<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 June 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 June 30, 1998, there were 17,375,908 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 six months ended
June 30, 1998 (See Note 6 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 August 14, 1998, and amended by Amendment No. 1 of
Quarterly Report on Form 10-Q/A filed on January 28, 1999.



                                       2

<PAGE>   3



                        FLEXIINTERNATIONAL SOFTWARE, INC.

                                TABLE OF CONTENTS



                                                                          PAGE
                                                                          ----

PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements
             Condensed Consolidated Balance Sheet.........................  4
             Condensed Consolidated Statement of Operations...............  5
             Condensed Consolidated Statement of Cash Flows...............  6
             Condensed Consolidated Statement of Stockholders' Equity.....  7
             Notes to Condensed Financial Statements......................  8
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations.............................. 12

PART II. OTHER INFORMATION
         Signature........................................................ 15



                                       3

<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>
                                                                                   June 30,       December 31,
                                                                                     1998            1997
                                                                                   --------       ------------
                                                                                (restated, see     (audited)
                                                                                    note 7)
<S>                                                                                <C>             <C>
         ASSETS
Current assets:
  Cash and cash equivalents                                                        $ 18,573        $ 24,622
  Short-term investments                                                              3,448              --
  Accounts receivable, net of allowance for doubtful
    accounts of $756 and $672, respectively                                           9,495           8,571
  Prepaid expenses and other current assets                                             871           1,143
                                                                                   --------        --------
        Total current assets                                                         32,387          34,336

Property and equipment at cost, net of accumulated depreciation
 and amortization of $1,728 and $1,392, respectively                                  2,063           1,222
Acquired software (see Note 3)                                                        2,160              --
Goodwill (see Note 3)                                                                 5,667              --
Other assets, net of accumulated amortization of $209 and $197, respectively            209             112
                                                                                   --------        --------
        Total assets                                                               $ 42,486        $ 35,670
                                                                                   ========        ========
         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                                            $  6,989        $  4,409
  Current portion of capital lease obligations                                          257             206
  Short-term debt                                                                       393              --
  Deferred revenues                                                                   4,247           3,045
                                                                                   --------        --------
        Total current liabilities                                                    11,886           7,660

Long-term portion of capital lease obligations                                          397             304
                                                                                   --------        --------

        Total liabilities                                                            12,283           7,964
                                                                                   --------        --------

Stockholders' equity:
  Common stock: $.01 par value; 50,000,000 shares authorized;
    issued and outstanding shares - 17,375,908 and 16,492,008,  respectively            174             165
  Additional paid-in capital                                                         56,299          49,749
  Accumulated deficit                                                               (26,270)        (22,208)
                                                                                   --------        --------
        Total stockholders' equity                                                   30,203          27,706
                                                                                   --------        --------

        Total liabilities and stockholders' equity                                 $ 42,486        $ 35,670
                                                                                   ========        ========
</TABLE>



     See accompanying notes to condensed consolidated financial statements.


                                       4

<PAGE>   5


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

<TABLE>
<CAPTION>
                                            Three Months Ended June 30,   Six Months Ended June 30,
                                            --------------------------    --------------------------
                                               1998            1997           1998           1997
                                            -----------      ---------    ------------      --------
                                            (Restated,                     (Restated,
                                            see Note 6)                    see Note 6)
<S>                                          <C>             <C>            <C>             <C>
Revenues:
  Software license                           $  4,114        $ 1,510        $  6,801        $ 2,821
  Service and maintenance                       3,159          1,465           5,980          2,701
                                             --------        -------        --------        -------
        Total revenues                          7,273          2,975          12,781          5,522

Cost of revenues:
  Software license                                664            163           1,131            459
  Service and maintenance                       2,106          1,100           3,859          1,877
                                             --------        -------        --------        -------
        Total cost of revenues                  2,770          1,263           4,990          2,336

Operating expenses:
  Sales and marketing                           2,605          1,753           4,748          3,314
  Product development                           2,304          1,914           4,326          4,066
  General and administrative                      805            507           1,417          1,102
  Acquired in-process research &
   development (see Note 3)                     1,890             --           1,890             --
                                             --------        -------        --------        -------
Total operating expenses                        7,604          4,174          12,381          8,482
                                             --------        -------        --------        -------

