<PAGE>   1
 
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1998
 
                                                     REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                            ------------------------
 
                              OPEN SOLUTIONS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------
 
<TABLE>
<S>                                  <C>                                  <C>
              DELAWARE                               7372                              22-317350
  (STATE OR OTHER JURISDICTION OF        (PRIMARY STANDARD INDUSTRIAL               (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)             IDENTIFICATION NUMBER)
</TABLE>
 
                            ------------------------
 
                            300 WINDING BROOK DRIVE
                         GLASTONBURY, CONNECTICUT 06033
                                 (860) 652-3155
    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
 
                              DOUGLAS K. ANDERSON
               CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
                              OPEN SOLUTIONS INC.
                            300 WINDING BROOK DRIVE
                         GLASTONBURY, CONNECTICUT 06033
                                 (860) 652-3155
               (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
               NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                            ------------------------
                                   COPIES TO:
 
<TABLE>
<S>                                                    <C>
                 MARK G. BORDEN, ESQ.                                  JOHN J. EGAN III, ESQ.
               PHILIP P. ROSSETTI, ESQ.                               JEFFREY C. HADDEN, ESQ.
                  HALE AND DORR LLP                                 GOODWIN, PROCTER & HOAR LLP
                   60 STATE STREET                                         EXCHANGE PLACE
             BOSTON, MASSACHUSETTS 02109                            BOSTON, MASSACHUSETTS 02109
              TELEPHONE: (617) 526-6000                              TELEPHONE: (617) 570-1000
               TELECOPY: (617) 526-5000                               TELECOPY: (617) 523-1231
</TABLE>
 
                            ------------------------
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date hereof.
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box.  [ ]
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ] ---------------
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ---------------
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ---------------
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.  [ ]
                            ------------------------
 
                        CALCULATION OF REGISTRATION FEE
 
<TABLE>
<CAPTION>
=====================================================================================================
                                                     PROPOSED MAXIMUM
            TITLE OF EACH CLASS OF                  AGGREGATE OFFERING              AMOUNT OF
          SECURITIES TO BE REGISTERED                    PRICE(1)              REGISTRATION FEE(2)
-----------------------------------------------------------------------------------------------------
<S>                                              <C>                        <C>
Common Stock, $0.01 par value per share........         $40,000,000                  $11,800
=====================================================================================================
</TABLE>
 
(1) Estimated solely for the purpose of calculating the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act of 1933,
    as amended.
 
(2) Calculated pursuant to Rule 457(a) based on an estimate of the proposed
    maximum aggregate offering price.
                            ------------------------
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE>   2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                                                           SUBJECT TO COMPLETION
 
                                                                   JUNE 10, 1998
 
                           [                 ] SHARES
 
                             [OPEN SOLUTIONS LOGO]
 
                                  COMMON STOCK
                            ------------------------
     Of the [            ] shares of Common Stock ("Common Stock") offered
hereby, [            ] are being sold by Open Solutions Inc. ("OSI" or the
"Company") and [            ] are being sold by certain stockholders of the
Company (the "Selling Stockholders"). See "Principal and Selling Stockholders."
The Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. Prior to this offering, there has been no public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $[     ] and $[     ] per share. See
"Underwriting" for the factors to be considered in determining the initial
public offering price. Application has been made for the listing of the Common
Stock on the Nasdaq National Market under the symbol "OSIF."
                            ------------------------
 
        THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 6.
                            ------------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
===================================================================================================================
                                    PRICE              UNDERWRITING            PROCEEDS            PROCEEDS TO
                                      TO              DISCOUNTS AND               TO                 SELLING
                                    PUBLIC            COMMISSIONS(1)          COMPANY(2)         STOCKHOLDERS(2)
-------------------------------------------------------------------------------------------------------------------
<S>                          <C>                   <C>                   <C>                   <C>
Per Share .................           $                     $                     $                     $
-------------------------------------------------------------------------------------------------------------------
Total(3) ..................           $                     $                     $                     $
===================================================================================================================
</TABLE>
 
(1) See "Underwriting" for information relating to indemnification of the
    Underwriters.
 
(2) Before deducting estimated expenses of $               , all of which will
    be payable by the Company.
 
(3) The Company and certain stockholders of the Company have granted to the
    Underwriters a 30-day option to purchase up to [               ] additional
    shares of Common Stock solely to cover over-allotments, if any. If such
    option is exercised in full, the total Price to Public, Underwriting
    Discounts and Commissions, Proceeds to Company and Proceeds to Selling
    Stockholders will be $               , $               , $               and
    $               , respectively. See "Underwriting."
                            ------------------------
     The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about               ,
1998.
BT ALEX. BROWN
                           CREDIT SUISSE FIRST BOSTON
                                                                  UBS SECURITIES
              THE DATE OF THIS PROSPECTUS IS               , 1998.
<PAGE>   3
 
                             [OPEN SOLUTIONS LOGO]
 
     The Company intends to distribute to its stockholders annual reports
containing audited consolidated financial statements. The Company also intends
to make available to its stockholders, within 45 days after the end of each
fiscal quarter, reports for the first three quarters of each fiscal year
containing interim unaudited financial information.
 
     CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK IN
CONNECTION WITH THE OFFERING, INCLUDING OVER-ALLOTMENT, STABILIZING AND
SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
     Open Solutions Inc. is a registered trademark, and The Complete Banking
Solution and The Complete Credit Union Solution are trademarks, of Open
Solutions Inc. All other trademarks or trade names referred to in this
Prospectus are the property of their respective owners.
                                        2
<PAGE>   4

       [DESCRIPTION OF LEFT HALF OF INSIDE FRONT COVER FOLDOUT GRAPHICS]

Four images of screens from the OSI system "The Complete Banking Solution" are
displayed along the left side of the page with text describing each screen
immediately to the right.


(Screen 1) The screen is the home screen of the Customer Service
Representative module. The screen contains a command line at the top of a large
yellow tickler field in the middle of the screen.

ENHANCED CUSTOMER SERVICE: Information concerning customers and prospects is 
easily captured, updated and accessed. The entire customer relationship can be
viewed from any desktop, and the system prompts the user with timely
suggestions, reminders and cross-selling opportunities. The result is customer
service that is comprehensive, effective and personal.


(Screen 2) The screen is the "Edit Person" screen from the Customer
Service Representative Module. The screen contains a number of data elements on
the left side of the screen and images of the customer's face and signature on
the right.

COMPLETE CUSTOMER PROFILE: One screen displays the customer's photograph,
signature, and other  identifiers, eliminating the need for a driver's license
or other identification.


(Screen 3) The screen is the "Edit Additional Property" screen from
the Lending module. The screen contains a number of data elements on the left
side of the screen and an image of a residential property on the right.

UP-TO-DATE COLLATERAL INFORMATION: A complete description of the latest
appraisal and all specifics regarding loan collateral, whether a home, car or
other property, can be obtained real-time. Appraisal information is easily
updated.


(Screen 4) The screen is the "Payoff Inquiry" screen from the lending
module. The screen contains a number of data elements at the top and detailed
payoff information at the bottom that is adjustable with a scroll bar.

CONSOLIDATED PAYOFF INQUIRY/TRANSACTION: A loan payoff need not involve
numerous computer transactions. Loan balance, interim interest charges, escrow
balance, mortgage insurance premiums due, late charges and other relevant data
can be viewed on one screen. The "Payoff" button activates the transaction and
completes the payoff, indicating the loan balance due to the bank or to the
borrower.



     [DESCRIPTION OF RIGHT HALF OF INSIDE FRONT COVER FOLDOUT GRAPHICS]

                                  OSI PRODUCTS

                       THE COMPLETE BANKING SOLUTION(TM)
                     THE COMPLETE CREDIT UNION SOLUTION(TM)
 

A three-dimensional circle at the center with the label "The OSI Data Model."
Surrounding the inner circle is a three-dimensional ring with connecting pipes
to the inner circle with the following text within the ring: "OSI
Applications -- Home/Internet Banking -- Teller/Platform -- Lending -- 
Depository -- Operations -- ATM." A second ring surrounds the first ring with 
the following text within the ring: "Third Party Products -- Item Processing --
Imaging -- Electronic Forms -- Interactive Voice Response -- Cash Management --
General Ledger." A third ring surrounds the entire graphic with the following 
text within the ring: "Commercial Banks -- Thrifts -- Credit Unions."
 
The following text appears below the graphic described above.
 
"The Complete Banking Solution" and "The Complete Credit Union Solution"
(collectively, the "OSI System") from Open Solutions Inc. (OSI) are fully
integrated suites of financial applications that operate in a Microsoft Windows
NT environment with an Oracle relational database. The OSI System interfaces to
third-party applications that are commonly used in banks and credit unions and
is designed to enable OSI's customers to reduce their core data processing and
operational costs and to leverage their customer information.

<PAGE>   5
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information
contained in this Prospectus (i) reflects the conversion of all outstanding
shares of the Company's Series A-1, Series A-2, Series B, Series C and Series D
Preferred Stock (the "Convertible Preferred Stock") into an aggregate of
5,308,472 shares of Common Stock at the closing of this offering and (ii)
assumes no exercise of the Underwriters' over-allotment option. This Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus.
 
                                  THE COMPANY
 
     Open Solutions Inc. (the "Company") is a leading provider of client/server
core processing software and related services to small to mid-size banks and
credit unions. The Company has developed The Complete Banking Solution and The
Complete Credit Union Solution (the "OSI System"), which are fully-integrated
suites of banking and credit union applications that operate in a Microsoft
Windows NT environment with an Oracle relational database. The Company's
software supports all of an institution's core processing requirements,
including deposits and loans, teller functions, home/Internet banking and
platform automation. The OSI System enables its customers to enhance customer
satisfaction and compete more effectively in the financial services industry.
 
     Currently, there are over 20,000 banking and depository institutions in the
United States with assets of up to $3 billion, including small to mid-size
commercial banks, thrifts and credit unions. The Company believes that these
institutions, which have traditionally competed on personalized service, are
facing increasing competitive pressures and are seeking to implement information
technology systems that provide a competitive advantage. Banks and credit unions
also require core processing systems that are able to accommodate new and
emerging technologies, such as automated teller machines ("ATMs"), telephone
banking and home banking via personal computers and the Internet. These
institutions have traditionally fulfilled their information technology needs
through legacy computer systems, operated either by the institution or a service
bureau on an outsourced basis. These legacy systems are not easily integrated
with other applications used in the enterprise, typically do not provide
real-time transaction processing and are not easily adapted to evolving business
needs and regulatory requirements.
 
     The need to improve customer service levels, enhance operating efficiencies
and lower costs has contributed to the growing acceptance of the client/server
model of computing based on open, industry-standard operating environments and
relational databases. Client/server systems can improve information sharing by
providing access at each desktop to critical customer and transaction data.
Until recently, the adoption of client/server systems in many banks and credit
unions has lagged other industries due to the limited number of suppliers of
open client/server systems designed specifically to address the core processing
requirements of such institutions. The Company believes that fewer than 200
small to mid-size banks and credit unions in the United States have implemented
open client/server core processing systems.
 
     The OSI System is a client/server software solution that is designed to
enable the Company's customers to reduce their core processing and operational
costs and to leverage their customer information to improve retention and
identify potential cross-selling opportunities. In addition to providing
comprehensive core processing functionality, the OSI System interfaces to
third-party applications that are commonly used in banks and credit unions,
including check processing, ATMs and general ledger applications. The OSI System
can reduce the overall cost of ownership of a financial institution's core
system. By integrating core banking functions, which have historically run on
separate systems, the OSI System enables its customers to achieve operational
efficiencies. The
                                        3
<PAGE>   6
 
OSI System can also reduce the costs that would otherwise be associated with the
ongoing maintenance of legacy systems.
 
     The Company's objective is to be the leading supplier of enterprise-wide
client/server software for small to mid-size banks and credit unions. The
Company's strategy for achieving this objective includes the following: (i)
continue to focus on small to mid-size banks and credit unions, (ii) expand
distribution through outsourcing solutions, (iii) leverage customer base and
(iv) maintain product leadership.
 
     The Company markets its software and services primarily through its direct
sales force. To expand its distribution capabilities, the Company has also
established strategic relationships with The BISYS Group, Inc., a major national
outsourcing provider, and Connecticut On-Line Computer Center, Inc., a major
regional outsourcing provider, under which these third parties provide
outsourced processing services to the financial services industry using the OSI
System.
 
     The Company was organized as a Delaware corporation in 1992. The Company's
principal office is located at 300 Winding Brook Drive, Glastonbury, Connecticut
06033 and its telephone number is (860) 652-3155.
 
                                        4
<PAGE>   7
 
                                  THE OFFERING
 
<TABLE>
<S>                                                       <C>
Common Stock offered by the Company...................    [          ] shares
Common Stock offered by the Selling Stockholders......    [          ] shares
Common Stock to be outstanding after the offering.....    [          ] shares(1)
Use of proceeds.......................................    Working capital and other general
                                                          corporate purposes
Nasdaq National Market symbol.........................    OSIF
</TABLE>
 
---------------
(1) Based on the number of shares of Common Stock outstanding on March 31, 1998.
    Excludes an aggregate of 1,643,125 shares subject to options outstanding as
    of March 31, 1998 at a weighted average exercise price of $0.58 per share,
    of which options to purchase 1,018,836 shares of Common Stock are
    exercisable. Also excludes an aggregate of 636,111 shares of Common Stock
    issuable upon the exercise of outstanding warrants as of March 31, 1998 at a
    weighted average exercise price of $5.66 per share, all of which are
    exercisable. See "Risk Factors -- Shares Eligible for Future Sale;
    Registration Rights," "Management -- Stock Plans," "Description of Capital
    Stock -- Warrants" and Notes 7 and 9 of Notes to the Company's Financial
    Statements.
 
                             SUMMARY FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                                               THREE MONTHS ENDED
                                                      YEAR ENDED DECEMBER 31,                      MARCH 31,
                                         --------------------------------------------------    ------------------
                                          1993      1994       1995       1996       1997       1997       1998
                                         ------    -------    -------    -------    -------    -------    -------
<S>                                      <C>       <C>        <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
  Software license...................    $   --    $    --    $   213    $   801    $ 4,099    $   693    $ 1,158
  Service and maintenance............        95         --         55        218      2,550        289      1,176
                                         ------    -------    -------    -------    -------    -------    -------
Total revenues.......................        95         --        268      1,019      6,649        982      2,334
Loss from operations.................      (476)    (1,205)    (1,890)    (3,774)    (3,264)    (1,223)    (2,122)
Net loss.............................      (513)    (1,191)    (1,895)    (3,638)    (3,055)    (1,179)    (2,027)
Net loss per common share (basic and
  diluted)...........................     (0.25)     (0.61)     (0.98)     (1.73)     (1.42)     (0.55)     (0.94)
Weighted average common shares used
  to compute net loss per share......     2,079      1,955      1,936      2,103      2,155      2,136      2,166
</TABLE>
 
<TABLE>
<CAPTION>
                                                                             MARCH 31, 1998
                                                              --------------------------------------------
                                                                              PRO            PRO FORMA
                                                               ACTUAL      FORMA(1)      AS ADJUSTED(1)(2)
                                                              --------    -----------    -----------------
<S>                                                           <C>         <C>            <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 7,346       $ 7,346          $
Working capital.............................................    6,232         6,232
Total assets................................................   11,686        11,686
Long-term debt, less current portion........................       58            58
Mandatorily redeemable convertible preferred stock..........   16,140            --
Stockholders' equity (deficit)..............................   (8,244)        7,896
</TABLE>
 
---------------
(1) Reflects conversion of all outstanding shares of Convertible Preferred Stock
    into an aggregate of 5,308,472 shares of Common Stock upon the closing of
    this offering. See Note 2 of Notes to the Company's Financial Statements.
 
(2) Adjusted to give effect to the sale by the Company of [          ] shares of
    Common Stock offered hereby at an assumed initial public offering price of
    $[          ] per share and after deducting the estimated underwriting
    discounts and commissions and offering expenses payable by the Company. See
    "Use of Proceeds."
 
                                        5
<PAGE>   8
 
                                  RISK FACTORS
 
     In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
 
     Limited Operating History; History of Losses.  The Company was incorporated
in May 1992 and did not sell its first product until the second quarter of 1995.
Accordingly, the Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies with limited
operating histories. Although the Company has experienced revenue growth in
recent periods, historical growth rates may not be sustained and are not
necessarily indicative of future operating results. The Company incurred
operating losses of $2.1 million, $3.3 million, $3.8 million and $1.9 million
for the three months ended March 31, 1998 and the years ended December 31, 1997,
1996 and 1995, respectively. There can be no assurance that operating losses
will not increase in the future or that the Company will ever achieve or sustain
profitability on a quarterly or annual basis. To the extent that revenues do not
grow at anticipated rates, increases in operating expenses precede or are not
subsequently followed by commensurate increases in revenues or the Company is
unable to adjust operating expense levels accordingly, the Company's business,
financial condition and results of operations will be materially adversely
affected. As of March 31, 1998, the Company had an accumulated deficit of $12.6
million.
 
     Potential Fluctuations in Quarterly Performance.  The Company's revenues
and operating results have varied substantially from quarter to quarter. The
Company's quarterly operating results may continue to fluctuate due to a number
of factors, including the timing, size and nature of the Company's licensing
transactions, lengthy and unpredictable sales cycles, the timing of introduction
and market acceptance of new products or product enhancements by the Company or
its competitors, product and price competition, the relative proportions of
revenues derived from license fees and services, changes in the Company's
operating expenses, software bugs or other product quality problems, personnel
changes and fluctuations in economic and financial market conditions.
 
     The Company recognizes software license revenues upon delivery and, if
required by the contract, upon customer acceptance, if such criteria is other
than perfunctory, which typically does not occur in the same quarter in which
the software license agreement for the system is signed. As a result, the
Company is constrained in its ability to increase its software license revenue
in any quarter if there are unexpected delays in delivery or required acceptance
of systems for which software licenses were signed in previous quarters.
Implementation of the OSI System typically occurs over 14 to 24 weeks, and the
Company currently has limited implementation resources. As a result of the
Company's limited operating history and experience in the implementation of the
OSI System, the Company may from time to time experience delays and difficulties
in implementation of the OSI System. Delays in the delivery, implementation or
any required acceptance of the Company's products, including delays resulting
from constraints upon the Company's limited installation resources, could
materially adversely affect the Company's quarterly results of operations. In
addition, increased sales and marketing expenses for any given quarter will
negatively impact operating results of such quarter due to a lack of recognition
of associated revenues until the subsequent delivery of the product.
 
     The Company's expense levels are based, in significant part, on its
expectations as to future revenues and are largely fixed in the short term. As a
result, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected shortfall in revenues. Accordingly, any
significant shortfall of revenues in relation to the Company's expectations
would have an immediate and materially adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company plans to
increase operating expenses to expand its installation, product development,
sales and marketing and administrative organizations. The timing of such
expansion and the rate at which new personnel become productive could cause
material fluctuations in quarterly results of operations.
 
                                        6
<PAGE>   9
 
     The Company believes that period-to-period comparisons of its results of
operations are not necessarily meaningful. There can be no assurance that future
revenues and results of operations will not vary substantially. It is also
possible that in some future quarter the Company's results of operations will be
below the expectations of public market analysts and investors. In either case,
the price of the Company's Common Stock could be materially adversely affected.
 
     Acceptance of OSI System.  The Company's revenues are derived primarily
from two sources: (i) license fees for software products and (ii) fees for a
full range of services complementing its products, including implementation,
training, and support and maintenance services. Substantially all of these fees
are attributable to licenses of the OSI System. Although the use of
client/server technology has grown in the banking and credit union industry in
recent years, the client/server market is still an emerging market. Moreover,
banks and credit unions historically have been slow to adapt to and accept new
technologies, including client/server systems. The Company's future financial
performance will depend in large part on continued growth in the number of banks
and credit unions utilizing client/server technology. Accordingly, if the
client/server market fails to grow or grows more slowly than the Company
currently anticipates, the Company's business, financial condition and results
of operations could be materially adversely affected. In addition, a significant
portion of all banks and credit unions have traditionally satisfied their
information technology needs through a service bureau or outsourcing solution.
Upon purchasing the OSI System, these customers will be required to employ
information technology personnel in order to successfully operate and maintain
the OSI System. There can be no assurance that the Company's customers will be
able to hire and retain such personnel or that any inability to do so will not
affect their ability to successfully operate and maintain the OSI System which
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company's future financial
performance will depend in part on the successful development, introduction and
customer acceptance of new and enhanced versions of the OSI System and other
products. A decline in demand for, or failure to achieve broad market acceptance
of, the OSI System or any enhanced version as a result of competition,
technological change or otherwise, will have a material adverse effect on the
Company's business, financial condition and results of operations.
 
     Dependence on New Products and Rapid Technological Change; Product
Development Risk. The client/server application software market is characterized
by rapid technological change, frequent new product introductions and evolving
industry standards. The introduction of products embodying new technologies and
the emergence of new industry standards can render existing products obsolete
and unmarketable in short periods of time. The Company expects new products and
services, and enhancements to existing products and services, to be developed
and introduced by others, which will compete with the products and services
offered by the Company. The life cycles of the Company's products are difficult
to estimate. The Company's future success will depend upon the widespread
adoption of client/server application software in the banking and credit union
industry, as well as the Company's ability to enhance its current products and
to develop and introduce new products that keep pace with technological
developments and emerging industry standards and to address the increasingly
sophisticated needs of its customers. There can be no assurance that the Company
will be successful in developing and marketing new products or product
enhancements that meet these changing demands, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products or that its new products and
product enhancements will adequately meet the demands of the marketplace and
achieve market acceptance.
 
     Delays in the release of new and upgraded versions of the Company's
software products, particularly the Oracle relational database management
system, could have a material adverse effect on the Company's revenues and
results of operations. Because of the complexities inherent in developing
software products as sophisticated as those sold by the Company and the lengthy
testing periods associated with such products, no assurance can be given that
future product introductions by the Company will not be delayed. In addition,
complex software programs may contain
 
                                        7
<PAGE>   10
 
undetected errors or bugs when they are first introduced or as new versions are
released. There can be no assurance that errors will not be found in the
Company's existing or future products or third-party products upon which the
Company's products are dependent, such as the Oracle relational database and
Microsoft Windows NT, with the possible result of delays in or loss of market
acceptance of the Company's products, diversion of the Company's resources,
injury to the Company's reputation and increased service, warranty expenses
and/or payment of damages.
 
     Intense Competition.  The market for the Company's products and services is
intensely competitive and subject to rapid technological change. Competitors
vary in size and in the scope and breadth of the products and services they
offer. The Company encounters competition from a number of sources, all of which
offer core software systems to the banking and credit union industry. The
Company expects additional competition from other established and emerging
companies as the client/server application software market continues to develop
and expand. The Company also expects that competition will increase as a result
of software industry consolidation, including particularly the acquisition of
any of its competitors or any of the client/server based retail banking system
providers by one of the larger service providers to the banking industry. The
Company encounters competition in the U.S. from a number of sources, including
Fiserv, Inc., NCR Corporation, Electronic Data Systems Corporation, Marshall &
Ilsley Corporation, M&I EastPoint, Phoenix International Ltd., Inc., Jack Henry
& Associates, Inc., ALLTEL Corporation, Prologic Corporation and Kirchman
Corporation, all of which offer core processing systems or outsourcing
alternatives to banks and credit unions. The Company also competes against a
number of smaller, regional competitors. In addition to these competitors, the
Company competes internationally with, Misys plc Banking Division (including
Midas-Kapiti International, Inc., Kindle Banking Systems and ACT Financial
Systems), Sanchez Computer Associates, Inc. and Financial Network Services,
among others. Some of the Company's current, and many of the Company's
potential, competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
engineering, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer demands or to devote greater resources to the
development, promotion and sale of their products than the Company. In addition,
current and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products to address the needs of the Company's prospective customers.
Accordingly, it is possible that new competitors or alliances among competitors
may emerge and rapidly acquire significant market share. The Company expects
that the banking and credit union software market will continue to attract new
competitors and new technologies, possibly involving alternative technologies
that are more sophisticated and cost effective than the Company's technology.
There can be no assurance that the Company will be able to compete successfully
against current or future competitors or that competitive pressures faced by the
Company will not materially adversely affect its business, financial condition
and results of operations.
 
     Management of Growth.  The Company is currently experiencing a period of
rapid growth which has placed, and could continue to place, a strain on its
management and other resources. The Company's business has grown in size and
complexity over the past three years. Total revenues increased from $268,141 for
the year ended December 31, 1995 to $6.6 million for the year ended December 31,
1997 and to $2.3 million for the three months ended March 31, 1998. In addition,
the number of employees increased from 26 as of December 31, 1995 to 109 as of
March 31, 1998, and the Company expects to hire additional personnel during 1998
and 1999. The Company's need to manage its growth effectively will require it to
continue to implement and improve its operational, financial and other internal
systems on a timely basis, and to attract, train, motivate, manage and retain
its employees. If the Company's management is unable to manage growth
effectively or new employees are unable to achieve anticipated performance
levels, the Company's business, financial condition and results of operations
could be materially adversely affected. In addition, the Company from time to
time may seek acquisitions of businesses, products and technologies that are
complementary to those of the Company or that allow the Company to enter new
markets. Any such
                                        8
<PAGE>   11
 
acquisition would place additional strains upon the Company's management and
other resources. Potential investors should consider the risks, expenses and
difficulties frequently encountered in connection with the operation and
development of an expanding business.
 
     Reliance on New Customers.  The Company historically has relied upon and
expects to continue to rely upon software license fees from new customers for a
substantial portion of its revenues. Most such licenses involve large dollar
amounts (typically ranging from $250,000 to $750,000), and the sales cycles for
these transactions are often lengthy and unpredictable. Any inability of the
Company to license and deliver the OSI System to a significant number of new
customers would have a material adverse effect on the Company's business,
financial condition and results of operations.
 
     Expansion of Credit Union Customer Base.  The Company's software for credit
unions, The Complete Credit Union Solution, has been installed to date at only
one credit union. There can be no assurance that The Complete Credit Union
Solution will be installed at additional credit unions or that it will achieve
wide customer acceptance. Any failure of the Company to successfully penetrate
the credit union industry could have a material adverse effect on the Company's
business, financial condition and results of operations.
 
     Dependence on the Banking and Credit Union Industry; Risk of
Consolidation.  Substantially all of the Company's revenues are derived from
customers in the banking and credit union industry, primarily small to mid-size
banks, and the Company expects it will continue to derive substantially all of
its revenues from such customers for the foreseeable future. Unfavorable
economic conditions adversely impacting the banking and credit union industry
could have a material adverse effect on the Company's business, financial
condition and results of operations. For example, the banking and credit union
industry has experienced and may continue to experience cyclical fluctuations in
profitability, which may affect the willingness or ability of participants in
this industry to fund projects such as those for which the Company may be
engaged.
 
     Merger and acquisition activity among financial institutions has been
widespread in recent years and is expected to continue in future years. As a
result, industry consolidation could have the effect of reducing the number of
current and potential customers of the Company. Any significant increase in the
level of such consolidation among small to mid-size banks and credit unions
could adversely affect the Company's business, financial condition and results
of operations.
 
     Lengthy Sales Cycle.  The Company's software is used for business-critical
purposes, and its implementation involves significant capital commitments by
customers. Potential customers generally commit significant resources to an
evaluation of available software and require the Company to expend substantial
time, effort and money educating them as to the value of the Company's software.
Sales of the Company's software products require an extensive education and
marketing effort throughout a customer's organization because decisions to
license such software generally involve the evaluation of the software by a
significant number of customer personnel in various functional areas, each
having specific and often conflicting requirements. A variety of factors,
including factors over which the Company has little or no control, may cause
potential customers to favor a competing vendor or to delay or forego a
purchase. In addition, the sales cycles associated with these transactions are
subject to a number of uncertainties, including customers' budgetary
constraints, the timing of the expiration of customers' current system license
agreements or outsourced core processing agreements, the timing of customers'
budget cycles and approval processes and customers' willingness to implement a
client/server operating environment. As a result of these or other factors, the
sales cycle for the Company's products is long, typically ranging between six to
nine months. Due to the length of the sales cycle for its software products, the
Company's ability to forecast the timing and amount of specific sales is
limited, and the delay or failure to complete one or more large license
transactions could have a material adverse effect on the Company's business,
financial condition and results of operations.
 
                                        9
<PAGE>   12
 
     Reliance on and Expansion of Sales Force and Third-Party Outsourcing
Agreements.  The Company relies primarily on its direct sales force for sales of
the OSI System. The Company will be required to hire additional sales, customer
service and implementation personnel in 1998 and beyond if the Company is to
achieve revenue growth in the future. Competition for such personnel is intense,
and there can be no assurance that the Company will be able to retain its
existing sales, customer service and implementation personnel or will be able to
attract, assimilate or retain such additional highly qualified personnel in the
future. If the Company is unable to hire such personnel on a timely basis, its
business, financial condition and results of operations could be materially
adversely affected.
 
     The Company has entered into exclusive license and marketing arrangements
with two providers of outsourcing services to financial institutions, The BISYS
Group, Inc. ("BISYS") and Connecticut On-Line Computer Center, Inc. ("COCC").
Accordingly, the Company's success depends in part on the ultimate success of
these license and marketing arrangements, including the effort and resources
expended by such providers to market outsourcing services using the OSI System.
 
     Dependence on Key Personnel.  The Company's future success depends to a
significant extent on the Company's executive officers and key employees,
including the Company's sales force and software professionals, particularly
project managers, software engineers and other senior technical personnel. The
loss of the services of any of these individuals or group of individuals could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company does not maintain any key person life
insurance for any of its executive officers or key employees. Competition for
qualified personnel in the software industry is intense and the Company competes
for such personnel with other software companies that have greater financial and
other resources. The future success of the Company will depend in large part on
its ability to attract, retain and motivate highly qualified personnel, and
there can be no assurance that the Company will be able to do so. The Company
has from time to time experienced difficulty in locating and retaining
candidates with appropriate qualifications.
 
     Dependence on Third-Party Technology.  The Company's proprietary software
is currently designed, and may in the future be designed, to work on or in
conjunction with certain third-party hardware and/or software products,
including the Microsoft Windows NT operating system with an Oracle relational
database. Although the Company believes that there are alternatives for these
products, any significant interruption in the supply of such third-party
hardware and/or software could have a material adverse effect on the Company's
sales unless and until the Company can replace the functionality provided by
these products. In addition, the Company is to a certain extent dependent upon
such third-parties' abilities to enhance their current products, to develop new
products on a timely and cost-effective basis and to respond to emerging
industry standards and other technological changes. There can be no assurance
that the Company would be able to replace the functionality provided by the
third-party hardware and/or software currently offered in conjunction with the
Company's products in the event that such hardware and/or software becomes
obsolete or incompatible with future versions of the Company's products or is
otherwise not adequately maintained or updated. The absence of or any
significant delay in the replacement of that functionality could have a material
adverse effect on the Company's business, financial condition and results of
operations.
 
     Concentration of Customers.  Historically, a limited number of customers
have accounted for a significant percentage of the Company's revenues in each
year. For the year ended December 31, 1997, two bank customers accounted for 17%
and 15% of the Company's total revenues. For the year ended December 31, 1996,
four bank customers accounted for 38%, 22%, 20% and 14% of the Company's total
revenues. Although the Company expects that its reliance on any particular
customer will decline as its customer base expands, the failure of the Company
to enter into a sufficient number of licensing agreements during a particular
period could have a material adverse effect on the Company's business, financial
condition and results of operations.
                                       10
<PAGE>   13
 
     Year 2000 Issues.  A portion of the growth in the Company's revenues in
1997 and the first quarter of 1998 resulted from the Company's ability to
provide banking applications that resolve the Year 2000 problem. As the overall
demand for Year 2000 solutions declines, there can be no assurance that the
demand for the Company's products and services will not be materially adversely
affected. Although the Company believes the OSI System complies with Year 2000
requirements, there can be no assurance that customers will not encounter
difficulties with the OSI System arising from Year 2000 issues. In addition,
there can be no assurance that Year 2000 issues will not adversely affect
third-party network or application software that is integrated with the OSI
System.
 
     Potential for Contract Liability.  Failures in a customer's system could
result in an increase in service and warranty costs or a claim for substantial
damages against the Company. There can be no assurance that the limitations of
liability set forth in the Company's contracts would be enforceable or would
otherwise protect the Company from liability for damages. The Company maintains
general liability insurance coverage, including coverage for errors and
omissions in excess of the applicable deductible amount. There can be no
assurance that such coverage will continue to be available on acceptable terms
or will be available in sufficient amounts to cover one or more large claims, or
that the insurer will not deny coverage as to any future claim. The successful
assertion of one or more large claims against the Company that exceeds available
insurance coverage, or the occurrence of changes in the Company's insurance
policies, including premium increases or the imposition of large deductible or
co-insurance requirements, could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore,
litigation, regardless of its outcome, could result in substantial cost to the
Company and divert management's attention from the Company's operations. Any
contract liability claim or litigation against the Company could, therefore,
have a material adverse effect on its business, financial condition and results
of operations. Because many of the Company's projects are business-critical
projects for financial institutions, a failure or inability to meet a customer's
expectations could seriously damage the Company's reputation and affect its
ability to attract new business.
 
     Government Regulation.  While the Company's operations are not directly
regulated by banking authorities, the Company's existing and potential customers
are subject to extensive federal, state and foreign governmental regulations.
Such regulations may adversely affect the banking and credit union industry,
limit the number of potential customers for the Company's products and services
or otherwise have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, governmental regulation in the
financial services industry is evolving, particularly with respect to banking
technology. There can be no assurance that future changes in such regulations or
in their interpretation will not adversely affect the business of the Company.
 
     Dependence on Intellectual Property Rights; Risk of Infringement.  The
Company relies on a combination of copyright, trademark and trade secret laws,
nondisclosure agreements and other contractual provisions and technical measures
to protect its intellectual property rights. There can be no assurance that
these protections will be adequate to prevent the Company's competitors from
copying or reverse-engineering the Company's products, or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technology. The Company does not include
in its products any mechanism to prevent unauthorized copying and any such
unauthorized copying could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company has no
patents, and existing copyright laws afford only limited protection for the
Company's intellectual property rights and will not protect such rights in the
event competitors independently develop products similar to those of the
Company. In addition, the laws of certain countries in which the Company's
products are or may be licensed do not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States.
 
     Although the Company has never been the subject of a material intellectual
property dispute, there can be no assurance that a third party will not assert
that the Company's technology violates its
                                       11
<PAGE>   14
 
intellectual property rights in the future. As the number of software products
in the Company's target market increases and the functionality of these products
further overlap, the Company believes that software developers may become
increasingly subject to infringement claims. Any such claims, whether with or
without merit, can be time consuming and expensive to defend. There can be no
assurance that third parties will not assert infringement claims against the
Company in the future with respect to its current or future products or that any
such assertion will not require the Company to enter into royalty arrangements
(if available) or litigation that could be costly to the Company.
 
     Significant Influence by Directors, Officers and Principal
Stockholders.  Upon completion of this offering, the Company's directors,
officers and certain principal stockholders of the Company will beneficially own
approximately [     ]% of the Company's outstanding Common Stock. These
stockholders, if acting together, would have the ability to elect the Company's
directors and may have the ability to determine the outcome of corporate actions
requiring stockholder approval, irrespective of how other stockholders of the
Company may vote. This concentration of ownership may have the effect of
delaying or preventing a change in control of the Company.
 
     Broad Discretion as to Use of Proceeds.  The net proceeds from this
offering will be used, as determined by management in its sole discretion, for
working capital and general corporate purposes, as well as for the possible
acquisition of additional businesses and technologies that are complementary to
the current or future business of the Company. However, the Company has not
determined the specific allocation of the net proceeds among the various uses
described above. The Company's management will have broad discretion over the
use and investment of such net proceeds, and, accordingly, investors in this
offering will rely upon the judgment of the Company's management with respect to
the use of proceeds, with only limited information concerning management's
specific intentions.
 
     No Prior Public Market for Common Stock; Possibility of Volatility of Stock
Price.  Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained after this offering or that the market price of the Common Stock
will not decline below the initial public offering price. The initial public
offering price will be determined by negotiations between the Company and the
Representatives of the Underwriters and is not necessarily indicative of the
market price at which the Common Stock of the Company will trade after this
offering. The market prices for securities of technology companies have been
highly volatile and the market has experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Announcements of technological innovations or new products or service
offerings by the Company or its competitors, developments concerning proprietary
rights, including patents and litigation matters, domestic or international
regulatory developments affecting the banking and credit union industry, general
market conditions, any shortfall in revenues or earnings from expected levels or
other failures by the Company to meet expectations of securities analysts and
other factors, may have a significant impact on the market price of the Common
Stock.
 
     Dividends.  No cash dividends have been declared or paid on its capital
stock to date and the Company does not anticipate paying cash dividends in the
foreseeable future. In addition, under the terms of the Company's credit
agreement there are certain restrictions on the Company's ability to declare and
pay dividends.
 
     Dilution.  Purchasers of shares of Common Stock in this offering will
suffer an immediate and substantial dilution in the net tangible book value of
the Common Stock from the initial public offering price.
 
     Shares Eligible for Future Sale; Registration Rights.  Sales of substantial
amounts of shares of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock. Upon completion of
this offering, the Company will have outstanding [          ] shares of Common
Stock. On the date of this Prospectus, in addition to the [          ] shares
offered hereby, approximately [          ] shares of Common Stock, which are not
subject to
                                       12
<PAGE>   15
 
180-day lock-up agreements (the "Lock-up Agreements") with the Representatives
of the Underwriters, will be eligible for immediate sale in the public market
pursuant to Rule 144(k) under the Securities Act of 1933, as amended (the
"Securities Act"). Approximately [          ] additional shares of Common Stock,
which are not subject to the Lock-up Agreements, will be eligible for sale in
the public market in accordance with Rule 144 or Rule 701 under the Securities
Act beginning 90 days after the date of this Prospectus. Upon expiration of the
Lock-up Agreements 180 days after the date of this Prospectus, approximately
[          ] additional shares of Common Stock will be available for sale in the
public market, subject to the provisions of Rule 144 under the Securities Act.
Promptly following the consummation of this offering, the Company intends to
register an aggregate of [          ] shares of Common Stock issuable under its
1994 Stock Option Plan, 1998 Employee Stock Purchase Plan and 1998 Stock
Incentive Plan. Holders of approximately [          ] shares of Common Stock
(including [          ] shares of Common Stock that may be acquired pursuant to
the exercise of options and warrants held by them) have agreed, pursuant to the
Lock-up Agreements, not to directly or indirectly offer, sell, pledge, contract
to sell, grant any option to purchase or otherwise dispose of such shares for
180 days after the date of the final Prospectus. The Company is unable to
predict the effect that sales made under Rule 144, or otherwise, may have on the
then prevailing market price of the Common Stock. The holders of approximately
[          ] shares of Common Stock are entitled to certain incidental and
demand registration rights with respect to such shares. By exercising their
registration rights, such holders could cause a large number of shares to be
registered and sold in the public market. Sales pursuant to Rule 144 or other
exemptions from registration, or pursuant to registration rights, may have an
adverse effect on the market price for the Common Stock and could impair the
Company's ability to raise capital through offerings of its equity securities.
 
     Antitakeover Provisions.  The Company's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") requires that any
action required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing, and requires advance notice by, and
certain information from, a stockholder of a proposal or director nomination
which such stockholder desires to present at any annual or special meeting of
stockholders. Special meetings of stockholders may be called only by the
Chairman of the Board or the President of the Company or by the Board of
Directors. The Restated Certificate of Incorporation provides for a classified
Board of Directors, and members of the Board of Directors may be removed only
for cause upon the affirmative vote of holders of at least 75% of the votes
which all the stockholders would be entitled to cast in any annual election of
directors or class of directors. In addition, shares of the Company's Preferred
Stock may be issued in the future without further stockholder approval and upon
such terms and conditions, and having such rights, privileges and preferences,
as the Board of Directors may determine. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights of any
holders of Preferred Stock that may be issued in the future. The Company has no
present plans to issue any shares of Preferred Stock. These provisions, and
other provisions of the Restated Certificate of Incorporation, the Company's
By-laws and certain provisions of the Delaware corporation law, may have the
effect of deterring hostile takeovers or delaying or preventing acquisition
proposals or changes in control or management of the Company, including
transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices. In addition, these provisions may limit
the ability of stockholders to approve transactions that they may deem to be in
their best interests.
 
                                       13
<PAGE>   16
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the [          ] shares of
Common Stock offered by the Company hereby are estimated to be $[          ]
after deducting the estimated underwriting discounts and commissions and
offering expenses payable by the Company and assuming an initial public offering
price of $[          ] per share. The Company will not receive any of the net
proceeds from the sale of shares by the Selling Stockholders. See "Principal and
Selling Stockholders."
 
     The principal purposes of this offering are to increase the Company's
equity capital, to create a public market for the Company's Common Stock, to
facilitate future access by the Company to public equity markets, to provide
liquidity to existing stockholders, to provide increased visibility and
credibility in a marketplace where several of its current and potential
competitors are or will be publicly held companies, and to enhance the ability
of the Company to use its Common Stock as consideration for acquisitions and as
a means of attracting and retaining key employees.
 
     The Company expects to use the net proceeds from this offering for working
capital and other general corporate purposes, including expansion of its
facilities. The Company has not as yet identified specific uses for such
proceeds and will have discretion over their use and investment. Pending use of
the net proceeds, the Company intends to invest the net proceeds from this
offering in short-term, investment grade, interest-bearing instruments. See
"Risk Factors -- Broad Discretion as to Use of Proceeds."
 
     The Company may seek acquisitions of businesses, products and technologies
that are complementary to those of the Company, and a portion of the net
proceeds may also be used for such acquisitions. While the Company engages from
time to time in discussions with respect to potential acquisitions, the Company
has no plans, commitments or agreements with respect to any such acquisitions as
of the date of this Prospectus, and there can be no assurances that any
acquisitions will be made.
 
                                DIVIDEND POLICY
 
     The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain earnings, if any, to support its
growth strategy and does not anticipate paying cash dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various factors,
including the Company's financial condition, operating results, current and
anticipated cash needs and plans for expansion. Under the terms of the Company's
credit agreement there are certain restrictions on the Company's ability to
declare and pay dividends. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and Note 6 of Notes to the Company's Financial Statements.
 
                                       14
<PAGE>   17
 
                                 CAPITALIZATION
 
     The following table sets forth the capitalization of the Company as of
March 31, 1998 (i) on an actual basis, (ii) on a pro forma basis giving effect,
upon the closing of this offering, to the conversion of all outstanding shares
of the Company's Convertible Preferred Stock into an aggregate of 5,308,472
shares of Common Stock and the filing of the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock,
eliminate the terms of the Company's existing series of Convertible Preferred
Stock and create a class of authorized but undesignated Preferred Stock and
(iii) on a pro forma basis, as adjusted to reflect the issuance and sale of the
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $[               ] per share, after deducting the
estimated underwriting discounts and commissions and offering expenses. The
capitalization information set forth in the table below is qualified by the
Company's Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.
 
<TABLE>
<CAPTION>
                                                                          AS OF MARCH 31, 1998
                                                              --------------------------------------------
                                                                                               PRO FORMA
                                                                 ACTUAL        PRO FORMA      AS ADJUSTED
                                                              ------------    ------------    ------------
<S>                                                           <C>             <C>             <C>
Long-term debt, less current portion(1).....................  $     57,778    $     57,778
                                                              ------------    ------------
Mandatorily redeemable convertible preferred stock:
  Series A-2 Preferred Stock, $0.01 par value; 166,667
    shares authorized, 166,667 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................       500,000              --
  Series B Preferred Stock, $0.01 par value; 1,736,250
    shares authorized, 1,627,916 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................     4,930,333              --
  Series C Preferred Stock, $0.01 par value; 1,375,000
    shares authorized, 1,263,889 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................     5,731,482              --
  Series D Preferred Stock, $0.01 par value; 1,250,000
    shares authorized, 833,333 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................     4,977,734              --
                                                              ------------    ------------
                                                                16,139,549              --
                                                              ------------    ------------
Stockholders' equity:
  Series A-1 Preferred Stock, $0.01 per value; 1,000,000
    shares authorized, 1,000,000 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................        10,000              --
  Series A-2 Preferred Stock, $0.01 par value; 416,667
    shares authorized, 416,667 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................         4,167              --
  Preferred Stock, $0.01 par value; no shares authorized,
    issued or outstanding (actual); 5,000,000 shares
    authorized, no shares issued and outstanding (pro forma
    and pro forma as adjusted)..............................            --              --
  Common Stock, $0.01 par value; 19,055,417 shares
    authorized, 2,165,804 issued and outstanding (actual);
    50,000,000 shares authorized, 7,474,276 (pro forma) and
    [            ] (pro forma as adjusted) shares issued and
    outstanding(2)..........................................        21,658          74,743
  Additional paid-in capital................................     4,291,481      20,392,112
  Accumulated deficit.......................................   (12,571,239)    (12,571,239)
                                                              ------------    ------------
    Total stockholders' equity (deficit)....................    (8,243,933)      7,895,616
                                                              ------------    ------------
        Total capitalization................................  $  7,953,394    $  7,953,394
                                                              ============    ============
</TABLE>
 
---------------
(1) See Note 6 of Notes to the Company's Financial Statements.
 
(2) Excludes an aggregate of 1,643,125 shares of Common Stock subject to options
    outstanding as of March 31, 1998 at a weighted average exercise price of
    $0.58 per share, of which options to purchase 1,018,836 shares of Common
    Stock are exercisable. Also excludes an aggregate of 636,111 shares of
    Common Stock issuable upon the exercise of outstanding warrants as of March
    31, 1998 at a weighted average exercise price of $5.66 per share, all of
    which are exercisable. See "Risk Factors -- Shares Eligible for Future Sale;
    Registration Rights," "Management -- Stock Plans," "Description of Capital
    Stock -- Warrants" and Notes 7 and 9 of Notes to the Company's Financial
    Statements.
 
                                       15
<PAGE>   18
 
                                    DILUTION
 
     The pro forma net tangible book value of the Company as of March 31, 1998
was $7,329,102 or $0.98 per share of Common Stock. Pro forma net tangible book
value per share is determined by dividing the Company's tangible net worth
(tangible assets less liabilities) by the number of shares of Common Stock
outstanding, after giving effect to the mandatory conversion of the Company's
Convertible Preferred Stock upon the completion of this offering. After giving
effect to the sale of the shares of Common Stock offered by the Company hereby
at an assumed initial public offering price of $[     ] per share and after
deducting the estimated underwriting discounts and commissions and offering
expenses, the pro forma net tangible book value of the Company as of March 31,
1998 would have been $[     ] per share. This represents an immediate increase
in such pro forma net tangible book value of $[     ] per share to existing
stockholders and an immediate dilution of $[     ] per share to new investors
purchasing shares in this offering. If the initial public offering price is
higher or lower, the dilution to the new investors will be greater or less,
respectively. The following table illustrates the per share dilution:
 
<TABLE>
<S>                                                           <C>       <C>
Assumed initial public offering price per share.............            $
  Pro forma net tangible book value per share as of March
     31, 1998...............................................  $
  Increase per share attributable to this offering..........
                                                              ------
Pro forma net tangible book value per share after this
  offering..................................................
                                                                        ------
Dilution per share to new investors.........................            $
                                                                        ======
</TABLE>
 
     The following table summarizes, on a pro forma basis as of March 31, 1998,
the total number of shares of Common Stock purchased from the Company, the total
consideration paid and the average consideration paid per share by the existing
stockholders and by the new investors based (for new investors) upon an assumed
initial public offering price of $[     ] per share (before deducting the
estimated underwriting discounts and commissions and offering expenses):
 
<TABLE>
<CAPTION>
                                 SHARES PURCHASED      TOTAL CONSIDERATION     AVERAGE
                               --------------------   ---------------------   PRICE PER
                                 NUMBER     PERCENT     AMOUNT      PERCENT     SHARE
                               ----------   -------   -----------   -------   ---------
<S>                            <C>          <C>       <C>           <C>       <C>
Existing stockholders(1).....   7,474,276         %   $19,031,128         %    $ 2.55
New investors................                                                  $
                               ----------    -----    -----------    -----     ------
     Total...................                     %   $                   %
                               ==========    =====    ===========    =====
</TABLE>
 
---------------
(1) Sales by the Selling Stockholders in this offering will reduce the number of
    shares held by existing stockholders to [               ], or approximately
    [               ]% of the total number of shares of Common Stock outstanding
    after this offering (or [               ] shares and approximately
    [               ]% if the Underwriters' over-allotment option is exercised
    in full), and will increase the number of shares held by new investors to
    [               ], or approximately [               ]% of the total number
    of shares of Common Stock outstanding after this offering (or
    [               ] shares and approximately [               ]% if the
    Underwriters' over-allotment option is exercised in full).
 
                                       16
<PAGE>   19
 
                            SELECTED FINANCIAL DATA
 
     The selected financial data set forth below as of December 31, 1997 and
1996, and for the three years ended December 31, 1997 are derived from the
Company's financial statements, which appear elsewhere in this Prospectus and
which have been audited by Price Waterhouse LLP, independent accountants. The
selected financial data set forth below as of December 31, 1995 and 1994, and
for the year ended December 31, 1994 are derived from the Company's audited
financial statements which are not included in this Prospectus. The selected
financial data set forth below as of and for the year ended December 31, 1993
are derived from the Company's unaudited financial statements which are not
included in this Prospectus. The selected financial data set forth below as of
March 31, 1998, and for the three months ended March 31, 1998 and 1997 are
derived from the Company's unaudited financial statements, which appear
elsewhere in this Prospectus. In the opinion of management, the unaudited
financial statements have been prepared on a basis consistent with the financial
statements which appear elsewhere in this Prospectus and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the financial position and results of operations for these
unaudited periods. The operating results for the three months ended March 31,
1998 are not necessarily indicative of the results to be expected for the full
year ending December 31, 1998. The data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's financial statements, including the
notes thereto, included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                                                        THREE MONTHS
                                                                                                            ENDED
                                                         YEAR ENDED DECEMBER 31,                          MARCH 31,
                                        ---------------------------------------------------------   ---------------------
                                          1993        1994        1995        1996        1997        1997        1998
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                     <C>         <C>         <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
  Revenues:
    Software license..................  $      --   $      --   $     213   $     801   $   4,099   $     693   $   1,158
    Service and maintenance...........         95          --          55         218       2,550         289       1,176
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
      Total revenues..................         95          --         268       1,019       6,649         982       2,334
  Cost of revenues:
    Software license..................         --          --         223         507       1,160         219         333
    Service and maintenance...........         25          --         477       1,530       3,150         732         987
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
      Total cost of revenues..........         25          --         700       2,037       4,310         951       1,320
  Operating expenses:
    Sales and marketing...............         60         136         398       1,051       2,132         458         784
    Product development...............        436         985         661       1,060       1,902         472         444
    General and administrative........         50          84         399         645       1,569         324         643
    Contract termination..............         --          --          --          --          --          --       1,265
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
      Total operating expenses........        546       1,205       1,458       2,756       5,603       1,254       3,136
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
  Loss from operations................       (476)     (1,205)     (1,890)     (3,774)     (3,264)     (1,223)     (2,122)
  Interest income (expense), net......        (37)         14          (5)        136         209          44          95
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
  Net loss............................  $    (513)  $  (1,191)  $  (1,895)  $  (3,638)  $  (3,055)  $  (1,179)  $  (2,027)
                                        =========   =========   =========   =========   =========   =========   =========
  Net loss per common share (basic and
    diluted)..........................  $   (0.25)  $   (0.61)  $   (0.98)  $   (1.73)  $   (1.42)  $   (0.55)  $   (0.94)
  Weighted average common shares used
    to compute net loss per share.....      2,079       1,955       1,936       2,103       2,155       2,136       2,166
</TABLE>
 
<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                              -------------------------------------------   MARCH 31,
                                                              1993    1994     1995      1996      1997       1998
                                                              -----   -----   -------   -------   -------   ---------
                                                                                  (IN THOUSANDS)
<S>                                                           <C>     <C>     <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
  Cash and cash equivalents.................................  $   2   $ 652   $ 3,914   $ 4,438   $ 7,596    $ 7,346
  Working capital (deficit).................................   (100)    660     3,570     4,901     6,198      6,232
  Total assets..............................................     67     771     4,354     7,546    11,302     11,686
  Long-term debt, less current portion......................    730     250        --        --        58         58
  Mandatorily redeemable convertible preferred stock........     --      --     5,092    10,573    15,551     16,140
  Stockholders' equity (deficit)............................   (764)    521    (1,253)   (4,779)   (7,826)    (8,244)
</TABLE>
 
                                       17
<PAGE>   20
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company is a leading provider of client/server core processing software
and related services to small to mid-size banks and credit unions. The Company
established operations in May 1992, and released its first major product, The
Complete Banking Solution, in the second quarter of 1995. The Company released a
second major product, The Complete Credit Union Solution, in the first quarter
of 1998. These two products (the "OSI System") are fully-integrated suites of
banking and credit union applications that operate in a Windows NT environment
using an Oracle relational database. The OSI System supports an institution's
entire core processing requirements, including deposits and loans, teller
functions, home/Internet banking and platform automation.
 
     As of June 30, 1998, the OSI System had been implemented in [     ] banks
and [     ] credit union and an additional [     ] institutions were under
contract. In addition, through June 30, 1998, BISYS and COCC had placed orders
with the Company for [     ] OSI Systems. New license agreements for OSI Systems
totaled four in 1995, 15 in 1996, 17 in 1997 and [     ] for the current year
through June 30, 1998. To date, all of the Company's sales have been in the
United States.
 
     The Company currently markets its products in the United States directly
and, through an alliance with Unisys PAAG ("Unisys"), in Asia (except Japan),
South Africa and certain other countries. The Company has established software
license and marketing agreements with BISYS and COCC under which these third
parties use the OSI System to provide core processing services to banks and
credit unions on an outsourced basis. Under the agreement with BISYS, software
license fees are paid to the Company over a three-year period following BISYS'
implementation of each OSI System. No revenue had been recognized under the
BISYS agreement through March 31, 1998. Under the agreement with COCC, software
license fees are paid, and revenues are recognized, upon implementation of each
OSI System. Under this agreement, once cumulative software license fees total a
stipulated amount, COCC is released from any further obligation to pay license
fees. This release is subject to a one-time payment in December 2002 if the
asset base of COCC's customers has exceeded a specified amount. Under both the
BISYS and COCC agreements, the Company is also entitled to annual support and
maintenance payments on each installed OSI System. The Company recognized
revenue of $250,000 in the three months ended March 31, 1998 for the delivery of
the OSI System source code to COCC. The Company will earn an additional $250,000
for implementation assistance on the first three COCC customers. Apart from
these fees, the Company does not expect to recognize significant revenues from
its agreements with Unisys and COCC until at least 1999.
 
     The Company's revenues are primarily derived from two sources: (i) software
license revenues and (ii) service and maintenance fees. Software license
revenues primarily include revenues from software licenses for the OSI System.
The Company also derives software license revenues from the sale of third-party
software sublicensed by the Company. Software license fees are generally based
on the bank's asset size and the number of accounts and typically are payable
upon delivery of the software. The Company derives service and maintenance
revenues from (i) implementation and training fees, which are based on customer
size and the magnitude and complexity of the project and (ii) customer support
and maintenance fees for providing on-going support and product updates.
Customer support and maintenance fees are established as a percentage of the
list price for the software license and are paid annually.
 
