable, assumed in the ULTRADATA acquisition, due in
     monthly installments of $29, including interest at the rate of
     10.0% percent                                                           456               --
Long-term portion of line of credit                                           --            4,000
                                                                      ----------       ----------
                                                                          65,557            5,954
Less current portion of long-term debt                                    (2,531)            (261)
                                                                      ----------       ----------
Long-term debt                                                         $  63,026       $    5,693
                                                                      ==========       ==========
</TABLE>





                                                      F-43

<PAGE>





                                                      F-44

<PAGE>



                                            Independent Auditors' Report


To the Board of Directors and Stockholders of ULTRADATA Corporation:

We have audited the  accompanying  balance sheet of ULTRADATA  Corporation  (the
"Company") as of December 31, 1998,  and the related  statements of  operations,
stockholders'  equity,  and cash flows for the year then ended.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion,  the 1998 financial  statements  present fairly, in all material
respects, the financial position of the Company as of December 31, 1998, and the
results  of its  operations  and its  cash  flows  for the  year  then  ended in
conformity with generally accepted accounting principles.


DELOITTE & TOUCHE LLP
San Jose, California
February 5, 1999

                                                      F-45

<PAGE>



                                            Independent Auditors' Report


Board of Directors
ULTRADATA Corporation:

We have audited the  accompanying  balance sheet of ULTRADATA  Corporation as of
December 31,  1997,  and the related  statements  of  operations,  stockholders'
equity  and cash  flows  for each of the  years  in the two  year  period  ended
December 31, 1997.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  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 provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of ULTRADATA  Corporation as of
December 31, 1997, and the results of its operations and its cash flows for each
of the years in the two year period ended December 31, 1997, in conformity  with
generally accepted accounting principles.


KPMG LLP
Mountain View, California
February 12, 1998

                                                      F-46

<PAGE>

<TABLE>
<CAPTION>


                                                ULTRADATA CORPORATION
                                                   Balance Sheets
                               (In thousands, except share data and par value amounts)

                                                                                            December 31,
                                                                                        1998            1997
<S>                                                                                  <C>        <C>
Assets

Current assets:
      Cash and cash equivalents                                                      $  2,418   $      486
      Short term investments                                                               --          303
      Restricted cash                                                                     321          536
      Trade accounts receivable, net                                                    6,523        6,387
      Inventories, including third-party product licenses                               1,932          815
      Prepaid expenses and other current assets                                           383          456
      Income tax receivable                                                                --           53
                                                                                     --------    ---------
           Total current assets                                                        11,577        9,036
Property and equipment, net                                                             3,312        4,533
                                                                                      -------      -------
                Total assets                                                          $14,889      $13,569
                                                                                       ======       ======

Liabilities and Stockholders' Equity

Current liabilities:
      Current portion of capital lease and debt obligations                         $    481    $     663
      Current portion, third-party product licenses                                      594           --
      Accounts payable                                                                 1,545        2,284
      Accrued expenses                                                                 1,646        1,239
      Deferred revenue and customer advances                                           1,479        1,852
                                                                                     -------      -------
           Total current liabilities                                                   5,745        6,038
Deferred revenue and customer advances                                                   682        1,113
Capital lease and debt obligations                                                         7          120
Long-term portion, third-party product licenses                                          625           --
                                                                                    --------    ---------
Total liabilities                                                                      7,059        7,271
                                                                                     -------      -------

Commitments and contingencies (Notes 4 and 8)

Stockholders' equity:
      Preferred stock; par value $.001; 2,000,000 shares authorized;                      --           --
      none outstanding Common stock; par value $.001; 23,000,000 shares
      authorized; 7,725,674 and 7,607,133 shares outstanding in 1998
      and 1997, respectively                                                               8            8
      Additional paid in capital                                                      15,515       15,202
      Accumulated deficit                                                             (7,693)      (8,912)
                                                                                      ------       ------

           Total stockholders' equity                                                  7,830        6,298
                                                                                     -------      -------

                Total liabilities and stockholders' equity                          $ 14,889    $  13,569
                                                                                      ======       ======
</TABLE>

      See accompanying notes to financial statements.

                                                      F-47

<PAGE>


<TABLE>
<CAPTION>

                                                ULTRADATA CORPORATION
                                              Statements of Operations
                                      (In thousands, except per share amounts)

                                                                                  Years Ended December 31,
                                                                                 1998        1997      1996
<S>                                                                            <C>        <C>        <C>
Revenue
      Software                                                                 $ 11,063   $  7,062   $  9,452
      Services                                                                   16,501     16,548     16,741
                                                                                 ------     ------     ------

           Subtotal                                                              27,564     23,610     26,193
      Hardware                                                                    3,197      5,493     14,251
                                                                                -------    -------     ------

Total revenue                                                                    30,761     29,103     40,444
                                                                                 ------     ------     ------

Cost of goods sold
      Software                                                                    1,979      1,034      2,202
      Services                                                                   10,889     11,770     13,502
                                                                                 ------     ------     ------

           Subtotal                                                              12,868     12,804     15,704
      Hardware                                                                    2,844      4,115     10,331
                                                                                -------    -------     ------

Total cost of goods sold                                                         15,712     16,919     26,035
                                                                                 ------     ------     ------

Gross margin                                                                     15,049     12,184     14,409
                                                                                 ------     ------     ------

      Product development                                                         4,689      4,608      6,180
      Selling, general, and administrative                                        9,201     11,964     15,518
      Gain on transfer of service bureau contracts                                 (162)      (558)        --
                                                                                -------    ------- ----------

           Total operating expenses                                              13,728     16,014     21,698
                                                                                 ------     ------     ------

Operating income (loss)                                                           1,321     (3,830)    (7,289)

Interest income                                                                      40        120        365
Interest expense                                                                   (179)      (102)       (36)
Other income                                                                         59        352         --
                                                                                -------   -------- ----------

Income (loss) before income taxes                                                 1,241     (3,460)    (6,960)

Income tax expense                                                                   22         --         --
                                                                                -------   --------   --------

Net income (loss)                                                              $  1,219   $ (3,460)  $ (6,960)
                                                                                =======    =======    =======

Net income (loss) per share information:
      Basic net income (loss) per share                                        $   0.16   $  (0.46)  $  (0.97)
      Diluted net income (loss) per share                                          0.15      (0.46)     (0.97)
      Shares used to compute basic net income (loss) per share                    7,687      7,585      7,195
      Shares used to compute dilutive net income (loss) per share                 7,924      7,585      7,195

</TABLE>


      See accompanying notes to financial statements.

                                                      F-48

<PAGE>


<TABLE>
<CAPTION>

                                                ULTRADATA CORPORATION

                                         Statements of Stockholders' Equity
                                                   (In thousands)

                                                                                         Retained
                                            Common Stock             Additional         Earnings            Total
                                         Shares                        Paid-In       (Accumulated    Stockholders'
                                     Outstanding       Amount           Capital           Deficit)         Equity

<S>                                  <C>               <C>           <C>              <C>             <C>
Balances as of January 1, 1996          5,742,000          $6              $4           $1,508          $1,518
Net proceeds from initial public
   offering                             1,650,000           1          14,241              --           14,242
Net proceeds from issuance of
   common stock                           133,864          --             696              --              696
Net loss                                      --           --             --            (6,960)         (6,960)
                                      -----------          --        ---------           ------          ------

Balances as of December 31, 1996        7,525,864           7          14,941           (5,452)          9,496
Net proceeds from issuance of
   common stock                            81,269           1             261              --              262
Net loss                                     --            --            --             (3,460)         (3,460)
                                      -----------          --        ---------           ------          ------

Balances as of December 31, 1997        7,607,133           8          15,202           (8,912)          6,298
Net proceeds from issuance of
   common stock                           118,541          --             313              --              313
Net income                                    --           --             --             1,219           1,219
                                      -----------          --        ---------           ------          ------

Balances as of December 31, 1998        7,725,674          $8         $15,515          $(7,693)         $7,830
                                        =========           =          ======           ======           =====

</TABLE>

      See accompanying notes to financial statements.

                                                      F-49

<PAGE>

<TABLE>
<CAPTION>


                                                ULTRADATA CORPORATION
                                              Statements of Cash Flows
                                                   (In thousands)
                                                                                   Years ended December 31,
                                                                       1998             1997              1996
<S>                                                                  <C>             <C>           <C>
Cash flows from operating activities:
Net income (loss)                                                    $  1,219        $   (3,460)   $    (6,960)
Adjustments to reconcile net income (loss) to net cash provided
      by (used for) operating activities:
      Depreciation and amortization                                     1,528             1,436            864
      Deferred income taxes                                                --                --            907
      Gain on sale of joint venture                                        --              (238)            --
      Equity in earnings of unconsolidated subsidiary                      --               (16)           (62)
      Loss on disposition of property and equipment                        67                --            250
      Changes in operating assets and liabilities:
           Trade accounts receivable, net                                (136)            4,069         (3,962)
           Inventories                                                    365               358             78
           Prepaid expenses and other assets                               73               579           (253)
           Income taxes receivable                                         53             1,023           (958)
           Accounts payable                                              (739)           (1,375)        (1,560)
           Accrued expenses                                               158              (887)           166
           Deferred revenue and customer advances                        (804)           (1,856)          (458)
                                                                        -----            ------        -------
      Net cash provided by (used for) operating activities              1,784              (367)       (11,948)
                                                                        -----           -------         ------
Cash flows from investing activities:
      Capital expenditures                                               (353)           (2,997)        (1,706)
      Proceeds from disposition of service bureau assets                   --               192             --
      Proceeds from disposition of other assets                            --               368             --
      Sale of joint venture                                                --               500             --
      Purchases of short-term investments                                  --                --         (4,276)
      Sale of short-term investments                                      303             1,117          2,856
      Repayment of stockholder notes receivable                            --                --          1,453
                                                                     --------         ---------        -------

           Net cash used for investing activities                         (50)             (820)        (1,673)
                                                                       ------            ------         ------
Cash flows from financing activities:
      Bank borrowings and long term obligations, net                       --               474         (1,000)
      Proceeds from debt                                                   --               250            388
      Decrease (increase) in restricted cash                              215              (536)            --
      Repayment of debt                                                  (330)             (360)          (246)
      Net proceeds from initial public offering                            --                --         14,242
      Net proceeds from issuance of common stock                          313               262            696
                                                                       ------            ------       --------
           Net cash provided by financing activities                      198                90         14,080
                                                                       ------           -------         ------
Net increase (decrease) in cash and cash equivalents                    1,932            (1,097)           459
Cash and cash equivalents at beginning of year                            486             1,583          1,124
                                                                       ------             -----        -------
Cash and cash equivalents at end of year                             $  2,418        $      486    $     1,583
                                                                        =====            ======        =======
Non cash operating, investing and financing activities:
      Property and equipment acquired under capital leases           $     21        $       --    $        --
                                                                      =======         =========     ==========
      Remaining obligation on third party product licenses             $1,482        $       --    $        --
                                                                        =====         =========     ==========
Supplemental disclosure of cash flow information:
      Cash paid for taxes                                            $     22        $        1    $        87
      Cash paid for interest                                         $    179        $      102    $        36

</TABLE>


      See accompanying notes to financial statements.

                                                      F-50

<PAGE>



NOTE 1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

      ULTRADATA  Corporation  (the "Company")  provides  information  management
software and solutions for relationship-oriented  financial institutions.  These
solutions  allow  the  Company's  customers  to  provide,  among  other  things,
financial  services  such as checking,  savings and  investment  accounts,  home
banking,  credit and debit cards, ATM access and consumer lending. The Company's
products are primarily  targeted at large and mid-sized credit unions for use as
an in-house  installation and to value-added resellers ("VARs") for distribution
to small-sized credit unions that operate in service bureau environments.

Revenue Recognition

      The  Company  recognizes  revenues  from  licenses  of  computer  software
provided that a noncancelable  license  agreement has been signed,  the software
and related documentation have been shipped, there are no material uncertainties
regarding  customer  acceptance,  and collection of the resulting  receivable is
deemed  probable.  Maintenance  revenues are deferred  and  recognized  over the
related  contract  period,  generally  three months to five years.  Services and
other revenues generated from professional  consulting and training services and
software  customization  services are  recognized as the services are performed.
Hardware revenues are recognized upon shipment.

      Software cost of revenues includes direct costs of software purchased from
third  parties  and  royalties.  Services  and other  cost of  revenues  include
maintenance,   the  direct  and  indirect   costs  of  providing   training  and
installation,  and consulting services relating to customer contracts.  Hardware
cost of revenues includes the costs of the hardware and freight.

      Statement of Position (SOP) 97-2 "Software Revenue Recognition," which was
issued  October  27,  1997,  supersedes  SOP 91-1 and became  effective  for the
Company in 1998.

Concentration of Credit Risk and Fair Value of Financial Instruments

      Financial   instruments   that   potentially   expose  the  Company  to  a
concentration of credit risk principally  consist of cash and cash  equivalents,
restricted  cash,  trade  accounts  receivable and short term  investments.  The
carrying value of the Company's financial  instruments  approximates fair market
value.

      The Company's current  customers are primarily  comprised of credit unions
throughout the United States.  Although the Company is directly  affected by the
financial cycles of the credit union industry,  management does not believe that
significant  credit risks existed as of December 31, 1998. The Company maintains
a reserve for  potential  bad debts  aggregating  $521,000 and  $1,094,000 as of
December 31, 1998 and 1997, respectively.

      No customer accounted for more than 10% of the Company's total revenues in
1998,  1997 or 1996.  No customer  accounted  for more than 10% of the Company's
accounts  receivables  in 1998.  One customer  accounted  for 13% of total trade
accounts receivable at December 31, 1997.

