<PAGE>   1

                                   FORM 10-Q/A

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                 AMENDMENT NO. 2

(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, 1998

                                       OR

   [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

For the transition period from  _______ to _______

Commission File Number: 000-23453

                        FLEXIINTERNATIONAL SOFTWARE, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                                           <C>
                           Delaware                                                         06-1309427
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)                (I.R.S. EMPLOYER IDENTIFICATION NO.)

              Two Enterprise Drive, Shelton, CT                                                06484
           (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                                          (ZIP CODE)
</TABLE>

                                 (203) 925-3040
              (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 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   [ ]

As of September 30, 1998, there were 17,331,122 shares of FlexiInternational
Software, Inc. Common Stock outstanding.


<PAGE>   2


RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION

As a result of the Company's regular quarterly financial statement review with
its independent accountants in the second quarter of 1999, the Company
determined that it would restate the amounts originally reported for 1998 and
the first quarter of 1999, to reflect a change in the revenue recognition for
several software license contracts. Most of the restated amounts relate to two
contracts that the Company believes were appropriately due and payable under
their contractual terms but payments with respect to which, in the second
quarter of 1999, became subject to dispute by the contracting parties. The
Company has restated its financial statements for the three and nine months
ended September 30, 1998 (See Note 7 to the Company's condensed consolidated
financial statements).

This Amendment No. 2 of Quarterly Report on Form 10-Q/A amends and restates
Items 1 and 2 and Exhibit 27.1 of the Company's previously filed Quarterly
Report on Form 10-Q filed on November 16, 1998, and amended by Amendment No. 1
of Quarterly Report on Form 10-Q/A filed on January 28, 1999.


<PAGE>   3





                        FLEXIINTERNATIONAL SOFTWARE, INC.

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

           Condensed Consolidated Balance Sheet...............................2

           Condensed Consolidated Statement of Operations.....................3

           Condensed Consolidated Statement of Cash Flows.....................4

           Condensed Consolidated Statement of Stockholders' Equity...........5

           Notes to Condensed Consolidated Financial Statements...............6

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

PART II. OTHER INFORMATION

         Signature...........................................................16




                                       1
<PAGE>   4




PART I.  FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                        FLEXIINTERNATIONAL SOFTWARE, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                 September 30,   December 31,
                                                                                                 -------------   ------------
                                                                                                     1998            1997
                                                                                                 -------------   ------------
                                                                                                 (restated, see    (audited)
                                                                                                      note 7)
<S>                                                                                                <C>             <C>
         ASSETS
         ------
Current assets:
  Cash and cash equivalents                                                                        $ 17,352        $ 24,622
  Accounts receivable, net of allowance for doubtful
    accounts of $812 and $672, respectively                                                           8,565           8,571
  Prepaid expenses and other current assets                                                           1,176           1,143
                                                                                                   --------        --------
          Total current assets                                                                       27,093          34,336

Property and equipment at cost, net of accumulated depreciation
  and amortization of $2,733 and $1,392, respectively                                                 2,483           1,222
Acquired software, net of accumulated amortization of $108 and $0, respectively (see Note 3)          2,052              --
Goodwill, net of accumulated amortization of $283 and $0, respectively (see Note 3)                   5,384              --
Other assets, net of accumulated amortization of $215 and $197, respectively                            217             112
                                                                                                   --------        --------
          Total assets                                                                             $ 37,229        $ 35,670
                                                                                                   ========        ========
         LIABILITIES AND STOCKHOLDERS' EQUITY
         -------------------------------------
Current liabilities:
  Accounts payable and accrued expenses                                                            $  6,781        $  4,409
  Current portion of capital lease obligations                                                          408             206
  Short-term debt                                                                                     1,450              --
  Deferred revenues                                                                                   4,053           3,045
                                                                                                   --------        --------
          Total current liabilities                                                                  12,692           7,660

Long-term portion of capital lease obligations                                                          705             304
                                                                                                   --------        --------

          Total liabilities                                                                          13,397           7,964
                                                                                                   --------        --------

Stockholders' equity:
  Common stock: $.01 par value; 50,000,000 shares authorized;
    issued shares - 17,383,133 and 16,492,008,  respectively and
    outstanding shares - 17,331,122 and 16,492,008 respectively                                         174             165
  Additional paid-in capital                                                                         56,308          49,749
  Currency translation adjustment                                                                        18              --
  Common stock in treasury at cost - 52,011 and 0 shares, respectively                                 (277)             --
  Accumulated deficit                                                                               (32,391)        (22,208)
                                                                                                   --------        --------
          Total stockholders' equity                                                                 23,832          27,706
                                                                                                   --------        --------

          Total liabilities and stockholders' equity                                               $ 37,229        $ 35,670
                                                                                                   ========        ========
</TABLE>




     See accompanying notes to condensed consolidated financial statements.