     Effective January 1, 1997 the Company adopted AICPA Statement of Position
97-2, "Software Revenue Recognition" ("SOP 97-2"). Under SOP 97-2, the Company
recognizes software license revenue when a noncancelable license agreement has
been executed, fees are fixed and determinable, the software has been delivered,
and accepted by the customer if acceptance is required by the contract and other
than perfunctory, and collection is considered probable. Prior to 1997, the
 
                                       18
<PAGE>   21
 
Company recognized software license revenue in accordance with AICPA Statement
of Position 91-1, "Software Revenue Recognition" ("SOP 91-1"). Under SOP 91-1,
the Company recognized software license revenue when the software was delivered,
collectibility was probable and no other significant post-delivery obligations
remained.
 
     In December 1997, the Company revised its standard end user license
agreement to eliminate certain customer acceptance provisions that required the
deferral of software license revenue recognition until after implementation was
completed. The Company expects that its future licensing arrangements will
generally be governed by the revised license agreement, although licenses sold
under the previous agreement will continue to affect revenue recognition through
1998 and certain new agreements may contain acceptance or other provisions that
have the effect of deferring revenue recognition. Such differences in the timing
of revenue recognition will impact the comparability of the Company's historical
revenues and operating results to future results of operations.
 
     The Company continues to evaluate and address business and operational
issues related to Year 2000 compliance, and believes that its internal
management systems and software products are in such compliance. The Company
expects that the total cost to the Company to address any potential Year 2000
issues will not be material to operations.
 
RESULTS OF OPERATIONS
 
     The following table sets forth certain financial data as a percentage of
revenues for the periods indicated.
 
<TABLE>
<CAPTION>
                                                                             THREE MONTHS
                                                YEAR ENDED DECEMBER 31,     ENDED MARCH 31,
                                               -------------------------    ---------------
                                                1995      1996     1997      1997     1998
                                               ------    ------    -----    ------    -----
<S>                                            <C>       <C>       <C>      <C>       <C>
Revenues:
  Software license...........................    79.3%     78.6%    61.7%     70.6%    49.6%
  Service and maintenance....................    20.7      21.4     38.3      29.4     50.4
                                               ------    ------    -----    ------    -----
     Total revenues..........................   100.0     100.0    100.0     100.0    100.0
Cost of revenues:
  Software license...........................    83.2      49.8     17.4      22.3     14.3
  Service and maintenance....................   177.9     150.1     47.4      74.5     42.3
                                               ------    ------    -----    ------    -----
     Total cost of revenues..................   261.1     199.9     64.8      96.8     56.6
Operating expenses:
  Sales and marketing........................   148.6     103.0     32.1      46.7     33.6
  Product development........................   246.3     104.0     28.6      48.0     19.0
  General and administrative.................   149.0      63.3     23.6      32.9     27.6
  Contract termination.......................      --        --       --        --     54.2
                                               ------    ------    -----    ------    -----
     Total operating expenses................   543.9     270.3     84.3     127.6    134.4
Loss from operations.........................  (705.0)   (370.2)   (49.1)   (124.4)   (91.0)
Interest income (expense), net...............    (1.7)     13.3      3.2       4.4      4.1
                                               ------    ------    -----    ------    -----
Net loss.....................................  (706.7)%  (356.9)%  (45.9)%  (120.0)%  (86.9)%
                                               ======    ======    =====    ======    =====
</TABLE>
 
  Three Months Ended March 31, 1998 and March 31, 1997
 
     Revenues.  Revenues increased 137.6% to $2.3 million for the three months
ended March 31, 1998 from $982,273 for the three months ended March 31, 1997.
Software license revenues increased 67.1% to $1.2 million for the three months
ended March 31, 1998 from $693,145 for the three months ended March 31, 1997.
This increase of software license revenues was primarily due to
 
                                       19
<PAGE>   22
 
increased sales of the OSI System. In addition, during the three months ended
March 31, 1998, the Company recognized revenues of $250,000 upon delivery of
source code to COCC for the OSI System pursuant to the agreement with COCC. For
the three months ended March 31, 1998 and 1997, software license revenues
included $212,235 and $194,145, respectively, related to third-party software
products, primarily Oracle's relational database management software, which were
sold by the Company with the OSI System under various sublicense agreements.
Service and maintenance revenues increased 306.6% to $1.2 million for the three
months ended March 31, 1998 from $289,128 for the three months ended March 31,
1997. This increase in service and maintenance revenues was primarily due to
implementation fees on a larger number of completed or in-process installations
and, to a lesser extent, an increase in the installed base of customers under
support and maintenance agreements. The Company's installed customer base was 27
at March 31, 1998 compared with 11 at March 31, 1997.
 
     The Company's backlog at March 31, 1998 was approximately $7.2 million,
which represented the unrecognized portion of contractually committed software
license and implementation fees.
 
     Cost of revenues.  Cost of software license revenues consists primarily of
sublicense fees paid on third-party software products that are sold with the OSI
System, including Oracle's relational database product, amortization of
capitalized software development costs and personnel and other costs to develop
and produce media and documentation. The Company amortizes capitalized software
development costs over a three-year period. Through March 1998, cost of revenues
also included royalties paid to Banking Spectrum Services, Inc., a shareholder
of the Company ("Banking Spectrum") for certain consulting and support services.
In March 1998, the Company entered into an agreement with Banking Spectrum that
released it from paying future royalties to Banking Spectrum. (See Note 13 of
Notes to the Company's Financial Statements). Cost of service and maintenance
fees primarily consists of personnel and related facility expenses associated
with implementation, training and consulting activities, and ongoing customer
support and product maintenance activities.
 
     Total cost of revenues increased 38.8% to $1.3 million for the three months
ended March 31, 1998 from $951,131 for the three months ended March 31, 1997. As
a percent of total revenues, total cost of revenues decreased to 56.6% for the
three months ended March 31, 1998 from 96.8% for the three months ended March
31, 1997, reflecting higher total revenues and productivity gains in the
implementation, training and customer support functions.
 
     Cost of software license revenues increased 51.9% to $332,675 for the three
months ended March 31, 1998 from $218,976 for the three months ended March 31,
1997. This increase was primarily due to an increase in the number of Oracle
relational database licenses required to support a greater number of new
installations, and increased royalties paid to Banking Spectrum. Cost of
software license revenues as a percent of software license revenues decreased to
28.7% for the three months ended March 31, 1998 from 31.6% for the three months
ended March 31, 1997. This decline was primarily due to a larger software
license fee revenue base over which to spread costs.
 
     Cost of service and maintenance revenues increased 34.9% to $987,697 for
the three months ended March 31, 1998 from $732,155 for the three months ended
March 31, 1997. This increase is primarily due to the hiring of additional
personnel in the implementation, training and customer support departments. Cost
of service and maintenance revenues as a percentage of service and maintenance
revenues decreased to 84.0% for the three months ended March 31, 1998 from
253.2% for the three months ended March 31, 1997. This decrease was primarily
due to a larger service and maintenance revenue base and productivity gains
achieved in the implementation, training and support functions with a larger
number of installations and a larger installed base.
 
     Sales and marketing.  Sales and marketing expenses primarily include
personnel costs associated with the Company's sales and marketing activities,
including sales commissions, travel and related overhead, and expenses incurred
in connection with trade shows, advertising, product literature and other
promotional activities. Sales and marketing expenses increased 71.0% to
                                       20
<PAGE>   23
 
$784,274 for the three months ended March 31, 1998 from $458,562 for the three
months ended March 31, 1997. This increase was primarily due to an increase in
sales department personnel and increased sales commissions paid on higher
revenues. Sales and marketing expenses as a percentage of total revenues
decreased to 33.6% for the three months ended March 31, 1998 from 46.7% for the
three months ended March 31, 1997. This decrease was primarily due to a larger
revenue base over which to spread costs.
 
     Product development.  Product development expenses consist of personnel and
related overhead expenses for programmers and outside consultants involved in
developing and maintaining new and existing software products. The Company
accounts for software development costs under Statement of Financial Accounting
Standards No. 86 "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed" ("SFAS 86"). Product development expenses are
charged to expenses as incurred until technological feasibility is established.
Thereafter, costs are capitalized until the product is released to the market.
The Company defines technological feasibility as the point in time at which the
Company has a working model of the related product. Capitalized software costs
are amortized over three years. Product development expenses decreased 6.0% to
$443,192 for the three months ended March 31, 1998 from $471,681 for the three
months ended March 31, 1997. This decrease was primarily due to increases in
capitalized software that offset increases in expenses associated with
additional staffing. The Company capitalized software development costs of
$107,986 and $34,977 for the three months ended March 31, 1998 and 1997,
respectively, in accordance with SFAS 86. Product development expenses as a
percentage of total revenues decreased to 19.0% for the three months ended March
31, 1998 from 48.0% for the three months ended March 31, 1997. This decrease was
primarily due to a larger revenue base over which to spread costs. The Company
anticipates that product development costs will increase in absolute terms in
future periods as the Company continues its development work on future releases
of the OSI System.
 
     General and administrative.  General and administrative expenses primarily
include personnel costs associated with the executive, administrative and
finance staff, as well as outside professional fees and other administrative
costs. General and administrative costs increased 98.6% to $642,922 for the
three months ended March 31, 1998 from $323,698 for the three months ended March
31, 1997. This increase was primarily due to the addition of personnel to
support the Company's growth. The Company believes that its costs of
professional services will continue to increase in future periods to accommodate
anticipated growth and expenses associated with its responsibilities as a public
company. General and administrative expenses as a percentage of total revenues
decreased to 27.6% for the three months ended March 31, 1998 from 32.9% for the
three months ended March 31, 1997. This decrease was primarily due to a larger
revenue base over which to spread costs.
 
     Contract termination.  In January 1994, the Company entered into an
agreement with Banking Spectrum to provide and receive certain consulting and
support services. Under the agreement, Banking Spectrum was entitled to three
percent of the Company's future license and maintenance revenues in exchange for
use of the Banking Spectrum products and Banking Spectrum's contributions to the
design of the Company's software, and an additional five percent of the
Company's future license and maintenance revenues for those future customers to
which Banking Spectrum provides compliance and regulatory support.
 
     In March 1998, the Company and Banking Spectrum terminated their previous
agreement and entered into a distribution and termination agreement. The new
agreement released the Company from any future royalty payments to Banking
Spectrum in exchange for a cash payment of $100,000 to Banking Spectrum and
fully vested options to shareholders of Banking Spectrum to purchase 275,000
shares of Common Stock at an exercise price of $0.45 per share. The stock
options were estimated by management to have a fair value of approximately $1.6
million. Net of amounts previously accrued, the Company recorded a contract
termination expense of approximately $1.3 million for the three months ended
March 31, 1998.
                                       21
<PAGE>   24
 
     Interest income (expense), net.  For the three months ended March 31, 1998,
the Company's cash balance was higher than in 1997 resulting in higher interest
income, which was partially offset by interest expense relating to an equipment
loan.
 
  Years Ended December 31, 1997 and 1996
 
     Revenues.  Total revenues increased 552.3% to $6.6 million in 1997 from
$1.0 million in 1996. Software license revenues increased 411.5% to $4.1 million
in 1997 from $801,532 in 1996. This increase was primarily due to increased
sales of the OSI System. Service and maintenance revenues increased 1070.4% to
$2.5 million in 1997 from $217,861 in 1996. This increase in service and
maintenance revenues was primarily due to a larger number of completed or
in-process installations and, to a lesser extent, an increase in the installed
base of customers under support and maintenance agreements.
 
     Cost of revenues.  Total cost of revenues increased 111.5% to $4.3 million
in 1997 from $2.0 million in 1996. This increase was primarily due to additional
staffing in the implementation, conversion, training and customer support
departments, increased license fees for third-party software and royalties paid
to Banking Spectrum. Total cost of revenues as a percent of total revenues
decreased to 64.8% in 1997 from 199.9% in 1996. This decrease was primarily due
to higher total revenues and productivity gains in the implementation, training
and customer support functions.
 
     Cost of software license revenues increased 128.8% to $1.2 million in 1997
from $507,094 in 1996. This increase was primarily due to an increase in the
number of Oracle relational database software licenses required for the
increased number of new installations, and increased royalties paid to Banking
Spectrum. Cost of software license revenues as a percent of software license
revenues decreased to 28.3% in 1997 from 63.3% in 1996. This decrease was
primarily due to a larger software license fee revenue base over which to spread
costs.
 
     Cost of service and maintenance revenues increased 105.8% to $3.2 million
in 1997 from $1.5 million in 1996. This increase was primarily attributable to
increased staffing in the implementation, training and customer support
departments to support the Company's growth. Cost of service and maintenance
revenues as a percentage of service and maintenance revenues decreased to 123.6%
in 1997 from 702.5% in 1996. This decrease was primarily due to a larger service
and maintenance revenue base and productivity gains achieved in the
implementation, training and support functions as a result of a larger number of
installations and a larger installed base.
 
     Sales and marketing.  Sales and marketing expenses increased 102.9% to $2.1
million in 1997 from $1.1 million in 1996. This increase was primarily due to an
increase in sales and marketing personnel, increased sales commissions paid on
higher revenues and increased advertising and promotion expenses. Sales and
marketing expenses as a percentage of total revenues decreased to 32.1% in 1997
from 103.0% in 1996. This decrease was primarily due to a larger revenue base
over which to spread costs.
 
     Product development.  Product development expenses increased 79.4% to $1.9
million in 1997 from $1.1 million in 1996. This increase was primarily due to
increased staffing and consulting fees incurred in connection with continued
development of the Company's software products. During 1997 and 1996, the
Company capitalized software development costs of $455,078 and $153,209,
respectively, in accordance with SFAS 86. Amounts capitalized in 1997 included
$240,000 related to the acquisition of automated teller machine ("ATM")
management software from a third party. Product development expenses as a
percentage of total revenues decreased to 28.6% in 1997 from 104.0% in 1996.
This decrease was primarily due to a larger revenue base over which to spread
costs.
 
     General and administrative.  General and administrative expenses increased
143.2% to $1.6 million in 1997 from $645,334 in 1996. This increase was
primarily due to the hiring of additional
 
                                       22
<PAGE>   25
 
accounting and executive personnel required to support the Company's growth.
General and administrative expenses as a percentage of total revenues decreased
to 23.6% in 1997 from 63.3% in 1996. This decrease was primarily due to a larger
revenue base over which to spread costs.
 
     Interest income (expense), net.  During 1997, the Company's average cash
balance was higher than in 1996, resulting in higher interest income, which was
partially offset by interest expense relating to an equipment loan.
 
  Years Ended December 31, 1996 and 1995
 
     Revenues.  Total revenues increased 280.2% to $1.0 million in 1996 from
$268,141 in 1995. Software license revenues increased 276.9% to $801,532 in 1996
from $212,653 in 1995. This increase was primarily due to increased sales of the
OSI System. Service and maintenance revenues increased 292.6% to $217,861 in
1996 from $55,488 in 1995. This increase in service fees was primarily due to
the increase in the number of installations in 1996 and, to a lesser extent, an
increase in the installed base of customers under support and maintenance
agreements.
 
     Cost of revenues.  Total cost of revenues increased 191.1% to $2.0 million
in 1996 from $700,006 in 1995. As a percent of total revenues, total cost of
revenues decreased to 199.9% in 1996 from 261.1% in 1995, reflecting higher
total revenues over which to spread costs. Cost of software license revenues
increased 127.4% to $507,094 in 1996 from $223,015 in 1995. This increase was
due to increased license fees paid to third-party software providers, primarily
Oracle, and increased royalties paid to Banking Spectrum. Cost of service and
maintenance revenues increased 220.9% to $1.5 million in 1996 from $476,991 in
1995. This increase was primarily attributable to increased staffing in the
implementation, training and customer support functions required to support the
growth in customer installations as noted above.
 
     Sales and marketing.  Sales and marketing expenses increased 163.7% to $1.1
million in 1996 from $398,496 in 1995. This increase was primarily due to an
increase in the number of sales personnel and increased sales commissions paid
on higher revenues. Sales and marketing expenses as a percentage of total
revenues decreased to 103.0% in 1996 from 148.6% in 1995. This decrease was
primarily due to a larger revenue base over which to spread costs.
 
     Product development.  Product development expenses increased 60.5% to $1.1
million in 1996 from $660,510 in 1995. Product development expense increased
primarily due to increased staffing and consulting fees required to support
continued development of the Company's software products. During 1996 and 1995,
the Company capitalized software development costs of $153,209 and $119,514,
respectively, in accordance with SFAS 86. Product development expenses as a
percentage of total revenues decreased to 104.0% in 1996 from 246.3% in 1995.
This decrease was primarily due to a larger revenue base over which to spread
costs.
 
     General and administrative.  General and administrative expenses increased
61.5% to $645,334 in 1996 from $399,576 in 1995. The increase in expenses was
primarily due to increased costs due to the relocation and expansion of the
Company's facilities. General and administrative expenses as a percentage of
total revenues decreased to 63.3% in 1996 from 149.0% in 1995. This decrease was
primarily due to a larger revenue case over which to spread costs.
 
     Interest income (expense), net.  During 1995, the Company was funding
operations with bridge loans from existing investors until a December 1995
preferred stock sale. The interest on the bridge loans exceeded the interest
income earned on the operating account balance during 1995.
 
                                       23
<PAGE>   26
 
SELECTED QUARTERLY RESULTS OF OPERATIONS
 
     The following table sets forth unaudited quarterly results of operations of
the Company for each of the quarters in the year ended December 31, 1997 and the
three months ended March 31, 1998. In management's opinion, this unaudited
information has been prepared on the same basis as the audited Financial
Statements and includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the information for the
quarters presented, when read in conjunction with the Company's Financial
Statements and Notes thereto included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                         ---------------------------------------------------------
                                         MAR. 31,    JUNE 30,    SEPT. 30,    DEC. 31,    MAR. 31,
                                           1997        1997        1997         1997        1998
                                         --------    --------    ---------    --------    --------
                                                              (IN THOUSANDS)
<S>                                      <C>         <C>         <C>          <C>         <C>
Revenues:
  Software license.....................  $   693     $   519      $  643       $2,245     $ 1,158
  Service and maintenance..............      289         467         698        1,095       1,176
                                         -------     -------      ------       ------     -------
     Total revenues....................      982         986       1,341        3,340       2,334
Costs of revenues:
  Software license.....................      219         150         251          541         333
  Service and maintenance..............      732         658         748        1,012         987
                                         -------     -------      ------       ------     -------
     Total cost of revenues............      951         808         999        1,553       1,320
Operating expenses:
  Sales and marketing..................      458         496         500          678         784
  Product development..................      472         560         480          390         444
  General and administrative...........      324         416         381          447         643
  Contract termination.................       --          --          --           --       1,265
                                         -------     -------      ------       ------     -------
     Total operating expenses..........    1,254       1,472       1,361        1,515       3,136
Income (loss) from operations..........   (1,223)     (1,294)     (1,019)         272      (2,122)
Interest income (expense), net.........       44          31          46           88          95
                                         -------     -------      ------       ------     -------
Net income (loss)......................  $(1,179)    $(1,263)     $ (973)      $  360     $(2,027)
                                         =======     =======      ======       ======     =======
</TABLE>
 
     The following table sets forth unaudited quarterly results of operations as
a percentage of revenues for each of the quarters in the year ended December 31,
1997 and the three months ended March 31, 1998.
 
<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                          ---------------------------------------------------------
                                          MAR. 31,    JUNE 30,    SEPT. 30,    DEC. 31,    MAR. 31,
                                            1997        1997        1997         1997        1998
                                          --------    --------    ---------    --------    --------
<S>                                       <C>         <C>         <C>          <C>         <C>
Revenues:
  Software license......................     70.6%       52.6%       47.9%        67.2%       49.6%
  Service and maintenance...............     29.4        47.4        52.1         32.8        50.4
                                          -------     -------      ------       ------      ------
     Total revenues.....................    100.0       100.0       100.0        100.0       100.0
Costs of revenues:
  Software license......................     22.3        15.1        18.7         16.2        14.3
  Service and maintenance...............     74.5        66.8        55.8         30.3        42.3
                                          -------     -------      ------       ------      ------
     Total cost of revenues.............     96.8        81.9        74.5         46.5        56.6
Operating expenses:
  Sales and marketing...................     46.7        50.3        37.3         20.3        33.6
  Product development...................     48.0        56.8        35.8         11.7        19.0
  General and administrative............     32.9        42.2        28.4         13.3        27.6
  Contract termination..................       --          --          --           --        54.2
                                          -------     -------      ------       ------      ------
     Total operating expenses...........    127.6       149.3       101.5         45.3       134.4
Income (loss) from operations...........   (124.4)     (131.2)      (76.0)         8.2       (91.0)
Interest income (expense), net..........      4.4         3.2         3.4          2.6         4.1
                                          -------     -------      ------       ------      ------
Net income (loss).......................   (120.0)%    (128.0)%     (72.6)%       10.8%      (86.9)%
                                          =======     =======      ======       ======      ======
</TABLE>
 
                                       24
<PAGE>   27
 
     The Company's revenues and operating results have varied substantially from
quarter to quarter. The Company's quarterly operating results may continue to
fluctuate due to a number of factors, including the timing, size and nature of
the Company's licensing transactions, lengthy and unpredictable sales cycles,
the timing of introduction and market acceptance of new products or product
enhancements by the Company or its competitors, product and price competition,
the relative proportions of revenues derived from license fees and services,
changes in the Company's operating expenses, software bugs or other product
quality problems, personnel changes and fluctuations in economic and financial
market conditions. Accordingly, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and the
results of operations for any quarter are not necessarily indicative of future
results of operations.
 
     Revenues of $3.3 million for the three months ended December 31, 1997
included software license and implementation revenues of $1.6 million associated
with two large banks (assets greater than $1 billion) that were implemented in
that quarter.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company has financed its operations primarily from the sale of
preferred stock and from a credit line for equipment purchases. The Company had
net working capital of $6.2 million at March 31, 1998, including cash and cash
equivalents totaling $7.3 million.
 
     Cash used in operating activities was $514,966, $1.0 million, $3.9 million
and $1.7 million for the three months ended March 31, 1998 and for the years
ended December 31, 1997, 1996 and 1995, respectively. Cash used in operations
during each of these periods was primarily due to net losses and an increase in
accounts receivable partially offset in each period by increases in accounts
payable, royalties payable and deferred revenues. In 1996, the cash used in
operating activities was also attributable to expenditures for deferred project
costs. In 1997, cash flow from operations was favorably impacted by a reduction
in deferred project costs.
 
     Cash used in investing activities was $289,578, $812,334, $850,083 and
$212,037 for the three months ended March 31, 1998, and for the years ended
December 31, 1997, 1996 and 1995, respectively. Cash used during such periods
was to acquire property and equipment and for capitalized software development
costs. The Company currently has no significant capital spending or purchase
commitments, but expects to continue to engage in capital spending in the
ordinary course of business.
 
     Cash provided by financing activities was $554,835, $5.0 million, $5.3
million and $5.2 million for the three months ended March 31, 1998, and for the
years ended December 31, 1997, 1996 and 1995, respectively. During 1997, 1996
and 1995, the Company received $5.0 million, $5.5 million, and $5.1 million,
respectively, of net proceeds from the sale of preferred stock. In addition, the
Company received $60,000 and $120,000 in proceeds during 1996 and 1995,
respectively, from a subscription note receivable.
 
     In 1995, the Company received and repaid $1.0 million in bridge loans from
existing investors. In September 1996, the Company entered into a $250,000
equipment line of credit with a bank. The equipment line allowed for draw downs
through September 1997 with the outstanding borrowings on the equipment line
converting to a $104,002, nine percent term loan payable in 36 months beginning
in October 1997. As of March 31, 1998, the Company had an outstanding balance of
$83,779 under this term loan. In June 1997, the Company entered into a $1.0
million working capital line of credit with the same bank that provides the
equipment line of credit. The line is secured by all assets, exclusive of those
financed under the equipment line. The maximum amount available under this line
of credit is 75% of domestic accounts receivable, less amounts that have been
outstanding for more than 90 days. This line of credit expires July 20, 1998. At
March 31, 1998, there was no balance outstanding on this line of credit.
 
     The Company believes that the proceeds generated by the sale of Common
Stock by the Company in this offering, cash and cash equivalents on hand and
cash generated by operations will be sufficient to meet the Company's working
capital requirements for the next twelve months.
 
                                       25
<PAGE>   28
 
                                    BUSINESS
 
     The Company is a leading provider of client/server core processing software
and related services to small to mid-size banks and credit unions. The Company
has developed The Complete Banking Solution and The Complete Credit Union
Solution (the "OSI System"), which are fully-integrated suites of banking and
credit union applications that operate in a Microsoft Windows NT environment
with an Oracle relational database. The Company's software supports all of an
institution's core processing requirements, including deposits and loans, teller
functions, home/ Internet banking and platform automation. The Company's open
and flexible client/server architecture is designed to enable its customers to
reduce their core processing and operational costs and leverage customer
information to improve retention and identify potential cross-selling
opportunities. The OSI System interfaces to third-party applications that are
commonly used in banks and credit unions, including check processing, ATMs and
general ledger applications. The OSI System enables its customers to enhance
customer satisfaction and compete more effectively in the financial services
industry.
 
INDUSTRY BACKGROUND
 
     Currently, there are over 20,000 banking and depositary institutions in the
United States with assets of up to $3 billion, including small to mid-size
commercial banks, thrifts and credit unions. The Company believes that these
institutions, which have traditionally competed on personalized service, are
facing increasing competitive pressures to improve their efficiencies in the
areas of customer service, operations and marketing. In addition, the evolving
requirements of the electronic marketplace demand that banks expand their
traditional services to include ATMs, telephone banking and home banking through
personal computers and the Internet. Banks and depositary institutions of all
sizes are also experiencing increased competitive pressures from non-bank
competitors which, as a result of the deregulation of the financial services
industry, can offer products and services traditionally marketed by banks.
 
     In responding to these trends, small to mid-size banks and credit unions
are increasingly seeking to implement information technology systems that will
enable them to increase the efficiency of their operations, offer a broader
array of services and provide enhanced levels of customer service. These
institutions have traditionally fulfilled their information technology needs
through legacy computer systems, operated either by the institution or a service
bureau on an outsourced basis. These systems, which operate in large mainframe
or minicomputer environments, are designed primarily to batch process a large
number of transactions and create centralized financial records. Nightly batch
sessions are typically required to update each customer's account with the
business day's transactions. As a result, banks utilizing legacy systems
typically do not offer their customers real-time processing of transactions, a
feature that is becoming an increasingly important operating requirement.
Moreover, legacy systems typically store data in non-relational, sequentially
indexed files. In this environment, retrieval of customer or other information
can be burdensome and time consuming and limits an institution's flexibility in
meeting changing customer service requirements. The centralized processing and
proprietary architecture of these systems is not designed to easily support
analysis for decision-making or integrate with other business applications used
throughout the enterprise. Financial institutions relying on legacy systems
often find it difficult to conform their business processes and reporting to the
architecture of the system and are not able to easily adapt the system to their
evolving needs.
 
     The need to improve customer service levels, enhance operating efficiencies
and lower costs has contributed to the growing acceptance of the client/server
model of computing based on open, industry-standard operating environments and
relational databases. In a client/server environment, servers provide shared
access to data and applications, while client devices such as personal computers
and workstations provide the user interface and local processing functions.
Client/server
 
                                       26
<PAGE>   29
 
systems can improve information sharing by providing access at each desktop to
critical customer and transaction data and business applications, which had
historically been restricted or difficult to access in legacy environments.
Client/server applications enable organizations to streamline core business
practices and reporting and to make faster, more informed decisions. The
client/server model is also scalable as capacity can be increased by upgrading
the server or linking multiple servers. In addition, the client/server model
offers flexibility in that additional functionality can easily be provided
through third-party applications.
 
     The Company believes that, until recently, the adoption of client/server
systems in many banks and credit unions has lagged other industries due to the
limited number of suppliers of open client/server systems designed specifically
to address the core processing requirements of such institutions. In part, this
has been attributable to the industry's long-standing reliance on legacy systems
and the high-volume processing requirements of larger banks. Among smaller
banking institutions, which the Company believes are best positioned to benefit
from the implementation of client/server systems, the adoption of such systems
has been hampered by the absence of cost effective client/server systems
designed specifically for use by such institutions. The Company believes that
fewer than 200 small to mid-size banks and credit unions in the United States
have implemented open client/server core processing systems.
 
     The Company believes that banks and credit unions today are seeking
information technology solutions that combine the performance, reliability and
security associated with legacy-based systems with the flexibility, ease-of-use,
scalability and reduced cost of ownership associated with client/server systems.
Banks and credit unions require systems that can be easily integrated with other
applications used in the enterprise, provide real-time transaction processing
and comply with applicable regulatory requirements. Banks and credit unions also
require core processing systems that are able to accommodate new and emerging
technologies, such as ATMs, telephone banking and home banking via personal
computers and the Internet. In addition, these institutions require systems that
are Year 2000 compliant. Banks and credit unions are also seeking information
technology solutions that offer quick and effective access to customer and
account data in order to offer better, more customized services, monitor trends
and performance and cross-sell services and products. A client/server core
processing solution must be able to meet all of these requirements to enable
banks and credit unions to achieve a competitive advantage in their markets
through improved customer service, lower costs and enhanced access to customer
information.
 
THE OSI SOLUTION
 
     The OSI System enables financial institutions to process transactions and
access critical customer and account data through a suite of open, distributed
application modules that operate in a Microsoft Windows NT environment with an
Oracle relational database. The Company's solutions are designed to provide its
customers with the following benefits:
 
     X Fully-Integrated Solution.  The OSI System supports all of an
       institution's core processing requirements, including those of its branch
       offices. The OSI System accommodates telephone banking and home banking
       via personal computers and the Internet, and provides ATM management
       capabilities. All components of the OSI System utilize a common
       relational database and operating system. This architecture allows a bank
       to provide its customers with real-time information concerning their
       accounts and to create real-time management reports. The OSI System also
       eliminates potential errors arising from the maintenance of multiple
       databases and enables institutions to change their business processes
       without requiring the modification of the underlying data model.
 
     X Enhanced Customer Service Through Real-Time Processing.  The OSI System
       allows a bank's customers and employees to access and process information
       on a real-time basis, which enables a bank's customers to receive up to
       the minute account and transaction information from any branch,
       telephone, home or Internet location. The OSI System also enables bank
 
                                       27
<PAGE>   30
 
       employees to quickly identify customers and gather accurate and current
       information about the entire customer relationship. Availability of this
       information enables institutions to improve their level of customer
       service and provide them with incremental opportunities for marketing
       additional products and services.
 
     X Open Architecture.  The OSI System operates in an open environment using
       the Microsoft Windows NT operating system and the Oracle relational
       database management system, which are installed on non-proprietary
       hardware. The flexible, open architecture of the OSI System facilitates
       the use of popular, off-the-shelf third-party software and the addition
       of more processing capability as the institution's requirements increase.
 
     X Reduced Cost of Ownership.  The OSI System can reduce the overall cost of
       ownership of a financial institution's core system. By integrating core
       banking functions, which have historically run on separate systems, into
       one seamless environment, the OSI System enables its customers to achieve
       operational efficiencies. The OSI System can also reduce the costs that
       would otherwise be associated with the ongoing maintenance of legacy
       systems. In addition, the time and expense required to adapt the OSI
       System to accommodate changing business processes and regulatory
       requirements is less than that required with a typical legacy system. The
       ability of the OSI System to operate across a broad range of popular
       hardware provides customers with increased flexibility and the ability to
       select the most cost-effective system.
 
STRATEGY
 
     The Company's objective is to be the leading supplier of enterprise-wide
client/server software for small to mid-size banks and credit unions. The
Company's strategy for achieving this objective includes the following:
 
     X Focus on Small to Mid-Size Banks and Credit Unions.  The Company will
       continue to focus on providing core processing solutions to small to
       mid-size banks and credit unions, which the Company defines as
       institutions with assets up to $3 billion. The Company believes that the
       client/server model of computing is particularly well-suited for
       institutions in this market. These institutions, unlike larger banks,
       typically do not require extensive customization in connection with the
       implementation of a banking system which makes it easier for them to
       realize the benefits of client/server core processing systems in a
       cost-effective manner. The Company believes that the demand for
       client/server systems in this market is increasing as a result of these
       factors.
 
     X Expand Distribution Through Outsourcing Solutions.  A number of small to
       mid-size banks and credit unions outsource their core processing systems
       to third-party service providers. These third-party service providers
       typically choose one or more significant banking solutions on which they
       base their outsourcing services. The Company has established strategic
       relationships with BISYS, a major national outsourcing provider, and
       COCC, a major regional outsourcing provider, under which these third
       parties provide outsourced processing services to the financial services
       industry using the OSI System. The Company plans to continue to jointly
       market the OSI System with its outsourcing partners to expand its
       installed customer base.
 
     X Leverage Customer Base.  The Company intends to continue to leverage its
       installed customer base by expanding the range of complementary products
       and services available to its customers. The Company generates recurring
       revenues by entering into maintenance arrangements with its customers
       that provide for annual service fees. As the asset size or number of
       accounts of a financial institution increases, or as additional
       application modules or services are provided, customers typically pay
       incremental license and maintenance fees. The Company plans to continue
       to expand its professional services offerings to its installed base of
       customers as they implement additional application modules.
 
                                       28
<PAGE>   31
 
     X Maintain Product Leadership.  The Company believes that the open
       client/server architecture of the OSI System provides it with competitive
       advantages over other core processing systems. For example, the OSI
       System offers on-line, real-time transaction processing capabilities that
       are not available in many competitive systems, and the Company recently
       announced the introduction of a home/Internet banking module supporting
       the Open Financial Exchange ("OFX") standard, which enables customers to
       access bank services using personal computers and the Internet. The
       Company's open architecture enables it to utilize leading,
       non-proprietary software and hardware to provide comprehensive
       functionality. The Company intends to extend its technological leadership
       by continuing to add new applications, integrate new technologies and
       expand the functionality of its system.
 
TECHNOLOGY
 
     The Company developed the OSI System to enable customers to realize the
advantages of client/server architectures. The OSI System is designed to offer
the following benefits: (i) flexible functionality, scalability, and high
performance, (ii) lower total cost of ownership, (iii) the ability to operate
either in real-time or batch processing mode and (iv) integration with
third-party applications and emerging technologies. The Company believes that
the OSI System achieves these objectives through an open architecture that is
based on leading technologies in the areas of operating systems, relational
databases, graphical user interfaces and report generation tools.
 
     The foundation of the OSI System is an enterprise-wide relational database.
The OSI System uses relational database software from the industry's leading
supplier, Oracle Corporation. The OSI System's functionality is implemented
through application modules, each of which performs a specific core processing
function, that share the data in the relational database. This approach allows
for database normalization and business modeling. Through database
normalization, data is organized in tables that are easily accessible through a
variety of query tools as well as the application modules. The OSI System's data
model consists of over 600 tables, which the Company believes is substantially
greater than the number of tables in the data models of competing solutions. As
a result, a higher degree of independence between a customer's business
processes and underlying data is achieved and the OSI System is more scalable
and adaptable to changing business needs. New application modules may be
developed or existing modules may be altered as required without having to
change the underlying data model.
 
     The OSI System is based on a single, enterprise-wide database as opposed to
a distributed database in which the database is spread among two or more
components, typically resident on different computers. The principal benefit of
an architecture using a single enterprise-wide database is that it permits
real-time processing so that, for example, transactions are immediately
reflected in a bank or credit union customer's account. This contrasts with a
batch processing approach in which all accounts are updated only at scheduled
intervals, typically at the end of the business day. The OSI System may be
configured to operate in either batch mode or a hybrid batch/real-time mode for
those banks or credit unions that do not require or desire real-time processing.
 
     The OSI System is a 32-bit Microsoft Windows NT application that operates
in an open systems environment. The system does not require any proprietary
hardware components and is currently deployed on a wide range of client and
server platforms. The system features multi-level security that takes advantage
of the features of the underlying operating system and relational database as
well as offers some that are indigenous to the system. The OSI System also
interfaces to a broad range of third-party applications and peripherals that are
commonly used in banks and credit unions.
 
PRODUCTS
 
     The OSI System is an enterprise-wide solution that addresses the core
processing requirements of small to mid-size banks and credit unions and other
financial institutions. The OSI System consists of software application modules
that operate on a fully-integrated basis and is designed to be Year
 
                                       29
<PAGE>   32
 
2000-compliant. The Company recently released its OSI/ATM Server, the OSI
home/Internet banking module and a 32-bit version of the OSI System. In
addition, the Company markets third-party applications that are commonly used in
banks and credit unions. Current prices for the base OSI System software license
range from approximately $140,000 to $1.5 million, depending on asset size and
number of customer accounts.
 
  Application Modules
 
     The following table describes certain application modules of the OSI
System:
 
<TABLE>
<CAPTION>
APPLICATION                                                        DESCRIPTION
-----------                                                        -----------
<S>                                           <C>
Customer Service..........................    Provides a quick and comprehensive view of each cus-
                                              tomer relationship; maintains customer's picture and
                                              signature for recognition; supports opening and
                                              maintenance of all types of accounts and provides a
                                              measure of an individual customer's profitability;
                                              enables tellers to complete an entire transaction
                                              on-line in the presence of the customer.
Comprehensive Lending.....................    Provides comprehensive management of all loans,
                                              whether mortgage, consumer or commercial, including
                                              establishment of escrow, insurance and tax accounts;
                                              can provide loan-loss reserve calculations based on
                                              risk ratings and loan classifications; includes "what
                                              if" loan calculator and amortization schedule.
Depository System.........................    Supports all forms of deposit instruments, including
                                              passbook and statement savings, club accounts and
                                              checking accounts, share drafts (credit unions),
                                              certificates of deposit and time deposits and
                                              repurchase agreements.
Teller Application........................    Provides a teller with real-time access to the bank's
                                              database and a complete profile of the bank's clients
                                              (including a customer's picture and signature); easily
                                              navigated by the teller and does not require
                                              transaction codes.
General Ledger Interface..................    Easy-to-use module designed to manage interfaces to
                                              popular general ledger systems.
Bank and Branch Operations................    A comprehensive and secure administrative management
                                              tool for determining user accessibility, security,
                                              hours of operation, cash boxes and authorization
                                              structures.
End of Day Production.....................    Identifies and schedules all end of day processing,
                                              including updating of interest, fees and other
                                              charges, and produces daily production reports and
                                              customer statements.
Executive Information.....................    Enables management to monitor bank's performance
                                              through on-line queries of any product or branch;
                                              tools can generate new reports in graphical or tabular
                                              form based upon ad hoc information requests.
External File Manager.....................    Manages all data that must be entered into the
                                              database from external sources, including check
                                              clearings, ACH (automatic clearing house), loan
                                              origination and ATM transaction files.
</TABLE>
 
                                       30
<PAGE>   33
 
<TABLE>
<CAPTION>
APPLICATION                                                        DESCRIPTION
-----------                                                        -----------
<S>                                           <C>
Payroll...................................    Enables updating of all payroll accounts provided
                                              through an ACH format or from outside payroll systems.
Product Manager...........................    Enables bank to design and promote new loan, checking
                                              and deposit products and to monitor current product
                                              offerings; uses fill-in-the-blank, easy-to-follow
                                              screens with user defined fees and rate schedules that
                                              allow for unlimited tiering.
IRS/Year-End Reporting....................    Supports year-end IRS reporting information for both
                                              standard and specialized forms.
Forms Integration.........................    Integrates generation of forms, includes new account
                                              documents, disclosures, signature cards and passbooks;
                                              eliminates need to inventory pre-printed forms.
</TABLE>
 
  OSI/ATM Server
 
     The OSI/ATM Server is an ATM management system that provides banks with the
capability to directly manage their own ATM network or interface with regional
ATM networks. The OSI/ATM Server enables customers to reduce costs associated
with ATM systems and provides features such as real-time, single balance update
capabilities, support for multiple ATM transactions and processing and
authorization options. In addition, the OSI/ATM Server enables banks to define
their own operating parameters without the need for program modifications. The
system, which operates on Stratus computers, is designed to provide
fault-tolerant reliability. The OSI/ATM Server is fully integrated with the OSI
System. Current list prices for the OSI/ATM Server module range from
approximately $45,000 to $90,000.
 
  Home/Internet Banking Module
 
     The Company's home/Internet banking module enables customers to remotely
access an online banking system through which a customer can transfer funds from
transaction accounts, make balance inquiries, generate instant statements and
monitor account activity. The Company's system supports the OFX standard, which
enables the system to interface to bank services that use a variety of devices
to originate customer transactions. Through the OFX standard, the OSI System can
also be integrated with commonly-used personal financial management products,
such as Microsoft's Money 98 and Intuit's Quicken. Current list prices for the
home/Internet banking module range from approximately $50,000 to $100,000.
 
  Third-Party Applications
 
     The open architecture of the OSI System facilitates the integration of
third-party applications, and the Company offers various third-party
applications for use with the OSI System. Such applications include:
asset/liability management, check and statement imaging, collection management,
disaster recovery planning, general ledger, voice response, loan origination and
on-line ATM interface.
 
SALES AND MARKETING
 
     The Company markets its software and services primarily through its direct
sales force. As of May 31, 1998, the Company employed 22 sales and marketing
personnel.
 
     The Company's marketing program includes direct mail, networking,
telemarketing, advertising in industry specific trade journals and periodicals,
seminars and trade shows. The Company maintains an Internet web site from which
prospective customers can retrieve and view product information. The Company has
established an alliance with Unisys PAAG under which Unisys has
 
                                       31
<PAGE>   34
 
exclusive rights to market the OSI System in Asia (except Japan), South Africa
and certain other countries. The Company has established strategic relationships
with Oracle Corporation, Compaq Computer Corporation and Stratus Computer, Inc.
providing for joint marketing efforts.
 
     Historically, a significant portion of all banks and credit unions have
chosen to satisfy their information technology needs through service bureaus. To
address this market, the Company has entered into software license and marketing
agreements with BISYS and COCC under which these third parties provide
outsourced core processing services to the financial services industry using the
OSI System.
 
     Pursuant to a Software License and Marketing and Distribution Agreement
with BISYS, the Company has granted BISYS the exclusive rights in the United
States, subject to certain exceptions, to use the OSI System to provide
outsourcing of core processing services to banks and credit unions. This grant
becomes non-exclusive if BISYS fails to enter into a specified number of
customer contracts in specified years. BISYS has agreed that the Company shall
be the exclusive provider of client/server core processing systems for BISYS
during the term of the Agreement. Pursuant to the Agreement, the parties engage
in joint marketing of each other's products and services and refer potential
customers to each other. As of June 30, 1998, BISYS had entered into outsourcing
agreements with [     ] institutions.
 
     The Company has also entered into a License and Marketing Agreement with
COCC under which the Company has granted COCC certain exclusive rights to use
the OSI System to provide outsourced core processing services to banks and
credit unions in the New England states and New York. COCC must meet certain
customer milestones to maintain its exclusivity. The Company receives license
fees with respect to outsourced data processing agreements entered into by COCC,
subject to a cumulative maximum payment, as stipulated in the agreement. As of
June 30, 1998, COCC had entered into outsourcing agreements with [     ]
institutions.
 
CUSTOMERS
 
     The Company's customers are primarily small to mid-size banks and credit
unions, typically with fewer than ten branches, that serve the banking needs of
their local communities. These banks are often the primary local providers of
savings accounts and consumer, mortgage and commercial loans in the markets they
serve. The majority of the Company's customers are located in the Northeast
region, although the Company is expanding its presence in other regions.
 
     The Company had three, two, four and two significant customers, which
accounted for approximately 48%, 32%, 94% and 98%, respectively, of total
revenues for the three months ended March 31, 1998 and the years ended 1997,
1996 and 1995, respectively. The Company anticipates that no customer will
account for more than 10% of revenues in the year ending December 31, 1998.
Sales to two banks and payments from one outsourcing provider accounted for
approximately 22%, 15% and 11% of total revenues, respectively, in the three
months ending March 31, 1998. Sales to two banks accounted for approximately 17%
and 15% of total revenues, respectively, in the year ended December 31, 1997.
Sales to four banks accounted for approximately 38%, 22%, 20% and 14% of total
revenues, respectively, in the year ended December 31, 1996. Sales to two banks
accounted for approximately 55% and 43% of total revenues, respectively, in the
year ended December 31, 1995.
 
SERVICES
 
     The Company provides comprehensive implementation and training services to
customers who purchase the OSI System. An implementation team works with the
customer through all phases of the project, including software installation,
data conversion, education and training. Full implementation of the OSI System
typically occurs over 14 to 24 weeks, depending on the complexity of the
conversion. The Company also provides post-implementation customer support and
maintenance.
 
                                       32
<PAGE>   35
 
As of May 31, 1998, the Company had 59 employees dedicated to implementation,
training, support and maintenance.
 
     X Implementation.  The Company assigns to each customer a project manager
       who coordinates all activities related to the implementation of the OSI
       System. The Company also assigns conversion programmers who convert a
       bank's current account data to the relational database in the OSI System.
       Data conversion activities include data mapping, program development,
       testing, data auditing and a complete trial conversion prior to the final
       implementation date.
 
     X Training.  The Company offers a comprehensive education and training
       program to its customers. The Company offers training classes at its
       headquarters in Connecticut and hands-on application training at the
       customer site prior to installation of the OSI System. In addition,
       on-site training for ancillary products is available upon request. The
       Company also assists customers desiring to adapt the OSI System to
       particular needs, including customer-specific software features, reports
       or regulatory requirements.
 
     X Support and Maintenance.  Support and maintenance personnel provide
       immediate telephone response service during normal working hours,
       supplemented by on-call support 24 hours a day, seven days a week. The
       Company also provides product support services through the Internet,
       electronic mail and facsimile. In addition, the Company offers remote
       product support services whereby the Company's support team directly
       connects to a customer's server to troubleshoot or perform routine
       maintenance. The Company enters into maintenance agreements with its
       customers pursuant to which they pay an annual maintenance fee, based on
       a percentage of the license fee, over the term of the software license.
       See "Management's Discussion and Analysis of Financial Condition and
       Results of Operations -- Overview."
 
PRODUCT DEVELOPMENT
 
     The Company plans to continue to invest significant resources to maintain
and enhance its current product and service offerings. The Company's principal
product development focus is on: (i) enhanced functionality of the OSI System
through the development of new features and improvements to existing
applications modules, (ii) software updates as new versions of the Windows NT
operating system and Oracle relational database are released and (iii) tools to
automate the process of converting a customer's legacy data to the OSI System.
 
     As of May 31, 1998, the Company employed a staff of 24 employees engaged in
product development. The Company's product development expenditures were
approximately $443,192, $1.9 million, $1.1 million and $660,510 for the three
months ended March 31, 1998 and the years ended December 31, 1997, 1996 and
1995, respectively.
 
COMPETITION
 
     The financial services software market is intensely competitive and subject
to rapid technological change. Competitors vary in size and in the scope and
breadth of products and services offered. The Company encounters competition in
the U.S. from a number of sources, including Fiserv, Inc., NCR Corporation,
Electronic Data Systems Corporation, Marshall & Ilsley Corporation, M&I
EastPoint, Phoenix International Ltd., Inc., Jack Henry & Associates, Inc.,
ALLTEL Corporation, Prologic Corporation and Kirchman Corporation, all of which
offer core processing systems or outsourcing alternatives to banks and credit
unions. The Company also competes against a number of smaller, regional
competitors. In addition to these competitors, the Company competes
internationally with Misys plc Banking Division (including Midas-Kapiti
International, Inc., Kindle Banking Systems and ACT Financial Systems), Sanchez
Computer Associates, Inc. and Financial Network Services, among others. The
Company also competes with other core processing alternatives, including
in-house applications, which were either developed internally or purchased from
third-party vendors, and outsourcing, either as a part of a total outsourcing
solution or through a service bureau arrangement. Furthermore, the Company
expects additional competition from other established and emerging companies as
the client/server application software market continues to
 
                                       33
<PAGE>   36
 
expand. There can be no assurance that the Company will be able to compete
successfully against either its existing or future competitors.
 
     In general, the Company competes on the basis of product architecture and
functionality, service and support, including the range and quality of technical
support, training and implementation services, and product pricing in relation
to performance and support.
 
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
 
     The Company relies primarily on a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company's license agreements contain
provisions which limit the number of users, state that title remains with the
Company and protect confidentiality. The Company presently has no patents or
patent applications pending.
 
     Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. Policing
unauthorized use of the Company's products is difficult, particularly overseas,
and while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to the extent of the laws of the United States.
Nevertheless, the Company believes that due to the rapid pace of technological
change in the information technology and software industries, factors such as
the technological and creative skills of its employees, new product
developments, frequent product enhancements and the timeliness and quality of
support services are more important to establishing and maintaining a
competitive advantage in the industry.
 
     The Company does not believe that any of its products infringe upon the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not claim infringement by the Company with respect to current
or future products. Any such claim could result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect upon the Company's business, financial condition and
results of operations.
 
EMPLOYEES
 
     As of May 31, 1998, the Company had a total of 121 employees, of which 27
were engaged in product development and system documentation, 59 were engaged in
implementation, training, support and maintenance, 22 were engaged in sales and
marketing and 13 were engaged in finance and administration. None of the
Company's employees is represented by a labor union. The Company has not
experienced any work stoppages and considers relations with its employees to be
good.
 
FACILITIES
 
     The Company currently leases approximately 15,000 square feet of space in
its headquarters facility in Glastonbury, Connecticut. The lease for this
property expires in 2003. The Company plans to lease approximately 15,000
additional square feet at this facility before the end of 1998.
 
LEGAL PROCEEDINGS
 
     The Company is not a party to any material legal proceedings that would
have a material adverse effect on the Company's business, financial condition or
results of operations.
 
                                       34
<PAGE>   37
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
 
     The executive officers, directors and certain other key employees of the
Company, their respective ages as of March 31, 1998 and their positions with the
Company are as follows:
 
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS            AGE                     POSITION
--------------------------------            ---                     --------
<S>                                         <C>    <C>
Douglas K. Anderson.......................  48     Chairman of the Board and Chief Executive
                                                   Officer
John L. Person............................  63     President and Chief Operating Officer
Graham H. Gurney..........................  57     Senior Vice President of Sales and
                                                   Director
Clifford I. Waggoner......................  56     Senior Vice President, Chief Technology
                                                   Officer and Director
Richard J. Willemin.......................  47     Senior Vice President and Chief Financial
                                                   Officer
Carlos P. Naudon (1)......................  47     Vice Chairman of the Board
Douglas C. Carlisle (2)...................  41     Director
David M. Clarke (1).......................  47     Director
Samuel F. McKay (1)(2)....................  58     Director
William W. Neville........................  44     Director
Richard P. Yanak (2)......................  63     Director
 
KEY EMPLOYEES
---------------
Charles J. Beer...........................  40     Vice President of Application Development
John J. DeMita............................  53     Vice President of Professional Services
John L. Messier...........................  34     Vice President of Conversion Services
Michael D. Nicastro.......................  39     Vice President of Marketing
Debra M. Dabrowski........................  30     Controller
</TABLE>
 
---------------
(1) Member of the Audit Committee effective as of the closing of this offering.
(2) Member of the Compensation Committee effective as of the closing of this
    offering.
 
     Mr. Anderson has served as Chairman of the Board and Chief Executive
Officer of the Company since December 1997 and as a director since July 1994.
Mr. Anderson served as President of the Company from October 1995 to December
1997. From December 1986 to October 1995, Mr. Anderson was employed by the
Savings Bank of Manchester and was responsible for all bank operations and
information technology, most recently as Executive Vice President. Prior to
joining the Savings Bank of Manchester, Mr. Anderson was employed for 14 years
by Unisys Corporation.
 
     Mr. Person has served as President and Chief Operating Officer of the
Company since December 1997, and served as Executive Vice President and Chief
Operating Officer of the Company from May 1997 to December 1997. From August
1996 to May 1997, Mr. Person was Managing Director of Compression Engines, LLC,
a software company. From October 1994 to May 1997, Mr. Person served as
President of Enanti Corporation, a contact management software company. From
July 1992 to October 1994, Mr. Person served as President of HP Films, a film
production company. Mr. Person also served as President of Newtrend MISER Group,
a company specializing in banking software.
 
     Mr. Gurney co-founded the Company in 1992, and has served as Senior Vice
President of Sales of the Company since June 1996 and as a director since 1992.
From September 1984 to October 1987, Mr. Gurney served as regional district
manager for the New York district of Sperry Corporation, a computer hardware and
software company. From October 1987 to June 1992, Mr. Gurney served as the
Eastern regional sales director for Sharebase Corporation, a relational database
company.
 
                                       35
<PAGE>   38
 
Mr. Gurney was employed in various positions for 15 years in the financial
services computing industry.
 
     Mr. Waggoner co-founded the Company in 1992, has served as Senior Vice
President and Chief Technology Officer of the Company since October 1995 and as
a director since 1992. Mr. Waggoner served as President of the Company from May
1992 to October 1995. From June 1987 to May 1992, Mr. Waggoner was Vice
President and Principal of Linc Systems Corporation, a software services
company. Prior to joining Linc Systems Corporation, Mr. Waggoner was employed
for 17 years by Electronic Data Systems Corporation.
 
     Mr. Willemin has served as Senior Vice President and Chief Financial
Officer of the Company since April 1998. From March 1997 to April 1998, Mr.
Willemin served as Chief Financial Officer of Summit Medical, Inc., a supplier
of clinical database software. From September 1996 to February 1997, Mr.
Willemin served as Chief Financial Officer of Datalogix International, Inc., a
supplier of manufacturing and logistics software. From June 1994 to August 1996,
Mr. Willemin served as Vice President and Chief Financial Officer of NEIC, a
transaction processing company in the health care industry. From March 1992 to
June 1994, Mr. Willemin served as interim Chief Financial Officer during periods
of transition for several companies, including, Saratoga Springs Water Company,
a beverage manufacturer and distributor, and Canyon Ranch Spa Cuisine, a mail
order health food company.
 
     Mr. Naudon has served as Vice Chairman of the Board of the Company since
October 1995 and as a director since September 1994, and served as Managing
Director from March 1995 to October 1995. Since May 1992, Mr. Naudon, has served
as Chairman of the Board of BSI Administrative Services Inc., a benefits plan
administration company. In addition, since January 1984, Mr. Naudon has served
as President, Chief Executive Officer and director of Banking Spectrum, Inc. and
Banking Spectrum Services, Inc., each a banking consulting company.
 
     Mr. Carlisle has served as a director of the Company since March 1994.
Since 1984, Mr. Carlisle has served as a general partner of Menlo Ventures VI,
L.P. ("Menlo Ventures"), a venture capital fund that invests in emerging growth
technology companies. Mr. Carlisle is a director of Carrier Access Corporation.
 
     Mr. Clarke has served as a director of the Company since April 1998. Since
September 1993, Mr. Clarke has served as Vice President, Private Equity, of the
Aetna Investment Management Group of Aetna Life Insurance Company ("Aetna").
From September 1977 to September 1993, Mr. Clarke held various other positions
in the Private Bond Investment Group of Aetna.
 
     Mr. McKay has served as a director of the Company since December 1995.
Since April 1994, Mr. McKay has served as a general partner of Axiom Venture
Partners, L.P. ("Axiom"), a venture capital firm. Previously, Mr. McKay was
general partner of Connecticut Seed Ventures, L.P. Mr. McKay is a director of
Anika Therapeutics, Inc., Sabre Communications Corporation, Costar Corporation
and Nightingale Corp.
 
