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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                   FORM 10-K
(MARK ONE)

    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
             EXCHANGE ACT OF 1934

               FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001

                                       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: 0-22657
                                  H.T.E., INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                            <C>
                   FLORIDA                                      59-2133858
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
         1000 BUSINESS CENTER DRIVE
            LAKE MARY, FLORIDA                                     32746
  (Address of Principal Executive Offices)                       (Zip Code)
</Table>

      Registrant's telephone number, including area code:  (407) 304-3235

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

                                      NONE

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

                          COMMON STOCK, $.01 PAR VALUE
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  YES [X]  NO [ ]

     Indicate by checkmark if disclosure of delinquent filers pursuant to Item
05 of regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this 10-K or any amendment
to this form 10-K.  [X]

     The aggregate market value of voting stock held by non-affiliates of the
Registrant, computed by reference to the last reported price at which the stock
was sold on March 4, 2002, was $38,914,103. For purposes of the above statement
only, all directors and executive officers of the Registrant are assumed to be
affiliates.

     The number of shares of the Registrant's Common Stock, $.01 par value,
outstanding as of March 4, 2002, was 10,988,147.
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                               TABLE OF CONTENTS

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                                                              PAGE
                                                              ----
<S>                                                           <C>
                           PART I
Item 1. Business............................................    1
Item 2. Properties..........................................    9
Item 3. Legal Proceedings...................................    9
Item 4. Submission of Matters to a Vote of Security
  Holders...................................................   10

                          PART II
Item 5. Market for Registrant's Common Equity and Related
  Stockholder Matters.......................................   10
Item 6. Selected Financial Data.............................   11
Item 7. Management's Discussion and Analysis of Financial
  Condition and Results of Operations.......................   13
Item 7A. Quantitative and Qualitative Disclosures about
  Market Risk...............................................   30
Item 8. Financial Statements and Supplementary Data.........   30
Item 9. Changes in and Disagreements with Accountants on
  Accounting and Financial Disclosure.......................   30

                          PART III
Item 10. Directors and Executive Officers of the
  Registrant................................................   31
Item 11. Executive Compensation.............................   33
Item 12. Security Ownership of Certain Beneficial Owners and
  Management................................................   42
Item 13. Certain Relationships and Related Transactions.....   43

                          PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
  on Form 8-K...............................................   45
</Table>

                           FORWARD-LOOKING STATEMENTS

     In addition to historical information, this Annual Report contains
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, and are subject to the safe harbor created by such sections. When
used in this Report, the words "believe," "anticipate," "estimate," "expect,"
"may," "will," "should," "plan," "intend," "potential," "estimate," "predict,"
"forecast," and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
reflected in these forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Factors That May Affect Future Results and Market Price
of Our Stock." Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's opinions only as of the
date hereof. The Company undertakes no obligation to revise or publicly release
the results of any revision to these forward-looking statements.

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                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

     H.T.E., Inc. ("HTE" or the "Company") develops, markets, implements and
supports fully-integrated enterprise-wide application software, Internet, and
wireless solutions designed specifically for public sector organizations,
including state, county and city governments, other municipal agencies and both
public and private utilities. The Company also develops custom solutions for use
by Federal agencies including FEMA and the Census Bureau. For over 20 years, the
Company has focused its applications, business and marketing exclusively on the
public sector and utilities and has established itself as a market leader. HTE's
fully-integrated enterprise-wide software applications are designed to enable
these organizations to improve delivery of services, reduce costs, enhance
revenue collection, operate within budgetary constraints, comply with government
regulations and improve overall operating efficiencies. The Company's Total
Enterprise Solution(R) currently includes more than 50 applications addressing
six functional areas: financial management, community services, public safety,
justice, utility management and K-12 school administration. The Company's
products operate as integrated suites of applications or as stand-alone
applications and function with a variety of computer and network hardware,
operating systems, database software and desktop applications provided by other
vendors. As part of its strategy to provide a completely integrated solution to
its customers, the Company also provides related services, including consulting,
implementation, and education and training.

     As of December 31, 2001, the Company's customers consisted of more than
2,200 offices, agencies, and utility companies in the U.S., Caribbean and
Canada, including installations in all 50 U.S. states. The Company markets and
sells its products primarily through a direct sales force. The Company's focus
on the public sector and utilities industries has allowed it to develop
significant domain expertise in these industries and to design feature-rich
solutions that address the specific needs of these organizations.

INDUSTRY BACKGROUND

     The public sector marketplace is composed of federal, state, county and
city governments, other municipal agencies, and publicly owned utilities. The
local government market comprises over 3,000 counties and over 19,000
municipalities in the U.S., not including school districts, townships and
special governmental districts. The utility market includes approximately 1,800
water, gas and electric utilities, each serving between 25,000 and 500,000
consumers. With respect to public safety agencies, there are approximately
50,000 police, fire and emergency service agencies in the U.S.

     The public sector marketplace is currently undergoing significant
organizational and business changes. In recent years, the federal government
gave additional program and funding responsibilities to state and local
governments, resulting in a growing requirement at the local level to fill the
gap between increasing constituent demands and limited resources. Like many
private sector businesses, public sector organizations are facing increasing
pressure to improve delivery of goods and services while striving to reduce
costs and generate additional revenue. In response, public sector organizations
are employing information technology ("IT") solutions in an effort to streamline
and automate administrative intensive processes, improve timeliness and quality
of services, and generally enhance operating efficiencies. These organizations
are also coming under pressure to provide services to citizens via the Internet
and to improve operations with wireless capabilities. In addition, public
organizations are seeking to use information technology to create new sources of
revenue and enhance existing revenue collection.

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

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<PAGE>

     In the 1970's and 1980's, local governments and utility companies began to
use computerized operations management systems principally based on mainframe
computers and later based on minicomputers. These legacy systems typically use
proprietary operating systems and database software and are frequently developed
on a custom basis to meet the specific needs of a customer. The proprietary and
custom nature of legacy systems often limits their accessibility and
interoperability with other software applications, systems and resources.
Further, these systems often do not address current needs and are becoming
increasingly difficult and expensive to maintain, update and change. Currently,
many public sector organizations are faced with a pressing need to integrate
mission-critical functions and databases by replacing stand-alone applications
and customized software with cost-effective enterprise-wide solutions that
improve overall operational efficiencies and manage the flow of information
between departments.

     In recent years, the increased performance and lower cost of desktop
computers, together with improvements in network communications, have
contributed to a shift by organizations from centralized computer systems to
more distributed environments that support the integration of a variety of
"client" (end-user) and "server" (host-based) applications. The first generation
of client/server software applications primarily consisted of "point solutions"
that focused on a single function, such as the general ledger or human resource
management. Point solutions are not easily interoperable with point solutions
from other providers, making access to information between departments difficult
and requiring redundant data entry or expensive customization and maintenance.
Because point solutions frequently do not operate on the customer's existing
system, they often require a long implementation process involving the costly
migration of large amounts of data from existing systems and the purchase of new
hardware and software.

     A number of software vendors now offer generalized client/server products
to the public sector market, though these are frequently private sector
providers with little public sector industry expertise. Additionally, their
solutions typically are not enterprise-wide and as a result do not enable
multiple departments, such as police and court records departments, to share
information. These solutions often do not fulfill the specific functional
requirements of the public sector marketplace such as complying with government
fund accounting standards, procurement processes, and regulated budgeting
processes. Consequently, public sector organizations frequently experience
lengthy and expensive customization and implementation cycles. Moreover, these
solutions may not be sufficiently flexible to cost-effectively accommodate the
ongoing needs of public sector organizations as they modify and improve their
operations.

     The deficiencies of these currently available solutions have become
increasingly apparent as organizations have attempted to reengineer their
operations management practices. Organizations are now attempting to identify
and implement preferred approaches within their specific organizations to manage
and control a broad range of operations and information. To implement this
re-engineering, public sector organizations are seeking software solutions that
allow them to manage enterprise-wide information and to distribute that
information to employees and the public. As a result of the increased complexity
and sophistication required to meet new computing challenges, public sector
organizations are demanding robust solutions to their information processing
needs that are based on proven technologies and incorporate the application
knowledge specific to the public sector market.

HTE'S TOTAL ENTERPRISE SOLUTION(R)

     The Company's integrated, enterprise-wide software solution enables public
sector and utility organizations to improve delivery of services, reduce costs,
enhance revenue collection, operate successfully within budgetary constraints,
comply with government regulations and improve overall operating efficiencies.
HTE's Total Enterprise Solution is based on more than 20 years of public sector
and utility expertise and consists of a full suite of software applications, as
well as a complete range of customer services, support and training. The
Company's Total Enterprise Solution provides the following:

          Integrated Enterprise-Wide Solutions and Depth of Functionality.  HTE
     offers a Total Enterprise Solution, consisting of more than 50
     applications, which provides feature-rich systems for financial management,
     community services, public safety, justice, utility management and K-12
     school administration. HTE's products operate as stand-alone applications
     or as integrated suites that provide users with a

                                        2
<PAGE>

     consistent browser enabled user interface and the ability to easily access
     data and share information among multiple departments and agencies. The
     Company's applications are based upon proven technologies and are designed
     to function in mission-critical environments.

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

          n-tiered Software Architecture.  The Company's layered software
     architecture isolates the application logic from the presentation layer and
     the database. This feature enables the Company to utilize multiple
     platforms and effectively integrate new technologies with existing
     software. n-tiered architecture allows customers to protect their
     investments in information systems while positioning them to adopt new
     object-based solutions, high performance servers and database management
     systems with no loss of functionality.

          Centralized System Administration.  System administration is
     centralized in HTE solutions, thereby simplifying system management,
     reducing the need for in-house system administrators and programmers and
     mitigating the need for third-party services. HTE's applications
     incorporate extensive security features designed to protect data from
     unauthorized retrieval or modification. Simplified menus and data access
     can be tailored to meet each organization's requirements.

          Cost-Effective Implementation Methodology.  The Company utilizes a
     highly responsive implementation planning process and focused consulting
     and training services specifically designed to satisfy the functionality
     and deployment needs of public sector and utilities customers. By offering
     rapid product deployment and easy migration among its product lines, the
     Company seeks to minimize the productivity interruption to organizations
     that typically results from the introduction of new technology, thereby
     enabling organizations to realize more quickly the associated benefits.

STRATEGY

     The Company's objective is to be the dominate provider of enterprise-wide
information solutions by virtue of providing the most compelling customer value
in the public sector and utility marketplace. Principal elements of the
Company's strategy include:

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

          Enable Citizen, Customer and Business Access via the Internet.  The
     Company estimates that millions of U.S. households and businesses are
     served by communities and organizations that use HTE software to manage
     their information systems. These citizens increasingly are looking to their
     counties/communities to improve electronic services access for the payment
     of utility bills, tax bills, and parking tickets and for additional
     e-government capabilities for such activities as scheduling building
     inspections, filing court cases, and filing general citizen complaints or
     incident reports. HTE meets this need by providing real time, transaction
     capable e-government applications.

                                        3
<PAGE>

          Capitalize on Public Sector Expertise.  The Company intends to
     capitalize on its public sector knowledge and experience to enhance sales
     in existing markets, such as the utilities market, and expand into new
     market segments, such as educational institutions. For over 20 years, the
     Company has focused exclusively on the public sector and utilities
     marketplace. The Company believes this focus has resulted in the
     development of a core expertise and background in areas such as government
     fund accounting, as well as the "front-office" and "back-office"
     mission-critical activities of police, fire and other emergency personnel.
     In addition, HTE believes its public sector focus has allowed the Company
     to develop a large customer base, consisting of more than 2,200 offices,
     agencies, and utility companies across North America. The Company believes
     the size and geographic breadth of its customer base offers significant
     leverage with regard to new business, since references from existing
     customers often result in future sales opportunities.

          Deliver New Applications and Technology.  The Company intends to
     continue to serve its customers' needs by maintaining its reputation for
     proven and effective use of recent advances in technology as they emerge
     and gain acceptance by these markets. The Company seeks to develop new
     applications and incorporate new product functionality, such as Internet
     integration, object technology, decision support, mobile computing, and
     wireless communications.

          Supplement Internal Growth Through Strategic Acquisitions.  The
     Company views acquisitions as a means of acquiring technology and
     application expertise, broadening its customer base. The Company believes
     that the public sector application vendor market is highly fragmented with
     many small point solution companies and that the industry is currently
     entering a period of consolidation. In the longer term, the Company intends
     to pursue acquisition opportunities that accomplish its objective of
     becoming the leading provider of enterprise-wide information solutions to
     the public sector. Over the past seven years, the Company has supplemented
     its internal growth with nine strategic acquisitions.

HTE'S INTEGRATED SOFTWARE PRODUCTS

     HTE offers integrated enterprise-wide software solutions designed to
automate and integrate the operations of public sector and utility
organizations. The Company has designed its products based on the philosophy
that complete application integration is essential for the effective sharing of
information across an organization. Offering enterprise-wide integration, the
Company's applications provide more than simple integration; they work together
seamlessly, sharing functions and eliminating redundant data and repetitive
tasks. Transactions are processed by a single application, and the information
is immediately ready for use by other interfaced applications. The license fee
for a typical sale ranges from approximately $80,000 to $500,000, depending on
hardware configurations, number of users and applications licensed.

     The following summarizes the Company's applications and the principal
benefits of the integrated application system:

                          FINANCIAL MANAGEMENT SYSTEMS

     HTE's Integrated Accounting System provides a comprehensive fund accounting
system that includes general ledger, budgeting, accounts payable, project and
grant management and financial reporting. The system is available in two formats
to accommodate a wide range of accounting practices, while maintaining
compliance with financial reporting guidelines. Integrated Accounting can work
independently or with other HTE applications to provide a completely integrated,
enterprise-wide financial solution. The principal benefits of this integrated
system are as follows:

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

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

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

     - Streamlines IRS reporting and offers custom budgeting tools.

                           COMMUNITY SERVICES SYSTEMS

     The Company's systems provide a centralized land and location database
solution that expedites access to property data, business licenses and permits,
code enforcement proceedings, planning and zoning processes, appraisal and
assessment, and tax billing and collections. The system also manages community
parks and recreational facilities. The principal benefits of the systems are as
follows:

     - A centralized information system that expedites access to property data,
       business licenses and permits, code enforcement proceedings, planning and
       zoning processes, appraisals and assessments, and tax billing and
       collections.

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

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

                             PUBLIC SAFETY SYSTEMS

     The public safety systems provide police, fire and emergency medical
responders with a complete public safety solution through an integrated suite of
applications. These applications provide immediate mobile access to vital
information such as prior call history, hazmat information, wanted person data,
equipment recommendations and first responder medical instructions. A complete
suite of mobile applications designed to run on platforms ranging from laptops
to PDA's allows for the collection of incident, fire and medical data comply
with all state and federal mandated requirements. This wireless capability
provides for increased emergency responder safety and awareness as departments
are able to share data across disparate agencies. Critical wireless
communications links allow for the real time dissemination of information in
disaster type situations through applications and technologies such as HTE
Message Switch, Mobile Data Browser, E911 integration, geographic information
technologies and various alarm interfaces. The principal benefits of the public
safety applications are as follows:

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

     - Provides emergency responders with silent communications, increasing
       officer safety and restricting unauthorized monitoring of emergency
       responder voice traffic.

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

     - Increases personnel safety and provides for better public service by
       allowing police and emergency personnel to remain in the field.

                                JUSTICE SYSTEMS

     The integrated justice suite provides a complete centralized system for
managing information and activities associated with jails, court cases, juries,
probation, prosecution, public defense and return of service. The principal
benefits of the justice applications are as follows:

     - An integrated suite of applications that ensures a smooth, efficient flow
       of information through all phases of the justice process.

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

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                                UTILITY SYSTEMS

     The Company offers a suite of integrated products designed to handle a full
range of utility services including electric, water, gas and others. The
flexibility of these programs lets customers tailor applications to meet
specific business needs. HTE's Customer Information System ("CIS") is capable of
interfacing with other software systems and with various databases, for
engineering purposes such as plant maintenance. Some of the principal benefits
of these products are as follows:

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

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

                           K-12 SCHOOL ADMINISTRATION

     These integrated applications address four key areas of K-12 school
administration: general accounting, payroll, human resources and student
administration. All applications incorporate a variety of standard features and
functions to provide ease of use, customization capabilities and reporting
flexibility. Among the principal benefits of these applications are the
following:

     - Integrates system security to restrict users and protect confidentiality.

     - Complies with state and federal reporting requirements.

     - Client/server platform operates in a network environment.

     - Supports bar coding and scanning for attendance, grade reporting and
       employee photos.

HTE'S LAYERED SOFTWARE ARCHITECTURE

     The Company's software architecture is based on a layered software model.
Under this model, Microsoft Windows 95, Windows 98 and Windows NT/2000 may host
the client. The n-tier architecture isolates the application logic and database
access from the presentation layer. A Java-based server running on either
Windows NT/2000 or the IBM eServer iSeries hosts the presentation layer. The
presentation layer supports Java-capable browsers such as Microsoft's Internet
Explorer and Netscape's Navigator.

CUSTOMER SERVICE

     HTE offers a range of services, including implementation support, customer
support, education and training and professional consulting services. The
Company continues to devote substantial resources toward improvements in
customer service and has recently expanded its support system with Internet
support capabilities.

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

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

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     Through its HTE User Group ("HUG"), the Company involves its customers and
end-users to help identify new functions and product features that offer the
greatest benefit. The Company believes that HUG assists the Company in the
development and support of products.

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

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

SALES AND MARKETING

     The Company sells its products in North America through a direct sales
force. As of December 31, 2001, the Company had 38 employees in its sales and
marketing organization, including sales representatives, pre-sale consultants,
sales and marketing management, proposal specialists, and product demonstrators.
The Company employs a variety of business development and marketing techniques
to communicate directly with current and prospective customers. These techniques
include exhibiting at trade shows; conducting seminars for clients and
prospective clients on technology and industry issues; and marketing through
targeted mail campaigns, telemarketing and the corporate web site.

     HTE uses a combination of electronic prospective client databases,
telemarketing, and field sales methodologies to identify potential candidates
for its Total Enterprise Solution systems. Prospective HTE customers are
monitored through a prospect management system that segments the sales cycle
into several phases, each with multiple measurement points, to assess properly
the prospective client base.

     A key aspect of the Company's sales and marketing strategy is to build and
maintain strong relationships with businesses that the Company believes play a
role in the successful marketing of its software products. The Company's
customers and potential customers often rely on third-party system integrators
to develop, deploy and manage information systems. These providers include
software and hardware vendors and technology consulting firms, some of which are
active in the selection and implementation of information systems for
organizations that comprise the Company's principal customer base. HTE maintains
relationships with companies such as Microsoft, IBM, Cognos, Jacada, and ESRI.
The Company believes that its marketing and sales efforts are enhanced by the
worldwide presence of many of these companies. HTE has conducted several joint
marketing and sales programs with these vendors, including seminars, direct mail
campaigns and trade show appearances. Additionally, the Company plans to drive
new growth through Internet citizen access. The Company's large existing
customer base of over 2,200 government offices, agencies, and utility companies
creates a ready market to millions of household citizens and utility customers
served by the Company's application suite. The Company believes that a
significant untapped business opportunity exists in providing these household
citizens and utility customers online transaction-oriented services, 24 hours a
day, seven days a week, from the comfort of their homes or offices.

CUSTOMERS

     The Company provides fully-integrated, enterprise-wide software solutions
to federal, state, city and county governments, utilities, transportation
authorities, parks and recreation departments and police, fire and emergency
personnel. As of December 31, 2001, the Company had a customer base of over
2,200 offices, agencies and utility companies, including installations in all 50
U.S. states. No customer accounted for more than 10% of total revenues for the
years ended December 31, 1999, 2000 or 2001.

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PRODUCT DEVELOPMENT

     HTE's product development efforts are focused on further enhancement of its
java based user interface, e-government applications and development of windows
based products architected for deployment alongside iSeries products. Key
product functionality enhancements will also be addressed as identified by our
user group through the Enhancement Request System (ERS) and by our marketing
research. In addition, HTE will continue to evolve its enterprise wide solution
by continuing to enhance and streamline application interfaces toward increased
performance and reliability. At December 31, 2001, HTE had 148 full-time
employees in product development.

     HTE plans to continue to add new products and services, both through
internal development and potential acquisitions, to leverage the Company's core
technologies and expertise. In the development of new applications, the Company
intends to strive to allow customers to utilize existing systems while at the
same time providing customers the advantage of advances in network systems,
platforms, database and other relevant technologies. The Company's gross
development expenditures were $23.1 million, $17.4 million and $15.5 million for
the years ended December 31, 1999, 2000 and 2001, respectively.

COMPETITION

     The Company faces competition from a variety of software vendors that offer
products and services similar to those offered by the Company and from companies
offering to develop custom software. Certain competitors have greater technical,
marketing and financial resources than the Company. The Company also competes
with in-house management information services staff. The Company believes
competitive differentiators are functionality, product flexibility, ease of
implementation in adapting products to individual customers' needs without
custom programming, enterprise product breadth and integration, individual
product features, service reputation and price.

     The Company believes the market is highly fragmented with a large number of
competitors that vary in size, primary computer platforms and overall product
scope. Within its markets, the Company competes from time to time with (i) the
consulting divisions of national and regional accounting firms, (ii) publicly
held companies that focus on selected segments of the public sector and
utilities markets including PeopleSoft, Inc., Systems Computer & Technology,
Inc., J.D. Edwards & Company, Inc., SunGard Data Systems, Inc., Tyler
Technologies, Inc., and EZ-gov and (iii) a significant number of smaller
companies. Many of these companies do not focus exclusively on the public sector
or offer fully-integrated enterprise-wide software applications. There can be no
assurance that such competitors will not develop products or offer services that
are superior to the Company's products or services or that achieve greater
market acceptance.

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

INTELLECTUAL PROPERTY, PROPRIETARY RIGHTS AND LICENSES

     The Company regards certain features of its internal operations, software
and documentation as confidential and proprietary, and relies on a combination
of contract and trade secret laws and other measures to protect its proprietary
intellectual property. The Company has no patents and, under existing copyright
                                        8
<PAGE>

laws, has only limited protection. The Company believes that, due to the rapid
rate of technological change in the computer software industry, trade secret and
copyright protection are less significant than factors such as knowledge,
ability and experience of the Company's employees, frequent product enhancements
and timeliness and quality of support services.

     The Company provides its products to customers under exclusive licenses,
which generally are non-transferable and have a perpetual term. The Company
generally licenses its products solely for the customer's internal operations
and only on designated computers. In certain circumstances, the Company makes
enterprise-wide licenses available for select applications. Although the Company
typically provides only object code to its customers, the Company historically
provided source code to its customers for several products and has escrowed, and
continues to escrow, its source code for the benefit of customers. A
misappropriation or other misuse of the Company's intellectual property,
including source code previously delivered to customers, could have an adverse
effect on the Company.

     From time to time, the Company licenses software from third parties for use
with its products. Typically, the Company resells such third-party software
products as an integrated part of one or more of the applications included in
HTE's Total Enterprise Solution. If any third-party license agreement for such
software product were to terminate and the Company was not able to obtain
another license or otherwise acquire comparable technology or software, the
Company would be adversely affected.

EMPLOYEES

     As of December 31, 2001, the Company employed 467 people, including 38 in
sales and marketing, 148 in product development, 128 in customer support and
field services, 100 in professional services and 53 in administration. The
Company's success will depend in large part upon its ability to continue to
attract and retain qualified employees. None of the Company's employees are
represented by a labor union or are subject to a collective bargaining
agreement. The Company believes that its relations with its employees are good.

ITEM 2.  PROPERTIES

     In June 1997, the Company moved its headquarters to Lake Mary, Florida,
where it leases an aggregate of approximately 87,000 square feet in the Heathrow
International Business Center. Administrative, marketing, product development
and customer support and service operations are located in this space. The
initial lease term for the new headquarters expires in June 2007, and may be
renewed by HTE for up to three consecutive renewal terms of five years each. In
connection with the lease, HTE entered into an expansion agreement pursuant to
which it may, at its option during the term of the main lease, lease two
additional office buildings in the Heathrow Business Center, each of which would
contain approximately 27,000 to 40,000 gross square feet of space.

     The Company also occupies approximately 7,500 square feet of space in Fort
Lauderdale, Florida, pursuant to a lease expiring in May 2002; approximately
4,400 square feet of space in Spokane, Washington, pursuant to a lease expiring
December 2002; approximately 4,900 square feet of space in Vienna, Virginia,
pursuant to a lease expiring April 2006; and approximately 5,400 square feet of
office space in Southbury, Connecticut, pursuant to a lease expiring December
2004.

ITEM 3.  LEGAL PROCEEDINGS

     As described in the Company's Form 8-K and Form 10-Q filed with the
Securities and Exchange Commission on October 29, 2001 and November 13, 2001,
respectively, the Company redeemed 5,618,952 shares of its common stock (the
"Redeemed Shares") from Tyler Technologies, Inc. ("Tyler") for a purchase price
of $7,304,637.60 (the "Redemption"). Tyler purchased the Redeemed Shares in 1999
in a control shares acquisition, as defined in Florida's control shares statute.
The Company effected the Redemption in accordance with the requirements of
Florida's control shares statute. The Redemption reduced the number of the
Company's issued and outstanding shares of common stock from 16,960,557 to
11,341,605 as of October 29, 2001. Tyler subsequently sent a letter to the
Company and issued a press release on October 30, 2001 asserting that it
continued to be a shareholder of the Company and that the Redemption was not
valid
                                        9
<PAGE>

and contrary to Florida law. The Company reaffirms that under Florida law, the
Redeemed Shares are no longer considered issued and outstanding and all rights
with respect to them have ceased. Accordingly, in order to legally confirm the
Redemption, the Company filed an action for a Declaratory Judgment, which is now
pending before the Federal District Court for the Middle District of Florida in
Orlando, Florida. If the redemption is confirmed, but at a higher price than the
Company paid for the redeemed shares, the Company will be required to draw such
funds from its cash reserves and/or from its line of credit.