                                       2
<PAGE>   5




                        FLEXIINTERNATIONAL SOFTWARE, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                    Three Months Ended September 30,    Nine Months Ended September 30,
                                                    --------------------------------    -------------------------------
                                                          1998             1997              1998               1997
                                                        -------           ------           --------           -------
                                                       (Restated,                         (Restated,
                                                      see Note 7)                         see Note 7)

<S>                                                     <C>               <C>              <C>                <C>
Revenues:
  Software license                                      $ 1,653           $4,541           $  8,454           $ 7,362
  Service and maintenance                                 4,129            2,397             10,109             5,098
                                                        -------           ------           --------           -------
          Total revenues                                  5,782            6,938             18,563            12,460

Cost of revenues:
  Software license                                          203              160              1,334               619
  Service and maintenance                                 3,248            1,622              7,107             3,499
                                                        -------           ------           --------           -------
          Total cost of revenues                          3,451            1,782              8,441             4,118

Operating expenses:
  Sales and marketing                                     3,160            1,992              7,908             5,306
  Product development                                     3,053            1,906              7,379             5,972
  General and administrative                              2,452              597              3,869             1,699
  Acquired in-process research &
    Development (see Note 3)                                 --               --              1,890                --
                                                        -------           ------           --------           -------
Total operating expenses                                  8,665            4,495             21,046            12,977
                                                        -------           ------           --------           -------

Operating (loss) income                                  (6,334)             661            (10,924)           (4,635)

Interest income                                             254               32                824                98
Interest expense                                            (28)             (57)               (70)             (103)
                                                        -------           ------           --------           -------
(Loss) income before provision for income taxes          (6,108)             636            (10,170)           (4,640)

Provision for income taxes                                   --               --                 --                --
                                                        -------           ------           --------           -------

Net (loss) income                                       $(6,108)          $  636           $(10,170)          $(4,640)
                                                        =======           ======           ========           =======

Net (loss) income per share:
  Basic                                                 $ (0.35)          $ 0.10           $  (0.61)          $ (0.79)
  Diluted                                               $ (0.35)          $ 0.09           $  (0.61)          $ (0.79)
Weighted average shares:
  Basic                                                  17,360            6,090             16,809             5,848
  Diluted                                                17,360            6,776             16,809             5,848
</TABLE>




     See accompanying notes to condensed consolidated financial statements.




                                       3
<PAGE>   6




                        FLEXIINTERNATIONAL SOFTWARE, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended
                                                                                --------------------------
                                                                                       September 30,
                                                                                --------------------------
                                                                                  1998               1997
                                                                                --------           -------
                                                                               (Restated,
                                                                               see Note 7)

<S>                                                                             <C>                <C>
Cash flows from operating activities:
Net loss                                                                        $(10,170)          $(4,640)
Non-cash items included in net loss:
   Depreciation and amortization                                                   1,014               404
   Acquired in-process research and development charge                             1,890                --
   Provision for doubtful accounts                                                   976               275
Change in operating accounts:
   Accounts receivable                                                              (161)           (2,014)
   Prepaid expenses and other assets                                                   8              (241)
   Accounts payable and accrued expenses                                            (190)              461
   Deferred revenue                                                                  (75)              285
                                                                                --------           -------
Net cash used in operating activities                                             (6,708)           (5,470)

Cash flows from investing activities:
   Acquisition of subsidiary, less cash acquired                                    (493)               --
   Purchase of property and equipment                                               (689)             (575)
                                                                                --------           -------
Net cash used in investing activities                                             (1,182)             (575)

Cash flows from financing activities:
  Purchase of short-tem investments                                               (3,448)               --
  Sale of short-tem investments                                                    3,448                --
  Proceeds from sales of common stock, net of stock issue costs                       --             4,300
  Proceeds from line of credit                                                     1,450             2,000
  Repayments of debt                                                                (393)               --
  Proceeds from exercise of stock options and warrants                                47                45
  Proceeds from employee stock purchase plan                                          32                --
  Purchase of treasury stock                                                        (322)               --
  Repayments of convertible note payable                                              --              (106)
  Payments of capital lease obligations                                             (198)             (210)
                                                                                --------           -------
Net cash provided by financing activities                                            616             6,029
                                                                                --------           -------

Effect of exchange rate changes on cash                                                4                --
                                                                                --------           -------

Decrease in cash and cash equivalents                                             (7,270)              (16)
                                                                                --------           -------
Cash and cash equivalents at beginning of period                                  24,622             3,273
                                                                                --------           -------
Cash and cash equivalents at end of period                                      $ 17,352           $ 3,257
                                                                                ========           =======
</TABLE>



     See accompanying notes to condensed consolidated financial statements.




                                       4
<PAGE>   7




                        FLEXIINTERNATIONAL SOFTWARE, INC.
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)
                             (RESTATED, SEE NOTE 7)

<TABLE>
<CAPTION>
                                                Common Stock      Additional    Currency                                  Total
                                            -------------------    paid-in     translation   Treasury   Accumulated    stockholders'
                                              Shares     Amount    capital     adjustment      stock      deficit         equity
                                            ----------   ------   ----------   -----------   --------   -----------    -------------


<S>                                         <C>           <C>      <C>            <C>         <C>         <C>            <C>
Balance at January 1, 1998                  16,492,008    $165     $49,749        $ --        $  --       $(22,208)      $ 27,706
  Exercise of stock options and warrants        27,625      --          47          --           --             --             47
  Stock issued in conjunction with the
    acquisition of The Dodge Group             863,500       9       6,512          --           --             --          6,521
  Shares issued for ESPP                            --      --          --          --           45            (13)            32
  Treasury stock acquired                           --      --          --          --         (322)            --           (322)
Net loss                                            --      --          --          --           --        (10,170)       (10,170)
Currency translation adjustment                     --      --          --          18           --             --             18
                                            ----------    ----     -------        ----        -----       --------       --------
Balance at September 30, 1998               17,383,133    $174     $56,308        $ 18        $(277)      $(32,391)      $ 23,832
                                            ==========    ====     =======        ====        =====       ========       ========
</TABLE>






     See accompanying notes to condensed consolidated financial statements.




                                       5
<PAGE>   8

                       FLEXIINTERNATIONAL SOFTWARE, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1 - BASIS OF PRESENTATION

RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION. The
condensed consolidated financial statements contain previously reported amounts
that have been restated to reflect a change in the revenue recognition for
certain contracts (see Note 7).

