UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 20-F/A
                                (Amendment No. 1)

[ ]    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                                       OR
|X|    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934
       For the Fiscal year ended December 31, 2002

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

Commission File Number_________________________________________________________


                                  FUNDTECH LTD.
                                 --------------
             (Exact Name of Registrant as specified in its charter)

                                 STATE OF ISRAEL
                                 ---------------
                 (Jurisdiction of incorporation or organization)

                         12 Ha'hilazon Street, 5th Floor
                                Ramat-Gan, Israel
                                -----------------
                    (Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act:

-------------------------------------- ----------------------------------------
       Title of each class             Name of each exchange on which registered
-------------------------------------- ----------------------------------------

-------------------------------------- ----------------------------------------


Securities registered or to be registered pursuant to Section 12(g) of the Act:

                       Ordinary Shares, NIS 0.01 par value
                       -----------------------------------
                                (Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:


_______________________________________________________________________________
                                (Title of Class)

Indicate the number of outstanding shares of each of issuer's classes of capital
or common stock as of the close of the period covered by the annual report:

As of December 31, 2002, the Registrant had outstanding 14,364,452 Ordinary
Shares, New Israeli Shekels 0.01 par value per share.

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 which financial statement item the Registrant has elected
to follow: Item 17 [ ]   Item 18 |X|

<PAGE>

                                EXPLANATORY NOTE

This Form 20-F/A has been filed to:

o    delete in its entirety Item 18 of the Annual Report on Form 20-F filed by
     Fundtech Ltd. on June 12, 2003 (the "Form 20-F") and the financial
     statements of Fundtech Ltd. set out on pages F-1 to F-28, including the
     accompanying Report of the Independent Auditors for the period ended
     December 31, 2002.

o    include in Item 18 of the Form 20-F the financial statements on pages F-1
     to F-28 of this Form 20-F/A, including the Report of the Independent
     Auditors for the period ended December 31, 2002.

o    include in Item 18 of the Form 20-F the Report of the Independent Auditors
     for the period ended December 31, 2001 following page F-28 of the financial
     statements set forth in this Form 20-F/A.

This amendment is being filed to include the Report of the Independent Auditors
for the year ended December 31, 2001 which was inadvertently omitted from the
Form 20-F filed by Fundtech Ltd. on June 12, 2003. Except for the addition of
the Report of Independent Auditors for the period ended December 31, 2001, no
changes have been made to the financial statements of Fundtech Ltd. as contained
in the Form 20-F.

This Form 20-F/A consists of a cover page, this explanatory note, Item 18 (as
amended) of the Form 20-F, the financial statements of Fundtech Ltd. for the
years 2001 and 2002, the signature page, and the required certifications of the
principal executive officer and the principal financial officer of Fundtech Ltd.
While the information provided in (as amended) Item 18 of the Form 20-F has been
restated in full as required by Rule 12b-15 under the Securities Exchange Act of
1934, no changes have been made to such information except as specifically
described above.

Other than expressly set forth above, this Form 20-F/A does not, and does not
purport to, amend, update or restate the information in any other Item of the
Form 20-F or reflect any events that have occurred after the Form 20-F was
filed.

<PAGE>

                                    PART III

ITEM 18.  FINANCIAL STATEMENTS.

           The Financial Statements required by this item are found at the end
of this Annual Report and have been set out on pages F-1 to F-28 of this Form
20-F/A.

ITEM 19.  EXHIBITS.

           The exhibits filed with or incorporated into this annual report are
listed on the index of exhibits below.


EXHIBIT
NUMBER           DESCRIPTION OF EXHIBIT
--------         ----------------------

   1.1           Amended Memorandum of Association of Registrant(1)

   1.2           Amended and Restated Articles of Association of  Registrant(1)

   2.1           Form of Ordinary Share Certificate(1)

   2.2           Form of Registration Rights(1)

   4.1           Fundtech Ltd. 1996 Employee Stock Option Plan for the Employees
                 of Fundtech Ltd. and the Employees of Fundtech Corp.(1)

   4.2           Fundtech Ltd. 1997 Stock Option Plan for Fundtech
                 Corporation(1)

   4.3           Fundtech Ltd. December 1997 Israeli Share Option Plan (English
                 summary)(1)

   4.4           Fundtech Ltd. 1999 Employee Option Plan(3)

   4.5           Fundtech Ltd. Directors Option Plan(4)

   4.6           Grant Approvals issued by the Marketing Fund to Fundtech
                 (English summary)(1)

   4.7           Employment Agreement between Reuven Ben Menachem and Fundtech
                 Corporation, dated November 25, 1997(2)

   4.8           Lease Agreement relating to Fundtech's Facility in Ramat-Gan,
                 Israel (English summary)(2)

   4.9           Lease Agreement relating to Fundtech's Facility in Norcross,
                 Georgia(2)

   4.10          Lease Agreement relating to Fundtech's Facility in Jersey City,
                 New Jersey*

   4.11          Lease Agreement relating to Fundtech's Facility in Burlington,
                 Massachusetts*

   8             Subsidiaries of Registrant*

   10.1          Consent of Brightman Almagor & Co.*

   10.2          Certification pursuant to Section 906 of the Sarbanes-Oxley Act
                 of 2002*

   10.3          Certification pursuant to Section 906 of the Sarbanes-Oxley Act
                 of 2002*


----------------


<PAGE>


(1)  Previously filed as an exhibit to the Registrant's Registration Statement
     on Form F-1, as amended, dated March 13, 1998, and incorporated herein by
     reference.

(2)  Previously filed as an exhibit to the Registrant's Report on Form 10-K,
     dated March 30, 1999, and incorporated herein by reference.

(3)  Previously filed as an annex to the Registrant's Proxy Statement, dated
     August 23, 1999.

(4)  Previously filed as Exhibit to the Registrant's Registration Statement on
     Form S-8, as amended (Commission Registration No. 333-9380), and
     incorporated herein by reference.

*    Previously filed as an exhibit to the Registrant's Annual Report for the
     year ended December 31, 2002 on Form 20-F, dated June 12, 2003, and
     incorporated herein by reference.



<PAGE>



                                  FUNDTECH LTD.
                                  -------------

                        CONSOLIDATED FINANCIAL STATEMENTS
                        ---------------------------------


                                      INDEX


                                                                        Page
                                                                     ----------

Report of Independent Auditors                                           F-1

Consolidated Financial Statements:

Balance Sheets
as of December 31, 2002 and 2001                                      F-2 - F-3

Statements of Operations
for the years ended December 31, 2002, 2001 and 2000                     F-4

Statements of Changes in Shareholders' Equity
for the years ended December 31, 2002, 2001 and 2000                  F-5 - F-6

Statements of Cash Flows
for the years ended December 31, 2002, 2001 and 2000                  F-7 - F-8

Notes to Financial Statements                                         F-9 - F-28


<PAGE>

Brightman Almagor
1 Azrieli Center
Tel Aviv 67021
P.O.B. 16593, Tel Aviv 61164

Tel: +972 (3) 608 5555
Fax: +972 (3) 609 4022
info@deloitte.co.il
www.deloitte.co.il



REPORT OF INDEPENDENT AUDITORS


To the Shareholders of
Fundtech Ltd.

We have audited the accompanying consolidated balance sheet of Fundtech Ltd.
("the Company") and its subsidiaries at December 31, 2002 and the related
statements of operations, changes in shareholders' equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company and its
subsidiaries at December 31, 2002 and the consolidated results of their
operations and their consolidated cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.




Brightman Almagor & Co.
Certified Public Accountants
A member of Deloitte Touche Tohmatsu

Tel Aviv, Israel February 12, 2003




                                       F-1


<PAGE>

                                  FUNDTECH LTD.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                               ---------------------------
                                                                                2 0 0 2           2 0 0 1
                                                                               ---------         ---------
ASSETS

<S>                                                                            <C>               <C>
CURRENT ASSETS
 Cash and cash equivalents                                                     $  26,571          $ 39,923
 Marketable securities (Note 3)                                                   15,925             5,462
 Trade receivables (net of allowance for doubtful accounts of $ 3,551
   and $ 5,005 at December 31, 2002 and 2001, respectively) (Note 4)              13,386            18,193
 Other accounts receivable and prepaid expenses                                    1,208             1,406
 Inventories                                                                          48                24
                                                                               ---------          --------

       Total current assets                                                       57,138            65,008
                                                                               ---------          --------

LONG-TERM ASSETS
 Severance pay fund                                                                  474               413
 Long - term trade receivables (net of allowance for doubtful
   accounts of $961 at December 31, 2002 and 2001) (Note 5)                        1,497             2,679
 Long term deposits                                                                1,027               607
 Property and equipment, net (Note 6)                                              7,265             9,276
 Other assets, net (Note 7)                                                       21,979            24,073
                                                                               ---------          --------

      Total long-term assets                                                      32,242            37,048
                                                                               ---------          --------
                                                                               _________          ________
                                                                               $  89,380          $102,056
                                                                               =========          ========





</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.




