<PAGE>

                                                                 EXHIBIT 13.2

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

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain statements 
of operations data as a percentage of total revenues:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Years Ended December 31,                1998           1997           1996
-----------------------------------------------------------------------------
<S>                                    <C>            <C>            <C>
Revenues:
  Software license fees                 25.8%          31.1%          38.4% 
  Services and post-contract 
    customer support                    64.5           65.0           61.0
  Hardware and other                     9.7            3.9            0.6
                                       -----          -----          -----
     Total revenues                    100.0          100.0          100.0

Operating expenses:
  Cost of software license fees          1.5            2.3            1.4
  Cost of services and post-
    contract customer support           43.0           61.0           58.4
  Cost of hardware and other             8.1            3.4              -
  Sales and marketing                   16.2           23.5           24.0
  Product development                   10.1           12.1           21.1
  General and administrative            12.4           17.7           20.3
  Write-off of purchased research
    and development                        -              -            9.5
  Restructuring and severance costs        -              -            2.8
                                       -----          -----          -----
     Total operating expenses           91.3          120.0          137.5 

Income (loss) from operations            8.7          (20.0)         (37.5)
Other income                             0.7            1.4            4.1
                                       -----          -----          -----
Income (loss) before provision 
    for income taxes                     9.4          (18.6)         (33.4)
Provision for income taxes               0.3              -              -
                                       -----          -----          -----
Net income (loss)                        9.1%         (18.6)%        (33.4)%
                                       =====          =====          =====
</TABLE>

<PAGE>

The following discussion contains forward-looking statements that are subject 
to risks and uncertainties that could cause actual results to differ 
materially from those anticipated by such statements. (These statements use 
words such as "anticipate," "believe," "estimate," "expects," or "future," or 
may be identified as "the Company expects" or "the Company believes" or 
otherwise stated as the Company's predictions for the future.) These 
statements, as with any predictions of the future, involve certain risk 
factors beyond the Company's control. The Company's actual results may differ 
materially from the results discussed in the forward-looking statements, and 
any such differences could have a material negative impact on the Company's 
share price. Factors that might cause such a difference include, but are not 
limited to, a decrease in demand for the Company's WMS products, delays in 
the timely availability of new features and releases of the Company's 
products, a too rapid increase in the Company's level of spending, actions 
taken by competitors, technological changes, those herein identified, those 
discussed in the Company's Registration Statement on Form SB filed with the 
SEC, and other factors identified from time to time as risks in the Company's 
reports filed with the SEC.

TOTAL REVENUES

The Company's revenues are derived from software license fees, services and 
post-contract customer support (PCS), and hardware sales and other. Total 
revenues increased by 6.4% to $22.5 million in 1997, and by 50.6% to $33.9 
million in 1998. The slower growth in total revenues in 1997 was due 
primarily to a nearly complete turnover of the Company's sales force during 
that period. The following table sets forth, by category, revenues and 
percentage change year over year for the years indicated:  

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
                                 Net Revenues          Percentage Change
                                (In thousands)          (Year over Year)
                            1998     1997     1996       1998      1997
-----------------------------------------------------------------------------
<S>                       <C>      <C>      <C>         <C>       <C>
Software license fees     $ 8,741  $ 7,007  $ 8,132      24.7%    (13.8)%
Services and PCS           21,890   14,637   12,902      49.6      13.4
Hardware and other          3,282      881      132     272.5     567.4
</TABLE>

International revenues decreased 8.6% from $4.6 million in 1996 to $4.2 
million in 1997 and increased by 56.1% to $6.5 million in 1998. International 
revenues accounted for 21.6%, 18.6%, and 19.3% of total revenues in 1996, 
1997, and 1998, respectively. The decrease in percentage of total revenues in 
1996 and 1997 occurred primarily because two large European projects nearing 
completion were not replaced with new projects of a comparable size. 
International revenues grew in 1998 by 56.1%, primarily due to substantial 
business in Canada during 1998, where the Company had sales of $2.0 million. 
In addition, the Company had sales of $1.0 million in Holland, where the 
first WMS site for a major customer in that country recently went live. 