     Mr. Neville has served as a director of the Company since June 1998. Since
June 1997, Mr. Neville has served as President of TOTALPLUS, a division of
BISYS. From June 1995 to June 1997, Mr. Neville served as Senior Vice President
and Eastern regional General Manager of TOTALPLUS. From June 1992 to June 1995,
Mr. Neville served as Vice President and General Manager of the New England
region of TOTALPLUS.
 
     Mr. Yanak has served as a director of the Company since May 1996. Since
October 1996, Mr. Yanak has served as Senior Advisor of NYCE Corporation, an
electronic banking services company. From December 1987 to October 1996, Mr.
Yanak served as President and Chief Executive Officer of NYCE Corporation.
 
     Mr. Beer has served as Vice President of Application Development of the
Company since October 1996, and served as Director of Application Development of
the Company from June 1992
 
                                       36
<PAGE>   39
 
to October 1996. Previously, Mr. Beer served as Assistant Vice President of
Development of American Savings Bank.
 
     Mr. DeMita has served as Vice President of Professional Services of the
Company since September 1996. From December 1995 to September 1996, Mr. DeMita
served as Vice President of Production of NYCE Corporation, an electronic
banking services company. From July 1992 to October 1995, Mr. DeMita served as
President of Hardcopy Media Inc., a printing company and owned and operated
Alpha Graphics, a printing franchise company. Previously, Mr. DeMita served as
President of American Business Information Services, a subsidiary of American
Savings Bank.
 
     Mr. Messier has served as Vice President of Conversion Services of the
Company since December 1997, and served as Manager of Customer Support of the
Company from July 1995 to December 1997. From February 1990 to July 1995, Mr.
Messier served as a Product Support Specialist and Senior Project Manager at
Fiserv, Inc., a financial services technology company.
 
     Mr. Nicastro has served as Vice President of Marketing of the Company since
October 1996, and served as Director of Marketing and Customer Services of the
Company from September 1994 to October 1996. From February 1985 to September
1994, Mr. Nicastro held various product management positions with the Data
Services Division of NCR Corporation. In addition, Mr. Nicastro served in
various positions at Bristol Savings Bank and Citicorp.
 
     Ms. Dabrowski has served as Controller of the Company since May 1997. From
August 1989 to April 1997, Ms. Dabrowski was employed by Price Waterhouse LLP,
an independent public accounting firm, most recently as Audit Manager in its
Technology Industry Group. Ms. Dabrowski is a certified public accountant.
 
     Pursuant to an Amended and Restated Investors' Rights Agreement dated as of
August 22, 1997 among the Company and certain stockholders of the Company, such
stockholders were granted the right (which terminates upon the closing of this
offering) to designate representatives on the Company's Board of Directors.
Under this agreement, Messrs. Carlisle, McKay, Clarke and Neville were elected
the representatives of Menlo Ventures, Axiom, Aetna and BISYS, respectively.
 
     Following this offering, the Board of Directors of the Company will be
divided into three classes, each of whose members will serve for a staggered
three-year term. The Board will consist of three Class I Directors (Messrs.
Carlisle, Naudon and Waggoner), three Class II Directors (Messrs. Gurney, McKay
and Yanak) and three Class III Directors (Messrs. Anderson, Clarke and Neville).
At each annual meeting of stockholders, a class of directors will be elected for
a three-year term to succeed the directors of the same class whose terms are
then expiring. The terms of the Class I Directors, Class II Directors and Class
III Directors expire upon the election and qualification of successor directors
at the annual meeting of stockholders to be held during the calendar years 1999,
2000 and 2001, respectively.
 
     Each officer serves at the discretion of the Board of Directors and holds
office until his or her successor is elected and qualified or until his or her
earlier resignation or removal. There are no family relationships among any of
the directors or executive officers of the Company.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
     The Board of Directors has a Compensation Committee composed of Messrs.
Carlisle, McKay and Yanak, which makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company and
administers and grants stock options pursuant to the Company's stock option
plans, and an Audit Committee composed of Messrs. Clark, McKay and Naudon, which
reviews the results and scope of the audit and other services provided by the
Company's independent public accountants.
 
                                       37
<PAGE>   40
 
DIRECTOR COMPENSATION
 
     Directors do not currently receive any compensation for their services on
the Board of Directors, other than reimbursement for out-of-pocket expenses.
 
EXECUTIVE COMPENSATION
 
     The following table sets forth the total compensation paid or accrued for
the year ended December 31, 1997 for the Company's Chief Executive Officer and
its three other most highly compensated executive officers in 1997 who were
serving as executive officers on December 31, 1997 (the Chief Executive Officer
and such other executive officers are hereinafter referred to as the "Named
Executive Officers"):
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                      LONG-TERM
                                      ANNUAL COMPENSATION            COMPENSATION
                             -------------------------------------   ------------
                                                         OTHER        SECURITIES
                                                         ANNUAL       UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITION   SALARY       BONUS      COMPENSATION    OPTIONS(1)    COMPENSATION
---------------------------  --------   -----------   ------------   ------------   ------------
<S>                          <C>        <C>           <C>            <C>            <C>
Douglas K. Anderson.......   $175,000     $30,000          $--       195,000(2)       $40,000(2)
  Chairman of the Board and
  Chief Executive Officer
 
Graham H. Gurney..........    100,000      15,400(3)       --               --             --
  Senior Vice President of
  Sales
 
Clifford I. Waggoner......    106,000       3,000          --               --             --
  Senior Vice President and
  Chief Technology Officer
 
John L. Person(4).........     88,218      15,000     2,800(5)         100,000          4,936(6)
  President and Chief
  Operating Officer
</TABLE>
 
---------------
(1) Represents the number of shares covered by options to purchase shares of the
    Company's Common Stock granted during the year ended December 31, 1997.
 
(2) In exchange for the surrender of the right to receive 175,000 shares of
    Common Stock originally granted on October 2, 1995, Mr. Anderson received an
    option to purchase 175,000 shares of Common Stock at an exercise price of
    $0.45 per share and supplemental compensation of $40,000 in 1997 and $60,000
    in 1998.
 
(3) Represents sales commissions.
 
(4) Mr. Person joined the Company in May 1997.
 
(5) Represents automobile allowance.
 
(6) Represents reimbursement for relocation expenses.
 
                                       38
<PAGE>   41
 
     The following table sets forth grants of stock options to each of the Named
Executive Officers during the year ended December 31, 1997.
 
                       OPTION GRANTS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                    INDIVIDUAL GRANTS                              POTENTIAL REALIZABLE VALUE
                            ------------------------------------------------------------------      AT ASSUMED ANNUAL RATES
                                          PERCENT OF                                                     OF STOCK PRICE
                            NUMBER OF       TOTAL                                                   APPRECIATION FOR OPTION
                            SECURITIES     OPTIONS                                                          TERM(2)
                            UNDERLYING    GRANTED TO     EXERCISE     FAIR MARKET                ------------------------------
                             OPTIONS     EMPLOYEES IN      PRICE       VALUE PER    EXPIRATION
NAME                        GRANTED(1)   FISCAL YEAR     PER SHARE       SHARE         DATE         0%         5%        10%
----                        ----------   ------------   -----------   -----------   ----------   --------   --------   --------
<S>                         <C>          <C>            <C>           <C>           <C>          <C>        <C>        <C>
Douglas K. Anderson.......   175,000         36.3%         $0.45         $1.50       7/21/07     $183,750   $299,309   $476,600
                              20,000          4.2%          0.45          1.50       7/21/07       21,000     34,207     54,469
Graham H. Gurney..........        --           --             --            --            --           --         --         --
Clifford I. Waggoner......        --           --             --            --            --           --         --         --
John L. Person............   100,000         20.7%          0.45          1.50       5/07/07      105,000    171,034    272,343
</TABLE>
 
---------------
(1) Mr. Anderson's option to purchase 175,000 shares vested with respect to
    84,722 shares immediately upon grant and the remaining shares underlying the
    option vest in twenty-six equal monthly installments. Twenty-five percent of
    Mr. Person's option and Mr. Anderson's option to purchase 20,000 shares vest
    on the first anniversary of the date of grant and the remaining shares
    underlying the options vest in thirty-six equal monthly installments.
 
(2) Amounts reported in these columns represent amounts that may be realized
    upon exercise of the options immediately prior to the expiration of their
    term assuming the specified compound rates of appreciation (0%, 5% and 10%)
    on the market value of the Common Stock on the date of option grant over the
    term of the options. These numbers are calculated based on rules promulgated
    by the Securities and Exchange Commission and do not reflect the Company's
    estimate of future stock price growth. Actual gains, if any, on stock option
    exercises and Common Stock holdings are dependent on the timing of such
    exercise and the future performance of the Common Stock. There can be no
    assurance that the rates of appreciation assumed in this table can be
    achieved or that the amounts reflected will be received by the individuals.
 
     The following table sets forth certain information concerning the number
and value of unexercised options held by each of the Named Executive Officers on
December 31, 1997. None of the Named Executive Officers exercised any stock
options during the year ended December 31, 1997.
 
                         FISCAL YEAR-END OPTION VALUES
 
<TABLE>
<CAPTION>
                                            NUMBER OF SHARES              VALUE OF UNEXERCISED
                                         UNDERLYING UNEXERCISED           IN-THE-MONEY OPTIONS
                                       OPTIONS AT FISCAL YEAR-END        AT FISCAL YEAR-END(1)
                                      ----------------------------    ----------------------------
NAME                                  EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
----                                  -----------    -------------    -----------    -------------
<S>                                   <C>            <C>              <C>            <C>
Douglas K. Anderson.................    130,555          94,445        $536,248        $384,002
Graham H. Gurney....................     81,272          30,208         342,314         126,874
Clifford I. Waggoner................     19,792          30,208          83,126         126,874
John L. Person......................         --         100,000              --         405,000
</TABLE>
 
---------------
(1) Represents the difference between the exercise price and the fair market
    value of the Common Stock at fiscal year end.
 
                                       39
<PAGE>   42
 
STOCK PLANS
 
  1994 Stock Option Plan and 1998 Stock Incentive Plan
 
     The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the
Board of Directors and approved by the stockholders of the Company in March
1994. Amendments to the 1994 Plan increased the number of authorized shares
under the Plan to 3,000,000 shares of Common Stock. As of March 31, 1998,
options to purchase an aggregate of 1,643,125 shares of Common Stock at a
weighted average exercise price of $0.58 per share were outstanding under the
1994 Plan. No additional option grants will be made under the 1994 Plan.
 
     The Company's 1998 Stock Incentive Plan (the "Incentive Plan") was adopted
by the Board of Directors, subject to stockholder approval, in June 1998. Awards
may be made under the Incentive Plan for up to the sum of (i) 1,200,000 shares
of Common Stock (subject to adjustment in the event of stock splits and other
similar events), plus (ii) the number of shares of Common Stock (up to
1,700,000) (subject to adjustment in the event of stock splits and other similar
events) subject to awards granted under the 1994 Plan which are not actually
issued because options granted under such plan expire or otherwise result in
shares not being issued or, in the case of restricted stock, are repurchased by
the Company pursuant to the terms of the applicable stock restriction agreement.
 
     The Incentive Plan provides for the grant of incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonstatutory stock options, restricted stock awards and
other stock-based awards (collectively, "Awards").
 
     Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to receive Awards under the Incentive Plan. Under
present law, however, incentive stock options may only be granted to employees.
The maximum number of shares with respect to which an Award may be granted to
any participant under the Incentive Plan may not exceed 400,000 shares per
calendar year.
 
     Optionees receive the right to purchase a specified number of shares of
Common Stock at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Options may be
granted at an exercise price which may be less than, equal to or greater than
the fair market value of the Common Stock on the date of grant. Under present
law, incentive stock options and options intended to qualify as
performance-based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the Common Stock
on the date of grant (or less than 110% of the fair market value in the case of
incentive stock options granted to optionees holding more than 10% of the voting
power of the Company). The Incentive Plan permits the Board of Directors to
determine the manner of payment of the exercise price of options, including
through payment by cash, check or in connection with a "cashless exercise"
through a broker, by surrender to the Company of shares of Common Stock, by
delivery to the Company of a promissory note, or by any combination of the
permitted forms of payment.
 
     As of March 31, 1998, approximately 115 persons would have been eligible to
receive Awards under the Incentive Plan, including the Company's four executive
officers and six non-employee directors. The granting of Awards under the
Incentive Plan is discretionary.
 
     The Incentive Plan is administered by the Board of Directors. The Board of
Directors has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the Incentive Plan and to interpret the
provisions thereof. Pursuant to the terms of the Incentive Plan, the Board of
Directors may delegate authority under the Incentive Plan to one or more
committees of the Board of Directors and, subject to certain limitations, to one
or more executive officers of the Company. The Board of Directors has authorized
the Compensation Committee to administer the Incentive Plan, including the
granting of options to executive officers. Subject to any applicable limitations
contained in the Incentive Plan, the Board of Directors, the Compensation
 
                                       40
<PAGE>   43
 
Committee or any other committee or executive officer to whom the Board of
Directors delegates authority, as the case may be, selects the recipients of
Awards and determines (i) the number of shares of Common Stock covered by
options and the dates upon which such options become exercisable, (ii) the
exercise price of options, (iii) the duration of options, and (iv) the number of
shares of Common Stock subject to any restricted stock or other stock-based
Awards and the terms and conditions of such Awards, including the conditions for
repurchase, issue price and repurchase price.
 
     In the event of a merger, liquidation or other Acquisition Event (as
defined in the Incentive Plan), the Board of Directors is authorized to provide
for outstanding options or other stock-based Awards to be assumed or substituted
for by the acquiror. If the acquiror refuses to assume or substitute for
outstanding Awards, they will accelerate, becoming fully exercisable and free of
restriction, prior to consummation of the Acquisition Event. In addition,
following an Acquisition Event, an assumed or substituted Award will accelerate
if the employment of its holder with the acquiror is terminated prior to the
first anniversary of the Aquisition Event other than "for cause," as defined in
the Incentive Plan.
 
     No Award may be granted under the Incentive Plan after June 2008, but the
vesting and effectiveness of Awards previously granted may extend beyond that
date. The Board of Directors may at any time amend, suspend or terminate the
Incentive Plan, except that no Award granted after an amendment of the Incentive
Plan and designated as subject to Section 162(m) of the Code by the Board of
Directors shall become exercisable, realizable or vested (to the extent such
amendment was required to grant such Award) unless and until such amendment is
approved by the Company's stockholders.
 
     The Company intends to grant options to purchase an aggregate of 200,000
shares of Common Stock to certain employees (none of whom is an executive
officer) on the effective date of this offering at a price per share equal to
the initial public offering price.
 
  1998 Employee Stock Purchase Plan
 
     The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors, subject to stockholder approval, in June
1998. The Purchase Plan authorizes the issuance of up to a total of 250,000
shares of Common Stock to participating employees.
 
     All employees of the Company, including directors of the Company who are
employees, and all employees of any participating subsidiaries, whose customary
employment is more than 20 hours per week and for more than five months in any
calendar year are eligible to participate in the Purchase Plan. Employees who
would immediately after the grant own 5% or more of the total combined voting
power or value of the stock of the Company or any subsidiary are not eligible to
participate. As of March 31, 1998, approximately 109 of the Company's employees
would have been eligible to participate in the Purchase Plan.
 
     On the first day of a designated payroll deduction period (the "Offering
Period"), the Company will grant to each eligible employee who has elected to
participate in the Purchase Plan an option to purchase the number of shares of
Common Stock equal to an amount (a whole percentage from 1% to 10% of such
employee's base pay) authorized by the employee to be deducted by the Company
from such employee's base pay during the Offering Period. On the last day of the
Offering Period, the employee is deemed to have exercised the option, at the
option exercise price, to the extent of accumulated payroll deductions. Under
the terms of the Purchase Plan, the option price is an amount equal to 85% of
the closing price (as defined) per share of the Common Stock on either the first
business day or the last business day of the Offering Period, whichever is
lower. In no event may an employee purchase in any one Offering Period a number
of shares which exceeds the number of shares determined by dividing (a) the
product of $2,083 and the number of whole months in such Offering Period by (b)
the closing price per share of the Common Stock on the commencement date of the
Offering Period. The Compensation Committee may, in its discretion, choose an
Offering
                                       41
<PAGE>   44
 
Period of 12 months or less for each Offering and choose a different Offering
Period for each Offering.
 
     If an employee is not a participant on the last day of the Offering Period,
such employee is not entitled to exercise any option, and the amount of such
employee's accumulated payroll deductions will be refunded. An employee's rights
under the Purchase Plan terminate upon voluntary withdrawal from the Purchase
Plan at any time, or when such employee ceases employment for any reason, except
that upon termination of employment because of death, the employee's beneficiary
has certain rights to elect to exercise the option to purchase the shares which
the accumulated payroll deductions in the participant's account would purchase
at the date of death.
 
     Because participation in the Purchase Plan is voluntary, the Company cannot
now determine the number of shares of Common Stock to be purchased by any
particular current executive officer, by all current executive officers as a
group or by non-executive employees as a group.
 
401(k) PLAN
 
     The Company currently maintains a 401(k) salary reduction plan (the "401(k)
Plan") which is intended to qualify under Sections 401(a) and 401(k) of the
Internal Revenue Code of 1986. Employees working more than 20 hours per week are
eligible to begin participating in the 401(k) Plan on the first day of each
calendar quarter. All eligible executive officers, other than Mr. Person, have
elected to participate in the 401(k) Plan.
 
     Eligible employees electing to participate in the 401(k) Plan may defer a
portion of their compensation on a pre-tax basis, by contributing a percentage
thereof to the 401(k) Plan. The maximum contribution is prescribed in Section
401(k) of the Internal Revenue Code of 1986. The contribution limit for 1997 was
$9,500. The Company made matching contributions of $30.00 plus up to one percent
of the employee's gross earnings in 1997, subject to the foregoing limit.
Eligible employees who elect to participate in the 401(k) Plan are generally
vested in the Company's matching contribution after two years of service.
 
EMPLOYMENT AGREEMENTS
 
     Pursuant to a Key Employee Agreement dated October 2, 1995, as amended on
July 21, 1997, the Company agreed to employ Douglas K. Anderson as President and
Chief Executive Officer. The Company also agreed to maintain a policy on the
life of Mr. Anderson with a death benefit of $300,000 payable to a beneficiary
named by Mr. Anderson. Under the agreement, Mr. Anderson retained 175,000 shares
of Common Stock initially issued to him and surrendered the right to receive
175,000 shares in exchange for the grant of an incentive stock option to
purchase 175,000 shares of Common Stock at an exercise price of $0.45 per share
and supplemental compensation of $40,000 in 1997 and $60,000 in 1998. The
Company also granted to Mr. Anderson an additional option to purchase 20,000
shares of Common Stock at an exercise price of $0.45 per share. On March 2,
1998, the Company agreed to pay Mr. Anderson an annual base salary of not less
than $225,000 and a bonus of $50,000 in 1998 based on the achievement of certain
performance targets. The Company also agreed to provide, under certain
circumstances, for 24 months of salary continuation and acceleration of options
upon termination of Mr. Anderson's employment.
 
     Pursuant to a letter agreement dated April 10, 1997, the Company agreed to
employ John L. Person as Executive Vice President and Chief Operating Officer
and to grant Mr. Person an incentive stock option to purchase 100,000 shares of
Common Stock at an exercise price of $0.45 per share. On March 2, 1998, the
Company agreed to pay Mr. Person an annual base salary of $190,000 and a bonus
of up to $35,000 based on the achievement of certain performance targets. The
Company also agreed to provide, under certain circumstances, 12 months salary
continuation and acceleration of options upon termination of Mr. Person's
employment.
 
                                       42
<PAGE>   45
 
     Pursuant to a letter agreement dated February 27, 1998, the Company agreed
to employ Richard J. Willemin as Senior Vice President and Chief Financial
Officer. The Company agreed to pay Mr. Willemin an annual base salary of
$150,000 and to grant Mr. Willemin an incentive stock option to purchase 100,000
shares of Common Stock at an exercise price of $2.75 per share. The Company also
agreed that in the event of a change in control of the Company the vesting of
all such options will be accelerated.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The current members of the Compensation Committee of the Board of Directors
are Messrs. Carlisle, McKay and Yanak. No executive officer of the Company has
served as a director or member of the compensation committee (or other committee
serving an equivalent function) of any other entity, whose executive officers
served as a director of or member of the Compensation Committee of the Board of
Directors.
 
     From January 1997 to June 1998, Mr. Naudon served as a member of the
Compensation Committee of the Board of Directors. Mr. Naudon is President, Chief
Executive Officer, a director and majority shareholder of Banking Spectrum, a
shareholder of the Company. See "Certain Transactions."
 
     Each of Messrs. Carlisle and McKay was appointed to the Board of Directors
as the designee of Menlo Ventures and Axiom, respectively. See "Certain
Transactions."
 
                              CERTAIN TRANSACTIONS
 
     In January 1994, the Company entered into an agreement with Banking
Spectrum Services, Inc., a shareholder of the Company, and Banking Spectrum,
Inc. (collectively, "Spectrum"), to provide and receive certain consulting and
support services. Pursuant to the agreement, the Company agreed to pay Spectrum
a three percent royalty based on license and maintenance revenues, as defined in
the agreement, in exchange for the use of Spectrum's products and contributions
to the design of the Company's software. In addition, the Company agreed to pay
Spectrum a five percent royalty based on license and maintenance revenues for
compliance and regulatory support provided to customers. In March 1998, the
Company and Spectrum entered into a distribution and termination agreement. The
March 1998 agreement releases the Company from any future royalty payments to
Spectrum in exchange for a cash payment of $100,000 and grants to affiliates of
Spectrum of fully-vested options to purchase 275,000 shares of Common Stock at
an exercise price of $0.45 per share. Mr. Naudon, a director of the Company, is
President and Chief Executive Officer, director and the majority shareholder of
Spectrum. The stock options were estimated by management to have a fair value of
approximately $1.6 million, and the Company recorded a contract termination
expense of approximately $1.3 million (net of amounts previously accrued) for
the three months ended March 31, 1998.
 
     In July 1992 and January 1994, the Company entered into Professional
Services Agreements (the "Prism Agreements") with Prince-Roth Information
Systems Management, Inc. T/A ("PRISM"). Under the PRISM Agreements, PRISM
provided data processing technical services to the Company, and the Company
deferred payment for such services under the agreements until June 1995 and June
1996, respectively. Pursuant to the terms of the PRISM Agreements, Messrs.
Gurney and Waggoner each received an aggregate of approximately $132,000.
Spouses of the shareholders of PRISM are shareholders of the Company.
 
     On February 3, 1994, the Company issued an aggregate of 1,000,000 shares of
Series A-1 Preferred Stock at $1.50 per share for an aggregate purchase price of
$1.5 million to Menlo Ventures and Menlo Entrepreneurs Fund VI, L.P. ("Menlo
Entrepreneurs"). In addition, the Company issued warrants to purchase 333,333
shares of Series A-2 Preferred Stock with an exercise price of $3.00 per share.
These warrants were exercised on September 13, 1994 for $999,999. Mr. Carlisle,
a director
 
                                       43
<PAGE>   46
 
of the Company, is a general partner of MV Management VI, L.P. ("MVM"). MVM is a
general partner of Menlo Ventures and Menlo Entrepreneurs.
 
     On September 14, 1994, the Company issued 83,333 shares of Series A-2
Preferred Stock at $3.00 per share for $50,000 cash and a $200,000 promissory
note from Banking Spectrum. Mr. Naudon, a director of the Company, is President
and Chief Executive Officer, and a director and the majority shareholder of
Banking Spectrum.
 
     On May 12, 1995, the Company issued 166,667 shares of Series A-2 Preferred
Stock at $3.00 per share for an aggregate purchase price of $500,000 to
Connecticut Innovations, Incorporated ("CII").
 
     On September 1, 1995, the Company issued demand notes with an interest rate
of 10% per annum to Menlo Ventures and Menlo Entrepreneurs in an aggregate
original principal amount of $500,000. On November 15, 1995, the Company issued
demand notes with an interest rate of 10% per annum to Menlo Ventures and Menlo
Entrepreneurs in an aggregate original principal amount of $500,000. Each of the
notes was repaid on December 27, 1995.
 
     On December 27, 1995, the Company issued an aggregate of 1,543,334 shares
of Series B Preferred Stock at $3.00 per share for an aggregate purchase price
of $4,630,000 to certain investors, including Menlo Ventures, Menlo
Entrepreneurs, Axiom and CII. In addition, the Company issued warrants to
purchase 192,916 shares of Series B Preferred Stock at $4.00 per share. Warrants
to purchase 84,583 shares of Series B Preferred Stock were exercised by Menlo
Ventures and Menlo Entrepreneurs on March 6, 1998 for $338,332. The Company
granted each of Axiom and Menlo the right (which terminates upon the closing of
this offering) to designate one nominee for election to the Board of Directors.
Mr. McKay, a director of the Company, is Chief Executive Officer of Axiom
Venture Associates, Inc. ("Axiom Associates"), the general partner of Axiom.
 
     On October 23, 1996, the Company issued 1,222,222 shares of Series C
Preferred Stock at $4.50 per share for an aggregate purchase price of $5,500,000
to Aetna, Menlo Ventures, Menlo Entrepreneurs, Axiom and CII. In addition, the
Company issued warrants to purchase 152,778 shares of Series C Preferred Stock
at $6.00 per share. Warrants to purchase 41,667 shares of Series C Preferred
Stock were exercised by Menlo Ventures and Menlo Entrepreneurs on March 6, 1998
for $250,002. The Company granted Aetna the right (which terminates upon the
closing of this offering) to designate one nominee for election to the Board of
Directors. Mr. Clarke, a director of the Company, is Vice President, Private
Equity, of Aetna.
 
     On August 22, 1997, the Company issued 833,333 shares of Series D Preferred
Stock at $6.00 per share for an aggregate purchase price of $5,000,000 to BISYS.
In addition, the Company issued a warrant to purchase 416,667 shares of Series D
Preferred Stock at $6.00 per share. The Company granted BISYS the right (which
terminates upon the closing of this offering) to designate one nominee for
election to the Board of Directors. Concurrent with such preferred stock
offering, the Company entered into a software license and marketing and
distribution agreement with BISYS. See "Business -- Sales and Marketing." Mr.
Neville, a director of the Company, is President of TOTALPLUS, a division of
BISYS.
 
     The Company has adopted a policy providing that all material transactions
between the Company and its officers, directors and other affiliates must (i) be
approved by a majority of the members of the Company's Board of Directors and by
a majority of the disinterested members of the Company's Board of Directors and
(ii) be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
 
                                       44
<PAGE>   47
 
                       PRINCIPAL AND SELLING STOCKHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of April 30, 1998, and as
adjusted to reflect the sale of the shares of Common Stock offered hereby, by
(i) each person or entity known to the Company to own beneficially more than 5%
of the Company's Common Stock, (ii) each of the directors of the Company, (iii)
each of the Named Executive Officers, (iv) all directors and executive officers
as a group and (v) each of the other Selling Stockholders. Except as indicated
below, none of these entities has a relationship with the Company or, to the
knowledge of the Company, any of the Underwriters or their respective
affiliates. Unless otherwise indicated, each person or entity named in the table
has sole voting power and investment power (or shares such power with his or her
spouse) with respect to all shares of capital stock listed as owned by such
person or entity. The address of each of the officers and directors of the
Company is c/o Open Solutions Inc., 300 Winding Brook Drive, Glastonbury, CT
06033.
 
<TABLE>
<CAPTION>
                                               SHARES BENEFICIALLY                       SHARES TO BE
                                                      OWNED                           BENEFICIALLY OWNED
                                              PRIOR TO OFFERING (1)      SHARES      AFTER OFFERING(1)(2)
                                              ----------------------     BEING      ----------------------
NAME OF BENEFICIAL OWNER                       NUMBER     PERCENTAGE   OFFERED(3)    NUMBER     PERCENTAGE
------------------------                      ---------   ----------   ----------   ---------   ----------
<S>                                           <C>         <C>          <C>          <C>         <C>
5% STOCKHOLDERS
MV Management VI, L.P.(4)...................  2,469,583      32.7%           --     2,469,583
  3000 Sand Hill Road
  Building 4, Suite 100
  Menlo Park, CA 94025
The BISYS Group, Inc.(5)....................  1,250,000      15.7%           --     1,250,000
  11 Greenway Plaza
  Houston, TX 77046
Axiom Venture Partners, L.P.(6).............    875,000      11.5%           --       875,000
  City Place II, 17th Floor
  Hartford, CT 06103
Aetna Life Insurance Company(7).............    750,000       9.8%           --       750,000
  151 Farmington Avenue
  Hartford, CT 06106
Carlos P. Naudon(8).........................    549,417       7.1%       55,000       494,417
Connecticut Innovations, Incorporated(9)....    479,167       6.3%           --       479,167
  999 West Street
  Rocky Hill, CT 06067
Lorraine H. Rothstein.......................    440,000       5.8%       88,000       352,000
  157 Arbour Circle
  Basking Ridge, NJ 07920
Graham H. Gurney(10)........................    437,522       5.5%           --       437,522
Ellen A. Dugan..............................    430,000       5.7%       40,000       390,000
  33 Country Oaks
  Lebanon, NJ 08833
Clifford I. Waggoner(11)....................    376,042       5.0%           --       376,042
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Douglas K. Anderson(12).....................    329,513       4.3%           --       329,513
Douglas C. Carlisle(4)......................  2,469,583      32.7%           --     2,469,583
David M. Clarke(7)..........................    750,000       9.8%           --       750,000
Samuel F. McKay(6)..........................    875,000      11.5%           --       875,000
William W. Neville(5).......................  1,250,000      15.7%           --     1,250,000
John L. Person(13)..........................     27,083         *            --        27,083
Richard J. Willemin.........................         --        --            --            --
Richard P. Yanak(14)........................     10,417         *            --        10,417
All executive officers and directors as a
  group (11 persons)(15)....................  7,074,577      81.2%       55,000     7,019,577
</TABLE>
 
---------------
   * Less than 1%
 
                                       45
<PAGE>   48
 
 (1) The number of shares beneficially owned by each stockholder is determined
     under rules promulgated by the Securities and Exchange Commission, and the
     information is not necessarily indicative of beneficial ownership for any
     other purpose. Under such rules, beneficial ownership includes any shares
     as to which the individual or entity has sole or shared voting power or
     investment power and any shares as to which the individual or entity has
     the right to acquire beneficial ownership within 60 days after April 30,
     1998 through the exercise of any stock option, warrant or other right. The
     inclusion herein of such shares, however, does not constitute an admission
     that the named stockholder is a direct or indirect beneficial owner of such
     shares.
 
 (2) Assumes no exercise of the Underwriters' over-allotment option.
 
 (3) In the event that the over-allotment option is exercised in full, Messrs.
     Gurney and Waggoner will each sell 35,000 shares to the Underwriters. As a
     result of such sale, Messrs. Gurney and Waggoner will thereafter
     beneficially own 402,522 ([     ]%) and 341,042 ([     ]%), respectively,
     of the shares outstanding after this offering.
 
 (4) Consists of 2,433,003 shares held by Menlo Ventures and 36,580 shares held
     by Menlo Entrepreneurs. MVM is a general partner of Menlo Ventures and
     Menlo Entrepreneurs. Mr. Carlisle, a director of the Company, is a general
     partner of MVM. Mr. Carlisle disclaims beneficial ownership of the shares
     held by Menlo Ventures and Menlo Entrepreneurs, except to the extent of his
     pecuniary interests therein.
 
 (5) Includes 416,667 shares issuable upon the exercise of warrants held by
     BISYS which are exercisable within 60 days after April 30, 1998. Mr.
     Neville, a director of the Company, is President of TOTALPLUS, a division
     of BISYS.
 
 (6) Includes 97,222 shares issuable upon the exercise of warrants held by Axiom
     which are exercisable within 60 days after April 30, 1998. Mr. McKay, a
     director of the Company, is Chief Executive Officer of Axiom Venture
     Associates, Inc., the general partner of Axiom. Mr. McKay shares voting and
     investment power with respect to such shares with two other executive
     officers of Axiom Associates. Mr. McKay disclaims beneficial ownership of
     the shares held by Axiom, except to the extent of his pecuniary interest
     therein.
 
 (7) Includes 83,333 shares issuable upon the exercise of warrants held by the
     Aetna which are exercisable within 60 days after April 30, 1998. Mr.
     Clarke, a director of the Company, is Vice President, Private Equity of
     Aetna.
 
 (8) Consists of 251,762 shares held by Banking Spectrum, 22,895 shares subject
     to options held by Banking Spectrum which are exercisable within 60 days
     after April 30, 1998, 33,440 shares held by Mr. Naudon, 205,695 shares held
     by Mr. Naudon which are exercisable within 60 days after April 30, 1998,
     10,000 shares held by The Enrique S. Naudon Trust, 10,000 shares held by
     The Ignacio S. Naudon Trust and 15,625 shares held by Allister & Naudon
     Profit Sharing Pension Plan. Mr. Naudon, a director of the Company, is
     President and Chief Executive Officer, and a director and the majority
     shareholder of Banking Spectrum, a trustee of the Allister & Naudon Profit
     Sharing Plan, and Susan Steingass, his spouse, is a trustee of The Enrique
     S. Naudon Trust and The Ignacio S. Naudon Trust.
 
 (9) Includes 34,722 shares issuable upon the exercise of warrants held by CII
     which are exercisable within 60 days after April 30, 1998.
 
(10) Includes 87,522 shares subject to options held by Mr. Gurney which are
     exercisable within 60 days after April 30, 1998.
 
(11) Includes 26,042 shares subject to options held by Mr. Waggoner which are
     exercisable within 60 days after April 30, 1998.
 
(12) Includes 154,513 shares subject to options held by Mr. Anderson which are
     exercisable within 60 days after April 30, 1998.
 
                                       46
<PAGE>   49
 
(13) Consists of shares subject to options held by Mr. Person which are
     exercisable within 60 days after April 30, 1998.
 
(14) Consists of shares subject to options held by Mr. Yanak which are
     exercisable within 60 days after April 30, 1998.
 
(15) Includes an aggregate of 1,166,091 shares of Common Stock subject to
     options or warrants which are exercisable within 60 days after April 30,
     1998.
 
                                       47
<PAGE>   50
 
                          DESCRIPTION OF CAPITAL STOCK
 
     After the filing of the Company's Restated Certificate of Incorporation
upon the closing of this offering, the authorized capital stock of the Company
will consist of 50,000,000 shares of Common Stock, $0.01 par value per share,
and 5,000,000 shares of Preferred Stock, $0.01 par value per share ("Preferred
Stock"). As of March 31, 1998 (after giving effect to the conversion of all
outstanding shares of Convertible Preferred Stock into Common Stock to be
effected upon the closing of this offering), there were outstanding (i)
7,474,276 shares of Common Stock held by 35 stockholders of record, (ii) options
to purchase an aggregate of 1,643,125 shares of Common Stock and (iii) warrants
to purchase an aggregate of 636,111 shares of Common Stock ("Warrants").
 
     The following summary of certain provisions of the Company's Common Stock,
Preferred Stock, Warrants, Restated Certificate of Incorporation and Amended and
Restated By-laws (the "By-laws") is not intended to be complete and is qualified
by reference to the provisions of applicable law and to the Company's Restated
Certificate of Incorporation, By-laws and Warrants included as exhibits to the
Registration Statement of which this Prospectus is a part. See "Additional
Information."
 
COMMON STOCK
 
     Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in this offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future. Certain holders of Common Stock have the
right to require the Company to effect the registration of their shares of
Common Stock in certain circumstances. See "Shares Eligible for Future Sale."
 
PREFERRED STOCK
 
     Under the terms of the Restated Certificate of Incorporation, the Board of
Directors is authorized, subject to any limitations prescribed by law, without
stockholder approval, to issue shares of Preferred Stock in one or more series.
Each such series of Preferred Stock shall have such rights, preferences,
privileges and restrictions, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be determined by the Board of Directors.
 
     The purpose of authorizing the Board of Directors to issue Preferred Stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. The Company has no
present plans to issue any shares of Preferred Stock.
 
                                       48
<PAGE>   51
 
WARRANTS
 
     As of March 31, 1998, the Company has outstanding warrants to purchase
108,333 shares of Series B Preferred Stock at an exercise price of $4.00 per
share, warrants to purchase 111,111 shares of Series C Preferred Stock at an
exercise price of $6.00 per share and a warrant to purchase 416,667 shares of
Series D Preferred Stock at an exercise price of $6.00 per share. The warrants
to purchase Series B Preferred Stock expire on December 27, 2000. The warrants
to purchase Series C Preferred Stock expire on October 23, 2001. The warrant to
purchase Series D Preferred Stock expires on August 22, 2001. All of these
warrants will become warrants to purchase Common Stock upon the closing of this
offering.
 
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
 
     The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
 
     The Restated Certificate of Incorporation provides for the division of the
Board of Directors into three classes as nearly equal in size as possible with
staggered three-year terms. See "Management." In addition, the Restated
Certificate of Incorporation provides that directors may be removed only for
cause by the affirmative vote of holders of at least 75% of the votes which all
the stockholders would be entitled to cast in any annual election of directors
or class of directors. Under the Restated Certificate of Incorporation, any
vacancy on the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board of Directors, may only be filled by
vote of a majority of the directors then in office. The classification of the
Board of Directors and the limitations on the removal of directors and filling
of vacancies could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, control of the
Company.
 
     The Restated Certificate of Incorporation also provides that, after the
closing of this offering, any action required or permitted to be taken by the
stockholders of the Company at an annual meeting or special meeting of
stockholders may only be taken if it is properly brought before such meeting and
may not be taken by written action in lieu of a meeting. The Restated
Certificate of Incorporation further provides that special meetings of the
stockholders may only be called by the Chairman of the Board, the President or
the Board of Directors. Under the Company's By-laws, in order for any matter to
be considered "properly brought" before a meeting, a stockholder must comply
with certain requirements regarding advance notice and provide certain
information to the Company. The foregoing provisions could have the effect of
delaying until the next stockholders meeting stockholder actions which are
favored by the holders of a majority of the outstanding voting securities of the
Company. These provisions may also discourage another person or entity from
making a tender offer for the Common Stock, because such person or entity, even
if it acquired a majority of the outstanding voting securities of the Company,
would be able to take action as a stockholder (such as electing new directors or
approving a merger) only at a duly called stockholders' meeting, and not by
written consent.
 
     The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. The Restated Certificate of Incorporation and
the By-laws require the affirmative vote of holders of at least 75% of the votes
which all the stockholders would
 
                                       49
<PAGE>   52
 
be entitled to cast in any annual election of directors or class of directors to
amend or repeal any of the provisions described in the prior two paragraphs.
 
     The Restated Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of directors. The provisions eliminate a director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation of
law. Further, the Restated Certificate of Incorporation contains provisions to
indemnify the Company's directors and officers to the fullest extent permitted
by the General Corporation Law of Delaware. The Company believes that these
provisions will assist the Company in attracting and retaining qualified
individuals to serve as directors.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is BankBoston, N.A.
 
                                       50
<PAGE>   53
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Prior to this offering, there has been no public market for the securities
of the Company. Upon completion of this offering, based upon the number of
shares outstanding at March 31, 1998, there will be [               ] shares of
Common Stock of the Company outstanding (assuming no exercise of the
Underwriters' over-allotment option or outstanding warrants or options of the
Company). Of these shares, the [               ] shares sold in this offering
will be freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except that any
shares purchased by "affiliates" of the Company, as that term is defined in Rule
144 ("Rule 144") under the Securities Act ("Affiliates"), may generally only be
sold in compliance with the limitations of Rule 144 described below.
 
SALES OF RESTRICTED SHARES
 
     The remaining [               ] shares of Common Stock are deemed
"restricted securities" under Rule 144. Of the restricted securities,
approximately [               ] shares of Common Stock, which are not subject to
the 180-day lock-up agreements (the "Lock-up Agreements") with the
Representatives of the Underwriters, will be eligible for immediate sale in the
public market pursuant to Rule 144(k) under the Securities Act. Approximately
[               ] additional shares of Common Stock, which are not subject to
Lock-up Agreements, will be eligible for sale in the public market in accordance
with Rule 144 or Rule 701 under the Securities Act beginning 90 days after the
date of this Prospectus. Upon expiration of the Lock-up Agreements 180 days
after the date of this Prospectus, approximately [               ] additional
shares of Common Stock will be available for sale in the public market, subject
to the provisions of Rule 144 under the Securities Act.
 
     The officers and directors of the Company, and certain securityholders,
which executive officers, directors and securityholders in the aggregate hold
approximately [               ] shares of Common Stock (including
[               ] shares of Common Stock that may be acquired pursuant to the
exercise of options and warrants held by them) on the date of this Prospectus,
have agreed that, for a period of 180 days after the date of this Prospectus,
they will not sell, consent to sell or otherwise dispose of any shares of Common
Stock, or any shares convertible into or exchangeable for shares of Common
Stock, owned directly by such persons or with respect to which they have the
power of disposition, without the prior written consent of the Representatives
of the Underwriters.
 
     In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of the Registration Statement of which this Prospectus is a
part, a stockholder, including an Affiliate, who has beneficially owned his or
her restricted securities (as that term is defined in Rule 144) for at least one
year from the later of the date such securities were acquired from the Company
or (if applicable) the date they were acquired from an Affiliate is entitled to
sell, within any three-month period, a number of such shares that does not
exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately [               ] shares immediately after this offering) or the
average weekly trading volume in the Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, under Rule 144(k),
if a period of at least two years has elapsed between the later of the date
restricted securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate of the Company, a stockholder who is not an
Affiliate of the Company at the time of sale and has not been an Affiliate of
the Company for at least three months prior to the sale is entitled to sell the
shares immediately without compliance with the foregoing requirements under Rule
144.
 
     Securities issued in reliance on Rule 701 (such as shares of Common Stock
acquired pursuant to the exercise of certain options granted under the Company's
stock plans) are also restricted securities and, beginning 90 days after the
effective date of the Registration Statement of which this Prospectus is a part,
may be sold by stockholders other than Affiliates of the Company subject only to
 
                                       51
<PAGE>   54
 
the manner of sale provisions of Rule 144 and by Affiliates under Rule 144
without compliance with its one-year holding period requirement.
 
OPTIONS
 
     The Company intends to file registration statements on Form S-8 with
respect to the shares of Common Stock issuable under the 1994 Plan, the
Incentive Plan and the Purchase Plan promptly following the consummation of this
offering. Shares issued upon the exercise of stock options after the effective
date of the Form S-8 registration statements will be eligible for resale in the
public market without restriction, subject to Rule 144 limitations applicable to
Affiliates and the Lock-Up Agreements noted above, if applicable.
 
REGISTRATION RIGHTS
 
     Pursuant to an Amended and Restated Investors' Rights Agreement dated as of
August 22, 1997 among the Company and certain persons and entities (the
"Rightsholders"), including Aetna, Axiom, Banking Spectrum, BISYS, CII and Menlo
Ventures and Menlo Entrepreneurs, such Rightsholders will be entitled following
the offering to certain rights with respect to the registration under the
Securities Act of a total of approximately 5,944,583 shares of Common Stock,
including the shares issuable upon exercise of outstanding warrants (the
"Registrable Stock"). The Amended and Restated Investors' Rights Agreement
generally provides that, in the event the Company proposes to register any of
its securities under the Securities Act, the Rightsholders shall be entitled to
include Registrable Stock in such Registration, subject to the right of the
managing underwriter of any underwritten offering to limit for marketing reasons
the number of shares of Registrable Stock included in such "piggyback"
registration period.
 
     The Rightsholders may, upon the request of holders of Registrable Stock
having an aggregate offering price of at least $2,000,000, require the Company
to prepare and file a registration statement under the Securities Act with
respect to their shares of Registrable Stock at any time after this offering.
The Company need effect only two such demand registrations and is not required
to file a demand registration statement within one hundred eighty days after the
effective date of any other registration statement filed by the Company.
 
EFFECT OF SALES OF SHARES
 
     Prior to this offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that market sales
of shares of Common Stock or the availability of shares for sale will have on
the market price of the Common Stock prevailing from time to time. Nevertheless,
sales of significant numbers of shares of the Common Stock in the public market
could adversely affect the market price of the Common Stock and could impair the
Company's future ability to raise capital through an offering of its equity
securities.
 
                                       52
<PAGE>   55
 
                                  UNDERWRITING
 
     Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives, BT
Alex. Brown Incorporated, Credit Suisse First Boston Corporation and UBS
Securities LLC, have severally agreed to purchase from the Company and the
Selling Stockholders the following respective numbers of shares of Common Stock
at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:
 
<TABLE>
<CAPTION>
                                                               NUMBER
UNDERWRITER                                                   OF SHARES
-----------                                                   ---------
<S>                                                           <C>
BT Alex. Brown Incorporated.................................
Credit Suisse First Boston Corporation......................
UBS Securities LLC..........................................
 
                                                              --------
          Total.............................................
                                                              ========
</TABLE>
 
     The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
such shares are purchased.
 
     The Company and the Selling Stockholders have been advised by the
Representatives of the Underwriters that the Underwriters propose to offer the
shares of Common Stock to the public at the initial public offering price set
forth on the cover page of this Prospectus, and to certain dealers at such price
less a concession not in excess of $[               ] per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $[               ] per share to certain other dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the Representatives of the Underwriters.
 
     The Company and certain stockholders of the Company (other than the Selling
Stockholders) have granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to
[               ] additional shares of Common Stock at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to [               ], and such
stockholders will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on the
same terms as those on which the [               ] shares are being offered.
 
     The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company, the Selling Stockholders and certain other
stockholders against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended.
 
                                       53
<PAGE>   56
 
     The Company, each of its officers and directors, and certain of its
stockholders, including all of the Selling Stockholders, have agreed, subject to
certain exceptions, not to offer, sell, pledge, contract to sell (including any
short sale), grant any option to purchase or otherwise dispose of any shares of
Common Stock or any shares which may be issued upon exercise of a stock option
or warrant or conversion of any convertible securities into Common Stock or
enter into any hedging transaction relating to the Common Stock for a period of
180 days after the date of this Prospectus without the prior written consent of
the Representatives of the Underwriters. The Representatives of the Underwriters
may, in their sole discretion and at any time without notice, release all or any
portion of the securities subject to Lock-up Agreements. See "Shares Eligible
for Future Sale."
 
     The Representatives have advised the Company, the Selling Stockholders and
certain other stockholders that the Underwriters do not intend to confirm sales
to any accounts over which they exercise discretionary authority.
 
     In connection with this offering, the Underwriters and other persons
participating in this offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the Common Stock. Specifically, the
Underwriters may over-allot in connection with this offering, creating a short
position in Common Stock for their own account. To cover over-allotments or to
stabilize the price of the Common Stock, the Underwriters may bid for, and
purchase, shares of Common Stock in the open market. The Underwriters may also
impose a penalty bid whereby they may reclaim selling concessions allowed to an
Underwriter or a dealer for distributing Common Stock in this offering, if the
Underwriters repurchase previously distributed Common Stock in transactions to
cover their short position, in stabilization transactions or otherwise. Finally,
the Underwriters may bid for, and purchase, shares of Common Stock in market
making transactions. These activities may stabilize or maintain the market price
of the Common Stock above market levels that may otherwise prevail. The
Underwriters are not required to engage in these activities and may end any of
these activities at any time.
 
     Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock will be determined by negotiations among the Company,
representatives of the Selling Stockholders and certain other stockholders and
the Representatives of the Underwriters. Among the factors to be considered in
such negotiations are the prevailing market conditions, the results of
operations of the Company in recent periods, the market capitalizations and
stages of development of other companies which the Company, representatives of
the Selling Stockholders and certain other stockholders and the Representatives
of the Underwriters believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant. Application has been made for
quotation of the Common Stock on the Nasdaq National Market under the symbol
"OSIF."
 
                                 LEGAL MATTERS
 
     The validity of the shares of Common Stock offered by the Company, the
Selling Stockholders and certain other stockholders hereby will be passed upon
for the Company by Hale and Dorr LLP, Boston, Massachusetts, and for the
Underwriters by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
 
                                    EXPERTS
 
     The Company's financial statements as of December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
 
                                       54
<PAGE>   57
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (which term shall include all amendments,
exhibits, schedules and supplements thereto) on Form S-1 under the Securities
Act with respect to the shares of Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission, to
which Registration Statement reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
 
     The Registration Statement and the exhibits thereto may be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. In addition, the Company is
required to file electronic versions to these documents with the Commission
through the Commission's Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
 
                                       55
<PAGE>   58
 
                              OPEN SOLUTIONS INC.
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Report of Independent Accountants...........................  F-2
Balance Sheet at December 31, 1996, 1997 and March 31, 1998
  (unaudited)...............................................  F-3
Statement of Operations for the years ended December 31,
  1995, 1996 and 1997 and for the three months ended March
  31, 1997 (unaudited) and March 31, 1998 (unaudited).......  F-4
Statement of Cash Flows for the years ended December 31,
  1995, 1996 and 1997 and for the three months ended March
  31, 1997 (unaudited) and March 31, 1998 (unaudited).......  F-5
Statement of Changes in Stockholders' Equity (Deficit) for
  the years ended December 31, 1995, 1996 and 1997 and for
  the three months ended March 31, 1998 (unaudited).........  F-6
Notes to Financial Statements...............................  F-7
</TABLE>
 
                                       F-1
<PAGE>   59
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders
of Open Solutions Inc.
 
     In our opinion, the accompanying balance sheet and the related statements
of operations, of cash flows and of changes in stockholders' equity (deficit)
present fairly, in all material respects, the financial position of Open
Solutions Inc. at December 31, 1997 and 1996, and the results of its operations,
its cash flows and changes in stockholders' equity (deficit) for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.


Price Waterhouse LLP
Hartford, Connecticut
April 6, 1998
 
                                       F-2
<PAGE>   60
 
                              OPEN SOLUTIONS INC.
 
                                 BALANCE SHEET
 
<TABLE>
<CAPTION>
                                                                                    MARCH 31, 1998
                                                                             -----------------------------
                                                                                               PRO FORMA
                                                        DECEMBER 31,                         STOCKHOLDERS'
                                                  ------------------------                      EQUITY
                                                     1996         1997          ACTUAL         (NOTE 2)
                                                  ----------   -----------   -------------   -------------
                                                                             (UNAUDITED)      (UNAUDITED)
<S>                                               <C>          <C>           <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents.....................  $4,437,657   $ 7,596,183    $ 7,346,474
  Restricted cash (Note 2)......................      94,241       281,090             --
  Accounts receivable (Note 2)..................   1,448,573     1,505,940      2,205,362
  Prepaid expenses and other....................     135,210       232,807        306,716
  Deferred project costs (Note 2)...............     458,675            --             --
                                                  ----------   -----------    -----------     -----------
      Total current assets......................   6,574,356     9,616,020      9,858,552
Fixed assets, net (Notes 2 and 3)...............     767,390     1,153,090      1,260,590
Software development costs, net (Note 2)........     204,035       533,343        566,514
                                                  ----------   -----------    -----------     -----------
      Total assets..............................  $7,545,781   $11,302,453    $11,685,656
                                                  ==========   ===========    ===========     ===========
LIABILITIES, MANDATORILY REDEEMABLE
  CONVERTIBLE PREFERRED STOCK
  AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable..............................  $  227,887   $   104,249    $   422,364
  Royalties payable (Note 13)...................      68,315       378,981             --
  Accrued expenses (Note 4).....................     372,108     1,081,917        716,704
  Note payable (Note 5).........................          --       175,000        150,000
  Current portion of long-term debt (Note 6)....          --        34,668         26,001
  Deferred revenue (Note 2).....................   1,005,129     1,643,457      2,311,132
                                                  ----------   -----------    -----------     -----------
      Total current liabilities.................   1,673,439     3,418,272      3,626,201
                                                  ----------   -----------    -----------     -----------
Accrued rent expense (Note 2)...................      77,731       100,823        106,061
Long-term debt, less current portion (Note 6)...          --        57,778         57,778
                                                  ----------   -----------    -----------     -----------
                                                      77,731       158,601        163,839
                                                  ----------   -----------    -----------     -----------
Total liabilities...............................   1,751,170     3,576,873      3,790,040
Commitments and contingencies (Note 10).........
Mandatorily redeemable convertible preferred
  stock (Note 7)................................  10,573,480    15,551,214     16,139,549     $        --
 
Stockholders' equity (deficit) (Note 8, 9 and
  14):
  Preferred stock, $0.01 par value; 1,416,667,
    1,416,667, 1,416,667, and 0 shares
    authorized; 1,416,667, 1,416,667, 1,416,667,
    and 0 shares issued and outstanding.........      14,167        14,167         14,167              --
  Common stock, $0.01 par value; 8,580,417,
    9,830,417, 19,055,417, and 50,000,000 shares
    authorized; 2,115,000, 2,165,325, 2,165,804
    and 7,474,276 shares issued and
    outstanding.................................      21,150        21,653         21,658          74,743
  Additional paid-in capital....................   2,674,465     2,682,569      4,291,481      20,392,112
  Accumulated deficit...........................  (7,488,651)  (10,544,023)   (12,571,239)    (12,571,239)
                                                  ----------   -----------    -----------     -----------
      Total stockholders' equity (deficit)......  (4,778,869)   (7,825,634)    (8,243,933)    $ 7,895,616
                                                  ----------   -----------    -----------     ===========
Total liabilities, mandatorily redeemable
  convertible preferred stock and stockholders'
  equity (deficit)..............................  $7,545,781   $11,302,453    $11,685,656
                                                  ==========   ===========    ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
                                       F-3
<PAGE>   61
 
                              OPEN SOLUTIONS INC.
 
                            STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED
                                                        YEAR ENDED DECEMBER 31,                   MARCH 31,
                                                ---------------------------------------   -------------------------
                                                   1995          1996          1997          1997          1998
                                                -----------   -----------   -----------   -----------   -----------
                                                                                          (UNAUDITED)   (UNAUDITED)
<S>                                             <C>           <C>           <C>           <C>           <C>
Revenues (Note 2):
  Software license............................  $   212,653   $   801,532   $ 4,099,722   $   693,145   $ 1,158,310
  Service and maintenance.....................       55,488       217,861     2,549,890       289,128     1,175,594
                                                -----------   -----------   -----------   -----------   -----------
         Total revenues.......................      268,141     1,019,393     6,649,612       982,273     2,333,904
                                                -----------   -----------   -----------   -----------   -----------
Cost of revenues:
  Software license............................      223,015       507,094     1,160,005       218,976       332,675
  Service and maintenance.....................      476,991     1,530,528     3,150,536       732,155       987,697
                                                -----------   -----------   -----------   -----------   -----------
         Total cost of revenues...............      700,006     2,037,622     4,310,541       951,131     1,320,372
                                                -----------   -----------   -----------   -----------   -----------
Operating expenses:
  Sales and marketing.........................      398,496     1,050,831     2,132,410       458,562       784,274
  Product development.........................      660,510     1,059,879     1,901,892       471,681       443,192
  General and administrative..................      399,576       645,334     1,569,568       323,698       642,922
  Contract termination (Note 13)..............           --            --            --            --     1,265,292
                                                -----------   -----------   -----------   -----------   -----------
         Total operating expenses.............    1,458,582     2,756,044     5,603,870     1,253,941     3,135,680
                                                -----------   -----------   -----------   -----------   -----------
Loss from operations..........................   (1,890,447)   (3,774,273)   (3,264,799)   (1,222,799)   (2,122,148)
Interest income (expense), net................       (4,506)      135,801       209,427        43,644        94,932
                                                -----------   -----------   -----------   -----------   -----------
Net loss......................................  $(1,894,953)  $(3,638,472)  $(3,055,372)  $(1,179,155)  $(2,027,216)
                                                ===========   ===========   ===========   ===========   ===========
Net loss per common share (basic and diluted)
  (Note 2)....................................  $     (0.98)  $     (1.73)  $     (1.42)  $     (0.55)  $     (0.94)
                                                ===========   ===========   ===========   ===========   ===========
Weighted average common shares outstanding
  (Note 2)....................................    1,935,644     2,102,568     2,155,333     2,136,056     2,165,546
                                                ===========   ===========   ===========   ===========   ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
                                       F-4
<PAGE>   62
 
                              OPEN SOLUTIONS INC.
 