Operating loss                                 (3,101)        (2,462)         (4,590)        (5,296)

Interest income                                   284             53             570             66
Interest expense                                  (29)           (20)            (42)           (46)
                                             --------        -------        --------        -------
Loss before provision for income taxes         (2,846)        (2,429)         (4,062)        (5,276)

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

Net loss                                     $ (2,846)       $(2,429)       $ (4,062)       $(5,276)
                                             ========        =======        ========        =======

Net loss per share:
  Basic                                      $  (0.17)       $ (0.41)       $  (0.25)       $ (0.92)
  Diluted                                    $  (0.17)       $ (0.41)       $  (0.25)       $ (0.92)
Weighted average shares:
  Basic                                        16,567          5,971          16,533          5,728
  Diluted                                      16,567          5,971          16,533          5,728
</TABLE>


     See accompanying notes to condensed consolidated financial statements.


                                       5

<PAGE>   6


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


<TABLE>
<CAPTION>

                                                                     Six Months Ended June 30,
                                                                     -------------------------
                                                                        1998            1997
                                                                     -----------      --------
                                                                     (Restated,
                                                                     see Note 6)
<S>                                                                   <C>             <C>
Cash flows from operating activities:
Net loss                                                              $ (4,062)       $(5,276)
Non-cash items included in net loss:
   Depreciation and amortization                                           348            235
   Acquired in-process research and development charge                   1,890             --
   Provision for doubtful accounts                                         150            150
Change in operating accounts:
   Accounts receivable                                                    (293)        (2,527)
   Prepaid expenses and other assets                                       326           (512)
   Accounts payable and accrued expenses                                    34            519
   Deferred revenue                                                        118          2,713
                                                                      --------        -------
Net cash used in operating activities                                   (1,489)        (4,698)

Cash flows from investing activities:
   Acquisition of subsidiary, less cash acquired                          (493)            --
   Purchase of property and equipment                                     (552)          (370)
                                                                      --------        -------
Net cash used in investing activities                                   (1,045)          (370)

Cash flows from financing activities:
  Purchase of short-term investments                                    (3,448)            --
  Proceeds from sales of common stock, net of stock issue costs             --          4,300
  Proceeds from line of credit, net                                         --            700
  Proceeds from exercise of stock options and warrants                      38             13
  Repayments of convertible note payable                                    --            (77)
  Payments of capital lease obligations                                   (105)          (139)
                                                                      --------        -------
Net cash (used in) provided by financing activities                     (3,515)         4,797
                                                                      --------        -------

Decrease in cash and cash equivalents                                   (6,049)          (271)
                                                                      --------        -------
Cash and cash equivalents at beginning of period                        24,622          3,273
                                                                      --------        -------
Cash and cash equivalents at end of period                            $ 18,573        $ 3,002
                                                                      ========        =======
</TABLE>


     See accompanying notes to condensed consolidated financial statements.



                                       6
<PAGE>   7


                        FLEXIINTERNATIONAL SOFTWARE, INC.
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)
                             (RESTATED, SEE NOTE 6)


<TABLE>
<CAPTION>
                                              Common Stock           Additional                           Total
                                          ---------------------        paid-in        Accumulated     stockholders'
                                            Shares       Amount        capital          deficit          equity
                                          ----------     ------      ----------       -----------     -------------

<S>                                       <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      20,400          -             38                 -              38
  Stock issued in conjunction with the
   acquisition of The Dodge Group            863,500          9          6,512                 -           6,521
  Net loss                                         -          -              -            (4,062)         (4,062)
                                          ----------      -----       --------        -----------      ---------
Balance at June 30, 1998                  17,375,908      $ 174       $ 56,299        $  (26,270)      $  30,203
                                          ==========      =====       ========        ===========      =========
</TABLE>




     See accompanying notes to condensed consolidated financial statements.



                                       7
<PAGE>   8


                        FLEXIINTERNATIONAL SOFTWARE, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

RESTATEMENT OF FINANCIAL STATEMENTS AND CHANGES TO CERTAIN INFORMATION. The
condensed consolidated financial statements contain amounts that have been
restated to reflect a change in the revenue recognition for certain contracts
(see Note 6).

