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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C. 20549-1004

                                   FORM 10-Q/A
                                (AMENDMENT NO. 1)

                                   (Mark One)

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

                FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2002

                                       OR

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

             For the transition period from __________ to __________

                        COMMISSION FILE NUMBER 000-19462

                                 ARTISOFT, INC.
             (Exact Name of Registrant as Specified in Its Charter)

            DELAWARE                                             86-0446453
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)

               5 CAMBRIDGE CENTER, CAMBRIDGE, MASSACHUSETTS 02142
               (Address of Principal Executive Offices) (Zip Code)

       Registrant's telephone number, including area code: (617) 354-0600

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act. YES [ ] NO [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                                                  SHARES OUTSTANDING AS OF
         TITLE OF CLASS OF COMMON STOCK              FEBRUARY 13, 2003
         ------------------------------              -----------------
     COMMON STOCK, $.01 PAR VALUE PER SHARE              2,970,920

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<PAGE>
                           FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes 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 subject to a number of risks and
uncertainties. All statements, other than statements of historical fact,
included in this Quarterly Report on Form 10-Q, including statements regarding
our strategy, future operations, financial position, estimated revenues,
projected costs, prospects, plans and objectives of management, are
forward-looking statements. When used in this Quarterly Report on Form 10-Q, the
words "will", "believe", "anticipate", "intend", "estimate", "expect", "project"
and similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying words. We
cannot guarantee future results, levels of activity, performance or
achievements, and you should not place undue reliance on our forward-looking
statements. Our forward-looking statements do not reflect the potential impact
of any future acquisitions, mergers, dispositions, joint ventures or strategic
alliances. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of various factors, including the
risks described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Risk Factors" and elsewhere in this Quarterly Report
on Form 10-Q. The forward-looking statements provided by Artisoft in this
Quarterly Report on Form 10-Q represent Artisoft's estimates as of February 14,
2003, the date this report was originally filed with the SEC. Forward-looking
statements contained herein do not reflect events transpiring subsequent to
February 14, 2003, notwithstanding the filing date of any amendment to this
Quarterly Report on Form 10-Q. However, while we may elect to update our
forward-looking statements in the future, we specifically disclaim any
obligation to do so. Our forward-looking statements should not be relied upon as
representing our estimates as of any date subsequent to the date this report is
filed with the SEC.

                                EXPLANATORY NOTE

     The purpose of this Form 10-Q/A is to amend the Form 10-Q filed on February
14, 2003 to:

     (1) Restate financial statements for the cost of equity issued in
connection with our Toshiba OEM and Reseller agreement.

     In January 2000 Artisoft entered into an OEM and Reseller Agreement with
Toshiba. Also in January, 2000 Artisoft entered into an agreement with Toshiba
under which Toshiba acquired 16,666 shares of Artisoft common stock at a price
of $41.964 per share and was issued warrants for an additional 8,333 shares of
Artisoft common stock at an exercise price of $41.964 per share. The fair market
value of the Artisoft common stock on the date of execution of the definitive
agreement was $129 per share. The difference between the issuance price and fair
market value of the Artisoft common stock, and the fair value of the warrants
(which were valued based upon the Black-Scholes Options Pricing Model) was
charged to selling expense in the quarter ended March 31, 2000. The difference
between issuance price and the market cost of the warrants was $2.3 million,
which was charged to selling expense.

     In May 2003, in response to comments Artisoft received from the SEC on its
accounting for this $2.3 million expense, Artisoft determined that the $2.3
million expense should be reflected as a reduction in revenue during the term of
the agreement, rather than a selling expense recognized at the time of the
signing of the definitive agreement. This cost of equity is being amortized as a
reduction of product revenues in proportion to revenue recognized relating to
the OEM and Reseller Agreement. The unamortized portion of this amount is
reported as deferred Toshiba equity costs in the shareholders' equity section of
the consolidated balance sheets. Artisoft's consolidated financial statements
and related disclosures set forth in this Form 10-Q/A have been restated to
reflect this determination.

     On May 8, 2003, Artisoft announced its preliminary financial results for
the third quarter of fiscal 2003. Those preliminary results were subject to the
final preparation and review of financial statements for the third quarter of
fiscal 2003 and an analysis of the financial restatements also announced on May
8, 2003. The preliminary results announced on May 8, 2003 reflected an
amortization of the cost of equity under Artisoft's agreement with Toshiba as a
reduction of product revenues at a rate of approximately $191,000 per quarter
over the term of the Toshiba OEM and Reseller agreement. After further analysis
in connection with preparing final financial statements for the third quarter of
fiscal 2003, Artisoft has amortized the cost of equity as a reduction of product
revenues in proportion to revenues recognized relating to the Toshiba OEM and
Reseller agreement. It is this treatment that is reflected in the financial
statements reported in this report. Under this treatment, as of March 31, 2003,
approximately $1.364 million of the cost of equity remains unamortized and will
be applied as a reduction of future product revenues under the Toshiba OEM and
Reseller agreement during the term of that agreement.

     (2) Restate financial statements to reflect all revenues related to our
Toshiba agreement as product revenues and record Toshiba revenue when Toshiba
has sold the products to its customers.

     In May 2003, also in response to comments Artisoft received from the SEC,
Artisoft determined that revenue it had previously recognized as services
revenue in 2000 and 2001 on the basis of specific product development
deliverables within its OEM and Reseller Agreement with Toshiba should be
recognized as product revenue. Accordingly, Artisoft's consolidated financial
statements and related disclosures set forth in this Form 10-Q/A have been
restated to reflect all revenue recognized under the agreement as product
revenues. Related costs of service revenue have been reclassified as product
development expense.

                                       2
<PAGE>
     In further response to the SEC comments received by Artisoft, Artisoft
determined that Toshiba product sales should have been recognized as revenue
with Toshiba's shipment of products to its customers (upon "sell-through"). The
Company had recorded service revenue based on the minimum purchase commitments
from inception through fiscal 2001. Product revenue commencing on July 1, 2001
through March 31, 2002 was based on product shipments to Toshiba(upon "sell-in)
and product revenue commencing on April 1, 2002 was recognized upon Toshiba's
sell-through. For further discussion of the conversion to recognizing Toshiba
related revenue upon Toshiba sell-through, please see the discussion in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

     (3) Revise certain other disclosures in response to SEC comments.

     This Form 10-Q/A contains revisions to certain other disclosures Artisoft
determined to include herein in response to comments Artisoft received from the
SEC.

     We have amended and restated in its entirety each Item of our Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 2002 that has been
affected by the restatements and revisions referenced above. This Amendment No.
1 to Quarterly Report on Form 10-Q does not reflect events occurring after the
February 14, 2002 filing of our Quarterly Report on Form 10-Q for the fiscal
quarter ended December 31, 2002 (except with respect to the reverse stock split
described below) or modify or update the disclosures set forth in that Quarterly
Report on Form 10-Q in any way, except as required to reflect the effects of the
restatements and revisions referenced above.

     On April 22, 2003 the company completed a reverse stock split of our common
stock at a ratio of one-for-six. We have reflected the reverse stock split to
the share and per share numbers in this amendment No. 1 on Form 10-Q/A to our
Quarterly Report for the fiscal quarter ended December 31, 2002.

     The Items of our Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 2002 which are amended and restated herein are:

     o    Items 1 and 2 of Part I; and
     o    Item 6 of Part II.

                                       3
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

                         ARTISOFT, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                   December 31,      June 30,
                                                                       2002            2002
                                                                   ------------    ------------
                                                                    (RESTATED)      (RESTATED)
<S>                                                                <C>             <C>
ASSETS
Current Assets:
  Cash and cash equivalents                                        $      5,489    $      6,020
  Trade accounts receivables, net of allowances of $320
    and $258 at December 2002 and June 2002, respectively                   550             858
  Prepaid expenses and other current assets                                 183             288
                                                                   ------------    ------------
               Total current assets                                       6,222           7,166
                                                                   ------------    ------------

Property and equipment                                                    3,662           3,480
  Less accumulated depreciation and amortization                         (3,003)         (2,682)
                                                                   ------------    ------------
               Net property and equipment                                   659             798

Other assets                                                                338             257
                                                                   ------------    ------------

                                                                   $      7,219    $      8,221
                                                                   ============    ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                 $        242    $        376
  Accrued liabilities                                                     1,865           1,569
  Deferred revenue                                                        1,616           1,723
  Customer deposits                                                         559              --
                                                                   ------------    ------------
               Total current liabilities                                  4,282           3,668
                                                                   ------------    ------------
Commitments and contingencies                                                --              --
Shareholders' equity:
  Preferred stock, $1.00 par value per share
    Authorized 11,433,600 shares;
      Series A preferred stock, $1.00 par value per share
        Authorized 50,000 Series A shares; no Series A shares
        issued at December 31, 2002 and June 30, 2002                        --              --
      Series B preferred stock, $1.00 par value per share
        Authorized 2,800,000 Series B shares; issued 2,800,000
      Series B shares at December 31, 2002 and June 30, 2002
        (aggregate liquidation value $7 million)                          2,800           2,800
  Common stock, $.01 par value per share. Authorized 50,000,000
    shares; issued 5,191,003 common shares at December 31, 2002
    and 4,861,102 at June 30, 2002                                           52              48
  Additional paid-in capital                                            108,579         106,704
  Accumulated deficit                                                   (37,318)        (33,697)
  Deferred Toshiba equity cost                                           (1,392)         (1,518)
  Less treasury stock, at cost, 2,216,783 shares at December 31,
    2002 and June 30, 2002                                              (69,784)        (69,784)
                                                                   ------------    ------------
               Shareholders' equity                                       2,937           4,553
                                                                   ------------    ------------
                                                                   $      7,219    $      8,221
                                                                   ============    ============
</TABLE>