<PAGE>

In early 1998, the Company decided that direct sales of its products in 
most foreign markets had both high cost and high risk. A decision was made to 
close the direct sales offices in Brazil, France, and Holland and focus on 
creating a global network of Value Added Resellers (VARs) who would sell, 
translate, and implement the WMS products in their respective countries. This 
strategy reduced cost and risk substantially, while offering a good 
opportunity to sell in those markets. This has proven to be a successful 
strategy for the Company for the past several years in Italy. The Company now 
has such VAR relationships either in place or in progress in Europe, the 
Middle East, South America, and Asia, and has plans for further expansion 
elsewhere. The Company believes that future international revenues should 
remain constant or increase slightly as a percentage of total revenues.

SOFTWARE LICENSE FEES

Software license fee revenues consist of revenues from software license 
agreements of Catalyst WMS, related add-on products, and relational database 
management systems (RDBMS). Software license fee revenues decreased by 13.8% 
to $7.0 million in 1997 and increased by 24.7% to $8.7 million in 1998. The 
decrease in software license fee revenues in 1997 was due in part to the 
fewer number of software licenses sold which resulted from a nearly complete 
turnover of the Company's sales force. The increase in software license fee 
revenues in 1998 was due to the higher number of new orders received and the 
sale of additional site licenses to existing customers.

Through December 31, 1997, the Company recognized both software license 
fees and modifications revenue using the straight-line method over the 
installation period. Beginning in January 1998, the Company changed these 
procedures to comply with Statement of Position 97-2, "Software Revenue 
Recognition," issued by the American Institute of Certified Public 
Accountants, and now uses contract accounting procedures based upon 
percentage of completion for all projects requiring "significant" 
modifications to the software. Revenue for projects with no modifications or 
modifications costing less than 5% of the software license fee are recognized 
upon delivery of the software, to the extent that payment is fixed and 
determinable and payment is likely due within 120 days. The Company does not 
believe that this change in revenue recognition procedures has had a material 
impact on the recognition of revenue, nor does it believe it will have a 
material impact on the recognition of future revenue. The Company believes 
that license fee revenues should increase in the future due to increased 
worldwide sales and marketing efforts, the maturation of its new sales force, 
its new products and efforts aimed at new markets, and continued market 
acceptance of Catalyst WMS. 

SERVICES AND PCS

Services and PCS revenues are derived from software modifications, 
professional services, and PCS agreements. Services and PCS revenues 
increased by 13.4% to $14.6 million in 1997 and by 49.6% to $21.9 million in 
1998. The following table sets forth the components of services and PCS 
revenues as a percentage of total revenues for the years indicated:

<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
                                       1998          1997          1996
-----------------------------------------------------------------------------
<S>                                    <C>           <C>           <C>
Software modifications                 15.0%         25.7%         28.6%
Professional services                  32.5          23.1          19.6
PCS agreements                         17.0          16.2          12.8
                                       ----          ----          ----
Total services and PCS                 64.5%         65.0%         61.0%
</TABLE>
<PAGE>

Software modifications are determined during the customer's Conference Room 
Pilot (CRP) and consist of changes to the software to facilitate specific 
functionality a customer desires. The Company believes that while a certain 
amount of software modifications will continue, future modifications revenues 
as a percentage of total revenues will decrease due to the increased 
functionality of its newer releases of Catalyst WMS. As is indicated by the 
1997 and 1998 trends, the Company believes that the percentages which 
software modifications represent of total revenues will continue to decrease 
in the future.

Professional services revenues are derived from training, technical 
services, performance of the CRP, on-site support, project management, and 
implementation services. While the Company continues to improve its Catalyst 
Implementation Methodology and Plan (CIMPL), professional services revenues 
will continue to increase, partially because of increased daily rates the 
Company is now charging for its services, and also because the Company 
expects to continue implementing new customer sites and current customer 
multi-site roll-outs. The increase in 1998 professional services revenue was 
due to the higher number of new orders, the impact of higher daily rates for 
services, and an effort on the part of the Company to sell upgrades, 
training, and other services to existing customers. Revenue for professional 
services is recognized based on the number of days of work actually 
performed.