     The Company is a party to some contracts, which may result in financial
penalties in the event of non-performance. Management anticipates that these
penalties, if any, will not have a material adverse effect on the Company's
financial position or operating results.

     In the normal course of business, the Company is subject to various claims
and legal actions. The Company provides for losses, if any, in the year in which
they can be reasonably estimated. The Company is not aware of any other legal
proceedings or claims that it believes are likely to have a material effect on
its financial position or operating results.

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

     No matters were submitted to a vote of security holders during the
Company's fourth quarter ended December 31, 2001.

                                    PART II

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

     The Company's common stock is traded on the NASDAQ National Market System
under the symbol "HTEI". The number of shareholders of record as of March 4,
2002 was 195; however, the number of beneficial holders is approximately 3,221.
The closing price per share on that date was $3.82.

     The table below sets forth information, for each quarter in 2000 and 2001,
concerning the high and low sales prices of a share of the Company's common
stock. Quotations for such periods are as reported by NASDAQ for National Market
Issues.

<Table>
<Caption>
                                                              STOCK PRICE RANGE
                                                              -----------------
                                                                LOW      HIGH
                                                              -------   -------
<S>                                                           <C>       <C>
YEAR ENDED DECEMBER 31, 2000
First Quarter...............................................  $2.656    $6.375
Second Quarter..............................................  $0.938    $3.344
Third Quarter...............................................  $1.063    $1.813
Fourth Quarter..............................................  $0.750    $1.531
YEAR ENDED DECEMBER 31, 2001
First Quarter...............................................  $0.875    $2.375
Second Quarter..............................................  $1.250    $3.130
Third Quarter...............................................  $1.570    $2.990
Fourth Quarter..............................................  $1.100    $2.250
</Table>

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

     The Company has not paid cash dividends in the past. The Company presently
intends to retain earnings for use in its business and other corporate purposes
with any future decision to pay cash dividends dependent on its growth,
profitability, financial condition and other factors the Board of Directors may
deem relevant.

                                        10
<PAGE>

USE OF PROCEEDS FROM INITIAL PUBLIC OFFERING

     The Company's registration statement for its initial public offering of
common stock (SEC File No. 333-22637) was declared effective by the SEC on June
10, 1997. A total of 5,750,000 shares of common stock (including the
underwriters' over-allotments) were registered for offer and sale for an
aggregate offering price of $31,625,000. The Company's representatives for the
offering were Volpe Brown Whelan & Company and Janney Montgomery Scott Inc. Of
the shares of common stock initially offered, 3,900,000 shares were sold by the
Company for gross proceeds of $21,450,000 and 1,100,000 shares were sold by
certain selling shareholders for gross proceeds of $6,050,000. In July 1997, the
underwriters exercised their option to purchase 750,000 additional shares of
common stock to cover over-allotments, for gross proceeds to the Company of
$4,125,000.

     The net proceeds from the sale of the 4,650,000 shares of common stock
offered by the Company were approximately $22.6 million (includes the
underwriters' over-allotment option of 750,000 shares which were exercised in
July 1997), after deducting underwriting commissions and discounts of $1.8
million and other expenses of $1.2 million, for an aggregate total of $3.0
million. The selling shareholders paid their respective underwriters commissions
($424,000), while the Company paid the remaining discounts and expenses on their
behalf. The Company used a portion of the proceeds ($2.3 million) to repay a
revolving credit facility, which matured on June 30, 1998, and bore interest at
the fluctuating prime rate plus 1.25%. The Company also paid the $300,000
aggregate principal balance on notes payable to related parties which arose from
the purchase of Bellamy Software Ltd. in 1996. The sum of $624,000 in accrued
dividends was paid to holders of mandatorily redeemable preferred stock.
Additionally, $3.6 million was used for the acquisitions of Kb Systems, Inc.,
JALAN, Inc., Vanguard Management and Information Systems, Inc. and Information
on Demand, Inc. The Company used all of the remaining net proceeds to fund
working capital and investment requirements.

ITEM 6.  SELECTED FINANCIAL DATA

     The following selected consolidated financial data should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Form 10-K. The selected
consolidated financial data of the Company as of December 31, 1997, 1998 and
1999, and for the years ended December 31, 1997 and 1998, have been derived from
consolidated financial statements audited by Arthur Andersen LLP. The selected
consolidated financial data of the Company as of December 31, 2000 and 2001, and
for the years ended December 31, 1999, 2000 and 2001, have been derived from the
Company's Consolidated Financial Statements audited by Arthur Andersen LLP,
independent certified public accountants, included elsewhere herein.

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                  ------------------------------------------------
                                                   1997      1998       1999      2000      2001
                                                  -------   -------   --------   -------   -------
                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                               <C>       <C>       <C>        <C>       <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
  Software licenses.............................  $26,762   $43,277   $ 24,641   $11,259   $12,891
  Professional services.........................   14,543    20,870     28,575    14,947    13,580
  Hardware......................................   11,768    15,516     14,945     3,725     1,930
  Maintenance and other.........................   12,571    17,793     25,772    31,605    35,738
  Resource management...........................      448     1,449      2,275     1,955     1,681
                                                  -------   -------   --------   -------   -------
          Total revenues........................   66,092    98,905     96,208    63,491    65,820
                                                  -------   -------   --------   -------   -------
</Table>

                                        11
<PAGE>

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                  ------------------------------------------------
                                                   1997      1998       1999      2000      2001
                                                  -------   -------   --------   -------   -------
                                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                               <C>       <C>       <C>        <C>       <C>
Operating expenses:
  Cost of software licenses.....................    5,283     8,843      7,489     5,380     5,033
  Cost of professional services.................    8,363    13,399     17,294    11,719     9,364
  Cost of hardware..............................    9,209    13,050     12,437     3,178     1,272
  Cost of maintenance and other.................    5,984    10,041     10,350     9,315     9,299
  Cost of resource management...................      343       918      1,440     1,168       571
  Research and development......................    8,256    14,048     19,294    14,189    13,405
  Sales and marketing...........................   11,520    20,526     20,116    12,170     9,681
  General and administrative....................   10,925    15,614     18,779    13,469    13,264
  Contract judgment and settlement, employee
     termination benefits and other costs.......       --       552     12,927    (1,131)    1,030
                                                  -------   -------   --------   -------   -------
          Total operating expenses..............   59,883    96,991    120,126    69,457    62,919
                                                  -------   -------   --------   -------   -------
Operating income (loss).........................    6,209     1,914    (23,918)   (5,966)    2,901
Other income (expense):
  Interest income, net..........................      227       321        154       423       429
  Loss on investment............................       --        --         --        --    (1,888)
                                                  -------   -------   --------   -------   -------
          Total other income (expense)..........      227       321        154       423    (1,459)
                                                  -------   -------   --------   -------   -------
Income (loss) before income taxes...............    6,436     2,235    (23,764)   (5,543)    1,442
Provision (benefit) for income taxes............    2,482     1,253     (8,898)   (2,162)      577
                                                  -------   -------   --------   -------   -------
Net income (loss)...............................    3,954       982    (14,866)   (3,381)      865
Accretion and accrual of dividends on
  mandatorily redeemable preferred stock........    1,308        --         --        --        --
                                                  -------   -------   --------   -------   -------
Net income (loss) attributable to common
  stockholders..................................  $ 2,646   $   982   $(14,866)  $(3,381)  $   865
                                                  =======   =======   ========   =======   =======
PER SHARE DATA:
Net income (loss) per share:
  Basic.........................................  $  0.21   $  0.06   $  (0.86)  $ (0.19)  $  0.05
                                                  =======   =======   ========   =======   =======
  Diluted.......................................  $  0.20   $  0.06   $  (0.86)  $ (0.19)  $  0.05
                                                  =======   =======   ========   =======   =======
PRO FORMA OPERATIONS DATA (UNAUDITED):
Income (loss) before income taxes...............  $ 6,436   $ 2,235   $(23,764)   (5,543)  $ 1,442
Pro forma provision (benefit) for income
  taxes.........................................    2,463       864     (8,898)   (2,162)      577
                                                  -------   -------   --------   -------   -------
Pro forma net income (loss)(1)..................  $ 3,973   $ 1,371   $(14,866)  $(3,381)  $   865
                                                  =======   =======   ========   =======   =======
Pro forma net income (loss) per share(2):
  Basic.........................................            $  0.08   $  (0.86)  $ (0.19)  $  0.05
                                                            =======   ========   =======   =======
  Diluted.......................................            $  0.08   $  (0.86)  $ (0.19)  $  0.05
                                                            =======   ========   =======   =======
</Table>

<Table>
<Caption>
                                                                      DECEMBER 31,
                                                      --------------------------------------------
                                                       1997      1998     1999     2000     2001
                                                      -------   ------   ------   ------   -------
                                                                     (IN THOUSANDS)
<S>                                                   <C>       <C>      <C>      <C>      <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents...........................  $18,634   $7,553   $6,901   $9,762   $10,862
Working capital.....................................   24,387   22,078    6,408    1,981    (2,080)
Total assets........................................   54,208   69,831   61,009   54,506    48,847
Long-term debt......................................       --       --       --      625        --
Total stockholders' equity (deficit)................   30,292   32,939   19,306   17,797    10,507
</Table>

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

(1) Prior to their acquisitions, certain businesses acquired by the Company were
    taxed as S corporations. The pro forma net income (loss) reflects historical
    data as adjusted for all income being taxed as if it were earned by a C
    corporation.

                                        12
<PAGE>

(2) Pro forma net income per share is determined by dividing pro forma net
    income by the pro forma weighted-average number of shares outstanding during
    the period. Pro forma weighted-average number of shares outstanding for all
    periods reported were determined assuming the conversion of the mandatorily
    redeemable preferred stock and the mandatorily redeemable Class C common
    stock into the Company's common stock as of the date it was first issued.
    Common share equivalents included in the diluted calculation are computed
    using the treasury stock method and consist of common stock which may be
    issuable upon the exercise of outstanding stock options, when dilutive.

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

OVERVIEW

     The Company develops, markets, implements and supports fully integrated
enterprise-wide software applications designed specifically for public sector
organizations, including state, county and city governments and other municipal
agencies and for public and private utilities. For over 20 years, the Company
has strategically focused on providing software applications exclusively to
middle market public sector organizations and utilities, and has established
itself as a leading provider of software solutions to those markets. HTE's fully
integrated enterprise-wide software applications are designed to fulfill the
specific functional requirements of the public sector marketplace, such as
improvement of delivery of services, reduction of costs, enhancement of revenue
collection, operation within budgetary constraints, compliance with government
regulations and improvement of overall operating efficiencies. The Company's
Total Enterprise Solution currently includes more than 50 applications
addressing six functional areas: financial management, community services,
public safety, justice, utility management and K-12 school administration. The
Company's products operate as integrated suites or as stand-alone applications
and function with a variety of computer and network hardware, operating systems,
database software and desktop applications provided by other vendors. As part of
its strategy to provide a completely integrated solution to its customers, the
Company also provides a variety of related services, including consulting,
implementation, education and training and the provision and configuration of
hardware systems. In 2000, the Company began outsourcing the sale and
configuration of hardware systems through an agreement with Vertical VAR. Under
this agreement, the Company will receive a royalty on hardware sales to HTE
customers by Vertical VAR.

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

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

     The sales cycle for the Company's systems is typically six to 18 months
from initial contact to contract signing. The product delivery cycle varies
based on the customer's implementation plan. Complete product

                                        13
<PAGE>

implementation typically occurs within six to nine months, but can extend beyond
nine months on contracts involving significant and continuing customer service
requirements, particularly with enterprise-wide solutions.

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

     The Company accounts for costs related to computer software in accordance
with Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed." All costs
incurred to establish technological feasibility of a software product are
charged to research and development expense as incurred. Technological
feasibility is established when the Company has completed all planning,
designing, coding and testing activities that are necessary to establish that
the product can be produced to meet its design specifications, including
functions, features and technical performance requirements. Costs of producing
product masters incurred subsequent to establishing technological feasibility
are capitalized and are amortized on a straight-line basis over three years once
the product is available for general release to customers. The Company ceases
capitalization when the product is available for general release to customers.

     The Company derives substantially all of its revenues from domestic
operations. In November 1996, HTE established a physical presence in Canada
through an acquisition of a Canadian company. The operating assets of this
Canadian subsidiary were sold in September 2001. However, the Company continues
to sell its products and services and maintain customer relationships in Canada
from the United States.

     The Company's revenues and operating results are subject to quarterly and
other fluctuations resulting from a variety of factors, including the budgeting
and purchasing practices of its customers, the length of the customer evaluation
process for the Company's solutions, the timing of customer system conversions,
and the Company's sales practices. The Company has often recognized a
substantial portion of its revenues during the last month of each quarter. Since
a significant portion of the Company's operating expenses is relatively fixed,
the Company may not be able to adjust or reduce spending in response to sales
shortfalls or delays. These factors can cause significant variations in
operating results from quarter to quarter. The Company believes that quarter to
quarter comparisons of its financial results are not necessarily meaningful and
should not be relied upon as an indication of its future performance.

RIGHTS OFFERING OF DEMANDSTAR.COM, INC. AND SUBSEQUENT DISPOSITION

     Pursuant to a registration statement on Form S-1 (File No. 333-93445), as
amended, filed with the SEC and which became effective March 27, 2000,
DemandStar, a wholly-owned subsidiary of the Company, completed a rights
offering of its common stock as of May 1, 2000. This rights offering was
essentially DemandStar's initial public offering. Rights to purchase an
aggregate of 6,374,080 shares of common stock were exercised for an aggregate
purchase price of $6.4 million. As a result, only DemandStar's operating results
through April 2000 are included in the Company's consolidated financial
statements in this report since the Company's ownership of DemandStar was
reduced to below twenty percent as of May 1, 2000.

     On March 2, 2001, the shareholders of DemandStar approved at a special
shareholders meeting an acquisition of DemandStar by Onvia pursuant to which
DemandStar became a wholly-owned subsidiary of Onvia effective March 5, 2001.
Shareholders of outstanding DemandStar common stock were issued 0.60 of a share
of Onvia's common stock for every share of DemandStar common stock they, and
outstanding shares of DemandStar common stock were canceled. Cash was paid to
DemandStar shareholders in lieu of fractional shares of Onvia common stock. The
Company was issued a total of 1,200,000 shares of Onvia common stock in respect
of the common stock and preferred stock the Company held in DemandStar.

FUTURE ACQUISITIONS

     Over the past seven years, the Company has supplemented its internal growth
with nine acquisitions, six of which have occurred since December 1997. The
Company intends to continue its growth strategy and expects growth from
acquisitions to complement internally generated growth. The Company views
acquisitions as a means of acquiring technology and industry expertise thereby
expanding the variety of enterprise-wide

                                        14
<PAGE>

software applications the Company offers for sale and servicing, broadening its
customer base and expanding internationally. The Company believes that the
public sector application vendor market is highly fragmented with many small
point solution companies and that the industry is currently entering a period of
consolidation. The Company intends to pursue acquisition opportunities which
help it to accomplish its objective of becoming the leading provider of
enterprise-wide IT solutions to the public sector.

RESULTS OF OPERATIONS

     The following table sets forth, for the periods indicated, the percentage
of total revenues represented by certain revenue, expense and income items:

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                         -------------------------------------
                                                         1997    1998    1999    2000    2001
                                                         -----   -----   -----   -----   -----
<S>                                                      <C>     <C>     <C>     <C>     <C>
Revenues:
  Software licenses....................................   40.5%   43.7%   25.6%   17.7%   19.6%
  Professional services................................   22.0    21.1    29.7    23.5    20.6
  Hardware.............................................   17.8    15.7    15.5     5.9     2.9
  Maintenance and other................................   19.0    18.0    26.8    49.8    54.3
  Resource management..................................    0.7     1.5     2.4     3.1     2.6
                                                         -----   -----   -----   -----   -----
          Total revenues...............................  100.0   100.0   100.0   100.0   100.0
                                                         -----   -----   -----   -----   -----
Operating expenses:
  Cost of software licenses............................    8.0     8.9     7.8     8.5     7.6
  Cost of professional services........................   12.7    13.5    18.0    18.5    14.2
  Cost of hardware.....................................   13.9    13.2    12.9     5.0     1.9
  Cost of maintenance and other........................    9.1    10.2    10.8    14.7    14.1
  Cost of resource management..........................    0.5     0.9     1.5     1.8     0.9
  Research and development.............................   12.5    14.2    20.1    22.3    20.4
  Sales and marketing..................................   17.4    20.8    20.9    19.2    14.7
  General and administrative...........................   16.5    15.8    19.5    21.2    20.2
  Contract judgment and settlement, employee
     termination benefits and other costs..............     --     0.6    13.4    (1.8)    1.6
                                                         -----   -----   -----   -----   -----
          Total operating expenses.....................   90.6    98.1   124.9   109.4    95.6
                                                         -----   -----   -----   -----   -----
Operating income (loss)................................    9.4     1.9   (24.9)   (9.4)    4.4
Other income (expense):
  Interest income, net.................................    0.3     0.4     0.2     0.7     0.7
  Loss on investment...................................     --      --      --      --    (2.9)
                                                         -----   -----   -----   -----   -----
          Total other income (expense).................    0.3     0.4     0.2     0.7    (2.2)
                                                         -----   -----   -----   -----   -----
Income (loss) before income taxes......................    9.7     2.3   (24.7)   (8.7)    2.2
Provision (benefit) for income taxes...................    3.7     1.3    (9.2)   (3.4)     .9
                                                         -----   -----   -----   -----   -----
          Net income (loss)............................    6.0%    1.0%  (15.5)%  (5.3)%   1.3%
                                                         =====   =====   =====   =====   =====
</Table>

  Comparison of Year Ended December 31, 2001 and December 31, 2000

  Revenues

     The Company's total revenues increased by 4% to $65.8 million for the year
ended December 31, 2001, from $63.5 million for the year ended December 31,
2000.

     Software License Revenues.  Revenues from software licenses increased 14%
to $12.9 million for the year ended December 31, 2001, compared to $11.3 million
for the year ended December 31, 2000. As a percentage of total revenues,
software license revenues increased to 19.6% for the year ended December 31,
2001, from 17.7% for the year ended December 31, 2000. The dollar and percentage
increases resulted primarily from the beginning of a market rebound for software
license fees combined with early adopters licensing new products.

                                        15
<PAGE>

     Professional Services Revenues.  Revenues from professional services
decreased 9% to $13.6 million for the year ended December 31, 2001, from $14.9
million for the year ended December 31, 2000. As a percentage of total revenues,
professional services revenues decreased to 20.6% for the year ended December
31, 2001, from 23.5% for the year ended December 31, 2000. The dollar and
percentage decreases were related to a decrease in professional services backlog
related to 2000 and 2001 contracts.

     Hardware Revenues.  Hardware revenues decreased 48% to $1.9 million for the
year ended December 31, 2001, from $3.7 million for the year ended December 31,
2000. As a percentage of total revenues, hardware revenues decreased to 2.9% for
the year ended December 31, 2001, from 5.9% for the year ended December 31,
2000. The dollar and percentage decreases were primarily due to the Company
transitioning out of the hardware business. In 2000, the Company entered into a
hardware outsourcing agreement with Vertical VAR. Under this agreement, the
Company receives a royalty on hardware sales to HTE customers by Vertical VAR.
In addition, the Company occasionally receives royalties from other hardware
vendors.

     Maintenance and Other Revenues.  Revenues from maintenance and other
increased 13% to $35.7 million for the year ended December 31, 2001, from $31.6
million for the year ended December 31, 2000. As a percentage of total revenues,
maintenance and other revenues increased to 54.3% for the year ended December
31, 2001, from 49.8% for the year ended December 31, 2000. The dollar and
percentage increases were primarily due to increases in the fees charged for
annual maintenance combined with maintenance contracts associated with new
software licenses.

     Resource Management Revenues.  Revenues from resource management decreased
14% to $1.7 million for the year ended December 31, 2001, from $2.0 million for
the year ended December 31, 2000. As a percentage of total revenues, resource
management revenues decreased to 2.6% for the year ended December 31, 2001, from
3.1% for the year ended December 31, 2000. The dollar and percentage decreases
were primarily related to the conversion of an outsourcing customer to an
in-house customer combined with an amendment of an outsourcing contract.

     Cost of Revenues

     Cost of Software License Revenues.  Cost of software licenses decreased 6%
to $5.0 million for the year ended December 31, 2001, from $5.4 million for the
year ended December 31, 2000. As a percentage of software license revenues, cost
of software licenses decreased to 39.0% for the year ended December 31, 2001,
from 47.8% for the year ended December 31, 2000. The dollar and percentage
decreases were primarily due to the lower amortization of computer software
development costs with higher software license revenues and the mix of third
party products sold.

     Cost of Professional Services Revenues.  Cost of professional services
decreased 20% to $9.4 million for the year ended December 31, 2001, from $11.7
million for the year ended December 31, 2000. As a percentage of professional
services revenues, cost of professional services decreased to 69.0% for the year
ended December 31, 2001, from 78.4% for the year ended December 31, 2000. The
dollar and percentage decreases were directly related to more efficient use of
existing resources and the reduction in use of contractors for billable work.

     Cost of Hardware Revenues.  Cost of hardware decreased 60% to $1.3 million
for the year ended December 31, 2001, from $3.2 million for the year ended
December 31, 2000. As a percentage of hardware revenues, cost of hardware
decreased to 65.9% for the year ended December 31, 2001, from 85.3% for the year
ended December 31, 2000. The dollar decrease was directly related to decreased
hardware revenues, which resulted from the transition out of the hardware
business. The decrease in the cost of hardware as a percentage of hardware
revenues was primarily due to the hardware royalties, which had no associated
cost.

     Cost of Maintenance and Other Revenues.  Cost of maintenance and other
remained constant at $9.3 million for the years ended December 31, 2001 and
2000. As a percentage of maintenance and other revenues, cost of maintenance and
other decreased to 26.0% for the year ended December 31, 2001, from 29.5% for
the year ended December 31, 2000. The decrease in cost of maintenance and other
as a percentage

                                        16
<PAGE>

of maintenance and other revenue was primarily due to an increase in the
maintenance revenue base combined with more efficient use of existing resources
and improved processes.

     Cost of Resource Management Revenues.  Cost of resource management
decreased 51% to $571,000 for the year ended December 31, 2001, from $1.2
million for the year ended December 31, 2000. As a percentage of resource
management revenues, cost of resource management decreased to 34.0% for the year
ended December 31, 2001, from 59.7% for the year ended December 31, 2000. The
dollar and percentage decreases were primarily related to the conversion of an
outsourcing customer to an in-house customer, coupled with a reduction in
management required to run this operation.

     Research and Development Expenses.  Research and development expenses
decreased 6% to $13.4 million for the year ended December 31, 2001, from $14.2
million for the year ended December 31, 2000. As a percentage of total revenues,
research and development decreased to 20.4% for the year ended December 31,
2001, from 22.3% for the year ended December 31, 2000. The dollar and percentage
decreases were primarily due to a reduction in the number of contractors used in
2001, along with a reduction in workforce.

     Sales and Marketing Expenses.  Sales and marketing expenses decreased 20%
to $9.7 million for the year ended December 31, 2001, from $12.2 million for the
year ended December 31, 2000. As a percentage of total revenues, sales and
marketing decreased to 14.7% for the year ended December 31, 2001, from 19.2%
for the year ended December 31, 2000. The dollar and percentage decreases were
primarily related to lower sales and a decrease in the resources required to
support the sales effort.

     General and Administrative Expenses.  General and administrative expenses
decreased 2% to $13.3 million for the year ended December 31, 2001, from $13.5
million for the year ended December 31, 2000. As a percentage of total revenues,
general and administrative expenses decreased to 20.2% for the year ended
December 31, 2001, from 21.2% for the year ended December 31, 2000. The dollar
and percentage decreases were primarily due to an effort by management to reduce
and control expenses by improving efficiencies, partially offset by an increased
allowance for doubtful accounts related to the discontinuance and sale of
various product lines.

     Contract Judgment and Settlement, Employee Termination Benefits and Other
Costs.  Employee termination benefits and other costs were $1.0 million, or 1.6%
of total revenues, for the year ended December 31, 2001. This amount includes
$659,000 for employee severance packages related to a workforce reduction and
$705,000 for the discontinuation of various product lines and other costs,
partially offset by a $334,000 gain from the sale of assets. This charge was the
result of the recent change in the Company's product and operating strategy.
Contract judgment and settlement, employee termination benefits and other costs
were $(1.1) million, or (1.8)% of total revenues, for the year ended December
31, 2000. This amount includes $(2.2) million for the reversal of previously
expensed one-time charges primarily related to the reduced Tacoma settlement,
partially offset by $1.1 million of costs associated with a workforce reduction,
discontinuance of various product lines and the closing of offices.

  Comparison of Year Ended December 31, 2000 and December 31, 1999

     Revenues

     The Company's total revenues decreased by 34% to $63.5 million for the year
ended December 31, 2000, from $96.2 million for the year ended December 31,
1999.

     Software License Revenues.  Revenues from software licenses decreased 54%
to $11.3 million for the year ended December 31, 2000, compared to $24.6 million
for the year ended December 31, 1999. As a percentage of total revenues,
software license revenues decreased to 17.7% for the year ended December 31,
2000, from 25.6% for the year ended December 31, 1999. The dollar and percentage
decreases resulted primarily from the long sales cycle associated with
governmental customers, combined with the general slowdown across the software
industry related to Y2K.