The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.

The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) which
are, in the opinion of management, necessary to state fairly the results for the
three and nine month periods ended September 30, 1998. The results for the three
and nine month periods ended September 30, 1998 are not necessarily indicative
of the results expected for the full year.

NOTE 2 - EARNINGS (LOSS) PER SHARE

In 1997, the Company adopted Financial Accounting Standards Board Statement No.
128, "Earnings Per Share" ("SFAS No. 128"). SFAS No. 128 applies to entities
with publicly held common stock or potential common stock and is effective for
financial statements issued for periods ending after December 15, 1997. Under
SFAS No. 128, the presentation of primary earnings per share is replaced with a
presentation of basic earnings per share. SFAS No. 128 requires dual
presentation of basic and diluted earnings per share for entities with complex
capital structures. Basic earnings (loss) per share includes no dilution and is
computed by dividing net income (loss) available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution of securities that could
share in the earnings of an entity, similar to fully diluted earnings per share.
The Company has presented basic and diluted income (loss) per share for all
periods.

In February 1998, the SEC issued Staff Accounting Bulletin No. 98 ("SAB No.
98"). SAB No. 98 requires the disclosure of historical earnings per share
information for all pre initial public offering periods in accordance with SFAS
No. 128. As a result, the Company has included historical net income (loss) per
share for all periods presented.

NOTE 3 - ACQUISITION

On June 24, 1998, the Company completed the acquisition of The Dodge Group, Inc.
("Dodge"), a software developer that specializes in financial data warehouse
solutions. Under the terms of the acquisition, the Company issued an aggregate
of 863,500 shares of its common stock and $754,000 in cash in exchange for all
outstanding shares of Dodge stock and payment in full of principal and interest
on promissory notes of Dodge held by certain former stockholders of Dodge. In
addition, the Company granted options to employees of Dodge under its 1997 Stock
Incentive Plan to purchase an aggregate of 168,000 shares of common stock. The
acquisition was accounted for using the purchase method of accounting, and
accordingly, the results of Dodge's operations are included in the Company's
condensed consolidated financial statements from the date of acquisition.

A summary of the purchase price for the acquisition is as follows (in
thousands):

         Stock and stock options                           $6,521
         Payment of convertible notes payable                 754
         Acquisition costs                                    281
         Liabilities assumed                                2,161
                                                           ------
                                                           $9,717
                                                           ======




                                       6
<PAGE>   9




A summary of the restated allocation of the purchase price is as follows (in
thousands):

         Acquired in-process research and development     $1,890
         Acquired software                                 2,160
         Goodwill                                          5,667
                                                          ------
                                                          $9,717
                                                          ======

Acquired in-process research and development represents the fair value of
technologies acquired for use in the Company's own development efforts. The
restated amount allocated to in-process R&D was determined based upon the
methodology set forth in the SEC's September 1998 letter to the AICPA that
required consideration of the stage of completion of the individual in-process
R&D projects at the date of acquisition. The adjustment reduces the one-time
charge from $6.8 million to $1.9 million. The in-process R&D was expensed upon
acquisition, as it was determined that technological feasibility had not been
established and no alternative uses existed. The excess of the purchase price
over the net assets acquired and the in-process R&D will be amortized on a
straight-line basis over five years.

Acquired software represents the fair value of applications and technologies
presently in use. The resulting value will be amortized using the straight-line
method over its estimated life of five years, and subjected to periodic
impairment tests in accordance with established policies.

Goodwill represents the excess of the purchase price over the fair value of
identifiable tangible and intangible assets acquired and is amortized using the
straight-line method over its estimated life of five years.

The acquisition of Dodge was a tax free reorganization under the Internal
Revenue Code (IRC). Therefore, the charge for in-process research and
development is not deductible for income tax purposes. The Company acquired a
net operating loss carryforward of approximately $29 million, which expires no
later than 2009. Under the provisions of the IRC, the amount of these net
operating loss carryforwards available annually to offset future taxable income
is significantly limited. No value has been attributed to these net operating
losses in the purchase price allocation due to these limitations.

In connection with the acquisition, approximately 86,350 shares of common stock
issued were placed in escrow as security for indemnification obligations made by
former shareholders of Dodge.

The following table reflects pro forma combined results of operations
(unaudited) of the Company and Dodge, giving effect to the acquisition of Dodge
at the beginning of the fiscal year 1997, for all periods presented, and
excludes the one-time in-process research and development charge of $1.9 million
for the periods presented:

<TABLE>
<CAPTION>
                                                    Three Months Ended September 30,    Nine Months Ended September 30,
                                                    --------------------------------    -------------------------------
                                                          1998           1997                  1998         1997
                                                        -------         ------               --------      -------
                                                      (Restated,                           (Restated,
                                                      see Note 7)                          see Note 7)
                                                                  (in thousands, except per share amounts)

<S>                                                     <C>             <C>                  <C>           <C>
Revenue                                                 $ 5,782         $9,289               $ 23,009      $19,082
Net (loss) income                                       $(6,108)        $  146               $(11,113)     $(6,215)
Net (loss) income per diluted common share              $ (0.35)        $ 0.02               $  (0.64)     $ (0.93)
Shares used in computation                               17,360          7,640                 17,366        6,712
</TABLE>


