<PAGE>

================================================================================





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

                                    Form 10-Q

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

                For the quarterly period ended December 31, 2002

                                       OR

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

                       (Commission file number: 000-30931)

                            OPNET TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

                Delaware                  7372                  52-1483235
            (State or other        (Primary Standard         (I.R.S. Employer
            jurisdiction of            Industrial           Identification No.)
            incorporation or       Classification Code
              organization)             Number)

                              7255 Woodmont Avenue
                               Bethesda, MD 20814
                     (Address of principal executive office)

                                 (240) 497-3000
              (Registrant's telephone number, including area code)

    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
registrants were required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

    At December 31, 2002, there were outstanding 19,347,297 shares of common
stock of the registrant.

================================================================================

<PAGE>

<TABLE>
<CAPTION>
                                                TABLE OF CONTENTS


                                                      PART I
                                                FINANCIAL INFORMATION

ITEM                                                                                                               Page
----                                                                                                               ----
<S>                                                                                                                <C>
   1.  -  Condensed Consolidated Financial Statements (unaudited)

          -  Condensed Consolidated Balance Sheets as of December 31, and March
             31, 2002 ........................................................................................       3

          -  Condensed Consolidated Statements of Operations for the Three and
             Nine Months Ended December 31, 2002 and 2001 ....................................................       4

          -  Condensed Consolidated Statements of Cash Flows for the Three and
             Nine Months Ended December 31, 2002 and 2001 ....................................................       5

          -  Notes to Condensed Consolidated Financial Statements ............................................       6

   2.  -  Management's Discussion and Analysis of Financial Condition and
          Results of Operations ..............................................................................       9

   3.  -  Quantitative and Qualitative Disclosures About Market Risk .........................................      21

   4.  -  Controls and Procedures ............................................................................      21


                                                        PART II
                                                    OTHER INFORMATION

ITEM                                                                                                               Page
----                                                                                                               ----

   1.  -  Legal Proceedings ..................................................................................      22

   2.  -  Changes in Securities and Use of Proceeds ..........................................................      22

   6.  -  Exhibits and Reports on Form 8-K ...................................................................      22

          Signatures .........................................................................................      23

          Certifications .....................................................................................      23

          Exhibit Index ......................................................................................      26
</TABLE>

                                       2

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  Condensed Consolidated Financial Statements

                            OPNET TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                           December 31,     March 31,
                                                                                              2002            2002
                                                                                           -----------     ----------
<S>                                                                                        <C>             <C>
                                                       ASSETS

Current assets:
    Cash and cash equivalents                                                              $    67,954     $   62,240
    Accounts receivable, net of $282 and $203 in allowance for doubtful accounts
       at December 31 and March 31, 2002, respectively                                           6,766          7,403
    Unbilled accounts receivable                                                                 1,396          1,331
    Refundable income taxes                                                                         23          1,253
    Prepaid expenses and other current assets                                                    1,251            910
                                                                                           -----------     ----------
            Total current assets                                                                77,390         73,137

Property and equipment, net                                                                      7,083          7,670
Intangible assets, net                                                                           1,692          2,067
Goodwill                                                                                        12,212         12,212
Deferred income taxes and other assets                                                             634             70
                                                                                           -----------     ----------
            Total assets                                                                   $    99,011     $   95,156
                                                                                           ===========     ==========

                                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                                       $       610     $      544
    Accrued liabilities                                                                          2,040          2,362
    Deferred and accrued income taxes                                                              158            156
    Deferred revenue                                                                             9,162          8,019
                                                                                           -----------     ----------
            Total current liabilities                                                           11,970         11,081

Notes payable                                                                                      300            150
Deferred rent                                                                                      579            381
Deferred revenue                                                                                   523            506
Deferred income taxes                                                                                -             43
                                                                                           -----------     ----------
            Total liabilities                                                                   13,372         12,161
                                                                                           -----------     ----------

Commitments and contingencies                                                                        -              -
Stockholders' equity:
    Preferred stock-par value $0.001; 5,000 shares authorized, no shares issued
       and outstanding at December 31 and March 31, 2002                                             -              -
    Common stock-par value $0.001; 100,000 authorized; 25,481 and 25,220 shares
       issued at December 31 and March 31, 2002, respectively; 19,347 and 19,086
       shares outstanding at December 31 and March 31, 2002, respectively                           25             25
    Additional paid-in capital                                                                  73,512         72,655
    Deferred compensation                                                                          (33)           (74)
    Retained earnings                                                                           16,261         14,499
    Accumulated other comprehensive loss                                                           (26)           (10)
    Treasury stock - 6,134 shares at December 31 and March 31, 2002                             (4,100)        (4,100)
                                                                                           -----------     ----------
            Total stockholders' equity                                                          85,639         82,995
                                                                                           -----------     ----------
            Total liabilities and stockholders' equity                                     $    99,011     $   95,156
                                                                                           ===========     ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                       3

<PAGE>

                            OPNET TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                  Three Months Ended         Nine Months Ended
                                                                                     December 31,                December 31,
                                                                                ----------------------     -----------------------
                                                                                  2002          2001         2002          2001
                                                                                ---------     --------     ---------    ----------
                                                                                      (in thousands, except per share data)
<S>                                                                             <C>           <C>         <C>           <C>
Revenues:
      Software licenses                                                         $  7,924      $ 6,807     $ 22,309      $ 19,922
      Services                                                                     3,772        4,166       11,738        13,456
                                                                                --------      -------     --------      --------
         Total revenues                                                           11,696       10,973       34,047        33,378
                                                                                --------      -------     --------      --------


Cost of revenues:
      Software licenses                                                              226           84          631           354
      Services                                                                     1,550        1,415        4,711         4,374
                                                                                --------      -------     --------      --------
         Total cost of revenues                                                    1,776        1,499        5,342         4,728
                                                                                --------      -------     --------      --------


Gross Profit                                                                       9,920        9,474       28,705        28,650
                                                                                --------      -------     --------      --------
Operating expenses:
      Research and development                                                     3,200        2,913        9,574         9,365
      Sales and marketing                                                          4,530        4,086       13,499        12,409
      General and administrative                                                   1,251        1,233        3,619         3,308
      Amortization of acquired technology                                            126          118          378           330
                                                                                --------      -------     --------      --------
         Total operating expenses                                                  9,107        8,350       27,070        25,412
                                                                                --------      -------     --------      --------


Income from operations                                                               813        1,124        1,635         3,238
Interest and other income, net                                                       192          331          716         1,499
                                                                                --------      -------     --------      --------
Income before provision for income taxes                                           1,005        1,455        2,351         4,737
Provision for income taxes                                                           252          233          589         1,278
                                                                                --------      -------     --------      --------
Net income                                                                      $    753      $ 1,222     $  1,762      $  3,459
                                                                                ========      =======     ========      ========


Basic net income per common share                                               $   0.04      $  0.06     $   0.09      $   0.18
                                                                                ========      =======     ========      ========
Diluted net income per common share                                             $   0.04      $  0.06     $   0.09      $   0.17
                                                                                ========      =======     ========      ========
Weighted average common shares outstanding (basic)                                19,299       18,995       19,242        18,919
                                                                                ========      =======     ========      ========
Weighted average common shares outstanding (diluted)                              20,046       19,956       19,940        20,017
                                                                                ========      =======     ========      ========
</TABLE>




     See accompanying notes to condensed consolidated financial statements.

                                       4

<PAGE>

                            OPNET TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                             December 31,
                                                                                  -------------------------------
                                                                                       2002             2001
                                                                                  ---------------  --------------
                                                                                           (in thousands)
<S>                                                                               <C>              <C>
Cash flows from operating activities:
    Net income                                                                    $        1,762     $      3,459
    Adjustments to reconcile net income to net cash provided by operating
      activities:
        Depreciation and amortization                                                      1,583            1,504
        Provision for losses on accounts receivable                                          270              256
        Deferred income taxes                                                               (632)             (50)
        Expense related to employee and other stock options                                   41               65
        Equity in net loss of affiliate                                                        -                3
        Changes in assets and liabilities:
           Accounts receivable                                                               302           (2,516)
           Prepaid expenses and other current assets                                        (341)             840
           Loans to employees                                                                  -              231
           Refundable income taxes                                                         1,230              165
           Deposits and other assets                                                         (57)              18
           Accounts payable                                                                   66             (308)
           Accrued liabilities                                                              (322)          (2,502)
           Accrued income taxes                                                               84              (40)
           Tax benefit from exercise of employee stock options                               265                -
           Deferred revenue                                                                1,160              159
           Deferred rent                                                                     198              250
                                                                                 ---------------   --------------
             Net cash provided by operating activities                                     5,609            1,534
                                                                                 ---------------   --------------

Cash flows from investing activities:
    Acquisition                                                                                -           (1,156)
    Purchase of property and equipment                                                      (621)          (2,504)
    Investment in affiliate                                                                    -             (461)
                                                                                 ---------------   --------------
             Net cash used in investing activities                                          (621)          (4,121)
                                                                                 ---------------   --------------

Cash flows from financing activities:
    Proceeds from issuance of notes payable                                                  150              150
    Proceeds from exercise of common stock options                                           282              328
    Proceeds from issuance of common stock under employee stock purchase plan                310              379
                                                                                 ---------------   --------------
             Net cash provided by financing activities                                       742              857
                                                                                 ---------------   --------------

Effect of exchange rate changes on cash and cash equivalents                                 (16)             (10)
                                                                                 ---------------   --------------

Net increase (decrease) in cash and cash equivalents                                       5,714           (1,740)

Cash and cash equivalents, beginning of period                                            62,240           62,623
                                                                                 ---------------   --------------

Cash and cash equivalents, end of period                                          $       67,954     $     60,883
                                                                                 ===============   ==============
</TABLE>

     See accompanying notes to condensed consolidated financial statements.