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements, especially Note 2, "Restatement" of the Notes
to Consolidated Financial Statements as set forth in this amended Quarterly
Report

                                       4
<PAGE>
                         ARTISOFT, INC. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                  Three Months Ended          Six Months Ended
                                                     December 31,                December 31,
                                               ------------------------    ------------------------
                                                  2002          2001          2002          2001
                                               ----------    ----------    ----------    ----------
                                                RESTATED      RESTATED      RESTATED      RESTATED
<S>                                            <C>           <C>           <C>           <C>
Net revenue:
  Product                                      $    1,556    $    1,693    $    2,999    $    3,062
  Services                                             --            --            --            20
                                               ----------    ----------    ----------    ----------
       Total net revenue                            1,556         1,693         2,999         3,082

Cost of sales:
  Product                                              54           451            90           672
  Services                                             --            --            --            12
                                               ----------    ----------    ----------    ----------
       Total cost of sales                             54           451            90           684

Gross profit:
  Product                                           1,502         1,242         2,909         2,390
  Services                                             --            --            --             8
                                               ----------    ----------    ----------    ----------
       Total gross profit                           1,502         1,242         2,909         2,398

Operating expenses:
  Sales and marketing                               1,143         1,442         2,535         3,012
  Product development                                 650           827         1,450         1,963
  General and administrative                          933         1,136         2,586         2,385
                                               ----------    ----------    ----------    ----------
       Total operating expenses                     2,726         3,405         6,571         7,360
                                               ----------    ----------    ----------    ----------

Loss from operations                               (1,224)       (2,163)       (3,662)       (4,962)

Other income, net                                      19            67            41           125
                                               ----------    ----------    ----------    ----------
       Net loss                                    (1,205)       (2,096)       (3,621)       (4,837)

Dividend to series B preferred shareholders            --          (387)       (2,006)       (2,766)
                                               ----------    ----------    ----------    ----------
Loss applicable to common shareholders         $   (1,205)   $   (2,483)   $   (5,627)   $   (7,603)
                                               ==========    ==========    ==========    ==========
Loss applicable to common shareholders -
  basic and diluted                            $    (0.41)   $    (0.95)   $    (2.00)   $    (2.90)
                                               ==========    ==========    ==========    ==========
Weighted average common shares outstanding -
  basic and diluted                                 2,959         2,623         2,807         2,622
                                               ==========    ==========    ==========    ==========
</TABLE>

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements, especially Note 2, "Restatement" of the Notes
to Consolidated Financial Statements as set forth in this amended Quarterly
Report

                                       5
<PAGE>
                         ARTISOFT, INC. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   Six Months Ended
                                                                      December 31,
                                                                ------------------------
                                                                   2002          2001
                                                                ----------    ----------
                                                                 RESTATED      RESTATED
<S>                                                             <C>           <C>
Cash flows from operating activities:
Net loss                                                        $   (3,621)   $   (4,837)
  Adjustments to reconcile net loss to net
      Cash used in operating activities:
      Depreciation and amortization                                    354           395
      Amortization of Deferred Toshiba equity cost                     126           139
      Non-cash changes in accounts receivable allowances:
      Bad debt allowances:
        Additions                                                       15            --
        Reductions                                                      (9)           --
      Non-cash changes in returns allowances:
        Additions                                                       --            --
        Reductions                                                     (10)          (25)
        Changes in assets and liabilities:
        Receivables
        Trade accounts                                                 312          (735)
        Other receivables                                               --            20
        Inventories
        Prepaid expenses and other current assets                      105           722
        Accounts payable                                              (134)         (277)
        Accrued liabilities                                            296            75
        Deferred revenue                                              (107)          754
        Customer deposits                                              559            --
        Other assets                                                    40            42
                                                                ----------    ----------

                Net cash used in operating activities               (2,074)       (3,727)
                                                                ----------    ----------

Cash flows from investing activities:
  Capitalization of software                                          (154)         (108)
  Purchases of property and equipment                                 (182)          (44)
                                                                ----------    ----------

                Net cash used in  investing activities                (336)         (152)
                                                                ----------    ----------

Cash flows from financing activities:
  Proceeds from issuance of preferred stock, net of expenses            --         6,773
  Net proceeds from issuance of common stock, net of expenses        1,879            86
                                                                ----------    ----------

                Net cash provided by financing activities            1,879         6,859
                                                                ----------    ----------

Net increase (decrease) in cash and cash equivalents                  (531)        2,980
Cash and cash equivalents at beginning of period                     6,020         5,801
                                                                ----------    ----------
Cash and cash equivalents at end of period                      $    5,489    $    8,781
                                                                ==========    ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Non-cash dividend to series B preferred shareholders            $    2,006    $    2,379
                                                                ==========    ==========
</TABLE>

The accompanying notes are an integral part of the unaudited condensed
consolidated financial statements, especially Note 2, "Restatement" of the Notes
to Consolidated Financial Statements as set forth in this amended Quarterly
Report

                                       6
<PAGE>
                         ARTISOFT, INC. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
        (IN THOUSANDS, EXCEPT PERCENTAGES, SHARES AND PER SHARE AMOUNTS)

(1) BASIS OF PRESENTATION

Artisoft, Inc. ("Artisoft", the "Company" or the "Registrant") develops, markets
and sells computer telephony software application products and associated
services.

The Company's principal executive offices are located at 5 Cambridge Center,
Cambridge, Massachusetts 02142. The telephone number at that address is (617)
354-0600. The Company was incorporated in November 1982 and reincorporated by
merger in Delaware in July 1991.

The condensed consolidated financial statements include the accounts of
Artisoft, Inc. and its three wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company in accordance with accounting principles generally
accepted in the United States of America and pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). In the
opinion of management, the accompanying financial statements include all
adjustments (of a normal recurring nature), which are necessary for a fair
presentation of the financial results for the interim periods presented. Certain
information and footnote disclosures normally included in financial statements
have been condensed or omitted pursuant to such rules and regulations. Although
the Company believes that the disclosures are adequate to make the information
presented not misleading, it is suggested that these financial statements be
read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K/A for the fiscal
year ended June 30, 2002, on file with the SEC. The results of operations for
the three and six months ended December 31, 2002 are not necessarily indicative
of the results to be expected for the full year or any other future periods.

(2) RESTATEMENT

     In January 2000, Artisoft entered into an OEM and Reseller Agreement with
Toshiba. Also in January 2000, Artisoft entered into an agreement with Toshiba
under which Toshiba acquired 16,666 shares of Artisoft common stock at a price
of $41.964 per share and was issued warrants for an additional 8,333 shares of
Artisoft common stock at an exercise price of $41.964 per share. The fair market
value of the Artisoft common stock on the date of execution of the definitive
agreement was $129 per share. The difference between the issuance price and fair
market value of the Artisoft common stock, and the fair value of the warrants
(which were valued based upon the Black Scholes Options Pricing Model) amounted
to $2.3 million and was charged to selling expense in the quarter ended March
31, 2000.

     In May 2003, in response to comments Artisoft received from the SEC on its
accounting for this $2.3 million expense, Artisoft determined that the $2.3
million expense should be reflected as a reduction in revenue during the term of
the agreement, rather than a selling expense recognized at the time of the
signing of the definitive agreement. This cost of equity is being amortized as a
reduction of product revenues in proportion to revenue recognized relating to
the OEM and Reseller Agreement. The unamortized portion of this amount is
reported as deferred Toshiba equity costs in the shareholders equity section of
the consolidated balance sheets. Artisoft's consolidated financial statements
and related disclosures set forth in this Form 10-Q/A have been restated to
reflect this determination

     In May 2003, Artisoft also determined that revenue it had previously
recognized as services revenue in 2000 and 2001 on the basis of specific product
development deliverables within its OEM and Reseller Agreement with Toshiba
should be recognized as product revenue. Accordingly, Artisoft's consolidated
financial statements and related disclosures have been restated to reflect all
revenue recognized under the agreement as product revenues. Related costs of
service revenue have been reclassified as product development expense.

     Artisoft further determined in May 2003 that product sales to Toshiba
should have been recognized as revenue when Toshiba shipped the products to its
customers (upon "sell-through"). The Company had recorded service revenue based
on the minimum purchase commitments from inception through fiscal 2001. Product
revenue commencing on July 1, 2001and through March 31, 2002 was based on
product shipments to Toshiba (upon "sell-in") and product revenue commencing on
April 1, 2002 was based upon sell-through.

     The principal adjustments to restate the financial statements for the
fiscal years ended June 30, 2000, June 30, 2001 and June 30, 2002 and for the
quarter ended December 31, 2002 are as follows:

                                       7
<PAGE>
     EQUITY TRANSACTIONS

In January 2000, Artisoft entered into an agreement with Toshiba under which
Toshiba acquired 16,666 shares of Artisoft common stock at a price of $41.964
per share and was issued warrants for an additional 8,333 shares of Artisoft
common stock at an exercise price of $41.964 per share. The fair market value of
the Artisoft common stock on the date of execution of the definitive agreement
was $129 per share. The difference between the issuance price and fair market
value of the Artisoft common stock, and the fair value of the warrants (which
were valued based upon the Black-Scholes Options Pricing Model) amounted to $2.3
million. This cost of equity is being amortized as a reduction of product
revenues in proportion to revenue recognized relating to the OEM and Reseller
Agreement entered into by the two companies at the same time as the equity
investment agreement. The unamortized portion of this amount is reported as
deferred Toshiba equity costs in the shareholders' equity section of the
consolidated balance sheets.