Financial Statement 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  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting   period.   Such  estimates   include   allowances   for   potentially
uncollectible  accounts receivable,  sales returns and a valuation allowance for
deferred tax assets. Actual results could differ from those estimates.


                                                      F-51

<PAGE>



Cash and Cash Equivalents

      Cash equivalents consist of short-term financial instruments with original
maturities of three months or less that are carried at cost, which  approximates
market.

Short-Term Investments

      Short-term  investments  as of December  31, 1997  consisted  of municipal
obligations with amortized cost approximating fair market value.

Inventories

      Inventories  consist of hardware and software purchased from third parties
pending  shipment to  customers  recorded  at the lower of cost or market,  on a
first in, first out basis.

Software Development Costs

      Capitalization of computer software costs, when material,  begins upon the
establishment  of  technological  feasibility.  Such  costs are  amortized  over
periods not exceeding three years. To date, software  development costs incurred
subsequent  to the  establishment  of  technological  feasibility  have not been
material.

Property and Equipment

      Property and equipment are stated at cost.  Depreciation is computed using
the straight-line method over the shorter of the estimated useful life (three to
five  years  for  computer  equipment  and  software  and five to ten  years for
furniture and fixtures) or the lease term.

Income Taxes

      The Company  utilizes the asset and  liability  method of  accounting  for
income taxes.  Deferred tax assets and  liabilities are established to recognize
the future tax  consequences  attributable to differences  between the financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax bases.  The  measurement  of deferred tax assets is reduced,  if
necessary,  by a  valuation  allowance  for any tax  benefits  of  which  future
realization is uncertain.

Net Income (Loss) Per Share

      Basic  income  (loss)  per share  excludes  dilution  and is  computed  by
dividing  net  income  (loss) by the  weighted-average  number of common  shares
outstanding,  less shares subject to repurchase by the Company,  for the period.
Diluted income (loss) per share reflects the potential dilution that could occur
if  securities  or other  contracts  to issue  common  stock were  exercised  or
converted  into common  stock.  Common share  equivalents  are excluded from the
computation in loss periods as their effect would be antidilutive.

Stock-Based Compensation

      The Company accounts for its stock-based  compensation plans in accordance
with the  provisions of  Accounting  Principles  Board  ("APB")  Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations.



                                                      F-52

<PAGE>



Impairment of Long-Lived Assets and Long-Lived Assets To Be Disposed Of

      The Company  evaluates  its  long-lived  assets and  certain  identifiable
intangibles for impairment whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable.  Recoverability  of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to the future net cash flows expected to be generated by the asset.  If
such assets are  considered to be impaired,  the  impairment to be recognized is
measured by the amount by which the  carrying  amount of the assets  exceeds the
fair value of the assets.  Assets to be disposed of are reported at the lower of
carrying amount or fair value less costs to sell.

Reclassifications

      Certain  amounts in the  accompanying  1997 and 1996 financial  statements
have been reclassified to conform with the 1998 presentation.

Recently Issued Accounting Standards

      In 1998, the Company adopted Statement of Financial  Accounting  Standards
("SFAS") No. 130, "Reporting Comprehensive Income," which requires an enterprise
to report,  by major  components and as a single total, the change in net assets
during the period from nonowner sources.  Adoption of this standard did not have
an impact on the  Company's  financial  position,  results of operations or cash
flows.  During 1998,  1997 and 1996 the Company's  sole source of  comprehensive
income is its net income (loss).

      The Financial  Accounting Standards Board issued SFAS No. 131, "Disclosure
about  Segments  of  an  Enterprise  and  Related  Information."  SFAS  No.  131
establishes annual and interim reporting standards for an enterprise's  business
segments and related disclosures about its products, services,  geographic areas
and major  customers.  The  Company  has  determined  that it  operates in three
segments:  software,  services and  hardware.  Management  reviews the operating
results  of these  segments  only at the gross  margin  level and assets are not
allocated by operating segment.

      In June 1998,  the FASB issued  SFAS No. 133  "Accounting  for  Derivative
Instruments and Hedging Activities." This statement requires companies to record
derivatives  on the  balance  sheet as assets or  liabilities,  measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge accounting. SFAS No. 133 will be effective for the Company's
year ending December 31, 2000.  Management believes that this statement will not
have a  significant  impact on the  Company's  financial  position,  results  of
operations or cash flows.

NOTE 2.    ACCOUNTS RECEIVABLE

      Accounts receivable consists of (in thousands):

                                        December 31,
                                        1998     1997

Trade accounts receivable               $3,998   $4,520
Unbilled revenues                        3,046    2,961
                                         -----    -----
      Accounts receivable, gross         7,044    7,481
Allowance for bad debts                   (521)  (1,094)
                                        ------    -----
      Accounts receivable, net          $6,523   $6,387
                                         =====    =====



                                                      F-53

<PAGE>



NOTE 3.    PROPERTY AND EQUIPMENT

      Property and equipment consists of (in thousands):
                                                    December 31,
                                                    1998     1997

Computer equipment                                  $4,073   $3,958
Furniture and fixtures                               2,841    2,687
Software                                             1,432    1,424
                                                     -----    -----
      Property and equipment, gross                  8,346    8,069
Accumulated depreciation and amortization           (5,034)  (3,536)
                                                     -----    -----
      Property and equipment, net                   $3,312   $4,533
                                                     =====    =====

NOTE 4.    ACCRUED EXPENSES

      Accrued expenses consists of (in thousands):

                                                   December 31,
                                                   1998     1997

Accrued royalties and loss contract accrual        $   314  $   305
Accrued vacation                                       613      598
Other                                                  719      336
                                                    ------   ------
      Total accrued expenses                        $1,646   $1,239
                                                     =====    =====

NOTE 5.    BANK BORROWINGS AND DEBT

Bank Borrowings

      In 1997, the Company entered into a factoring agreement which provides for
borrowing  by the  Company of up to $1.5  million,  to be effected by the bank's
purchase of eligible accounts receivable and payment to the Company of an amount
equal to 80% of the purchased accounts receivable.  Purchases of receivables and
corresponding  advances to the Company are at the discretion of the bank.  There
is a 0.5%  administrative fee for each receivable  purchased and a 1.75% monthly
finance charge for as long as each purchased receivable remains outstanding. The
agreement  also provides that the borrowings  under the factoring  agreement are
secured by all  tangible  and  intangible  assets of the  Company.  To date,  no
amounts have been borrowed  under the factoring  agreement.  In addition,  as of
December  31,  1998 and 1997,  the  outstanding  balance on a capital  equipment
facility was $321,000 and $539,000, respectively. The capital equipment facility
bears  interest at a rate equal to 0.25% above the prime rate and will be due in
June of 2000. This facility was secured by cash  collateral,  and was retired in
January 1999.

Other Debt

      In the second  quarter of 1997,  the Company  entered into an agreement to
distribute  certain  products  developed  by a  third  party.  As a part of this
agreement, the Company purchased certain products with payments due through 2001
with interest imputed at 12.5%.  Future principal  payments under this agreement
as of December 31, 1998 are as follows:



                                                      F-54

<PAGE>



                                     Year Ending         Principal
                                    December 31,         Payments
                                                     (in thousands)

                                    1999             $    741
                                    2000                  323
                                    2001                  302
                                                       ------
         Total Payments                              $  1,366

      In  addition,  the  Company  entered  into  a  non-cancelable  maintenance
agreement  related to the purchased  licenses with an annual expense of $204,000
in 1998 and $326,000 each year thereafter through 2004.

      Interest  expense  incurred during the years ended December 31, 1998, 1997
and 1996 was $179,000, $102,000 and $36,000, respectively.

NOTE 6.    INCOME TAXES

      The  components  of income  tax  expense  (benefit)  for the  years  ended
December 31, 1998, 1997, and 1996 consisted of the following (in thousands):

                                              Current   Deferred        Total

1998:
      Federal                                $    15       $  --        $   15
      State                                        7          --             7
                                             -------        ----        ------
           Total income tax expense          $    22       $  --        $   22
                                              ======        ====         =====
1997:
      Federal                                $   (25)      $  --        $  (25)
      State                                       25          --            25
                                              ------        ----         -----
           Total income tax expense          $    --       $  --        $   --
                                             =======        ====        ======
1996:
      Federal                                  $(932)      $ 621        $ (311)
      State                                       25         286           311
                                               -----         ---           ---
           Total income tax expense            $(907)      $ 907        $   --
                                                ====         ===        ======

The difference  between the "expected" income tax expense (benefit)  computed at
the 35% statutory  federal  income tax rate and the Company's  actual income tax
expense for the years ended December 31, 1998,  1997 and 1996 was as follows (in
thousands):

<TABLE>
<CAPTION>

                                                                            For the years ended December 31,
                                                                        1998             1997              1996

<S>                                                                     <C>            <C>            <C>
Computed "expected" tax expense (benefit)                               $ 434          $  (1,176)     $ (2,366)
State income taxes, before valuation allowance adjustment,  net of
      federal income tax effect                                            72                 25            25
Change in the beginning of the year valuation allowance on deferred
      tax assets                                                         (672)                --           907
Current year losses and temporary differences for which no benefit
      was recognized                                                      185              1,134         1,329
Nondeductible expenses                                                      3                 39            37
Other, net                                                                 --                (22)           68
                                                                        -----            -------       -------
      Actual income tax expense                                         $  22          $       0      $      0
                                                                         ====           ========       =======

</TABLE>

                                                      F-55

<PAGE>



      The  tax  effects  of  significant  temporary  differences  that  comprise
deferred tax assets are as follows (in thousands):

                                                              December 31,
                                                              1998    1997
Deferred tax assets:
      Accounts receivable reserves                        $    223 $    628
      Vacation accrual                                         208      244
      Deferred revenue                                         915      787
      Net operating loss carryforwards                       1,199    1,867
      Tax credit carryforwards                                 922      894
      Other                                                    242       12
                                                            ------  -------
      Gross deferred tax assets                              3,709    4,432
           Less valuation allowance                         (3,609)  (4,281)
                                                             -----    -----
      Deferred tax assets, net of valuation allowance          100      151
                                                            ------   ------
Deferred tax liabilities - accumulated depreciation           (100)    (151)
                                                             -----    -----
Net deferred tax assets                                  $      -- $     --
                                                          ========  ========

      The net change in the valuation  allowance for the year ended December 31,
1998 and 1997 was a  decrease  of  approximately  $672,000  and an  increase  of
approximately $1,277,000. Management believes that sufficient uncertainty exists
as to whether the  deferred  tax assets will be  realized,  and  accordingly,  a
valuation allowance is required.

      The  Company  has  net  operating  loss   carryforwards  for  federal  and
California  income tax  purposes of  approximately  $3,200,000  and  $1,000,000,
respectively.  The federal net operating loss  carryforward will expire if it is
not utilized by the year 2011 through 2012.  The  California  net operating loss
carryforward  will expire if it is not utilized by the year 2001  through  2002.
The Company has research credit  carryforwards for federal and California income
tax purposes of approximately $540,000 and $320,000,  respectively.  The federal
research credit  carryforward will expire if not utilized  beginning in the year
2008 through 2011. The California  research credit carries forward  indefinitely
until  utilized.  The  Company  also has minimum  tax credit  carryforwards  for
federal income tax purposes of approximately  $62,000,  which will carry forward
indefinitely until utilized.

      The Tax  Reform  Act of 1986  and the  California  Conformity  Act of 1987
impose  restrictions  on the  utilization  of net operating  loss and tax credit
carryforwards  in the event of an "ownership  change" as defined by the Internal
Revenue Code. If an "ownership change," as defined by the Internal Revenue Code,
has occurred,  the Company's  ability to utilize its net operating  loss and tax
credit carryforwards may be subject to restriction pursuant to these provisions.

NOTE 7.    STOCKHOLDERS' EQUITY.

      The following is a reconciliation  of the  denominators  used in computing
diluted net income (loss) per share (in thousands):

<TABLE>
<CAPTION>

                                                                                1998    1997     1996
                                                                                ----    ----     ----

Shares used to compute basic net income (loss) per share- weighted average
<S>                                                                             <C>     <C>      <C>
      number of common shares outstanding                                       7,687    7,585    7,195

Effect of dilutive common equivalent shares - stock options outstanding           237       --       --
                                                                                -----   ------   ------

Shares used to compute diluted net income (loss) per share                      7,924    7,585    7,195
                                                                                =====    =====    =====

</TABLE>

      For the above mentioned  periods,  the Company had options  outstanding of
1,910,587,  1,911,740  and  1,820,149  as of the end of 1998,  1997,  and  1996,
respectively which could potentially dilute basic and diluted net

                                                      F-56

<PAGE>



income  (loss) per share in the future but were excluded in the  computation  of
diluted net income  (loss) per share in the periods  presented  as their  effect
would have been antidilutive.

Employee Stock Option and Purchase Plans

1994 Equity Incentive Plan

      The 1994  Equity  Incentive  Plan (the "1994  Plan") was  adopted in March
1994. The 1994 Plan provides for the grant of incentive  stock options and stock
bonuses and the issuance of  restricted  stock by the Company to its  employees,
officers, directors,  consultants,  independent contractors, and advisors. There
are 1,300,000  shares of the Company's  common stock reserved for issuance under
the 1994 plan, of which 318,243 are available for grant as of December 31, 1998.
These  options  vest 25%  after  one year and  ratably  over  thirty-six  months
thereafter, and expire ten years from the date of grant.

1995 Directors Stock Option Plan

      The 1995 Directors Stock Option Plan (the "Directors Plan") was adopted in
July  1996.  The  Directors  Plan  provides   non-qualified   stock  options  to
non-employee directors of the Company. There are 150,000 shares of the Company's
common stock  reserved for issuance,  of which 55,000 are available for grant as
of December 31, 1998.  Members of the Board of Directors who are not  employees,
consultants or independent contractors of the Company, or any parent, subsidiary
or affiliate of the Company are eligible to participate  in the Directors  Plan.
These  options vest 25% in each of four  consecutive  years.  As of December 31,
1998, 95,000 options have been granted under the Directors Plan.

