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

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**FORM 10-Q**

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(Mark One)

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

**For the Quarterly Period Ended March 31, 2001**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 0-22292**

**ACTIONPOINT, INC.**
(Exact name of Registrant as specified in its Charter)



|**Delaware**                                                   | **77-0104275**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**1299 Parkmoor AvenueSan Jose, California    95126**(Address of Principal Executive Offices including Zip Code)

**(408) 325-3800**(Registrant's Telephone Number, Including Area Code)

****
(Former name, former address and former fiscal year, if changed since last report)







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 reports), and (2) has been subject to such filing
requirements for the past 90 days.    YES [X]    NO [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as
of March 31, 2001: 4,274,949







**ACTIONPOINT, INC.
      QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2001
                                Index**



|**PART I.   FINANCIAL INFORMATION**                                                                                   | **Page No.**
|--------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                      |             
|Item 1.   Financial Statements                                                                                        |             
|                                                                                                                      |             
|Consolidated Balance Sheets at March 31, 2001 and
     December 31, 2000                                              | **          
|                                                                                                                      |             
|Consolidated Statements of Operations for the
          
    three month periods ended March 31, 2001 and 2000        | **          
|                                                                                                                      |             
|Consolidated Statements of Cash Flows for the
          
    three month periods ended March 31, 2001 and 2000        | **          
|                                                                                                                      |             
|Notes to the Consolidated Financial Statements                                                                        | **          
|                                                                                                                      |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations | **          
|                                                                                                                      |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                  | **          
|                                                                                                                      |             
|**PART II.  OTHER INFORMATION**                                                                                       |             
|                                                                                                                      |             
|Item 1.   Legal Proceedings                                                                                           | **          
|                                                                                                                      |             
|Item 2.   Changes in Securities                                                                                       | **          
|                                                                                                                      |             
|Item 3.   Defaults Upon Senior Securities                                                                             | **          
|                                                                                                                      |             
|Item 4.   Submission of Matters to a Vote of Security Holders                                                         | **          
|                                                                                                                      |             
|Item 5.   Other Information                                                                                           | **          
|                                                                                                                      |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                            | **          
|                                                                                                                      |             
|**Signature Page**                                                                                                    | **          

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**PART I -- FINANCIAL INFORMATION**

Item 1. Financial Statements

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**ACTIONPOINT, INC.

                       CONSOLIDATED BALANCE SHEETS**
(In thousands)

`March 31,      December 31,
                                               2001           2000
                                           -------------  -----------
                                           (Unaudited)
                       ASSETS
Current assets:
  Cash and cash equivalents ...............      $3,947       $2,242
  Accounts receivable, net.................       4,714        7,912
  Deferred income taxes and
     other current assets..................       1,315        1,885
                                           -------------  -----------
    Total current assets...................       9,976       12,039

Property and equipment, net................       1,437        1,585
Other assets...............................       4,177        4,177
                                           -------------  -----------
                                                $15,590      $17,801
                                           =============  ===========

       LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable.........................        $332         $414
  Deferred revenue.........................       3,052        3,202
  Accrued liabilities......................       1,806        3,463
                                           -------------  -----------
    Total current liabilities..............       5,190        7,079

Long term deferred revenue.................         786          800
                                           -------------  -----------
Total liabilities..........................       5,976        7,879
                                           -------------  -----------
Stockholders' equity:
  Common stock.............................          43           43
  Paid-in capital..........................       9,988        9,981
  Retained earnings........................        (417)        (102)
                                           -------------  -----------
    Stockholders' equity...................       9,614        9,922
                                           -------------  -----------
                                                $15,590      $17,801
                                           =============  ===========`

The accompanying notes are an integral part of these consolidated
                         financial statements

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**ACTIONPOINT, INC.

                 CONSOLIDATED STATEMENTS OF OPERATIONS

                              (UNAUDITED)**
(In thousands, except per share amounts)

`Three Months Ended
                                            March 31,
                                        -------------------
                                           2001      2000
                                        --------- ---------
Net revenues:
  License...............................  $4,935    $3,518
  Service...............................   1,660     1,095
                                        --------- ---------
Total revenues..........................   6,595     4,613
                                        --------- ---------
Cost of revenues:
  License...............................     175        83
  Service (inclusive of stock
    related bonus expense of
    $138 in 2000).......................     854       883
                                        --------- ---------
Cost of revenues........................   1,029       966
                                        --------- ---------
Gross profit                               5,566     3,647

