<PAGE>   1
================================================================================
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark one)
[X]            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1999

                                       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 0-20034

                          ELITE INFORMATION GROUP, INC.
             (Exact name of registrant as specified in its charter)

          DELAWARE                                      41-1522214
          --------                                      ----------
(State or other jurisdiction                         (I.R.S. Employer
     of incorporation or                            Identification No.)
       organization)

  5100 WEST GOLDLEAF CIRCLE
   LOS ANGELES, CALIFORNIA                                90056
   -----------------------                                -----
    (Address of principal                               (Zip code)
     executive offices)

                                 (323) 642-5200
                                 --------------
              (Registrant's telephone number, including area code)

        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 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 [ ] .

        As of November 1, 1999 there were 9,316,623 shares of Common Stock, $.01
par value, outstanding.

================================================================================

                                  Page 1 of 14


<PAGE>   2
                          ELITE INFORMATION GROUP, INC.
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                              PAGE
                                                                             NUMBER
                                                                             ------
<S>                                                                          <C>
PART I FINANCIAL INFORMATION:

Item 1. Financial Statements

        Consolidated Statement of Operations -
           Three and nine months ended September 30, 1999
           and September 30, 1998                                               3

        Consolidated Balance Sheet -
           September 30, 1999 and December 31, 1998                             4

        Consolidated Statement of Cash Flows -
           Nine months ended September 30, 1999 and
             September 30, 1998                                                 5

        Notes to Consolidated Financial Statements                            6 - 7

Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations                        7 - 11

Item 3. Quantitative and Qualitative Disclosures about Market Risk             11


PART II OTHER INFORMATION:

Item 6. Exhibits and Reports on Form 8-K                                       12

SIGNATURE                                                                      13
</TABLE>


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


PRODUCTS MENTIONED IN THIS REPORT ARE USED FOR IDENTIFICATION PURPOSES ONLY AND
MAY BE TRADE NAMES OR TRADEMARKS OF ELITE INFORMATION GROUP, INC., ITS
SUBSIDIARIES OR THIRD PARTIES.

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



                                       2
<PAGE>   3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.

                          Elite Information Group, Inc.
                      Consolidated Statement of Operations
                      (In thousands, except per share data)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                          Three months ended                 Nine months ended
                                                                              September 30,                    September 30,
                                                                         1999             1998             1999             1998
                                                                       --------         --------         --------         --------
<S>                                                                    <C>              <C>              <C>              <C>
Net revenue                                                            $ 15,381         $ 12,385         $ 43,770         $ 31,578
                                                                       --------         --------         --------         --------

Operating expenses:
  Cost of revenue                                                         8,974            7,643           25,330           20,640
  Research and development                                                1,125              825            3,140            1,999
  Sales and marketing                                                     2,203            2,310            7,033            5,924
  General and administrative                                              1,437            1,703            5,197            4,900
                                                                       --------         --------         --------         --------
       Total operating expenses                                          13,739           12,481           40,700           33,463
                                                                       --------         --------         --------         --------
Operating income (loss)                                                   1,642              (96)           3,070           (1,885)
Loss on disposition of non-strategic business unit                           --               --             (295)              --
Interest income, net                                                        354              246              777              730
                                                                       --------         --------         --------         --------
Income (loss) from continuing operations before income taxes              1,996              150            3,552           (1,155)
Income tax (provision) benefit for continuing operations                   (779)             (11)          (1,548)              80
                                                                       --------         --------         --------         --------
Income (loss) from continuing operations                                  1,217              139            2,004           (1,075)
                                                                       --------         --------         --------         --------
Discontinued Operations:
  Income (loss) from discontinued operations, net of tax
    (provision) benefit                                                      --           (2,851)            (382)          (4,304)
  Gain on sale of discontinued operations, net of tax provision              --               --            4,919               --
                                                                       --------         --------         --------         --------
Net income (loss)                                                      $  1,217         $ (2,712)        $  6,541         $ (5,379)
                                                                       -=======         ========         ========         ========