                            STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                             THREE MONTHS ENDED
                                                        YEAR ENDED DECEMBER 31,                   MARCH 31,
                                                ---------------------------------------   -------------------------
                                                   1995          1996          1997          1997          1998
                                                -----------   -----------   -----------   -----------   -----------
                                                                                          (UNAUDITED)   (UNAUDITED)
<S>                                             <C>           <C>           <C>           <C>           <C>
Cash flows from operating activities:
  Net loss....................................  $(1,894,953)  $(3,638,472)  $(3,055,372)  $(1,179,155)  $(2,027,216)
  Adjustments to reconcile net loss to net
    cash used by operating activities:
    Depreciation and amortization.............       53,865       147,790       352,326        55,452       148,907
    Compensation expense related to stock and
      options granted.........................           --        52,500        85,526        41,149        23,130
    Options granted to Banking Spectrum (Note
      13).....................................           --            --            --            --     1,608,750
    Changes in operating assets and
      liabilities:
      Restricted cash.........................           --       (94,241)     (186,849)     (214,283)      281,090
      Accounts receivable.....................     (146,240)   (1,302,333)      (57,367)     (181,428)     (699,422)
      Prepaid expenses and other..............      (17,054)     (110,005)      (97,597)      (20,919)      (73,909)
      Deferred project costs..................           --      (458,675)      458,675       126,758            --
      Accounts payable and accrued expenses...      264,158       371,774       500,645       (16,449)      (70,228)
      Royalties payable.......................           --        68,315       310,666       (68,315)     (378,981)
      Deferred revenue........................           --       968,254       638,328       175,135       667,675
      Accrued rent expense....................           --        77,731        23,092         6,843         5,238
                                                -----------   -----------   -----------   -----------   -----------
      Net cash used by operating activities...   (1,740,224)   (3,917,362)   (1,027,927)   (1,275,212)     (514,966)
                                                -----------   -----------   -----------   -----------   -----------
Cash flows from investing activities:
  Purchases of fixed assets...................      (92,523)     (696,874)     (597,256)      (81,852)     (181,592)
  Software development costs..................     (119,514)     (153,209)     (215,078)      (34,977)     (107,986)
                                                -----------   -----------   -----------   -----------   -----------
      Net cash used by investing activities...     (212,037)     (850,083)     (812,334)     (116,829)     (289,578)
                                                -----------   -----------   -----------   -----------   -----------
Cash flows from financing activities:
  Net proceeds from the sale of preferred
    stock.....................................    5,092,000     5,481,480     4,977,734            --            --
  Proceeds from exercise of stock options.....        1,500            --         8,607         6,938           167
  Proceeds from exercise of warrants..........           --            --            --                     588,335
  Proceeds from short-term debt...............    1,000,000            --            --            --            --
  Payments of short-term debt.................   (1,000,000)     (250,000)           --            --       (33,667)
  Proceeds from long-term debt................           --            --       104,002            --            --
  Payments of long-term debt..................           --            --       (91,556)           --            --
  Proceeds from subscription note
    receivable................................      120,000        60,000            --            --            --
                                                -----------   -----------   -----------   -----------   -----------
      Net cash provided by financing
         activities...........................    5,213,500     5,291,480     4,998,787         6,938       554,835
                                                -----------   -----------   -----------   -----------   -----------
  Net increase (decrease) in cash and cash
    equivalents...............................    3,261,239       524,035     3,158,526    (1,385,103)     (249,709)
  Cash and cash equivalents at beginning of
    period....................................      652,383     3,913,622     4,437,657     4,437,657     7,596,183
                                                -----------   -----------   -----------   -----------   -----------
  Cash and cash equivalents at end of
    period....................................  $ 3,913,622   $ 4,437,657   $ 7,596,183   $ 3,052,554   $ 7,346,474
                                                ===========   ===========   ===========   ===========   ===========
Supplemental disclosure
  Cash paid for:
    Interest..................................  $    21,781   $     3,438   $     9,148   $     1,732   $     2,143
    Income taxes..............................        4,156        25,923        19,172            --            --
</TABLE>
 
     See discussion of non-cash transaction in Note 5.
 
   The accompanying notes are an integral part of these financial statements.
                                       F-5
<PAGE>   63
 
                              OPEN SOLUTIONS INC.
 
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
 
<TABLE>
<CAPTION>
                                 PREFERRED STOCK        COMMON STOCK       ADDITIONAL                        TOTAL
                               -------------------   -------------------     PAID-IN     ACCUMULATED     STOCKHOLDERS'
                                SHARES     AMOUNT     SHARES     AMOUNT      CAPITAL       DEFICIT      EQUITY (DEFICIT)
                               ---------   -------   ---------   -------   -----------   ------------   ----------------
<S>                            <C>         <C>       <C>         <C>       <C>           <C>            <C>
Balance -- December 31,
  1994.......................  1,416,667  $14,167    1,930,000  $19,300    $ 2,442,315   $(1,955,226)     $   520,556
  Exercise of stock
    options..................         --       --       10,000      100          1,400            --            1,500
  Proceeds from subscription
    note receivable..........         --       --           --       --        120,000            --          120,000
  Net loss...................         --       --           --       --             --    (1,894,953)      (1,894,953)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- December 31,
  1995.......................  1,416,667   14,167    1,940,000   19,400      2,563,715    (3,850,179)      (1,252,897)
  Issuance of common stock
    (Note 8).................         --       --      175,000    1,750         50,750            --           52,500
  Proceeds from subscription
    note receivable..........         --       --           --       --         60,000            --           60,000
  Net loss...................         --       --           --       --             --    (3,638,472)      (3,638,472)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- December 31,
  1996.......................  1,416,667   14,167    2,115,000   21,150      2,674,465    (7,488,651)      (4,778,869)
  Exercise of stock
    options..................         --       --       50,325      503          8,104            --            8,607
  Net loss...................         --       --           --       --             --    (3,055,372)      (3,055,372)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- December 31,
  1997.......................  1,416,667   14,167    2,165,325   21,653      2,682,569   (10,544,023)      (7,825,634)
  Exercise of stock
    options..................         --       --          479        5            162            --              167
  Issuance of stock options
    (Note 13)................         --       --           --       --      1,608,750            --        1,608,750
  Net loss...................         --       --           --       --             --    (2,027,216)      (2,027,216)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- March 31, 1998
  (unaudited)................  1,416,667  $14,167    2,165,804  $21,658     $4,291,481  $(12,571,239)     $(8,243,933)
                               =========   =======   =========   =======   ===========   ============     ===========
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
                                       F-6
<PAGE>   64
 
                              OPEN SOLUTIONS INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 1 -- THE COMPANY
 
     Open Solutions Inc. (the "Company") is a provider of client/server core
processing software and related professional services to small to mid-size banks
and credit unions. The Company's current products operate in a Microsoft Windows
NT environment using an Oracle relational database.
 
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Cash and Cash Equivalents
 
     Cash and cash equivalents include cash on deposit with banks, as well as
short-term investments with original maturities of 90 days or less.
 
  Restricted Cash
 
     As of December 31, 1996 and 1997, certain cash amounts were restricted by a
customer in an escrow account. In February 1998, the restriction was removed.
 
  Accounts Receivable
 
     Receivables are net of the allowance for doubtful accounts. As of December
31, 1996 and 1997 and March 31, 1998, the allowance for doubtful accounts was
approximately $86,000, $214,000 and $334,000 (unaudited), respectively.
 
  Fixed Assets
 
     Fixed assets are stated at cost and are depreciated using the straight-line
method over the estimated useful lives of the assets, ranging from 5 and 7
years. Leasehold improvements are amortized over the shorter of the term of the
lease or the useful life of the asset.
 
  Software Development Costs
 
     Software development costs for new software products and additional modules
for existing software are expensed as incurred until technological feasibility
is established. Technological feasibility is defined as the point in time at
which the Company has a working model of the product. Software development costs
incurred subsequent to the establishment of technological feasibility and prior
to general release of the product are capitalized and amortized based on the
greater of the amount computed using (a) the ratio that current gross revenues
for a product bear to the total of current and anticipated future gross revenues
for that product or (b) the straight-line method over the remaining estimated
economic life of the product, generally three years. Capitalized software
development costs were $153,209, $455,078 and $107,986 (unaudited) for years
ended December 31, 1996, 1997 and for the three months ended March 31, 1998,
respectively. Amortization expense was $19,919, $48,769, $125,770, $9,694
(unaudited) and $74,815 (unaudited) for the years ended December 31, 1995, 1996,
1997 and the three months ended March 31, 1997 and 1998, respectively.
Accumulated amortization was $68,688, $194,458, and $269,273 (unaudited) as of
December 31, 1996, 1997 and March 31, 1998, respectively.
 
  Accrued Rent Expense
 
     Accrued rent expense results from the recognition of rent expense on a
straight-line basis relating to a seven year lease agreement with escalating
payments expiring April 2003.
 
                                       F-7
<PAGE>   65
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Pro Forma Stockholders' Equity (Unaudited)
 
     If the offering contemplated in this Prospectus is consummated, all of the
Company's preferred stock outstanding at the closing date will be converted into
an equal number of shares of common stock. The unaudited pro forma stockholders'
equity as of March 31, 1998 reflects the conversion of all outstanding preferred
stock into 5,308,472 shares of common stock.
 
  Revenue Recognition
 
     The Company generates revenues from licensing the rights to use its
software products and certain third-party software products to end users. The
Company also generates revenues from customer support and maintenance, and from
implementation and training services provided to customers.
 
     Effective January 1, 1997 the Company early adopted AICPA Statement of
Position 97-2, "Software Revenue Recognition" (SOP 97-2). Under SOP 97-2, the
Company recognizes software license revenue when a noncancelable license
agreement has been executed, fees are fixed and determinable, the software has
been delivered, and accepted by the customer if acceptance is required by the
contract and other than perfunctory, and collection is considered probable.
Prior to 1997, the Company recognized software license revenue in accordance
with AICPA Statement of Position 91-1, "Software Revenue Recognition" (SOP
91-1). Under SOP 91-1, the Company recognized software license revenue when the
software was delivered, collectibility was probable and no other significant
post delivery obligations remained.
 
     Maintenance revenues are recognized ratably over the maintenance period,
generally one year. Revenues from implementation and training services are
recognized as services are performed. The Company enters into contracts which
provide both license and service elements. As such service elements are not
essential to functionality of the software, in accordance with SOP 97-2, the
license fees are generally recognized upon delivery and the service revenues are
recognized when performed.
 
     Deferred revenue is comprised of payments received in advance of product
delivery, maintenance and other services which have been paid by customers prior
to the services being performed. Deferred project costs are comprised of costs
associated with projects in process for which revenue has not yet been
recognized.
 
     The Company receives royalties from several software vendors for marketing
referrals. Royalty income is recognized at the time the software vendor receives
payment from its customer, and such income is included in service and
maintenance revenue.
 
  Income Taxes
 
     The Company uses the liability method of accounting for income taxes, as
set forth in Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the financial statement carrying amounts and the tax basis of the assets
and liabilities and the net operating loss carryforwards using presently enacted
tax rates.
 
  Earnings Per Share
 
     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" (EPS) (SFAS 128) which specifies the computation,
presentation and disclosure requirements for earnings per share of entities with
publicly held common stock or potential common stock. SFAS 128 is effective for
financial statements for both interim and annual
 
                                       F-8
<PAGE>   66
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
periods ended after December 15, 1997. The statement defines two earnings per
share calculations, basic and diluted. Basic EPS is computed by dividing income
available to common stock by the weighted average number of common shares
outstanding; diluted EPS is computed by giving effect to all dilutive potential
common shares that were outstanding during the period. The calculation of
diluted EPS is similar to basic EPS except both the numerator and denominator
are increased for the conversion of potential common shares. Dilutive common
share equivalents include stock options, warrants, and convertible preferred
stock.
 
     The 1995, 1996, 1997 and March 1998 calculations of diluted EPS do not
include the exercise of stock options, conversion of preferred stock or the
exercise of warrants as the effect on diluted earnings per share would have been
antidilutive.
 
  Concentration of Credit Risk
 
     Financial instruments which potentially expose the Company to
concentrations of credit risk are limited to accounts receivable. Two customers,
four customers, two customers, and three customers, respectively, each
represented 10% or more of the Company's total revenues, or an aggregate of 98%,
94%, 32%, and 48% (unaudited) of total revenues for the years ended December 31,
1995, 1996, and 1997 and for the three months ended March 31, 1998,
respectively. Five customers represented approximately 59%(unaudited) of the
Company's total accounts receivable at March 31, 1998. The Company maintains
reserves for potential credit risks and otherwise controls this risk through
credit approvals and monitoring procedures.
 
  Stock Based Compensation
 
     The Company applies APB Opinion 25 and related interpretations in
accounting for its stock option plan. Under APB 25, compensation expense is
recognized to the extent that the fair market value of the underlying stock on
the date of grant exceeds the exercise price of the employee stock option.
Additional disclosures required under Financial Accounting Standards Board
Statement No. 123 "Accounting for Stock-Based Compensation" (SFAS 123), are
included in Note 9, Stock Option Plan.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  New Accounting Pronouncements
 
     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 applies to all
companies and is effective for fiscal years beginning after December 15, 1997.
SFAS 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 investment by owners and distributions to
owners. The Company has adopted SFAS 130 beginning January 1, 1998. For the
three months ended March 31, 1998, comprehensive loss was the same as net loss.
 
                                       F-9
<PAGE>   67
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     In June 1997, the Financial Accounting Standards Board issued Statement No.
131 "Disclosures about Segments of an Enterprise and Related Information" (SFAS
131). SFAS 131 applies to all public companies and is effective for fiscal years
beginning after December 15, 1997. SFAS 131 requires that business segment
financial information be reported in the financial statements utilizing the
management approach. 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 Company has adopted SFAS 131 beginning
January 1, 1998. The Company's operations are currently managed all within one
segment.
 
     Unaudited Interim Financial Statements.  The financial statements as of
March 31, 1998 and for the three months ended March 31, 1997 and 1998 are
unaudited and include all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the results for such interim periods. The results of operations
for the three months ended March 31, 1998 are not necessarily indicative of the
results to be expected for any future period.
 
NOTE 3 -- FIXED ASSETS
 
<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                       ---------------------    MARCH 31,
                                         1996        1997         1998
                                       --------   ----------   -----------
                                                               (UNAUDITED)
<S>                                    <C>        <C>          <C>
Computer equipment...................  $633,664   $1,106,892   $1,233,036
Office furniture and equipment.......   112,262      198,200      235,581
Leasehold improvements...............   186,855      239,945      258,013
                                       --------   ----------   ----------
                                        932,781    1,545,037    1,726,630
Less: accumulated depreciation.......  (165,391)    (391,947)    (466,040)
                                       --------   ----------   ----------
                                       $767,390   $1,153,090   $1,260,590
                                       ========   ==========   ==========
</TABLE>
 
     Depreciation expense was $33,946, $99,021 and $226,556, for the years ended
December 31, 1995, 1996 and 1997, respectively, and $45,758 (unaudited) and
$74,092 (unaudited) for the three months ended March 31, 1997 and 1998,
respectively.
 
NOTE 4 -- ACCRUED EXPENSES
 
<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                       ---------------------    MARCH 31,
                                         1996        1997         1998
                                       --------   ----------   -----------
                                                               (UNAUDITED)
<S>                                    <C>        <C>          <C>
Accrued compensation.................  $146,555   $  423,833   $   180,463
Accrued third party license fees.....        --      327,425       192,236
Accrued sales tax....................   113,102      316,463       304,845
Other................................   112,451       14,196        39,160
                                       --------   ----------   -----------
                                       $372,108   $1,081,917   $   716,704
                                       ========   ==========   ===========
</TABLE>
 
NOTE 5 -- NOTE PAYABLE
 
     In August 1997, the Company entered into an agreement with another software
company for the purchase of certain assets, properties and rights relating to an
ATM software product in exchange for a $255,000 note. The amount due to the
vendor is being paid down based on per copy fees of the purchased software
products, however, any remaining balance will be due in full on June 30, 1998.
At December 31, 1997 and March 31, 1998, the balance due to the software company
was $175,000 and $150,000 (unaudited), respectively.
 
                                      F-10
<PAGE>   68
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 6 -- LINES OF CREDIT
 
     In September 1996, the Company entered into a $250,000 equipment line of
credit with a bank. The equipment line allowed for draw downs through September
1997 with the outstanding borrowings on the equipment line converting to a
$104,002, nine percent term loan payable in 36 months beginning October 1997.
Borrowings are secured by a first security interest in the related equipment. At
December 31, 1997 and March 31, 1998 the term loan balance was $92,446 and
$83,779 (unaudited), respectively.
 
     In June 1997, the Company entered into a $1,000,000 working capital line of
credit with the same bank. At December 31, 1997 and March 31, 1998, there was no
balance outstanding under this line of credit. The line of credit is secured
with a first security interest in all assets, exclusive of those financed under
the equipment line. The line of credit is available up to 75% of domestic
accounts receivable less than 90 days outstanding. Interest will be paid monthly
at the bank's prime plus 50 basis points.
 
     In conjunction with these credit agreements, the Company must maintain
certain liquidity, tangible capital base and quick ratio financial covenants.
The Company was in compliance with its financial covenants at March 31, 1998
(unaudited). Payment of dividends is prohibited under the lines of credit.
 
NOTE 7 -- MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
 
     In May 1995, the Company issued to Connecticut Innovations, Incorporated
("CII") 166,667 shares of Series A-2 Preferred Stock at $3.00 per share for
$500,000. As a requirement of the funding, the Company must maintain its
principal place of business and conduct the majority of its operations in
Connecticut. If the Company fails to maintain its Connecticut presence, CII may
require the Company to purchase CII's shares at the greater of the original
purchase price plus a 40% annual compounded rate of return or the fair market
value of the shares. In addition, CII may require the Company to purchase its
shares if the Company is a private company and is acquired by a third party or
if the Company disposes of substantially all of its assets to a third party. The
price of redemption will be the greater of the original purchase price of the
shares plus a 25% annually compounded rate of return or the fair market value of
the shares. Management does not consider any of the events that would trigger
mandatory redemption to be probable events and therefore does not accrue for
accretion.
 
     In December 1995, the Company issued to a group of investors 1,543,334
shares of Series B Preferred Stock at $3.00 per share for $4,630,000. In
conjunction with the sale, the Company issued 192,916 warrants to purchase
additional shares of Series B Preferred Stock at $4.00 per share of which 84,583
warrants were exercised in March 1998. The Series B Preferred Stock has similar
mandatory redemption features as the May 1995 Series A-2.
 
     In October 1996, the Company issued to a group of investors 1,222,222
shares of Series C Preferred Stock at $4.50 per share for $5,500,000. In
conjunction with the sale, the Company issued 152,778 warrants to purchase
additional shares of Series C Preferred Stock at $6.00 per share of which 41,667
warrants were exercised in March 1998. The Series C Preferred Stock has similar
mandatory redemption features as the May 1995 Series A-2 and Series B.
 
     In August 1997, the Company issued to an investor 833,333 shares of Series
D Preferred Stock at $6.00 per share for $5,000,000. In conjunction with the
sale, the Company issued 416,667 warrants to purchase additional shares of
Series D Preferred Stock at $6.00 per share. The Series D Preferred Stock has
similar mandatory redemption features as the May 1995 Series A-2, Series B and
Series C. Concurrent with the preferred stock offering, the investor in the
Series D Preferred Stock offering
 
                                      F-11
<PAGE>   69
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
also entered into a marketing and distribution agreement with the Company. As of
March 31, 1998, there have been no revenues recognized under this agreement.
 
     The holders of preferred stock are entitled to receive noncumulative cash
dividends when and as declared by the Board of Directors and have similar voting
rights as common stockholders in addition to certain other defined voting
rights. In the event of any voluntary or involuntary liquidation of the Company,
the holders of Series A-1, Series A-2, Series B, Series C and Series D Preferred
Stock shall be entitled to all unpaid dividends at the time of liquidation and
$1.50, $3.00, $3.00 or $4.50 and $6.00, respectively, per share as a liquidating
distribution prior to any liquidating distribution to the common stockholders.
At the option of the preferred stockholders, their shares may be converted to
common stock at the rate of one common stock share for one share of preferred
stock. The preferred stock shall automatically convert into shares of common
stock upon the closing of a public offering meeting certain criteria. The
mandatory redemption features terminate upon the closing of a public offering
and the expiration of any related lock-up agreements, with the exception of the
Series A-2 Preferred Stock held by CII. The rights of CII to require the Company
to purchase its Series A-2 Preferred Stock in the event the Company fails to
maintain its Connecticut presence do not terminate.
 
NOTE 8 -- STOCKHOLDERS' EQUITY
 
  Capital Stock Transactions
 
     In December 1995, in conjunction with the issuance of the Series B
Preferred Stock, the Company revised its certificate of incorporation to
authorize 11,000,000 shares, of which 7,680,417 were common stock and 3,319,583
were preferred stock. In October 1996, in conjunction with the issuance of the
Series C Preferred Stock, the Company revised its certificate of incorporation
to authorize 13,275,000 shares of which 8,580,417 were common stock and
4,694,583 were preferred stock. In August 1997, in conjunction with the issuance
of the Series D Preferred Stock, the Company revised its certificate of
incorporation to authorize 15,775,000 shares, of which 9,830,417 were common
stock and 5,944,583 were preferred stock. In February 1998, the Company revised
its certificate of incorporation to approve an increase in authorized shares
from 15,775,000 to 25,000,000.
 
     In January 1996, the Company issued 175,000 shares of common stock to the
Chief Executive Officer, resulting in compensation expense of $52,500.
 
     The Company has reserved shares of common stock as follows:
 
<TABLE>
<CAPTION>
                                                              DECEMBER 31,     MARCH 31,
                                                                  1997            1998
                                                              ------------    ------------
                                                                              (UNAUDITED)
<S>                                                           <C>             <C>
     Conversion of preferred stock..........................   5,182,222       5,308,472
     Conversion of preferred stock upon exercise of
       warrants.............................................    762,361         636,111
     Exercise of options....................................   1,610,000       3,000,000
                                                              ------------    ------------
                                                               7,554,583       8,944,583
                                                              ============    ============
</TABLE>
 
  Preferred Stock
 
     In February 1994, the Company issued 1,000,000 shares of preferred stock
designated as Series A-1 Preferred Stock at $1.50 per share. In conjunction with
the issuance of the Series A-1 Preferred Stock, the Company issued a warrant to
purchase 333,333 shares of Series A-2 Preferred Stock with an exercise price of
$3.00 per share. The warrant was subsequently converted to 333,333 shares of
Series A-2 Preferred Stock in September 1994 for $999,999.
 
                                      F-12
<PAGE>   70
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     In September 1994, the Company issued an additional 83,333 shares of
preferred stock designated as Series A-2 Preferred Stock at $3.00 per share. The
Company received $50,000 in cash and a note for $200,000 payable in monthly
installments of $10,000 plus interest, of which $60,000 and $0 was outstanding
at December 31, 1995 and 1996, respectively. The shares were pledged as
collateral against the note.
 
     At the option of the preferred stockholders, their shares may be converted
to common stock at the rate of one common stock share for one share of preferred
stock. The preferred stock shall automatically convert into shares of common
stock upon the closing of a public offering meeting certain criteria.
 
NOTE 9 -- STOCK OPTION PLAN
 
     The Company has established the 1994 Stock Option Plan (the "1994 Plan")
for employees, officers, directors, and consultants or advisors to the Company
under which the Board of Directors may grant incentive stock options and
non-qualified stock options. Incentive stock options will be granted at the fair
value of the Common Stock at the time of grant, as determined by the Board of
Directors. Generally, incentive stock options vest 25% on the first anniversary
of the date of grant and then ratably on a monthly basis over the subsequent
three years. In certain circumstances, at the discretion of the Board of
Directors, options are granted with a vesting schedule of other than four years.
Non-qualified stock options have a vesting period as determined by the Board of
Directors generally vesting 25% on the first anniversary of the date of grant
and then ratably on a monthly basis over the subsequent three years. The stock
options are exercisable over a period of ten years from the date of grant.
 
     In May 1997, the shareholders approved an increase in the maximum number of
shares that may be issued under the 1994 Plan from 1,110,000 to 1,610,000. In
February 1998, the shareholders approved an increase in the maximum number of
shares that may be issued under the 1994 Plan from 1,610,000 to 3,000,000.
 
     A summary of stock option activity under the 1994 Plan is as follows:
 
<TABLE>
<CAPTION>
                                                                           WEIGHTED
                                                                           AVERAGE
                                                              NUMBER OF    EXERCISE
                                                               SHARES       PRICE
                                                              ---------    --------
<S>                                                           <C>          <C>
Outstanding at December 31, 1995............................    595,500     $0.20
  Granted...................................................    386,500      0.30
                                                              ---------
Outstanding at December 31, 1996............................    982,000      0.24
  Granted...................................................    482,250      1.23
  Canceled..................................................    (47,675)     0.24
  Exercised.................................................    (50,325)     0.17
                                                              ---------
Outstanding at December 31, 1997............................  1,366,250      0.59
  Granted...................................................    283,500      0.52
  Canceled..................................................     (6,146)     1.82
  Exercised.................................................       (479)     0.30
                                                              ---------
Outstanding at March 31, 1998 (unaudited)...................  1,643,125      0.58
                                                              =========
</TABLE>
 
     Stock options outstanding at March 31, 1998 includes 275,000 stock options
granted to affiliates of Banking Spectrum Services, Inc., a shareholder of the
Company, in March 1998. The Company recorded contract termination expense in
connection with these stock options, as described in Note 13, Related Parties.
 
                                      F-13
<PAGE>   71
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table summarizes information regarding stock options granted
during 1995, 1996 and 1997, and the three months ended March 31, 1998
(unaudited):
 
<TABLE>
<CAPTION>
                                                                                       WEIGHTED
                                                                                       AVERAGE
                                                                                       SFAS123
                                                                          WEIGHTED     MINIMUM
                                                              NUMBER OF    AVERAGE     VALUE AT
                                                               OPTIONS    EXERCISE      GRANT
                                                               GRANTED      PRICE        DATE
                                                              ---------   ---------   ----------
<S>                                                           <C>         <C>         <C>
1995:
Options granted with an exercise price equal to market
  value.....................................................   245,500      $0.28       $ 0.09
1996:
Options granted with an exercise price equal to market
  value.....................................................   386,500       0.30         0.10
1997:
Options granted with an exercise price equal to market
  value.....................................................     8,500       0.36         0.12
Options granted with an exercise price less than market
  value.....................................................   473,750       1.25         1.10
1998:
Options granted with an exercise price less than market
  value.....................................................   283,500       0.52         6.22
</TABLE>
 
     The weighted average SFAS 123 minimum value at grant date is the amount
attributable to the option that is calculated without considering the expected
volatility of the underlying stock.
 
     The following table summarizes additional information about stock options
outstanding at March 31, 1998 (unaudited):
 
<TABLE>
<CAPTION>
                          OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
           --------------------------------------------------   --------------------------------
               NUMBER          WEIGHTED-                            NUMBER
           OUTSTANDING AT       AVERAGE           WEIGHTED      EXERCISABLE AT      WEIGHTED
EXERCISE     MARCH 31,         REMAINING          AVERAGE         MARCH 31,          AVERAGE
 PRICE          1998        CONTRACTUAL LIFE   EXERCISE PRICE        1998        EXERCISE PRICE
--------   --------------   ----------------   --------------   --------------   ---------------
<S>        <C>              <C>                <C>              <C>              <C>
 $0.15         296,000            6.2              $0.15            283,813           $0.15
  0.15          20,000            6.9               0.15             15,833            0.15
  0.30         203,000            7.3               0.30            160,115            0.30
  0.30         368,500            8.2               0.30            159,011            0.30
  0.45         311,125            9.2               0.45            123,085            0.45
  0.45         275,000            9.9               0.45            275,000            0.45
  2.75         161,000            9.6               2.75              1,979            2.75
  2.75           8,500            9.9               2.75                 --              --
             ---------                                            ---------           -----
             1,643,125                                            1,018,836            0.32
             =========                                            =========           =====
</TABLE>
 
     Had compensation expense been recognized based on the minimum value of the
employee options at their grant dates, as prescribed in SFAS 123, the Company's
pro forma net loss would have been as follows:
 
<TABLE>
<CAPTION>
                                                                             THREE MONTHS
                                         YEAR ENDED DECEMBER 31,                ENDED
                                ------------------------------------------    MARCH 31,
                                    1995           1996           1997           1998
                                ------------   ------------   ------------   ------------
                                                                             (UNAUDITED)
<S>                             <C>            <C>            <C>            <C>
Net loss:
  As reported.................   $1,894,953     $3,638,472     $3,055,372     $2,027,216
  Pro forma...................    1,896,688      3,646,337      3,131,847      2,066,900
Pro forma net loss per share
  (basic and diluted):
  As reported.................   $    (0.98)    $    (1.73)    $    (1.42)    $    (0.94)
  Pro forma...................        (0.98)         (1.73)         (1.45)         (0.95)
</TABLE>
 
                                      F-14
<PAGE>   72
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The minimum value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions used
for options granted during the applicable period: .
 
<TABLE>
<CAPTION>
                                                                                MARCH 31,
                                                 1995     1996       1997         1998
                                                -------  -------  -----------   ---------
                                                                               (UNAUDITED)
<S>                                             <C>      <C>      <C>          <C>
Risk free interest rate.......................   7.24%    6.72%   5.65%-6.66%     5.42%
Expected dividend yield.......................   None     None       None         None
Expected life of option.......................  6 years  6 years    6 years      6 years
Expected volatility...........................    0%       0%         0%           0%
</TABLE>
 
     The minimum value method requires the input of subjective assumptions.
Changes in the subjective input assumptions can materially affect the minimum
value estimate.
 
     Compensation of $358,513 and $24,225 (unaudited) has been attributed to
those common stock options granted to employees during 1997 and the three months
ended March 31, 1998, respectively, with an exercise price below estimated fair
value. Compensation expense is recognized over the four year vesting period and
totaled $85,526, $41,149 (unaudited) and $23,130 (unaudited) for the year ended
December 31, 1997 and the three months ended March 31, 1997 and 1998,
respectively.
 
NOTE 10 -- COMMITMENTS AND CONTINGENCIES
 
     At March 31, 1998, the Company was committed under facility and various
other operating leases with an initial term of more than one year which expire
at various dates through 2003. Terms of the facility lease provide for
escalating rent payments in future years. Minimum lease payments under these
noncancelable leases are approximately as follows:
 
<TABLE>
<S>                                                  <C>
April 1 -- December 31, 1998.......................  $  128,000
1999...............................................     182,000
2000...............................................     191,000
2001...............................................     211,000
2002...............................................     219,000
Thereafter.........................................      72,000
                                                     ----------
          Total minimum obligations................  $1,003,000
                                                     ==========
</TABLE>
 
     Rent expense under operating leases was approximately $36,000, $149,000 and
$194,000 for the years ended December 31, 1995, 1996 and 1997 and $51,000
(unaudited) and $46,000 (unaudited) for the three months ended March 31, 1997
and 1998, respectively.
 
     From time to time in the ordinary course of business, the Company is
subject to legal proceedings. While it is impossible to determine the ultimate
outcome of such matters, it is management's opinion that the resolution of any
pending issues will not have a material adverse effect on the financial
position, results of operations or cash flows of the Company.
 
NOTE 11 -- DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The carrying amount of cash, trade accounts receivable, other current
assets, trade accounts payable, royalties payable, accrued expenses, notes
payable and outstanding lines of credit approximate fair value because of the
short maturity of those instruments.
 
                                      F-15
<PAGE>   73
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 12 -- INCOME TAXES
 
     Significant components of the Company's deferred tax asset at December 31,
1996 and 1997, and March 31, 1998 are as follows:
 
<TABLE>
<CAPTION>
                                        DECEMBER 31,
                                  -------------------------    MARCH 31,
                                     1996          1997          1998
                                  -----------   -----------   -----------
                                                              (UNAUDITED)
<S>                               <C>           <C>           <C>
Gross deferred tax assets:
  Net operating loss
     carryforwards..............  $ 2,853,000   $ 3,967,000   $ 4,017,000
  Research & development credit
     carryforwards..............      130,000       332,000       363,000
  Stock option expense..........           --            --       643,000
  Other.........................       32,000       126,000       136,000
                                  -----------   -----------   -----------
                                    3,015,000     4,425,000     5,159,000
                                  -----------   -----------   -----------
Gross deferred tax liability:
  Capitalized software
     development costs..........       84,000       221,000       145,000
  Accelerated depreciation......       14,000        71,000        79,000
                                  -----------   -----------   -----------
                                       98,000       292,000       224,000
                                  -----------   -----------   -----------
Valuation allowance.............   (2,917,000)   (4,133,000)   (4,935,000)
                                  -----------   -----------   -----------
Net deferred tax asset..........  $        --   $        --   $        --
                                  ===========   ===========   ===========
</TABLE>
 
     The Company has provided a valuation allowance for the full amount of the
net deferred tax asset as of December 31, 1996 and 1997 and March 31, 1998 since
management has not determined realization of these future benefits to be more
likely than not. If the Company achieves profitability, the deferred tax asset
would be available, subject to certain annual limitations, to offset future
income taxes.
 
     At March 31, 1998, the Company had approximately $9.9 million of federal
net operating loss carryforwards that begin expiring in 2007 and had
approximately $10.7 million of state net operating loss carryforwards that begin
expiring in 1998. At March 31, 1998, the Company had approximately $363,000 of
research and development credit carryforwards that begin expiring in 2007.
 
     As defined in the Internal Revenue Code, certain ownership changes limit
the annual utilization of federal net operating loss and tax credit
carryforwards. The Company experienced such an ownership change in December 1995
which limits approximately $3.2 million of federal net operating loss
carryforwards and $143,000 of research tax credits to a $307,000 annual Section
382 limitation.
 
NOTE 13 -- RELATED PARTIES
 
  Banking Spectrum
 
     In January 1994, the Company entered into an agreement with Banking
Spectrum Services, Inc., a shareholder of the Company, and Banking Spectrum,
Inc. (collectively, "Banking Spectrum"), to provide and receive certain
consulting and support services. The majority shareholder of Banking Spectrum
Services, Inc. is a director and shareholder of the Company. Pursuant to the
agreement, the Company agreed to pay Banking Spectrum a three percent royalty
based on license and maintenance revenues, as defined in the agreement, in
exchange for the use of Banking Spectrum's products and contributions to the
design of the Company's software. In addition, the Company agreed to pay Banking
Spectrum a five percent royalty based on license and maintenance revenues
 
                                      F-16
<PAGE>   74
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
for compliance and regulatory support provided to customers. The Company
recognized royalty expense of $9,021, $72,064, $337,945, $30,791 (unaudited) and
$90,403 (unaudited) for the years ended December 31, 1995, 1996, 1997 and for
the three months ended March 31, 1997 and 1998, respectively.
 
     In March 1998, the Company and Banking Spectrum terminated their previous
agreement and entered into a distribution and termination agreement. The new
agreement released the Company from any future royalty payments to Banking
Spectrum in exchange for cash payment of $100,000 to Banking Spectrum and fully
vested options to affiliates of Banking Spectrum Services, Inc. to purchase
275,000 shares of Common Stock at an exercise price of $0.45 per share. The
stock options were estimated by management to have a fair value of approximately
$1.6 million (unaudited). Net of amounts previously accrued, the Company
recorded a contract termination expense of approximately $1.3 million
(unaudited) for the three months ended March 31, 1998.
 
  PRISM
 
     During 1994, the Company borrowed $250,000 from Prince-Roth Information
Systems Management Inc. ("PRISM"), a related party. Spouses of the shareholders
of PRISM are shareholders of the Company. The note was paid in full during 1996
including interest due. Interest expense was $0 and $3,000 for the years ended
December 31, 1995 and 1996, respectively.
 
NOTE 14 -- SUBSEQUENT EVENTS
 
  Amended and Restated Certificate of Incorporation
 
     After the filing of the Company's Amended and Restated Certificate of
Incorporation upon the closing of this offering, the authorized capital stock of
the Company will consist of 50,000,000 shares of common stock, $0.01 par value
per share, and 5,000,000 shares of preferred stock, $0.01 par value per share.
 
  1998 Stock Incentive Plan
 
     The Company's 1998 Stock Incentive Plan (the "Incentive Plan") was adopted
by the Board of Directors, subject to stockholder approval, in June 1998,
effective upon the closing of the offering contemplated in this Prospectus. The
Incentive Plan is intended to replace the Company's 1994 Plan. Awards may be
made under the Incentive Plan for up to the sum of (i) 1,200,000 shares of
common stock (subject to adjustment in the event of stock splits and other
similar events), plus (ii) the number of shares of common stock (up to
1,700,000) (subject to adjustment in the event of stock splits and other similar
events) subject to awards granted under the 1994 Plan which are not actually
issued because options granted under such plan expire or otherwise result in
shares not being issued or, in the case of restricted stock, are repurchased by
the Company pursuant to the terms of the applicable stock restriction agreement.
 
  1998 Employee Stock Purchase Plan
 
     The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors, subject to stockholder approval, in June
1998, effective upon the closing of the offering. The Purchase Plan authorizes
the issuance of up to a total of 250,000 shares of common stock to participating
employees.
 
                                      F-17
<PAGE>   75
 
=====================================================
  NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR
ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
                               ------------------
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                        PAGE
                                        ----
<S>                                     <C>
Prospectus Summary....................     3
Risk Factors..........................     6
Use of Proceeds.......................    14
Dividend Policy.......................    14
Capitalization........................    15
Dilution..............................    16
Selected Financial Data...............    17
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................    18
Business..............................    26
Management............................    35
Certain Transactions..................    43
Principal and Selling Stockholders....    45
Description of Capital Stock..........    48
Shares Eligible for Future Sale.......    51
Underwriting..........................    53
Legal Matters.........................    54
Experts...............................    54
Additional Information................    55
Index to Financial Statements.........   F-1
</TABLE>
 
                               ------------------
  UNTIL               , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
=====================================================
 
=====================================================
 
                         [                     ] SHARES
 
                             [OPEN SOLUTIONS LOGO]
 
                                  COMMON STOCK
                            ------------------------
 
                                   PROSPECTUS
                            ------------------------
                                 BT ALEX. BROWN
 
                           CREDIT SUISSE FIRST BOSTON
 
                                 UBS SECURITIES
                                            , 1998
 
=====================================================
<PAGE>   76
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses, all of which will be
borne by the Registrant, in connection with the sale and distribution of the
securities being registered, other than the underwriting discounts and
commissions. All amounts shown are estimates except for the Securities and
Exchange Commission registration fee and the NASD filing fee.
 
<TABLE>
<S>                                                             <C>
SEC registration fee........................................    $ 11,800
NASD filing fee.............................................       4,500
Nasdaq National Market listing fee..........................      95,000
Blue Sky fees and expenses..................................      10,000
Transfer Agent and Registrar fees...........................      15,000
Accounting fees and expenses................................     250,000
Legal fees and expenses.....................................     250,000
Printing and mailing expenses...............................     150,000
Miscellaneous...............................................     113,700
                                                                --------
     Total..................................................    $900,000
                                                                ========
</TABLE>
 
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     Article EIGHTH of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") provides that no
director of the Registrant shall be personally liable for any monetary damages
for any breach of fiduciary duty as a director, except to the extent that the
Delaware General Corporation Law prohibits the elimination or limitation of
liability of directors for breach of fiduciary duty.
 
     Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that a director or officer of the Registrant (a) shall be indemnified
by the Registrant against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with any litigation
or other legal proceeding (other than an action by or in the right of the
Registrant) brought against him by virtue of his position as a director or
officer of the Registrant if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by the Registrant against all expenses (including attorneys' fees)
and amounts paid in settlement incurred in connection with any action by or in
the right of the Registrant brought against him by virtue of his position as a
director or officer of the Registrant if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Registrant, except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by the Registrant against all expenses (including attorneys' fees)
incurred in connection therewith. Expenses shall be advanced to a director or
officer at his request, provided that he undertakes to repay the amount advanced
if it is ultimately determined that he is not entitled to indemnification for
such expenses.
 
     Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct
 
                                      II-1
<PAGE>   77
 
required for indemnification, or if the Registrant fails to make an
indemnification payment within 60 days after such payment is claimed by such
person, such person is permitted to petition the court to make an independent
determination as to whether such person is entitled to indemnification. As a
condition precedent to the right of indemnification, the director or officer
must give the Registrant notice of the action for which indemnity is sought and
the Registrant has the right to participate in such action or assume the defense
thereof.
 
     Article NINTH of the Registrant's Restated Certificate of Incorporation
further provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended
to expand the indemnification permitted to directors or officers the Registrant
must indemnify those persons to the fullest extent permitted by such law as so
amended.
 
     Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
 
     Under Section 8 of the Underwriting Agreement, the Underwriters are
obligated, under certain circumstances, to indemnify directors and officers of
the Registrant against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of Underwriting Agreement filed as
Exhibit 1 hereto.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     Set forth in chronological order is information regarding shares of Common
Stock and Preferred Stock issued, warrants issued and options granted by the
Registrant since June 1995. Further included is the consideration, if any,
received by the Registrant for such shares, warrants and options and information
relating to the section of the Securities Act of 1933, as amended (the
"Securities Act"), or rule of the Securities and Exchange Commission under which
exemption from registration was claimed.
 
          1.  On December 27, 1995, the Registrant sold a total of 1,543,334
     shares of Series B Preferred Stock to Axiom Venture Partners L.P., Barry
     Bloom, Mark Heller, Menlo Ventures VI, L.P., Menlo Entrepreneurs Fund VI,
     L.P., Connecticut Innovations, Incorporated and Zachs CMP for an aggregate
     purchase price of $4.6 million. The Registrant also issued such investors
     warrants to purchase an aggregate of 192,916 shares of Series B Preferred
     Stock at an exercise price of $3.00 per share.
 
          2.  On October 23, 1996, the Registrant sold a total of 1,222,222
     shares of Series C Preferred Stock to Aetna Life Insurance Company, Axiom
     Venture Partners L.P., Menlo Ventures VI, L.P., Menlo Entrepreneurs Fund
     VI, L.P. and Connecticut Innovations, Incorporated for an aggregate
     purchase price of $5.5 million. The Registrant also issued such investors
     warrants to purchase an aggregate of 152,778 shares of Series C Preferred
     Stock at an exercise price of $6.00 per share.
 
          3.  On August 22, 1997, the Registrant sold a total of 833,333 shares
     of Series D Preferred Stock to The BISYS Group, Inc. for $5.0 million. The
     Company also issued such investor a warrant to purchase 416,667 shares of
     Series D Preferred Stock at an exercise price of $6.00 per share.
 
                                      II-2
<PAGE>   78
 
          4.  On March 6, 1998, the Registrant issued a total of 84,583 shares
     of Series B Preferred Stock and 41,667 shares of Series C Preferred Stock
     to Menlo Ventures VI, L.P. and Menlo Entrepreneurs Fund VI, L.P. upon the
     exercise of warrants.
 
     Certain of the transactions described above involved directors, officers
and five percent stockholders of the Registrant. See "Certain Transactions."
 
     The Registrant's 1994 Stock Option Plan was adopted by the Board of
Directors and approved by the stockholders of the Registrant in March 1994. As
of March 31, 1998, options to purchase 60,804 shares of Common Stock had been
exercised for an aggregate consideration of $10,274, options to purchase
1,643,125 shares of Common Stock were outstanding and 175,000 shares of Common
Stock had been issued under an award of restricted stock under such plan.
 
     The securities issued in the foregoing transactions were either (i) offered
and sold in reliance upon exemptions from Securities Act registration set forth
in Sections 3(b) and 4(2) of the Securities Act, or any regulations promulgated
thereunder, relating to sales by an issuer not involving any public offering, or
(ii) in the case of certain options to purchase shares of Common Stock and
shares of Common Stock issued upon the exercise of such options, such offers and
sales were made in reliance upon an exemption from registration under Rule 701
of the Securities Act. No underwriters were involved in the foregoing sales of
securities.
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     (a) EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
NO.                                DESCRIPTION
-------                            -----------
<C>        <S>
     1     Form of Underwriting Agreement.
   3.1     Certificate of Incorporation of the Registrant, as amended.
   3.2     Amended and Restated Certificate of Incorporation of the
           Registrant, to be effective upon the closing of this
           offering.
   3.3     By-Laws of the Registrant, as amended.
   3.4     Amended and Restated By-Laws of the Registrant, to be
           effective upon the closing of this offering.
  *4.1     Specimen certificate for shares of Common Stock.
    *5     Opinion of Hale and Dorr LLP.
  10.1     1994 Stock Option Plan, as amended.
 *10.2     1998 Stock Incentive Plan, including forms of stock option
           agreement for incentive and nonstatutory stock options.
  10.3     1998 Employee Stock Purchase Plan.
  10.4     Amended and Restated Investors' Rights Agreement, dated as
           of August 22, 1997, between the Company and the Investors
           (as defined therein).
  10.5     Form of Series B Preferred Stock Warrant.
  10.6     Form of Series C Preferred Stock Warrant.
  10.7     Form of Series D Preferred Stock Warrant.
 *10.8     Employment Agreement between the Company and Douglas K.
           Anderson dated October 2, 1995, as amended.
 +10.9     Software License and Marketing and Distribution Agreement,
           between the Company and BISYS, Inc., dated as of August 20,
           1997.
+10.10     License and Marketing Agreement, between the Company and
           Connecticut On-Line Computer Center, Inc., dated as of
           December 9, 1997.
+10.11     Software License Agreement, between the Company and Unisys
           Corporation, dated as of June 18, 1997.
*10.12     Employment Agreement between the Company and Graham H.
           Gurney dated January 2, 1993.
*10.13     Employment Agreement between the Company and Clifford I.
           Waggoner dated January 2, 1993.
</TABLE>
 
                                      II-3
<PAGE>   79
 
<TABLE>
<CAPTION>
EXHIBIT
NO.                                DESCRIPTION
-------                            -----------
<C>        <S>
 10.14     Letter Agreement between the Company and John L. Person
           dated April 10, 1997.
 10.15     Letter Agreement between the Company and Richard J. Willemin
           dated February 27, 1998.
 10.16     Form of Information Processing System Agreement.
 10.17     Form of prior Information Processing System Agreement.
  23.1     Consent of Price Waterhouse LLP.
  23.2     Consent of Hale and Dorr LLP (included in Exhibit 5).
    24     Power of Attorney (included on page II-5).
    27     Financial Data Schedule.
</TABLE>
 
---------------
* To be filed by amendment.
 
+ Confidential treatment requested as to certain portions, which portions are
  omitted and filed separately with the Securities and Exchange Commission.
 
     (B) FINANCIAL STATEMENT SCHEDULES
 
     Schedule II -- Valuation and Qualifying Accounts is included in this
Registration Statement. All other schedules have been omitted because they are
not required or because the required information is given in the Registrant's
Financial Statements or Notes thereto.
 
ITEM 17.  UNDERTAKINGS
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Amended and Restated
Certificate of Incorporation of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
     The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     The undersigned Registrant hereby undertakes that:
 
          (1)  For purposes of determining any liability under the Securities
     Act, the information omitted form the form of prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.
 
          (2)  For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
                                      II-4
<PAGE>   80
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Glastonbury, Connecticut, on this
10th day of June, 1998.
 
                                          OPEN SOLUTIONS INC.
 
                                          By:   /s/ DOUGLAS K. ANDERSON
 
                                          --------------------------------------
                                                     Douglas K. Anderson
                                                    Chairman of the Board
                                                 and Chief Executive Officer
 
                        POWER OF ATTORNEY AND SIGNATURES
 
     We, the undersigned officers and directors of Open Solutions Inc., hereby
severally constitute and appoint Douglas K. Anderson, Richard J. Willemin, Mark
G. Borden and Philip P. Rossetti, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement on
Form S-1 filed herewith and any and all pre-effective and post-effective
amendments to said Registration Statement, and any subsequent Registration
Statement for the same offering which may be filed under Rule 462(b), and
generally to do all such things in our names and on our behalf in our capacities
as officers and directors to enable Open Solutions Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto or to any subsequent
Registration Statement for the same offering which may be filed under Rule
462(b).
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
<C>                                                  <S>                                 <C>
 
              /s/ DOUGLAS K. ANDERSON                Chairman of the Board and Chief     June 10, 1998
---------------------------------------------------  Executive Officer (Principal
                Douglas K. Anderson                  Executive Officer)
 
              /s/ RICHARD J. WILLEMIN                Senior Vice President and Chief     June 10, 1998
---------------------------------------------------  Financial Officer (Principal
                Richard J. Willemin                  Financial and Accounting
                                                     Officer)
 
              /s/ DOUGLAS C. CARLISLE                Director                            June 10, 1998
---------------------------------------------------
                Douglas C. Carlisle
 
                /s/ DAVID M. CLARKE                  Director                            June 10, 1998
---------------------------------------------------
                  David M. Clarke
 
              /s/ GRAHAM H. GURNEY                   Director                            June 10, 1998
---------------------------------------------------
                 Graham H. Gurney
</TABLE>
 
                                      II-5
<PAGE>   81
 
<TABLE>
<CAPTION>
                     SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
<C>                                                  <S>                                 <C>
 
                /s/ SAMUEL F. MCKAY                  Director                            June 10, 1998
---------------------------------------------------
                  Samuel F. McKay
 
               /s/ CARLOS P. NAUDON                  Director                            June 10, 1998
---------------------------------------------------
                 Carlos P. Naudon
 
              /s/ WILLIAM W. NEVILLE                 Director                            June 10, 1998
---------------------------------------------------
                William W. Neville
 
             /s/ CLIFFORD I. WAGGONER                Director                            June 10, 1998
---------------------------------------------------
               Clifford I. Waggoner
 
               /s/ RICHARD P. YANAK                  Director                            June 10, 1998
---------------------------------------------------
                 Richard P. Yanak
</TABLE>
 
                                      II-6
<PAGE>   82
 
                                                                     SCHEDULE II
 
                              OPEN SOLUTIONS INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                         ADDITIONS
                               BALANCE AT    ----------------------------------   DEDUCTIONS   BALANCE AT
                              BEGINNING OF   CHARGE TO COSTS    CHARGE TO OTHER     NET OF       END OF
        DESCRIPTION              PERIOD        AND EXPENSES        ACCOUNTS       WRITE-OFFS     PERIOD
        -----------           ------------   ----------------   ---------------   ----------   ----------
<S>                           <C>            <C>                <C>               <C>          <C>
ALLOWANCE FOR DOUBTFUL
  ACCOUNTS:
Years ended
  December 31, 1995.........        --               --                 --            --             0
  December 31, 1996.........        --               86                 --            --            86
  December 31, 1997.........        86              239                 --           111           214
Three months ended March 31,
  1998 (unaudited)..........       214              130                 --            --           344
</TABLE>
 
                                       S-1
<PAGE>   83
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT
NO.                                DESCRIPTION
-------                            -----------
<C>        <S>
     1     Form of Underwriting Agreement.
   3.1     Certificate of Incorporation of the Registrant, as amended.
   3.2     Amended and Restated Certificate of Incorporation of the
           Registrant, to be effective upon the closing of this
           offering.
   3.3     By-Laws of the Registrant, as amended.
   3.4     Amended and Restated By-Laws of the Registrant, to be
           effective upon the closing of this offering.
  *4.1     Specimen certificate for shares of Common Stock.
    *5     Opinion of Hale and Dorr LLP.
  10.1     1994 Stock Option Plan, as amended.
 *10.2     1998 Stock Incentive Plan, including forms of stock option
           agreement for incentive and nonstatutory stock options.
  10.3     1998 Employee Stock Purchase Plan.
  10.4     Amended and Restated Investors' Rights Agreement, dated as
           of August 22, 1997, between the Company and the Investors
           (as defined therein).
  10.5     Form of Series B Preferred Stock Warrant.
  10.6     Form of Series C Preferred Stock Warrant.
  10.7     Form of Series D Preferred Stock Warrant.
 *10.8     Employment Agreement between the Company and Douglas K.
           Anderson dated October 2, 1995, as amended.
 +10.9     Software License and Marketing and Distribution Agreement,
           between the Company and BISYS, Inc., dated as of August 20,
           1997.
+10.10     License and Marketing Agreement, between the Company and
           Connecticut On-Line Computer Center, Inc., dated as of
           December 9, 1997.
+10.11     Software License Agreement, between the Company and Unisys
           Corporation, dated as of June 18, 1997.
*10.12     Employment Agreement between the Company and Graham H.
           Gurney dated January 2, 1993.
*10.13     Employment Agreement between the Company and Clifford I.
           Waggoner dated January 2, 1993.
 10.14     Letter Agreement between the Company and John L. Person
           dated April 10, 1997.
 10.15     Letter Agreement between the Company and Richard J. Willemin
           dated February 27, 1998.
 10.16     Form of Information Processing System Agreement.
 10.17     Form of prior Information Processing System Agreement.
  23.1     Consent of Price Waterhouse LLP.
  23.2     Consent of Hale and Dorr LLP (included in Exhibit 5).
    24     Power of Attorney (included on page II-5).
    27     Financial Data Schedule.
</TABLE>
 
---------------
* To be filed by amendment.
 