                                      F-2

<PAGE>

<TABLE>
<CAPTION>

                                  FUNDTECH LTD.
                           CONSOLIDATED BALANCE SHEETS
                                 (In thousands)
                              (except share data)


                                                                                December 31,
                                                                          -----------------------
                                                                           2 0 0 2        2 0 0 1
                                                                          --------       --------
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
<S>                                                                      <C>             <C>
 Trade payables                                                          $   1,221       $   2,254
 Deferred revenues                                                           4,959           1,389
 Accrued restructuring expenses (Note 9b)                                    1,523             634
 Employees and payroll accruals                                              1,496           2,393
 Other accounts payable and accrued expenses (Note 8)                        3,309           3,132
                                                                         ---------      ----------

      Total current liabilities                                             12,508           9,802
                                                                         ---------      ----------

LONG-TERM LIABILITIES
 Accrued severance pay                                                         527             506
 Accrued restructuring expenses (Note 9b)                                    1,179             528
                                                                         ---------      ----------
      Total long-term liabilities                                            1,706           1,034
                                                                         ---------      ----------
                                                                         _________      __________

      Total liabilities                                                     14,214          10,836
                                                                         ---------      ----------

COMMITMENTS AND CONTINGENCIES (Note 11)

SHAREHOLDERS' EQUITY (Note 12)
 Share capital:
 Ordinary shares of NIS 0.01 par value: Authorized:
   19,949,998 shares as of December 31, 2002 and 2001;
   Issued and outstanding:14,321,452 and 14,278,096 shares
   at December 31, 2002 and 2001, respectively                                  43              43
 Deferred shares of NIS 0.01 par value: Authorized,
   issued and outstanding:
   50,002 shares at December 31, 2002 and 2001                           (*)     -       (*)     -
 Additional paid-in capital                                                139,851         139,708
 Accumulated other comprehensive loss                                         (602)         (1,140)
 Accumulated deficit                                                       (64,038)        (47,391)
                                                                         ----------      ----------
                                                                            75,254          91,220

 Treasury shares at cost, 21,500 shares at December 31, 2002                   (88)              -
                                                                         ---------      ----------

      Total shareholders' equity                                            75,166          91,220
                                                                         ---------      ----------

                                                                         $  89,380      $  102,056
                                                                         =========      ==========
</TABLE>

(*) Represents an amount lower than $ 1.


The accompanying notes are an integral part of the consolidated financial
statements.



                                      F-3


<PAGE>

                                  FUNDTECH LTD.
                       CONSOLIDATED BALANCE OF OPERATIONS
                                 (In thousands)
                               (except share data)


<TABLE>
<CAPTION>

                                                                             Year ended December 31,
                                                                   -------------------------------------------
                                                                    2 0 0 2           2 0 0 1          2 0 0 0
                                                                   --------          --------         --------

Revenues (Note 15)

<S>                                                                <C>               <C>               <C>
 Software license fees                                             $ 10,068          $ 17,067          $ 28,492
 Maintenance and services fees                                       29,355            27,085            18,019
 Hardware sales                                                         405               842             1,437
                                                                   --------          --------          --------
      Total revenues                                                 39,828            44,994            47,948
                                                                   --------          --------          --------
Operating Expenses

 Software license costs                                                 703               896               252
 Maintenance and services costs                                      17,612            19,153            12,960
 Hardware costs                                                         317               686             1,131
 Research and development                                            14,525            19,185            17,747
 Selling and marketing, net                                           9,453            10,325             9,637
 General and administrative                                           7,230             9,116             6,133
 Amortization of capitalized software development costs               1,182                 -                 -
 Amortization of acquisition-related goodwill                             -             1,663             1,597
 Amortization of other acquired intangibles assets                      911               862               865
 Provision for doubtful accounts                                      1,335             5,966               717
 Restructuring expenses (Note 9a)                                     3,252             2,573                 -
 Non recurring expenses (Note 10)                                         -             1,500                 -
                                                                   --------          --------          --------

      Total operating expenses                                       56,520            71,925            51,039
                                                                   --------          --------          --------
                                                                   ________          ________          ________

 Operating loss                                                     (16,692)          (26,931)           (3,091)
 Impairment and realized losses on available for sale
   marketable securities (Note 3)                                      (281)           (7,826)                -
 Financial Income, net (Note 16)                                        691             3,343             5,542
                                                                   --------          --------          --------
 Income (loss) before income taxes                                  (16,282)          (31,414)            2,451

 Income taxes                                                          (365)             (212)              (74)
                                                                   --------          --------          --------
 Net income (loss)                                               $  (16,647)         $(31,626)         $  2,377
                                                                 ==========          ========          ========

       Basic earnings (loss) per share (Note 13)                 $    (1.16)         $  (2.22)         $   0.17
                                                                 ==========          ========          ========

       Diluted earnings (loss) per share                         $    (1.16)         $  (2.22)         $   0.16
                                                                 ==========          ========          ========
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.


                                      F-4


<PAGE>

<TABLE>
<CAPTION>

                                                     FUNDTECH LTD.
                              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                    (In thousands)


                                              Ordinary shares                  Deferred shares         Additional        Deferred
                                         --------------------------         --------------------        paid-in        Stock-based
                                           Shares          Amount           Shares       Amount         capital        compensation
                                         ----------       ---------         -------      -------      -----------      ------------

<S>                                     <C>               <C>              <C>          <C>           <C>              <C>
Balance as of January 1, 2000            13,951,582        $   42           50,002       (*)  -        $137,997         $  (147)
Exercise of stock options, net              192,892       (*)   -                -            -             966               -
Exercise of warrants, net                    40,000       (*)   -                -            -             520               -
Amortization of deferred stock-based
  Compensation                                    -             -                -            -               -              52
Forfeiture of stock options                       -             -                -            -             (63)             63
Comprehensive loss:
  Foreign currency translation
    adjustments                                   -             -                -            -               -               -
  Unrealized losses on available-
    for-sale marketable securities, net           -             -                -            -               -               -
  Net income                                      -             -                -            -               -               -
                                         ----------       -------          -------       ------        --------         -------

    Total comprehensive loss

Balance as of December 31, 2000          14,184,474            42           50,002       (*)  -         139,420             (32)
Exercise of stock options                    93,622             1                -            -             288               -
Amortization of deferred stock-based
  compensation                                    -             -                -            -               -              32
Comprehensive loss:
  Foreign currency translation
    adjustments                                   -             -                -            -               -               -
  Unrealized losses on available-
    for-sale marketable securities, net           -             -                -            -               -               -
  Realization of losses on available-
    for-sale marketable securities                -             -                -            -               -               -
Net loss                                          -             -                -            -               -               -
                                         ----------       -------          -------       ------        --------          ------

    Total comprehensive loss

Balance as of December 31, 2001          14,278,096            43           50,002       (*)  -        139,708                -


<CAPTION>

                                                                Accumulated
                                                                   other                                Total           Total
                                                Treasury        comprehensive      Accumulated      comprehensive    shareholders'
                                                 shares             loss            deficit             Loss            equity
                                                --------        -------------     ------------      -------------    ------------

<S>                                            <C>              <C>              <C>               <C>               <C>
Balance as of January 1, 2000                    $    -          $ (1,156)         $ (18,142)                -        $ 118,594
Exercise of stock options, net                        -                 -                  -                 -              966
Exercise of warrants, net                             -                 -                  -                 -              520
Amortization of deferred stock-based
  Compensation                                        -                 -                  -                 -               52
Forfeiture of stock options                           -                 -                  -                 -                -
Comprehensive loss:
  Foreign currency translation
    adjustments                                       -              (465)                 -         $   (465)             (465)
  Unrealized losses on available-
    for-sale marketable securities, net               -            (2,330)                 -           (2,330)           (2,330)
  Net income                                          -                 -              2,377            2,377             2,377
                                             ----------       -----------          ---------         --------          --------

    Total comprehensive loss                                                                         $   (418)
                                                                                                     ========

Balance as of December 31, 2000                       -            (3,951)           (15,765)               -           119,714
Exercise of stock options                             -                 -                  -                -               289
Amortization of deferred stock-based
  compensation                                        -                 -                  -                -                32
Comprehensive loss:
  Foreign currency translation
    adjustments                                       -              (225)                 -         $   (225)             (225)
  Unrealized losses on available-
    for-sale marketable securities, net               -            (4,790)                 -           (4,790)           (4,790)
  Realization of losses on available-
    for-sale marketable securities                    -             7,826                  -            7,826             7,826
Net loss                                              -                 -            (31,626)         (31,626)          (31,626)
                                             ----------       -----------          ---------        ---------          --------

    Total comprehensive loss                                                                        $ (28,815)
                                                                                                    =========

Balance as of December 31, 2001                       -            (1,140)           (47,391)                            91,220
</TABLE>


(*) Represents an amount lower than $ 1.



The accompanying notes are an integral part of the consolidated financial
statements.



                                      F-5

<PAGE>


<TABLE>
<CAPTION>

                                                     FUNDTECH LTD.
                              CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                                                    (In thousands)
                                                  (except share data)


                                              Ordinary shares                  Deferred shares         Additional        Deferred
                                         --------------------------         --------------------        paid-in        Stock-based
                                           Shares          Amount           Shares       Amount         capital        compensation
                                         ----------       ---------         -------      -------      -----------      ------------

<S>                                     <C>               <C>              <C>          <C>           <C>              <C>
Balance as of December 31, 2001          14,278,096        $   43           50,002      (*)     -       $139,708         $    -
Exercise of stock options                    64,856             -                -              -            143              -
Purchase of treasury shares                 (21,500)            -                -              -              -              -
Comprehensive loss:
Foreign currency translation
Foreign currency translation
 adjustments                                      -             -                -              -              -              -
Unrealized losses on
 available-for-sale
     marketable securities, net                   -             -                -              -              -              -
Realization of losses on
 available-for-
     sale marketable securities                   -             -                -              -              -              -
Net loss                                          -             -                -              -              -              -
                                        -----------        ------         --------       --------       --------         -------
     Total comprehensive loss

Balance as of December 31, 2002          14,321,452        $   43           50,002      (*)     -       $139,851         $    -
                                        ===========        ======         ========       ========       ========         =======

<CAPTION>

                                                             Accumulated
                                                                other                                Total             Total
                                               Treasury      comprehensive      Accumulated      comprehensive     shareholders'
                                                shares           loss            deficit             Loss             equity
                                             -----------    --------------     ------------      -------------     ------------

<S>                                          <C>             <C>               <C>               <C>               <C>
Balance as of December 31, 2001              $      -          $ (1,140)          $(47,391)                            $91,220
Exercise of stock options                           -                 -                  -                -                143
Purchase of treasury shares                       (88)                -                  -                -                (88)
Comprehensive loss:
Foreign currency translation adjustments            -               538                  -        $     538                538
Unrealized losses on
 available-for-sale
     marketable securities, net                     -              (281)                 -             (281)              (281)
Realization of losses on
 available-for-
     sale marketable securities                     -               281                  -              281                281
Net loss                                            -                 -            (16,647)         (16,647)           (16,647)
                                             --------          --------           --------        ---------           ---------

     Total comprehensive loss                                                                     $ (16,109)
                                                                                                  =========
Balance as of December 31, 2002              $    (88)         $   (602)          $(64,038)                           $ 75,166
                                             ========          ========           ========                            ========
</TABLE>


(*) Represents an amount lower than $ 1.