NOTE 4 - REVENUE RECOGNITION

The Company licenses software under noncancellable license agreements through
direct and indirect channels, and provides services including maintenance,
training and consulting. Effective January 1, 1998, the Company has adopted SOP
97-2 "Software Revenue Recognition". Software license revenues through the
Company's direct sales channel are recognized when persuasive evidence of an
arrangement exists, the licensed products have been shipped, fees are fixed and
determinable and collectibility is considered probable. Customers may elect to
receive the licensed products pre-loaded and configured on a hardware unit. In
this case, revenue is recognized when the




                                       7
<PAGE>   10

licensed product are installed on the hardware unit, the unit is shipped and all
other criteria are met. Software license royalties earned through the Company's
indirect sales channel are recognized as such fees are reported to the Company.
Revenues on all software license transactions in which there are significant
outstanding obligations are not recognized until such obligations are fulfilled.
Maintenance revenues for maintaining, supporting and providing periodic
upgrading are deferred and recognized ratably over the maintenance period,
generally one year. Revenues from training and consulting services are
recognized as such services are performed. The Company does not require
collateral for its receivables, and reserves are maintained for potential
losses.

During the second quarter of 1999, the Company reviewed its revenue recognition
policies for multiple element arrangements. For such arrangements with extended
payment terms, or where a significant portion of the payment is due after
inception of the license agreement, all revenue is deferred until the final
portion of the license fee becomes due and payable, and all other criteria are
met at that time.

NOTE 5 - COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board issued Statement No.
130,"Reporting Comprehensive Income," ("SFAS No. 130"). SFAS No. 130 applies to
all companies and is effective for fiscal years beginning after December 15,
1997. SFAS No. 130 establishes standards for the reporting and display of
comprehensive income in a set of financial statements. Comprehensive income is
defined as the change in net assets of a business enterprise during a period
from transactions generated from non-owner sources. It includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. The following table sets forth the calculation of
comprehensive income (unaudited):

<TABLE>
<CAPTION>
                                                        Three Months Ended         Nine Months Ended
                                                           September 30,              September 30,
                                                        ------------------        --------------------
                                                          1998       1997           1998        1997
                                                         -------     ----         --------     -------
                                                       (Restated,               (Restated,
                                                       see Note 7)              see Note 7)
                                                                        (in thousands)

<S>                                                      <C>         <C>          <C>          <C>
Net (loss) income                                        $(6,108)    $636         $(10,170)    $(4,640)
Currency translation adjustment                               18       --               18          --
                                                         -------     ----         --------     -------

Comprehensive (loss) income                              $(6,090)    $636         $(10,152)    $(4,640)
                                                         ========    ====         =========    ========
</TABLE>

NOTE 6 - RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board issued Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information," ("SFAS
No. 131"). SFAS No. 131 applies to all public companies and is effective for
fiscal years beginning after December 15, 1997. SFAS No. 131 requires that
business segment financial information be reported in the financial statements
utilizing the management approach, and also includes disclosures of certain
geographic financial information. The management approach is defined as the
manner in which management organizes the segments within the enterprise for
making operating decisions and assessing performance. The adoption of this
standard is not expected to materially affect presentation and disclosure in the
Company's financial statements.

NOTE 7 - RESTATEMENT

CURRENT RESTATEMENT

As a result of the Company's regular quarterly financial statement review with
its independent accountants, the Company determined that it would restate the
prior period amounts originally reported for 1998 and the first quarter of 1999,
to reflect a change in the revenue recognition for several 1998 software license
contracts. Most of the restated amounts relate to two contracts that the Company
believes were appropriately due and payable under their contractual terms but
payments with respect to which, in the second quarter of 1999 became subject to
dispute by the contracting parties. For revenue which has been restated in the
three and nine months ended September 30, 1998, all amounts billed are included
in accounts receivable as of September 30, 1998 with a corresponding offset
included in deferred revenues. Any amounts stipulated in contracts which have
not been



                                       8
<PAGE>   11

invoiced have not been recognized in the financial statements. A summary
(unaudited) of the effects of the restatement follows (in thousands, except per
share amounts):

<TABLE>
<CAPTION>
                                                     Three Months Ended                  Nine Months Ended
                                                     September 30, 1998                 September 30, 1998
                                                --------------------------          ---------------------------
                                                As Reported       Restated          As Reported        Restated
                                                -----------       --------          -----------        --------

<S>                                               <C>             <C>                 <C>              <C>
Statement of Operations:
------------------------
Software license revenue                          $ 1,866         $ 1,653             $12,612          $  8,454
Service and maintenance revenue                     4,243           4,129              10,256            10,109
Total revenues                                      6,109           5,782              22,868            18,563
Operating loss                                     (6,007)         (6,334)             (6,619)          (10,924)
Net loss                                           (5,781)         (6,108)             (5,865)          (10,170)
Net loss per share:
  Basic                                           $ (0.33)        $ (0.35)            $ (0.35)         $  (0.61)
  Diluted                                         $ (0.33)        $ (0.35)            $ (0.35)         $  (0.61)
</TABLE>


                                                    September 30, 1998
                                                --------------------------
                                                As Reported       Restated
                                                -----------       --------

Balance Sheet:
--------------
Accounts receivable, net of allowance for
  doubtful accounts                              $ 11,341          $ 8,565
Total current assets                               29,869           27,093
Long-term receivable                                  800                -
Total assets                                       40,805           37,229
Deferred revenues                                   3,324            4,053
Current liabilities                                11,963           12,692
Total liabilities                                  12,668           13,397
Accumulated deficit                               (28,086)         (32,391)
Total stockholders' equity                         28,137           23,832
Total liabilities and stockholders' equity         40,805           37,229