     Professional Services Revenues.  Revenues from professional services
decreased 48% to $14.9 million for the year ended December 31, 2000, from $28.6
million for the year ended December 31, 1999. As a

                                        17
<PAGE>

percentage of total revenues, professional services revenues decreased to 23.5%
for the year ended December 31, 2000, from 29.7% for the year ended December 31,
1999. The dollar and percentage decreases were related to a decrease in
professional services backlog related to 1999 and 2000 contracts.

     Hardware Revenues.  Hardware revenues decreased 75% to $3.7 million for the
year ended December 31, 2000, from $14.9 million for the year ended December 31,
1999. As a percentage of total revenues, hardware revenues decreased to 5.9% for
the year ended December 31, 2000, from 15.5% for the year ended December 31,
1999. The dollar and percentage decreases were primarily due to a smaller number
of customers who required additional hardware with software purchases. The
Company is also transitioning out of the hardware business and has entered into
an agreement with Vertical VAR. Under this agreement, the Company will receive a
royalty on hardware sales to HTE customers by Vertical VAR.

     Maintenance and Other Revenues.  Revenues from maintenance and other
increased 23% to $31.6 million for the year ended December 31, 2000, from $25.8
million for the year ended December 31, 1999. As a percentage of total revenues,
maintenance and other revenues increased to 49.8% for the year ended December
31, 2000, from 26.8% for the year ended December 31, 1999. The dollar and
percentage increases were primarily due to maintenance contracts associated with
new software licenses booked in 1998, 1999 and 2000, customer system upgrades
and price increases in the fees charged for annual maintenance. In addition, the
increase as a percentage of total revenues was due to lower software license and
hardware revenues.

     Resource Management Revenues.  Revenues from resource management decreased
14% to $2.0 million for the year ended December 31, 2000, from $2.3 million for
the year ended December 31, 1999. As a percentage of total revenues, resource
management revenues increased to 3.1% for the year ended December 31, 2000, from
2.4% for the year ended December 31, 1999. The dollar decrease was primarily
related to the conversion of an outsourcing customer to an in-house customer.
The increase in resource management revenues as a percentage of total revenues
was primarily related to lower software license and hardware revenues.

     Cost of Revenues

     Cost of Software License Revenues.  Cost of software licenses decreased 28%
to $5.4 million for the year ended December 31, 2000, from $7.5 million for the
year ended December 31, 1999. As a percentage of software license revenues, cost
of software licenses increased to 47.8% for the year ended December 31, 2000,
from 30.4% for the year ended December 31, 1999. The dollar decrease was
primarily due to lower software license revenues. The increase in the cost of
software licenses as a percentage of software license revenues was primarily due
to relatively fixed computer software development amortization costs with lower
software license revenues and sales of third party products related to public
safety applications, which typically carry a higher cost of sale.

     Cost of Professional Services Revenues.  Cost of professional services
decreased 32% to $11.7 million for the year ended December 31, 2000, from $17.3
million for the year ended December 31, 1999. As a percentage of professional
services revenues, cost of professional services increased to 78.4% for the year
ended December 31, 2000, from 60.5% for the year ended December 31, 1999. The
dollar decrease was directly related to decreased professional services
revenues. The increase in the cost of professional services as a percentage of
professional services revenues is primarily due to lower professional services
revenues with a limited decrease in employee related costs.

     Cost of Hardware Revenues.  Cost of hardware decreased 74% to $3.2 million
for the year ended December 31, 2000, from $12.4 million for the year ended
December 31, 1999. As a percentage of hardware revenues, cost of hardware
increased to 85.3% for the year ended December 31, 2000, from 83.2% for the year
ended December 31, 1999. The dollar decrease was directly related to decreased
hardware revenues. The increase in the cost of hardware as a percentage of
hardware revenues was primarily due to the mix of equipment sold and the lower
margins associated with smaller contracts.

     Cost of Maintenance and Other Revenues.  Cost of maintenance and other
decreased 10% to $9.3 million for the year ended December 31, 2000, from $10.4
million for the year ended December 31, 1999. As a

                                        18
<PAGE>

percentage of maintenance and other revenues, cost of maintenance and other
decreased to 29.5% for the year ended December 31, 2000, from 40.2% for the year
ended December 31, 1999. The dollar and percentage decreases were primarily
related to more efficient use of existing resources and improved processes.

     Cost of Resource Management Revenues.  Cost of resource management
decreased 19% to $1.2 million for the year ended December 31, 2000, from $1.4
million for the year ended December 31, 1999. As a percentage of resource
management revenues, cost of resource management decreased to 59.7% for the year
ended December 31, 2000, from 63.3% for the year ended December 31, 1999. The
slight dollar and percentage decreases were primarily related to the conversion
of an outsourcing customer to an in-house customer, partially offset by costs
associated with a new outsourcing contract, which began in July 1999.

     Research and Development Expenses.  Research and development expenses
decreased 26% to $14.2 million for the year ended December 31, 2000, from $19.3
million for the year ended December 31, 1999. As a percentage of total revenues,
research and development increased to 22.3% for the year ended December 31,
2000, from 20.1% for the year ended December 31, 1999. The dollar decrease was
primarily due to a reduction in the number of contractors used in 2000, along
with a reduction in workforce. The increase in research and development expenses
as a percentage of total revenues was due to lower software license and hardware
revenues.

     Sales and Marketing Expenses.  Sales and marketing expenses decreased 40%
to $12.2 million for the year ended December 31, 2000, from $20.1 million for
the year ended December 31, 1999. As a percentage of total revenues, sales and
marketing decreased to 19.2% for the year ended December 31, 2000, from 20.9%
for the year ended December 31, 1999. The dollar and percentage decreases were
primarily related to lower sales and a decrease in the resources required to
support the sales effort. The Company's sales team has recently initiated
programs to refocus attention on its existing base of 2,100 offices, agencies,
and utility companies in selected traditionally higher opportunity states.

     General and Administrative Expenses.  General and administrative expenses
decreased 28% to $13.5 million for the year ended December 31, 2000, from $18.8
million for the year ended December 31, 1999. As a percentage of total revenues,
general and administrative expenses increased to 21.2% for the year ended
December 31, 2000, from 19.5% for the year ended December 31, 1999. The dollar
decrease was primarily due to an effort by management to reduce and control
expenses by improving efficiencies. The increase in general and administrative
expenses as a percentage of total revenues was due to lower software license and
hardware revenues.

     Contract Judgment and Settlement, Employee Termination Benefits and Other
Costs.  Employee termination benefits and other costs were $(1.1) million, or
(1.8)% of total revenues, for the year ended December 31, 2000. This amount
primarily represents $(2.2) million for the reversal of previously expensed
one-time charges primarily related to the reduced Tacoma settlement, partially
offset by $1.1 million of costs associated with a workforce reduction,
discontinuance of various product lines and the closing of offices. During the
year ended December 31, 1999, the comparable costs were $12.9 million, or 13.4%
of total revenues. These costs primarily include $7.5 million for contract
judgment and settlement, $2.5 million for employee severance packages and a
non-cash charge of $1.1 million for discontinuation of various product lines.
The remaining charge of $1.8 million primarily included other costs associated
with the discontinuation of product lines and certain lease termination costs.

  Comparison of Year Ended December 31, 1999 and December 31, 1998

     Revenues

     The Company's total revenues decreased by 3% to $96.2 million for the year
ended December 31, 1999, from $98.9 million for the year ended December 31,
1998.

     Software License Revenues.  Revenues from software licenses decreased 43%
to $24.6 million for the year ended December 31, 1999, from $43.3 million for
the year ended December 31, 1998. As a percentage of total revenues, software
license revenues decreased to 25.6% for the year ended December 31, 1999, from
43.7% for the year ended December 31, 1998. The dollar and percentage decreases
resulted primarily from a

                                        19
<PAGE>

general slowdown across the software industry as businesses, including
governments, adopted a "wait and see" attitude towards Y2K. In addition, the
decrease as a percentage of total revenues resulted from increased service
revenues due to an effort to reduce the services backlog related to 1998
bookings.

     Professional Services Revenues.  Revenues from professional services
increased 37% to $28.6 million for the year ended December 31, 1999, from $20.9
million for the year ended December 31, 1998. As a percentage of total revenues,
professional services revenues increased to 29.7% for the year ended December
31, 1999, from 21.1% for the year ended December 31, 1998. The dollar and
percentage increases in professional services were directly related to the
growth in revenue generating (billable) staff and related revenue stemming from
the increase in license fees and service offerings in 1998. In addition, the
increase as a percentage of total revenues was due to lower software license
revenues.

     Hardware Revenues.  Hardware revenues decreased 4% to $14.9 million for the
year ended December 31, 1999, from $15.5 million for the year ended December 31,
1998. As a percentage of total revenues, hardware revenues decreased to 15.5%
for the year ended December 31, 1999, from 15.7% for the year ended December 31,
1998. The dollar and percentage decreases were primarily due to the decrease in
software license purchases. The majority of hardware sales are made in
conjunction with software license purchases.

     Maintenance and Other Revenues.  Revenues from maintenance and other
increased 45% to $25.8 million for the year ended December 31, 1999, from $17.8
million for the year ended December 31, 1998. As a percentage of total revenues,
maintenance and other revenues increased to 26.8% for the year ended December
31, 1999, from 18.0% for the year ended December 31, 1998. The dollar and
percentage increases were primarily due to maintenance contracts associated with
new software licenses booked in 1998, customer system upgrades and price
increases in the fees charged for annual maintenance. In addition, the increase
as a percentage of total revenues was due to lower software license revenues.

     Resource Management Revenues.  Revenues from resource management increased
57% to $2.3 million for the year ended December 31, 1999, from $1.4 million for
the year ended December 31, 1998. As a percentage of total revenues, resource
management revenues increased to 2.4% for the year ended December 31, 1999, from
1.5% for the year ended December 31, 1998. The dollar and percentage increases
were primarily related to the sale of a new outsourcing contract in July 1999,
along with the sale of additional services and an annual price increase on the
existing contract.

     Cost of Revenues

     Cost of Software License Revenues.  Cost of software licenses decreased 15%
to $7.5 million for the year ended December 31, 1999, from $8.8 million for the
year ended December 31, 1998. As a percentage of software license revenues, cost
of software licenses increased to 30.4% for the year ended December 31, 1999,
from 20.4% for the year ended December 31, 1998. The dollar decrease was
primarily related to the decrease in software license revenues. The increase in
the cost of software licenses as a percentage of software license revenues
resulted primarily from an increased number of third-party software licenses,
specifically module enhancements such as report writers and imaging products and
third-party software related to public safety applications which typically carry
a higher cost of sale than other third-party products. In addition, the
percentage increase is also due to relatively fixed computer software
development amortization costs with lower software license revenues.

     Cost of Professional Services Revenues.  Cost of professional services
increased 29% to $17.3 million for the year ended December 31, 1999, from $13.4
million for the year ended December 31, 1998. As a percentage of professional
services revenues, cost of professional services decreased to 60.5% for the year
ended December 31, 1999, from 64.2% for the year ended December 31, 1998. The
dollar increase was directly related to increased professional services revenues
and expanded offerings of full service professional services. The decrease in
the cost of professional services as a percentage of professional services
revenues is primarily due to an increase in the billable percentage of employees
as new staff increased productivity.

     Cost of Hardware Revenues.  Cost of hardware decreased 5% to $12.4 million
for the year ended December 31, 1999, from $13.1 million for the year ended
December 31, 1998. As a percentage of hardware

                                        20
<PAGE>

revenues, cost of hardware decreased to 83.2% for the year ended December 31,
1999, from 84.1% for the year ended December 31, 1998. The dollar and slight
percentage decreases were related to the decreased hardware sales and the mix of
equipment sold.

     Cost of Maintenance and Other Revenues.  Cost of maintenance and other
increased 3% to $10.4 million for the year ended December 31, 1999, from $10.0
million for the year ended December 31, 1998. As a percentage of maintenance and
other revenues, cost of maintenance and other decreased to 40.2% for the year
ended December 31, 1999, from 56.4% for the year ended December 31, 1998. The
dollar increase was primarily due to increased personnel to enhance products and
support a larger client base. The decrease in the cost of maintenance and other
as a percentage of maintenance and other revenue was related to more efficient
use of existing resources and improved processes.

     Cost of Resource Management Revenues.  Cost of resource management
increased 57% to $1.4 million for the year ended December 31, 1999, from
$918,000 for the year ended December 31, 1998. As a percentage of resource
management revenues, cost of resource management remained relatively constant at
63.3% and 63.4% for the years ended December 31, 1999 and 1998, respectively.
The dollar increase was primarily related to costs associated with a new
outsourcing contract which began in July 1999 and additional services.

     Research and Development Expenses.  Research and development expenses
increased 37% to $19.3 million for the year ended December 31, 1999, from $14.0
million for the year ended December 31, 1998. As a percentage of total revenues,
research and development increased to 20.1% for the year ended December 31,
1999, from 14.2% for the year ended December 31, 1998. The dollar and percentage
increases were primarily due to an increased focus on product enhancements,
which resulted in lower capitalization of software development costs and
increased expense. In addition, the increase as a percentage of total revenues
was due to lower software license revenues.

     Sales and Marketing Expenses.  Sales and marketing expenses decreased 2% to
$20.1 million for the year ended December 31, 1999, from $20.5 million for the
year ended December 31, 1998. As a percentage of total revenues, sales and
marketing remained relatively constant at 20.9% and 20.8% for the years ended
December 31, 1999 and 1998, respectively. The slight dollar decrease was
attributable to a decrease in the resources required to support the sales
effort.

     General and Administrative Expenses.  General and administrative expenses
increased 20% to $18.8 million for the year ended December 31, 1999, from $15.6
million for the year ended December 31, 1998. As a percentage of total revenues,
general and administrative expenses increased to 19.5% for the year ended
December 31, 1999, from 15.8% for the year ended December 31, 1998. The dollar
and percentage increases were due to the recent changes in management and the
Company's strategy. These expenses consist primarily of additional staffing,
increased allowance for doubtful accounts, additional facility related expenses
and additional computer equipment and software required to build the
infrastructure to support the Company's growth of services revenue. In addition,
the increase as a percentage of total revenues was due to lower software license
revenues. Management anticipates that general and administrative expenses as a
percentage of total revenues will decrease in future years and that current
trends are not indicative of the future.

     Contract Judgment and Settlement, Employee Termination Benefits and Other
Costs.  Contract judgment and settlement, employee termination benefits and
other costs were $12.9 million, or 13.4% of total revenues, for the year ended
December 31, 1999. These costs consist primarily of $7.5 million for contract
judgment and settlement, $2.5 million for employee severance packages and a
non-cash charge of $1.1 million for discontinuation of various product lines.
The remaining charge of $1.8 million primarily included other costs associated
with the discontinuation of product lines and certain lease termination costs.
In 1998, the Company recorded a charge of $552,000, or 0.6% of total revenue,
related to the Company's planned underwritten offering, which was terminated on
October 15, 1998.

                                        21
<PAGE>

CRITICAL ACCOUNTING POLICIES

     The Company considers certain accounting policies related to revenue
recognition, allowance for doubtful accounts, capitalized computer software
development costs, impairment of intangible assets and valuation of deferred tax
assets to be critical policies due to the estimation processes involved in each.

     Revenue Recognition.  The Company derives revenue from software licenses,
post-contract customer support/maintenance, hardware, and services which
typically range from installation, training and basic consulting. We apply the
provisions of Statement of Position ("SOP") 97-2, "Software Revenue Recognition"
as amended. We recognize revenue from the sale of software licenses when
persuasive evidence of an arrangement exists, the product has been delivered,
the fee is fixed and determinable and collection of the resulting receivable is
assured.

     For arrangements containing multiple elements, such as software license
fees, consulting services and maintenance, and where vendor-specific objective
evidence ("VSOE") of fair value exists for all undelivered elements, we account
for the delivered elements in accordance with the "residual method" prescribed
by SOP 98-9, "Modification of 97-2, Software Revenue Recognition, With Respect
to Certain Transactions." For arrangements in which VSOE does not exist for each
element, revenue is deferred and not recognized until delivery of the element
without VSOE has occurred.

     Recurring software maintenance revenue is typically based on one-year
renewable contracts. Software maintenance and support revenues are recognized
ratably over the contract period. Cash received in advance is recorded as
deferred revenue.

     We also generate non-recurring revenue from consulting fees for
implementation, installation, data conversion, and training related to the use
of the Company's proprietary and third-party licensed products. We recognize
revenues for these services as they are performed, as they are principally
contracted for on a time and material basis.

     Allowance for Doubtful Accounts.  The Company maintains allowances for
doubtful accounts and sales adjustments which are provided at the time revenue
is recognized. Because of the nature of our customers being governmental
entities, we rarely incur a loss resulting from the inability of our customers
to make required payments. Alternatively, customers may become dissatisfied with
the functionality of the software products and/or the quality of the services
and request a reduction of the aggregate contract price or similar concession.
While the Company engages in extensive product and service quality programs and
processes, the Company's allowances for such contract price reductions may need
to be revised in the future. Also, management reviews on a monthly basis
significant past due account receivables and the related adequacy of the
Company's reserves.

     Capitalized Computer Software Development Costs.  We capitalize internal
software development costs subsequent to establishing technological feasibility.
Technological feasibility of a computer software product is established when the
Company has completed all planning, designing, coding and testing activities
that are necessary to establish that the product can be produced to meet its
design specifications including functions, features and technical performance
requirements. Costs of producing product masters incurred subsequent to
establishing technological feasibility are capitalized and are amortized on a
straight-line basis over three years once the product is available for general
release to customers. Such capitalized costs are reported at the lower of
unamortized cost or net realizable value. The Company ceases capitalization of
computer software costs when the product is available for general release to
customers. Amortization of such costs is included in cost of software licenses.

     Impairment of Intangible Assets.  We assess impairment of our identifiable
intangible assets whenever events or changes in circumstances indicates that the
carrying value may not be recoverable. As of December 31, 2001, the Company had
fully amortized all goodwill related to its acquisitions.

     Valuation of Deferred Tax Assets.  The carrying value of the Company's
deferred tax assets assumes that the Company will be able to generate sufficient
future taxable income in certain tax jurisdictions, based on estimates and
assumptions. If these estimates and related assumptions change in the future,
the Company

                                        22
<PAGE>

may be required to record valuation allowances against its deferred tax assets
resulting in additional income tax expense in the Company's consolidated
statements of operations. Management evaluates the realizability quarterly and
assesses the need for valuation allowances quarterly.

LIQUIDITY AND CAPITAL RESOURCES

     Prior to 1997, the Company funded its operations primarily through cash
generated from operations, supplemented by borrowings under a bank line of
credit and the private sale of equity securities. On June 11, 1997, the Company
completed its initial public offering of common stock (the "IPO"). The Company
received $22.6 million from the IPO, net of issuance costs. Cash flow provided
by operating activities was $12.9 million and $8.3 million for the years ended
December 31, 2001 and 2000, on net income (loss) of $865,000 and $(3.4) million,
respectively. Cash flow provided by operating activities was $8.3 million and
$3.5 million for the years ended December 31, 2000 and 1999, on net loss of
$(3.4) million and $(14.9) million, respectively. Cash flow provided by (used
in) operating activities was $3.5 million and $(3.3) million for the years ended
December 31, 1999 and 1998, on net (loss) income of $(14.9) million and
$982,000, respectively.

     Cash used in investing activities (capital expenditures, software
development investments and acquisitions) totaled $3.2 million and $5.4 million
during the year ended December 31, 2001 and 2000, respectively. Cash used in
investing activities totaled $5.4 million and $5.3 million during the year ended
December 31, 2000 and 1999, respectively. Cash used in investing activities
totaled $5.3 million and $7.9 million during the year ended December 31, 1999
and 1998, respectively. In 2001, the Company's capital expenditures of $1.2
million were primarily comprised of investments in equipment and related
software. The Company made expenditures of $2.0 million in 2001 related to
software development efforts for additional products and platforms. In 2000, the
Company spun-off DemandStar, a wholly owned subsidiary, which reduced cash by
$923,000. The Company's capital expenditures of $1.7 million were primarily
comprised of investments in equipment and related software. The Company made
expenditures of $2.8 million in 2000 related to software development efforts for
additional products and platforms. In 1999, the Company acquired certain assets
of Information On Demand, Inc. for $1.0 million in cash. The Company's capital
expenditures of $925,000 were primarily comprised of investments in equipment
and related software. The Company made expenditures of $3.4 million in 1999
related to software development efforts for additional products and platforms.

     Net cash used in financing activities was $(8.6) million in the year ended
December 31, 2001, which related to the redemption of common stock owned by
Tyler Technologies, Inc. and common stock repurchased, partially offset by the
proceeds from sales of common stock through the Employee Stock Purchase Plan and
stock option agreements. Net cash provided by financing activities was $24,000
in the year ended December 31, 2000, which related to the proceeds from sales of
common stock through the Employee Stock Purchase Plan, stock option agreements
and employment agreements, partially offset by common stock repurchased. Net
cash provided by financing activities was $1.2 million in the year ended
December 31, 1999, which related to the proceeds from sales of common stock
through the Employee Stock Purchase Plan and stock option agreements.

     Based on current operating projections, the Company believes its cash
balances and cash generated from operations will satisfy the Company's working
capital and capital expenditure requirements for at least the next 12 months.
Effective October 24, 2001, the Company entered into a new Loan and Security
Agreement with Silicon Valley Bank (the "New Loan") for a line of credit up to
$5 million based on the Company's accounts receivable balance. The term of the
New Loan is for one year from the date of closing and bears interest at the
bank's prime rate plus 0.5 percent, increasing to the bank's prime rate plus 1.5
percent if quarterly net profit excluding non-recurring charges is not achieved.
Two consecutive quarters of net profitability are required to regain the bank's
prime rate plus 0.5 percent rate. The New Loan is collateralized by the assets
of the Company and requires the Company to maintain a financial covenant related
to tangible net worth. As of December 31, 2001, the Company was in compliance
with this debt covenant, and there were no borrowings outstanding under the New
Loan. In the longer term or if the Company's current operating projections do
not materialize, the Company may require additional sources of liquidity to fund
future growth and operations. Such sources of liquidity may include additional
equity offerings or debt financings.
                                        23
<PAGE>

     The Company filed for a Declaratory Judgment requesting the Court to
confirm the Company's redemption of 5,618,952 shares of common stock held by
Tyler Technologies, Inc. If the redemption is confirmed, but at a higher price
than the Company paid for the redeemed shares, the Company will be required to
draw such funds from its cash reserves and/or from its line of credit.

     The Company leases office space, furniture, an automobile and equipment
under certain long-term non-cancelable operating lease agreements with varying
terms and conditions. As of December 31, 2001, the Company has no outstanding
debt or other cash obligations. Future aggregate minimum rental payments under
the operating lease agreements are as follows as of December 31, 2001:

<Table>
<Caption>
YEAR ENDING DECEMBER 31,                                         AMOUNT
------------------------                                       ----------
<S>                                                            <C>
2002........................................................   $2,126,000
2003........................................................    1,541,000
2004........................................................    1,508,000
2005........................................................    1,420,000
2006........................................................    1,310,000
Thereafter..................................................      631,000
                                                               ----------
                                                               $8,536,000
                                                               ==========
</Table>

FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF OUR STOCK

     We operate in a rapidly changing environment that involves numerous risks,
some of which are beyond our control. The following discussion highlights some
of these risks.

 We experience fluctuations in quarterly operating results related to
 significant contracts signed towards the end of the quarter.

     Our revenues and operating results are subject to quarterly and other
fluctuations resulting from a variety of factors. Such factors include the
budgeting and purchasing practices of our customers, the length of customer
evaluation processes for our solutions and the timing of customer system
conversions. Because a substantial portion of revenues may not be generated
until the end of each quarter, we may not be able to adjust or reduce spending
in response to sales shortfalls or delays. In addition, our expense levels are
based, in significant part, on our expectations of future revenues and are
therefore relatively fixed in the short term. If revenues fall below
expectations, net income is likely to be adversely affected. These factors can
cause significant variations in operating results from quarter to quarter. We
believe that quarter to quarter comparisons of our financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance.

 Our business depends on acceptance of our products and services by governmental
 agencies through a regulated and protracted process.

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

     For each contract with a public sector customer, we are typically subject
to a protracted procurement process. The process can include one or more of the
following hurdles:

     - a detailed written response to product demonstrations;

     - the design of software that addresses customer-specified needs;

                                        24
<PAGE>

     - the integration of our products and third party products;

     - political influences;

     - award protests initiated by unsuccessful bidders; and

     - changes in budgets or appropriations which are beyond our control.

     Contracts with public sector customers are typically subject to procurement
policies which may be onerous and may include profit limitations and rights of
the agency to terminate for convenience or if funds are unavailable. Some public
sector customers require liquidated damages for defective products and/or for
delays or interruptions caused by system failures. Payments under some public
sector contracts are subject to achieving implementation milestones, and we have
had, and may in the future have, differences with customers as to whether
milestones have been achieved.

     Government organizations require compliance with various legal and other
special considerations in the procurement process. The adoption of new or
modified procurement regulations could increase costs to us of competing for
sales or impact our ability to perform government contracts, which could
adversely affect us. Any violation, intentional or otherwise, of these
regulations could result in the imposition of fines, and/or debarment from award
of additional government contracts which could have a material adverse effect on
us.

 Our business and operating results could suffer if we do not manage our growth
 effectively.