The accompanying notes are an integral part of the
consolidated financial atatements




                                      F-6


<PAGE>

<TABLE>
<CAPTION>

                                                    FUNDTECH LTD.
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (In thousands)


                                                                                         Year ended December 31,
                                                                               ------------------------------------------
                                                                                2 0 0 2          2 0 0 1         2 0 0 0
                                                                               ---------        ---------        --------
Cash flows from operating activities:
------------------------------------


<S>                                                                            <C>              <C>              <C>
 Net income (loss)                                                             $(16,647)        $(31,626)        $  2,377
 Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
    Depreciation and amortization                                                 5,580            6,303            5,187
    Impairment and realized losses on available for sale
      marketable securities                                                         281            7,826                -
    Write-off of other accounts receivable                                            -            1,035                -
    Loss on abandonment of property and equipment                                     -              270                -
    Provision for doubtful accounts                                               1,335            5,966              717
    Amortization of deferred stock-based compensation                                 -               32               52
    Deferred income taxes, net                                                      109             (319)               -
    Decrease (increase) in trade receivables and long-term trade
      receivables                                                                 4,737            1,202          (15,989)
    Decrease (increase) in other accounts receivable, prepaid
      expenses and inventories                                                       52              344             (856)
    Increase (decrease) in trade payables                                        (1,059)            (832)           1,566
    Increase (decrease) in deferred revenues, employees and
      payroll accruals and other accounts payable and accrued expenses            2,609            3,546           (2,905)
    Increase in accrued restructuring expenses                                    1,540            1,162                -
    Accrued severance pay, net                                                      (40)             (26)              74
    Accrued interest on marketable securities                                      (196)               -                -
    Other                                                                            39              (14)              (2)
                                                                               --------         --------         --------

        Net cash used in operating activities                                    (1,660)          (5,131)          (9,779)
                                                                               --------         --------         --------

Cash flows from investing activities:
------------------------------------

 Investments in available for sale marketable securities                              -           (1,986)          (3,374)
 Proceeds from (investments in) short-term bank deposits                              -            3,170           (3,132)
 Proceeds from sales of available-for-sale marketable securities                  5,181           33,801                -
 Investment in held-to-maturity marketable securities                           (15,729)               -                -
 Long-term lease deposits                                                          (365)            (143)            (476)
 Purchase of property and equipment                                              (1,298)          (2,322)          (5,907)
 Proceeds from sale of property and equipment                                        60                -               81
 Capitalized software development costs                                               -           (5,901)          (1,975)
                                                                               --------         --------         --------

   Net cash provided by (used in) investing activities                          (12,151)          26,619          (14,783)
                                                                               --------         --------         --------
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.



                                      F-7


<PAGE>

<TABLE>
<CAPTION>

                                                    FUNDTECH LTD.
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                  (In thousands)


                                                                              Year ended December 31,
                                                                   --------------------------------------------
                                                                     2 0 0 2          2 0 0 1          2 0 0 0
                                                                   ----------        ---------        ---------
Cash flows from financing activities:
------------------------------------

<S>                                                                <C>               <C>              <C>
 Purchase of treasury shares                                       $    (88)         $      -         $      -
 Proceeds from exercise of stock options and warrants, net              143               289            1,486
                                                                     --------         -------         ---------

   Net cash provided by financing activities                             55               289            1,486

 Effect of exchange rate on cash and cash equivalents                   404                30             (301)
                                                                     --------         -------         ---------

 Increase (decrease) in cash and cash equivalents                   (13,352)           21,807          (23,377)
 Cash and cash equivalents at the beginning of the year              39,923            18,116           41,493
                                                                     --------         -------         ---------

 Cash and cash equivalents at the end of the year                  $ 26,571          $ 39,923         $ 18,116
                                                                     ========        ========         ========

Supplemental disclosure of cash flows activities:
------------------------------------------------

 Cash paid during the year for:
  Interest                                                         $    123          $     31         $     34
                                                                   ========          ========         ========
  Income taxes                                                     $    287          $    224         $     47
                                                                   ========          ========         ========
</TABLE>



The accompanying notes are an integral part of the consolidated financial
statements.



                                      F-8


<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 1  - GENERAL OVERVIEW

          Fundtech Ltd, an Israeli corporation and its subsidiaries ("the
          Company"), is a leading provider of software solutions and services
          that facilitate payments, settlement and cash management by enabling
          banks and their customers to electronically manage cash, process
          payments and transfer funds. The Company's client-server and Internet
          software products automate the process of transferring funds among
          corporations, banks and clearance systems and enable businesses to
          manage global cash positions efficiently and in real-time.

          The company sells and supports its products mainly in the United
          States and Europe.

          The Company operates in three business segments: Cash Management,
          Payments and its Swiss subsidiary Biveroni Batschelet Partners AG
          ("BBP").

          The Company's cash management solutions enable small, mid and
          large-tier financial institutions to deliver a complete set of cash
          management services through the Internet and other delivery channels.
          The Company's payments solutions automate all aspects of the funds
          transfer, including foreign exchange settlement and customer
          notification process, enabling straight-through-processing (STP) of
          payments. BBP develops, implements, maintains and operates systems for
          the automatic processing and transport of data in the finance
          industry. BBP also provides interbank gateway services. Its products
          include system solutions for interbank applications, as well as
          integration modules for host connections.


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES

          The consolidated financial statements have been prepared in accordance
          with generally accepted accounting principles in the United States of
          America ("US GAAP").

          a.   Use of estimates:

               The preparation of financial statements in conformity with
               generally accepted accounting principles requires management to
               make estimates and assumptions that affect the amounts reported
               in the financial statements and accompanying notes. Actual
               results could differ from those estimates.

          b.   Financial statements in U.S. dollars:

               A majority of the revenues of Fundtech Ltd. and certain of its
               subsidiaries is generated in U.S. dollars ("dollar" or
               "dollars"). In addition, substantial portions of the company's
               costs are incurred in dollars. The Company believes that the
               dollar is the primary currency of the economic environment in
               which the Company operates. Thus, the functional and reporting
               currency of the Company is the dollar.

               Accordingly, monetary accounts maintained in currencies other
               than the dollar are remeasured into dollars in accordance with
               Statement of Financial Accounting Standard No. 52 "Foreign
               Currency Translation" ("SFAS No. 52"). All transaction gains and
               losses from the remeasurement of monetary balance sheet items are
               reflected in the statements of operations as financial income or
               expenses, as appropriate. The financial statements of a foreign
               subsidiary, whose functional currency is not the dollar, have
               been translated into dollars. All balance sheet accounts have
               been translated using the exchange rates in effect at the balance
               sheet date. Statement of operations amounts have been translated
               using the average exchange rate for the period. The resulting
               translation adjustments are reported as a separate component of
               accumulated other comprehensive loss in shareholders' equity.




                                      F-9



<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          c.   Principles of consolidation:

               The consolidated financial statements include the accounts of
               Fundtech Ltd. and its subsidiaries, all of which are
               wholly-owned. Intercompany balances and transactions have been
               eliminated in consolidation.

          d.   Cash equivalents:

               Cash equivalents include short-term, highly liquid investments
               that are readily convertible to cash, with original maturities of
               three months or less.

          e.   Short-term bank deposits:

               Bank deposits with maturities of more than three months but less
               than one year, are included in short-term deposits. The
               short-term bank deposits are presented at their cost, including
               accrued interest.

          f.   Marketable securities:

               The Company accounts for its investments in marketable securities
               using SFAS No. 115, "Accounting for Certain Investments in Debt
               and Equity Securities".

               Management determines the appropriate classification of its
               investments in marketable debt and equity securities at the time
               of purchase and reevaluates such determinations at each balance
               sheet date. Held-to-maturity securities include debt securities
               for which the Company has the intent and ability to hold to
               maturity. Debt securities for which the Company does not have the
               intent or ability to hold to maturity are classified as
               available-for-sale. The Company does not hold any equity
               securities classified as trading securities.

               As of December 31, 2002 all marketable securities are designated
               as held-to-maturity and, accordingly, are stated at amortized
               cost. Interest income including the amortization of premium and
               discount are included in the consolidated statement of
               operations.

               As of December 31, 2001 all marketable securities are designated
               as available-for-sale and accordingly are stated at fair value,
               with the unrealized gains and losses reported as a separate
               component of shareholders' equity under accumulated other
               comprehensive loss. Realized gains and losses on sales of
               investments, as determined on a specific identification basis,
               are included in the consolidated statement of operations.

               As of December 31, 2001, the Company's evaluation indicated that
               the decline in available-for-sale marketable securities was other
               than temporary. Therefore, the Company realized during 2001 its
               losses on available-for-sale marketable securities, which are
               included in the statement of operations as impairment and
               realization of losses on marketable securities.

          g.   Long-term trade receivables:

               Long-term receivables from extended payment agreements (See Note
               2k) are recorded at estimated present values determined based on
               current rates of interest and reported at the net amounts in the
               accompanying financial statements. Imputed interest is
               recognized, as a component of interest income using the effective
               interest method.