PREVIOUS RESTATEMENT
In January 1999, the Company restated its originally filed quarterly report on
Form 10-Q to reduce the one-time in-process research and development charge
associated with the Company's acquisition of Dodge from $6.8 million to $1.9
million with a corresponding increase to goodwill. A summary (unaudited) of the
effects of that restatement are as follows (in thousands, except per share
amounts):

<TABLE>
<CAPTION>
                                                     Three Months Ended                  Nine Months Ended
                                                     September 30, 1998                 September 30, 1998
                                                --------------------------          ---------------------------
                                                As Reported       Restated          As Reported        Restated
                                                -----------       --------          -----------        --------

<S>                                               <C>             <C>                 <C>              <C>
Statement of Operations:
------------------------
General and administrative                        $ 2,205         $ 2,452             $  3,622         $ 3,869
Acquired in-process
  research and development                             --              --                6,830           1,890
Operating loss                                     (5,760)         (6,007)             (11,312)         (6,619)
Net loss                                           (5,534)         (5,781)             (10,558)         (5,865)
Net loss per share:
   Basic                                          $ (0.32)        $ (0.33)            $  (0.63)        $ (0.35)
   Diluted                                        $ (0.32)        $ (0.33)            $  (0.63)        $ (0.35)
</TABLE>





                                       9
<PAGE>   12



                                                    September 30, 1998
                                                --------------------------
                                                As Reported       Restated
                                                -----------       --------

Balance Sheets:
Goodwill                                         $    691         $  5,384
Total assets                                       36,112           40,805
Accumulated deficit                               (32,779)         (28,086)
Total stockholders' equity                         23,444           28,137


NOTE 8 - SUBSEQUENT EVENTS - GOING CONCERN

Late in the second quarter of 1999, management identified a number of factors
that cause them to believe that available cash resources may not be sufficient
to fund anticipated operating losses. These include: (1) the continued general
business slowdown, which resulted in revenue levels significantly lower than
expected in the first half of 1999; (2) payment disputes that arose in the
second quarter of 1999 related to two significant contracts for licensing of
software and provision of services (see Note 7) and; (3) delays experienced in
the second quarter of 1999 related to the release of the next version of the
Company's general ledger product. Management has taken actions to reduce costs
in response to lower revenues and is prepared to take further actions, if
necessary, in order to continue to respond to competitive and economic pressures
in the marketplace. Management is also seeking to obtain additional equity
capital. However, there can be no assurance that the Company will be able to
reduce costs to a level to appropriately respond to competitive pressures or to
obtain additional funding. As a result of the foregoing, there exists
substantial doubt about the Company's ability to continue as a going concern.
These financial statements do not include any adjustments relating to the
recoverability of the carrying amount of recorded assets or the amounts of
liabilities that might result from the outcome of this uncertainty.




                                       10
<PAGE>   13




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

FORWARD-LOOKING STATEMENTS

In addition to historical information, this Quarterly Report contains
forward-looking statements. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes," "anticipates,"
"plans," "expects," and similar expressions are intended to identify
forward-looking statements. 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. Readers
should carefully review the risk factors described in other documents the
Company files from time to time with the Securities and Exchange Commission,
including the Annual Report on Form 10-K for the year ended December 31, 1997.

RESULTS OF OPERATIONS

       Restatement. The condensed consolidated financial statements included and
discussed herein contain amounts which have been restated to reflect a change in
the original revenue recognition for certain contracts. (See Note 7 to the
condensed consolidated financial statements for effects of the restatement.)
The appropriate amounts below reflect the restatement.

       Revenues. Total revenues, consisting of software license revenues and
service and maintenance revenues, decreased 16.7%, from $6.9 million for the
three months ended September 30, 1997 to $5.8 million for the three months ended
September 30, 1998. Year to date revenues increased 49.0% from $12.5 million in
1997 to $18.6 million for the same period in 1998. The revenue decline for the
three-month period ended September 30, 1998 was due primarily to contract and
implementation delays, partially offset by increased service and maintenance
revenues. For the three-month period ended September 30, 1998, no customer
represented greater than 10% of revenues, and for the year to date period ended
September 30, 1998, three customers provided approximately 42.8% of the total
revenues.

       Software license revenues decreased 63.6%, from $4.5 million for the
three months ended September 30, 1997 to $1.7 million for the three months ended
September 30, 1998. Year to date software license revenues increased 14.8% from
$7.4 million in 1997 to $8.5 million in 1998. This revenue decline for the
three-month period ended September 30, 1998 was due primarily to contract and
implementation delays. Year to date software license revenue growth was due to
increased revenue from new clients, existing clients and indirect sales channel
fees.

       Service and maintenance revenues increased 72.3%, from $2.4 million for
the three months ended September 30, 1997 to $4.1 million for the three months
ended September 30, 1998. Year to date service and maintenance revenues
increased 98.3% from $5.1 million in 1997 to $10.1 million in 1998. The
increases were primarily attributable to the growth of the installed base of
customers and the increasing complexity of user requirements, which resulted in
an increase in consulting service revenues.

       Cost of Revenues. The Company's cost of revenues consists of the cost of
software license revenues and the cost of service and maintenance revenues. Cost
of software license revenues consists primarily of the cost of third-party
software products distributed by the Company and the cost of product media,
manuals and shipping. Cost of service and maintenance revenues consists of costs
to provide consulting, implementation and training to licensees of the Company's
products and the cost of providing software maintenance to customers, technical
support services and periodic upgrades of software.

