<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

[X]      Annual report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the Fiscal Year ended December 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: 0-20937

                        PHOENIX INTERNATIONAL LTD., INC.
                    (Exact name of registrant in its charter)

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<S>                                                                     <C>
                          Florida                                                     59-3171810            
(State or other jurisdiction of incorporation or organization)           (I.R.S. Employer Identification No.)

            500 International Parkway, Heathrow, Florida                                 32746              
              (Address of principal executive offices)                                (Zip Code)

        (Registrant's telephone number, including area code):                      (407) 548-5100

     Securities registered pursuant to Section 12(b) of the Act:

               Common Stock, $0.01 Par Value Per Share                                   None
                        (Title of each class)                          (Name of each exchange on which registered)

     Securities registered pursuant to Section 12(g) of the Act:
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                                      None
                                (Title of class)

Indicate by check mark whether the Registrant: (1) 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 in response 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. [__]

The estimated aggregate market value of the voting stock held by non-affiliates
of the Registrant, based upon the closing sale price of Common Stock on March
22, 1999, as reported on the Nasdaq Stock Market's National Market, was
approximately $28,133,460. As of March 22, 1999, the Registrant had outstanding
8,504,989 shares of Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE 1998 ANNUAL REPORT TO SHAREHOLDERS OF THE REGISTRANT ARE
INCORPORATED BY REFERENCE IN PART II OF THIS FORM 10-K, AND PORTIONS OF THE
PROXY STATEMENT FOR THE REGISTRANT'S 1999 ANNUAL MEETING OF SHAREHOLDERS TO BE
HELD ON MAY 7, 1999 ARE INCORPORATED BY REFERENCE IN PART III OF THIS FORM
10-K.


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                               INDEX OF FORM 10-K

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PART I

<S>               <C>                                                                                                <C>

Item 1.           Business.......................................................................................     3

Item 2.           Properties.....................................................................................    16

Item 3.           Legal Proceedings..............................................................................    16

Item 4.           Submission of Matters to a Vote of Security Holders............................................    17

PART II

Item 5.           Market for Registrant's Common Equity and Related Stockholder Matters..........................    18

Item 6.           Selected Financial Data........................................................................    18

Item 7.           Management's Discussion and Analysis of Financial Condition and Results of Operations..........    18

Item 7A.          Quantitative and Qualitative Disclosure on Market Risk.........................................    18

Item 8.           Financial Statements and Supplementary Data....................................................    18

Item 9.           Changes and Disagreements with Accountants in Accounting and Financial Disclosure..............    18

PART III

Item 10.          Directors and Executive Officers of the Registrant.............................................    19

Item 11.          Executive Compensation.........................................................................    22

Item 12.          Security Ownership of Certain Beneficial Owners and Management.................................    22

Item 13.          Certain Relationships and Related Transactions.................................................    22

PART IV

Item 14.          Exhibits, Financial Statement Schedules and Reports on Form 8-K................................    23
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                                     PART I

ITEM 1.  BUSINESS

         This Report contains statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
These statements appear in a number of places in this Report and include all
statements that are not historical statements of fact regarding the intent,
belief or current expectations of the Company, its directors or its officers
with respect to, among other things: (i) the Company's financing plans; (ii)
trends affecting the Company's financial condition or results of operations;
and (iii) the Company's growth and operating strategies. Words such as "may,"
"would," "could," "will," "expect," "estimate," "anticipate," "believe,"
"intend," and "plans" are intended to identify forward-looking statements.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, many of
which are beyond the Company's control. Actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors. Among the key risks, assumptions and factors that may affect operating
results, performance and financial condition are the Company's reliance on
significant new customers and the timing of customer contracts; dependence on
its strategic alliances and marketing relationships; its ability to expand and
leverage its sales force and other distribution channels worldwide;
fluctuations in its quarterly results; ability to continue and manage its
growth; Year 2000 risks and concerns; competition and the other factors
discussed herein and in the Company's filings with the Securities and Exchange
Commission (the "Commission"), including the "Risk Factors" section of the
Company's Registration Statement on Form S-1 (Registration Number 333-31415),
as declared effective on August 13, 1997.

GENERAL

         Phoenix International Ltd., Inc. is a leading provider of highly
adaptable, enterprise-wide client/server application software and related
services to the financial services industry. Phoenix's flagship product, the
Phoenix System, is a fully integrated processing solution that manages
financial institutions' retail and wholesale operations in an open-system
environment. The Company offers the Phoenix System, together with its trade
finance and global payments software products and a full suite of professional
and systems integration services, to financial institutions around the world.
Phoenix's primary market focus in the United States is on financial
institutions with assets of $100 million to $2 billion and internationally is
on retail-oriented institutions located in Africa, Asia-Pacific, Europe,
Central and South America and the Middle East that have up to 300 branches
and/or one million accounts ("Tier 2 Banks"). As of December 31, 1998,
Phoenix's customer base included 127 institutions worldwide.

         The Company's Chairman of the Board and Chief Executive Officer,
Bahram Yusefzadeh, has 30 years of experience in the banking software industry.
In addition, the Company's senior management team has over 100 years of
experience in the retail banking and/or software industries and 45 years of
trade finance and wholesale banking experience. Mr. Yusefzadeh founded Phoenix
for the purpose of developing and marketing a new generation of integrated
banking software applications using client/server technology that would replace
less flexible and technologically dated legacy systems. Phoenix combined (i)
its management's extensive experience with banking and banking software
systems, (ii) input from a consortium of financial institutions concerning bank
operational and flexibility needs and (iii) advances in client/server
technology to design and develop the Phoenix System. During 1998, Phoenix
formed alliances with international banking organizations and technology and
service providers to further develop, enhance and expand the Phoenix System and
its capabilities for the international market.

INDUSTRY BACKGROUND

         Many financial institutions employ legacy computer systems for their
core processing needs. These legacy systems were originally developed for large
mainframe and mid-range computer environments. Like legacy systems, the Phoenix
System supports core areas of bank data processing, including system
administration, account processing of loans and deposits, nightly processing,
general ledger, budgeting, teller functions and holding company accounting.
Although some modified legacy systems have introduced newer technologies to



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provide for easier use, increased data storage and more flexible access to
data, these systems generally are limited because they are based on decades-old
architecture that does not permit full integration of data. Without full
integration of data, the information provided by these modified legacy systems
generally is neither complete nor readily accessible. Thus, Phoenix believes
that financial institutions using legacy-based systems are at a competitive
disadvantage.

         Over the past several years, the competitive landscape of the
financial services industry has changed dramatically and banks now compete
directly with diversified non-bank financial service providers. Financial
institutions, like other businesses, face pressure and challenges to do things
faster, more efficiently and more profitably. Recent developments such as the
rapid acceptance and use of electronic commerce have further elevated customer
expectations for convenient access to a full suite of financial services. In
order to stay competitive, financial institutions now face an increased need
for detailed, easily accessible information about their institutions and
customers in order to develop and market profitable products and services more
effectively and to expand customer relationships.

         Phoenix believes that client/server computing makes possible the
development of powerful applications that are capable of addressing
enterprise-wide business problems in a flexible and cost-effective manner. The
client/server model consists of personal computer workstation "clients"
connected on enterprise-wide networks to "servers" that provide data storage
and processing capabilities. Because of this allocation, a client/server system
is scalable, that is, upgrading the server or replacing it with a more powerful
model can increase its responsiveness and capacity. Client/server systems also
offer the level of data integrity and security that financial institutions
require because access to information can be controlled by server-based
relational database management systems. In addition, the development of the
Microsoft(R) Windows NT(R) operating system in the mid-1990s has increased the
cost-competitiveness of client/server systems.

         Phoenix believes that relatively few financial institutions have fully
realized the benefits offered by client/server technology due to the limited
number of vendors that offer true client/server applications. However,
management believes that due to the recent and rapid developments in banking
software technology, an increasing number of U.S. and international financial
institutions are recognizing the outdated functionality of their current
software and hardware systems and are evaluating the data processing
alternatives available to improve performance and increase flexibility and
functionality.

THE PHOENIX SOLUTION

         The Phoenix System allows financial institutions to integrate data
into a comprehensive management information network that is readily accessible
throughout the entire institution, capable of being modified to suit the
particular needs of an institution and easily interfaced with other products.
The Company believes that the Phoenix System is easy to use and simple to
learn, which enables a financial institution to provide higher quality customer
service with reduced operating and training costs. Unlike legacy systems, the
Phoenix System is a fully integrated system that provides significant
advantages in three critical areas: (i) customer relationship management, (ii)
management decision support, and (iii) financial product development. In
addition, the Phoenix System is flexible and scalable, it stores dates and
performs calculations using code written in four-digit years, hence, it is year
2000 compliant, and it allows financial institutions to take advantage of
emerging technologies easily and less costly through its open architecture
technology and advanced software systems.

         Customer Relationship Management. The Phoenix System places a
structural emphasis on managing customer relationships which allows an
institution to pursue a more personalized and profitable approach to its
products and services. The Relationship Information Management ("RIM") module
integrates a customer's account data, transactional activity, financial data
from third party financial applications, marketing information, relationships
with other customers and other accounts, financial statements and other types
of information required to view a customer's total relationship portfolio. The
RIM module benefits an institution by providing its management with critical
assistance in managing, tracking and analyzing the financial condition,
profitability, creditworthiness and overall relationships with customers and
related groups of customers. The customer relationship management features
include:



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-        Marketing and Other Personal Information. The RIM module tracks a
         range of personal information, such as employment history,
         homeownership status, other credit providers and other bank accounts.

-        On-line Financial Statements and Portfolios. The RIM module maintains 
         information regarding a customer's assets, liabilities, income and
         expenses.

-        Extensive Customer Relationship Tracking. The RIM module can track
         relationships between customers, groups of customers and accounts.

-        Customer-Based Statements. Combined customer statements can be
         customized to contain an unlimited number of accounts and each
         statement can be configured to show only summary information or both
         summary information and detailed account information.

-        Integrated Signature, Photograph and Document Imaging. The RIM module
         maintains on-line images of a customer's signature card and personal
         photograph and can store and display images including images of loan
         collateral and other assets, Social Security cards and drivers'
         licenses.

-        Flexible Inquiry Capability. The Phoenix System enables users to
         progress through increasingly detailed levels of information which
         allows for thorough and quick research of customer inquiries, without
         having to enter arcane codes or search through voluminous printed
         reports.

-        Third Party Information. The Phoenix System is able to integrate data
         from third party software and service providers, including information
         onbrokerage, insurance and credit card accounts, with existing RIM
         information.

         Management Decision Support. The Phoenix System is focused on
providing financial institution executives with the following real-time
capabilities: (i) a fully integrated general ledger; (ii) a broad suite of
standard reports augmented by an ad hoc reporting capability; (iii) an
integrated set of budgeting templates; and (iv) customer and account
profitability analysis. Through the Phoenix Executive Information System
("EIS"), the Phoenix System allows senior executives to track performance and
model the effect of business strategies and changes in market conditions on
their financial institution. The EIS takes into account both the relationship
of a particular indicator to other related categories of information, as well
as the trends for that indicator over time. In addition, the EIS provides an
institution with statistical measures of product penetration, profitability and
performance.

         Financial Product Development. The Phoenix System provides the
capability to quickly develop, deliver and process financial products and
services that can be as simple or as sophisticated as an institution's
customers and competition demand. Because all financial product development is
parameter-driven, institutions can design products and services by simply
selecting product features from a variety of options. New financial products
can be developed rapidly and do not require programming or the support of
technical personnel. In addition, the Phoenix System allows institutions to
analyze the profitability of individual loans and customer relationships, as
well as broad categories of customers, and to perform "what if" calculations to
model the financial impact of new products and services based upon information
maintained on the Phoenix System.