Nonqualified Stock Option Grants

      On July  31,  1995,  the  Company  granted  to the  Company's  then  Chief
Executive  Officer,  who is currently a director of the Company,  outside of the
1994 Plan,  nonqualified  options to purchase  600,000 shares of common stock at
$6.00 per share all of which were vested by December  31,  1998.  On October 17,
1996, the Company  granted to the Company's  current  President,  outside of the
1994 Plan,  nonqualified  options to purchase  600,000 shares of common stock at
$3.50 per share.  Options for 25% of this grant vested on October 17, 1997,  and
the  remaining  shares vest in equal  monthly  increments  over the following 36
months.

1995 Employee Stock Purchase Plan

      In  September  1995,  the Board of  Directors  adopted  the 1995  Employee
Purchase Plan (the "Purchase Plan") and reserved 250,000 shares of the Company's
common  stock for  issuance  thereunder.  The  Purchase  Plan  permits  eligible
employees  to acquire  shares of the  Company's  common  stock  through  payroll
deductions.  Each  offering  under the Purchase Plan will be for a period of six
months  commencing on February 1 and August 1 of each year.  Eligible  employees
may select a rate of payroll deduction between 2% and 10% of their compensation,
up to an aggregate total payroll deduction not to exceed $21,250 in any calendar
year.

      The purchase  price for the  Company's  common stock  purchased  under the
Purchase  Plan is 85% of the lesser of the fair  market  value of the  Company's
common stock on the first day of the applicable  offering period or the last day
of that offering period.

Accounting for Stock-Based Compensation

      A summary of the status of the  Company's  fixed  option plans and nonplan
grants is presented below:


                                                      F-57

<PAGE>


<TABLE>
<CAPTION>

                                    December 31, 1998         December 31, 1997         December 31, 1996
                                    -----------------         -----------------         -----------------

                                            Weighted                   Weighted                  Weighted
                                             Average                    Average                   Average
                                             Exercise                   Exercise                  Exercise
                                    Shares      Price         Shares       Price        Shares       Price

<S>                             <C>              <C>       <C>              <C>      <C>              <C>
Outstanding at beginning of
      year                      1,911,740        $4.71     1,820,149        $5.16    1,209,663        $5.64
Granted                           334,050        $4.87       475,600        $3.91      918,600        $4.76
Exercised                         (25,609)       $4.12           --       $    --     (103,747)       $5.00
Canceled                          (72,331)       $4.54      (384,009)       $5.83     (204,367)       $6.27
                               ----------         ----     ---------         ----    ---------         ----
Outstanding at end of year      2,147,850        $4.75     1,911,740        $4.71    1,820,149        $5.16
                                =========         ====     =========         ====    =========         ====
Exercisable at end of year      1,255,490        $5.13       952,142        $5.47      561,119        $5.67
                                =========         ====        ======         ====      =======         ====

Weighted-average fair value
of options granted during the
year at exercise price equal
to fair value at grant date                      $1.94                      $1.97                     $2.39

</TABLE>

      The Company has elected to use the intrinsic value-based method to account
for all of its employee  stock-based  compensation  plans. Under APB Opinion No.
25,  Accounting  for Stock  Issued to  Employees,  the Company  has  recorded no
compensation  costs  related to its stock  options  granted to employees for the
years ended December 31, 1998,  1997 and 1996 because the exercise price of each
option equaled or exceeded the fair value of the  underlying  common stock as of
its grant date.

      Pursuant to SFAS No. 123,  Accounting for  Stock-Based  Compensation,  the
Company is required to disclose the pro forma  effects on net income  (loss) and
net income  (loss) per basic and diluted  share as if the Company had elected to
use the fair value  approach  to  account  for all of its  employee  stock-based
compensation   plans.  Had  compensation  cost  for  the  Company's  plans  been
determined  consistent  with the fair value approach  described in SFAS No. 123,
the  Company's  net income  (loss) and net income  (loss) per basic and  diluted
share for the years ended  December 31,  1998,  1997 and 1996 would have been as
indicated below (in thousands, except per share data):

                                                  Years Ended December 31,
                                               1998      1997         1996

Net income (loss):
      As reported                            $ 1,219    $(3,460)    $(6,960)
      Pro forma                              $   502    $(4,261)    $(7,623)
Basic net income (loss) per share:
      As reported                            $  0.16    $ (0.46)    $ (0.97)
      Pro forma                              $  0.07    $ (0.56)    $ (1.06)
Diluted net income (loss) per share:
      As reported                            $  0.15    $  (0.46)   $ (0.97)
      Pro forma                              $  0.06    $  (0.56)   $ (1.06)

      The Company's  fair value  calculations  on  stock-based  awards were made
using the Black-Scholes option pricing model with the following weighted average
assumptions:  expected  life, 3.5 years from the date of grant in 1996 and 1997,
and 4.25 years in 1998; stock volatility,  63% in 1996 and 1997 and 51% in 1998;
risk-free interest rate, 6.08% in 1996 and 1997 and 5% in 1998; and no dividends
during the  expected  term.  The  Company's  calculations  are based on a single
option award valuation  approach,  and forfeitures are recognized as they occur.
The Company's fair value  calculations on stock-based  awards under the Purchase
Plan for all  years  presented  were also made  using the  Black-Scholes  option
pricing model with the following weighted average assumptions:  expected life, 6
months;  stock volatility,  51%;  risk-free  interest rate, 5%; and no dividends
during the expected term.

                                                      F-58

<PAGE>



      The  following  table  summarizes  information  about fixed stock  options
outstanding as of December 31, 1998:

<TABLE>
<CAPTION>

                                                     Options Outstanding                Options Vested

                                                         Weighted                          Options        Weighted
                                   Options                 Average        Weighted         Vested at      Average
              Range of         Outstanding at            Remaining          Average     December 31,      Exercise
         Exercise Prices   December 31, 1998         Contractual Life  Exercise Price       1998           Price
         ---------------   -----------------         ----------------  --------------   -------------     ----------

<S>      <C>               <C>                       <C>               <C>              <C>               <C>
         $2.63 - 3.50             785,550                     7.7            $3.46          368,341          $3.48
         $4.00 - 6.00           1,254,900                     7.1            $5.32          817,268          $5.65
         $6.25 - 11.00            107,400                     7.1            $7.52           69,881          $7.69
                               ----------                                               -----------

        $2.63 - 11.00           2,147,850                     7.4            $4.75        1,255,490          $5.13
                                =========                                                 =========
</TABLE>


NOTE 7.    EMPLOYEE BENEFIT PLAN

      In 1987, the Company adopted a defined  contribution  retirement plan (the
"Retirement Plan"), which has been determined by the Internal Revenue Service to
be qualified  under  Section  401(k) of the Internal  Revenue Code of 1986.  The
Retirement Plan covers essentially all full-time  employees.  Eligible employees
may  make  voluntary  contributions  to the  Retirement  Plan up to 15% of their
annual compensation.  The Company contributed  $187,000,  $177,000 and $0 to the
plan during the years ended December 31, 1998, 1997, and 1996, respectively.

NOTE 8.    COMMITMENTS

Leases

      The Company leases its principal facility under a noncancelable  operating
lease through  January 2007.  The Company is also party to a lease for its prior
office  space which has been  subleased  through  July 2002.  The Company has an
office in Carrollton,  Texas,  which houses the corporate and customer  disaster
recovery center.  The Company signed a new lease for this facility for 36 months
beginning  January 1, 1999.  Rental  expense for operating  leases for the years
ended  December 31, 1998,  1997,  and 1996 amounted to $746,000,  $1,070,000 and
$1,060,000,  respectively,  net of 1998 and 1997 rental  income of $310,000  and
$124,000, respectively, under the sublease.

      The  Company   leases  its   facilities   and  certain   equipment   under
noncancelable  capital and operating leases. Future minimum lease payments under
the  Company's  capital and  operating  leases and the present  value of minimum
lease  payments  under capital leases as of December 31, 1998 are as follows (in
thousands):

Year Ending December 31,               Capital Leases        Operating Leases

1999                                        $16                 $   739
2000                                          9                     739
2001                                         --                     783
2002                                         --                     902
2003                                         --                   1,116
Thereafter                                   --                   3,784
                                           ----                   -----
Future minimum lease payments               $25                  $8,063
                                                                  =====
Amounts representing interest                (5)
Present value of future minimum
     lease payments                         $20
                                            ===

      Future  payments  under  operating  leases are net of  sub-lease  payments
totaling  approximately  $276,000  for each of the years 1999  through  2001 and
approximately $161,000 for 2002.

                                                      F-59

<PAGE>





                                                      F-60

<PAGE>


<TABLE>
<CAPTION>

                                                ULTRADATA CORPORATION
                                                    BALANCE SHEET
                                                   (In thousands)


                                                                     June 30,             December 31,
                                                                        1999                    1998
                                                                      (Unaudited)
<S>                                                                  <C>                  <C>
ASSETS
Current Assets:
      Cash and cash equivalents                                      $  2,716             $  2,418
      Restricted cash                                                       700                  321
      Trade accounts receivable, net                                     3,905                6,523
      Inventory                                                             491               1,932
      Prepaid expenses and other current assets                             667                  383
                                                                       --------           ----------
           Total Current Assets                                          8,479              11,577
Property and equipment, net                                              3,001                3,312
                                                                       -------            ---------

Total Assets                                                         $11,480              $14,889
                                                                      ======              =======

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
      Bank borrowings and current portion of
           long-term obligations                                     $   290              $  1,075
      Accounts payables                                                   794                 1,545
      Accrued expenses                                                 1,594                  1,646
      Deferred revenue and customer advances - current portion            880                 1,479
                                                                     --------             ---------
           Total Current Liabilities                                   3,558                  5,745
      Deferred revenue and customer advances                              477                    682
      Long-term obligations                                               252                    632
                                                                     --------             ----------
           Total Liabilities                                           4,287                  7,059
                                                                     -------              ---------

Stockholders' Equity:
      Common stock                                                         8                     8
      Additional paid in capital                                      15,709                15,515
      Accumulated deficit                                             (8,524)                (7,693)
                                                                      ------              ----------
           Total Stockholders' Equity                                   7,193                 7,830
                                                                      -------             ---------
           Total Liabilities and Stockholders' Equity                $11,480              $14,889
                                                                      ======              =======
</TABLE>


           The accompanying notes are an integral part of this balance sheet.

                                                      F-61

<PAGE>


<TABLE>
<CAPTION>

                                                ULTRADATA CORPORATION
                                         UNAUDITED STATEMENTS OF OPERATIONS
                                                   (In thousands)


                                                                     Six Months Ended     Six Months Ended
                                                                         June 30, 1999        June 30, 1998

<S>                                                                        <C>                 <C>
Revenues:
      Software                                                             $  4,186            $  5,406
      Services and other                                                      9,456               7,650
                                                                              -----               -----
                                                                             13,642              13,056
      Hardware                                                                  244               1,756
                                                                            -------               -----
           Total revenues                                                    13,886              14,812
                                                                             ------              ------

Cost of revenues:
      Software                                                                  948                 490
      Services and other                                                      4,460               5,471
      Hardware                                                                  310               1,441
                                                                           --------             -------
           Total cost of revenues                                             5,718               7,402
                                                                            -------             -------
           Gross margin                                                       8,168               7,410
                                                                            -------             -------

Operating expenses:
      Product development                                                     1,996               2,402
      Selling, general and administrative                                     6,991               4,759
                                                                            -------             -------
           Total operating expenses                                           8,987               7,161
                                                                            -------             -------
            Operating income (loss)                                            (819)                249
Interest Expense, net                                                           (59)                (50)
Other income                                                                     47                  54
                                                                            =======            ========
           Net (loss) income                                               $   (831)           $    253
                                                                            ========            =======

Earnings (loss) per share information:
      Basic net income (loss) per share                                    $  (0.11)           $   0.03
      Diluted net income (loss) per share                                  $  (0.11)           $   0.03
      Shares used to compute basic net income (loss) per share                7,745               7,657
      Shares used to compute diluted net income (loss) per share              7,745               7,885

</TABLE>


      The accompanying notes are an integral part of these statements.

                                                      F-62

<PAGE>

<TABLE>
<CAPTION>


                                                ULTRADATA CORPORATION
                                          UNAUDITED STATEMENT OF CASH FLOWS
                                                   (In thousands)

                                                                       Six Months Ended         Six Months Ended
                                                                         June 30, 1999           June 30, 1998
                                                                         -------------           -------------

<S>                                                                      <C>                      <C>
Cash flows from operating activities:
      Net (loss) income                                                  $     (831)              $     253
Adjustments to reconcile net (loss) income to net cash provided
   by operating activities:
      Depreciation and amortization                                             647                     928
      Write off related to renegotiation of agreement                           149                      --
      Changes in operating assets and liabilities:
           Trade accounts receivable, net                                     2,618                  (1,169)
           Inventory                                                            664                  (1,404)
           Prepaid expenses and other current assets                           (284)                     70
           Income taxes receivable                                               --                      25
           Accounts payable                                                    (333)                    390
           Accrued expenses                                                     (52)                    293
           Deferred revenue and customer advances                              (804)                    (67)
           LT Obligations                                                         -                   1,268
                                                                          ---------                 -------
                Net cash provided by operating activities                     1,774                     587
                                                                              -----                     ---
Cash flows from investing activities:
      Capital expenditures                                                     (336)                   (368)
      Sale of short-term investments                                             --                     303
                                                                         ----------                     ---
           Net cash used for investing activities                              (336)                   (65)
                                                                               -----                   ----
Cash flows from financing activities:
      Restricted cash                                                          (379)                    103
      Repayment of debt                                                        (955)                   (133)
      Net proceeds from issuance of common stock                                194                     200
                                                                            -------                 -------
           Net cash provided by (used for) financing activities              (1,140)                    170
                                                                             -------                -------
      Net increase in cash and equivalents                                      298                     692
      Cash and equivalents at beginning of period                             2,418                     486
                                                                              -----                 -------
           Cash and equivalents at end of period                         $    2,716              $    1,178
                                                                             ======                  ======

</TABLE>


           The accompanying notes are an integral part of these statements.

