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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-K
(MARK ONE)
 
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 for the fiscal year ended March 31, 1998.
                                       or
 
[  ] Transition Report Pursuant to Section 13 or 15 (d) of the Securities
     Exchange Act of 1934
     For the transition period from -------------------- to
     --------------------
 
                        COMMISSION FILE NUMBER: 0-21985
 
                                   SEEC, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
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<S>                                                      <C>
                      PENNSYLVANIA                                              55-0686906
                (State of Incorporation)                           (I.R.S. Employer Identification No.)
 
       PARK WEST ONE, SUITE 200, CLIFF MINE ROAD,
                PITTSBURGH, PENNSYLVANIA                                          15275
        (Address of principal executive offices)                                (Zip code)
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       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (412) 893-0300
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) of the Act:
 
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                  TITLE OF EACH CLASS                           NAME OF EACH EXCHANGE ON WHICH REGISTERED
                  -------------------                           -----------------------------------------
<S>                                                      <C>
                          None                                                Not applicable
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          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) of the Act:
 
                    Common Stock, par value $0.01 per share
                                (TITLE OF CLASS)
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
  Yes  X   No 
      ---     ---
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [___]
 
     As of May 29, 1998, the aggregate market value of voting Common Stock held
by non-affiliates of the registrant, based upon the last reported sale price for
the registrant's Common Stock on the Nasdaq National Market on such date, as
reported in The Wall Street Journal, was $44,318,714 (calculated by excluding
shares owned beneficially by directors and executive officers as a group from
total outstanding shares solely for the purpose of this response).
 
     The number of shares of the registrant's Common Stock outstanding as of the
close of business on May 29, 1998 was 6,076,546.
                      
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     Certain portions of the definitive Proxy Statement of SEEC, Inc. ("SEEC" or
"the Company") to be prepared for the 1998 Annual Meeting of Shareholders
scheduled for August 6, 1998 (the "Proxy Statement") to be filed with the
Commission are incorporated by reference into Part III of this Annual Report on
Form 10-K to the extent provided herein. Except as specifically incorporated by
reference herein, the Proxy Statement is not to be deemed filed as part of this
Annual Report on Form 10-K.
 
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<PAGE>   2
 
                                   SEEC, INC.
 
                               TABLE OF CONTENTS
 
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                                PART I
Item 1.   Business....................................................    1
Item 2.   Properties..................................................   18
Item 3.   Legal Proceedings...........................................   18
Item 4.   Submission of Matters to a Vote of Security Holders.........   18
 
                               PART II
Item 5.   Market for the Registrant's Common Equity and Related
          Shareholder Matters.........................................   19
Item 6.   Selected Financial Data.....................................   20
Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations...................................   21
Item 8.   Financial Statements and Supplementary Data.................   28
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosures...................................   48
 
                               PART III
Item 10.  Directors and Executive Officers of SEEC....................   48
Item 11.  Executive Compensation......................................   48
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   48
Item 13.  Certain Relationships and Related Transactions..............   48
 
                               PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
          8-K.........................................................   48
 
SIGNATURES............................................................   50
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<PAGE>   3
 
ITEM 1. BUSINESS
 
     Except for historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Such forward-looking statements include, but are not limited to,
statements regarding future events and the Company's plans and expectations. The
Company's actual results could differ materially from those discussed herein.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed below in "Factors That May Affect Future Results,"
as well as those discussed elsewhere in this Form 10-K or incorporated herein by
reference. See "Special Note on Forward-Looking Statements."
 
GENERAL
 
     SEEC develops, markets and provides integrated and comprehensive enterprise
solutions that enable large organizations and third party service providers to
efficiently and effectively reengineer legacy system applications and databases.
The Company's enterprise solutions combine a suite of software products with
well-defined, repeatable methodologies designed to automate various functions
and improve the quality, productivity and effectiveness of the reengineering
process. SEEC's enterprise solutions address the year 2000 problem and ongoing
testing requirements. Solutions have been developed or are being developed to
address the European Monetary Unit ("Euro") currency conversion problem and the
integration of legacy systems with Internet (or World Wide Web ("Web")) and
client/server-based applications. SEEC introduced its core source code analysis
technology and the first PC-based reengineering software product in 1992.
 
     The Company's software products, including those based on the Company's
core source code analysis technology, automate many of the procedures required
for reengineering mainframe-based legacy software systems, including year 2000
conversion. The Company's products analyze and modify source code, which is
downloaded from the mainframe to a PC-based environment, where it is stored in
application dictionaries for performance of reengineering functions. SEEC has
also developed software products that enable customers to extract business rules
and functions from legacy applications for reuse in object-oriented
client/server environments. SEEC believes that its core technology and
methodologies are adaptable for use in developing enterprise solutions for
integration of mainframe-based legacy systems with Internet, Enterprise Resource
Planning ("ERP"), data warehousing, and data mining applications. SEEC markets
and sells its enterprise solutions and products primarily to Fortune 1000
companies and similarly-sized business and governmental organizations. SEEC also
licenses its products to third party service providers.
 
INDUSTRY BACKGROUND
 
     Organizations are under increasing pressure to utilize efficiently and
effectively their information technology ("IT") assets to respond to increasing
global competitive demands. For many business organizations, these IT assets are
critical to their operation and represent a key competitive advantage. Most
large organizations utilize complex, proprietary mainframe computer systems for
their information requirements, and these legacy systems contain the core
business rules, processes and data that support the mission critical operations
of these organizations. Many organizations have made significant investments in
their legacy systems over a number of years. Industry sources estimate that
there are more than 45,000 mainframe sites and 150 billion lines of COBOL code
in use worldwide.
 
  Legacy System Reengineering
 
     Organizations that rely on legacy systems must continually reengineer their
systems, applications and databases to meet constantly changing information
requirements and to incorporate technological advances. Many legacy system
applications have been developed internally by these organizations over a number
of years and have been customized to meet specific needs. In addition, legacy
systems often are composed of a variety of hardware platforms, software
applications and databases, many of which utilize different computer languages.
As a result, legacy systems often are highly complex, have little or no
system-wide documentation, and are difficult and expensive to maintain.
According to the Gartner Group, 60% to 80% of the average annual IT application
 
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development budget is spent on reengineering legacy applications. Legacy system
reengineering requirements limit the availability of resources for other
important tasks, such as developing new software applications.
 
     The majority of legacy system reengineering involves a large number of
incremental or smaller-scale repairs or enhancements to existing systems, such
as an enhancement to a billing system to include additional customer data.
Certain reengineering projects, however, are large-scale in nature and can
require analysis, remediation and testing of millions of lines of code. An
immediate large-scale reengineering requirement is caused by the year 2000
problem. Examples of additional large-scale legacy reengineering needs include
the standardization on the Euro currency in Europe, the combination of existing
legacy systems as the result of a merger or acquisition, and conversion to a new
COBOL dialect due to a system upgrade or hardware platform change. Traditional
reengineering of these legacy systems is often manual, time-consuming, tedious
and error-prone. Many organizations are attempting to improve the reengineering
process in order to reduce costs, improve productivity and accuracy and leverage
existing legacy system investments.
 
  Year 2000 Conversion
 
     The year 2000 problem is currently the most critical legacy system
reengineering project for many organizations. Awareness and recognition of the
year 2000 problem has been increasing rapidly as the millennium approaches. The
year 2000 problem relates to the inability of many existing computer systems to
process completely or accurately information or logic involving the year 2000
and beyond. The problem results from the use of two-digit date fields to perform
computations and decision-making functions in most legacy systems. For example,
a program using a two-digit date field may misinterpret "00" as the year 1900
rather than 2000. Date-dependent programs are ubiquitous in legacy software
applications used in many critical business operations, and unless these
programs are remediated to address the year 2000 problem, many mission-critical
programs may fail or produce erroneous data or results. The year 2000 problem is
particularly acute for many large organizations with extensive legacy systems
that have been developed over a number of years, such as banks, insurance
companies and governmental agencies.
 
  Testing
 
     Software reliability and the ability of companies to release software
products on time has been a major issue for many years. Business critical
operations very often depend on software performing accurately, and the year
2000 problem has further added to the complexity of achieving adequate testing
in a limited period of time. Testing costs are 50% of the total cost of fixing
the year 2000 problem, according to various industry estimates. As the use of
software continues to expand in businesses worldwide, testing is expected to
consume a majority of IT department resources. As a result, organizations are
looking for automated testing solutions that assist in reducing the time and
cost of software testing and that increase test coverage.
 
  Data Warehousing and Web Enablement
 
     Many organizations are leveraging their mainframe legacy systems to
implement data warehousing, data mining or Web-enabled applications.
Improvements in the performance of mainframes, connectivity with the Internet
and trends towards centralization of data on the mainframes have prolonged the
life of legacy systems. Industry sources indicate that the mainframe legacy
systems will be retained for a long period of time, therefore requiring that
existing legacy systems be integrated with client/server and Web-based systems.
Organizations undertaking this integration process are faced with additional
reengineering requirements. Also, when implementing integration projects,
organizations can replace or reuse existing legacy system applications.
Replacement of existing legacy applications can involve either purchasing or
customizing "off-the-shelf" software packages or rewriting legacy code into new
software code that will operate in an integrated environment. The reuse of
existing legacy software code involves the extraction of existing business rules
and functions from legacy software applications, which can be converted into
objects to be utilized in these environments.
 
     The growing availability and functionality of client/server and Web-based
applications are increasing the rate of integration. ERP applications often must
be integrated with existing legacy systems to access certain programs and data
contained in these legacy systems. There is an increasing need to integrate
client/server and web-based data warehousing and data mining systems with key
business data developed and maintained on
 
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legacy systems. Much of the data managed and analyzed by data warehousing and
data mining applications has been developed and stored on mainframe legacy
systems and is impacted by legacy applications. Accordingly, many organizations
are seeking solutions that leverage investments in existing legacy systems and
provide efficient and cost-effective integration.
 
SEEC'S STRATEGY
 
     SEEC's objective is to become a leading provider of enterprise solutions
for reengineering legacy systems. The following are the principal elements of
the Company's strategy to achieve this objective:
 
     Enhance and Expand Leadership in Enterprise Solutions.  SEEC intends to
continue to enhance and expand its offerings of enterprise solutions. The
Company intends to continue to enhance its core source code analysis technology,
solution methodologies, and software products to provide additional automation,
functionality and cost savings to its customers. SEEC's core source code
analysis technology allows the Company to efficiently introduce new software
products that can be integrated with new or existing enterprise solutions. The
Company plans to enhance or develop solutions to address additional legacy
system reengineering opportunities, including the integration of legacy systems
with client/server and Internet-based systems, and the introduction of the Euro.
 
     Capitalize on the Year 2000 Opportunity.  The Company currently is focusing
much of its efforts on addressing the significant near-term market opportunity
presented by the demand for year 2000 solutions. The Company intends to
capitalize on this opportunity by (i) expanding its direct sales force,
marketing efforts, and indirect distribution channels, both domestically and
internationally, and (ii) establishing new relationships with, and licensing
additional products to, third party service providers.
 
     Leverage Customer Base.  Many of the Company's customers have commenced the
evaluation of their year 2000 problem and are engaged in year 2000 assessment,
planning or remediation. The Company intends to continue to license its products
and sell its enterprise solutions to these customers. The Company also will seek
to leverage its year 2000 customer base by providing additional products and
solutions to such customers. SEEC believes that the knowledge and close working
relationship it develops with its new and existing customers in providing
enterprise solutions for the year 2000 problem will lead to opportunities to
provide additional enterprise solutions to these customers. In particular, the
Company's existing legacy system reengineering solutions and the solutions that
the Company is developing or plans to develop will be marketed to its year 2000
customers.
 
     Provide Solutions with Broad Market Appeal.  SEEC's enterprise solutions
have been developed to be cost-effective, flexible and scalable. As a result,
SEEC's enterprise solutions appeal to a wide range of Fortune 1000 organizations
with a variety of reengineering requirements and to a broad range of third party
service providers. SEEC intends to capitalize on these opportunities by
marketing and selling its products through a broad range of distribution
channels, including direct sales to end users, to end users in conjunction with
third party service providers, to third party service providers and indirect
sales through distributors.
 
SEEC ENTERPRISE SOLUTIONS
 
     SEEC's enterprise solutions provide an integrated and comprehensive
approach to legacy system reengineering by combining SEEC's PC-based software
products with well-defined methodologies that enable organizations to analyze,
understand and improve existing legacy systems. SEEC's enterprise solutions are
designed to reduce the time and labor required to perform legacy system
reengineering projects. These solutions are provided directly to end-user
customers or to third party service providers. In addition, customers may
outsource certain enterprise solution needs to the Company on a limited basis.
The Company's enterprise solutions have been utilized by a broad range of
customers in a number of industries to perform legacy system reengineering
functions. Due to the immediate and significant focus by organizations on the
year 2000 problem and SEEC's desire to capitalize on the year 2000 opportunity,
substantially all of the Company's revenues through fiscal 1998 have been
generated by sales of SEEC's legacy system reengineering solutions that are
related to the year 2000 problem. These solutions incorporate SEEC's core
technology and could be utilized by SEEC's customers for
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future ongoing and additional reengineering tasks, thereby producing future
revenues for SEEC that are unrelated to the year 2000 problem.
 
  Year 2000 Enterprise Solution
 
     SEEC provides year 2000 conversion solutions through its Smart Change
Factory. The Smart Change Factory combines SEEC's proprietary software products,
including COBOL Analyst 2000, Smart Change 2000 and COBOL Slicer with
well-defined methodologies and third party software products to provide a
comprehensive and integrated solution for year 2000 conversion. The Smart Change
Factory is designed to address all phases of a year 2000 project, including
assessment, planning, remediation and testing. The Smart Change Factory is
designed to accurately analyze and determine which applications require
remediation and automates certain portions of the analysis and remediation
process. The Smart Change Factory can be established by an end-user customer, a
third party service provider, or by SEEC to perform outsourcing services. As a
result, the Smart Change Factory provides for efficient utilization of existing
customer IT resources by allowing a year 2000 project to be performed either
in-house by an end user or partially or completely outsourced to a third party
service provider. Currently, 17 third party service providers have licensed all
or a portion of SEEC's Smart Change Factory for use in their year 2000
conversion projects.
 
     The Smart Change Factory is designed to be highly scalable by utilizing
well-defined, repeatable and reliable processes. In addition, since SEEC's
solutions are PC-based and easy to implement, use and learn, additional
hardware, software and technical personnel resources can be added quickly and
cost-effectively to meet expanding customer needs. The scalability features of
the Smart Change Factory are particularly attractive to third party service
providers, who are performing year 2000 conversions on a large scale for a
number of customers and may need to rapidly expand their services to meet
customer demand.
 
  Testing -- SEEC AccuTest Solution
 
     SEEC AccuTest is a comprehensive, integrated testing solution that
addresses mainframe COBOL testing. Testing is an essential process, integral to
all legacy system reengineering projects. AccuTest can be employed as part of
ongoing, non-year 2000 reengineering projects, or in conjunction with SEEC's
Smart Change 2000 solution. AccuTest combines the breadth and accuracy of SEEC's
remediation, test coverage and path analysis tools with the strengths of third
party test management and capture/playback tools and date simulators, creating a
single, seamless testing solution for mainframe COBOL legacy systems. AccuTest
accelerates remediation and redeployment of applications, helping IT
organizations to convert a larger percentage of applications before the year
2000 deadline and to reduce the cost of ongoing testing for non-year 2000
projects.
 
  Legacy System Reengineering
 
     SEEC's legacy system reengineering enterprise solutions offer an integrated
set of software products and repeatable processes that provide for the ongoing,
day-to-day reengineering needs of legacy system customers. SEEC's solutions
provide system documentation and understanding of existing business rules,
program logic and data structures to assist in improving, updating, enhancing
and reengineering existing legacy systems and integrating new technologies. The
Company is developing additional legacy system reengineering solutions that
utilize its core source code analysis technology and methodologies to address
other specific large scale reengineering needs, such as the legacy system
reengineering required to address the proposed introduction of the Euro.
 
  Data Warehousing and Web Enablement
 
     SEEC is developing enterprise solutions to allow organizations to leverage
their mainframe legacy systems to implement data warehousing, data mining or
Internet applications, and to integrate legacy systems with client/server and
Web-based systems. SEEC's existing software product technology provides the
ability to extract business rules for reuse in an object-oriented, client/server
or Web-based environment, which avoids the costly recreation of these rules when
integrating a legacy application to these environments. SEEC's existing software
product technology also provides legacy system documentation and understanding,
which increases the efficiency of integrating legacy systems with client/server
systems. The Company plans to enhance, develop or acquire
 
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methodologies and software products that will integrate client/server or
Web-based systems with existing legacy systems. The Company has developed
methodologies for certain of these solutions, although none of the solutions
have been marketed to date.
 
SEEC SOFTWARE PRODUCTS
 
     SEEC offers a range of proprietary software products for legacy system
reengineering that are integrated with the Company's enterprise solutions or
provided to customers as stand-alone products. The Company's primary software
product line is based on its core source code analysis technology introduced
with the COBOL Analyst product in 1992 and provides a broad range of
capabilities to address various legacy system reengineering needs. The Company's
products have been designed to be easy to use and learn, allowing customers to
rapidly train technical personnel and reduce training costs. SEEC's products
operate in a PC-based environment and are available in versions for Windows 3.1,
OS/2, Windows 95 and Windows NT. SEEC's software products can be purchased in
various combinations or can function as stand-alone products, allowing customers
to meet specific reengineering needs.
 
     The Company's primary software products analyze and modify mainframe source
code that is downloaded to a PC-based environment and stored in an application
dictionary for the performance of reengineering functions. The application
dictionary contains all of the key design elements of a legacy application,
including source code, database definitions, screen definitions and job control
language. The Company's software utilizes proprietary parsing, data flow and
program slicing technology to create the relationships between databases and
source code that enables the documentation and understanding of a legacy COBOL
system. Information about the flow of control among programs is also stored in
the application dictionary, providing further system understanding by enabling
users to group items by business function. The Company's software utilizes
proprietary text scanning technology to identify date fields and the impacted
lines of code for a wide variety of non-COBOL languages.
 
     SEEC's core source code analysis technology has been designed to allow for
the integration and efficient development of additional software application
modules to meet evolving legacy system reengineering needs. In addition, the
application dictionary created by SEEC's core technology can be accessed to
perform future reengineering functions, providing additional benefit to the
customer. For example, an application dictionary created for a year 2000
conversion can be accessed for other ongoing reengineering needs.
 
     As indicated by the following chart, the software products incorporated in
SEEC's year 2000 and legacy system reengineering enterprise solutions support
analysis, remediation and test planning across a wide range of platforms,
languages and databases, including both COBOL and non-COBOL systems:
 
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                   DATABASES/
                 TELEPROCESSING
   PLATFORMS        MONITORS                    LANGUAGES
---------------  --------------  ----------------------------------------
<S>              <C>             <C>                <C>
IBM MVS          IMS             INTELLIGENT PARSING TECHNOLOGY
IBM VSE          DB2             IBM OS/VS COBOL    IBM COBOL 2
Unisys A-Series  VSAM            IBM DOS/VSE COBOL  Unisys A-Series COBOL
Unisys 2200      IDMS            IBM COBOL 370      Unisys 2200 COBOL
DEC/VAX          ADABAS          CA-Realia COBOL    MicroFocus COBOL
HP 3000          CICS            HP COBOL           DEC/VAX COBOL
                 IMS/DC                             Software AG Natural
 
                                 RULE-BASED TEXT SCANNING TECHNOLOGY
                                 ADS/O              Assembler
                                 CSP                Easytrieve
                                 Easytrieve Plus    Focus
                                 Fortran            Mantis
                                 LINC II            PL/1
                                 Quickjob           RPG
                                 SAS                TBOL
                                 Telon
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     The following software products utilize the Company's core source code
analysis technology:
 
     SEEC COBOL Analyst. COBOL Analyst is an application reengineering software
product that is used for performing system-wide change impact analysis, for
documentation and for enhancing program and system understanding. Organizations
use COBOL Analyst for ongoing legacy system reengineering needs or for rewriting
legacy system applications in a client/server architecture. COBOL Analyst
includes several features that facilitate reengineering tasks, including
features that (i) guide programmers through multiple execution scenarios and
record traversed paths for future analysis and follow-up, (ii) detect and
identify redundant data across programs, screens, files and databases, (iii)
load and analyze data definitions and the structured query language embedded
within a program and provide drill-down capability to permit analysis of design
details, and (iv) permit users to export system-level cross reference
information into a relational database, to enable customized analysis and
reporting.
 