       Cost of software license revenues increased 26.9%, from $160,000 for the
three months ended September 30, 1997 to $203,000 for the three months ended
September 30, 1998. Cost of software license revenues as a percentage of
software license revenues increased from 3.5% for the three months ended
September 30, 1997 to 12.3% for the three months ended September 30, 1998. Year
to date the cost of software license revenues increased 115.5% from $619,000 in
1997 to $1.3 million in 1998, and increased as a percentage of software license
revenue from 8.4% in 1997 to 15.8% in 1998. The dollar increases in cost of
software license revenues was primarily attributable to an increase in
third-party software products distributed by the Company. The increases as a
percent of software license revenue was the result of an increased percentage of
sales that contained third-party product.



                                       11
<PAGE>   14

       Cost of service and maintenance revenues increased 100.2%, from $1.6
million for the three months ended September 30, 1997 to $3.2 million for the
three months ended September 30, 1998. Cost of service and maintenance revenues
as a percentage of service and maintenance revenues increased from 67.7% for the
three months ended September 30, 1997 to 78.7% for the three months ended
September 30, 1998. Year to date the cost of service and maintenance revenues
increased 103.1% from $3.5 million in 1997 to $7.1 million in 1998, while
increasing as a percentage of service and maintenance revenues from 68.6% in
1997 to 70.3% in 1998. The dollar increases in cost of service and maintenance
revenues resulted primarily from the addition of service consultants and
customer support personnel to provide services to a larger customer base. The
third quarter increase as a percent of cost of service and maintenance revenues
was primarily due to increased non-billable time of service employees while they
were cross-trained on the Company's products, as a result of The Dodge Group
acquisition.

       Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions, travel and promotional expenses, and facility and
communication costs for direct sales offices. Sales and marketing expenses
increased 58.6%, from $2.0 million for the three months ended September 30, 1997
to $3.2 million for the three months ended September 30, 1998. Year to date
sales and marketing expenses increased 49.0% from $5.3 million in 1997 to $7.9
million in 1998. The dollar increase in sales and marketing expenses was
primarily attributable to increased staffing in the direct sales force and sales
and marketing organizations. Sales and marketing expenses as a percentage of
total revenues increased from 28.7% to 54.7% for the three months ended
September 30, 1997 and 1998, respectively, and remained constant at 42.6% for
year to date periods. The increase in the percentage for the three months ended
September 30, 1998, was primarily the result of the lower revenues for the
period coupled with an increase in the sales and marketing staff. While the
acquisition of The Dodge Group increased the Company's international presence,
the Company is still in the process of expanding its distribution channels, both
domestically and internationally and, accordingly, sales and marketing expenses
are expected to increase in dollar amount in the future.

       Product Development (Excluding Acquired In-Process Research and
Development). Product development expenses include software development costs
and consist primarily of engineering personnel costs. The Company has made
significant investments in product development in the past several years to
bring its suite of component-based, object-oriented financial accounting
products to market.

       Product development expenses increased 60.2%, from $1.9 million for the
three months ended September 30, 1997 to $3.1 million for the three months ended
September 30, 1998. Year to date product development expenses increased 23.6%
from $6.0 million in 1997 to $7.4 million in 1998. The increases in product
development expenses were due primarily to an increase in staffing. Product
development expenses as a percentage of total revenues increased from 27.5% to
52.8% for the three months ended September 30, 1997 and 1998, respectively, and
decreased from 47.9% to 39.8% for year to date 1997 and 1998, respectively. The
Company anticipates that product development expenses will increase in dollar
amount in future periods as the Company continues to enhance the functionality
of its core financial accounting and reporting and workflow applications and as
it continues development work on the next releases of its suite of application
modules.

       General and Administrative. General and administrative expenses consist
primarily of salaries of executive, administrative and financial personnel, as
well as provisions for doubtful accounts, amortization of acquired software and
goodwill and outside professional fees. General and administrative expenses
increased 310.7%, from $597,000 for the three months ended September 30, 1997 to
$2.5 million for the three months ended September 30, 1998. Year to date general
and administrative expenses increased 127.7% from $1.7 million in 1997 to $3.9
million in 1998. The increases in general and administrative expenses were
primarily the result of an increased reserve for bad debts, commencement of
amortization of acquired software and goodwill associated with the June 24, 1998
acquisition of The Dodge Group and an increase in administrative personnel as a
result of the Dodge Group acquisition. General and administrative expenses as a
percentage of total revenues increased from 8.6% to 42.4% for the three months
ended September 30, 1997 and 1998, respectively, and from 13.6% to 20.8% for
year to date 1997 and 1998, respectively.

        Acquired In-Process Research and Development. As a result of the June
24, 1998 acquisition of The Dodge Group, the Company experienced a one-time
charge of $1.9 million for acquired in-process research and development in the
year to date 1998. The Company anticipates additional product development
expenses in future periods in order to establish technological feasibility for
this technology, and expects that this will be a commercially viable product
within the next 9 months.



                                       12
<PAGE>   15

        Provision for Income Taxes. No provision or benefit for federal, state
or foreign income taxes was made for the three-month or year to date periods
ended September 30, 1998 and 1997. Excluding the Dodge acquisition, the Company
has reported only annual tax losses to date and consequently has approximately
$18.0 million of net operating loss carryforwards at December 31, 1997, which
expire at various times through the year 2012, available to offset future
taxable income. The utilization of such net operating losses is subject to
limitations as a result of an ownership change. The annual limitation and the
timing of attaining profitability may result in the expiration of net operating
loss carryforwards before utilization.