                                      F-10


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)
                             (except per share data)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          h.   Property and equipment:

               Property and equipment are stated at cost, net of accumulated
               depreciation. Depreciation is calculated by the straight-line
               method over the estimated useful lives of the assets, at the
               following annual rates:
                                                            %
                                                         -------
                Office furniture and equipment            6 - 15
                Computers and software                   20 - 33
                Motor vehicles                              15
                Leasehold improvements            Over the term of the lease

               The Company periodically assesses the recoverability of the
               carrying amount of property and equipment based on expected
               undiscounted cash flows. If an asset's carrying amount is
               determent to be not recoverable, the Company recognizes an
               impairment loss based upon the difference between the carrying
               amount and the fair value of such assets, in accordance with SFAS
               No. 144 "Accounting for the Impairment or Disposal of Long-Lived
               Assets" ("SFAS No. 144").

          i.   Acquisition-related intangible assets:

               Acquisition-related intangible assets result from the Company's
               acquisitions of businesses accounted for under the purchase
               method and consist of the values of identifiable intangible
               assets including mainly developed technology and customer base,
               as well as goodwill. Goodwill is the amount by which the
               acquisition cost exceeds the fair values of the identifiable net
               assets on the date of purchase. Acquisition-related intangible
               assets are reported at cost, net of accumulated amortization.
               Developed technology and customer base are amortized on a
               straight-line basis over their estimated useful lives of five and
               ten years, respectively.

               In July 2001, the Financial Accounting Standards Board (FASB)
               issued SFAS No. 141 "Business Combinations" ("SFAS No. 141") and
               No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142").
               SFAS No. 141 requires all business combinations initiated after
               June 30, 2001 to be accounted for using the purchase method.
               Under SFAS No. 142, goodwill and intangible assets with
               indefinite lives are no longer amortized effective January 1,
               2002, but are reviewed annually (or more frequently if impairment
               indicators arise) for impairment. Identifiable intangible assets
               that are not deemed to have indefinite lives will continue to be
               amortized over their useful lives (but with no maximum life). The
               adoption of SFAS No. 142 resulted in a reduction of amortization
               expense in the amount of approximately $1,700 in 2002. A
               reconciliation of previously reported net income (loss) and
               earnings (loss) per share to the amounts adjusted for the
               exclusion of goodwill amortization is as follows:

<TABLE>
<CAPTION>

                                                         2002               2001              2000

<S>                                                   <C>                <C>                <C>
Reported net income (loss)                            $  (16,647)        $  (31,626)        $   2,377
Goodwill amortization                                          -              1,663             1,597
                                                      ----------         ----------         ---------
Adjusted net income (loss)                            $  (16,647)        $  (29,963)        $   3,974
                                                      ==========         ==========         =========

Reported basic earnings (loss) per share              $    (1.16)        $    (2.22)        $    0.17
Goodwill amortization                                          -               0.12              0.11
                                                      ----------         ----------         ---------
Adjusted basic earnings (loss) per share              $    (1.16)        $    (2.10)        $    0.28
                                                      ==========         ==========         =========

Reported diluted earnings (loss) per share            $    (1.16)        $    (2.22)        $    0.16
Goodwill amortization                                          -               0.12              0.11
                                                      ----------         ----------         ---------
Adjusted diluted earnings (loss) per share            $    (1.16)        $    (2.10)        $    0.27
                                                      ==========         ==========         =========
</TABLE>



                                      F-11


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          j.   Income taxes:

               The Company accounts for income taxes in accordance with SFAS No.
               109, "Accounting for Income Taxes" ("SFAS No. 109"). This
               Statement prescribes the use of the liability method whereby
               deferred tax asset and liability account balances are determined
               based on differences between financial reporting and tax bases of
               assets and liabilities and are measured using the enacted tax
               rates and laws that will be in effect when the differences are
               expected to reverse. The Company provides a valuation allowance,
               if necessary, to reduce deferred tax assets to their estimated
               realizable value.

          k.   Revenue recognition:

               The Company generates revenues from licensing the rights to use
               its software products directly to end-users, sales of
               professional services, including consulting, implementation and
               training. The Company also provides hosting services, contingency
               and recovery services, as well as maintenance and sales of
               hardware.

               Revenue from software license agreements are recognized when all
               criteria outlined in Statement of Position (SOP) 97-2 "Software
               Revenue Recognition" (as amended) ("SOP 97-2") are met.
               Therefore, revenue from license fees is recognized when
               persuasive evidence of an agreement exists, delivery of the
               product has occurred, no significant obligations with regard to
               implementation remain, the fee is fixed or determinable and
               collectibility is probable.

               Where software arrangements involve multiple elements, revenue is
               allocated to each element based on vendor specific objective
               evidence ("VSOE") of the relative fair values of each element in
               the arrangement. The Company's VSOE used to allocate the sales
               price to services and maintenance is based on the price charged
               when these elements are sold separately. License revenue is
               recorded based on the residual method as prescribed by SOP 98-9
               "Modification of SOP 97-2, Software Revenue Recognition With
               Respect to Certain Transactions". Under the residual method,
               revenue is recognized for the delivered elements when (1) there
               is VSOE of the fair values of all the undelivered elements, and
               (2) all revenue recognition criteria of SOP 97-2, as amended, are
               satisfied. Under the residual method any discount in the
               arrangement is allocated to the delivered element.

               The Company generally does not grant right of return to its
               customers. The Company generally provides a warranty period for
               up to six months at no extra charge. As of December 31, 2002 and
               2001, the provision for warranty cost is immaterial.

               Through December 31, 2001 the Company applied Emerging Issues
               Task Force (EITF) No. 00-03 "Application of AICPA Statement of
               Position 97-2 to Arrangements That Include the Right to Use
               Software Stored on Another Entity's Hardware" regarding revenues
               from ASP/Outsourcing solutions and Wire-up contingency processing
               centers arrangements. Such arrangements also included extended
               payment terms of more than twelve months (generally 36 to 60
               months). In accordance with SOP 97-2, extended payment terms in a
               software licensing arrangement may indicate that the software
               license fees are not deemed to be fixed or determinable. In
               addition, if payment of a significant portion of the software
               license fees is not due until more than twelve months after
               delivery, the software license fees should be presumed not to be
               fixed or determinable and, thus, should be recognized as the
               payments become due. However, SOP 97-2 provides that the software
               vendor can overcome the presumption that the software license
               fees are not fixed or determinable if the vendor has a standard
               business practice of using long-term or installment contracts and
               has a history of successfully collecting the software license
               fees under the original payment terms of the software license
               arrangement without making concessions. The Company had concluded
               that for these arrangements the "fixed or determinable"
               presumption had been overcome and the related software license
               fees had been recognized upon meeting the remaining SOP 97-2
               revenue recognition criteria. The present value of such software
               license fees recognized in 2000 and 2001 totaled approximately $
               5,000 and $ 1,883, respectively.



                                      F-12


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          k.   Revenue recognition: (Cont.)

               In 2002, the Company changed its business practice regarding
               ASP/outsourcing and Wire-up arrangements in a manner that it no
               longer grants software license rights in these arrangements.
               Revenues from such arrangements are recognized as the related
               services are provided. Accordingly, no additional Long-term trade
               receivables arise from these arrangements.

               Revenue from software licenses that require significant
               customization, integration and installation are recognized based
               on SOP 81-1 "Accounting for Performance of Construction - Type
               and Certain Production - Type Contracts", using contract
               accounting on the percentage of completion method, based on the
               relationship of actual labor costs incurred, to total labor costs
               estimated to be incurred over the duration of the contract.
               Provisions for estimated losses on uncompleted contracts are made
               in the period in which such losses are first determined, in the
               amount of the estimated loss on the entire contract.

               Arrangements that include professional services are evaluated to
               determine whether those services are essential to the
               functionality of other elements of the arrangement. When services
               are considered essential, revenue under the arrangement is
               recognized using contract accounting. When services are not
               considered essential, the revenue allocable to the software
               services is recognized as the services are performed.

               Revenue from maintenance is recognized over the life of the
               maintenance agreement.

               Deferred revenues include unearned amounts received under
               maintenance and support contracts and amounts billed and paid by
               customers but not yet recognized as revenues.

          l.   Severance pay:

               The Company's liability for severance pay is calculated pursuant
               to Israeli severance pay law based on the most recent salary of
               the employees multiplied by the number of years of employment, as
               of the balance sheet date. Israeli employees are entitled to one
               month's salary for each year of employment or a portion thereof.
               The Company's liability for all of its Israeli employees is fully
               provided for by monthly deposits with insurance policies and by
               an accrual. The value of these policies is recorded as an asset
               in the Company's balance sheet.

               The deposited funds include profits accumulated up to the balance
               sheet date. The deposited funds may be withdrawn only upon the
               fulfillment of the conditions pursuant to Israeli severance pay
               law or labor agreements. The value of the deposited funds is
               based on the cash surrender value of these policies, including
               immaterial profits.

               Severance expenses for the years ended December 31, 2002, 2001
               and 2000, amounted to approximately $ 138, $ 89 and $ 74,
               respectively.


                                      F-13


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          m.   Software development costs:

               The Company capitalizes software development costs in accordance
               with SFAS No. 86 "Accounting for the Costs of Computer Software
               to be Sold, Leased or Otherwise Marketed" ("SFAS No. 86").
               Capitalization of software development costs begins upon the
               establishment of technological feasibility, and continues up to
               the time the software is available for general release to
               customers. The establishment of technological feasibility and the
               ongoing assessment of the recoverability of these costs requires
               considerable judgment by management with respect to certain
               external factors including, but not limited to, anticipated
               future gross product revenue, estimated economic life and changes
               in software and hardware technology.

               Amortization of capitalized software development costs is
               provided on a product-by-product basis and begins when the
               product is available for general release to customers. Annual
               amortization is the greater of the amount computed using the
               ratio of current gross revenue for a product to the total of
               current and anticipated product revenue or the straight-line
               basis over the remaining economic useful life of the software,
               which is not more than five years.

          n.   Concentration of credit risks:

               Financial instruments that potentially subject the Company to
               concentrations of credit risk consist principally of cash and
               cash equivalents, short-term bank deposits, marketable
               securities, trade receivables and long-term trade receivables.
               The Company's cash, cash equivalents and marketable securities
               are maintained with high-quality institutions, and the
               composition and maturities of investments are regularly monitored
               by management. Generally, these securities and deposits are
               traded in a highly liquid market, may be redeemed upon demand and
               bear minimal risk.