Customers typically enter into a one-year agreement for PCS at the time 
they first license Catalyst WMS and, once installed, pay for the first year 
of PCS fees in advance. The increase in PCS revenues in 1997 and 1998 was due 
primarily to growth in the installed customer base for Catalyst WMS and 
current customers renewing their PCS agreements. Revenue on PCS is recognized 
ratably over the term of the PCS agreement, which is generally one year. The 
Company believes that PCS revenues will increase in the future as more 
Catalyst WMS systems are implemented, resulting in the execution of 
corresponding PCS agreements along with the renewal of existing PCS 
agreements.

HARDWARE AND OTHER

Hardware and other revenues consist of products that the Company sold to 
its customers on behalf of other manufacturers, including computer hardware, 
radio frequency equipment, and printers. Hardware and other revenues 
increased by 567.4% to $881,000 in 1997 and by 272.5% to $3.3 million in 

<PAGE>

1998. The increase in hardware and other revenue in 1997 and 1998 is due to 
the resale of hardware to meet a desire by certain customers for a "turnkey" 
solution.
 
COST OF SOFTWARE LICENSE FEES

Cost of software license fees consists of the cost of third-party software 
licenses sold by the Company. The cost of software license fees was $288,000, 
$524,000, and $525,000 in 1996, 1997, and 1998, respectively. There was no 
cost of software license fees for the Catalyst WMS due to the fact that costs 
to develop this product have been expensed as incurred, because the Company's 
product development efforts have been directed at enhancing and improving the 
product. 

The Company expects to continue to expense the cost of developing new 
releases of the Catalyst UNIX WMS and related products and therefore 
anticipates that the cost of software license fees for those products and 
their related RDBMS software in the future will remain approximately the same 
as a percentage of total software license fee revenues. However, in 
connection with the acquisition of the Company's new NT-based WMS product in 
1998, certain amounts were capitalized based on an independent valuation of 
the assets acquired. Subsequent costs of $302,000 expended to complete this 
product were capitalized in 1998, and similar but probably smaller amounts 
may also be capitalized in the future. Upon general release of the NT-based 
WMS product, these amounts will be amortized over the future anticipated life 
of the product, and will be expensed as costs of software license fees.

COST OF SERVICES AND PCS

Cost of services and PCS consists primarily of personnel costs for the 
performance of software modifications, professional services, and PCS. Cost 
of services and PCS as a percentage of total services and PCS revenues were 
95.9%, 93.9%, and 66.6% in 1996, 1997, and 1998, respectively. The increase 
in cost of services and PCS in 1996 and 1997 was attributable to increased 
staffing of the Company's service and support organizations, coupled with 
below-market pricing for these services. In mid-1997, the Company raised its 
daily rate for services to market levels, which resulted in the profitability 
improvements shown above.

  The Company anticipates that, while the total number of employees in its 
service and support organization may increase, the future cost of services 
and PCS as a percentage of services and PCS revenues should decrease as a 
result of increased rates which the Company will receive for performing 
services and improved efficiencies in providing such services.

COST OF HARDWARE AND OTHER

Cost of hardware and other consists primarily of the cost of products sold by 
the Company on behalf of other manufacturers. There was no cost of hardware 
and other expense in 1996 because of the Company's decision not to sell 
hardware at that time. The only hardware and other revenue for that period 
consisted of miscellaneous commissions and sales of user manuals. In mid-
1997, the Company changed its strategy regarding hardware, and began to offer 
select items to its customers who were looking for a turnkey solution. 
Because of low margins, the Company does not inventory, service, or discount 

<PAGE>

these items, but makes them available if a customer desires a turnkey 
solution. Several sales were made in late 1997 with a cost of $766,000 and a 
profit margin of 13.1%. Sales made in 1998 had a cost of $2.8 million and a 
profit margin of 15.9%. The Company expects these sales to increase in future 
periods with similar or improved margins.

