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

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   ----------

                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


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

               For the quarterly period ended September 30, 2002

                                       OR

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

          For the transition period from ____________ to ____________


                         Commission file number 0-30828

                         PRECISE SOFTWARE SOLUTIONS LTD.
             (Exact Name of Registrant as Specified in Its Charter)


           Israel                                              Not Applicable
(State or Other Jurisdiction                                  (I.R.S. Employer
      of Organization)                                       Identification No.)

                              10 Hata'asiya Street
                     P.O. Box 1066, Or-Yehuda, 60408 Israel
               (Address of Principal Executive Offices) (Zip Code)

      Registrant's Telephone Number, Including Area Code 972-(3)-735-2222

     Indicate by check [X] whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days

Yes  [X]  No  [ ]

     Indicate by check [X] whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes  [X]  No  [ ]

     At November 7, 2002, 29,676,667 of the registrant's ordinary shares (par
value, 0.03 NIS per share) were outstanding.
================================================================================
<PAGE>

                                    FORM 10-Q

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

                                TABLE OF CONTENTS
                                                                           PAGE

PART I.    FINANCIAL INFORMATION

     ITEM 1.  Consolidated Financial Statements:

         Condensed Consolidated Balance Sheets as of September
         30, 2002 (unaudited) and December 31, 2001.........................3-4

         Condensed Consolidated Statements of Operations
         (unaudited) for the three and nine months
         ended September 30, 2002 and 2001....................................5

         Condensed Consolidated Statements of Cash Flows
         (unaudited) for the nine months ended
         September 30, 2002 and 2001........................................6-7

         Notes to Condensed Consolidated Financial Statements (unaudited)..8-14

     ITEM 2   Management's Discussion and Analysis of Financial
              Condition and Results of Operations.........................15-19

     ITEM 3   Quantitative and Qualitative Disclosures
              About Market Risk..............................................19

     ITEM 4   Controls and Procedures........................................19

PART II.   OTHER INFORMATION

     ITEM 1.  Legal Proceedings..............................................20

     ITEM 2.  Changes in Securities and Use of Proceeds.......................*

     ITEM 3.  Defaults Upon Senior Securities.................................*

     ITEM 4.  Matters Submitted to a Vote of Security Holders.................*

     ITEM 5.  Other Information...............................................*

     ITEM 6.  Exhibits and Reports on Form 8-K...............................20


SIGNATURES...................................................................21

CERTIFICATIONS............................................................22-23

*No information provided due to inapplicability of item.

                                        2
<PAGE>

                         PRECISE SOFTWARE SOLUTIONS LTD.
                                    FORM 10-Q
                        QUARTER ENDED SEPTEMBER 30, 2002

                          PART I. FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS

                            PRECISE SOFTWARE SOLUTIONS LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. dollars in thousands


                                                     December 31,  September 30,
                                                         2001          2002
                                                      ----------    ----------
                                                        Audited      Unaudited
                                                      ----------    ----------
     ASSETS

Current assets:
  Cash and cash equivalents                           $   35,144    $   23,224
  Marketable securities                                   39,752        71,694
  Trade receivables, net of allowance for doubtful
    accounts (2001 - $179, 2002 - $273)                   12,156        15,208
  Other accounts receivable and prepaid expenses           3,168         3,858
                                                      ----------    ----------

Total current assets                                      90,220       113,984
                                                      ----------    ----------

Marketable securities, non current                        60,935        46,074
                                                      ----------    ----------

Severance pay fund                                           750           904
                                                      ----------    ----------

Property and equipment, net                                5,047         4,821
                                                      ----------    ----------

Other assets, net                                         46,231        48,518
                                                      ----------    ----------

Total assets                                          $  203,183    $  214,301
                                                      ==========    ==========


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

                                        3
<PAGE>

                            PRECISE SOFTWARE SOLUTIONS LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U.S. dollars in thousands

                                                     December 31,  September 30,
                                                         2001          2002
                                                      ----------    ----------
                                                        Audited      Unaudited
                                                      ----------    ----------
     LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Trade payables                                      $    1,394    $    1,151
  Deferred revenues                                        6,673         9,536
  Employees and payroll accruals                           5,161         4,445
  Accrued expenses                                         2,014         2,219
  Other current liabilities                                  973         1,363
                                                      ----------    ----------

Total current liabilities                                 16,215        18,714
                                                      ----------    ----------

Long-term liabilities:
  Long-term debt and other liabilities                       193            96
  Accrued severance pay                                    1,116         1,252
                                                      ----------    ----------