     SEEC COBOL Analyst 2000. COBOL Analyst 2000 is an enhanced version of COBOL
Analyst that contains all the capabilities of COBOL Analyst, as well as several
additional features that enable accurate identification of date fields in COBOL
programs, databases and screens. COBOL Analyst 2000 assists in all phases of
year 2000 conversion projects. COBOL Analyst 2000 generates impact analysis
reports and provides a cost model for estimating time, labor and conversion
requirements. COBOL Analyst 2000 supports IMS, DB2 and VSAM databases, and the
Company believes it is the only product of its type with support for ADABAS and
CA-IDMS databases. COBOL Analyst 2000 includes a feature to scan for date
patterns in order to locate date items and a synonym processing feature to
identify indirect references to date items.
 
     SEEC Smart Change 2000. Smart Change 2000 employs SEEC's extensive
knowledge base of commonly-used date rules to identify the items and statements
affected by the year 2000 and uses an expert system to select the appropriate
rule to be applied. Smart Change 2000 enables users to customize data logic
rules to meet specific requirements. Smart Change 2000 modifies the affected
date-related code, replacing it with year 2000-compliant code. All original
source code remains intact, and Smart Change 2000 changes are identified by tags
that mark the renovated code and explain why a correction was made. This type of
documentation allows developers to audit and verify changes made, and intervene
where necessary to perform manual code changes. This documentation also eases
the task of future reengineering on impacted code.
 
     SEEC COBOL Slicer. COBOL Slicer, which is derived from the Company's core
source code analysis technology, uses "program slicing" technology to increase
application reengineering productivity by providing understanding of business
rules embedded in legacy applications. COBOL Slicer allows customers to
understand the program, data structure and input/output screens of an
application. Business rules can then be identified by locating appropriate
slicing criteria and understanding the code slice, control flow and the logical
data model. COBOL Slicer also is being used for test planning, including test
planning for year 2000 problems. The test case generation option enables COBOL
Slicer to identify all of the application paths that need to be tested as a
result of changes made for the year 2000 problem.
 
     In order to address other legacy system reengineering needs, SEEC also has
developed other software products that are based on technology other than the
Company's core source code analysis technology:
 
     SEEC Natural Analyst 2000. Natural Analyst 2000 is a stand-alone software
product that parses and examines Natural/ADABAS applications in order to
efficiently and accurately identify date fields, maps and database descriptions.
Natural Analyst 2000 generates comprehensive year 2000 reports following
application analysis.
 
     SEEC Object Designer. Object Designer is a stand-alone product that also
can interface with the Company's core source code analysis technology. Object
Designer utilizes an object modeling technique to represent the business model
and generate the database design for relational databases such as Oracle and
Sybase. Object Designer allows the user to generate objects which are reusable
by applications in PC-based visual languages such as Microsoft's Visual Basic
and Sybase's Power Builder. The object model can be populated by mapping objects
to entities in the legacy application using the application dictionary. Object
Designer may be utilized in conjunction with COBOL Analyst, COBOL Slicer and/or
third party software tools to extract business rules to
 
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build reusable objects for client/server migration. The Company plans to
introduce this product for sale in fiscal 1999.
 
     SEEC Date Analyzer. Date Analyzer is a stand-alone product that uses
text-scanning technology to provide year 2000 impact analysis for non-COBOL
applications. Date Analyzer examines the various programs or source files across
languages using a pattern-matching process and then analyzes the language rules
to detect the items and statements which are potentially affected by the year
2000. Date Analyzer utilizes pre-defined language rules that enable it to
address different languages. Date Analyzer produces comprehensive reports and
helps produce a set of metrics used to create a cost estimation model for
non-COBOL source programs.
 
TRAINING, CONSULTING AND YEAR 2000 SERVICES
 
     The Company provides a variety of training and consulting services to its
customers for its enterprise solutions and software products. SEEC offers user
training at its own facilities or at the customer site. SEEC provides consulting
expertise in its software products, methodologies and project management. These
services enable customers to tailor SEEC's enterprise solutions to fit
individual requirements, including setting up a Smart Change Factory at a
customer site or at a third party service provider site. SEEC also operates
Smart Change Factories at customer sites or at its Pittsburgh, Pennsylvania
headquarters on a limited basis. SEEC also undertakes assessment and remediation
projects on a limited basis at its headquarters.
 
PRICING OF PRODUCTS AND PROFESSIONAL SERVICES
 
     SEEC's software products are typically licensed to customers. End-user
license agreements generally limit the use of products to a fixed number of
users. On average, the license fee to an end user for SEEC's suite of software
products ranges from $100,000 to $500,000, depending on the number of users,
platforms, languages and databases that must be supported.
 
     Product pricing for third party service providers, who typically have
established "factories" for year 2000 conversions for multiple customers, is
based on a line of code ("LOC") usage fee. Third party service providers
generally make a minimum initial purchase to establish a Smart Change Factory.
Additional fees paid by third party service providers vary based on the LOC
volume processed through the factory utilizing SEEC's software products and
enterprise solutions. The volume of LOC processed is monitored by the Company
through the use of programmed hardware keys that attach to the factory
computers. Recurring maintenance fees are charged both to end-user customers and
third party service providers based on the applicable list prices for the
software.
 
     The Company generally offers on-site training and consulting services on a
time-and-materials basis, although from time to time, the Company offers year
2000 assessment and remediation solutions on a fixed-price basis. These
fixed-price contracts are typically terminable by either party upon written
notice. Although the Company uses its past experiences to reduce the risks
associated with estimating, planning and performing fixed-price projects, the
Company has limited historical data on which to base such estimates. The
Company's failure to estimate accurately the resources, costs and time required
to complete a project or its failure to fulfill its contractual obligations
within the time allowed could result in cost overruns and reduced margins and
could have a material adverse effect on the Company's business, operating
results and financial condition.
 
CUSTOMER AND TECHNICAL SUPPORT
 
     SEEC offers maintenance for each of its products, which entitles the
customer to receive technical support and advice, including problem resolution
services, installation assistance, error corrections and any product
enhancements released during the maintenance period. SEEC's standard license
agreement does not require SEEC to provide maintenance for any period of time
and does not provide express or implied warranties for SEEC's product software.
Maintenance and support services are provided primarily by telephone or e-mail
from the Company's Pittsburgh, Pennsylvania headquarters.
 
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CUSTOMERS
 
     SEEC's products and services are used by information systems departments of
Fortune 1000 companies and similarly-sized business and governmental
organizations, and by third party service providers.
 
     Following is a partial list of customers and service providers that have
purchased products and/or services from SEEC:
 
<TABLE>
<CAPTION>
                               CUSTOMERS                                          SERVICE PROVIDERS
-----------------------------------------------------------------------  -----------------------------------
<S>                                       <C>                            <C>
Aluminum Company of America               Mack Trucks, Inc.              Complete Business
American Savings Bank                     Michigan Department of State     Solutions, Inc.
Anthem Insurance Companies, Inc.          Northern Illinois Gas Company  Computer Enterprises, Inc.
Avon Products, Inc.                       NOVUS Services                 Coopers & Lybrand LLP
Banc One Services Corporation             Olin Corporation               CyberTech International Corporation
Bank of New York                          Rockwell International         DMR Consulting Group, Inc.
BJC Health Systems Corporation              Corporation                  IBM Global Services
Dun & Bradstreet Europe Ltd.              Joseph T. Ryerson & Son, Inc.  INTERSOLV, Inc.
Firstar Information Services Corporation  Sallie Mae, Inc.               IMI Systems, Inc.
Foremost Insurance Company                University of Pittsburgh       Motorola Korea Limited
  (through IBM's Integrated Systems       USA Group, Inc.                Patni Computer Systems
  and Solutions Corp.)                    Weirton Steel Corporation      PKS Systems Integration, LLC
Harris Trust and Savings Bank             Wells Fargo Bank                 Private Limited
Hudson's Bay Company                      Wheeling-Pittsburgh Steel      Quasar Professionals
Human Resources Administration-             Corporation                  Satyam Computer Services Limited
  The City of New York                                                   Silverline Industries, Inc.
Human Resources Department-Canada                                        Synapse Computer Services, Inc.
Lucent Technologies, Inc.                                                Tata Infotech Limited
                                                                         UII Corporation
                                                                         Unisys Corporation
</TABLE>
 
     Historically, a relatively small number of customers have accounted for a
significant percentage of the Company's revenues. During fiscal 1996 and 1997,
revenues from Complete Business Solutions, Inc. (CBSI) were $330,000 and
$493,000, which accounted for 32% and 19%, respectively, of the Company's total
revenues in each of these years. Three other customers in fiscal 1996 accounted
for 32% of the Company's total revenues. During fiscal 1998, revenues from
INTERSOLV, Inc. (INTERSOLV) accounted for 11% of SEEC's total revenues, and nine
customers represented approximately 50% of the Company's total revenues. As the
Company continues to grow, the percentages derived from each customer will
continue to decrease as the Company enters into agreements with a broader range
of customers.
 
ACQUISITION
 
     ERA Software Systems Private Limited ("ERA"), a software development
company in India, provided certain research and development services to SEEC
since the Company's inception in 1988. ERA also served as the distributor of
SEEC's products in India and other markets, subject to royalty payments to SEEC
of 50% of the Company's suggested international list price for all products
distributed by ERA. In March 1996, SEEC and ERA had entered into a Product
Purchase Agreement and a Marketing Agreement to define the terms and conditions
of the research and development services and distribution rights, respectively.
The Product Purchase Agreement provided for the transfer to SEEC of ERA's 35%
ownership interest in jointly-owned products and technologies, and for ERA to
provide design and development work with respect to SEEC's products on a
non-exclusive, time-and-materials basis. In consideration of ERA's transfer of
its ownership interest in the products and technology, SEEC issued 226,305
shares of Common Stock to ERA.
 
     On February 27, 1998, SEEC and ERA entered into an agreement whereby ERA
transferred to SEEC its distribution rights for SEEC products, plus certain
fixed assets and 30 ERA employees engaged exclusively in SEEC-related research
and development, sales and administration, for consideration of approximately
$1,047,000. All Company-related research and development work performed by ERA
through the date of acquisition had been previously expensed by the Company as
incurred. The acquisition was effective at the close of business February 28,
1998, at which time the Product Purchase Agreement and Marketing Agreement were
 
                                        8
<PAGE>   11
 
terminated, and SEEC assumed control and responsibility for product distribution
and development efforts. Final closing of the acquisition is scheduled to take
place during the Company's first quarter of fiscal 1999. At closing, the
purchase price, consisting of approximately $1,042,000 in cash plus other
consideration valued at $5,000, will be remitted to ERA. SEEC Technologies Asia
Private Limited ("SEEC Asia") was formed as a wholly-owned subsidiary of SEEC to
effect the acquisition and to hold and manage the acquired rights, certain
assets and SEEC-related product development projects. See also "Research and
Development."
 
SALES, MARKETING AND DISTRIBUTION
 
     SEEC markets and sells its products and solutions directly through its
direct sales force and indirectly through third party service providers. To
support its sales efforts, SEEC utilizes a direct mail campaign supported by
promotion through trade articles and trade shows. In addition, SEEC enters into
software licenses and other arrangements with third party service providers such
as Complete Business Solutions, IBM, INTERSOLV and Unisys. These third party
service providers utilize the Company's solutions and software products in
connection with legacy system reengineering engagements, including year 2000
services. SEEC has granted several organizations the non-exclusive right to
market its products. In North and South America, SEEC sells and supports its
products and services from its Pittsburgh, Pennsylvania headquarters, its five
U.S. regional offices and through sales personnel located in two other U.S.
cities. Sales and support services are provided in Europe through the Company's
wholly-owned subsidiary, SEEC Europe Limited ("SEEC Europe"), which is based in
the London, England area. SEEC Europe also has a sales office in Munich,
Germany.
 
     SEEC sells and supports its products and services in the Asian and Pacific
Rim markets through SEEC Asia, its wholly-owned subsidiary in Hyderabad, India.
Prior to March 1, 1998, these markets had been served by ERA.
 
     As of March 31, 1998, SEEC and its subsidiaries had 36 employees engaged in
sales and marketing. In fiscal 1996, 1997 and 1998, approximately 4%, 16% and
21%, respectively, of the Company's revenues were from sales to customers
outside of the United States including sales to ERA.
 
     SEEC intends to continue to expand its sales and marketing effort by hiring
additional sales and marketing personnel, opening new sales offices and entering
into additional arrangements with third party service providers and
distributors. SEEC also intends to enter into additional distribution, license
and/or marketing agreements, particularly with service providers or strategic
systems integrators, for its software products. The Company is focused on
increasing the number of licenses of its year 2000 solutions and developing its
year 2000 solution customer base. The Company intends to leverage this customer
base to cross-sell other enterprise solutions and software products.
 
     In November 1993, SEEC entered into a five-year International Software
Marketing and License Agreement (the "VIASOFT Agreement") with VIASOFT, pursuant
to which SEEC granted VIASOFT a worldwide license to use and market all of
SEEC's products that address the COBOL maintenance market, including the COBOL
Analyst product line, but excluding the year 2000 products, under VIASOFT's
private label "ESW/PC". The license granted to VIASOFT limited exclusive
marketing rights through June 1, 1995 and non-exclusive rights thereafter.
Pursuant to the VIASOFT Agreement, VIASOFT paid SEEC a royalty of 30% of all
license or maintenance fees related to its distribution of SEEC's products up to
a maximum of $2 million, and thereafter a royalty of 25% of license fees and 30%
of maintenance fees related to SEEC's products. The VIASOFT Agreement permitted
SEEC to use VIASOFT's proprietary COBOL Parser Validation Suite to test SEEC's
products. In exchange, SEEC agreed to pay to VIASOFT a royalty of 5% of SEEC's
sales of products which contain or use a COBOL parser, subject to a maximum
royalty payment of $1 million and a minimum royalty payment of $100,000, during
the five-year period ending November 30, 1998.
 
     SEEC gave notice to VIASOFT on December 3, 1996 of its intention to
terminate the VIASOFT Agreement as a result of VIASOFT's not making minimum
royalty payments of at least $1 million during the 12 months preceding the third
anniversary of the date of the VIASOFT Agreement. SEEC received notice from
VIASOFT that it did not intend to extend the VIASOFT Agreement by making such
minimum payments and acknowledging that the VIASOFT Agreement would terminate
effective June 4, 1997.
 
                                        9
<PAGE>   12
 
     The VIASOFT Agreement had provided that, upon termination, the Company
would be obligated to deliver to VIASOFT that number of copies of the licensed
products equal to the balance of the advanced royalty divided by the applicable
licensed product royalty amount. At such time as these copies were delivered to
VIASOFT, the Company would recognize as income the balance of the advance
royalty. On June 30, 1997, the Company received formal notice from VIASOFT that
no further copies of the licenses products were to be delivered to VIASOFT, and
that the Company was relieved of such obligation under the terms of the VIASOFT
Agreement. Accordingly, the $780,552 balance of the advance royalty was
recognized as software license revenue in the quarter ended June 30, 1997.
 
COMPETITION
 
     The market for SEEC's enterprise solutions and software products, including
products and solutions for the year 2000 problem, is intensely competitive and
is characterized by rapid change in technology and user needs and the frequent
introduction of new products. SEEC's principal competitors in the software
products market include Computer Associates International, Inc., Compuware
Corp., MicroFocus Group Public Limited Company, Peritus Software Services, Inc.
and VIASOFT. Many of the Company's potential customers are outsourcing their
year 2000 conversion work to outside service providers. Accordingly, the Company
also competes indirectly, and its third party service providers compete
directly, with large service providers such as Cap Gemini America, Computer
Horizons Corp., IBM Global Services, Information Management Resources Inc. and
Keane, Inc. Certain of these service providers have developed or acquired
proprietary software products that compete directly with the Company's software
products. Many of the Company's competitors are more established, benefit from
greater name recognition and have substantially greater financial, technical and
marketing resources than the Company.
 
     SEEC believes that the principal factors affecting competition in its
markets include product performance and reliability, product functionality,
ability to respond to changing customer needs, ease of use, training, quality of
support and price. Other than technical expertise and, with respect to the year
2000 solutions market, the limited time remaining until the year 2000 arrives,
there are no significant proprietary or other barriers to entry that could
prevent potential competitors from developing or acquiring similar software
products or providing competing solutions in the Company's market.
 
RESEARCH AND DEVELOPMENT
 
     The Company intends to continue to enhance its current products and to
develop, acquire or license new products or technology to keep pace with
evolving industry standards and technological developments and to provide
additional functionality to address changing customer needs. This may require,
among other things, that the Company build interfaces with third party products.
 
     In the latter half of fiscal 1998, the Company began to direct most of its
research and development efforts towards adapting its core source code analysis
technology to provide an expanded offering of enterprise solutions. Natural
extensions and applications of the Company's core technology include
reengineering solutions for legacy systems for client/server migration, Web
enablement, data warehousing, and the Euro currency conversion. The Company
believes that each of these potential reengineering solutions represents a
significant market and revenue opportunity.
 
     SEEC's development of new products over the last three years has been
accomplished primarily with in-house development personnel and resources, and in
conjunction with ERA. The initial development of SEEC's COBOL maintenance
products was funded in part by a grant from Industrial Credit and Investment
Corporation of India, Ltd. ("ICICI") pursuant to the Cooperation and Project
Financing Agreement among ICICI, SEEC and ERA. The Cooperation and Project
Financing Agreement provided for joint ownership by SEEC and ERA of all products
developed with funds provided thereunder. In March 1996, SEEC and ERA entered
into a Product Purchase Agreement (the "Product Purchase Agreement"), pursuant
to which ERA transferred its ownership interest in SEEC's products and
technologies to SEEC and agreed to assist SEEC in developing new products and
technologies. Pursuant to the Product Purchase Agreement, ERA had the
nonexclusive right to perform design and development work with respect to SEEC's
products pursuant to specified development schedules. In addition,
 
                                       10
<PAGE>   13
 
ERA had agreed to maintain in India the necessary infrastructure and personnel
to support such design and development work. ERA had also agreed to transfer to
SEEC the necessary manpower for product support and to maintain a team of
personnel in India for maintenance of SEEC's products.
 
     ERA's research and development employees and related assets, along with
certain other rights and assets, were transferred to SEEC's control effective at
the close of business on February 28, 1998, in an acquisition effected by SEEC
Asia. See "Sales, Marketing and Distribution."
 
     As of March 31, 1998, SEEC had 26 employees engaged in product development,
including 15 employees of SEEC Asia. During fiscal 1996, 1997 and 1998, research
and development expenditures, including research and development fees paid to
ERA, were $337,000, $428,000, and $1,105,000, respectively. The Company
anticipates that it will continue to commit substantial resources to research
and development in the future.
 
INTELLECTUAL PROPERTY
 
     SEEC relies on a combination of copyright, trade secret and trademark laws,
and contractual provisions to establish and protect its rights in its software
products and proprietary technology. The Company protects the source code
version of its products as a trade secret and as an unpublished copyrighted
work. Despite these precautions, it may be possible for unauthorized parties to
copy certain portions of the Company's products or reverse engineer or obtain
and use information that the Company regards as proprietary. The Company has no
patents, and existing copyright and trade secret laws offer only limited
protection. Certain provisions of the license and distribution agreements
generally used by the Company, including provisions protecting against
unauthorized use, copying, transfer and disclosure, may be unenforceable under
the laws of certain jurisdictions, and the Company is required to negotiate
limits on these provisions from time to time. In addition, the laws of some
foreign countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States. The Company has been and may be
required from time to time to enter into source code escrow agreements with
certain customers and distributors, providing for release of source code in the
event the Company breaches its support and maintenance obligations, files
bankruptcy or ceases to continue doing business.
 