Research and development
  (inclusive of stock related
  bonus expense of $710 in 2000.........   1,683     2,457
Sales and marketing
  (inclusive of stock related
  bonus expense of $638 in 2000.........   3,293     3,966
General and administrative
  (inclusive of stock related
  bonus expense of $1,090 in 2000.......     940     1,962
                                        --------- ---------
Operating loss..........................    (350)   (4,738)
Interest and other income                     35       106
Write-off of minority equity
  investment............................      --      (500)
                                        --------- ---------
Loss before provision
   for income taxes.....................    (315)   (5,132)
Provision for income taxes..............      --         7
                                        --------- ---------
Net loss................................   ($315)  ($5,139)
                                        ========= =========

Basic and diluted EPS:
 Net loss................                 ($0.07)   ($1.24)
                                        ========= =========

Shares used in basic and diluted
   EPS calculations: ................      4,275     4,134
                                        ========= =========`

The accompanying notes are an integral part of these consolidated
                         financial statements

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**ACTIONPOINT, INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS**
(UNAUDITED - IN THOUSANDS)

`Three Months Ended
                                                                   March 31
                                                           -------------------
                                                             2001      2000
                                                           --------- ---------
Cash flows from operating activities:
 Net loss...............................................      ($315)  ($5,139)
 Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
   Depreciation and amortization........................        218       182
   Decrease in allowance for doubtful accounts..........        (40)       --
   Stock compensation charge............................         --        59
   Write-off of minority equity investment..............         --       500
   Shares issued for stock related bonus................         --       346

 Change in assets and liabilities:
    Accounts receivable.................................      3,238     1,616
    Other assets and deferred income taxes..............        570      (460)
    Accounts payable....................................        (82)       58
    Deferred revenue....................................       (164)       (8)
    Accrued liabilities.................................     (1,657)     (169)
                                                           --------- ---------
    Net cash provided by (used in) operating activities.      1,768    (3,015)
                                                           --------- ---------
Cash flows from investing activities:
 Property and equipment additions.......................        (70)     (340)
                                                           --------- ---------
    Net cash used in investing activities...............        (70)     (340)
                                                           --------- ---------
Cash flows from financing activities:
 Net proceeds from issuance of common stock.............          7       556
                                                           --------- ---------
    Net cash provided by financing activities...........          7       556
                                                           --------- ---------
Net increase (decrease) in cash and cash equivalents....      1,705    (2,799)

Cash and cash equivalents at beginning of period........      2,242     9,193
                                                           --------- ---------
Cash and cash equivalents at end of period..............     $3,947    $6,394
                                                           ========= =========`

The accompanying notes are an integral part of these consolidated
                         financial statements

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**ACTIONPOINT, INC.

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              (UNAUDITED)**



1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Interim Unaudited Financial Information:

The accompanying interim unaudited consolidated financial
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission.  The December 31, 2000 balance sheet data
was derived from audited consolidated financial statements contained in the
Company's 2000 Annual Report on Form 10-K but does not include all disclosures
required by accounting principles generally accepted in the United States of
America. The unaudited consolidated financial statements for the three month
periods ended March 31, 2001 and 2000 include, in the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the financial information set herein.  The results of operations for the
interim periods are not necessarily indicative of the results to be expected for
an entire year and should not be relied on as such.

Liquidity and capital
resources:

For the year ended
December 31, 2000 the Company incurred a net loss of $8.8M and negative cash
flows from operations of $6.9M. At December 31, 2000 the Company had cash and
cash equivalents of $2.2M. For the first quarter ended March 31, 2001, the
company incurred a net loss of $315,000 and generated positive cash flows from
operating activities of $1.8 million.  At March 31, 2001, the Company had cash
and cash equivalents of $3.9 million.



During the quarter ended March 31, 2001, management reduced
the workforce and took other steps to reduce operating expenditures.



In the event that such measures are not sufficient to
reduce expenses to levels that can be financed by revenues generated, the
Company may need to seek additional financing. There can be no assurance that
such additional financing will be available or will be available on terms
acceptable to the Company, which, as a result, could have a material adverse
effect on the Company's business, operating results and financial condition.

Recent Pronouncements:



In June 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Standards No. 133 ("SFAS
133"), "Accounting for Derivative Instruments and Hedging
Activities." SFAS 133, as amended, establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. SFAS 133 requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. The
Company has adopted SFAS 133 as of January 1, 2001. The adoption of SFAS 133 did
not have a material effect on the financial position or the results of
operations of the Company.



3.  	INCOME TAXES:

The tax benefit related to the operating loss for the
quarter ended March 31, 2001, has been offset by a valuation reserve established
against the resulting deferred tax assets.





4.	COMPUTATION OF NET LOSS PER SHARE

The following table presents the calculation of basic and diluted net loss
per share (in thousands, except per share data):

`Three Months Ended
                                        March 31,
                                    -------------------
                                       2001      2000
                                    --------- ---------

Net loss............................   ($315)  ($5,139)

Shares used in basic and diluted
 EPS calculation....................   4,275     4,134

Basic and diluted EPS...............  ($0.07)   ($1.24)`



Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations.