Net income (loss) per share - continuing operations
    - Basic                                                            $   0.15         $   0.02         $   0.24         $  (0.12)
    - Diluted                                                          $   0.14         $   0.02         $   0.23         $  (0.12)

Net income (loss) per share - discontinued operations
    - Basic                                                            $     --         $  (0.33)        $  (0.05)        $  (0.48)
    - Diluted                                                          $     --         $  (0.33)        $  (0.04)        $  (0.48)

Net income per share - gain on sale of discontinued operations
    - Basic                                                            $     --         $     --         $   0.59         $     --
    - Diluted                                                          $     --         $     --         $   0.58         $     --

Net income (loss) per share
    - Basic                                                            $   0.15         $  (0.31)        $   0.79         $  (0.60)
    - Diluted                                                          $   0.14         $  (0.31)        $   0.77         $  (0.60)

Weighted average shares outstanding
    - Basic                                                               8,322            8,765            8,283            9,023
    - Diluted                                                             8,604            8,765            8,535            9,023

</TABLE>


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


                                       3
<PAGE>   4
                          Elite Information Group, Inc.
                           Consolidated Balance Sheet
                 (In thousands, except share and per share data)


<TABLE>
<CAPTION>
                                                                             September 30,   December 31,
                                                                                 1999             1998
                                                                             -------------   ------------
                                                                              (Unaudited)
<S>                                                                          <C>             <C>
Assets
Current assets:
    Cash and cash equivalents                                                 $   30,448       $   15,273
    Receivables                                                                   21,077           28,417
    Deferred income taxes                                                          4,236            6,131
    Other current assets                                                             810            1,930
                                                                              ----------       ----------
        Total current assets                                                      56,571           51,751
Property and equipment                                                             1,611            5,167
Software costs                                                                       975            3,309
Intangible assets                                                                  3,775            4,782
Other assets                                                                         246               87
                                                                              ----------       ----------
                                                                              $   63,178       $   65,096
                                                                              ==========       ==========

Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable-trade                                                    $    4,654       $    5,070
    Accrued compensation                                                           2,901            3,974
    Other accrued liabilities                                                      4,917            4,758
    Deferred revenue                                                              15,858           22,710
    Income taxes payable                                                             791            1,169
                                                                              ----------       ----------
        Total current liabilities                                                 29,121           37,681
                                                                              ----------       ----------
Deferred income taxes                                                                924            1,392
                                                                              ----------       ----------
Other liabilities                                                                    244            1,004
                                                                              ----------       ----------
Stockholders' equity:
    Common stock, $.01 par value; Authorized 20,000,000 shares; Issued
    shares were 9,291,873 and 9,228,623, respectively                                 92               92
    Paid-in capital                                                               39,202           38,696
    Less treasury stock, at cost, 950,743 shares and 1,038,552
      shares, respectively                                                        (4,604)          (5,427)
    Accumulated deficit                                                           (1,801)          (8,342)
                                                                              ----------       ----------

        Total stockholders' equity                                                32,889           25,019
                                                                              ----------       ----------
                                                                              $   63,178       $   65,096
                                                                              ==========       ==========
</TABLE>


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


                                       4


<PAGE>   5
                          Elite Information Group, Inc.
                      Consolidated Statement of Cash Flows
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                               Nine months ended
                                                                                September 30,
                                                                             1999            1998
                                                                          --------         --------
<S>                                                                       <C>              <C>
Cash flows from operating activities:
    Net income (loss)                                                     $  6,541         $ (5,379)
    Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
        Depreciation and amortization                                        2,770            3,990
        Deferred income taxes                                                1,427           (1,076)
        Restructuring charge                                                     -              639
        (Gain) loss on disposition of non-strategic business units             295           (1,762)
        Gain on sale of discontinued operations                             (4,919)               -
        Changes in assets and liabilities excluding effects of
          disposition of non-strategic business units
                Receivables                                                  1,940           11,270
                Accounts payable - trade                                     1,052           (2,632)
                Accrued compensation                                           748              419
                Deferred revenue and customer deposits                      (1,979)           2,971
                Income taxes                                                  (378)          (2,589)
                Other, net                                                     316              151
                                                                          --------         --------
        Net cash provided by operating activities                            7,813            6,002
                                                                          --------         --------