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 six month periods ended June 30, 1998. The results for the three and
six month periods ended June 30, 1998 are not necessarily indicative of the
results expected for the full year.

NOTE 2 - 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 loss per share includes no dilution and is computed by
dividing net loss available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted loss per share
reflects the potential dilution of securities that could share in the earnings
of an entity. The Company has presented basic and diluted loss per share for all
periods. The number of shares used in the June 30, 1998 and 1997 diluted per
share calculations do not include the effect of outstanding stock options, as
the effect would be anti-dilutive.

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 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):

<TABLE>
<CAPTION>

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



                                       8
<PAGE>   9


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

<TABLE>

         <S>                                             <C>
         Acquired in-process research and development    $1,890
         Acquired software                                2,160
         Goodwill                                         5,667
                                                         ------
                                                         $9,717
                                                         ======
</TABLE>


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 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                              Three Months Ended June 30,       Six Months Ended June 30,
                                              ---------------------------       -------------------------
                                                 1998             1997              1998          1997
                                              -----------     -----------       -------------   ---------
                                              (Restated,                         (Restated,
                                              see Note 6)                        see Note 6)

<S>                                             <C>             <C>               <C>            <C>
Revenue                                         $ 9,577         $ 5,003           $17,227        $ 9,793
Net loss                                        $(2,605)        $(3,284)          $(5,005)       $(6,361)
Net loss per diluted common share               $ (0.15)        $ (0.48)          $ (0.29)       $ (0.96)
Shares used in computation                       17,373           6,835            17,368          6,592
</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 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


                                       9
<PAGE>   10


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 - RECENTLY ISSUED ACCOUNTING STANDARDS

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. Management believes that with the acquisition of Dodge,
and the possibility of foreign currency fluctuations, the adoption of SFAS No.
130 will have an impact on future financial statements.

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, which 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. Management continues to
assess its reporting requirements under SFAS 131 and will make all required
disclosures as necessary.

NOTE 6 - RESTATEMENT

CURRENT RESTATEMENT

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 prior period 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. For
revenue which has been restated in the three and six month periods ended June
30, 1998, all amounts billed are included in accounts receivable as of June 30,
1998 with a corresponding offset included in deferred revenues. Any amounts
stipulated in contracts which have not been invoiced have not been recognized in
the financial statements. The restatement has resulted in a reduction in revenue
for the three and six months ended June 30, 1998. A summary (unaudited) of the
effects of the restatement follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                            Three Months Ended                  Six Months Ended
                                               June 30, 1998                      June 30, 1998
                                          -----------------------            ------------------------
                                          As Reported    Restated            As Reported     Restated
                                          -----------    --------            -----------     --------
<S>                                         <C>          <C>                  <C>            <C>
Statement of Operations:
Software license revenue                    $ 6,059      $ 4,114              $ 10,746       $ 6,801
Service and maintenance revenue               3,192        3,159                 6,013         5,980
Total revenues                                9,251        7,273                16,759        12,781
Operating loss                               (1,123)      (3,101)                 (612)       (4,590)
Net loss                                       (868)      (2,846)                  (84)       (4,062)
Net loss per share:
  Basic                                     $ (0.05)     $ (0.17)              $ (0.01)      $ (0.25)
  Diluted                                   $ (0.05)     $ (0.17)              $ (0.01)      $ (0.25)
</TABLE>



                                       10
<PAGE>   11

<TABLE>
<CAPTION>
                                                           June 30, 1998
                                                   ---------------------------
                                                   As Reported        Restated
                                                   -----------        --------
<S>                                                 <C>                <C>
BALANCE SHEET:
Accounts receivable, net of allowance for
 doubtful accounts                                  $ 12,008           $ 9,495
Total current assets                                  34,900            32,387
Long-term receivable                                     800                 -
Total assets                                          45,799            42,486
Deferred revenues                                      3,582             4,247
Current liabilities                                   11,221            11,886
Total liabilities                                     11,618            12,283
Accumulated deficit                                  (22,292)          (26,270)
Total stockholders' equity                            34,181            30,203
Total liabilities and stockholders' equity            45,799            42,486
</TABLE>