               The Company's marketable securities include corporate bonds and
               notes, Euro dollar bonds and asset-backed securities.

               The trade receivables and long-term trade receivables of the
               Company include banks and large financial institutions. The
               Company generally does not require collateral; however, in
               certain circumstances, the Company may require letters of credit,
               other collateral or additional guarantees. An allowance for
               doubtful accounts is determined with respect to those amounts
               that the Company has determined to be doubtful of collection. The
               Company performs ongoing credit evaluations of its customers (see
               Note 4).

               The Company has no off-balance sheet concentration of credit risk
               such as foreign exchange contracts, option contracts or other
               foreign hedging arrangements.

          o.   Basic and diluted earnings (loss) per share:

               Basic earnings (loss) per share is computed based on the weighted
               average number of ordinary shares outstanding during each year.
               Diluted earnings per share is computed based on the weighted
               average number of ordinary shares outstanding during each year,
               plus dilutive potential ordinary shares considered outstanding
               during the year, in accordance with SFAS No. 128, "Earnings Per
               Share" ("SFAS No. 128").

               In 2002 and 2001, certain outstanding stock options and warrants
               have been excluded from the calculation of the diluted earnings
               per ordinary share because of the anti-dilutive effect. The total
               weighted average number of shares related to the outstanding
               options and warrants excluded from the calculations of diluted
               loss per share were 313,700 and 398,428 for the years ended
               December 31, 2002 and 2001, respectively. In 2000, 543,120
               options and warrants were excluded from the calculation of
               diluted net earnings per share (see Note 12).



                                      F-14


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)
                             (except per share data)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          p.   Stock-based compensation:

               The Company accounts for employee stock-based compensation in
               accordance with Accounting Principles Board Opinion No. 25,
               "Accounting for Stock Issued to Employees" ("APB 25") and in
               accordance with FASB Interpretation No. 44. Pursuant to these
               accounting pronouncements, the Company records compensation for
               stock options granted to employees over the vesting period of the
               options based on the difference, if any, between the exercise
               price of the options and the market price of the underlying
               shares at that date. With respect to variable awards, changes in
               the market price of the underlying shares at each balance sheet
               date affect the aggregate amount of compensation recorded.
               Deferred compensation is amortized to compensation expense over
               the vesting period of the options. See below for pro forma
               disclosures required in accordance with SFAS No. 123, "Accounting
               for Stock-Based Compensation" ("SFAS No.123"), as amended by SFAS
               148.

               Pro forma Loss Per Share According to SFAS 123 and SFAS 148:

               For purposes of estimating fair value in accordance with SFAS
               123, the Company utilized the Black & Scholes option-pricing
               model. The following assumptions were utilized in such
               calculations for the years 2002, 2001 and 2000 (all in weighted
               averages):

                                                  2002        2001       2000
                                                --------    --------   --------
               Risk-free interest rate            3.78%       6.0%       6.0%
               Expected life of options          4 years     4 years    4 years
               Expected volatility                 64%         73%        73%
               Expected dividend yield            none        none       none

               Had compensation cost for the Company's stock option plans been
               determined based on fair value at the grant dates for all awards
               made in 2002, 2001 and 2000 in accordance with SFAS 123, as
               amended by SFAS 148, the Company's pro forma loss per share would
               have been as follows:

<TABLE>
<CAPTION>

                                                                 2 0 0 2       2 0 0 1        2 0 0 0
                                                                ---------     --------       --------

              <S>                                              <C>           <C>            <C>
               Pro forma Net income (loss)
               Net income (loss) for the year, as reported      $(16,647)     $(31,626)      $  2,377
               Deduct  - stock-based compensation
                 determined under APB-25                               -            32             52
               Add - stock-based compensation
                 determined under SFAS 123                        (4,390)       (2,897)        (3,409)
                                                                --------      --------       --------
               Pro forma net income (loss)                      $(21,037)     $(34,491)      $   (980)
                                                                ========      ========       ========

               Pro forma loss per share                         $  (1.47)     $  (2.43)      $  (0.07)
               Basic and diluted earnings (loss) per
                 share as reported                              $  (1.16)     $  (2.22)      $   0.17
                                                                ========      ========       ========
</TABLE>


          q.   Fair value of financial instruments:

               The following methods and assumptions were used by the Company in
               estimating its fair value disclosures for financial instruments:

               The carrying amounts of cash and cash equivalents, short-term
               bank deposits, trade receivables and trade payables approximate
               their fair value due to the short-term maturity of such
               instruments.

               The fair value of marketable securities is based on quoted market
               price (see Note 3).

               The fair value of long-term receivables is estimated by
               discounting the future cash flows using the current rates of
               which similar credits would be made to customers with similar
               credit ratings and for the same remaining maturities. The
               carrying amount of long-term trade receivables approximates their
               fair value since the interest rate which was used in order to
               discount future cash flows remained unchanged.




                                  F-15
<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 2  - SIGNIFICANT ACCOUNTING POLICIES (Cont.)

          r.   Reclassification:

               Certain prior years amounts have been reclassified in conformity
               with current year's financial statement.

          s.   Impact of recently issued accounting standards:

               In November 2001, the EITF issued Topic No. D-103 (Topic D-103),
               subsequently renumbered as EITF 01-14, relating to the accounting
               for reimbursements received from customers for the Company's
               out-of-pocket expenses for the delivery of services. In
               accordance with EITF 01-14, reimbursements received for
               out-of-pocket expenses incurred should be characterized as
               revenue in the statement of operations. The Company has
               historically accounted for reimbursements received for
               out-of-pocket expenses incurred as a reduction to the cost of
               service revenues in the statement of operations to offset the
               costs incurred. The Company adopted EITF 01-14 effective January
               1, 2002 and reclassified approximately $837 thousand and $668
               thousand into revenues from cost of revenues for the years ended
               December 31, 2001 and 2000, respectively, to comply with this
               guidance.

               In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs
               Associated with Exit or Disposal Activities" ("SFAS No. 146").
               SFAS No. 146 requires that a liability for costs associated with
               an exit or disposal activity be recognized only when the
               liability is incurred, rather than at the date of an entity's
               commitment to an exit plan. SFAS No. 146 requires that the
               liability be initially measured at fair value. SFAS No. 146 is
               effective for exit or disposal activities that are initiated
               after December 31, 2002. Management does not expect that adoption
               of SFAS No. 146 will have material impact on its financial
               statements.

               In November 2002, the FASB issued Interpretation No. 45
               "Guarantor's Accounting and Disclosure Requirements for
               Guarantees, Including Indirect Guarantees of Indebtedness of
               Others" ("FIN 45"), which clarifies disclosure and
               recognition/measurement requirements related to certain
               guarantees. The disclosure requirements are effective for
               financial statements issued after December 15, 2002 and the
               recognition/measurement requirements are effective on a
               prospective basis for guarantees issued or modified after
               December 31, 2002. The application of the requirements of FIN 45
               did not have a material impact on the Company's financial
               statements.

               In December 2002, the FASB issued SFAS No. 148, "Accounting for
               Stock-Based Compensation -- Transition and Disclosure" ("SFAS
               No.148"). SFAS No. 148 amends SFAS No. 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 No. 148 amends the disclosure
               requirements of SFAS No. 123 to require prominent disclosures in
               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 No. 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 employee 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.


                                      F-16


<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 3   - MARKETABLE SECURITIES


                                                               December 31,
                                                           -------------------
                                                            2 0 0 2    2 0 0 1
                                                           --------    -------

          (*)  Available for sale - Mutual funds           $      -    $ 5,462
                                                           --------    -------
                Held to maturity  -
                  Corporate bonds                             5,698          -
                  Corporate notes                             2,603          -
                  Euro-dollar bonds                           2,660          -
                  Asset backed securities                     4,964          -
                                                           --------    -------
                                                             15,925      5,462
                                                           --------    -------
                                                           ________    _______

                                                           $ 15,925    $ 5,462
                                                           ========    =======

          Fair value                                       $ 15,924    $ 5,462
                                                           ========    =======

          (*)  As of December 31, 2001 due to the market conditions, and since
               the Company's management believed that the decline in the fair
               value is other than temporary, the cost basis of these securities
               was written down to fair value as a new cost basis. During the
               fourth quarter of 2001, the Company sold approximately 86% of its
               investment in marketable securities. For the year ended December
               31, 2001, impairment and realized losses on available-for-sale
               marketable securities amounting to $ 7,826 were included in
               earnings.


NOTE 4  - TRADE RECEIVABLES

                                                                December 31,
                                                           -------------------
                                                            2 0 0 2    2 0 0 1
                                                           ---------  --------

          Accounts receivable, net of allowance for
           doubtful accounts                               $ 10,535    $ 5,571
          Unbilled receivables, net of allowance for
           doubtful accounts                                  2,851     12,622
                                                           --------    -------
                                                           $ 13,386    $18,193
                                                           ========    =======


               Management's assessment for uncertainties of outstanding debt
               collectibility resulted in doubtful accounts expenses in the
               Statement of Operations of $1,335, $ 5,966 and $ 717 for 2002,
               2001 and 2000, respectively.