Cash flows provided (used) by investing activities:
    Purchase of property and equipment                                        (558)          (2,646)
    Investment in software costs                                                 -             (838)
    Net proceeds from sale of discontinued operations                        8,619                -
    Cash used in disposition of non-strategic business units                  (699)               -
                                                                          --------         --------
        Net cash provided (used) by investing activities                     7,362           (3,484)
                                                                          --------         --------
Cash flows used by financing activities:
    Payments of notes payable and long-term debt                                 -             (138)
    Purchase of treasury stock                                                   -           (4,935)
                                                                          --------         --------
        Net cash used by financing activities                                    -           (5,073)
                                                                          --------         --------

Net increase (decrease) in cash and cash equivalents                        15,175           (2,555)
Cash and cash equivalents, beginning of period                              15,273           17,965
                                                                          --------         --------
Cash and cash equivalents, end of period                                  $ 30,448         $ 15,410
                                                                          ========         ========
</TABLE>


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


                                       5


<PAGE>   6
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                   (UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION:

        For the periods presented, the consolidated financial statements of
Elite Information Group, Inc. ("Elite" or the "Company") reflect as continuing
operations the results of operations and financial position of the Company's
wholly owned subsidiary Elite Information Systems, Inc. During the third quarter
of 1999, the Company began start-up operations of its new Elite.com subsidiary,
the results for which are included in the third quarter financial statements.
During the second quarter of 1999 the Company sold its Customer Relationship
Management business ("CRM") (see Note 3). The operating results for CRM are
presented in the Consolidated Statement of Operations as discontinued operations
and prior periods have been restated to reflect the Company's continuing
operations. Also, effective March 5, 1999 the Company sold all of the
outstanding shares of The Minicomputer Company of Maryland, Inc. ("TMC") to a
holding company owned by TMC management.

        The consolidated financial statements of the Company include all
adjustments of a normal recurring nature which, in the opinion of management,
are necessary for a fair presentation of financial position as of September 30,
1999 and results of operations and cash flows for the interim periods presented.
The results of operations for the three months and nine months ended September
30, 1999 are not necessarily indicative of the results to be expected for the
entire year.

        The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, certain information and footnotes required by
generally accepted accounting principles are not included herein. These interim
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 1998 as
reported by the Company in its Annual Report on Form 10-K.

        Certain prior year amounts have been reclassified to conform with
current year presentation.

NOTE 2 - CORPORATE NAME CHANGE:

        On May 27, 1999, the Company's stockholders approved an amendment to the
Company's Certificate of Incorporation to change its name to Elite Information
Group, Inc., from Broadway & Seymour, Inc. The name change became effective on
May 27, 1999. The Company also changed its NASDAQ trading symbol to ELTE and
will continue to trade as a National Market Issue on the NASDAQ under ELTE.

NOTE 3 - DISCONTINUED OPERATIONS:

        On May 19, 1999 the Company sold its Customer Relationship Management
business, based in Charlotte, NC, to Science Applications International
Corporation ("SAIC"). During the second quarter ended June 30, 1999, the Company
recorded a gain on sale of discontinued operations of $4.9 million, after an
income tax provision of $2.9 million, related to this disposition. The gain on
sale included certain transaction costs and reserve provisions associated with
the sale. The Company received approximately $14.3 million in cash proceeds from
the transaction.

