CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are not historical in nature and typically address future or anticipated events, trends, expectations or beliefs with respect to our financial condition, results of operations or business. Forward-looking statements often contain words such as "believes," "expects," "anticipates," "foresees," "forecasts," "estimates," "plans," "intends," "continues," "may," "will," "should," "projects," "might," "could" or other similar words or phrases. Similarly, statements that describe our business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. We believe there is a reasonable basis for our forward-looking statements, but they are inherently subject to risks and uncertainties and actual results could differ materially from the expectations and beliefs reflected in the forward-looking statements. We presently consider the following to be among the important factors that could cause actual results to differ materially from our expectations and beliefs: (1) changes in the budgets or regulatory environments of our customers, primarily local and state governments, that could negatively impact information technology spending; (2) our ability to achieve our financial forecasts due to various factors, including project delays by our customers, reductions in transaction size, fewer transactions, delays in delivery of new products or releases or a decline in our renewal rates for service agreements;
(3) economic, political and market conditions, including the global economic and financial crisis, and the general tightening of access to debt or equity capital; (4) technological and market risks associated with the development of new products or services or of new versions of existing or acquired products or services; (5) our ability to successfully complete acquisitions and achieve growth or operational synergies through the integration of acquired businesses, while avoiding unanticipated costs and disruptions to existing operations;
(6) competition in the industry in which we conduct business and the impact of competition on pricing, customer retention and pressure for new products or services; (7) the ability to attract and retain qualified personnel and dealing with the loss or retirement of key members of management or other key personnel; and (8) costs of compliance and any failure to comply with government and stock exchange regulations. A detailed discussion of these factors and other risks that affect our business are described in our filings with the Securities and Exchange Commission, including the detailed "Risk Factors" contained in our most recent annual report on Form 10-K. We expressly disclaim any obligation to publicly update or revise our forward-looking statements.

GENERAL

We provide integrated information management solutions and services for local governments. We develop and market a broad line of software products and services to address the information technology ("IT") needs of cities, counties, schools and other local government entities as well as state governments. In addition, we provide professional IT services to our customers, including software and hardware installation, data conversion, and training and for certain customers, product modifications, along with continuing maintenance and support for customers using our systems. We also provide subscription-based services such as software as a service ("SaaS") arrangements and other hosting services as well as property appraisal outsourcing services for taxing jurisdictions. In 2010 we began providing electronic document filing solutions ("e-filings") for courts and law offices which simplify the filing and management of court related documents. Revenues for e-filings are generally derived from transaction fees.

Our products generally automate three major functional areas: (1) financial management and education, (2) courts and justice and (3) property appraisal and tax and we report our results in two segments. The Enterprise Software Solutions ("ESS") segment provides municipal and county governments and schools with software systems to meet their information technology and automation needs for mission-critical "back-office" functions such as financial management and courts and justice processes. The Appraisal and Tax Software Solutions and Services ("ATSS") segment provides systems and software that automate the appraisal and assessment of real and personal property as well as property appraisal outsourcing services for local governments and taxing

In January 2012, we acquired substantially all of the assets of Akanda Innovation, Inc. ("Akanda"), a provider of web-based solutions to the public sector which are integrated with our property tax software, for a total purchase price of $2.9 million. The purchase price included certain liabilities we assumed of approximately $800,000, resulting in net cash paid to the sellers of $2.1 million, of which $900,000 was paid prior to December 31, 2011.

In March 2012, we acquired all the capital stock of UniFund, L.L.C. ("UniFund") for a cash purchase price of $4.6 million, net of cash acquired of $780,000. UniFund provides enterprise resource planning solutions to schools and local governments, primarily in the Northeast. UniFund is a reseller of Tyler's Infinite Visions school enterprise solution.

In April 2012, we acquired all of the capital stock of Computer Software Associates, Inc. ("CSA") for a cash purchase price of $9.4 million, net of cash acquired of $437,000. CSA is also a reseller of our Infinite Visions school enterprise solution, and sells proprietary CSA tax and recording solutions to county governments, primarily in the Northwest.

Our total employee count increased to 2,276 at September 30, 2012 from 2,011 at September 30, 2011. This increase includes 163 employees added as a result of several acquisitions.