NOTE 5  - LONG-TERM TRADE RECEIVABLES
                                                                December 31,
                                                           -------------------
                                                            2 0 0 2    2 0 0 1
                                                           ---------  --------

          Maturity dates - long-term trade receivables:
             First year (current maturities)                $  1,675   $ 2,256
             Second year                                       1,452     1,516
             Third year                                          740     1,136
             Fourth year                                         266       720
             Fifth year                                            -       268
                                                            --------    ------
                                                               4,133     5,896
                                                           ---------    ------

             Less -   Current maturities                       1,675     2,256
                      Allowance for doubtful accounts (see
                       also Note 4)                              961       961
                                                            --------   -------
                                                            $  1,497   $ 2,679
                                                            ========   =======



                                      F-17


<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 6  - PROPERTY AND EQUIPMENT, NET
                                                                 December 31,
                                                             ------------------
                                                             2 0 0 2    2 0 0 1
                                                            ---------  --------
          Cost:
             Office furniture and equipment                $  2,442    $ 2,392
             Computers and software                          16,344     15,004
             Motor vehicles                                     225        298
             Leasehold improvements                           1,316      1,228
                                                           --------    -------
                                                             20,327     18,922

             Accumulated depreciation                        13,062      9,646
                                                           --------    -------
                  Net book value                           $  7,265    $ 9,276
                                                           ========    =======



NOTE 7  - OTHER ASSETS, NET
                                                                December 31,
                                                            ------------------
                                                             2 0 0 2    2 0 0 1
                                                           ----------  ---------
          Acquisition-related intangible assets
          -------------------------------------
          Cost:
             Goodwill                                     $  14,791   $ 14,791
             Developed technology                             4,241      4,241
             Customer base                                    3,461      3,461
             Other intangible assets                             58         58
                                                           --------   --------
                                                             22,551     22,551
            Accumulated amortization                         (7,266)    (6,354)
                                                           --------   --------
                                                             15,285     16,197
                                                           --------   --------
          Capitalized software development costs
          --------------------------------------
          Cost                                                7,876      7,876
            Accumulated amortization                         (1,182)         -
                                                           ---------    -------
                                                              6,694      7,876
                                                           ---------   --------
                                                           _________   ________

            Net book value                                $  21,979   $ 24,073
                                                          ==========  =========


NOTE 8  - OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES

                                                                December 31,
                                                            -------------------
                                                             2 0 0 2    2 0 0 1
                                                            ---------  ---------

          Accrued expenses                                  $ 2,426    $ 1,603
          Government authorities                                677      1,176
          Office of the Chief Scientist and the Fund for
            the encouragement of Marketing Activities           180        333
          Other                                                  26         20
                                                           ---------   --------
                                                            $ 3,309    $ 3,132
                                                           =========   ========

                                      F-18


<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 9 - RESTRUCTURING EXPENSES

         In response to declines associated with the current cautious
         information technology ("IT") spending environment within the financial
         services industry, the Company adopted three restructuring plans during
         the third and fourth quarters of 2002 and the second quarter of 2001.

         In 2002, two plans consisted of employee termination benefits
         associated with the involuntary termination of 78 employees (61
         research and development and professional services employees, 12
         administrative employees and 5 selling and marketing employees) and
         closure and sublet portions of existing office space.

         In 2001, a plan consisted of employee termination benefits associated
         with the involuntary termination of 89 employees (71 research and
         development and professional services employees, 13 administrative
         employees and 5 selling and marketing employees) and sublet portions of
         their existing office space. As part of the plan, the Company also
         consolidated aspects of its Dallas operations into its existing Atlanta
         operations in order to improve efficiency and eliminate duplicate
         costs.

         All restructuring plans were substantially completed by February 2003.


      a. Restructuring expenses:
                                                        Year ended December 31
                                                       ------------------------
                                                         2 0 0 2      2 0 0 1
                                                       -----------  ----------

                Employee termination benefits and
                  related costs                           $ 1,458     $   790
                Facility closures and related costs         1,794       1,513
                Property and equipment abandonment              -         270
                                                         ---------   ---------
                                                          $ 3,252     $ 2,573
                                                         =========   =========


      b. The following table summarizes the restructuring accruals status as
         of December 31, 2002:

<TABLE>
<CAPTION>

                                                Employee termination    Facility closures
                                                 and related costs      and related costs    Total
                                                --------------------    -----------------   --------

<S>        <C>                                     <C>                      <C>             <C>
         Original Accrual
          Balance as of January 1, 2002               $  790                  $1,513          $2,303
          Additional accruals                          1,458                   1,794           3,252
                                                     -------                 -------          ------
            Total                                      2,248                   3,307           5,555
                                                     -------                 -------          ------
         Utilized in cash
          During 2001                                    628                     513           1,141
          During 2002                                    900                     812           1,712
                                                     -------                 -------          ------
            Total                                      1,528                   1,325           2,853
                                                     -------                 -------          ------
                                                     _______                 _______          ______

         Net Balance as of December 31, 2002          $  720                  $1,982          $2,702
                                                     =======                 =======          ======

         Net Balance as of December 31, 2001          $  162                  $1,000          $1,162
                                                     =======                 =======          ======
</TABLE>



                                      F-19


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 10 - NON-RECURRING EXPENSES

          a.   Integration costs:

               In 2001, as part of the restructuring and integration plan, the
               Company recorded $ 465 of integration costs primarily for
               relocating employees and abandonment of property and equipment
               pursuant to the plan.

               The Company does not anticipate material additional integration
               charges in the future. All integration charges have been, and
               will be, expensed as incurred.

          b.   Write-off of other accounts receivable:

               In 2001 and 2000, the Company incurred expenses on behalf of a
               new venture in the amount of approximately $ 111 and $ 924,
               respectively. It was agreed between the investors that such
               expenses would be reimbursed upon the formation of the new
               entity, therefore such expenses were recorded as other accounts
               receivable. In April 2001, the Company and the other investor
               decided not to proceed with the formation of the new entity.
               Accordingly, the Company wrote-off the related other account
               receivable for the total amount of $1,035.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

          a.   Lease commitments:

               The Company leases its facilities and vehicles under various
               operating lease agreements, which expire on various dates, the
               latest of which is in 2014. The minimum lease commitments under
               non-cancelable operating leases are as follows:

               Year ended December 31,

               2003                                         $  2,281
               2004                                            2,085
               2005                                            1,444
               2006                                              902
               2007-2014                                       4,950
                                                            --------
                                                              11,662
               Less - sublease rentals                          (210)
                                                            --------
                                                            $ 11,452
                                                            ========

               The above minimum lease commitments include amounts previously
               accrued under the Company's restructuring plans (see also Note
               9b).

               Total facilities lease expenses for the years ended December 31,
               2002, 2001 and 1999, were approximately $1,982, $ 2,150 and $
               1,778 (net of sublease rentals incurred of $31, $ 4, and $0),
               respectively.



                                      F-20


<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 11 - COMMITMENTS AND CONTINGENCIES (Cont.)

          b.   Guarantees:

               1. The Company has obtained a bank guarantee of $46, secured by a
                  restricted deposit, in connection with the Company's
                  facilities operating lease agreement in Israel.
               2. The Company has obtained a bank guarantee of $312, secured by
                  a restricted bank deposit, for BBP as required by Swiss Law.

          c.   Tax Notice:

               BBP received a letter from the Tax Office of the Canton Aargovia,
               Switzerland ("Aargovia") asserting deficiencies in BBP's
               corporate income taxes for 1999 to 2001 tax years. The Company
               intends to challenge the deficiencies asserted by Aargovia. The
               Company believes that it has meritorious defenses to those
               deficiencies and believes that the ultimate outcome of the case
               will not result in a material impact on the Company's
               consolidated results of operations or financial position.

NOTE 12 - SHAREHOLDERS' EQUITY

          a.   The Ordinary shares of the Company are traded on the NASDAQ
               National Market.

          b.   The Ordinary shares confer upon the holders the right to receive
               notice to participate and vote in general meetings of the Company
               and the right to receive dividends, if declared.

               Deferred shares are non-transferable and entitle their holders to
               no voting, dividend or other rights except for the right to
               receive the par value of the shares upon dissolution of the
               Company.

          c.   Treasury shares:

               On February 21, 2002, the Company's Board of Directors authorized
               to purchase up to one million ordinary shares of the company from
               time to time on an open market. By December 31, 2002, the Company
               had purchased a total of 21,500 shares.

          d.   Stock options:

               1. Under the Company's 1998 Director's Stock Option Plan and the
                  1999 Employee Stock Option Plan (collectively - the "Plans"),
                  up to 2,492,815 options may be granted to employees and
                  directors of the Company.

               2. Pursuant to the Plans, as of December 31, 2002, an aggregate
                  of 1,921,941 options of the Company are still available for
                  future grants. Subsequent to the balance sheet date the
                  Company granted 969,311 options under the options exchange
                  program (see 4 below).

               3. Each option granted under the Plans to employees expires not
                  later than ten years from the date of the grant, except for
                  grants to persons holding 10% or more of the Company's stock,
                  which expire in five years. Each option granted under the
                  Plans to directors expires no later than five years from the
                  date of grant. The options vest primarily over four years. Any
                  options that are canceled or forfeited before expiration
                  become available for future grants. Options granted to
                  directors are vested over a one year period from their date of
                  grant. The exercise price of the options granted under the
                  plans may not be less than the nominal value of the shares
                  into which such options are exercised.



                                      F-21


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)
                               (expect share data)


NOTE 12  - SHAREHOLDERS' EQUITY (Cont.)

              4.   In June 2002 the Company commenced a voluntary stock option
                   exchange program for its employees. Under the program
                   participating employees were given the opportunity to have
                   unexercised stock options previously granted to them
                   cancelled, and to receive replacement options at a future
                   date. Replacement options will be granted at a ratio of one
                   new option for each option cancelled, at an exercise price
                   equal to the fair market value of the Company's Ordinary
                   Shares on the date of the re-grant.