OVERVIEW:



We develop, market and service information capture software. Information
capture solutions enable organizations to collect, organize and input paper and
fax-based information into their installed computing systems, providing a
critical bridge between the paper world and the digital world. The result is
improved customer satisfaction, increased productivity and cost control. Our
customers have traditionally been large global 1000 businesses and governmental
agencies.  We currently have two main product lines to serve the electronic
documentation needs of entities that use computers to facilitate business
activities.  Our InputAccel family is an information capture product, which
means that it automates the conversion of paper and fax documents into
electronic format thus allowing improved operating efficiencies. Our customers
use InputAccel to convert transaction-related documents, such as order forms,
claim forms, or loan applications, into an appropriate electronic format and to
transport images of and information  from these documents to storage on Web
sites, compact disks, or internal databases for subsequent search, retrieval or
further processing. Our new Dialog Server product, released in September 2000,
is an XML-based software product designed to replace static forms on the Web
with personalized, intelligent interactions.  Additionally, we market software
tools under our Pixel Translations brand to various hardware and software
providers.



RESULTS OF OPERATIONS:



This Quarterly Report on Form 10-Q may contain forward-looking statements
that involve risks and uncertainties.  The Company's actual results may differ
materially from the results discussed in any such forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed below in the section captioned RISK FACTORS and in the Company's
most recent Annual Report on Form 10-K.

Revenues

The Company's license revenues increased 40% in the first
quarter of 2001 to $4.9 million from $3.5 million in the first quarter of 2000.
As a percent of revenue, licenses accounted for 75% and 76% for the first
quarter of 2001 and 2000, respectively. The increase in revenue is due primarily
from increased revenues from InputAccel product line.

The Company's service revenues increased 52% in the first
quarter of 2001 to $1.7 million from $1.1 million in the first quarter of 2000.
As a percent of revenue, services accounted for 25% and 24% for the first
quarter of 2001 and 2000, respectively. The increase in service revenues was
primarily attributable to a larger installed base of customers purchasing annual
software maintenance contracts.

Gross Profit

Gross profit increased 53% for the first quarter of 2001 to
$5.6 million from $3.6 million for the first quarter of 2000. The increase in
gross profit is due primarily from increased revenues. Gross margin increased to
84% from 79% for the first quarter of 2001 and 2000, respectively. The increase
in gross margin is due to an increased percentage of revenue derived from
license fees in the first quarter of 2001, which have higher margins than
revenue from maintenance and services.



Research and Development

Research and development expenses decreased 32% in the first
quarter of 2001 to $1.7 million from $2.5 million in the first quarter of 2000.
The decrease is principally due to a one-time charge of $710,000 of stock
related bonus expense in the first quarter of 2000. As a percent of revenue,
research and development decreased to 26% for the first quarter of 2001, from
53% in the first quarter of 2000. Excluding the stock related bonus expense the
decrease in percentage is primarily due to increased revenue levels.

The Company believes that continued investment in research
and development is critical to its future growth and will continue to commit
resources to this area.

Sales and marketing

Sales and marketing expenses decreased 17% in the first
quarter of 2001 to $3.3 million from $4.0 million in the first quarter of 2000.
The decrease is principally due to a one-time charge of $638,000 of stock
related bonus expense in the first quarter of 2000. As a percent of revenue,sales and marketing decreased to 50% for the first quarter of 2001, from 86%
in the first quarter of 2000. Excluding the stock related bonus expense the
decrease in percentage is primarily due to increased revenue levels.

General and administrative

General and administrative expenses decreased 52% for the
first quarter of 2001 to $940,000 from $2.0 million in the first quarter of
2000. The decrease is largely due to a one-time charge of $1.1 million of stock
related bonus expense in the first quarter of 2000 partially offset by increase
in spending due to professional fees and expenses incurred in conjunction with
various strategic initiatives. As a percentage of revenue, general and
administrative expenses decreased to 14% for the first quarter of 2001, from 43%
for the first quarter of 2000. Excluding the stock related bonus expense the
decrease in percentage is primarily due to increased revenue levels.

Minority Equity Investment

Based on its assessment of the likelihood of realizing value, the Company
wrote off a $500,000 minority equity interest in the first quarter of 2000, that
was made in 1998 in conjunction with the sale of the Company's hardware
division.



Provision for Income Taxes

The benefit for the tax loss carry forward in the first
quarter of 2001 and 2000, respectively, was offset by an increase to the
valuation allowance.