+ Confidential treatment requested as to certain portions, which portions are
  omitted and filed separately with the Securities and Exchange Commission.
[{"type": "S-1", "sequence": "1", "description": "OPEN SOLUTIONS INC.", "secsgml_size_bytes": 331953}]
{"company-data": {"conformed-name": "OPEN SOLUTIONS INC", "cik": "0000873538", "assigned-sic": "", "irs-number": "22317350", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-56503", "film-number": "98645716"}, "business-address": {"street1": "300 WINDING BROOK DRIVE", "city": "GLASTONBURY", "state": "CT", "zip": "06033", "phone": "8606523155"}, "mail-address": {"street1": "300 WINDING BROOK DRIVE", "city": "GLASTONBURY", "state": "CT", "zip": "06033"}}
1
 
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 10, 1998
 
                                                     REGISTRATION NO. 333-
================================================================================
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                            ------------------------
 
                              OPEN SOLUTIONS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
                            ------------------------
DELAWARE                               7372                              22-317350
  (STATE OR OTHER JURISDICTION OF        (PRIMARY STANDARD INDUSTRIAL               (I.R.S. EMPLOYER
   INCORPORATION OR ORGANIZATION)        CLASSIFICATION CODE NUMBER)             IDENTIFICATION NUMBER)
------------------------
 
                            300 WINDING BROOK DRIVE
                         GLASTONBURY, CONNECTICUT 06033
                                 (860) 652-3155
    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
                            ------------------------
 
                              DOUGLAS K. ANDERSON
               CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
                              OPEN SOLUTIONS INC.
                            300 WINDING BROOK DRIVE
                         GLASTONBURY, CONNECTICUT 06033
                                 (860) 652-3155
               (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
               NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
                            ------------------------
                                   COPIES TO:
MARK G. BORDEN, ESQ.                                  JOHN J. EGAN III, ESQ.
               PHILIP P. ROSSETTI, ESQ.                               JEFFREY C. HADDEN, ESQ.
                  HALE AND DORR LLP                                 GOODWIN, PROCTER & HOAR LLP
                   60 STATE STREET                                         EXCHANGE PLACE
             BOSTON, MASSACHUSETTS 02109                            BOSTON, MASSACHUSETTS 02109
              TELEPHONE: (617) 526-6000                              TELEPHONE: (617) 570-1000
               TELECOPY: (617) 526-5000                               TELECOPY: (617) 523-1231
------------------------
 
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:  As soon as
practicable after the effective date hereof.
    If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box.  [ ]
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ] ---------------
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ---------------
    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ] ---------------
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box.  [ ]
                            ------------------------
 
                        CALCULATION OF REGISTRATION FEE
=====================================================================================================
                                                     PROPOSED MAXIMUM
            TITLE OF EACH CLASS OF                  AGGREGATE OFFERING              AMOUNT OF
          SECURITIES TO BE REGISTERED                    PRICE(1)              REGISTRATION FEE(2)
-----------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value per share........         $40,000,000                  $11,800
=====================================================================================================
(1) Estimated solely for the purpose of calculating the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act of 1933,
    as amended.
 
(2) Calculated pursuant to Rule 457(a) based on an estimate of the proposed
    maximum aggregate offering price.
                            ------------------------
 
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
2
 
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
 
                                                           SUBJECT TO COMPLETION
 
                                                                   JUNE 10, 1998
 
                           [                 ] SHARES
 
                             [OPEN SOLUTIONS LOGO]
 
                                  COMMON STOCK
                            ------------------------
     Of the [            ] shares of Common Stock ("Common Stock") offered
hereby, [            ] are being sold by Open Solutions Inc. ("OSI" or the
"Company") and [            ] are being sold by certain stockholders of the
Company (the "Selling Stockholders"). See "Principal and Selling Stockholders."
The Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. Prior to this offering, there has been no public market
for the Common Stock of the Company. It is currently estimated that the initial
public offering price will be between $[     ] and $[     ] per share. See
"Underwriting" for the factors to be considered in determining the initial
public offering price. Application has been made for the listing of the Common
Stock on the Nasdaq National Market under the symbol "OSIF."
                            ------------------------
 
        THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 6.
                            ------------------------
 
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
                               CRIMINAL OFFENSE.
===================================================================================================================
                                    PRICE              UNDERWRITING            PROCEEDS            PROCEEDS TO
                                      TO              DISCOUNTS AND               TO                 SELLING
                                    PUBLIC            COMMISSIONS(1)          COMPANY(2)         STOCKHOLDERS(2)
-------------------------------------------------------------------------------------------------------------------
Per Share .................           $                     $                     $                     $
-------------------------------------------------------------------------------------------------------------------
Total(3) ..................           $                     $                     $                     $
===================================================================================================================
(1) See "Underwriting" for information relating to indemnification of the
    Underwriters.
 
(2) Before deducting estimated expenses of $               , all of which will
    be payable by the Company.
 
(3) The Company and certain stockholders of the Company have granted to the
    Underwriters a 30-day option to purchase up to [               ] additional
    shares of Common Stock solely to cover over-allotments, if any. If such
    option is exercised in full, the total Price to Public, Underwriting
    Discounts and Commissions, Proceeds to Company and Proceeds to Selling
    Stockholders will be $               , $               , $               and
    $               , respectively. See "Underwriting."
                            ------------------------
     The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if delivered to and accepted by them, and subject to
the right of the Underwriters to reject any order in whole or in part. It is
expected that delivery of the shares of Common Stock will be made at the offices
of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about               ,
1998.
BT ALEX. BROWN
                           CREDIT SUISSE FIRST BOSTON
                                                                  UBS SECURITIES
              THE DATE OF THIS PROSPECTUS IS               , 1998.
3
 
                             [OPEN SOLUTIONS LOGO]
 
     The Company intends to distribute to its stockholders annual reports
containing audited consolidated financial statements. The Company also intends
to make available to its stockholders, within 45 days after the end of each
fiscal quarter, reports for the first three quarters of each fiscal year
containing interim unaudited financial information.
 
     CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK IN
CONNECTION WITH THE OFFERING, INCLUDING OVER-ALLOTMENT, STABILIZING AND
SHORT-COVERING TRANSACTIONS IN SUCH SECURITIES, AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
 
     Open Solutions Inc. is a registered trademark, and The Complete Banking
Solution and The Complete Credit Union Solution are trademarks, of Open
Solutions Inc. All other trademarks or trade names referred to in this
Prospectus are the property of their respective owners.
                                        2
4

       [DESCRIPTION OF LEFT HALF OF INSIDE FRONT COVER FOLDOUT GRAPHICS]

Four images of screens from the OSI system "The Complete Banking Solution" are
displayed along the left side of the page with text describing each screen
immediately to the right.

(Screen 1) The screen is the home screen of the Customer Service
Representative module. The screen contains a command line at the top of a large
yellow tickler field in the middle of the screen.

ENHANCED CUSTOMER SERVICE: Information concerning customers and prospects is 
easily captured, updated and accessed. The entire customer relationship can be
viewed from any desktop, and the system prompts the user with timely
suggestions, reminders and cross-selling opportunities. The result is customer
service that is comprehensive, effective and personal.

(Screen 2) The screen is the "Edit Person" screen from the Customer
Service Representative Module. The screen contains a number of data elements on
the left side of the screen and images of the customer's face and signature on
the right.

COMPLETE CUSTOMER PROFILE: One screen displays the customer's photograph,
signature, and other  identifiers, eliminating the need for a driver's license
or other identification.

(Screen 3) The screen is the "Edit Additional Property" screen from
the Lending module. The screen contains a number of data elements on the left
side of the screen and an image of a residential property on the right.

UP-TO-DATE COLLATERAL INFORMATION: A complete description of the latest
appraisal and all specifics regarding loan collateral, whether a home, car or
other property, can be obtained real-time. Appraisal information is easily
updated.

(Screen 4) The screen is the "Payoff Inquiry" screen from the lending
module. The screen contains a number of data elements at the top and detailed
payoff information at the bottom that is adjustable with a scroll bar.

CONSOLIDATED PAYOFF INQUIRY/TRANSACTION: A loan payoff need not involve
numerous computer transactions. Loan balance, interim interest charges, escrow
balance, mortgage insurance premiums due, late charges and other relevant data
can be viewed on one screen. The "Payoff" button activates the transaction and
completes the payoff, indicating the loan balance due to the bank or to the
borrower.

     [DESCRIPTION OF RIGHT HALF OF INSIDE FRONT COVER FOLDOUT GRAPHICS]

                                  OSI PRODUCTS

                       THE COMPLETE BANKING SOLUTION(TM)
                     THE COMPLETE CREDIT UNION SOLUTION(TM)
 

A three-dimensional circle at the center with the label "The OSI Data Model."
Surrounding the inner circle is a three-dimensional ring with connecting pipes
to the inner circle with the following text within the ring: "OSI
Applications -- Home/Internet Banking -- Teller/Platform -- Lending -- 
Depository -- Operations -- ATM." A second ring surrounds the first ring with 
the following text within the ring: "Third Party Products -- Item Processing --
Imaging -- Electronic Forms -- Interactive Voice Response -- Cash Management --
General Ledger." A third ring surrounds the entire graphic with the following 
text within the ring: "Commercial Banks -- Thrifts -- Credit Unions."
 
The following text appears below the graphic described above.
 
"The Complete Banking Solution" and "The Complete Credit Union Solution"
(collectively, the "OSI System") from Open Solutions Inc. (OSI) are fully
integrated suites of financial applications that operate in a Microsoft Windows
NT environment with an Oracle relational database. The OSI System interfaces to
third-party applications that are commonly used in banks and credit unions and
is designed to enable OSI's customers to reduce their core data processing and
operational costs and to leverage their customer information.
5
 
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, all information
contained in this Prospectus (i) reflects the conversion of all outstanding
shares of the Company's Series A-1, Series A-2, Series B, Series C and Series D
Preferred Stock (the "Convertible Preferred Stock") into an aggregate of
5,308,472 shares of Common Stock at the closing of this offering and (ii)
assumes no exercise of the Underwriters' over-allotment option. This Prospectus
contains forward-looking statements which involve risks and uncertainties. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus.
 
                                  THE COMPANY
 
     Open Solutions Inc. (the "Company") is a leading provider of client/server
core processing software and related services to small to mid-size banks and
credit unions. The Company has developed The Complete Banking Solution and The
Complete Credit Union Solution (the "OSI System"), which are fully-integrated
suites of banking and credit union applications that operate in a Microsoft
Windows NT environment with an Oracle relational database. The Company's
software supports all of an institution's core processing requirements,
including deposits and loans, teller functions, home/Internet banking and
platform automation. The OSI System enables its customers to enhance customer
satisfaction and compete more effectively in the financial services industry.
 
     Currently, there are over 20,000 banking and depository institutions in the
United States with assets of up to $3 billion, including small to mid-size
commercial banks, thrifts and credit unions. The Company believes that these
institutions, which have traditionally competed on personalized service, are
facing increasing competitive pressures and are seeking to implement information
technology systems that provide a competitive advantage. Banks and credit unions
also require core processing systems that are able to accommodate new and
emerging technologies, such as automated teller machines ("ATMs"), telephone
banking and home banking via personal computers and the Internet. These
institutions have traditionally fulfilled their information technology needs
through legacy computer systems, operated either by the institution or a service
bureau on an outsourced basis. These legacy systems are not easily integrated
with other applications used in the enterprise, typically do not provide
real-time transaction processing and are not easily adapted to evolving business
needs and regulatory requirements.
 
     The need to improve customer service levels, enhance operating efficiencies
and lower costs has contributed to the growing acceptance of the client/server
model of computing based on open, industry-standard operating environments and
relational databases. Client/server systems can improve information sharing by
providing access at each desktop to critical customer and transaction data.
Until recently, the adoption of client/server systems in many banks and credit
unions has lagged other industries due to the limited number of suppliers of
open client/server systems designed specifically to address the core processing
requirements of such institutions. The Company believes that fewer than 200
small to mid-size banks and credit unions in the United States have implemented
open client/server core processing systems.
 
     The OSI System is a client/server software solution that is designed to
enable the Company's customers to reduce their core processing and operational
costs and to leverage their customer information to improve retention and
identify potential cross-selling opportunities. In addition to providing
comprehensive core processing functionality, the OSI System interfaces to
third-party applications that are commonly used in banks and credit unions,
including check processing, ATMs and general ledger applications. The OSI System
can reduce the overall cost of ownership of a financial institution's core
system. By integrating core banking functions, which have historically run on
separate systems, the OSI System enables its customers to achieve operational
efficiencies. The
                                        3
6
 
OSI System can also reduce the costs that would otherwise be associated with the
ongoing maintenance of legacy systems.
 
     The Company's objective is to be the leading supplier of enterprise-wide
client/server software for small to mid-size banks and credit unions. The
Company's strategy for achieving this objective includes the following: (i)
continue to focus on small to mid-size banks and credit unions, (ii) expand
distribution through outsourcing solutions, (iii) leverage customer base and
(iv) maintain product leadership.
 
     The Company markets its software and services primarily through its direct
sales force. To expand its distribution capabilities, the Company has also
established strategic relationships with The BISYS Group, Inc., a major national
outsourcing provider, and Connecticut On-Line Computer Center, Inc., a major
regional outsourcing provider, under which these third parties provide
outsourced processing services to the financial services industry using the OSI
System.
 
     The Company was organized as a Delaware corporation in 1992. The Company's
principal office is located at 300 Winding Brook Drive, Glastonbury, Connecticut
06033 and its telephone number is (860) 652-3155.
 
                                        4
7
 
                                  THE OFFERING
Common Stock offered by the Company...................    [          ] shares
Common Stock offered by the Selling Stockholders......    [          ] shares
Common Stock to be outstanding after the offering.....    [          ] shares(1)
Use of proceeds.......................................    Working capital and other general
                                                          corporate purposes
Nasdaq National Market symbol.........................    OSIF
---------------
(1) Based on the number of shares of Common Stock outstanding on March 31, 1998.
    Excludes an aggregate of 1,643,125 shares subject to options outstanding as
    of March 31, 1998 at a weighted average exercise price of $0.58 per share,
    of which options to purchase 1,018,836 shares of Common Stock are
    exercisable. Also excludes an aggregate of 636,111 shares of Common Stock
    issuable upon the exercise of outstanding warrants as of March 31, 1998 at a
    weighted average exercise price of $5.66 per share, all of which are
    exercisable. See "Risk Factors -- Shares Eligible for Future Sale;
    Registration Rights," "Management -- Stock Plans," "Description of Capital
    Stock -- Warrants" and Notes 7 and 9 of Notes to the Company's Financial
    Statements.
 
                             SUMMARY FINANCIAL DATA
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED
                                                      YEAR ENDED DECEMBER 31,                      MARCH 31,
                                         --------------------------------------------------    ------------------
                                          1993      1994       1995       1996       1997       1997       1998
                                         ------    -------    -------    -------    -------    -------    -------
STATEMENT OF OPERATIONS DATA:
Revenues:
  Software license...................    $   --    $    --    $   213    $   801    $ 4,099    $   693    $ 1,158
  Service and maintenance............        95         --         55        218      2,550        289      1,176
                                         ------    -------    -------    -------    -------    -------    -------
Total revenues.......................        95         --        268      1,019      6,649        982      2,334
Loss from operations.................      (476)    (1,205)    (1,890)    (3,774)    (3,264)    (1,223)    (2,122)
Net loss.............................      (513)    (1,191)    (1,895)    (3,638)    (3,055)    (1,179)    (2,027)
Net loss per common share (basic and
  diluted)...........................     (0.25)     (0.61)     (0.98)     (1.73)     (1.42)     (0.55)     (0.94)
Weighted average common shares used
  to compute net loss per share......     2,079      1,955      1,936      2,103      2,155      2,136      2,166
MARCH 31, 1998
                                                              --------------------------------------------
                                                                              PRO            PRO FORMA
                                                               ACTUAL      FORMA(1)      AS ADJUSTED(1)(2)
                                                              --------    -----------    -----------------
BALANCE SHEET DATA:
Cash and cash equivalents...................................  $ 7,346       $ 7,346          $
Working capital.............................................    6,232         6,232
Total assets................................................   11,686        11,686
Long-term debt, less current portion........................       58            58
Mandatorily redeemable convertible preferred stock..........   16,140            --
Stockholders' equity (deficit)..............................   (8,244)        7,896
---------------
(1) Reflects conversion of all outstanding shares of Convertible Preferred Stock
    into an aggregate of 5,308,472 shares of Common Stock upon the closing of
    this offering. See Note 2 of Notes to the Company's Financial Statements.
 
(2) Adjusted to give effect to the sale by the Company of [          ] shares of
    Common Stock offered hereby at an assumed initial public offering price of
    $[          ] per share and after deducting the estimated underwriting
    discounts and commissions and offering expenses payable by the Company. See
    "Use of Proceeds."
 
                                        5
8
 
                                  RISK FACTORS
 
     In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
 
     Limited Operating History; History of Losses.  The Company was incorporated
in May 1992 and did not sell its first product until the second quarter of 1995.
Accordingly, the Company's prospects must be considered in light of the risks,
expenses and difficulties frequently encountered by companies with limited
operating histories. Although the Company has experienced revenue growth in
recent periods, historical growth rates may not be sustained and are not
necessarily indicative of future operating results. The Company incurred
operating losses of $2.1 million, $3.3 million, $3.8 million and $1.9 million
for the three months ended March 31, 1998 and the years ended December 31, 1997,
1996 and 1995, respectively. There can be no assurance that operating losses
will not increase in the future or that the Company will ever achieve or sustain
profitability on a quarterly or annual basis. To the extent that revenues do not
grow at anticipated rates, increases in operating expenses precede or are not
subsequently followed by commensurate increases in revenues or the Company is
unable to adjust operating expense levels accordingly, the Company's business,
financial condition and results of operations will be materially adversely
affected. As of March 31, 1998, the Company had an accumulated deficit of $12.6
million.
 
     Potential Fluctuations in Quarterly Performance.  The Company's revenues
and operating results have varied substantially from quarter to quarter. The
Company's quarterly operating results may continue to fluctuate due to a number
of factors, including the timing, size and nature of the Company's licensing
transactions, lengthy and unpredictable sales cycles, the timing of introduction
and market acceptance of new products or product enhancements by the Company or
its competitors, product and price competition, the relative proportions of
revenues derived from license fees and services, changes in the Company's
operating expenses, software bugs or other product quality problems, personnel
changes and fluctuations in economic and financial market conditions.
 
     The Company recognizes software license revenues upon delivery and, if
required by the contract, upon customer acceptance, if such criteria is other
than perfunctory, which typically does not occur in the same quarter in which
the software license agreement for the system is signed. As a result, the
Company is constrained in its ability to increase its software license revenue
in any quarter if there are unexpected delays in delivery or required acceptance
of systems for which software licenses were signed in previous quarters.
Implementation of the OSI System typically occurs over 14 to 24 weeks, and the
Company currently has limited implementation resources. As a result of the
Company's limited operating history and experience in the implementation of the
OSI System, the Company may from time to time experience delays and difficulties
in implementation of the OSI System. Delays in the delivery, implementation or
any required acceptance of the Company's products, including delays resulting
from constraints upon the Company's limited installation resources, could
materially adversely affect the Company's quarterly results of operations. In
addition, increased sales and marketing expenses for any given quarter will
negatively impact operating results of such quarter due to a lack of recognition
of associated revenues until the subsequent delivery of the product.
 
     The Company's expense levels are based, in significant part, on its
expectations as to future revenues and are largely fixed in the short term. As a
result, the Company may be unable to adjust spending in a timely manner to
compensate for any unexpected shortfall in revenues. Accordingly, any
significant shortfall of revenues in relation to the Company's expectations
would have an immediate and materially adverse effect on the Company's business,
financial condition and results of operations. In addition, the Company plans to
increase operating expenses to expand its installation, product development,
sales and marketing and administrative organizations. The timing of such
expansion and the rate at which new personnel become productive could cause
material fluctuations in quarterly results of operations.
 
                                        6
9
 
     The Company believes that period-to-period comparisons of its results of
operations are not necessarily meaningful. There can be no assurance that future
revenues and results of operations will not vary substantially. It is also
possible that in some future quarter the Company's results of operations will be
below the expectations of public market analysts and investors. In either case,
the price of the Company's Common Stock could be materially adversely affected.
 
     Acceptance of OSI System.  The Company's revenues are derived primarily
from two sources: (i) license fees for software products and (ii) fees for a
full range of services complementing its products, including implementation,
training, and support and maintenance services. Substantially all of these fees
are attributable to licenses of the OSI System. Although the use of
client/server technology has grown in the banking and credit union industry in
recent years, the client/server market is still an emerging market. Moreover,
banks and credit unions historically have been slow to adapt to and accept new
technologies, including client/server systems. The Company's future financial
performance will depend in large part on continued growth in the number of banks
and credit unions utilizing client/server technology. Accordingly, if the
client/server market fails to grow or grows more slowly than the Company
currently anticipates, the Company's business, financial condition and results
of operations could be materially adversely affected. In addition, a significant
portion of all banks and credit unions have traditionally satisfied their
information technology needs through a service bureau or outsourcing solution.
Upon purchasing the OSI System, these customers will be required to employ
information technology personnel in order to successfully operate and maintain
the OSI System. There can be no assurance that the Company's customers will be
able to hire and retain such personnel or that any inability to do so will not
affect their ability to successfully operate and maintain the OSI System which
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the Company's future financial
performance will depend in part on the successful development, introduction and
customer acceptance of new and enhanced versions of the OSI System and other
products. A decline in demand for, or failure to achieve broad market acceptance
of, the OSI System or any enhanced version as a result of competition,
technological change or otherwise, will have a material adverse effect on the
Company's business, financial condition and results of operations.
 
     Dependence on New Products and Rapid Technological Change; Product
Development Risk. The client/server application software market is characterized
by rapid technological change, frequent new product introductions and evolving
industry standards. The introduction of products embodying new technologies and
the emergence of new industry standards can render existing products obsolete
and unmarketable in short periods of time. The Company expects new products and
services, and enhancements to existing products and services, to be developed
and introduced by others, which will compete with the products and services
offered by the Company. The life cycles of the Company's products are difficult
to estimate. The Company's future success will depend upon the widespread
adoption of client/server application software in the banking and credit union
industry, as well as the Company's ability to enhance its current products and
to develop and introduce new products that keep pace with technological
developments and emerging industry standards and to address the increasingly
sophisticated needs of its customers. There can be no assurance that the Company
will be successful in developing and marketing new products or product
enhancements that meet these changing demands, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products or that its new products and
product enhancements will adequately meet the demands of the marketplace and
achieve market acceptance.
 
     Delays in the release of new and upgraded versions of the Company's
software products, particularly the Oracle relational database management
system, could have a material adverse effect on the Company's revenues and
results of operations. Because of the complexities inherent in developing
software products as sophisticated as those sold by the Company and the lengthy
testing periods associated with such products, no assurance can be given that
future product introductions by the Company will not be delayed. In addition,
complex software programs may contain
 
                                        7
10
 
undetected errors or bugs when they are first introduced or as new versions are
released. There can be no assurance that errors will not be found in the
Company's existing or future products or third-party products upon which the
Company's products are dependent, such as the Oracle relational database and
Microsoft Windows NT, with the possible result of delays in or loss of market
acceptance of the Company's products, diversion of the Company's resources,
injury to the Company's reputation and increased service, warranty expenses
and/or payment of damages.
 
     Intense Competition.  The market for the Company's products and services is
intensely competitive and subject to rapid technological change. Competitors
vary in size and in the scope and breadth of the products and services they
offer. The Company encounters competition from a number of sources, all of which
offer core software systems to the banking and credit union industry. The
Company expects additional competition from other established and emerging
companies as the client/server application software market continues to develop
and expand. The Company also expects that competition will increase as a result
of software industry consolidation, including particularly the acquisition of
any of its competitors or any of the client/server based retail banking system
providers by one of the larger service providers to the banking industry. The
Company encounters competition in the U.S. from a number of sources, including
Fiserv, Inc., NCR Corporation, Electronic Data Systems Corporation, Marshall &
Ilsley Corporation, M&I EastPoint, Phoenix International Ltd., Inc., Jack Henry
& Associates, Inc., ALLTEL Corporation, Prologic Corporation and Kirchman
Corporation, all of which offer core processing systems or outsourcing
alternatives to banks and credit unions. The Company also competes against a
number of smaller, regional competitors. In addition to these competitors, the
Company competes internationally with, Misys plc Banking Division (including
Midas-Kapiti International, Inc., Kindle Banking Systems and ACT Financial
Systems), Sanchez Computer Associates, Inc. and Financial Network Services,
among others. Some of the Company's current, and many of the Company's
potential, competitors have longer operating histories, greater name
recognition, larger customer bases and significantly greater financial,
engineering, technical, marketing and other resources than the Company. As a
result, they may be able to respond more quickly to new or emerging technologies
and changes in customer demands or to devote greater resources to the
development, promotion and sale of their products than the Company. In addition,
current and potential competitors have established or may establish cooperative
relationships among themselves or with third parties to increase the ability of
their products to address the needs of the Company's prospective customers.
Accordingly, it is possible that new competitors or alliances among competitors
may emerge and rapidly acquire significant market share. The Company expects
that the banking and credit union software market will continue to attract new
competitors and new technologies, possibly involving alternative technologies
that are more sophisticated and cost effective than the Company's technology.
There can be no assurance that the Company will be able to compete successfully
against current or future competitors or that competitive pressures faced by the
Company will not materially adversely affect its business, financial condition
and results of operations.
 
     Management of Growth.  The Company is currently experiencing a period of
rapid growth which has placed, and could continue to place, a strain on its
management and other resources. The Company's business has grown in size and
complexity over the past three years. Total revenues increased from $268,141 for
the year ended December 31, 1995 to $6.6 million for the year ended December 31,
1997 and to $2.3 million for the three months ended March 31, 1998. In addition,
the number of employees increased from 26 as of December 31, 1995 to 109 as of
March 31, 1998, and the Company expects to hire additional personnel during 1998
and 1999. The Company's need to manage its growth effectively will require it to
continue to implement and improve its operational, financial and other internal
systems on a timely basis, and to attract, train, motivate, manage and retain
its employees. If the Company's management is unable to manage growth
effectively or new employees are unable to achieve anticipated performance
levels, the Company's business, financial condition and results of operations
could be materially adversely affected. In addition, the Company from time to
time may seek acquisitions of businesses, products and technologies that are
complementary to those of the Company or that allow the Company to enter new
markets. Any such
                                        8
11
 
acquisition would place additional strains upon the Company's management and
other resources. Potential investors should consider the risks, expenses and
difficulties frequently encountered in connection with the operation and
development of an expanding business.
 
     Reliance on New Customers.  The Company historically has relied upon and
expects to continue to rely upon software license fees from new customers for a
substantial portion of its revenues. Most such licenses involve large dollar
amounts (typically ranging from $250,000 to $750,000), and the sales cycles for
these transactions are often lengthy and unpredictable. Any inability of the
Company to license and deliver the OSI System to a significant number of new
customers would have a material adverse effect on the Company's business,
financial condition and results of operations.
 
     Expansion of Credit Union Customer Base.  The Company's software for credit
unions, The Complete Credit Union Solution, has been installed to date at only
one credit union. There can be no assurance that The Complete Credit Union
Solution will be installed at additional credit unions or that it will achieve
wide customer acceptance. Any failure of the Company to successfully penetrate
the credit union industry could have a material adverse effect on the Company's
business, financial condition and results of operations.
 
     Dependence on the Banking and Credit Union Industry; Risk of
Consolidation.  Substantially all of the Company's revenues are derived from
customers in the banking and credit union industry, primarily small to mid-size
banks, and the Company expects it will continue to derive substantially all of
its revenues from such customers for the foreseeable future. Unfavorable
economic conditions adversely impacting the banking and credit union industry
could have a material adverse effect on the Company's business, financial
condition and results of operations. For example, the banking and credit union
industry has experienced and may continue to experience cyclical fluctuations in
profitability, which may affect the willingness or ability of participants in
this industry to fund projects such as those for which the Company may be
engaged.
 
     Merger and acquisition activity among financial institutions has been
widespread in recent years and is expected to continue in future years. As a
result, industry consolidation could have the effect of reducing the number of
current and potential customers of the Company. Any significant increase in the
level of such consolidation among small to mid-size banks and credit unions
could adversely affect the Company's business, financial condition and results
of operations.
 
     Lengthy Sales Cycle.  The Company's software is used for business-critical
purposes, and its implementation involves significant capital commitments by
customers. Potential customers generally commit significant resources to an
evaluation of available software and require the Company to expend substantial
time, effort and money educating them as to the value of the Company's software.
Sales of the Company's software products require an extensive education and
marketing effort throughout a customer's organization because decisions to
license such software generally involve the evaluation of the software by a
significant number of customer personnel in various functional areas, each
having specific and often conflicting requirements. A variety of factors,
including factors over which the Company has little or no control, may cause
potential customers to favor a competing vendor or to delay or forego a
purchase. In addition, the sales cycles associated with these transactions are
subject to a number of uncertainties, including customers' budgetary
constraints, the timing of the expiration of customers' current system license
agreements or outsourced core processing agreements, the timing of customers'
budget cycles and approval processes and customers' willingness to implement a
client/server operating environment. As a result of these or other factors, the
sales cycle for the Company's products is long, typically ranging between six to
nine months. Due to the length of the sales cycle for its software products, the
Company's ability to forecast the timing and amount of specific sales is
limited, and the delay or failure to complete one or more large license
transactions could have a material adverse effect on the Company's business,
financial condition and results of operations.
 
                                        9
12
 
     Reliance on and Expansion of Sales Force and Third-Party Outsourcing
Agreements.  The Company relies primarily on its direct sales force for sales of
the OSI System. The Company will be required to hire additional sales, customer
service and implementation personnel in 1998 and beyond if the Company is to
achieve revenue growth in the future. Competition for such personnel is intense,
and there can be no assurance that the Company will be able to retain its
existing sales, customer service and implementation personnel or will be able to
attract, assimilate or retain such additional highly qualified personnel in the
future. If the Company is unable to hire such personnel on a timely basis, its
business, financial condition and results of operations could be materially
adversely affected.
 
     The Company has entered into exclusive license and marketing arrangements
with two providers of outsourcing services to financial institutions, The BISYS
Group, Inc. ("BISYS") and Connecticut On-Line Computer Center, Inc. ("COCC").
Accordingly, the Company's success depends in part on the ultimate success of
these license and marketing arrangements, including the effort and resources
expended by such providers to market outsourcing services using the OSI System.
 
     Dependence on Key Personnel.  The Company's future success depends to a
significant extent on the Company's executive officers and key employees,
including the Company's sales force and software professionals, particularly
project managers, software engineers and other senior technical personnel. The
loss of the services of any of these individuals or group of individuals could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company does not maintain any key person life
insurance for any of its executive officers or key employees. Competition for
qualified personnel in the software industry is intense and the Company competes
for such personnel with other software companies that have greater financial and
other resources. The future success of the Company will depend in large part on
its ability to attract, retain and motivate highly qualified personnel, and
there can be no assurance that the Company will be able to do so. The Company
has from time to time experienced difficulty in locating and retaining
candidates with appropriate qualifications.
 
     Dependence on Third-Party Technology.  The Company's proprietary software
is currently designed, and may in the future be designed, to work on or in
conjunction with certain third-party hardware and/or software products,
including the Microsoft Windows NT operating system with an Oracle relational
database. Although the Company believes that there are alternatives for these
products, any significant interruption in the supply of such third-party
hardware and/or software could have a material adverse effect on the Company's
sales unless and until the Company can replace the functionality provided by
these products. In addition, the Company is to a certain extent dependent upon
such third-parties' abilities to enhance their current products, to develop new
products on a timely and cost-effective basis and to respond to emerging
industry standards and other technological changes. There can be no assurance
that the Company would be able to replace the functionality provided by the
third-party hardware and/or software currently offered in conjunction with the
Company's products in the event that such hardware and/or software becomes
obsolete or incompatible with future versions of the Company's products or is
otherwise not adequately maintained or updated. The absence of or any
significant delay in the replacement of that functionality could have a material
adverse effect on the Company's business, financial condition and results of
operations.
 
     Concentration of Customers.  Historically, a limited number of customers
have accounted for a significant percentage of the Company's revenues in each
year. For the year ended December 31, 1997, two bank customers accounted for 17%
and 15% of the Company's total revenues. For the year ended December 31, 1996,
four bank customers accounted for 38%, 22%, 20% and 14% of the Company's total
revenues. Although the Company expects that its reliance on any particular
customer will decline as its customer base expands, the failure of the Company
to enter into a sufficient number of licensing agreements during a particular
period could have a material adverse effect on the Company's business, financial
condition and results of operations.
                                       10
13
 
     Year 2000 Issues.  A portion of the growth in the Company's revenues in
1997 and the first quarter of 1998 resulted from the Company's ability to
provide banking applications that resolve the Year 2000 problem. As the overall
demand for Year 2000 solutions declines, there can be no assurance that the
demand for the Company's products and services will not be materially adversely
affected. Although the Company believes the OSI System complies with Year 2000
requirements, there can be no assurance that customers will not encounter
difficulties with the OSI System arising from Year 2000 issues. In addition,
there can be no assurance that Year 2000 issues will not adversely affect
third-party network or application software that is integrated with the OSI
System.
 
     Potential for Contract Liability.  Failures in a customer's system could
result in an increase in service and warranty costs or a claim for substantial
damages against the Company. There can be no assurance that the limitations of
liability set forth in the Company's contracts would be enforceable or would
otherwise protect the Company from liability for damages. The Company maintains
general liability insurance coverage, including coverage for errors and
omissions in excess of the applicable deductible amount. There can be no
assurance that such coverage will continue to be available on acceptable terms
or will be available in sufficient amounts to cover one or more large claims, or
that the insurer will not deny coverage as to any future claim. The successful
assertion of one or more large claims against the Company that exceeds available
insurance coverage, or the occurrence of changes in the Company's insurance
policies, including premium increases or the imposition of large deductible or
co-insurance requirements, could have a material adverse effect on the Company's
business, financial condition and results of operations. Furthermore,
litigation, regardless of its outcome, could result in substantial cost to the
Company and divert management's attention from the Company's operations. Any
contract liability claim or litigation against the Company could, therefore,
have a material adverse effect on its business, financial condition and results
of operations. Because many of the Company's projects are business-critical
projects for financial institutions, a failure or inability to meet a customer's
expectations could seriously damage the Company's reputation and affect its
ability to attract new business.
 
     Government Regulation.  While the Company's operations are not directly
regulated by banking authorities, the Company's existing and potential customers
are subject to extensive federal, state and foreign governmental regulations.
Such regulations may adversely affect the banking and credit union industry,
limit the number of potential customers for the Company's products and services
or otherwise have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, governmental regulation in the
financial services industry is evolving, particularly with respect to banking
technology. There can be no assurance that future changes in such regulations or
in their interpretation will not adversely affect the business of the Company.
 
     Dependence on Intellectual Property Rights; Risk of Infringement.  The
Company relies on a combination of copyright, trademark and trade secret laws,
nondisclosure agreements and other contractual provisions and technical measures
to protect its intellectual property rights. There can be no assurance that
these protections will be adequate to prevent the Company's competitors from
copying or reverse-engineering the Company's products, or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technology. The Company does not include
in its products any mechanism to prevent unauthorized copying and any such
unauthorized copying could have a material adverse effect on the Company's
business, financial condition and results of operations. The Company has no
patents, and existing copyright laws afford only limited protection for the
Company's intellectual property rights and will not protect such rights in the
event competitors independently develop products similar to those of the
Company. In addition, the laws of certain countries in which the Company's
products are or may be licensed do not protect the Company's products and
intellectual property rights to the same extent as the laws of the United
States.
 
     Although the Company has never been the subject of a material intellectual
property dispute, there can be no assurance that a third party will not assert
that the Company's technology violates its
                                       11
14
 
intellectual property rights in the future. As the number of software products
in the Company's target market increases and the functionality of these products
further overlap, the Company believes that software developers may become
increasingly subject to infringement claims. Any such claims, whether with or
without merit, can be time consuming and expensive to defend. There can be no
assurance that third parties will not assert infringement claims against the
Company in the future with respect to its current or future products or that any
such assertion will not require the Company to enter into royalty arrangements
(if available) or litigation that could be costly to the Company.
 
     Significant Influence by Directors, Officers and Principal
Stockholders.  Upon completion of this offering, the Company's directors,
officers and certain principal stockholders of the Company will beneficially own
approximately [     ]% of the Company's outstanding Common Stock. These
stockholders, if acting together, would have the ability to elect the Company's
directors and may have the ability to determine the outcome of corporate actions
requiring stockholder approval, irrespective of how other stockholders of the
Company may vote. This concentration of ownership may have the effect of
delaying or preventing a change in control of the Company.
 
     Broad Discretion as to Use of Proceeds.  The net proceeds from this
offering will be used, as determined by management in its sole discretion, for
working capital and general corporate purposes, as well as for the possible
acquisition of additional businesses and technologies that are complementary to
the current or future business of the Company. However, the Company has not
determined the specific allocation of the net proceeds among the various uses
described above. The Company's management will have broad discretion over the
use and investment of such net proceeds, and, accordingly, investors in this
offering will rely upon the judgment of the Company's management with respect to
the use of proceeds, with only limited information concerning management's
specific intentions.
 
     No Prior Public Market for Common Stock; Possibility of Volatility of Stock
Price.  Prior to this offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market will develop
or be sustained after this offering or that the market price of the Common Stock
will not decline below the initial public offering price. The initial public
offering price will be determined by negotiations between the Company and the
Representatives of the Underwriters and is not necessarily indicative of the
market price at which the Common Stock of the Company will trade after this
offering. The market prices for securities of technology companies have been
highly volatile and the market has experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Announcements of technological innovations or new products or service
offerings by the Company or its competitors, developments concerning proprietary
rights, including patents and litigation matters, domestic or international
regulatory developments affecting the banking and credit union industry, general
market conditions, any shortfall in revenues or earnings from expected levels or
other failures by the Company to meet expectations of securities analysts and
other factors, may have a significant impact on the market price of the Common
Stock.
 
     Dividends.  No cash dividends have been declared or paid on its capital
stock to date and the Company does not anticipate paying cash dividends in the
foreseeable future. In addition, under the terms of the Company's credit
agreement there are certain restrictions on the Company's ability to declare and
pay dividends.
 
     Dilution.  Purchasers of shares of Common Stock in this offering will
suffer an immediate and substantial dilution in the net tangible book value of
the Common Stock from the initial public offering price.
 
     Shares Eligible for Future Sale; Registration Rights.  Sales of substantial
amounts of shares of Common Stock in the public market following this offering
could adversely affect the market price of the Common Stock. Upon completion of
this offering, the Company will have outstanding [          ] shares of Common
Stock. On the date of this Prospectus, in addition to the [          ] shares
offered hereby, approximately [          ] shares of Common Stock, which are not
subject to
                                       12
15
 
180-day lock-up agreements (the "Lock-up Agreements") with the Representatives
of the Underwriters, will be eligible for immediate sale in the public market
pursuant to Rule 144(k) under the Securities Act of 1933, as amended (the
"Securities Act"). Approximately [          ] additional shares of Common Stock,
which are not subject to the Lock-up Agreements, will be eligible for sale in
the public market in accordance with Rule 144 or Rule 701 under the Securities
Act beginning 90 days after the date of this Prospectus. Upon expiration of the
Lock-up Agreements 180 days after the date of this Prospectus, approximately
[          ] additional shares of Common Stock will be available for sale in the
public market, subject to the provisions of Rule 144 under the Securities Act.
Promptly following the consummation of this offering, the Company intends to
register an aggregate of [          ] shares of Common Stock issuable under its
1994 Stock Option Plan, 1998 Employee Stock Purchase Plan and 1998 Stock
Incentive Plan. Holders of approximately [          ] shares of Common Stock
(including [          ] shares of Common Stock that may be acquired pursuant to
the exercise of options and warrants held by them) have agreed, pursuant to the
Lock-up Agreements, not to directly or indirectly offer, sell, pledge, contract
to sell, grant any option to purchase or otherwise dispose of such shares for
180 days after the date of the final Prospectus. The Company is unable to
predict the effect that sales made under Rule 144, or otherwise, may have on the
then prevailing market price of the Common Stock. The holders of approximately
[          ] shares of Common Stock are entitled to certain incidental and
demand registration rights with respect to such shares. By exercising their
registration rights, such holders could cause a large number of shares to be
registered and sold in the public market. Sales pursuant to Rule 144 or other
exemptions from registration, or pursuant to registration rights, may have an
adverse effect on the market price for the Common Stock and could impair the
Company's ability to raise capital through offerings of its equity securities.
 
     Antitakeover Provisions.  The Company's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") requires that any
action required or permitted to be taken by stockholders of the Company must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by any consent in writing, and requires advance notice by, and
certain information from, a stockholder of a proposal or director nomination
which such stockholder desires to present at any annual or special meeting of
stockholders. Special meetings of stockholders may be called only by the
Chairman of the Board or the President of the Company or by the Board of
Directors. The Restated Certificate of Incorporation provides for a classified
Board of Directors, and members of the Board of Directors may be removed only
for cause upon the affirmative vote of holders of at least 75% of the votes
which all the stockholders would be entitled to cast in any annual election of
directors or class of directors. In addition, shares of the Company's Preferred
Stock may be issued in the future without further stockholder approval and upon
such terms and conditions, and having such rights, privileges and preferences,
as the Board of Directors may determine. The rights of the holders of Common
Stock will be subject to, and may be adversely affected by, the rights of any
holders of Preferred Stock that may be issued in the future. The Company has no
present plans to issue any shares of Preferred Stock. These provisions, and
other provisions of the Restated Certificate of Incorporation, the Company's
By-laws and certain provisions of the Delaware corporation law, may have the
effect of deterring hostile takeovers or delaying or preventing acquisition
proposals or changes in control or management of the Company, including
transactions in which stockholders might otherwise receive a premium for their
shares over then current market prices. In addition, these provisions may limit
the ability of stockholders to approve transactions that they may deem to be in
their best interests.
 
                                       13
16
 
                                USE OF PROCEEDS
 
     The net proceeds to the Company from the sale of the [          ] shares of
Common Stock offered by the Company hereby are estimated to be $[          ]
after deducting the estimated underwriting discounts and commissions and
offering expenses payable by the Company and assuming an initial public offering
price of $[          ] per share. The Company will not receive any of the net
proceeds from the sale of shares by the Selling Stockholders. See "Principal and
Selling Stockholders."
 
     The principal purposes of this offering are to increase the Company's
equity capital, to create a public market for the Company's Common Stock, to
facilitate future access by the Company to public equity markets, to provide
liquidity to existing stockholders, to provide increased visibility and
credibility in a marketplace where several of its current and potential
competitors are or will be publicly held companies, and to enhance the ability
of the Company to use its Common Stock as consideration for acquisitions and as
a means of attracting and retaining key employees.
 
     The Company expects to use the net proceeds from this offering for working
capital and other general corporate purposes, including expansion of its
facilities. The Company has not as yet identified specific uses for such
proceeds and will have discretion over their use and investment. Pending use of
the net proceeds, the Company intends to invest the net proceeds from this
offering in short-term, investment grade, interest-bearing instruments. See
"Risk Factors -- Broad Discretion as to Use of Proceeds."
 
     The Company may seek acquisitions of businesses, products and technologies
that are complementary to those of the Company, and a portion of the net
proceeds may also be used for such acquisitions. While the Company engages from
time to time in discussions with respect to potential acquisitions, the Company
has no plans, commitments or agreements with respect to any such acquisitions as
of the date of this Prospectus, and there can be no assurances that any
acquisitions will be made.
 
                                DIVIDEND POLICY
 
     The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain earnings, if any, to support its
growth strategy and does not anticipate paying cash dividends in the foreseeable
future. Payment of future dividends, if any, will be at the discretion of the
Company's Board of Directors after taking into account various factors,
including the Company's financial condition, operating results, current and
anticipated cash needs and plans for expansion. Under the terms of the Company's
credit agreement there are certain restrictions on the Company's ability to
declare and pay dividends. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources" and Note 6 of Notes to the Company's Financial Statements.
 
                                       14
17
 
                                 CAPITALIZATION
 
     The following table sets forth the capitalization of the Company as of
March 31, 1998 (i) on an actual basis, (ii) on a pro forma basis giving effect,
upon the closing of this offering, to the conversion of all outstanding shares
of the Company's Convertible Preferred Stock into an aggregate of 5,308,472
shares of Common Stock and the filing of the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of Common Stock,
eliminate the terms of the Company's existing series of Convertible Preferred
Stock and create a class of authorized but undesignated Preferred Stock and
(iii) on a pro forma basis, as adjusted to reflect the issuance and sale of the
shares of Common Stock offered by the Company hereby at an assumed initial
public offering price of $[               ] per share, after deducting the
estimated underwriting discounts and commissions and offering expenses. The
capitalization information set forth in the table below is qualified by the
Company's Financial Statements and Notes thereto appearing elsewhere in this
Prospectus.
AS OF MARCH 31, 1998
                                                              --------------------------------------------
                                                                                               PRO FORMA
                                                                 ACTUAL        PRO FORMA      AS ADJUSTED
                                                              ------------    ------------    ------------
Long-term debt, less current portion(1).....................  $     57,778    $     57,778
                                                              ------------    ------------
Mandatorily redeemable convertible preferred stock:
  Series A-2 Preferred Stock, $0.01 par value; 166,667
    shares authorized, 166,667 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................       500,000              --
  Series B Preferred Stock, $0.01 par value; 1,736,250
    shares authorized, 1,627,916 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................     4,930,333              --
  Series C Preferred Stock, $0.01 par value; 1,375,000
    shares authorized, 1,263,889 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................     5,731,482              --
  Series D Preferred Stock, $0.01 par value; 1,250,000
    shares authorized, 833,333 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................     4,977,734              --
                                                              ------------    ------------
                                                                16,139,549              --
                                                              ------------    ------------
Stockholders' equity:
  Series A-1 Preferred Stock, $0.01 per value; 1,000,000
    shares authorized, 1,000,000 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................        10,000              --
  Series A-2 Preferred Stock, $0.01 par value; 416,667
    shares authorized, 416,667 issued and outstanding
    (actual); no shares authorized, issued or outstanding
    (pro forma and pro forma as adjusted)...................         4,167              --
  Preferred Stock, $0.01 par value; no shares authorized,
    issued or outstanding (actual); 5,000,000 shares
    authorized, no shares issued and outstanding (pro forma
    and pro forma as adjusted)..............................            --              --
  Common Stock, $0.01 par value; 19,055,417 shares
    authorized, 2,165,804 issued and outstanding (actual);
    50,000,000 shares authorized, 7,474,276 (pro forma) and
    [            ] (pro forma as adjusted) shares issued and
    outstanding(2)..........................................        21,658          74,743
  Additional paid-in capital................................     4,291,481      20,392,112
  Accumulated deficit.......................................   (12,571,239)    (12,571,239)
                                                              ------------    ------------
    Total stockholders' equity (deficit)....................    (8,243,933)      7,895,616
                                                              ------------    ------------
        Total capitalization................................  $  7,953,394    $  7,953,394
                                                              ============    ============
---------------
(1) See Note 6 of Notes to the Company's Financial Statements.
 
(2) Excludes an aggregate of 1,643,125 shares of Common Stock subject to options
    outstanding as of March 31, 1998 at a weighted average exercise price of
    $0.58 per share, of which options to purchase 1,018,836 shares of Common
    Stock are exercisable. Also excludes an aggregate of 636,111 shares of
    Common Stock issuable upon the exercise of outstanding warrants as of March
    31, 1998 at a weighted average exercise price of $5.66 per share, all of
    which are exercisable. See "Risk Factors -- Shares Eligible for Future Sale;
    Registration Rights," "Management -- Stock Plans," "Description of Capital
    Stock -- Warrants" and Notes 7 and 9 of Notes to the Company's Financial
    Statements.
 
                                       15
18
 
                                    DILUTION
 
     The pro forma net tangible book value of the Company as of March 31, 1998
was $7,329,102 or $0.98 per share of Common Stock. Pro forma net tangible book
value per share is determined by dividing the Company's tangible net worth
(tangible assets less liabilities) by the number of shares of Common Stock
outstanding, after giving effect to the mandatory conversion of the Company's
Convertible Preferred Stock upon the completion of this offering. After giving
effect to the sale of the shares of Common Stock offered by the Company hereby
at an assumed initial public offering price of $[     ] per share and after
deducting the estimated underwriting discounts and commissions and offering
expenses, the pro forma net tangible book value of the Company as of March 31,
1998 would have been $[     ] per share. This represents an immediate increase
in such pro forma net tangible book value of $[     ] per share to existing
stockholders and an immediate dilution of $[     ] per share to new investors
purchasing shares in this offering. If the initial public offering price is
higher or lower, the dilution to the new investors will be greater or less,
respectively. The following table illustrates the per share dilution:
Assumed initial public offering price per share.............            $
  Pro forma net tangible book value per share as of March
     31, 1998...............................................  $
  Increase per share attributable to this offering..........
                                                              ------
Pro forma net tangible book value per share after this
  offering..................................................
                                                                        ------
Dilution per share to new investors.........................            $
                                                                        ======
The following table summarizes, on a pro forma basis as of March 31, 1998,
the total number of shares of Common Stock purchased from the Company, the total
consideration paid and the average consideration paid per share by the existing
stockholders and by the new investors based (for new investors) upon an assumed
initial public offering price of $[     ] per share (before deducting the
estimated underwriting discounts and commissions and offering expenses):
SHARES PURCHASED      TOTAL CONSIDERATION     AVERAGE
                               --------------------   ---------------------   PRICE PER
                                 NUMBER     PERCENT     AMOUNT      PERCENT     SHARE
                               ----------   -------   -----------   -------   ---------
Existing stockholders(1).....   7,474,276         %   $19,031,128         %    $ 2.55
New investors................                                                  $
                               ----------    -----    -----------    -----     ------
     Total...................                     %   $                   %
                               ==========    =====    ===========    =====
---------------
(1) Sales by the Selling Stockholders in this offering will reduce the number of
    shares held by existing stockholders to [               ], or approximately
    [               ]% of the total number of shares of Common Stock outstanding
    after this offering (or [               ] shares and approximately
    [               ]% if the Underwriters' over-allotment option is exercised
    in full), and will increase the number of shares held by new investors to
    [               ], or approximately [               ]% of the total number
    of shares of Common Stock outstanding after this offering (or
    [               ] shares and approximately [               ]% if the
    Underwriters' over-allotment option is exercised in full).
 
                                       16
19
 
                            SELECTED FINANCIAL DATA
 
     The selected financial data set forth below as of December 31, 1997 and
1996, and for the three years ended December 31, 1997 are derived from the
Company's financial statements, which appear elsewhere in this Prospectus and
which have been audited by Price Waterhouse LLP, independent accountants. The
selected financial data set forth below as of December 31, 1995 and 1994, and
for the year ended December 31, 1994 are derived from the Company's audited
financial statements which are not included in this Prospectus. The selected
financial data set forth below as of and for the year ended December 31, 1993
are derived from the Company's unaudited financial statements which are not
included in this Prospectus. The selected financial data set forth below as of
March 31, 1998, and for the three months ended March 31, 1998 and 1997 are
derived from the Company's unaudited financial statements, which appear
elsewhere in this Prospectus. In the opinion of management, the unaudited
financial statements have been prepared on a basis consistent with the financial
statements which appear elsewhere in this Prospectus and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the financial position and results of operations for these
unaudited periods. The operating results for the three months ended March 31,
1998 are not necessarily indicative of the results to be expected for the full
year ending December 31, 1998. The data set forth below should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Company's financial statements, including the
notes thereto, included elsewhere in this Prospectus.
THREE MONTHS
                                                                                                            ENDED
                                                         YEAR ENDED DECEMBER 31,                          MARCH 31,
                                        ---------------------------------------------------------   ---------------------
                                          1993        1994        1995        1996        1997        1997        1998
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
  Revenues:
    Software license..................  $      --   $      --   $     213   $     801   $   4,099   $     693   $   1,158
    Service and maintenance...........         95          --          55         218       2,550         289       1,176
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
      Total revenues..................         95          --         268       1,019       6,649         982       2,334
  Cost of revenues:
    Software license..................         --          --         223         507       1,160         219         333
    Service and maintenance...........         25          --         477       1,530       3,150         732         987
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
      Total cost of revenues..........         25          --         700       2,037       4,310         951       1,320
  Operating expenses:
    Sales and marketing...............         60         136         398       1,051       2,132         458         784
    Product development...............        436         985         661       1,060       1,902         472         444
    General and administrative........         50          84         399         645       1,569         324         643
    Contract termination..............         --          --          --          --          --          --       1,265
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
      Total operating expenses........        546       1,205       1,458       2,756       5,603       1,254       3,136
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
  Loss from operations................       (476)     (1,205)     (1,890)     (3,774)     (3,264)     (1,223)     (2,122)
  Interest income (expense), net......        (37)         14          (5)        136         209          44          95
                                        ---------   ---------   ---------   ---------   ---------   ---------   ---------
  Net loss............................  $    (513)  $  (1,191)  $  (1,895)  $  (3,638)  $  (3,055)  $  (1,179)  $  (2,027)
                                        =========   =========   =========   =========   =========   =========   =========
  Net loss per common share (basic and
    diluted)..........................  $   (0.25)  $   (0.61)  $   (0.98)  $   (1.73)  $   (1.42)  $   (0.55)  $   (0.94)
  Weighted average common shares used
    to compute net loss per share.....      2,079       1,955       1,936       2,103       2,155       2,136       2,166
DECEMBER 31,
                                                              -------------------------------------------   MARCH 31,
                                                              1993    1994     1995      1996      1997       1998
                                                              -----   -----   -------   -------   -------   ---------
                                                                                  (IN THOUSANDS)
BALANCE SHEET DATA:
  Cash and cash equivalents.................................  $   2   $ 652   $ 3,914   $ 4,438   $ 7,596    $ 7,346
  Working capital (deficit).................................   (100)    660     3,570     4,901     6,198      6,232
  Total assets..............................................     67     771     4,354     7,546    11,302     11,686
  Long-term debt, less current portion......................    730     250        --        --        58         58
  Mandatorily redeemable convertible preferred stock........     --      --     5,092    10,573    15,551     16,140
  Stockholders' equity (deficit)............................   (764)    521    (1,253)   (4,779)   (7,826)    (8,244)
17
20
 
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
OVERVIEW
 
     The Company is a leading provider of client/server core processing software
and related services to small to mid-size banks and credit unions. The Company
established operations in May 1992, and released its first major product, The
Complete Banking Solution, in the second quarter of 1995. The Company released a
second major product, The Complete Credit Union Solution, in the first quarter
of 1998. These two products (the "OSI System") are fully-integrated suites of
banking and credit union applications that operate in a Windows NT environment
using an Oracle relational database. The OSI System supports an institution's
entire core processing requirements, including deposits and loans, teller
functions, home/Internet banking and platform automation.
 
     As of June 30, 1998, the OSI System had been implemented in [     ] banks
and [     ] credit union and an additional [     ] institutions were under
contract. In addition, through June 30, 1998, BISYS and COCC had placed orders
with the Company for [     ] OSI Systems. New license agreements for OSI Systems
totaled four in 1995, 15 in 1996, 17 in 1997 and [     ] for the current year
through June 30, 1998. To date, all of the Company's sales have been in the
United States.
 
     The Company currently markets its products in the United States directly
and, through an alliance with Unisys PAAG ("Unisys"), in Asia (except Japan),
South Africa and certain other countries. The Company has established software
license and marketing agreements with BISYS and COCC under which these third
parties use the OSI System to provide core processing services to banks and
credit unions on an outsourced basis. Under the agreement with BISYS, software
license fees are paid to the Company over a three-year period following BISYS'
implementation of each OSI System. No revenue had been recognized under the
BISYS agreement through March 31, 1998. Under the agreement with COCC, software
license fees are paid, and revenues are recognized, upon implementation of each
OSI System. Under this agreement, once cumulative software license fees total a
stipulated amount, COCC is released from any further obligation to pay license
fees. This release is subject to a one-time payment in December 2002 if the
asset base of COCC's customers has exceeded a specified amount. Under both the
BISYS and COCC agreements, the Company is also entitled to annual support and
maintenance payments on each installed OSI System. The Company recognized
revenue of $250,000 in the three months ended March 31, 1998 for the delivery of
the OSI System source code to COCC. The Company will earn an additional $250,000
for implementation assistance on the first three COCC customers. Apart from
these fees, the Company does not expect to recognize significant revenues from
its agreements with Unisys and COCC until at least 1999.
 