         Advanced Technology. The Phoenix System operates in an "open systems"
environment that uses a graphical user interface, modern relational database
technology and nonproprietary hardware and software components. The Phoenix
System divides core processing functions among seven discrete, but fully
integrated, software modules: (i) system administration, (ii) account
processing, (iii) nightly processing, (iv) teller system, (v) holding company
financial statements, (vi) EIS, and (vii) budgeting. The core applications of
the Phoenix System include: (a) deposit and loan processing which can be
customized to implement an analysis-based approach tailored to an institution's
products and services; (b) a self-balancing multi-currency general ledger
system that supports both batch and on-line memo post transaction processing
functions; (c) full on-line transaction processing capabilities which permit
users to post on-line transactions to any account in the Phoenix System; (d) a
comprehensive set of controls for restricting access to different levels of
information, for limiting transactional 



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activity and for logging activities for audit purposes; and (e) integrated
connections to an interactive on-line help system. Furthermore, because the
Phoenix System was conceived and developed to store all dates with four-digit
years and to perform all calculations to four digits, it is year 2000
compliant.

         To address the increasingly sophisticated needs of its customers,
Phoenix intends to continue to enhance its current products and to develop and
introduce additional products that keep pace with technological developments
and emerging industry standards. Phoenix continues to consult with its bank
customers to help identify and prioritize the product enhancements and
additional functionality needed to keep the Phoenix System as a leading
client/server computing solution. The combination of Phoenix's retail, trade
finance and treasury offerings allows Phoenix to market an integrated
"universal" banking system. Phoenix also intends to develop and license
additional international functionality as it enters new countries which require
additional functionality. Phoenix is also participating on the advisory council
for Microsoft's Windows Distributed Internet Applications Architecture for
Financial Services ("Windows DNAfs"). Windows DNAfs is an industry framework -
a way of constructing software applications that will allow different financial
services industry software providers to exchange data and communicate with each
other. Phoenix intends to continue to develop, modify and enhance the Phoenix
System to offer its customer institutions what it believes are some of the best
technologies available in the financial services software industry worldwide.
See "--Product Development and New Products."

STRATEGY

         The Company's primary objective is to advance its position as a
leading provider of enterprise-wide client/server application software for the
financial services industry worldwide by pursuing the following strategies:

         Maintain and Extend Technology Leadership. The Company believes that
the Phoenix System is the most advanced client/server computing solution for
financial institutions worldwide. Phoenix intends to maintain its leadership
position by continuing to integrate new technologies, add new applications,
enhance existing applications and expand functionality. During 1998, the
Company released U.S. Version D-2.0.1, which contained many upgrades to the
Phoenix System and completed development of international Version I-2.0.2 and
subsequent development and installation of I-2.0.3 for international customers
to add new functionality to meet the international market's need for an
integrated system that supports multi-currency retail banking. During 1998, the
Company also announced the planned release of the Microsoft(R) SQL Server 7(TM)
version of the Phoenix System, currently scheduled to be available in the
second half of 1999. Microsoft SQL Server 7 is a high performance relational
database management system that runs on the Microsoft(R) Windows NT(R)
operating system. The Company believes that the combination of Phoenix's
client/server software and the Microsoft SQL Server 7 will allow financial
institutions to take full advantage of new and emerging technologies including
the myriad of opportunities available using Internet based technologies. The
Company intends to continue to commit substantial resources to maintain and
extend its technological leadership.

         Expand International Distribution. During 1998, the Company
successfully expanded its global distribution and market penetration by
increasing its international direct sales and implementation forces, by
enlarging its international offices, by opening additional sales and marketing
offices in strategically located cities worldwide and by leveraging its
strategic alliances and distribution channels. The Company's international
sales and implementation forces grew from 17 to 52 persons. During 1998, the
Company expanded its London office to better service Europe, the Middle East
and Africa. Phoenix opened a development center in Sydney, Australia and a
sales office in Singapore to focus on the development, direct sales and
servicing of the Company's products in the Asia-Pacific region. In addition, an
existing strategic alliance between Phoenix and Siemens Business Services, a
division of Siemens A.G., one of the world's leading suppliers of financial
services information technology, led to the signing of a contract with Data
Action, which added 12 credit unions to Phoenix's customer base and which
provides access to over 200 other credit unions in Australia. Data Action
accounted for over 10% of Phoenix's revenues during 1998 and is expected to be
a significant revenue source for Phoenix in 1999. In addition, Phoenix
maintains agreements with Computer Systems Associates (Nigeria) Limited
("CSA"), International Turnkey Systems ("ITS"), Unisys Corporation ("Unisys"),
and Siemens Business Services to increase global distribution efforts to cover
countries in Africa, Asia-Pacific, Europe, Latin America/Caribbean and the
Middle East.



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         Expand Domestic Distribution. The Company plans to continue to expand
its domestic distribution by increasing its direct sales and implementation
forces in key geographic locations and by seeking additional strategic sales
and marketing relationships. The Company increased its direct sales and
implementation forces from 60 to 73 persons during 1998 and had customers
located in 30 states at year-end. The Company continues to leverage its
relationships with other organizations in the United States to market the
Phoenix System primarily to smaller financial institutions within specified
territories in the U.S. In addition, many financial institutions that have
elected not to maintain in-house core processing systems use service bureau
organizations to handle their core processing and other functions. During 1998,
the Company made an equity investment in Servers On-Line, Inc., a northeastern
service bureau, to offer financial institutions an alternative delivery channel
for the Phoenix System and further enhance Phoenix's ability to market to a
wider range of bank customers. The Company believes that this and other service
bureau relationships offer a significant marketing opportunity as a significant
portion of the banking community prefers to outsource their technology needs to
a service bureau provider rather than manage these functions in-house. The
Company intends to form other strategic relationships with several small to
medium size service bureaus that are looking to replace their current legacy
systems with open system alternatives to gain a competitive advantage in this
market segment.

         Broaden Primary Markets. During 1998, the Company entered the credit
union market when it signed a long-term agreement with Data Action to license
the Phoenix System. As a result, Phoenix added 12 credit unions to its customer
portfolio and established the Phoenix System as Data Action's exclusive
information processing solution, allowing the Company access to over 200 credit
unions in Australia. This agreement helps to broaden the primary market for the
Phoenix System by expanding and diversifying the Company's customer base. In
addition, a large number of new bank charters in the United States allowed
Phoenix to increase its presence in this segment of the United States banking
market during 1998. These newly chartered banks, unlike established
institutions that require extensive conversions, require shorter implementation
cycles and therefore create opportunities to realize higher operating margins.
Phoenix also joined the IBM Netfinity ServerProven(TM) program during 1998 in
order to provide smaller independent community banks an IBM platform for the
Phoenix System. In addition, the Company intends to capitalize on its strategic
relationships with value added resellers ("VARs") and agents to more rapidly
expand the processing capabilities and functionality of the Phoenix System to
address the specific needs of financial institutions with larger asset sizes or
more complex branch networks.

         Leverage Existing Customer Base. At the end of 1998, Phoenix's
customer base included 127 financial institutions worldwide. Phoenix believes
that many financial institutions that are looking for updated technology
solutions are hesitant to be the first institution to implement new
technologies within their region. In the United States, Phoenix successfully
leveraged its installed customer base to help generate 25 new customers during
1998. Internationally, Phoenix installed the Phoenix System in its first
customer institution in Turkey during 1998 and by the end of the year the
Company had contracts to install the Phoenix System in three major banks in
Turkey. Phoenix intends to build its presence worldwide by continuing to
capitalize on its installed customer base in each region of its target
international market. The Company intends to continue to leverage its
implemented customer base by: (i) maximizing recurring revenues from its
customers; (ii) offering complementary products and services to existing
customers and licensing additional subsidiaries of existing bank holding
companies; (iii) obtaining favorable references from existing customers in the
course of developing new customer relationships; and (iv) consulting with
existing customers in the development of new products and product enhancements.

         Pursue Complementary Acquisitions. Phoenix intends to carefully and
selectively pursue strategic acquisitions of providers of complementary
technologies, products and services. Management believes there are acquisition
opportunities that may: (i) optimize the package of software applications and
solutions offered by the Company; (ii) expand the Company's customer base by
converting the customers of the acquired companies to the Phoenix System; (iii)
add new channels of distribution; and (iv) add experienced personnel with
specialized knowledge of either the domestic or international financial
services industries. The Company believes such strategic acquisitions will
permit Phoenix to enter new markets, increase market penetration, expand its
expertise, strengthen its strategic relationships, provide outsourcing
alternatives and obtain and develop additional products and applications to
meet the demands of its customers both in the U.S. and internationally. Phoenix
also intends to invest in companies with complementary technologies and
products in order to enhance the functionality of the Phoenix System.



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TECHNOLOGY

         Phoenix has worked with leading hardware manufacturers and tools and
relational database vendors in the client/server community, such as Microsoft,
Hewlett-Packard Company, Centura Software Corporation and Sybase, Inc.
("Sybase"), to produce software based on leading-edge technological
developments. The Phoenix System operates on Microsoft Windows(R), Windows
NT(R) and UNIX environments. The Company has installed the IBM Netfinity
platform for the Phoenix System in two banks and the Company now offers the
Phoenix System on an IBM platform in order to provide smaller banks the choice
of an IBM computing environment for their core processing needs. During 1998,
the Company released U.S. Version D-2.0.1, which contained many upgrades to the
Phoenix System and completed development of international Version I-2.0.2 and
subsequent development and installation of I-2.0.3 for international customers
to add new functionality to meet the international market's need for an
integrated system that supports multi-currency retail banking. In addition, the
Company is developing a version of the Phoenix System to run on Microsoft's SQL
Server 7(TM). Phoenix currently anticipates delivering the Microsoft SQL Server
7 version of the Phoenix System in the second half of 1999. Some of the key
technological features of the Phoenix System are described below.

         Centralized Relational Database Management System. An advantage of the
Phoenix System as compared to legacy or modified legacy systems is that the
Phoenix System stores and maintains data in an open relational database rather
than in a proprietary file format. As a result, this data can be easily
accessed and integrated by many third-party products, such as query and report
writing tools that are currently available commercially. In addition, with a
structured query language (SQL) relational database, it is easy to expand and
change the structures of the tables and manipulate data stored and maintained
in the Phoenix System.

         The Phoenix System, TradeWind(TM), and TradeCentre use Sybase System
11.0, a relational database technology provided by Sybase, which has been
integrated into the NT Version and the UNIX version of the Phoenix System. The
Phoenix System, TradeWind(TM) and TradeCentre can run on platforms from
Hewlett-Packard, IBM, NCR Corporation, Sun Microsystems, Inc., Unisys and all
others which are UNIX or Microsoft Windows NT compliant.

         Replication and Distributed Data Processing. Phoenix has leveraged the
open architecture of the Phoenix System to implement an advanced distributed
database for support of its off-line teller system. The off-line teller system
uses a local database on each branch server to maintain normal processing in
the event of hardware or network failure at the central server. Off-line
branches are supported using Centura's SQL Base for either Novell NetWare or
Microsoft Windows NT.

         Open Protocols for Data Communication. Phoenix uses the industry
standard TCP/IP protocol for communicating with the relational database server
and either IPX/SPX or TCP/IP for communicating with the local area network file
server. This allows the Company's customers implementing either Windows NT or
Novell Netware networks to implement a broad array of local area network and
wide area network topologies and configurations. In addition, customers that
have an existing network infrastructure in place that supports TCP/IP do not
have to reinvest in new technology simply to run the Company's products.