                                                      F-63

<PAGE>



                                                ULTRADATA CORPORATION
                                       Notes to Unaudited Financial Statements
                                                   (In Thousands)


1.    UNAUDITED INTERIM FINANCIAL DATA

      The  interim  financial  data as of June 30,  1999 and for the six  months
ended June 30, 1999 and June 30, 1998 is unaudited;  however,  in the opinion of
the Company,  the interim  data  includes all  adjustments,  consisting  only of
normal recurring adjustments,  necessary for a fair statement of results for the
interim periods.  Certain information and note disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have been  omitted  from the  unaudited  financial  statements.  The
results of  operations  for the  six-month  period  ended June 30,  1999 are not
necessarily  indicative of the operating results for the full year or for future
periods.  For  further  information,  refer  to  the  financial  statements  and
footnotes thereto for the year ended December 31, 1998 included as an exhibit to
this Form 8-K/A.

2.    SHORT-TERM OBLIGATIONS

      In 1997, the Company  entered into an agreement  ("License  Agreement") to
distribute  certain products developed by a third party. In the first quarter of
1999, the Company  renegotiated  this agreement  which  effectively  reduced the
number of licenses  purchased (which had been recorded as inventory),  long-term
debt  obligations  and the related  maintenance  commitments.  Under the revised
License  Agreement,  payments  totaling  $1,200 are due  through  April 2001 and
include payments of $400 for maintenance.  This revision resulted in a charge of
$149 during the six months  ended June 30,  1999,  which is included in software
costs of revenues in the accompanying income statement.

3.    COMPUTATION OF EARNINGS (LOSS) PER SHARE

      In accordance  with Statement of Financial  Accounting  Standards No. 128,
Earnings Per Share ("SFAS No. 128"),  basic earnings per share is computed using
the weighted  average  number of common  shares  outstanding  during the period.
Diluted  earnings  per share is computed  using the weighted  average  number of
common and dilutive  common  equivalent  shares  outstanding  during the period,
using the treasury stock method for options.  The following is a  reconciliation
of the  denominator  in the  computation  of  diluted  earnings  per share  (the
numerator equals the net income (loss)):

<TABLE>
<CAPTION>
                                                          Six Months Ended            Six Months Ended
                                                               June 30, 1999             June 30, 1998
                                                          ---------------------      ---------------------
<S>                                                             <C>                       <C>
Weighted average outstanding shares                             7,745                     7,657
Common stock equivalents                                           --                       228
                                                                -----                     -----

Shares used to compute diluted net income (loss) per share      7,745                     7,885
                                                                =====                     =====

Antidilutive common stock equivalents excluded                  2,163                       897
                                                                =====                     =====

</TABLE>

4.    SUBSEQUENT EVENT.

      On August 13, 1999, CFI ProServices,  Inc., d/b/a Concentrex Incorporated,
purchased  all of the  Company's  common  stock and certain  outstanding  vested
options for approximately $63.3 million in cash,  including  previously acquired
common stock. The acquisition was accounted for as a purchase.

                                                      F-64

<PAGE>





                                                      F-65

<PAGE>



                                          Report of Independent Accountants


To the Board of Managers of MECA Software, L.L.C.

      In our opinion, the accompanying balance sheets and the related statements
of operations and changes in members' equity (deficit) and of cash flows present
fairly,  in all material  respects,  the  financial  position of MECA  Software,
L.L.C.  at December 31, 1997 and 1998,  and the results of their  operations and
their cash flows for the years then ended 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  audits.  We  conducted  our audits 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  audits  provide  a
reasonable basis for the opinion expressed above.

      The  Company  is a member  of a group of  affiliated  companies,  and,  as
disclosed  in  the  financial   statements,   has  extensive   transactions  and
relationships with members of the group. Because of these  relationships,  it is
possible  that the terms of these  transactions  are not the same as those  that
would result from transactions among wholly unrelated parties.

      The accompanying financial statements have been prepared assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial statements,  the Company has suffered recurring losses from operations
and has a net capital  deficiency that raise substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 2. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.


PricewaterhouseCoopers LLP
Stamford, Connecticut
March 5, 1999

                                                      F-66

<PAGE>

<TABLE>
<CAPTION>


                                                MECA Software, L.L.C.
                                                    Balance Sheet

                                                                                     December 31,
                                                                                 1997          1998
<S>                                                                       <C>             <C>
ASSETS
Current assets:
      Cash and cash equivalents                                           $  5,326,539    $  1,677,599
      Accounts receivable, less allowance for doubtful
           accounts of $131,721 and $390,319, respectively                   3,753,149       3,287,800
      Inventory                                                                224,247         160,689
      Other current assets                                                     296,817         588,696
      Costs and estimated profits in excess of billings on
           uncompleted contracts (Note 3)                                    1,450,659              --
                                                                            ----------     -----------
           Total current assets                                             11,051,411       5,714,784

Restricted cash (Note 3)                                                       283,997         210,000
Fixed assets, net (Notes 3 and 9)                                            2,199,622       1,430,847
Goodwill, net of accumulated amortization of $19,126,379 at
      December 31, 1997 (Notes 3 and 7)                                     17,332,526              --
Other assets                                                                    66,825          66,825
                                                                            ----------     -----------

                                                                           $30,934,381    $  7,422,456
                                                                            ==========     ===========

LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
Current liabilities:
      Accounts payable and accrued expenses                                $ 3,703,534    $  7,773,389
      Deferred revenue (Note 3)                                              2,022,695         100,000
      Notes payable - related party (Note 8)                                 7,500,000       7,500,000
      Accrued interest - related party (Note 8)                                321,370         630,674
      Accrued restructuring costs (Note 11)                                    768,076         190,000
      Estimated loss on uncompleted contracts (Note 3)                         646,128              --
                                                                            ----------     -----------
           Total current liabilities                                        14,961,803      16,194,063

Deferred compensation (Note 12)                                                848,186       1,491,629
                                                                            ----------     -----------
      Total liabilities                                                     15,809,989      17,685,692

Commitments (Note 12)

Members' equity (deficit)                                                   15,124,392     (10,263,236)
                                                                            ----------     -----------
      Total liabilities and members' equity (deficit)                      $30,934,381    $  7,422,456
                                                                            ==========     ===========

</TABLE>


      The accompanying notes are an integral part of these statements.

                                                      F-67

<PAGE>


<TABLE>
<CAPTION>

                                                MECA Software, L.L.C.
                                               Statement of Operations

                                                                                For the years ended
                                                                                     December 31,
                                                                                1997                 1998
<S>                                                                        <C>            <C>
Revenue
      Software license fees                                                $  4,045,219   $  8,882,992
      Custom development services                                             7,255,466      2,431,011
      Technical support services                                              8,638,433      8,876,411
      Manufacturing and fulfillment                                           3,074,574      2,964,887
      Retail                                                                  1,211,611        492,731
                                                                            -----------     -----------
                                                                             24,225,303     23,648,032

Costs and expenses
      Cost of custom development services                                     6,278,988      2,730,393
      Cost of technical support services                                      6,709,212      5,686,333
      Cost of manufacturing and fulfillment                                   2,499,231      2,125,791
      Cost of retail                                                            727,635        105,130
      Research and development (Note 6)                                       6,161,286     10,385,755
      Sales and marketing                                                     1,841,117      1,676,784
      General and administrative                                              5,581,549      8,510,537
      Amortization of goodwill (Note 7)                                       7,549,993     17,332,526
      Restructuring charge (Note 11)                                          1,000,000             --
                                                                            -----------     -----------
                                                                             38,349,011     48,553,249
           Loss from operations                                             (14,123,708)   (24,905,217)

           Interest income                                                      321,755        130,573
           Interest expense - related party (Note 8)                           (633,185)      (612,984)
                                                                            ------------    -----------

           Net loss                                                        $(14,435,138)  $(25,387,628)
                                                                             ===========   ============

</TABLE>


      The accompanying notes are an integral part of these statements.

                                                      F-68

<PAGE>


                             MECA Software, L.L.C.
               Statement of Changes in Members' Equity (Deficit)
                 For the years ended December 31, 1997 and 1998

<TABLE>
<CAPTION>
                                                                                       New
                                Bank of        Fleet        U.S.       Royal Bank    England
                                America        Bank         Bank        of Canada    Financial    Citibank       Total
                             -------------  -----------  -----------  ------------ ------------- -----------  -------------
<S>                          <C>           <C>          <C>          <C>           <C>          <C>          <C>
Balance, December 31, 1996   $ (3,926,684) $ 6,789,659  $ 6,789,659  $  6,966,784  $ 9,958,821  $         -  $  26,578,239

Capital contributions                   -            -            -             -            -    3,000,000      3,000,000

Legal and investment
  banking costs (Note 5)           (6,236)      (3,118)      (3,118)       (3,118)      (3,119)           -        (18,709)

Net loss for the year          (4,739,894)  (2,369,947)  (2,369,947)   (2,369,947)  (2,369,947)    (215,456)   (14,435,138)
                             -------------  -----------  -----------  ------------  -----------  -----------  -------------

Balance, December 31, 1997     (8,672,814)   4,416,594    4,416,594     4,593,719    7,585,755    2,784,544     15,124,392

Net loss for the year          (8,124,042)  (4,062,021)  (4,062,021)   (4,062,021)  (4,062,021)  (1,015,502)   (25,387,628)
                             -------------  -----------  -----------  ------------  -----------  -----------  -------------
                                                                  -
Balance, December 31, 1998   $(16,796,856) $   354,573  $   354,573  $    531,698  $ 3,523,734  $ 1,769,042  $ (10,263,236)
                             =============  ===========  ===========  ============  ===========  ===========  =============

</TABLE>

        The accompanying notes are an integral part of these statements.

                                      F-69

<PAGE>


<TABLE>
<CAPTION>


                                                MECA Software, L.L.C.
                                               Statement of Cash Flows
                                  Increase (Decrease) in Cash and Cash Equivalents


                                                                                     For the years ended
                                                                                      December 31,
                                                                                    1997             1998
<S>                                                                            <C>              <C>
Cash flows from operating activities:
      Net loss                                                                 $(14,435,138)    $(25,387,628)
      Adjustments to reconcile net loss to net cash provided by (used in)
         operating activities:
           Depreciation and amortization                                          8,740,815       18,447,619
           Loss on the disposal of fixed assets                                          --          487,773
           Changes in assets and liabilities:
                Accounts receivables, net                                        (1,423,866)         465,349
                Inventories                                                         260,051           63,558
                Costs in excess of billings on uncompleted contracts             (1,105,185)       1,450,659
                Other assets, current                                              (208,012)        (291,879)
                Accounts payable and accrued expenses                              (392,141)       4,069,855
                Deferred revenue                                                    440,627       (1,922,695)
                Accrued restructuring costs                                         768,076         (578,076)
                Estimated loss on uncompleted contracts                             530,628         (646,128)
                Deferred compensation                                               (26,718)         643,443
                                                                                -----------      -----------
                     Net cash used in operating activities                       (6,850,863)      (3,198,150)
                                                                                -----------      -----------

Cash flows from investing activities:
      Additions to furniture, fixtures and equipment                             (1,046,811)        (834,091)
      Restricted cash                                                                    --           73,997
                                                                                -----------      -----------

                Net cash used in investing activities                            (1,046,811)        (760,094)
                                                                                -----------      -----------

Cash flows from financing activities:
      Capital contributions, net of issuance costs                                2,981,291               --
      Accrued interest - related party (Note 8)                                    (163,824)         309,304
                                                                                -----------      -----------
                Net cash provided by financing activities                         2,817,467          309,304
                                                                                -----------      -----------

                Net decrease in cash and cash equivalents                        (5,080,207)      (3,648,940)

Cash and cash equivalents:
      Beginning of year                                                          10,406,746        5,326,539
                                                                                 ----------       ----------
      End of year                                                              $  5,326,539     $  1,677,599
                                                                                ===========       ==========

Supplemental disclosure of cash flow information:
      Interest paid                                                            $    795,432     $    303,679
                                                                                ===========      ===========

</TABLE>

      The accompanying notes are an integral part of these statements.

                                                      F-70

<PAGE>



                                                MECA SOFTWARE, L.L.C.
                                            NOTES TO FINANCIAL STATEMENTS
                                             DECEMBER 31, 1997 AND 1998


1.    BUSINESS AND ORGANIZATION

      MECA Software,  L.L.C.  (the  "Company" or "MECA") is a limited  liability
company  which was formed by operating  subsidiaries  of Bank of America NT & SA
("Bank of  America")  and  NationsBank,  N.A.  ("NationsBank")  to acquire  MECA
Software,  Inc.  from H&R Block,  effective  June 29, 1995.  Bank of America and
NationsBank merged in the fourth quarter of 1998. As a result of the merger, all
capital  from  NationsBank  was  transferred  to  Bank  of  America.  Additional
shareholders  purchased interests in MECA in 1996 and 1997. The Company develops
and executes  custom  software  and service  solutions  which  enable  financial
institutions to provide to their customers electronic remote access to financial
products and services on their  terms.  The Company also offers a  comprehensive
array  of  on-line  banking  support  services   including   technical  support,
manufacturing, fulfillment, training and marketing.