     SERVICES REVENUE

     In May 2003, in response to comments Artisoft received from the SEC,
Artisoft determined that revenue it had previously recognized as services
revenue in 2000 and 2001 on the basis of specific product development
deliverables within its OEM and Reseller Agreement with Toshiba should be
recognized as product revenue. Accordingly, Artisoft's consolidated financial
statements and related disclosures set forth in this Form 10-Q/A have been
restated to reflect all revenue recognized under the agreement as product
revenues. $411 thousand of services revenue in 2000 and $1.590 million of
services revenue in 2001 were reversed and recognized as product revenue, as
discussed below. Related costs of service revenue have also been reclassified as
product development expense, $408 thousand and $1.01 million of services costs
of sale were reclassified in 2000 and 2001, respectively.

     TOSHIBA REVENUE RECOGNITION

     In further response to the SEC comments received by Artisoft, Artisoft
determined that Toshiba product sales should have been recognized as revenue
with Toshiba's shipment of products to its customers ("sell-through"). The
Company had recorded service revenue based on the minimum purchase commitments
from inception through fiscal 2001, product revenue commencing on July 1, 2001
through March 31, 2002 based on product shipments to Toshiba and product revenue
commencing on April 1, 2002 based on sell-through. Accordingly, $411 thousand of
revenue in 2000, $1.59 million of revenue in 2001 and $1.03 million of revenue
in 2002 based on sales to Toshiba were reversed. The Toshiba sell-through
revenue net of related equity costs recognized in its place was $81 thousand in
2000, $386 thousand in 2001 and $448 thousand in 2002, as well as $85 thousand
in first quarter fiscal 2003 and $62 thousand in second quarter fiscal 2003. In
addition, stock rotation reserves of $800 thousand in 2002 and $274 thousand in
Q2 of fiscal 2003 were reversed as a consequence of the restatement of prior
period sales to Toshiba revenues.

     PRODUCT DEVELOPMENT COSTS

     Product Development costs that were associated with the specific
deliverables of the Toshiba OEM and Reseller Agreement had been recognized as
Cost of Sales - Services. Since all services revenue related to the Toshiba
agreement is being reversed, the product development costs associated with that
revenue are being reclassed as operating expenses. The expenses were $408
thousand in 2000 and $1.01 million in 2001.

     BALANCE SHEET

     The Balance Sheet impact of the changes discussed above include a reduction
of accounts receivable of $201 thousand at June 30, 2002 , an increase in
deferred revenue of $1.142 million, $1.145 million and $1.072 million at June
30, 2001, June 30, 2002 and December 31, 2002 respectively and, a decrease in
the reserve for stock rotations of $800 thousand and $484 thousand at June 30,
2002 and June 30, 2001 respectively and $1.074 million at December 31, 2002, and
an increase in deferred Toshiba equity cost of $1.896 million, $1.518 million
and $1.392 million at June 30, 2001, June 30, 2002 and December 31, 2002
respectively.

     The following tables outline the effect of these adjustments on the fiscal
years ended June 30, 2001 and June 30, 2002 and the quarter and six months
ending December 31, 2002:

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
                                                        QUARTER ENDED DECEMBER 31, 2002
                                                        -------------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
                                                               (In thousands)
<S>                                                        <C>            <C>
NET PRODUCT REVENUE .............................          $    1,220     $    1,556
         Total net revenue ......................          $    1,220     $    1,556

Gross profit - product ..........................          $    1,166     $    1,502
         Total gross profit .....................          $    1,166     $    1,502
Net Loss from operations ........................          $   (1,560)    $   (1,224)
Net Loss ........................................          $   (1,560)    $   (1,224)
Loss applicable to common shareholders ..........          $   (1,541)    $   (1,205)
Basic and Diluted loss per common share: ........          $     (.52)    $     (.41)

                                                 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
                                                      SIX MONTHS ENDED DECEMBER 31, 2002
                                                      ----------------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
                                                                 (In thousands)
NET PRODUCT REVENUE .............................          $    2,577     $    2,999
         Total net revenue ......................          $    2,577     $    2,999
Gross profit - product ..........................          $    2,487     $    2,909
Total gross profit ..............................          $    2,487     $    2,909
Net Loss from operations ........................          $   (4,084)    $   (3,662)
    Net loss ....................................          $   (4,043)    $   (3,621)
Net Loss applicable to common shareholders ......          $   (6,049)    $   (5,627)
Basic and Diluted loss per common share: ........          $    (2.15)    $    (2.00)

                                                          CONSOLIDATED BALANCE SHEET
                                                             AT DECEMBER 31, 2002
                                                          ---------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
TRADE RECEIVABLES ...............................          $      802     $      550
  Total current assets ..........................          $    6,474     $    6,222
         Total assets ...........................          $    7,471     $    7,219

Deferred Revenue ................................          $      544     $    1,616
         Total current liabilities ..............          $    4,536     $    4,282
Accumulated deficit .............................          $  (38,712)    $  (37,318)
Deferred Toshiba equity cost ....................          $       --     $   (1,392)
         Total shareholders' equity .............          $    2,935     $    2,937
Total Liabilities and shareholders equity: ......          $    7,471     $    7,219

                                                          CONSOLIDATED BALANCE SHEET
                                                               AT JUNE 30, 2002
                                                          ---------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
TRADE RECEIVABLES ...............................          $    1,199     $      858
Total current assets ............................          $    7,507     $    7,166
   Total assets .................................          $    8,562     $    8,221
Deferred revenue ................................          $      578     $    1,723
Reserve for stock rotation ......................          $      940     $       --
   Total current liabilities ....................          $    3,463     $    3,668
Accumulated Deficit .............................          $  (34,669)    $  (33,697)
Deferred Toshiba equity cost ....................          $       --     $   (1,518)
Total shareholders' equity ......................          $    5,099     $    4,553
Total Liabilities and shareholders equity: ......          $    8,361     $    8,221
</TABLE>

                                        9
<PAGE>
<TABLE>
<CAPTION>
                                                 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
                                                        QUARTER ENDED DECEMBER 31, 2001
                                                        -------------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
                                                                (In thousands)
<S>                                                        <C>            <C>
NET PRODUCT REVENUE .............................          $    2,499     $    1,693
Total net revenue ...............................          $    2,499     $    1,693

Gross profit - product ..........................          $    2,048     $    1,242
Total gross profit ..............................          $    2,048     $    1,242

Loss from operations ............................          $   (1,357)    $   (2,163)
  Net Loss ......................................          $   (1,290)    $   (2,096)
Loss applicable to common shareholders ..........          $   (1,677)    $   (2,483)
Basic and Diluted loss per common share: ........          $     (.64)    $     (.95)

                                                 CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
                                                       SIX MONTHS ENDED DECEMBER 31, 2001
                                                       ----------------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
                                                                (In thousands)
NET PRODUCT REVENUE .............................          $    3,897     $    3,062
Total net revenue ...............................          $    3,917     $    3,082

Gross profit - product ..........................          $    3,325     $    2,390
Total gross profit ..............................          $    3,233     $    2,398

Loss from operations ............................          $   (4,127)    $   (4,962)
  Net Loss ......................................          $   (4,002)    $   (4,837)
Loss applicable to common shareholders ..........          $   (6,768)    $   (7,603)
Basic and Diluted loss per common share: ........          $    (2.58)    $    (2.90)

                                                 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
                                                       SIX MONTHS ENDED DECEMBER 31, 2002
                                                       ----------------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
                                                                (In thousands)
NET LOSS ........................................          $   (4,043)    $   (3,621)
  Amortization of Deferred Toshiba equity cost ..          $       --     $      126
  Changes in deferred revenue ...................          $      167     $     (107)
  Changes in reserve for stock rotation .........          $      386     $       --

                                                 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
                                                       SIX MONTHS ENDED DECEMBER 31, 2001
                                                       ----------------------------------
                                                          As Reported     As Restated
                                                          -----------     -----------
                                                                (In thousands)
NET LOSS ........................................          $   (4,002)    $   (4,837)
  Amortization of Deferred Toshiba equity cost ..          $       --     $      139
  Changes in trade accounts receivable ..........          $     (412)    $     (735)
  Changes in deferred revenue ...................          $       59     $      754
  Changes in reserve for stock rotation .........          $     (323)    $       --
</TABLE>

(3) REVENUE RECOGNITION

The Company has one family of products, TeleVantage, a shrink-wrap
software-based phone system that runs on Windows 2000/NT platform and Intel
communications hardware. TeleVantage has an optional Call Center module, and
add-ons, such as TeleVantage Call Center Scoreboard, TeleVantage Call
Classifier, TeleVantage Smart Dialer and TeleVantage persistent pager. All
modules are fully integrated and represent shrink-wrap software. The Company
does not provide training or installation services. However, we have provided
development services to Intel in the past as discussed below.