                                        5

<PAGE>

                            OPNET TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


    1.   Basis of Presentation and Nature of Operations

    OPNET Technologies, Inc. ("OPNET", "we" or "us") provides intelligent
network management software solutions that enable users in network operations,
planning, engineering and application development to optimize the performance
and availability of their networks and networked applications. We sell our
products to corporate enterprises, government and defense agencies, network
service providers, and network equipment manufacturers. We market our product
suite in North America primarily through a direct sales force and, to a lesser
extent, several resellers and original equipment manufacturers. Internationally,
we conduct research and development through our wholly-controlled subsidiary in
Ghent, Belgium and market our products through our wholly-owned subsidiaries in
Paris, France; Reading, United Kingdom; and Sydney, Australia;, third-party
distributors, and value-added resellers. OPNET is headquartered in Bethesda, MD
and has offices in Cary, NC; Dallas, TX; and Santa Clara, CA.

    The accompanying condensed consolidated financial statements include our
results and the results of our wholly-owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation. The interim
financial statements included herein are unaudited and have been prepared in
accordance with generally accepted accounting principles ("GAAP") and applicable
rules and regulations of the Securities and Exchange Commission (the "SEC")
regarding interim financial reporting. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with GAAP have been condensed or omitted pursuant to such rules and regulations.
Accordingly, these interim financial statements should be read in conjunction
with the audited consolidated financial statements and accompanying notes
thereto contained in the Company's Annual Report on Form 10-K for the year ended
March 31, 2002, filed with the SEC. The March 31, 2002 consolidated balance
sheet included herein was derived from the audited financial statements as of
that date, but does not include all disclosures including notes required by
GAAP. In the opinion of management, these interim financial statements reflect
all adjustments of a normal and recurring nature necessary to present fairly our
results for the interim periods. The preparation of financial statements in
conformity with GAAP requires management to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities as of the date of the financial statements, as well as
the reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates. In addition, our operating results
for the three and nine months ended December 31, 2002 may not be indicative of
the operating results for the full fiscal year or any other future period.

    2.   Credit Agreements and Note Payable

     Effective June 10, 2002, we entered into a $10.0 million credit facility
with a commercial bank. The credit facility permits the use of funds for general
corporate purposes and the issuance of letters of credit up to a maximum of
$10.0 million in the aggregate. Borrowings under the credit facility are limited
to 80% of eligible accounts receivable. We used the facility to issue a letter
of credit for approximately $3.4 million to satisfy the security deposit
requirements for our corporate office lease. Interest is payable monthly, based
on LIBOR plus the applicable margin ranging from 2% to 2.5% as stated in the
loan agreement. The credit facility includes a fee in the amount of 0.25% per
annum on the unused portion of the credit facility. The credit facility is
collateralized by our accounts receivable. The loan agreement contains customary
affirmative and negative covenants including a financial covenant requiring that
we not exceed a ratio of Funded Debt to EBITDA of 2.5:1.0 as such terms are
defined in the loan agreement. The credit facility expires June 10, 2004. As of
December 31, 2002, we had no borrowings under the available credit facility.

    In November 2002, we received proceeds from a $150,000 loan from the
Department of Economic Development of the State of Maryland under the Maryland
Economic Development Assistance Fund. The loan is subject to multiple maturity
dates and has a 4.83% annual interest rate. The principal amount and any accrued
interest will be deferred if we meet certain conditions regarding the hiring of
full time employees. In December 2007, the principal amount and any accrued
interest are payable in full; however, these amounts may be reduced or converted
to a grant if we achieve certain requirements related to employment.

                                       6

<PAGE>

    3.   Stockholders' Equity

    During the three and nine months ended December 31, 2002, we received
proceeds of approximately $76,000 and $282,000 and issued 46,280 and 218,228
shares of Common Stock, respectively, pursuant to employee exercises of stock
options. During the nine months ended December 31, 2002 employees purchased
42,835 shares of Common Stock under the 2000 Employee Stock Purchase Plan,
resulting in proceeds to us of approximately $310,000. Tax benefit from exercise
of employee stock options was $265,000 for the nine months ending December 31,
2002.

    4.   Net Income per Common Share

    The following is a reconciliation of the amounts used in calculating basic
and diluted net income per common share for the three and nine months ended
December 31, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                      Three Months Ended          Nine Months Ended
                                                                         December 31,                 December 31,
                                                                    ------------------------     -----------------------
                                                                       2002          2001          2002          2001
                                                                    ---------    -----------     ---------    ----------
                                                                            (in thousands, except per share data)
        <S>                                                         <C>          <C>             <C>          <C>
        Income (Numerator):
           Net income (basic and diluted)                           $    753      $  1,222       $ 1,762       $ 3,459
                                                                    ========      ========       =======       =======

        Shares (Denominator):
           Weighted average shares outstanding (basic)                19,299        18,995        19,242        18,919
           Plus:
               Effect of other dilutive securities--options              747           961           698         1,098
                                                                    --------      --------       -------       -------
           Weighted average shares outstanding (diluted)              20,046        19,956        19,940        20,017
                                                                    ========      ========       =======       =======

        Net income per common share:
           Basic net income per common share                        $   0.04      $   0.06       $  0.09       $  0.18
           Diluted net income per common share                      $   0.04      $   0.06       $  0.09       $  0.17
</TABLE>

    5.   Business Segment and Geographic Information

    We operate in one industry segment, the development and sale of computer
software programs and related services. Revenues from transactions with U.S.
government agencies were approximately 34.0% and 19.8% for the quarter ended
December 31, 2002 and 2001, respectively. Revenues from transactions with U.S.
government agencies were approximately 32.8% and 23.2% for the nine months ended
December 31, 2002 and 2001, respectively. Total receivables from transactions
with U.S. government agencies represented approximately 43.2% of total accounts
receivable at December 31, 2002. Substantially all assets were held in the
United States at December 31 and March 31, 2002. Revenues by geographic
destination and as a percentage of total revenues follows:

<TABLE>
<CAPTION>
                                                                     Three Months Ended           Nine Months Ended
                                                                        December 31,                  December 31,
                                                                    ----------------------       -----------------------
                                                                       2002        2001             2002          2001
                                                                    ---------    ---------       ----------    ---------
                                                                                       (in thousands)
        <S>                                                         <C>          <C>             <C>           <C>
        Geographic Area by Destination:
             United States                                          $   9,018    $   7,909       $  26,944     $  26,662
             International                                              2,678        3,064           7,103         6,716
                                                                    ---------    ---------       ---------     ---------
             Total revenue                                          $  11,696    $  10,973       $  34,047     $  33,378
                                                                    =========    =========       =========     =========

        Geographic Area by Destination:
             United States                                               77.1%        72.1%           79.1%         79.9%
             International                                               22.9         27.9            20.9          20.1
                                                                    ---------    ---------       ---------     ---------
             Total revenue                                              100.0%       100.0%          100.0%        100.0%
                                                                    =========    =========       =========     =========
</TABLE>

                                       7

<PAGE>

     6.   Supplemental Cash Flow Information

<TABLE>
<CAPTION>
                                                                 Nine Months Ended
                                                                    December 31,
                                                           ------------------------------
                                                                2002             2001
                                                           --------------    ------------
                                                                    (in thousands)
<S>                                                        <C>               <C>
        Supplemental disclosure of cash flow information:
              Cash paid for income taxes                      $   79             $  871
              Cash paid for interest                               4                 --

        Supplemental disclosure of non-cash activities:
              Accrued tenant allowance                        $   --             $  359
              Post-closing acquisition adjustments                --                217
</TABLE>

     7.   Comprehensive Income

     Comprehensive income includes net income and foreign currency translation
adjustments. Total comprehensive income is summarized as follows:

<TABLE>
<CAPTION>
                                                                    Three Months Ended           Nine Months Ended
                                                                       December 31,                December 31,
                                                                  ------------------------    ------------------------
                                                                     2002          2001          2002          2001
                                                                  ---------    -----------    ----------    ----------
                                                                                    (in thousands)
<S>                                                               <C>          <C>            <C>           <C>
     Net income                                                   $    753     $    1,222     $    1,762    $    3,459
     Foreign currency translation adjustments                           (5)            (2)           (16)          (10)
                                                                  --------     ----------     ----------    ----------
     Total comprehensive income                                   $    748     $    1,220     $    1,746    $    3,449
                                                                  ========     ==========     ==========    ==========
</TABLE>

     8.   New Accounting Pronouncements

     In July 2002, the Financial Accounting Standards Board (FASB) issued
Statement No. 146 (SFAS No. 146), "Accounting for Costs Associated with Exit or
Disposal Activities". SFAS No. 146 replaces Emerging Issues Task Force Issue No.
94-3, "Liability Recognition for Certain Employee Termination Benefits and Other
Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)". SFAS No. 146 requires companies to recognize costs associated
with exit or disposal activities when they are incurred rather than at the date
of a commitment to an exit or disposal plan. Examples of costs covered by the
standard include lease termination costs and certain employee severance costs
that are associated with a restructuring, discontinued operation, plant closing,
or other exit or disposal activity. SFAS No. 146 is to be applied prospectively
to exit or disposal activities initiated after December 31, 2002. We do not
expect the adoption of SFAS No. 146 to have a material effect on our
consolidated financial position, results of operations, or cash flows.

     In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based
Compensation- Transition and Disclosure- an amendment of SFAS No. 123" (SFAS No.
148). In response to a growing number of companies announcing plans to record
expenses for the fair value of stock options, this statement amends SFAS No. 123
"Accounting for Stock Based Compensation" (SFAS No. 123) to provide alternative
methods of voluntarily transitioning to the fair value based method of
accounting for stock-based employee compensation. SFAS No. 148 also amends the
disclosure requirements of SFAS No. 123 to require disclosure of the method used
to account for stock-based employee compensation and the effect of the method on
reported results in both annual and interim financial statements. We have
evaluated the provisions of SFAS No. 148 and will continue to account for
stock-based compensation given to employees in accordance with APB No. 25. Under
APB No. 25, we recognize compensation expense for fixed stock option grants only
when the exercise price is less than the fair market value of the shares on the
date of grant. Therefore, SFAS No. 148 is not expected to have a material impact
on our financial position or results of operations. We will adopt the additional
disclosure provisions required by SFAS No. 148 in both our annual and quarterly
reporting beginning March 31, 2003.

                                        8

<PAGE>

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

     The following discussion and analysis relates to our financial condition
and results of operations for the three and nine months ended December 31, 2002
and 2001, and should be read in conjunction with our condensed consolidated
financial statements and the related notes included elsewhere in this report.
You should also read the following discussion and analysis in conjunction with
our consolidated financial statements and the related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in our Annual Report on Form 10-K for the year ended March 31, 2002,
filed with the SEC.

     This report contains forward-looking statements that involve substantial
risks and uncertainties. You can identify these statements by forward-looking
words such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "plan," "potential," "should," "will," and "would" or similar words. You
should read statements that contain these words carefully because they discuss
our future expectations, contain projections of our future results of operations
or of our financial position, or state other forward-looking information. We
believe that it is important to communicate our future expectations to our
investors. However, there may be events in the future that we are not able to
predict or control accurately. The factors listed in this section, as well as
any cautionary language contained herein, provide examples of risks,
uncertainties, and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. You should
also carefully review the risks outlined in other documents that we file from
time to time with the Securities and Exchange Commission, including our
Quarterly Reports on Form 10-Q that we will file in fiscal 2003.

Overview

     Introduction. Founded in 1986, we are the pioneer and leading provider of
intelligent network management software. OPNET software embeds expert knowledge
on how network devices, network protocols, applications, and servers operate.
This intelligence enables users in network operations, engineering, planning,
and application development to be far more effective in optimizing performance
and availability of their networks and applications. We believe our software
solutions generate significant return on investment to a broad customer base,
including corporate enterprises, government and defense agencies, network
service providers, and network equipment manufacturers by empowering them to
rapidly make better use of resources, reduce operational problems and improve
competitiveness.

     We market focused software solutions for each of our target markets. OPNET
IT Guru, which was launched in August 1998 and OPNET SP Guru, which was launched
in June 2001, are our platform intelligent network management products for
enterprises and service providers, respectively. OPNET WDM Guru, which was
launched in December 2001, is an optical network planning product for network
equipment manufacturers and service providers. OPNET Modeler, our first product
that was launched in 1987, is a modeling and simulation product for network R&D,
mainly sold to network equipment manufacturers. OPNET Netbiz applications are
custom solutions developed with the OPNET Development Kit (ODK), which were
launched in August 1998, and are sold primarily to network equipment
manufacturers. Finally, OPNET VNE Server, which was launched in June 2002, is an
on-line continuously operating software product that maintains a valid
comprehensive view of the network, including infrastructure, configuration, and
performance data. OPNET VNE Server merges and validates multiple sources of
information into a cohesive model. This product is sold mainly to enterprises
and service providers. We sell each of these products to government and defense
agencies.

     Revenues. We generate revenues principally from licensing our intelligent
network management software products and providing related services, including
maintenance and technical support, consulting, and training. Our software
license revenues consist of perpetual and term license sales of our software
products and fees associated with periodic unspecified product upgrades
("license updates").

     Our service revenues consist of fees from maintenance and technical support
agreements, consulting services, and training. The maintenance agreements
covering our products provide for technical support and license updates. In July
2001, we changed our business practice to allow our customers to separately
purchase license updates without purchasing technical support. Revenue related
to license updates is now included in license revenue. Revenue related to
technical support is included in service revenue. License revenue from license
updates was approximately $2.2 million and $5.9 million for the three and nine
months ended December 31, 2002, respectively. License revenue from license
updates was $611,000 and $693,000 for the three and nine months ended December
31, 2001. We offer consulting services, generally under fixed-price agreements,
primarily to provide product customization and enhancements. We provide on-site
training to our customers on a daily fee basis.

     Revenues from sales outside of the United States represented 22.9% and
27.9% for the three months ended December 31, 2002 and 2001, respectively.
Revenues from sales outside the United States represented 20.9% and

                                        9

<PAGE>

20.1% for the nine months ended December 31, 2002 and 2001, respectively. Sales
outside the United States were primarily made through our Paris, France and
Reading, United Kingdom offices as well as third-party distributors and
value-added resellers, who are generally responsible for providing technical
support and service to customers within their territory. We expect revenues from
sales outside the United States to continue to account for a significant portion
of our total revenues in the future. We believe that continued growth and
profitability will require further expansion of our sales, marketing, and
customer service functions in both United States and international markets.

Results of Operations

     The following table sets forth items from our statements of operations
expressed as a percentage of total revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                     Three Months Ended       Nine Months Ended
                                                         December 31,            December 31,
                                                    ---------------------   ---------------------
                                                      2002         2001       2002         2001
                                                    --------     --------   --------     --------
   <S>                                              <C>          <C>        <C>          <C>
   Revenues:
      Software licenses                                 67.7%        62.0%      65.5%        59.7%
      Services                                          32.3         38.0       34.5         40.3
                                                    --------     --------   --------     --------
         Total revenues                                100.0        100.0      100.0        100.0
                                                    --------     --------   --------     --------

   Cost of revenues:
      Software licenses                                  2.0          0.8        1.9          1.1
      Services                                          13.2         12.9       13.8         13.1
                                                    --------     --------   --------     --------
         Total cost of revenues                         15.2         13.7       15.7         14.2
                                                    --------     --------   --------     --------

   Gross Profit                                         84.8         86.3       84.3         85.8
                                                    --------     --------   --------     --------
   Operating expenses:
      Research and development                          27.4         26.6       28.2         28.1
      Sales and marketing                               38.7         37.2       39.6         37.1
      General and administrative                        10.7         11.2       10.6          9.9
      Amortization of acquired technology                1.0          1.1        1.1          1.0
                                                    --------     --------   --------     --------
         Total operating expenses                       77.8         76.1       79.5         76.1
                                                    --------     --------   --------     --------


   Income from operations                                7.0         10.2        4.8          9.7
   Interest and other income, net                        1.6          3.0        2.1          4.5
                                                    --------     --------   --------     --------

   Income before provision for income taxes              8.6         13.3        6.9         14.2
   Provision for income taxes                            2.2          2.1        1.7          3.8
                                                    --------     --------   --------     --------

   Net income                                            6.4%        11.1%       5.2%        10.4%
                                                    ========     ========   ========     ========
</TABLE>

     The following table sets forth, for each component of revenues, the cost of
these revenues as a percentage of the related revenues for the periods
indicated:

<TABLE>
<CAPTION>
                                                     Three Months Ended       Nine Months Ended
                                                         December 31,            December 31,
                                                    ---------------------   ---------------------
                                                      2002         2001       2002         2001
                                                    --------     --------   --------     --------
   <S>                                              <C>          <C>        <C>          <C>
   Cost of software license revenues                     2.9%         1.2%       2.8%         1.8%
   Cost of service revenues                             41.1         34.0       40.1         32.5
                                                    --------     --------   --------     --------
</TABLE>

                                       10

<PAGE>

Revenues

     Software License Revenues. Software license revenues increased 16.4% to
$7.9 million for the three months ended December 31, 2002 from $6.8 million for
the three months ended December 31, 2001. Software license revenues increased
12.0% to $22.3 million for the nine months ended December 31, 2002 from $19.9
million for the nine months ended December 31, 2001. This growth is due to
revenue contributions from the change in business practice in July 2001 to allow
customers to separately purchase license updates without purchasing technical
support (contributed approximately $1.6 million and $5.2 million of incremental
license revenue for the three and nine months ended December 31, 2002,
respectively, over the comparable periods of fiscal 2002), and new products.
However, revenue contributions from the latter were partially offset by
discounts associated with pricing strategies and product bundling in fiscal
2003. For the three and nine months ended December 31, 2002, growth in sales to
(i) enterprises of OPNET IT Guru, Application Characterization Environment
("ACE"), ACE Decode Module, NetDoctor and Flow Analysis, and (ii) enterprises
and service providers of OPNET SP Guru offset a significant decline in sales to
network equipment manufacturers of OPNET Modeler.

     We may experience a slower rate of growth in overall software license
revenues in the near-term due to potentially lower spending levels by enterprise
IT organizations, service providers, and network equipment manufacturers as a
result of a challenging economy.

     Service Revenues. Service revenues decreased 9.5% to $3.8 million for the
three months ended December 31, 2002 from $4.2 million for the three months
ended December 31, 2001. Service revenues decreased 12.8% to $11.7 million for
the nine months ended December 31, 2002 from $13.5 million for the nine months
ended December 31, 2001. The decrease results from the adverse impact on service
revenues from the change in business practice in July 2001 to allow customers to
separately purchase license updates (license revenue) and technical support
(service revenue). This decrease is partially offset by growing demand for our
consulting services, including engagements with U.S. government agencies,
renewals of technical support contracts by our installed base of customers, and
additional technical support contracts related to new license sales. A
consulting contract with the U.S. Department of Defense that contributed 15.4%
and 21.4% of service revenue for the three and nine months ended December 31,
2002, respectively, expired December 31, 2002. The U.S. Department of Defense
issued a request for proposal for this program and we were awarded the contract
in January 2003. The initial funding under this contract for 2003 is $2.2
million, compared to $3.2 million in 2002. There are four successive option
years under this contract which may be exercised by the U.S. Department of
Defense in its discretion. In the event that we are not awarded additional
funding under this contract, our results of operations could be adversely
impacted. We expect service revenues to decline in the near-term due to the mix
of consulting contracts and as our customers purchase license updates separately
from technical support. Our ability to grow service revenues will be dependent
on our ability to expand our installed base of customers and our ability to
maintain several large consulting contracts with U.S. government agencies.

     International Revenues. Our international revenues decreased 12.6% to $2.7
million, or 22.9% of total revenue, for the three months ended December 31, 2002
from $3.1 million, or 27.9% of total revenues, for the three months ended
December 31, 2001. Our international revenues increased 5.8% to $7.1 million, or
20.9% of total revenue, for the nine months ended December 31, 2002 from $6.7
million, or 20.1% of total revenues, for the nine months ended December 31,
2001. Our international revenues are primarily generated in Europe and Japan.
The challenging global economy can lengthen our sales cycle for certain
international customers and therefore impacts the timing of sales orders. We
expect to continue experiencing fluctuations of international revenues in the
future.

Cost of Revenues

     Cost of software license revenues consists primarily of royalties, media,
manuals, and distribution costs. Cost of service revenues consists primarily of
personnel-related costs in providing technical support, consulting, and training
to customers. Gross margin on software license revenues is substantially higher
than gross margin on service revenues due to the low materials, packaging, and
other costs of software products compared with the relatively high personnel
costs associated with providing services.

     Cost of Software License Revenues. Cost of software license revenues was
$226,000 and $84,000 for the three months ended December 31, 2002 and 2001,
respectively. Gross margin on software licenses revenue decreased to 97.1% for
the three months ended December 31, 2002 from 98.8% for the three months ended
December 31, 2001. Cost of software license revenues was $631,000 and $354,000
for the nine months ended December 31, 2002 and 2001, respectively. Gross margin
on software licenses revenue decreased to 97.2% for the nine months ended
December 31, 2002 from 98.2% for the nine months ended December 31, 2001. The
increases in cost of software license revenues and the resulting lower gross
margins are primarily due to an increase in sales requiring royalty payments
under licensing agreements.

                                       11

<PAGE>

     Cost of Service Revenues. Cost of service revenues increased 9.5% to $1.6
million for the three months ended December 31, 2002 from $1.4 million for the
three months ended December 31, 2001. Gross margin on service revenues decreased
to 58.9% for the three months ended December 31, 2002 from 66.0% for the three
months ended December 31, 2001. Cost of service revenues increased 7.7% to $4.7
million for the nine months ended December 31, 2002 from $4.4 million for the
nine months ended December 31, 2001. Gross margin on service revenues decreased
to 59.9% for the nine months ended December 31, 2002 from 67.5% for the nine
months ended December 31, 2001. The increases in cost of services revenues and
the resulting lower gross margins are primarily due to a higher proportion of
service revenues derived from consulting services, which provide lower gross
margins than maintenance services. We expect cost of service revenues as a
percentage of service revenues to vary based primarily on the profitability of
individual consulting engagements.

Operating Expenses

     Research and Development. Research and development expenses increased 9.9%
to $3.2 million for the three months ended December 31, 2002 from $2.9 million
for the three months ended December 31, 2001. Research and development expenses
increased 2.2% to $9.6 million for the nine months ended December 31, 2002 from
$9.4 million for the nine months ended December 31, 2001. These increases were
attributable to additional personnel costs related to increased headcount as a
result of the WDM NetDesign acquisition in January 2002, and increased staffing
levels for developing new products as well as sustaining and upgrading existing
products. The increases were partially offset by no discretionary bonus expense
for the three and nine months ended December 31, 2002.

     We believe that a significant level of research and development investment
will be required to maintain our competitive position and broaden our product
lines, as well as to enhance the features and functionality of our current
products. We expect the absolute dollar amount of these expenditures to grow but
generally decrease as a percentage of total revenues in future periods. Our
ability to decrease these expenses as a percentage of revenue will depend upon
our revenue growth, among other factors.

     Sales and Marketing. Sales and marketing expenses increased 10.9% to $4.5
million for the three months ended December 31, 2002 from $4.1 million for the
three months ended December 31, 2001. Sales and marketing expenses increased
8.8% to $13.5 million for the nine months ended December 31, 2002 from $12.4
million for the nine months ended December 31, 2001. As a percentage of total
revenues, sales and marketing expenses increased to 38.7% for the three months
ended December 31, 2002 from 37.2% for the three months ended December 31, 2001
and increased to 39.6% for the nine months ended December 31, 2002 from 37.1%
for the nine months ended December 31, 2001. The increases are primarily due to
an increase in the size of our direct sales force due to the addition of sales
offices in the United Kingdom and Australia in the second half of fiscal year
2002, and increases in international sales commissions to third parties and
certain marketing costs. The increases were partially offset by lower travel and
entertainment expenses and no discretionary bonus expense for the three and nine
months ended December 31, 2002.

     We anticipate that we will continue to commit substantial resources to
sales and marketing in the future and that sales and marketing expenses may
increase in absolute dollars and as a percentage of total revenue in future
periods.

     General and Administrative. General and administrative expenses increased
1.5% to $1.3 million for the three months ended December 31, 2002 from $1.2
million for the three months ended December 31, 2001. General and administrative
expenses increased 9.4% to $3.6 million for the nine months ended December 31,
2002 from $3.3 million for the nine months ended December 31, 2001. The
increases are primarily due to higher personnel costs, bad debt expense, and
insurance costs. The increases were partially offset by no discretionary bonus
expense for the three and nine months ended December 31, 2002.

     We expect the dollar amount of general and administrative expenses to
increase as we continue to expand our operations but generally decrease as a
percentage of total revenues in future periods. Our ability to decrease these
expenses as a percentage of revenues will depend upon our revenue growth, among
other factors.

     Amortization of Acquired Technology. In connection with our acquisitions of
NetMaker in March 2001 and WDM NetDesign in January 2002, we recorded acquired
technology of $2.5 million. Amortization of acquired technology was $126,000 and
$118,000 for the three months ended December 31, 2002 and 2001, respectively,
and $378,000 and $330,000 for nine months ended December 31, 2002 and 2001,
respectively.