Outlook

Consistent with 2011, we expect to continue to invest aggressively in product development in 2012. We believe that our competitive position is strong and that the majority of our growth will come from recurring revenues. We expect that software services revenues and margins in the fourth quarter will be lower than the third quarter as the result of seasonal lower utilization around the holidays.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements. These condensed consolidated financial statements have been prepared following the requirements of accounting principles generally accepted in the United States ("GAAP") for interim periods and require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition and amortization and potential impairment of intangible assets and goodwill and share-based compensation expense. As these are condensed financial statements, one should also read expanded information about our critical accounting policies and estimates provided in Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in our Form 10-K for the year ended December 31, 2011. There have been no material changes to our critical accounting policies and estimates from the information provided in our 10-K for the year ended December 31, 2011.

ANALYSIS OF RESULTS OF OPERATIONS

Revenues



                                                            Percentage of Total Revenue
                                                     Third Quarter                Nine Months
                                                  2012          2011          2012          2011
Revenue:
Software licenses                                    9.3 %         9.9 %         9.1 %        10.0 %
Subscriptions                                       12.1          10.3          11.9           9.8
Software services                                   23.5          22.9          23.3          23.1
Maintenance                                         47.4          48.0          47.2          47.3
Appraisal services                                   6.0           7.5           6.3           7.9
Hardware and other                                   1.7           1.4           2.2           1.9

Total revenue                                      100.0         100.0         100.0         100.0
Operating Expenses:
Cost of software licenses and acquired
software                                             1.0           1.0           1.1           1.4
Cost of software services, maintenance and
subscriptions                                       46.3          46.3          47.2          46.8
Cost of appraisal services                           3.8           4.9           4.2           5.0
Cost of hardware and other                           0.9           1.0           1.6           1.6
Selling, general and administrative expenses        22.3          24.3          23.9          24.0
Research and development expense                     4.6           5.5           5.5           6.0
Amortization of customer base and trade name
intangibles                                          1.2           1.0           1.2           1.0

Operating income                                    19.9          16.0          15.3          14.2
Other expense                                        0.9           0.7           0.8           0.7

Income before income taxes                          19.0          15.3          14.5          13.5
Income tax provision                                 7.5           5.6           5.7           5.2

Net income                                          11.5 %         9.7 %         8.8 %         8.3 %

Software licenses.

The following table sets forth a comparison of our software license revenues for the periods presented as of September 30:

                                       Third Quarter              Change                 Nine Months                Change
($ in thousands)                     2012        2011          $           %          2012         2011          $           %
ESS                                 $ 8,307     $ 7,081     $ 1,226         17 %    $ 22,995     $ 20,930     $ 2,065         10 %
ATSS                                    397         550        (153 )      (28 )       1,445        1,831        (386 )      (21 )

Total software license revenue      $ 8,704     $ 7,631     $ 1,073         14 %    $ 24,440     $ 22,761     $ 1,679          7 %

Since October 2011, we have acquired several companies which primarily provide financial and human capital management software solutions to the K-12 education market and are included in our ESS segment. Excluding the results of acquisitions, software license revenue for the three months ended September 30, 2012 increased 3% compared to the prior year period due to investments in certain financial products resulting in a more competitive offering. Excluding the results of acquisitions, software license revenue for the nine months ended September 30, 2012 was flat compared to the prior year period due to fewer add-on sales from our existing customer base. In addition, software license growth was reduced somewhat because of a growing number of customers choosing our subscription-based options, rather than purchasing the software under a traditional perpetual software arrangement. Subscription-based arrangements result in lower software license revenues in the initial year as compared to

Subscriptions.

The following table sets forth a comparison of our subscription revenues for the
periods presented as of September 30:



                                       Third Quarter              Change                Nine Months               Change
($ in thousands)                      2012        2011          $         %          2012         2011          $         %
ESS                                 $ 10,960     $ 7,800     $ 3,160       41 %    $ 30,969     $ 21,726     $ 9,243       43 %
ATSS                                     375         189         186       98           887          504         383       76

Total subscriptions revenue         $ 11,335     $ 7,989     $ 3,346       42 %    $ 31,856     $ 22,230     $ 9,626       43 %

Excluding the impact of acquisitions, subscription-based services revenue grew approximately 38% and 40% for the three and nine months ending September 30, 2012, respectively from the prior year periods. Subscription-based services revenue primarily consists of revenues derived from SaaS arrangements and other hosted service offerings, software subscriptions and disaster recovery services. We also provide electronic document filing solutions ("e-filings") for courts and law offices which simplify the filing and management of court related documents. Revenues from e-filings are generally derived from transaction fees. SaaS and other software subscription agreements are typically for initial periods of three to six years and automatically renew unless either party cancels the agreement. Disaster recovery and miscellaneous other hosted service agreements are typically renewable annually. New customers for SaaS and other hosted service offerings provided the majority of the subscription revenue increase. In the three months ending September 30, 2012, we added 12 new customers and 19 existing customers elected to convert to our SaaS model. Since September 30, 2011, we have added 56 new customers and 65 existing customers elected to convert to our SaaS model. E-filing services also contributed approximately $615,000 and $1.6 million of the subscription revenue increase for the three and nine months ended September 30, 2012, respectively as the result of new customers and several court systems expanding mandatory e-filings for court documents beginning in the last half of 2011.