SALES AND MARKETING

Sales and marketing expenses consist primarily of salaries and commissions 
paid to sales personnel along with marketing, promotional, and travel 
expenses. Sales and marketing expenses increased by 4.2% to $5.3 million in 
1997 and by 3.8% to $5.5 million in 1998. In general, the increase in sales 
and marketing expenses in each year was due to the expansion of the Company's 
sales and marketing staff and increased marketing and promotional expenses in 
the domestic and international markets. Sales and marketing expenses 
represented 24.0%, 23.5%, and 16.2% of total revenues in 1996, 1997, and 
1998, respectively. These expenses were a lower percentage in 1998 due to the 
large increase in revenue. The marketing component of this expense category 
increased 38.5% in 1998 over the previous year, but in total, the combined 
expense did not grow more than 3.8% due to the savings realized by the 
closing of several of the Company's foreign sales offices. It is the 
intention of the Company to reinvest these savings into more marketing 
efforts, a larger domestic direct sales force, and the development of a 
global VAR organization.

PRODUCT DEVELOPMENT

Product development costs include expenses associated with research and 
development, including costs of engineering personnel and related development 
expenses such as development software tools, training, and documentation. 
Product development costs decreased by 38.9% to $2.7 million in 1997 and 
increased 24.9% to $3.4 million in 1998. In April 1996, the Company purchased 
Information Strategies, Incorporated (ISI) (an NT-based WMS software 
company). The Company abandoned and discontinued development of the ISI 
product in early 1997 when it realized that further development costs would 
far exceed the value of the product. The growth in research and development 
expenditures in 1998 reflects the Company's efforts to expand its product 
offering into vertical markets, to develop new products suitable for the mid-
tier market, and to continuously improve upon and add additional 
functionality to its existing products. Product development costs represented 
21.1%, 12.1%, and 10.1% of total revenues in 1996, 1997, and 1998, 
respectively. The Company believes that product development costs should 
increase as a percentage of total revenues in the future.

GENERAL AND ADMINISTRATIVE

General and administrative expenses consist primarily of the salaries of 
administrative, executive and finance personnel. General and administrative 
expenses decreased by 7.3% to $4.0 million in 1997 and increased by 5.1% to 
$4.2 million in 1998. General and administrative expenses represented 20.3% 
of total revenues in 1996, 17.7% in 1997, and 12.3% in 1998. In 1997, the 
size of the administrative staff was decreased as a result of a 
restructuring. In 1998, general and administrative expenses were higher due 
to the inclusion of management bonuses, an increase in the Company's matching 

<PAGE>

percentage for employee 401(k) contributions, and the amortization of 
intangible assets recorded in the purchase of Kearney Systems, Inc. (KSI). 
The Company expects that general and administrative expenses may increase in 
the future, but should continue to decrease as a percentage of total 
revenues.

TREATMENT OF ACQUISITION COSTS

In August 1998, in a non-related party transaction, the Company acquired 
100% of the stock of KSI in exchange for approximately 143,000 shares of the 
Company's stock. The Company acquired KSI in order to obtain KSI's NT-based 
WMS software, which had been in development for several years. The 
acquisition was treated as a purchase. Based upon an independent valuation of 
the intangible assets of KSI, the NT-based WMS software was valued at 
$723,000. This value was capitalized by the Company because the software was 
determined to have reached technological feasibility and to have substantial 
future value to the Company.  While the technological feasibility of the NT-
based WMS product had been established prior to the KSI purchase, the product 
did require further development of functionality in order to meet the needs 
of the first beta customer. These development efforts were completed by a 
team of Catalyst and KSI developers and the beta product was successfully 
installed at the customer in mid-December, 1998. Costs of $302,000 related to 
the completion of the development were capitalized at year-end and added to 
the value of the product recorded upon the purchase of KSI. General release 
of the NT-based WMS product is expected in 1999.

OTHER INCOME AND EXPENSE

Other income and expense consists primarily of interest income and interest 
expense and does not have a material impact on operating results. The Company 
expects other income and expense to remain relatively constant in the future 
since invested cash balances are increasing but interest rates earned have 
been decreasing.