Liquidity and Capital Resources



At March 31, 2001, the Company had cash and cash equivalents of $3.9
million, compared to $2.2 million at December 31, 2000.

Net cash provided by operating activities was $1.8 million in
the first three months of 2001 compared to net cash used by operating activities
of $3.0 in the first three months of 2000. The net cash provided by operating
activities in the first three months of 2001 is primarily due to the collection
of accounts receivable partially offset by a decrease in accrued liabilities. In
the first three months of 2000, funds were utilized to support increased
development and marketing expenses, primarily related to the Dialog Server
product family, and for payments made under a stock-based incentive plan.

Net cash used in investing activities, exclusively additions
to property and equipment, was $70,000 for the first three months of 2001,
compared to  $340,000 in the first three months of 2000.

Net cash provided by financing activities was $7,000 for the
first three months of 2001 and $556,000 for the first three months of 2000,
primarily from the proceeds of exercises of employee stock options.

The Company believes that its cash and cash equivalents,
together with cash flows from operations will be sufficient to meet the
Company's liquidity and capital requirements for at least the next 12 months.
The Company may, however, seek additional equity or debt financing to fund
further expansion.  The timing and amount of such capital requirements cannot be
precisely determined at this time and will depend on a number of factors,
including demand for the Company's products, product mix and competitive
factors.  Accordingly, the Company may require additional funds to support its
working capital requirements or for other purposes and may seek to raise such
additional funds through public or private equity or other sources.  There can
be no assurance that additional financing will be available at all or that it,
if available, will be obtainable on terms favorable to the Company and would not
be dilutive.





RISK FACTORS:

In addition to the other information in this Report, the
following risk factors should be considered carefully in evaluating us and our
business.





Risks Related to our Financial Results

We have recently experienced net losses and may continue to incur net
losses for the foreseeable future, which may harm the market price of our common
stock.

We incurred net losses of $315,000 for the first
quarter ended March 31, 2001. In recent periods we have not generally generated
cash from operations. Our recent net losses are substantially the result of
expenses incurred for our new Dialog Server product family. We expect to
continue to devote substantial resources to our product families and as a result
we will need to achieve increased revenues to achieve profitability. Even if we
achieve profitability, given the competitive and evolving nature of our industry
we may not be able to sustain or increase profitability on a quarterly or annual
basis. As a result, we will need to generate higher revenues while containing
costs and operating expenses to become and remain profitable. Our failure to do
so will cause the price of our stock to decline.

Because of the unpredictability of operating results from
our products, we may not accurately forecast our revenues or match our expenses
to our revenues, which could harm our quarterly operating results and cause
volatility or declines in our stock price.

Our quarterly revenues, expenses and operating results
have varied significantly in the past and are likely to vary significantly in
the future due to a variety of factors, including:



- the introduction of new or enhanced products, including
our Dialog Server product family;
- fluctuations in the size and timing of significant
orders;
- uncertainty in the budgeting cycles of our customers;
- possible delays in recognizing licensing revenues and the
trend within the software industry for a large portion of orders to be booked
late in a calendar quarter.



We operate with virtually no order backlog because our
software products are shipped shortly after orders are received. That makes
product revenues in any quarter substantially dependent on orders booked and
shipped throughout that quarter. In addition, we achieve a significant portion
of revenues from indirect sales channels over which we have little control.
Moreover, our expense levels are based to a significant extent on our
expectations of future revenues and therefore are relatively fixed in the short
term. If revenue levels are below expectations, our operating results are likely
to be harmed because only a small portion of the expenses vary with revenues.



Also, in recent years, we have had relatively stronger demand
for our products during the quarter ending December 31 and relatively weaker
demand in the quarter ending March 31. We believe that, adjusting for the
negative impact in late 1999 caused by Year 2000 concerns, this pattern will
continue. In addition, we expect that sales may decline during summer months,
particularly in European markets. This seasonality makes it more difficult to
forecast future revenues.  Therefore, it is likely that in some future quarter
operating results will fall below expectations and as a result, the price of our
common stock may be harmed.



Our failure to forecast our revenues and future operating
expenses accurately could cause quarterly fluctuations in our revenues and may
result in volatility, which may cause a decline in our stock price.



As a result of these factors, we believe that quarter-to-
quarter comparisons of our revenue, expenses and operating results are likely to
vary significantly in the future and that period-to-period comparisons of our
operating results are not necessarily meaningful. In any event, such comparisons
should not be relied upon as indications of our future performance. In addition,
our operating results in one or more future quarters may fail to meet the
expectations of securities analysts or investors. If this occurs, we could
experience an immediate and significant decline in the trading price of our
stock.

You may have difficulty evaluating our business and
operating results because we have yet to ship any meaningful volume of Dialog
Server products, our new e-commerce interaction management product family.