                                       10
<PAGE>
The Company follows the provisions of Statement of Position "SOP" 97-2, SOFTWARE
REVENUE RECOGNITION as amended by SOP 98-9, MODIFICATION OF SOP 97-2 SOFTWARE
REVENUE RECOGNITION, WITH RESPECT TO CERTAIN TRANSACTIONS. The Company
recognizes revenue when it is realized or realizable and earned. The Company
considers revenue realized or realizable and earned when persuasive evidence of
an arrangement exists, the product has been shipped or the services have been
provided to the customer, the sales price is fixed or determinable and
collectability is reasonably assured. The Company reduces revenue for estimated
customer returns, rotations and sales rebates. Revenue from software license
agreements that have significant customizations and modification of the software
product are recognized in accordance with the provisions of SOP 97-2 as it
relates to contract accounting under SOP 81-1, ACCOUNTING FOR PERFORMANCE OF
CONSTRUCTION-TYPE AND CERTAIN PRODUCTION-TYPE CONTRACTS. In addition to the
aforementioned general policy, the following are the specific revenue
recognition policies for each major category of revenue. The same revenue
recognition criteria are used to account for sales through distributors as sales
to end users

PRODUCT-SOFTWARE, NOT-FOR-RESALE KITS (NFR'S) AND HARDWARE. TeleVantage is sold
under a perpetual license agreement. As part of the product sales price, the
Company also provides second tier telephone support that is generally utilized
by the customer shortly after the sale. Telephone support is the only
undelivered element that is implicitly or explicity included in the sales price
of the license. The Company has concluded that the level of support it provides
occurs within one year after sale, unspecified upgrades/enhancements offered
have historically been minimal and are expected to continue to be minimal, and
the cost to provide this limited amount of service is insignificant and subject
to estimation and therefore the Company recognizes license revenue upon shipment
and meeting all other revenue recognition criteria and accrues the related costs
of telephone support.

VSOE is established through the use of established fixed price lists that are
strictly adhered to.

Upgrades for product enhancements are charged for separately based on standard
price lists in effect at the time the upgrade is purchased, or are provided for
under annual subscriptions. Annual subscriptions are sold separately and are
based upon standard price lists. Revenue for annual subscriptions is recognized
ratably over the length of the software subscription period, typically twelve
months.

The following discusses the Company's policies regarding its revenue recognition
criteria:

*    Persuasive evidence of an arrangement exists: The Company's practice
     requires that authorized purchase orders are received by the customer,
     generally by either Fax or E-mail. Arrangements outside of standard terms,
     for example the arrangement with Toshiba, are evidenced by a signed
     agreement.

*    Delivery has occurred: The product is shipped by mail, outside delivery
     service or E-Mail and ownership passes upon shipment according to our
     standard sales terms. The Company has historically entered into one
     contract with payment terms of six months. The Company evaluated the
     payment terms and concluded that the contract fee was fixed and
     determinable.

*    The vendor's fee is fixed or determinable: Prices charged are based upon
     established price lists and payment terms require payment generally within
     30 days.

*    Collectibility is probable: Credit is granted based on the customer's
     history with us or if a new customer, based upon credit checks such as Dun
     and Bradstreet and/or bank and vendor references. Prepayment is required if
     customer credit history is questionable.

The Company does not typically have bundled contract elements for which revenue
is deferred. For bundled contract arrangements, the Company has separately
stated and substantive renewal rates and as a result, the Company has followed
the residual method as defined in SOP 98-9.

Also, in January 2000, the Company executed a strategic alliance agreement with
Toshiba intended to allow the Company and Toshiba to deliver an integrated
communications server and software-PBX solution for small and midsize
businesses. TeleVantage 4.0 represents the results of a 1-1/2 year
joint-engineering project with Toshiba to integrate TeleVantage with Toshiba
digital handsets. Through an Original Equipment Manufacturer (OEM) arrangement
with Artisoft, Toshiba is marketing TeleVantage 4.0 under the Strata CS brand,
which is being distributed and supported through Toshiba's established dealer
channel. Under the terms of the agreement, Toshiba will purchase licenses of
TeleVantage for customized versions of the software product to be integrated
with its digital handsets and communications server product offerings... .
SERVICES. Revenue from time and material service contracts is recognized as the
services are provided. Revenue from fixed price, long-term service or
development contracts is recognized over the contract term based on the
percentage of services that are provided during the period compared with the
total estimated services to be provided over the entire contract. Losses on
fixed price contracts are recognized during the period in which the loss first
becomes apparent. Deferred revenue represents cash received for services that
have not yet been provided. Customer deposits represent cash received for
products not yet shipped.

                                       11
<PAGE>
(4) RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued Financial
Accounting Standards ("SFAS") No. 143, ACCOUNTING FOR ASSET RETIREMENT
OBLIGATIONS ("SFAS 143") which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. SFAS 143 requires an enterprise to record the
fair value of an asset retirement obligation as a liability in the period in
which it incurs a legal obligation associated with the retirement of a tangible
long-lived asset. SFAS 143 also requires the enterprise to record the contra to
the initial obligation as an increase to the carrying amount of the related
long-lived asset and to depreciate that cost over the remaining useful life of
the asset. The liability is changed at the end of each period to reflect the
passage of time and changes in the estimated future cash flows underlying the
initial fair value measurement. SFAS 143 is effective for fiscal years beginning
after June 15, 2002. The Company adopted this standard effective July 1, 2002.
Adoption of the standard did not have a material effect on the financial
position or results of operations of the Company.

On July 30, 2002, the FASB issued Statement No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES ("SFAS 146"). SFAS 146 is based on
the fundamental principle that a liability for a cost associated with an exit or
disposal activity should be recorded when it (1) is incurred, that is, when it
meets the definition of a liability in FASB Concepts Statement No. 6, ELEMENTS
OF FINANCIAL STATEMENTS, and (2) can be measured at fair value. SFAS 146 notes
that the principal reason for issuing SFAS 146 is the FASB's belief that some
liabilities for costs associated with exit or disposal activities that entities
record under current accounting pronouncements, in particular Issue 94-3,
LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS
TO EXIT AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING),) do
not meet the definition of a liability. SFAS 146 nullifies Issue 94-3; thus, it
will have a significant effect on practice because commitment to an exit or
disposal plan no longer will be a sufficient basis for recording a liability for
costs related to those activities. SFAS 146 is effective for exit and disposal
activities initiated after December 31, 2002. The Company adopted this standard
effective July 1, 2002. Adoption of the standard did not have a material effect
on the financial position or results of operations of the Company.

In December 2002, the FASB issued SFAS No. 148, ACCOUNTING FOR STOCK-BASED
COMPENSATION-TRANSITION AND DISCLOSURE ("SFAS 148"). SFAS 148 amends FASB
Statement No. 123 ("SFAS 123") to provide alternative methods of transition for
a voluntary change to the fair value based method of accounting for stock-based
employee compensation. In addition, SFAS 148 amends the disclosure requirements
of SFAS 123 to require prominent disclosures of both annual and interim
financial statements about the method of accounting for stock-based employee
compensation and the effect of the method used on reported results. The
transition guidance and annual disclosure provisions of SFAS 148 are effective
for fiscal years ending after December 15, 2002. The interim disclosure
provisions are effective for financial reports containing financial statements
for interim periods beginning after December 15, 2002. As the Company did not
make a voluntary change to the fair value based method of accounting for
stock-based compensation in 2002, the adoption of SFAS No. 148 did not have a
material impact on the Company's financial position and results of operations.
The Company will adopt the interim disclosure provisions for the period ending
March 31, 2003.

(5) CONTINGENCY

In September 2002, the Company recorded an accrual of $.7 million related to
potential tax exposure associated with a technical compliance issue involving
its employee stock option plan and past incentive stock options exercised under
the plan. The Company continues to evaluate the facts and circumstances
surrounding this technical compliance issue and the ultimate resolution of this
issue could differ materially from the amount of the established actual.

(6) COMPUTATION OF NET LOSS PER SHARE

Net loss per share basic and diluted are based upon the weighted average number
of common shares outstanding. Common equivalent shares, consisting of
outstanding stock options, convertible preferred shares and warrants to purchase
common stock are included in the diluted per share calculations where the effect
of their inclusion would be dilutive.

                                        Three Months Ended     Six Months Ended
                                           December 31,           December 31,
                                         -----------------     -----------------
                                          2002       2001       2002       2001
                                         ------     ------     ------     ------
Antidilutive potential common shares
  excluded from net loss per share        1,103       727       1,131       500

                                       12
<PAGE>
(7) COMMON STOCK

On August 8, 2002, the Company entered into a purchase agreement under which it
agreed to issue and sell 317,466 shares of common stock at a per share purchase
price equal to $6.30 in a private placement financing. On September 27, 2002,
the Company received gross proceeds from the issuance and sale of that common
stock in the amount of $2,000,040. Under its registration rights agreement with
the investors in this September 2002 financing, the Company is required to
register these shares of common stock for resale by the investors. The shares of
common stock issued and sold to the investors are subject to purchase price
adjustments in certain events during the 24-month period following the first
effective date of a registration statement to be filed by Artisoft covering the
resale of those shares. In the event of a purchase price adjustment, the Company
will be required to issue additional shares of common stock to the investors for
no additional consideration and to register those additional shares for resale
by the investors. The investors in the September 2002 financing have the right
to designate one person for election to the Company's board of directors, and
the Company will be required to use its best efforts to cause that person to be
elected to the board of directors. The investors have not yet exercised this
right.

The investors in the September 2002 and 2001 financings have the right to
participate, up to their pro rata share in the respective financing, in future
non-public capital raising transactions by the Company. This right, as held by
the investors in the September 2002 financing, is not exercisable unless and
until the expiration or termination in full of the similar rights of the
investors in the 2001 financing.

The closing of the issuance and sale of shares of common stock in the September
2002 financing resulted in anti-dilution adjustments to the Series B Preferred
Stock and the warrants issued in Artisoft's 2001 financing. As a result of these
anti-dilution adjustments, each share of Series B Preferred Stock is convertible
into approximately .3967 shares of common stock. Prior to the issuance and sale
of shares of common stock in the September 2002 financing, each share of Series
B Preferred Stock was convertible into one sixth of one share of common stock.
In addition, the per share exercise price of each warrant was reduced from
$22.50 to $6.30, as a result of the September 2002 financing. These adjustments
were accounted for as a $2.0 million non-cash dividend to the series B preferred
shareholders and are included in the computation of the loss available to common
shareholders and in the loss per share for the six months ended December 31,
2002. The excess of the aggregate fair value of the beneficial conversion
feature over the proceeds received amounted to $9.7 million and has not been
reflected in the results of operations or financial position of the Company for
the periods presented.