           Net (Loss) Income and (Loss) Income per Share. The net loss for the
three and nine month periods ended September 30, 1998, was ($6.1) million or
($0.35) per diluted share and ($10.2) million or ($0.61) per diluted share,
respectively. Excluding the second quarter one-time charge of $1.9 million for
acquired in-process research and development the net loss for the nine-month
period ended September 30, 1998 was ($8.3) million or ($0.49) per diluted share.
This compares to net income of $636,000 or $0.09 per diluted share and net loss
of ($4.6) million or ($0.79) per diluted share in the three and nine-month
periods ended September 30, 1997, respectively, as reflected in the following
table (unaudited):

<TABLE>
<CAPTION>
                                          Three Months Ended September 30,        Nine Months Ended September 30,
                                          --------------------------------      -----------------------------------
                                             1998 (1)             1997          1998 (1)       1998 (2)       1997
                                             -------             -----          --------       --------     -------
                                                           (in thousands, except per share amounts)

<S>                                          <C>                 <C>            <C>            <C>          <C>
Net (loss) income                            $(6,108)            $ 636          $(10,170)      $(8,280)     $(4,640)

Net (loss) income per share:

     Basic                                   $ (0.35)            $0.10          $  (0.61)      $ (0.49)     $ (0.79)
     Diluted                                 $ (0.35)            $0.09          $  (0.61)      $ (0.49)     $ (0.79)
</TABLE>


(1)   Restated, see Note 7 to the condensed consolidated financial statements.

(2)   Excludes one-time charge of $1.9 million for acquired in-process research
      & development.


LIQUIDITY AND CAPITAL RESOURCES

       Since its inception, the Company has primarily financed its operations
through private placements of its stock to private investors, issuances of
convertible promissory notes and loans and, to a lesser extent, equipment
financing and traditional financing arrangements. In December 1997, the Company
completed an initial public offering of its common stock, resulting in net
proceeds to the Company of approximately $22.2 million.

       As of September 30, 1998, the Company had cash and cash equivalents of
$17.4 million, a decrease of $7.3 million from December 31, 1997. The Company's
working capital at September 30, 1998 was $14.4 million, compared to $26.7
million at December 31, 1997.

       The Company's operating activities resulted in net cash outflow of $6.7
million for the nine months ended September 30, 1998, attributable primarily to
the net operating loss. Investing activities, consisting of payments under the
Dodge acquisition on June 24, 1998, and capital expenditures (primarily computer
property and equipment), resulted in net cash outflow of $1.2 million for the
nine months ended September 30, 1998. The Company's financing activities
resulted in net cash inflow of $616,000 for the nine months ended September 30,
1998.

       The Company's Board of Directors approved a share repurchase program
authorizing the Company to purchase up to 1.0 million shares of its common stock
on the open market. As of September 30, 1998 the Company has purchased 60,000
common shares at a total cost of $322,000.

        The Company has a working capital revolving line of credit with a bank,
which is secured by the Company's accounts receivable. The amount available
under this facility is limited to the lesser of 80% of the Company's eligible
accounts receivable, as defined, or $4.8 million. The facility will expire on
April 1, 1999. The agreement under which the line of credit was established
contains certain covenants, including provisions requiring the




                                       13
<PAGE>   16

Company to maintain specified financial ratios. The Company was in compliance
with these covenants at September 30, 1998. At September 30, 1998, $1.5 million
of these borrowings were outstanding under this line of credit.

        Late in the second quarter of 1999, management identified a number of
factors that cause them to believe that available cash resources may not be
sufficient to fund anticipated operating losses. These include: (1) the
continued general business slowdown, which resulted in revenue levels
significantly lower than expected in the first half of 1999; (2) payment
disputes that arose in the second quarter of 1999 related to two significant
contracts for licensing of software and provision of services (see Note 7) and;
(3) delays experienced in the second quarter of 1999 related to the release of
the next version of the Company's general ledger product. Management has taken
actions to reduce costs in response to lower revenues and is prepared to take
further actions, if necessary, in order to continue to respond to competitive
and economic pressures in the marketplace. Management is also seeking to obtain
additional equity capital. However, there can be no assurance that the Company
will be able to reduce costs to a level to appropriately respond to competitive
pressures or to obtain additional funding. As a result of the foregoing, there
exists substantial doubt about the Company's ability to continue as a going
concern. These financial statements do not include any adjustments relating to
the recoverability of the carrying amount of recorded assets or the amounts of
liabilities that might result from the outcome of this uncertainty.

YEAR 2000 COMPLIANCE

         The Year 2000 issue relates to computer programs and systems that
recognize dates using two-digit year data rather than four-digit year data. As a
result, such programs and systems may fail or provide incorrect information when
using dates after December 31, 1999. If the Year 2000 issue were to disrupt to
the Company's internal information technology systems, or the information
technology systems of entities with whom the Company has significant commercial
relationships, the Company's business and financial condition could be
materially adversely affected.

         The Year 2000 issue is relevant to four areas of the Company's
business: (1) the Company's accounting software products, (2) the Company's
internal computer systems, (3) the computer systems of significant suppliers or
customers of the Company, and (4) the products, internal systems and third-party
dependencies of The Dodge Group. Each such area is addressed below.

           1. THE COMPANY'S PRODUCTS. From its inception, the Company has
designed and tested all of its products to be Year 2000 compliant. Accordingly,
the Company does not intend to adopt a formal Year 2000 compliance program for
its products, other than to maintain its policy of designing all new products,
and any updates of its existing products, to be Year 2000 compliant.

           2. INTERNAL SYSTEMS. The Company's internal computer programs and
operating systems relate to virtually all segments of the Company's business,
including merchandising, customer database management, marketing, order
processing, order fulfillment, contract management, inventory management,
customer service and financial reporting. These programs and systems consist
primarily of:

                  - "Front-end" Systems. These systems automate and manage
business functions such as contract management, order-taking and
order-processing, inventory management, accounting and financial reporting.