                   Pursuant to the terms of the offer, 1,025,700 options were
                   cancelled on July 16, 2002. The Company granted the
                   replacement options on January 17, 2003.

          e.  A summary of the Company's option activity under the Plans is as
              follows:

<TABLE>
<CAPTION>

                                                                          Year ended December 31,
                                             ------------------------------------------------------------------------------------
                                                      2 0 0 2                      2 0 0 1                     2 0 0 0
                                             --------------------------      ----------------------        ----------------------
                                                               Weighted                    Weighted                     Weighted
                                                               average                     average                      average
                                               Number          exercise        Number      exercise          Number     exercise
                                             of options         price        of options     price          of options     price
                                             ----------        --------      ----------    --------        ----------   --------

<S>              <C>                        <C>                <C>          <C>            <C>             <C>            <C>
                Outstanding at January 1      1,363,843         $14.85       1,830,893      $14.15          1,355,421      $10.84
                 Granted                        500,800           3.84               -           -            818,100       17.38
                 Exercised                      (64,856)          3.33         (93,622)       2.94           (192,892)       4.94
                 Option exchange program     (1,025,700)         15.65               -           -                  -           -
                 Forfeited/cancelled           (209,632)         10.23        (373,428)      14.54           (149,736)      12.10
                                             ----------                      ---------                      ---------
                Outstanding at
                 December 31                    564,455         $ 6.68       1,363,843      $14.85          1,830,893      $14.15
                                             ==========                      =========                      =========

                Exercisable options at
                 December 31                    241,921         $10.43         810,987      $13.85            624,269      $11.70
                                             ==========                      =========                      =========
</TABLE>


The options outstanding as of December 31, 2002, have been
separated into ranges of exercise price, as follows:

<TABLE>
<CAPTION>

                                              Options            Weighted                        Options
                                            outstanding          average         Weighted       exercisable       Weighted
                                               as of            remaining         Average          as of           average
                Ranges of exercise           December          contractual       Exercise         December        exercise
                Price                        31, 2002          life (years)        Price          31, 2002          price
                ------------------          -----------        ------------      --------       -----------       --------

<S>             <C>                          <C>                  <C>             <C>             <C>             <C>
                $  3.55-5.00                   452,955             7.7             $ 3.87          132,796          $ 4.04
                $ 11.63-16.75                   69,500             2.3              15.55           67,125           15.62
                $ 22.31                         42,000             1.7              22.31           42,000           22.31
                                             ---------                                            --------
                                               564,455             6.6             $ 6.68          241,921         $ 10.43
                                             =========                                            ========
</TABLE>

All options granded during 2002 and 2000 were at an exercise price that is equal
to the fair value of the stock at the grant date. No options were granted during
2001.


                                      F-22


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)
                             (except per share data)

NOTE 12 - SHAREHOLDERS' EQUITY (Cont.)

          f.   Dividends:

               In the event that cash dividends are declared in the future, such
               dividends will be paid in NIS. The Company does not intend to pay
               cash dividends in the foreseeable future.

               The Company has decided to permanently reinvest its tax-exempt
               income (see Note 13b).


NOTE 13 - NET EARNINGS (LOSS) PER SHARE

          The following table sets forth the computation of historical basic and
          diluted net earnings (loss) per share:

<TABLE>
<CAPTION>

                                                               Year ended December 31,
                                                  --------------------------------------------
                                                     2 0 0 2         2 0 0 1         2 0 0 0
                                                 --------------   -------------   ------------
<S>                                             <C>              <C>              <C>
          Numerator:
           Net income (loss)                     $    (16,647)    $    (31,626)    $      2,377
                                                 ============     ============     ============

           Numerator for basic earnings
            (loss) per share - income (loss)
            available to Ordinary shareholders   $    (16,647)    $    (31,626)    $      2,377
                                                 ============     ============     ============

           Numerator for diluted net earnings
            (loss) pershare - income (loss)
            available to Ordinary shareholders
            after assumed exercises              $    (16,647)    $    (31,626)    $      2,377
                                                 ============     ============     ============

           Denominator:                                         Number of shares
                                                 ----------------------------------------------
           Denominator for basic net earnings
            (loss) per share - weighted - average
            shares                                 14,290,317       14,218,388       14,096,298
                                                  -----------      -----------      -----------

           Effect of dilutive securities:
            Employee stock options                    (*)   -       (*)      -          674,510
            Warrants                                  (*)   -       (*)      -            5,807
                                                  -----------      -----------      -----------


           Dilutive potential Ordinary Shares         (*)   -       (*)      -          680,317
                                                  -----------      -----------      -----------

           Denominator for diluted net
            earnings (loss) per share              14,290,317       14,218,388       14,776,615
                                                 ============     ============     ============
</TABLE>

           (*) Antidilutive.

                                      F-23


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 14 - INCOME TAXES

          a.   Measurement of taxable income under the Israeli Income Tax Law
               (Inflationary Adjustments), 1985:

               Results for tax purposes are measured in real terms of earnings
               in NIS after certain adjustments for increases in the Israeli
               Customer Price Index. As explained in Note 2b, the financial
               statements are measured in dollars. The difference between the
               annual change in the CPI and in the NIS/dollar exchange rate
               causes a difference between taxable income and the income before
               taxes shown in the financial statements. In accordance with
               paragraph 9(f) of SFAS No. 109, the Company has not provided
               deferred income taxes on this difference between the reporting
               currency and the tax bases of assets and liabilities.

          b.   Tax benefits under the Israeli Law for the Encouragement of
               Capital Investments, 1959:

               The Company has been granted in November 1995 the status of an
               "Approved Enterprise", under the Israeli Law for the
               Encouragement of Capital Investments, 1959 (the "Investment Law")
               and the Company has elected the alternative benefits program,
               waiver of grants in return for tax exemptions. Pursuant thereto,
               the income of the Company derived from the "Approved Enterprise"
               program is tax-exempt for two years commencing with the year it
               first earns taxable income relating to each expansion program,
               and subject to corporate taxes at the reduced rate of 10% to 25%,
               for an additional eight years. The Company completed its
               investment according to certain of its first program on November
               27, 1997. Income derived from this program was tax exempt for two
               years commencing in 1998 and will be subject to the reduced tax
               rates for eight years ending in 2005 (subject to an adjustment
               based upon the foreign investors' ownership of the Company). In
               1998, the Company received approval for its first expansion
               program. In 2000, the Company received approval for its second
               expansion program. Income derived from the expansion programs
               will be tax-exempt for a period of two years and will be subject
               to a reduced tax rate as mentioned above for an additional period
               of eight years. The period of benefits for these programs has not
               yet commenced since no income was derived. The period of tax
               benefits detailed above is subject to limits of 12 years from the
               year of commencement of production, or 14 years from the date of
               granting the approval, whichever is earlier.

               The tax-exempt profits that will be earned by the Company's
               "Approved Enterprise" can be distributed to shareholders, without
               imposing tax liability on the Company only upon the complete
               liquidation of the Company. As of December 31, 2002, retained
               earnings included approximately $ 4,597 in tax exempt income
               earned by the Company's "Approved Enterprise". The Company has
               decided to permanently reinvest its tax exempt income.
               Accordingly, no deferred income taxes have been provided on
               income attributable to the Company's "Approved Enterprise". If
               these retained tax-exempt profits are distributed in a manner
               other than in the complete liquidation of the Company, they would
               be taxed at the corporate tax rate applicable to such profits as
               if the Company had not elected the alternative tax benefits
               (currently between 10% to 25% for an "Approved Enterprise").

               The Investment Law also grants entitlement to claim accelerated
               depreciation on equipment used by the "Approved Enterprise"
               during five tax years.

               The entitlement to the above benefits is conditional upon the
               Company fulfilling the conditions stipulated by the above law,
               regulations published thereunder and the instruments of approval
               for the specific investments in "Approved Enterprises". In the
               event of failure to comply with these conditions, the benefits
               may be canceled and the Company may be required to refund the
               amount of the benefits, in whole or in part, including interest.

               Income not eligible for "Approval Enterprise" benefits mentioned
               above is taxed at the regular rate of 36%.


                                      F-24


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 14 - INCOME TAXES (Cont.)


          c.   Net operating losses carryforwards:

               As of December 31, 2002, the Company had approximately $14,617 of
               Israeli net operating loss carryforwards. The Israeli loss
               carryforwards have no expiration date.

               As of December 31, 2002, Fundtech Corporation had a U.S. federal
               net operating loss carryforward of approximately $46,648 that can
               be carried forward and offset against taxable income for 10-15
               years and begin to expire in 2010 through 2017. Utilization of
               U.S. net operating losses may be subject to substantial annual
               limitation due to the "change in ownership" provisions of the
               Internal Revenue Code of 1986 and similar state provisions. The
               annual limitation may result in the expiration of net operating
               losses before utilization.

          d.   Deferred income taxes:

               Deferred income taxes reflect the net tax effects of temporary
               differences between the carrying amounts of assets and
               liabilities for financial reporting purposes and the amounts used
               for income tax purposes.

               Significant components of the Company and its subsidiaries assets
               are as follows.

                                                                December 31,
                                                           --------------------
                                                            2 0 0 2     2 0 0 1
                                                           ---------   --------
               Deferred tax assets:
                 U.S. net operating loss carryforwards     $ 20,967    $ 14,538
                 Israel net operating loss carryforwards      1,462       1,048
                 Swiss net operating loss carryforwards           -         109
                 Other reserve and allowances                 6,642       7,414
                                                           --------   ---------
               Total deferred tax assets before
                 valuation allowance                         29,071      23,109
               Valuation allowance                          (29,071)    (23,000)
                                                           --------    --------
               Balance at the end of the year
                (all foreign)                              $     -     $    109
                                                           ========    ========

               Deferred tax liabilities:
               Deferred taxes due to assets acquired and
                liabilities assumed (all foreign)          $     -     $      -
                                                           ========    ========

               As of December 31, 2002, the Company and its subsidiaries have
               provided valuation allowances of approximately $29,071 in respect
               of deferred tax assets resulting from tax loss carryforwards and
               other temporary differences. Management currently believes that
               since the Company and its subsidiaries have a history of losses,
               it is more likely than not that the deferred tax regarding the
               loss carryforwards and other temporary differences will not be
               realized in the foreseeable future.

          e.   Tax assesments:

               The Company received final tax assessments through the tax year
               ended December 31, 1999. The subsidiaries of the Company have not
               been assessed for income tax purposes since incorporation.