     The Company's competitive position may be affected by its ability to
protect its proprietary information. However, because the software industry is
characterized by rapid technological change, the Company believes that patent,
trademark, copyright, trade secret and other legal protections are less
significant to the Company's success than other factors such as the knowledge,
ability and experience of the Company's personnel, new product and service
development, frequent production enhancements, customer service and ongoing
product support.
 
     While the Company has no knowledge that it is infringing the proprietary
rights of any third party, there can be no assurance that such claims will not
be asserted in the future with respect to existing or future products. Any such
assertion by a third party could require the Company to pay royalties, to
participate in costly litigation and defend licensees in any such suit pursuant
to indemnification agreements or to refrain from selling an alleged infringing
product or service. See "Factors that May Affect Future Results -- Dependence on
Proprietary Rights."
 
     Smart Change Factory(R), SEEC Date Analyzer(R), SEEC COBOL Analyst(R), SEEC
COBOL Slicer(R) and SEEC COBOL Analyst 2000(R) are registered U.S. trade marks
or service marks of the Company. Applications for U.S. registrations of the
marks SEEC Smart Change 2000(TM), SEEC Natural Analyst 2000(TM), SEEC
AccuFind(TM), SEEC AccuFix(TM) and SEEC AccuTest(TM) are pending.
 
EMPLOYEES
 
     As of March 31, 1998, SEEC and its subsidiaries had 108 employees,
including 36 in sales and marketing, 26 in research and development, nine in
customer support, 21 in professional services and 16 in corporate operations and
administration worldwide. The Company's continued success will depend, in part,
upon its ability to hire and retain key senior management and skilled technical,
professional services and sales and marketing personnel. The market for
qualified personnel has historically been, and the Company expects that it will
continue
 
                                       11
<PAGE>   14
 
to be, intensely competitive. None of SEEC's employees is represented by a
collective bargaining agreement. SEEC believes that its relations with its
employees are favorable.
 
FACTORS THAT MAY AFFECT FUTURE RESULTS
 
     Significant Fluctuations in Quarterly Operating Results.  The Company has
experienced, and expects to continue to experience, significant fluctuations in
its quarterly operating results. There can be no assurance that the Company will
be profitable in any particular quarter. Quarterly operating results may
fluctuate due to a variety of factors, including the budgeting and purchasing
practices of the Company's customers, which affect the volume and timing of
product orders and solution engagements received by the Company, the timing of
the announcement and introduction of new products and product enhancements by
the Company and competitors, market acceptance of new products, the mix of
direct and indirect sales, the mix of license fee and services revenues, the mix
of maintenance, training and consulting services within services revenues, the
number and timing of new hires, the loss of any key, sales, marketing or
professional services personnel, the length of its sales cycles, competitive
conditions in the industry and general economic conditions. The Company has
historically recognized a significant portion of its revenues in the last month
of a quarter, with these revenues frequently concentrated in the last week of a
quarter. As a result, license fee revenue in any quarter is substantially
dependent on orders booked and shipped in the last month and last week of that
quarter. Further, the Company's enterprise solutions business is expected to be
characterized by significant customer concentration and relatively large
projects. The Company operates with little or no backlog and, as a result, the
Company's revenues for a particular quarter are generally dependent on orders
received during that quarter, including large orders. The failure to receive a
large order in a given quarter could materially and adversely affect the
Company's operating results for that quarter. The Company's expenses are based,
in part, upon anticipated revenue levels and planned projects, and the Company
may not be able to adjust spending in a timely manner to compensate for any
unexpected shortfall in revenues. Accordingly, the timing of product shipments
or achievement of specified performance milestones on certain customer solution
engagements could cause variations in operating results from period to period
and could result in quarterly losses if shipments are not made or milestones are
not achieved within the quarter. Due to the foregoing factors, the Company
believes that quarter-to-quarter comparisons of its financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance. The Company has limited ability to forecast future revenues, and it
is likely that in some future quarters, the Company's operating results will be
below the expectations of securities analysts and investors. In the event that
operating results are below expectations, or in the event that adverse
conditions prevail or are perceived to prevail generally or with respect to the
Company's business, operating results or financial condition, the price of the
Company's Common Stock would likely be materially and adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
 
     Volatility of Stock Price.  The market prices of companies addressing the
year 2000 problem, including the Company, have been highly volatile. The market
price of the Common Stock is likely to continue to be highly volatile and may
increase or decrease significantly as a result of factors such as actual or
anticipated fluctuations in the Company's operating results, general conditions
in the computer hardware and software industries, announcements of new products,
technological innovations or new contracts by the Company or by its competitors,
developments with respect to patents, copyrights or proprietary rights, general
market conditions and other factors. A contributing factor to the volatility is
the relatively low volume of shares of Common Stock available for trading or
traded in a given time period. Low volume trading can significantly affect the
market price. In addition, in recent years the stock market in general, and the
shares of technology companies in particular, have experienced extreme price
fluctuations. These broad market and industry fluctuations, over which the
Company has no control, may materially and adversely affect the market price of
the Common Stock. In addition, shortfalls in sales or earnings as compared with
securities analysts' expectations, changes in such analysts' recommendations or
projections and general economic conditions may materially and adversely affect
the market price of the Common Stock.
 
     Dependence on Year 2000 Solutions; Need to Develop Additional Products and
Solutions.  Through fiscal 1998, the Company generated substantially all of its
revenues from its year 2000 solutions, and such solutions are expected to
continue to account for a significant portion of the Company's revenues for the
next few years.
                                       12
<PAGE>   15
 
Accordingly, the Company's operating results will depend, in large part, on
achieving broader market acceptance for such solutions. A failure to increase
demand for such solutions or an increase in market competition for such
solutions would have a material adverse effect on the Company's operating
results and financial condition. Although the Company believes that the demand
for its year 2000 solutions will continue to exist for some time after the year
2000, this demand will diminish significantly over time and will eventually
disappear. In order to achieve sustained growth, the Company must develop and
successfully market new products and solutions to address additional markets.
The Company's strategy is to leverage the market recognition and business
relationships it achieves through sales of its year 2000 solutions to enhance
its efforts in other markets. There can be no assurance, however, that the
Company will be successful in generating business by selling new products or
solutions to its year 2000 customers or new customers, or, if it is, that such
products and solutions will achieve market acceptance at a rate sufficient to
maintain growth, or even to offset declines in year 2000-related revenues.
SEEC's core technology incorporated in its year 2000 solutions may be utilized
by SEEC's customers for additional reengineering tasks in the future. However,
there can be no assurance that such customers will utilize SEEC's core
technology for non-year 2000 reengineering tasks or that significant revenues
will result from such utilization.
 
     The Company has developed products for the migration of existing COBOL
software applications from legacy systems to client/server architectures. The
Company has not yet attempted to market and sell such products to date, and
there can be no assurance that they will achieve market acceptance in the
future. The Company anticipates that migration from legacy systems to
client/server systems will be gradual, particularly for large customized
applications. Many organizations perceive a high degree of risk and expense in
migrating entire applications from a mainframe environment to a client/server
system. The Company has not yet developed enterprise solutions or developed or
commercialized software products designed specifically for integration of legacy
systems with client/server systems including ERP packaged software, data
warehousing or data mining systems, or for Web enablement of legacy systems, and
there is no assurance that the Company will be able to adapt its existing
products and solutions to these problems. The market for such products and
solutions may not develop to the extent or in the time periods anticipated by
the Company. See "Business." The failure to diversify and develop additional
products and solutions would have a material adverse effect on the Company's
business, operating results and financial condition.
 
     Uncertainty of Current and Future Demand for Year 2000 Solutions.  The
Company is currently focusing a significant portion of its efforts on the
marketing and sale of products and enterprise solutions for year 2000
assessment, planning, remediation and testing. Although the Company believes
that the market for products and solutions addressing the year 2000 problem will
grow significantly as the year 2000 approaches, there can be no assurance that
this market will develop to the extent anticipated by the Company. In addition,
organizations affected by the year 2000 problem may not be willing or able to
allocate the financial or other resources required to address the problem in a
timely manner. Many organizations may attempt to resolve the problem internally
rather than purchase products and solutions from the Company or its competitors.
Due to these factors, development of the market for products and solutions
addressing the year 2000 problem is uncertain and unpredictable. If the market
fails to increase, or increases more slowly than anticipated, the Company's
business, operating results and financial condition could be materially and
adversely affected.
 
     The Company's year 2000 solutions provide automated solutions for many year
2000 assessment, planning, remediation and testing tasks and procedures. There
can be no assurance that potential customers will perceive the benefits of such
automation of various year 2000 conversion tasks, and therefore they may decide
to perform manually all aspects of the year 2000 solution process. In addition,
many other organizations may outsource such work to outside service providers
that use their own software products or license products from the Company's
competitors. See "Business."
 
     Ability to Manage Change and Rapid Growth.  The Company has recently
experienced significant changes in its business, such as the development of new
products and solutions, including year 2000 solutions, significant revenue
growth and expansion of operations. These changes have placed, and are expected
to continue to place, significant demands on its management, operational and
financial resources. The Company has been expanding its direct sales force;
however, the failure of such personnel to perform as anticipated and achieve
their sales
 
                                       13
<PAGE>   16
 
goals, or any delay in achieving such goals could have a material adverse effect
on the Company's business, operating results and financial condition. The
Company also intends to also expand its operations by opening new offices in new
geographic regions. No assurance can be given that such new offices will be
successful in generating additional revenues, or that any such revenues will be
sufficient to cover the costs of opening and operating such offices. The
Company's future growth, should it occur, may require the Company to manage a
number of large projects in different geographic locations. There can be no
assurance that the Company will be able to do so effectively. The Company's
failure to do so could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, the development of the
market for products and solutions addressing the year 2000 problem is uncertain,
unpredictable and subject to rapid change. The Company's failure to respond to
such change and adapt its solutions and strategies accordingly could have a
material adverse effect on the Company's business, operating results and
financial condition. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."
 
     Ability to Address Technological Changes and Customer Requirements; New
Products and Solutions.  The Company's future success will depend, in large
part, on its ability to enhance its current products and develop or acquire new
products to keep pace with evolving industry standards and technological
developments and to provide additional functionality to address changing
customer needs. This will require, among other things, that the Company build
interfaces with third party products and adapt to changing industry standards.
There can be no assurance that the Company will be successful in developing or
acquiring product enhancements or new products, that it can introduce such
products or enhancements on a timely basis, or that any such products or
enhancements will be successful in the marketplace. The Company's delay or
failure to develop or acquire products that keep pace with evolving industry
standards and technological developments or provide additional functionality to
address changing customer needs could have a material adverse effect on its
business, operating results and financial condition. In addition, there can be
no assurance that such products or enhancements will meet the requirements of
the marketplace or achieve market acceptance, or that new technologies will not
be developed by one or more third parties that render the Company's products and
solutions obsolete. See "Business -- Research and Development."
 
     Intense Competition.  The market for the Company's enterprise solutions and
software products, and in particular its products and solutions for the year
2000 problem, is intensely competitive and is characterized by rapid change in
technology and user needs and the frequent introduction of new products and
solutions. The Company's principal competitors in the software products market
include Computer Associates International, Inc., Compuware Corp., MicroFocus
Group Public Limited Company, Peritus Software Services, Inc. and VIASOFT, Inc.
Many of the Company's potential customers are outsourcing their year 2000
conversion work to outside service providers. Accordingly, the Company also
competes indirectly, and its third party service providers compete directly,
with large service providers such as Cap Gemini America, Computer Horizons
Corp., IBM Global Services, Information Management Resources Inc. and Keane,
Inc. Certain of these service providers have developed or acquired proprietary
software products. In addition, certain of these service providers have elected
to use software products offered by the Company's competitors and may be unable
or unwilling to change software vendors. Many of the Company's competitors are
more established, benefit from greater name recognition and have substantially
greater financial, technical and marketing resources than the Company. In
addition, there can be no assurance that the Company's competitors will not form
joint ventures, business combinations or other strategic alliances and develop
or offer comprehensive enterprise solutions which further compete with the
Company's products and solutions. The announcement of such developments prior to
release may result in potential customers delaying their purchasing decisions
while they evaluate the new competitive products. Certain of the Company's
current or potential competitors also serve as sales channels for the Company's
products and solutions and may elect to discontinue their sales efforts for the
Company's products or solutions or to commence or increase their promotional and
sales efforts for their own products and solutions. The Company believes that
the principal factors affecting competition in its markets include product
performance and reliability, product functionality, ability to respond to
changing customer needs, ease of use, training, quality of support and price.
Other than technical expertise and, with respect to the year 2000 solutions
market, the limited time available to enter the market, there are no significant
proprietary or other barriers to entry that could keep
 
                                       14
<PAGE>   17
 
potential competitors from developing or acquiring similar products or providing
competing solutions in the Company's market.
 
     The Company's ability to compete successfully in the sale of enterprise
solutions and software products will depend in large part upon its ability to
attract new customers, expand its direct sales force and its indirect sales and
marketing channels, deliver and support product enhancements to its existing and
new customers and respond effectively to continuing technological change by
developing new solutions and products. There can be no assurance that the
Company will be able to compete successfully in the future, or that future
competition for product sales and solutions or other competitive factors will
not have a material adverse effect on the Company's business, operating results
and financial condition. See "Business -- Competition."
 
     Potential for Product Liability.  The Company's enterprise solutions and
products often are utilized to perform reengineering functions on
mission-critical components of its customers' information systems. The programs
and data contained in these systems are often necessary for the continuation of
the customer's business and are critical to the operations and financial
performance of the customer. Any failure of these systems could have a material
adverse effect upon the Company's customers and could result in a claim for
substantial damages against the Company, regardless of the Company's
responsibility for such failure. In connection with the license of its products
and the sale of its services, the Company attempts to contractually limit its
liability for damages arising from negligent acts, errors, mistakes or
omissions. Despite this precaution, there can be no assurance that the
limitations of liability set forth in its customer contracts would be
enforceable or would otherwise protect the Company from liability for damages.
Additionally, the Company maintains general liability insurance coverage with
limits of $1 million per occurrence and $1 million aggregate coverage and excess
liability insurance coverage with limits of $6 million per occurrence and $6
million aggregate coverage. However, there can be no assurance that such
coverage will continue to be available on acceptable terms or will be sufficient
to cover one or more large claims, or that the insurer will not disclaim
coverage as to any future claim. The successful assertion of one or more large
claims against the Company that exceed available insurance coverages, or changes
in the Company's insurance policies, such as premium increases or the imposition
of large deductible or co-insurance requirements, could have a material adverse
effect on the Company's business, operating results and financial condition.
 
     Risks Associated with Sales Channels.  The Company's ability to achieve
significant revenue growth in the future will depend, in part, on its success in
recruiting and training sufficient direct sales personnel and expanding the
number of third party service providers which utilize or market the Company's
products. Although the Company is currently investing, and plans to continue to
invest, significant resources to develop and expand its direct sales force and
expand its network of third party service providers, the Company has at times
experienced and may continue to experience difficulty in recruiting qualified
personnel for its direct sales force and forming or maintaining relationships
with third party service providers. There can be no assurance that the Company
will be able to maintain or successfully expand its direct sales force or
network of service providers, or that any such expansion will result in an
increase in revenue. Any failure by the Company to expand its direct sales force
or network of service providers could have a material adverse effect on the
Company's business, operating results and financial condition. The Company's
agreements with its third party service providers are generally non-exclusive,
and some may be terminated by either party without cause. The Company's third
party service providers are not within the control of the Company, are not
obligated to purchase products from the Company and may also offer their own
product lines and solutions or represent or refer product lines or solutions
offered by the Company's competitors. There can be no assurance that these
service providers will continue their current relationships with the Company, or
that they will not give higher priority to the sale or referral of other
products or solutions, including products or solutions of the Company's
competitors. A reduction in sales efforts or discontinuance of sales or
referrals of the Company's products by third party service providers could lead
to reduced sales and could materially and adversely affect the Company's
business, operating results and financial condition. Certain of the Company's
current or potential competitors also serve as sales channels for the Company's
solutions and may elect to discontinue their sales efforts related to the
Company's products or solutions or to commence or increase promotional and sales
efforts for their own products and solutions.
 
                                       15
<PAGE>   18
 
     The Company's strategy of marketing its products directly to end users and
indirectly through third party service providers may result in distribution
channel conflicts. The Company's direct sales efforts may compete with those of
its indirect sales channels and, to the extent one or more third party service
provider targets the same customer, such service providers may come into
conflict with each other. There can be no assurance that channel conflicts will
not materially and adversely affect the Company's relationships with its
customers or third party service providers or its ability to attract additional
service providers.
 
     Reliance on Certain Relationships.  The Company has established strategic
relationships with a number of organizations that it believes are important to
its worldwide sales, marketing and support activities. The Company's
relationships with its service providers such as CBSI, IBM, INTERSOLV, and
Unisys expand the distribution of its products. There can be no assurance that
the Company's service providers, many of which have significantly greater
financial and marketing resources than the Company, will not develop or market
software products which compete with the Company's products in the future or
will not otherwise discontinue their relationships with, or support of, the
Company. The failure by the Company to maintain its existing relationships or to
establish new relationships in the future could have a material adverse effect
of the Company's business, operating results and financial condition.
 
     Dependence on Offshore Software Development.  A significant element of the
Company's business strategy is to continue to leverage its investment in its
Indian operations, now controlled by SEEC Asia. SEEC believes that the use of an
offshore software development center will provide the Company with a potential
cost advantage over some of its competitors. In the past, India has experienced
significant inflation and other economic difficulties and has been subject to
significant currency fluctuations. The Indian government has exercised and
continues to exercise significant influence over many aspects of the Indian
economy, and Indian government actions concerning the economy could have a
material adverse effect on private sector entities. During the past several
years, India's government has provided significant tax incentives and relaxed
certain regulatory restrictions in order to encourage foreign investment in
specified sectors of the economy, including the software development industry.
Certain of those benefits which have directly affected the Company include,
among others, tax holidays, liberalized import and export duties, and
preferential rules concerning foreign investment and repatriation.
Notwithstanding these benefits, however, India's central and state governments
continue to impose significant regulatory restrictions. The elimination of any
of these benefits could have a material adverse effect on the Company's
business, operating results and financial condition. Further, no assurance can
be given that the Company will not be materially and adversely affected by
future changes in inflation, interest rates, currency valuation, taxation,
social stability or other political, economic or diplomatic developments in or
affecting India. Recently, the U.S. government announced that it would impose
economic sanctions against India in response to its May 1998 underground nuclear
weapons tests. Although these sanctions have not had a material impact on the
Company's operations, the actual extent of the sanctions and the future impact
of such sanctions cannot be ascertained at this time. It is possible that in the
future, such sanctions may have a material adverse effect
on the Company's business, results of operations and financial condition. See
"Business -- Research and Development."
 
     Risk of Doing Business in International Markets.  In fiscal 1997 and fiscal
1998, approximately 16% and 18%, respectively, of the Company's revenues were
from international customers, including sales to ERA. The Company expects that
international revenues will account for an increasingly significant percentage
of the Company's revenues. The Company has formed wholly-owned subsidiaries in
the United Kingdom and India and plans to expand its operations in international
markets. As a result, the Company will be subject to a number of risks,
including, among other things, difficulties relating to administering its
business globally, managing foreign operations, currency fluctuations,
restrictions against the repatriation of earnings, export requirements and
restrictions, and multiple and possibly overlapping tax structures. In addition,
from time to time, the Company may experience a decrease in revenues in certain
foreign countries as a result of general economic conditions in such countries.
These risks could have a material adverse effect on the Company's business,
operating results and financial condition. In addition, acceptance of the
Company's products in certain international markets may require exclusive,
time-consuming and costly modifications to the Company's products to localize
the products for use in particular markets. Any earnings generated in countries
other than the United States may be
 
                                       16
<PAGE>   19
 
permanently invested outside the United States or may be subject to considerable
taxation if repatriated to the United States. The Company presently generates
most of its revenue in U.S. dollars. In the future, the Company may incur
significant costs in foreign currencies to enhance its marketing, sales and
distribution in other countries. Accordingly, the Company is subject to risks
that, as a result of currency fluctuations, the translation of foreign
currencies into U.S. dollars for accounting purposes could adversely affect its
operating results. Historically, the Company's foreign exchange transactions
have not been significant.
 