(8) SUBSEQUENT EVENTS -REVERSE STOCK SPLIT

On April 22, 2003 the Company completed a reverse stock split of its common
stock at a ratio of one-for-six. The company has retroactively applied the
reverse stock split to the share and per numbers in these financial statements

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

YOU SHOULD READ THE FOLLOWING DISCUSSION TOGETHER WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS QUARTERLY
REPORT ON FORM 10-Q. THIS ITEM, INCLUDING, WITHOUT LIMITATION, THE INFORMATION
SET FORTH UNDER THE HEADING "FUTURE RESULTS", CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND
SECTION 21E OF THE SECURITIES AND EXCHANGE ACT OF 1934 THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE INCLUDED IN SUCH
FORWARD-LOOKING STATEMENTS. FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY INCLUDE THOSE SET FORTH UNDER "RISK FACTORS" COMMENCING ON PAGE 17,
AS WELL AS THOSE OTHERWISE DISCUSSED IN THIS SECTION AND ELSEWHERE IN THIS
QUARTERLY REPORT ON FORM 10-Q/A. SEE "FORWARD-LOOKING STATEMENTS".

RESTATEMENT

Our previously issued consolidated balance sheets as of June 30, 2002, and
December 31, 2002 and the related consolidated statements of operations for the
three and six month periods ended December 31, 2001 and 2002 and cash flows for
the six months ended December 31, 2001 and 2002 have been restated.

The following "Management's Discussion and Analysis has been restated to reflect
the changes more fully described within note 2 of the notes to restated
consolidated financial statements.

Our discussion and analysis of our financial condition and results of operations
are based upon our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amount of assets and

                                       13
<PAGE>
liabilities at the date of the financial statements and revenues and expenses
during the reporting period. Areas where significant judgments are made include,
but are not limited to revenue recognition. Actual results could differ
materially from these estimates. For a more detailed explanation of the
judgments made in these areas, please refer to our Annual Report on Form 10-K
for the year ended June 30, 2002, as filed with the Securities and Exchange
Commission on September 30, 2002.

The Company has one family of products, TeleVantage, a shrink-wrap
software-based phone system that runs on Windows 2000 /NT platform and Intel
communications hardware. TeleVantage has an optional Call Center module, and
add-ons, such as TeleVantage Call Center Scoreboard, TeleVantage Call
Classifier, TeleVantage Smart Dialer and TeleVantage persistent pager. All
modules are fully integrated and represent shrink-wrap software. The Company
does not provide training or installation services.

RESULTS OF OPERATIONS

NET REVENUES

PRODUCT REVENUE. Net product revenue was $1.6 million for the quarter ended
December 31, 2002 and $1.7 million for the quarter ended 2001, representing a
decrease of 8% . Net product revenue was $3 million for the six months ended
December 31, 2002 and $3.1 million for the six months ended December 31, 2001,
representing a decrease of 2.1% . Contributing to the decline was the strategic
decision to discontinue selling voice processing hardware, the elimination of
all channel inventories, and the impact of rotation reserves.

These revenue declines were offset by strong growth in TeleVantage software
sales of licenses for use by end users and TeleVantage dealers.

We distribute our products both domestically and internationally. International
product revenue was $.2 million for each of the quarters ended December 31, 2002
and 2001, representing 13% of total net revenue in the 2002 quarter and 12% of
total net revenue in the 2001 quarter. International revenue was $.3 million for
each of the six-month periods ended December 31, 2002 and 2001, representing 10%
of total net revenue in both 6 month periods.

SERVICE REVENUE. We had no service revenue for the quarters ended December 31,
2002 and 2001. For the six months ended December 31, 2002 we had no service
revenue compared with $20,000 of service revenue recognized from Intel
Corporation for the six months ended December 31, 2001. We have completed our
development obligations under our agreement with Intel and no additional service
revenue is anticipated under that agreement.

GROSS PROFIT

PRODUCT. Gross profit on product revenue was $1.5 million for the quarter ended
December 31, 2002 and $1.2 million for the quarter ended December 31, 2001,
representing 96.5% of net product revenue in the 2002 quarter and 73.4% of net
product revenue in the 2001 quarter. Gross profit for the six months ended
December 31, 2002 was $2.9 million for the six months ended December 31, 2002
and $2.4 million for the six months ended December 31, 2001, representing 97% of
net product revenue for the 2002 period and 77.8% of net product revenue for the
2001 period. The increases in gross profit percentage for the quarter and six
months ended December 31, 2002 compared to the comparable periods in 2001 are
the result of a higher percentage of total product revenue derived from
TeleVantage software with lesser amounts from lower margin Dialogic hardware.

SALES AND MARKETING

Sales and marketing expenses were $1.1 million for the quarter ended December
31, 2002 and $1.4 million for the quarter ended December 31, 2001, representing
73.4% of total net sales for the 2002 quarter and 85.1% of total net sales for
the 2001 quarter. Sales and marketing expenses were $2.5 million for the six
months ended December 31, 2002 and $3.0 million for the six months ended
December 31, 2001, representing 84.5% of total net sales for the 2002 period and
97.7% of the total net sales for the 2001 period.. The decreases in sales and
marketing expense in aggregate dollars for the quarter and six months ended
December 31, 2002, as compared to the comparable period in 2001, reflect a
reduction in spending for marketing programs and other expenses. In addition,
the decrease in sales and marketing expenses in aggregate dollars for the six
month period ended December 31, 2002, as compared to the comparable period in
2001, reflects the impact of a restructuring in personnel costs as a result of
workforce reductions implemented in September 2001.

PRODUCT DEVELOPMENT

Product development expenses were $.7 million for the quarter ended December 31,
2002 and $.8 million for the quarter ended December 31, 2001, representing 41.8%
of total net revenue for the 2002 quarter and 48.8% of total net revenue for the
2001 quarter. Product development expenses were $1.5 million for the six months
ended December 31, 2002 and $2.0 million for the six months ended December 31,
2001, representing 48.3% of the total net revenue for the 2002 period and 63.7%
of total net revenue for the 2001 period. The decrease in the percentage of
development expense to total net revenue for the quarter ended December 31,

                                       14
<PAGE>
2002, as compared to the comparable period in 2001 is primarily attributable to
the capitalization of approximately $.2 million of expense attributable to the
development of TeleVantage 5.0. In accordance with established accounting
policy, product development costs are capitalized after technological
feasibility is established and until the products are available for sale.
TeleVantage 5.0 reached technical feasibility during the quarter ended December
31, 2002 and was shipped on December 27 of that quarter. Development expenses,
including those capitalized, were flat in the quarter ended December 31, 2002
compared with the quarter ended December 31, 2001. In addition, the reduction in
the ratio of product development costs to total net revenue and aggregate
dollars for the six months ended December 31, 2002 reflect a reduction in
development personnel headcount in September 2001 due to the completion of the
Intel development agreement.

GENERAL AND ADMINISTRATIVE

General and administrative expenses were $.9 million for the quarter ended
December 31, 2002 and $1.1 million for the quarter ended December 31, 2001,
representing 60% of total net revenue for the 2002 quarter and 67% of total net
revenue for the 2001 quarter. General and administrative expenses were $2.6
million for the six months ended December 31, 2002 and $2.4 million for the six
months ended December 31, 2001, representing 86.2% of the total net revenue for
the 2002 period and 77.3% of total net revenue for the 2001 period. The
reduction in general and administrative expenses in aggregate dollars for the
three months ended December 31, 2002, as compared to the comparable period in
2001, reflects a net decrease in overall expense levels, including a reduction
of approximately $.1 million in sales tax reserves no longer needed. In addition
the increases in the percentage of general and administrative expense to total
net revenue and aggregate dollars for the six months ended December 31, 2002
reflect an accrual established in the quarter ended September 30, 2002 of $.7
million for a tax exposure due to a technical compliance issue related to our
stock option plan and past option exercises under the plan. The Company believes
that that if a tax is assessed it has reasonable defenses to pursue an appeal
and minimize the impact of this contingency on our financial position. However,
the impact of the ultimate resolution of this issue could differ materially from
the amount of the established reserve partially offseting the impact of this $.7
million accrual were decreases in administrative payroll and other expenses.

OTHER INCOME, NET

Other Income, Net represents interest income and was $19,000 for the quarter
ended December 31, 2002 and $67,000 for the quarter ended December 31, 2001.
Other Income, Net was $41,000 for the six months ended December 31, 2002 and
$125,000 for the six months ended December 31, 2001. The decreases for the
quarter and six-month period ended December 31, 2002, as compared to the
comparable periods in 2001, were the result of lower interest rates combined
with lower average cash and invested balances.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

We had cash and cash equivalents of $5.5 million at December 31, 2002 compared
to $6.0 million at June 30, 2002. Working capital was $1.9 million at December
31, 2002 compared to $3.5 million at June 30, 2002, a decrease of $1.6 million.
The decrease in working capital, excluding cash, reflects a decrease in current
assets of $.4 million primarily in trade accounts receivable and prepaid
expenses. Current liabilities increased $..6 million due to an increase of $.6
million in customer deposits received from Toshiba under our OEM agreement.
Future product shipments and resale by Toshiba to its customers (sell-through)
is required to satisfy the deposit amounts.. Accounts payable and accrued
expenses increased $.2 million, net. Included in accrued liabilities is a
reserve of $.7 million for a tax exposure due to a technical compliance issue
related to our stock option plan and past option exercises. The decrease in cash
and cash equivalents of $.5 million primarily results from the receipt of $1.9
million, net of issuance costs, from the sale of common stock in a private
placement on September 27, 2002, and $25,000 from the sale of common stock on
December 31, 2002 under the Employee Stock Purchase Plan, less cash of $2.4
million used in operations and investing activities.