         32-bit Application Support. Version D-2.0.1 and Version I-2.0.3 of the
Phoenix System, which the Company released on a widespread basis to its
customers in 1998, are native 32-bit applications which enable the Company's
customers to take further advantage of operating systems from Microsoft
(Windows 95 and Windows NT Workstation). These systems offer the Company's
customers substantial benefits in the areas of fault tolerance, ability to
support more complex transaction processing (multi-tasking), enhanced
performance and advanced security.

TARGET MARKETS

         The United States Market. The FDIC, as of the end of the third quarter
of 1998, divided its insured depository institutions in the United States
market into groups based on asset-size: (i) institutions with assets less than
$100 million (approximately 6,305 institutions); (ii) institutions with assets
between $100 million and $1 



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billion (approximately 3,791 institutions); (iii) institutions with assets
between $1 billion and $3 billion (approximately 299 institutions); and (iv)
institutions with assets over $3 billion (approximately 228 institutions). The
Company primarily focuses its direct sales efforts in the U.S. on those
commercial banks and savings institutions with asset sizes ranging between $100
million and $2 billion. Management believes that many of these financial
institutions seek cost-effective, flexible and sophisticated technology
solutions that can provide a competitive advantage in the changing financial
services marketplace. The Phoenix System runs on the UNIX operating system
platform as well as the Microsoft Windows and Windows NT environments. The
Company believes that the NT version is attractive to a wide group of
institutions because of the lower overall costs (including hardware) related to
operating in a Microsoft Windows NT environment. The Company intends to take
advantage of improvements made to UNIX and NT operating systems to expand the
capabilities of the Phoenix System to address the needs of institutions with
larger numbers of branches, accounts and transactions to process, while
maintaining its focus on supporting the needs of middle market banks in the
United States.

         The International Market. Phoenix currently divides international
financial institutions into two groups based upon the number of branches and
accounts: (i) those with more than 300 branches and/or one million accounts;
and (ii) Tier 2 Banks. The Company primarily focuses its sales and marketing
efforts on Tier 2 Banks located in countries within Africa, Asia-Pacific,
Europe, Latin America/Caribbean and the Middle East. The Company believes the
international market offers significant opportunity because economic diversity
and other market factors have increased the demand for sophisticated wholesale
and retail banking services. Sophisticated international financial institutions
offer a broad array of financial products and services and demand technology
that is open, powerful and economical. The Company also believes that these
technology-minded institutions are looking for software solutions that will
last at least 10 to 15 years and, therefore, these institutions can appreciate
the flexibility and functionality of the client/server technology it offers.
During 1998, over half of Phoenix's revenues were derived from its
international customers. There are many risks associated with such significant
international operations which could have a material impact on Phoenix's
operations and financial performance, including governmental and regulatory
changes, the relative political and economic instability of foreign markets,
the diminished ability to monitor and maintain customer relationships across
larger geographical areas, the increased costs incurred to maintain
international operations and the other risks discussed in the Company's filings
with the Commission, including in the "Risk Factors" Section of its
registration statement on Form S-1 (No. 333-31415) declared effective on August
13, 1997.

SALES AND MARKETING

         The Company markets its software and services directly through its
sales and marketing personnel and through VARs and agents that are involved in
providing products and services to the financial services industry. As of
December 31, 1998, the Company's sales and marketing department, including
administrative staff, consisted of 22 individuals. The Company established
sales offices in Singapore and Sydney, and expanded its London office to cover
Europe, the Middle East, South Africa and Asia during 1998. In addition, the
Company has established non-exclusive local representation relationships with
agents located in several countries who add value in the sales and
implementation process. Through these relationships, the Company has added
customers in Turkey and South Africa and believes that these relationships will
assist Phoenix in building its international following in the future.

         The Company's direct sales and marketing personnel and consultants are
experienced in the sales process for banking software products and generate
leads through a marketing program which includes direct mail, networking,
telemarketing, seminars and trade shows, and provide white papers and other
sales support literature and ongoing customer communications. Phoenix also
actively markets its products and services through its Internet web site from
which prospects can read or download product information, access online product
presentations, and register to receive information by mail. The Company
believes that an increasing number of future customers will initially learn
about the Company and its products and services through its Internet web site.

         The Company's direct sales and marketing force is complemented,
particularly in the international market, by various indirect distribution
channels, including a growing network of VARs and agents. Some VARs and agents
also provide implementation, training, support and other services to the
end-user. In all cases, the Phoenix System software remains the sole property
of the Company, and if the Company terminates its 



                                       9
<PAGE>   10


relationship with any VAR or agent, customers sold by that VAR or agent will
continue to pay support fees to the Company. The Company intends to expand its
network for indirect distribution primarily on a non-exclusive basis and
anticipates that the percentage of its total revenues derived from indirect
sales will increase in the future.

         In the United States market, Phoenix has established marketing agency
agreements with ISC Financial Systems, Inc. ("ISC"), Advanced Financial
Systems, Inc. ("AFS"), ERAS JV ("ERAS"), and Servers On-Line, Inc. ("Servers"),
whereby ISC, AFS, ERAS and Servers market the Phoenix System to certain
financial institutions within their respective territories. ISC and AFS have
non-exclusive rights to market the Phoenix System within their territories,
which include Colorado, Idaho, Kentucky, Montana, North Dakota, Ohio, western
Pennsylvania, South Dakota, Utah, West Virginia and Wyoming. ERAS has
non-exclusive rights to market the Phoenix System within its territory, which
consists of five counties in southeastern Florida. In 1998, these relationships
resulted in five new customers for Phoenix in the U.S. Also in 1998, Phoenix
signed a Referred Authorized Reseller Agreement with Western Micro Technology,
a division of Savoir Technology Group, Inc., and Unisys to sell the Phoenix
System on the Unisys line of Aquanta NT servers. Phoenix was also approved by
IBM as part of the IBM ServerProven(TM) program and is now IBM-endorsed on the
line of IBM Netfinity servers, which will permit Phoenix to offer the Phoenix
System to independent community banks with less than $500 million in assets
that want to operate on an IBM platform

         In the international market, CSA exclusively markets the Phoenix
System to financial institutions in certain countries of Africa and
non-exclusively markets the Phoenix System to institutions in the Republic of
South Africa; ITS exclusively markets the Phoenix System to financial
institutions in certain countries in the Middle East; SNI markets, sublicenses
and distributes the Phoenix System to financial institutions located in
Australia and in those countries in Africa, Asia-Pacific, Europe and the Middle
East that are not a part of ITS' and CSA's exclusive territories and Unisys
markets the Phoenix System on a nonexclusive basis to financial institutions in
Central and South America. Each of ITS and CSA has guaranteed a minimum dollar
amount of sales to retain its exclusive rights in their respective territories.

PRODUCT PRICING

         The Company prices the Phoenix System and related services in two
components: (i) license fees for software products and other revenues and
commissions from the sale and delivery of software and hardware products of
third party vendors; and (ii) fees for a full range of services complementing
its products, including implementation, programming services, conversion
training and installation services, interface services for tying the Phoenix
System to third-party applications, customer and software support services,
disaster recovery services and Internet/Intranet consulting services. License
agreements generally have a term of five years, renewable for one year periods
thereafter. Each agreement also contains a five year commitment to pay for
customer and software support. Such fees are recognized quarterly. Most
agreements provide that the Company can cancel a license if the customer does
not continue to pay for customer and software support. Implementation,
conversion, training and installation fees and interface fees are paid at the
beginning of the license agreement or when the service is performed.

         In the United States, license fees are based on the asset size of the
institution. Internationally, each institution is charged a base license fee
and an incremental license fee determined by the number of branches for such
financial institution. Implementation, programming services, conversion,
training and interface fees vary based on the complexity of a particular
project. Customer and software support fees are paid annually or quarterly and
are generally calculated as a percentage of the total license fees. As the
asset size of the institution increases or as branches are added, customers pay
an additional incremental license fee and increased service fees over the life
of the license agreement.

         The Company's VARs and agents license the Company's products at a
discount for relicensing or are paid a commission by the Company. Under many of
these agreements, it is anticipated that primary responsibility for
implementation and training services will shift to the VARs and agents after a
certain number of installations are completed successfully with Company
supervision. Under these relicensing arrangements, the VARs and agents will
retain a greater percentage of the implementation, conversion and training
service fees as more of the responsibility for these services is transitioned
to the VAR or agent. The Company believes, however, that the 



                                      10
<PAGE>   11


difference in the margins obtained from direct and indirect sales should not
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 "-- Implementation and Training
Services."

IMPLEMENTATION AND TRAINING SERVICES

         The Company provides comprehensive implementation services to
customers converting to the Phoenix System. Phoenix assigns each customer an
implementation team of experts which works with the customer through all phases
of the project, including project management, data conversion, software
installation and network certification, education and training and consulting.
Each implementation team can work on multiple projects at the same time. As of
December 31, 1998, the Company had 75 people assigned to the implementation and
training department. To better support its growing client base, and because
international implementations are customized for each client (requiring more
on-site service) Phoenix hired 21 new employees with extensive implementation
services backgrounds during 1998. The Company believes its implementation teams
are better structured to support both international and domestic customers. The
Company intends to hire additional people and add resources as necessary.

         Project Management and Coordination. Phoenix provides extensive
project planning and coordination as part of the implementation process.
Phoenix assigns a full-time project manager who guides the customer through the
installation process and to coordinate all conversion and implementation
activities.

         Data Conversion. Application analysts and conversion programmers map
and convert a bank's current account data to the Phoenix System. Data
conversion activities include data mapping, program development, extensive
testing, detailed data auditing and a complete trial conversion prior to the
final implementation date.

         Software Installation and Network Certification. Phoenix provides
network engineers to install software and certify the customer's network prior
to installation of the Phoenix System. This on-site service ensures that all
hardware and software is installed correctly and that the proper network
security is in place.

         Education and Training. Phoenix offers a comprehensive education and
training program to customers. The Company offers training classes for product
set-up at the Company's headquarters in Florida. Phoenix also provides hands-on
application training services at the customer site prior to installation.
Additional on-site training for ancillary products is available upon request.

         Consulting/Development Services. The Company's consultants are
available to work closely with customers. These consulting services generally
consist of assisting customers who are planning large implementations, who are
engaged in operational reorganizations or who wish to customize the Phoenix
System to their unique needs, including customer specified programming
features, reports or regulatory requirements.

         Fees for project management and coordination, data conversion, and
software installation, network certification and basic education and consulting
are included in the cost of U.S. implementation. Generally, the Company charges
additional fees for education and consulting requested by its U.S. customers.
International implementations are priced based on time and materials for the
services performed.

         The Company's arrangements with its VARs and agents provide for the
transition of primary responsibility for implementation services to the VAR or
agent. To ensure quality control, each VAR and agent sends a team of people to
Phoenix to work side by side with one of its implementation teams for three or
four months. By the end of this training period, the VAR or agent assumes
primary and direct responsibility for substantially all of these services in
their region. This process allows Phoenix to deliver and install its software
faster and across more areas. Regardless of the number of installations
accomplished through its VARs and agents, however, Phoenix intends to continue
to provide the resources and support needed to maintain customer satisfaction
and quality assurances through its many offices worldwide.