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               Six Months Ended
                                                  June 30, 1998                  June 30, 1998
                                            ------------------------         ------------------------
                                            As Reported     Restated         As Reported     Restated
                                            -----------     --------         -----------     --------
<S>                                          <C>           <C>                 <C>          <C>
STATEMENT OF OPERATIONS:
Acquired in process
  research and development                   $ 6,830       $ 1,890             $ 6,830      $ 1,890
Operating loss                                (6,063)       (1,123)             (5,552)        (612)
Net loss                                      (5,808)         (868)             (5,024)         (84)
Net loss per share:
   Basic                                     $ (0.35)      $ (0.05)            $ (0.30)     $ (0.01)
   Diluted                                   $ (0.35)      $ (0.05)            $ (0.30)     $ (0.01)
</TABLE>


<TABLE>
<CAPTION>
                                                   June 30, 1998
                                             -----------------------
                                             As Reported    Restated
                                             -----------    --------
<S>                                           <C>          <C>
BALANCE SHEETS:
Goodwill                                      $    727     $  5,667
Total assets                                    40,859       45,799
Accumulated deficit                            (27,232)     (22,292)
Total stockholders' equity                      29,241       34,181
</TABLE>


NOTE 7 - 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 6) 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.



                                       11
<PAGE>   12


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 6 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, increased 144.5%, from $3.0 million for the
three months ended June 30, 1997 to $7.3 million for the three months ended June
30, 1998. Year to date revenues increased 131.5% from $5.5 million in 1997 to
$12.8 million for the same period in 1998. Three customers provided
approximately 49.9% and 51.6% of the total revenues for the three months and six
months ended June 30, 1998, respectively. Revenue growth was due primarily to
increased software license revenues.

     Software license revenues increased 172.5%, from $1.5 million for the three
months ended June 30, 1997 to $4.1 million for the three months ended June 30,
1998. Year to date software license revenues increased 141.1% from $2.8 million
in 1997 to $6.8 million in 1998. Software license revenue growth was due to
increased revenue from new clients, existing clients and indirect sales channel
fees.

     Service and maintenance revenues increased 115.6%, from $1.5 million for
the three months ended June 30, 1997 to $3.2 million for the three months ended
June 30, 1998. Year to date service and maintenance revenues increased 121.4%
from $2.7 million in 1997 to $6.0 million in 1998. The increase was 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 cost of
software license revenues and 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 307.4%, from $163,000 for the three months ended June 30, 1997 to
$664,000 for the three months ended June 30, 1998. Cost of software license
revenues as a percentage of software license revenues increased from 10.8% for
the three months ended June 30, 1997 to 16.1% for the three months ended June
30, 1998. Year to date the cost of software license revenues increased 146.4%
from $0.5 million in 1997 to $1.1 million in 1998, and increasing as a
percentage of software license revenue from 16.3% in 1997 to 16.6% in 1998. The
dollar increase in cost of software license revenues was primarily attributable
to an increase in third-party software products distributed by the Company, as
well as costs associated with increased sales volume.

     Cost of service and maintenance revenues increased 91.5%, from $1.1 million
for the three months ended June 30, 1997 to $2.1 million for the three months
ended June 30, 1998. Cost of service and maintenance revenues as a percentage of
service and maintenance revenues decreased from 75.1% for the three months ended
June 30, 1997 to 66.7% for the three months ended June 30, 1998. Year to date
the cost of service and maintenance revenues increased 105.6% from $1.9 million
in 1997 to $3.9 million in 1998, while decreasing as a percentage of service and
maintenance revenues from 69.5% in 1997 to 64.5% in 1998. The increase in dollar
amount resulted primarily from the addition of service consultants and customer
support personnel to provide services to a larger customer base.