2.    BASIS OF PREPARATION

      Since  inception,  the Company has suffered  recurring losses and net cash
outflows from operations and expects to incur additional losses from operations.
The Company has funded its operating losses through capital  contributions  from
its Class A and Class B Members.  It is  management's  intention  to continue to
fund the  Company's  operating  loss through new or existing  additional  member
capital contributions in order to meet its strategic  objectives.  Management is
actively  pursuing  various options which include  obtaining  funding from a new
Class A or Class B Member or obtaining additional funding from its current Class
A or Class B Members.  The Company  believes  that  sufficient  funding  will be
available to meet its planned business  objectives,  including  anticipated cash
needs for working capital for a reasonable period of time. However, there can be
no  assurance  the Company will be able to obtain  sufficient  funds to continue
operations.  As a result of the foregoing,  there exists substantial doubt about
the Company's ability to continue as a going concern.  See unaudited  subsequent
event  Note 13.  These  financial  statements  do not  include  any  adjustments
relating to the  recoverability of the carrying amount of recorded assets or the
amounts of liabilities that might result from the outcome of this uncertainty.

3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash Equivalents and Restricted Cash

      The  Company  considers  all  highly  liquid   investments  with  original
maturities  of three  months  or less  from the date of  acquisition  to be cash
equivalents.  The Company  invests its excess cash in an overnight  money market
account  or in AAA rated  corporate  bonds.  Accordingly,  the  investments  are
subject to minimal  credit and market risk.  At December 31, 1997 and 1998,  the
Company had $871,000 and $1,320,000, respectively, in a money market account. At
December  31,  1997  and  1998,   the  Company  had   $4,349,294  and  $640,604,
respectively, invested in AAA rated corporate bonds.

      In  accordance  with certain  operating  lease  agreements  with two third
parties,  the Company must maintain a minimum cash deposit at the Company's bank
of $150,000 and $133,997,  and $100,000 and  $110,000,  at December 31, 1997 and
1998,  respectively,  for the  duration of the leases  which expire on April 30,
1999 and October 31, 2001, respectively.

Revenue Recognition

      The Company's revenue recognition policies for the period are presented in
conformity  with Statement of Position  97-2,  "Software  Revenue  Recognition,"
promulgated  by the  American  Institute of Certified  Public  Accountants.  The
following is a summary of MECA's revenue recognition  policies for each of their
various sources of revenue:

                                                      F-71

<PAGE>



           Software License Fees Revenue - The Company  generates  revenues from
licensing  the  rights  to  use  its  software  product  to  certain   financial
institutions  and their  customers.  Revenue is recognized  upon shipment of the
product to the financial institution or its customer.  Amounts received prior to
the shipment of the product are initially  recorded as deferred  revenue.  It is
management's  preference  to bill license fees  separately.  Materials and other
direct costs that result from software license  activities are billed separately
and the  corresponding  revenues  and costs are  included in  manufacturing  and
fulfillment on the statement of operations.

           Custom Development  Services Revenue - Revenue generated from certain
custom  development  contracts is  recognized  as the services are performed and
delivered.

           From  time to time,  certain  other  fixed  fee  contracts  have been
entered into involving significant  modifications or customizations to the basic
software  delivered  under the contract.  The completed  contract method is used
under such  contracts when the fees are fixed and the contract is expected to be
completed  within one year. A contract is considered  complete when the software
is  delivered,   and  the  Company  has  substantially   completed  its  service
obligations under the contract.  Amounts received prior to the completion of the
contract are recorded as deferred revenue until the contract has been completed.
At  December  31,  1997,  costs and  estimated  profits in excess of billings on
uncompleted contracts was $1,450,659.

           A provision for loss under these contracts,  principally with Class A
Members,  was  computed on the basis of total  estimated  costs to complete  the
contract, which includes contract costs incurred to date plus estimated costs to
complete.  At  December  31,  1997,  there were  accrued  losses on  uncompleted
contracts of $646,128 which has been charged to the statement of operations.

           Technical  Support Services Revenue - The Company provides  technical
support  services  to  the  financial  institutions'  customers.   Revenue  from
technical support is recognized as the services are provided.

           Manufacturing and Fulfillment  Revenues - Revenues from manufacturing
and fulfillment services are generated under separate contracts from the copying
of discs or CD-ROMs,  packaging and shipment of the Company's  software products
and third party software products to licensed users.  Revenue from such services
is recognized upon shipment.

           Retail  Revenue - Revenue is  generated  from sales of the  Company's
products  to retail  stores.  Revenue is  recognized  upon  shipment,  net of an
allowance  for returns.  Also  included  within  retail sales is royalty  income
earned on the services and supplies utilized to support the Company's product.

Inventory

      Inventory consists principally of raw materials and is valued at the lower
of cost or market, determined on the weighted average basis.

Fixed Assets

      Fixed  assets  are  recorded  at  cost  and  are  depreciated   using  the
straight-line method over their estimated useful lives which range from three to
five  years.  Leasehold  improvements  are  amortized  over the shorter of their
economic life or their life of the lease. The Company  periodically  reviews the
recoverability  of long lived assets based upon anticipated cash flows generated
from such assets.  During 1998,  the Company  incurred a loss on the disposal of
fixed assets of $487,773.



                                                      F-72

<PAGE>



Goodwill

      The excess  purchase price over the fair value of net assets  acquired was
being amortized using the  straight-line  method over five years.  The Company's
policy is to make an annual  evaluation of the remaining  goodwill for potential
impairment  of value at each  balance  sheet  date.  During  1998,  the  Company
expensed the full amount of remaining  goodwill as more fully  described in Note
7.

Internally Developed Software Costs

      In accordance  with  Statement of Financial  Accounting  Standards No. 86,
"Accounting for the Costs of Computer  Software to be Sold,  Leased or Otherwise
Marketed," the Company evaluates the establishment of technological  feasibility
of its various  products  during the development  stage.  The time period during
which  costs  could be  capitalized  from the  point of  reaching  technological
feasibility  until the time of general product release is tentatively short and,
consequently,  the amounts  that could be  capitalized  are not  material to the
Company's  financial position or results of operations.  Therefore,  the Company
charges all product development expenses to operations in the period incurred.

Concentration of Credit Risk

      Financial   instruments   which   potentially   expose   the   Company  to
concentrations  of credit risk consist  primarily of trade accounts  receivable.
The Company  maintains  allowances for potential credit losses.  At December 31,
1997  and  1998,  the  Company  had  approximately  92%  of the  total  accounts
receivable balance concentrated within the top ten customers.

Financial Instruments

      The carrying amounts of the Company's financial instruments, which include
cash and cash  equivalents,  accounts  receivable,  accounts payable and accrued
expenses,  and notes payable,  approximate  their fair market values at December
31, 1997 and 1998.

Advertising and Promotional Expenses

      Advertising and promotional  expenses are charged to operations during the
periods in which they are incurred.  Total advertising and promotional  expenses
were  $687,000  and  $607,313  for the years ended  December  31, 1997 and 1998,
respectively,   and  are  included  in  sales  and  marketing  expenses  in  the
accompanying statement of operations.

Income Taxes

      Income  taxes have not been  provided  for in the  accompanying  financial
statements  as the limited  liability  company is a  partnership  for income tax
purposes.  Members  are  responsible  for  reporting  their  allocable  share of
membership  income,  gains,  deductions,  losses  and  credits  in their own tax
returns.

Reclassifications

      Certain  prior year amounts have been  reclassified  to conform to current
year's presentation.

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,  including  goodwill and
other  intangibles,  and  liabilities  and  disclosure of contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

                                                      F-73

<PAGE>



4.    RECLASSIFICATIONS

      Effective  December 31, 1998,  the Company  elected to reclassify  certain
revenues,  costs and expenses in its statement of  operations to further  detail
certain revenues and expenses.  For financial statement  presentation  purposes,
the Company  has  expanded  the  presentation  of revenues  and cost of revenues
according  to  the  business   activities  to  which  it  relates  (e.g.  custom
development,  technical support,  etc.). In addition, the Company now groups the
corresponding departmental indirect costs, as well as the above mentioned direct
costs,  within costs of revenues according to the business activity to which the
costs relate.  The effect of this  presentation  is to reclassify  certain prior
year amounts,  previously  reported  within research and development and general
administrative   expenses,   to  cost  of   revenues.   The   effect   of  these
reclassifications is as follows:

<TABLE>
<CAPTION>

                                                                Year Ended December 31, 1997:

                                                     Reclassified    Previously           Effects of
                                                     Amount          Reported        Reclassification

<S>                                                   <C>             <C>            <C>
Revenues:
      Software license fees                           $4,045,219      $        --    $ (4,045,219)
      Custom development services                      7,255,466               --      (7,255,466)
      Technical support services                       8,638,433               --      (8,638,433)
      Manufacturing and fulfillment                    3,074,574               --      (3,074,574)
      Retail                                           1,211,611               --      (1,211,611)
      Net revenues                                            --       24,225,303      24,225,303

Costs and Expenses:
      Cost of custom development services              6,278,988               --      (6,278,988)
      Cost of technical support services               6,709,212               --      (6,709,212)
      Cost of manufacturing and fulfillment            2,499,231               --      (2,499,231)
      Cost of retail                                     727,635               --        (727,635)
      Total cost of revenue                                   --        1,474,302       1,474,302
      Research and development                         6,161,286       12,157,451        5,996,165
      General and administrative                       5,581,549       14,326,148        8,744,599
                                                                                       -----------
                                                                                                --
                                                                                       ===========

</TABLE>

5.    LIMITED LIABILITY COMPANY AGREEMENT

      The Company has been organized as a limited liability company ("LLC"). The
owners of an interest in a limited  liability  company are called  "Members" and
are not individually liable for obligations and liabilities of the entity.

      Pursuant to the LLC  Agreement,  the Class A Members of the LLC have equal
economic and voting  interest in the Company.  Each Class A Member has the right
to  elect  one  manager  to the  Board of  Managers.  Membership  interests  are
transferable  only  with the  written  approval  of the  majority  interest,  as
defined.  Each Class A Member is required to sign a licensing  and  distribution
agreement with respect to the Company's products and services.

      On September 10, 1997,  Citibank became a Class B Member with a $3 million
capital  contribution.  Class B Members do not have voting rights. In connection
with making  Citibank a Class B Member,  the Company  incurred costs of $18,709,
which were paid by the other Members in a pro rata share.

      The LLC shall continue until  dissolved and liquidated in accordance  with
the Agreement. The Company will not make any distribution to its Members, unless
determined by the Board of Managers.  Allocations to members'  capital  accounts
for items of income,  gain,  loss,  deduction and credit of the Company shall be
allocated  to  the  members  in  accordance  with  their  respective  percentage
ownership and period of ownership; provided, however,

                                                      F-74

<PAGE>



that if any loss,  deduction,  expense  or credit  attributable  to any  capital
contribution made by a Member can be specifically allocated to such Member.

6.    RESEARCH AND DEVELOPMENT

      Research and  development  expense was $6,161,286 and  $10,385,755 for the
years  ended  December  31,  1997 and 1998,  respectively.  Included in the 1998
research and development  expense was a transaction  with New England  Financial
(NEF). In connection with NEF's purchase of a Class A (voting) interest in MECA,
NEF entered into a Development,  License and Marketing Agreement with MECA. This
agreement stated that a pro rata portion (1/6 which is equal to the NEF interest
in MECA) of  MECA's  annual  product  spending  would be  directed  to  projects
specified  by NEF.  The total  costs  incurred  during  1998  related to the NEF
project  during 1998 were  $1,128,000.  The Company  terminated the agreement in
1998 for a payment of  $600,000,  which is  included in the above  Research  and
Development expense amount.

7.    GOODWILL IMPAIRMENT

      In accordance with Statement of Financial  Accounting Standards (SFAS) No.
121, "Accounting for the Impairment of Long-Lived Assets to Be Disposed Of," the
Company  periodically  evaluates the carrying  value of long-lived  assets to be
held and used, including goodwill,  when events and circumstances warrant such a
review.  During the latter part of 1998, through analyzing operating results and
related cash flows,  trends and  prospects as well as  competitive  and economic
factors  surrounding  the  Company,  management  concluded  that  the  remaining
goodwill  was  permanently  impaired.  Accordingly,  the  remaining  unamortized
goodwill   balance  of  $17,332,526  was  expensed  and  has  been  included  in
amortization of goodwill in the Company's statement of operations.

8.    RELATED PARTY TRANSACTIONS

      Principal  revenue sources for the Company are the  development  contracts
with the Class A and B Members and license  fees earned on  customized  software
products for the Class A and B Members.  Aggregate  revenues  recognized  during
1997 and 1998 from these sources were approximately $20,822,159 and $20,316,883,
respectively.  Aggregate  receivable  balances were $3,033,866 and $1,702,622 at
December 31, 1997 and 1998, respectively.

      At December 31, 1998,  the Company had  outstanding  notes  payable in the
amount of  $7,500,000 to certain Class A Members.  This balance  represents  the
original  amounts loaned to the Company upon the formation of the LLC by certain
Class A Members.  These  promissory  notes  accrue  interest at a rate per annum
equal to the average of the prime rate (8.25% at December 31, 1997 and 1998) and
is payable  quarterly.  These notes are  payable on demand.  For the years ended
December 31, 1997 and 1998, interest of $633,185 and $612,984, respectively, was
incurred.  Additionally,  accrued  interest at December  31, 1997 and 1998,  was
$321,370 and $630,674, respectively.