                                      11
<PAGE>   12


CLIENT SERVICE AND SUPPORT

         The Company believes that maintaining a high level of support and
service is imperative to customer satisfaction because of the critical nature
of the Phoenix System to a bank's day-to-day operations. The Company's Client
Services Group supports banks in the use of the Phoenix System and with the
maintenance of their network and technology infrastructures. As of December 31,
1998, the Company had 50 people in its Client Services Group that primarily
provide this service and support. These personnel provide service 24 hours a
day, seven days a week, and have pagers, cellular telephones and laptop
computers which enable them to answer a customer's question from any location.
In 1998, Phoenix created a new Client Management Program within its Client
Services Group to further enhance its client relationships and offer superior
levels of support. Every Phoenix client has a dedicated Client Care Manager
assigned to their financial institution to serve as a single point of contact
from the initial contract signing through the implementation phase and beyond.
In 1998, the Company held its first professionally managed users conference in
Orlando, produced its first client newsletter, and did a client satisfaction
survey in order to better communicate with its growing customer base.

         Product Support Services. Phoenix delivers product support services
through all traditional avenues, including telephone, Internet, electronic mail
and facsimile. Many critical customer support activities can also be performed
through high-speed telecommunication lines connected directly to a customer's
location. Phoenix support personnel have the ability to connect quickly to a
server at a customer site and to perform work as if they were physically at the
customer's site. Using this approach, Phoenix is able to offer effective and
direct support to its customers without the traditional expense associated with
on-site visits.

         Networking Support Services. Phoenix offers a full range of networking
support services upon request. Phoenix performs on-site network certification
for all customers during their initial software installation, and network
engineers are available for ongoing support by telephone. Networking support
and on-site consulting are available upon request.

         Internet/Intranet Product and Customization Services. Phoenix also
offers Internet Consulting Service ("ICS"), which provides both Internet and
Intranet services to client institutions. ICS allows client institutions to
establish a presence on the World Wide Web through home pages and web sites.
ICS can also provide client institutions with the services to create an
internal web environment, known as an Intranet, which enables the institution
to improve productivity without additional hardware and infrastructure costs.

         Disaster Recovery Service. Phoenix also offers a disaster recovery
service that provides customers with assistance in reestablishing the Phoenix
System's processing capacity within 24 hours if a disaster occurs. Phoenix's
disaster recovery service is a separate five-year contract that has an initial
implementation fee and annual service fees. In December 1998, Phoenix entered
an agreement with SunGard Recovery Services, Inc. ("SunGard") under which
SunGard will offer disaster recovery services to Phoenix customers and will pay
Phoenix a commission based on monthly fees SunGard charges to Phoenix
customers. This added-cost service satisfies current United States bank
regulatory obligations to maintain and annually test a disaster recovery plan
and allows Phoenix to generate additional recurring revenue from its
implemented customer base.

         SupportNet. Phoenix also provides SupportNet, part of the Company's
World Wide Web site, which provides an additional vehicle of support for client
financial institutions. SupportNet is a free service which allows users with
Internet access to obtain support through features such as (i) an online
discussion forum, (ii) online support documents for the Phoenix System, (iii)
online software defect reporting, (iv) online enhancement requests and (v)
online file transfers from the Company.

PRODUCT DEVELOPMENT AND NEW PRODUCTS

         Phoenix was founded in January 1993 for the purpose of developing and
marketing a new generation of integrated banking software applications that
would replace less flexible and technologically dated legacy systems. From the
Company's inception through December 31, 1998, product development expenditures
(the total of product development expense and capitalized software development
costs) represented approximately 40% of the Company's aggregate revenues.
Hewlett-Packard provided developmental-stage assistance to the Company by



                                      12
<PAGE>   13


supplying computer hardware to the Company for development and testing of the
Company's products. Early in the Company's history, a group of U.S. financial
institutions participated in the Company's joint application development (JAD)
program under which end-users were involved in product development and testing.
The joint application development program helped reduce the development cycle
by increasing the efficiency with which design problems were identified and
corrected. U.S. financial institutions continue to contribute to plans for new
products and enhancements as part of the Phoenix Customer ("PHOCUS") group.

         Consistent with the Company's original plan, Phoenix designed its
software to incorporate numerous international features, such as multi-currency
capabilities and multi-language support. Phoenix has designed a multi-currency
enhancement to the Phoenix System which support the world currencies formatted
in accordance with the standards established by the International Standards
Organization. Phoenix has acquired additional international capabilities, such
as a trade finance system, and has rights to license from AFA Systems
International the "Musketeer" treasury and risk management client/server system
to Phoenix customers. The combination of Phoenix's retail, trade finance and
treasury offerings allows Phoenix to market an integrated "universal" banking
system. Phoenix also intends to develop and license additional international
functionality as it enters new countries which require additional
functionality. For instance, to support its new relationship with Data Action,
a major credit union service bureau provider in Australia, the Company has
established a development center in Sydney, Australia to work on enhancing the
Phoenix System for the credit union market in Australia. Phoenix intends to
continue to incorporate additional international functionality and to integrate
new technologies for the benefit of existing and future customers around the
world.

         Phoenix is also participating on the advisory council for Microsoft's
Windows DNAfs. Windows DNAfs is an industry framework - a way of constructing
software applications that will allow different financial services industry
software providers to exchange data and communicate with each other. Phoenix is
working with Microsoft to finalize DNAfs specifications for the Company's
Project Aurora. Aurora is a set of technologies, tools and frameworks that
Phoenix is developing to serve as the foundation for a new set of products to
be delivered in the coming years. Fundamentally, Aurora is a distributed
internet-based application that is being built from the ground up to run under
Windows 2000's COM+ environment and is deployed using an Internet browser.
Aurora is designed to enhance, rather than replace, the existing product and is
expected to dramatically extend the functionality of the existing software.
Project Aurora spent much of 1998 in design work and in early conceptual
studies as to the feasibility of the project. Initial key members of the Aurora
team have been identified and hired and have begun working on some detailed
designs for the application. The Company expects to continue working on Aurora
during 1999 while awaiting Microsoft's delivery of Windows 2000 but plans to be
able to demonstrate the technology to select customers and partners. Phoenix
intends to continue to develop, modify and enhance the Phoenix System to offer
its customer institutions what it believes are some of the best technologies
available in the financial services software industry.

         Phoenix believes that its future success will depend in large part on
its ability to maintain and enhance its current product and service offerings
and to develop, acquire or integrate and introduce new products and features
that will keep pace with technological advances and satisfy evolving customer
requirements. As of December 31, 1998, the Company's Research & Development
Division consisted of 147 individuals. Phoenix develops and adjusts product
direction in response to two core trend areas: (i) developments within the
financial services industry and (ii) developments within the technology arena.

         Product Development Cycle. Phoenix develops plans for new products and
enhancements following discussions with PHOCUS, which consists of all current
domestic and international users of the Phoenix System and from specific
requests from new customers. PHOCUS meets approximately twice a year with the
Company to offer recommendations and to help prioritize product development and
enhancement projects. In addition, Phoenix adapts and augments the Phoenix
System on a country-by-country basis as it signs contracts in new countries.
Moreover, the Company's product development personnel continually develop new
product ideas and enhancements. Once a product idea has been formalized, the
Company uses an internal review process to: (i) determine whether to develop
the product or enhancement; (ii) set a development schedule and (iii) develop a
budget for the product or enhancement.



                                      13
<PAGE>   14


         Development Methodology. Development tools, such as 4GL programming
tools, enable rapid prototyping and have dramatically reduced development
cycles. Enhancements developed in client/server environments take significantly
less time to complete than in a legacy system environment. Phoenix believes
that the efficiencies of its product architecture and development methodology
allow it to move products from planning to delivery more quickly than its
legacy system-based competitors.

         Product Plans. The Company's product development efforts are currently
focused on enhancing the functionality of the Phoenix System so that it will be
attractive to a broader range of customers both in the U.S. and abroad. Phoenix
believes that it will be able to improve its competitive position by
successfully completing, licensing, acquiring or delivering to client
institutions the following new products and enhancements, among others,
primarily during 1999:

-        Microsoft SQL Server 7(TM). Phoenix is developing a version of the
         Phoenix System to run on the Microsoft SQL Server 7 to further enhance
         the functionality and flexibility of its products. Phoenix currently
         anticipates delivering this version in the second half of 1999.

-        Project Aurora. Phoenix is working with Microsoft to finalize DNAfs
         specifications for the Company's Project Aurora, which is expected to
         serve as the foundation for a new set of products to be delivered in
         the coming years. Fundamentally, Aurora is a distributed internet-based
         application that is being built from the ground up to run under Windows
         2000's COM+ environment and will be deployed using an Internet browser.
         Aurora is designed to enhance, rather than replace, the existing
         product and is expected to dramatically extend the functionality of the
         existing software.

-        Cash Management System. Phoenix has acquired exclusive rights to a
         cash management system that was originally developed by one of its
         international customers. As part of its Project Aurora, Phoenix plans
         to deliver a highly integrated version of this cash management system
         in 1999 which will allow the Company's customers to provide online
         cash management services to their retail and commercial customers.

-        Trade Finance Processing. Phoenix is developing the interfaces to the
         customer account and general ledger modules of the Phoenix System
         which are required to integrate TradeWind(TM), a trade finance
         software system, into the Phoenix System for eventual delivery to the
         international market.

-        ATM System. The Company has delivered and intends to enhance the
         Phoenix ATM system which allows its customers to support their own ATM
         network and to connect to regional and national ATM networks.

-        International Capabilities. Phoenix is developing enhancements for the
         international market including large digit support, interbranch
         accounting and electronic bill payment functionality. The Company has
         established a development center in Sydney, Australia to customize the
         Phoenix System for use in credit unions and other financial
         institutions in the international market.

-        Larger Bank Processing. Significant enhancements for the United States
         market during 1998 focused on the loan processing area, such as
         investor reporting for secondary mortgage marketing. Phoenix also
         developed modules that permit the processing of dealer loans and
         accounting for non-accrual loans and plans to enhance the performance
         of these modules. Phoenix believes that such enhancements broaden the
         appeal of the Phoenix System for larger institutions. Phoenix is
         continuing to develop a variety of enhancements to process larger
         financial institutions, capitalizing on the latest database and server
         technological advances.

These potential new enhancements and products are subject to significant
technical risks, including delays in the development, introduction, production
or implementation of the new enhancements or products, failure to achieve
market acceptance and undetected and uncorrected errors or failures. These
product plans are "forward-looking 



                                      14
<PAGE>   15


statements" which are subject to the risks and uncertainties discussed earlier
in this Annual Report and in the Company's filing with the Securities and
Exchange Commission.

COMPETITION

         The financial services software market is intensely competitive,
rapidly evolving and subject to rapid technological change. Competitors vary in
size and in the scope and breadth of the products and services offered. Phoenix
encounters competition in the U.S. from a number of sources, including Fiserv,
Inc., Bisys, Inc., Marshall & Ilsley Corp., East Point Technology, Inc., a
division of Marshall & Ilsley Corp. ("East Point"), Electronic Data Systems
Corp., Jack Henry & Associates, Inc., ALLTEL Information Services, Inc.,
Prologic Corporation, The Kirchman Corporation and Open Solutions, Inc.
("OSI"), all of which offer core retail software systems or outsourcing
alternatives to the financial services industry. Of these competitors, the
Company believes that only East Point and OSI offer true client/server
solutions. In the international arena, the Company competes with several global
players, including Fiserv, Inc., Midas-Kapiti International, Inc., ACT/Kindle
Banking Systems ("ACT/Kindle"), Sanchez Computer Associates, Inc., Prologic
Corporation and Financial Network Services ("FNS"). In addition, there are
smaller, regional competitors in the countries which the Company targets
internationally. The Company expects additional competition from other
established and emerging companies as the client/server application software
market continues to develop and expand.