        Operating results for CRM are classified as discontinued operations on
the Company's Consolidated Statement of Operations. Revenue applicable to
discontinued operations for the current year through the May 19, 1999 sale was
$10,911,000. Revenue totaled $5,120,000 for the third quarter and $19,112,000
for the nine months ended September 30, 1998. Income (loss) from discontinued
operations for 1999 is net of an income tax benefit of $(222,000). Income (loss)
from discontinued operations is net of income tax benefits of $(1,216,000) and
$(2,537,000) for the three and nine months ended September 30, 1998,
respectively.


                                       6


<PAGE>   7
NOTE 4 - SHAREHOLDER RIGHTS PLAN:

        On April 13, 1999, the Board of Directors of the Company implemented a
shareholder rights plan and declared a dividend of one preferred share purchase
right (a "Right") for each outstanding share of common stock, par value $.01 per
share, of the Company. The dividend was paid on April 26, 1999, to the
stockholders of record on that date. Each Right entitles the registered holder
to purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company (the
"Preferred Stock") at a price of $22.00 per one one-hundredth of a share of
Preferred Stock, subject to adjustment. The description and terms of the Rights
are set forth in a Rights Agreement, dated as of April 14, 1999, as the same may
be amended from time to time, between the Company and EquiServe Trust Company,
N.A., as Rights Agent.

NOTE 5 - CREDIT FACILITY:

        The Company recently made the decision to change banking relationships
and chose not to renew its two-year, $15 million revolving credit facility,
which the Company allowed to expire in October 1999. The Company is in the
process of negotiating a new revolving credit facility with another financial
institution, which the Company expects to be effective in the fourth quarter of
1999.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

RESULTS OF OPERATIONS:

        The consolidated financial statements of Elite Information Group, Inc.
("Elite" or the "Company") reflect as continuing operations the results of
operations and financial position of the Company's wholly owned subsidiary Elite
Information Systems, Inc. During the third quarter of 1999 the Company began
operations of its new Elite.com subsidiary, and incurred start-up expenses of
approximately $600,000 for the quarter. During the second quarter of 1999 the
Company sold its Customer Relationship Management business ("CRM") (see Note 3
of Notes to Consolidated Financial Statements included in Item 1.). The
operating results for CRM are presented on the Consolidated Statement of
Operations as discontinued operations and prior periods have been restated to
reflect the Company's continuing operations. Also, effective March 5, 1999 the
Company sold all of the outstanding shares of The Minicomputer Company of
Maryland, Inc. ("TMC") to a holding company owned by TMC management.

        On May 19, 1999 the Company sold its Customer Relationship Management
business, based in Charlotte, NC, to Science Applications International
Corporation ("SAIC"). During the second quarter ended June 30, 1999, the Company
recorded a gain on sale of discontinued operations of $4.9 million, after an
income tax provision of $2.9 million, related to this disposition. The gain on
sale included certain transaction costs and reserve provisions associated with
the sale. The Company received approximately $14.3 million in cash proceeds from
the transaction.

        Based in Los Angeles, California, Elite provides a comprehensive suite
of financial and practice management software applications for law firms and
other professional service organizations of all sizes. Elite's applications
include integrated time and billing systems, general ledger, accounts payable
and practice management solutions such as marketing and contact management,
records management and case management. Elite also offers consulting services to
the professional services markets. Elite's software products are often sold with
related services to aid the customer in implementation, data conversion and user
training efforts.

        The Company's revenue increased $3.0 million (24%) to $15.4 million in
the third quarter of 1999 from $12.4 million in the third quarter of 1998.
Revenue for the first nine months of 1999 increased $12.2 million (39%) to $43.8
million compared to $31.6 million for the same period of 1998. Revenue growth
during the third quarter and first nine months of 1999 was greatly influenced by
the higher levels of orders received during 1998, which were 67% above the
amount of orders signed during 1997. Management believes that the increase in
contract signings in 1998 was due in part to Elite's introduction of products
utilizing a wider variety of database platforms and enhancements to existing
product functionality. The Year 2000 issue may have also focused an increasing
number of professional service firms on replacing


                                       7


<PAGE>   8
their existing systems by the end of 1999. The continued expansion of Elite's
customer base has also increased customer support, training and maintenance
revenue.