     Dependence on Key Personnel.  The Company's success will depend, in part,
upon its ability to hire and retain key senior management and skilled technical,
professional services and sales and marketing personnel. In particular, the
Company's operations, including its strategic direction, sales and development
efforts, are dependent on Ravindra Koka, the Company's President and Chief
Executive Officer. Although the Company believes it will be able to hire
qualified personnel for such purposes, an inability to do so could materially
and adversely affect the Company's ability to market, sell, develop and enhance
its enterprise solutions and products. The market for qualified personnel has
historically been, and the Company expects that it will continue to be,
intensely competitive, and the process of locating and hiring qualified
personnel can be difficult, time-consuming and expensive. Specifically, the
demand for experienced COBOL project managers and programmers is expected to
continue to increase significantly over the next several years, particularly as
a result of the year 2000 problem. Many of the Company's IT professionals are
citizens of other countries, with most of those working in the U.S. under H-1B
temporary visas. Under current law, there is a statutory limit on new H-1B visas
that may be issued in a given year. If the Company is unable to obtain H-1B
visas for its employees in sufficient quantities or at a sufficient rate for a
significant period of time, the Company's business, operating results and
financial condition could be materially and adversely affected.
 
     The Company has been hiring, and intends to continue to hire, sales
managers and other senior management personnel. The Company's success will
depend in part on the successful assimilation and performance of these
individuals. The loss of one or more of its key employees, in particular, Mr.
Koka, or the Company's inability to hire and retain other qualified employees
could have a material adverse effect on the Company's business, operating
results and financial condition. The Company has employment agreements with
certain key employees, including Mr. Koka, but does not maintain key man life
insurance on any its employees.
 
     Dependence on Proprietary Rights.  The Company's success is heavily
dependent upon its proprietary technology. The Company regards its enterprise
solutions and software products as proprietary and attempts to protect them
under a combination of copyright, trade secret and trademark laws as well as by
contractual restrictions on employees and third parties. Despite these
precautions, it may be possible for unauthorized parties to copy the Company's
software or to reverse engineer or otherwise obtain and use information the
Company regards as proprietary. The Company has no patents, and existing trade
secret and copyright laws provide only limited protection. Certain provisions of
the license and distribution agreements generally used by the Company, including
"shrink-wrap" license agreements, which contain provisions protecting against
unauthorized use, copying, transfer and disclosure, may be unenforceable under
the laws of certain jurisdictions, and the Company is required to negotiate
limits on these provisions from time to time. Policing unauthorized use of the
Company's products is difficult, and while the Company is unable to determine
the extent to which piracy of its software exists, software piracy is expected
to be a persistent problem, particularly in international markets and as a
result of the growing use of the Internet. Certain third parties have been
provided access to the source code for certain of the Company's products. Such
access to source code may increase the possibility of misappropriation or misuse
of the Company's software. The Company's close relationship with certain third
party service providers increases the risk that such providers may attempt to
use the Company's proprietary products and methodologies to develop their own
solutions that compete with those of the Company. In addition, the laws of some
foreign countries do not protect the Company's proprietary rights to the same
extent as do the laws of the United States. There can be no assurance that the
steps taken by the Company will be adequate to deter misappropriation of
proprietary information, or that the Company will be able to detect unauthorized
use and take appropriate steps to enforce its intellectual property rights. In
addition, the Company's solutions depend, to a certain extent, on the ability of
the Company to build interfaces with third party software products, which are
subject to the proprietary rights of such third parties. There can be no
assurance that such third parties will continue to support or update
 
                                       17
<PAGE>   20
 
such products, or that the Company will continue to have the access to such
products necessary to offer the interfaces as a component of the Company's
solutions.
 
     Significant and protracted litigation may be necessary to protect the
Company's proprietary rights, to determine the scope of the proprietary rights
of others or to defend against claims for infringement. The Company is not aware
that any its products, trademarks or other proprietary rights infringe the
proprietary rights of third parties, and the Company is not currently involved
in any litigation with respect to proprietary rights. Infringement claims
against software developers are likely to increase as the number of functionally
similar products in the market increases. There can be no assurance that third
party claims, with or without merit, alleging infringement will not be asserted
against the Company in the future. Such assertions, whether with or without
merit, can be time consuming and expensive to defend and could require the
Company to cease the use and sale of infringing products, trademarks or
technologies, to incur significant litigation costs and expenses and to develop
or acquire non-infringing technology or to obtain licenses to the alleged
infringing technology. There can be no assurance that the Company would be able
to develop or acquire alternative technologies or to obtain such licenses on
commercially acceptable terms or at all, which could have a material adverse
effect on the Company's business, operating results and financial condition. See
"Business -- Intellectual Property."
 
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
 
     Except for historical information contained herein, this Form 10-K contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act, and the Company intends that such
forward-looking statements be subject to the safe harbors created thereby. Such
forward-looking statements involve risks and uncertainties and include, but are
not limited to, statements regarding future events and the Company's plans and
expectations. The Company's actual results may differ materially from such
statements. Factors that cause or contribute to such differences include, but
are not limited to, those discussed above in "Factors That May Affect Future
Results," as well as those discussed elsewhere in this Form 10-K and the
documents incorporated herein by reference. Although the Company believes that
the assumptions underlying its forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in such forward-looking statements will be
realized. In addition, as disclosed above under "Factors That May Affect Future
Results," the business and operations of the Company are subject to substantial
risks which increase the uncertainties inherent in the forward-looking
statements included in this Form 10-K. The inclusion of such forward-looking
information should not be regarded as a representation by the Company or any
other person that the future events, plans or expectations contemplated by the
Company will be achieved.
 
ITEM 2. PROPERTIES
 
     SEEC's principal administrative, research and development, customer support
and marketing facilities are located in approximately 16,000 square feet of
office space located within the greater Pittsburgh metropolitan area. The
Company relocated to its new headquarters in March 1998. The current lease
agreement expires in February 2003. In addition, SEEC leases office space for
regional sales offices located in or near Boston, Massachusetts; Chicago,
Illinois; Cincinnati, Ohio; Dallas, Texas and Washington, DC. SEEC also leases
office space in London, England and in Munich, Germany for its European
operations, and in Hyderabad, India, for its Asian operations. The Company
anticipates that additional facilities will be required in the future and
believes that it will be able to obtain suitable additional space as needed.
 
ITEM 3. LEGAL PROCEEDINGS
 
     SEEC is not a party to any material litigation.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1998.
 
                                       18
<PAGE>   21
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
 
     From January 22, 1997, the effective date of the Company's initial public
offering, through May 7, 1997, the Common Stock of the Company was traded on the
Nasdaq SmallCap Market tier of the Nasdaq Stock Market under the symbol "SEEC."
Beginning May 8, 1997 the Company's Common Stock began trading on the Nasdaq
National Market under the same symbol. The following table sets forth the range
of high and low sale prices of the Common Stock as reported on the Nasdaq Market
for the periods indicated.
 
          FISCAL YEARS ENDED MARCH 31,
 
<TABLE>
<CAPTION>
                                                              HIGH      LOW
                                                             ------    ------
<S>                                                          <C>       <C>
1997:
Fourth quarter (commencing January 22).....................  $11.25    $ 8.00
1998:
First quarter..............................................  $24.00    $ 8.13
Second quarter.............................................  $37.38    $16.38
Third quarter..............................................  $29.50    $14.00
Fourth quarter.............................................  $22.75    $11.25
1999:
First quarter (through May 29).............................  $15.88    $ 9.31
</TABLE>
 
     As of May 29, 1998, there were approximately 3,600 beneficial owners of the
Company's Common Stock.
 
     The Company has never declared or paid cash dividends on its capital stock
and does not anticipate paying any cash dividends in the foreseeable future. The
Company currently anticipates that it will retain future earnings, if any, to
fund its operations.
 
                                       19
<PAGE>   22
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                         FISCAL YEARS ENDED MARCH 31
                                               -----------------------------------------------
                                                1994      1995      1996      1997      1998
                                               ------    ------    ------    ------    -------
                                                    (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                            <C>       <C>       <C>       <C>       <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
  Software license and maintenance fees......  $  460    $  393    $  372    $1,242    $10,397
  Professional services -- product related...      41        42       181       776      1,832
  Professional services -- other.............     363       350       476       605        187
                                               ------    ------    ------    ------    -------
          Total revenues.....................     864       785     1,029     2,623     12,416
                                               ------    ------    ------    ------    -------
Operating expenses:
  Cost of revenues:
     Software license and maintenance fees...      91        92       102       252      1,434
     Professional services -- product
       related...............................      10        14        59       470      1,507
     Professional services -- other..........     255       243       439       513        178
                                               ------    ------    ------    ------    -------
          Total cost of revenues.............     356       349       600     1,235      3,119
  General and administrative.................     149       132       142       442      1,753
  Sales and marketing........................     215       236       237       999      4,342
  Research and development...................     317       407       337       428      1,105
                                               ------    ------    ------    ------    -------
          Total operating expenses...........   1,037     1,124     1,316     3,104     10,319
                                               ------    ------    ------    ------    -------
Income (loss) from operations................    (173)     (339)     (287)     (481)     2,097
                                               ------    ------    ------    ------    -------
Interest income (expense), net:
  Interest expense...........................     (50)      (63)      (75)      (50)       (26)
  Interest income............................       1         6        20       135        804
                                               ------    ------    ------    ------    -------
          Total interest income (expense),
            net..............................     (49)      (57)      (55)       85        778
                                               ------    ------    ------    ------    -------
Income (loss) before income taxes............    (222)     (396)     (342)     (396)     2,875
Provision for income taxes...................      --        --        --        --        365
                                               ------    ------    ------    ------    -------
Net income (loss)............................  $ (222)   $ (396)   $ (342)   $ (396)   $ 2,510
                                               ======    ======    ======    ======    =======
Net income (loss) per common share(1):
  Basic......................................  $ (.10)   $ (.18)   $ (.15)   $ (.13)   $   .49
  Diluted....................................  $ (.10)   $ (.18)   $ (.15)   $ (.13)   $   .46
Weighted average number of common and common
  equivalent shares outstanding(1):
  Basic......................................   2,263     2,264     2,270     3,037      5,145
  Diluted....................................   2,263     2,264     2,270     3,037      5,417
</TABLE>
 
---------------
 
(1) The Company has adopted Statement of Financial Accounting Standards No. 128,
    "Earnings per Share" ('SFAS 128'). This statement established new guidelines
    for calculating earnings per share. The Company's Earnings (Loss) per Common
    Share figures have been restated to conform with the provisions of SFAS 128.
 
<TABLE>
<CAPTION>
                                                                AS OF MARCH 31
                                                -----------------------------------------------
                                                1994      1995      1996      1997       1998
                                                -----    ------    ------    -------    -------
                                                                (IN THOUSANDS)
<S>                                             <C>      <C>       <C>       <C>        <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
  investments.................................  $  45    $  328    $  111    $12,799    $30,828
Working capital...............................      6       187       128     13,151     32,107
Total assets..................................    235       583       429     14,058     39,255
Advance royalty...............................    159       698       796        781         --
Total long-term obligations...................    810       858     1,042        150         --
Total shareholders' equity (deficit)..........   (942)   (1,337)   (1,667)    12,344     34,024
</TABLE>
 
                                       20
<PAGE>   23
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
  OVERVIEW
 
     SEEC develops, markets and provides integrated and comprehensive enterprise
solutions that enable large organizations and third party service providers to
efficiently and effectively reengineer legacy system applications and databases.
The Company's enterprise solutions utilize a suite of software products and
well-defined, repeatable methodologies that are designed to automate various
functions and improve the quality, productivity and effectiveness of the
reengineering process. SEEC introduced its core source code analysis technology
and the first PC-based reengineering software product in 1992.
 
     The Company was founded in 1988 to develop tools and solutions for
reengineering of legacy COBOL applications. In 1992, the Company commercially
introduced its first product, COBOL Analyst. From 1992 to 1996, the Company
devoted significant resources to developing its proprietary suite of products
for COBOL reengineering, including products for year 2000 impact analysis. In
1995 and 1996, the Company introduced its COBOL Analyst 2000, COBOL Slicer, LAN
version of COBOL Analyst 2000, and Date Analyzer products. In 1997 and 1998, the
Company introduced Smart Change 2000, COBOL Slicer, Natural Analyst 2000,
AccuTest and other product-line enhancements and extensions. The Company has
continually enhanced its COBOL Analyst product line. The Company began to
increase its commitment to providing year 2000-related professional services in
fiscal 1996 as a result of the increased awareness of and demand for year 2000
solutions.
 
     The Company derives its revenues primarily from software license fees,
maintenance fees, and professional services fees. The Company's software is
licensed primarily to Fortune 1000 companies, governmental organizations and
third party service providers. Product-related services are provided to
customers in conjunction with the license of software products. Other
professional services are primarily programming services provided on a contract
basis. The Company's enterprise solutions and software products and services are
marketed through a broad range of distribution channels, including direct sales
to end users, to end users in conjunction with third party service providers, to
third-party service providers and indirect sales through a distributor.
 
     The Company recognizes software license fees upon shipment of the software
to the customer. Typically, software maintenance contracts are purchased with
software licenses. Revenues from software maintenance are deferred and
recognized on a straight-line basis over the contract period, which is typically
one year. Software maintenance contracts are generally renewable on an annual
basis, although the Company also enters into long-term maintenance contracts
from time to time. Revenues from professional services are recognized as the
services are provided or upon the achievement of specified performance
milestones. See Note 1 to Financial Statements.
 
                                       21
<PAGE>   24
 
RESULTS OF OPERATIONS
 
     The following table sets forth, for the periods indicated, the percentage
of total revenues represented by certain income and expense items.
 
<TABLE>
<CAPTION>
                                                               FISCAL YEARS ENDED
                                                                   MARCH 31,
                                                              --------------------
                                                              1996    1997    1998
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
REVENUES:
  Software license and maintenance fees.....................   36%     48%     84%
  Professional services -- product related..................   18      29      15
  Professional services -- other............................   46      23       1
                                                              ---     ---     ---
          Total revenues....................................  100     100     100
                                                              ---     ---     ---
OPERATING EXPENSES:
  Cost of revenues:
     Software license and maintenance fees..................   10      10      12
     Professional services -- product related...............    6      17      12
     Professional services -- other.........................   43      20       1
                                                              ---     ---     ---
          Total cost of revenues............................   59      47      25
  General and administrative................................   13      17      14
  Sales and marketing.......................................   23      38      35
  Research and development..................................   33      16       9
                                                              ---     ---     ---
          Total operating expenses..........................  128     118      83
                                                              ---     ---     ---
Income (loss) from operations...............................  (28)    (18)     17
Interest income (expense), net..............................   (5)      3       6
                                                              ---     ---     ---
Income (loss) before income taxes...........................  (33)    (15)     23
Provision for income taxes..................................   --      --       3
                                                              ---     ---     ---
Net income (loss)...........................................  (33)%   (15)%   20%
                                                              ===     ===     ===
</TABLE>
 
COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1998 AND MARCH 31, 1997
 
     Revenues.  Total revenues for fiscal 1998 were $12.4 million compared to
$2.6 million for fiscal 1997, an increase of $9.8 million, or 377%. The increase
in revenues resulted primarily from increases in software license and
maintenance fees, including approximately $781,000 attributable to the revenue
recognition of the non-recurring advance royalty from VIASOFT. See
"Business -- Sales, Marketing, and Distribution" and Note 8 to Financial
Statements. To a lesser extent, the increase also resulted from increased
professional services -- product related revenues which was offset, in
substantial part, by a planned decrease in professional services -- other
revenues.
 
     Software license and maintenance fees were $10.4 million for fiscal 1998
compared to $1.2 million for fiscal 1997, an increase of $9.2 million or 767%.
The increase in software license and maintenance fees is attributable to (1) the
Company's recent build-up of its sales and marketing infrastructure to market
its products and solutions directly to end users, (2) new product introductions
and increased customer awareness of the year 2000 problem, both of which
resulted in higher demand for the Company's tools and solutions, (3) expanded
distribution of the Company's products and solutions through ERA and third party
service providers, and (4) revenue recognition of the $781,000 advance royalty
from VIASOFT, which occurred in the first quarter of fiscal 1998.
 
     Professional services -- product related revenues consist of consulting,
training and reengineering services fees related directly to product licenses
from the Company, primarily the Company's year 2000 products. Such revenues were
$1.8 million for fiscal 1998 compared to $776,000 for fiscal 1997, an increase
of $1.0 million or 132%. These increases are primarily attributable to increased
year 2000 assessment and remediation services performed during fiscal 1998.
 
                                       22
<PAGE>   25
 
     Revenues from professional services -- other consist of contract
programming fees for projects unrelated to the license of the Company's software
products. Such revenues were $186,000 for fiscal 1998 compared to $605,000 for
fiscal 1997, a decrease of $419,000 or 69%. The Company has been redirecting its
programming resources to meet increased demand for its year 2000 products and
services. As a result, revenues from professional services -- other have been
steadily decreasing since the second quarter of fiscal 1997 and are not expected
to comprise a significant portion of overall revenues in the future.
 
     Cost of Revenues.  Cost of revenues includes cost of software license and
maintenance fees, cost of professional services -- product related, and cost of
professional services -- other. Included in the cost of software license and
maintenance fees and cost of professional services -- product related are
royalties which the Company paid to ICICI for each product sold or service
provided, and to VIASOFT for certain products. Through December 31, 1996, the
Company had also paid royalties to ERA. Such royalty payments were eliminated
effective January 1, 1997 by mutual agreement between the Company and ERA.
 
     The Company's total cost of revenues was $3.1 million for fiscal 1998,
compared to $1.2 million for fiscal 1997, representing an increase of 158%. The
increase was primarily attributable to the additional costs of royalties and
personnel required to provide customer support and year 2000 services. Both the
additional royalty and personnel costs were directly related to increased
revenues.
 
     Cost of software license and maintenance fees includes the costs of
providing customer support and the costs of media, manuals, duplication and
shipping related to the sales of the Company's software products. Customer
support is primarily telephone support for customers who have purchased
maintenance in conjunction with software license purchases. Cost of software
license and maintenance fees was $1.4 million for fiscal 1998 compared to
$252,000 for fiscal 1997, an increase of 456%. This increase was primarily
attributable to increased royalty payments, particularly royalties payable to
ICICI. Royalty expense is calculated as a percentage of revenues from sales of
software products specified in the ICICI and VIASOFT agreements. In addition,
the Company incurred increased costs for customer support related to additional
maintenance contracts entered into during fiscal 1998.
 
     Professional services -- product related costs consist primarily of
compensation and related benefits, and travel and equipment for Company
personnel responsible for providing consulting, training and reengineering
services to customers. Also included are the costs of temporary or subcontracted
labor required on occasion to meet the demands for providing services.
Professional services -- product related costs were $1.5 million for fiscal 1998
compared to $470,000 for fiscal 1997, an increase of 219%. This increase was
primarily attributable to services related to increased purchases of the
Company's Smart Change Factory solution and increased year 2000 assessment and
remediation services performed in fiscal 1998. The Company has been developing
its professional services infrastructure to address increasing demand for its
year 2000 products and solutions.
 
     Professional services -- other costs consist primarily of compensation and
related benefits for Company personnel engaged in providing contract programming
services for customers. Professional services -- other costs were $178,000 for
fiscal 1998 compared to $513,000 for fiscal 1997, a decrease of $335,000 or 65%.
The decrease corresponds to the decline in contract programming services
provided during fiscal 1998.
 
     Gross Margins.  The Company's total gross margin (total revenues less total
cost of revenues) as a percentage of revenues was 75% for fiscal 1998 as
compared to 53% for fiscal 1997. The increase in the total gross margin was
primarily attributable to the increase in software license and maintenance fees
as a percentage of total revenue. Software license and maintenance fees
represented 84% of total revenue for fiscal 1998 compared to 48% for fiscal
1997. Software license and maintenance fees have higher gross margins than
professional service fees.
 