     In the past, we have grown through acquisitions and expanded operations.
This growth resulted in new and increased responsibility for management
personnel and placed additional demands upon our operational, administrative and
financial resources. To compete effectively and manage potential future growth,
we must continue to implement and improve information systems, procedures and
controls and expand, train, motivate and manage our staff. These demands will
require the addition of new management and other qualified personnel. We cannot
assure you that our personnel, systems, procedures and controls will be adequate
to support our future operations or to integrate successfully operations and
personnel of acquired entities. Any failure to implement and improve our
operational, financial and management systems, to integrate operations of
acquired businesses or to expand, train, motivate or manage employees could have
a material adverse effect on our business, operating results and financial
condition.

 We may be unable to hire, integrate or retain qualified personnel.

     Our continued success will depend upon the availability and performance of
our key management, sales, marketing, customer support and product development
personnel. The loss of key management or technical personnel could adversely
affect us. We believe that our continued success will depend in large part upon
our ability to attract, integrate and retain such personnel. We have at times
experienced and continue to experience difficulty in recruiting qualified
personnel. Competition for qualified software development, sales and other
personnel is intense, and we cannot assure you that we will be successful in
attracting and retaining such personnel.

 We must respond to rapid technological changes to be competitive.

     The market for our products is characterized by rapid technological change,
evolving industry standards in computer hardware and software technology,
changes in customer requirements and frequent new product introductions and
enhancements. The introduction of products embodying new technologies and the
emergence of new industry standards can render existing products obsolete and
unmarketable. As a result, our future success will depend, in part, upon our
ability to continue to enhance existing products and develop and introduce in a
timely manner or acquire new products that keep pace with technological
developments, satisfy increasingly sophisticated customer requirements and
achieve market acceptance. We cannot assure you that we will successfully
identify new product opportunities and develop and bring new products to market
in a timely and cost-effective manner. Further, we cannot assure you that
products, capabilities or technologies developed by others will not render our
products or technologies obsolete or noncompetitive. If we are unable to develop
or acquire on a timely and cost-effective basis new software products or
enhancements to existing
                                        25
<PAGE>

products, or if such new products or enhancements do not achieve market
acceptance, our business, operating results and financial condition may be
materially adversely affected.

 We may have difficulty integrating businesses and/or generating acceptable
 returns from future acquisitions.

     As part of our long-term growth strategy, we evaluate the acquisition of
other companies, assets or product lines that would complement or expand our
business in attractive geographic or service markets or that would broaden our
customer relationships. We cannot assure you that we will be able to identify
suitable acquisition candidates available for sale at reasonable prices,
consummate any acquisition or successfully integrate any acquired business into
our operations. The success of any completed acquisition will depend in large
measure on our ability to integrate the operations of the acquired business with
our operations and otherwise to maintain and improve the results of operations
of the acquired business. Acquisitions may involve a number of special risks,
including diversion of management's attention, failure to retain key acquired
personnel, unanticipated events or circumstances, legal liabilities and
amortization of acquired intangible assets. Some or all of these risks could
have a material adverse effect on our business, financial condition and results
of operations. Although we conduct due diligence reviews of potential
acquisition candidates, we may not identify all material liabilities or risks
related to acquisition candidates.

     We may elect to finance acquisitions with debt financing, through the
issuance of common stock or other securities convertible into common stock, or
any combination of the foregoing. We cannot assure you that we will be able to
arrange adequate financing on acceptable terms. If we were to consummate one or
more significant acquisitions in which the consideration consisted of stock, our
shareholders could suffer dilution of their interests. Most of the businesses
that might become attractive acquisition candidates for us are likely to have
significant intangible assets. Acquisition of these businesses, if accounted for
as a purchase, would typically result in substantial amortization charges to us,
which would reduce future earnings. In addition, such acquisitions could involve
non-recurring acquisition-related charges, such as write-offs or write-downs of
acquired research and development costs, which could have a material adverse
effect on our results of operations for the accounting period in which such
charges are incurred.

 We face significant competition from other vendors and potential new entrants
 into our markets.

     We believe we are a leading provider of integrated enterprise-wide
solutions for the public sector and utility markets. However, we face
competition from a variety of software vendors that offer products and services
similar to those offered by us, and from companies offering to develop custom
software. Certain competitors have greater technical, marketing and financial
resources. We also compete with in-house management information services staffs.

     We believe the market is highly fragmented with a large number of
competitors that vary in size, primary computer platforms and overall product
scope. We compete from time to time with the following:

     - the consulting divisions of national and regional accounting firms;

     - publicly held companies which focus on selected segments of the public
       sector and utilities markets including PeopleSoft, Inc., Systems &
       Computer Technology Corp., J.D. Edwards & Company, Inc., SunGard Data
       Systems, Inc., Tyler Technologies, Inc. and EZ-gov; and

     - a significant number of smaller companies.

     We cannot assure you that such competitors will not develop products or
offer services that are superior to our products or services or that achieve
greater market acceptance.

     We could face additional competition as other established and emerging
companies enter the public sector software application market and new products
and technologies are introduced. Increased competition could result in price
reductions, fewer customer orders, reduced gross margins and loss of market
share. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third-parties, thereby increasing the ability of their products to address the
needs of our prospective customers. It is possible that new competitors or
alliances among current and new

                                        26
<PAGE>

competitors may emerge and rapidly gain significant market share. Further,
competitive pressures could require us to reduce the price of our software
licenses and related services. We cannot assure you that we will be able to
compete successfully against current and future competitors, and the failure to
do so would have a material adverse effect upon our business, operating results
and financial condition.

 We are dependent on key suppliers and strategic relationships for our products.

     We purchase certain key components of our products from single or limited
source suppliers. Those components include the adapter code and certain
application development tools. There are relatively few suppliers for certain of
those components. We currently have relatively few agreements that would assure
delivery of such components from our suppliers. Generally, these contracts are
terminable by either party upon 60 to 90 days notice. Establishing additional or
replacement suppliers for any of the numerous components used in our products,
if required, may not be accomplished or could involve significant additional
costs. The ability of any of our suppliers to provide functional components in a
timely manner, or the inability of us to locate qualified alternative suppliers
for components at a reasonable cost, could adversely affect our business,
financial condition and results of operations. Our success also depends in part
upon our alliances and relationships with leading hardware and software vendors.
Any change in these relationships could have an adverse effect on our financial
performance while we seek to establish alternative relationships. Further, we
may need to establish additional alliances and relationships in order to keep
pace with changes in technology and we cannot assure you that such additional
alliances will be established.

 Our products are complex and, as such, we run the risk of errors or defects
 with new product introductions or enhancements.

     Software products as complex as those developed by us may contain errors or
defects, especially when first introduced or when new versions or enhancements
are released. Although we have not experienced material adverse effects
resulting from any such defects or errors to date, we cannot assure you that
material defects and errors will not be found after commencement of product
shipments. Any such defects could result in loss of revenues or delay market
acceptance.

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

 We may be unable to protect our proprietary rights.

     We regard certain features of our internal operations, software and
documentation as confidential and proprietary. We rely on a combination of
contract and trade secret laws and other measures to protect our proprietary
intellectual property. We own no patents and, under existing copyright laws,
have only limited protection for our intellectual property. We believe that, due
to the rapid rate of technological change in the computer software industry,
trade secret and copyright protection are less significant than factors such as
the knowledge, ability and experience of our employees, frequent product
enhancements and timeliness and quality of support services.

     We provide our products to customers under exclusive licenses, which
generally are non-transferable and have a perpetual term. We generally license
our products solely for the customer's internal operations and only on
designated computers. In certain circumstances, we make enterprise-wide licenses
available for select applications. Although we typically provide object code to
our customers and not source code, we historically provided source code to our
customers for several products. We have escrowed and continue to escrow our
source code for the benefit of all customers. A misappropriation or other misuse
of our intellectual property, including source codes previously delivered to
customers, could have an adverse effect on us. Further, we

                                        27
<PAGE>

cannot assure you that third parties will not assert infringement or
misappropriation claims against us in the future with respect to current or
future products. Any claims or litigation, with or without merit, could be
time-consuming and result in costly litigation and diversion of management's
attention. Further, any claims and litigation could cause product shipment
delays or require us to enter into royalty or licensing arrangements. Such
royalty or licensing arrangements, if required, may not be available on terms
acceptable to us, if at all. Thus, litigation to defend and enforce our
intellectual property rights could have a material adverse effect on our
business, financial condition and results of operations, regardless of the final
outcome of such litigation. We may be subject to additional risks as we enter
into transactions in countries where intellectual property laws are not well
developed or are poorly enforced. Legal protections of our rights may be
ineffective in such countries.

 There are numerous additional risks associated with selling our products to
 foreign markets.

     We have sold and continue to sell products to customers in Canada and the
Caribbean. Our management expects to augment our presence in international
markets. Accordingly, our business, and our ability to expand our operations
internationally, is subject to various risks inherent in international business
activities. We may have difficulty in safeguarding our intellectual property in
countries where intellectual property laws are not well developed or are poorly
enforced.

     General economic conditions and political conditions of various countries
may be subject to severe fluctuations at any time. Such fluctuations could
hinder our performance under contracts in those countries or could hinder our
ability to collect for product and services delivered in those countries.

     Unexpected changes in foreign regulatory requirements could also make it
difficult or too costly for us to conduct business internationally.

     In addition, although we have normally been successful in stipulating that
our foreign customers pay in U.S. dollars, any payment provisions involving
foreign currencies may result in less revenue than expected due to foreign
currency rate fluctuations. Further, the payment cycle for accounts receivable
is longer in many countries than it is for domestic customers. If we
significantly expand our international business, we anticipate that it will
hedge exchange rate movements on either side of a locked-in spot rate for
movements within certain ranges on dollar-foreign currency rates. Changes in the
value of foreign currencies relative to the dollar beyond the ranges hedged by
us could affect our financial condition and results of operations, and gains and
losses on currency translations could contribute to fluctuations in our results
of operations.

     Other risks associated with international operations include import and
export licensing requirements, trade restrictions, changes in tariff rates,
overlapping tax structures, and compliance with a variety of foreign laws and
regulations. In addition, if we elect to establish a presence in international
markets rather than marketing through independent sales representatives, as we
do presently, we could encounter difficulty in staffing and managing an
organization spread over various countries.

     In addition, we must translate our software into foreign languages. To the
extent that we are unable to accomplish such translations in a timely manner,
our ability to further penetrate international markets would be adversely
affected. The deeper exposure to international markets creates new areas with
which we are not familiar and places us in competition with new vendors. We
cannot assure you that we will be successful in its efforts to compete in these
international markets.

 Our stock price may be volatile.

     The market price of our common stock may be volatile and may be
significantly affected by many different factors. Some examples of factors that
can have a significant impact on our stock price are as follows:

     - actual or anticipated fluctuations in our operating results;

     - announcements of technological innovations, new products or new contracts
       by us or our competitors;

     - developments with respect to patents, copyrights or proprietary rights;

                                        28
<PAGE>

     - conditions and trends in the software and other technology industries;

     - adoption of new accounting standards affecting the software industry;

     - changes in financial estimates by securities analysts;

     - general market conditions and other factors.

     In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have particularly affected the market prices
for the common stock of technology companies. These broad market fluctuations
may adversely affect the market price of our common stock. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
that company. We cannot assure you that similar litigation will not occur in the
future with respect to us. Such litigation could result in substantial costs and
a diversion of management's attention and resources, which could have a material
adverse effect upon our business, operating results and financial condition.

  The anti-takeover provisions in our corporate documents and under Florida law
  may frustrate a take-over attempt of our company that a shareholder may
  consider in its best interest.

     Certain provisions of Florida law and our articles of incorporation, as
amended, may deter or frustrate a takeover attempt of our company that a
shareholder might consider in its best interest. We are subject to the
"affiliated transactions" and "control share acquisition" provisions of the
Florida Business Corporation Act. These provisions require, subject to certain
exceptions, that certain business combinations and corporate transactions with
beneficial owners of more than 10 percent of a corporation's voting stock, or
any entity or individual controlled by such owner, an "interested shareholder",
be approved by a majority of disinterested directors or the holders of
two-thirds of the voting shares other than those beneficially owned by an
"interested shareholder." Voting rights must also be conferred on "control
shares" acquired in specified control share acquisitions, generally only to the
extent conferred by resolution approved by the shareholders, excluding holders
of shares defined as "interested shares." "Control shares" are defined as shares
that, except for the application of the statute, would have voting power that,
when added to all other shares that the acquirer owns or has the power to vote,
would give the acquirer, directly, indirectly, alone, or as a member of a group,
voting power in excess of certain statutory parameters. "Interested shares" are
defined as a corporation's shares for which any of the following persons have
direct or indirect voting power in the election of directors: (a) the person or
group that acquires control shares, (b) every officer of the corporation, and
(c) every employee of the corporation who is also a director.

     In addition, certain provisions of our amended articles or bylaws, among
other things, provide that:

     - any action required or permitted to be taken by our shareholders may be
       effected only at an annual or special meeting of shareholders, and not by
       written consent of our shareholders;

     - the annual meeting of shareholders shall be held on such date and at such
       time fixed from time to time by the Board of Directors, provided that
       there shall be an annual meeting held every calendar year;

     - any special meeting of the shareholders may be called only by the
       Chairman of the Board, or upon the affirmative vote of at least a
       majority of the members of the Board of Directors, or upon the written
       demand of the holders of not less than 50% of the votes entitled to be
       cast at a special meeting;

     - an advance notice procedure must be followed for nomination of directors
       and for other shareholder proposals to be considered at annual
       shareholders' meetings; and

     - our Board of Directors be divided into three classes, each of which
       serves for different three-year periods.

     In addition, we are authorized to issue additional shares of common stock
and up to five million shares of preferred stock. Preferred stock may be issued
in one or more series, having terms fixed by the Board of Directors without
shareholder approval, including voting, dividend or liquidation rights that
could be greater

                                        29
<PAGE>

than or senior to the rights of holders of common stock. Issuance of additional
shares of common stock or new shares of preferred stock could also be used as an
anti-takeover device.

  Our earnings and assets will change if the Court determines that we did not
  redeem shares of common stock from Tyler Technologies, Inc. or that the
  redemption price should be increased.

     The financial information presented herein for the fiscal year ended 2001
is based on the number of outstanding shares of the Company's common stock after
the redemption (the "Redemption") of 5,618,952 shares of our common stock (the
"Redeemed Shares") held by Tyler Technologies, Inc. ("Tyler"). If our
declaratory relief action which we filed for a declaratory judgment to confirm
the redemption is denied by the Court, the financial information presented
herein would be impacted as follows: i) outstanding shares of the Company's
common stock would increase by 5,618,952 shares; ii) for the year ended December
31, 2001, Diluted EPS would be $0.05 and Operating EPS (excluding one-time
charges and gains) would be $0.15; iii) the ending cash balance would increase
by $7,305,000 if the redemption were not confirmed. If the redemption is
confirmed but it is determined that we must pay a higher redemption price, we
would be required to draw such funds from our cash reserves and/or our line of
credit.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     No information has been presented pursuant to Item 7A as the Company does
not have any financial instruments outstanding as of December 31, 2001,
requiring market risk disclosure or material foreign currency exposure requiring
market risk disclosure.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Company's Consolidated Financial Statements appear beginning at page
F-1 of this Report. See Item 14 of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     None.

                                        30
<PAGE>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

<Table>
<Caption>
                   NAME                      AGE                        POSITION
                   ----                      ---                        --------
<S>                                          <C>   <C>
Bernard B. Markey..........................  37    Director -- Class III and Chairman
Joseph M. Loughry, III.....................  55    Director -- Class II, President and Chief Executive
                                                     Officer
L.A. Gornto, Jr............................  59    Director -- Class II and Executive Vice President,
                                                     Secretary, and General Counsel
Ronald E. Goodrow..........................  50    Executive Vice President -- Operations
Susan D. Falotico..........................  39    Vice President, Chief Financial Officer, and
                                                     Treasurer
Gilbert O. Santos..........................  41    Vice President -- Business Development and Strategy
                                                     and Chief Technology Officer
William C. Barnett.........................  47    Vice President -- Integrated Solutions and
                                                     Technology
Del C. King................................  44    Vice President -- Public Safety and Justice
                                                     Solutions
Edward A. Moses............................  59    Director -- Class I
O.F. Ramos.................................  43    Director -- Class I
George P. Keeley...........................  72    Director -- Class III
D. Van R. Morris...........................  47    Director -- Class II
</Table>

     Mr. Bernard B. Markey has been a director of the Company since 1995 and has
served as Chairman since 1999. Mr. Markey is a Managing Partner of Navigator
Equity Partners, LLC a private equity firm which he joined in September 1999.
Mr. Markey was a general partner of Meridian Venture Partners, a privately-held
venture capital fund, from 1995 through September 1999. Mr. Markey also serves
on the Board of Directors of several privately-held companies.

     Mr. Joseph M. Loughry, III joined the Company in November 1999 initially as
a Director and in January of 2000 assumed the position of President and Chief
Executive Officer. Mr. Loughry's background includes several years at General
Electric Information Services where he was involved in sales, marketing, product
management and product development. Mr. Loughry also served in senior executive
positions at various system software companies including Goal Systems, Inc.,
UCCEL Corporation, and Legent Corporation. Mr. Loughry held several positions
with First Union Corporation from January 1993 through January 1999. These
positions included Chief Executive Officer of Nationwide Remittance Centers,
Inc., which was acquired by CoreStates Bank (subsequently a part of First Union
Corporation). Mr. Loughry thereafter became the President and Chief Executive
Officer of Questpoint Holdings, Inc., a 4,500 employee, $300 million processing
services and information technology affiliate of the bank. During 1999, Mr.
Loughry was temporarily retired.

     Mr. L.A. Gornto, Jr. was appointed as a member of the Company's Board of
Directors in December 1999. Mr. Gornto joined the Company in January 1997 and
also serves as Executive Vice President, Secretary and General Counsel. Mr.
Gornto was also appointed as Chief Financial Officer, Secretary, and a director
of DemandStar, a subsidiary of the Company, in November 1999 and served as
DemandStar's Executive Vice President and General Counsel since its inception in
June 1999 until March 2001. From January 1997 until November 1997, he served as
the Company's Chief Financial Officer. Since 1988, Mr. Gornto has been engaged
in the private practice of law in central Florida and provides legal services to
the Company as General Counsel. From 1985 to 1987, Mr. Gornto served as Senior
Vice President -- Finance and Chief Financial

                                        31
<PAGE>

Officer of Jerrico, Inc., formerly a publicly-traded company and holding company
of Long John Silvers, a seafood restaurant chain. From 1977 to 1985, he was
engaged in the private practice of law and also served as a management
consultant. From 1968 to 1977, he served as Executive Vice President and Chief
Financial Officer and a director of Red Lobster Restaurants, a seafood
restaurant chain and formerly a subsidiary of General Mills, Inc. Mr. Gornto is
an attorney-at-law and certified public accountant licensed in the states of
Florida and Georgia and holds an L.L.M. degree in taxation from Emory University
School of Law.

     Mr. Ronald E. Goodrow rejoined the Company September 11, 2000 as Executive
Vice President -- Operations. Mr. Goodrow's responsibilities include the
Company's product divisions and professional services organization, with a focus
on continuing to improve quality and customer service. Mr. Goodrow initially
joined HTE in 1988 as Director of Operations. During his tenure with the
Company, he was instrumental in the creation of the Company's product
implementation methodology, its customer support systems and the formation of a
professional services consulting division. Mr. Goodrow resigned from HTE in 1998
to pursue other business opportunities. Most recently, he was with a subsidiary
of Tyler Technologies, Inc., where he was responsible for sales and
implementation of the Munis product line for the southern region of the United
States. Prior to his initial employment with HTE, he served as vice president of
field operations and director of customer support for the Travenol Corporation,
now part of McKesson HBOC, which specializes in software for the healthcare
industry. He began his career in the software industry at GCC Beverages, Inc.,
where he was responsible for development, implementation and support of the
software systems used by the company's franchises.

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

     Mr. Gilbert O. Santos joined the Company in September 1998 and currently
serves as its Vice President -- Business Development and Strategy and Chief
Technology Officer. From 1998 to 1999, Mr. Santos served as Vice
President -- Customer Services, responsible for various functional areas
including customer support and training, documentation and media, software
quality assurance and testing, service management and project management and
implementation. Mr. Santos held various strategic marketing and engineering
management positions with the Land Mobile Products Sector of Motorola, Inc. from
1983 to September 1998, most recently as Director of Operations.

     Mr. William C. Barnett joined the Company in July 1988, and was appointed
as Vice President -- Integrated Solutions and Technology in May 2000. He
currently is responsible for product management for Financial, Community
Development, and Utility Billing Systems. From 1999 to 2000, Mr. Barnett served
as the Director of Financial Applications. During his twelve-year tenure, Mr.
Barnett has worked with a broad range of HTE applications, giving him intimate
knowledge of cross-application integration. He began his career with the Company
as a programmer analyst for Utility Billing applications and subsequently served
as product manager for Fleet Management, Tax Billing, Fire Records Systems, and
Case Management. He also served as applications manager for the Company's AS/400
Public Safety and Justice products. Prior to joining the Company, Mr. Barnett
worked as a programmer and systems analyst for the City of Orlando and for a
private sector company.

     Mr. Del C. King joined the Company in February 2001 and serves as Vice
President -- Public Safety and Justice Solutions. Mr. King's product management
responsibilities include more than 20 law enforcement, fire, EMS and justice
products. Prior to joining HTE, Mr. King was in charge of E-911 systems for
Greenville County, S.C., where he led the modernization of their public safety
information systems. From 1980 to 1992 he was the Information Systems Manager
for the Greenville Police Department. Mr. King served in the Military Police
Corps of the United States Army and is a past President of HTE's national user
organization.

                                        32
<PAGE>

     Mr. Edward A. Moses was appointed as a member of the Company's Board of
Directors in December 1998. Mr. Moses served as dean of the Roy E. Crummer
Graduate School of Business at Rollins College from 1994 until 2000, and
currently serves as Bank of America professor of finance. From 1985 to 1989 he
served as dean and professor of finance at the University of North Florida. He
has also served in academic and administrative positions at the University of
Tulsa, Georgia State University and the University of Central Florida, and
currently serves as a faculty member in the Graduate School of Banking of the
South. Mr. Moses also serves as a director of CNL Retirement Properties, Inc., a
publicly-registered real estate investment trust. Mr. Moses received a B.S. in
accounting from the Wharton School at the University of Pennsylvania and a
Masters of Business Administration and Ph.D. in finance from the University of
Georgia in 1971.

     Mr. O.F. Ramos joined the Company in June 1998 and was appointed to the
Board of Directors in August 1998. He currently serves as President of National
Auto Lenders, Inc. and Auto Solution USA, Inc, which are both privately held
Florida corporations. He served as Chief Executive Officer, President and a
director of DemandStar, a former subsidiary of the Company until March 2001.
Formerly, Mr. Ramos served as Executive Vice President of the Company and
President of HTE-UCS, Inc., a wholly-owned subsidiary of the Company from June
1998 to November 1999. From 1986 to 1998, Mr. Ramos served as the President and
Chief Executive Officer of UCS, Inc. As the co-founder of UCS, Inc., he was
responsible for the corporate direction and financial development of that
company and for overseeing operations. Prior to 1986, Mr. Ramos served in
various engineering and management capacities at Motorola, Inc., where he was
responsible for the development of diverse software and hardware projects for
several platforms.

     Mr. George P. Keeley was appointed as a member of the Company's Board of
Directors in July 2000. From 1985 to 1996 Mr. Keeley was Chairman of the Board
of PQ Corporation, a privately held, global manufacturer of industrial and
specialty chemicals. From 1986 to 1997, he was General Partner of Meridian
Venture Partners, a pre-IPO investor in HTE. From 1979 to 1993, he was the CEO
and owner of Keeley Management Company, a specialized investment banking firm.
Over the years, Mr. Keeley served as a director of many other public and private
companies. He was Chairman of both the Buckeye Pipeline Company and the Detroit
Toledo and Ironton Railroad. In addition to his board position with HTE, Mr.
Keeley is a director of the Clearfield Companies, an oil and natural gas
transport and propane distribution company and of the Rockland Growth Fund, a
small cap mutual fund.

     Mr. D. Van R. Morris was appointed as a member of the Company's Board of
Directors in November 2001. Mr. Morris is Chairman and CEO of Ripple
Technologies, a provider of systems management tools for the Windows (NT) server
environment. From 1995 to August 2001, he served as CEO of Infonautics, Inc., a
provider of online information databases and internet agent technologies. Mr.
Morris also served in senior management positions with Legent Corporation, Goals
Systems, Inc, and UCCEL Corporation. In addition to his board position with HTE,
Mr. Morris is also a director of Tucows, Inc., a provider of wholesale digital
products and distributor of e-business services and applications on the
Internet.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors and greater than ten percent shareholders
(collectively, "Reporting Persons") to file reports of ownership and changes in
ownership with the SEC and NASDAQ. Reporting Persons are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received or written
representations from Reporting Persons, the Company believes that with respect
to the fiscal year ended December 31, 2000, all the Reporting Persons complied
with all applicable filing requirements.