        The Company's signed contract backlog totaled $13.7 million as of
September 30, 1999, compared to a record $26.4 million as of December 31, 1998.
Backlog represents the amount of unearned software license and implementation
revenue on signed customer contracts.

        Gross profit, which represents net revenue less cost of revenue, for the
three months ended September 30, 1999 was $6.4 million, an increase of 35% over
the $4.7 million in the same period of 1998. The Company's gross margin percent
was 41.7% for this year's third quarter compared to 38.3% for the same period
last year. For the nine months ended September 30, 1999, gross profit was $18.4
million (or 42.1% of revenue), an increase of 69% from $10.9 million (or 34.6%
of revenue) for the same period of 1998. The Company's cost of revenue consists
primarily of expenses for deployable resources such as implementation personnel
and contract labor, salaries and related expenses for the Company's customer
support department, and amounts paid to third party software vendors. Elite's
higher 1999 gross margin percent principally reflects improvements in the
Company's revenue mix combined with the effect of added efficiency in its
contract implementation function.

        Research and development expenses for this year's third quarter
increased $.3 million to $1.1 million (or 7.3% of revenue) from $.8 million (or
6.7% of revenue) in 1998. For the nine months ended September 30, 1999, research
and development expenses increased $1.1 million to $3.1 million (or 7.2% of
revenue) from $2.0 million (or 6.3% of revenue) in the same period of 1998.
Research and development expenses consist primarily of salaries and expenses of
the Company's development personnel and outside consultants. The third quarter
1999 increase over the same period of last year can be attributed primarily to
start-up costs related to the Company's Elite.com subsidiary. The higher
expenses for the first nine months of 1999 also reflect ongoing efforts to
develop the next version of the Elite suite of products, based on an advanced
object-oriented architecture with enhanced usability features. The Company is
committed to maintaining its research and development efforts so it can continue
to provide marketable software solutions as the needs of its customer base and
target markets change. For the first nine months of 1999 no software development
costs were capitalized. During the third quarter and first nine months of 1998,
$.1 million and $.2 million of costs were capitalized, respectively.

        Sales and marketing expenses decreased $.1 million in the third quarter
to $2.2 million (or 14.3% of revenue) from $2.3 million (or 18.7% of revenue) in
same period of 1998. For the first nine months of 1999, sales and marketing
expenses increased $1.1 million to $7.0 million (or 16.1% of revenue) from $5.9
million (or 18.8% of revenue) in the same period last year. Sales and marketing
expenses consist primarily of salaries, commission, travel and promotional
expense. The third quarter 1999 decrease in sales and marketing expenses
compared to the prior year is primarily due to lower commissions and incentives
related in part to lower contract signing volume. The expense increase through
the first nine months in 1999 over the same period in 1998 is principally
related to added headcount and increased commissions and incentive awards
related to the growth in revenue.

        General and administrative expenses decreased $.3 million to $1.4
million (or 9.3% of revenue) in the third quarter of 1999 from $1.7 million (or
13.8% of revenue) in third quarter of last year. For the nine months ended
September 30, 1999, general and administrative expenses increased $.3 million to
$5.2 million (or 11.9% of revenue) from $4.9 million (or 15.5% of revenue) in
the first nine months of 1998. General and administrative expenses consist
primarily of salaries of corporate executive, legal, financial and human
resources personnel as well as professional fees and insurance costs.