     Gross margin percentages were 86% and 80% for software license and
maintenance fees, 18% and 39% for professional services -- product related, and
5% and 15% for professional services -- other, for fiscal 1998 and 1997,
respectively. The increase in the gross margin percentage for software license
and maintenance fees was primarily attributable to the discontinuation of the
royalties payable to ERA, effective January 1, 1997. Offsetting that impact, in
part, was the Company's increased investment in customer support during fiscal
1998. Gross
 
                                       23
<PAGE>   26
 
margin percentages for software license and maintenance fees fluctuate depending
on the mix of software products and the royalty expenses associated with those
products.
 
     The gross margin percentages for professional services -- product related
vary depending on the type of services provided and the timing and amount of
costs incurred to build up the professional services infrastructure. Services
that have higher degrees of automation, such as year 2000 inventory and impact
assessments, typically require fewer professional hours to perform than services
involving planning, source code remediation or testing. Furthermore, the
Company's pricing for product-related services varies based on the complexity
and scope of the engagement and competitive considerations. The professional
services -- product related gross margin percentage of 18% during fiscal 1998
reflected additional costs incurred for recruiting, hiring, training and
purchasing equipment for new professionals. The Company has been building its
professional services infrastructure, typically in advance of contract signing
and commencement of services, so that adequate resources are available to meet
the continuing demand for year 2000 products and solutions. While these costs
are likely to recur, the timing and amounts are expected to fluctuate from
period to period and will therefore have a varying impact on gross margin
percentages. Furthermore, the gross margin percentage of 39% during fiscal 1997
was higher due to a greater level of automated services performed in the period.
 
     The gross margin percentages for professional services -- other fluctuate
based on the prices of the individual service contracts, the Company's payroll
and other costs of professional staff providing the services, and the
proportionate contribution of each contract to the total revenue for this
category during the period.
 
     Sales and Marketing.  Sales and marketing expenses consist primarily of
salaries, incentive compensation and related benefits of the Company's sales,
sales support, and marketing personnel, plus the costs of travel, advertising,
and other promotional activities. Sales and marketing expenses were $4.3 million
for the fiscal year 1998 compared to $999,000 for fiscal 1997, an increase of
$3.3 million or 330%. This increase was primarily due to the Company's decision
to increase the direct sales and marketing of its products and solutions to
customers to address year 2000 revenue opportunities. Spending accelerated in
the latter part of fiscal 1997 and continued through fiscal 1998, as funds
raised in the Company's initial and second public offerings were used to recruit
and hire sales and sales support personnel, to add domestic and international
sales offices and to increase market awareness of the Company's products and
solutions through expanded advertising, participation in trade shows and
conferences, and other promotional activities.
 
     General and Administrative.  General and administrative expenses include
the costs of general management, finance, legal, accounting, office facilities,
communications, and other administrative functions. General and administrative
expenses were $1.8 million for fiscal 1998 compared to $442,000 for fiscal 1997,
an increase of $1.4 million or 307%. These increases are primarily due to
additional payroll and related costs, rent, insurance and professional service
costs, reflective of the Company's growth and expanded operations and costs
associated with being a public company.
 
     Research and Development.  Total expenditures for research and development
were $1.1 million in fiscal 1998 compared to $428,000 in fiscal 1997, an
increase of $0.7 million or 164%. Expenditures for research and development vary
depending upon the number of projects underway at any time, the size of the
projects, their stage of development, and the in-house versus off-shore
components of the project costs. The Company utilizes the resources of SEEC Asia
for certain research and development. Furthermore, during fiscal 1997, the
Company temporarily redirected some professional research and development staff
to meet the increased demand for year 2000 services.
 
     Interest Expense.  Interest expense consists of accrued interest on
indebtedness and interest on accrued but unpaid royalties payable to ICICI.
Interest expense for fiscal 1998 was $26,000 compared to $50,000 in fiscal 1997.
Until July 1996, interest expense included interest on notes and advances
payable to certain directors and shareholders, and deferred salaries of two
officers and shareholders. These interest-bearing obligations were converted to
shares of the Company's Common Stock in July 1996. Interest expense on the
Company's indebtedness to ICICI was included in all twelve months of fiscal
1997, but only three months of interest expense was included in fiscal 1998. The
ICICI loan was paid in full on June 30, 1997.
 
                                       24
<PAGE>   27
 
     Interest Income.  Interest income was $804,000 in fiscal 1998 compared to
$135,000 in fiscal 1997, representing a 496% increase. This increase was due
primarily to interest earned on the net proceeds from the Company's initial
public offering in January 1997 and also from the secondary public offering in
February 1998. The proceeds are invested in money market funds and high-grade
government and corporate bonds and bond funds with average maturities of less
than two years.
 
     Provision for Income Taxes.  The provision for income taxes was $365,000 in
fiscal 1998, resulting in an effective tax rate of approximately 13%. The
Company's effective tax rate was impacted by the availability of net operating
loss carryforwards, which reduced the Company's federal tax liability for fiscal
1998. At March 31, 1997 the Company calculated a net deferred tax asset, which
was offset by a valuation allowance to eliminate the deferred benefit of net
operating loss carryforwards and reversing temporary differences, since
management could not determine at that time that it was more likely than not
that the benefit could be realized in the foreseeable future. Accordingly, no
provision for income taxes was recorded in fiscal 1997. See Note 13 to Financial
Statements.
 
COMPARISON OF FISCAL YEARS ENDED MARCH 31, 1997 AND MARCH 31, 1996
 
     Revenues.  Total revenues were $2.6 million in fiscal 1997, an increase of
160% from $1.0 million in fiscal 1996. Software license and maintenance fees
were $1.2 million in fiscal 1997, an increase of 223% from $372,000 in fiscal
1996. The increase in software license and maintenance fees was attributable to
the Company's decision to market its products and solutions directly to end
users, and also to increased customer awareness of the year 2000 problem, which
resulted in higher demand for the Company's year 2000 software products and
solutions. Software license and maintenance fees include sales through a
distributor of the Company's products. Distributor sales were $222,000 in fiscal
1997, compared to $38,000 in fiscal 1996. This increase was attributable to the
commencement of marketing of the Company's year 2000 products and solutions by
ERA in the third quarter of fiscal 1996. VIASOFT, the Company's only distributor
during the first two quarters of fiscal 1996, accounted for $16,000 and $21,000
of royalties in fiscal 1997 and 1996, respectively.
 
     Professional services -- product related revenues increased to $776,000 in
fiscal 1997 from $181,000 in fiscal 1996. This increase was primarily
attributable to increased customer awareness of the year 2000 problem and
acceptance of the Company's Smart Change Factory process and software products.
The number of customers for year 2000 services increased from four in fiscal
1996 to 23 in fiscal 1997. Revenues from professional services--other were
$605,000 in fiscal 1997, an increase of 27% from $476,000 in fiscal 1996. This
increase was attributable to increased demand for C++ and Windows programming
services.
 
     Cost of Revenues.  The Company's total cost of revenue was $1.2 million in
fiscal 1997, an increase of 100% from $600,000 in fiscal 1996. Cost of software
license and maintenance fees increased 147%, from $102,000 in fiscal 1996 to
$252,000 in fiscal 1997. This increase was primarily attributable to increased
royalty expenses, in particular those payable to ICICI, ERA and VIASOFT.
Professional services--product related costs increased from $59,000 in fiscal
1996 to $470,000 in fiscal 1997, corresponding to the increase in revenues for
year 2000 services discussed above. Professional services -- other costs
increased by 17%, from $439,000 in fiscal 1996 to $513,000 in fiscal 1997. The
increases in professional services -- product related and professional services
--other were both due to the additional costs of professional staff required to
provide the services.
 
     The Company's gross margin as a percentage of revenue was 53% in fiscal
1997 compared to 42% in fiscal 1996. Gross margin percentages were 80% and 73%
for software license and maintenance fees, 39% and 67% for professional services
-- product related, and 15% and 8% for professional services -- other,
respectively, for fiscal 1997 and fiscal 1996. The gross margin percentage for
software license and maintenance fees was favorably impacted by the elimination
of royalties paid to ERA on product revenues, effective January 1, 1997.
 
     The gross margin percentage of 67% for professional services -- product
related in fiscal 1996 was generated from $181,000 in revenues. In contrast, the
gross margin percentage of 39% in fiscal 1997 was generated from $776,000 in
revenues and is more representative of the gross margin percentage for this
category of revenue since it reflects the experience of providing a wider range
of services over a larger number of engagements. The increase in gross margin
percentage for professional services -- other to 15% in fiscal 1997 from 8% in
fiscal 1996 was due to an increased proportion of higher-margin contracts.
                                       25
<PAGE>   28
 
     Sales and Marketing.  Sales and marketing expenses were $999,000 in fiscal
1997, an increase of 321% from $237,000 in fiscal 1996. This increase was due
primarily to increased direct sales and marketing of the Company's products and
solutions to customers. Expenditures for sales and marketing began to increase
during fiscal 1997, when the Company decided to increase the direct sales and
marketing of its products and solutions to customers to address year 2000
revenue opportunities. Spending accelerated in the latter part of fiscal 1997,
as funds raised in the Company's initial public offering were used to recruit
and hire sales and sales support personnel, to add two sales offices, and to
increase market awareness of the Company through expanded advertising and
participation in trade shows and conferences.
 
     General and Administrative.  General and administrative expenses were
$442,000 in fiscal 1997, an increase of 211% from $142,000 in fiscal 1996. The
increase was due primarily to additional payroll, rent, insurance and
professional service costs, each reflective of the Company's growth.
 
     Research and Development.  Total expenditures for research and development
were $428,000 in fiscal 1997 as compared to $337,000 in fiscal 1996, an increase
of 27%. The increase was primarily attributable to the Company's development of
Smart Change 2000 and development of product extensions to cover additional
platforms, databases and languages.
 
     Interest Expense. Interest expense was $50,000 in fiscal 1997, compared to
$75,000 in fiscal 1996. The expense in both periods included interest on various
obligations, including notes and advances payable to certain directors and
shareholders, and deferred salaries of two operating officers and shareholders.
Certain of the interest-bearing obligations were converted into shares of the
Company's Common Stock in July 1996, resulting in reduced interest expense for
the remainder of fiscal 1997.
 
     Interest Income.  Interest income was $135,000 in fiscal 1997, compared to
$20,000 in fiscal 1996. The increase was due primarily to interest earned on the
net proceeds received in January 1997 from the Company's initial public
offering, which were invested in money market funds and high-grade bonds and
bond funds with average maturities of less than two years.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     Prior to the Company's initial public offering of Common Stock in January
1997, the Company funded its operations and its product development from the
following principal sources: (i) proceeds from the sale of shares of Common
Stock, (ii) the ICICI grants and loan described below, (iii) payments received
from the sale of products and services, including $900,000 in advance royalties
from VIASOFT, (iv) proceeds from the issuance of subordinated and demand notes
and (v) deferral of payments of salaries to the Company's executive officers. As
of March 31, 1996, the Company had working capital of $128,000, total
liabilities of $2.1 million, and cash and cash equivalents of $111,000. In
fiscal 1997, $225,000 of the Company's 10% Subordinated Notes, $220,000 of
unsecured notes and advances payable to certain directors and shareholders, and
$127,000 of deferred salaries payable to two officers, together with accrued
interest, were converted into 237,025 shares of Common Stock. Also in fiscal
1997, the Company sold 211,425 shares of Common Stock in a private placement for
an aggregate of $747,000 and in the fourth quarter of fiscal 1997 sold 2,070,000
shares of Common Stock in an initial public offering, the net proceeds of which
were $13.0 million to the Company. In the fourth quarter of fiscal 1998, the
Company sold 1,030,000 shares of Common Stock in a secondary public offering,
the net proceeds of which were $19.1 million to the Company. As a result of
these transactions and profitable operations for fiscal 1998, the Company's
working capital, total liabilities and cash and short-term investments at March
31, 1998 were $32.1 million, $5.2 million and $30.8 million, respectively.
 
     The Company's initial development of its COBOL maintenance products was
funded in part by grants totaling $255,000 from ICICI pursuant to a Cooperation
and Project Financing Agreement dated June 1, 1990 (the "Project Financing
Agreement") among ICICI, the Company and ERA. The Project Financing Agreement
required the Company to pay royalties to ICICI equal to 10% of the Company's
gross revenues from product sales and 5% of gross revenues from maintenance and
services, up to a maximum royalty payment of $525,000. The royalty obligation to
ICICI was satisfied in full during fiscal 1998.
 
                                       26
<PAGE>   29
 
     During fiscal 1995, the Company funded its operations in part through a
$300,000 term loan from ICICI pursuant to a Term Loan Agreement between the
Company and ICICI dated May 3, 1994. The loan was paid in full by the Company on
June 30, 1997.
 
     The Company's cash flows have been used primarily for general operating
expenses, to purchase equipment, furniture and leasehold improvements, and to
fund internal research and development. At March 31, 1998 and March 31, 1997,
the Company had cash, cash equivalents, and temporary investments of $30.8
million and $12.8 million, respectively.
 
     The Company's cash balances may be used to develop international sales and
marketing efforts, expand domestic sales and marketing efforts, establish
additional facilities, hire additional personnel, increase research and
development for enterprise solutions, increase capital expenditures and for
working capital and other general corporate purposes. Approximately $1,042,000
of cash will be remitted to ERA in fiscal 1999 in connection with the Company's
acquisition of certain assets and rights from ERA. The Company may utilize cash
to develop or acquire other businesses, products or technologies complementary
to its current business. The amounts actually expended for each such purpose may
vary significantly and are subject to change in the Company's discretion,
depending upon certain factors, including economic or industry conditions,
changes in the competitive environment and strategic opportunities that may
arise. Management believes that cash flows from operations and the current cash
balances will be sufficient to meet the Company's liquidity needs for the
foreseeable future. In the longer term, the Company may require additional
sources of capital to fund future growth. Such sources of capital may include
additional equity offerings or debt financings.
 
IMPACT OF INFLATION
 
     Increases in the inflation rate are not expected to affect the Company's
operating expenses. Although the Company has no current plans to borrow funds,
if it were to do so at variable interest rates, any increase in interest rates
would increase the Company's cost of borrowed funds.
 
FOREIGN CURRENCY TRANSLATION
 
     The overall effects of foreign currency exchange rates on the Company's
business during the periods discussed have not been material. Movements in
foreign currency exchange rates create a degree of risk to the Company's
operations if those movements affect the dollar value of costs incurred in
foreign currencies. Substantially all of the Company's billings to date have
been denominated in U.S. dollars. Changing currency exchange rates may affect
the Company's competitive position if exchange rate changes impact profitability
and business and/or pricing strategies of non-U.S. based competitors.
 
     The functional currency of the Company's wholly-owned subsidiaries is the
U.S. dollar. Assets and liabilities of these subsidiaries are translated at the
current exchange rate at the balance sheet date. Expenses are translated using
the average exchange rate during the period.
 
SEASONALITY
 
     The Company's operations are not affected by seasonal fluctuations,
although the Company's cash flows may at times be affected by fluctuations in
the timing of cash receipts from large individual sales.
 
OTHER
 
     SFAS No. 128, "Earnings per Share," was issued in February 1997. The
Company adopted the new standard for the interim period ended December 31, 1997
and for all interim and annual periods thereafter. All prior periods have been
restated to conform to the requirements of SFAS No. 128. The primary
requirements of this standard are: (i) replacement of primary earnings per share
with basic earnings per share, which eliminates the dilutive effect of options
and warrants; (ii) use of an average share price in applying the treasury method
to compute dilution for options and warrants for fully-diluted earnings per
share and (iii) disclosure reconciling the numerator and denominator of earnings
per share calculations. See Note 14 to the Financial Statements.
 
                                       27
<PAGE>   30
 
     SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
reporting and display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and distributions to owners.
SFAS No. 130 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to be
restated. Management does not expect the impact, if any, on future financial
statement disclosures to be significant. Results of operations and financial
position, however, will be unaffected by implementation of this standard.
 
     SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for the way that public companies report
selected information about operating segments in annual financial statements and
requires reporting selected information about operating segments in interim
financial statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas, and major
customers. SFAS No. 131 defines operating segments as components of a company
about which separate financial information is available that is evaluated
regularly by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. SFAS No. 131 is effective for financial
statements for periods beginning after December 15, 1997 and requires
comparative information for earlier years to be restated. Management does not
believe the standard will have a significant impact on future financial
statement disclosures. Results of operations and financial position, however,
will be unaffected by implementation of this standard.
 
     SFAS No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits--an amendment of FASB Statements No. 87, 88, and 106,"
revises employers' disclosures about pension and other postretirement benefit
plans. It does not change the measurement or recognition of those plans. SEEC
currently has no pension benefit plans for its employees, and as such will not
be subject to the disclosure requirements of this Statement.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     See Item 14 below and the index therein for a listing of financial
statements and supplementary data filed as part of this report.
 
                                       28
<PAGE>   31
 
                                   SEEC, INC.
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                                PAGE
                                                                ----
<S>                                                            <C>
Report of Independent Certified Public Accountants..........      30
Consolidated Balance Sheets.................................      31
Consolidated Statements of Operations.......................      32
Consolidated Statements of Changes in Shareholders' Equity
  (Deficit).................................................      33
Consolidated Statements of Cash Flows.......................      34
Notes to Consolidated Financial Statements..................   35-47
</TABLE>
 
                                       29
<PAGE>   32
 
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
 
To the Shareholders and
Board of Directors
SEEC, Inc.
Pittsburgh, Pennsylvania
 
     We have audited the accompanying consolidated balance sheets of SEEC, Inc.
and subsidiaries as of March 31, 1997 and 1998, and the related consolidated
statements of operations, changes in shareholders' equity (deficit), and cash
flows for each of the three years in the period ended March 31, 1998. We have
also audited the schedule listed in the accompanying index. These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule 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 and schedule are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedule. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements and schedule. 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 consolidated financial position of SEEC, Inc. and
subsidiaries as of March 31, 1997 and 1998, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended March 31, 1998, in conformity with generally accepted accounting
principles.
 
     Also, in our opinion, the schedule presents fairly, in all material
respects, the information set forth therein.
 