                  - Personal Computers and Local Area Networks. These systems
are used for word processing, document management and other similar
administrative functions.

                  - Telecommunications Systems. These systems provide telephone,
voicemail, e-mail, Internet and intranet connectivity, and enable the Company to
manage overall internal and external communications.

         All of the Company's "front-end" systems that relate to accounting and
financial functions consist of the Company's own products, which have been
designed and tested to be Year 2000 compliant. All other internal systems
consist of widely available office applications and application suites for
word-processing, voicemail and other office-related functions. The Company
maintains current versions of all such applications and all are, or are expect
to be, Year 2000 compliant. Accordingly, the Company does not intend to adopt a
formal Year 2000 compliance program for its internal systems.



                                       14
<PAGE>   17

           3. THIRD-PARTY SYSTEMS. The computer programs and operating systems
used by entities with whom the Company has commercial relationships pose
potential problems relating to the Year 2000 issue, which may affect the
Company's operations in a variety of ways. These risks are more difficult to
assess than those posed by internal programs and systems, and the Company has
not yet completed the process of formulating a plan for assessing them. The
Company believes that the programs and operating systems used by entities with
whom it has commercial relationships generally fall into two categories:

        - First, the Company relies upon programs and systems used by providers
of basic services necessary to enable the Company to reach, communicate and
transact business with its suppliers and customers. Examples of such providers
include the United States Postal Service, UPS, telephone companies, other
utility companies and banks. Services provided by such entities affect almost
all facets of the Company's operations. However, these third-party dependencies
are not specific to the Company's business, and disruptions in their
availability would likely have a negative impact on most enterprises within the
software industry and on many enterprises outside the software industry. The
Company believes that all of the most reasonably likely worst-case scenarios
involving disruptions to its operations stemming from the Year 2000 issue relate
to programs and systems in this first category.

        - Second, the Company relies upon third parties for certain software
code or programs that are embedded in, or work with, its products. The Company
believes that the functionality of its products would not be materially
diminished by a failure of such third-party software to be Year 2000 compliant.
Nonetheless, the Company expects, as part of its plan for assessing third-party
programs and systems, to solicit assurances of Year 2000 compliance from each
provider of significant in-licensed software.

         There can be no assurance that the Company may not experience
unanticipated expenses or be otherwise adversely impacted by a failure of
third-party systems or software to be Year 2000 compliant. The most reasonably
likely worst-case scenarios may include: (i) corruption of data contained in the
Company's internal information systems, (ii) hardware failure, and (iii) failure
of infrastructure services provided by utilities and/or government. The Company
intends to include an evaluation of such scenarios in its plan for assessing the
programs and systems of the entities with whom it has commercial relationships.

           4. THE DODGE GROUP. In June 1998, the Company acquired The Dodge
Group. The Company has not yet completed the process of formulating a plan for
assessing the potential impact of the Year 2000 problem on the products or
internal operations of The Dodge Group, or those of significant third-party
suppliers or customers of The Dodge Group. A failure of the products or
disruption of the operations of The Dodge Group, or those of third parties upon
which its business is substantially dependent, could have a material adverse
effect on the Company's business and financial condition.

         The Company expects to complete the formulation of its plan for
assessing the programs and systems of the entities with whom it has commercial
relationships by the end of fiscal 1998 and the identification of related risks
and uncertainties by the end of the first quarter of fiscal 1999. Once such
identification has been completed, the Company intends to resolve any material
risks and uncertainties that are identified by communicating further with the
relevant vendors and providers, by working internally to identify alternative
sourcing and by formulating contingency plans to deal with such material risks
and uncertainties. To date, however, the Company has not formulated such a
contingency plan. The Company expects the resolution of such material risks and
uncertainties to be an ongoing process until all year 2000 problems are
satisfactorily resolved. The Company does not currently anticipate that the
total cost of any Year 2000 remediation efforts that may be needed will be
material.

EUROPEAN MONETARY UNION (EMU)

       The Company's internal business information systems are comprised of the
same commercial application software products generally offered for license by
the Company to end user customers. The Company's latest software release
contains EMU functionality that allows for dual currency reporting and
information management. The Company is not aware of any material operational
issues or costs associated with preparing internal systems for the EMU. However,
the Company utilizes other third party vendor network equipment, and other third
party software products that may or may not be EMU compliant. Although the
Company is currently taking steps to address the impact, if any, of EMU
compliance for such third party products, failure of any critical technology
components to operate properly post EMU may have an adverse impact on business
operations or require the Company to incur unanticipated expenses to remedy any
problems.




                                       15
<PAGE>   18






                                    SIGNATURE

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

                                             FLEXIINTERNATIONAL SOFTWARE, INC.


                                             By: /s/ Stefan R. Bothe
                                                 -------------------------------
                                                 Stefan R. Bothe, Chairman & CEO

Date: November 5, 1999




                                       16
<PAGE>   19






                                  EXHIBIT INDEX


EXHIBIT NO.                         DESCRIPTION
-----------                         -----------

   3.1            Amended and Restated Certificate of Incorporation of the
                  Registrant is incorporated herein by reference to Exhibit 3.2
                  to the Registrant's Registration Statement on Form S-1, as
                  amended (File No 333-38403) (the "Form S-1").
   3.2            Amended and Restated By-Laws of the Registrant is incorporated
                  herein by reference to Exhibit 3.4 to the Form S-1.
  27.1            Financial Data Schedule (nine-month period ended September 30,
                  1998).






                                       17