        The decrease in general and administrative expenses in the third quarter
of 1999 versus the prior year is primarily related to lower salaries and other
costs following the sale of the Company's CRM business (see Note 3 of Notes to
Consolidated Financial Statements included in Item 1.). This reduction was
partially offset by certain one-time costs incurred in the quarter for outside
consulting services. Higher general and administrative expenses for the first
nine months of this year compared to the same period in 1998 are primarily the
result of one-time pretax charges in the second quarter of 1999 totaling
approximately $350,000 related to transferring the corporate functions from the
Company's former corporate headquarters in Charlotte, NC, to its Los Angeles
office, as well as costs related with changing the Company's name (see Note 2 of
Notes to Consolidated Financial Statements included in Item 1.).

        The Company sold its CRM business in the second quarter of 1999 and
therefore had no results from discontinued operations for the third quarter. The
Company reported a loss from discontinued operations for 1999 year-to-date of
$.4 million. This compares to losses of $2.9 million and $4.3 million for third
quarter and first nine months of 1998. In the


                                       8


<PAGE>   9
second quarter of this year the Company recorded a one time, non-recurring,
after-tax gain on the sale of discontinued operations related to the sale of its
CRM business of $4.9 million. See Note 3 of Notes to Consolidated Financial
Statements included in Item 1 for a more detailed explanation of the Company's
discontinued operations.

        The provision for income taxes on continuing operations for the three
and nine months ended September 30, 1999 of $.8 million and $1.5 million,
respectively (39% and 44% of continuing operations pre-tax income, respectively)
exceeds the income tax expense at the statutory rates for this period primarily
due to the permanent difference of non-deductible goodwill amortization, stock
compensation expense, and state income taxes. The reduced income tax provision
for the third quarter of 1999 is due to a year to date adjustment in the
Company's effective tax rate based on current profit expectations for the year.
The income tax provision on continuing operations for the third quarter of 1998
was $11,000 (representing 7% of the continuing operations pre-tax income). For
the nine months ended September 30, 1998 the Company recorded an income tax
benefit on continuing operations of $80,000 (representing 7% of the continuing
operations pre-tax loss). The Company believes that the effective tax rate in
1999 will remain higher than the statutory rate due to the ongoing
non-deductible goodwill amortization.

YEAR 2000 COMPLIANCE:

        Overview

        Many software products, custom-developed software, and products embedded
with microprocessor chips were designed to store, process or perform
calculations using only the last two digits of a four-digit year date, for
example, "98" rather than "1998". These software systems and embedded products
may assume the first two digits of the year date to be "19" and as such they may
not be able to process dates with years following 1999. For example, "00" may be
treated by certain software systems as the year 1900 rather than the year 2000.
Results of this failure to process the date correctly could include
miscalculations, unpredictable or inconsistent results or complete system
failures. As a software vendor, the so-called "Year 2000 compliance" issue is an
issue that the Company must address with respect to its products as well as
software and systems provided by others that the Company uses internally.

        State of Readiness

        The Company has recognized the need to address the Year 2000 compliance
issue and in 1997 established a Year 2000 compliance committee to supervise and
monitor the planning, performance and assessment of the Company's Year 2000
compliance efforts. This committee has involved members of senior management,
product development leaders, information systems management, facilities
management and corporate finance management in efforts to develop a
comprehensive and coordinated Year 2000 compliance effort. The Company's Year
2000 Project Manager periodically reports plans, progress and issues to
executive management.

        Beginning in the second half of 1997, the Company began developing an
inventory list of all its proprietary software products, third party products it
incorporates in its products or resells, infrastructure and internal use
products, facilities and office service systems and hardware products upon which
it relies. Upon completion of the inventory list, the Company's Year 2000
committee appointed individual team leaders from various functional areas to be
responsible for the efforts of assessing Year 2000 compliance for each of the
inventory list items.