Software services.

The following table sets forth a comparison of our software service revenues for the periods presented as of September 30:

                                         Third Quarter               Change                 Nine Months                Change
($ in thousands)                       2012         2011          $           %          2012         2011          $            %
ESS                                  $ 20,213     $ 15,199     $ 5,014         33 %    $ 56,659     $ 45,087     $ 11,572         26 %
ATSS                                    1,886        2,445        (559 )      (23 )       5,707        7,313       (1,606 )      (22 )

Total software services revenue      $ 22,099     $ 17,644     $ 4,455         25 %    $ 62,366     $ 52,400     $  9,966         19 %

Software services revenues primarily consists of professional services billed in connection with the installation of our software, conversion of customer data, training customer personnel and consulting. New customers who purchase our proprietary software licenses generally also contract with us to provide for the related software services. Existing customers also periodically purchase additional training, consulting and minor programming services. Excluding the impact of acquisitions, software services revenue grew 17% and 13% for the three and nine months ended September 30, 2012, respectively compared to the prior year periods. The increase in software services revenues is partly due to slightly higher software license volume and contract arrangements that included more programming services as well as several state-wide arrangements that in addition to our services, include more third party vendor services to build certain software interfaces.

Maintenance.

The following table sets forth a comparison of our maintenance revenues for the
periods presented as of September 30:



                                          Third Quarter              Change                 Nine Months                Change
($ in thousands)                        2012         2011          $         %          2012          2011           $          %
ESS                                   $ 40,282     $ 33,152     $ 7,130       22 %    $ 114,012     $  96,099     $ 17,913       19 %
ATSS                                     4,170        3,859         311        8         12,350        11,480          870        8

Total maintenance revenue             $ 44,452     $ 37,011     $ 7,441       20 %    $ 126,362     $ 107,579     $ 18,783       17 %

We provide maintenance and support services for our software products and third party software. Excluding acquisitions, maintenance revenue increased 10% and 9% for the three and nine months ended September 30, 2012, respectively compared to the prior year periods. Maintenance and support revenues increased due to growth in our installed customer base from new software license sales and maintenance rate increases on most of our product lines.

Appraisal services.

The following table sets forth a comparison of our appraisal service revenues for the periods presented as of September 30:

                                       Third Quarter             Change                 Nine Months               Change
($ in thousands)                     2012        2011         $          %           2012         2011         $          %
ESS                                 $    -      $    -      $   -         -  %     $     -      $     -      $   -         -  %
ATSS                                  5,594       5,761       (167 )      (3 )       17,047       17,945       (898 )      (5 )

Total appraisal services revenue    $ 5,594     $ 5,761     $ (167 )      (3 )%    $ 17,047     $ 17,945     $ (898 )      (5 )%

The appraisal services business is somewhat cyclical and driven in part by statutory revaluation cycles in various states. The decline for the three and nine months ended September 30, 2012 compared to the prior year periods is mainly due to the completion of a large contract in Pennsylvania. This decline was offset somewhat by the start-up of smaller projects, including several in Ohio. We expect appraisal revenues for 2012 will decline slightly compared to 2011.

Cost of Revenues and Gross Margins

The following table sets forth a comparison of the key components of our cost of
revenues for the periods presented as of September 30:



                                         Third Quarter               Change                   Nine Months                 Change
($ in thousands)                       2012         2011          $           %           2012          2011           $            %
Software licenses                    $    458     $    536     $   (78 )      (15 )%    $   1,508     $   2,320     $   (812 )      (35 )%
Acquired software                         478          243         235         97           1,370           782          588         75
Software services, maintenance and
subscriptions                          43,485       35,689       7,796         22         126,416       106,371       20,045         19
Appraisal services                      3,598        3,776        (178 )       (5 )        11,270        11,302          (32 )       -
Hardware and other                        882          808          74          9           4,310         3,645          665         18

Total cost of revenues               $ 48,901     $ 41,052     $ 7,849         19 %     $ 144,874     $ 124,420     $ 20,454         16 %