                                          BDO Seidman, LLP
 
Boston, Massachusetts
June 8, 1998
 
                                       30
<PAGE>   33
 
                                   SEEC, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                       MARCH 31
                                                              --------------------------
                                                                 1997           1998
                                                              -----------    -----------
<S>                                                           <C>            <C>
                           ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $ 3,811,401    $23,795,965
  Short-term investments (Note 4)...........................    8,987,771      7,032,550
  Accounts receivable:
    Trade -- less allowance for doubtful accounts of $10,000
      and $50,000 at March 31, 1997 and 1998, respectively
      (Notes 5 and 10)......................................      872,363      5,774,495
    Affiliate -- ERA (Notes 7 and 8)........................       84,142        189,097
  Prepaid expenses and other current assets.................      178,210        545,980
                                                              -----------    -----------
         Total current assets...............................   13,933,887     37,338,087
PROPERTY AND EQUIPMENT, NET (Notes 6 and 10)................      119,565      1,291,659
INVESTMENT IN AFFILIATE (Notes 3 and 7).....................        5,000             --
GOODWILL, LESS ACCUMULATED AMORTIZATION of $10,000 (Note
  3)........................................................           --        625,000
                                                              -----------    -----------
                                                              $14,058,452    $39,254,746
                                                              ===========    ===========
            LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Accounts payable:
    Trade...................................................  $   306,778    $ 1,142,253
    Affiliate -- ERA (Notes 7 and 8)........................       23,650        230,085
  Obligation to ERA in connection with acquisition (Note
    3)......................................................           --      1,042,000
  Accrued payroll, related taxes and withholdings...........       21,890        799,072
  Accrued interest payable (Note 10)........................       15,546             --
  Accrued royalties (Notes 7 and 8).........................       90,509        224,206
  Other accrued expenses....................................       82,558        522,220
  Deferred maintenance revenue..............................      122,378        867,339
  Customer advance..........................................           --         31,705
  Deferred Federal and state income taxes (Note 13).........           --        372,330
  Current maturities of long-term debt (Note 10)............      120,000             --
                                                              -----------    -----------
         Total current liabilities..........................      783,309      5,231,210
LONG-TERM DEBT, LESS CURRENT MATURITIES (Note 10)...........      120,000             --
ADVANCE ROYALTY (Note 8)....................................      780,552             --
ACCRUED ROYALTIES (Note 8)..................................       30,331             --
                                                              -----------    -----------
         Total liabilities..................................    1,714,192      5,231,210
                                                              -----------    -----------
COMMITMENTS AND CONTINGENCIES (Notes 7, 8, 11, 12 and 16)
SHAREHOLDERS' EQUITY (Notes 2, 7, 9, 11 and 15):
  Preferred stock -- no par value; 10,000,000 shares
    authorized; none outstanding............................
  Common Stock -- $.01 par value; 20,000,000 shares
    authorized; 5,000,833 and 6,076,546 issued and
    outstanding at March 31, 1997 and 1998, respectively....       50,008         60,765
  Additional paid-in capital................................   14,489,601     33,566,408
  Retained earnings (accumulated deficit)...................   (2,127,749)       382,047
  Unrealized gains (losses) on investments, net of taxes of
    $9,700 at March 31, 1998................................      (67,600)        14,316
                                                              -----------    -----------
         Total shareholders' equity.........................   12,344,260     34,023,536
                                                              -----------    -----------
                                                              $14,058,452    $39,254,746
                                                              ===========    ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       31
<PAGE>   34
 
                                   SEEC, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED MARCH 31
                                                        ---------------------------------------
                                                           1996          1997          1998
                                                        ----------    ----------    -----------
<S>                                                     <C>           <C>           <C>
REVENUES (Note 5):
  Software license and maintenance fees (Notes 7 and
     8)...............................................  $  371,457    $1,241,911    $10,397,418
  Professional services -- product related............     181,395       776,287      1,832,197
  Professional services -- other......................     476,413       604,466        185,994
                                                        ----------    ----------    -----------
          Total revenues..............................   1,029,265     2,622,664     12,415,609
                                                        ----------    ----------    -----------
OPERATING EXPENSES:
  Cost of revenues:
     Software license and maintenance fees (Notes 7
       and 8).........................................     101,991       252,368      1,434,270
     Professional services--product related...........      58,542       470,159      1,506,865
     Professional services--other (Note 7)............     439,545       512,559        177,542
                                                        ----------    ----------    -----------
          Total cost of revenues......................     600,078     1,235,086      3,118,677
  General and administrative (Note 12)................     142,058       441,717      1,753,083
  Sales and marketing.................................     236,788       999,496      4,342,323
  Research and development (Note 7)...................     336,954       427,490      1,104,732
                                                        ----------    ----------    -----------
          Total operating expenses....................   1,315,878     3,103,789     10,318,815
                                                        ----------    ----------    -----------
INCOME (LOSS) FROM OPERATIONS.........................    (286,613)     (481,125)     2,096,794
                                                        ----------    ----------    -----------
INTEREST INCOME (EXPENSE), NET:
  Interest expense (Notes 10 and 15)..................     (74,712)      (50,371)       (26,161)
  Interest income.....................................      19,380       135,107        804,163
                                                        ----------    ----------    -----------
          Total interest income (expense), net........     (55,332)       84,736        778,002
                                                        ----------    ----------    -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES.......    (341,945)     (396,389)     2,874,796
PROVISION FOR INCOME TAXES (Note 13)..................          --            --        365,000
                                                        ----------    ----------    -----------
NET INCOME (LOSS).....................................  $ (341,945)   $ (396,389)   $ 2,509,796
                                                        ==========    ==========    ===========
Net income (loss) per common share (Note 14):
     Basic............................................  $    (0.15)   $    (0.13)   $      0.49
                                                        ==========    ==========    ===========
     Diluted..........................................  $    (0.15)   $    (0.13)   $      0.46
                                                        ==========    ==========    ===========
Weighted average number of common and common
  equivalent shares outstanding:
     Basic............................................   2,269,707     3,037,484      5,145,032
                                                        ==========    ==========    ===========
     Diluted..........................................   2,269,707     3,037,484      5,416,569
                                                        ==========    ==========    ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       32
<PAGE>   35
 
                                   SEEC, INC.
 
      CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
 
                   YEARS ENDED MARCH 31, 1996, 1997 AND 1998
 
<TABLE>
<CAPTION>
                                    COMMON STOCK                       RETAINED                          TOTAL
                                 -------------------   ADDITIONAL      EARNINGS       UNREALIZED     SHAREHOLDERS'
                                 NUMBER OF               PAID-IN     (ACCUMULATED   GAINS (LOSSES)      EQUITY
                                  SHARES     AMOUNT      CAPITAL       DEFICIT)     ON INVESTMENTS     (DEFICIT)
                                 ---------   -------   -----------   ------------   --------------   -------------
<S>                              <C>         <C>       <C>           <C>            <C>              <C>
Balance -- April 1, 1995 (Note
  1)...........................  2,040,144   $20,402   $    31,969   $(1,389,415)      $     --       $(1,337,044)
Exercise of warrants (Note
  11)..........................     91,474       915         1,106            --             --             2,021
Acquisition of software rights
  from affiliate (Note 7)......    226,305     2,263        (2,263)           --             --                --
Net loss for year..............         --        --            --      (341,945)            --          (341,945)
                                 ---------   -------   -----------   -----------       --------       -----------
Balance -- March 31, 1996......  2,357,923    23,580        30,812    (1,731,360)            --        (1,676,968)
Issuance of common stock for:
  Conversion of notes and other
    long-term liabilities
    payable to related parties
    (Note 15)..................    237,025     2,370       783,165            --             --           785,535
  Cash (Note 15)...............    211,425     2,114       745,326            --             --           747,440
Initial public offering, less
  issuance costs (Note 2)......  2,070,000    20,700    12,929,054            --             --        12,949,754
Exercise of warrants (Note
  11)..........................    124,460     1,244         1,244            --             --             2,488
Net loss for year..............         --        --            --      (396,389)            --          (396,389)
Unrealized losses on
  investments..................         --        --            --            --        (67,600)          (67,600)
                                 ---------   -------   -----------   -----------       --------       -----------
Balance -- March 31, 1997......  5,000,833    50,008    14,489,601    (2,127,749)       (67,600)       12,344,260
Public offering, less issuance
  costs (Note 2)...............  1,030,000    10,300    19,058,345            --             --        19,068,645
Exercise of stock options (Note
  9)...........................      2,715        27        18,032            --             --            18,059
Exercise of warrants (Note
  11)..........................     42,998       430           430            --             --               860
Net income for year............         --        --            --     2,509,796             --         2,509,796
Unrealized gains on
  investments, net of taxes....         --        --            --            --         81,916            81,916
                                 ---------   -------   -----------   -----------       --------       -----------
Balance -- March 31, 1998......  6,076,546   $60,765   $33,566,408   $   382,047       $ 14,316       $34,023,536
                                 =========   =======   ===========   ===========       ========       ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       33
<PAGE>   36
 
                                   SEEC, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                   YEARS ENDED MARCH 31
                                                          ---------------------------------------
                                                            1996          1997           1998
                                                          ---------    -----------    -----------
<S>                                                       <C>          <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss).......................................  $(341,945)   $  (396,389)   $ 2,509,796
Adjustments to reconcile net income (loss) to net cash
  used by operating activities:
  Depreciation and amortization.........................     14,351         36,050        103,960
  Provision for doubtful accounts.......................      6,836          9,392         71,975
  Loss on disposals of equipment........................         --             --         32,023
  Proceeds from advance royalty.........................    120,000             --             --
  Accrued non-current interest..........................     46,048         13,420             --
  Accrued non-current royalty...........................     11,588          1,291        (30,331)
  Deferred income taxes.................................         --             --        365,000
Changes in operating assets and liabilities, net of
  effects of acquisition of business:
    Accounts receivable -- trade........................    (62,239)      (637,076)    (4,909,107)
    Accounts receivable -- affiliate....................     15,742        (83,150)      (104,955)
    Prepaid expenses....................................    (21,041)      (138,476)      (367,770)
    Accounts payable -- trade...........................     14,020        246,362        746,475
    Accounts payable -- affiliate.......................         --         23,650        206,435
    Accrued payroll, related taxes and withholdings.....     10,860        (23,770)       777,182
    Accrued royalties...................................         --         90,509        133,697
    Other accrued expenses..............................      5,972         76,044        439,662
    Deferred maintenance revenue........................      1,262         68,275        744,961
    Advance royalty.....................................    (21,177)       (15,927)      (780,552)
    Other, net..........................................     (3,140)       (26,034)        13,789
                                                          ---------    -----------    -----------
       Net cash used by operating activities............   (202,863)      (755,829)       (47,760)
                                                          ---------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment....................    (16,035)      (127,922)      (868,003)
  Proceeds from equipment disposals.....................         --             --          5,926
  Purchase of short-term investments....................         --     (9,055,371)    (2,173,163)
  Sales of short-term investments.......................         --             --      4,220,000
                                                          ---------    -----------    -----------
       Net cash provided (used) by investing
         activities.....................................    (16,035)    (9,183,293)     1,184,760
                                                          ---------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of long-term debt...........................         --        (60,000)      (240,000)
  Proceeds from sale of common stock, net...............         --     13,697,194     19,068,645
  Exercise of common stock warrants and options.........      2,021          2,488         18,919
                                                          ---------    -----------    -----------
       Net cash provided by financing activities........      2,021     13,639,682     18,847,564
                                                          ---------    -----------    -----------
Net increase (decrease) in cash and cash equivalents....   (216,877)     3,700,560     19,984,564
Cash and cash equivalents, beginning of period..........    327,718        110,841      3,811,401
                                                          ---------    -----------    -----------
Cash and cash equivalents, end of period................  $ 110,841    $ 3,811,401    $23,795,965
                                                          =========    ===========    ===========
Supplemental cash flow information:
Cash paid during the period for interest................  $  19,825    $    40,500    $    27,464
                                                          =========    ===========    ===========
Purchase of software rights from affiliate (Note 7).....  $   2,263    $        --    $        --
                                                          =========    ===========    ===========
Conversion of debt to common stock (Note 15)............  $      --    $   785,535    $        --
                                                          =========    ===========    ===========
Unrealized gains (losses) on investments, net of
  taxes.................................................  $      --    $   (67,600)   $    81,916
                                                          =========    ===========    ===========
Non-cash investing and financing activities:
  Business acquisition:
  Fair value of assets acquired.........................  $      --    $        --    $   496,000
  Goodwill, net.........................................         --             --        635,000
  Current liabilities assumed...........................         --             --        (89,000)
                                                          ---------    -----------    -----------
  Obligation incurred to seller.........................  $      --    $        --    $ 1,042,000
                                                          =========    ===========    ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       34
<PAGE>   37
 
                                   SEEC, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1--BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
     Business.  SEEC, Inc. (the Company) provides a suite of software products
and related services to assist primarily Fortune 1000 companies and
similarly-sized business and governmental organizations in the reengineering of
legacy COBOL software applications and related databases for large mainframe
systems. The Company also provides solutions for the system reengineering
required for year 2000 compliance and to support the migration of existing COBOL
applications from a mainframe to a client/server environment.
 
     The Company's PC-Windows-based products for COBOL application reengineering
are designed to be alternatives to mainframe-based tools. Marketing efforts are
conducted through the Company's direct sales force, a product distributor, and
relationships with third party service providers under non-exclusive marketing
licenses. The Company sells and supports its products and services from its
Pittsburgh, Pennsylvania headquarters.
 
     Until February 27, 1998, the Company had a strategic software research and
development alliance with ERA Software Systems Private, Limited (ERA), a
software consulting and development company based in India. The Company and ERA
were affiliated through common ownership until the Company acquired certain of
ERA's assets and operations in a transaction effective February 27, 1998 (see
Notes 3, 7 and 8).
 
     Basis of Presentation.  The March 31, 1998 financial statements include the
accounts of the Company's wholly-owned subsidiaries, SEEC Europe Limited,
organized in April 1997, and SEEC Technologies Asia Private Limited ("SEEC
Asia"), which was organized in March 1998 to hold the assets acquired from ERA
on February 27, 1998 and manage the operations acquired from ERA (see Note 3).
All significant intercompany balances and transactions have been eliminated.
 
     Foreign Currency Translation.  The Company's foreign operations' functional
currency is the U.S. dollar. Monetary assets and liabilities of the Company's
foreign subsidiaries are translated at year-end exchange rates and non-monetary
items are translated at historical rates. Revenues and expenses are translated
at average exchange rates in effect during the period. Foreign currency
transaction gains and losses, which are not material, are recognized currently
in the consolidated statements of operations. Through March 31, 1998,
substantially all of the Company's billings have been denominated in U.S.
dollars.
 
     Recapitalization.  On January 15, 1997, the Board of Directors effected a
1-for-2.2094 reverse stock split in connection with the January 22, 1997 initial
public offering of the Company's common stock. All shares, options, warrants and
per share amounts in the accompanying financial statements have been adjusted to
reflect the effects of this recapitalization.
 
     Use of Estimates.  The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
     Cash, Cash Equivalents and Concentrations of Credit Risk.  The statements
of cash flows classify changes in cash and cash equivalents (short-term,
highly-liquid investments readily convertible into cash with an original
maturity of three months or less) according to operating, investing or financing
activities. Cash equivalents consist of funds in money market accounts and were
$3,798,799 and $23,779,062 at March 31, 1997 and 1998, respectively. Financial
instruments that potentially expose the Company to concentrations of credit risk
consist principally of cash, temporary cash investments and accounts receivable.
 
     The Company places its cash and temporary cash investments with financial
institutions which management considers to be of high quality; however, at times
such deposits may be in excess of the Federal Deposit Insurance Corporation
insurance limit.
 
                                       35
<PAGE>   38
 
     Concentrations of credit risk with respect to accounts receivable result
from a significant portion of revenues being derived from a relatively small
number of entities (see Notes 5 and 8); however, the Company's customer base has
been growing and is dispersed across many different industries and geographic
areas. The Company generally extends credit to its customers without requiring
collateral; however, it closely monitors extensions of credit and has not
experienced significant credit losses.
 
     Short-Term Investments.  Short-term investments consist of short duration
fixed-income securities, primarily U.S. government agency issues and corporate
bonds. The average duration of the short-term investment portfolio of debt
securities is approximately two years. The Company's short-term investments are
classified as available-for-sale and are carried at fair value with the net
unrealized gain or loss reported as a separate component of shareholders'
equity. Realized gains and losses are recognized in the results of operations.
 
     Revenue Recognition.  Revenues are derived from the license of software
products, customer support and maintenance contracts, and COBOL reengineering
contracts, including year 2000 compliance solutions. Revenue from product sales
is recognized upon shipment. Customer support and maintenance contract revenue
is recognized ratably over the term of the related agreement. The Company
provides programming and reengineering services under time and materials and
fixed-price contracts. Revenues from time and materials contracts are recognized
as the services are provided. Revenues from fixed-price contracts are recognized
on achievement of specified performance milestones negotiated with customers.
This method, which recognizes revenues on substantially the same basis as the
percentage-of-completion method, is used because management considers milestones
to be the best available measure of progress on these contracts. Provision for
estimated losses on uncompleted contracts is made in the period in which such
losses are determinable (see Note 8).
 
     In October 1997, the AICPA issued Statement of Position (SOP) 97-2,
Software Revenue Recognition, which supersedes SOP 91-1. The Company will be
required to adopt SOP 97-2 for software transactions entered into beginning
April 1, 1998. Retroactive application to years prior to adoption is prohibited.
SOP 97-2 generally requires revenue earned on software arrangements involving
multiple elements (i.e., software products, upgrades/enhancements, post contract
customer support, installation, training, etc.) to be allocated to each element
based on the relative fair values of the elements. The fair value of an element
must be based on evidence that is specific to the Company. The revenue allocated
to software products (including specified upgrades/enhancements) generally is
recognized upon delivery of the products. The revenue allocated to post-
contract customer support generally is recognized ratably over the term of the
support, and revenue allocated to service elements (such as training and
installation) generally is recognized as the services are performed. If the
Company does not have evidence of the fair value for all elements in a
multiple-element arrangement, all revenue from the arrangement is deferred until
such evidence exists or until all elements are delivered.
 
     On March 18, 1998, the AICPA cleared SOP 98-4, which provides for the
one-year deferral of certain provisions of SOP 97-2 pertaining to its
requirements for what constitutes vendor specific evidence of the fair value of
multiple elements included in an arrangement. The deferral is to allow time to
complete a project to consider whether guidance is needed on any restrictions
that should be placed on what constitutes evidence of fair value and, if so,
what the guidance should be. Because of the uncertainties with respect to the
outcome of any such project, the impact of the deferred provisions of SOP 97-2
on the Company's financial position or results of operations upon expiration of
the one-year deferral period is not currently determinable. However, the Company
believes that those provisions of SOP 97-2 that have not been deferred, and
therefore are applicable to the Company commencing April 1, 1998, will not
materially affect its financial position or results of operations.
 
     Property and Equipment.  Property and equipment are stated at cost.
Maintenance and repairs that are not considered to extend the useful life of
assets are charged to operations as incurred.
 
     The straight-line method of depreciation was adopted for all property and
equipment placed in service after December 31, 1997. For property and equipment
acquired prior to January 1, 1998, depreciation and amortization is calculated
using the declining-balance method. The Company believes the new method will
more appropriately reflect its financial results by better allocating costs of
new assets over their estimated useful lives. The effect of this change on net
income for the year ended March 31, 1998 was not material. Estimated useful
lives of assets
 
                                       36
<PAGE>   39
 
are as follows: computer equipment -- 3 to 5 years; software and other
equipment -- 5 years; furniture and fixtures -- 5 to 7 years; and leasehold
improvements -- life of the lease.
 
     Investment in Affiliate.  Investment in affiliate represents the Company's
investment in ERA prior to the acquisition discussed in Note 3. The investment,
which represented an ownership interest of less than 10%, is accounted for at
cost. The common ownership interests of the Company and ERA were not considered
sufficient to enable either of them to exert significant influence necessary to
require the Company's investment in ERA to be accounted for under the equity
method of accounting. Further, in management's opinion, the use of the equity
method of accounting would not have a significant effect on the Company's
financial position or results of operations.
 
     Goodwill.  Goodwill represents the excess of the consideration paid for the
purchase of a subsidiary over the fair value of the net assets acquired and is
being amortized over a five-year period. The carrying value of goodwill is
assessed on an on-going basis.
 
     Research and Development Costs.  Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed" (SFAS 86), establishes criteria for capitalization
of software development costs, beginning upon the establishment of product
technological feasibility and concluding when the product is available for
general release to customers.
 
     Management believes that in applying the above criteria, capitalizable
costs must be carefully evaluated in conjunction with certain factors including,
among other things, costs reimbursed by the ICICI grant (see Notes 7 and 8),
anticipated future revenues, estimated economic product life, amortization
methodologies, and frequency of changes in software and hardware technologies.
After carefully evaluating these factors, management concluded that the amounts
which should have been capitalized pursuant to SFAS 86, specifically costs
incurred after technological feasibility is established and prior to general
release of the software to customers, were immaterial and therefore no software
development costs have been capitalized to date.
 
     Advertising Costs.  The Company expenses advertising costs as incurred.
 
     Stock-Based Compensation.  The Financial Accounting Standards Board (FASB)
has issued Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," which establishes financial accounting and reporting
standards for stock-based employee compensation plans. The Company adopted this
statement during the year ended March 31, 1997; however, it has elected to
continue to account for stock options at their intrinsic value with disclosures
of the effects of fair value accounting on net income (loss) and net income
(loss) per share on a pro forma basis (see Note 9).
 
     Income Taxes.  The Company records income taxes pursuant to Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No.
109). Under the asset and liability method of SFAS No. 109, deferred income
taxes are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred taxes of a change in tax
rates is recognized in income in the period that includes the enactment date
(see Note 13).
 
     Net Income (Loss) per Common Share.  Net income (loss) per common share has
been computed in accordance with Statement of Financial Accounting Standards No.
128, "Earnings Per Share" (see Note 14).
 
     Financial Instruments.  The estimated fair value of the Company's financial
instruments, which include short-term investments, accounts receivable, accounts
payable and an off-balance sheet letter of credit, approximates their carrying
value.
 