     The Company's revenues are primarily derived from two sources: (i) software
license revenues and (ii) service and maintenance fees. Software license
revenues primarily include revenues from software licenses for the OSI System.
The Company also derives software license revenues from the sale of third-party
software sublicensed by the Company. Software license fees are generally based
on the bank's asset size and the number of accounts and typically are payable
upon delivery of the software. The Company derives service and maintenance
revenues from (i) implementation and training fees, which are based on customer
size and the magnitude and complexity of the project and (ii) customer support
and maintenance fees for providing on-going support and product updates.
Customer support and maintenance fees are established as a percentage of the
list price for the software license and are paid annually.
 
     Effective January 1, 1997 the Company adopted AICPA Statement of Position
97-2, "Software Revenue Recognition" ("SOP 97-2"). Under SOP 97-2, the Company
recognizes software license revenue when a noncancelable license agreement has
been executed, fees are fixed and determinable, the software has been delivered,
and accepted by the customer if acceptance is required by the contract and other
than perfunctory, and collection is considered probable. Prior to 1997, the
 
                                       18
21
 
Company recognized software license revenue in accordance with AICPA Statement
of Position 91-1, "Software Revenue Recognition" ("SOP 91-1"). Under SOP 91-1,
the Company recognized software license revenue when the software was delivered,
collectibility was probable and no other significant post-delivery obligations
remained.
 
     In December 1997, the Company revised its standard end user license
agreement to eliminate certain customer acceptance provisions that required the
deferral of software license revenue recognition until after implementation was
completed. The Company expects that its future licensing arrangements will
generally be governed by the revised license agreement, although licenses sold
under the previous agreement will continue to affect revenue recognition through
1998 and certain new agreements may contain acceptance or other provisions that
have the effect of deferring revenue recognition. Such differences in the timing
of revenue recognition will impact the comparability of the Company's historical
revenues and operating results to future results of operations.
 
     The Company continues to evaluate and address business and operational
issues related to Year 2000 compliance, and believes that its internal
management systems and software products are in such compliance. The Company
expects that the total cost to the Company to address any potential Year 2000
issues will not be material to operations.
 
RESULTS OF OPERATIONS
 
     The following table sets forth certain financial data as a percentage of
revenues for the periods indicated.
THREE MONTHS
                                                YEAR ENDED DECEMBER 31,     ENDED MARCH 31,
                                               -------------------------    ---------------
                                                1995      1996     1997      1997     1998
                                               ------    ------    -----    ------    -----
Revenues:
  Software license...........................    79.3%     78.6%    61.7%     70.6%    49.6%
  Service and maintenance....................    20.7      21.4     38.3      29.4     50.4
                                               ------    ------    -----    ------    -----
     Total revenues..........................   100.0     100.0    100.0     100.0    100.0
Cost of revenues:
  Software license...........................    83.2      49.8     17.4      22.3     14.3
  Service and maintenance....................   177.9     150.1     47.4      74.5     42.3
                                               ------    ------    -----    ------    -----
     Total cost of revenues..................   261.1     199.9     64.8      96.8     56.6
Operating expenses:
  Sales and marketing........................   148.6     103.0     32.1      46.7     33.6
  Product development........................   246.3     104.0     28.6      48.0     19.0
  General and administrative.................   149.0      63.3     23.6      32.9     27.6
  Contract termination.......................      --        --       --        --     54.2
                                               ------    ------    -----    ------    -----
     Total operating expenses................   543.9     270.3     84.3     127.6    134.4
Loss from operations.........................  (705.0)   (370.2)   (49.1)   (124.4)   (91.0)
Interest income (expense), net...............    (1.7)     13.3      3.2       4.4      4.1
                                               ------    ------    -----    ------    -----
Net loss.....................................  (706.7)%  (356.9)%  (45.9)%  (120.0)%  (86.9)%
                                               ======    ======    =====    ======    =====
Three Months Ended March 31, 1998 and March 31, 1997
 
     Revenues.  Revenues increased 137.6% to $2.3 million for the three months
ended March 31, 1998 from $982,273 for the three months ended March 31, 1997.
Software license revenues increased 67.1% to $1.2 million for the three months
ended March 31, 1998 from $693,145 for the three months ended March 31, 1997.
This increase of software license revenues was primarily due to
 
                                       19
22
 
increased sales of the OSI System. In addition, during the three months ended
March 31, 1998, the Company recognized revenues of $250,000 upon delivery of
source code to COCC for the OSI System pursuant to the agreement with COCC. For
the three months ended March 31, 1998 and 1997, software license revenues
included $212,235 and $194,145, respectively, related to third-party software
products, primarily Oracle's relational database management software, which were
sold by the Company with the OSI System under various sublicense agreements.
Service and maintenance revenues increased 306.6% to $1.2 million for the three
months ended March 31, 1998 from $289,128 for the three months ended March 31,
1997. This increase in service and maintenance revenues was primarily due to
implementation fees on a larger number of completed or in-process installations
and, to a lesser extent, an increase in the installed base of customers under
support and maintenance agreements. The Company's installed customer base was 27
at March 31, 1998 compared with 11 at March 31, 1997.
 
     The Company's backlog at March 31, 1998 was approximately $7.2 million,
which represented the unrecognized portion of contractually committed software
license and implementation fees.
 
     Cost of revenues.  Cost of software license revenues consists primarily of
sublicense fees paid on third-party software products that are sold with the OSI
System, including Oracle's relational database product, amortization of
capitalized software development costs and personnel and other costs to develop
and produce media and documentation. The Company amortizes capitalized software
development costs over a three-year period. Through March 1998, cost of revenues
also included royalties paid to Banking Spectrum Services, Inc., a shareholder
of the Company ("Banking Spectrum") for certain consulting and support services.
In March 1998, the Company entered into an agreement with Banking Spectrum that
released it from paying future royalties to Banking Spectrum. (See Note 13 of
Notes to the Company's Financial Statements). Cost of service and maintenance
fees primarily consists of personnel and related facility expenses associated
with implementation, training and consulting activities, and ongoing customer
support and product maintenance activities.
 
     Total cost of revenues increased 38.8% to $1.3 million for the three months
ended March 31, 1998 from $951,131 for the three months ended March 31, 1997. As
a percent of total revenues, total cost of revenues decreased to 56.6% for the
three months ended March 31, 1998 from 96.8% for the three months ended March
31, 1997, reflecting higher total revenues and productivity gains in the
implementation, training and customer support functions.
 
     Cost of software license revenues increased 51.9% to $332,675 for the three
months ended March 31, 1998 from $218,976 for the three months ended March 31,
1997. This increase was primarily due to an increase in the number of Oracle
relational database licenses required to support a greater number of new
installations, and increased royalties paid to Banking Spectrum. Cost of
software license revenues as a percent of software license revenues decreased to
28.7% for the three months ended March 31, 1998 from 31.6% for the three months
ended March 31, 1997. This decline was primarily due to a larger software
license fee revenue base over which to spread costs.
 
     Cost of service and maintenance revenues increased 34.9% to $987,697 for
the three months ended March 31, 1998 from $732,155 for the three months ended
March 31, 1997. This increase is primarily due to the hiring of additional
personnel in the implementation, training and customer support departments. Cost
of service and maintenance revenues as a percentage of service and maintenance
revenues decreased to 84.0% for the three months ended March 31, 1998 from
253.2% for the three months ended March 31, 1997. This decrease was primarily
due to a larger service and maintenance revenue base and productivity gains
achieved in the implementation, training and support functions with a larger
number of installations and a larger installed base.
 
     Sales and marketing.  Sales and marketing expenses primarily include
personnel costs associated with the Company's sales and marketing activities,
including sales commissions, travel and related overhead, and expenses incurred
in connection with trade shows, advertising, product literature and other
promotional activities. Sales and marketing expenses increased 71.0% to
                                       20
23
 
$784,274 for the three months ended March 31, 1998 from $458,562 for the three
months ended March 31, 1997. This increase was primarily due to an increase in
sales department personnel and increased sales commissions paid on higher
revenues. Sales and marketing expenses as a percentage of total revenues
decreased to 33.6% for the three months ended March 31, 1998 from 46.7% for the
three months ended March 31, 1997. This decrease was primarily due to a larger
revenue base over which to spread costs.
 
     Product development.  Product development expenses consist of personnel and
related overhead expenses for programmers and outside consultants involved in
developing and maintaining new and existing software products. The Company
accounts for software development costs under Statement of Financial Accounting
Standards No. 86 "Accounting for the Costs of Computer Software to be Sold,
Leased or Otherwise Marketed" ("SFAS 86"). Product development expenses are
charged to expenses as incurred until technological feasibility is established.
Thereafter, costs are capitalized until the product is released to the market.
The Company defines technological feasibility as the point in time at which the
Company has a working model of the related product. Capitalized software costs
are amortized over three years. Product development expenses decreased 6.0% to
$443,192 for the three months ended March 31, 1998 from $471,681 for the three
months ended March 31, 1997. This decrease was primarily due to increases in
capitalized software that offset increases in expenses associated with
additional staffing. The Company capitalized software development costs of
$107,986 and $34,977 for the three months ended March 31, 1998 and 1997,
respectively, in accordance with SFAS 86. Product development expenses as a
percentage of total revenues decreased to 19.0% for the three months ended March
31, 1998 from 48.0% for the three months ended March 31, 1997. This decrease was
primarily due to a larger revenue base over which to spread costs. The Company
anticipates that product development costs will increase in absolute terms in
future periods as the Company continues its development work on future releases
of the OSI System.
 
     General and administrative.  General and administrative expenses primarily
include personnel costs associated with the executive, administrative and
finance staff, as well as outside professional fees and other administrative
costs. General and administrative costs increased 98.6% to $642,922 for the
three months ended March 31, 1998 from $323,698 for the three months ended March
31, 1997. This increase was primarily due to the addition of personnel to
support the Company's growth. The Company believes that its costs of
professional services will continue to increase in future periods to accommodate
anticipated growth and expenses associated with its responsibilities as a public
company. General and administrative expenses as a percentage of total revenues
decreased to 27.6% for the three months ended March 31, 1998 from 32.9% for the
three months ended March 31, 1997. This decrease was primarily due to a larger
revenue base over which to spread costs.
 
     Contract termination.  In January 1994, the Company entered into an
agreement with Banking Spectrum to provide and receive certain consulting and
support services. Under the agreement, Banking Spectrum was entitled to three
percent of the Company's future license and maintenance revenues in exchange for
use of the Banking Spectrum products and Banking Spectrum's contributions to the
design of the Company's software, and an additional five percent of the
Company's future license and maintenance revenues for those future customers to
which Banking Spectrum provides compliance and regulatory support.
 
     In March 1998, the Company and Banking Spectrum terminated their previous
agreement and entered into a distribution and termination agreement. The new
agreement released the Company from any future royalty payments to Banking
Spectrum in exchange for a cash payment of $100,000 to Banking Spectrum and
fully vested options to shareholders of Banking Spectrum to purchase 275,000
shares of Common Stock at an exercise price of $0.45 per share. The stock
options were estimated by management to have a fair value of approximately $1.6
million. Net of amounts previously accrued, the Company recorded a contract
termination expense of approximately $1.3 million for the three months ended
March 31, 1998.
                                       21
24
 
     Interest income (expense), net.  For the three months ended March 31, 1998,
the Company's cash balance was higher than in 1997 resulting in higher interest
income, which was partially offset by interest expense relating to an equipment
loan.
 
  Years Ended December 31, 1997 and 1996
 
     Revenues.  Total revenues increased 552.3% to $6.6 million in 1997 from
$1.0 million in 1996. Software license revenues increased 411.5% to $4.1 million
in 1997 from $801,532 in 1996. This increase was primarily due to increased
sales of the OSI System. Service and maintenance revenues increased 1070.4% to
$2.5 million in 1997 from $217,861 in 1996. This increase in service and
maintenance revenues was primarily due to a larger number of completed or
in-process installations and, to a lesser extent, an increase in the installed
base of customers under support and maintenance agreements.
 
     Cost of revenues.  Total cost of revenues increased 111.5% to $4.3 million
in 1997 from $2.0 million in 1996. This increase was primarily due to additional
staffing in the implementation, conversion, training and customer support
departments, increased license fees for third-party software and royalties paid
to Banking Spectrum. Total cost of revenues as a percent of total revenues
decreased to 64.8% in 1997 from 199.9% in 1996. This decrease was primarily due
to higher total revenues and productivity gains in the implementation, training
and customer support functions.
 
     Cost of software license revenues increased 128.8% to $1.2 million in 1997
from $507,094 in 1996. This increase was primarily due to an increase in the
number of Oracle relational database software licenses required for the
increased number of new installations, and increased royalties paid to Banking
Spectrum. Cost of software license revenues as a percent of software license
revenues decreased to 28.3% in 1997 from 63.3% in 1996. This decrease was
primarily due to a larger software license fee revenue base over which to spread
costs.
 
     Cost of service and maintenance revenues increased 105.8% to $3.2 million
in 1997 from $1.5 million in 1996. This increase was primarily attributable to
increased staffing in the implementation, training and customer support
departments to support the Company's growth. Cost of service and maintenance
revenues as a percentage of service and maintenance revenues decreased to 123.6%
in 1997 from 702.5% in 1996. This decrease was primarily due to a larger service
and maintenance revenue base and productivity gains achieved in the
implementation, training and support functions as a result of a larger number of
installations and a larger installed base.
 
     Sales and marketing.  Sales and marketing expenses increased 102.9% to $2.1
million in 1997 from $1.1 million in 1996. This increase was primarily due to an
increase in sales and marketing personnel, increased sales commissions paid on
higher revenues and increased advertising and promotion expenses. Sales and
marketing expenses as a percentage of total revenues decreased to 32.1% in 1997
from 103.0% in 1996. This decrease was primarily due to a larger revenue base
over which to spread costs.
 
     Product development.  Product development expenses increased 79.4% to $1.9
million in 1997 from $1.1 million in 1996. This increase was primarily due to
increased staffing and consulting fees incurred in connection with continued
development of the Company's software products. During 1997 and 1996, the
Company capitalized software development costs of $455,078 and $153,209,
respectively, in accordance with SFAS 86. Amounts capitalized in 1997 included
$240,000 related to the acquisition of automated teller machine ("ATM")
management software from a third party. Product development expenses as a
percentage of total revenues decreased to 28.6% in 1997 from 104.0% in 1996.
This decrease was primarily due to a larger revenue base over which to spread
costs.
 
     General and administrative.  General and administrative expenses increased
143.2% to $1.6 million in 1997 from $645,334 in 1996. This increase was
primarily due to the hiring of additional
 
                                       22
25
 
accounting and executive personnel required to support the Company's growth.
General and administrative expenses as a percentage of total revenues decreased
to 23.6% in 1997 from 63.3% in 1996. This decrease was primarily due to a larger
revenue base over which to spread costs.
 
     Interest income (expense), net.  During 1997, the Company's average cash
balance was higher than in 1996, resulting in higher interest income, which was
partially offset by interest expense relating to an equipment loan.
 
  Years Ended December 31, 1996 and 1995
 
     Revenues.  Total revenues increased 280.2% to $1.0 million in 1996 from
$268,141 in 1995. Software license revenues increased 276.9% to $801,532 in 1996
from $212,653 in 1995. This increase was primarily due to increased sales of the
OSI System. Service and maintenance revenues increased 292.6% to $217,861 in
1996 from $55,488 in 1995. This increase in service fees was primarily due to
the increase in the number of installations in 1996 and, to a lesser extent, an
increase in the installed base of customers under support and maintenance
agreements.
 
     Cost of revenues.  Total cost of revenues increased 191.1% to $2.0 million
in 1996 from $700,006 in 1995. As a percent of total revenues, total cost of
revenues decreased to 199.9% in 1996 from 261.1% in 1995, reflecting higher
total revenues over which to spread costs. Cost of software license revenues
increased 127.4% to $507,094 in 1996 from $223,015 in 1995. This increase was
due to increased license fees paid to third-party software providers, primarily
Oracle, and increased royalties paid to Banking Spectrum. Cost of service and
maintenance revenues increased 220.9% to $1.5 million in 1996 from $476,991 in
1995. This increase was primarily attributable to increased staffing in the
implementation, training and customer support functions required to support the
growth in customer installations as noted above.
 
     Sales and marketing.  Sales and marketing expenses increased 163.7% to $1.1
million in 1996 from $398,496 in 1995. This increase was primarily due to an
increase in the number of sales personnel and increased sales commissions paid
on higher revenues. Sales and marketing expenses as a percentage of total
revenues decreased to 103.0% in 1996 from 148.6% in 1995. This decrease was
primarily due to a larger revenue base over which to spread costs.
 
     Product development.  Product development expenses increased 60.5% to $1.1
million in 1996 from $660,510 in 1995. Product development expense increased
primarily due to increased staffing and consulting fees required to support
continued development of the Company's software products. During 1996 and 1995,
the Company capitalized software development costs of $153,209 and $119,514,
respectively, in accordance with SFAS 86. Product development expenses as a
percentage of total revenues decreased to 104.0% in 1996 from 246.3% in 1995.
This decrease was primarily due to a larger revenue base over which to spread
costs.
 
     General and administrative.  General and administrative expenses increased
61.5% to $645,334 in 1996 from $399,576 in 1995. The increase in expenses was
primarily due to increased costs due to the relocation and expansion of the
Company's facilities. General and administrative expenses as a percentage of
total revenues decreased to 63.3% in 1996 from 149.0% in 1995. This decrease was
primarily due to a larger revenue case over which to spread costs.
 
     Interest income (expense), net.  During 1995, the Company was funding
operations with bridge loans from existing investors until a December 1995
preferred stock sale. The interest on the bridge loans exceeded the interest
income earned on the operating account balance during 1995.
 
                                       23
26
 
SELECTED QUARTERLY RESULTS OF OPERATIONS
 
     The following table sets forth unaudited quarterly results of operations of
the Company for each of the quarters in the year ended December 31, 1997 and the
three months ended March 31, 1998. In management's opinion, this unaudited
information has been prepared on the same basis as the audited Financial
Statements and includes all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the information for the
quarters presented, when read in conjunction with the Company's Financial
Statements and Notes thereto included elsewhere in this Prospectus.
THREE MONTHS ENDED
                                         ---------------------------------------------------------
                                         MAR. 31,    JUNE 30,    SEPT. 30,    DEC. 31,    MAR. 31,
                                           1997        1997        1997         1997        1998
                                         --------    --------    ---------    --------    --------
                                                              (IN THOUSANDS)
Revenues:
  Software license.....................  $   693     $   519      $  643       $2,245     $ 1,158
  Service and maintenance..............      289         467         698        1,095       1,176
                                         -------     -------      ------       ------     -------
     Total revenues....................      982         986       1,341        3,340       2,334
Costs of revenues:
  Software license.....................      219         150         251          541         333
  Service and maintenance..............      732         658         748        1,012         987
                                         -------     -------      ------       ------     -------
     Total cost of revenues............      951         808         999        1,553       1,320
Operating expenses:
  Sales and marketing..................      458         496         500          678         784
  Product development..................      472         560         480          390         444
  General and administrative...........      324         416         381          447         643
  Contract termination.................       --          --          --           --       1,265
                                         -------     -------      ------       ------     -------
     Total operating expenses..........    1,254       1,472       1,361        1,515       3,136
Income (loss) from operations..........   (1,223)     (1,294)     (1,019)         272      (2,122)
Interest income (expense), net.........       44          31          46           88          95
                                         -------     -------      ------       ------     -------
Net income (loss)......................  $(1,179)    $(1,263)     $ (973)      $  360     $(2,027)
                                         =======     =======      ======       ======     =======
The following table sets forth unaudited quarterly results of operations as
a percentage of revenues for each of the quarters in the year ended December 31,
1997 and the three months ended March 31, 1998.
THREE MONTHS ENDED
                                          ---------------------------------------------------------
                                          MAR. 31,    JUNE 30,    SEPT. 30,    DEC. 31,    MAR. 31,
                                            1997        1997        1997         1997        1998
                                          --------    --------    ---------    --------    --------
Revenues:
  Software license......................     70.6%       52.6%       47.9%        67.2%       49.6%
  Service and maintenance...............     29.4        47.4        52.1         32.8        50.4
                                          -------     -------      ------       ------      ------
     Total revenues.....................    100.0       100.0       100.0        100.0       100.0
Costs of revenues:
  Software license......................     22.3        15.1        18.7         16.2        14.3
  Service and maintenance...............     74.5        66.8        55.8         30.3        42.3
                                          -------     -------      ------       ------      ------
     Total cost of revenues.............     96.8        81.9        74.5         46.5        56.6
Operating expenses:
  Sales and marketing...................     46.7        50.3        37.3         20.3        33.6
  Product development...................     48.0        56.8        35.8         11.7        19.0
  General and administrative............     32.9        42.2        28.4         13.3        27.6
  Contract termination..................       --          --          --           --        54.2
                                          -------     -------      ------       ------      ------
     Total operating expenses...........    127.6       149.3       101.5         45.3       134.4
Income (loss) from operations...........   (124.4)     (131.2)      (76.0)         8.2       (91.0)
Interest income (expense), net..........      4.4         3.2         3.4          2.6         4.1
                                          -------     -------      ------       ------      ------
Net income (loss).......................   (120.0)%    (128.0)%     (72.6)%       10.8%      (86.9)%
                                          =======     =======      ======       ======      ======
24
27
 
     The Company's revenues and operating results have varied substantially from
quarter to quarter. The Company's quarterly operating results may continue to
fluctuate due to a number of factors, including the timing, size and nature of
the Company's licensing transactions, lengthy and unpredictable sales cycles,
the timing of introduction and market acceptance of new products or product
enhancements by the Company or its competitors, product and price competition,
the relative proportions of revenues derived from license fees and services,
changes in the Company's operating expenses, software bugs or other product
quality problems, personnel changes and fluctuations in economic and financial
market conditions. Accordingly, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and the
results of operations for any quarter are not necessarily indicative of future
results of operations.
 
     Revenues of $3.3 million for the three months ended December 31, 1997
included software license and implementation revenues of $1.6 million associated
with two large banks (assets greater than $1 billion) that were implemented in
that quarter.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company has financed its operations primarily from the sale of
preferred stock and from a credit line for equipment purchases. The Company had
net working capital of $6.2 million at March 31, 1998, including cash and cash
equivalents totaling $7.3 million.
 
     Cash used in operating activities was $514,966, $1.0 million, $3.9 million
and $1.7 million for the three months ended March 31, 1998 and for the years
ended December 31, 1997, 1996 and 1995, respectively. Cash used in operations
during each of these periods was primarily due to net losses and an increase in
accounts receivable partially offset in each period by increases in accounts
payable, royalties payable and deferred revenues. In 1996, the cash used in
operating activities was also attributable to expenditures for deferred project
costs. In 1997, cash flow from operations was favorably impacted by a reduction
in deferred project costs.
 
     Cash used in investing activities was $289,578, $812,334, $850,083 and
$212,037 for the three months ended March 31, 1998, and for the years ended
December 31, 1997, 1996 and 1995, respectively. Cash used during such periods
was to acquire property and equipment and for capitalized software development
costs. The Company currently has no significant capital spending or purchase
commitments, but expects to continue to engage in capital spending in the
ordinary course of business.
 
     Cash provided by financing activities was $554,835, $5.0 million, $5.3
million and $5.2 million for the three months ended March 31, 1998, and for the
years ended December 31, 1997, 1996 and 1995, respectively. During 1997, 1996
and 1995, the Company received $5.0 million, $5.5 million, and $5.1 million,
respectively, of net proceeds from the sale of preferred stock. In addition, the
Company received $60,000 and $120,000 in proceeds during 1996 and 1995,
respectively, from a subscription note receivable.
 
     In 1995, the Company received and repaid $1.0 million in bridge loans from
existing investors. In September 1996, the Company entered into a $250,000
equipment line of credit with a bank. The equipment line allowed for draw downs
through September 1997 with the outstanding borrowings on the equipment line
converting to a $104,002, nine percent term loan payable in 36 months beginning
in October 1997. As of March 31, 1998, the Company had an outstanding balance of
$83,779 under this term loan. In June 1997, the Company entered into a $1.0
million working capital line of credit with the same bank that provides the
equipment line of credit. The line is secured by all assets, exclusive of those
financed under the equipment line. The maximum amount available under this line
of credit is 75% of domestic accounts receivable, less amounts that have been
outstanding for more than 90 days. This line of credit expires July 20, 1998. At
March 31, 1998, there was no balance outstanding on this line of credit.
 
     The Company believes that the proceeds generated by the sale of Common
Stock by the Company in this offering, cash and cash equivalents on hand and
cash generated by operations will be sufficient to meet the Company's working
capital requirements for the next twelve months.
 
                                       25
28
 
                                    BUSINESS
 
     The Company is a leading provider of client/server core processing software
and related services to small to mid-size banks and credit unions. The Company
has developed The Complete Banking Solution and The Complete Credit Union
Solution (the "OSI System"), which are fully-integrated suites of banking and
credit union applications that operate in a Microsoft Windows NT environment
with an Oracle relational database. The Company's software supports all of an
institution's core processing requirements, including deposits and loans, teller
functions, home/ Internet banking and platform automation. The Company's open
and flexible client/server architecture is designed to enable its customers to
reduce their core processing and operational costs and leverage customer
information to improve retention and identify potential cross-selling
opportunities. The OSI System interfaces to third-party applications that are
commonly used in banks and credit unions, including check processing, ATMs and
general ledger applications. The OSI System enables its customers to enhance
customer satisfaction and compete more effectively in the financial services
industry.
 
INDUSTRY BACKGROUND
 
     Currently, there are over 20,000 banking and depositary institutions in the
United States with assets of up to $3 billion, including small to mid-size
commercial banks, thrifts and credit unions. The Company believes that these
institutions, which have traditionally competed on personalized service, are
facing increasing competitive pressures to improve their efficiencies in the
areas of customer service, operations and marketing. In addition, the evolving
requirements of the electronic marketplace demand that banks expand their
traditional services to include ATMs, telephone banking and home banking through
personal computers and the Internet. Banks and depositary institutions of all
sizes are also experiencing increased competitive pressures from non-bank
competitors which, as a result of the deregulation of the financial services
industry, can offer products and services traditionally marketed by banks.
 
     In responding to these trends, small to mid-size banks and credit unions
are increasingly seeking to implement information technology systems that will
enable them to increase the efficiency of their operations, offer a broader
array of services and provide enhanced levels of customer service. These
institutions have traditionally fulfilled their information technology needs
through legacy computer systems, operated either by the institution or a service
bureau on an outsourced basis. These systems, which operate in large mainframe
or minicomputer environments, are designed primarily to batch process a large
number of transactions and create centralized financial records. Nightly batch
sessions are typically required to update each customer's account with the
business day's transactions. As a result, banks utilizing legacy systems
typically do not offer their customers real-time processing of transactions, a
feature that is becoming an increasingly important operating requirement.
Moreover, legacy systems typically store data in non-relational, sequentially
indexed files. In this environment, retrieval of customer or other information
can be burdensome and time consuming and limits an institution's flexibility in
meeting changing customer service requirements. The centralized processing and
proprietary architecture of these systems is not designed to easily support
analysis for decision-making or integrate with other business applications used
throughout the enterprise. Financial institutions relying on legacy systems
often find it difficult to conform their business processes and reporting to the
architecture of the system and are not able to easily adapt the system to their
evolving needs.
 
     The need to improve customer service levels, enhance operating efficiencies
and lower costs has contributed to the growing acceptance of the client/server
model of computing based on open, industry-standard operating environments and
relational databases. In a client/server environment, servers provide shared
access to data and applications, while client devices such as personal computers
and workstations provide the user interface and local processing functions.
Client/server
 
                                       26
29
 
systems can improve information sharing by providing access at each desktop to
critical customer and transaction data and business applications, which had
historically been restricted or difficult to access in legacy environments.
Client/server applications enable organizations to streamline core business
practices and reporting and to make faster, more informed decisions. The
client/server model is also scalable as capacity can be increased by upgrading
the server or linking multiple servers. In addition, the client/server model
offers flexibility in that additional functionality can easily be provided
through third-party applications.
 
     The Company believes that, until recently, the adoption of client/server
systems in many banks and credit unions has lagged other industries due to the
limited number of suppliers of open client/server systems designed specifically
to address the core processing requirements of such institutions. In part, this
has been attributable to the industry's long-standing reliance on legacy systems
and the high-volume processing requirements of larger banks. Among smaller
banking institutions, which the Company believes are best positioned to benefit
from the implementation of client/server systems, the adoption of such systems
has been hampered by the absence of cost effective client/server systems
designed specifically for use by such institutions. The Company believes that
fewer than 200 small to mid-size banks and credit unions in the United States
have implemented open client/server core processing systems.
 
     The Company believes that banks and credit unions today are seeking
information technology solutions that combine the performance, reliability and
security associated with legacy-based systems with the flexibility, ease-of-use,
scalability and reduced cost of ownership associated with client/server systems.
Banks and credit unions require systems that can be easily integrated with other
applications used in the enterprise, provide real-time transaction processing
and comply with applicable regulatory requirements. Banks and credit unions also
require core processing systems that are able to accommodate new and emerging
technologies, such as ATMs, telephone banking and home banking via personal
computers and the Internet. In addition, these institutions require systems that
are Year 2000 compliant. Banks and credit unions are also seeking information
technology solutions that offer quick and effective access to customer and
account data in order to offer better, more customized services, monitor trends
and performance and cross-sell services and products. A client/server core
processing solution must be able to meet all of these requirements to enable
banks and credit unions to achieve a competitive advantage in their markets
through improved customer service, lower costs and enhanced access to customer
information.
 
THE OSI SOLUTION
 
     The OSI System enables financial institutions to process transactions and
access critical customer and account data through a suite of open, distributed
application modules that operate in a Microsoft Windows NT environment with an
Oracle relational database. The Company's solutions are designed to provide its
customers with the following benefits:
 
     X Fully-Integrated Solution.  The OSI System supports all of an
       institution's core processing requirements, including those of its branch
       offices. The OSI System accommodates telephone banking and home banking
       via personal computers and the Internet, and provides ATM management
       capabilities. All components of the OSI System utilize a common
       relational database and operating system. This architecture allows a bank
       to provide its customers with real-time information concerning their
       accounts and to create real-time management reports. The OSI System also
       eliminates potential errors arising from the maintenance of multiple
       databases and enables institutions to change their business processes
       without requiring the modification of the underlying data model.
 
     X Enhanced Customer Service Through Real-Time Processing.  The OSI System
       allows a bank's customers and employees to access and process information
       on a real-time basis, which enables a bank's customers to receive up to
       the minute account and transaction information from any branch,
       telephone, home or Internet location. The OSI System also enables bank
 
                                       27
30
 
       employees to quickly identify customers and gather accurate and current
       information about the entire customer relationship. Availability of this
       information enables institutions to improve their level of customer
       service and provide them with incremental opportunities for marketing
       additional products and services.
 
     X Open Architecture.  The OSI System operates in an open environment using
       the Microsoft Windows NT operating system and the Oracle relational
       database management system, which are installed on non-proprietary
       hardware. The flexible, open architecture of the OSI System facilitates
       the use of popular, off-the-shelf third-party software and the addition
       of more processing capability as the institution's requirements increase.
 
     X Reduced Cost of Ownership.  The OSI System can reduce the overall cost of
       ownership of a financial institution's core system. By integrating core
       banking functions, which have historically run on separate systems, into
       one seamless environment, the OSI System enables its customers to achieve
       operational efficiencies. The OSI System can also reduce the costs that
       would otherwise be associated with the ongoing maintenance of legacy
       systems. In addition, the time and expense required to adapt the OSI
       System to accommodate changing business processes and regulatory
       requirements is less than that required with a typical legacy system. The
       ability of the OSI System to operate across a broad range of popular
       hardware provides customers with increased flexibility and the ability to
       select the most cost-effective system.
 
STRATEGY
 
     The Company's objective is to be the leading supplier of enterprise-wide
client/server software for small to mid-size banks and credit unions. The
Company's strategy for achieving this objective includes the following:
 
     X Focus on Small to Mid-Size Banks and Credit Unions.  The Company will
       continue to focus on providing core processing solutions to small to
       mid-size banks and credit unions, which the Company defines as
       institutions with assets up to $3 billion. The Company believes that the
       client/server model of computing is particularly well-suited for
       institutions in this market. These institutions, unlike larger banks,
       typically do not require extensive customization in connection with the
       implementation of a banking system which makes it easier for them to
       realize the benefits of client/server core processing systems in a
       cost-effective manner. The Company believes that the demand for
       client/server systems in this market is increasing as a result of these
       factors.
 
     X Expand Distribution Through Outsourcing Solutions.  A number of small to
       mid-size banks and credit unions outsource their core processing systems
       to third-party service providers. These third-party service providers
       typically choose one or more significant banking solutions on which they
       base their outsourcing services. The Company has established strategic
       relationships with BISYS, a major national outsourcing provider, and
       COCC, a major regional outsourcing provider, under which these third
       parties provide outsourced processing services to the financial services
       industry using the OSI System. The Company plans to continue to jointly
       market the OSI System with its outsourcing partners to expand its
       installed customer base.
 
     X Leverage Customer Base.  The Company intends to continue to leverage its
       installed customer base by expanding the range of complementary products
       and services available to its customers. The Company generates recurring
       revenues by entering into maintenance arrangements with its customers
       that provide for annual service fees. As the asset size or number of
       accounts of a financial institution increases, or as additional
       application modules or services are provided, customers typically pay
       incremental license and maintenance fees. The Company plans to continue
       to expand its professional services offerings to its installed base of
       customers as they implement additional application modules.
 
                                       28
31
 
     X Maintain Product Leadership.  The Company believes that the open
       client/server architecture of the OSI System provides it with competitive
       advantages over other core processing systems. For example, the OSI
       System offers on-line, real-time transaction processing capabilities that
       are not available in many competitive systems, and the Company recently
       announced the introduction of a home/Internet banking module supporting
       the Open Financial Exchange ("OFX") standard, which enables customers to
       access bank services using personal computers and the Internet. The
       Company's open architecture enables it to utilize leading,
       non-proprietary software and hardware to provide comprehensive
       functionality. The Company intends to extend its technological leadership
       by continuing to add new applications, integrate new technologies and
       expand the functionality of its system.
 
TECHNOLOGY
 
     The Company developed the OSI System to enable customers to realize the
advantages of client/server architectures. The OSI System is designed to offer
the following benefits: (i) flexible functionality, scalability, and high
performance, (ii) lower total cost of ownership, (iii) the ability to operate
either in real-time or batch processing mode and (iv) integration with
third-party applications and emerging technologies. The Company believes that
the OSI System achieves these objectives through an open architecture that is
based on leading technologies in the areas of operating systems, relational
databases, graphical user interfaces and report generation tools.
 
     The foundation of the OSI System is an enterprise-wide relational database.
The OSI System uses relational database software from the industry's leading
supplier, Oracle Corporation. The OSI System's functionality is implemented
through application modules, each of which performs a specific core processing
function, that share the data in the relational database. This approach allows
for database normalization and business modeling. Through database
normalization, data is organized in tables that are easily accessible through a
variety of query tools as well as the application modules. The OSI System's data
model consists of over 600 tables, which the Company believes is substantially
greater than the number of tables in the data models of competing solutions. As
a result, a higher degree of independence between a customer's business
processes and underlying data is achieved and the OSI System is more scalable
and adaptable to changing business needs. New application modules may be
developed or existing modules may be altered as required without having to
change the underlying data model.
 
     The OSI System is based on a single, enterprise-wide database as opposed to
a distributed database in which the database is spread among two or more
components, typically resident on different computers. The principal benefit of
an architecture using a single enterprise-wide database is that it permits
real-time processing so that, for example, transactions are immediately
reflected in a bank or credit union customer's account. This contrasts with a
batch processing approach in which all accounts are updated only at scheduled
intervals, typically at the end of the business day. The OSI System may be
configured to operate in either batch mode or a hybrid batch/real-time mode for
those banks or credit unions that do not require or desire real-time processing.
 
     The OSI System is a 32-bit Microsoft Windows NT application that operates
in an open systems environment. The system does not require any proprietary
hardware components and is currently deployed on a wide range of client and
server platforms. The system features multi-level security that takes advantage
of the features of the underlying operating system and relational database as
well as offers some that are indigenous to the system. The OSI System also
interfaces to a broad range of third-party applications and peripherals that are
commonly used in banks and credit unions.
 
PRODUCTS
 
     The OSI System is an enterprise-wide solution that addresses the core
processing requirements of small to mid-size banks and credit unions and other
financial institutions. The OSI System consists of software application modules
that operate on a fully-integrated basis and is designed to be Year
 
                                       29
32
 
2000-compliant. The Company recently released its OSI/ATM Server, the OSI
home/Internet banking module and a 32-bit version of the OSI System. In
addition, the Company markets third-party applications that are commonly used in
banks and credit unions. Current prices for the base OSI System software license
range from approximately $140,000 to $1.5 million, depending on asset size and
number of customer accounts.
 
  Application Modules
 
     The following table describes certain application modules of the OSI
System:
APPLICATION                                                        DESCRIPTION
-----------                                                        -----------
Customer Service..........................    Provides a quick and comprehensive view of each cus-
                                              tomer relationship; maintains customer's picture and
                                              signature for recognition; supports opening and
                                              maintenance of all types of accounts and provides a
                                              measure of an individual customer's profitability;
                                              enables tellers to complete an entire transaction
                                              on-line in the presence of the customer.
Comprehensive Lending.....................    Provides comprehensive management of all loans,
                                              whether mortgage, consumer or commercial, including
                                              establishment of escrow, insurance and tax accounts;
                                              can provide loan-loss reserve calculations based on
                                              risk ratings and loan classifications; includes "what
                                              if" loan calculator and amortization schedule.
Depository System.........................    Supports all forms of deposit instruments, including
                                              passbook and statement savings, club accounts and
                                              checking accounts, share drafts (credit unions),
                                              certificates of deposit and time deposits and
                                              repurchase agreements.
Teller Application........................    Provides a teller with real-time access to the bank's
                                              database and a complete profile of the bank's clients
                                              (including a customer's picture and signature); easily
                                              navigated by the teller and does not require
                                              transaction codes.
General Ledger Interface..................    Easy-to-use module designed to manage interfaces to
                                              popular general ledger systems.
Bank and Branch Operations................    A comprehensive and secure administrative management
                                              tool for determining user accessibility, security,
                                              hours of operation, cash boxes and authorization
                                              structures.
End of Day Production.....................    Identifies and schedules all end of day processing,
                                              including updating of interest, fees and other
                                              charges, and produces daily production reports and
                                              customer statements.
Executive Information.....................    Enables management to monitor bank's performance
                                              through on-line queries of any product or branch;
                                              tools can generate new reports in graphical or tabular
                                              form based upon ad hoc information requests.
External File Manager.....................    Manages all data that must be entered into the
                                              database from external sources, including check
                                              clearings, ACH (automatic clearing house), loan
                                              origination and ATM transaction files.
30
33
APPLICATION                                                        DESCRIPTION
-----------                                                        -----------
Payroll...................................    Enables updating of all payroll accounts provided
                                              through an ACH format or from outside payroll systems.
Product Manager...........................    Enables bank to design and promote new loan, checking
                                              and deposit products and to monitor current product
                                              offerings; uses fill-in-the-blank, easy-to-follow
                                              screens with user defined fees and rate schedules that
                                              allow for unlimited tiering.
IRS/Year-End Reporting....................    Supports year-end IRS reporting information for both
                                              standard and specialized forms.
Forms Integration.........................    Integrates generation of forms, includes new account
                                              documents, disclosures, signature cards and passbooks;
                                              eliminates need to inventory pre-printed forms.
OSI/ATM Server
 
     The OSI/ATM Server is an ATM management system that provides banks with the
capability to directly manage their own ATM network or interface with regional
ATM networks. The OSI/ATM Server enables customers to reduce costs associated
with ATM systems and provides features such as real-time, single balance update
capabilities, support for multiple ATM transactions and processing and
authorization options. In addition, the OSI/ATM Server enables banks to define
their own operating parameters without the need for program modifications. The
system, which operates on Stratus computers, is designed to provide
fault-tolerant reliability. The OSI/ATM Server is fully integrated with the OSI
System. Current list prices for the OSI/ATM Server module range from
approximately $45,000 to $90,000.
 
  Home/Internet Banking Module
 
     The Company's home/Internet banking module enables customers to remotely
access an online banking system through which a customer can transfer funds from
transaction accounts, make balance inquiries, generate instant statements and
monitor account activity. The Company's system supports the OFX standard, which
enables the system to interface to bank services that use a variety of devices
to originate customer transactions. Through the OFX standard, the OSI System can
also be integrated with commonly-used personal financial management products,
such as Microsoft's Money 98 and Intuit's Quicken. Current list prices for the
home/Internet banking module range from approximately $50,000 to $100,000.
 
  Third-Party Applications
 
     The open architecture of the OSI System facilitates the integration of
third-party applications, and the Company offers various third-party
applications for use with the OSI System. Such applications include:
asset/liability management, check and statement imaging, collection management,
disaster recovery planning, general ledger, voice response, loan origination and
on-line ATM interface.
 
SALES AND MARKETING
 
     The Company markets its software and services primarily through its direct
sales force. As of May 31, 1998, the Company employed 22 sales and marketing
personnel.
 
     The Company's marketing program includes direct mail, networking,
telemarketing, advertising in industry specific trade journals and periodicals,
seminars and trade shows. The Company maintains an Internet web site from which
prospective customers can retrieve and view product information. The Company has
established an alliance with Unisys PAAG under which Unisys has
 
                                       31
34
 
exclusive rights to market the OSI System in Asia (except Japan), South Africa
and certain other countries. The Company has established strategic relationships
with Oracle Corporation, Compaq Computer Corporation and Stratus Computer, Inc.
providing for joint marketing efforts.
 
     Historically, a significant portion of all banks and credit unions have
chosen to satisfy their information technology needs through service bureaus. To
address this market, the Company has entered into software license and marketing
agreements with BISYS and COCC under which these third parties provide
outsourced core processing services to the financial services industry using the
OSI System.
 
     Pursuant to a Software License and Marketing and Distribution Agreement
with BISYS, the Company has granted BISYS the exclusive rights in the United
States, subject to certain exceptions, to use the OSI System to provide
outsourcing of core processing services to banks and credit unions. This grant
becomes non-exclusive if BISYS fails to enter into a specified number of
customer contracts in specified years. BISYS has agreed that the Company shall
be the exclusive provider of client/server core processing systems for BISYS
during the term of the Agreement. Pursuant to the Agreement, the parties engage
in joint marketing of each other's products and services and refer potential
customers to each other. As of June 30, 1998, BISYS had entered into outsourcing
agreements with [     ] institutions.
 
     The Company has also entered into a License and Marketing Agreement with
COCC under which the Company has granted COCC certain exclusive rights to use
the OSI System to provide outsourced core processing services to banks and
credit unions in the New England states and New York. COCC must meet certain
customer milestones to maintain its exclusivity. The Company receives license
fees with respect to outsourced data processing agreements entered into by COCC,
subject to a cumulative maximum payment, as stipulated in the agreement. As of
June 30, 1998, COCC had entered into outsourcing agreements with [     ]
institutions.
 
CUSTOMERS
 
     The Company's customers are primarily small to mid-size banks and credit
unions, typically with fewer than ten branches, that serve the banking needs of
their local communities. These banks are often the primary local providers of
savings accounts and consumer, mortgage and commercial loans in the markets they
serve. The majority of the Company's customers are located in the Northeast
region, although the Company is expanding its presence in other regions.
 
     The Company had three, two, four and two significant customers, which
accounted for approximately 48%, 32%, 94% and 98%, respectively, of total
revenues for the three months ended March 31, 1998 and the years ended 1997,
1996 and 1995, respectively. The Company anticipates that no customer will
account for more than 10% of revenues in the year ending December 31, 1998.
Sales to two banks and payments from one outsourcing provider accounted for
approximately 22%, 15% and 11% of total revenues, respectively, in the three
months ending March 31, 1998. Sales to two banks accounted for approximately 17%
and 15% of total revenues, respectively, in the year ended December 31, 1997.
Sales to four banks accounted for approximately 38%, 22%, 20% and 14% of total
revenues, respectively, in the year ended December 31, 1996. Sales to two banks
accounted for approximately 55% and 43% of total revenues, respectively, in the
year ended December 31, 1995.
 
SERVICES
 
     The Company provides comprehensive implementation and training services to
customers who purchase the OSI System. An implementation team works with the
customer through all phases of the project, including software installation,
data conversion, education and training. Full implementation of the OSI System
typically occurs over 14 to 24 weeks, depending on the complexity of the
conversion. The Company also provides post-implementation customer support and
maintenance.
 
                                       32
35
 
As of May 31, 1998, the Company had 59 employees dedicated to implementation,
training, support and maintenance.
 
     X Implementation.  The Company assigns to each customer a project manager
       who coordinates all activities related to the implementation of the OSI
       System. The Company also assigns conversion programmers who convert a
       bank's current account data to the relational database in the OSI System.
       Data conversion activities include data mapping, program development,
       testing, data auditing and a complete trial conversion prior to the final
       implementation date.
 
     X Training.  The Company offers a comprehensive education and training
       program to its customers. The Company offers training classes at its
       headquarters in Connecticut and hands-on application training at the
       customer site prior to installation of the OSI System. In addition,
       on-site training for ancillary products is available upon request. The
       Company also assists customers desiring to adapt the OSI System to
       particular needs, including customer-specific software features, reports
       or regulatory requirements.
 
     X Support and Maintenance.  Support and maintenance personnel provide
       immediate telephone response service during normal working hours,
       supplemented by on-call support 24 hours a day, seven days a week. The
       Company also provides product support services through the Internet,
       electronic mail and facsimile. In addition, the Company offers remote
       product support services whereby the Company's support team directly
       connects to a customer's server to troubleshoot or perform routine
       maintenance. The Company enters into maintenance agreements with its
       customers pursuant to which they pay an annual maintenance fee, based on
       a percentage of the license fee, over the term of the software license.
       See "Management's Discussion and Analysis of Financial Condition and
       Results of Operations -- Overview."
 
PRODUCT DEVELOPMENT
 
     The Company plans to continue to invest significant resources to maintain
and enhance its current product and service offerings. The Company's principal
product development focus is on: (i) enhanced functionality of the OSI System
through the development of new features and improvements to existing
applications modules, (ii) software updates as new versions of the Windows NT
operating system and Oracle relational database are released and (iii) tools to
automate the process of converting a customer's legacy data to the OSI System.
 
     As of May 31, 1998, the Company employed a staff of 24 employees engaged in
product development. The Company's product development expenditures were
approximately $443,192, $1.9 million, $1.1 million and $660,510 for the three
months ended March 31, 1998 and the years ended December 31, 1997, 1996 and
1995, respectively.
 
COMPETITION
 
     The financial services software market is intensely competitive and subject
to rapid technological change. Competitors vary in size and in the scope and
breadth of products and services offered. The Company encounters competition in
the U.S. from a number of sources, including Fiserv, Inc., NCR Corporation,
Electronic Data Systems Corporation, Marshall & Ilsley Corporation, M&I
EastPoint, Phoenix International Ltd., Inc., Jack Henry & Associates, Inc.,
ALLTEL Corporation, Prologic Corporation and Kirchman Corporation, all of which
offer core processing systems or outsourcing alternatives to banks and credit
unions. The Company also competes against a number of smaller, regional
competitors. In addition to these competitors, the Company competes
internationally with Misys plc Banking Division (including Midas-Kapiti
International, Inc., Kindle Banking Systems and ACT Financial Systems), Sanchez
Computer Associates, Inc. and Financial Network Services, among others. The
Company also competes with other core processing alternatives, including
in-house applications, which were either developed internally or purchased from
third-party vendors, and outsourcing, either as a part of a total outsourcing
solution or through a service bureau arrangement. Furthermore, the Company
expects additional competition from other established and emerging companies as
the client/server application software market continues to
 
                                       33
36
 
expand. There can be no assurance that the Company will be able to compete
successfully against either its existing or future competitors.
 
     In general, the Company competes on the basis of product architecture and
functionality, service and support, including the range and quality of technical
support, training and implementation services, and product pricing in relation
to performance and support.
 
INTELLECTUAL PROPERTY AND OTHER PROPRIETARY RIGHTS
 
     The Company relies primarily on a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company's license agreements contain
provisions which limit the number of users, state that title remains with the
Company and protect confidentiality. The Company presently has no patents or
patent applications pending.
 
     Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. Policing
unauthorized use of the Company's products is difficult, particularly overseas,
and while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to the extent of the laws of the United States.
Nevertheless, the Company believes that due to the rapid pace of technological
change in the information technology and software industries, factors such as
the technological and creative skills of its employees, new product
developments, frequent product enhancements and the timeliness and quality of
support services are more important to establishing and maintaining a
competitive advantage in the industry.
 
     The Company does not believe that any of its products infringe upon the
proprietary rights of third parties. There can be no assurance, however, that
third parties will not claim infringement by the Company with respect to current
or future products. Any such claim could result in costly litigation, cause
product shipment delays or require the Company to enter into royalty or
licensing agreements. Such royalty or licensing agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect upon the Company's business, financial condition and
results of operations.
 
EMPLOYEES
 
     As of May 31, 1998, the Company had a total of 121 employees, of which 27
were engaged in product development and system documentation, 59 were engaged in
implementation, training, support and maintenance, 22 were engaged in sales and
marketing and 13 were engaged in finance and administration. None of the
Company's employees is represented by a labor union. The Company has not
experienced any work stoppages and considers relations with its employees to be
good.
 
FACILITIES
 
     The Company currently leases approximately 15,000 square feet of space in
its headquarters facility in Glastonbury, Connecticut. The lease for this
property expires in 2003. The Company plans to lease approximately 15,000
additional square feet at this facility before the end of 1998.
 
LEGAL PROCEEDINGS
 
     The Company is not a party to any material legal proceedings that would
have a material adverse effect on the Company's business, financial condition or
results of operations.
 
                                       34
37
 
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
 
     The executive officers, directors and certain other key employees of the
Company, their respective ages as of March 31, 1998 and their positions with the
Company are as follows:
EXECUTIVE OFFICERS AND DIRECTORS            AGE                     POSITION
--------------------------------            ---                     --------
Douglas K. Anderson.......................  48     Chairman of the Board and Chief Executive
                                                   Officer
John L. Person............................  63     President and Chief Operating Officer
Graham H. Gurney..........................  57     Senior Vice President of Sales and
                                                   Director
Clifford I. Waggoner......................  56     Senior Vice President, Chief Technology
                                                   Officer and Director
Richard J. Willemin.......................  47     Senior Vice President and Chief Financial
                                                   Officer
Carlos P. Naudon (1)......................  47     Vice Chairman of the Board
Douglas C. Carlisle (2)...................  41     Director
David M. Clarke (1).......................  47     Director
Samuel F. McKay (1)(2)....................  58     Director
William W. Neville........................  44     Director
Richard P. Yanak (2)......................  63     Director
 
KEY EMPLOYEES
---------------
Charles J. Beer...........................  40     Vice President of Application Development
John J. DeMita............................  53     Vice President of Professional Services
John L. Messier...........................  34     Vice President of Conversion Services
Michael D. Nicastro.......................  39     Vice President of Marketing
Debra M. Dabrowski........................  30     Controller
---------------
(1) Member of the Audit Committee effective as of the closing of this offering.
(2) Member of the Compensation Committee effective as of the closing of this
    offering.
 
     Mr. Anderson has served as Chairman of the Board and Chief Executive
Officer of the Company since December 1997 and as a director since July 1994.
Mr. Anderson served as President of the Company from October 1995 to December
1997. From December 1986 to October 1995, Mr. Anderson was employed by the
Savings Bank of Manchester and was responsible for all bank operations and
information technology, most recently as Executive Vice President. Prior to
joining the Savings Bank of Manchester, Mr. Anderson was employed for 14 years
by Unisys Corporation.
 
     Mr. Person has served as President and Chief Operating Officer of the
Company since December 1997, and served as Executive Vice President and Chief
Operating Officer of the Company from May 1997 to December 1997. From August
1996 to May 1997, Mr. Person was Managing Director of Compression Engines, LLC,
a software company. From October 1994 to May 1997, Mr. Person served as
President of Enanti Corporation, a contact management software company. From
July 1992 to October 1994, Mr. Person served as President of HP Films, a film
production company. Mr. Person also served as President of Newtrend MISER Group,
a company specializing in banking software.
 
     Mr. Gurney co-founded the Company in 1992, and has served as Senior Vice
President of Sales of the Company since June 1996 and as a director since 1992.
From September 1984 to October 1987, Mr. Gurney served as regional district
manager for the New York district of Sperry Corporation, a computer hardware and
software company. From October 1987 to June 1992, Mr. Gurney served as the
Eastern regional sales director for Sharebase Corporation, a relational database
company.
 
                                       35
38
 
Mr. Gurney was employed in various positions for 15 years in the financial
services computing industry.
 
     Mr. Waggoner co-founded the Company in 1992, has served as Senior Vice
President and Chief Technology Officer of the Company since October 1995 and as
a director since 1992. Mr. Waggoner served as President of the Company from May
1992 to October 1995. From June 1987 to May 1992, Mr. Waggoner was Vice
President and Principal of Linc Systems Corporation, a software services
company. Prior to joining Linc Systems Corporation, Mr. Waggoner was employed
for 17 years by Electronic Data Systems Corporation.
 
     Mr. Willemin has served as Senior Vice President and Chief Financial
Officer of the Company since April 1998. From March 1997 to April 1998, Mr.
Willemin served as Chief Financial Officer of Summit Medical, Inc., a supplier
of clinical database software. From September 1996 to February 1997, Mr.
Willemin served as Chief Financial Officer of Datalogix International, Inc., a
supplier of manufacturing and logistics software. From June 1994 to August 1996,
Mr. Willemin served as Vice President and Chief Financial Officer of NEIC, a
transaction processing company in the health care industry. From March 1992 to
June 1994, Mr. Willemin served as interim Chief Financial Officer during periods
of transition for several companies, including, Saratoga Springs Water Company,
a beverage manufacturer and distributor, and Canyon Ranch Spa Cuisine, a mail
order health food company.
 
     Mr. Naudon has served as Vice Chairman of the Board of the Company since
October 1995 and as a director since September 1994, and served as Managing
Director from March 1995 to October 1995. Since May 1992, Mr. Naudon, has served
as Chairman of the Board of BSI Administrative Services Inc., a benefits plan
administration company. In addition, since January 1984, Mr. Naudon has served
as President, Chief Executive Officer and director of Banking Spectrum, Inc. and
Banking Spectrum Services, Inc., each a banking consulting company.
 
     Mr. Carlisle has served as a director of the Company since March 1994.
Since 1984, Mr. Carlisle has served as a general partner of Menlo Ventures VI,
L.P. ("Menlo Ventures"), a venture capital fund that invests in emerging growth
technology companies. Mr. Carlisle is a director of Carrier Access Corporation.
 
     Mr. Clarke has served as a director of the Company since April 1998. Since
September 1993, Mr. Clarke has served as Vice President, Private Equity, of the
Aetna Investment Management Group of Aetna Life Insurance Company ("Aetna").
From September 1977 to September 1993, Mr. Clarke held various other positions
in the Private Bond Investment Group of Aetna.
 