        Proprietary Software Products and Custom Developed Software: In 1997,
the Company adopted the widely accepted definition for Year 2000 readiness set
out in the "Compliance with British Standards Institution DISC PD2000-1 for Year
2000". In May 1998, following a period of assessment and testing, the Company
issued its Year 2000 readiness statement which specifically identified the
current versions of each of the Company's proprietary products that met the
adopted standard. The Company continues to test new versions of its products for
compliance with this standard on an ongoing basis. The Company believes that its
current versions of proprietary software products are Year 2000 compliant;
however, no assurance can be given that additional modifications for Year 2000
compliance will not be necessary. The Company's software products are integrated
with its customers' software and hardware systems and have, in many cases, been
uniquely customized to the customers' specifications. The Company has generally
not tested its products as integrated in its customers' operating environments.
The customers' systems with which the Company's products interoperate may not be
Year 2000 compliant which may affect the operation of the Company's products. As
a result the Company, in the course of providing its software maintenance
services, may incur costs in ascertaining the cause(s) of system failures not


                                       9


<PAGE>   10
caused by its own products. Such costs, if any, that the Company may incur are
not estimable, but will generally be charged to customers.

        Some of the Company's former customers and current customers presently
use earlier versions of the Company's software products and/or associated custom
code, that are not Year 2000 compliant. The Company has made efforts to
communicate with these customers to advise them that they will need to upgrade
to a Year 2000 compliant version of the Company's software product, revise
custom code or implement other alternatives to meet their business needs.
Customers paying support fees are entitled to receive software product upgrades
as part of their regular maintenance contracts. Customers who have not
maintained support agreements with the Company may purchase such upgrades after
purchasing maintenance contracts. Changes to custom code provided by the Company
that is not Year 2000 compliant are not covered by customer maintenance
agreements. Customers may perform necessary Year 2000 changes to such code
themselves or engage third parties to perform the changes. Customers may need to
upgrade third party products and their host software and hardware systems that
share data or interoperate with the Company's products in order to utilize the
Company's software upgrades or modified custom or systems integration code. Such
costs could impact customer purchasing decisions and may lead customers to
choose alternatives to the Company's products or services.

        Third Party Products: Third party products integrated within the
Company's products are included in the test plans and compliance efforts that
the Company already has underway for its own products. In addition, the Company
has obtained certification of Year 2000 compliance from most third party vendors
whose products are integrated in the Company's products or that are resold by
the Company.

        Infrastructure and Third Party Products Used Internally: The Company has
obtained certification of Year 2000 compliance from each of the vendors of its
internal use information technology systems. The Company has developed test
plans for these internal use systems following the same guidelines and standards
that it has used for its own products. The Company has developed test plans for
all critical internal use technology systems and the testing of these systems
will continue through 1999.

        The Company has developed a contingency plan against Year 2000 failure
for its mission critical software applications, hardware and other systems.

        The majority of non-information technology systems on which the Company
relies in its operations are owned and managed by the lessors of the buildings
in which the Company's offices are located. The Company has developed checklists
of critical systems upon which it relies and certification documents have been
sought from its lessors and other appropriate providers as applicable regarding
Year 2000 compliance of their systems.

        Risks and Costs

        Because of the nature of the Company's business, the Company may be
subject to Year 2000 claims or litigation by: its customers; customers of
divested businesses, where the Company retained potential product liabilities,
including the CRM business; or other parties. Many customers will incur
significant costs in making their information processing systems Year 2000
compliant and may seek to transfer such costs through litigation to information
processing industry vendors such as the Company. Although the ultimate outcome
of any litigation is uncertain, the Company does not believe that the ultimate
amount of liability, if any, from such actions would have a material adverse
effect on the Company.

        The Company believes that Year 2000 issues may affect the purchasing
patterns of its customers and potential customers in a variety of ways. Many
companies are expending significant amounts and rededicating personnel to
correct or patch their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase software products
such as those offered by the Company. It is possible that certain of the
Company's customers are purchasing support contracts with the intent of
discontinuing such support after January 1, 2000 when they have satisfied
themselves that the supported product is Year 2000 compliant. Additionally, Year
2000 compliance issues could cause a significant number of companies, including
current Company customers, to reevaluate their current system needs and as a
result to consider switching to other systems or suppliers.