         In general, Phoenix competes on the basis of: (i) product
architecture, including distributed computing capability, access to commercial
SQL databases and ease of customization and integrations with other
applications; (ii) functionality, including the breadth and depth of features
and functions and ease of use; (iii) service and support, including the range
and quality of technical support, training, implementation and consulting
services and the capability to provide these on a global basis; (iv) management
expertise, including management's banking software experience and financial
services industry knowledge; and (v) product pricing in relation to performance
and support. Management believes that the Phoenix System is a market leader in
the areas of product architecture and management expertise and that the Company
competes favorably in the areas of functionality, service and support and
product pricing.

         Financial institutions have two fundamental alternatives for obtaining
data processing capabilities: (i) in-house applications, either those that are
developed internally or those that are purchased from third party vendors; and
(ii) outsourcing, either as a part of a total outsourcing solution or where a
third party acts as a service bureau. Until the introduction of client/server
technology, the only in-house processing systems offered were proprietary
legacy systems running on mainframe or mid-range computer hardware. In the
United States market, client/server application software has only recently been
made available to financial institutions, but it is gaining market acceptance
and market share. In the international market, there are a number of
client/server alternatives available, as well as traditional legacy systems.

         The Company believes that its current competitors do not offer
application software that provides the level of flexibility and functionality
featured in the Company's customer relationship management, customer
profitability analysis or executive information modules. The Company expects
additional competition from other established and emerging companies as the
client/server market continues to develop and expand. In addition, competition
could increase as a result of software industry consolidations, including
particularly the acquisition of any of the client/server based retail banking
system providers by one of the larger service providers to the financial
services industry.

INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS

         Phoenix relies primarily on a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. Phoenix seeks to protect its software,
documentation and other written materials under trade secret and copyright
laws, which afford only limited protection. The Company's license agreements
contain provisions which limit the number of users, state that title remains
with the Company, protect confidentiality, permit the termination of license
for misuse or abuse and require licensees to notify the Company of
infringements on the Company's property and rights. Phoenix presently has no
patents or patent application spending and has no trademark or copyright
registrations. Despite 



                                      15
<PAGE>   16


the Company's efforts to protect its proprietary rights, unauthorized parties
may attempt to copy aspects of the Company's products or to obtain and use
information that the Company regards as proprietary. Policing unauthorized use
of the Company's products is difficult, particularly overseas, and while the
Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem. In
addition, the laws of some foreign countries do not protect the Company's
proprietary rights to as great of an extent as do the laws of the United
States. Nevertheless, the Company believes that due to the rapid pace of
technological change in the information technology and software industries,
factors such as the technological and creative skills of its employees, new
product developments, frequent product enhancements and the timeliness and
quality of support services are more important to establishing and maintaining
a competitive advantage in the industry.

         Phoenix does not believe that any of its products infringe upon the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not claim infringement by the Company with respect to
current or future products. The Company expects that software product
developers will be increasingly subject to infringement claims as the number of
products and competitors in the Company's industry segment grows and the
functionality of products in different industry segments overlaps. Any such
claims, with or without merit, could be time-consuming, result in costly
litigation, cause product shipment delays or require Phoenix to enter into
royalty or licensing agreements. Such royalty or licensing agreements, if
required, may not be available on terms acceptable to the Company or at all,
which could have a material adverse effect upon the Company's business,
operating results and financial conditions.

EMPLOYEES

         As of December 31, 1998, Phoenix had a total of 368 employees and
contract workers, of which 225 were engaged in research & development and
support, 75 were in implementation and training, 22 were in sales and
marketing, 23 were in finance and administration, 7 were in executive
management, and 16 were engaged in product development and support, sales and
marketing and general business operations at Phoenix A.P. Limited. All of the
Company's executive officers who were employed by the Company as of the date of
this report have entered into employment agreements with the Company. None of
the Company's employees is represented by a labor union. The Company has not
experienced any work stoppages and considers its relations with its employees
to be satisfactory.

FACILITIES

         In March 1997 the Company moved its principal administrative, sales,
marketing, support and product development facility to a commercial building in
Heathrow, Florida. The Company currently leases approximately 48,000 square
feet of space in this building and approximately 22,500 square feet in a nearby
building. The lease for both properties is for a term of ten years and expires
on April 1, 2007.


ITEM 2.  PROPERTIES

         See the information provided in Item 1 above entitled "Business --
Facilities" for information with respect to the Company's facilities.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is not a party to, nor is any of its property subject to,
any material legal proceedings, other than routine litigation incidental to its
business.



                                      16
<PAGE>   17

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was submitted to a vote of the Company's security holders
during the fourth quarter of the year ended December 31, 1998.



                                      17
<PAGE>   18


                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The information required in Item 5 is incorporated herein by reference
from the Company's 1998 Annual Report to Shareholders, included in this Form
10-K as Exhibit 13.1 (the "Annual Report").


ITEM 6.  SELECTED FINANCIAL DATA

         The information required in Item 6 is incorporated herein by reference
from the Annual Report.


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS

         The information required in Item 7 is incorporated herein by reference
from the Annual Report.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ON MARKET RISK.

         Phoenix does not use derivative financial instruments in its
operations or investments. While the Company has significant international
operations, its contracts are all written for payments to be made in U.S.
Dollars and, therefore, it does not believe it is materially subject to
fluctuations in foreign currency exchange rates. Phoenix's short term and long
term investments are deposited principally in a single financial institution
with significant assets and consist of U.S. Treasury bills and notes with
maturities of less than three years. Phoenix does not consider the interest
rate risk for these investments to be material. The Company does not have
any material credit facilities and, therefore, the Company does not have a
significant risk due to potential fluctuations in interest rates for loans at
this time. Changes in interest rates could decrease the Company's interest
income and could make it more costly to borrow money in the future and may
impede Phoenix's future acquisition and growth strategies if management
determines that the costs associated with borrowing funds are too high to
implement these strategies.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The information required in Item 8 is incorporated herein by reference
from the Annual Report.


ITEM 9.  CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS IN ACCOUNTING AND 
         FINANCIAL DISCLOSURES

         Not applicable.



                                      18
<PAGE>   19



                                    PART III

         Certain information required by Part III is omitted from this Report
in that the Registrant will file a definitive Proxy Statement pursuant to
Regulation 14A (the "Proxy Statement") not later than 120 days after the end of
the financial year covered by this Report, and certain information included
therein is incorporated herein by reference.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

EXECUTIVE OFFICERS AND DIRECTORS

         The executive officers and directors of the Company and their ages as
of March 15, 1999 are as follows:

<TABLE>
<CAPTION>

NAME                                       AGE     CLASS(1)                      POSITION                        

<S>                                        <C>     <C>       <C>
Bahram Yusefzadeh(2)(3)                     52      III      Chairman of the Board and Chief Executive 
                                                             Officer

Raju M. Shivdasani                          48      III      President, Chief Operating Officer and Director

Theodore C. Burns                           42       --      Senior Vice President and Chief Financial 
                                                             Officer

Daniel P. Baker                             36       --      Senior Vice President, Research and 
                                                             Development

Harold C. Boughton                          47       --      Senior Vice President, USA Business
                                                             Development

Barbara A. Brescia                          53       --      Senior Vice President, Human Resources

Brian J. Morgan                             52       --      Senior Vice President, International Business
                                                             Development

Jocelyn C. Ruggiero                         37       --      Senior Vice President, Implementation Services

John F. Winstanley                          39       --      Senior Vice President, Strategic Operations

Ruann F. Ernst(2)(3)                        52      I        Director

Ronald E. Fenton(3)(4)                      70      III      Director

William C. Hess(4)                          62      I        Director

James C. Holly(2)                           57      III      Director

Paul A. Jones(2)                            44      II       Director

J. Michael Murphy(3)                        58      II       Director

Glenn W. Sturm(4)                           45      II       Director

O. Jay Tomson (4)                           62      I        Director
</TABLE>

---------------------
(1)      Class I term expires in 2000; Class II term expires in 2001; and Class
         III term expires in 1999.
(2)      Member of Compensation and Stock Option Committee. Mr. Holly is the
         Chairman of the Compensation and Stock Option Committee, and Mr.
         Yusefzadeh is a non-voting member of the Compensation and Stock Option
         Committee.
(3)      Member of the Executive Committee. Mr. Yusefzadeh is the Chairman of
         the Executive Committee. 
(4)      Member of Audit Committee. Mr. Fenton is the Chairman of the Audit 
         Committee.



                                      19
<PAGE>   20


         Bahram Yusefzadeh. Mr. Yusefzadeh, the Company's founder, Chairman of
the Board and Chief Executive Officer, has 30 years of experience in the
banking software industry. In 1969, he co-founded Nu-Comp Systems, Inc., where
he developed the Liberty Banking System and served as Nu-Comp's president and
chief executive officer. Mr. Yusefzadeh became chairman of the board of
Broadway & Seymour, Inc. upon its acquisition of Nu-Comp in June 1986 and
remained in that position until November 1986. From 1986 to 1992, he worked for
The Kirchman Corporation, first as president of the product and marketing
strategies division, and later as president of both the independent banking
group and the outsourcing division. Mr. Yusefzadeh currently serves as a member
of the Executive Committee and as a non-voting member of the Compensation and
Stock Option Committee. Mr. Yusefzadeh has been a director of Towne Services,
Inc., a publicly traded company, since 1997 and has been a member of its
compensation committee since 1998.

         Raju M. Shivdasani. Mr. Shivdasani joined the Company in July 1996 as
a Senior Vice President and Division President of International Sales. In
January 1998, Mr. Shivdasani assumed the position of President and Chief
Operating Officer and was appointed a director of the Company. From 1990 to
1996, he worked for Fiserv, Inc. where he served as group executive vice
president of the bank services sector and president of CBS Worldwide, a banking
software division. Mr. Shivdasani has over 27 years of experience working for
companies in the banking software, service bureau and data center services
industries.

         Theodore C. Burns. Mr. Burns joined the Company in October 1998 as
Senior Vice President and Chief Financial Officer. From 1993 to 1998, Mr. Burns
worked with PricewaterhouseCoopers LLP (and its predecessor, Price Waterhouse
LLP) in Indonesia, India, South Korea and the U.S., most recently as a Director
in their Financial Advisory Services Group. He previously advised banking
institutions in the areas of mergers & acquisitions, capital raising and
strategy for over eight years, first with Golembe Associates, Inc. and later
with Fox-Pitt, Kelton Inc. Mr. Burns holds an MBA from Columbia University and
is a Certified Public Accountant.

         Daniel P. Baker. Mr. Baker joined the Company in February 1998 as
Senior Vice President, Research and Development and is responsible for domestic
and international product development and quality assurance of the Phoenix
System and Phoenix ancillary products. From 1995 to 1998, Mr. Baker served as
Senior Vice President, Information Technology Division and Director of Market
Systems Strategy at the John H. Harland Company. From 1993 to 1995, he worked
for Fiserv Inc., where he served as Vice President of Technology Services.
Prior to Fiserv, Mr. Baker served over 14 years in the banking industry.

         Harold C. Boughton. Mr. Boughton joined the Company in June 1996 as
Senior Vice President, USA Business Development and is responsible for all
domestic sales and marketing activities. From 1992 to 1996, Mr. Boughton worked
for Fiserv, Inc., first as national sales manager for the CBS Service Bureau
and later as national sales manager for InformEnt. From 1990 to 1992 he served
as regional sales manager and national sales manager for DCR Technologies, an
optical storage technology company.

         Barbara A. Brescia. Ms. Brescia joined the Company as Senior Vice
President, Human Resources in January 1998 and is responsible for all employment
administrative matters for the Company. Ms. Brescia was the Director of Human
Resources for Amnex Corporation, a telecommunications services provider, from
1997-1998. From 1994 to 1997, she was studying for a Ph.D. and was a human
resources consultant. Ms. Brescia has over 14 years of human resource management
experience with major companies such as Amnex and Harcourt Brace Jovanovich,
Inc.