Total long-term liabilities                                1,309         1,348
                                                      ----------    ----------

Shareholders' equity:
  Ordinary shares and additional paid-in capital         210,436       216,016
  Deferred stock compensation                               (544)         (144)
  Accumulated other comprehensive income                   1,191         1,215
  Accumulated deficit                                    (25,424)      (22,848)
                                                      ----------    ----------

Total shareholders' equity                               185,659       194,239
                                                      ----------    ----------

Total liabilities and shareholders' equity            $  203,183    $  214,301
                                                      ==========    ==========

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

                                        4
<PAGE>

                            PRECISE SOFTWARE SOLUTIONS LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
U.S. dollars in thousands (except per share data)
<TABLE><CAPTION>
                                                       Three months ended           Nine months ended
                                                          September 30,               September 30,
                                                    ------------------------    ------------------------
                                                       2001          2002          2001          2002
                                                    ----------    ----------    ----------    ----------
                                                                         Unaudited
                                                    ----------------------------------------------------
Revenues:
<S>                                                 <C>           <C>           <C>           <C>
   Software licenses                                $   11,300    $   12,562    $   30,741    $   38,161
   Services                                              3,028         6,788         7,804        16,503
                                                    ----------    ----------    ----------    ----------
          Total revenues                                14,328        19,350        38,545        54,664
                                                    ----------    ----------    ----------    ----------

Cost of revenues:
   Software licenses                                        69           237           181           490
   Services                                                766         1,963         2,213         4,362
                                                    ----------    ----------    ----------    ----------
          Total cost of revenues                           835         2,200         2,394         4,852
                                                    ----------    ----------    ----------    ----------

Gross profit                                            13,493        17,150        36,151        49,812
                                                    ----------    ----------    ----------    ----------
Operating expenses:
   Research and development                              2,850         3,199         7,774         9,638
   Sales and marketing                                   8,688        10,738        24,442        31,080
   General and administrative                            1,887         2,152         5,025         6,505
   Amortization of deferred stock compensation             404            72         1,586           335
   Amortization of goodwill and intangible assets          833           979         2,125         2,631
                                                    ----------    ----------    ----------    ----------

Total operating expenses                                14,662        17,140        40,952        50,189
                                                    ----------    ----------    ----------    ----------

Operating income (loss)                                 (1,169)           10        (4,801)         (377)
Financial income and other, net                          1,621         1,094         5,492         3,113
                                                    ----------    ----------    ----------    ----------

Income before income taxes                                 452         1,104           691         2,736
Income taxes                                              --               8          --             160
                                                    ----------    ----------    ----------    ----------

Net income                                          $      452    $    1,096    $      691    $    2,576
                                                    ==========    ==========    ==========    ==========
Net earnings per share:
   Basic earnings per share                         $     0.02    $     0.04    $     0.03    $     0.09
                                                    ==========    ==========    ==========    ==========
   Diluted earnings per share                       $     0.02    $     0.04    $     0.02    $     0.08
                                                    ==========    ==========    ==========    ==========
   Weighted average number of shares used in
   computing basic earnings per share                   26,942        28,866        26,390        28,590
                                                    ==========    ==========    ==========    ==========
   Weighted average number of shares used in
   computing diluted earnings per share                 29,757        30,378        29,710        30,707
                                                    ==========    ==========    ==========    ==========
</TABLE>
          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                        5
<PAGE>

                            PRECISE SOFTWARE SOLUTIONS LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. dollars in thousands
<TABLE><CAPTION>
                                                                               Nine months ended
                                                                                  September 30,
                                                                            ------------------------
                                                                               2001          2002
                                                                            ----------    ----------
                                                                                   Unaudited
                                                                            ------------------------
Cash flows from operating activities:
<S>                                                                         <C>           <C>
Net income                                                                  $      691    $    2,576
Adjustments to reconcile net income to net cash provided by operating
  activities:
  Depreciation                                                                     923         1,503
  Loss on sale of property and equipment                                          --              40
  Amortization of debenture premium (accretion of discount)
    on available-for-sale marketable securities                                    (37)          818
  Amortization of deferred stock compensation                                    1,586           335
  Amortization of intangible assets, goodwill and in-process research and
     development                                                                 2,125         2,631
  Increase in trade receivables, net                                            (3,562)       (2,444)
  Decrease (increase) in other accounts receivable and prepaid expenses            701          (667)
  Decrease (increase) in other assets                                             (109)          429
  Decrease in trade payables                                                      (235)         (307)
  Increase in deferred revenues                                                    953         2,117
  Increase (decrease) in employees and payroll accruals                          1,462          (830)
  Increase in other current liabilities and accrued expenses                       186           121
  Increase (decrease) in accrued severance pay, net                                 90           (18)
                                                                            ----------    ----------
Net cash provided by operating activities                                        4,774         6,304
                                                                            ----------    ----------