                                               Third Quarter         Change           Nine Months          Change
                                              2012        2011          %           2012        2011          %
Software license and acquired software         89.2 %      89.8 %       (0.6 )%      88.2 %      86.4 %        1.8 %
Software services, maintenance and
subscriptions                                  44.2        43.0          1.2         42.7        41.6          1.1
Appraisal services                             35.7        34.5          1.2         33.9        37.0         (3.1 )
Hardware and other                             46.9        29.6         17.3         26.5        17.1          9.4

Overall gross margin                           47.9 %      46.8 %        1.1 %       45.9 %      45.3 %        0.6 %

Software licenses and acquired software. Costs of software license and acquired software are primarily comprised of third party software costs and amortization expense for software acquired through acquisitions. For the three months ended September 30, 2012, our software license gross margin percentage declined because of higher amortization expense associated with four acquisitions from October 2011 through April 2012. These costs are being amortized over a weighted average period of approximately five years. For the nine months ended September 30, 2012, our software license gross margin percentage increased because the product mix included less third party software which offset higher amortization expense associated with acquisitions. Third party software has a lower gross margin than proprietary software solutions.

Software services, maintenance and subscription services. Cost of software services, maintenance and subscriptions primarily consists of personnel costs related to installation of our software, conversion of customer data, training customer personnel and support activities and various other services such as SaaS and disaster recovery. For the three and nine months ended September 30, 2012, the software services, maintenance and subscriptions gross margin percentage increased 1.2% and 1.1%, respectively compared to the prior year periods in part because maintenance and various other services such as SaaS and disaster recovery costs typically grow at a slower rate than related revenues due to leverage in the utilization of our support and maintenance staff and economies of scale, as well as slightly higher rates on certain services. We are also managing costs and staff levels to ensure they are in line with demand for professional services. Excluding 144 additional employees added with acquisitions, our implementation and support staff has increased by 102 employees since September 30, 2011. Due to the volume of recent contract signings we expect to add staff for the remainder of the year which will be slightly ahead of revenues and may negatively impact the gross margin in the short-term as well as seasonal lower utilization around the holidays.

Appraisal services. Our appraisal services revenues are approximately 6% of total revenues. The appraisal services gross margin percentage increased in the three months ended September 30, 2012 compared to the prior year period due to very small adjustments to related costs such as travel. The appraisal services gross margin percentage in the nine months ended September 30, 2011 was positively impacted by operational efficiencies associated with a large revaluation contract which began in mid-2010 and was substantially complete by mid-2011.

Our blended gross margin increased 1.1% and .6% in the three and nine months ended September 30, 2012, respectively, compared to the prior year periods. This increase was primarily due to leverage in the utilization of our support, maintenance and subscription-based services staff and economies of scale and slightly higher rates on certain services. The gross margin also benefited from lower third party software costs in the nine months ended September 30, 2012.

Selling, general and administrative ("SG&A") expenses consist primarily of salaries, employee benefits, travel, share-based compensation expense, commissions and related overhead costs for administrative and sales and marketing employees, as well as professional fees, trade show activities, advertising costs and other marketing related costs. The following table sets forth a comparison of our SG&A expenses for the periods presented as of September 30:

                                          Third Quarter              Change                Nine Months               Change
($ in thousands)                        2012         2011          $         %          2012         2011          $         %
Selling, general and administrative
expenses                              $ 20,909     $ 18,755     $ 2,154       11 %    $ 63,943     $ 54,509     $ 9,434       17 %

Excluding the impact of acquisitions, SG&A grew 9% and 14% for the three and nine months ended September 30, 2012, respectively compared to the prior year periods. SG&A as a percentage of revenues for the three and nine months ended September 30, 2012 was 22.3% and 23.9%, respectively compared to 24.3% and 24.0% for the three and nine months ended September 30, 2011, respectively. SG&A expenses increased due to increased headcount in sales and related expenses to support geographic expansion; costs associated with consolidating office space in our new Yarmouth, Maine facility in August 2011 and other facilities related costs, increased incentive compensation costs due to improved results and higher stock compensation expense because our company stock price has increased substantially over the last twelve months.

Research and Development Expense

The following table sets forth a comparison of our research and development expense for the periods presented as of September 30:

Third Quarter Change Nine Months Change ($ in thousands) 2012 2011 $ % 2012 2011 $ % Research and development expense $ 4,273 $ 4,196 $ 77 2 % $ 14,775 $ 13,780 $ 995 7 %

. . .