We used cash of $2.1 million to fund operating activities during the six months
ended December 31, 2002. The cash used in operating activities was principally
the result of $3.6 million in net loss offset by depreciation and amortization
of $.5 million and a net changes in current assets, excluding cash, and
liabilities of $1.1 million.

In September 2002, the Company recorded an accrual of $.7 million related to
potential tax exposure associated with a technical compliance issue involving
its employee stock option plan and past incentive stock options exercised under
the plan. The Company continues to evaluate the facts and circumstances
surrounding this technical compliance issue and the ultimate resolution of this
issue could differ materially from the amount of the established actual.

On August 8, 2002, we entered into a purchase agreement under which we agreed to
issue and sell 317,466 shares of common stock at a per share purchase price
equal to $6.30 in a private placement financing. On September 27, 2002 we
received gross proceeds from the issuance and sale of that common stock in the
amount of $2,000,040. Under its registration rights agreement with the investors
in this September 2002 financing, Artisoft is required to register these shares
of common stock for resale by the investors. The shares of common stock issued
and sold to the investors are subject to purchase price adjustments in certain
events during the 24-month period following the first effective date of a
registration statement to be filed by Artisoft covering the resale of those
shares. In the event of a purchase price adjustment, Artisoft will be required
to issue additional shares of common stock to the investors for no additional
consideration and to register those additional shares for resale by the
investors. The investors in the September 2002 financing have the right to

                                       15
<PAGE>
designate one person for election to our board of directors, and we will be
required to use our best efforts to cause that person to be elected to the board
of directors. The investors have not yet exercised this right.

The closing of the issuance and sale of shares of common stock in the September
2002 financing resulted in anti-dilution adjustments to the series B preferred
stock and the warrants issued in Artisoft's 2001 financing. As a result of these
anti-dilution adjustments, each share of series B preferred stock is convertible
into approximately .3967 shares of common stock. Prior to the issuance and sale
of shares of common stock under this agreement each share of series B preferred
stock was convertible into one sixth of one share of common stock. In addition,
the per share exercise price of each warrant has been reduced from $22.50 to
$6.30.

We anticipate that existing cash balances at December 31, 2002, together with
cash generated from sales of our product, will be adequate to meet the Company's
current and expected cash requirements for the next year, including the impact
of the technical compliance issue related to our option plan discussed above.
However, a change in circumstance, such as a reduction in the anticipated growth
of demand for our products, could necessitate that the Company seek additional
debt or equity capital. The Company believes that future TeleVantage revenues
will increase and thereby reduce future operating losses. However, the rate at
which these revenues may increase will be highly dependent on the overall
telecommunications industry capital spending environment, the rate of market
acceptance of TeleVantage and the success of the Company's strategic
relationship with Toshiba. See "Risk Factors" below. In addition, the Company
may also from time to time seek debt or equity financing for various business
reasons. In the event the Company seeks and successfully receives additional
equity capital, such additional financing may result in significant stockholder
dilution. There can be no assurance that any such additional financing will be
available when needed or on acceptable terms to allow the Company to
successfully achieve its operating plan or fund future investment in its
TeleVantage product line.

The investors in our 2001 and 2002 financing have the right to participate, up
to their pro rata share in the respective financing, in future non-public
capital raising transactions by Artisoft. This right, as held by the investors
in the September 2002 financing, is not exercisable unless and until the
expiration or termination in full of the similar rights of the investors in the
2001 financing. The existence of this right may substantially reduce Artisoft's
ability to establish terms with respect to, or enter into, any such financing
with parties other than the investors.

Our common stock trades on the NASDAQ SmallCap Market. In order to continue
trading on the NASDAQ SmallCap Market, we must satisfy the continued listing
requirements for that market. The minimum bid price of our common stock is
currently below the $1.00 per share minimum bid price continued listing
requirement of the NASDAQ SmallCap Market. The listing of our common stock on
the NASDAQ SmallCap is currently being maintained under a grace period permitted
by applicable NASDAQ Marketplace rules. The grace period expires March 11, 2003.
In order to retain our current listing status on the NASDAQ SmallCap, our common
stock must close at $1.00 per share or more for a minimum of 10 consecutive
trading days on or before March 11, 2003. We must also maintain compliance with
the other criteria for continued inclusion on the NASDAQ SmallCap Market, with
which we are currently in compliance.

If our common stock is delisted from the NASDAQ SmallCap Market, due to the
expiration of the grace period with respect to the minimum bid price of our
common stock or otherwise, the listing of our common stock may be transferred to
the over-the-counter electronic bulletin board, also referred to as the OTCBB,
or the Pink Sheets. The listing of our common stock on the OTCBB or the Pink
Sheets would materially reduce the liquidity of our common stock and result in a
corresponding material reduction in the price of our common stock. In addition,
such delisting would materially adversely affect our access to the capital
markets, and the limited liquidity and reduced price of our common stock would
materially adversely affect our ability to raise capital through alternative
financing sources on terms applicable to us or at all.

FUTURE RESULTS

The Company intends to continue investing in the sales, marketing and
development of its software-based phone system, TeleVantage. The Company expects
operating expenditures will increase from the amounts incurred in the first six
months of fiscal year 2003 but will not exceed levels incurred in fiscal year
2002.

The Company believes that future TeleVantage revenues will increase and thereby
reduce future operating losses. However, the rate at which these revenues may
increase will be highly dependent on the overall telecommunications industry
capital spending environment, the rate of market acceptance of TeleVantage and
the success of the Company's strategic relationship with Toshiba. See "Risk
Factors" below.

Specifically, through an original equipment manufacturer development arrangement
with Artisoft, Toshiba is marketing TeleVantage under the Strata CS brand, which
is being distributed and supported through Toshiba's established dealer channel.
Under the terms of the agreement, Toshiba will purchase licenses of customized
versions of the TeleVantage software product to be integrated with its digital
handsets and communications server product offerings. Any significant delay,
cancellation, or termination of this arrangement with Toshiba will have a
material adverse effect on the Company's future results of operations. However,
any such events will be mitigated to the extent of the minimum revenue
guarantees provided to us by Toshiba for a total remaining amount of $1.4
million through September 30, 2003. The agreement expires in December 2003.

                                       16
<PAGE>
Toshiba is obligated to satisfy the minimum revenue guarantees in accordance
with the following terms and conditions:

*    At the end of each of the last calendar quarter of 2002, the first calendar
     quarter of 2003 and the second calendar quarter of 2003, Toshiba will pay
     the greater of the royalties for products licensed in that quarter, less
     any unused prepayments from the previous period, or $375,000. If royalties
     for that period are less than $375,000, the difference will be considered a
     prepayment of future royalties.

*    At the end of the third calendar quarter of 2003, Toshiba shall pay the
     greater of (i) the royalties for products licensed in that quarter, less
     any unused prepayments from the previous period; or (ii) $250,000. If the
     royalties for that period are less than $250,000, the difference will be
     considered a prepayment of future royalties.

RISK FACTORS

WE CAUTION YOU THAT THE FOLLOWING IMPORTANT FACTORS, AMONG OTHERS, IN THE FUTURE
COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN
FORWARD-LOOKING STATEMENTS MADE BY OR ON BEHALF OF US IN FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION, PRESS RELEASES, COMMUNICATIONS WITH
INVESTORS AND ORAL STATEMENTS. ANY OR ALL OF OUR FORWARD-LOOKING STATEMENTS IN
THIS QUARTERLY REPORT ON FORM 10-Q/A, AND IN ANY OTHER PUBLIC STATEMENTS WE MAKE
MAY TURN OUT TO BE WRONG. THEY CAN BE AFFECTED BY INACCURATE ASSUMPTIONS WE
MIGHT MAKE OR BY KNOWN OR UNKNOWN RISKS AND UNCERTAINTIES. MANY FACTORS
MENTIONED IN THE DISCUSSION BELOW ARE IMPORTANT IN DETERMINING FUTURE RESULTS.
WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE ANY FORWARD-LOOKING STATEMENTS,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. YOU ARE
ADVISED, HOWEVER, TO CONSULT ANY FURTHER DISCLOSURES WE MAKE IN OUR REPORTS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

OUR REVENUES ARE DEPENDENT UPON SALES OF A SINGLE FAMILY OF PRODUCTS, AND OUR
BUSINESS WILL FAIL, IF WE DO NOT INCREASE SALES OF THOSE PRODUCTS.

Our revenues are derived from sales of a single family of products, TeleVantage.
If we are not able to increase sales of these products, our business will fail.
TeleVantage is a relatively new product in the emerging market for
software-based phone systems and it is difficult to predict when or if sales of
TeleVantage will increase substantially or at all. We face a substantial risk
that our sales will continue to not cover our operating expenses and that we
will continue to incur operating losses.

WE HAVE A HISTORY OF LOSSES AND EXPECT TO INCUR FUTURE LOSSES.