Cash flows from investing activities:

   Purchase of property and equipment                                           (2,170)       (1,180)
   Purchase of available-for-sale marketable securities                        (67,638)      (45,716)
   Purchase of other assets                                                     (1,315)       (1,466)
   Payment for acquisition of consolidated subsidiaries (1) (2)                (20,120)       (3,236)
   Proceeds from redemption of available-for-sale marketable securities         41,210        26,900
   Proceeds from sale of marketable securities                                   3,785           747
                                                                            ----------    ----------
Net cash used in investing activities                                       $  (46,248)   $  (23,951)
                                                                            ==========    ==========
</TABLE>
          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                        6
<PAGE>

                            PRECISE SOFTWARE SOLUTIONS LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
U.S. dollars in thousands
<TABLE><CAPTION>
                                                                  Nine months ended
                                                                    September 30,
                                                              ------------------------
                                                                 2001          2002
                                                              ----------    ----------
                                                                     Unaudited
                                                              ------------------------
Cash flows from financing activities:
<S>                                                               <C>           <C>
   Proceeds from exercise of options                               1,962         4,920
   Proceeds from issuance of shares under ESPP                       323           725
   Repayment of long-term debt                                       (20)          (53)
                                                              ----------    ----------

Net cash provided by financing activities                          2,265         5,592
                                                              ----------    ----------

Effect of exchange rate change on cash and cash equivalents           62           135
                                                              ----------    ----------

Decrease in cash and cash equivalents                            (39,147)      (11,920)
Cash and cash equivalents at the beginning of the period          82,218        35,144
                                                              ----------    ----------

Cash and cash equivalents at the end of the period            $   43,071    $   23,224
                                                              ==========    ==========

(1)  The net fair value of the assets acquired in September
     2001 were as follows:

     Working deficiency, except cash and cash equivalents     $     (478)
     Fixed assets                                                    475
     Long-term loans                                                 (93)
     Other assets                                                    481
     Intangible assets                                            32,134
     In-process research and development                              86
                                                              ----------
                                                                  32,605
     Issuance of shares, net                                     (12,485)
                                                              ----------
                                                              $   20,120
                                                              ==========

(2)  The net fair value of the assets of the consolidated
     subsidiary acquired in June 2002 were as follows:

     Working deficiency, except cash and cash equivalents                   $     (383)
     Property and equipment                                                         35
     Other assets                                                                3,584
                                                                            ----------
                                                                            $    3,236
                                                                            ==========

     Supplemental disclosure of cash flows activities:

     Cash paid during the period for:
        Interest                                              $       14    $       18
                                                              ==========    ==========
        Income taxes                                          $      --     $        9
                                                              ==========    ==========

     Non cash transactions:
        Purchased technology                                  $      --     $      297
                                                              ==========    ===========
        Capital lease obligation                              $      --     $       67
                                                              ==========    ==========
        Adjustment to Savant Corporation acquisition, net     $    1,426    $      --
                                                              ==========    ==========
</TABLE>
          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                        7
<PAGE>

PRECISE SOFTWARE SOLUTIONS LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1: BASIS OF PRESENTATION

        a. Company:

           Precise Software Solutions Ltd. ("the Company") was established in
           Israel on November 15, 1990. The Company is a provider of software
           products that assist organizations in performance management,
           monitoring and tuning of applications, and related consulting,
           training and support services. The Company has operations in the form
           of wholly-owned subsidiaries in the United States, the United
           Kingdom, France, Germany, Holland, Japan, Malaysia and Australia.

        b. Accounting:

           The accompanying condensed interim consolidated financial statements
           have been prepared by Precise Software Solutions Ltd. in accordance
           with generally accepted accounting principles in the United States,
           pursuant to the rules and regulations of the Securities and Exchange
           Commission and include the accounts of Precise Software Solutions
           Ltd. and its wholly-owned subsidiaries collectively. Certain
           information and footnote disclosures, normally included in financial
           statements prepared in accordance with generally accepted accounting
           principles in the United States, have been condensed or omitted
           pursuant to such rules and regulations. In the opinion of the
           Company, the unaudited financial statements reflect all adjustments
           (consisting only of normal recurring adjustments) necessary for a
           fair presentation of the financial position at September 30, 2002 and
           the operating results for the three and nine months ended September
           30, 2002 and 2001 and cash flows for the nine months ended September
           30, 2002 and 2001. These financial statements and notes should be
           read in conjunction with the Company's audited consolidated financial
           statements and notes thereto, included in the Company's annual report
           on Form 10-K filed with the Securities and Exchange Commission.