     Comprehensive Income.  Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130), issued by FASB is effective for
financial statements for periods beginning after
 
                                       37
<PAGE>   40
 
December 15, 1997 and requires comparative information for earlier years to be
restated. SFAS 130 establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Management does not expect
the impact, if any, the standard may have on future financial statement
disclosures to be significant. Results of operations and financial position,
however, will be unaffected by implementation of this standard.
 
     Segment Reporting.  Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information (SFAS 131),
supersedes SFAS No. 14, Financial Reporting for Segments of a Business
Enterprise. SFAS 131 establishes standards for the way that public companies
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS 131 defines operating segments as components of a company about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker in deciding how to allocate resources and in
assessing performance.
 
     SFAS 131 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to be
restated. Management does not expect the impact it may have on future financial
statement disclosures to be significant. Results of operations and financial
position, however, will be unaffected by implementation of this standard.
 
     Disclosures about Pensions and Other Postretirement Benefits. SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits--an
amendment of FASB Statements No. 87, 88, and 106," revises employers'
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of those plans. The Company currently has
no pension benefit plans for its employees, and as such will not be subject to
the disclosure requirements of this Statement.
 
NOTE 2--CAPITAL STOCK AND PUBLIC OFFERINGS
 
     In January 1997 the Company sold, through an underwritten initial public
offering, 1,800,000 common shares. In February 1997 an additional 270,000 shares
were sold pursuant to an underwriters over-allotment provision. The net proceeds
of these sales were approximately $12,950,000. In February 1998 the Company
completed a secondary public offering of 1,030,000 new shares of its common
stock for approximately $19,068,000, net of issuance costs.
 
     A portion of the proceeds of the initial public offering has been used for
expanded sales and marketing, new personnel, additional capital expenditures,
working capital and other general corporate purposes. The remaining proceeds of
these offerings are intended to be used further in these areas and to expand
international operations, increase research and development, and possibly
acquire businesses, products or technologies complementary to the Company's
current business.
 
     In connection with the initial public offering, the Company issued to
underwriters warrants to purchase additional shares of common stock (see Note
11).
 
     In advance of the initial public offering, the Board of Directors
authorized an amendment of the Company's Articles of Incorporation to increase
the number of authorized shares of common stock to 20,000,000 shares and to
authorize the issuance of 10,000,000 shares of preferred stock, without par
value, issuable in series from time to time by the Board of Directors.
 
NOTE 3--ACQUISITION
 
     On February 27, 1998, the Company entered into an agreement with ERA,
whereby ERA transferred its distribution rights for Company products, plus
certain fixed assets and 30 former ERA employees engaged exclusively in
Company-related research and development, sales and administration, for a net
consideration of $1,042,000. With the acquisition, the Company assumed control
of ERA's research and development and
 
                                       38
<PAGE>   41
 
distribution functions. All Company-related research and development work
performed by ERA through the date of the acquisition had been previously
expensed by the Company as incurred. SEEC Asia was formed to effect the
acquisition and to subsequently control and manage the acquired rights, assets
and product development projects previously owned or managed by ERA, as well as
to expand the Company's sales and marketing efforts in the Asian and Pacific Rim
regions.
 
     The acquisition was accounted for as a purchase and accordingly, the
results of operations of the acquired business are included in the Company's
consolidated financial statements since the effective date. The acquisition was
effective at the close of business on February 28, 1998, with final closing and
remittance of the net consideration scheduled to occur in June 1998. The
aggregate purchase price has been allocated to the net assets acquired based
upon their respective fair market values. The excess of the purchase price over
the fair values of the net assets acquired of $635,000 was allocated to goodwill
and is being amortized on a straight-line basis over five years. Under terms of
the agreement, the Product Purchase Agreement and the Marketing Agreement
between the Company and ERA (as discussed at Note 7) were terminated.
 
     Based upon the estimated fair market values on the effective date of the
acquisition, the purchase price was allocated as follows:
 
<TABLE>
<S>                                                           <C>
Current assets..............................................  $   65,000
Property and equipment......................................     436,000
Goodwill....................................................     635,000
Current liabilities.........................................     (89,000)
                                                              ----------
Total purchase price........................................   1,047,000
Write-off of investment in affiliate........................      (5,000)
                                                              ----------
Net consideration...........................................  $1,042,000
                                                              ==========
</TABLE>
 
     A final appraisal of certain assets included in the acquisition has not
been completed. Pending the results of the appraisal, the allocation among the
various components of the purchase price may change; however, any such
reallocation will not materially affect the overall financial position or
results of operations of the Company.
 
     The acquisition had no significant impact on operating results for the year
ended March 31, 1998, as the acquisition was not effective until the last month
of the fiscal year. The effect on operating results, assuming the acquisition
had taken place as of the beginning of each of the years ended March 31, 1996,
1997 and 1998, would not have been material.
 
NOTE 4--SHORT-TERM INVESTMENTS
 
     Short-term investments consist of the following:
 
<TABLE>
<CAPTION>
                                                                         UNREALIZED      MARKET
                                                               COST      GAIN (LOSS)     VALUE
                                                            ----------   -----------   ----------
<S>                                                         <C>          <C>           <C>
March 31, 1997:
  U.S. Government agency securities.......................  $2,772,827    $(13,716)    $2,759,111
  Corporate bonds.........................................     250,620         896        251,516
  Registered investment company consisting of U.S.
     Government and corporate fixed income securities.....   6,031,924     (54,780)     5,977,144
                                                            ----------    --------     ----------
                                                            $9,055,371    $(67,600)    $8,987,771
                                                            ==========    ========     ==========
March 31, 1998:
  U.S. Government agency securities.......................  $1,016,136    $    744     $1,016,880
  Corporate bonds.........................................     352,240         732        352,972
  Registered investment company consisting of U.S.
     Government and corporate fixed income securities.....   5,640,158      22,540      5,662,698
                                                            ----------    --------     ----------
                                                            $7,008,534    $ 24,016     $7,032,550
                                                            ==========    ========     ==========
</TABLE>
 
                                       39
<PAGE>   42
 
     Management does not anticipate realization of the holding gain in the
upcoming year due to the anticipated adequacy of cash and cash equivalents
currently held to fund current operating requirements.
 
NOTE 5--MAJOR CUSTOMERS AND EXPORT SALES
 
     During the years ended March 31, 1996 and 1997, a significant percentage of
the Company's revenues was derived from a limited number of customers. Sales to
Complete Business Solutions, Inc. (CBSI) represented approximately 32% and 19%
of revenues, respectively, for such periods. Additionally, sales to ASD
International (ASD) and Wheeling Pittsburgh Steel Corporation (WP) represented
14% and 10%, respectively, of revenues in 1996. Accounts receivable from CBSI
totaled $152,757 at March 31, 1997.
 
     Sales to INTERSOLV, Inc. accounted for 11% of the Company's total revenues
during the year ended March 31, 1998, and accounts receivable from INTERSOLV,
Inc. totaled $797,563 at March 31, 1998.
 
     For the year ended March 31, 1998, export sales to customers not affiliated
with the Company accounted for approximately 19% of total revenues, with sales
to Europe and Asia representing approximately 8% and 7% of total revenues,
respectively. Such export sales were not significant for the years ended March
31, 1996 and 1997.
 
NOTE 6--PROPERTY AND EQUIPMENT
 
     Property and equipment consists of the following:
 
<TABLE>
<CAPTION>
                                                                    MARCH 31
                                                              ---------------------
                                                                1997        1998
                                                              --------   ----------
<S>                                                           <C>        <C>
Land........................................................  $     --   $   87,000
Computer equipment..........................................   145,192      673,894
Software and other equipment................................    31,258      145,993
Furniture and fixtures......................................    22,999      332,136
Leasehold improvements......................................        --      190,299
                                                              --------   ----------
Total property and equipment................................   199,449    1,429,322
Accumulated depreciation and amortization...................   (79,884)    (137,663)
                                                              --------   ----------
Property and equipment, net.................................  $119,565   $1,291,659
                                                              ========   ==========
</TABLE>
 
NOTE 7--TRANSACTIONS WITH AFFILIATE
 
     Prior to the ERA acquisition, (see Note 3), the Company and ERA developed
certain COBOL analysis software products (the Products) through their
cooperative research and development efforts, which were funded in part through
grants from the Industrial Credit and Investment Corporation of India, Ltd.
(ICICI), an investment bank that administers an agreement between the
governments of the United States of America and the Republic of India. The
ongoing process of development of the Products commenced in 1990 and had been
undertaken pursuant to the terms of various agreements among the Company, ERA
and ICICI, which have been amended from time to time to reflect their evolving
relationships.
 
     Until March 31, 1996, the Company had a 65% ownership interest in the
Products and paid a royalty to ICICI (see Note 8), a 10% royalty to ERA based on
revenues from sales or licensing of Products and a monthly research and
development fee of $5,000 to ERA.
 
     Pursuant to a product purchase agreement (the Product Purchase Agreement)
dated March 31, 1996, the Company acquired ERA's 35% interest in the Products in
exchange for 226,305 shares of the Company's common stock. The transaction was
assigned a nominal value of $2,263 to reflect the predecessor basis of ERA in
the Products by applying the Company's accounting policy of expensing all
research and development costs.
 
     Pursuant to the Product Purchase Agreement, the Company agreed to pay the
following to:
 
        - ERA -- a research and development fee (royalty) equal to 10% of gross
          Product revenues (in no event were quarterly payments to be less than
          $12,000) through December 31, 1996;
 
                                       40
<PAGE>   43
 
        - ICICI on behalf of ERA -- 5% of gross Product revenues until such
          aggregate payments (see Note 8) satisfy ERA's obligation to ICICI (the
          ERA Obligation) after which such payments shall cease; and,
 
        - ERA -- a monthly maintenance fee of $5,000 for the first three years,
          $6,000 for the next three years, and thereafter in amounts to be
          mutually determined.
 
     Effective January 1, 1997, the Company and ERA agreed to amend the Product
Purchase Agreement to eliminate the research and development fee (royalty) and
the monthly maintenance fee described above and replace them with specific fees
determined on a project-by-project basis for research and development performed
by ERA. ERA performed research and development for the Company under this
arrangement through the date of the acquisition, when the Company acquired ERA's
research and development facility.
 
     Effective March 1, 1996, the Company formalized its marketing arrangements
with ERA by entering into a marketing agreement to distribute the Company's
products on a non-exclusive basis in India. The agreement provided for royalties
to be paid by ERA to the Company based on 40% of revenues (using the suggested
international list prices established by the Company) from customers in India
through September 1, 1996, and 50% thereafter. Royalties received under the
terms of the marketing agreement amounted to $11,500, $205,799 and $299,930 for
the years ended March 31, 1996, 1997 and 1998, respectively. The marketing
agreement was terminated coincident with the ERA acquisition, effective February
27, 1998.
 
     The Company incurred the following expenses in connection with its
activities with ERA:
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED MARCH 31
                                                       -----------------------------
                                                        1996       1997       1998
                                                       -------   --------   --------
<S>                                                    <C>       <C>        <C>
Royalty expense......................................  $18,941   $ 36,310   $     --
                                                       =======   ========   ========
Research and development fees........................  $60,000   $129,218   $229,977
                                                       =======   ========   ========
Fees applicable to professional services provided by
  ERA employees......................................  $72,429   $ 77,078   $ 13,000
                                                       =======   ========   ========
</TABLE>
 
     During the year ended March 31, 1998, the Company paid to ERA sales support
and maintenance support fees related to certain U.S. sales where ERA was
instrumental in effecting the sale and for which ERA was expected to provide
ongoing maintenance support to the customer. For the year ended March 31, 1998,
these fees totaled $142,833, net of $40,417 in unamortized maintenance support
expense which was eliminated in connection with the ERA acquisition.
 
NOTE 8--ROYALTY AGREEMENTS
 
     VIASOFT, Inc. -- Effective December 1, 1993, the Company entered into a
five-year license agreement (the License Agreement) with VIASOFT, Inc. (the
Licensee) which generally granted to the Licensee a worldwide license to use and
market certain of the Company's products on a private label basis. The License
Agreement provides, among other things, for royalties of up to 30% of any
license or maintenance fees related to licensed products and minimum advance
royalty payments totaling $900,000 during the eighteen-month exclusivity period
which expired on May 31, 1995.
 
     Pursuant to the terms of the agreement, the Company gave notice to VIASOFT
on December 3, 1996 of its intention to terminate the License Agreement as a
result of VIASOFT's not making additional minimum royalty payments of at least
$1,000,000 during the twelve-month period preceding the third anniversary of the
License Agreement. The Company received notice from VIASOFT that it did not
intend to extend the License Agreement by making such minimum payments and
acknowledging that the License Agreement would terminate effective June 4, 1997.
 
     The License Agreement had provided that, upon termination, the Company
would be obligated to deliver to VIASOFT that number of copies of the licensed
products equal to the balance of the advance royalty divided by the applicable
licensed product royalty amounts. At such time as these copies were delivered to
VIASOFT, the Company would recognize as income the balance of the advance
royalty. On June 30, 1997, the Company
 
                                       41
<PAGE>   44
 
received formal notice from VIASOFT that no further copies of the licensed
products were to be delivered to VIASOFT, and that the Company was relieved of
such obligation under the terms of the License Agreement. Accordingly, the
$780,552 balance of the advance royalty that had been deferred was recognized as
software license revenue in the year ended March 31, 1998.
 
     The Company had not received any royalty payments beyond the minimum
advance royalty of $900,000, which was being recognized as income as copies of
the licensed products were delivered to VIASOFT for resale, and, to a lesser
extent, as royalties on the related maintenance revenues were reported to the
Company by VIASOFT. Software license fees as presented in the accompanying
statements of operations includes VIASOFT royalty income of $21,177, $15,927 and
$780,552 for the years ended March 31, 1996, 1997 and 1998, respectively. Total
revenues from VIASOFT, including income from the advance royalty, represented
8%, 2% and 6% of the Company's total revenues for the years ended March 31,
1996, 1997 and 1998, respectively.
 
     The License Agreement also requires the Company to pay a royalty of 5% of
sales of its products which contain or use a COBOL parser, up to $1,000,000 over
a five-year period ending November 30, 1998. Since inception through March 31,
1998, the Company has expensed a total of $218,018 in related royalties expense.
 
     ICICI -- Pursuant to the terms of the June 1, 1990 ICICI agreement, as
amended (the ICICI Agreement), the Company received a $255,000 grant to
partially fund research and development costs to develop the Products in
association with ERA. The grant program administered by ICICI was designed to
accelerate the pace and quality of technological innovation through the
promotion and financing of Indo-U.S. cooperative technology development ventures
(see Note 7). ERA received a grant of approximately $101,000 under the ICICI
Agreement for similar purposes.
 
     The ICICI Agreement required the Company and ERA to make royalty payments
based on Product revenues up to a maximum of approximately $735,000. The Company
and ERA were jointly and severally obligated for payment of the royalties.
However, subsequent to March 31, 1993, ICICI agreed to accept from the Company
total royalties of 10% of Product revenues and 5% of revenues from Product
maintenance and Product-related services in satisfaction of future royalties due
from the Company and ERA. Total royalty expense under the ICICI Agreement for
the years ended March 31, 1996, 1997 and 1998 amounted to $34,006, $122,585 and
$497,965, respectively.
 
     Both the maximum royalty obligation of the Company pursuant to the ICICI
Agreement and the amount of the ERA Obligation (see Note 7) were paid in full
during the year ended March 31, 1998.
 
NOTE 9--STOCK OPTION PLANS
 
     On September 12, 1994, the Company's shareholders approved the SEEC, Inc.
1994 Stock Option Plan (the 1994 Plan) under which a maximum of 226,305 common
shares may be awarded during the 1994 Plan's ten-year term. On August 8, 1997,
the Company's shareholders approved the SEEC, Inc. 1997 Stock Option Plan (the
1997 Plan), under which a maximum of 650,000 common shares may be awarded,
through June 2007. The purpose of the 1994 and 1997 Plans (collectively, the
Plans) is to promote the interests of the Company and its shareholders by
providing key employees with additional incentives to continue the success of
the Company.
 
     Under the Plans, options are awarded by a committee designated by the
Company's Board of Directors or, if no committee is designated, the full Board.
Incentive stock options and non-qualifying stock options may be granted to
purchase a specified number of shares of common stock at a price not less than
the fair market value on the date of grant and for a term not to exceed 10
years. Options become exercisable at such times and in such installments as
determined at the date of grant, subject to continued employment and certain
other conditions, including a limited ability to sell or otherwise transfer
shares issued pursuant to the Plans.
 
                                       42
<PAGE>   45
 
     Stock option activity under the 1994 Plan during fiscal years ended March
31, 1996, 1997 and 1998 was as follows:
 
<TABLE>
<CAPTION>
                                                             YEAR ENDED MARCH 31
                                        --------------------------------------------------------------
                                               1996                 1997                  1998
                                        ------------------   -------------------   -------------------
                                                 WEIGHTED              WEIGHTED              WEIGHTED
                                                  AVERAGE               AVERAGE               AVERAGE
                                                 EXERCISE              EXERCISE              EXERCISE
                                                   PRICE                 PRICE                 PRICE
            FIXED OPTIONS               SHARES   PER SHARE   SHARES    PER SHARE   SHARES    PER SHARE
            -------------               ------   ---------   -------   ---------   -------   ---------
<S>                                     <C>      <C>         <C>       <C>         <C>       <C>
Outstanding at beginning of year......  27,698     $.45       49,556     $ .45     146,455    $ 3.08
Granted...............................  21,858     $.44       98,709     $4.40     108,625    $12.90
Exercised.............................      --     $ --           --     $  --        (452)   $ 3.65
Canceled..............................      --     $ --       (1,810)    $3.31     (32,564)   $ 8.28
                                        ------               -------               -------
Outstanding at end of year............  49,556     $.45      146,455     $3.08     222,064    $ 7.12
                                        ======               =======               =======
Options exercisable at end of year....  21,318                34,593                79,579
                                        ======               =======               =======
Weighted average fair value of options
  granted during the year.............  $  .04               $   .87               $  5.81
                                        ======               =======               =======
</TABLE>
 
     Stock option activity under the 1997 Plan during fiscal year ended March
31, 1998 was as follows:
 
<TABLE>
<CAPTION>
                                                                WEIGHTED
                                                                 AVERAGE
                                                                EXERCISE
                                                                  PRICE
                    FIXED OPTIONS                      SHARES   PER SHARE
                    -------------                      -------  ---------
<S>                                                    <C>      <C>
Outstanding at beginning of year.....................       --   $   --
Granted..............................................  121,750   $16.06
Exercised............................................       --   $   --
Canceled.............................................       --   $   --
                                                       -------
Outstanding at end of year...........................  121,750   $16.06
                                                       =======
Options exercisable at end of year...................       --
                                                       =======
Weighted average fair value of options granted during
  the year...........................................    $6.93
                                                       =======
</TABLE>
 
SUMMARY STOCK OPTION INFORMATION:
 
     The Company accounts for the Plans using the intrinsic value method.
Accordingly, no compensation cost has been recognized for the Plans. The pro
forma data below reflects the effect had compensation cost for the Plans been
determined based on the fair market value at the grant dates for the awards
under the Plans in accordance with SFAS No. 123.
 
<TABLE>
<CAPTION>
                                                                            YEAR ENDED MARCH 31
                                                                           ----------------------
                                                                             1997         1998
                                                                           ---------   ----------
<S>                                    <C>                                 <C>         <C>
Net income (loss)                      As reported.......................  $(396,389)  $2,509,796
                                       Pro forma.........................  $(404,389)  $2,365,106
Net income (loss) per basic share      As reported.......................  $    (.13)  $      .49
                                       Pro forma.........................  $    (.13)  $      .46
Net income (loss) per diluted share    As reported.......................  $    (.13)  $      .46
                                       Pro forma.........................  $    (.13)  $      .44
</TABLE>
 
     The fair value of each option grant is estimated on the date of grant using
the Black-Sholes option pricing model with the following assumptions used for
grants for the year ended March 31, 1997: a risk free interest rate
 
                                       43
<PAGE>   46
 
of 7%, dividend yield of zero, and expected weighted average term of 2.1 years.
The assumptions used for grants for the year ended March 31, 1998 were: a risk
free interest rate of 6%, dividend yield of zero, and expected weighted average
term of 2.9 years. Volatility of 60% was assumed in the estimation of fair value
for options granted subsequent to the Company's initial public offering, for the
years ended March 31, 1997 and 1998. The estimated fair value of options granted
in fiscal 1996 and resultant compensation costs were not significant.
 