                                      F-25


<PAGE>


                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 14  - INCOME TAXES (Cont.)

           f. Composition of income tax expenses


                                                     Year ended December 31,
                                                 -------------------------------
                                                  2 0 0 2     2 0 0 1    2 0 0 0
                                                 ---------   ---------  --------
              Income (loss) before taxes on
               income:

              Domestic                           $ (2,205)   $ (7,441)   $6,951
              Foreign                             (14,077)    (23,973)   (4,500)
                                                 ---------   ---------   ------
                                                 $(16,282)   $(31,414)   $2,451
                                                 =========   =========   ======



              Income tax provision (benefit) :

              Current:
                 Domestic                        $     51     $   136     $   8
                 Foreign                              205         185        66
                                                 --------     -------    -------
                                                      256         321        74
                                                 --------     -------    -------
              Deferred:
                 Domestic                               -           -         -
                 Foreign                              109        (109)        -
                                                 --------     ---------  -------
                                                      109        (109)        -
                                                 --------     ---------  -------
                                                 $    365     $   212     $  74
                                                 =========    =========  =======


           g.  Theoretical taxes

               The following is a reconciliation of the theoretical taxes on
               income assuming that all income is taxed at the ordinary rate
               applicable to Israeli companies and the actual taxes on income:

                                                     Year ended December 31,
                                               ---------------------------------
                                                 2 0 0 2    2 0 0 1     2 0 0 0
                                               ----------  ----------  ---------

              Income (loss) before taxes on
                income                         $ (16,282) $ (31,414)   $ 2,451
                                               ==========  ==========  ========

              Theoretical tax on the above
                amount                        $   (5,862) $ (11,309)   $   882

              Tax benefit arising from
                "Approved Enterprise"                396      1,602     (2,555)

              Increase in valuation allowance      6,071      8,388      2,544

              Adjustments arising from
                differences in the basis of
                measurement for tax purposes
                and for financial reporting
                purposes                               -      2,095          -

              Other, net                            (240)      (564)      (797)
                                              ----------  ----------   -------
                                              $      365  $     212    $    74
                                              ==========  ==========   ========



                                      F-26


<PAGE>

                                  FUNDTECH LTD.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (In thousands)


NOTE 15  - OPERATING SEGMENT AND GEOGRAPHICAL INFORMATION

         a.    The Company evaluates its business activities in accordance with
               the provisions of SFAS No. 131 "Disclosure about Segments of an
               Enterprise and Related Information". In prior years, the Company
               determined that its operating segments had similar economic
               characteristics such as products and services, customers' methods
               used to distribute products and services, and regulatory
               environment resulting in their aggregation.

               As a result of the substantial completion of the Company's
               restructuring and integration efforts that began in the second
               quarter of 2001, in 2002 the Company aligned itself into three
               operating business segments: Cash Management, Payments and BBP.

               The Company's cash management solutions enable small, mid and
               large-tier financial institutions to deliver a complete set of
               cash management services through the Internet and other delivery
               channels. The Company's payments solutions automate all aspects
               of the funds transfer, including foreign exchange settlement and
               customer notification process, enabling
               straight-through-processing (STP) of payments. BBP develops,
               implements, maintains and operates systems for the automatic
               processing and transport of data in the finance industry. BBP
               also provides interbank gateway services. Its products include
               system solutions for interbank applications, as well as
               integration modules for host connections. In the beginning of
               2002, the Company also changed it's management reporting
               structure to include relevant operating data for each of its
               three segments. The Company's chief operating decision makers
               evaluate performance of each segment based on income (loss) from
               operations before restructuring expenses, interest expenses and
               income taxes.

               The Company does not identify or allocate its assets by operating
               segments as part of the assessment of segment performance.

               Summarized financial information for each of the reportable
               segments is presented below. Segment information related to Cash
               Management and Payments revenue or operating loss for 2001 and
               2000 has not been provided as the Company's operations and
               internal reporting were not organized in a manner consistent with
               the current reportable segments and the Company has determined it
               is impracticable to identify such information.

               The following table sets forth the Company's revenue and
               operating income (loss) from all reportable segments for the year
               2002 as well as BBP for the years 2001 and 2000:

                                                     Year ended December 31,
                                                 -------------------------------
                                                 2 0 0 2     2 0 0 1    2 0 0 0
                                                ---------   ---------  ---------
              Cash Management:
              ----------------
                 Revenues                       $ 8,098          --         --
                 Operating loss                 $(2,844)         --         --

              Payments:
              ---------
                 Revenues                       $24,214          --         --
                 Operating loss                 $(2,681)         --         --

              BBP:
              ----
                 Revenues                       $ 7,516     $ 6,901     $ 6,450
                 Operating income (loss)        $    42     $  (914)    $(2,390)

          b.   Following is a reconciliation of the operating loss of the
               reportable segments to the data included in the consolidated
               financial statements:


                                      F-27


<PAGE>


                                                               Year ended
                                                            December 31, 2002
                                                            -----------------
               Total operating loss
                 of the reportable segments:                       5,483

               Amounts not allocated to segments:
                General and administrative expenses                6,172
                Marketing expenses                                 1,785
                Restructuring expenses                             3,252
                                                                 -------
               Consolidated operating loss                       $16,692
                                                                 =======



NOTE 15  -OPERATING SEGMENT AND GEOGRAPHICAL INFORMATION  (Cont.)

          c.   Geographic information:

               The total revenues are attributed to geographic information,
               based on the customers' location

<TABLE>
<CAPTION>


                                                        Year ended December 31,
                               ---------------------------------------------------------------------------
                                     2 0 0 2                    2 0 0 1                    2 0 0 0
                               ---------------------      ----------------------     ---------------------
                                              Long -                      Long -                    Long -
                                 Total        lived        Total          lived       Total         lived
                               revenues       assets      revenues        assets     revenues       assets
                               --------       ------      --------        ------     --------       ------

<S>           <C>             <C>          <C>           <C>           <C>            <C>           <C>
             Israel             $   142      $   827       $   205       $   737      $   574       $   830
             U.S.                26,272       20,844        31,610        24,140       27,610        20,942
             Australia              140           11             -            10        4,062             7
             Switzerland          7,801        8,451         7,381         8,847        6,313        10,529
             Others               5,473          138         5,798           222        9,389           139
                                -------      -------       -------       -------      -------       -------
                                $39,828      $30,271       $44,994       $33,956      $47,948       $32,447
                                =======      =======       =======       =======      =======       =======
</TABLE>


          d. Major customer data as a percentage of total revenue:

                                                     Year ended December 31,
                                                 ------------------------------
                                                 2 0 0 2     2 0 0 1    2 0 0 0
                                                 -------     -------    -------

              Customer A                           18%         17%         2%
                                                  ====        ====       ====

              In 2000 no customer exceeded 10% of the Company's consolidated
              revenue.


NOTE 16 - FINANCIAL INCOME, NET:

                                                     Year ended December 31,
                                                 ------------------------------
                                                 2 0 0 2     2 0 0 1    2 0 0 0
                                                 -------     -------    -------

              Financial expenses:
                 Interest and other              $  172      $  325     $    2
                 Foreign currency translation
                  differences, net                  161         205         33
                                                 ------      ------     ------
                                                    333         530         35
                                                 ------      ------     ------
              Financial income:
                 Interest and other                 930       3,787      5,577
                 Foreign currency translation
                  differences, net                   94          86          -
                                                 ------      ------    -------

                                                  1,024       3,873      5,577
                                                 ------      ------    -------
                                                 ______      ______    _______
                                                 $  691      $3,343    $ 5,542
                                                 ======      ======    =======



                                      F-28


<PAGE>


                            Kost Forer & Gabbay             Phone: 972-3-6232525
                            3 Aminadav St.                  Fax: 972-3-5622555
                            Tel-Aviv 67067, Israel



                         REPORT OF INDEPENDENT AUDITORS

                             To the Shareholders of

                                  FUNDTECH LTD.

           We have audited the accompanying consolidated balance sheets of
Fundtech Ltd. ("the Company") and its subsidiaries as of December 31, 2001, and
the related consolidated statements of operations, changes in shareholders'
equity and cash flows for each of the two years in the period ended December 31,
2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

           We conducted our audits in accordance with auditing standards
generally accepted in the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance as to whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

           In our opinion, the consolidated financial statements referred to
above, present fairly, in all material respects, the consolidated financial
position of Fundtech Ltd. and its subsidiaries as of December 31, 2001, and the
consolidated results of their operations and cash flows for each of the two
years in the period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States.




Tel-Aviv, Israel                                       KOST, FORER & GABBAY
February 11, 2002                               A Member of Ernst & Young Global


<PAGE>


                                    SIGNATURE
                                    ---------

           The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F/A and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

                                           FUNDTECH  LTD.




                                           By: /s/ Reuven Ben Menachem
                                               ---------------------------
                                               Reuven Ben Menachem

Date: June 27, 2003


<PAGE>

                                 CERTIFICATIONS
                                 --------------

I, Reuven Ben Menachem, certify that:

1. I have reviewed this annual report on Form 20-F/A of Fundtech Ltd.;

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officer 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 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 annual 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 annual report (the "Evaluation Date"); and

           c. presented in this annual 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 officer 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
annual 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: June 27, 2003

                                              /s/ Reuven Ben Menachem
                                             ------------------------------
                                              Reuven Ben Menachem
                                              Chief Executive Officer
                                              (Principal Executive Officer)



                                       1

<PAGE>

I, Yoram Bibring, certify that:

1. I have reviewed this annual report on Form 20-F/A of Fundtech Ltd.;

2. Based on my knowledge, this annual 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 annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual report;

4. The registrant's other certifying officer 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 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 annual 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 annual report (the "Evaluation Date"); and

           c. presented in this annual 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 officer 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
annual 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: June 27, 2003


                                                  /s/ Yoram Bibring
                                                 -----------------------------
                                                  Yoram Bibring
                                                  Chief Financial Officer
                                                  (Principal Financial Officer)




                                       2