We had operating losses for the fiscal year ended June 30, 2002 and in each of
the last eight fiscal years, and negative cash flow from operating activities in
four out of the last eight fiscal years including the fiscal year ended June 30,
2002. If our revenues do not increase significantly we may never achieve
profitability, on a sustained basis or at all, or generate positive cash flow in
the future. In that case our business will fail. We expect to incur significant
future operating losses and negative cash flows.

OUR OPERATING RESULTS VARY, MAKING FUTURE OPERATING RESULTS DIFFICULT TO PREDICT
AND ADVERSELY AFFECTING THE PRICE OF OUR COMMON STOCK.

Our operating results have in the past fluctuated, and may in the future
fluctuate, from quarter to quarter. The resulting continued unpredictability of
our operating results could depress the market price of our common stock,
particularly if operating results do not meet the expectations of public market
analysts or investors. Factors that contribute to fluctuations in our operating
results include:

*    the extent and timing of sales to significant customers, particularly
     Toshiba;

*    our ability to develop, introduce and market enhancements to our
     TeleVantage family of products;

*    changes in pricing policies or price reductions by us or our competitors;

*    variations in sales by our value-added resellers and distributors; and

*    variations in product returns.

Sales in any quarter are dependent primarily on orders booked and shipped in
that quarter and are not predictable with any degree of certainty. In addition,
our expense levels are based, in part, on our expectations as to future
revenues. If revenue levels are below our expectations, net loss may be
disproportionately affected due to fixed costs related to generating our
revenues.

                                       17
<PAGE>
WE RELY UPON THE AVAILABILITY TO MARKET TELEVANTAGE OF DISTRIBUTORS, RESELLERS
AND ORIGINAL EQUIPMENT MANUFACTURERS AND THE ABILITY OF THESE ORGANIZATIONS TO
PAY FOR THE PRODUCTS THEY PURCHASE FROM US.

If distributors, resellers and original equipment manufacturers in the software
industry choose not to focus their marketing efforts on software-based phone
systems or on products competitive with TeleVantage, our sales efforts will be
materially adversely affected. In fiscal year 2002, our distributor, Paracon,
accounted for 32% of our total net sales. In fiscal year 2001 Paracon accounted
for approximately 21% of total net sales, and our original equipment
manufacturer, Intel, accounted for 14% of total net sales. We depend upon the
availability of distribution outlets similar to these relationships to market
TeleVantage. In addition, our operating results would be adversely affected if
one of our major distributors, resellers or original equipment manufacturers
fails to pay us for the products they purchase from us. At June 30, 2002,
Paracon represented approximately 36% of our outstanding trade receivables and
Goldkist represented approximately 17% of our outstanding trade receivables. At
June 30, 2001, Toshiba represented approximately 41% and Paracon represented
approximately 21% of our outstanding trade receivables.

OUR COMMON STOCK MAY BE DELISTED FROM THE NASDAQ SMALLCAP MARKET AND TRANSFERRED
TO THE OVER-THE-COUNTER ELECTRONIC BULLETIN BOARD OR THE PINK SHEETS, WHICH
WOULD REDUCE THE LIQUIDITY OF OUR COMMON STOCK AND MAY DEPRESS THE PRICE OF OUR
COMMON STOCK.

If our common stock is delisted from the NASDAQ SmallCap Market, the listing of
our common stock may be transferred to the over-the-counter electronic bulletin
board, also referred to as the OTCBB, or the Pink Sheets. The listing of our
common stock on the OTCBB or the Pink Sheets would materially reduce the
liquidity of our common stock and result in a corresponding material reduction
in the price of our common stock. In addition, such delisting would materially
adversely affect our access to the capital markets, and the limited liquidity
and reduced price of our common stock would materially adversely affect our
ability to raise capital through alternative financing sources on terms
applicable to us or at all.

In order to continue trading on the NASDAQ SmallCap Market, we must satisfy the
continued listing requirements for that market. The minimum bid price of our
common stock is currently below the $1.00 per share minimum bid price continued
listing requirement of the NASDAQ SmallCap Market. The listing of our common
stock on the NASDAQ SmallCap Market is currently being maintained under a grace
period permitted by applicable NASDAQ Marketplace rules. This grace period
expires on March 11, 2003. In order to retain our current listing status on the
NASDAQ SmallCap, our common stock must close at $1.00 per share or more for a
minimum of 10 consecutive trading days on or before March 11, 2003. We must also
maintain compliance with the other criteria for continued inclusion on the
NASDAQ SmallCap Market, with which we are currently in compliance.

WE MAY HAVE A NEED TO PROCURE ADDITIONAL THIRD PARTY FINANCING, BUT FINANCING
MAY NOT BE AVAILABLE WHEN NEEDED OR UPON TERMS ACCEPTABLE TO US. IF A FINANCING
IS CONSUMMATED, CURRENT SHAREHOLDERS MAY EXPERIENCE SUBSTANTIAL DILUTION OF
THEIR OWNERSHIP IN ARTISOFT.

In order to obtain the funds to continue our operations and meet our working
capital requirements, we may require additional equity financing or debt
financing. Any additional financing may not be available to us on terms
acceptable to us or at all. The holders of our Series B Preferred Stock and the

holders of common stock issued pursuant to our September 2002 financing have
price-related anti-dilution protection in the event of future issuances of
securities by us. These provisions could substantially dilute your interest in
Artisoft in the event of a future financing transaction. In addition, those same
investors all have the right to participate, up to their pro rata share in their
respective financing, in future capital raising transactions by the Company. The
existence of this right may substantially reduce the Company's ability to
establish terms with respect to, or enter into, any such financing with parties
other than the investors. The terms of any additional financing we may enter
into may impose substantial constraint on our ability to operate our business as
we deem appropriate.

OUR MARKET IS HIGHLY COMPETITIVE; IF WE FAIL TO COMPETE SUCCESSFULLY, OUR
PRODUCTS WILL NOT BE SUCCESSFUL.

We compete with other phone system companies, many of which have substantially
greater financial, technological, production, sales and marketing and other
resources, as well as greater name recognition and larger customer bases, than
does Artisoft. Given the greater financial resources of many of our competitors,
our products may not be successful or even accepted. The computer telephony
industry is highly competitive and is characterized by rapidly evolving industry
standards. We believe that the principal competitive factors affecting the
markets we serve include:

*    product architecture, functionality and features;

*    price;

                                       18
<PAGE>
*    vendor and product reputation;

*    quality of product and support; and

*    effectiveness of sales and marketing efforts.

Our competitors may be able to respond more quickly and effectively than can
Artisoft to new or emerging technologies and changes in customer requirements or
to devote greater resources than can Artisoft to the development, promotion,
sales and support of their products. For example, our competitors could develop
products compatible with the Intel SoftSwitch Framework that could displace
TeleVantage CTM Suite.

IF SOFTWARE-BASED PHONE SYSTEMS DO NOT ACHIEVE WIDESPREAD ACCEPTANCE, WE MAY NOT
BE ABLE TO CONTINUE OUR OPERATIONS.

Our sole product line, TeleVantage, competes in the newly emerging
software-based phone system market as well as existing traditional, proprietary
hardware solutions offered by companies such as Avaya Communications, Nortel
Networks Corporation and Siemens Corporation. We do not know if markets will
migrate toward software-based phone system solutions. If software-based phone
systems do not achieve widespread acceptance or widespread acceptance is
delayed, sales of TeleVantage will not increase and may decline. We may then be
unable to continue our operations.

VARIABILITY IN PRODUCT RETURNS MAKES IT DIFFICULT TO PREDICT OUR REVENUE.

We are exposed to the risk of product returns from our distributors and
value-added resellers, which are estimated and recorded by us as a reduction in
sales. Actual returns in any period may exceed our estimates, thereby making it
difficult to predict our revenues. To the extent we may, in the future,
introduce new products, the predictability and timing of sales to end-users and
the management of returns to us of unsold products by distributors and volume
purchasers may become more complex.

OUR MARKET IS SUBJECT TO CHANGING PREFERENCES AND TECHNOLOGICAL CHANGE; OUR
FAILURE TO KEEP UP WITH THESE CHANGES WOULD RESULT IN OUR LOSING MARKET SHARE.

The introduction of products incorporating new technologies and the emergence of
new industry standards could render TeleVantage obsolete and unmarketable. If
this occurs, we would likely lose market share. The markets for computer
telephony solutions are characterized by rapid technological change, changing
customer needs, frequent product introductions and evolving industry standards
within the markets for computer technology solutions. Our future success will
depend upon our ability to develop and introduce new computer telephony products
(including new releases and enhancements) on a timely basis that keep pace with
technological developments and emerging industry standards and address the
increasingly sophisticated needs of our customers.

SOME OF OUR SHAREHOLDERS HAVE ACQUIRED A SUBSTANTIAL INTEREST IN ARTISOFT AND
MAY BE ABLE TO EXERT SUBSTANTIAL INFLUENCE OVER ARTISOFT'S ACTIONS.

Based upon their substantial stock ownership and their director rights, Austin
W. Marxe and David M. Greenhouse may be able to exert substantial influence over
matters submitted to our shareholders for approval and our management and
affairs, including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of our assets. As of December
31, 2002, Austin W. Marxe and David M. Greenhouse beneficially owned
approximately 45.9% of our common stock. In addition, Austin W. Marxe and David
M. Greenhouse, through their affiliates, have the right to elect two directors
and the right to designate an additional director. Effective as of August 28,
2002, the holders of our series B preferred stock elected Robert J. Majteles to
our board of directors. Mr. Majteles was selected for election by an affiliate
of Austin W. Marxe and David M. Greenhouse under an agreement among the holders
of the series B preferred stock.