     Mr. McKay has served as a director of the Company since December 1995.
Since April 1994, Mr. McKay has served as a general partner of Axiom Venture
Partners, L.P. ("Axiom"), a venture capital firm. Previously, Mr. McKay was
general partner of Connecticut Seed Ventures, L.P. Mr. McKay is a director of
Anika Therapeutics, Inc., Sabre Communications Corporation, Costar Corporation
and Nightingale Corp.
 
     Mr. Neville has served as a director of the Company since June 1998. Since
June 1997, Mr. Neville has served as President of TOTALPLUS, a division of
BISYS. From June 1995 to June 1997, Mr. Neville served as Senior Vice President
and Eastern regional General Manager of TOTALPLUS. From June 1992 to June 1995,
Mr. Neville served as Vice President and General Manager of the New England
region of TOTALPLUS.
 
     Mr. Yanak has served as a director of the Company since May 1996. Since
October 1996, Mr. Yanak has served as Senior Advisor of NYCE Corporation, an
electronic banking services company. From December 1987 to October 1996, Mr.
Yanak served as President and Chief Executive Officer of NYCE Corporation.
 
     Mr. Beer has served as Vice President of Application Development of the
Company since October 1996, and served as Director of Application Development of
the Company from June 1992
 
                                       36
39
 
to October 1996. Previously, Mr. Beer served as Assistant Vice President of
Development of American Savings Bank.
 
     Mr. DeMita has served as Vice President of Professional Services of the
Company since September 1996. From December 1995 to September 1996, Mr. DeMita
served as Vice President of Production of NYCE Corporation, an electronic
banking services company. From July 1992 to October 1995, Mr. DeMita served as
President of Hardcopy Media Inc., a printing company and owned and operated
Alpha Graphics, a printing franchise company. Previously, Mr. DeMita served as
President of American Business Information Services, a subsidiary of American
Savings Bank.
 
     Mr. Messier has served as Vice President of Conversion Services of the
Company since December 1997, and served as Manager of Customer Support of the
Company from July 1995 to December 1997. From February 1990 to July 1995, Mr.
Messier served as a Product Support Specialist and Senior Project Manager at
Fiserv, Inc., a financial services technology company.
 
     Mr. Nicastro has served as Vice President of Marketing of the Company since
October 1996, and served as Director of Marketing and Customer Services of the
Company from September 1994 to October 1996. From February 1985 to September
1994, Mr. Nicastro held various product management positions with the Data
Services Division of NCR Corporation. In addition, Mr. Nicastro served in
various positions at Bristol Savings Bank and Citicorp.
 
     Ms. Dabrowski has served as Controller of the Company since May 1997. From
August 1989 to April 1997, Ms. Dabrowski was employed by Price Waterhouse LLP,
an independent public accounting firm, most recently as Audit Manager in its
Technology Industry Group. Ms. Dabrowski is a certified public accountant.
 
     Pursuant to an Amended and Restated Investors' Rights Agreement dated as of
August 22, 1997 among the Company and certain stockholders of the Company, such
stockholders were granted the right (which terminates upon the closing of this
offering) to designate representatives on the Company's Board of Directors.
Under this agreement, Messrs. Carlisle, McKay, Clarke and Neville were elected
the representatives of Menlo Ventures, Axiom, Aetna and BISYS, respectively.
 
     Following this offering, the Board of Directors of the Company will be
divided into three classes, each of whose members will serve for a staggered
three-year term. The Board will consist of three Class I Directors (Messrs.
Carlisle, Naudon and Waggoner), three Class II Directors (Messrs. Gurney, McKay
and Yanak) and three Class III Directors (Messrs. Anderson, Clarke and Neville).
At each annual meeting of stockholders, a class of directors will be elected for
a three-year term to succeed the directors of the same class whose terms are
then expiring. The terms of the Class I Directors, Class II Directors and Class
III Directors expire upon the election and qualification of successor directors
at the annual meeting of stockholders to be held during the calendar years 1999,
2000 and 2001, respectively.
 
     Each officer serves at the discretion of the Board of Directors and holds
office until his or her successor is elected and qualified or until his or her
earlier resignation or removal. There are no family relationships among any of
the directors or executive officers of the Company.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
     The Board of Directors has a Compensation Committee composed of Messrs.
Carlisle, McKay and Yanak, which makes recommendations concerning salaries and
incentive compensation for employees of and consultants to the Company and
administers and grants stock options pursuant to the Company's stock option
plans, and an Audit Committee composed of Messrs. Clark, McKay and Naudon, which
reviews the results and scope of the audit and other services provided by the
Company's independent public accountants.
 
                                       37
40
 
DIRECTOR COMPENSATION
 
     Directors do not currently receive any compensation for their services on
the Board of Directors, other than reimbursement for out-of-pocket expenses.
 
EXECUTIVE COMPENSATION
 
     The following table sets forth the total compensation paid or accrued for
the year ended December 31, 1997 for the Company's Chief Executive Officer and
its three other most highly compensated executive officers in 1997 who were
serving as executive officers on December 31, 1997 (the Chief Executive Officer
and such other executive officers are hereinafter referred to as the "Named
Executive Officers"):
 
                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                      ANNUAL COMPENSATION            COMPENSATION
                             -------------------------------------   ------------
                                                         OTHER        SECURITIES
                                                         ANNUAL       UNDERLYING     ALL OTHER
NAME AND PRINCIPAL POSITION   SALARY       BONUS      COMPENSATION    OPTIONS(1)    COMPENSATION
---------------------------  --------   -----------   ------------   ------------   ------------
Douglas K. Anderson.......   $175,000     $30,000          $--       195,000(2)       $40,000(2)
  Chairman of the Board and
  Chief Executive Officer
 
Graham H. Gurney..........    100,000      15,400(3)       --               --             --
  Senior Vice President of
  Sales
 
Clifford I. Waggoner......    106,000       3,000          --               --             --
  Senior Vice President and
  Chief Technology Officer
 
John L. Person(4).........     88,218      15,000     2,800(5)         100,000          4,936(6)
  President and Chief
  Operating Officer
---------------
(1) Represents the number of shares covered by options to purchase shares of the
    Company's Common Stock granted during the year ended December 31, 1997.
 
(2) In exchange for the surrender of the right to receive 175,000 shares of
    Common Stock originally granted on October 2, 1995, Mr. Anderson received an
    option to purchase 175,000 shares of Common Stock at an exercise price of
    $0.45 per share and supplemental compensation of $40,000 in 1997 and $60,000
    in 1998.
 
(3) Represents sales commissions.
 
(4) Mr. Person joined the Company in May 1997.
 
(5) Represents automobile allowance.
 
(6) Represents reimbursement for relocation expenses.
 
                                       38
41
 
     The following table sets forth grants of stock options to each of the Named
Executive Officers during the year ended December 31, 1997.
 
                       OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS                              POTENTIAL REALIZABLE VALUE
                            ------------------------------------------------------------------      AT ASSUMED ANNUAL RATES
                                          PERCENT OF                                                     OF STOCK PRICE
                            NUMBER OF       TOTAL                                                   APPRECIATION FOR OPTION
                            SECURITIES     OPTIONS                                                          TERM(2)
                            UNDERLYING    GRANTED TO     EXERCISE     FAIR MARKET                ------------------------------
                             OPTIONS     EMPLOYEES IN      PRICE       VALUE PER    EXPIRATION
NAME                        GRANTED(1)   FISCAL YEAR     PER SHARE       SHARE         DATE         0%         5%        10%
----                        ----------   ------------   -----------   -----------   ----------   --------   --------   --------
Douglas K. Anderson.......   175,000         36.3%         $0.45         $1.50       7/21/07     $183,750   $299,309   $476,600
                              20,000          4.2%          0.45          1.50       7/21/07       21,000     34,207     54,469
Graham H. Gurney..........        --           --             --            --            --           --         --         --
Clifford I. Waggoner......        --           --             --            --            --           --         --         --
John L. Person............   100,000         20.7%          0.45          1.50       5/07/07      105,000    171,034    272,343
---------------
(1) Mr. Anderson's option to purchase 175,000 shares vested with respect to
    84,722 shares immediately upon grant and the remaining shares underlying the
    option vest in twenty-six equal monthly installments. Twenty-five percent of
    Mr. Person's option and Mr. Anderson's option to purchase 20,000 shares vest
    on the first anniversary of the date of grant and the remaining shares
    underlying the options vest in thirty-six equal monthly installments.
 
(2) Amounts reported in these columns represent amounts that may be realized
    upon exercise of the options immediately prior to the expiration of their
    term assuming the specified compound rates of appreciation (0%, 5% and 10%)
    on the market value of the Common Stock on the date of option grant over the
    term of the options. These numbers are calculated based on rules promulgated
    by the Securities and Exchange Commission and do not reflect the Company's
    estimate of future stock price growth. Actual gains, if any, on stock option
    exercises and Common Stock holdings are dependent on the timing of such
    exercise and the future performance of the Common Stock. There can be no
    assurance that the rates of appreciation assumed in this table can be
    achieved or that the amounts reflected will be received by the individuals.
 
     The following table sets forth certain information concerning the number
and value of unexercised options held by each of the Named Executive Officers on
December 31, 1997. None of the Named Executive Officers exercised any stock
options during the year ended December 31, 1997.
 
                         FISCAL YEAR-END OPTION VALUES
NUMBER OF SHARES              VALUE OF UNEXERCISED
                                         UNDERLYING UNEXERCISED           IN-THE-MONEY OPTIONS
                                       OPTIONS AT FISCAL YEAR-END        AT FISCAL YEAR-END(1)
                                      ----------------------------    ----------------------------
NAME                                  EXERCISABLE    UNEXERCISABLE    EXERCISABLE    UNEXERCISABLE
----                                  -----------    -------------    -----------    -------------
Douglas K. Anderson.................    130,555          94,445        $536,248        $384,002
Graham H. Gurney....................     81,272          30,208         342,314         126,874
Clifford I. Waggoner................     19,792          30,208          83,126         126,874
John L. Person......................         --         100,000              --         405,000
---------------
(1) Represents the difference between the exercise price and the fair market
    value of the Common Stock at fiscal year end.
 
                                       39
42
 
STOCK PLANS
 
  1994 Stock Option Plan and 1998 Stock Incentive Plan
 
     The Company's 1994 Stock Option Plan (the "1994 Plan") was adopted by the
Board of Directors and approved by the stockholders of the Company in March
1994. Amendments to the 1994 Plan increased the number of authorized shares
under the Plan to 3,000,000 shares of Common Stock. As of March 31, 1998,
options to purchase an aggregate of 1,643,125 shares of Common Stock at a
weighted average exercise price of $0.58 per share were outstanding under the
1994 Plan. No additional option grants will be made under the 1994 Plan.
 
     The Company's 1998 Stock Incentive Plan (the "Incentive Plan") was adopted
by the Board of Directors, subject to stockholder approval, in June 1998. Awards
may be made under the Incentive Plan for up to the sum of (i) 1,200,000 shares
of Common Stock (subject to adjustment in the event of stock splits and other
similar events), plus (ii) the number of shares of Common Stock (up to
1,700,000) (subject to adjustment in the event of stock splits and other similar
events) subject to awards granted under the 1994 Plan which are not actually
issued because options granted under such plan expire or otherwise result in
shares not being issued or, in the case of restricted stock, are repurchased by
the Company pursuant to the terms of the applicable stock restriction agreement.
 
     The Incentive Plan provides for the grant of incentive stock options
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), nonstatutory stock options, restricted stock awards and
other stock-based awards (collectively, "Awards").
 
     Officers, employees, directors, consultants and advisors of the Company and
its subsidiaries are eligible to receive Awards under the Incentive Plan. Under
present law, however, incentive stock options may only be granted to employees.
The maximum number of shares with respect to which an Award may be granted to
any participant under the Incentive Plan may not exceed 400,000 shares per
calendar year.
 
     Optionees receive the right to purchase a specified number of shares of
Common Stock at a specified option price and subject to such other terms and
conditions as are specified in connection with the option grant. Options may be
granted at an exercise price which may be less than, equal to or greater than
the fair market value of the Common Stock on the date of grant. Under present
law, incentive stock options and options intended to qualify as
performance-based compensation under Section 162(m) of the Code may not be
granted at an exercise price less than the fair market value of the Common Stock
on the date of grant (or less than 110% of the fair market value in the case of
incentive stock options granted to optionees holding more than 10% of the voting
power of the Company). The Incentive Plan permits the Board of Directors to
determine the manner of payment of the exercise price of options, including
through payment by cash, check or in connection with a "cashless exercise"
through a broker, by surrender to the Company of shares of Common Stock, by
delivery to the Company of a promissory note, or by any combination of the
permitted forms of payment.
 
     As of March 31, 1998, approximately 115 persons would have been eligible to
receive Awards under the Incentive Plan, including the Company's four executive
officers and six non-employee directors. The granting of Awards under the
Incentive Plan is discretionary.
 
     The Incentive Plan is administered by the Board of Directors. The Board of
Directors has the authority to adopt, amend and repeal the administrative rules,
guidelines and practices relating to the Incentive Plan and to interpret the
provisions thereof. Pursuant to the terms of the Incentive Plan, the Board of
Directors may delegate authority under the Incentive Plan to one or more
committees of the Board of Directors and, subject to certain limitations, to one
or more executive officers of the Company. The Board of Directors has authorized
the Compensation Committee to administer the Incentive Plan, including the
granting of options to executive officers. Subject to any applicable limitations
contained in the Incentive Plan, the Board of Directors, the Compensation
 
                                       40
43
 
Committee or any other committee or executive officer to whom the Board of
Directors delegates authority, as the case may be, selects the recipients of
Awards and determines (i) the number of shares of Common Stock covered by
options and the dates upon which such options become exercisable, (ii) the
exercise price of options, (iii) the duration of options, and (iv) the number of
shares of Common Stock subject to any restricted stock or other stock-based
Awards and the terms and conditions of such Awards, including the conditions for
repurchase, issue price and repurchase price.
 
     In the event of a merger, liquidation or other Acquisition Event (as
defined in the Incentive Plan), the Board of Directors is authorized to provide
for outstanding options or other stock-based Awards to be assumed or substituted
for by the acquiror. If the acquiror refuses to assume or substitute for
outstanding Awards, they will accelerate, becoming fully exercisable and free of
restriction, prior to consummation of the Acquisition Event. In addition,
following an Acquisition Event, an assumed or substituted Award will accelerate
if the employment of its holder with the acquiror is terminated prior to the
first anniversary of the Aquisition Event other than "for cause," as defined in
the Incentive Plan.
 
     No Award may be granted under the Incentive Plan after June 2008, but the
vesting and effectiveness of Awards previously granted may extend beyond that
date. The Board of Directors may at any time amend, suspend or terminate the
Incentive Plan, except that no Award granted after an amendment of the Incentive
Plan and designated as subject to Section 162(m) of the Code by the Board of
Directors shall become exercisable, realizable or vested (to the extent such
amendment was required to grant such Award) unless and until such amendment is
approved by the Company's stockholders.
 
     The Company intends to grant options to purchase an aggregate of 200,000
shares of Common Stock to certain employees (none of whom is an executive
officer) on the effective date of this offering at a price per share equal to
the initial public offering price.
 
  1998 Employee Stock Purchase Plan
 
     The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors, subject to stockholder approval, in June
1998. The Purchase Plan authorizes the issuance of up to a total of 250,000
shares of Common Stock to participating employees.
 
     All employees of the Company, including directors of the Company who are
employees, and all employees of any participating subsidiaries, whose customary
employment is more than 20 hours per week and for more than five months in any
calendar year are eligible to participate in the Purchase Plan. Employees who
would immediately after the grant own 5% or more of the total combined voting
power or value of the stock of the Company or any subsidiary are not eligible to
participate. As of March 31, 1998, approximately 109 of the Company's employees
would have been eligible to participate in the Purchase Plan.
 
     On the first day of a designated payroll deduction period (the "Offering
Period"), the Company will grant to each eligible employee who has elected to
participate in the Purchase Plan an option to purchase the number of shares of
Common Stock equal to an amount (a whole percentage from 1% to 10% of such
employee's base pay) authorized by the employee to be deducted by the Company
from such employee's base pay during the Offering Period. On the last day of the
Offering Period, the employee is deemed to have exercised the option, at the
option exercise price, to the extent of accumulated payroll deductions. Under
the terms of the Purchase Plan, the option price is an amount equal to 85% of
the closing price (as defined) per share of the Common Stock on either the first
business day or the last business day of the Offering Period, whichever is
lower. In no event may an employee purchase in any one Offering Period a number
of shares which exceeds the number of shares determined by dividing (a) the
product of $2,083 and the number of whole months in such Offering Period by (b)
the closing price per share of the Common Stock on the commencement date of the
Offering Period. The Compensation Committee may, in its discretion, choose an
Offering
                                       41
44
 
Period of 12 months or less for each Offering and choose a different Offering
Period for each Offering.
 
     If an employee is not a participant on the last day of the Offering Period,
such employee is not entitled to exercise any option, and the amount of such
employee's accumulated payroll deductions will be refunded. An employee's rights
under the Purchase Plan terminate upon voluntary withdrawal from the Purchase
Plan at any time, or when such employee ceases employment for any reason, except
that upon termination of employment because of death, the employee's beneficiary
has certain rights to elect to exercise the option to purchase the shares which
the accumulated payroll deductions in the participant's account would purchase
at the date of death.
 
     Because participation in the Purchase Plan is voluntary, the Company cannot
now determine the number of shares of Common Stock to be purchased by any
particular current executive officer, by all current executive officers as a
group or by non-executive employees as a group.
 
401(k) PLAN
 
     The Company currently maintains a 401(k) salary reduction plan (the "401(k)
Plan") which is intended to qualify under Sections 401(a) and 401(k) of the
Internal Revenue Code of 1986. Employees working more than 20 hours per week are
eligible to begin participating in the 401(k) Plan on the first day of each
calendar quarter. All eligible executive officers, other than Mr. Person, have
elected to participate in the 401(k) Plan.
 
     Eligible employees electing to participate in the 401(k) Plan may defer a
portion of their compensation on a pre-tax basis, by contributing a percentage
thereof to the 401(k) Plan. The maximum contribution is prescribed in Section
401(k) of the Internal Revenue Code of 1986. The contribution limit for 1997 was
$9,500. The Company made matching contributions of $30.00 plus up to one percent
of the employee's gross earnings in 1997, subject to the foregoing limit.
Eligible employees who elect to participate in the 401(k) Plan are generally
vested in the Company's matching contribution after two years of service.
 
EMPLOYMENT AGREEMENTS
 
     Pursuant to a Key Employee Agreement dated October 2, 1995, as amended on
July 21, 1997, the Company agreed to employ Douglas K. Anderson as President and
Chief Executive Officer. The Company also agreed to maintain a policy on the
life of Mr. Anderson with a death benefit of $300,000 payable to a beneficiary
named by Mr. Anderson. Under the agreement, Mr. Anderson retained 175,000 shares
of Common Stock initially issued to him and surrendered the right to receive
175,000 shares in exchange for the grant of an incentive stock option to
purchase 175,000 shares of Common Stock at an exercise price of $0.45 per share
and supplemental compensation of $40,000 in 1997 and $60,000 in 1998. The
Company also granted to Mr. Anderson an additional option to purchase 20,000
shares of Common Stock at an exercise price of $0.45 per share. On March 2,
1998, the Company agreed to pay Mr. Anderson an annual base salary of not less
than $225,000 and a bonus of $50,000 in 1998 based on the achievement of certain
performance targets. The Company also agreed to provide, under certain
circumstances, for 24 months of salary continuation and acceleration of options
upon termination of Mr. Anderson's employment.
 
     Pursuant to a letter agreement dated April 10, 1997, the Company agreed to
employ John L. Person as Executive Vice President and Chief Operating Officer
and to grant Mr. Person an incentive stock option to purchase 100,000 shares of
Common Stock at an exercise price of $0.45 per share. On March 2, 1998, the
Company agreed to pay Mr. Person an annual base salary of $190,000 and a bonus
of up to $35,000 based on the achievement of certain performance targets. The
Company also agreed to provide, under certain circumstances, 12 months salary
continuation and acceleration of options upon termination of Mr. Person's
employment.
 
                                       42
45
 
     Pursuant to a letter agreement dated February 27, 1998, the Company agreed
to employ Richard J. Willemin as Senior Vice President and Chief Financial
Officer. The Company agreed to pay Mr. Willemin an annual base salary of
$150,000 and to grant Mr. Willemin an incentive stock option to purchase 100,000
shares of Common Stock at an exercise price of $2.75 per share. The Company also
agreed that in the event of a change in control of the Company the vesting of
all such options will be accelerated.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
     The current members of the Compensation Committee of the Board of Directors
are Messrs. Carlisle, McKay and Yanak. No executive officer of the Company has
served as a director or member of the compensation committee (or other committee
serving an equivalent function) of any other entity, whose executive officers
served as a director of or member of the Compensation Committee of the Board of
Directors.
 
     From January 1997 to June 1998, Mr. Naudon served as a member of the
Compensation Committee of the Board of Directors. Mr. Naudon is President, Chief
Executive Officer, a director and majority shareholder of Banking Spectrum, a
shareholder of the Company. See "Certain Transactions."
 
     Each of Messrs. Carlisle and McKay was appointed to the Board of Directors
as the designee of Menlo Ventures and Axiom, respectively. See "Certain
Transactions."
 
                              CERTAIN TRANSACTIONS
 
     In January 1994, the Company entered into an agreement with Banking
Spectrum Services, Inc., a shareholder of the Company, and Banking Spectrum,
Inc. (collectively, "Spectrum"), to provide and receive certain consulting and
support services. Pursuant to the agreement, the Company agreed to pay Spectrum
a three percent royalty based on license and maintenance revenues, as defined in
the agreement, in exchange for the use of Spectrum's products and contributions
to the design of the Company's software. In addition, the Company agreed to pay
Spectrum a five percent royalty based on license and maintenance revenues for
compliance and regulatory support provided to customers. In March 1998, the
Company and Spectrum entered into a distribution and termination agreement. The
March 1998 agreement releases the Company from any future royalty payments to
Spectrum in exchange for a cash payment of $100,000 and grants to affiliates of
Spectrum of fully-vested options to purchase 275,000 shares of Common Stock at
an exercise price of $0.45 per share. Mr. Naudon, a director of the Company, is
President and Chief Executive Officer, director and the majority shareholder of
Spectrum. The stock options were estimated by management to have a fair value of
approximately $1.6 million, and the Company recorded a contract termination
expense of approximately $1.3 million (net of amounts previously accrued) for
the three months ended March 31, 1998.
 
     In July 1992 and January 1994, the Company entered into Professional
Services Agreements (the "Prism Agreements") with Prince-Roth Information
Systems Management, Inc. T/A ("PRISM"). Under the PRISM Agreements, PRISM
provided data processing technical services to the Company, and the Company
deferred payment for such services under the agreements until June 1995 and June
1996, respectively. Pursuant to the terms of the PRISM Agreements, Messrs.
Gurney and Waggoner each received an aggregate of approximately $132,000.
Spouses of the shareholders of PRISM are shareholders of the Company.
 
     On February 3, 1994, the Company issued an aggregate of 1,000,000 shares of
Series A-1 Preferred Stock at $1.50 per share for an aggregate purchase price of
$1.5 million to Menlo Ventures and Menlo Entrepreneurs Fund VI, L.P. ("Menlo
Entrepreneurs"). In addition, the Company issued warrants to purchase 333,333
shares of Series A-2 Preferred Stock with an exercise price of $3.00 per share.
These warrants were exercised on September 13, 1994 for $999,999. Mr. Carlisle,
a director
 
                                       43
46
 
of the Company, is a general partner of MV Management VI, L.P. ("MVM"). MVM is a
general partner of Menlo Ventures and Menlo Entrepreneurs.
 
     On September 14, 1994, the Company issued 83,333 shares of Series A-2
Preferred Stock at $3.00 per share for $50,000 cash and a $200,000 promissory
note from Banking Spectrum. Mr. Naudon, a director of the Company, is President
and Chief Executive Officer, and a director and the majority shareholder of
Banking Spectrum.
 
     On May 12, 1995, the Company issued 166,667 shares of Series A-2 Preferred
Stock at $3.00 per share for an aggregate purchase price of $500,000 to
Connecticut Innovations, Incorporated ("CII").
 
     On September 1, 1995, the Company issued demand notes with an interest rate
of 10% per annum to Menlo Ventures and Menlo Entrepreneurs in an aggregate
original principal amount of $500,000. On November 15, 1995, the Company issued
demand notes with an interest rate of 10% per annum to Menlo Ventures and Menlo
Entrepreneurs in an aggregate original principal amount of $500,000. Each of the
notes was repaid on December 27, 1995.
 
     On December 27, 1995, the Company issued an aggregate of 1,543,334 shares
of Series B Preferred Stock at $3.00 per share for an aggregate purchase price
of $4,630,000 to certain investors, including Menlo Ventures, Menlo
Entrepreneurs, Axiom and CII. In addition, the Company issued warrants to
purchase 192,916 shares of Series B Preferred Stock at $4.00 per share. Warrants
to purchase 84,583 shares of Series B Preferred Stock were exercised by Menlo
Ventures and Menlo Entrepreneurs on March 6, 1998 for $338,332. The Company
granted each of Axiom and Menlo the right (which terminates upon the closing of
this offering) to designate one nominee for election to the Board of Directors.
Mr. McKay, a director of the Company, is Chief Executive Officer of Axiom
Venture Associates, Inc. ("Axiom Associates"), the general partner of Axiom.
 
     On October 23, 1996, the Company issued 1,222,222 shares of Series C
Preferred Stock at $4.50 per share for an aggregate purchase price of $5,500,000
to Aetna, Menlo Ventures, Menlo Entrepreneurs, Axiom and CII. In addition, the
Company issued warrants to purchase 152,778 shares of Series C Preferred Stock
at $6.00 per share. Warrants to purchase 41,667 shares of Series C Preferred
Stock were exercised by Menlo Ventures and Menlo Entrepreneurs on March 6, 1998
for $250,002. The Company granted Aetna the right (which terminates upon the
closing of this offering) to designate one nominee for election to the Board of
Directors. Mr. Clarke, a director of the Company, is Vice President, Private
Equity, of Aetna.
 
     On August 22, 1997, the Company issued 833,333 shares of Series D Preferred
Stock at $6.00 per share for an aggregate purchase price of $5,000,000 to BISYS.
In addition, the Company issued a warrant to purchase 416,667 shares of Series D
Preferred Stock at $6.00 per share. The Company granted BISYS the right (which
terminates upon the closing of this offering) to designate one nominee for
election to the Board of Directors. Concurrent with such preferred stock
offering, the Company entered into a software license and marketing and
distribution agreement with BISYS. See "Business -- Sales and Marketing." Mr.
Neville, a director of the Company, is President of TOTALPLUS, a division of
BISYS.
 
     The Company has adopted a policy providing that all material transactions
between the Company and its officers, directors and other affiliates must (i) be
approved by a majority of the members of the Company's Board of Directors and by
a majority of the disinterested members of the Company's Board of Directors and
(ii) be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
 
                                       44
47
 
                       PRINCIPAL AND SELLING STOCKHOLDERS
 
     The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of April 30, 1998, and as
adjusted to reflect the sale of the shares of Common Stock offered hereby, by
(i) each person or entity known to the Company to own beneficially more than 5%
of the Company's Common Stock, (ii) each of the directors of the Company, (iii)
each of the Named Executive Officers, (iv) all directors and executive officers
as a group and (v) each of the other Selling Stockholders. Except as indicated
below, none of these entities has a relationship with the Company or, to the
knowledge of the Company, any of the Underwriters or their respective
affiliates. Unless otherwise indicated, each person or entity named in the table
has sole voting power and investment power (or shares such power with his or her
spouse) with respect to all shares of capital stock listed as owned by such
person or entity. The address of each of the officers and directors of the
Company is c/o Open Solutions Inc., 300 Winding Brook Drive, Glastonbury, CT
06033.
SHARES BENEFICIALLY                       SHARES TO BE
                                                      OWNED                           BENEFICIALLY OWNED
                                              PRIOR TO OFFERING (1)      SHARES      AFTER OFFERING(1)(2)
                                              ----------------------     BEING      ----------------------
NAME OF BENEFICIAL OWNER                       NUMBER     PERCENTAGE   OFFERED(3)    NUMBER     PERCENTAGE
------------------------                      ---------   ----------   ----------   ---------   ----------
5% STOCKHOLDERS
MV Management VI, L.P.(4)...................  2,469,583      32.7%           --     2,469,583
  3000 Sand Hill Road
  Building 4, Suite 100
  Menlo Park, CA 94025
The BISYS Group, Inc.(5)....................  1,250,000      15.7%           --     1,250,000
  11 Greenway Plaza
  Houston, TX 77046
Axiom Venture Partners, L.P.(6).............    875,000      11.5%           --       875,000
  City Place II, 17th Floor
  Hartford, CT 06103
Aetna Life Insurance Company(7).............    750,000       9.8%           --       750,000
  151 Farmington Avenue
  Hartford, CT 06106
Carlos P. Naudon(8).........................    549,417       7.1%       55,000       494,417
Connecticut Innovations, Incorporated(9)....    479,167       6.3%           --       479,167
  999 West Street
  Rocky Hill, CT 06067
Lorraine H. Rothstein.......................    440,000       5.8%       88,000       352,000
  157 Arbour Circle
  Basking Ridge, NJ 07920
Graham H. Gurney(10)........................    437,522       5.5%           --       437,522
Ellen A. Dugan..............................    430,000       5.7%       40,000       390,000
  33 Country Oaks
  Lebanon, NJ 08833
Clifford I. Waggoner(11)....................    376,042       5.0%           --       376,042
OTHER DIRECTORS AND EXECUTIVE OFFICERS
Douglas K. Anderson(12).....................    329,513       4.3%           --       329,513
Douglas C. Carlisle(4)......................  2,469,583      32.7%           --     2,469,583
David M. Clarke(7)..........................    750,000       9.8%           --       750,000
Samuel F. McKay(6)..........................    875,000      11.5%           --       875,000
William W. Neville(5).......................  1,250,000      15.7%           --     1,250,000
John L. Person(13)..........................     27,083         *            --        27,083
Richard J. Willemin.........................         --        --            --            --
Richard P. Yanak(14)........................     10,417         *            --        10,417
All executive officers and directors as a
  group (11 persons)(15)....................  7,074,577      81.2%       55,000     7,019,577
---------------
   * Less than 1%
 
                                       45
48
 
 (1) The number of shares beneficially owned by each stockholder is determined
     under rules promulgated by the Securities and Exchange Commission, and the
     information is not necessarily indicative of beneficial ownership for any
     other purpose. Under such rules, beneficial ownership includes any shares
     as to which the individual or entity has sole or shared voting power or
     investment power and any shares as to which the individual or entity has
     the right to acquire beneficial ownership within 60 days after April 30,
     1998 through the exercise of any stock option, warrant or other right. The
     inclusion herein of such shares, however, does not constitute an admission
     that the named stockholder is a direct or indirect beneficial owner of such
     shares.
 
 (2) Assumes no exercise of the Underwriters' over-allotment option.
 
 (3) In the event that the over-allotment option is exercised in full, Messrs.
     Gurney and Waggoner will each sell 35,000 shares to the Underwriters. As a
     result of such sale, Messrs. Gurney and Waggoner will thereafter
     beneficially own 402,522 ([     ]%) and 341,042 ([     ]%), respectively,
     of the shares outstanding after this offering.
 
 (4) Consists of 2,433,003 shares held by Menlo Ventures and 36,580 shares held
     by Menlo Entrepreneurs. MVM is a general partner of Menlo Ventures and
     Menlo Entrepreneurs. Mr. Carlisle, a director of the Company, is a general
     partner of MVM. Mr. Carlisle disclaims beneficial ownership of the shares
     held by Menlo Ventures and Menlo Entrepreneurs, except to the extent of his
     pecuniary interests therein.
 
 (5) Includes 416,667 shares issuable upon the exercise of warrants held by
     BISYS which are exercisable within 60 days after April 30, 1998. Mr.
     Neville, a director of the Company, is President of TOTALPLUS, a division
     of BISYS.
 
 (6) Includes 97,222 shares issuable upon the exercise of warrants held by Axiom
     which are exercisable within 60 days after April 30, 1998. Mr. McKay, a
     director of the Company, is Chief Executive Officer of Axiom Venture
     Associates, Inc., the general partner of Axiom. Mr. McKay shares voting and
     investment power with respect to such shares with two other executive
     officers of Axiom Associates. Mr. McKay disclaims beneficial ownership of
     the shares held by Axiom, except to the extent of his pecuniary interest
     therein.
 
 (7) Includes 83,333 shares issuable upon the exercise of warrants held by the
     Aetna which are exercisable within 60 days after April 30, 1998. Mr.
     Clarke, a director of the Company, is Vice President, Private Equity of
     Aetna.
 
 (8) Consists of 251,762 shares held by Banking Spectrum, 22,895 shares subject
     to options held by Banking Spectrum which are exercisable within 60 days
     after April 30, 1998, 33,440 shares held by Mr. Naudon, 205,695 shares held
     by Mr. Naudon which are exercisable within 60 days after April 30, 1998,
     10,000 shares held by The Enrique S. Naudon Trust, 10,000 shares held by
     The Ignacio S. Naudon Trust and 15,625 shares held by Allister & Naudon
     Profit Sharing Pension Plan. Mr. Naudon, a director of the Company, is
     President and Chief Executive Officer, and a director and the majority
     shareholder of Banking Spectrum, a trustee of the Allister & Naudon Profit
     Sharing Plan, and Susan Steingass, his spouse, is a trustee of The Enrique
     S. Naudon Trust and The Ignacio S. Naudon Trust.
 
 (9) Includes 34,722 shares issuable upon the exercise of warrants held by CII
     which are exercisable within 60 days after April 30, 1998.
 
(10) Includes 87,522 shares subject to options held by Mr. Gurney which are
     exercisable within 60 days after April 30, 1998.
 
(11) Includes 26,042 shares subject to options held by Mr. Waggoner which are
     exercisable within 60 days after April 30, 1998.
 
(12) Includes 154,513 shares subject to options held by Mr. Anderson which are
     exercisable within 60 days after April 30, 1998.
 
                                       46
49
 
(13) Consists of shares subject to options held by Mr. Person which are
     exercisable within 60 days after April 30, 1998.
 
(14) Consists of shares subject to options held by Mr. Yanak which are
     exercisable within 60 days after April 30, 1998.
 
(15) Includes an aggregate of 1,166,091 shares of Common Stock subject to
     options or warrants which are exercisable within 60 days after April 30,
     1998.
 
                                       47
50
 
                          DESCRIPTION OF CAPITAL STOCK
 
     After the filing of the Company's Restated Certificate of Incorporation
upon the closing of this offering, the authorized capital stock of the Company
will consist of 50,000,000 shares of Common Stock, $0.01 par value per share,
and 5,000,000 shares of Preferred Stock, $0.01 par value per share ("Preferred
Stock"). As of March 31, 1998 (after giving effect to the conversion of all
outstanding shares of Convertible Preferred Stock into Common Stock to be
effected upon the closing of this offering), there were outstanding (i)
7,474,276 shares of Common Stock held by 35 stockholders of record, (ii) options
to purchase an aggregate of 1,643,125 shares of Common Stock and (iii) warrants
to purchase an aggregate of 636,111 shares of Common Stock ("Warrants").
 
     The following summary of certain provisions of the Company's Common Stock,
Preferred Stock, Warrants, Restated Certificate of Incorporation and Amended and
Restated By-laws (the "By-laws") is not intended to be complete and is qualified
by reference to the provisions of applicable law and to the Company's Restated
Certificate of Incorporation, By-laws and Warrants included as exhibits to the
Registration Statement of which this Prospectus is a part. See "Additional
Information."
 
COMMON STOCK
 
     Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the net
assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in this offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future. Certain holders of Common Stock have the
right to require the Company to effect the registration of their shares of
Common Stock in certain circumstances. See "Shares Eligible for Future Sale."
 
PREFERRED STOCK
 
     Under the terms of the Restated Certificate of Incorporation, the Board of
Directors is authorized, subject to any limitations prescribed by law, without
stockholder approval, to issue shares of Preferred Stock in one or more series.
Each such series of Preferred Stock shall have such rights, preferences,
privileges and restrictions, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall
be determined by the Board of Directors.
 
     The purpose of authorizing the Board of Directors to issue Preferred Stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding voting stock of the Company. The Company has no
present plans to issue any shares of Preferred Stock.
 
                                       48
51
 
WARRANTS
 
     As of March 31, 1998, the Company has outstanding warrants to purchase
108,333 shares of Series B Preferred Stock at an exercise price of $4.00 per
share, warrants to purchase 111,111 shares of Series C Preferred Stock at an
exercise price of $6.00 per share and a warrant to purchase 416,667 shares of
Series D Preferred Stock at an exercise price of $6.00 per share. The warrants
to purchase Series B Preferred Stock expire on December 27, 2000. The warrants
to purchase Series C Preferred Stock expire on October 23, 2001. The warrant to
purchase Series D Preferred Stock expires on August 22, 2001. All of these
warrants will become warrants to purchase Common Stock upon the closing of this
offering.
 
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
 
     The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. Section 203 prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. A "business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the interested stockholder. Subject to certain exceptions, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
 
     The Restated Certificate of Incorporation provides for the division of the
Board of Directors into three classes as nearly equal in size as possible with
staggered three-year terms. See "Management." In addition, the Restated
Certificate of Incorporation provides that directors may be removed only for
cause by the affirmative vote of holders of at least 75% of the votes which all
the stockholders would be entitled to cast in any annual election of directors
or class of directors. Under the Restated Certificate of Incorporation, any
vacancy on the Board of Directors, however occurring, including a vacancy
resulting from an enlargement of the Board of Directors, may only be filled by
vote of a majority of the directors then in office. The classification of the
Board of Directors and the limitations on the removal of directors and filling
of vacancies could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, control of the
Company.
 
     The Restated Certificate of Incorporation also provides that, after the
closing of this offering, any action required or permitted to be taken by the
stockholders of the Company at an annual meeting or special meeting of
stockholders may only be taken if it is properly brought before such meeting and
may not be taken by written action in lieu of a meeting. The Restated
Certificate of Incorporation further provides that special meetings of the
stockholders may only be called by the Chairman of the Board, the President or
the Board of Directors. Under the Company's By-laws, in order for any matter to
be considered "properly brought" before a meeting, a stockholder must comply
with certain requirements regarding advance notice and provide certain
information to the Company. The foregoing provisions could have the effect of
delaying until the next stockholders meeting stockholder actions which are
favored by the holders of a majority of the outstanding voting securities of the
Company. These provisions may also discourage another person or entity from
making a tender offer for the Common Stock, because such person or entity, even
if it acquired a majority of the outstanding voting securities of the Company,
would be able to take action as a stockholder (such as electing new directors or
approving a merger) only at a duly called stockholders' meeting, and not by
written consent.
 
     The General Corporation Law of Delaware provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or by-laws,
unless a corporation's certificate of incorporation or by-laws, as the case may
be, requires a greater percentage. The Restated Certificate of Incorporation and
the By-laws require the affirmative vote of holders of at least 75% of the votes
which all the stockholders would
 
                                       49
52
 
be entitled to cast in any annual election of directors or class of directors to
amend or repeal any of the provisions described in the prior two paragraphs.
 
     The Restated Certificate of Incorporation contains certain provisions
permitted under the General Corporation Law of Delaware relating to the
liability of directors. The provisions eliminate a director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation of
law. Further, the Restated Certificate of Incorporation contains provisions to
indemnify the Company's directors and officers to the fullest extent permitted
by the General Corporation Law of Delaware. The Company believes that these
provisions will assist the Company in attracting and retaining qualified
individuals to serve as directors.
 
TRANSFER AGENT AND REGISTRAR
 
     The transfer agent and registrar for the Common Stock is BankBoston, N.A.
 
                                       50
53
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Prior to this offering, there has been no public market for the securities
of the Company. Upon completion of this offering, based upon the number of
shares outstanding at March 31, 1998, there will be [               ] shares of
Common Stock of the Company outstanding (assuming no exercise of the
Underwriters' over-allotment option or outstanding warrants or options of the
Company). Of these shares, the [               ] shares sold in this offering
will be freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except that any
shares purchased by "affiliates" of the Company, as that term is defined in Rule
144 ("Rule 144") under the Securities Act ("Affiliates"), may generally only be
sold in compliance with the limitations of Rule 144 described below.
 
SALES OF RESTRICTED SHARES
 
     The remaining [               ] shares of Common Stock are deemed
"restricted securities" under Rule 144. Of the restricted securities,
approximately [               ] shares of Common Stock, which are not subject to
the 180-day lock-up agreements (the "Lock-up Agreements") with the
Representatives of the Underwriters, will be eligible for immediate sale in the
public market pursuant to Rule 144(k) under the Securities Act. Approximately
[               ] additional shares of Common Stock, which are not subject to
Lock-up Agreements, will be eligible for sale in the public market in accordance
with Rule 144 or Rule 701 under the Securities Act beginning 90 days after the
date of this Prospectus. Upon expiration of the Lock-up Agreements 180 days
after the date of this Prospectus, approximately [               ] additional
shares of Common Stock will be available for sale in the public market, subject
to the provisions of Rule 144 under the Securities Act.
 
     The officers and directors of the Company, and certain securityholders,
which executive officers, directors and securityholders in the aggregate hold
approximately [               ] shares of Common Stock (including
[               ] shares of Common Stock that may be acquired pursuant to the
exercise of options and warrants held by them) on the date of this Prospectus,
have agreed that, for a period of 180 days after the date of this Prospectus,
they will not sell, consent to sell or otherwise dispose of any shares of Common
Stock, or any shares convertible into or exchangeable for shares of Common
Stock, owned directly by such persons or with respect to which they have the
power of disposition, without the prior written consent of the Representatives
of the Underwriters.
 
     In general, under Rule 144 as currently in effect, beginning 90 days after
the effective date of the Registration Statement of which this Prospectus is a
part, a stockholder, including an Affiliate, who has beneficially owned his or
her restricted securities (as that term is defined in Rule 144) for at least one
year from the later of the date such securities were acquired from the Company
or (if applicable) the date they were acquired from an Affiliate is entitled to
sell, within any three-month period, a number of such shares that does not
exceed the greater of 1% of the then outstanding shares of Common Stock
(approximately [               ] shares immediately after this offering) or the
average weekly trading volume in the Common Stock during the four calendar weeks
preceding the date on which notice of such sale was filed under Rule 144,
provided certain requirements concerning availability of public information,
manner of sale and notice of sale are satisfied. In addition, under Rule 144(k),
if a period of at least two years has elapsed between the later of the date
restricted securities were acquired from the Company or (if applicable) the date
they were acquired from an Affiliate of the Company, a stockholder who is not an
Affiliate of the Company at the time of sale and has not been an Affiliate of
the Company for at least three months prior to the sale is entitled to sell the
shares immediately without compliance with the foregoing requirements under Rule
144.
 
     Securities issued in reliance on Rule 701 (such as shares of Common Stock
acquired pursuant to the exercise of certain options granted under the Company's
stock plans) are also restricted securities and, beginning 90 days after the
effective date of the Registration Statement of which this Prospectus is a part,
may be sold by stockholders other than Affiliates of the Company subject only to
 
                                       51
54
 
the manner of sale provisions of Rule 144 and by Affiliates under Rule 144
without compliance with its one-year holding period requirement.
 
OPTIONS
 
     The Company intends to file registration statements on Form S-8 with
respect to the shares of Common Stock issuable under the 1994 Plan, the
Incentive Plan and the Purchase Plan promptly following the consummation of this
offering. Shares issued upon the exercise of stock options after the effective
date of the Form S-8 registration statements will be eligible for resale in the
public market without restriction, subject to Rule 144 limitations applicable to
Affiliates and the Lock-Up Agreements noted above, if applicable.
 
REGISTRATION RIGHTS
 
     Pursuant to an Amended and Restated Investors' Rights Agreement dated as of
August 22, 1997 among the Company and certain persons and entities (the
"Rightsholders"), including Aetna, Axiom, Banking Spectrum, BISYS, CII and Menlo
Ventures and Menlo Entrepreneurs, such Rightsholders will be entitled following
the offering to certain rights with respect to the registration under the
Securities Act of a total of approximately 5,944,583 shares of Common Stock,
including the shares issuable upon exercise of outstanding warrants (the
"Registrable Stock"). The Amended and Restated Investors' Rights Agreement
generally provides that, in the event the Company proposes to register any of
its securities under the Securities Act, the Rightsholders shall be entitled to
include Registrable Stock in such Registration, subject to the right of the
managing underwriter of any underwritten offering to limit for marketing reasons
the number of shares of Registrable Stock included in such "piggyback"
registration period.
 
     The Rightsholders may, upon the request of holders of Registrable Stock
having an aggregate offering price of at least $2,000,000, require the Company
to prepare and file a registration statement under the Securities Act with
respect to their shares of Registrable Stock at any time after this offering.
The Company need effect only two such demand registrations and is not required
to file a demand registration statement within one hundred eighty days after the
effective date of any other registration statement filed by the Company.
 
EFFECT OF SALES OF SHARES
 
     Prior to this offering, there has been no public market for the Common
Stock, and no prediction can be made as to the effect, if any, that market sales
of shares of Common Stock or the availability of shares for sale will have on
the market price of the Common Stock prevailing from time to time. Nevertheless,
sales of significant numbers of shares of the Common Stock in the public market
could adversely affect the market price of the Common Stock and could impair the
Company's future ability to raise capital through an offering of its equity
securities.
 
                                       52
55
 
                                  UNDERWRITING
 
     Subject to the terms and conditions of the Underwriting Agreement, the
Underwriters named below (the "Underwriters"), through their Representatives, BT
Alex. Brown Incorporated, Credit Suisse First Boston Corporation and UBS
Securities LLC, have severally agreed to purchase from the Company and the
Selling Stockholders the following respective numbers of shares of Common Stock
at the initial public offering price less the underwriting discounts and
commissions set forth on the cover page of this Prospectus:
NUMBER
UNDERWRITER                                                   OF SHARES
-----------                                                   ---------
BT Alex. Brown Incorporated.................................
Credit Suisse First Boston Corporation......................
UBS Securities LLC..........................................
 
                                                              --------
          Total.............................................
                                                              ========
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all shares of the Common Stock offered hereby if any
such shares are purchased.
 
     The Company and the Selling Stockholders have been advised by the
Representatives of the Underwriters that the Underwriters propose to offer the
shares of Common Stock to the public at the initial public offering price set
forth on the cover page of this Prospectus, and to certain dealers at such price
less a concession not in excess of $[               ] per share. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $[               ] per share to certain other dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the Representatives of the Underwriters.
 
     The Company and certain stockholders of the Company (other than the Selling
Stockholders) have granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to
[               ] additional shares of Common Stock at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this Prospectus. To the extent that the Underwriters exercise such option, each
of the Underwriters will have a firm commitment to purchase approximately the
same percentage thereof that the number of shares of Common Stock to be
purchased by it shown in the above table bears to [               ], and such
stockholders will be obligated, pursuant to the option, to sell such shares to
the Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the Common Stock offered
hereby. If purchased, the Underwriters will offer such additional shares on the
same terms as those on which the [               ] shares are being offered.
 
     The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company, the Selling Stockholders and certain other
stockholders against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended.
 
                                       53
56
 
     The Company, each of its officers and directors, and certain of its
stockholders, including all of the Selling Stockholders, have agreed, subject to
certain exceptions, not to offer, sell, pledge, contract to sell (including any
short sale), grant any option to purchase or otherwise dispose of any shares of
Common Stock or any shares which may be issued upon exercise of a stock option
or warrant or conversion of any convertible securities into Common Stock or
enter into any hedging transaction relating to the Common Stock for a period of
180 days after the date of this Prospectus without the prior written consent of
the Representatives of the Underwriters. The Representatives of the Underwriters
may, in their sole discretion and at any time without notice, release all or any
portion of the securities subject to Lock-up Agreements. See "Shares Eligible
for Future Sale."
 
     The Representatives have advised the Company, the Selling Stockholders and
certain other stockholders that the Underwriters do not intend to confirm sales
to any accounts over which they exercise discretionary authority.
 
     In connection with this offering, the Underwriters and other persons
participating in this offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the Common Stock. Specifically, the
Underwriters may over-allot in connection with this offering, creating a short
position in Common Stock for their own account. To cover over-allotments or to
stabilize the price of the Common Stock, the Underwriters may bid for, and
purchase, shares of Common Stock in the open market. The Underwriters may also
impose a penalty bid whereby they may reclaim selling concessions allowed to an
Underwriter or a dealer for distributing Common Stock in this offering, if the
Underwriters repurchase previously distributed Common Stock in transactions to
cover their short position, in stabilization transactions or otherwise. Finally,
the Underwriters may bid for, and purchase, shares of Common Stock in market
making transactions. These activities may stabilize or maintain the market price
of the Common Stock above market levels that may otherwise prevail. The
Underwriters are not required to engage in these activities and may end any of
these activities at any time.
 
     Prior to this offering, there has been no public market for the Common
Stock of the Company. Consequently, the initial public offering price for the
Common Stock will be determined by negotiations among the Company,
representatives of the Selling Stockholders and certain other stockholders and
the Representatives of the Underwriters. Among the factors to be considered in
such negotiations are the prevailing market conditions, the results of
operations of the Company in recent periods, the market capitalizations and
stages of development of other companies which the Company, representatives of
the Selling Stockholders and certain other stockholders and the Representatives
of the Underwriters believe to be comparable to the Company, estimates of the
business potential of the Company, the present state of the Company's
development and other factors deemed relevant. Application has been made for
quotation of the Common Stock on the Nasdaq National Market under the symbol
"OSIF."
 
                                 LEGAL MATTERS
 
     The validity of the shares of Common Stock offered by the Company, the
Selling Stockholders and certain other stockholders hereby will be passed upon
for the Company by Hale and Dorr LLP, Boston, Massachusetts, and for the
Underwriters by Goodwin, Procter & Hoar LLP, Boston, Massachusetts.
 
                                    EXPERTS
 
     The Company's financial statements as of December 31, 1997 and 1996 and for
each of the three years in the period ended December 31, 1997 included in this
Prospectus have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
 
                                       54
57
 
                             ADDITIONAL INFORMATION
 
     The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (which term shall include all amendments,
exhibits, schedules and supplements thereto) on Form S-1 under the Securities
Act with respect to the shares of Common Stock offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission, to
which Registration Statement reference is hereby made. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.
 
     The Registration Statement and the exhibits thereto may be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the regional offices of the Commission located at Seven World
Trade Center, 13th Floor, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. In addition, the Company is
required to file electronic versions to these documents with the Commission
through the Commission's Electronic Data Gathering, Analysis, and Retrieval
(EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
 
                                       55
58
 
                              OPEN SOLUTIONS INC.
 
                         INDEX TO FINANCIAL STATEMENTS
PAGE
                                                              ----
Report of Independent Accountants...........................  F-2
Balance Sheet at December 31, 1996, 1997 and March 31, 1998
  (unaudited)...............................................  F-3
Statement of Operations for the years ended December 31,
  1995, 1996 and 1997 and for the three months ended March
  31, 1997 (unaudited) and March 31, 1998 (unaudited).......  F-4
Statement of Cash Flows for the years ended December 31,
  1995, 1996 and 1997 and for the three months ended March
  31, 1997 (unaudited) and March 31, 1998 (unaudited).......  F-5
Statement of Changes in Stockholders' Equity (Deficit) for
  the years ended December 31, 1995, 1996 and 1997 and for
  the three months ended March 31, 1998 (unaudited).........  F-6
Notes to Financial Statements...............................  F-7
F-1
59
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholders
of Open Solutions Inc.
 
     In our opinion, the accompanying balance sheet and the related statements
of operations, of cash flows and of changes in stockholders' equity (deficit)
present fairly, in all material respects, the financial position of Open
Solutions Inc. at December 31, 1997 and 1996, and the results of its operations,
its cash flows and changes in stockholders' equity (deficit) for each of the
three years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP
Hartford, Connecticut
April 6, 1998
 
                                       F-2
60
 
                              OPEN SOLUTIONS INC.
 
                                 BALANCE SHEET
MARCH 31, 1998
                                                                             -----------------------------
                                                                                               PRO FORMA
                                                        DECEMBER 31,                         STOCKHOLDERS'
                                                  ------------------------                      EQUITY
                                                     1996         1997          ACTUAL         (NOTE 2)
                                                  ----------   -----------   -------------   -------------
                                                                             (UNAUDITED)      (UNAUDITED)
ASSETS
Current assets:
  Cash and cash equivalents.....................  $4,437,657   $ 7,596,183    $ 7,346,474
  Restricted cash (Note 2)......................      94,241       281,090             --
  Accounts receivable (Note 2)..................   1,448,573     1,505,940      2,205,362
  Prepaid expenses and other....................     135,210       232,807        306,716
  Deferred project costs (Note 2)...............     458,675            --             --
                                                  ----------   -----------    -----------     -----------
      Total current assets......................   6,574,356     9,616,020      9,858,552
Fixed assets, net (Notes 2 and 3)...............     767,390     1,153,090      1,260,590
Software development costs, net (Note 2)........     204,035       533,343        566,514
                                                  ----------   -----------    -----------     -----------
      Total assets..............................  $7,545,781   $11,302,453    $11,685,656
                                                  ==========   ===========    ===========     ===========
LIABILITIES, MANDATORILY REDEEMABLE
  CONVERTIBLE PREFERRED STOCK
  AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable..............................  $  227,887   $   104,249    $   422,364
  Royalties payable (Note 13)...................      68,315       378,981             --
  Accrued expenses (Note 4).....................     372,108     1,081,917        716,704
  Note payable (Note 5).........................          --       175,000        150,000
  Current portion of long-term debt (Note 6)....          --        34,668         26,001
  Deferred revenue (Note 2).....................   1,005,129     1,643,457      2,311,132
                                                  ----------   -----------    -----------     -----------
      Total current liabilities.................   1,673,439     3,418,272      3,626,201
                                                  ----------   -----------    -----------     -----------
Accrued rent expense (Note 2)...................      77,731       100,823        106,061
Long-term debt, less current portion (Note 6)...          --        57,778         57,778
                                                  ----------   -----------    -----------     -----------
                                                      77,731       158,601        163,839
                                                  ----------   -----------    -----------     -----------
Total liabilities...............................   1,751,170     3,576,873      3,790,040
Commitments and contingencies (Note 10).........
Mandatorily redeemable convertible preferred
  stock (Note 7)................................  10,573,480    15,551,214     16,139,549     $        --
 
Stockholders' equity (deficit) (Note 8, 9 and
  14):
  Preferred stock, $0.01 par value; 1,416,667,
    1,416,667, 1,416,667, and 0 shares
    authorized; 1,416,667, 1,416,667, 1,416,667,
    and 0 shares issued and outstanding.........      14,167        14,167         14,167              --
  Common stock, $0.01 par value; 8,580,417,
    9,830,417, 19,055,417, and 50,000,000 shares
    authorized; 2,115,000, 2,165,325, 2,165,804
    and 7,474,276 shares issued and
    outstanding.................................      21,150        21,653         21,658          74,743
  Additional paid-in capital....................   2,674,465     2,682,569      4,291,481      20,392,112
  Accumulated deficit...........................  (7,488,651)  (10,544,023)   (12,571,239)    (12,571,239)
                                                  ----------   -----------    -----------     -----------
      Total stockholders' equity (deficit)......  (4,778,869)   (7,825,634)    (8,243,933)    $ 7,895,616
                                                  ----------   -----------    -----------     ===========
Total liabilities, mandatorily redeemable
  convertible preferred stock and stockholders'
  equity (deficit)..............................  $7,545,781   $11,302,453    $11,685,656
                                                  ==========   ===========    ===========
The accompanying notes are an integral part of these financial statements.
                                       F-3
61
 
                              OPEN SOLUTIONS INC.
 