Interest and Other Income, Net

     Interest and other income, net, were $192,000 and $331,000 for the three
months ended December 31, 2002 and 2001,

                                       12

<PAGE>

respectively, and $716,000 and $1.5 million for the nine months ended December
31, 2002 and 2001, respectively. The decreases are primarily due to a reduction
in interest income earned on our cash and cash equivalents due to the decline in
interest rates throughout the periods.

Provision for Income Taxes

     Our effective tax rates were 25% and 16% for the three months ended
December 31, 2002 and 2001, respectively, and 25% and 27% for the nine months
ended December 31, 2002 and 2001, respectively. The effective tax rate differs
from the statutory tax rate and varies from period to period due principally to
the amount of income before taxes from various tax jurisdictions and the amount
of tax credits available to us in each period from incremental research
expenditures.

     We expect our effective tax rate in the near-term to range from 25% to 30%;
however, future provisions for taxes will depend, among other things, on the mix
and amount of worldwide income, the tax rates in effect for various tax
jurisdictions and the amount of research tax credits.

Liquidity and Capital Resources

     Since inception, we have funded our operations primarily through cash
provided by operating activities and through the sale of equity securities. In
August 2000, we completed our initial public offering in which we raised
approximately $54.1 million, net of underwriting discounts and offering expenses
payable by us. As of December 31, 2002, we had cash and cash equivalents
totaling $68 million.

     Cash provided by operating activities was $5.6 million and $1.5 million for
the nine months ended December 31, 2002 and 2001, respectively. Cash provided by
operating activities is primarily derived from net income, as adjusted for
depreciation and amortization and changes in assets and liabilities. The
increase in cash provided by operations in the nine months ended December 31,
2002 from the nine months ended December 31, 2001 was generated, in part, by the
collection of refundable income taxes from tax credits for incremental research
expenditures, growth in our deferred revenues, improved collection of
receivables, and no payment of discretionary bonuses during the nine months
ended December 31, 2002.

     Cash used in investing activities was $621,000 and $4.1 million for the
nine months ended December 31, 2002 and 2001, respectively. The funds were used
to purchase property and equipment for our corporate headquarters in Bethesda,
MD. Cash used in investing activities for the nine months ended December 31,
2001 also includes the costs incurred for the NetMaker and WDM NetDesign
acquisitions.

     Cash provided by financing activities was $742,000 and $857,000 for the
nine months ended December 31, 2002 and 2001, respectively. Cash provided by
financing activities reflects funds received from the issuance of notes payable,
proceeds received from the exercise of stock options, and the sale of common
stock under our 2000 Employee Stock Purchase Plan.

     As discussed in Note 2 to our condensed consolidated financial statements,
effective June 10, 2002, we entered into a $10.0 million line of credit with a
commercial bank, which expires in June 2004. Borrowings under our line of credit
bear interest at an annual rate equal to LIBOR plus 2% to 2.5%. We have
currently used $3.4 million of the facility for a letter of credit that secures
the lease for our headquarters in Bethesda, MD. There was no balance outstanding
on this line of credit as of December 31, 2002.

     As of December 31, 2002, we did not have any significant contractual
commitments other than operating leases for office facilities.

     We expect working capital needs to increase in the foreseeable future in
order for us to execute our business plan. We anticipate that operating
activities, as well as planned capital expenditures, will constitute a material
use of our cash resources. In addition, we may utilize cash resources to fund
acquisitions or investments in complementary businesses, technologies or
products.

     We believe that our current cash and cash equivalents and cash generated
from operations, along with available borrowings under our line of credit, will
be sufficient to meet our anticipated cash requirements for working capital and
capital expenditures for at least the next 12 months.

                                       13

<PAGE>

Critical Accounting Policies

     The preparation of our financial statements in conformity with generally
accepted accounting principles requires us to utilize accounting policies and
make estimates and assumptions that affect our reported amounts. Future results
may differ from these estimates under different assumptions or conditions. We
consider the following accounting policies to be both important to the portrayal
of our financial position and results of operations and require the exercise of
significant, subjective, or complex judgment and/or estimates.

     Revenue Recognition. We recognize revenue in accordance with Statement of
Position ("SOP") No. 97-2, "Software Revenue Recognition", as amended by SOP No.
98-9, "Modification of SOP No. 97-2, Software Revenue Recognition, With Respect
to Certain Transactions", SOP No. 81-1, "Accounting for Performance of
Construction-Type and Certain Production-Type Contracts" and the Securities and
Exchange Commission Staff Accounting Bulletin No. 101, "Revenue Recognition in
Financial Statements."

     For our software arrangements, a determination needs to be made for each
arrangement regarding whether the percentage-of-completion contract accounting
method should be used to recognize revenue or whether revenue can be recognized
when the software is delivered and all of the conditions of SOP 97-2 are met.
Contract accounting is required if our services are essential to the
arrangement. In some cases, our services are essential to the arrangement
because they involve customization and enhancements, and our fees are paid in
stages based upon the completion of defined service deliverables. As a result,
we typically recognize revenue from these arrangements using contract
accounting, which generally results in recording revenue over a longer period of
time. In other cases, our services are not essential to the arrangement and the
realization of our license fee is not dependent on the completion of such
services. In these situations, we recognize software license revenue when (1)
persuasive evidence of an arrangement exists, (2) the product has been
delivered, (3) the fee is fixed or determinable, and (4) collectibility is
probable, which generally results in recording revenue earlier than when
contract accounting is used. The determination of whether our services are
essential involves significant judgment and could have a material impact on our
results of operations from period to period to the extent that significant new
arrangements are not accounted for using contract accounting.

     Under the percentage-of-completion contract accounting method, we recognize
revenue from the entire arrangement based on the percentage of hours incurred
related to our services compared to the total hours of such services. Using the
percentage-of-completion method requires us to make estimates about the future
cost of services and estimated hours to complete, which are subject to change
for a variety of internal and external factors. A change in these estimates
could result in a material adjustment to the amount of revenue recorded in any
period under the arrangement.

     Allowance for Doubtful Accounts. We maintain an allowance for doubtful
accounts receivable for estimated losses resulting from the inability of our
customers to make required payments and for the limited circumstances when the
customer disputes the amounts due us. Our methodology for determining this
allowance requires significant estimates. In estimating the allowance,
management considers the age of the receivable, the creditworthiness of the
customer, the economic conditions of the customer's industry, and general
economic conditions. While we believe that the estimates we use are reasonable,
should any of these factors change, the estimates made by management will also
change, which could impact the amount of our future allowance for doubtful
accounts as well as future operating income. Specifically, if the financial
condition of our customers were to deteriorate, resulting in an impairment of
their ability to make payments to us, additional allowances may be required.

     Valuation of Intangible Assets and Goodwill. We account for our goodwill
and intangible assets in accordance with Statement of Financial Accounting
Standard ("SFAS") No. 141, "Business Combinations" and SFAS No. 142, "Goodwill
and Other Intangible Assets". Our intangible assets consist of acquired
technology. They are recorded at cost and amortized on a straight-line basis
over their expected useful lives of five years. We use the projected discounted
cash flow method in valuing our acquired technology, using certain assumptions
including revenue growth, cost levels, present value discount rate and working
capital requirements. While we believe the assumptions used are reasonable,
actual results will more likely than not differ from those assumptions. Future
cash flows are subject to change for a variety of internal and external factors.
We will periodically review the value of acquired technology for reasonableness.
Changes in our assumptions at the time of future periodic reviews could result
in impairment losses.

     Goodwill is recorded when the consideration paid for acquisitions exceeds
the fair value of net tangible and intangible assets acquired. Goodwill is not
amortized. We perform an annual review during our fourth quarter to identify any
facts or circumstances that indicate the carrying value of goodwill is impaired.
The review is based on various analyses including cash flow and profitability
projections and the market capitalization of our common stock. Impairment, if
any, is based on the excess of the carrying amount of goodwill over its fair
value. No impairment has been indicated to date. Changes in our assumptions at
the time of future periodic reviews could result in impairment losses.

                                       14

<PAGE>

     Accounting for Software Development Costs. Costs incurred in the research
and development of new software products are expensed as incurred until
technological feasibility is established. Development costs are capitalized
beginning when a product's technological feasibility has been established and
ending when the product is available for general release to our customers.
Technological feasibility is reached when the product reaches the working model
stage. To date, products and enhancements have generally reached technological
feasibility and have been released for sale at substantially the same time and
all research and development costs have been expensed. Consequently, no research
and development costs were capitalized in the accompanying condensed
consolidated financial statements.

Certain Factors That May Affect Future Results

     The following important factors, among others, could cause actual results
to differ materially from those indicated by forward-looking statements made in
this report and presented elsewhere by management from time to time.