ITEM 11.  EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

     The Company reimburses all directors for the expenses incurred in attending
meetings of the Board of Directors. Directors who are full-time employees of the
Company receive no additional compensation for service as directors. Directors
who are not full-time employees receive $1,000 per day for attending Board

                                        33
<PAGE>

meetings and $500 for attending committee meetings and are eligible for stock
awards or option grants under the Company's 1997 Employee Incentive Compensation
Plan. During 2001, the Company issued 11,111 shares of restricted stock to each
non-employee director for serving on the Board. The Company also granted to each
of Bernard Markey, L.A. Gornto, Jr. and O.F. Ramos options to acquire 10,000
shares of the Company's common stock. These options have exercise prices of
$1.31 and vest over three-year periods. Additionally, the Company granted to
D.Van R. Morris options to acquire 10,000 shares of the Company's common stock.
These options have an exercise price of $1.85 and vest over a three-year period.
During 2000, the Company granted to each of George Keeley and Mark Leonard
options to acquire 10,000 shares of the Company's common stock. These options
have exercise prices of $1.45 for Mr. Keeley and $1.50 for Mr. Leonard and vest
over three-year periods. Mr. Leonard's options expired unvested on October 11,
2001 upon his resignation from the Board. Additionally, the Company granted to
each of Bernard Markey and L.A. Gornto, Jr. options to acquire 25,000 shares of
the Company's common stock. These options are exercisable at $1.50 and vest
based on the amount of days worked on the Company's business. During fiscal year
1999, the Company granted to Bernard Markey options to acquire 10,000 shares of
the Company's common stock. The options have an exercise price of $2.06 per
share and vest over a one-year period. The Company also granted to Edward Moses
an option to acquire 3,333 shares of the Company's common stock. The options
have an exercise price of $2.06 per share and vest after one year. In 1999, the
Company granted to L.A. Gornto, Jr. options to acquire 10,000 shares of the
Company's common stock. The options have an exercise price of $2.41 per share
and vest immediately. Additionally, in 1999, the Company granted to O.F. Ramos
an option to acquire 20,000 shares of the Company's common stock. The options
have an exercise price of $2.06 per share and vest immediately. During fiscal
year 1998, the Company granted to Mr. Moses an option to acquire 10,000 shares
of the Company's common stock. The options have an exercise price of $8.38 per
share and vest over a three-year period. All of the options were granted under
the Company's 1997 Employee Incentive Compensation Plan.

                                        34
<PAGE>

                  INFORMATION REGARDING EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

     The following table sets forth the compensation paid by the Company for
services performed on the Company's behalf during the fiscal years ended
December 31, 2001, 2000 and 1999 with respect to the Company's Chief Executive
Officer and the Company's four most highly compensated executive officers, other
than the Chief Executive Officer, who served as such on December 31, 2001, and
whose total annual salary and bonus for the fiscal year ended December 31, 2001
exceeded $100,000 (the "Named Executive Officers").

<Table>
<Caption>
                                                                                LONG-TERM
                                                                               COMPENSATION
                                                ANNUAL COMPENSATION(1)            AWARDS
                                           ---------------------------------    SECURITIES
                                FISCAL                          OTHER ANNUAL    UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITION      YEAR      SALARY    BONUS(2)   COMPENSATION    OPTIONS(#)    COMPENSATION
---------------------------   ----------   -------   --------   ------------   ------------   ------------
<S>                           <C>          <C>       <C>        <C>            <C>            <C>
Joseph M. Loughry, III......  12/31/2001   270,000    56,290         --             --            4,050(3)
  President and Chief         12/31/2000   258,750        --         --             --           60,000(4)
  Executive Officer           12/31/1999        --        --         --             --               --
Ronald E. Goodrow...........  12/31/2001   185,000    38,569         --             --            1,388(3)
  Executive Vice
  President --                12/31/2000    57,516        --         --             --               --
  Operations                  12/31/1999    25,000        --
Gilbert O. Santos...........  12/31/2001   170,000    35,442         --             --            5,100(3)
  Vice President -- Business  12/31/2000   170,000        --         --             --            4,600(3)
  Development and Strategy    12/31/1999   154,166        --         --             --           22,505(4)
  and Chief Technology
  Officer
Susan D. Falotico(5)........  12/31/2001   170,000    35,442         --             --            5,100(3)
  Vice President and Chief    12/31/2000   155,833        --         --             --           63,435(7)
  Financial Officer           12/31/1999   102,500        --         --             --          118,000(6)
William C. Barnett..........  12/31/2001   150,000    31,272         --             --            4,313(3)
  Vice
     President -- Integrated  12/31/2000   141,426        --         --             --            3,395(3)
  Solutions and Technology    12/31/1999   113,182        --         --             --            2,822(3)
</Table>

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

(1) The amounts reflected in the above table do not include any amounts for
    perquisites and other personal benefits extended to the Named Executive
    Officers. The aggregate amount of such compensation for each Named Executive
    Officer is less than 10% of the total annual salary and bonus.
(2) The Company has had a policy of granting discretionary annual bonuses to its
    executive officers and employees based primarily on certain performance
    criteria. The Board of Directors intends to continue this policy in the
    future. See "Annual Incentive Compensation Bonuses."
(3) Represents matching contributions to the accounts of the Named Executive
    Officers under the Company's 401(k) savings plan.
(4) Represents relocation moving expenses.
(5) Ms. Falotico was employed as an officer of the Company until July 19, 1999.
    She served as interim CFO from September 13, 1999 to January 28, 2000, at
    which time she was re-appointed as an officer of the Company.
(6) Represents $58,950 in contract employment as an interim Chief Financial
    Officer, $55,000 in severance and $4,050 in matching contributions to Ms.
    Falotico's account under the Company's 401(k) savings plan.
(7) Represents $17,460 in contract employment as an interim Chief Financial
    Officer, $41,250 in severance and $4,725 in matching contributions to Ms.
    Falotico's account under the Company's 401(k) savings plan.

                                        35
<PAGE>

STOCK OPTIONS GRANTED IN FISCAL 2001

     The following table sets forth certain information concerning grants of
options made during fiscal 2001 to the Named Executive Officers.

<Table>
<Caption>
                                                                                   POTENTIAL REALIZED VALUE
                                             PERCENT                                   AT ASSUMED ANNUAL
                             NUMBER OF       OF TOTAL                                RATES OF STOCK PRICE
                             SECURITIES    OPTIONS/SARS   EXERCISE                     APPRECIATION FOR
                             UNDERLYING     GRANTED TO     OR BASE                      OPTION TERM(1)
                            OPTIONS/SARS    EMPLOYEES       PRICE     EXPIRATION   -------------------------
           NAME              GRANTED(#)      IN 2001      ($/SH)(2)      DATE        5%($)         10%($)
           ----             ------------   ------------   ---------   ----------   ----------    -----------
<S>                         <C>            <C>            <C>         <C>          <C>           <C>
Joseph M. Loughry, III....     10,000           2%          $1.31       3/1/2002    $ 8,254       $ 20,918
Joseph M. Loughry, III....     40,000           9            1.89     12/17/2011     47,544        120,487
Ronald E. Goodrow.........     15,000           3            1.89     12/17/2011     17,829         45,183
Gilbert O. Santos.........     25,000           6            1.89     12/17/2011     29,715         75,304
Susan D. Falotico.........     30,000           7            1.89     12/17/2011     35,658         90,365
William C. Barnett........         --          --              --             --         --             --
</Table>

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

(1) The dollar amounts set forth in these columns are the result of calculations
    at the five percent and ten percent rates set by the SEC, and therefore are
    not intended to forecast possible future appreciation, if any, of the market
    price of the common stock.
(2) Fair market value as of the date of grant.

AGGREGATE STOCK OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE

     The following table sets forth certain information concerning option
exercises in fiscal 2001, the number of stock options held by the Named
Executive Officers as of December 31, 2001 and the value (based on the fair
market value of a share of stock at fiscal year-end) of in-the-money options
outstanding as of such date.

<Table>
<Caption>
                                                                                           VALUE OF UNEXERCISED
                                                            NUMBER OF UNEXERCISED              IN-THE-MONEY
                                                             OPTIONS/SARS HELD AT              OPTIONS/SARS
                            NUMBER OF                         FISCAL YEAR-END(#)           AT FISCAL YEAR END(1)
                         SHARES ACQUIRED      VALUE      ----------------------------   ---------------------------
         NAME            ON EXERCISE(#)    REALIZED($)   EXERCISABLE    UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
         ----            ---------------   -----------   -----------    -------------   -----------   -------------
<S>                      <C>               <C>           <C>            <C>             <C>           <C>
Joseph M. Loughry,
  III..................         --              --         56,667          403,333        $ 6,875        $ 4,400
Ronald E. Goodrow......         --              --         20,000          115,000         15,000         76,650
Gilbert O. Santos......         --              --         44,914           69,915             --          2,750
Susan D. Falotico......         --              --         86,700           60,600             --          3,300
William C. Barnett.....         --              --         21,982           29,068            223            894
</Table>

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

(1) The closing sale price for the Company's common stock as reported by the
    NASDAQ National Market System on December 31, 2001 was $2.00 per share.
    Value is calculated by multiplying (a) the difference between $2.00 and the
    option exercise price by (b) the number of shares of common stock underlying
    the option.

EMPLOYMENT AGREEMENTS

     Effective January 17, 2000, the Company entered into an employment
agreement with Joseph M. Loughry, III, the Company's President and Chief
Executive Officer. The agreement provides for a base salary and incentive
compensation payments based on performance. Mr. Loughry's current base salary is
$295,000. Mr. Loughry's agreement provides for a bonus aggregating up to a
maximum of 50% of his annual base salary if certain performance goals are met.
The agreement provides for an initial term through January 17, 2004. At the end
of the initial term, the agreement automatically renews and continues until
terminated by either of the parties upon no less than 90 days notice. The
agreement provides for a nine month severance arrangement upon termination
without "Cause" if within the first two years of the initial employment
agreement, and for a period of six months thereafter. The agreement contains
confidentiality provisions and also prohibits the executive from competing with
the Company during the term of the agreement and for two years thereafter.

                                        36
<PAGE>

Upon resignation, the Company shall pay to the executive any unpaid base salary
and any accrued but unpaid incentive compensation through the date of
resignation. Effective January 8, 2002, the agreement was further amended to
provide enhanced severance and accelerated option vesting in the event of a
change in control of the Company.

     Effective September 1998, the Company entered into an employment agreement
with Gilbert O. Santos, the Company's Vice President -- Business Development and
Strategy and Chief Technology Officer, and, in October 1999, the Company amended
his agreement. The amended agreement provides for a base salary and incentive
compensation payments based on performance. Mr. Santos' current base salary is
$185,000. Mr. Santos' agreement provides for a bonus aggregating up to a maximum
of 50% of his annual base salary if certain performance goals are met. The
agreement provides for a two-year initial term with successive one-year renewals
thereafter. The agreement also provides that, upon the termination of the
executive's employment or death, the Company will pay to the executive's estate
any unpaid base salary and any accrued but unpaid incentive compensation through
the date of termination. In the event the executive is terminated without
"Cause," the Company will pay to the executive any unpaid base salary, any
accrued but unpaid incentive compensation through the date of termination and
continue to pay the executive's base salary with benefits for a period of six
months. The agreement also provides that the executive may receive stock options
pursuant to the Employee Incentive Compensation Plan. The agreement contains
confidentiality provisions and also prohibits the executive from competing with
the Company during the term of the agreement and for one year thereafter. Upon
resignation, the Company shall pay to the executive any unpaid base salary and
any accrued but unpaid incentive compensation through the date of resignation.
Effective January 8, 2002, the agreement was further amended to provide enhanced
severance and accelerated option vesting in the event of a change in control of
the Company.

     On January 28, 2000, the Company entered into an employment agreement with
Susan D. Falotico, the Company's Vice President and Chief Financial Officer. The
agreement provides for a base salary and incentive compensation payments based
on performance. Ms. Falotico's current base salary is $182,000. Ms. Falotico's
agreement provides for a bonus aggregating up to a maximum of 50% of her annual
base salary if certain performance goals are met. The agreement provides for an
initial term through December 31, 2001 with successive one-year renewals
thereafter. The agreement also provides that, upon the termination of the
executive's employment or death, the Company will pay to the executive's estate
any unpaid base salary and any accrued but unpaid incentive compensation through
the date of termination. In the event the executive is terminated without
"Cause," the Company will pay to the executive any unpaid base salary, any
accrued but unpaid incentive compensation through the date of termination and
continue to pay the executive's base salary with benefits for a period of six
months. The agreement also provides that the executive may receive stock options
pursuant to the Employee Incentive Compensation Plan. The agreement contains
confidentiality provisions and also prohibits the executive from competing with
the Company during the term of the agreement and for one year thereafter. Upon
resignation, the Company shall pay to the executive any unpaid base salary and
any accrued but unpaid incentive compensation through the date of resignation.
Effective January 8, 2002, the agreement was further amended to provide enhanced
severance and accelerated option vesting in the event of a change in control of
the Company.

     Effective May 10, 2000, the Company entered into an employment agreement
with William C. Barnett, the Company's Vice President -- Integrated Solutions
and Technology. The agreement provides for a base salary and incentive
compensation payments based on performance. Mr. Barnett's current base salary is
$155,000. Mr. Barnett's agreement provides for a bonus aggregating up to a
maximum of 50% of his annual base salary if certain performance goals are met.
The agreement provides for an initial term ending December 31, 2000, with
successive one-year renewals thereafter. The agreement also provides that, upon
the termination of the executive's employment or death, the Company will pay to
the executive's estate any unpaid base salary and any accrued but unpaid
incentive compensation through the date of termination. In the event the
executive is terminated without "Cause," the Company will pay to the executive
any unpaid base salary, any accrued but unpaid incentive compensation through
the date of termination and continue to pay the executive's base salary with
benefits for a period of six months. The agreement also provides that the
executive may receive stock options pursuant to the Employee Incentive
Compensation Plan. The agreement

                                        37
<PAGE>

contains confidentiality provisions and also prohibits the executive from
competing with the Company during the term of the agreement and for one year
thereafter. Upon resignation, the Company shall pay to the executive any unpaid
base salary and any accrued but unpaid incentive compensation through the date
of resignation. Effective January 8, 2002, the agreement was further amended to
provide enhanced severance and accelerated option vesting in the event of a
change in control of the Company.

     Effective August 15, 2000, the Company entered into an employment agreement
with Ronald E. Goodrow, the Company's Executive Vice President -- Operations.
The agreement provides for a base salary and incentive compensation payments
based on performance. Mr. Goodrow's current base salary is $193,000. Mr.
Goodrow's agreement provides for a bonus aggregating up to a maximum of 50% of
his annual base salary if certain performance goals are met. The agreement
provides for an initial term ending December 31, 2001, with successive one-year
renewals thereafter. The agreement also provides that, upon the termination of
the executive's employment or death, the Company will pay to the executive's
estate any unpaid base salary and any accrued but unpaid incentive compensation
through the date of termination. In the event the executive is terminated
without "Cause," the Company will pay to the executive any unpaid base salary,
any accrued but unpaid incentive compensation through the date of termination
and continue to pay the executive's base salary with benefits for a period of
six months. The agreement also provides that the executive may receive stock
options pursuant to the Employee Incentive Compensation Plan. The agreement
contains confidentiality provisions and also prohibits the executive from
competing with the Company during the term of the agreement and for two years
thereafter. Upon resignation, the Company shall pay to the executive any unpaid
base salary and any accrued but unpaid incentive compensation through the date
of resignation. Effective January 8, 2002, the agreement was further amended to
provide enhanced severance and accelerated option vesting in the event of a
change in control of the Company.

ANNUAL INCENTIVE COMPENSATION BONUSES

     The Company has an incentive compensation bonus program for its executive
officers pursuant to which distributions may be made annually based on the
Company's earnings and on each participating officer's contributions to the
Company's profits and other corporate goals. Distributions are made from a pool,
the amount of which is established by the Company's Board of Directors.
Individual distributions from the pool are determined by the Company's
Compensation Committee and are generally based on a percentage of the
participating officer's base salary.

EMPLOYEE INCENTIVE COMPENSATION PLAN

     The Employee Incentive Compensation Plan was established by the Company in
January 1997. The plan is currently administered by the Company's Board of
Directors which has broad powers to administer and interpret the plan. The
purpose of the employee Incentive Compensation plan is to attract and retain key
employees and consultants of the company, to provide an incentive for them to
achieve long range performance goals, and to enable them to participate in the
long term growth of the Company. The Employee Incentive Compensation plan
authorizes the grant of stock options (incentive and nonstatutory), stock
appreciation rights ("SARs") and restricted stock to employees and consultants
of the Company capable of contributing to the Company's performance. The Company
has reserved an aggregate of 3,700,000 shares of common stock for grants under
the Employee Incentive Compensation plan. Incentive stock options may be granted
only to employees eligible to receive them under the Internal Revenue Code of
1986, as amended. As of December 31, 2001, the Company had options (both
incentive and nonstatutory) for a total of 2,441,515 shares of the Company's
common stock outstanding, leaving a total of 1,012,431 shares available for
future grants. Upon expiration of unexercised options, the unpurchased shares
subject to such options will again be available for purposes of the plan.

EMPLOYEE STOCK PURCHASE PLAN

     The Employee Stock Purchase Plan was approved by the Board of Directors in
July 1997 and approved by the Company's shareholders at the 1998 annual meeting.
It is currently administered by the Company's Board of Directors who has broad
powers to administer and interpret the plan. The employee stock purchase
                                        38
<PAGE>

plan permits employees to purchase stock of the company at a favorable price and
possibly with favorable tax consequences to the participants. All employees
(including officers) of the Company or of those subsidiaries designated by the
Board who are regularly scheduled to work at least 20 hours per week and more
than five months per year are eligible to participate in any purchase periods of
the plan after completing 90 days of continuous employment. However, any
participant who would own (as determined under the internal revenue code),
immediately after the grant of an option, stock possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company will
not be granted an option under the plan. As of December 31, 2001, 417,415 shares
of common stock remain available for issuance under the plan.

     Under the Employee Stock Purchase Plan, eligible employees may elect to
participate in the plan on January 1 or July 1 of each year. On the date he
becomes a participant, and on the first business day in January and July
thereafter, subject to certain limitations determined in accordance with
calculations set forth in the plan, an eligible employee is granted a right to
purchase shares of common stock (up to a maximum of 1,000 shares) on the last
business day on or before each June 30 and December 31 during which he is a
participant. Upon enrollment in the plan, the participant authorizes a payroll
deduction, on an after-tax basis, in an amount of not less than 1% and not more
than 25% of the participant's compensation on each payroll date. Unless the
participant withdraws from the plan, the participant's option for the purchase
of shares is exercised automatically on each exercise date, and paid for with
the accumulated plan contributions. The option exercise price per share may not
be less than 85% of the lower of the market price on the first day of the
offering period or the market price on the exercise date, unless the
participant's entry date is not the first day of the offering period, in which
case the exercise price may not be lower than 85% of the market price of the
common stock on the entry date.

     As of December 31, 2001, 782,585 shares of common stock had been purchased
under the Employee Stock Purchase Plan. If any option granted under the plan
expires or terminates for any reason other than having been exercised in full,
the unpurchased shares subject to that option will again be available for
purposes of the plan.

                 REPORT OF THE HUMAN RESOURCE COMMITTEE OF THE
                  BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION

GENERAL

     During fiscal year 2001, the Human Resource Committee of the Board of
Directors consisted of George P. Keeley, Edward A. Moses, O.F. Ramos and D. Van
R. Morris. (Effective December 17, 2001, D. Van R. Morris was added to the Human
Resource Committee and O.F. Ramos resigned.) Each Human Resource Committee
member is a non-employee director of the Company. The Human Resource Committee
administers the Company's executive compensation program, monitors corporate
performance and its relationship to compensation for executive officers, and
makes appropriate recommendations concerning matters of executive compensation.

COMPENSATION PHILOSOPHY

     The Company has developed and implemented a compensation program that is
designed to attract, motivate, reward and retain the broad-based management
talent required to achieve the Company's business objectives and increase
shareholder value. There are two major components of the Company's compensation
program: base salary and incentives, each of which is intended to serve the
overall compensation philosophy.

BASE SALARY

     The Company's salary levels for executive officers, including its Chief
Executive Officer, are intended to be consistent with competitive pay practices
of similarly-sized companies within the industry. In determining executive
officers' salaries, the Human Resource Committee considers level of
responsibility, competitive trends, the financial performance and resources of
the Company, general economic conditions, as well as

                                        39
<PAGE>

factors relating to the particular individual, including overall job
performance, level of experience and prior service, ability, and knowledge of
the job.

INCENTIVES

     Incentives consist of stock options and cash bonus awards. The Human
Resource Committee strongly believes that the compensation program should
provide employees with an opportunity to increase their ownership and potential
for financial gain from increases in the Company's stock price. This approach
closely aligns the best interests of shareholders and executives and employees.
Therefore, executives and other employees are eligible to receive stock options,
giving them the right to purchase shares of the Company's common stock at a
specified price in the future. Stock option grants are determined by the
Company's Board of Directors. The grant of options is based primarily on a key
employee's potential contribution to the Company's growth and profitability, as
measured by the market value of the Company's common stock. The Company has an
incentive compensation bonus program for its executive officers pursuant to
which distributions may be made annually based on the Company's earnings and on
each participating officer's contributions to the Company's profits and other
corporate goals. Distributions are made from a pool, the amount of which is
established by the Company's Board of Directors. Individual distributions from
the pool are determined by the Company's Human Resource Committee and are
generally based on a percentage of the participating officer's base salary.

                                          Respectfully submitted,

                                          THE HUMAN RESOURCE COMMITTEE
                                          George P. Keeley
                                          Edward A. Moses
                                          D. Van R. Morris

                                        40
<PAGE>

                            STOCK PERFORMANCE GRAPH

     The graph below compares the cumulative total shareholder return on the
Company's common stock (Company Index) with the cumulative total return of the
NASDAQ Stock Market (Market Index) and the NASDAQ Computer and Data Processing
Stocks (Peer Index) for the period commencing June 11, 1997 (the date on which
trading in the Company's common stock commenced) through December 31, 2001,
assuming an investment of $100 and the reinvestment of any dividends. The base
price for the Company's common stock is the initial public offering price of
$5.50 per share. The comparisons in the graph below are based upon historical
data and are not indicative of, nor intended to forecast, future performance of
the Company's common stock.

                              (Performance Graph)

<Table>
<Caption>
                                                      COMPANY INDEX               MARKET INDEX                 PEER INDEX
                                                      -------------               ------------                 ----------
<S>                                             <C>                         <C>                         <C>
6/11/1997                                                100.000                     100.000                     100.000
12/31/1997                                               195.294                     112.265                     104.876
12/31/1998                                                94.118                     158.282                     187.090
12/31/1999                                               112.941                     294.081                     411.241
12/29/2000                                                17.059                     176.886                     189.359
12/31/2001                                                37.647                     140.353                     152.491
</Table>

                                        41
<PAGE>

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information, as of March 4, 2002
with respect to the beneficial ownership of the Company's common stock by: (i)
each shareholder known by the Company to be the beneficial owner of more than 5%
of the Company's common stock; (ii) each director; (iii) each executive officer
named in the Summary Compensation Table; and (iv) all executive officers and
directors as a group.

<Table>
<Caption>
                                                                 SHARES      PERCENTAGE OF
                                                              BENEFICIALLY    OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER(1)(2)                      OWNED(3)     SHARES OWNED
------------------------------------------                    ------------   -------------
<S>                                                           <C>            <C>
Constellation Software, Inc.................................   1,292,700          12%
  20 Adelaide Street East, Suite 1200
  Toronto, Ontario M5C 2T6
L.A. Gornto, Jr.(4).........................................     451,222           4%
O.F. Ramos(5)...............................................     243,659           2%
Bernard B. Markey(6)........................................     161,960           1%
Susan D. Falotico(7)........................................     106,265           1%
Gilbert O. Santos(8)........................................      45,914            *
Joseph M. Loughry, III(9)...................................     199,144           2%
Edward A. Moses(10).........................................      49,234            *
George P. Keeley(11)........................................     129,629           1%
Ronald E. Goodrow(12).......................................      33,500            *
William C. Barnett(13)......................................      25,495            *
D. Van R. Morris............................................      53,290            *
All executive officers and directors as a group (12
  persons)..................................................   1,455,516          12%
</Table>

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

  *  Less than one percent

 (1) Except as otherwise noted, and subject to community property laws where
     applicable, each person named in the table has sole voting and investment
     power with respect to all securities owned by such person.

 (2) Unless otherwise noted, the address of each person or entity listed is
     H.T.E., Inc., 1000 Business Center Drive, Lake Mary, Florida 32764.

 (3) A person is deemed to be the beneficial owner of securities that can be
     acquired by such person within 60 days from the date hereof either from the
     exercise of options or from the conversion of a security.

 (4) Includes 294,821 shares of common stock that Mr. Gornto may acquire within
     60 days from the date hereof upon exercise of stock options.

 (5) Includes 23,334 shares of common stock that Mr. Ramos may acquire within 60
     days from the date hereof upon exercise of stock options.

 (6) Includes 15,084 shares of common stock that Mr. Markey may acquire within
     60 days from the date hereof upon exercise of stock options.

 (7) Includes 102,300 shares of common stock that Ms. Falotico may acquire
     within 60 days from the date hereof upon exercise of stock options.

 (8) Includes 44,914 shares of common stock that Mr. Santos may acquire within
     60 days from the date hereof upon exercise of stock options.

 (9) Includes 146,666 shares of common stock that Mr. Loughry may acquire within
     60 days from the date hereof upon exercise of stock options.

(10) Includes 13,333 shares of common stock that Mr. Moses may acquire within 60
     days from the date hereof upon exercise of stock options.

(11) Includes 3,334 shares of common stock that Mr. Keeley may acquire within 60
     days from the date hereof upon exercise of stock options.

                                        42
<PAGE>

(12) Includes 30,000 shares of common stock that Mr. Goodrow may acquire within
     60 days from the date hereof upon exercise of stock options.