        The Company has not specifically hired additional personnel or made
material purchases of products to address Year 2000 compliance issues, nor does
the Company expect it will be necessary to do so. The expenditures made to date
have principally related to salary costs of existing personnel assigned to
participate at various levels in the Company's


                                       10


<PAGE>   11
compliance efforts and costs associated with upgrading certain business systems.
All costs related to achieving Year 2000 compliance are being expensed as
incurred. The Company estimates that the costs incurred to date related to Year
2000 compliance efforts range between $.5 and $1.0 million. The Company expects
to continue to test current and new versions of its proprietary software, work
with vendors of third party software that the Company uses or resells, update
and test its inventory of potentially affected internal systems and communicate
with vendors and customers regarding the Year 2000 compliance issue. The Company
estimates the costs of these efforts will be below $.5 million.

FINANCIAL POSITION:

        The Company's cash and cash equivalents totaled $30.4 million at
September 30, 1999, which included approximately $8.6 million of net cash
proceeds from the sale of the CRM business after income tax and other
transaction related payments. The Company generated positive cash flow from
operating activities of approximately $7.8 million and $6.0 million for the nine
months ended September 30, 1999 and 1998, respectively. Working capital at
September 30, 1999 was $27.5 million compared to $14.1 million at December 31,
1998.

        The Company recently made the decision to change banking relationships
and chose not to renew its two-year, $15 million revolving credit facility,
which the Company allowed to expire in October 1999. The Company is in the
process of negotiating a new revolving credit facility with another financial
institution, which the Company expects to be effective in the fourth quarter of
1999.

        Management believes that the Company's cash and cash equivalent
balances, anticipated cash flow from operations and other external sources of
available credit will be sufficient to meet the Company's future cash
requirements.

FORWARD LOOKING STATEMENTS:

        This Quarterly Report on Form 10-Q may contain certain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended, and Section 27A of the Securities Act of 1933, as amended,
that represent the Company's expectations or beliefs concerning future events or
projected financial results. Such forward-looking statements are about matters
that are inherently subject to risks and uncertainties. Factors that could
influence the matters discussed in certain forward-looking statements include
the timing and amount of revenue that may be recognized by the Company,
continuation of current expense trends, absence of unforeseen changes in the
Company's markets, continued acceptance of the Company's existing services and
products in the Company's existing markets and the acceptance of these services
and products in new markets, the ability to timely complete the development of
new products and services, customer acceptance of new products and services and
general changes in the economy, Year 2000 risks discussed in the "Year 2000
Compliance" section of this 10Q report, as well as matters discussed in "Risks
and Uncertainties" in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998. There can be no assurance that such future events or
projected results will be achieved and actual results could differ materially.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        The Company has limited exposure to market risk for changes in interest
rates related to the Company's cash and cash equivalents. The Company maintains
an investment policy designed to ensure the safety and preservation of its cash
and cash equivalents by limiting default risk, market risk and reinvestment risk
by depositing its cash and cash equivalents in major financial institutions.


                                       11


<PAGE>   12
PART II - OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS:


<TABLE>
<CAPTION>
  Exhibit No.                      Description
  -----------                      -----------
<S>              <C>
11               Computation of earnings per share

27               Financial Data Schedule, which is submitted electronically to the
                 Securities and Exchange Commission for information only and not
                 filed.
</TABLE>


(b) REPORTS ON FORM 8-K:

    None.


                                       12


<PAGE>   13
                                    SIGNATURE

        Pursuant to the requirements of Section 13 or 15(d) 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.


                                    ELITE INFORMATION GROUP, INC.

Date:   November 11, 1999           By:     Barry D. Emerson
                                        ----------------------------------
                                        Barry D. Emerson, Vice President,
                                        Treasurer, Chief Financial Officer


                                       13