         Brian J. Morgan. Mr. Morgan joined the company in April 1998 as Senior
Vice President of International Business Development. Mr. Morgan leads the
Company's efforts to develop new worldwide business opportunities for its
customers. Prior to joining the Phoenix team, from 1996 to 1998, Mr. Morgan was
managing director of a consulting partnership that assisted software companies
in expanding their market reach and increasing revenues. From 1994 to 1996, Mr.
Morgan was the assistant general manager and head of sales and marketing for
Arab National Bank. Mr. Morgan has over 7 years experience with banking,
software and electronic product delivery companies.

         Jocelyn C. Ruggiero. Ms. Ruggiero joined Phoenix in April 1998 as
Senior Vice President, Implementation Services and is responsible for customer
implementation and training services. From 1989 to 



                                      20
<PAGE>   21


1998, Ms. Ruggiero worked for PaySys International, Inc. where she served as
Director of Compliance Services and was responsible for the development and
installation of credit card systems for domestic and international banks. She
has 15 years of experience in the banking software industry.

         John F. Winstanley. Mr. Winstanley joined the company in May 1998 as
Senior Vice President, Strategic Operations. Before joining Phoenix, he was
with TCA Consulting, where he was responsible for managing account
relationships. From 1991 to 1996, Mr. Winstanley worked with International
Banking Systems (IBIS) in various capacities providing system delivery services
and system strategy direction. Mr. Winstanley has over twenty years banking and
systems experience and has worked in thirty different countries during his
career.

         Ruann F. Ernst. Ms. Ernst has been a director of the Company since
1996 and currently serves as a member of the Executive Committee and
Compensation and Stock Option Committee. Ms. Ernst is the president and chief
executive officer of Digital Island, Inc. and serves as a director of Advanced
Fiber Communications, Inc. Prior to her joining Digital Island in 1998, Ms.
Ernst worked for Hewlett-Packard for more than 13 years. From 1991 to 1993, she
served as Director of Strategic Business for Hewlett-Packard's multi-user UNIX
product line. In 1993, Ms. Ernst assumed the position of Marketing Manager for
Hewlett-Packard for the financial industry worldwide as well as U.S.
responsibility for process, retail and oil and gas industries. From 1995 to
1998, she served as General Manager of the financial services business unit of
Hewlett-Packard's Computer Systems Organization.

         Ronald E. Fenton. Mr. Fenton has been a director of Phoenix since
1993, currently serves as a member of the Executive Committee and is the
Chairman of the Audit Committee. Mr. Fenton is the chairman of the board of
directors of F&M Bank - Iowa Central and a board member of F&M Bank - Iowa
Story County and F&M Bank - Iowa South Central. He also serves as chairman of
the board of directors of BancSecurity Corporation (where he has been since
1982), and recently retired as president, chief executive officer and director
of Security Bank (where he had been since 1976). He is also a director and
former chairman of the board of Shazam, Inc. ("Shazam"), a regional electronic
funds transfer network.

         William C. Hess. Mr. Hess has been a director of the Company since
1993 and currently serves as a member of the Audit Committee. Since 1984, he
has been the president of Iowa Savings Bank, and since 1988, he has been
chairman of the board of Sac City State Bank. Mr. Hess serves as an officer and
director of several bank holding companies and he is also a director of Audubon
State Bank, Iowa Savings Bank, Perry State Bank, Raccoon Valley State Bank and
Home State Bank. Mr. Hess is a past director of Shazam, a past director of the
Iowa Bankers Mortgage Association and Iowa Bankers Association and a past
member of the member of the board of directors of the Iowa Department of
Banking.

         James C. Holly. Mr. Holly has been a director of Phoenix since 1993,
serves as a member of the Executive Committee and is Chairman of the
Compensation and Stock Option Committee. Since 1977, he has served as
president, chief executive officer and director of Bank of the Sierra. He is
also the current president of the California Independent Bankers Association.
Mr. Holly holds an M.B.A. from the University of Wisconsin and was a
commissioned officer in the United States Army (Armor). Mr. Holly has elected
not to stand for re-election to the Board when his current term as a director
expires in 1999.

         Paul A. Jones. Mr. Jones has been director of the Company since 1995
and currently serves as a member of the Compensation and Stock Option
Committee. He is the president, chief executive officer and a director of
Glenview State Bank and was the president of such bank from 1986 to 1996. Mr.
Jones is a director of Cummins-American Corp. and Cummins-Allison Corp. and
serves as a board member for the Glenview Park District and Chamber of Commerce
and the United Way--Glenview.

         J. Michael Murphy. Mr. Murphy has been a director of Phoenix since
1993 and currently serves as a member of the Executive Committee. Since 1977,
he has served as president of Drum Service Co. of Florida, which in February
1998 merged into Palex, Inc. Since 1988 he has been a director of Lochaven
Federal Savings and Loan Association, Orlando Florida and served as chairman of
the board from 1995-1996. He is a past chairman of the National Trade
Association of Container Reconditioners and was chairman of the board of the



                                      21
<PAGE>   22



International Confederation of Drum Reconditioners from 1990 to 1993. Mr.
Murphy holds an M.B.A. from the Harvard Graduate School of Business
Administration.

         Glenn W. Sturm. Mr. Sturm has been a director of the Company since
1996 and currently serves as a member of the Audit Committee. Since 1992, Mr.
Sturm has been a partner in the law firm of Nelson Mullins Riley & Scarborough,
L.L.P., where he serves on the law firm's executive committee. Mr. Sturm has
been a director of Towne Services, Inc. since 1996 and a director of The
InterCept Group, Inc. since 1997.

         O. Jay Tomson. Mr. Tomson has been a director of the Company since
1993 and was Chairman of the Board of the Company from August 1993 to February
1994. Mr. Tomson is also a member of the Audit Committee. Since 1974, he has
served as chairman and chief executive officer of First Citizens National Bank,
and since 1977, he has been chairman of the board of First Citizens Financial
Corporation. Mr. Tomson was a member of the Board of Directors of the Federal
Reserve Bank of Chicago from 1980 to 1986. He is a former director and president
of Shazam.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         The information required by this Item is incorporated by reference
from the Proxy Statement.


ITEM 11. EXECUTIVE COMPENSATION

         The information required by Item 11 is incorporated by reference from
the Proxy Statement.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by Item 12 is incorporated by reference from
the Proxy Statement.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by Item 13 is incorporated by reference from
the Proxy Statement.



                                      22
<PAGE>   23


                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1)   Financial Statements

         The consolidated financial statements of the Company as of December
31, 1998 and 1997 and for each of the years in the three-year period ending
December 31, 1998, together with the report of Ernst & Young LLP, dated
February 3, 1999, appearing in the Company's 1998 Annual Report to
Shareholders, included as Exhibit 13.1 to this Form 10-K, are incorporated
herein by reference.

(a)(2)   Financial Statement Schedules

         Financial statement schedules are omitted because they are either: (i)
not applicable or not required; or (ii) the information required is contained
in the consolidated financial statements or the notes thereto.

<TABLE>
<CAPTION>

(b)               Exhibits

<S>               <C>
 3.1              Amended and Restated Articles of Incorporation as amended by
                  the Articles of Amendment to Amended and Restated Articles of
                  Incorporation as filed with the Secretary of State of Florida
                  on May 28, 1997 (incorporated by reference to Exhibit 3.1 of
                  the Company's Registration Statement on Form S-1 (Registration
                  No. 333-31415), as declared effective by the Securities and
                  Exchange Commission on August 13, 1997 (the "1997 Registration
                  Statement")).

 3.2              Amended and Restated Bylaws (incorporated by reference to Exhibit 
                  3.2 of the Company's Form 10-Q dated August 14, 1996, File
                  No. 0-20937 (the "Second Quarter 1996 10-Q")).

 4.1              See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated
                  Articles of Incorporation and Amended and Restated Bylaws
                  defining the rights of the holders of Common Stock of the
                  Company.

10.1              Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan,
                  effective as of March 18, 1995 (incorporated by reference to
                  Exhibit 10.12 of the Company's Registration Statement on Form
                  S-1 (Registration No. 33-03355), as declared effective by the
                  Securities and Exchange Commission on July 1, 1996 (the "1996
                  Registration Statement").*

10.2              Amendment, dated May 24, 1996, to the Phoenix International
                  Ltd., Inc. 1995 Employee Stock Option Plan, effective March
                  18, 1995 (incorporated by reference to Exhibit 10.43 of the
                  1996 Registration Statement).*

10.3              Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan,
                  effective as of October 21, 1995 (the "October Plan")
                  (incorporated by reference to Exhibit 10.13 of the 1996
                  Registration Statement).*

10.4              Amendment, dated May 24, 1996, to the October Plan (incorporated
                  by reference to Exhibit 10.44 of the 1996 Registration
                  Statement).*

10.5              Second Amendment, dated as of January 24, 1997, to the October
                  Plan (incorporated by reference to Exhibit 4.1 of the
                  Company's Registration Statement on Form S-8, as filed with
                  the Securities and Exchange Commission on December 31, 1996
                  and as amended by the Company's Registration Statement on Form
                  S-8, as filed July 3, 1997 (the "Form S-8").*

10.6              Third Amendment, dated as of January 30, 1998, to the October
                  Plan (incorporated by reference to Exhibit A of the Company's
                  definitive proxy statement on Schedule 14A for its 1998 annual
                  meeting of shareholders, File No. 0-20937 (the "1998 Proxy").
</TABLE>



                                      23
<PAGE>   24


<TABLE>

<S>               <C>    
10.7              Revised Form of Stock Option Agreement for the October Plan 
                  (incorporated by reference to Exhibit 10.45 of the 1996
                  Registration Statement).*

10.8              Phoenix International Ltd., Inc. 1996 Director Stock Option Plan
                  (the "Director Plan") (incorporated by reference to Exhibit
                  10.46 of the 1996 Registration Statement).*

10.9              First Amendment to the Director Plan (incorporated by reference 
                  to Exhibit B to the 1998 Proxy).*

10.10             Form of Stock Option Agreement under the Phoenix International 
                  Ltd., Inc. 1996 Director Stock Option Plan (incorporated by
                  reference to Exhibit 4.7 of the Form S-8).*

10.11             Phoenix International Ltd., Inc. 1998 Employee Stock Purchase Plan
                  (incorporated by reference to Exhibit C of the 1998 Proxy).*

10.12             Form of the Company's Director Indemnity Agreement (incorporated
                  by reference to Exhibit 10.47 of the 1996 Registration
                  Statement).

10.13             Employment Agreement by and between the Company and Bahram Yusefzadeh,
                  dated December 28, 1995 (incorporated by reference to Exhibit
                  10.14 of the 1996 Registration Statement).*

10.14             First Amendment to Employment Agreement by and between the Company
                  and Bahram Yusefzadeh, dated May 22, 1996 (incorporated by
                  reference to Exhibit 10.15 of the 1996 Registration
                  Statement).*

10.15             Amended and Restated Employment Agreement by and between the
                  Company and Raju M. Shivdasani, dated as of March 20, 1998
                  (incorporated by reference to Exhibit 10.3 of the Company's
                  Form 10-Q, dated May 6, 1998, File No.
                  0-20937 (the "First Quarter 1998 10-Q")).*

10.16             Letter agreement dated August 1, 1998 between the Company and 
                  Brian Morgan.*

10.17             Employment Agreement by and between the Company and Harold C. 
                  Boughton, dated June 3, 1996 (incorporated by reference to
                  Exhibit 10.1 of the Second Quarter 1996 10-Q).*

10.18             Employment Agreement dated as of March 6, 1998 by and between
                  the Company and Daniel P. Baker (incorporated by reference to
                  Exhibit 10.4 of the First Quarter 1998 10-Q).*

10.19             Employment Agreement dated as of March 25, 1998 by and between
                  the Company and Jocelyn F. Ruggiero (incorporated by reference
                  to Exhibit 10.5 of the First Quarter 1998 10-Q).*

10.20             Form of Employment Agreement by and between the Company and its
                  Senior Vice Presidents.*

10.21             Form of Employee Confidentiality Agreement (incorporated by
                  reference to Exhibit 10.19 of the Company's Annual Report on
                  Form 10-K for the year ended December 31, 1996, File No.
                  O-20937) (the "1996 10-K ")).