We recently developed and have continued to enhance our
new Dialog Server product family to compete in the market for e-commerce
interaction management software. Because we have a limited operating history for
this new product family, it is impossible to discern trends that may emerge and
affect our business. Our limited historical financial performance for this
product family will make it difficult for you to evaluate the success of our
business to date and to assess its future viability.



Risks Related to the Information Capture and Interaction
Management

Software Industry

If we are not able to effectively compete against other
software providers in the interaction management and data capture software
industry, our revenues will not increase and may decrease.

The market for our products is intensely competitive and
subject to rapid change.  In addition, because there are relatively low barriers
to entry in the software market, we may encounter additional competition from
many established and emerging companies. Many of our competitors have longer
operating histories, significantly greater financial, technical, marketing and
other resources than us, significantly greater name recognition and a large
installed base of customers. As a result, our competitors may be able to respond
more quickly to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development, promotion and
sale of competitive products than we can. There is also a substantial risk that
announcements of competing products by large competitors could result in the
delay or postponement of customer orders in anticipation of the introduction of
such new products.



In addition, current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to increase the ability of their products to address customer
needs. These cooperative relationships may limit our ability to sell our
products through particular reseller partners. Accordingly, new competitors or
competitive cooperative relationships may emerge and rapidly gain significant
market share. We also expect that competition will increase as a result of
software industry consolidation. Increased competition is likely to result in
price reductions, fewer customer orders, reduced margins and loss of market
share, any of which could harm our revenues and business.

If the market for interaction management and data capture
software does not grow, our revenues may not grow.

The markets for interaction management and information
capture software are fragmented, rapidly changing and extremely competitive.
This interaction management market is still emerging, and it may not continue to
grow or organizations may not adopt our products. We have spent, and intend to
continue to spend, considerable resources educating potential customers about
our software products and the interaction management market generally. Our
expenditures may fail to achieve any additional degree of market acceptance for
our products. The rate at which organizations have adopted our existing products
has varied significantly, and we expect to continue to experience such
variations in the future. For instance, the market for e-commerce interaction
management products will not grow if customers are reluctant to abandon
traditional customer relationship and order management systems. If the markets
for our products fail to develop, or develop more slowly than we currently
anticipate, our revenues will not grow and our operating results will
suffer.

If businesses do not increasingly adopt the Internet as a means to deliver
information and conduct commerce, the market for our products will not grow and
the market price for our common stock could decline as a result of lower
revenues or reduced investor expectations.

The market for e-commerce interaction management
products, particularly those using the Internet to deliver information and
process commercial transactions, has only recently begun to develop and is
evolving rapidly.  Because this market is new, we cannot predict its potential
size or future growth rate. The use and acceptance of the Internet may not
increase for a number of reasons, including:



- high cost or lack of availability of access;

- transmission errors and traffic congestion or other usage delays on the
Internet;

- inconsistent quality of service or the lack of availability of cost
effective, high-speed service;

- governmental regulation; and

- uncertainty regarding intellectual property ownership.



If Internet infrastructure, products, services or facilities
that support and complement our products are not developed, or if use of the
Internet does not increase as expected, this could force us to lower the prices
of our products or result in fewer sales of our products and our revenues will
not grow and could decline.

Potential increases or changes in governmental regulation of Internet
communication and commerce could discourage the growth of the Internet, which
could decrease the demand for our new family of products.

Due to concerns arising from use of the Internet, a
number of domestic and international laws and regulations have been, and may be,
adopted covering issues including user privacy, taxation, pricing, acceptable
content and quality of products and services. Legislative changes could dampen
the growth in use of the Internet generally and decrease the acceptance of the
Internet as a communications and commercial medium. This could limit the market
acceptance of our recently released e-commerce interaction management products.
Further, due to the global nature of the Internet, it is possible that multiple
federal, state or foreign jurisdictions might attempt to regulate Internet
transmissions or levy sales or other taxes relating to Internet-based
activities. Moreover, the applicability to the Internet of existing laws,
including laws governing property ownership, libel and personal privacy, is
uncertain. We cannot assess the possible negative impact of any future
regulation of the Internet on our business.



Risks Related to Our Business



Significantly all of our revenues are currently derived from
sales of our InputAccel product and related software tools, and if demand for
these products declines or fails to grow as we expect, our revenues will be
harmed.

We derived substantially all of our revenues from the
InputAccel product family and Pixtools software tools.  Revenues from our new
Dialog Server product family are not expected to start contributing any
significant amount until late in 2001.  Therefore, our future operating results
depend heavily upon continued and widespread market acceptance for our
InputAccel products and enhancements to those products. A decline in the demand
for InputAccel products as a result of competition, technological change or
other factors, would cause our revenues to suffer.