Austin W. Marxe and David M. Greenhouse may elect to sell all or a substantial
portion of their Artisoft securities to one or more third parties. In that case,
a third party with whom we have no prior relationship could exercise the same
degree of control over us as Austin W. Marxe and David M. Greenhouse presently
do. In this regard, this prospectus covers the resale by affiliates of Austin W.
Marxe and David M. Greenhouse of shares of our common stock representing a 36%
ownership interest in Artisoft, in the aggregate.

IF THE EMPLOYMENT OF ANY OF OUR EXECUTIVE OFFICERS IS TERMINATED PRIOR TO
OCTOBER 2004 WITHOUT CAUSE OR BY THE EXECUTIVE FOR GOOD REASON, WE WILL BE
REQUIRED TO PROVIDE SUBSTANTIAL BENEFITS TO THAT OFFICER.

We have change in control agreements with each of our executive officers that
provide that in the event of termination of employment of an executive officer
within two years of the change in control either without cause or by the
executive for "good reason," such as a reduction in duties and responsibilities:

                                       19
<PAGE>
*    all of the executive's unvested options vest and become exercisable in
     full; and

*    Artisoft will pay the executive a lump sum equal to one year's, or two
     years' in the case of the Chief Executive Officer, base salary plus bonus.

Due to open market purchases of our common stock, a change in control within the
meaning of the change in control agreements occurred in October 2002. Therefore,
each of the executives set forth in the table below will receive benefits under
its change in control agreement in the event his employment at Artisoft is
terminated prior to 2004 either without cause or for good reason. The salary and
bonus of each executive for Artisoft's 2002 fiscal year ended June 30, 2002 is
also set forth on the table below.

<TABLE>
<CAPTION>
Name                                       Title              Fiscal 2002 Salary   Fiscal 2002 Bonus
----                                       -----              ------------------   -----------------
<S>                           <C>                                   <C>                <C>
Steven G. Manson...........   President and Chief Executive
                              Officer                               $210,861                 --
Christopher Brookins.......   Vice President of Development
                              and Chief Technology Officer          $166,575                 --
Paul Gregory Burningham....   Vice President of Sales               $135,343            $37,935
Michael J. O'Donnell.......   Chief Financial Officer               $152,923                 --
</TABLE>

SOFTWARE ERRORS MAY DAMAGE OUR REPUTATION, CAUSE LOSS OF CUSTOMERS AND INCREASE
CUSTOMER SUPPORT COSTS.

Software products as complex as TeleVantage may contain undetected errors. This
could result in damage to our reputation, loss of customers, delay of market
acceptance of our products or all of these consequences. We or our customers may
find errors in TeleVantage or any new products after commencement of commercial
shipments. In addition, if our products are flawed, or are difficult to use,
customer support costs could rise.

WE RELY ON THIRD-PARTY TECHNOLOGY AND HARDWARE PRODUCTS. THIS TECHNOLOGY MAY
CONTAIN UNDETECTED ERRORS, BE SUPERSEDED OR MAY BECOME UNAVAILABLE, THEREBY
LIMITING OUR ABILITY TO SELL, AND THE PERFORMANCE OF, OUR PRODUCTS.

TeleVantage operates on hardware manufactured by Intel. To the extent that this
hardware becomes unavailable or in short supply we could experience delays in
shipping TeleVantage to our customers. In addition, we are dependent on the
reliability of this hardware and to the extent the hardware has defects it will
affect the performance of TeleVantage. If the hardware becomes unreliable, does
not perform in a manner that is acceptable to our customers or becomes more
expensive, sales of TeleVantage could fall.

Because our products run only on Microsoft Windows NT servers and use other
Microsoft Corporation technologies, including the Microsoft Data Engine, a
decline in market acceptance for Microsoft technologies or the increased
acceptance of other server technologies could cause us to incur significant
development costs and could have a material adverse effect on our ability to
market our current products.

ANY FAILURE BY US TO PROTECT OUR INTELLECTUAL PROPERTY COULD HARM OUR BUSINESS
AND COMPETITIVE POSITION.

Our success is dependent upon our software code base, our programming
methodologies and other intellectual properties. If we are unable to protect
these properties, we will not be able to remain technologically competitive and
our business will suffer. To protect our proprietary technology, we rely
primarily on a combination of trade secret laws and nondisclosure,
confidentiality, and other agreements and procedures, as well as copyright and
trademark laws. These laws and actions may afford only limited protection. We
may not be able to deter misappropriation of our proprietary information or to
prevent the successful assertion of an adverse claim to software utilized by us.
In addition, we may not be able to detect unauthorized use and take effective
steps to enforce our intellectual property rights. In selling our products, we
rely primarily on "shrink wrap" licenses that are not signed by licensees and,
therefore, may be unenforceable under the laws of some jurisdictions. In
addition, the laws of some foreign countries provide substantially less
protection to our proprietary rights than do the laws of the United States.

IF WE ARE NOT ABLE TO HIRE AND RETAIN QUALIFIED PERSONNEL, WE WILL BE HINDERED
IN OUR EFFORTS TO MAINTAIN AND EXPAND OUR BUSINESS.

We are dependent on our ability to identify, hire, train, retain and motivate
high quality personnel, especially highly skilled engineers involved in the
ongoing research and development required to develop and enhance our software
products and introduce enhanced future products. If we are not able to hire and

                                       20
<PAGE>
retain qualified personnel, we will be hindered in our efforts to maintain and
expand our business. The computer telephony industry is characterized by rapid
technological change, changing customer needs, frequent product introduction and
evolving industry standards. These characteristics require a high degree of
industry-specific technological and operational understanding. A high level of
employee mobility and aggressive recruiting of skilled personnel characterize
our industry. There can be no assurance that our current employees will continue
to work for us or that we will be able to hire additional employees on a timely
basis or at all. We expect to grant additional stock options and provide other
forms of incentive compensation to attract and retain key technical and
executive personnel. These additional incentives will lead to higher
compensation costs in the future and may adversely affect our future results of
operations.

OUR STOCK PRICE MAY BE ADVERSELY AFFECTED BY OUR ANTITAKEOVER DEFENSES.

Provisions of our certificate of incorporation and bylaws and of Delaware law
could have the effect of delaying, deferring or preventing an acquisition of our
company. These provisions may deprive you of the opportunity to sell your shares
to potential acquirors at a premium over prevailing prices. This potential
inability to obtain a control premium could reduce the market price of our
common stock. Our board of directors (except for directors elected by the
holders of our series B preferred stock) is divided into three classes, each of
which serves a three year term, and our shareholders do not have the ability to
call special stockholder meetings. Therefore, a two-year period is required to
elect directors representing a majority of our non-series B preferred stock
directors. Gaining control of our board of directors is further complicated by
the presence of one director elected solely by the holders of our series B
preferred stock and right of those holders to elect an additional director.
These issues relating to the election of our directors are an example of our
antitakeover provisions that may frustrate potential acquirors.

PART II - OTHER INFORMATION

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

a. Exhibits

The Exhibits filed as part of this Amendment No. 1 on Form 10-Q/A to Artisoft's
Quarterly Report for the quarter ended December 31, 2002 are listed on the
Exhibit Index immediately preceding such Exhibits, which Exhibit Index is
incorporated herein by reference. Documents listed on such Exhibit Index, except
for documents identified by footnotes, are being filed as exhibits herewith.
Documents identified by footnotes are not being filed herewith and, pursuant to
Rule 12b-32 under the Securities Exchange Act of 1934, reference is made to such
documents as previously filed as exhibits filed with the Securities and Exchange
Commission. Artisoft's file number under the Securities Exchange Act of 1934 is
000-19462.

b. Reports on Form 8-K

Previously reported.

                                       21
<PAGE>
                                   SIGNATURES

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

                                       ARTISOFT, INC.


Date: May 20, 2003                     By: /s/ Steven G. Manson
                                           -------------------------------------
                                           Steven G. Manson
                                           President and Chief Executive Officer


Date: May 20, 2003                     By: /s/ Duncan G. Perry
                                           -------------------------------------
                                           Duncan G. Perry
                                           Chief Financial Officer (Principal
                                           Financial Officer and Chief
                                           Accounting Officer)

                                       22
<PAGE>
                                 CERTIFICATIONS

I, Steven G. Manson, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Artisoft, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: May 20, 2003                      By: /s/ Steven G. Manson
                                            ------------------------------------
                                            Steven G. Manson
                                            Chief Executive Officer
                                            (Principal Executive Officer)

                                       23
<PAGE>
I, Duncan G. Perry, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Artisoft, Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Dated: May 20, 2003                     /s/ DUNCAN G. PERRY
                                        ----------------------------------------
                                        Duncan G. Perry
                                        Chief Financial Officer
                                        (Principal Financial Officer)

                                       24
<PAGE>
                                  EXHIBIT INDEX

Designation    Description
-----------    -----------

   10.1        Patent License Agreement between Lucent Technologies GRL
               Corporation and the Registrant effective June 30, 2000, was filed
               with the Commission on December 20, 2002 as an exhibit to the
               Registrant's Registration Statement of Form S-3 (File No.
               333-100756) and is herein incorporated by reference.

   10.2        Second Addendum to OEM/Reseller Agreement dated January 18, 2000
               by and between the Registrant and Telecommunications Systems
               Division of Toshiba America Information Systems, Inc., was filed
               with the Commission on February 10, 2003 as an exhibit to the
               Registrant's Registration Statement of Form S-3 (File No.
               333-100756) and is herein incorporated by reference.

   99.1        Certification of Chief Executive Officer Pursuant to 18
               U.S.C.ss.1350

   99.2        Certification of Chief Financial Officer Pursuant to 18
               U.S.C.ss.1350

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