10.22             OEM Software License Agreement, dated June 30, 1995, between
                  the Company and Gupta Corporation (incorporated by reference
                  to Exhibit 10.26 of the 1996 Registration Statement).+

10.23             Value Added Remarketer  Agreement,  dated October 13, 1993,  
                  between the Company and Sybase, Inc. (incorporated by
                  reference to Exhibit 10.27 of the 1996 Registration
                  Statement).+
</TABLE>



                                      24
<PAGE>   25


<TABLE>

<S>               <C>
10.24             Software License Agreement between the Company and Unisys 
                  Corporation, dated March 16, 1996 (incorporated by reference
                  to Exhibit 10.28 of the 1996 Registration Statement).+

10.25             First Amendment to Software License Agreement between the Company 
                  and Unisys Corporation, dated December 27, 1996 (incorporated
                  by reference to Exhibit 10.25 of the 1996 10-K).+

10.26             Second Amendment to Software License Agreement between the
                  Company and Unisys Corporation, dated June 30, 1997
                  (incorporated by reference to Exhibit 10.27 of the 1997
                  Registration Statement). +

10.27             General Agreement for Strategic Relationship between the
                  Company and Hewlett-Packard Company, dated April 30, 1993
                  (incorporated by reference to Exhibit 10.29 of the 1996
                  Registration Statement).+

10.28             Form of Domestic Software License Agreement (incorporated by 
                  reference to Exhibit 10.1 of Company's Form 10-Q, dated July
                  31, 1998, File No. 0-20937 (the "Second Quarter 1998 10-Q")).

10.29             Form of International Software License Agreement (incorporated
                  by reference to Exhibit 10.2 of the Second Quarter 1998
                  10-Q).

10.30             Form of Disaster Recovery Service Agreement (incorporated by 
                  reference to Exhibit 10.32 of the 1996 Registration
                  Statement).+

10.31             Form of Software Deposit Agreement (incorporated by reference to
                  Exhibit 10.33 of the 1996 Registration Statement).+

10.32             Form of Confidentiality and Non-Disclosure Agreement (incorporated
                  by reference to Exhibit 10.34 of the 1996 Registration
                  Statement).

10.33             Form of Confidentiality Agreement (incorporated by reference to 
                  Exhibit 10.35 of the 1996 Registration Statement).

10.34             Form of Mutual Non-Disclosure Agreement (incorporated by reference
                  to Exhibit 10.36 of the 1996 Registration Statement).

10.35             Form of Confidentiality/Non-Disclosure Agreement Remitting
                  Access to System Documentation and Data Files for Data
                  Conversion (incorporated by reference to Exhibit 10.37 of the
                  1996 Registration Statement).

10.36             Form of Phoenix International Ltd., Inc. Confidentiality Agreement
                  (incorporated by reference to Exhibit 10.38 of the 1996
                  Registration Statement).

10.37             The Principal Financial Group Prototype for Savings Plans
                  (401k), as amended, and the Group Annuity Contract for the
                  Company (incorporated by reference to Exhibit 10.41 of the
                  1996 Registration Statement).*

10.38             Remarketing Agreement and Support Authorization, dated as of
                  April 22, 1996, between the Company and Computer Systems
                  Associates (Nigeria) Limited ("CSA") (incorporated by
                  reference to Exhibit 10.42 of the 1996 Registration Statement)
                  (the "CSA Agreement").+

10.39             Lease Agreement, dated September 11, 1996, between the Company
                  and 500 International Parkway Development Company
                  (incorporated by reference to Exhibit 10.1 of the Company's
                  Form 10-Q, dated November 5, 1996, File No.
                  0-20937).
</TABLE>



                                      25
<PAGE>   26


<TABLE>

<S>               <C>
10.40             Addendum to Lease Agreement, dated March 17, 1997, between the
                  Company and 500 International Parkway Development Company
                  (incorporated by reference to Exhibit 10.1 of the Company's
                  Form 10-Q, dated May 8, 1997, File No. 0-20937 (the "First
                  Quarter 1997 10-Q")).

10.41             Cooperative Marketing Agreement, dated October 2, 1996,
                  between the Company and ISC Financial Systems, Inc.
                  (incorporated by reference to Exhibit 10.43 of the 1996
                  10-K).+

10.42             License and Distribution Agreement, dated March 5, 1997,
                  between the Company and Dyad Corporation (incorporated by
                  reference to Exhibit 10.45 of the 1996 10-K).+

10.43             Form of Software License Agreement used in connection with the
                  CSA Agreement (incorporated by reference to Exhibit 10.47 of
                  the 1996 10-K).

10.44             Cooperative Marketing Agreement, dated March 26, 1997, between
                  the Company and International Turnkey Systems (incorporated by
                  reference to Exhibit 10.2 of the First Quarter 1997 10-Q).+

10.45             Cooperative Marketing Agreement, dated June 28, 1997, between
                  the Company and Siemens Nixdorf Informationssysteme AG
                  (incorporated by reference to Exhibit 10.49 of the 1997
                  Registration Statement).+

10.46             Cooperative Marketing Agreement, dated March 31, 1997, between
                  the Company and ERAS JV (incorporated by reference to Exhibit
                  10.50 of the 1997 Registration Statement).+

10.47             Cooperative Marketing Agreement, dated April 16, 1997, between
                  the Company and Advanced Financial Systems, Inc.
                  (incorporated by reference to Exhibit 10.51 of the 1997
                  Registration Statement).+

10.48             Software License and Development Agreement, dated as of
                  January 15, 1998, between the Company and Intercept Systems,
                  Inc. (incorporated by reference to Exhibit 10.2 of the First
                  Quarter 1998 10-Q).+

10.49             Source Code License and Marketing Agreement, dated as of March
                  31, 1998, between the Company and CSA (incorporated by
                  reference to Exhibit 10.2 to the First Quarter 1998 10-Q).+

10.50             Agreement for Software Services in Relation to Phoenix Banking
                  system dated September 30, 1998 between the Company and
                  Siemens Nixdorf Information Systems Pty. Limited (incorporated
                  by reference to Exhibit 10.1 to the Company's Form 10-Q, dated
                  November 4, 1998, File No. 0-20937).

10.51             Disaster Recovery Services Marketing Agreement dated as of 
                  December 15, 1998 between the Company and SunGard Recovery
                  Services Inc.++

13.1              Registrant's 1998 Annual Report to Shareholders. Except for the
                  portions of said Annual Report specifically incorporated
                  herein by reference, the Annual Report is furnished for the
                  information of the Commission and is not deemed filed
                  herewith.

21.1              Subsidiaries of the Company.

23.1              Consent of Ernst & Young LLP.

24.1              Power of Attorney (contained on the signature page of this 
                  filing).
</TABLE>



                                      26
<PAGE>   27


27.1              Financial Data Schedule (for Commission purposes only).

-----------------
+        Confidential treatment previously granted for portions of such 
         exhibit.
++       Confidential treatment has been requested for certain confidential
         portions of this exhibit pursuant to Rule 24b-2 under the Securities
         Exchange Act of 1934, as amended. In accordance with this rule, these
         confidential portions have been omitted from this exhibit and filed
         separately with the Securities and Exchange Commission.
*        This agreement is a compensatory plan or arrangement required to be
         filed as an exhibit to this Form 10-K pursuant to Item 14(c).



                                      27
<PAGE>   28


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereto duly authorized.

                                     Phoenix International Ltd., Inc.


                                     By:         /s/ Bahram Yusefzadeh   
                                           ------------------------------------
Date   March 23, 1999                      Bahram Yusefzadeh
                                           Chairman and Chief Executive Officer



                               POWER OF ATTORNEY

         KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints jointly and severally, Bahram
Yusefzadeh and Raju M. Shivdasani, and each one of them, his attorneys-in-fact,
each with the power of substitution, for him in any and all capacities, to sign
any and all amendments to this Annual Report (Form 10-K) and to file the same,
with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each said attorneys-in-fact, or his substitute or substitutes, may do or cause
to be done by virtue hereof.

         Pursuant to the requirements of the Securities Exchanges 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>

SIGNATURES                            TITLE                                                        DATE

<S>                                   <C>                                                          <C>
/s/ Bahram Yusefzadeh                 Chairman of the Board and Chief Executive                    March 23, 1999
-------------------------------       Officer (principal executive officer)
Bahram Yusefzadeh                     


/s/ Theodore C. Burns                 Chief Financial Officer (principal financial and             March 23, 1999
-------------------------------       accounting officer)
Theodore C. Burns                     


/s/ Raju M. Shivdasani                President, Chief Operating                                   March 23, 1999
--------------------------------      Officer and Director
Raju M. Shivdasani                    


/s/ Ruann F. Ernst                    Director                                                     March 23, 1999
-------------------------------
Ruann F. Ernst


/s/ Ronald E. Fenton                  Director                                                     March 23, 1999
-------------------------------
Ronald E. Fenton


/s/ William C. Hess                   Director                                                     March 23, 1999
-------------------------------
William C. Hess
</TABLE>



                                      28
<PAGE>   29


<TABLE>

<S>                                   <C>                                                          <C>
/s/ James C. Holly                    Director                                                     March 23, 1999
-------------------------------
James C. Holly

/s/ Paul A. Jones                     Director                                                     March 23, 1999
-------------------------------
Paul A. Jones

/s/ J. Michael Murphy                 Director                                                     March 23, 1999
--------------------------------
J. Michael Murphy


/s/ Glenn W. Sturm                    Director                                                     March 23, 1999
-------------------------------
Glenn W. Sturm

/s/ O. Jay Tomson                     Director                                                     March 23, 1999
-------------------------------
O. Jay Tomson
</TABLE>



                                      29
<PAGE>   30



                                 EXHIBIT INDEX

<TABLE>
<CAPTION>

EXHIBIT
NUMBER            DESCRIPTION

<S>               <C>
 3.1              Amended and Restated Articles of Incorporation as amended by
                  the Articles of Amendment to Amended and Restated Articles of
                  Incorporation as filed with the Secretary of State of Florida
                  on May 28, 1997 (incorporated by reference to Exhibit 3.1 of
                  the Company's Registration Statement on Form S-1 (Registration
                  No. 333-31415), as declared effective by the Securities and
                  Exchange Commission on August 13, 1997 (the "1997 Registration
                  Statement")).

 3.2              Amended and Restated Bylaws (incorporated by reference to 
                  Exhibit 3.2 of the Company's Form 10-Q dated August 14, 1996,
                  File No. 0-20937 (the "Second Quarter 1996 10-Q")).

 4.1              See Exhibits 3.1 and 3.2 for provisions of the Amended and 
                  Restated Articles of Incorporation and Amended and Restated
                  Bylaws defining the rights of the holders of Common Stock of
                  the Company.