If the market for our new Dialog Server product family and
enhancements for our existing products fails to develop or grow, our revenues
may not grow and our operating results will suffer.

If sales of our new products are lower than expected,
our revenues and operating results will suffer. Factors that may affect the
market acceptance of our new products, some of which are beyond our control,
include the following:

- the growth and changing requirements of the e-commerce interaction
management and data capture software market;

- the performance, quality, price and total cost of ownership of our
products;

- the availability, price, quality and performance of competing products and
technologies; and

- the successful development of our relationships with existing and potential
channel partners.

If we are unable to respond in an effective and timely manner
to rapid technological change and new products in our industry, our revenues and
operating results will suffer.

The market for information capture and interaction
management software is characterized by rapid technological change, frequent new
product introductions and enhancements, uncertain product life cycles, changes
in customer demands and evolving industry standards. The introduction of
products, such as our Dialog Server product family, embodying new technologies
and the emergence of new industry standards can render existing products
obsolete and unmarketable. Our future success will depend upon our ability to
continue to enhance our current products and to develop and introduce new
products on a timely basis that keep pace with technological developments and
satisfy increasingly sophisticated customer requirements. As a result of the
complexities inherent in our software, new products and product enhancements can
require long development and testing periods. As a result, significant delays in
the general availability of such new releases or significant problems in the
installation or implementation of such new releases could harm our operating
results and financial condition. We have experienced delays in the past in the
release of new products and new product enhancements. We may fail to develop and
market on a timely and cost effective basis new products or new product
enhancements that respond to technological change, evolving industry standards
or customer requirements. We may experience difficulties that could delay or
prevent the successful development, introduction or marketing of these products
or that our new products and product enhancements will achieve market
acceptance.



Software defects that are discovered in our products could
harm our business by damaging our reputation, causing us to lose customers and
resulting in significant costs and liabilities.



Our software products are complex and may contain errors
or defects, particularly when first introduced or when new versions or
enhancements are released. In the past, we have discovered software errors in
certain of our new products after their introduction. In addition, our products
are combined with complex products developed by other vendors. As a result,
should problems occur, it may be difficult to identify the source of the
problem. Defects and errors, or end-user perception of defects and errors, found
in current versions, new versions or enhancements of our products after
commencement of commercial shipments may result in:

- loss of customers;

- damage to our brand reputation;

- delay in market acceptance of our current and future products;

- diversion of development and engineering resources; and

- legal actions by our customers.

The occurrence of any one or more of these factors could harm our revenues
and gross margins.

If we cannot manage and expand our international
operations, our revenues may not increase and our business and results of
operations would be harmed.

In 2000, international sales represented approximately
26% of our revenues, and we anticipate that for the foreseeable future a
significant portion of our revenues will be derived from sources outside North
America. In addition, we intend to continue to expand our sales and support
operations internationally. In order to successfully expand international sales,
we may establish additional foreign operations, expand our international sales
channel management and support organizations, hire additional personnel,
customize our products for local markets, recruit additional international
resellers and attempt to increase the productivity of existing international
resellers. If we are unable to do these things in a timely and cost-effective
manner, our sales growth internationally, if any, will be limited, and our
business, operating results and financial condition would be harmed. Even if we
are able to successfully expand our international operations, we may not be able
to maintain or increase international market demand for our products.



Our international operations are generally subject to a
number of risks, including:

- costs of customizing products for foreign countries;

- protectionist laws and business practices favoring local
competition;

- dependence on local vendors;

- compliance with multiple, conflicting and changing government laws and
regulations;

- longer sales cycles;

- greater difficulty or delay in accounts receivable collection;

- import and export restrictions and tariffs;

- difficulties in staffing and managing foreign operations;

- foreign currency exchange rate fluctuations; and

- political and economic instability.

To date, the majority of our revenues and costs have been
denominated in U.S. dollars. However, we expect that in the future an increasing
portion of our revenues and costs will be denominated in foreign currencies.
Although we may undertake foreign exchange hedging transactions to reduce our
foreign currency transaction exposure, we do not currently attempt to eliminate
all foreign currency transaction exposure.

Our future success is dependent on the services of our key
management, sales and marketing, technical support and research and development
personnel, and those persons' knowledge of our business and technical expertise
would be difficult to replace.



Our products and technologies are complex, and we are
substantially dependent upon the continued service of our existing key
management, sales and marketing, technical support and research and development
personnel. We do not have employment agreements with any of our

key employees . The loss of the services of one or more of
our key employees could harm our business and slow our product development
processes or sales and marketing efforts.