     Our operating results may fluctuate significantly as a result of factors
outside of our control, which could cause the market price of our stock to
decline

     Our operating results have fluctuated in the past, and are likely to
fluctuate significantly in the future. Our financial results may as a
consequence fall short of the expectations of public market analysts or
investors, which could cause the price of our common stock to decline. Our
revenues and operating results may vary significantly from quarter to quarter
due to a number of factors, many of which are beyond our control. Factors that
could affect our operating results include:

..    the timing of large orders;

..    software arrangements requiring contract accounting;

..    changes in the mix of our sales, including the mix between higher margin
     software products and lower margin services and maintenance, and the
     proportion of our license sales requiring us to make royalty payments;

..    the timing and amount of our marketing, sales, and product development
     expenses;

..    the cost and time required to develop new software products;

..    the introduction, timing, and market acceptance of new products introduced
     by us or our competitors;

..    changes in network technology or in applications, which could require us to
     modify our products or develop new products;

..    general economic conditions, which can affect our customers' purchasing
     decisions and the length of our sales cycle;

..    changes in our pricing policies or those of our competitors; and

..    the timing and size of potential acquisitions by us.

     We expect to make significant expenditures in all areas of our business,
particularly sales and marketing operations, in order to promote future growth.
Because the expenses associated with these activities are relatively fixed in
the short term, we may be unable to adjust spending quickly enough to offset any
unexpected shortfall in revenue growth or any decrease in revenue levels. In
addition, our revenues in any quarter depend substantially on orders we receive
and ship in that quarter. We typically receive a significant portion of orders
in any quarter during the last month of the quarter, and we cannot predict
whether those orders will be placed and shipped in that period. If we have lower
revenues than we expect, we probably will not be able to reduce our operating
expenses quickly in response. Therefore, any significant shortfall in revenues
or delay of customer orders could have an immediate adverse effect on our
operating results in that quarter.

     For all of these reasons, quarterly comparisons of our financial results
are not necessarily meaningful and you should not rely on them as an indication
of our future performance.

     The market for intelligent network management software is new and evolving,
and if this market does not develop as anticipated, our revenues could decline

                                       15

<PAGE>

     We derive all of our revenues from the sale of products and services that
are designed to allow our customers to manage the performance of networks and
applications. Accordingly, if the market for intelligent network management
software does not continue to grow, we could face declining revenues, which
could ultimately lead to our becoming unprofitable. The market for intelligent
network management software solutions is in an early stage of development.
Therefore, we cannot accurately assess the size of the market and may be unable
to identify an effective distribution strategy, the competitive environment that
will develop, and the appropriate features and prices for products to address
the market. If we are to be successful, our current and potential customers must
recognize the value of intelligent network management software solutions, decide
to invest in the management of their networks, and, in particular, adopt and
continue to use our software solutions.

     Our customers are primarily in four target markets and our operating
results may be adversely affected by changes in one or more of these markets

     As part of our focus on four targeted markets, our financial results
depend, in significant part, upon the economic conditions of enterprise, U.S.
government agencies, service provider, and network equipment manufacturer
markets. An economic downturn or adverse change in the regulatory environment or
business prospects for one or more of these markets may decrease our revenues or
lower our growth rate.

     A decline in information technology spending may result in a decrease in
our revenues or lower our growth rate

     A decline in the demand for information technology among our current and
prospective customers may result in decreased revenues or a lower growth rate
for us because our sales depend, in part, on our customers' level of funding for
new or additional information technology systems and services.

     A continued economic downturn may cause our customers to reduce or
eliminate information technology spending and cause price erosion for our
solutions, which would substantially reduce the number of new software licenses
we sell and the average sales price for these licenses. Accordingly, we cannot
assure you that we will be able to increase or maintain our revenues.

     If our newest products, particularly those targeted primarily for
enterprises, do not gain widespread market acceptance, our revenues might not
increase and it is possible that they would decline

     We expect to derive a substantial portion of our revenues in the future
from sales to enterprises of version 9.0 of OPNET IT Guru, which was released in
October 2002, and its associated modules including Application Characterization
Environment, ACE Decode Module, NetDoctor, Flow Analysis, and OPNET VNE Server,
which was released in June 2002. Our business depends on customer acceptance of
these products and our revenues may not increase, or may decline, if our target
customers do not adopt and expand their use of our products. In addition, if our
OPNET Modeler product, which we have been selling since 1987, continues to
encounter declining sales, which could occur for a variety of reasons, including
market saturation and the financial condition of network equipment
manufacturers, and sales of our newer products do not grow at a rate sufficient
to offset the shortfall, our revenues would decline.

     We may not be able to grow our business if service providers do not buy our
products

     An element of our strategy is to increase sales to service providers of
OPNET SP Guru and OPNET WDM Guru, both launched in fiscal 2002. Accordingly, if
our products fail to perform favorably in the service provider environment or to
gain wider adoption by service providers, our business and future operating
results could suffer.

     Our lengthy and variable sales cycle makes it difficult to predict
operating results

     It is difficult for us to forecast the timing and recognition of revenues
from sales of our products because prospective customers often take significant
time evaluating our products before licensing them. The period between initial
customer contact and a purchase by a customer may vary from three months to more
than a year. During the sales process, the customer may decide not to purchase
or may scale down proposed orders of our products for various reasons, including
changes in budgets and purchasing priorities. Our prospective customers
routinely require education regarding the use and benefit of our products. This
may also lead to delays in receiving customers' orders.

     If we do not successfully expand our sales force, we may be unable to
increase our sales

     We sell our products primarily through our direct sales force, and we must
expand the size of our sales force to increase

                                       16

<PAGE>

revenues. If we are unable to hire or retain qualified sales personnel, if newly
hired personnel fail to develop the necessary skills to be productive, or if
they reach productivity more slowly than anticipated, our ability to increase
our revenues and grow our business could be compromised. Our sales people
require a long period of time to become productive, typically three to nine
months. The time required to reach productivity, as well as the challenge of
attracting, training, and retaining qualified candidates, may make it difficult
to meet our sales force growth targets. Further, we may not generate sufficient
sales to offset the increased expense resulting from growing our sales force or
we may be unable to manage a larger sales force.

     Our ability to increase our sales will be impaired if we do not expand and
manage our indirect distribution channels

     To increase our sales, we must, among other things, further expand and
manage our indirect distribution channels, which consist primarily of
international distributors and original equipment manufacturers and resellers.
If we are unable to expand and manage our relationships with our distributors,
our distributors are unable or unwilling to effectively market and sell our
products, or we lose existing distributor relationships, we might not be able to
increase our revenues. Our international distributors and original equipment
manufacturers and resellers have no obligation to market or purchase our
products. In addition, they could partner with our competitors, bundle or resell
competitors' products, or internally develop products that compete with our
products.

     We may not be able to successfully manage our expanding operations, which
could impair our ability to operate profitably

     We may be unable to operate our business profitably if we fail to manage
our growth. Our growth has sometimes strained, and may in the future continue to
strain, our managerial, administrative, operational, and financial resources and
controls. We plan to continue to expand our operations and increase the number
of our full-time employees. Our ability to manage growth will depend in part on
our ability to continue to enhance our operating, financial, and management
information systems. Our personnel, systems, and controls may not be adequate to
support our growth. In addition, our revenues may not continue to grow at a
sufficient rate to absorb the costs associated with a larger overall employee
base.

     If we are unable to introduce new and enhanced products on a timely basis
that respond effectively to changing technology, our revenues may decline

     Our market is characterized by rapid technological change, changes in
customer requirements, frequent new product and service introductions and
enhancements, and evolving industry standards. If we fail to develop and
introduce new and enhanced products on a timely basis that respond to these
changes, our products could become obsolete, demand for our products could
decline, and our revenues could fall. Advances in network management technology,
software engineering, and simulation technology, or the emergence of new
industry standards, could lead to new competitive products that have better
performance, more features, or lower prices than our products and could render
our products unmarketable.

     Our future revenue is substantially dependent upon our installed customer
base continuing to license additional products, renew maintenance agreements and
purchase additional services

     Our installed customer base has traditionally generated additional revenue
from consulting services, renewed maintenance agreements, and license of other
products. The maintenance agreements are generally renewable at the option of
the customers and there are no mandatory payment obligations or obligations to
license additional software. In addition, customers may decide not to purchase
additional products or services. If our customers fail to renew their
maintenance agreements or purchase additional products or services, our revenues
could decrease.

     Increases in service revenues as a percentage of total revenues could
decrease overall margins and adversely affect our operating results

     We realize lower margins on service revenues than on software license
revenues. As a result, if service revenues increase as a percentage of total
revenues, our gross margins will be lower and our operating results may be
adversely affected.

     If we fail to retain our key personnel and attract and retain additional
qualified personnel, we might not be able to maintain our revenue base

     Our future success and our ability to maintain our revenue base depend upon
the continued service of our executive officers and other key sales and research
and development personnel. The loss of any of our key employees, in particular
Marc A. Cohen, our chairman of the board and chief executive officer, and Alain
J. Cohen, our president and chief technology officer, could adversely affect our
ability to pursue our growth strategy. We do not have employment agreements or
any other agreements that obligate any of our officers or key employees to
remain with us.