(13) Includes 30,061 shares of common stock that Mr. Barnett may acquire within
     60 days from the date hereof upon exercise of stock options.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     L.A. Gornto, Jr., the Company's Executive Vice President, General Counsel
and Secretary, has performed certain legal services for the Company through his
law firm, Gornto & Gornto, P.A., for which the Company paid approximately
$108,000 during fiscal 2001.

     In connection with DemandStar's rights offering, the Company and O.F.
Ramos, L.A. Gornto, Jr., Bernard B. Markey, and Edward A. Moses, directors of
the Company, agreed to add capital to DemandStar in the event DemandStar did not
receive $5,000,000 in gross proceeds from its rights offering. In consideration
of such a commitment, DemandStar issued a total of 1,000,000 warrants to the
Company and Messrs. Ramos, Gornto, Markey and Moses, entitling them to purchase
an aggregate of 1,000,000 shares of DemandStar common stock at an exercise price
of $2.00 per share. Of that total amount, each of the individuals received
warrants to purchase 125,000 shares of DemandStar common stock and the Company
received warrants to purchase 500,000 shares of DemandStar common stock. At the
time the warrants were issued, they were independently appraised at $0.05 per
warrant. As a result of the acquisition of DemandStar by Onvia effected on March
5, 2001, the DemandStar warrants held by the Company and each of Messrs. Ramos,
Gornto, Markey and Moses converted to Onvia warrants and the number of
underlying shares and exercise price were adjusted by the 0.60 exchange ratio.

     In DemandStar's rights offering, Messrs. O.F. Ramos, Bernard B. Markey,
L.A. Gornto, Jr., and Edward Moses acquired for $1.00 per share an aggregate of
656,821 restricted shares of DemandStar common stock, representing the rights to
which they were entitled in the rights offering. Messrs. Ramos, Markey and
Moses, together with certain other officers of DemandStar, purchased from the
shares of unsubscribed common stock available on the closing date of
DemandStar's rights offering, an additional 718,568 shares of common stock for
$1.00 per share. The acquisition was made to assure of DemandStar sufficient
initial capital from its rights offering. All shares issued to Messrs. Ramos,
Gornto, Markey, Moses and the other participating officers were restricted
shares. As a result of the acquisition of DemandStar by Onvia effected on March
5, 2001, the DemandStar shares held by Messrs. Ramos, Gornto, Markey and Moses
were converted to Onvia common stock in accordance with the 0.60 exchange ratio.

     The Company entered into an unsecured loan agreement with DemandStar, which
has a principal amount of $1,750,000. Interest accrues on the outstanding
principal and accrued interest at 8 percent per annum. In October 2000, the
Company entered into the Modification to Promissory Note Agreement (the
Agreement). The Agreement deferred the payment of the principal and interest due
October 31, 2000, (the "10-31-00 Note Payment") under the loan agreement until
October 31, 2001 and allows DemandStar to repay the 10-31-00 Note Payment by
issuing equity securities to the Company only if DemandStar issues a new equity
security in a third party transaction in which equity capital in excess of
$3,000,000 is raised prior to October 31, 2001. In consideration of this
deferral, the Agreement increases the interest rate from 8 to 10 percent per
annum effective November 1, 2000, and required DemandStar to pay the Company a
one-time modification fee of $10,000 on or before January 15, 2001. The note, as
amended by the Agreement, is payable in four installments of $450,000, $350,000,
$450,000 and $500,000 on October 31, 2001, 2002, 2003 and 2004, respectively.
The first payment of $450,000 was received by the Company in October 2001,
leaving an outstanding principal balance of $1,300,000 as of December 31, 2001.

     In November 2000, the Company entered into an agreement with Mark H.
Leonard, Constellation Software, Inc. and its Board of Directors ("the
Agreement"), pursuant to which Mr. Leonard was appointed to the Company's Board
of Directors (the "Board") for a two-year term expiring on the date of the
annual meeting in 2002. Since Constellation Software, Inc. competes with the
Company with respect to some of its products and services, the Agreement limits
Mr. Leonard's access to and disclosure of confidential competitive information
of the Company and requires Constellation Software, Inc. to vote its shares
consistent with the

                                        43
<PAGE>

recommendation of the Company's Board during Mr. Leonard's term as a director of
the Company or 90 days after resignation, whichever is earlier. In addition, it
requires all directors to vote consistent with the recommendation of the Board
and limits the transfer of the Company's shares owned by Constellation Software,
Inc. for that same period. The Agreement also limits the number of shares
Constellation Software, Inc. and the directors can purchase and any involvement
with proxy solicitation without prior written consent of the Company until the
day after the annual meeting in 2002. Mr. Leonard resigned from the Company's
Board effective October 11, 2001. The Agreement terminates after the annual
meeting on June 12, 2002.

     In February and April 2001, the Company entered into two agreements with
Constellation Software, Inc. ("Constellation") (the "Second Agreement") pursuant
to which Constellation was authorized and did purchase 432,900 shares of the
Company's common stock in open market transactions prior to May 25, 2001 (the
"Constellation Additional HTE Stock"). The Second Agreement provides that for as
long as Constellation controls or holds a beneficial interest in the
Constellation Additional HTE Stock, Constellation shall effect such action as
may be necessary to ensure that all such shares are: (i) voted in favor of all
of the nominees to, and proposals of, the board of directors as approved by the
Company's Board of Directors; (ii) voted against any shareholder proposal not
approved or recommended by the Company's Board of Directors; and (iii) voted and
deemed to be present in person or by proxy at all meetings of the shareholders
of the Company so that all shares may be counted for purposes of determining the
presence of a quorum at such meeting. Further, with respect to the sale or other
disposition of the 859,800 shares of the Company's common stock acquired by
Constellation in open market transactions prior to November 16, 2000 (the
"Constellation Initial HTE Stock"), which are subject to an agreement with the
Company dated as of November 16, 2000 (the "First Agreement"), and the
Constellation Additional HTE Stock (collectively "Constellation's Total HTE
Stock"), the Second Agreement provides for the following resale restrictions:
(i) no more than ten percent (10%) of Constellation's Total HTE Stock may be
sold or disposed of in open market transactions during any calendar month; (ii)
without the prior written consent of the Company, no more than two percent (2%)
of the shares representing the aggregate voting power of the Company's then
outstanding voting capital stock may be knowingly sold or otherwise transferred
(directly or indirectly) to a single entity or person, including affiliates
thereof (as defined in paragraph 7 of the First Agreement after substituting the
name of such single entity or person for the names Leonard, Directors and
Constellation therein), provided Constellation notifies, in writing, any broker,
dealer or agent (the "Agent") representing it or handling such transaction(s) of
this condition of sale hereunder; (iii) more than ten percent (10%) of
Constellation's Total HTE Stock may be sold or disposed of during any calendar
month, provided such sale or disposition occurs in a private transaction(s)
which does not print or is not otherwise reported through NASDAQ, any other
exchange or public markets stock quotation or reporting service (an "Exchange");
or (iv) notwithstanding the foregoing to the contrary, any amount of
Constellation's Total HTE Stock may be sold or otherwise transferred from time
to time, provided that: (y) all of such transaction(s) pursuant to this clause
shall be entirely completed or crossed off or away from an Exchange in a private
or negotiated trade, even though such transaction(s) may be reported
after-the-fact through an Exchange, and (x) no more than four and nine tenths
percent (4.9%) of the shares representing the aggregate voting power of the
Company's then outstanding voting capital stock may be knowingly sold or
otherwise transferred (directly or indirectly) cumulatively to a single entity
or person, including affiliates thereof (as defined in paragraph 7 of the First
Agreement after substituting the name of such single entity or person for the
names Leonard, Directors and Constellation therein), provided Constellation
notifies, in writing, the Agent representing it or handling such transaction(s)
of this condition of sale thereunder. In addition, the Second Agreement provides
that without the prior written consent of the Company, Constellation shall not
sell or transfer any of Constellation's Total HTE Stock to its affiliate(s) (as
defined in paragraph 7 of the First Agreement). The Second Agreement shall
continue in effect until the later of: (i) such date when all obligations of the
parties thereto to the other have been fully satisfied; (ii) the day after the
date Constellation, including affiliates thereof (as defined in paragraph 7 of
the First Agreement), no longer owns or holds a beneficial interest in any of
the Company's common stock; or (iii) the day after the date of the Company's
annual shareholders' meeting held in the year 2002.

                                        44
<PAGE>

                                    PART IV

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

(A) 1. FINANCIAL STATEMENTS

     The following financial statements are filed as a part of this report:

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Certified Public Accountants..........  F-2
Consolidated Financial Statements:
  Balance Sheets as of December 31, 2000 and 2001...........  F-3
  Statements of Operations for the years ended December 31,
     1999, 2000 and 2001....................................  F-4
  Statements of Stockholders' Equity and Comprehensive
     Income (Loss) for the years ended December 31, 1999,
     2000 and 2001..........................................  F-5
  Statements of Cash Flows for the years ended December 31,
     1999, 2000 and 2001....................................  F-6
  Notes to Consolidated Financial Statements................  F-7
</Table>

(B) REPORTS ON FORM 8-K

     The Company filed a report on Form 8-K on October 29, 2001, indicating the
Company issued a press release related to the redemption of 5,618,952 shares of
common stock of Tyler Technologies, Inc.

(C) EXHIBIT INDEX

<Table>
<Caption>
NUMBER                                    NAME
------                                    ----
<C>      <C>  <S>
 1.1     --   Form of Underwriting Agreement(1)
 3.1     --   Amended Articles of Incorporation(1)
 3.11    --   Articles of Amendment to Articles of Incorporation(2)
 3.2     --   Amended and Restated Bylaws(1)
10.1     --   Registrant's 1997 Employee Incentive Compensation Plan, as
              amended(3)
10.2     --   Registration Rights Agreement(1)
10.3     --   Form of Stock Option Agreement(1)
10.4     --   Form of Indemnification Agreement between the Registrant and
              each of its Directors and certain executive officers(1)
10.5     --   Form of Employment Agreement for L.A. Gornto, Jr.(1)
10.6     --   Form of Employment Agreement for certain other employees(1)
10.7     --   Lease agreement (Heathrow International Business Center,
              Lake Mary, Florida)(1)
10.8     --   1997 Employee Stock Purchase Plan, as amended(4)
10.9     --   Agreement and Plan of Merger (acquisition of UCS, Inc.)(5)
10.10    --   Amendment to Agreement and Plan of Merger (acquisition of
              UCS, Inc.)(5)
10.11    --   Employment Agreement with Joseph M. Loughry, III(6)
10.12    --   Employment Agreement with Ronald E. Goodrow(6)
10.13    --   Employment Agreement with Susan D. Falotico(6)
10.14    --   Employment Agreement with Gilbert O. Santos(6)
10.15    --   Employment Agreement with William C. Barnett(6)
10.16    --   Amendment to the Employment Agreement with Joseph M.
              Loughry, III(7)
10.17    --   Form of Amendment to the Employment Agreements Ronald E.
              Goodrow, Susan D. Falotico, Gilbert O. Santos, and William
              C. Barnett(7)
</Table>

                                        45
<PAGE>

<Table>
<Caption>
NUMBER                                    NAME
------                                    ----
<C>      <C>  <S>
10.18    --   Agreement, dated as of November 16, 2000, by and between the
              Registrant, Constellation Software, Inc., Mark Leonard, and
              the Directors of the Registrant(7)
10.19    --   Letter Agreement, dated February 25, 2001, between the
              Registrant and Constellation Software, Inc.(7)
10.20    --   Letter Agreement, dated April 19, 2001, between the
              Registrant and Constellation Software, Inc.(7)
21.0     --   Subsidiaries of the Registrant(7)
23.1     --   Consent of Arthur Andersen LLP(7)
99.1     --   Letter to the Securities and Exchange Commission(7)
</Table>

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

(1) Incorporated by reference to Registrant's Form S-1 Registration Statement
    (File No. 333-22637).
(2) Incorporated by reference to Registrant's Form 10-Q for the quarter ended
    June 30, 1998.
(3) Incorporated by reference to Registrant's Form S-8 Registration Statement
    filed December 22, 2000 (File No. 333-52552)
(4) Incorporated by reference to Registrant's Form S-8 Registration Statement
    filed December 22, 2000 (File No. 333-52566)
(5) Incorporated by reference to Registrant's Form 8-K dated June 1, 1998.
(6) Incorporated by reference to Registrant's Form 10-K dated March 29, 2001.
(7) Filed herewith.

                                        46
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          H.T.E., INC.

                                          /s/   JOSEPH M. LOUGHRY, III
                                          --------------------------------------
                                                  Joseph M. Loughry, III
                                          President and Chief Executive Officer
                                            and Director (principal executive
                                                         officer)

Date: March 27, 2002

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<Table>
<Caption>
                      SIGNATURE                                     TITLE                    DATE
                      ---------                                     -----                    ----
<C>                                                    <S>                              <C>

             /s/ JOSEPH M. LOUGHRY, III                President and Chief Executive    March 27, 2002
-----------------------------------------------------    Officer and Director
               Joseph M. Loughry, III                    (principal
                                                         executive officer)

                /s/ BERNARD B. MARKEY                  Chairman of the Board            March 27, 2002
-----------------------------------------------------    of Directors
                  Bernard B. Markey

                /s/ L.A. GORNTO, JR.                   Executive Vice President,        March 27, 2002
-----------------------------------------------------    General Counsel, Secretary
                  L.A. Gornto, Jr.                       and Director

                /s/ SUSAN D. FALOTICO                  Vice President, Chief Financial  March 27, 2002
-----------------------------------------------------    Officer (principal financial
                  Susan D. Falotico                      officer)

                   /s/ O.F. RAMOS                      Director                         March 27, 2002
-----------------------------------------------------
                     O.F. Ramos

                  /s/ EDWARD MOSES                     Director                         March 27, 2002
-----------------------------------------------------
                    Edward Moses

                /s/ GEORGE P. KEELEY                   Director                         March 27, 2002
-----------------------------------------------------
                  George P. Keeley

                                                       Director                         March 27, 2002
-----------------------------------------------------
                  D. Van R. Morris
</Table>

                                        47
<PAGE>

                           HTE, INC. AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<Table>
<Caption>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Certified Public Accountants..........  F-2
Consolidated Balance Sheets.................................  F-3
Consolidated Statements of Operations.......................  F-4
Consolidated Statements of Stockholders' Equity and
  Comprehensive Income (Loss)...............................  F-5
Consolidated Statements of Cash Flows.......................  F-6
Notes to Consolidated Financial Statements..................  F-7
</Table>

                                       F-1
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders of H.T.E., Inc.:

     We have audited the accompanying consolidated balance sheets of H.T.E.,
Inc. (a Florida corporation) and subsidiaries as of December 31, 2000 and 2001,
and the related consolidated statements of operations, stockholders' equity and
comprehensive income (loss) and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of H.T.E., Inc. and
subsidiaries as of December 31, 2000 and 2001, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

                                          /s/ Arthur Andersen LLP

Tampa, Florida,
February 8, 2002

                                       F-2
<PAGE>

                           HTE, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                                                DECEMBER 31,
                                                              -----------------
                                                               2000      2001
                                                              -------   -------
<S>                                                           <C>       <C>
                                    ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 9,762   $10,862
  Trade accounts receivable, less allowance of $2,018 and
    $1,457 for doubtful accounts at December 31, 2000 and
    2001, respectively......................................   23,543    21,235
  Deferred income taxes.....................................    2,263     1,732
  Note receivable, current portion..........................      450       360
  Other current assets......................................    1,599     1,663
                                                              -------   -------
         Total current assets...............................   37,617    35,852
                                                              -------   -------
Equipment, furniture and fixtures, net......................    3,633     3,308
                                                              -------   -------
Other assets:
  Computer software development costs, net of accumulated
    amortization of $17,051 and $19,728 at December 31, 2000
    and 2001, respectively..................................    5,427     4,001
  Other intangible assets, net..............................      325       103
  Deferred income taxes.....................................    3,793     3,747
  Note receivable, long-term................................    1,300       950
  Investment................................................    2,164       648
  Deposits..................................................      247       238
                                                              -------   -------
         Total other assets.................................   13,256     9,687
                                                              -------   -------
         Total assets.......................................  $54,506   $48,847
                                                              =======   =======

                     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 2,763   $ 1,367
  Accrued liabilities.......................................    5,661     5,359
  Deferred revenue..........................................   26,587    31,206
  Note payable, current portion.............................      625        --
                                                              -------   -------
         Total current liabilities..........................   35,636    37,932
                                                              -------   -------
Long-term liabilities:
  Note payable, long-term...................................      625        --
  Deferred lease commitment.................................      448       408
                                                              -------   -------
         Total long-term liabilities........................    1,073       408
                                                              -------   -------
Commitments and Contingencies (Notes 13 and 14)
Stockholders' Equity:
  Common stock, $.01 par value, 50,000,000 shares
    authorized, 17,239,890 and 11,341,596 shares issued and
    outstanding as of December 31, 2000 and 2001............      172       114
  Preferred stock, $.01 par value, 5,000,000 shares
    authorized, none issued and outstanding.................       --        --
  Additional paid-in capital................................   30,903    22,375
  Accumulated deficit.......................................  (15,103)  (14,238)
  Equity from investment in subsidiary......................    2,470     2,470
  Cumulative translation adjustment.........................      (59)       --
  Unrealized loss on investment.............................     (586)     (214)
                                                              -------   -------
         Total stockholders' equity.........................   17,797    10,507
                                                              -------   -------
         Total liabilities and stockholders' equity.........  $54,506   $48,847
                                                              =======   =======
</Table>

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

                                       F-3
<PAGE>

                           HTE, INC. AND SUBSIDIARIES

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

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ----------------------------
                                                                1999      2000      2001
                                                              --------   -------   -------
<S>                                                           <C>        <C>       <C>
Revenues:
  Software licenses.........................................  $ 24,641   $11,259   $12,891
  Professional services.....................................    28,575    14,947    13,580
  Hardware..................................................    14,945     3,725     1,930
  Maintenance and other.....................................    25,772    31,605    35,738
  Resource management.......................................     2,275     1,955     1,681
                                                              --------   -------   -------
          Total revenues....................................    96,208    63,491    65,820
                                                              --------   -------   -------
Expenses:
  Cost of software licenses.................................     7,489     5,380     5,033
  Cost of professional services.............................    17,294    11,719     9,364
  Cost of hardware..........................................    12,437     3,178     1,272
  Cost of maintenance and other.............................    10,350     9,315     9,299
  Cost of resource management...............................     1,440     1,168       571
  Research and development..................................    19,294    14,189    13,405
  Sales and marketing.......................................    20,116    12,170     9,681
  General and administrative................................    18,779    13,469    13,264
  Contract judgment and settlement, employee termination
     benefits and other costs...............................    12,927    (1,131)    1,030
                                                              --------   -------   -------
          Total operating expenses..........................   120,126    69,457    62,919
                                                              --------   -------   -------
INCOME (LOSS) FROM OPERATIONS...............................   (23,918)   (5,966)    2,901
                                                              --------   -------   -------
OTHER INCOME (EXPENSE)
  Interest income, net......................................       154       423       429
  Loss on investment........................................        --        --    (1,888)
                                                              --------   -------   -------
          Total other income (expense)......................       154       423    (1,459)
                                                              --------   -------   -------
INCOME (LOSS) BEFORE INCOME TAXES...........................   (23,764)   (5,543)    1,442
  Provision (benefit) for income taxes (Note 12)............    (8,898)   (2,162)      577
                                                              --------   -------   -------
NET INCOME (LOSS)...........................................  $(14,866)  $(3,381)  $   865
                                                              ========   =======   =======
NET INCOME (LOSS) PER SHARE:
  Basic.....................................................  $  (0.86)  $ (0.19)  $  0.05
                                                              ========   =======   =======
  Diluted...................................................  $  (0.86)  $ (0.19)  $  0.05
                                                              ========   =======   =======
</Table>

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

                                       F-4
<PAGE>

                           HTE, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                        AND COMPREHENSIVE INCOME (LOSS)
                             (AMOUNTS IN THOUSANDS)

<Table>
<Caption>
                                    COMMON STOCK     ADDITIONAL   RETAINED     EQUITY FROM    CUMULATIVE    UNREALIZED
                                   ---------------    PAID-IN     EARNINGS    INVESTMENT IN   TRANSLATION    LOSS ON
                                   SHARES   AMOUNT    CAPITAL     (DEFICIT)    SUBSIDIARY     ADJUSTMENT    INVESTMENT    TOTAL
                                   ------   ------   ----------   ---------   -------------   -----------   ----------   --------
<S>                                <C>      <C>      <C>          <C>         <C>             <C>           <C>          <C>
Balance, December 31, 1998.......  17,013    $170     $29,661     $  3,144       $   --          $(36)        $  --      $ 32,939
  Proceeds from exercise of stock
    options......................      89       1          85           --           --            --            --            86
    Proceeds from issuance of
      stock under benefit plan...     299       3       1,066           --           --            --            --         1,069
  Compensation from stock
    options......................      --      --          13           --           --            --            --            13
  Tax benefit associated with
    stock options................      --      --          65           --           --            --            --            65
  Comprehensive loss:
    Net loss.....................      --      --          --      (14,866)          --            --            --
    Translation adjustment.......      --      --          --           --           --            --            --
        Total comprehensive
          loss...................      --      --          --           --           --            --            --       (14,866)
                                   ------    ----     -------     --------       ------          ----         -----      --------
Balance, December 31, 1999.......  17,401     174      30,890      (11,722)          --           (36)           --        19,306
  Proceeds from exercise of stock
    options......................      51       1         113           --           --            --            --           114
  Proceeds from issuance of stock
    under benefit plan...........     187       2         379           --           --            --            --           381
  Proceeds from issuance of
    stock........................      44      --         124           --           --            --            --           124
  Repurchase of common stock.....    (443)     (5)       (590)          --           --            --            --          (595)
  Compensation from stock
    options......................      --      --          19           --           --            --            --            19
  Comprehensive loss:
    Net loss.....................      --      --          --       (3,381)          --            --            --
    Unrealized loss on
      investment.................      --      --          --           --           --            --          (586)
    Translation adjustment.......      --      --          --           --           --           (23)           --
    Equity from investment in
      subsidiary.................      --      --         (32)          --        2,470            --            --
        Total comprehensive
          loss...................      --      --          --           --           --            --            --        (1,552)
                                   ------    ----     -------     --------       ------          ----         -----      --------
Balance, December 31, 2000.......  17,240     172      30,903      (15,103)       2,470           (59)         (586)       17,797
  Proceeds from exercise of stock
    options......................       9      --          15           --           --            --            --            15
  Proceeds from issuance of stock
    under benefit plan...........     199       2         151           --           --            --            --           153
  Issuance of restricted stock...      67       1          59           --           --            --            --            60
  Repurchase of common stock.....    (554)     (5)     (1,504)          --           --            --            --        (1,509)
  Redemption of common stock from
    Tyler Technologies, Inc......  (5,619)    (56)     (7,249)          --           --            --            --        (7,305)
  Comprehensive income:
    Net income...................      --      --          --          865           --            --            --
    Unrealized gain on
      investment.................      --      --          --           --           --            --           372
    Translation adjustment.......      --      --          --           --           --            59            --
        Total comprehensive
          income.................      --      --          --           --           --            --            --         1,296
                                   ------    ----     -------     --------       ------          ----         -----      --------
Balance, December 31, 2001.......  11,342    $114     $22,375     $(14,238)      $2,470          $ --         $(214)     $ 10,507
                                   ======    ====     =======     ========       ======          ====         =====      ========
</Table>

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

                                       F-5
<PAGE>

                           HTE, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)
                                   (NOTE 16)

<Table>
<Caption>
                                                                YEAR ENDED DECEMBER 31,
                                                              ----------------------------
                                                                1999      2000      2001
                                                              --------   -------   -------
<S>                                                           <C>        <C>       <C>
Cash flows from operating activities:
  Net income (loss).........................................  $(14,866)  $(3,381)  $   865
  Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
    Depreciation and amortization...........................     5,865     5,639     4,867
    Loss on disposal of equipment, furniture and fixtures...        57        34        10
    Loss from discontinuation of product line...............     1,138       195       285
    Gain on sale of assets..................................        --        --       (81)
    Compensation due to stock transactions..................        13        19        60
    Deferred income taxes...................................    (8,898)     (459)      577
    Loss on investment......................................        --        --     1,888
    Tax benefit associated with stock options...............        65        --        --
  Changes in operating assets and liabilities, net of effect
    of acquisitions --
    Decrease (increase) in assets --
      Trade accounts receivable, net........................     7,228     9,841     2,308
      Income tax receivable.................................     3,050        --        --
      Other current assets..................................     2,633       201       (68)
      Note receivable.......................................        --        --       450
      Deposits..............................................        37       (10)        5
    Increase (decrease) in liabilities --
      Accounts payable......................................    (2,155)     (315)   (1,396)
      Accrued liabilities...................................     5,992    (4,775)     (302)
      Deferred revenue......................................     3,226     1,331     4,732
      Note payable..........................................        --        --    (1,250)
      Deferred lease commitment.............................        90       (27)      (40)
                                                              --------   -------   -------
    Net cash provided by operating activities...............     3,475     8,293    12,910
                                                              --------   -------   -------
Cash flows from investing activities:
  Capital expenditures......................................      (925)   (1,699)   (1,229)
  Cash paid for acquisitions................................    (1,000)       --        --
  Spin-off of subsidiary....................................        --      (923)       --
  Computer software development costs.......................    (3,357)   (2,811)   (1,994)
                                                              --------   -------   -------
         Net cash used in investing activities..............    (5,282)   (5,433)   (3,223)
                                                              --------   -------   -------
Cash flows from financing activities:
  Net proceeds from issuance of common stock................     1,155       619       168
  Repurchase of common stock................................        --      (595)   (1,509)
  Redemption of common stock from Tyler Technologies,
    Inc.....................................................        --        --    (7,305)
                                                              --------   -------   -------
         Net cash provided by (used in) financing
           activities.......................................     1,155        24    (8,646)
                                                              --------   -------   -------
Effect of foreign currency exchange rate changes on cash and
  cash equivalents..........................................        --       (23)       59
                                                              --------   -------   -------
Net (decrease) increase in cash and cash equivalents........      (652)    2,861     1,100
Cash and cash equivalents, beginning of period..............     7,553     6,901     9,762
                                                              --------   -------   -------
Cash and cash equivalents, end of period....................  $  6,901   $ 9,762   $10,862
                                                              ========   =======   =======
Supplemental schedules of cash flow information
  Cash paid for interest....................................  $     61   $    27   $   169
  Cash refund for income taxes..............................  $     --   $ 1,703   $    --
</Table>

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

                                       F-6
<PAGE>

                           HTE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1999, 2000 AND 2001
       (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

     The accompanying consolidated financial statements include the accounts of
H.T.E., Inc. (HTE), a Florida corporation, and its wholly-owned subsidiaries,
HTE-Bellamy Ltd. (Bellamy), a Canadian corporation, HTE-Kb Systems, Inc. (Kb
Systems), a Florida corporation, HTE-Jalan, Inc. (Jalan), a Florida corporation,
HTE-Phoenix Systems, Inc., a Florida corporation, HTE-UCS, Inc. (UCS), a Florida
corporation, HTE-Vanguard Systems, Inc., a Florida corporation and
DemandStar.com, Inc. (DSI), a Florida corporation through April 30, 2000 (see
below)(collectively, the Company). The Company develops, markets, implements and
supports fully-integrated enterprise-wide software applications designed
specifically for public sector and utility organizations, including state,
county and city governments, other municipal agencies, and publicly and
privately owned utilities. The Company was also engaged in remarketing IBM
hardware systems to run in concert with their application software. In 2000, the
Company began outsourcing the sale and configuration of hardware systems through
an agreement with Vertical VAR. Under this agreement, the Company will receive a
royalty on hardware sales to HTE customers by Vertical VAR. The effect of the
Company's foreign operations on the accompanying consolidated financial
statements was not material.