10.1              Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan,
                  effective as of March 18, 1995 (incorporated by reference to
                  Exhibit 10.12 of the Company's Registration Statement on Form
                  S-1 (Registration No. 33-03355), as declared effective by the
                  Securities and Exchange Commission on July 1, 1996 (the "1996
                  Registration Statement").*

10.2              Amendment, dated May 24, 1996, to the Phoenix International
                  Ltd., Inc. 1995 Employee Stock Option Plan, effective March
                  18, 1995 (incorporated by reference to Exhibit 10.43 of the
                  1996 Registration Statement).*

10.3              Phoenix International Ltd., Inc. 1995 Employee Stock Option Plan,
                  effective as of October 21, 1995 (the "October Plan")
                  (incorporated by reference to Exhibit 10.13 of the 1996
                  Registration Statement).*

10.4              Amendment, dated May 24, 1996, to the October Plan (incorporated
                  by reference to Exhibit 10.44 of the 1996 Registration
                  Statement).*

10.5              Second Amendment, dated as of January 24, 1997, to the October
                  Plan (incorporated by reference to Exhibit 4.1 of the
                  Company's Registration Statement on Form S-8, as filed with
                  the Securities and Exchange Commission on December 31, 1996
                  and as amended by the Company's Registration Statement on Form
                  S-8, as filed July 3, 1997 (the "Form S-8").*

10.6              Third Amendment, dated as of January 30, 1998, to the October
                  Plan (incorporated by reference to Exhibit A of the Company's
                  definitive proxy statement on Schedule 14A for its 1998 annual
                  meeting of shareholders, File No. 0-20937 (the "1998 Proxy").

10.7              Revised Form of Stock Option Agreement for the October Plan
                  (incorporated by reference to Exhibit 10.45 of the 1996
                  Registration Statement).*

10.8              Phoenix International Ltd., Inc. 1996 Director Stock Option Plan
                  (the "Director Plan") (incorporated by reference to Exhibit
                  10.46 of the 1996 Registration Statement).*

10.9              First Amendment to the Director Plan (incorporated by reference
                  to Exhibit B to the 1998 Proxy).*

10.10             Form of Stock Option Agreement under the Phoenix International
                  Ltd., Inc. 1996 Director Stock Option Plan (incorporated by
                  reference to Exhibit 4.7 of the Form S-8).*
</TABLE>



<PAGE>   31


<TABLE>

<S>               <C>
10.11             Phoenix International Ltd., Inc. 1998 Employee Stock Purchase Plan
                  (incorporated by reference to Exhibit C of the 1998 Proxy).*

10.12             Form of the Company's Director Indemnity Agreement (incorporated
                  by reference to Exhibit 10.47 of the 1996 Registration
                  Statement).

10.13             Employment Agreement by and between the Company and Bahram 
                  Yusefzadeh, dated December 28, 1995 (incorporated by
                  reference to Exhibit 10.14 of the 1996 Registration
                  Statement).*

10.14             First Amendment to Employment Agreement by and between the Company
                  and Bahram Yusefzadeh, dated May 22, 1996 (incorporated by
                  reference to Exhibit 10.15 of the 1996 Registration
                  Statement).*

10.15             Amended and Restated Employment Agreement by and between the
                  Company and Raju M. Shivdasani, dated as of March 20, 1998
                  (incorporated by reference to Exhibit 10.3 of the Company's
                  Form 10-Q, dated May 6, 1998, File No.
                  0-20937 (the "First Quarter 1998 10-Q")).*

10.16             Letter agreement dated August 1, 1998 between the Company and 
                  Brian Morgan.*

10.17             Employment Agreement by and between the Company and Harold C.
                  Boughton, dated June 3, 1996 (incorporated by reference to
                  Exhibit 10.1 of the Second Quarter 1996 10-Q).*

10.18             Employment Agreement dated as of March 6, 1998 by and between
                  the Company and Daniel P. Baker (incorporated by reference to
                  Exhibit 10.4 of the First Quarter 1998 10-Q).*

10.19             Employment Agreement dated as of March 25, 1998 by and between
                  the Company and Jocelyn F. Ruggiero (incorporated by reference
                  to Exhibit 10.5 of the First Quarter 1998 10-Q).*

10.20             Form of Employment Agreement by and between the Company and its 
                  Senior Vice Presidents.*

10.21             Form of Employee Confidentiality Agreement (incorporated by
                  reference to Exhibit 10.19 of the Company's Annual Report on
                  Form 10-K for the year ended December 31, 1996, File No.
                  O-20937) (the "1996 10-K ")).

10.22             OEM Software License Agreement, dated June 30, 1995, between
                  the Company and Gupta Corporation (incorporated by reference
                  to Exhibit 10.26 of the 1996 Registration Statement).+

10.23             Value Added Remarketer Agreement, dated October 13, 1993, between
                  the Company and Sybase, Inc. (incorporated by reference to
                  Exhibit 10.27 of the 1996 Registration Statement).+

10.24             Software License Agreement between the Company and Unisys 
                  Corporation, dated March 16, 1996 (incorporated by reference
                  to Exhibit 10.28 of the 1996 Registration Statement).+

10.25             First Amendment to Software License Agreement between the Company
                  and Unisys Corporation, dated December 27, 1996 (incorporated
                  by reference to Exhibit 10.25 of the 1996 10-K).+

10.26             Second Amendment to Software License Agreement between the
                  Company and Unisys Corporation, dated June 30, 1997
                  (incorporated by reference to Exhibit 10.27 of the 1997
                  Registration Statement). +

10.27             General Agreement for Strategic Relationship between the
                  Company and Hewlett-Packard Company, dated April 30, 1993
                  (incorporated by reference to Exhibit 10.29 of the 1996
                  Registration Statement).+
</TABLE>



<PAGE>   32


<TABLE>

<S>               <C>
10.28             Form of Domestic Software License Agreement (incorporated by 
                  reference to Exhibit 10.1 of Company's Form 10-Q, dated July
                  31, 1998, File No. 0-20937 (the "Second Quarter 1998 10-Q")).

10.29             Form of International Software License Agreement (incorporated
                  by reference to Exhibit 10.2 of the Second Quarter 1998
                  10-Q).

10.30             Form of Disaster Recovery Service Agreement (incorporated by 
                  reference to Exhibit 10.32 of the 1996 Registration
                  Statement).+

10.31             Form of Software Deposit Agreement (incorporated by reference 
                  to Exhibit 10.33 of the 1996 Registration Statement).+

10.32             Form of Confidentiality and Non-Disclosure Agreement (incorporated
                  by reference to Exhibit 10.34 of the 1996 Registration
                  Statement).

10.33             Form of Confidentiality Agreement (incorporated by reference to 
                  Exhibit 10.35 of the 1996 Registration Statement).

10.34             Form of Mutual Non-Disclosure Agreement (incorporated by reference
                  to Exhibit  10.36 of the 1996  Registration Statement).

10.35             Form of Confidentiality/Non-Disclosure Agreement Remitting
                  Access to System Documentation and Data Files for Data
                  Conversion (incorporated by reference to Exhibit 10.37 of the
                  1996 Registration Statement).

10.36             Form of Phoenix International Ltd., Inc. Confidentiality Agreement
                  (incorporated by reference to Exhibit 10.38 of the 1996
                  Registration Statement).

10.37             The Principal Financial Group Prototype for Savings Plans
                  (401k), as amended, and the Group Annuity Contract for the
                  Company (incorporated by reference to Exhibit 10.41 of the
                  1996 Registration Statement).*

10.38             Remarketing Agreement and Support Authorization, dated as of
                  April 22, 1996, between the Company and Computer Systems
                  Associates (Nigeria) Limited ("CSA") (incorporated by
                  reference to Exhibit 10.42 of the 1996 Registration Statement)
                  (the "CSA Agreement").+

10.39             Lease Agreement, dated September 11, 1996, between the Company
                  and 500 International Parkway Development Company
                  (incorporated by reference to Exhibit 10.1 of the Company's
                  Form 10-Q, dated November 5, 1996, File No.
                  0-20937).

10.40             Addendum to Lease Agreement, dated March 17, 1997, between the
                  Company and 500 International Parkway Development Company
                  (incorporated by reference to Exhibit 10.1 of the Company's
                  Form 10-Q, dated May 8, 1997, File No. 0-20937 (the "First
                  Quarter 1997 10-Q")).

10.41             Cooperative Marketing Agreement, dated October 2, 1996,
                  between the Company and ISC Financial Systems, Inc.
                  (incorporated by reference to Exhibit 10.43 of the 1996
                  10-K).+

10.42             License and Distribution Agreement, dated March 5, 1997,
                  between the Company and Dyad Corporation (incorporated by
                  reference to Exhibit 10.45 of the 1996 10-K).+

10.43             Form of Software License Agreement used in connection with the 
                  CSA Agreement (incorporated by reference to Exhibit 10.47 of
                  the 1996 10-K).
</TABLE>



<PAGE>   33


<TABLE>

<S>               <C>
10.44             Cooperative Marketing Agreement, dated March 26, 1997, between
                  the Company and International Turnkey Systems (incorporated by
                  reference to Exhibit 10.2 of the First Quarter 1997 10-Q).+

10.45             Cooperative Marketing Agreement, dated June 28, 1997, between
                  the Company and Siemens Nixdorf Informationssysteme AG
                  (incorporated by reference to Exhibit 10.49 of the 1997
                  Registration Statement).+

10.46             Cooperative Marketing Agreement, dated March 31, 1997, between
                  the Company and ERAS JV (incorporated by reference to Exhibit
                  10.50 of the 1997 Registration Statement).+

10.47             Cooperative Marketing Agreement, dated April 16, 1997, between
                  the Company and Advanced Financial Systems, Inc.
                  (incorporated by reference to Exhibit 10.51 of the 1997
                  Registration Statement).+

10.48             Software License and Development Agreement, dated as of
                  January 15, 1998, between the Company and Intercept Systems,
                  Inc. (incorporated by reference to Exhibit 10.2 of the First
                  Quarter 1998 10-Q).+

10.49             Source Code License and Marketing Agreement, dated as of March
                  31, 1998, between the Company and CSA (incorporated by
                  reference to Exhibit 10.2 to the First Quarter 1998 10-Q).+

10.50             Agreement for Software Services in Relation to Phoenix Banking
                  system dated September 30, 1998 between the Company and
                  Siemens Nixdorf Information Systems Pty. Limited (incorporated
                  by reference to Exhibit 10.1 to the Company's Form 10-Q, dated
                  November 4, 1998, File No. 0-20937).

10.51             Disaster Recovery Services Marketing Agreement dated as of 
                  December 15, 1998 between the Company and SunGard Recovery
                  Services Int.++

13.1              Registrant's 1998 Annual Report to Shareholders. Except for the
                  portions of said Annual Report specifically incorporated
                  herein by reference, the Annual Report is furnished for the
                  information of the Commission and is not deemed filed
                  herewith.

21.1              Subsidiaries of the Company.

23.1              Consent of Ernst & Young LLP.

24.1              Power of Attorney (contained on the signature page of this filing).

27.1              Financial Data Schedule (for Commission purposes only).
</TABLE>
-----------------
+        Confidential treatment previously granted for portions of such 
         exhibit.
++       Confidential treatment has been requested for certain confidential
         portions of this exhibit pursuant to Rule 24b-z under the Securities
         Exchange Act of 1934, as amended. In accordance with this rule, these
         confidential portions have been omitted from this exhibit and filed
         separately with the Securities and Exchange Commission.
*        This agreement is a compensatory plan or arrangement required to be
         filed as an exhibit to this Form 10-K pursuant to Item 14(c).