                                       17

<PAGE>

     We must also continue to hire highly qualified individuals, particularly
software engineers and sales and marketing personnel. Our failure to attract and
retain technical personnel for our product development, consulting services, and
technical support teams may limit our ability to develop new products or product
enhancements. Competition for these individuals is intense, and we may not be
able to attract and retain additional highly qualified personnel in the future.
In addition, limitations imposed by federal immigration laws and the
availability of visas could impair our ability to recruit and employ skilled
technical professionals from other countries to work in the United States.

     Our international operations subject our business to additional risks,
which could cause our sales or profitability to decline

     We plan to increase our international sales activities, but these plans are
subject to a number of risks that could cause our sales to decline or could
otherwise cause a decline in profitability. These risks include:

..    difficulty in attracting distributors that will market and support our
     products effectively;

..    greater difficulty in accounts receivable collection and longer collection
     periods;

..    the need to comply with varying employment policies and regulations that
     could make it more difficult and expensive to manage our employees if we
     need to establish more direct sales or support staff outside the United
     States;

..    potentially adverse tax consequences;

..    the effects of currency fluctuations; and

..    political and economic instability.

     We expect to face intense competition, which could cause us to lose sales,
resulting in lower profitability

     Increasing competition in our market could cause us to lose sales and
become unprofitable. We believe that the market for intelligent network
management software is likely to become more competitive as it evolves and as
the demand for intelligent network management solutions continues to increase.
At least one of our current competitors and many of our potential competitors
are larger and have substantially greater financial and technical resources than
we do. In addition, it is possible that other vendors as well as some of our
customers or distributors will develop and market solutions that compete with
our products in the future.

     If our products contain errors and we are unable to correct those errors,
our reputation could be harmed and could cause our customers to demand refunds
from us or assert claims for damages against us

     Our software products could contain significant errors or bugs that may
result in:

..    the loss of or delay in market acceptance and sales of our products;

..    the delay in introduction of new products;

..    diversion of our resources;

..    injury to our reputation; and

..    increased support costs.

     Bugs may be discovered at any point in a product's life cycle. We expect
that errors in our products will be found in the future, particularly in new
product offerings and new releases of our current products.

     Because our customers use our products to manage networks that are critical
to their business operations, any failure of our products could expose us to
product liability claims. In addition, errors in our products could cause our
customers' networks and systems to fail or compromise their data, which could
also result in liability to us. Product liability claims brought against us
could divert the attention of management and key personnel, could be expensive
to defend, and may result in adverse settlements and judgments.

                                       18

<PAGE>

     Our software products rely on our intellectual property, and any failure to
protect our intellectual property could enable our competitors to market
products with similar features that may reduce our revenues and could allow the
use of our products by users who have not paid the required license fee

     If we are unable to protect our intellectual property, our competitors
could use our intellectual property to market products similar to our products,
which could reduce our revenues. In addition, we may be unable to prevent the
use of our products by persons who have not paid the required license fee, which
could reduce our revenues. Our success and ability to compete depend
substantially upon the internally developed technology that is incorporated in
our products. Policing unauthorized use of our products is difficult, and we may
not be able to prevent misappropriation of our technology, particularly in
foreign countries where the laws may not protect our proprietary rights as fully
as those in the United States. Others may circumvent the patents, copyrights,
and trade secrets we own. In the ordinary course of business, we enter into a
combination of confidentiality, non-competition and non-disclosure agreements
with our employees.

     These measures afford only limited protection and may be inadequate,
especially because our employees are highly sought after and may leave our
employ with significant knowledge of our proprietary information. In addition,
any confidentiality, non-competition and non-disclosure agreements we enter into
may be found to be unenforceable, or our copy protection mechanisms embedded in
our software products could fail or could be circumvented.

     Our products employ technology that may infringe on the proprietary rights
of others, and, as a result, we could become liable for significant damages

     We expect that our software products may be increasingly subject to
third-party infringement claims as the number of competitors in our industry
segment grows and the functionalities of products in different industry segments
overlap.

     Regardless of whether these claims have any merit, they could:

..    be time-consuming to defend;

..    result in costly litigation;

..    divert our management's attention and resources;

..    cause us to cease or delay product shipments; or

..    require us to enter into royalty or licensing agreements.

     These royalty or licensing agreements may not be available on terms
acceptable to us, if at all. A successful claim of product infringement against
us or our failure or inability to license the infringed or similar technology
could adversely affect our business because we would not be able to sell the
affected product without redeveloping it or incurring significant additional
expense.

     Possible adverse impact of interpretations of existing accounting
pronouncements

     Based on our reading and interpretations of SOPs 81-1, 97-2 and 98-9, and
SAB 101, we believe that our current contract terms and business arrangements
have been properly reported. However, the American Institute of Certified Public
Accountants and its Software Revenue Recognition Task Force continue to issue
interpretations and guidance for applying the relevant standards to a wide range
of sales contract terms and business arrangements that are prevalent in the
software industry. Future interpretations of existing accounting standards or
changes in our business practices could result in future changes in our revenue
recognition accounting policies that could have a material adverse effect on our
business, financial condition, and results of operations.

     As with other software vendors, we may be required to delay revenue
recognition into future periods, which could adversely impact our operating
results.

     We have in the past had to, and in the future may have to, defer
recognition for license fees due to several factors, including whether:

..    software arrangements include undelivered elements for which we do not have
     vendor specific evidence of fair value;

                                       19

<PAGE>

..    we must deliver services for significant customization, enhancements and
     modifications of our software;

..    the transaction involves material acceptance criteria or there are other
     identified product-related issues;

..    the transaction involves contingent payment terms or fees;

..    we are required to accept a fixed-fee services contract; or

..    we are required to accept extended payment terms.

     Because of the factors listed above and other specific requirements under
accounting principles generally accepted in the United States for software
revenue recognition, we must have very precise terms in our software
arrangements in order to recognize revenue when we initially deliver software or
perform services. Negotiation of mutually acceptable terms and conditions can
extend the sales cycle, and sometimes we do not obtain terms and conditions that
permit revenue recognition at the time of delivery.

     If we undertake acquisitions, they may be expensive and disruptive to our
business and could cause the market price of our common stock to decline

     We completed the NetMaker and WDM NetDesign acquisitions in March 2001 and
January 2002, respectively. We may continue to acquire or make investments in
companies, products or technologies if opportunities arise. Any acquisition
could be expensive, disrupt our ongoing business, distract our management and
employees, and adversely affect our financial results and the market price of
our common stock. We may not be able to identify suitable acquisition or
investment candidates, and if we do identify suitable candidates, we may not be
able to make these acquisitions or investments on commercially acceptable terms
or at all. If we make an acquisition, we could have difficulty integrating the
acquired technology, employees, or operations. In addition, the key personnel of
the acquired company may decide not to work for us.

     We also expect that we would incur substantial expenses if we acquired
other businesses or technologies. We might use cash on hand, incur debt, or
issue equity securities to pay for any future acquisitions. If we issue
additional equity securities, our stockholders could experience dilution and the
market price of our stock may decline.

     Our products are subject to changing computing environments, including
operating system software and hardware platforms, which could render our
products obsolete

     The evolution of existing computing environments and the introduction of
new popular computing environments may require us to redesign our products or
develop new products. Computing environments, including operating system
software and hardware platforms, are complex and change rapidly. Our products
are designed to operate in currently popular computing environments. Due to the
long development and testing periods required to adapt our products to new or
modified computing environments, our research and development efforts could be
distracted and we could also experience significant delays in product releases
or shipments, which could result in lost revenues and significant additional
expense.

                                       20

<PAGE>

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

     We consider all highly liquid investments purchased with a maturity of
three months or less to be cash equivalents, and those with maturities greater
than three months are considered to be marketable securities. Cash equivalents
and marketable securities are stated at amortized cost plus accrued interest,
which approximates fair value. Cash equivalents and marketable securities
consist primarily of money instruments and U.S. Treasury bills. We currently do
not hedge interest rate exposure, but do not believe that an increase in
interest rates would have a material effect on the value of our marketable
securities.

ITEM 4. Controls and Procedures

     We maintain a system of internal controls and procedures that are designed
to provide reasonable assurance that information required to be disclosed by us
in the reports that we file under the Exchange Act is recorded, processed,
summarized and reported within required time periods. Our Chief Executive
Officer and our Chief Financial Officer have evaluated the effectiveness of our
disclosure controls and procedures as of a date within 90 days before the filing
of this quarterly report, and have each concluded that, as of the evaluation
date, such controls and procedures were effective, in all material respects, to
ensure that required information will be disclosed on a timely basis in our
reports filed under the Exchange Act.