     Pursuant to a registration statement on Form S-1 (File No. 333-93445), as
amended, filed with the Securities and Exchange Commission and which became
effective March 27, 2000, DSI completed a rights offering of its common stock as
of May 1, 2000. Rights to purchase an aggregate of 6,374,080 shares of common
stock were exercised for an aggregate purchase price of $6,374. As a result,
only DSI's operating results through April 30, 2000 are included in the
Company's consolidated financial statements since the Company's ownership of DSI
was reduced to 16.4 percent as of May 1, 2000, and the Company's investment in
DSI is accounted for using the cost method after that. In addition, the spin-off
resulted in a gain of $2,470 which is recorded as equity from investment in
subsidiary in comprehensive loss in the accompanying consolidated statements of
stockholders' equity and comprehensive income (loss). During 2001, DSI stock was
acquired by Onvia.com, Inc. (Onvia) in a stock for stock transaction. See Note
5.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

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

  Cash and Cash Equivalents

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

                                       F-7
<PAGE>

  Trade Accounts Receivable

     Included in trade accounts receivable at December 31, 2000 and 2001, are
unbilled receivables of $2,613 and $1,725, respectively. The following table
reflects the activity in the allowance for doubtful accounts for the years ended
December 31, 1999, 2000 and 2001:

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                           --------------------------
                                                            1999      2000     2001
                                                           -------   ------   -------
<S>                                                        <C>       <C>      <C>
Balance at the beginning of the period...................  $ 1,351   $2,074   $ 2,018
Provision................................................    2,237       85       466
Write-offs...............................................   (1,514)    (141)   (1,027)
                                                           -------   ------   -------
Balance at the end of the period.........................  $ 2,074   $2,018   $ 1,457
                                                           =======   ======   =======
</Table>

  Equipment, Furniture and Fixtures

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

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

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

     Depreciation and amortization expense related to equipment, furniture and
fixtures of $1,616, $1,575 and $1,391, is included in general and administrative
expenses on the accompanying consolidated statements of operations for the years
ended December 31, 1999, 2000 and 2001, respectively.

  Computer Software Development Costs

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

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

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

     Amortization expense related to computer software development costs of
$3,379, $3,473 and $3,265 is included in cost of software licenses in the
accompanying consolidated statements of operations for the years ended December
31, 1999, 2000 and 2001, respectively.

                                       F-8
<PAGE>

  Other Intangible Assets

     Other intangible assets consisted of the following as of December 31, 2000
and 2001:

<Table>
<Caption>
                                                                  DECEMBER
                                                              -----------------
DESCRIPTION                                                    2000      2001
-----------                                                   -------   -------
<S>                                                           <C>       <C>
Goodwill....................................................  $   416   $   127
Purchased software..........................................    2,153     1,897
Customer lists..............................................      903       516
                                                              -------   -------
                                                                3,472     2,540
Less -- Accumulated amortization............................   (3,147)   (2,437)
                                                              -------   -------
                                                              $   325   $   103
                                                              =======   =======
</Table>

     Goodwill represents amounts paid in excess of the fair market value of net
tangible and identifiable intangible assets purchased in the acquisitions of
Software Management, Inc., Bellamy, Kb Systems, Inc. and Information On Demand,
Inc. (IOD), subsequently renamed DSI, and is amortized using the straight-line
method over a period of 60 months. As of December 31, 2001, all goodwill has
been fully amortized. Customer lists represent identifiable intangible assets
purchased in connection with the acquisitions of Bellamy, Kb Systems, Inc.,
JALAN, Inc., Vanguard Management and Information Systems, Inc. (Vanguard) and
IOD and are amortized over a period of 60 months. Purchased software represents
identifiable intangible assets purchased in connection with the acquisitions of
Programmed-For-Success, Inc., Bellamy, Kb Systems, Inc., JALAN, Inc. and
Vanguard and is amortized using the straight-line method over a period of 36
months. Amortization expense related to goodwill and customer lists of $473,
$377 and $211 is included in general and administrative expenses in the
accompanying consolidated statements of operations for the years ended December
31, 1999, 2000 and 2001, respectively. Amortization expense related to the
purchased software of $817 and $661 is included in the cost of software licenses
in the accompanying consolidated statements of operations for the years ended
December 31, 1999 and 2000, respectively. As of December 31, 2000, the purchased
software was fully amortized.

     During 2000, HTE disposed of the Vanguard related product lines. During
2001, HTE sold the assets of Bellamy. As a result of these transactions, HTE
wrote off net intangible assets as follows:

<Table>
<Caption>
                                                          YEAR ENDED          YEAR ENDED
                                                       DECEMBER 31, 2000   DECEMBER 31, 2001
                                                       -----------------   -----------------
<S>                                                    <C>                 <C>
Goodwill.............................................          --                   5
Purchased software...................................         160                  --
Customer lists.......................................          24                   6
</Table>

  Deferred Revenue and Revenue Recognition

     Deferred revenue represents advance payments by customers for software
licenses, maintenance and professional services. Maintenance revenue is deferred
and recognized ratably over the service period. Professional services include
system planning and implementation, project management and training and
education services and are recognized as revenue as the work is performed. As
the functionality of the hardware is not dependent on any other services
provided by the Company, hardware sales are recognized upon shipment.

     The Company applies the provisions of Statement of Position (SOP) 97-2,
"Software Revenue Recognition," as amended.

     The Company derives revenue from software licenses, post-contract customer
support/maintenance, hardware, and services which typically range from
installation, training and basic consulting. The Company recognizes revenue from
the sale of software licenses when persuasive evidence of an arrangement exists,
the

                                       F-9
<PAGE>

product has been delivered, the fee is fixed and determinable and collection of
the resulting receivable is assured.

     For arrangements containing multiple elements, such as software license
fees, consulting services and maintenance, and where vendor-specific objective
evidence ("VSOE") of fair value exists for all undelivered elements, the Company
accounts for the delivered elements in accordance with the "residual method"
prescribed by SOP 98-9, "Modification of 97-2, Software Revenue Recognition,
With Respect of Certain Transactions." For arrangements in which VSOE does not
exist for each element, revenue is deferred and not recognized until delivery of
the element without VSOE has occurred. In addition, the Company generates
revenue from consulting fees for implementation, installation, data conversion,
and training related to the use of the Company's proprietary and third-party
licensed products. The Company recognizes revenues for these services as they
are performed, as they are principally contracted for on a time and material
basis.

     Recurring software maintenance revenue is typically based on one-year
renewable contracts. Software maintenance and support revenues are recognized
ratably over the contract period.

  Income Taxes

     The Company accounts for income taxes using an asset and liability approach
which requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, the Company considers all expected future events other than
enactments of changes in the tax law or rates. Changes in the tax law or rates
will be recognized in the future years in which they occur.

  Significant Concentrations

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

     During 1999, substantially all of the Company's hardware revenues were
derived from the sale of IBM AS/400 systems in connection with the Company's
Industry Remarketing agreement with IBM. In 2000, the Company began outsourcing
the sale and configuration of hardware systems through an agreement with
Vertical VAR. Under this agreement, the Company will receive a royalty on
hardware sales to HTE customers by Vertical VAR.

  Stock-Based Compensation

     The Company measures compensation cost for stock options issued to
employees using the intrinsic value based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB No. 25). Under APB No. 25, if the exercise price of the
Company's stock options equals or exceeds the estimated fair market value of the
underlying stock on the date of grant, no compensation expense is generally
recognized. As the stock options issued to employees have had no intrinsic value
at the date of grant, no compensation expense related to stock options issued to
employees has been recorded. For stock options granted to non-employees,
compensation cost is measured using the fair value based method. Additionally,
the Company has provided pro forma disclosures of net income and earnings per
share as if the fair value based method had been applied to all stock options
issued by the Company as required by Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" (SFAS 123). See Note 9.

  Foreign Currency Translation

     The functional currency of the Company's foreign subsidiary is the Canadian
dollar. The financial statements of the Company's foreign subsidiary have been
translated into U.S. dollars. Accordingly, assets and liabilities of foreign
operations are translated at period-end rates of exchange, with any resulting
translation

                                       F-10
<PAGE>

adjustments reported as a separate component of stockholders' equity.
Consolidated statements of operations accounts are translated at average
exchange rates for the period and gains and losses from foreign currency
transactions are included in net income (loss).

  Net Income (Loss) Per Share

     Basic earnings per share was calculated by dividing net income (loss) by
the weighted-average number of common shares outstanding during the period.
Diluted earnings per share was calculated by dividing net income (loss) after
assumed conversion of dilutive securities by the sum of the weighted-average
number of common shares outstanding plus all dilutive potential common shares
that were outstanding during the period. Potential common shares included in the
diluted calculation related to stock options are computed using the treasury
stock method and consist of common stock which may be issuable upon the exercise
of outstanding common stock options, when dilutive.

     The following table reconciles the number of shares utilized in the
earnings per share calculations (amounts in thousands):

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                              ------------------------
                                                               1999     2000     2001
                                                              ------   ------   ------
<S>                                                           <C>      <C>      <C>
Basic weighted-average shares outstanding...................  17,282   17,529   16,173
Common shares applicable to stock options...................      --       --      124
                                                              ------   ------   ------
Diluted weighted-average shares outstanding.................  17,282   17,529   16,297
                                                              ======   ======   ======
</Table>

     Options to purchase approximately 1,801,000, 2,282,000 and 1,902,000 shares
were outstanding as of December 31, 1999, 2000 and 2001, respectively, but were
not included in the computation of diluted earnings per share because they are
antidilutive.

  Carrying Value of Long-Lived Assets

     The Company reviews the carrying value of all long-lived assets, including
equipment, furniture and fixtures, computer software development costs, and
other intangible assets, whenever events or changes in circumstances indicate
that the carrying value may not be recoverable through projected undiscounted
future operating cash flows. Although no impairment is indicated at December 31,
2001, the assessment of recoverability will be impacted if estimated projected
undiscounted operating cash flows are not achieved.

  Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

  Fair Value of Financial Instruments

     The carrying amounts of the Company's financial assets and liabilities,
including cash and cash equivalents, trade accounts receivable, note receivable,
accounts payable and note payable at December 31, 2000 and 2001, approximate
fair value because of the short maturity of these instruments. The carrying
amount of the investment in Onvia has been adjusted to reflect the fair value of
the investment by recording an unrealized (loss) gain of $(586) and $372 in the
accompanying consolidated statements of stockholders' equity and comprehensive
income (loss) for the years ended December 31, 2000 and 2001, respectively.

  Comprehensive Income (Loss)

     The Company presents comprehensive income (loss) in accordance with
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130). SFAS 130 establishes

                                       F-11
<PAGE>

standards for reporting and display of comprehensive income (loss) and its
components. As this statement pertains to disclosure and informational
requirements, it has no impact on the Company's operating results or financial
position. The Company's adjustments to arrive at comprehensive income (loss)
include the foreign currency translation adjustment, the unrealized loss related
to the investment in Onvia and the equity from investment in subsidiary. These
amounts are presented in the accompanying consolidated statements of
stockholders' equity and comprehensive income (loss).

  Segment Reporting

     The Company has adopted Statement of Financial Accounting Standards No. 131
(SFAS 131), which establishes standards for reporting information about
operating segments. As this statement pertains to disclosure and informational
requirements, it has no impact on the Company's operating results or financial
position. Although the Company has five operating segments, separate segment
data has not been presented as they meet the criteria set forth in SFAS 131 for
aggregation.

  New Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141 (SFAS 141), "Business Combinations", and
No. 142 (SFAS 142), "Goodwill and Other Intangible Assets." SFAS 141 addresses
financial accounting and reporting for goodwill and other intangible assets
acquired in a business combination at acquisition. SFAS 141 requires the
purchase method of accounting to be used for all business combinations initiated
after June 30, 2001; establishes specific criteria for the recognition of
intangible assets separately from goodwill; and requires unallocated negative
goodwill to be written off immediately as an extraordinary gain (instead of
being deferred and amortized). SFAS 142 addresses financial accounting and
reporting for intangible assets acquired individually or with a group of other
assets (but not those acquired in a business combination) at acquisition. SFAS
142 also addresses financial accounting and reporting for goodwill and other
intangible assets subsequent to their acquisition. SFAS 142 provides that
goodwill and intangible assets which have indefinite useful lives will not be
amortized but rather will be tested at least annually for impairment. It also
provides that intangible assets that have finite useful lives will continue to
be amortized over their useful lives, but those lives will no longer be limited
to forty years. The provisions of SFAS 142 are effective for fiscal years
beginning after December 15, 2001. The Company will adopt SFAS 142 beginning
January 1, 2002. The Company has determined the impact of adopting SFAS 141 and
SFAS 142 will not have a material effect on its financial position or results of
operations.

     In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations" (SFAS 143). SFAS 143 establishes accounting standards for
recognition and measurement of a liability for an asset retirement obligation
and the associated asset retirement cost. SFAS 143 is effective for financial
statements relating to fiscal years beginning after June 15, 2002. Management
does not expect SFAS 143 to have a material effect on the Company's financial
statements.

     In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS 144). SFAS 144 addresses the financial
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS 144 is effective for financial statements issued for fiscal years beginning
after December 15, 2001. Management does not expect SFAS 144 to have a material
effect on the Company's financial statements.

  Reclassifications

     Certain reclassifications have been made to the 2000 financial statements
to conform to the 2001 presentation.

                                       F-12
<PAGE>

2. EQUIPMENT, FURNITURE AND FIXTURES

     Equipment, furniture and fixtures consisted of the following as of December
31, 2000 and 2001:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                              -----------------
                                                               2000      2001
                                                              -------   -------
<S>                                                           <C>       <C>
Equipment...................................................  $ 7,918   $ 8,216
Office furniture and fixtures...............................      544       509
Leasehold improvements......................................    1,111     1,192
                                                              -------   -------
                                                                9,573     9,917
Less -- Accumulated depreciation and amortization...........   (5,940)   (6,609)
                                                              -------   -------
                                                              $ 3,633   $ 3,308
                                                              =======   =======
</Table>

3. BUSINESS COMBINATIONS

     In June 1999, the Company created HTE-IOD, Inc., a wholly-owned subsidiary,
which later changed its name to DemandStar.com, Inc. DSI purchased certain
assets of IOD for $1,000 in cash. The assets purchased consisted of customer
lists and goodwill, which were recorded as other intangible assets in the
accompanying consolidated financial statements. As part of the purchase, the
Company also assumed various customer service liabilities. Under the original
agreement, the Company could have paid up to an additional $2,000 for the
purchase if DSI meets certain financial targets set forth in the Agreement for
Sale and Purchase of Assets. However, this liability was transferred to DSI
effective with the rights offering as of May 1, 2000. This acquisition was
accounted for as a purchase in the accompanying consolidated financial
statements.

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

<Table>
<Caption>
                                                                 YEAR ENDED
                                                              DECEMBER 31, 1999
                                                              -----------------
<S>                                                           <C>
Revenues....................................................      $ 96,340
Net income (loss)...........................................       (15,136)
Basic net income (loss) per share...........................         (0.88)
Diluted net income (loss) per share.........................         (0.88)
</Table>

4. NOTE RECEIVABLE

     In October 1999, the Company entered into an unsecured loan agreement with
DSI which has a principal balance of $1,750. Interest accrues on the outstanding
principal and accrued interest at 8 percent. In October 2000, the Company
entered into the Modification to Promissory Note Agreement (the Agreement). The
Agreement deferred the payment of the principal and interest due October 31,
2000, (the "10-31-00 Note Payment") under the loan agreement until October 31,
2001 and allows DSI to repay the 10-31-00 Note Payment by issuing equity
securities to HTE only if DSI issues a new equity security in a third party
transaction in which equity capital in excess of $3,000 is raised prior to
October 31, 2001. In consideration of this deferral, the Agreement increased the
interest rate from 8 to 10 percent effective November 1, 2000, and required DSI
to pay HTE a one-time modification fee of $10 on or before January 15, 2001,
which was received on January 15, 2001. The Company received $450 in 2001
related to the note. The note, as amended by the Agreement, provides for the
principal balance to be repaid by DSI according to the following schedule:

<Table>
<Caption>
                        OCTOBER 31,                            AMOUNT
                        -----------                            ------
<S>                                                            <C>
2002........................................................   $  350
2003........................................................      450
2004........................................................      500
                                                               ------
                                                               $1,300
                                                               ======
</Table>

                                       F-13
<PAGE>

     In 2001, DSI was acquired by Onvia. See Note 5. In connection with this
acquisition, this note was assumed by Onvia.

5. LOSS ON INVESTMENT

     On March 2, 2001, the shareholders of DSI approved at a special
shareholders meeting an acquisition of DSI by Onvia pursuant to which DSI became
a wholly-owned subsidiary of Onvia effective March 5, 2001. Shareholders of
outstanding DSI common stock were issued 0.60 of a share of Onvia's common stock
for every share of DSI common stock they held, and outstanding shares of DSI
common stock were canceled. Cash was paid to DSI shareholders in lieu of
fractional shares of Onvia common stock. The Company was issued a total of
1,200,000 shares of Onvia common stock in respect of the common stock and
preferred stock the Company held in DSI. In connection with this transaction,
the Company recorded a loss on investment of $1,888 in the year ended December
31, 2001, of which $586 had been recorded as an unrealized loss in comprehensive
loss as of December 31, 2000. For the year ended December 31, 2001, the Company
recorded an unrealized loss of $214 on this investment.

6. NOTE PAYABLE

     In June 2000, the Company recorded a note payable for $1,250 with $625 due
June 1, 2001 and $625 due June 1, 2002. These payments are subject to a secured
promissory note. Interest accrues on the note at 9 percent per annum and is
payable concurrently with the principal payments. The note is secured by 750,000
shares of DSI Series A Preferred stock and 1,250,000 shares of DSI common stock
held by the Company. Pursuant to the merger between DSI and Onvia effective
March 5, 2001, these shares were exchanged for 1,200,000 shares of Onvia common
stock. See Note 5. The payment due June 1, 2002 was prepaid in December 2001.
Therefore, there are no amounts outstanding under the note payable as of
December 31, 2001.

7. LINE OF CREDIT

     The Company had a Loan and Security Agreement with Silicon Valley Bank for
up to $5,000 secured by the Company's trade accounts receivable balance (the
"Loan"). The Loan expired in September 2001. The Loan bore interest at the
bank's prime rate plus 2 percent. The Loan was collateralized by the assets of
the Company and required the Company to maintain a financial covenant related to
tangible net worth.

     Effective October 24, 2001, the Company entered into a new Loan and
Security Agreement with Silicon Valley Bank (the "New Loan") for a line of
credit up to $5,000 based on the Company's trade accounts receivable balance.
The term of the New Loan is for one year from the date of closing and bears
interest at the bank's prime rate plus 0.5 percent (5.25 percent as of December
31, 2001), increasing to the bank's prime rate plus 1.5 percent if quarterly net
profit excluding non-recurring charges is not achieved. Two consecutive quarters
of net profitability are required to regain the bank's prime rate plus 0.5
percent rate. The New Loan is collateralized by the assets of the Company and
requires the Company to maintain a financial covenant related to tangible net
worth. As of December 31, 2001, the Company was in compliance with this debt
covenant, and there were no borrowings outstanding under the New Loan.

8. STOCKHOLDERS' EQUITY

     On October 29, 2001, the Company redeemed 5,618,952 shares of its common
stock from Tyler Technologies, Inc. (Tyler) for a purchase price of $7,305. The
Company effected the redemption in accordance with applicable Florida law by
delivering notice of redemption to Tyler on October 29, 2001 and depositing the
total amount of the purchase price with an escrow agent. As a result of the
notice and escrow of funds, the 5,618,952 shares are deemed not to be issued and
outstanding. Upon receipt of the certificates representing all of the shares
redeemed, the escrow agent will release funds in the amount of the purchase
price to Tyler.

     Subsequently, Tyler issued a statement denying that a redemption of the
Company's shares had occurred. Therefore, the Company filed an action in
Seminole County, Florida Circuit Court for a Declaratory
                                       F-14
<PAGE>

Judgment to legally confirm its rights, under Florida law, to redeem 5,618,952
shares of its common stock from Tyler. If the redemption is confirmed, but at a
higher price than the Company paid for the redeemed shares, the Company will be
required to draw such funds from its cash reserves and/or from its line of
credit.

9. STOCK COMPENSATION PLANS

EMPLOYEE STOCK OPTIONS

     On July 1, 1996, the Company granted options to an employee to purchase
106,000 shares of the Company's common stock. The options were exercisable
beginning January 1, 1997, at $0.91 per share, which approximated the fair
market value of the stock at the date of grant. The options expire the earlier
of five years from the date of grant or seven months from the employee's date of
termination. There are no outstanding options under this grant as of December
31, 2001, as all of these options were exercised during 1998 and 1999.

HTE EMPLOYEE INCENTIVE PLAN

     The Company's 1997 Employee Incentive Compensation Plan (the "HTE Plan")
was adopted by the Board of Directors (the "Board") in January 1997. The purpose
of the HTE Plan is to attract and retain key employees and consultants of the
Company, to provide an incentive for them to achieve long-range performance
goals and to enable them to participate in the long-term growth of the Company.
The HTE Plan authorizes the grant of stock options (incentive and
non-statutory), stock appreciation rights and restricted stock to employees and
consultants of the Company capable of contributing to the Company's performance.
As of December 31, 2001, the Company had not awarded stock appreciation rights
under the HTE Plan. In January 2001, the Company awarded 66,666 shares of
restricted stock under the HTE Plan for services by the Board during 2001.
Compensation expense of $60 was recognized throughout the year as services were
performed. No other restricted stock was issued under the HTE Plan as of
December 31, 2001. The Company has reserved an aggregate of 3,700,000 shares
(subject to adjustment for stock splits and similar capital changes) of common
stock for grants under the HTE Plan, of which 1,012,431 shares are available for
future grants as of December 31, 2001. Incentive stock options may be granted
only to employees eligible to receive them under the Internal Revenue Code of
1986, as amended. The exercise price of each option equals the market price of
the Company's stock on the date of grant and an option's maximum term is 10
years. Some options have been granted with immediate vesting, although most of
the options have vesting schedules over four or five years.