INCOME TAX EXPENSE

In 1996 and 1997, no income tax expense was recorded as the Company 
incurred a net loss for both financial and income tax reporting purposes. In 
1998, the Company was not subject to regular federal income taxes, because it 
had approximately $8.2 million in net operating loss carryforwards. However, 
because of its 1998 net income, Catalyst was subject to an alternative 
minimum tax (AMT), an income tax on its UK subsidiary, and certain state tax 
amounts. No net deferred tax expense was recorded in any of the three years 
reported as the Company continues to record a valuation allowance to reserve 
for the net deferred tax asset.

LIQUIDITY AND CAPITAL RESOURCES

The Company used cash of $14.3 million in 1996, of which $3.3 million was 
used in operating activities, mostly due to a net loss of $7.1 million for 
the year. Also in 1996, $3.6 million was used for capital expenditures and 
the purchase of ISI, and $7.0 million was used to purchase common stock for 
the treasury due to stock repurchase transactions. In 1997, the Company used 
$5.1 million in cash, of which $3.2 million was used in operating activities 

<PAGE>

(largely relating to a $4.2 million net loss for the year), $770,000 was used 
for capital expenditures, and $1.1 million was used to purchase treasury 
stock from the Company's former president and chief executive officer. In 
1998, the Company generated $4.3 million in cash, of which $5.0 million was 
generated by operating activities, and $800,000 was used for capital 
expenditures and capitalization of software development costs. In addition, 
cash of $335,000 was generated by the employees' exercise of stock options.

Capital expenditures totaled $2.1 million, $770,000, and $505,000 in 1996, 
1997, and 1998, respectively. In 1996, an increase in employees led to a 
higher level of expenses related to equipment, software, and furniture. In 
1997, the Company upgraded certain of its computer and internal network 
equipment, which it financed under capital leases. As of December 31, 1997, 
the aggregate amount owing under capital leases, including interest, was 
$589,000. As of December 31, 1998, the aggregate amount owing under capital 
leases, including interest, was $879,000. The Company anticipates making 
similar expenditures for new hardware during 1999. Such expenditures will be 
funded from cash flows from operations and from additional capital leases.

During 1996, the Company instituted a stock buy-back program through which 
it purchased approximately 234,000 shares of its common stock at various 
market prices. The aggregate cash used to purchase the stock was $1.2 
million. In November 1996, the Company redeemed approximately 1.2 million 
shares of its common stock from Summit Partners for $5.7 million in cash. In 
January 1997, the Company redeemed approximately 226,000 shares of its common 
stock as a part of a negotiated agreement between the Company and its former 
president and chief executive officer. At this time, the Company does not 
anticipate purchasing additional shares of its common stock in the open 
market, or concluding any redemptions of its common stock, in the foreseeable 
future. In 1998, the Company issued approximately 143,000 shares of its 
common stock previously held in treasury for the purchase of KSI.

As of December 31, 1998, the Company had $8.6 million in cash and cash 
equivalents and working capital of $9.5 million. In addition, the Company has 
a $1.0 million line of credit (the "Revolving Credit Facility") with Bank 
One, Milwaukee, Wisconsin, N.A. As of December 31, 1998, there were no 
amounts outstanding under the Revolving Credit Facility. 

At December 31, 1998, accounts receivable increased by 20.1% or $1.6 
million, compared to December 31, 1997. This increase was due to the higher 
level of revenues recognized by the Company. At December 31, 1998, the 
Company had reserves of $534,000 for doubtful accounts and $700,000 for known 
and estimated project cost overruns. This compares to $339,000 and $700,000 
for the same reserve amounts at December 31, 1997. The Company feels it has 
adequately provided for potential risks.

The Company believes that liquidity provided by cash generated from its 
ongoing operations, existing cash balances, and borrowings under the 
Revolving Credit Facility will be sufficient to meet the Company's currently 
anticipated working capital and capital expenditure requirements through 
1999.

The Company has never paid cash dividends on its common stock. The 
Company's policy has been to retain cash from operations to provide funds for 

<PAGE>

the operation and expansion of its business. Accordingly, the Company does 
not anticipate paying cash dividends in the foreseeable future.