                                       12

<PAGE>   13


     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 48.6%, from $1.8 million for the three months ended June 30, 1997 to
$2.6 million for the three months ended June 30, 1998. Year to date sales and
marketing expenses increased 43.3% from $3.3 million in 1997 to $4.7 million in
1998. The increase in dollar amount 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 decreased from 58.9% to
35.8% for the three months ended June 30, 1997 and 1998, respectively, and from
60.0% to 37.1% for year to date 1997 and 1998, respectively. The decreases in
these percentages were primarily due to an increasing revenue base. The Company
is 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 20.4%, from $1.9 million for the
three months ended June 30, 1997 to $2.3 million for the three months ended June
30, 1998. Year to date product development expenses increased 6.4% from $4.1
million in 1997 to $4.3 million in 1998. The increase in product development
expenses was due primarily to an increase in staffing. Product development
expenses as a percentage of total revenues decreased from 64.3% to 31.7% for the
three months ended June 30, 1997 and 1998, respectively, and from 73.6% to 33.8%
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 and outside professional fees. General
and administrative expenses increased 58.8%, from $507,000 for the three months
ended June 30, 1997 to $805,000 for the three months ended June 30, 1998. Year
to date general and administrative expenses increased 28.6% from $1.1 million in
1997 to $1.4 million in 1998. General and administrative expenses as a
percentage of total revenues decreased from 17.0% to 11.1% for the three months
ended June 30, 1997 and 1998, respectively, and from 20.0% to 11.1% for year to
date 1997 and 1998, respectively. The decreases in these percentages were
primarily due to an increasing revenue base. The Company expects general and
administrative expenses to increase in dollar amount in future periods due to
the Company's growth as well as the additional expense of being a public
company.

     Acquired In-Process Research and Development. As a result of the June 24,
1998 acquisition of The Dodge Group, there is a one-time charge of $1.9 million
for acquired in-process research and development in the three month and six
months periods ended June 30, 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 12 months.

     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
June 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.

     Supplemental Disclosure of Net Loss and Loss per Share Excluding
Nonrecurring Charges. Excluding the one-time charge for acquired in-process
research and development of $1.9 million, the net loss was $1.0 million or $0.06
loss per diluted share and a net loss of $2.2 million or $0.13 loss per diluted
share for the three and six month periods ended June 30, 1998, respectively.
This compares to a loss of $2.4 million or $0.41 loss per diluted share and a
net loss of $5.3 million or $0.92 loss per diluted share in the three and six
month periods ended June 30, 1997, respectively, as reflected in the following
table (unaudited):



                                       13
<PAGE>   14


(In thousands, except per share amounts)

<TABLE>
<CAPTION>

                                      Three Months Ended June 30,         Six Months Ended June 30, 1998
                                      ---------------------------         ------------------------------
                                      1998(1)    1998(2)    1997           1998(1)   1998(2)       1997
                                      -------    -------    -----          -------   -------       -----
<S>                                  <C>        <C>       <C>              <C>       <C>          <C>
Supplemental net loss                $(2,846)   $ (956)   $(2,429)         $(4,062)  $(2,172)     $(5,276)
Percentage of revenue                 (39.1%)   (13.1%)    (81.6%)          (31.8%)   (17.0%)      (95.5%)

Supplemental net loss per share:
     Basic                           $ (0.17)   $(0.06)   $ (0.41)         $(0.25)   $ (0.13)     $(0.92)
     Diluted                         $ (0.17)   $(0.06)   $ (0.41)         $(0.25)   $ (0.13)     $(0.92)
</TABLE>

(1)  Restated, see Note 6 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 June 30, 1998, the Company had cash and cash equivalents of $18.6
million, a decrease of $6.0 million from December 31, 1997. The Company's
working capital at June 30, 1998 was $20.5 million, compared to $26.7 million at
December 31, 1997.

     The Company's operating activities resulted in net cash outflow of $1.5
million for the six months ended June 30, 1998 due to the net 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 $1.0 million for the six months ended June 30, 1998. The
Company's financing activities resulted in net cash outflow of $3.5 million for
the six months ended June 30, 1998, primarily attributable to the purchase of
short-term investments.

     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 Company to
maintain specified financial ratios. The Company was in compliance with these
covenants at June 30, 1998. At June 30, 1998, no 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 6) 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 Company continues to evaluate and address business and operational
issues related to Year 2000 compliance, and believes that its installed computer
systems and software products, and those of its subsidiaries are in compliance.
The total cost to remediate its Year 2000 issues is not expected to be material.


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<PAGE>   15


                                    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




                                       15
<PAGE>   16


                                  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 (six-month period ended June 30, 1998).




                                       16