     The following table summarizes information about stock options outstanding
at March 31, 1998:
 
<TABLE>
<CAPTION>
                          OPTIONS OUTSTANDING             OPTIONS EXERCISABLE
                  ------------------------------------   ---------------------
                                WEIGHTED     WEIGHTED                WEIGHTED
                                AVERAGE       AVERAGE                 AVERAGE
    RANGE OF                   REMAINING     EXERCISE                EXERCISE
    EXERCISE       NUMBER     CONTRACTUAL      PRICE      NUMBER       PRICE
     PRICES       OF SHARES   LIFE (YEARS)   PER SHARE   OF SHARES   PER SHARE
----------------  ---------   ------------   ---------   ---------   ---------
<S>               <C>         <C>            <C>         <C>         <C>
$.44--$.49          48,651        6.35        $  .45      46,278       $ .45
$3.31--$4.00        80,138        8.84        $ 3.84      29,445       $3.88
$8.13--$8.50        37,175        9.38        $ 8.63       3,856       $8.24
$13.50--$19.00     170,350        9.86        $15.94          --       $  --
$24.50               7,500        9.42        $24.50          --       $  --
                   -------                                ------
                   343,814        9.06        $10.33      79,579       $2.09
                   =======                                ======
</TABLE>
 
     During the year ended March 31, 1997, the Company issued non-qualified
options to purchase a total of 11,315 shares of common stock at exercise prices
of $3.62 and $7.25.
 
     During the year ended March 31, 1998, the Company issued non-qualified
options to purchase a total of 45,000 shares of common stock at an exercise
price of $20.75. The Company also issued non-qualified options to purchase 9,000
shares of common stock at an exercise price of $8.25 in conjunction with an
employment severance agreement, and in exchange for the forfeiture of
previously-issued incentive stock options to purchase 20,000 shares of common
stock at the same exercise price of $8.25.
 
     Options to purchase 2,263 shares of common stock were exercised at an
exercise price of $7.25 during the year ended March 31, 1998.
 
     At March 31, 1998, non-qualified options to purchase a total of 63,052
shares of common stock were outstanding, exercisable as follows:
 
<TABLE>
<CAPTION>
    EXERCISE   NUMBER OF
     PRICE      SHARES                          EXERCISABLE
    --------   ---------                        -----------
     <S>        <C>        <C>
     $ 3.62      9,052     4,526 each at August 30, 1997 and 1998
     $ 8.25      9,000     3,000 each at April 1, June 1, and August 1, 1998
     $20.75     45,000     15,000 each at August 8, 1998, 1999 and 2000
</TABLE>
 
NOTE 10 -- LONG-TERM DEBT
 
     The Company was a party to a term loan agreement with ICICI pursuant to
which ICICI made a loan of $300,000 to the Company. The loan was secured by the
Company's trade accounts receivable and equipment and required interest at the
prime rate plus 2.5% (limited to a floor of 6% and ceiling of 9%). Quarterly
principal payments of $30,000 were originally scheduled to commence December 15,
1995. On July 23, 1996, the ICICI term loan agreement was amended to defer the
start of the quarterly payments until December 15, 1996.
 
     The entire outstanding balance of principal and interest was repaid on June
30, 1997.
 
NOTE 11 -- COMMON STOCK WARRANTS
 
     At March 31, 1996, 1997 and 1998, the Company had outstanding warrants to
purchase 167,458, 249,998 and 207,000 shares of the Company's common stock,
respectively (see Note 2). All warrants are exercisable at $.02, except for
certain warrants outstanding at March 31, 1997 and 1998 to purchase 207,000
shares of common stock at $8.70 per share. Warrants were exercised as follows:
91,474 shares as of March 18, 1996, 124,460 shares as of March 25, 1997, and
42,998 shares as of December 18, 1997. At March 31, 1996, 1997 and 1998,
167,458,
 
                                       44
<PAGE>   47
 
249,998 and 207,000 shares of common stock, respectively, were reserved for
issuance upon the exercise of outstanding warrants. All outstanding warrants at
March 31, 1998 will expire on January 22, 2002.
 
NOTE 12 -- OPERATING LEASES
 
     In March 1998 the Company moved into a new headquarters facility under an
operating lease executed in November 1997. In addition to minimum rentals, the
lease provides for adjustments relating to changes in real estate taxes and
other operating expenses. The Company also rents seven remote offices, including
six sales offices and the office facilities of the Company's subsidiaries based
in Delaware and the United Kingdom. Management intends to renew or replace these
leases during the normal course of business.
 
     Total rent expense incurred for all leases during the years ended March 31,
1996, 1997 and 1998 amounted to $23,710, $48,849 and $187,562, respectively.
Future minimum rental payments as of March 31, 1998 under leases having
noncancelable lease terms in excess of one year are as follows:
 
<TABLE>
<CAPTION>
YEAR ENDING MARCH 31,
---------------------
<S>                                                            <C>
1999.......................................................    $  368,844
2000.......................................................       310,658
2001.......................................................       294,894
2002.......................................................       294,894
2003.......................................................       270,320
                                                               ----------
                                                               $1,539,610
                                                               ==========
</TABLE>
 
NOTE 13 -- INCOME TAXES
 
     No provision for income taxes was recorded for the years ended March 31,
1996 and 1997 due to the Company's significant net operating loss position. The
provision for income taxes for the year ended March 31, 1998 consisted of
deferred Federal income taxes of $219,000 and deferred state income taxes of
$146,000.
 
     As presented below, at March 31, 1997 the Company calculated a net deferred
tax asset, which was offset by a valuation allowance to eliminate the deferred
benefit of net operating loss carryforwards and reversing temporary differences,
since management could not determine at that time that it was more likely than
not that the benefit could be realized in the foreseeable future. During the
year ended March 31, 1998, the valuation allowance was eliminated based on
profitable operations for the year and future income projections.
 
     The components of the net deferred tax asset (liability) are as follows:
 
<TABLE>
<CAPTION>
                                                                     MARCH 31
                                                              ----------------------
                                                                1997        1998
                                                              --------   -----------
<S>                                                           <C>        <C>
Net deferred tax asset (liability) resulting from using the
  cash method of accounting for tax reporting, attributable
  to:
  Accounts payable..........................................  $126,577   $   427,621
  Accrued payroll and related taxes.........................     8,733       316,534
  Deferred maintenance revenue and advance royalty..........   372,549       341,990
  Accrued royalties.........................................    49,858        91,027
  Accounts receivable, net..................................  (359,937)   (2,318,055)
  Prepaid expenses..........................................   (73,529)      (85,101)
Other, net..................................................    11,233        86,712
Tax effect of unrealized gains and losses on investments....        --        (9,700)
                                                              --------   -----------
                                                               135,484    (1,148,972)
Tax effect of federal and state net operating loss
  carryforwards.............................................   779,169       776,642
                                                              --------   -----------
Net deferred tax asset (liability)..........................   914,653      (372,330)
Valuation allowance.........................................   914,653            --
                                                              --------   -----------
Deferred tax (liability), net...............................  $     --   $  (372,330)
                                                              ========   ===========
</TABLE>
 
                                       45
<PAGE>   48
 
     Following are the significant differences between the U.S. Federal
statutory tax rate and the Company's effective tax rate for financial statement
purposes for the year ended March 31, 1998:
 
<TABLE>
<S>                                                           <C>
Federal statutory tax rate..................................   34.0%
State income taxes..........................................    6.6
Reduction in valuation allowance............................  (24.7)
Other, net..................................................   (3.2)
                                                              -----
Effective tax rate..........................................   12.7%
                                                              =====
</TABLE>
 
     The Company had unused net operating loss carryforwards available at March
31, 1998 that may be applied to reduce future taxable income as follows:
 
<TABLE>
<CAPTION>
                                                         NET OPERATING LOSS
                   EXPIRES DURING                           CARRYFORWARDS
                     YEAR ENDING                       -----------------------
                      MARCH 31                          FEDERAL       STATE
                   --------------                      ----------   ----------
                         <S>                           <C>          <C>
                         2000........................  $       --   $1,092,226
                         2001........................          --      265,494
                         2006........................      65,955           --
                         2007........................      70,111           --
                         2008........................     230,949           --
                         2010........................      53,743           --
                         2011........................     255,274           --
                         2012........................   1,092,226           --
                         2013........................     265,494           --
                                                       ----------   ----------
                                                       $2,033,752   $1,357,720
                                                       ==========   ==========
</TABLE>
 
     The expected statutory tax benefit of the net operating loss carryforwards
was recorded as a reduction in the income tax provision for financial reporting
purposes for the year ended March 31, 1998.
 
     If an "ownership change" were to occur, within the meaning of the Internal
Revenue Code of 1986, as amended, the utilization of net operating loss
carryforwards would be subject to an annual limitation.
 
NOTE 14 -- EARNINGS PER SHARE
 
     Earnings per share (EPS) for all periods presented is computed in
accordance with the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (SFAS No. 128). The provisions and disclosure
requirements for SFAS No. 128 were required to be adopted for interim and annual
periods ending after December 15, 1997, with restatement of EPS for prior
periods.
 
     The following is a reconciliation of the denominators (the number of
shares) of the basic and diluted EPS. The numerator (earnings or net income) is
the same for the basic and the diluted EPS computations for all periods
presented.
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED MARCH 31
                                                     ---------------------------------
                                                       1996        1997        1998
                                                     ---------   ---------   ---------
<S>                                                  <C>         <C>         <C>
Basic shares.......................................  2,269,707   3,037,484   5,145,032
Effect of dilutive securities--options and
  warrants.........................................         --          --     271,537
                                                     ---------   ---------   ---------
Diluted shares.....................................  2,269,707   3,037,484   5,416,569
                                                     =========   =========   =========
</TABLE>
 
     For the year ended March 31, 1998, options and warrants to purchase 12,500
shares and 45,000 shares, respectively, were excluded from the computation of
diluted EPS because the options and warrants' exercise prices were greater than
the average market price of the common shares.
 
                                       46
<PAGE>   49
 
NOTE 15 -- RELATED PARTY TRANSACTIONS
 
     In September 1996 the Company sold 4,139 shares of common stock to a
director and 43,450 shares to family members of a director at a value of $3.62
per share, for an aggregate purchase price of $172,440.
 
     A portion of the annual salaries of two officers and shareholders,
aggregating $127,106, was deferred in a prior year. Interest at 7% was accrued
on the deferred salaries, with related interest of $8,896 and $2,595 charged to
expense during the years ended March 31, 1996 and 1997, respectively. The
Company also issued warrants, on the basis of one warrant (pre-split) for each
dollar of deferred salary, to purchase 57,529 shares of common stock at a value
of $.02 per share (see Note 11). Effective July 1996, the entire balance of
principal and accrued interest was converted into 52,827 shares of the Company's
common stock at a value of $3.31 per share.
 
NOTE 16 -- COMMITMENTS AND CONTINGENCIES
 
     The Company has entered into employment/severance (change in control)
agreements with four executive officers and has employment agreements with
certain key employees that provide for minimum annual salaries and automatic
annual renewal at the end of the initial two-year term. The agreements generally
contain, among other things, confidentiality agreements, assignment to the
Company of inventions made during employment (and under certain circumstances
for two years following termination of employment) and non-competition
agreements for the term of the agreements plus two years. The executive
employment/severance agreements provide for payments of up to one year's
compensation if there is a change of control in the Company, as defined, and a
termination of employment. The maximum contingent liability under these
agreements was approximately $477,000 at March 31, 1998.
 
     The Company had an outstanding irrevocable letter of credit in the amount
of $300,000 at March 31, 1998. This letter of credit, which expires on November
19, 2000, serves as collateral on the lease obligation entered into in November
1997 in connection with the Company's headquarters facility (see Note 12).
 
                                       47
<PAGE>   50
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURES
 
     None.
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF SEEC
 
     Information required by this item is incorporated by reference from the
information under the caption "Directors and Executive Officers of SEEC" in the
Company's definitive Proxy Statement to be filed pursuant to Regulation 14A
relating to the Company's Annual Meeting of Shareholders to be held on August 6,
1998 and is incorporated herein by reference to this Item 10.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     Information required by this item is incorporated by reference from the
information under the caption "Executive Compensation" in the Company's
definitive Proxy Statement to be filed pursuant to Regulation 14A relating to
the Company's Annual Meeting of Shareholders to be held on August 6, 1998 and is
incorporated herein by reference to this Item 11.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     Information required by this item is incorporated by reference from the
information under the caption "Security Ownership of Certain Beneficial Owners
and Management" in the Company's definitive Proxy Statement to be filed pursuant
to Regulation 14A relating to the Company's Annual Meeting of Shareholders to be
held on August 6, 1998 and is incorporated herein by reference to this Item 12.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     Information required by this item is incorporated by reference from the
information under the caption "Certain Relationships and Related Transactions"
in the Company's definitive Proxy Statement to be filed pursuant to Regulation
14A relating to the Company's Annual Meeting of Shareholders to be held on
August 6, 1998 and is incorporated herein by reference to this Item 13.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     (a) Documents filed as part of this Report
 
     1. FINANCIAL STATEMENTS. The following financial statements of the Company
are filed as part of this Annual Report on Form 10-K:
 
<TABLE>
<CAPTION>
                                                                   PAGE
                                                                  NUMBER
                                                                  ------
    <S>                                                           <C>
    Report of Independent Certified Public Accountants..........     30
    Consolidated Balance Sheets as of March 31, 1997 and 1998...     31
    Consolidated Statements of Operations for the years ended
      March 31, 1996, 1997 and 1998.............................     32
    Consolidated Statements of Changes in Shareholders' Equity
      (Deficit) for the years ended
      March 31, 1996, 1997 and 1998.............................     33
    Consolidated Statements of Cash Flows for the years ended
      March 31, 1996, 1997 and 1998.............................     34
    Notes to Consolidated Financial Statements..................  35-47
    2. FINANCIAL STATEMENT SCHEDULES.
    Schedule II -- Valuation and Qualifying Accounts for the
      years ended
      March 31, 1996, 1997 and 1998.............................     51
</TABLE>
 
                                       48
<PAGE>   51
 
  3. EXHIBITS. The Exhibits listed below are filed or incorporated by reference
               as part of this Annual Report on Form 10-K.
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                             DESCRIPTION
-------                           -----------
<C>       <S>
   3.1*   The Company's Amended and Restated Articles of Incorporation
   3.2*   The Company's Amended and Restated Bylaws
  10.1*   SEEC, Inc. 1994 Stock Option Plan
  10.2*   Cooperation and Project Financing Agreement dated June 1,
          1990, as supplemented and amended, among the Industrial
          Credit and Investment Corporation of India, Limited,
          ("ICICI"), ERA and the Company
  10.3*   Loan Agreement dated June 20, 1994 between ICICI and the
          Company, as amended
  10.4*   International Software Marketing and License Agreement dated
          November 29, 1993 between VIASOFT, Inc. and the Company, as
          amended
  10.5*   Product Purchase Agreement dated as of March 31, 1996
          between the Company and ERA
  10.6*   Marketing Agreement dated as of March 1, 1996 between the
          Company and ERA
  10.7*   Stock Purchase Agreement dated as of July 15, 1996 among the
          Company, Glen Chatfield and certain former noteholders of
          the Company
  10.8*   Stock Purchase Agreement dated as of August 15, 1996 among
          the Company and certain purchasers of its Common Stock
  10.9*   Registration Rights Agreement dated as of August 15, 1996
          among the Company and certain of its shareholders
 10.10*   Employment Agreement dated October 1, 1996 between the
          Company and Ravindra Koka
 10.11*   Employment Agreement dated October 1, 1996 between the
          Company and John D. Godfrey
 10.12*   Employment Agreement dated October 1, 1996 between the
          Company and Richard J. Goldbach
 10.13*   Agreement dated July 16, 1996 between the Company and Raj
          Reddy
 10.14*   Trust Agreement dated August 4, 1992 among the Company,
          Ravindra Koka and Dr. K. Buddhiraju
 10.15**  SEEC, Inc. 1997 Stock Option Plan
 10.16**  Letter Employment Agreement dated December 26, 1996 between
          the Company and Allen D. Gart
 10.17**  Amendment dated January 1, 1997 to Product Purchase
          Agreement between the Company and ERA
 10.18    Memorandum of Understanding dated February 27, 1998 between
          the Company and ERA
  21.1    Subsidiaries of the Company
    27    Financial Data Schedule
</TABLE>
 
*  Incorporated by reference to Exhibits to the Company's Registration Statement
   on Form S-1, File No. 333-14027
** Incorporated by reference to Exhibits to the Company's Annual Report on Form
   10-K, File No. 0-21985.
 
                                       49
<PAGE>   52
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15 (d) of the Securities Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
 
                                          SEEC, Inc.
June 16, 1998
                                          By:        /s/ RAVINDRA KOKA
                                             -----------------------------------
                                                       Ravindra Koka
                                             President, Chief Executive Officer
                                                         and Director
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                    SIGNATURE AND TITLE                                       DATE
                    -------------------                                       ----
<S>                                                          <C>
 
                    By /s/ RAVINDRA KOKA                                  June 16, 1998
------------------------------------------------------------
                       Ravindra Koka
      President, Chief Executive Officer and Director
 
                      /s/ JOHN D. GODFREY                                 June 16, 1998
------------------------------------------------------------
                      John D. Godfrey
           Vice-President-Professional Services,
                   Secretary and Director
 
                    /s/ RICHARD J. GOLDBACH                               June 16, 1998
------------------------------------------------------------
                    Richard J. Goldbach
           Treasurer and Chief Financial Officer
 
                         /s/ RAJ REDDY                                    June 16, 1998
------------------------------------------------------------
                         Raj Reddy
             Chairman of the Board and Director
 
                     /s/ STANLEY A. YOUNG                                 June 16, 1998
------------------------------------------------------------
                      Stanley A. Young
                          Director
 
                       /s/ RADHA R. BASU                                  June 16, 1998
------------------------------------------------------------
                       Radha R. Basu
                          Director
 
                     /s/ ABRAHAM OSTROVSKY                                June 16, 1998
------------------------------------------------------------
                     Abraham Ostrovsky
                          Director
 
                     /s/ GLEN F. CHATFIELD                                June 16, 1998
------------------------------------------------------------
                     Glen F. Chatfield
                          Director
</TABLE>
 
                                       50
<PAGE>   53
 
                                   SEEC, INC.
 
                 VALUATION AND QUALIFYING ACCOUNTS--SCHEDULE II
 
                   YEARS ENDED MARCH 31, 1996, 1997 AND 1998
 
<TABLE>
<CAPTION>
                   COLUMN A                        COLUMN B      COLUMN C     COLUMN D      COLUMN E
                   --------                      ------------   ----------   -----------   ----------
                                                                ADDITIONS    DEDUCTIONS
                                                  BALANCE AT    CHARGED TO   CREDITED TO   BALANCE AT
                                                 BEGINNING OF   COSTS AND     ACCOUNTS       END OF
                  DESCRIPTION                       PERIOD       EXPENSES    RECEIVABLE      PERIOD
                  -----------                    ------------   ----------   -----------   ----------
<S>                                              <C>            <C>          <C>           <C>
MARCH 31, 1996
  Allowance deducted from related balance sheet
     account--Accounts receivable..............     $ 3,935      $ 6,836       $ 2,995      $ 7,776
                                                    =======      =======       =======      =======
MARCH 31, 1997
  Allowance deducted from related balance sheet
     account--Accounts receivable..............     $ 7,776      $ 9,392       $ 7,168      $10,000
                                                    =======      =======       =======      =======
MARCH 31, 1998
  Allowance deducted from related balance sheet
     account--Accounts receivable..............     $10,000      $71,975       $31,975      $50,000
                                                    =======      =======       =======      =======
</TABLE>
 
                                       51