                                                      F-75

<PAGE>



9.    FIXED ASSETS

      Fixed assets consist of the following:

                                               1997            1998
                                               ----            ----

Computer equipment and software             $5,134,610     $1,570,509
Machinery and equipment                        835,084        712,376
Furniture and fixtures                         716,680        518,831
Leasehold improvements                         426,628        241,856
                                            ----------     ----------
                                             7,113,002      3,043,572
Less - accumulated depreciation             (4,913,380)    (1,612,725)
                                            ----------     ----------
                                            $2,199,622     $1,430,847
                                             =========      =========

      Depreciation  expense for the years ended  December  31, 1997 and 1998 was
$1,190,822  and  $1,115,093,  respectively.  Fixed  assets  no  longer in use of
$4,903,522 were written off during 1998.

10.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

      Accounts payable and accrued expenses include the following:

                                                       December 31,
                                                    1997         1998

           Accounts payable                      $  710,529     $2,116,176
           Accrued employee costs                 1,347,200      1,525,192
           Lease termination costs                       --        885,000
           Development, License and Marketing
               Agreement termination costs               --        600,000
           Other accrued expenses                 1,645,805      2,647,021
                                                  ----------     ---------

                                                 $3,703,534     $7,773,389

11.   RESTRUCTURING PLAN

      The Company approved certain  restructuring  plans to reduce costs through
job eliminations and, as a result, recorded a restructuring charge of $1,000,000
in 1997 and  certain  other minor  charges in 1998,  principally  for  severance
costs.  Approximately  55 employees were terminated  under these  programs.  The
Company has paid  severance  costs of $231,924  and  $633,587 as of December 31,
1997 and 1998,  respectively.  At  December  31,  1998,  approximately  $190,000
remains to be paid to former employees under these programs.

12.   COMMITMENTS

      The  Company has  employment  agreements  with  certain  officers  and key
employees.  The terms of these  employment  agreements are generally three years
and can be terminated by the Company under certain circumstances. The agreements
include a  component  of  deferred  compensation.  Benefits  accrued  under this
arrangement,  including accrued interest,  totaled  $1,004,865 and $2,006,629 at
December 31, 1997 and 1998,  respectively,  which are being paid over the course
of three years in accordance to their respective agreements.



                                                      F-76

<PAGE>



Lease Commitments

      The  Company  leases  office  space  and  machinery  under   noncancelable
operating  leases.  The lease for the office space is  guaranteed by the Class A
Members.  Future  minimum  rental  payments  under the  operating  leases are as
follows:

           1999             $1,403,824
           2000              1,374,606
           2001              1,296,094
           2002              1,087,631
           2003                988,562
                             ----------
                            $6,150,717

      Rent expense  totaled  $1,440,048 and  $1,402,779,  respectively,  for the
years ended December 31, 1997 and 1998.

Employee Benefit Plans

      The Company has a voluntary  401(k) Plan that is available to all eligible
employees after 90 days of service.  Beginning January 1, 1998, the Company made
contributions  equal  to 75%  of the  employees'  pretax  contributions  up to a
maximum of 6% of participants' total eligible compensation. From January 1, 1997
to December 31, 1997, the Company made  contributions  in an amount equal to 50%
of employees' pretax contributions, up to a maximum of 6% of participants' total
eligible compensation.  Prior to January 1, 1997, the Company made contributions
in an amount equal to 25% of employees' pretax contributions, up to a maximum of
6% of participants' total eligible compensation. The Company contributed $99,996
and  $215,160 to the 401(k) Plan  during the years ended  December  31, 1997 and
1998, respectively.

13.   SUBSEQUENT EVENT -- UNAUDITED

      On May 17, 1999, CFI  ProServices,  Inc.,  d/b/a  Concentrex  Incorporated
("Concentrex")  and  MoneyScape  Holdings,  Inc. (a wholly owned  subsidiary  of
Concentrex),  acquired 99% and 1%, respectively,  of the Members' equity in MECA
in exchange for 50,000 shares of Concentrex common stock.


                                                      F-77

<PAGE>





                                                      F-78

<PAGE>

<TABLE>
<CAPTION>


                                                MECA Software, L.L.C.
                                                    Balance Sheet
                                                   (In Thousands)


                                                                                 December 31,        March 31,
                                                                                    1998              1999
                                                                                                   (Unaudited)
<S>                                                                              <C>                  <C>
ASSETS
Current assets:
      Cash and cash equivalents                                                  $     1,678          $  3,527
      Receivables, net of allowances of $409 and $309, respectively                    3,288             3,063
      Inventory                                                                          161                62
      Other current assets                                                               589               334
                                                                                  -----------         --------
           Total current assets                                                        5,715             6,986

Restricted cash                                                                          210               210
Fixed assets, net                                                                      1,431             1,356
Other assets                                                                              66
                                                                                  -----------         --------
           Total assets                                                              $ 7,423          $  8,552
                                                                                     ========          =======

LIABILITIES AND MEMBERS' DEFICIT
Current liabilities:
      Accounts payable and accrued expenses                                          $ 8,594          $  6,601
      Deferred revenue                                                                   100             2,677
      Notes payable                                                                    7,500             7,500
                                                                                     --------          -------
           Total current liabilities                                                  16,194            16,778

Deferred compensation                                                                  1,492             1,451
                                                                                     --------          -------
           Total liabilities                                                          17,686            18,229

Commitments

Members' deficit                                                                     (10,263)           (9,677)
                                                                                  -----------         --------
           Total liabilities and members' deficit                                $     7,423          $  8,552
                                                                                    =========          =======
</TABLE>


      The accompanying notes are an integral part of these statements.

                                                      F-79

<PAGE>



                                                MECA Software, L.L.C.
                                         Unaudited Statements of Operations
                                                   (In Thousands)

                                               For the three months ended
                                                         March 31,
                                                    1998           1999

Revenue
      Software license fees                      $ 2,303         $3,556
      Custom development services                    666            804
      Technical support services                   2,060          2,207
      Manufacturing and fulfillment                  456            495
      Retail                                         161             95
                                                  ------        -------

           Total revenue                           5,646          7,157

Costs and expenses
      Cost of software license fees                   --            123
      Cost of custom development services            815            787
      Cost of technical support services           1,442          1,544
      Cost of manufacturing and fulfillment          373            440
      Cost of retail                                  61             --
      Research and development                     1,439          1,453
      Sales and marketing                            318            427
      General and administrative                   2,322          1,682
      Goodwill amortization                        1,878             --
                                                   -----         ------
           Total operating expenses                8,648         6,456
                                                   -----         -----

           Income (loss) from operations          (3,002)          701

           Interest expense, net                     (97)         (115)
                                                  -------        ------

           Net income (loss)                     $(3,099)       $  586
                                                  ======         ======

      The accompanying notes are an integral part of these statements.

                                                      F-80

<PAGE>

<TABLE>
<CAPTION>


                                                MECA Software, L.L.C.
                                          Unaudited Statement of Cash Flows
                                                   (In Thousands)

                           For the three months ended
                                                                                    March 31,
                                                                               1998            1999
<S>                                                                        <C>           <C>
Cash flows from operating activities:
      Net income (loss)                                                    $ (3,099)     $     586
      Adjustments to reconcile net income (loss) to net cash provided
           by (used in) operating activities:
           Depreciation and amortization                                      2,130            169
           Loss on the disposal of fixed assets                                  --             25
           Changes in assets and liabilities:
                Accounts receivables, net                                      (674)           223
                Inventory                                                       (79)            98
                Other assets                                                   (144)           355
                Accounts payable and accrued expenses                          (204)        (1,592)
                Deferred revenue                                               (400)         2,577
                Accrued restructuring costs                                       --          (137)
                Estimated loss on uncompleted contracts                        (135)          (440)
                Deferred compensation                                            32            (41)
                                                                           --------        -------
                      Net cash provided by (used in) operating activities    (2,573)         1,823
                                                                              -----         ------

Cash flows from investing activities:
      Additions to furniture, fixtures, and equipment                           (96)          (119)
      Restricted cash                                                            (1)            --
                                                                           --------      ---------
                      Net cash used in investing activities                     (97)          (119)
                                                                            -------         ------

Cash flows from financing activities:
      Accrued interest - related party                                         (164)           145
                                                                             ------        -------
                      Net cash provided by (used in) financing activities      (164)           145
                                                                             ------        -------

                      Net increase (decrease) in cash and cash equivalents   (2,834)         1,849

Cash and cash equivalents:
      Beginning of period                                                     5,327          1,678
                                                                              -----         ------

      End of period                                                          $2,493         $3,527
                                                                              =====          =====

</TABLE>


      The accompanying notes are an integral part of these statements.

                                                      F-81

<PAGE>



                              MECA SOFTWARE, L.L.C.
                 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1.    UNAUDITED INTERIM FINANCIAL DATA

      The interim  financial data as of March 31, 1999, and for the three months
ended March 31, 1999 and March 31, 1998 is unaudited; however, in the opinion of
the Company,  the interim  data  includes all  adjustments,  consisting  only of
normal recurring adjustments,  necessary for a fair statement of results for the
interim periods.  Certain information and note disclosures  normally included in
financial  statements  prepared in accordance with generally accepted accounting
principles  have been  omitted  from the  unaudited  financial  statements.  The
results of  operations  for the three month  period ended March 31, 1999 are not
necessarily  indicative of the operating results for the full year or for future
periods.  For  further  information,  refer  to  the  financial  statements  and
footnotes  thereto for the year ended  December 31, 1998  included  elsewhere in
this registration statement.

2.   SUBSEQUENT EVENT -- UNAUDITED

      On May 17, 1999, CFI  ProServices,  Inc.,  d/b/a  Concentrex  Incorporated
("Concentrex")  and  MoneyScape  Holdings,  Inc. (a wholly owned  subsidiary  of
Concentrex),  acquired 99% and 1%, respectively,  of the Members' equity in MECA
in exchange for 50,000 shares of Concentrex common stock.


                                                      F-82

<PAGE>



                                1,249,356 SHARES

                              CFI PROSERVICES, INC.

                                  COMMON STOCK

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


                                   PROSPECTUS
                                December 9, 1999


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

                     DEALER PROSPECTUS DELIVERY REQUIREMENTS


     UNTIL  JANUARY 13, 2000,  ALL DEALERS  SELLING  SHARES OF THE COMMON STOCK,
WHETHER OR NOT  PARTICIPATING  IN THIS  OFFERING,  MAY BE  REQUIRED TO DELIVER A
PROSPECTUS.  THIS IS IN  ADDITION  TO THE  OBLIGATION  OF  DEALERS  TO DELIVER A
PROSPECTUS  WHEN  ACTING  AS  UNDERWRITERS  AND WITH  RESPECT  TO  THEIR  UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.



<PAGE>



                                                       PART II

                                       INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

           The expenses in connection with the issuance and  distribution of the
securities being  registered  hereby will be borne by us and are estimated to be
as follows:

                SEC Registration Fee             $     4,223
                NASD Filing Fee                  $     7,500
                Blue Sky Fees and Expenses       $     7,500
                Legal Fees and Expenses(1)       $    50,000
                Accounting Fees and Expenses(1)  $    50,000
                Printing Expenses(1)             $     5,000
                Miscellaneous(1)                 $       777
                                                  ----------

                      Total(1)                   $   125,000

      (1)Estimated.

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

           ORS 60.367,  a section of the Oregon  Business  Corporation  Act (the
"Act"),  provides that any director held liable for an unlawful  distribution in
violation  of ORS  60.367 is  entitled  to  contribution  from (1)  every  other
director who voted for or assented to the  distribution  without  complying with
the applicable  statutory  standards of conduct and (2) each shareholder for the
amount the shareholder  accepted  knowing the distribution was made in violation
of the Act or the corporation's Articles of Incorporation.

           Under  Sections  60.387 to 60.414 of the Act,  a person who is made a
party to a proceeding  because such person is or was an officer or director of a
corporation (an  "Indemnitee")  shall be indemnified by the corporation  (unless
the  corporation's   Articles  of  Incorporation   provide   otherwise)  against
reasonable expenses incurred by the Indemnitee in connection with the proceeding
if the  Indemnitee  is wholly  successful,  on the  merits or  otherwise,  or if
ordered by a court of competent jurisdiction. In addition, under such sections a
corporation is permitted to indemnify an Indemnitee  against liability  incurred
in a  proceeding  if (1) the  Indemnitee's  conduct  was in good  faith and in a
manner he or she reasonably  believed was in the corporation's best interests or
at least not opposed to its best interests, (2) the Indemnitee had no reasonable
cause to  believe  his or her  conduct  was  unlawful  if the  proceeding  was a
criminal  proceeding,  (3)  the  Indemnitee  was  not  adjudged  liable  to  the
corporation if the proceeding was by or in the right of the corporation, and (4)
the  Indemnitee  was not adjudged  liable on the basis that he or she improperly
received a personal benefit.  Indemnification in connection with a proceeding by
or in the right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.

           Article  VII of the  registrant's  Amended and  Restated  Articles of
Incorporation,  as amended,  provides  that the  registrant  will  indemnify its
directors and officers to the fullest extent  permissible  by law.  Article V of
the Amended and Restated  Bylaws provides that the registrant will indemnify its
directors  and  officers as set forth in the Amended  and  Restated  Articles of
Incorporation.

           The  registrant's  Amended and  Restated  Articles  of  Incorporation
provide for the elimination of personal liability of directors to the registrant
or its  shareholders  for  monetary  damages  for  conduct as a director  to the
fullest  extent  permitted  by the Act.  Under  Section  60.047  of the  Act,  a
corporation  may not eliminate or limit the liability of a director for: (1) any
breach of the director's duty of loyalty to the corporation or its shareholders;
(2) acts of omissions not in good faith or which involve intentional  misconduct
or a knowing  violation  of law;  (3) any unlawful  distribution  under  Section
60.367 of the Act; or (4) any  transaction  from which the  director  derived an
improper personal benefit.