     A summary of the status of the Company's outstanding stock options, each of
which is fixed with respect to number of shares and exercise price, including
employee stock options discussed above, as of December 31, 1999, 2000 and 2001,
and changes during the periods ending on those dates is presented below:

<Table>
<Caption>
                                    1999                    2000                    2001
                            ---------------------   ---------------------   ---------------------
                                        WEIGHTED-               WEIGHTED-               WEIGHTED-
                                         AVERAGE                 AVERAGE                 AVERAGE
                                        EXERCISE                EXERCISE                EXERCISE
                             SHARES       PRICE      SHARES       PRICE      SHARES       PRICE
                            ---------   ---------   ---------   ---------   ---------   ---------
<S>                         <C>         <C>         <C>         <C>         <C>         <C>
Outstanding at beginning
  of year.................  1,514,941     $7.29     1,800,826     $5.14     2,282,085     $3.54
  Granted.................  1,008,727      2.61     1,275,010      2.20       446,440      1.55
  Exercised...............     93,056      1.03        50,490      2.23         9,398      1.57
  Forfeited...............    629,786      7.24       743,261      5.24       277,612      3.97
                            ---------               ---------               ---------
Outstanding at end of
  year....................  1,800,826     $5.14     2,282,085     $3.54     2,441,515     $3.13
                            =========               =========               =========
Options exercisable at
  year end................    825,028     $4.46       799,574     $4.58     1,027,785     $4.08
Weighted-average fair
  value of options granted
  during the year.........                $2.65                   $1.91                   $1.27
</Table>

                                       F-15
<PAGE>

     The following table summarizes information about fixed stock options
outstanding at December 31, 2001:

<Table>
<Caption>
                                           OPTIONS OUTSTANDING                   OPTIONS EXERCISABLE
                              ---------------------------------------------   --------------------------
                                  NUMBER          WEIGHTED-       WEIGHTED-       NUMBER       WEIGHTED-
                              OUTSTANDING AT       AVERAGE         AVERAGE    EXERCISABLE AT    AVERAGE
                               DECEMBER 31,       REMAINING       EXERCISE     DECEMBER 31,    EXERCISE
RANGE OF EXERCISE PRICES           2001        CONTRACTUAL LIFE     PRICE          2001          PRICE
------------------------      --------------   ----------------   ---------   --------------   ---------
<S>                           <C>              <C>                <C>         <C>              <C>
$1.06 to  2.00..............    1,077,765            8.1             1.71        218,047          1.76
 2.06 to  3.00..............      686,126            8.0             2.69        223,311          2.54
 3.31 to  4.72..............      566,200            5.2             4.68        515,347          4.69
 8.38 to 13.50..............      111,424            6.1            11.78         71,080         11.59
</Table>

DSI 1999 EMPLOYEE INCENTIVE COMPENSATION PLAN

     In December 1999, DSI's board of directors approved the 1999 Employee
Incentive Compensation Plan (the "DSI Plan"). The DSI Plan provides that awards
may be granted to DSI's key officers, employees, consultants, advisors and
directors or others designated by the board of directors at the fair market
value at the date of grant. Awards under the DSI Plan may take the form of stock
options, share appreciation rights or restricted stock. The DSI Plan limits the
number of shares, which may be issued pursuant to incentive stock options to
4,000,000 shares. As of December 31, 1999, DSI had not awarded share
appreciation rights or restricted stock under the DSI Plan.

     A summary of the status of DSI's outstanding stock options, each of which
is fixed with respect to number of shares and exercise price, including employee
stock options discussed above, as of December 31, 1999, and changes during the
period ending on that date is presented below:

<Table>
<Caption>
                                                                     1999
                                             ----------------------------------------------------
                                                     EMPLOYEES                 NON-EMPLOYEES
                                             --------------------------   -----------------------
                                                           WEIGHTED-                 WEIGHTED-
                                                            AVERAGE                   AVERAGE
                                              SHARES     EXERCISE PRICE   SHARES   EXERCISE PRICE
                                             ---------   --------------   ------   --------------
<S>                                          <C>         <C>              <C>      <C>
Outstanding at beginning of year...........         --       $  --            --       $  --
  Granted..................................  1,310,000        1.00        90,000        1.00
  Exercised................................         --          --            --          --
  Forfeited................................         --          --            --          --
                                             ---------                    ------
Outstanding at end of year.................  1,310,000       $1.00        90,000       $1.00
                                             ---------                    ------
Options exercisable at year end............    167,500       $1.00        22,500       $1.00
Weighted-average fair value of options
  granted during the year..................                  $0.26                     $0.52
</Table>

     Subsequent to December 31, 1999 and prior to the rights offering, DSI
issued approximately 1,011,000 stock options to employees at an average exercise
price of $1.00. The weighted-average fair value of the options granted during
this time was not material to the pro forma disclosures shown below. Since DSI
completed a rights offering as of May 1, 2000, and HTE did not own more than
twenty percent of DSI at December 31, 2000, no stock option information is
presented for DSI from May 1, 2000 through December 31, 2000.

     During the years ended December 31, 1999 and 2000, the compensation from
stock options of $13 and $19, respectively, was related to options granted to a
consultant and was calculated at the fair value using the Black-Scholes options
valuation model as described below. This expense is included in general and
administrative expenses in the consolidated statement of operations. There were
no related costs for the year ended December 31, 2001.

EMPLOYEE STOCK PURCHASE PLAN

     The Company adopted an Employee Stock Purchase Plan (ESPP) on July 23,
1997, which was approved by the stockholders in May 1998. The plan was effective
as of September 1, 1997, and has been designed to

                                       F-16
<PAGE>

qualify as an employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986, as amended. One million two hundred thousand shares are
reserved for issuance over the term of the plan, subject to periodic adjustment
for changes in the outstanding common stock occasioned by stock splits, stock
dividends, recapitalizations or other similar changes. The ESPP qualifies as a
non-compensatory plan under APB No. 25; therefore, the plan is not expected to
have any effect on the results of operations.

     Under the terms of the ESPP, employees can choose each year to have up to
25 percent of their annual base earnings withheld to purchase the Company's
common stock. The purchase price of the stock is 85 percent of the lower of its
beginning of period or end of period market price. As of December 31, 2001, 25
percent of the Company's employees participate in the plan. As of December 31,
2000 and 2001, there were 93,278 and 56,176 purchase rights outstanding. These
purchase rights were exercisable at the respective year-ends and had a
weighted-average exercise price of $0.77 and $1.70 as of December 31, 2000 and
2001, respectively. The weighted-average fair value of purchase rights granted
during 2000 and 2001 under the ESPP was $0.42 and $0.46, respectively. All
outstanding purchase rights at December 31, 2000 and 2001, were exercised in
January 2001 and 2002, respectively.

BLACK-SCHOLES OPTION PRICING MODEL

     The fair value of options granted during the fiscal years ended December
31, 1999, 2000 and 2001, reported below has been estimated at the date of grant
using a Black-Scholes option pricing model. The Black-Scholes option valuation
model was developed for use in estimating the fair value of traded options that
have no vesting restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective assumptions, including
the expected stock price volatility. The Company's options have characteristics
significantly different from those of traded options, and changes in the
subjective assumptions can materially affect the fair value estimate. The fair
value of each option grant was estimated on the date of grant based on the
following weighted-average assumptions for options granted during 1999, 2000 and
2001:
<Table>
<Caption>
                                                HTE PLAN                      DSI PLAN                ESPP
                               ------------------------------------------   ------------   ---------------------------
                                YEAR ENDED     YEAR ENDED     YEAR ENDED     YEAR ENDED     YEAR ENDED     YEAR ENDED
                               DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,   DECEMBER 31,
                                   1999           2000           2001           1999           1999           2000
                               ------------   ------------   ------------   ------------   ------------   ------------
<S>                            <C>            <C>            <C>            <C>            <C>            <C>
Expected life (in years).....        10              6              6            4.9             .3             .3
Weighted-average risk-free
  interest rate..............      5.19%          6.11%          5.08%          6.15%          4.97%          5.69%
Volatility -- employees......     238.5%         114.9%         104.8%            --          238.5%         114.9%
Dividend yield...............        --             --             --             --             --             --

<Caption>
                                   ESPP
                               ------------
                                YEAR ENDED
                               DECEMBER 31,
                                   2001
                               ------------
<S>                            <C>
Expected life (in years).....        .3
Weighted-average risk-free
  interest rate..............      2.80%
Volatility -- employees......     104.8%
Dividend yield...............        --
</Table>

PRO FORMA DISCLOSURES

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

<Table>
<Caption>
                                                              YEAR ENDED DECEMBER 31,
                                                             --------------------------
                                                               1999      2000     2001
                                                             --------   -------   -----
<S>                                                          <C>        <C>       <C>
Net income (loss):
  As reported..............................................  $(14,866)  $(3,381)  $ 865
  Pro forma................................................   (16,004)   (4,824)     (2)
Basic earnings (loss) per share:
  As reported..............................................  $  (0.86)  $ (0.19)  $0.05
  Pro forma................................................     (0.93)    (0.28)   0.00
Diluted earnings (loss) per share:
  As reported..............................................  $  (0.86)  $ (0.19)  $0.05
  Pro forma................................................     (0.93)    (0.28)   0.00
</Table>

                                       F-17
<PAGE>

     The effects of applying SFAS No. 123 on pro forma disclosures of net income
(loss) and per share amounts for the periods presented are not likely to be
representative of the pro forma effects on net income (loss) and per share
amounts in future years.

10. EMPLOYEE RETIREMENT PLAN

     The Company has established an employee retirement savings plan that covers
substantially all employees who have met certain service and age requirements.
Employees may contribute from 2 percent to 15 percent of their annual
compensation to the plan as limited by Internal Revenue Service regulations. The
Company will match contributions up to three percent of each individual's
compensation. Contributions made by the Company totaled $413, $482 and $402 for
the years ended December 31, 1999, 2000 and 2001, respectively, and are included
in general and administrative expenses in the accompanying consolidated
statements of operations.

11. CONTRACT JUDGMENT AND SETTLEMENT, EMPLOYEE TERMINATION BENEFITS AND OTHER
COSTS

     During the years ended December 31, 1999, 2000 and 2001, the Company
recorded a charge (benefit) of $12,927, $(1,131) and $1,030, respectively. These
amounts were primarily related to a contract judgment, a contract settlement,
employee termination benefits, and the discontinuance of product lines. As of
December 31, 2000 and 2001, charges of $920 and $173, respectively, remain in
accrued liabilities in the accompanying consolidated balance sheets.

CONTRACT JUDGMENT AND SETTLEMENT

     During the years ended December 31, 1999 and 2000, the Company recorded a
benefit and charge of $7,493 and $(2,234), respectively, related to a contract
judgment and a contract settlement. In 2000, the benefit included $(2,234)
related to a reduction in a judgment award. In 1999, the charge included $2,319
related to a write-off of certain assets related to the contract settlement and
contract judgment and $5,174 related to a judgment award. The judgment award is
included in accrued liabilities in the accompanying consolidated balance sheet
as of December 31, 1999.

EMPLOYEE TERMINATION BENEFITS

     During the years ended December 31, 1999, 2000 and 2001, the Company
recorded charges of $2,459, $622 and $659, respectively, related to employee
severance packages and benefits. After reviewing its staffing requirements, the
Company terminated employees across all areas of the Company.

DISCONTINUATION OF PRODUCT LINES

     During the years ended December 31, 1999, 2000 and 2001, and as a result of
the change in management and strategy, the Company decided to discontinue
several product lines. As a result of this decision, the Company recorded a
non-cash charge for the net book value of these product lines, which totaled
$1,138, $160 and $275 during the years ended December 31, 1999, 2000 and 2001,
respectively.

OTHER COSTS

     The remaining charges of $1,837, $321 and $96 in the years ended December
31, 1999, 2000 and 2001, respectively, primarily included costs associated with
certain lease termination costs, the closing of offices, a gain on the sale of
certain assets that had been written off as part of the first quarter 2000
re-alignment and offering costs.

                                       F-18
<PAGE>

12. INCOME TAXES

     The provision (benefit) for income taxes consists of the following for the
years ended December 31, 1999, 2000 and 2001:

<Table>
<Caption>
                                                                  DECEMBER 31,
                                                           --------------------------
                                                            1999       2000      2001
                                                           -------    -------    ----
<S>                                                        <C>        <C>        <C>
Current:
  Federal................................................  $    --    $    --    $ --
  State..................................................       --         --      --
                                                           -------    -------    ----
                                                                --         --      --
Deferred.................................................   (8,898)    (2,162)    577
                                                           -------    -------    ----
                                                           $(8,898)   $(2,162)   $577
                                                           =======    =======    ====
</Table>

     The provision (benefit) for income taxes differs from the amount computed
by applying the U.S. federal corporate tax rate of 34 percent to income before
provision (benefit) for income taxes for years ended December 31, 1999, 2000 and
2001, as follows:

<Table>
<Caption>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                              1999     2000     2001
                                                              -----    -----    -----
<S>                                                           <C>      <C>      <C>
U.S. federal income tax rate................................  34.00%   34.00%   34.00%
  State taxes...............................................   4.62     4.62     4.62
  Meals and entertainment...................................   0.76     2.04     3.52
  Other.....................................................  (1.94)   (1.66)   (2.13)
                                                              -----    -----    -----
Effective tax rate..........................................  37.44%   39.00%   40.01%
                                                              =====    =====    =====
</Table>

     Deferred income taxes consisted of the following as of December 31, 2001:

<Table>
<Caption>
                                                            CURRENT   NONCURRENT    TOTAL
                                                            -------   ----------   -------
<S>                                                         <C>       <C>          <C>
Tax assets:
  Net operating losses....................................  $   --     $ 5,412     $ 5,412
  Accrued liabilities.....................................     657          --         657
  Basis difference of Onvia/DSI...........................     548          --         548
  Allowance for doubtful accounts.........................     523          --         523
  Deferred lease commitment...............................      --         157         157
  Other intangible assets.................................      --          (5)         (5)
  Other...................................................       4          --           4
                                                            ------     -------     -------
     Total assets.........................................   1,732       5,564       7,296
                                                            ------     -------     -------
Tax liabilities:
  Basis difference in equipment, furniture and fixtures...      --        (272)       (272)
  Capitalized computer software development costs.........      --      (1,545)     (1,545)
                                                            ------     -------     -------
     Total liabilities....................................      --      (1,817)     (1,817)
                                                            ------     -------     -------
Net deferred tax asset....................................  $1,732     $ 3,747     $ 5,479
                                                            ======     =======     =======
</Table>

                                       F-19
<PAGE>

     Deferred income taxes consisted of the following as of December 31, 2000:

<Table>
<Caption>
                                                            CURRENT   NONCURRENT    TOTAL
                                                            -------   ----------   -------
<S>                                                         <C>       <C>          <C>
Tax assets:
  Net operating losses....................................  $   --     $ 5,882     $ 5,882
  Accrued liabilities.....................................   1,480          --       1,480
  Allowance for doubtful accounts.........................     779          --         779
  Deferred lease commitment...............................      --         173         173
  Other intangible assets.................................      --          74          74
  Other...................................................       4          --           4
                                                            ------     -------     -------
          Total assets....................................   2,263       6,129       8,392
                                                            ------     -------     -------
Tax liabilities:
  Basis difference in equipment, furniture and fixtures...      --        (317)       (317)
  Capitalized computer software development costs.........      --      (2,019)     (2,019)
                                                            ------     -------     -------
          Total liabilities...............................      --      (2,336)     (2,336)
                                                            ------     -------     -------
Net deferred tax asset....................................  $2,263     $ 3,793     $ 6,056
                                                            ======     =======     =======
</Table>

     The Company received a tax refund of $1,703 during the year ended December
31, 2000. In connection with the DSI rights offering, deferred tax assets of
$1,271 were transferred to DSI.

     As of December 31, 2001, the Company had net operating losses (NOL) for
federal tax purposes totaling $14,013 which may be used to offset future taxable
income, or, if unused, expire between 2019 and 2020. Management believes the
deferred tax asset related to the NOL is fully realizable.

13. COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

     The Company leases office space, furniture, an automobile and equipment
under certain long-term non-cancelable operating lease agreements with varying
terms and conditions.

     Future aggregate minimum rental payments under these agreements are as
follows as of December 31, 2001:

<Table>
<Caption>
YEAR ENDING DECEMBER 31,                                      AMOUNT
------------------------                                      ------
<S>                                                           <C>
2002........................................................  $2,126
2003........................................................   1,541
2004........................................................   1,508
2005........................................................   1,420
2006........................................................   1,310
Thereafter..................................................     631
                                                              ------
                                                              $8,536
                                                              ======
</Table>

     In April 1996, the Company entered into a lease agreement for the corporate
office in Lake Mary under a 10-year, non-cancelable operating lease, which began
on May 1, 1997. The lease agreement also provides the Company with three
five-year renewal options. The Company expenses the total estimated cash
payments on a straight-line basis over the life of the lease. The cumulative
difference between the amount expensed and the amount actually paid is recorded
as a deferred lease commitment on the accompanying consolidated balance sheets
as of December 31, 2000 and 2001. Rent expense under operating leases totaled
approximately $5,418, $4,710 and $4,443 for the years ended December 31, 1999,
2000 and 2001, respectively.

PRODUCT ROYALTY AGREEMENTS

     The Company has entered into several product royalty agreements with
various entities who have sold their application rights or product designs to
the Company. The majority of these agreements are similar in

                                       F-20
<PAGE>

nature in that they each state that royalties shall be paid on the basis of
applicable software license revenues collected by the Company. However, each
agreement may have a different percentage upon which the product royalty is
based. The Company accrues these product royalties as the applicable software
license revenues are recognized. The Company has recorded $18 and $69 as accrued
liabilities for product royalties as of December 31, 2000 and 2001,
respectively. Royalty expense was approximately $39, $5 and $119 for the years
ended December 31, 1999, 2000 and 2001, respectively, and is included in cost of
software licenses in the accompanying consolidated statements of operations.

EMPLOYMENT AGREEMENT

     Effective January 2000, the Company entered into an employment agreement
with Joseph M. Loughry III to serve as the President and Chief Executive
Officer. This agreement is for a term of four years. In the event the executive
is terminated "without cause" during the first two years, the executive is
entitled to receive nine months of continued salary and benefits. If the
executive is terminated "without cause" during the last two years, the executive
is entitled to receive six months of continued salary and benefits. Under the
agreement, the executive is entitled to receive annual bonuses up to 50 percent
of the base salary based on achieving goals set by the Board of Directors. The
Company also granted a total of 400,000 stock options to purchase the Company's
common stock. These options include both qualified and non-qualified options and
have various vesting schedules based on time and performance measures.

     As of December 31, 2001, the Company has entered into other various
employment agreements with certain key employees which call for salary
continuation and other severance benefits to be paid in the approximate
aggregate amount of $478 in the event such employees are terminated "without
cause."

PRODUCT LIABILITY

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

14. LITIGATION

     As described in the Company's Form 8-K and Form 10-Q filed with the
Securities and Exchange Commission on October 29, 2001 and November 13, 2001,
respectively, the Company redeemed 5,618,952 shares of its common stock (the
"Redeemed Shares") from Tyler for a purchase price of $7,305 (the "Redemption").
Tyler purchased the Redeemed Shares in 1999 in a control shares acquisition, as
defined in Florida's control shares statute. The Company effected the Redemption
in accordance with the requirements of Florida's control shares statute. The
Redemption reduced the number of the Company's issued and outstanding shares of
common stock from 16,960,557 to 11,341,605 as of October 29, 2001. Tyler
subsequently sent a letter to the Company and issued a press release on October
30, 2001 asserting that it continued to be a shareholder of the Company and that
the Redemption was not valid and contrary to Florida law. The Company reaffirms
that under Florida law, the Redeemed Shares are no longer considered issued and
outstanding and all rights with respect to them have ceased. Accordingly, in
order to legally confirm the Redemption, the Company filed an action for a
Declaratory Judgment, which is now pending before the Federal District Court for
the Middle District of Florida in Orlando, Florida. If the redemption is
confirmed, but at a higher price than the Company paid for the redeemed shares,
the Company will be required to draw such funds from its cash reserves and/or
from its line of credit.

                                       F-21
<PAGE>

     The Company is a party to some contracts which may result in financial
penalties in the event of non-performance. Management anticipates that these
penalties, if any, will not have a material adverse effect on the Company's
financial position or operating results.

     In the normal course of business, the Company is subject to various claims
and legal actions. The Company provides for losses, if any, in the year in which
they can be reasonably estimated. The Company is not aware of any other legal
proceedings or claims that it believes are likely to have a material effect on
its financial position or operating results.

15. RELATED PARTIES

     One of the Company's directors has performed certain legal services for the
Company through his law firm, for which the Company paid approximately $192,
$189 and $108 during fiscal 1999, 2000 and 2001, respectively.

     In November 2000, the Company entered into an agreement with Mark H.
Leonard, Constellation Software, Inc. and its Board of Directors (the
"Agreement"), pursuant to which Mr. Leonard was appointed to the Company's Board
of Directors (the "Board") for a two-year term expiring on the date of the
annual meeting in 2002. Since Constellation Software, Inc. competes with the
Company with respect to some of its products and services, the Agreement limits
Mr. Leonard's access to and disclosure of confidential competitive information
of the Company and requires Constellation Software, Inc. to vote its shares
consistent with the recommendation of the Company's Board during Mr. Leonard's
term as a director of the Company or 90 days after resignation, whichever is
earlier. In addition, it requires all directors to vote consistent with the
recommendation of the Board and limits the transfer of the Company's shares
owned by Constellation Software, Inc. for that same period. The Agreement also
limits the number of shares Constellation Software, Inc. and the directors can
purchase and any involvement with proxy solicitation without prior written
consent of the Company until the day after the annual meeting in 2002. Mr.
Leonard resigned from the Company's Board effective October 11, 2001. The
Agreement terminates after the annual meeting on June 12, 2002.

16. SUPPLEMENTAL NONCASH TRANSACTIONS

     The Company includes depreciation on certain equipment in the costs
capitalized as computer software development costs. During the years ended
December 31, 1999, 2000 and 2001, depreciation of $420, $447 and $119,
respectively, was capitalized as computer software development costs.

     In 1999, the Company purchased certain assets of IOD for $1,000 in cash.
Additionally, the Company accrued fees related to a legal judgment with the City
of Tacoma, Washington. This case was settled in 2000 and was subsequently
reclassed to a note payable for the year ended December 31, 2000.

     In 2000, DSI completed a rights offering of its common stock which was
effective as of May 1, 2000. As a result, the Company recorded a reduction of
cash of $923.

     In 2001, the Company recorded a loss on investment of $1,888. In addition,
the Company sold selected assets of a subsidiary for a gain of $81.

                                       F-22
<PAGE>

     The acquisitions, reclassification and spin-off had the following non-cash
effect of increasing (decreasing) the following accounts for the years ended
December 31, 1999, 2000 and 2001:

<Table>
<Caption>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                               1999     2000      2001
                                                              ------   -------   ------
<S>                                                           <C>      <C>       <C>
Trade accounts receivable...................................  $   --   $   (23)  $   --
Other current assets........................................      --        86        4
Note receivable.............................................      --     1,750      (10)
Equipment, furniture and fixtures...........................      --      (296)      34
Other intangible assets.....................................   1,173      (834)      --
Deferred income taxes.......................................      --    (1,271)      --
Investment..................................................      --     2,164    1,516
Deposits....................................................      --        (9)       4
Accounts payable............................................      --      (623)      --
Accrued liabilities.........................................      --    (1,529)      --
Deferred revenue............................................     173      (306)    (113)
Note payable................................................      --     1,250       --
Additional paid in capital..................................      --       (32)      --
Unrealized loss on investment...............................      --       586      372
Equity from investment in subsidiary........................      --     2,470       --
</Table>

                                       F-23
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
NUMBER                                    NAME
------                                    ----
<C>      <C>  <S>
 1.1     --   Form of Underwriting Agreement(1)
 3.1     --   Amended Articles of Incorporation(1)
 3.11    --   Articles of Amendment to Articles of Incorporation(2)
 3.2     --   Amended and Restated Bylaws(1)
10.1     --   Registrant's 1997 Employee Incentive Compensation Plan, as
              amended(3)
10.2     --   Registration Rights Agreement(1)
10.3     --   Form of Stock Option Agreement(1)
10.4     --   Form of Indemnification Agreement between the Registrant and
              each of its Directors and certain executive officers(1)
10.5     --   Form of Employment Agreement for L.A. Gornto, Jr.(1)
10.6     --   Form of Employment Agreement for certain other employees(1)
10.7     --   Lease agreement (Heathrow International Business Center,
              Lake Mary, Florida)(1)
10.8     --   1997 Employee Stock Purchase Plan, as amended(4)
10.9     --   Agreement and Plan of Merger (acquisition of UCS, Inc.)(5)
10.10    --   Amendment to Agreement and Plan of Merger (acquisition of
              UCS, Inc.)(5)
10.11    --   Employment Agreement with Joseph M. Loughry, III(6)
10.12    --   Employment Agreement with Ronald E. Goodrow(6)
10.13    --   Employment Agreement with Susan D. Falotico(6)
10.14    --   Employment Agreement with Gilbert O. Santos(6)
10.15    --   Employment Agreement with William C. Barnett(6)
10.16    --   Amendment to the Employment Agreement with Joseph M.
              Loughry, III(7)
10.17    --   Form of Amendment to the Employment Agreements Ronald E.
              Goodrow, Susan D. Falotico, Gilbert O. Santos, and William
              C. Barnett(7)
10.18    --   Agreement, dated as of November 16, 2000, by and between the
              Registrant, Constellation Software, Inc., Mark Leonard, and
              the Directors of the Registrant(7)
10.19    --   Letter Agreement, dated February 25, 2001, between the
              Registrant and Constellation Software, Inc.(7)
10.20    --   Letter Agreement, dated April 19, 2001, between the
              Registrant and Constellation Software, Inc.(7)
21.0     --   Subsidiaries of the Registrant(7)
23.1     --   Consent of Arthur Andersen LLP(7)
99.1     --   Letter to the Securities and Exchange Commission(7)
</Table>

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

(1) Incorporated by reference to Registrant's Form S-1 Registration Statement
    (File No. 333-22637).
(2) Incorporated by reference to Registrant's Form 10-Q for the quarter ended
    June 30, 1998.
(3) Incorporated by reference to Registrant's Form S-8 Registration Statement
    filed December 22, 2000 (File No. 333-52552)
(4) Incorporated by reference to Registrant's Form S-8 Registration Statement
    filed December 22, 2000 (File No. 333-52566)
(5) Incorporated by reference to Registrant's Form 8-K dated June 1, 1998.
(6) Incorporated by reference to Registrant's Form 10-K dated March 29, 2001.
(7) Filed herewith.