     Subsequent to the date of our evaluation, there have been no significant
changes to our internal controls or in other factors that could significantly
affect our internal controls.

                                       21

<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1.   Legal Proceedings

    OPNET is involved in various claims and legal proceedings arising from its
normal operations. Management does not consider any of those matters to be
material.

ITEM 2.   Changes in Securities and Use of Proceeds

    In August 2000, we closed an initial public offering of our common stock.
The Registration Statement on Form S-1 (No. 333-32588) was declared effective by
the Securities and Exchange Commission on August 1, 2000 and we commenced the
offering on that date. After deducting the underwriting discounts and
commissions and the offering expenses, the net proceeds from the offering were
approximately $54.1 million.

    As of December 31, 2002, the proceeds from the offering were used to fund
approximately (i) $7.6 million of general corporate expenses, working capital
and capital expenditures, including $4.8 million for capital expenditures and
leasehold improvements related to our headquarters facility in Bethesda, MD,
(ii) $6.2 million of acquisition and acquisition-related expenses for the
NetMaker acquisition, and (iii) $1.4 million of the purchase price for WDM
NetDesign. None of these amounts were paid directly or indirectly to any
director, officer, or general partner of us or their associates, persons owning
10% or more of any class of our equity securities, or any affiliate of us. We
have not allocated any of the remaining net proceeds to any identifiable uses.
We may also use a portion of the net proceeds to acquire businesses, products,
or technologies that are complementary to our business. Pending their use, we
have invested the net proceeds in investment grade, interest-bearing securities.

ITEM 6.   Exhibits and Reports on Form 8-K

    A.  Exhibits:  See Exhibit Index
    B.  Reports on Form 8-K
           None.

                                       22

<PAGE>

                                    SIGNATURE

     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.

                                       OPNET TECHNOLOGIES, INC.
                                       (Registrant)

                                       By: /s/ Joseph W. Kuhn
                                           -------------------
Date: January 29, 2003                     Name:   Joseph W. Kuhn
                                           Title:  Vice President of Finance
                                                   and Chief Financial Officer
                                                   (Principal Financial and
                                                   Accounting Officer)

                                 CERTIFICATIONS

Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and Item 307 of Regulation S-K

I, Marc A. Cohen, certify that:

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

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

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

4.   The registrant's other certifying 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 we have:

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

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

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

5.   The registrant's other certifying 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

                                       23

<PAGE>

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

Dated: January 29, 2003                By:   /s/ Marc A. Cohen
                                             ----------------------------------
                                             Marc A. Cohen
                                             Chairman and Chief Executive
                                             Officer
                                             (Principal Executive Officer)

Certification of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

In connection with this quarterly report on Form 10-Q of OPNET Technologies,
Inc., I, Marc A. Cohen, Chief Executive Officer of OPNET Technologies, Inc.,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

     (1)  The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

Dated: January 29, 2003                By:   /s/ Marc A. Cohen
                                             --------------------------------
                                             Marc A. Cohen
                                             Chairman and Chief Executive
                                             Officer
                                             (Principal Executive Officer)

Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and Item 307 of Regulation S-K

I, Joseph W. Kuhn, certify that:

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

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

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

4.   The registrant's other certifying 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 we have:

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

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

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

5.   The registrant's other certifying 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):

                                       24

<PAGE>
              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 officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Dated: January 29, 2003                By:   /s/ Joseph W. Kuhn
                                             -----------------------------------
                                             Joseph W. Kuhn
                                             Vice President and Chief Financial
                                             Officer
                                             (Principal Financial and Accounting
                                             Officer)


Certification of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002

In connection with this quarterly report on Form 10-Q of OPNET Technologies,
Inc., I, Joseph W. Kuhn, Chief Financial Officer of OPNET Technologies, Inc.,
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

          (1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and

          (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.

Dated: January 29, 2003                By:   /s/ Joseph W. Kuhn
                                             ----------------------------------
                                             Joseph W. Kuhn
                                             Vice President and Chief Financial
                                             Officer
                                             (Principal Financial and Accounting
                                             Officer)

                                       25

<PAGE>

                            OPNET TECHNOLOGIES, INC.
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
 Number                      Description                                                Source
 ------                      -----------                                                ------
<S>        <C>                                                   <C>
  3.1      Third Amended and Restated Certificate of             Incorporated by reference from exhibit 3.2 to the
           Incorporation of the Registrant                       Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).

  3.2      Amended and Restated By-Laws of the Registrant        Incorporated by reference from exhibit 3.4 to the
                                                                 Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).

  4.1      Specimen common stock certificate                     Incorporated by reference from exhibit 4.1 to the
                                                                 Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).

  4.2      See Exhibits 3.1 and 3.2 for provisions of the        Incorporated by reference from exhibit 4.2 to the
           Certificate of Incorporation and By-Laws of the       Registrant's Registration Statement on Form S-1 (File No.
           Registrant defining the rights of holders of          333-2588).
           common stock of the Registrant

 *10.1     2000 Employee Stock Purchase Plan, as Amended         Exhibit 10.1 to Current Report on Form 10-Q.

  10.2     Amended and Restated Registration Rights              Incorporated by reference from exhibit 10.1 to the
           Agreement, dated as of March 30, 2001, by and         Registrant's Annual Report on Form 10-K for the period
           among the Registrant, Summit Ventures IV, L.P.,       ended March 31, 2001 as filed with the SEC on June 29,
           Summit Investors III, L.P., Alain J. Cohen,           2001.
           Marc A. Cohen and Make Systems, Inc.

  10.3     Asset Purchase Agreement, dated as of March 20,       Incorporated by reference from exhibit 2.1 to the
           2001, by and among the Registrant, Make               Registrant's Current Report on Form 8-K dated March 22,
           Systems, Inc. and Metromedia Company                  2001 filed the Securities and Exchange Commission ("SEC")
                                                                 on March 23, 2001 (File No. 000-30931).

  10.4     Stock Purchase and Option Agreement, dated as         Incorporated by reference from exhibit 10.6 to the
           of November 1, 1999, between the Registrant           Registrant's Registration Statement on Form S-1 (File No.
           and Steven G. Finn                                    333-2588).

  10.5     Stock Purchase and Option Agreement, dated as         Incorporated by reference from exhibit 10.7 to the
           of November 1, 1999, between the Registrant and       Registrant's Registration Statement on Form  S-1 (File No.
           William F. Stasior                                    333-2588).

  10.6     Amended and Restated 1993 Incentive Stock Option      Incorporated by reference from exhibit 10.10 to the
           Plan                                                  Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).

  10.7     2000 Director Stock Option Plan                       Incorporated by reference from exhibit 10.13 to the
                                                                 Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).

  10.8     Non-competition Agreement, dated as of December       Incorporated by reference from exhibit 10.15 to the
           31, 1997, between the Registrant and Marc A. Cohen    Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).
</TABLE>

                                       26

<PAGE>

<TABLE>
  <S>                                                            <C>
  10.9     Non-competition Agreement, dated as of December 31,   Incorporated by reference from exhibit 10.16 to the
           1997, between the Registrant and Alain J. Cohen       Registrant's Registration Statement on Form S-1 (File No.
                                                                 333-2588).

  10.10    Change-in Control Agreement, dated as of June 1,      Incorporated by reference from exhibit 10.19 to the
           2000, between the Registrant and Pradeep K. Singh     Registrant's Annual Report on Form 10-K for the period
                                                                 ended March 31, 2001 as filed with the SEC on June 29,
                                                                 2001.

  10.11    Office Lease Agreement, dated May 2000, between the   Incorporated by reference from exhibit 10.21 to the
           Registrant and Street Retail, Inc.                    Registrant's Annual Report on Form 10-K for the period
                                                                 ended March 31, 2001 as filed with the SEC on June 29,
                                                                 2001.

  10.12    Amended and Restated 2000 Stock Incentive Plan        Incorporated by reference from exhibit 10.1 to the
                                                                 Registrant's Quarterly Report on Form 10-Q for the period
                                                                 ended December 31, 2001 as filed with the SEC November 14,
                                                                 2001.

  10.13    Loan Agreement, dated June 10, 2002, between          Incorporated by reference from exhibit 10.1 to the
           Registrant and Bank of America, N.A.                  Registrant's Quarterly Report on Form 10-Q for the period
                                                                 ended June 30, 2002 as filed with the SEC August 9, 2002.

  10.14    Promissory Note, dated June 10, 2002, between         Incorporated by reference from exhibit 10.2 to the
           Registrant and Bank of America, N.A.                  Registrant's Quarterly Report on Form 10-Q for the period
                                                                 ended June 30, 2002 as filed with the SEC August 9, 2002.

  21       Subsidiaries of the Registrant                        Incorporated by reference from exhibit 21 to the
                                                                 Registrant's Annual Report on Form 10-K for the period
                                                                 ended March 31, 2002 as filed with the SEC on June 20,
                                                                 2002.
</TABLE>

* filed herewith

                                       27