                                                       II-1

<PAGE>



           The registrant maintains directors' and officers' liability insurance
under which the registrants' directors and officers are insured against loss (as
defined) as a result of claims  brought  against them for their wrongful acts in
such capacities.

ITEM 16.  RECENT SALES OF UNREGISTERED SECURITIES.

           In  the  three  years  preceding  the  filing  of  this  Registration
Statement, the Company has issued securities in the following transactions, each
of which was  intended to be exempt from the  registration  requirements  of the
Securities Act of 1933 by virtue of Section 4(2) thereunder:

           1. On January 1, 1998, the Company  delivered stock  certificates for
33,341  shares of common stock to Eric T.  Wagner,  John M.  Loveless,  David A.
Steffens,  and Douglas Teets  pursuant to the Stock  Purchase and Sale Agreement
dated  November  21,  1995,  among the Company,  Culverin  Corporation,  Eric T.
Wagner,  John M.  Loveless,  David  Steffens,  and Douglas Teets (such shares of
common  stock were  issued as of January 1, 1995,  and had an  aggregate  market
value as of that date equal to $450,103.50 ($13.50 per share)).

           2. On January 1, 1999,  the Company  issued  50,000  shares of common
stock to Modern Computer Systems,  Inc.,  pursuant to an Asset Purchase and Sale
Agreement dated effective  January 1, 1999,  among the Company,  Modern Computer
Systems, Inc., BankServ, Inc., Inasyst, Inc., Dealer Computer Systems, Inc., and
Ronald L. Ingersoll (the shares of common stock had an aggregate  value equal to
approximately $650,000).

           3. On May 14, 1999,  the Company issued 45,000 shares of common stock
to David E. Grove and 45,000 to Regan MacKenzie  Incorporated,  as Custodian for
David C. Grove, IRA, for $900,000 in cash.

           4. On August 13, 1999, the Company issued Warrants to Ableco Holdings
LLC, Levine Leichtman  Capital Partners II, L.P.,  Foothill  Partners III, L.P.,
and U.S. Bancorp Libra, a division of U.S. Bancorp Investments,  Inc., entitling
them to purchase up to 439,822  shares of common  stock at an exercise  price of
$12.34375 per share and 10%  Convertible  Subordinated  Discount Notes to Levine
Leichtman  Capital  Partners II, L.P.,  U.S.  Bancorp  Libra, a division of U.S.
Bancorp Investments, Inc., Bay Star Capital, L.P., Soundshore Holdings Ltd., and
Soundshore  Opportunity  Holding  Fund Ltd.  entitling  them to  purchase  up to
602,534 shares of common stock at a conversion price of $12.34375 per share.



          5. On  September  15,  1999,  the   Company  agreed to  issue  to  RCG
Capital Markets Group,  Inc.  options to purchase up to 100,000 shares of common
stock at exercise prices of $12.00, $15.00, or $18.00 per share.



           6.  The  Company  has  agreed  to  issue a  Warrant  to U.S.  Bancorp
Investments,  Inc., entitling it to purchase up to 17,000 shares of common stock
at an exercise price of $12.00 per share.

ITEM 17.  EXHIBITS AND EXHIBIT INDEX.

Exhibit
Number     Description of Exhibits

2.1        Stock Purchase and Sale Agreement dated November 21, 1995,  among CFI
           ProServices,  Inc.,  Culverin  Corporation,  Eric T. Wagner,  John M.
           Loveless,  David  Steffens,  and Douglas Teets - previously  filed as
           Exhibit  2.1 to the  Current  Report on Form 8-K dated  November  21,
           1995,  as filed  with  the  Securities  and  Exchange  Commission  on
           December 6, 1995, and incorporated herein by reference.

2.2        Stock  Purchase and Sale  Agreement  effective  April 1, 1996, by and
           among MicroBilt Corporation,  First Financial Management Corporation,
           and CFI ProServices,  Inc. - previously filed as Exhibit 2.1 with the
           Company's  Form 8-K dated April 1, 1996, as filed with the Securities
           and Exchange Commission on April 16, 1996, and incorporated herein by
           reference.


                                                       II-2

<PAGE>



2.3        Asset  Purchase and Sale  Agreement  effective  April 1, 1996, by and
           among Input Creations,  inc., its shareholders,  and CFI ProServices,
           Inc. - previously  filed as Exhibit 2.1 with the  Company's  Form 8-K
           dated  April 17,  1996,  as filed with the  Securities  and  Exchange
           Commission on May 2, 1996, and incorporated herein by reference.

2.4        Asset Purchase and Sale Agreement,  dated effective  January 1, 1999,
           among CFI ProServices, Inc., Modern Computer Systems, Inc., BankServ,
           Inc.,  Inasyst,  Inc., Dealer Computer  Systems,  Inc., and Ronald L.
           Ingersoll - previously  filed as Exhibit 2.1 to the Current Report on
           Form 8-K dated  February 10, 1999, as filed with the  Securities  and
           Exchange  Commission on February 10, 1999, and incorporated herein by
           reference.

2.5        Purchase and Sale Agreement dated May 17, 1999,  among MECA Software,
           L.L.C., the members of MECA Software, L.L.C., CFI ProServices,  Inc.,
           and MoneyScape  Holdings,  Inc. - previously  filed as Exhibit 2.1 to
           the Current  Report on Form 8-K dated June 2, 1999, as filed with the
           Securities and Exchange  Commission on June 7, 1999, and incorporated
           herein by reference.

2.6        Agreement  and Plan of  Merger  dated as of May 17,  1999,  among the
           Company, UFO Acquisition Co., and ULTRADATA  Corporation - previously
           filed as Exhibit 2.1 to the Current  Report on Form 8-K dated  August
           27, 1999,  as filed with the  Securities  and Exchange  Commission on
           August 27, 1999, and incorporated herein by reference.

2.7        Revolving  Credit Note in the principal  amount of up to  $15,000,000
           dated as of August 13,  1999  previously  filed as Exhibit 2.2 to the
           Current  Report on Form 8-K dated August 27, 1999,  as filed with the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.

2.8        Form of Term Loan A Promissory Note in the aggregate principal amount
           of  $35,000,000  dated as of August 13,  1999 -  previously  filed as
           Exhibit 2.3 to the Current  Report on Form 8-K dated August 27, 1999,
           as filed with the  Securities  and Exchange  Commission on August 27,
           1999, and incorporated herein by reference.

2.9        Form of Term Loan B Promissory Note in the aggregate principal amount
           of  $30,000,000  dated as of August 13,  1999 -  previously  filed as
           Exhibit 2.4 to the Current  Report on Form 8-K dated August 27, 1999,
           as filed with the  Securities  and Exchange  Commission on August 27,
           1999, and incorporated herein by reference.

2.10       Form of Warrant  issued by the  Company to the Lenders to purchase up
           to an aggregate of 381,822  shares of the common stock of the Company
           dated as of August 13, 1999 - previously  filed as Exhibit 2.5 to the
           Current  Report on Form 8-K dated August 27, 1999,  as filed with the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.

2.11       Registration  Rights  Agreement  for the  Lender  Warrants  among the
           Company  and the  Lenders  dated as of August 13,  1999 -  previously
           filed as Exhibit 2.6 to the Current  Report on Form 8-K dated  August
           27, 1999,  as filed with the  Securities  and Exchange  Commission on
           August 27, 1999, and incorporated herein by reference.

2.12       Note Purchase  Agreement among the Company and the Note Holders dated
           as of August 13, 1999 previously  filed as Exhibit 2.7 to the Current
           Report  on Form  8-K  dated  August  27,  1999,  as  filed  with  the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.

2.13       Form of 10%  Convertible  Subordinated  Discount  Notes  dated  as of
           August 13,  1999 -  previously  filed as Exhibit  2.8 to the  Current
           Report  on Form  8-K  dated  August  27,  1999,  as  filed  with  the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.


                                                       II-3

<PAGE>



2.14       Registration  Rights Agreement for the  Subordinated  Notes among the
           Company and the Note Holders dated as of August 13, 1999 - previously
           filed as Exhibit 2.9 to the Current  Report on Form 8-K dated  August
           27, 1999,  as filed with the  Securities  and Exchange  Commission on
           August 27, 1999, and incorporated herein by reference.

2.15       Warrant issued to U.S. Bancorp Libra, financial advisor and placement
           agent for the Company,  to purchase  58,000  shares of the  Company's
           common  stock,  dated as of August  13,  1999 -  previously  filed as
           Exhibit 2.10 to the Current Report on Form 8-K dated August 27, 1999,
           as filed with the  Securities  and Exchange  Commission on August 27,
           1999, and incorporated herein by reference.

2.16       Registration  Rights  Agreement  for the Libra  Warrants  dated as of
           August 13,  1999 -  previously  filed as Exhibit  2.11 to the Current
           Report  on Form  8-K  dated  August  27,  1999,  as  filed  with  the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.

3.1        Registrant's   Amended  and  Restated  Articles  of  Incorporation  -
           previously filed as Exhibit 3(i)(a) to the Registration  Statement on
           Form S-1, Registration No. 33-64894, as filed with the Securities and
           Exchange  Commission  on June 23, 1993,  and  incorporated  herein by
           reference.

3.2        Amendments  to   Registrant's   Amended  and  Restated   Articles  of
           Incorporation  (effective June 28, 1993)  previously filed as Exhibit
           3(i)(b)  to the  Registration  Statement  on Form  S-1,  Registration
           Statement No.  33-64894,  as filed with the  Securities  and Exchange
           Commission on July 26, 1993, and incorporated herein by reference).

3.3        Amendments  to   Registrant's   Amended  and  Restated   Articles  of
           Incorporation  (effective July 26, 1993)  previously filed as Exhibit
           3(i)(c)  to the  Registration  Statement  on Form  S-1,  Registration
           Statement No.  33-64894,  as filed with the  Securities  and Exchange
           Commission on August 10, 1993, and incorporated herein by reference.

3.4        Registrant's  Amended  and  Restated  Bylaws  -  previously  filed as
           Exhibit 3(ii) to the Registration Statement on Form S-1, Registration
           Statement No.  33-64894,  as filed with the  Securities  and Exchange
           Commission on August 10, 1993, and incorporated herein by reference.

5.1        CFI  ProServices,  Inc.  Employee  Savings and Stock Ownership Plan -
           previously  filed as Exhibit  5.1 to the  Current  Report on Form 8-K
           dated  August 27,  1999,  as filed with the  Securities  and Exchange
           Commission on August 27, 1999, and incorporated herein by reference.

5.2        ULTRADATA  Employment Agreement with Robert J. Majteles dated October
           22, 1996 - previously  filed as Exhibit 5.2 to the Current  Report on
           Form 8-K dated  August 27,  1999,  as filed with the  Securities  and
           Exchange  Commission on August 27, 1999, and  incorporated  herein by
           reference.

5.3        ULTRADATA  Employment  Agreement  with Cindy Cooper dated November 6,
           1999 - previously  filed as Exhibit 5.3 to the Current Report on Form
           8-K dated August 27, 1999, as filed with the  Securities and Exchange
           Commission on August 27, 1999, and incorporated herein by reference.

5.4        ULTRADATA  Employment  Agreement with David J. Robbins dated November
           6, 1999 -  previously  filed as Exhibit 5.4 to the Current  Report on
           Form 8-K dated  August 27,  1999,  as filed with the  Securities  and
           Exchange  Commission on August 27, 1999, and  incorporated  herein by
           reference.

5.5        ULTRADATA   Employment  Agreement  with  James  R.  Berthelson  dated
           November  6, 1998 -  previously  filed as Exhibit  5.5 to the Current
           Report  on Form  8-K  dated  August  27,  1999,  as  filed  with  the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.


                                                       II-4

<PAGE>



5.6        ULTRADATA   Employment  Agreement  with  Ronald  H.  Bissinger  dated
           November  6, 1998 -  previously  filed as Exhibit  5.6 to the Current
           Report  on Form  8-K  dated  August  27,  1999,  as  filed  with  the
           Securities   and  Exchange   Commission  on  August  27,  1999,   and
           incorporated herein by reference.

5.7        Opinion of Farleigh, Wada & Witt, P.C.

10.1       Nonqualified  Stock Option Plan dated  October 15,  1993,  previously
           filed as  Exhibit  99.10 to the  Registration  Statement  on Form S-8
           (Registration  No.  33-70506),  as  filed  with  the  Securities  and
           Exchange  Commission on October 19, 1993, and incorporated  herein by
           reference.

10.2*      Registrant's  Outside  Director  Compensation  and Stock  Option Plan
           previously  filed as Exhibit 10.3 to the Company's  Form 10-Q for the
           quarter ended March 31, 1994, and incorporated herein by reference.

10.3*      Registrant's  Standardized Regional Prototype 401(k) Cash or Deferred
           Savings Plan and Trust, adopted December 1, 1994, previously filed as
           Exhibit 10.12 to the Company's  Form 10-K for the year ended December
           31, 1995, and as filed with the Securities and Exchange Commission on
           April 1, 1996, and incorporated herein by reference.

10.4       Legal Services  Agreement for the State of Louisiana  effective March
           13,  1986,  between  the  Company and  McGlinchey,  Stafford,  Mintz,
           Cellini   &  Lang,   a   Louisiana   professional   law   corporation
           (confidential  treatment  requested)  -  previously  filed as Exhibit
           10.25 to the  Registration  Statement on Form S-1  (Registration  No.
           33-64894)  filed with the Securities and Exchange  Commission on July
           26, 1993, and incorporated herein by reference.

10.5       1994 Employee Stock Purchase Plan - previously  filed as Exhibit 10.2
           to the Company's  Form 10-Q for the quarter ended June 30, 1994,  and
           incorporated herein by reference.

10.6*      1995  Consolidated  and Restated Stock Option Plan - previously filed
           as Exhibit 99.13 to the Registration Statement on Form S-8 filed with
           the  Securities  and  Exchange  Commission  on  March  1,  1995,  and
           incorporated herein by reference.