If we fail to recruit and retain a significant number of
qualified technical personnel, we may not be able to develop, introduce or
enhance our products on a timely basis.

We require the services of a substantial number of
qualified technical support and research and development personnel. The market
for these personnel is characterized by intense competition, as well as a high
level of employee mobility.  These factors make it particularly difficult to
attract and retain the qualified technical personnel we require. We have
experienced, and we expect to continue to experience, difficulty in hiring and
retaining highly skilled employees with appropriate technical qualifications. If
we are unable to recruit and retain a sufficient number of technical personnel,
we may not be able to complete development of, or upgrade or enhance, our
products in a timely manner. Even if we are able to expand our staff of
qualified technical personnel, it may require greater than expected compensation
packages that would increase our operating expenses.

We must expand our sales and marketing organization to increase market
awareness and sales of our products or our revenues may be adversely affected.

The sale of our products requires long and involved sales
efforts targeted at several key departments within our prospective customers'
organizations. Sales of our products require the prolonged efforts of executive
personnel and specialized systems and applications engineers working together
with a small number of dedicated salespersons. We will need to grow our sales
force in order to increase market awareness and sales of our products.
Competition for these individuals is intense, and we might not be able to hire a
sufficient number of qualified sales personnel and applications engineers
without incurring higher than expected compensation costs. If we are unable to
expand our sales operations, we may not be able to increase market awareness or
sales of our products, which could adversely affect our revenues.

If our products fail to perform properly, our customers
may assert product liability claims for damages and our reputation and operating
results may suffer.

Our products are used in connection with critical
business functions and may result in significant liability claims if they do not
work properly.  Limitation of liability provisions we include in our license
agreements may not sufficiently protect us from product liability claims because
of limitations in existing or future laws or unfavorable judicial decisions.
Although we have not experienced any material product liability claims to date,
the sale and support of our products may give rise to claims which may be
substantial in light of the use of the our products in business-critical
applications.  Liability claims could require us to spend significant time and
money in litigation or to pay significant damages.  Any claims for damages,
whether or not successful, could seriously damage our reputation and our
business.

We may need additional capital, which may not be
available, and our ability to grow may be limited as a result.

The development and marketing of new and enhanced
products and the associated personnel and capital expenditures will require a
significant commitment of resources. As a result, we may need to raise
substantial additional capital. If we must raise additional funds, we may not be
able to do so on favorable terms, or at all. If we cannot raise funds on
acceptable terms, we may not be able to further develop or enhance our products,
take advantage of future opportunities or respond to competitive pressures or
unanticipated requirements, which would harm our business and could require us
to terminate operations.





Risks Related to Our Product's Dependence on Intellectual
Property

and Our Use of Our Brand

Our reliance upon contractual provisions and domestic
copyright and trademark laws to protect our proprietary rights may not be
sufficient to protect our intellectual property from others who may sell similar
products.

We believe that the steps we have taken to safeguard our
intellectual property afford only limited protection. We rely primarily on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our proprietary rights. We
license our software products primarily under license agreements. Competitors
may develop technologies that are similar or superior to our technology or
design that do not infringe our copyrights and trade secrets, and this could
reduce demand for our products. Despite our efforts to protect our proprietary
rights, unauthorized parties may attempt to copy aspects of our products or to
obtain and use information that we regard as proprietary. Policing unauthorized
use of our products is difficult, and although we are unable to determine the
extent to which piracy of our software products exists, software piracy can be
expected to be a persistent problem.



In addition, the laws of some foreign countries do not
protect our proprietary rights as fully as do the laws of the U.S. In those
countries, reverse engineering, unauthorized copying or other misappropriation
of our proprietary technology could enable third parties to benefit from our
technology without paying us for it, which would significantly harm our
business.



We depend upon software we license from third parties, the
loss of which could harm our revenues.

We rely upon certain software that we license from
third parties, including software that is integrated with our internally
developed software and used in our products to perform key functions.  There can
be no assurance that these third-party software licenses will continue to be
available to the Company on commercially reasonable terms, if at all.  The loss
of or inability to maintain any such software licenses could result in shipment
delays or reductions until equivalent software could be developed, identified,
licensed and integrated such delays would materially adversely affect the our
business, operating results and financial condition.

We have invested substantial resources in developing our
products and our brand, and our operating results would suffer if we were
subject to a protracted infringement claim or one with a significant damage
award.

Substantial litigation regarding intellectual property
rights and brand names exists in our industry. We expect that software product
developers increasingly will be subject to infringement claims as the number of
products and competitors in our industry segment grows and the functionality of
products in different industry segments overlaps. We are not aware that any of
our products infringe any proprietary rights of third parties. However, third
parties, some with far greater financial resources than us, may claim
infringement by our products of their intellectual property rights. Any such
claims, with or without merit, could:



- result in costly litigation;

- divert management's attention and resources;

- cause product shipment delays; or

- require us to enter into royalty or licensing agreements.