IMPACT OF YEAR 2000

The Year 2000 issue is the result of computer programs using two digits 
rather than four to define the applicable year. Any of the Company's computer 
programs, either internal or sold to customers, that have time-sensitive 
software may recognize a date using "00" as the year 1900 rather than the 
year 2000. This could result in a system failure or miscalculations causing 
disruptions of operations, including, among other things, a temporary 
inability to process transactions, send invoices, or engage in normal 
business activities.

The Company's primary software offering, the Catalyst WMS, is written to 
store the year in the database using four digits to allow data entry in an 
unambiguous manner and to process program functions in four digits. The 
Company has certified that its most recent product offerings, Flowthrough 
Release 6.0/Build 17, Release 7.0/Build 8, and later releases of the Catalyst 
WMS, are Year 2000 compliant. The Company has extensively tested these 
releases and has not to date found any material errors which could affect 
Year 2000 compliance. Because the Catalyst WMS was originally developed using 
four digit coding, the Company does not expect problems with the Year 2000 
compliance of prior releases of the Catalyst WMS. However, due to the fact 
that the Catalyst WMS is integrated with different combinations of third 
party software and hardware products, any Year 2000 problem occurring within 
these third party software and hardware products may impact the operation of 
the Catalyst WMS which, in turn, may lead to claims against the Company. The 
potential for and outcome of such claims and impact on the Company cannot be 
estimated at this time.

In mid-1997, the Company began a proactive program of offering to its 
existing customers assistance in assessing whether the customer's fully 
integrated system is Year 2000 compliant and coordinating the remediation of 
non-compliant systems. The Company has contacted all customers with pre-
release 7.0 of the Catalyst WMS and notified them that, because their systems 
interface with third party software and hardware products, their entire 
system should be reviewed for compliance. This effort is ongoing and certain 
customers have retained the Company to perform an assessment of and/or 
coordination of the remediation work for their entire system.

With respect to the Company's internal computer systems and equipment, the 
Company continues to conduct a comprehensive review to ensure that all such 
systems are, or prior to the end of 1999 will be, Year 2000 compliant. The 
Company's Year 2000 readiness plan includes the following phases: (i) 
conducting an inventory of the Company's internal systems, including 
information technology systems and non-information technology systems (which 
include office and facilities' environment-related systems) and the systems 
acquired or to be acquired by the Company from third parties; (ii) assessing 
and prioritizing any required remediation; (iii) remediating any problems by 
repairing or, if appropriate, replacing the non-compliant systems; (iv) 
testing of all remediated systems; and (v) developing a contingency plan. The 
Company has completed its inventory and assessment phases of this plan and is 
actively engaged in completing the remaining phases. The Company expects to 
complete all phases of its readiness plan before the end of 1999.

<PAGE>

In addition to assessing its internal systems, the Company has initiated 
communications with its vendors, service providers, and third party business 
partners to assess their Year 2000 readiness. Many of these entities have 
responded in writing to the Company's Year 2000 readiness inquiries. The 
Company plans to continue assessing its vendors, service suppliers, and third 
party business partners to ensure Year 2000 readiness. Despite the Company's 
diligence, there can be no guarantee that the non-compliant systems of other 
entities which the Company relies upon in its day to day operations will not 
have a material adverse impact on the Company. The actual impact on the 
Company resulting therefrom cannot be determined at this time.

To date, the Company has expended approximately $250,000 in conjunction 
with its Year 2000 readiness plan. The Company expects that the cost of 
completing this Year 2000 readiness plan, including replacement of all 
necessary computer systems, will not exceed an additional $100,000.

The Company has limited the scope of its risk assessment to those factors 
upon which it can reasonably be expected to have an influence. The Company 
has made the assumption that government agencies, utility companies, and 
national telecommunication providers will continue to operate. The lack of 
such services could have a material impact on the Company's ability to 
operate; however, the Company has little, if any, ability to influence such 
an outcome, or to make alternative arrangements in advance for such services 
if they are unavailable. Additionally, the Company believes that disruptions 
in the economy generally resulting from Year 2000 issues could have a 
material adverse impact on the Company. The amount of potential liability or 
loss of revenue to the Company cannot be reasonably estimated at this time. 
 