10.7*      First Amendment to 1995 Consolidated and Restated Stock Option Plan -
           previously  filed  as  Exhibit  9.2  to  the  Company's  Registration
           Statement  on  Form  S-8  filed  with  the  Securities  and  Exchange
           Commission on or about September 4, 1996, and incorporated  herein by
           reference.

10.8       Office  Lease  dated  March 18,  1994,  between  the Company and John
           Hancock Mutual Life Insurance  Company - previously  filed as Exhibit
           10.1 to the Company's Form 10-Q for the quarter ended March 31, 1994,
           and incorporated herein by reference.

10.9       First amendment,  dated July 8, 1996, to office lease dated March 18,
           1994,  between  the Company and John  Hancock  Mutual Life  Insurance
           Company - previously  filed as Exhibit 10.17 to the Company's  Annual
           Report on Form 10-K for the year ended  December 31,  1996,  as filed
           with the Securities and Exchange Commission on March 27, 1997, and is
           incorporated herein by reference.

10.10      Second amendment, dated January 11, 1999, to office lease dated March
           18, 1994,  between the Company and John Hancock Mutual Life Insurance
           Company.

10.11*     Employment  and  Noncompetition  Agreement  dated  November 21, 1995,
           between CFI  ProServices,  Inc. and Eric T. Wagner - previously filed
           as Exhibit  10.1 to the  Company's  Current  Report on Form 8-K filed
           with the Securities and Exchange  Commission on December 6, 1995, and
           incorporated herein by reference.

10.12      Business Loan Agreement  (Revolving Line of Credit) dated November 8,
           1995,  between CFI  ProServices,  Inc. and Bank of America,  Oregon -
           previously filed as Exhibit 10.35 to the Company's Annual Report on

                                                       II-5

<PAGE>



           Form 10-K for the year ended  December  31,  1995,  as filed with the
           Securities and Exchange Commission on April 1, 1996, and incorporated
           herein by reference.

10.13      Amendment No. 1, dated May 17, 1996, to Business Loan Agreement dated
           November 8, 1995  previously  filed as Exhibit 10.7 to the  Company's
           quarterly report of Form 10-Q for the quarter ended June 30, 1996, as
           filed with the Securities and Exchange Commission on August 13, 1996,
           and incorporated herein by reference.

10.14      Amendment No. 2, dated July 1, 1996, to Business Loan Agreement dated
           November 8, 1995  previously  filed as Exhibit 10.8 to the  Company's
           quarterly report of Form 10-Q for the quarter ended June 30, 1996, as
           filed with the Securities and Exchange Commission on August 13, 1996,
           and incorporated herein by reference.

10.15      Amendment No. 3, dated September 24, 1996, to Business Loan Agreement
           dated  November  8,  1995  previously  filed  as  Exhibit  10 to  the
           Company's  quarterly  report  of  Form  10-Q  for the  quarter  ended
           September  30,  1996,  as filed  with  the  Securities  and  Exchange
           Commission  on  November  14,  1996,  and   incorporated   herein  by
           reference.

10.16      Amendment No. 4, dated  November 21, 1996, to Business Loan Agreement
           dated  November  8,  1995  previously  filed as  Exhibit  10.1 to the
           Company's  Registration  Statement No. 333-15505 on Form S-3 as filed
           with the Securities and Exchange  Commission on January 27, 1997, and
           incorporated herein by reference.

10.17      Amendment No. 5, dated  December 31, 1996, to Business Loan Agreement
           dated  November  8,  1995  previously  filed as  Exhibit  10.2 to the
           Company's  Registration  Statement No. 333-15505 on Form S-3 as filed
           with the Securities and Exchange  Commission on January 27, 1997, and
           incorporated herein by reference.

10.18      Amendment  No. 6, dated  March 1, 1997,  to Business  Loan  Agreement
           dated  November 8, 1995  previously  filed as exhibit  10.41 with the
           Company's  Form 10-K for the year ended  December  31,  1996,  and as
           filed with the Securities and Exchange  Commission on March 21, 1997,
           and incorporated herein by reference.

10.19      Amendment No. 7 dated June 1, 1997, to Business Loan Agreement  dated
           November 8, 1995 - previously  filed with the Company's Form 10-Q for
           the quarter  ended June 30, 1997,  as filed with the  Securities  and
           Exchange Commission on August 13, 1997, and is incorporated herein by
           reference.

10.20      Amendment  No. 8 dated March 31,  1998,  to business  loan  agreement
           dated November 8, 1995 previously  filed with the Company's Form 10-Q
           for the quarter  ended March 31, 1998,  as filed with the  Securities
           and Exchange Commission on May 5, 1998, and is incorporated herein by
           reference.

10.21      Amendment  No. 9 dated April 30,  1998,  to business  loan  agreement
           dated  November 8, 1995 - previously  filed with the  Company's  Form
           10-Q  for the  quarter  ended  March  31,  1998,  as  filed  with the
           Securities   and  Exchange   Commission  on  May  5,  1998,   and  is
           incorporated herein by reference.

10.22*     Form of Executive  Retention  Agreement - previously filed as Exhibit
           10.1 to the  Company's  Current  Report  on Form 8-K  filed  with the
           Securities   and  Exchange   Commission  on  August  22,  1994,   and
           incorporated herein by reference.

10.23      Financing  Agreement  dated as of August 13,  1999,  by and among CFI
           ProServices,  Inc.,  ULTRADATA  Corporation,  MECA Software,  L.L.C.,
           MoneyScape  Holdings,  Inc.,  Foothill  Capital  Corporation,  Ableco
           Finance  L.L.C.,  Levine  Leichtman  Capital  Partners II, L.P.,  and
           Foothill Partners III, L.P. - previously filed as Exhibit 10.1 to the
           Company's Form 10-Q dated August 16, 1999,  filed with the Securities
           and Exchange  Commission on August 16, 1999, and incorporated  herein
           by reference.

                                                       II-6

<PAGE>



10.24      Third  Amendment  to Office  Lease  dated  August 11,  1999,  between
           Registrant  and  John  Hancock   Mutual  Life  Insurance   Company  -
           previously  filed as Exhibit  10.2 to the Current  Report on Form 8-K
           dated  August 27,  1999,  as filed with the  Securities  and Exchange
           Commission on August 27, 1999, and incorporated herein by reference.



10.25**    Employment,  Confidentiality,  and Invention Agreement dated December
           12, 1997, as amended May 27, 1999, among  Registrant,  MECA Software,
           L.L.C., and Paul D. Harrison.

21**       Subsidiaries of the Registrant.

23.1**     Consent of Arthur Andersen LLP.

23.2**     Consent of Deloitte & Touche LLP.

23.3**     Consent of KPMG LLP.

23.4**     Consent of PricewaterhouseCoopers LLP.

23.5**     Consent of Farleigh, Wada & Witt, P.C. (included in Exhibit 5.7).

27**       Financial Data Schedule.


      *Management contract or compensatory plan or arrangement.
     **Previously filed.


ITEM 18.  UNDERTAKINGS.

           The undersigned registrant hereby undertakes:

                a. To file, during any period in which offers or sales are made,
a post-effective amendment to this Registration Statement:

     i. To include any prospectus required by Section 10(a)(3) of the Securities
Act  of  1933,   unless  the  information   required  to  be  included  in  such
post-effective  amendment  is  contained  in a  periodic  report  filed  by  the
registrant  pursuant to Section 13 or Section 15(d) of the  Securities  Exchange
Act of 1934 (the "Exchange Act") that is incorporated herein by reference;

     ii. To  reflect in the  prospectus  any facts or events  arising  after the
effective date of the Registration  Statement (or the most recent post-effective
amendment  thereof)  which,  individually  or  in  the  aggregate,  represent  a
fundamental  change in the information set forth in the Registration  Statement,
unless the

                                                       II-7

<PAGE>



information  required  to  be  included  in  such  post-effective  amendment  is
contained in a periodic report filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that is incorporated herein by reference;

     iii.  To  include  any  material  information  with  respect to the plan of
distribution  not  previously  disclosed  in the  Registration  Statement or any
material change to such information in the Registration Statement.

                b. That, for the purpose of determining  any liability under the
Securities Act of 1933, each such post-effective amendment 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.

                c. To  remove  from  registration  by means of a  post-effective
amendment  any of the  securities  being  registered  that remain  unsold at the
termination of the offering.

                d. 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 Exchange Act 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.

           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 provisions described in Item 15 above,
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 Securities Act of 1933 as 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  Securities  Act of 1933 and  will be  governed  by the  final
adjudication of such issue.

                                                     SIGNATURES

           Pursuant  to the  requirements  of the  Securities  Act of 1933,  the
registrant  has duly  caused  this  registration  statement  to be signed on its
behalf by the undersigned,  thereunto duly authorized,  in the City of Portland,
State of Oregon, on December 7, 1999.

                               CFI PROSERVICES, INC.


                               By:  /s/ Matthew W. Chapman
                                    ----------------------
                                    Matthew W. Chapman, Chief Executive Officer

           Pursuant  to the  requirements  of the  Securities  Act of  1933,  as
amended,  this  Registration  Statement  has been signed below by the  following
persons in the capacities indicated as of the 7th day of December, 1999.

Signature                  Title                            Dated


/s/ Matthew W. Chapman     Chairman, Chief Executive
- ----------------------     Officer, and Director           December 7, 1999
Matthew W. Chapman




                                                       II-8

<PAGE>



/s/ Robert P. Chamness     President, Chief Operating      December 7, 1999
- ----------------------     Officer, and Director
Robert P. Chamness


/s/ Kurt W. Ruttum         Vice President and Chief        December 7, 1999
- ------------------         Financial Officer
Kurt W. Ruttum             (Principal Financial and Accounting Officer)


/s/ Robert T. Jett         Executive Vice President,       December 7, 1999
- ------------------         Secretary, and Director
Robert T. Jett


/s/ J. Kenneth Brody       Director                        December 7, 1999
- ----------------------
J. Kenneth Brody


/s/ L. B. Day              Director                        December 7, 1999
- ----------------------
L. B. Day


                                      II-9



                                                                     Exhibit 5.7

                           Farleigh, Wada & Witt, P.C.
                       121 S.W. Morrison Street, Suite 600
                             Portland, Oregon 97204
                                 (503) 228-6044
                               (503) 228-1741 fax



                                November 12, 1999



CFI ProServices, Inc., dba
Concentrex Incorporated
400 S.W. Sixth Avenue
Portland, Oregon 97204


Gentlemen:

           We have acted as counsel to CFI  ProServices,  Inc.,  dba  Concentrex
Incorporated (the "Company"), in connection with the registration by the Company
of up to  1,249,356  shares  of its  common  stock,  no par value  (the  "Common
Stock"),  which the Company issued to certain  security holders and which are or
may become  issuable to certain  other  security  holders  upon the exercise and
conversion of currently outstanding Options,  Warrants, and Notes (collectively,
the  "Convertible  Securities"),  together with any additional  shares of Common
Stock  that  may  become  issuable  upon  the  exercise  and  conversion  of the
Convertible  Securities as a result of adjustment of the respective exercise and
conversion prices of the Convertible Securities to anti-dilution provisions. The
shares of Common  Stock  issued to certain  security  holders  and  issuable  to
certain other security holders upon exercise of the Options and Warrants and the
conversion  of the Notes at any time  hereafter  are herein  referred  to as the
"Shares."  This  opinion is being  rendered in  connection  with a  Registration
Statement on Form S-1  covering  resales of the Shares with the  Securities  and
Exchange  Commission  pursuant to the  Securities  Act of 1933,  as amended (the
"Securities Act").

           In connection herewith,  we have examined and relied as to matters of
fact  upon  such  certificates  of  public  officials,  certificates  or  copies
certified to our satisfaction of the Articles of Incorporation and Bylaws of the
Company (each  amended  through the date  hereof),  proceedings  of the Board of
Directors of the Company and other corporate records,  documents,  certificates,
and instruments as we have deemed necessary or appropriate in order to enable us
to render the opinion expressed below.

           In rendering the following  opinion,  we have assumed the genuineness
of all  signatures  on all  documents  examined by us, the  authenticity  of all
documents  submitted to us as originals  and the  conformity to the originals of
all  documents  submitted  to us as copies,  and we have relied as to matters of
fact upon statements and certifications of officers of the Company.

<PAGE>

CFI ProServices, Inc., dba
Concentrex Incorporated
November 12, 1999
Page Two

           Based on the  foregoing,  we are of the  opinion  that the Shares are
duly and validly  authorized,  that the Shares  issued to the  selling  security
holders  identified in the  Registration  Statement have been validly issued and
are fully paid and nonassessable,  and when the Shares have been issued upon the
exercise of the  Options and  Warrants  and the  conversion  of the Notes at the
respective exercise and conversion prices in effect at the time of such issuance
and otherwise in accordance with their terms, the Shares will be validly issued,
fully paid and nonassessable.

           For purposes of the opinion above, we have assumed that all necessary
approvals  have been  received  for the  issuance of the Shares,  including  the
issuance  of the Shares  upon  exercise  of the  Options  and  Warrants  and the
conversion of the Notes and including approval by the Company's shareholders, if
required,  and any  regulatory  approvals  required by rules of the Nasdaq Stock
Market.

           We hereby  consent to the filing of this opinion as an exhibit to the
aforesaid  Registration  Statement  on Form S-1 and to the use of our name under
the caption "Legal Matters" in the prospectus filed as a part thereof. In giving
this  consent,  we do not thereby  admit that we are in the  category of persons
whose consent is required under Section 7 of the Securities Act.

                                                Very truly yours,

                                                FARLEIGH, WADA & WITT, P.C.




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