If we are required to enter into royalty or licensing
agreements to resolve an infringement claim, we may not be able to enter into
these agreements on terms acceptable to us, if at all. A successful claim of
product infringement against us or our failure or inability to either license
the infringed or similar technology or develop alternative technology on a
timely basis, may harm our operating results,  and our financial condition could
be harmed because we would not be able to sell the impacted product without
redeveloping it or incurring significant additional expenses.



Risks Related to the Market for Our Common Stock and Our
Business

We experience volatility in our share price, and investors
may not be able to resell shares of our common stock at or above the purchase
price.

The market price of our common stock has historically
varied from time to time. An investor in shares of our common stock may not be
able to resell those shares at or above the price paid. Our common stock price
may fluctuate significantly in the future due to:



- any deviations in our revenues, gross margins or net
losses from levels expected by securities analysts;



- Changes in financial estimates by securities
analysts;
- changes in market valuations of other optical networking
companies; and



- our future sales of common stock or other
securities.



In addition, The Nasdaq National Market has experienced
extreme volatility in recent years that has often been unrelated to the
performance of particular companies. Future market fluctuations may cause our
stock price to fall regardless of our performance.

Provisions of our charter documents, Delaware law and our
rights plan may have anti-takeover effects that could discourage or prevent a
change in control, which may suppress our stock price or cause it to
decline.

Provisions of our certificate of incorporation and bylaws
and a rights plan adopted by our board of directors may discourage, delay or
prevent a merger or acquisition that our common stockholders may consider
favorable.  Provisions of our Certificate of Incorporation and bylaws:

- prohibit cumulative voting in the election of directors;

- eliminate the ability of stockholders to call special meetings;
and

- establish advance notice requirements for nominations for election to the
board of directors or for proposing matters that can be acted on by stockholders
at stockholder meetings.

The rights granted pursuant to the rights agreement entered
into as part of our rights plan have anti-takeover effects.  The rights may
cause substantial dilution to a person or group that attempts to acquire
ActionPoint on terms that our board of directors determines are not in the best
interests of our stockholders. Certain provisions of Delaware law also may
discourage, delay or prevent someone from acquiring or merging with us, which
may cause the market price of our common stock to decline.









Item 3- Quantitative and Qualitative Disclosures About Market Risk.

The Company's exposure to market risk for changes in interest
rates relates primarily to its investment portfolio. The Company maintains an
investment policy which is intended to ensure the safety and preservation of its
invested funds by limiting default risk, market risk and reinvestment risk. The
Company does not currently use, nor has it historically used, derivative
financial instruments to manage or reduce market risk. The Company mitigates
default risk by investing in high credit quality securities such as debt
instruments of the United States government and its agencies and high quality
corporate issuers, as well as money market funds. The portfolio includes only
marketable securities with active secondary or resale markets to ensure
portfolio liquidity and maintains a prudent amount of diversification. As of
March 31, 2001, the Company had $3.9 million of cash and cash equivalents.



The Company does not currently transact any significant
portion of its business in functional currencies other than the United States
dollar.

To the extent that it continues to transact its business
using the United State dollar as its functional currency, the Company does not
believe that the fluctuations in foreign currency exchange rates will have a
material adverse effect on the Company's results of operations.



**PART II - OTHER INFORMATION**

**Item 1.   Legal Proceedings**

Not Applicable

**Item 2.   Changes in Securities**

Not Applicable

**Item 3.   Defaults Upon Senior Securities**

Not Applicable

**Item 4.   Submission of Matters to a Vote of Security Holders**

Not Applicable

**Item 5. Other Information**

Not Applicable

**Item 6. Exhibits and Reports on Form 8-K**

Not Applicable

---

**ACTIONPOINT, INC.**

**SIGNATURES**

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



| |                  
| | -----------------
| | ACTIONPOINT, INC.

| |             
| | ------------
| | (Registrant)



| |     |                 
| | --- | ----------------
| | By: | /s/ KIMRA HAWLEY

| |                                                                                                 
| | ------------------------------------------------------------------------------------------------
| |                                                                                                 
| | Kimra Hawley                                                                                    
| | President, Chief Executive
                                                 Officer and Director
| | (Principal Executive Officer)                                                                   



| |     |                 
| | --- | ----------------
| | By: | /s/ JOHN FINEGAN

| |                                                                                       
| | --------------------------------------------------------------------------------------
| |                                                                                       
| | John Finegan                                                                          
| | Chief Financial Officer
                                                 and Secretary
| | (Principal Financial and Accounting Officer)