During the first quarter of 1999, the Company intends to retain an external 
auditor to review the procedures used by the Company in assessing its Year 
2000 readiness. Upon completion of this external audit, the Company intends 
to address any potential exposures raised by the auditors and commence 
developing its Year 2000 contingency plan. The Company believes that this is 
an appropriate time frame for developing the contingency plan and that 
efforts prior to that time should be focused on the remediation and testing 
phases of the Company's Year 2000 readiness plan. 

The information contained herein, as well as all information previously 
filed by the Company regarding its Year 2000 readiness, are designated as 
Year 2000 readiness disclosures as defined by the Year 2000 Information and 
Readiness Disclosure Act.

ECONOMIC AND MONETARY UNION IN EUROPE (EMU)

EMU refers to the movement toward economic and monetary union in Europe 
with the ultimate goal of introducing a single currency called the euro. 
While the European monetary union will have profound financial and political 
implications, the Company believes that the formation of EMU will not impact 
the Company's earnings in any material way.

<PAGE>

QUARTERLY RESULTS

  The following table sets forth unaudited statements of operations data for 
each of the quarters in the years ended December 31, 1997 and 1998. This 
unaudited quarterly information has been prepared on the same basis as the 
annual information presented elsewhere herein and, in the Company's opinion, 
includes all adjustments (consisting only of normal recurring entries) 
necessary for a fair presentation of the information for the quarter 
presented. The operating results for any quarter are not necessarily 
indicative of the results for any future period.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
Quarters Ended                    Dec.     Sept.    June     Mar.     Dec.     Sept.    June     Mar.
                                   31,      30,      30,      31,      31,      30,      30,      31,   
                                  1998     1998     1998     1998     1997     1997     1997     1997
-----------------------------------------------------------------------------
(In thousands, except per share data)
<S>                              <C>       <C>      <C>      <C>      <C>      <C>      <C>      <C>
Revenues:
  Software license fees          $2,661    $2,311   $1,662   $2,107   $2,067   $1,781   $1,863  $1,296
  Services and post-contract 
    customer support              6,310     5,180    5,298    5,123    4,525    4,118    3,169    2,825
  Hardware and other                837     1,329      881      235      626      253        -        2
                                  -----     -----    -----    -----    -----    -----    -----    -----
    Total revenues                9,808     8,819    7,821    7,465    7,218    6,152    5,032    4,123

Operating expenses:
  Cost of software license fees     178       187      128       32      234        5      188       97
  Cost of services and post-
    contract customer support     3,717     3,695    3,447    3,724    3,786    3,700    3,363    2,896
  Cost of hardware and other        807     1,064      680      208      536      230        -        -
  Sales and marketing             1,439     1,182    1,447    1,424    1,266    1,405    1,371    1,249
  Product development             1,034       814      866      698      605      568      615      943
  General and administrative      1,163     1,048      848    1,118      771      933    1,004    1,267
                                  -----     -----    -----    -----    -----     -----    -----    -----
    Total operating expenses      8,339     7,990    7,416    7,204    7,198    6,841    6,541    6,452
                                  -----     -----    -----    -----    -----    -----    -----    -----
Income (loss) from operations     1,468       829      405      261       20     (689)  (1,509)  (2,329)
Other income                         88        57       41       31      128       52       54       74
                                  -----     -----    -----    -----    -----    -----    -----    -----
Income (loss) before provision 
  for income taxes                1,556       886      446      292      148     (637)  (1,455) (2,255)
Provision for income taxes          100         -        -        -        -        -        -       -
                                  -----     -----    -----    -----    -----    -----    -----   -----
Net income (loss)                $1,456    $  886   $  446   $  292   $  148   $ (637) $(1,455)$(2,255)
                                  -----     -----    -----    -----    -----    -----    -----   -----
Net income (loss) per share      $ 0.19    $ 0.12   $ 0.06   $ 0.04   $ 0.02   $(0.10)  $(0.22) $(0.34)
                                  -----     -----    -----    -----    -----    -----    -----   -----
Shares used in computing net 
  income (loss) per share         7,517     7,377    7,426    6,988    7,035    6,644    6,633    6,591

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