                            STATEMENT OF OPERATIONS
THREE MONTHS ENDED
                                                        YEAR ENDED DECEMBER 31,                   MARCH 31,
                                                ---------------------------------------   -------------------------
                                                   1995          1996          1997          1997          1998
                                                -----------   -----------   -----------   -----------   -----------
                                                                                          (UNAUDITED)   (UNAUDITED)
Revenues (Note 2):
  Software license............................  $   212,653   $   801,532   $ 4,099,722   $   693,145   $ 1,158,310
  Service and maintenance.....................       55,488       217,861     2,549,890       289,128     1,175,594
                                                -----------   -----------   -----------   -----------   -----------
         Total revenues.......................      268,141     1,019,393     6,649,612       982,273     2,333,904
                                                -----------   -----------   -----------   -----------   -----------
Cost of revenues:
  Software license............................      223,015       507,094     1,160,005       218,976       332,675
  Service and maintenance.....................      476,991     1,530,528     3,150,536       732,155       987,697
                                                -----------   -----------   -----------   -----------   -----------
         Total cost of revenues...............      700,006     2,037,622     4,310,541       951,131     1,320,372
                                                -----------   -----------   -----------   -----------   -----------
Operating expenses:
  Sales and marketing.........................      398,496     1,050,831     2,132,410       458,562       784,274
  Product development.........................      660,510     1,059,879     1,901,892       471,681       443,192
  General and administrative..................      399,576       645,334     1,569,568       323,698       642,922
  Contract termination (Note 13)..............           --            --            --            --     1,265,292
                                                -----------   -----------   -----------   -----------   -----------
         Total operating expenses.............    1,458,582     2,756,044     5,603,870     1,253,941     3,135,680
                                                -----------   -----------   -----------   -----------   -----------
Loss from operations..........................   (1,890,447)   (3,774,273)   (3,264,799)   (1,222,799)   (2,122,148)
Interest income (expense), net................       (4,506)      135,801       209,427        43,644        94,932
                                                -----------   -----------   -----------   -----------   -----------
Net loss......................................  $(1,894,953)  $(3,638,472)  $(3,055,372)  $(1,179,155)  $(2,027,216)
                                                ===========   ===========   ===========   ===========   ===========
Net loss per common share (basic and diluted)
  (Note 2)....................................  $     (0.98)  $     (1.73)  $     (1.42)  $     (0.55)  $     (0.94)
                                                ===========   ===========   ===========   ===========   ===========
Weighted average common shares outstanding
  (Note 2)....................................    1,935,644     2,102,568     2,155,333     2,136,056     2,165,546
                                                ===========   ===========   ===========   ===========   ===========
The accompanying notes are an integral part of these financial statements.
                                       F-4
62
 
                              OPEN SOLUTIONS INC.
 
                            STATEMENT OF CASH FLOWS
THREE MONTHS ENDED
                                                        YEAR ENDED DECEMBER 31,                   MARCH 31,
                                                ---------------------------------------   -------------------------
                                                   1995          1996          1997          1997          1998
                                                -----------   -----------   -----------   -----------   -----------
                                                                                          (UNAUDITED)   (UNAUDITED)
Cash flows from operating activities:
  Net loss....................................  $(1,894,953)  $(3,638,472)  $(3,055,372)  $(1,179,155)  $(2,027,216)
  Adjustments to reconcile net loss to net
    cash used by operating activities:
    Depreciation and amortization.............       53,865       147,790       352,326        55,452       148,907
    Compensation expense related to stock and
      options granted.........................           --        52,500        85,526        41,149        23,130
    Options granted to Banking Spectrum (Note
      13).....................................           --            --            --            --     1,608,750
    Changes in operating assets and
      liabilities:
      Restricted cash.........................           --       (94,241)     (186,849)     (214,283)      281,090
      Accounts receivable.....................     (146,240)   (1,302,333)      (57,367)     (181,428)     (699,422)
      Prepaid expenses and other..............      (17,054)     (110,005)      (97,597)      (20,919)      (73,909)
      Deferred project costs..................           --      (458,675)      458,675       126,758            --
      Accounts payable and accrued expenses...      264,158       371,774       500,645       (16,449)      (70,228)
      Royalties payable.......................           --        68,315       310,666       (68,315)     (378,981)
      Deferred revenue........................           --       968,254       638,328       175,135       667,675
      Accrued rent expense....................           --        77,731        23,092         6,843         5,238
                                                -----------   -----------   -----------   -----------   -----------
      Net cash used by operating activities...   (1,740,224)   (3,917,362)   (1,027,927)   (1,275,212)     (514,966)
                                                -----------   -----------   -----------   -----------   -----------
Cash flows from investing activities:
  Purchases of fixed assets...................      (92,523)     (696,874)     (597,256)      (81,852)     (181,592)
  Software development costs..................     (119,514)     (153,209)     (215,078)      (34,977)     (107,986)
                                                -----------   -----------   -----------   -----------   -----------
      Net cash used by investing activities...     (212,037)     (850,083)     (812,334)     (116,829)     (289,578)
                                                -----------   -----------   -----------   -----------   -----------
Cash flows from financing activities:
  Net proceeds from the sale of preferred
    stock.....................................    5,092,000     5,481,480     4,977,734            --            --
  Proceeds from exercise of stock options.....        1,500            --         8,607         6,938           167
  Proceeds from exercise of warrants..........           --            --            --                     588,335
  Proceeds from short-term debt...............    1,000,000            --            --            --            --
  Payments of short-term debt.................   (1,000,000)     (250,000)           --            --       (33,667)
  Proceeds from long-term debt................           --            --       104,002            --            --
  Payments of long-term debt..................           --            --       (91,556)           --            --
  Proceeds from subscription note
    receivable................................      120,000        60,000            --            --            --
                                                -----------   -----------   -----------   -----------   -----------
      Net cash provided by financing
         activities...........................    5,213,500     5,291,480     4,998,787         6,938       554,835
                                                -----------   -----------   -----------   -----------   -----------
  Net increase (decrease) in cash and cash
    equivalents...............................    3,261,239       524,035     3,158,526    (1,385,103)     (249,709)
  Cash and cash equivalents at beginning of
    period....................................      652,383     3,913,622     4,437,657     4,437,657     7,596,183
                                                -----------   -----------   -----------   -----------   -----------
  Cash and cash equivalents at end of
    period....................................  $ 3,913,622   $ 4,437,657   $ 7,596,183   $ 3,052,554   $ 7,346,474
                                                ===========   ===========   ===========   ===========   ===========
Supplemental disclosure
  Cash paid for:
    Interest..................................  $    21,781   $     3,438   $     9,148   $     1,732   $     2,143
    Income taxes..............................        4,156        25,923        19,172            --            --
See discussion of non-cash transaction in Note 5.
 
   The accompanying notes are an integral part of these financial statements.
                                       F-5
63
 
                              OPEN SOLUTIONS INC.
 
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
PREFERRED STOCK        COMMON STOCK       ADDITIONAL                        TOTAL
                               -------------------   -------------------     PAID-IN     ACCUMULATED     STOCKHOLDERS'
                                SHARES     AMOUNT     SHARES     AMOUNT      CAPITAL       DEFICIT      EQUITY (DEFICIT)
                               ---------   -------   ---------   -------   -----------   ------------   ----------------
Balance -- December 31,
  1994.......................  1,416,667  $14,167    1,930,000  $19,300    $ 2,442,315   $(1,955,226)     $   520,556
  Exercise of stock
    options..................         --       --       10,000      100          1,400            --            1,500
  Proceeds from subscription
    note receivable..........         --       --           --       --        120,000            --          120,000
  Net loss...................         --       --           --       --             --    (1,894,953)      (1,894,953)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- December 31,
  1995.......................  1,416,667   14,167    1,940,000   19,400      2,563,715    (3,850,179)      (1,252,897)
  Issuance of common stock
    (Note 8).................         --       --      175,000    1,750         50,750            --           52,500
  Proceeds from subscription
    note receivable..........         --       --           --       --         60,000            --           60,000
  Net loss...................         --       --           --       --             --    (3,638,472)      (3,638,472)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- December 31,
  1996.......................  1,416,667   14,167    2,115,000   21,150      2,674,465    (7,488,651)      (4,778,869)
  Exercise of stock
    options..................         --       --       50,325      503          8,104            --            8,607
  Net loss...................         --       --           --       --             --    (3,055,372)      (3,055,372)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- December 31,
  1997.......................  1,416,667   14,167    2,165,325   21,653      2,682,569   (10,544,023)      (7,825,634)
  Exercise of stock
    options..................         --       --          479        5            162            --              167
  Issuance of stock options
    (Note 13)................         --       --           --       --      1,608,750            --        1,608,750
  Net loss...................         --       --           --       --             --    (2,027,216)      (2,027,216)
                               ---------   -------   ---------   -------   -----------   ------------     -----------
Balance -- March 31, 1998
  (unaudited)................  1,416,667  $14,167    2,165,804  $21,658     $4,291,481  $(12,571,239)     $(8,243,933)
                               =========   =======   =========   =======   ===========   ============     ===========
The accompanying notes are an integral part of these financial statements.
                                       F-6
64
 
                              OPEN SOLUTIONS INC.
 
                         NOTES TO FINANCIAL STATEMENTS
 
NOTE 1 -- THE COMPANY
 
     Open Solutions Inc. (the "Company") is a provider of client/server core
processing software and related professional services to small to mid-size banks
and credit unions. The Company's current products operate in a Microsoft Windows
NT environment using an Oracle relational database.
 
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Cash and Cash Equivalents
 
     Cash and cash equivalents include cash on deposit with banks, as well as
short-term investments with original maturities of 90 days or less.
 
  Restricted Cash
 
     As of December 31, 1996 and 1997, certain cash amounts were restricted by a
customer in an escrow account. In February 1998, the restriction was removed.
 
  Accounts Receivable
 
     Receivables are net of the allowance for doubtful accounts. As of December
31, 1996 and 1997 and March 31, 1998, the allowance for doubtful accounts was
approximately $86,000, $214,000 and $334,000 (unaudited), respectively.
 
  Fixed Assets
 
     Fixed assets are stated at cost and are depreciated using the straight-line
method over the estimated useful lives of the assets, ranging from 5 and 7
years. Leasehold improvements are amortized over the shorter of the term of the
lease or the useful life of the asset.
 
  Software Development Costs
 
     Software development costs for new software products and additional modules
for existing software are expensed as incurred until technological feasibility
is established. Technological feasibility is defined as the point in time at
which the Company has a working model of the product. Software development costs
incurred subsequent to the establishment of technological feasibility and prior
to general release of the product are capitalized and amortized based on the
greater of the amount computed using (a) the ratio that current gross revenues
for a product bear to the total of current and anticipated future gross revenues
for that product or (b) the straight-line method over the remaining estimated
economic life of the product, generally three years. Capitalized software
development costs were $153,209, $455,078 and $107,986 (unaudited) for years
ended December 31, 1996, 1997 and for the three months ended March 31, 1998,
respectively. Amortization expense was $19,919, $48,769, $125,770, $9,694
(unaudited) and $74,815 (unaudited) for the years ended December 31, 1995, 1996,
1997 and the three months ended March 31, 1997 and 1998, respectively.
Accumulated amortization was $68,688, $194,458, and $269,273 (unaudited) as of
December 31, 1996, 1997 and March 31, 1998, respectively.
 
  Accrued Rent Expense
 
     Accrued rent expense results from the recognition of rent expense on a
straight-line basis relating to a seven year lease agreement with escalating
payments expiring April 2003.
 
                                       F-7
65
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
  Pro Forma Stockholders' Equity (Unaudited)
 
     If the offering contemplated in this Prospectus is consummated, all of the
Company's preferred stock outstanding at the closing date will be converted into
an equal number of shares of common stock. The unaudited pro forma stockholders'
equity as of March 31, 1998 reflects the conversion of all outstanding preferred
stock into 5,308,472 shares of common stock.
 
  Revenue Recognition
 
     The Company generates revenues from licensing the rights to use its
software products and certain third-party software products to end users. The
Company also generates revenues from customer support and maintenance, and from
implementation and training services provided to customers.
 
     Effective January 1, 1997 the Company early adopted AICPA Statement of
Position 97-2, "Software Revenue Recognition" (SOP 97-2). Under SOP 97-2, the
Company recognizes software license revenue when a noncancelable license
agreement has been executed, fees are fixed and determinable, the software has
been delivered, and accepted by the customer if acceptance is required by the
contract and other than perfunctory, and collection is considered probable.
Prior to 1997, the Company recognized software license revenue in accordance
with AICPA Statement of Position 91-1, "Software Revenue Recognition" (SOP
91-1). Under SOP 91-1, the Company recognized software license revenue when the
software was delivered, collectibility was probable and no other significant
post delivery obligations remained.
 
     Maintenance revenues are recognized ratably over the maintenance period,
generally one year. Revenues from implementation and training services are
recognized as services are performed. The Company enters into contracts which
provide both license and service elements. As such service elements are not
essential to functionality of the software, in accordance with SOP 97-2, the
license fees are generally recognized upon delivery and the service revenues are
recognized when performed.
 
     Deferred revenue is comprised of payments received in advance of product
delivery, maintenance and other services which have been paid by customers prior
to the services being performed. Deferred project costs are comprised of costs
associated with projects in process for which revenue has not yet been
recognized.
 
     The Company receives royalties from several software vendors for marketing
referrals. Royalty income is recognized at the time the software vendor receives
payment from its customer, and such income is included in service and
maintenance revenue.
 
  Income Taxes
 
     The Company uses the liability method of accounting for income taxes, as
set forth in Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Under this method, deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary differences
between the financial statement carrying amounts and the tax basis of the assets
and liabilities and the net operating loss carryforwards using presently enacted
tax rates.
 
  Earnings Per Share
 
     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" (EPS) (SFAS 128) which specifies the computation,
presentation and disclosure requirements for earnings per share of entities with
publicly held common stock or potential common stock. SFAS 128 is effective for
financial statements for both interim and annual
 
                                       F-8
66
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
periods ended after December 15, 1997. The statement defines two earnings per
share calculations, basic and diluted. Basic EPS is computed by dividing income
available to common stock by the weighted average number of common shares
outstanding; diluted EPS is computed by giving effect to all dilutive potential
common shares that were outstanding during the period. The calculation of
diluted EPS is similar to basic EPS except both the numerator and denominator
are increased for the conversion of potential common shares. Dilutive common
share equivalents include stock options, warrants, and convertible preferred
stock.
 
     The 1995, 1996, 1997 and March 1998 calculations of diluted EPS do not
include the exercise of stock options, conversion of preferred stock or the
exercise of warrants as the effect on diluted earnings per share would have been
antidilutive.
 
  Concentration of Credit Risk
 
     Financial instruments which potentially expose the Company to
concentrations of credit risk are limited to accounts receivable. Two customers,
four customers, two customers, and three customers, respectively, each
represented 10% or more of the Company's total revenues, or an aggregate of 98%,
94%, 32%, and 48% (unaudited) of total revenues for the years ended December 31,
1995, 1996, and 1997 and for the three months ended March 31, 1998,
respectively. Five customers represented approximately 59%(unaudited) of the
Company's total accounts receivable at March 31, 1998. The Company maintains
reserves for potential credit risks and otherwise controls this risk through
credit approvals and monitoring procedures.
 
  Stock Based Compensation
 
     The Company applies APB Opinion 25 and related interpretations in
accounting for its stock option plan. Under APB 25, compensation expense is
recognized to the extent that the fair market value of the underlying stock on
the date of grant exceeds the exercise price of the employee stock option.
Additional disclosures required under Financial Accounting Standards Board
Statement No. 123 "Accounting for Stock-Based Compensation" (SFAS 123), are
included in Note 9, Stock Option Plan.
 
  Use of Estimates
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
  New Accounting Pronouncements
 
     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 applies to all
companies and is effective for fiscal years beginning after December 15, 1997.
SFAS 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 investment by owners and distributions to
owners. The Company has adopted SFAS 130 beginning January 1, 1998. For the
three months ended March 31, 1998, comprehensive loss was the same as net loss.
 
                                       F-9
67
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     In June 1997, the Financial Accounting Standards Board issued Statement No.
131 "Disclosures about Segments of an Enterprise and Related Information" (SFAS
131). SFAS 131 applies to all public companies and is effective for fiscal years
beginning after December 15, 1997. SFAS 131 requires that business segment
financial information be reported in the financial statements utilizing the
management approach. 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 Company has adopted SFAS 131 beginning
January 1, 1998. The Company's operations are currently managed all within one
segment.
 
     Unaudited Interim Financial Statements.  The financial statements as of
March 31, 1998 and for the three months ended March 31, 1997 and 1998 are
unaudited and include all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of the results for such interim periods. The results of operations
for the three months ended March 31, 1998 are not necessarily indicative of the
results to be expected for any future period.
 
NOTE 3 -- FIXED ASSETS
DECEMBER 31,
                                       ---------------------    MARCH 31,
                                         1996        1997         1998
                                       --------   ----------   -----------
                                                               (UNAUDITED)
Computer equipment...................  $633,664   $1,106,892   $1,233,036
Office furniture and equipment.......   112,262      198,200      235,581
Leasehold improvements...............   186,855      239,945      258,013
                                       --------   ----------   ----------
                                        932,781    1,545,037    1,726,630
Less: accumulated depreciation.......  (165,391)    (391,947)    (466,040)
                                       --------   ----------   ----------
                                       $767,390   $1,153,090   $1,260,590
                                       ========   ==========   ==========
Depreciation expense was $33,946, $99,021 and $226,556, for the years ended
December 31, 1995, 1996 and 1997, respectively, and $45,758 (unaudited) and
$74,092 (unaudited) for the three months ended March 31, 1997 and 1998,
respectively.
 
NOTE 4 -- ACCRUED EXPENSES
DECEMBER 31,
                                       ---------------------    MARCH 31,
                                         1996        1997         1998
                                       --------   ----------   -----------
                                                               (UNAUDITED)
Accrued compensation.................  $146,555   $  423,833   $   180,463
Accrued third party license fees.....        --      327,425       192,236
Accrued sales tax....................   113,102      316,463       304,845
Other................................   112,451       14,196        39,160
                                       --------   ----------   -----------
                                       $372,108   $1,081,917   $   716,704
                                       ========   ==========   ===========
NOTE 5 -- NOTE PAYABLE
 
     In August 1997, the Company entered into an agreement with another software
company for the purchase of certain assets, properties and rights relating to an
ATM software product in exchange for a $255,000 note. The amount due to the
vendor is being paid down based on per copy fees of the purchased software
products, however, any remaining balance will be due in full on June 30, 1998.
At December 31, 1997 and March 31, 1998, the balance due to the software company
was $175,000 and $150,000 (unaudited), respectively.
 
                                      F-10
68
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 6 -- LINES OF CREDIT
 
     In September 1996, the Company entered into a $250,000 equipment line of
credit with a bank. The equipment line allowed for draw downs through September
1997 with the outstanding borrowings on the equipment line converting to a
$104,002, nine percent term loan payable in 36 months beginning October 1997.
Borrowings are secured by a first security interest in the related equipment. At
December 31, 1997 and March 31, 1998 the term loan balance was $92,446 and
$83,779 (unaudited), respectively.
 
     In June 1997, the Company entered into a $1,000,000 working capital line of
credit with the same bank. At December 31, 1997 and March 31, 1998, there was no
balance outstanding under this line of credit. The line of credit is secured
with a first security interest in all assets, exclusive of those financed under
the equipment line. The line of credit is available up to 75% of domestic
accounts receivable less than 90 days outstanding. Interest will be paid monthly
at the bank's prime plus 50 basis points.
 
     In conjunction with these credit agreements, the Company must maintain
certain liquidity, tangible capital base and quick ratio financial covenants.
The Company was in compliance with its financial covenants at March 31, 1998
(unaudited). Payment of dividends is prohibited under the lines of credit.
 
NOTE 7 -- MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK
 
     In May 1995, the Company issued to Connecticut Innovations, Incorporated
("CII") 166,667 shares of Series A-2 Preferred Stock at $3.00 per share for
$500,000. As a requirement of the funding, the Company must maintain its
principal place of business and conduct the majority of its operations in
Connecticut. If the Company fails to maintain its Connecticut presence, CII may
require the Company to purchase CII's shares at the greater of the original
purchase price plus a 40% annual compounded rate of return or the fair market
value of the shares. In addition, CII may require the Company to purchase its
shares if the Company is a private company and is acquired by a third party or
if the Company disposes of substantially all of its assets to a third party. The
price of redemption will be the greater of the original purchase price of the
shares plus a 25% annually compounded rate of return or the fair market value of
the shares. Management does not consider any of the events that would trigger
mandatory redemption to be probable events and therefore does not accrue for
accretion.
 
     In December 1995, the Company issued to a group of investors 1,543,334
shares of Series B Preferred Stock at $3.00 per share for $4,630,000. In
conjunction with the sale, the Company issued 192,916 warrants to purchase
additional shares of Series B Preferred Stock at $4.00 per share of which 84,583
warrants were exercised in March 1998. The Series B Preferred Stock has similar
mandatory redemption features as the May 1995 Series A-2.
 
     In October 1996, the Company issued to a group of investors 1,222,222
shares of Series C Preferred Stock at $4.50 per share for $5,500,000. In
conjunction with the sale, the Company issued 152,778 warrants to purchase
additional shares of Series C Preferred Stock at $6.00 per share of which 41,667
warrants were exercised in March 1998. The Series C Preferred Stock has similar
mandatory redemption features as the May 1995 Series A-2 and Series B.
 
     In August 1997, the Company issued to an investor 833,333 shares of Series
D Preferred Stock at $6.00 per share for $5,000,000. In conjunction with the
sale, the Company issued 416,667 warrants to purchase additional shares of
Series D Preferred Stock at $6.00 per share. The Series D Preferred Stock has
similar mandatory redemption features as the May 1995 Series A-2, Series B and
Series C. Concurrent with the preferred stock offering, the investor in the
Series D Preferred Stock offering
 
                                      F-11
69
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
also entered into a marketing and distribution agreement with the Company. As of
March 31, 1998, there have been no revenues recognized under this agreement.
 
     The holders of preferred stock are entitled to receive noncumulative cash
dividends when and as declared by the Board of Directors and have similar voting
rights as common stockholders in addition to certain other defined voting
rights. In the event of any voluntary or involuntary liquidation of the Company,
the holders of Series A-1, Series A-2, Series B, Series C and Series D Preferred
Stock shall be entitled to all unpaid dividends at the time of liquidation and
$1.50, $3.00, $3.00 or $4.50 and $6.00, respectively, per share as a liquidating
distribution prior to any liquidating distribution to the common stockholders.
At the option of the preferred stockholders, their shares may be converted to
common stock at the rate of one common stock share for one share of preferred
stock. The preferred stock shall automatically convert into shares of common
stock upon the closing of a public offering meeting certain criteria. The
mandatory redemption features terminate upon the closing of a public offering
and the expiration of any related lock-up agreements, with the exception of the
Series A-2 Preferred Stock held by CII. The rights of CII to require the Company
to purchase its Series A-2 Preferred Stock in the event the Company fails to
maintain its Connecticut presence do not terminate.
 
NOTE 8 -- STOCKHOLDERS' EQUITY
 
  Capital Stock Transactions
 
     In December 1995, in conjunction with the issuance of the Series B
Preferred Stock, the Company revised its certificate of incorporation to
authorize 11,000,000 shares, of which 7,680,417 were common stock and 3,319,583
were preferred stock. In October 1996, in conjunction with the issuance of the
Series C Preferred Stock, the Company revised its certificate of incorporation
to authorize 13,275,000 shares of which 8,580,417 were common stock and
4,694,583 were preferred stock. In August 1997, in conjunction with the issuance
of the Series D Preferred Stock, the Company revised its certificate of
incorporation to authorize 15,775,000 shares, of which 9,830,417 were common
stock and 5,944,583 were preferred stock. In February 1998, the Company revised
its certificate of incorporation to approve an increase in authorized shares
from 15,775,000 to 25,000,000.
 
     In January 1996, the Company issued 175,000 shares of common stock to the
Chief Executive Officer, resulting in compensation expense of $52,500.
 
     The Company has reserved shares of common stock as follows:
DECEMBER 31,     MARCH 31,
                                                                  1997            1998
                                                              ------------    ------------
                                                                              (UNAUDITED)
Conversion of preferred stock..........................   5,182,222       5,308,472
     Conversion of preferred stock upon exercise of
       warrants.............................................    762,361         636,111
     Exercise of options....................................   1,610,000       3,000,000
                                                              ------------    ------------
                                                               7,554,583       8,944,583
                                                              ============    ============
Preferred Stock
 
     In February 1994, the Company issued 1,000,000 shares of preferred stock
designated as Series A-1 Preferred Stock at $1.50 per share. In conjunction with
the issuance of the Series A-1 Preferred Stock, the Company issued a warrant to
purchase 333,333 shares of Series A-2 Preferred Stock with an exercise price of
$3.00 per share. The warrant was subsequently converted to 333,333 shares of
Series A-2 Preferred Stock in September 1994 for $999,999.
 
                                      F-12
70
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     In September 1994, the Company issued an additional 83,333 shares of
preferred stock designated as Series A-2 Preferred Stock at $3.00 per share. The
Company received $50,000 in cash and a note for $200,000 payable in monthly
installments of $10,000 plus interest, of which $60,000 and $0 was outstanding
at December 31, 1995 and 1996, respectively. The shares were pledged as
collateral against the note.
 
     At the option of the preferred stockholders, their shares may be converted
to common stock at the rate of one common stock share for one share of preferred
stock. The preferred stock shall automatically convert into shares of common
stock upon the closing of a public offering meeting certain criteria.
 
NOTE 9 -- STOCK OPTION PLAN
 
     The Company has established the 1994 Stock Option Plan (the "1994 Plan")
for employees, officers, directors, and consultants or advisors to the Company
under which the Board of Directors may grant incentive stock options and
non-qualified stock options. Incentive stock options will be granted at the fair
value of the Common Stock at the time of grant, as determined by the Board of
Directors. Generally, incentive stock options vest 25% on the first anniversary
of the date of grant and then ratably on a monthly basis over the subsequent
three years. In certain circumstances, at the discretion of the Board of
Directors, options are granted with a vesting schedule of other than four years.
Non-qualified stock options have a vesting period as determined by the Board of
Directors generally vesting 25% on the first anniversary of the date of grant
and then ratably on a monthly basis over the subsequent three years. The stock
options are exercisable over a period of ten years from the date of grant.
 
     In May 1997, the shareholders approved an increase in the maximum number of
shares that may be issued under the 1994 Plan from 1,110,000 to 1,610,000. In
February 1998, the shareholders approved an increase in the maximum number of
shares that may be issued under the 1994 Plan from 1,610,000 to 3,000,000.
 
     A summary of stock option activity under the 1994 Plan is as follows:
WEIGHTED
                                                                           AVERAGE
                                                              NUMBER OF    EXERCISE
                                                               SHARES       PRICE
                                                              ---------    --------
Outstanding at December 31, 1995............................    595,500     $0.20
  Granted...................................................    386,500      0.30
                                                              ---------
Outstanding at December 31, 1996............................    982,000      0.24
  Granted...................................................    482,250      1.23
  Canceled..................................................    (47,675)     0.24
  Exercised.................................................    (50,325)     0.17
                                                              ---------
Outstanding at December 31, 1997............................  1,366,250      0.59
  Granted...................................................    283,500      0.52
  Canceled..................................................     (6,146)     1.82
  Exercised.................................................       (479)     0.30
                                                              ---------
Outstanding at March 31, 1998 (unaudited)...................  1,643,125      0.58
                                                              =========
Stock options outstanding at March 31, 1998 includes 275,000 stock options
granted to affiliates of Banking Spectrum Services, Inc., a shareholder of the
Company, in March 1998. The Company recorded contract termination expense in
connection with these stock options, as described in Note 13, Related Parties.
 
                                      F-13
71
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The following table summarizes information regarding stock options granted
during 1995, 1996 and 1997, and the three months ended March 31, 1998
(unaudited):
WEIGHTED
                                                                                       AVERAGE
                                                                                       SFAS123
                                                                          WEIGHTED     MINIMUM
                                                              NUMBER OF    AVERAGE     VALUE AT
                                                               OPTIONS    EXERCISE      GRANT
                                                               GRANTED      PRICE        DATE
                                                              ---------   ---------   ----------
1995:
Options granted with an exercise price equal to market
  value.....................................................   245,500      $0.28       $ 0.09
1996:
Options granted with an exercise price equal to market
  value.....................................................   386,500       0.30         0.10
1997:
Options granted with an exercise price equal to market
  value.....................................................     8,500       0.36         0.12
Options granted with an exercise price less than market
  value.....................................................   473,750       1.25         1.10
1998:
Options granted with an exercise price less than market
  value.....................................................   283,500       0.52         6.22
The weighted average SFAS 123 minimum value at grant date is the amount
attributable to the option that is calculated without considering the expected
volatility of the underlying stock.
 
     The following table summarizes additional information about stock options
outstanding at March 31, 1998 (unaudited):
OPTIONS OUTSTANDING                         OPTIONS EXERCISABLE
           --------------------------------------------------   --------------------------------
               NUMBER          WEIGHTED-                            NUMBER
           OUTSTANDING AT       AVERAGE           WEIGHTED      EXERCISABLE AT      WEIGHTED
EXERCISE     MARCH 31,         REMAINING          AVERAGE         MARCH 31,          AVERAGE
 PRICE          1998        CONTRACTUAL LIFE   EXERCISE PRICE        1998        EXERCISE PRICE
--------   --------------   ----------------   --------------   --------------   ---------------
$0.15         296,000            6.2              $0.15            283,813           $0.15
  0.15          20,000            6.9               0.15             15,833            0.15
  0.30         203,000            7.3               0.30            160,115            0.30
  0.30         368,500            8.2               0.30            159,011            0.30
  0.45         311,125            9.2               0.45            123,085            0.45
  0.45         275,000            9.9               0.45            275,000            0.45
  2.75         161,000            9.6               2.75              1,979            2.75
  2.75           8,500            9.9               2.75                 --              --
             ---------                                            ---------           -----
             1,643,125                                            1,018,836            0.32
             =========                                            =========           =====
Had compensation expense been recognized based on the minimum value of the
employee options at their grant dates, as prescribed in SFAS 123, the Company's
pro forma net loss would have been as follows:
THREE MONTHS
                                         YEAR ENDED DECEMBER 31,                ENDED
                                ------------------------------------------    MARCH 31,
                                    1995           1996           1997           1998
                                ------------   ------------   ------------   ------------
                                                                             (UNAUDITED)
Net loss:
  As reported.................   $1,894,953     $3,638,472     $3,055,372     $2,027,216
  Pro forma...................    1,896,688      3,646,337      3,131,847      2,066,900
Pro forma net loss per share
  (basic and diluted):
  As reported.................   $    (0.98)    $    (1.73)    $    (1.42)    $    (0.94)
  Pro forma...................        (0.98)         (1.73)         (1.45)         (0.95)
F-14
72
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
     The minimum value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions used
for options granted during the applicable period: .
MARCH 31,
                                                 1995     1996       1997         1998
                                                -------  -------  -----------   ---------
                                                                               (UNAUDITED)
Risk free interest rate.......................   7.24%    6.72%   5.65%-6.66%     5.42%
Expected dividend yield.......................   None     None       None         None
Expected life of option.......................  6 years  6 years    6 years      6 years
Expected volatility...........................    0%       0%         0%           0%
The minimum value method requires the input of subjective assumptions.
Changes in the subjective input assumptions can materially affect the minimum
value estimate.
 
     Compensation of $358,513 and $24,225 (unaudited) has been attributed to
those common stock options granted to employees during 1997 and the three months
ended March 31, 1998, respectively, with an exercise price below estimated fair
value. Compensation expense is recognized over the four year vesting period and
totaled $85,526, $41,149 (unaudited) and $23,130 (unaudited) for the year ended
December 31, 1997 and the three months ended March 31, 1997 and 1998,
respectively.
 
NOTE 10 -- COMMITMENTS AND CONTINGENCIES
 
     At March 31, 1998, the Company was committed under facility and various
other operating leases with an initial term of more than one year which expire
at various dates through 2003. Terms of the facility lease provide for
escalating rent payments in future years. Minimum lease payments under these
noncancelable leases are approximately as follows:
April 1 -- December 31, 1998.......................  $  128,000
1999...............................................     182,000
2000...............................................     191,000
2001...............................................     211,000
2002...............................................     219,000
Thereafter.........................................      72,000
                                                     ----------
          Total minimum obligations................  $1,003,000
                                                     ==========
Rent expense under operating leases was approximately $36,000, $149,000 and
$194,000 for the years ended December 31, 1995, 1996 and 1997 and $51,000
(unaudited) and $46,000 (unaudited) for the three months ended March 31, 1997
and 1998, respectively.
 
     From time to time in the ordinary course of business, the Company is
subject to legal proceedings. While it is impossible to determine the ultimate
outcome of such matters, it is management's opinion that the resolution of any
pending issues will not have a material adverse effect on the financial
position, results of operations or cash flows of the Company.
 
NOTE 11 -- DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     The carrying amount of cash, trade accounts receivable, other current
assets, trade accounts payable, royalties payable, accrued expenses, notes
payable and outstanding lines of credit approximate fair value because of the
short maturity of those instruments.
 
                                      F-15
73
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
NOTE 12 -- INCOME TAXES
 
     Significant components of the Company's deferred tax asset at December 31,
1996 and 1997, and March 31, 1998 are as follows:
DECEMBER 31,
                                  -------------------------    MARCH 31,
                                     1996          1997          1998
                                  -----------   -----------   -----------
                                                              (UNAUDITED)
Gross deferred tax assets:
  Net operating loss
     carryforwards..............  $ 2,853,000   $ 3,967,000   $ 4,017,000
  Research & development credit
     carryforwards..............      130,000       332,000       363,000
  Stock option expense..........           --            --       643,000
  Other.........................       32,000       126,000       136,000
                                  -----------   -----------   -----------
                                    3,015,000     4,425,000     5,159,000
                                  -----------   -----------   -----------
Gross deferred tax liability:
  Capitalized software
     development costs..........       84,000       221,000       145,000
  Accelerated depreciation......       14,000        71,000        79,000
                                  -----------   -----------   -----------
                                       98,000       292,000       224,000
                                  -----------   -----------   -----------
Valuation allowance.............   (2,917,000)   (4,133,000)   (4,935,000)
                                  -----------   -----------   -----------
Net deferred tax asset..........  $        --   $        --   $        --
                                  ===========   ===========   ===========
The Company has provided a valuation allowance for the full amount of the
net deferred tax asset as of December 31, 1996 and 1997 and March 31, 1998 since
management has not determined realization of these future benefits to be more
likely than not. If the Company achieves profitability, the deferred tax asset
would be available, subject to certain annual limitations, to offset future
income taxes.
 
     At March 31, 1998, the Company had approximately $9.9 million of federal
net operating loss carryforwards that begin expiring in 2007 and had
approximately $10.7 million of state net operating loss carryforwards that begin
expiring in 1998. At March 31, 1998, the Company had approximately $363,000 of
research and development credit carryforwards that begin expiring in 2007.
 
     As defined in the Internal Revenue Code, certain ownership changes limit
the annual utilization of federal net operating loss and tax credit
carryforwards. The Company experienced such an ownership change in December 1995
which limits approximately $3.2 million of federal net operating loss
carryforwards and $143,000 of research tax credits to a $307,000 annual Section
382 limitation.
 
NOTE 13 -- RELATED PARTIES
 
  Banking Spectrum
 
     In January 1994, the Company entered into an agreement with Banking
Spectrum Services, Inc., a shareholder of the Company, and Banking Spectrum,
Inc. (collectively, "Banking Spectrum"), to provide and receive certain
consulting and support services. The majority shareholder of Banking Spectrum
Services, Inc. is a director and shareholder of the Company. Pursuant to the
agreement, the Company agreed to pay Banking Spectrum a three percent royalty
based on license and maintenance revenues, as defined in the agreement, in
exchange for the use of Banking Spectrum's products and contributions to the
design of the Company's software. In addition, the Company agreed to pay Banking
Spectrum a five percent royalty based on license and maintenance revenues
 
                                      F-16
74
                              OPEN SOLUTIONS INC.
 
                  NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
 
for compliance and regulatory support provided to customers. The Company
recognized royalty expense of $9,021, $72,064, $337,945, $30,791 (unaudited) and
$90,403 (unaudited) for the years ended December 31, 1995, 1996, 1997 and for
the three months ended March 31, 1997 and 1998, respectively.
 
     In March 1998, the Company and Banking Spectrum terminated their previous
agreement and entered into a distribution and termination agreement. The new
agreement released the Company from any future royalty payments to Banking
Spectrum in exchange for cash payment of $100,000 to Banking Spectrum and fully
vested options to affiliates of Banking Spectrum Services, Inc. to purchase
275,000 shares of Common Stock at an exercise price of $0.45 per share. The
stock options were estimated by management to have a fair value of approximately
$1.6 million (unaudited). Net of amounts previously accrued, the Company
recorded a contract termination expense of approximately $1.3 million
(unaudited) for the three months ended March 31, 1998.
 
  PRISM
 
     During 1994, the Company borrowed $250,000 from Prince-Roth Information
Systems Management Inc. ("PRISM"), a related party. Spouses of the shareholders
of PRISM are shareholders of the Company. The note was paid in full during 1996
including interest due. Interest expense was $0 and $3,000 for the years ended
December 31, 1995 and 1996, respectively.
 
NOTE 14 -- SUBSEQUENT EVENTS
 
  Amended and Restated Certificate of Incorporation
 
     After the filing of the Company's Amended and Restated Certificate of
Incorporation upon the closing of this offering, the authorized capital stock of
the Company will consist of 50,000,000 shares of common stock, $0.01 par value
per share, and 5,000,000 shares of preferred stock, $0.01 par value per share.
 
  1998 Stock Incentive Plan
 
     The Company's 1998 Stock Incentive Plan (the "Incentive Plan") was adopted
by the Board of Directors, subject to stockholder approval, in June 1998,
effective upon the closing of the offering contemplated in this Prospectus. The
Incentive Plan is intended to replace the Company's 1994 Plan. Awards may be
made under the Incentive Plan for up to the sum of (i) 1,200,000 shares of
common stock (subject to adjustment in the event of stock splits and other
similar events), plus (ii) the number of shares of common stock (up to
1,700,000) (subject to adjustment in the event of stock splits and other similar
events) subject to awards granted under the 1994 Plan which are not actually
issued because options granted under such plan expire or otherwise result in
shares not being issued or, in the case of restricted stock, are repurchased by
the Company pursuant to the terms of the applicable stock restriction agreement.
 
  1998 Employee Stock Purchase Plan
 
     The Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") was
adopted by the Board of Directors, subject to stockholder approval, in June
1998, effective upon the closing of the offering. The Purchase Plan authorizes
the issuance of up to a total of 250,000 shares of common stock to participating
employees.
 
                                      F-17
75
 
=====================================================
  NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR
ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
                               ------------------
                               TABLE OF CONTENTS
PAGE
                                        ----
Prospectus Summary....................     3
Risk Factors..........................     6
Use of Proceeds.......................    14
Dividend Policy.......................    14
Capitalization........................    15
Dilution..............................    16
Selected Financial Data...............    17
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................    18
Business..............................    26
Management............................    35
Certain Transactions..................    43
Principal and Selling Stockholders....    45
Description of Capital Stock..........    48
Shares Eligible for Future Sale.......    51
Underwriting..........................    53
Legal Matters.........................    54
Experts...............................    54
Additional Information................    55
Index to Financial Statements.........   F-1
------------------
  UNTIL               , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED HEREBY, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
=====================================================
 
=====================================================
 
                         [                     ] SHARES
 
                             [OPEN SOLUTIONS LOGO]
 
                                  COMMON STOCK
                            ------------------------
 
                                   PROSPECTUS
                            ------------------------
                                 BT ALEX. BROWN
 
                           CREDIT SUISSE FIRST BOSTON
 
                                 UBS SECURITIES
                                            , 1998
 
=====================================================
76
 
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
     The following table sets forth the various expenses, all of which will be
borne by the Registrant, in connection with the sale and distribution of the
securities being registered, other than the underwriting discounts and
commissions. All amounts shown are estimates except for the Securities and
Exchange Commission registration fee and the NASD filing fee.
SEC registration fee........................................    $ 11,800
NASD filing fee.............................................       4,500
Nasdaq National Market listing fee..........................      95,000
Blue Sky fees and expenses..................................      10,000
Transfer Agent and Registrar fees...........................      15,000
Accounting fees and expenses................................     250,000
Legal fees and expenses.....................................     250,000
Printing and mailing expenses...............................     150,000
Miscellaneous...............................................     113,700
                                                                --------
     Total..................................................    $900,000
                                                                ========
ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
     Article EIGHTH of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") provides that no
director of the Registrant shall be personally liable for any monetary damages
for any breach of fiduciary duty as a director, except to the extent that the
Delaware General Corporation Law prohibits the elimination or limitation of
liability of directors for breach of fiduciary duty.
 
     Article NINTH of the Registrant's Restated Certificate of Incorporation
provides that a director or officer of the Registrant (a) shall be indemnified
by the Registrant against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with any litigation
or other legal proceeding (other than an action by or in the right of the
Registrant) brought against him by virtue of his position as a director or
officer of the Registrant if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by the Registrant against all expenses (including attorneys' fees)
and amounts paid in settlement incurred in connection with any action by or in
the right of the Registrant brought against him by virtue of his position as a
director or officer of the Registrant if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Registrant, except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by the Registrant against all expenses (including attorneys' fees)
incurred in connection therewith. Expenses shall be advanced to a director or
officer at his request, provided that he undertakes to repay the amount advanced
if it is ultimately determined that he is not entitled to indemnification for
such expenses.
 
     Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct
 
                                      II-1
77
 
required for indemnification, or if the Registrant fails to make an
indemnification payment within 60 days after such payment is claimed by such
person, such person is permitted to petition the court to make an independent
determination as to whether such person is entitled to indemnification. As a
condition precedent to the right of indemnification, the director or officer
must give the Registrant notice of the action for which indemnity is sought and
the Registrant has the right to participate in such action or assume the defense
thereof.
 
     Article NINTH of the Registrant's Restated Certificate of Incorporation
further provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended
to expand the indemnification permitted to directors or officers the Registrant
must indemnify those persons to the fullest extent permitted by such law as so
amended.
 
     Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
 
     Under Section 8 of the Underwriting Agreement, the Underwriters are
obligated, under certain circumstances, to indemnify directors and officers of
the Registrant against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of Underwriting Agreement filed as
Exhibit 1 hereto.
 
ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES
 
     Set forth in chronological order is information regarding shares of Common
Stock and Preferred Stock issued, warrants issued and options granted by the
Registrant since June 1995. Further included is the consideration, if any,
received by the Registrant for such shares, warrants and options and information
relating to the section of the Securities Act of 1933, as amended (the
"Securities Act"), or rule of the Securities and Exchange Commission under which
exemption from registration was claimed.
 
          1.  On December 27, 1995, the Registrant sold a total of 1,543,334
     shares of Series B Preferred Stock to Axiom Venture Partners L.P., Barry
     Bloom, Mark Heller, Menlo Ventures VI, L.P., Menlo Entrepreneurs Fund VI,
     L.P., Connecticut Innovations, Incorporated and Zachs CMP for an aggregate
     purchase price of $4.6 million. The Registrant also issued such investors
     warrants to purchase an aggregate of 192,916 shares of Series B Preferred
     Stock at an exercise price of $3.00 per share.
 
          2.  On October 23, 1996, the Registrant sold a total of 1,222,222
     shares of Series C Preferred Stock to Aetna Life Insurance Company, Axiom
     Venture Partners L.P., Menlo Ventures VI, L.P., Menlo Entrepreneurs Fund
     VI, L.P. and Connecticut Innovations, Incorporated for an aggregate
     purchase price of $5.5 million. The Registrant also issued such investors
     warrants to purchase an aggregate of 152,778 shares of Series C Preferred
     Stock at an exercise price of $6.00 per share.
 
          3.  On August 22, 1997, the Registrant sold a total of 833,333 shares
     of Series D Preferred Stock to The BISYS Group, Inc. for $5.0 million. The
     Company also issued such investor a warrant to purchase 416,667 shares of
     Series D Preferred Stock at an exercise price of $6.00 per share.
 
                                      II-2
78
 
          4.  On March 6, 1998, the Registrant issued a total of 84,583 shares
     of Series B Preferred Stock and 41,667 shares of Series C Preferred Stock
     to Menlo Ventures VI, L.P. and Menlo Entrepreneurs Fund VI, L.P. upon the
     exercise of warrants.
 
     Certain of the transactions described above involved directors, officers
and five percent stockholders of the Registrant. See "Certain Transactions."
 
     The Registrant's 1994 Stock Option Plan was adopted by the Board of
Directors and approved by the stockholders of the Registrant in March 1994. As
of March 31, 1998, options to purchase 60,804 shares of Common Stock had been
exercised for an aggregate consideration of $10,274, options to purchase
1,643,125 shares of Common Stock were outstanding and 175,000 shares of Common
Stock had been issued under an award of restricted stock under such plan.
 
     The securities issued in the foregoing transactions were either (i) offered
and sold in reliance upon exemptions from Securities Act registration set forth
in Sections 3(b) and 4(2) of the Securities Act, or any regulations promulgated
thereunder, relating to sales by an issuer not involving any public offering, or
(ii) in the case of certain options to purchase shares of Common Stock and
shares of Common Stock issued upon the exercise of such options, such offers and
sales were made in reliance upon an exemption from registration under Rule 701
of the Securities Act. No underwriters were involved in the foregoing sales of
securities.
 
ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
     (a) EXHIBITS
EXHIBIT
NO.                                DESCRIPTION
-------                            -----------
1     Form of Underwriting Agreement.
   3.1     Certificate of Incorporation of the Registrant, as amended.
   3.2     Amended and Restated Certificate of Incorporation of the
           Registrant, to be effective upon the closing of this
           offering.
   3.3     By-Laws of the Registrant, as amended.
   3.4     Amended and Restated By-Laws of the Registrant, to be
           effective upon the closing of this offering.
  *4.1     Specimen certificate for shares of Common Stock.
    *5     Opinion of Hale and Dorr LLP.
  10.1     1994 Stock Option Plan, as amended.
 *10.2     1998 Stock Incentive Plan, including forms of stock option
           agreement for incentive and nonstatutory stock options.
  10.3     1998 Employee Stock Purchase Plan.
  10.4     Amended and Restated Investors' Rights Agreement, dated as
           of August 22, 1997, between the Company and the Investors
           (as defined therein).
  10.5     Form of Series B Preferred Stock Warrant.
  10.6     Form of Series C Preferred Stock Warrant.
  10.7     Form of Series D Preferred Stock Warrant.
 *10.8     Employment Agreement between the Company and Douglas K.
           Anderson dated October 2, 1995, as amended.
 +10.9     Software License and Marketing and Distribution Agreement,
           between the Company and BISYS, Inc., dated as of August 20,
           1997.
+10.10     License and Marketing Agreement, between the Company and
           Connecticut On-Line Computer Center, Inc., dated as of
           December 9, 1997.
+10.11     Software License Agreement, between the Company and Unisys
           Corporation, dated as of June 18, 1997.
*10.12     Employment Agreement between the Company and Graham H.
           Gurney dated January 2, 1993.
*10.13     Employment Agreement between the Company and Clifford I.
           Waggoner dated January 2, 1993.
II-3
79
EXHIBIT
NO.                                DESCRIPTION
-------                            -----------
10.14     Letter Agreement between the Company and John L. Person
           dated April 10, 1997.
 10.15     Letter Agreement between the Company and Richard J. Willemin
           dated February 27, 1998.
 10.16     Form of Information Processing System Agreement.
 10.17     Form of prior Information Processing System Agreement.
  23.1     Consent of Price Waterhouse LLP.
  23.2     Consent of Hale and Dorr LLP (included in Exhibit 5).
    24     Power of Attorney (included on page II-5).
    27     Financial Data Schedule.
---------------
* To be filed by amendment.
 
+ Confidential treatment requested as to certain portions, which portions are
  omitted and filed separately with the Securities and Exchange Commission.
 
     (B) FINANCIAL STATEMENT SCHEDULES
 
     Schedule II -- Valuation and Qualifying Accounts is included in this
Registration Statement. All other schedules have been omitted because they are
not required or because the required information is given in the Registrant's
Financial Statements or Notes thereto.
 
ITEM 17.  UNDERTAKINGS
 
     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Amended and Restated
Certificate of Incorporation of the Registrant and the laws of the State of
Delaware, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
 
     The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
     The undersigned Registrant hereby undertakes that:
 
          (1)  For purposes of determining any liability under the Securities
     Act, the information omitted form the form of prospectus filed as part of
     this Registration Statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     Registration Statement as of the time it was declared effective.
 
          (2)  For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.
 
                                      II-4
80
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in Glastonbury, Connecticut, on this
10th day of June, 1998.
 
                                          OPEN SOLUTIONS INC.
 
                                          By:   /s/ DOUGLAS K. ANDERSON
 
                                          --------------------------------------
                                                     Douglas K. Anderson
                                                    Chairman of the Board
                                                 and Chief Executive Officer
 
                        POWER OF ATTORNEY AND SIGNATURES
 
     We, the undersigned officers and directors of Open Solutions Inc., hereby
severally constitute and appoint Douglas K. Anderson, Richard J. Willemin, Mark
G. Borden and Philip P. Rossetti, and each of them singly, our true and lawful
attorneys with full power to them, and each of them singly, to sign for us and
in our names in the capacities indicated below, the Registration Statement on
Form S-1 filed herewith and any and all pre-effective and post-effective
amendments to said Registration Statement, and any subsequent Registration
Statement for the same offering which may be filed under Rule 462(b), and
generally to do all such things in our names and on our behalf in our capacities
as officers and directors to enable Open Solutions Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorneys, or any of them, to said
Registration Statement and any and all amendments thereto or to any subsequent
Registration Statement for the same offering which may be filed under Rule
462(b).
 
     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
/s/ DOUGLAS K. ANDERSON                Chairman of the Board and Chief     June 10, 1998
---------------------------------------------------  Executive Officer (Principal
                Douglas K. Anderson                  Executive Officer)
 
              /s/ RICHARD J. WILLEMIN                Senior Vice President and Chief     June 10, 1998
---------------------------------------------------  Financial Officer (Principal
                Richard J. Willemin                  Financial and Accounting
                                                     Officer)
 
              /s/ DOUGLAS C. CARLISLE                Director                            June 10, 1998
---------------------------------------------------
                Douglas C. Carlisle
 
                /s/ DAVID M. CLARKE                  Director                            June 10, 1998
---------------------------------------------------
                  David M. Clarke
 
              /s/ GRAHAM H. GURNEY                   Director                            June 10, 1998
---------------------------------------------------
                 Graham H. Gurney
II-5
81
SIGNATURE                                    TITLE                      DATE
                     ---------                                    -----                      ----
/s/ SAMUEL F. MCKAY                  Director                            June 10, 1998
---------------------------------------------------
                  Samuel F. McKay
 
               /s/ CARLOS P. NAUDON                  Director                            June 10, 1998
---------------------------------------------------
                 Carlos P. Naudon
 
              /s/ WILLIAM W. NEVILLE                 Director                            June 10, 1998
---------------------------------------------------
                William W. Neville
 
             /s/ CLIFFORD I. WAGGONER                Director                            June 10, 1998
---------------------------------------------------
               Clifford I. Waggoner
 
               /s/ RICHARD P. YANAK                  Director                            June 10, 1998
---------------------------------------------------
                 Richard P. Yanak
II-6
82
 
                                                                     SCHEDULE II
 
                              OPEN SOLUTIONS INC.
                       VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)
ADDITIONS
                               BALANCE AT    ----------------------------------   DEDUCTIONS   BALANCE AT
                              BEGINNING OF   CHARGE TO COSTS    CHARGE TO OTHER     NET OF       END OF
        DESCRIPTION              PERIOD        AND EXPENSES        ACCOUNTS       WRITE-OFFS     PERIOD
        -----------           ------------   ----------------   ---------------   ----------   ----------
ALLOWANCE FOR DOUBTFUL
  ACCOUNTS:
Years ended
  December 31, 1995.........        --               --                 --            --             0
  December 31, 1996.........        --               86                 --            --            86
  December 31, 1997.........        86              239                 --           111           214
Three months ended March 31,
  1998 (unaudited)..........       214              130                 --            --           344
S-1
83
 
                                 EXHIBIT INDEX
EXHIBIT
NO.                                DESCRIPTION
-------                            -----------
1     Form of Underwriting Agreement.
   3.1     Certificate of Incorporation of the Registrant, as amended.
   3.2     Amended and Restated Certificate of Incorporation of the
           Registrant, to be effective upon the closing of this
           offering.
   3.3     By-Laws of the Registrant, as amended.
   3.4     Amended and Restated By-Laws of the Registrant, to be
           effective upon the closing of this offering.
  *4.1     Specimen certificate for shares of Common Stock.
    *5     Opinion of Hale and Dorr LLP.
  10.1     1994 Stock Option Plan, as amended.
 *10.2     1998 Stock Incentive Plan, including forms of stock option
           agreement for incentive and nonstatutory stock options.
  10.3     1998 Employee Stock Purchase Plan.
  10.4     Amended and Restated Investors' Rights Agreement, dated as
           of August 22, 1997, between the Company and the Investors
           (as defined therein).
  10.5     Form of Series B Preferred Stock Warrant.
  10.6     Form of Series C Preferred Stock Warrant.
  10.7     Form of Series D Preferred Stock Warrant.
 *10.8     Employment Agreement between the Company and Douglas K.
           Anderson dated October 2, 1995, as amended.
 +10.9     Software License and Marketing and Distribution Agreement,
           between the Company and BISYS, Inc., dated as of August 20,
           1997.
+10.10     License and Marketing Agreement, between the Company and
           Connecticut On-Line Computer Center, Inc., dated as of
           December 9, 1997.
+10.11     Software License Agreement, between the Company and Unisys
           Corporation, dated as of June 18, 1997.
*10.12     Employment Agreement between the Company and Graham H.
           Gurney dated January 2, 1993.
*10.13     Employment Agreement between the Company and Clifford I.
           Waggoner dated January 2, 1993.
 10.14     Letter Agreement between the Company and John L. Person
           dated April 10, 1997.
 10.15     Letter Agreement between the Company and Richard J. Willemin
           dated February 27, 1998.
 10.16     Form of Information Processing System Agreement.
 10.17     Form of prior Information Processing System Agreement.
  23.1     Consent of Price Waterhouse LLP.
  23.2     Consent of Hale and Dorr LLP (included in Exhibit 5).
    24     Power of Attorney (included on page II-5).
    27     Financial Data Schedule.
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* To be filed by amendment.
 
+ Confidential treatment requested as to certain portions, which portions are
  omitted and filed separately with the Securities and Exchange Commission.