           The results of operations for the three and nine month periods ended
           September 30, 2002 are not necessarily indicative of results that may
           be expected for any other interim period or for the full fiscal year
           ending December 31, 2002.


NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        a. Cash and cash equivalents:

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

        b. Marketable securities:

           The Company accounts for investments in debt and equity securities in
           accordance with SFAS No. 115, "Accounting for Certain Investments in
           Debt and Equity Securities." Management determines the proper
           classification of investments with fixed maturities and marketable
           equity securities at the time of purchase and reevaluates such
           designations as of each balance sheet date. At September 30, 2002,
           all securities covered by SFAS No. 115 were designated as
           available-for-sale. Accordingly, these securities are stated at fair
           value, with unrealized gains and losses reported in a separate
           component of shareholders' equity, accumulated other comprehensive
           income. Amortization of premium and accretion of discounts are
           included in financial income and other, net. Realized gains and
           losses on all sales of investments, as determined on a specific
           identification basis, are included in the consolidated statement of
           operations, financial income and other, net.

                                        8
<PAGE>

        c. Other assets:

           Acquired technology, acquired trademark and customer relationships,
           acquired patents, acquired website, acquired courses and book
           royalties, internet site capitalization costs and goodwill are stated
           at amortized cost. Amortization is calculated using the straight-line
           method over the estimated useful lives, which are three to ten years.

        d. Revenue recognition:

           The Company and its subsidiaries generate revenues mainly from
           licensing the rights to use their software products and services. The
           Company and its subsidiaries sell products primarily through a direct
           sales force, resellers and Original Equipment Manufacturers ("OEMs").

           The Company has implemented Statement of Position (SOP) 97-2,
           "Software Revenue Recognition," as amended. Revenues from software
           arrangements are recognized upon delivery of the product when no
           future obligation exists, when collection is probable, the product
           fee is either fixed or determinable and persuasive evidence of an
           arrangement exists. SOP 97-2 requires revenue earned on software
           arrangements involving multiple elements to be allocated to each
           element based on the relative fair value of the elements. The Company
           has also adopted SOP 98-9, "Modification of SOP 97-2, Software
           Revenue Recognition with Respect to Certain Transactions," for all
           transactions entered into after January 1, 2000. The Company's Vendor
           Specific Objective Evidence ("VSOE") used to allocate the sales price
           to maintenance and support and professional services are based on
           renewal ratio or the price charged when these elements will be sold
           separately. SOP 98-9 requires that revenue be recognized under the
           "residual method" when (1) VSOE of fair value exists for all
           undelivered elements, and (2) all revenue recognition criteria of SOP
           97-2, as amended, are satisfied. Under the residual method any
           discount in the arrangement is allocated to the delivered elements.

           The Company is entitled to fees from its OEMs upon the sublicensing
           of the Company's products to end-users. Generally, the fees due from
           the OEMs are recognized when such fees are reported to the Company
           upon the sublicensing of the products by the OEMs.

           The Company and its subsidiaries generally do not grant a right of
           return to their customers, except for time-limited warranty
           provisions. Historically, the Company has seen negligible returns.

           Service revenues are comprised of revenues from maintenance and
           support arrangements, consulting fees, and training, none of which
           are considered essential to the functionality of the software
           license. Revenues from maintenance and support arrangements are
           deferred and recognized on a straight-line basis as service revenues
           over the life of the related agreement. Consulting fees and training
           revenues are recognized after the services are rendered.

           Deferred revenue includes unearned amounts received under maintenance
           and support contracts and professional services engagements, and
           amounts received from customers, but not yet recognized as revenues.

                                        9
<PAGE>

        e. Impact of recently issued accounting standards:

           In July 2001, the Financial Accounting Standards Board ("FASB"),
           issued Statement of Financial Accounting Standard No. 142 "Goodwill
           and Other Intangible Assets" ("SFAS No. 142"). SFAS No. 142 prohibits
           the amortization of goodwill and intangible assets with indefinite
           useful lives and instead requires that these assets be reviewed for
           impairment on a periodic basis. Intangible assets with finite lives
           will continue to be amortized over their estimated useful lives.
           Additionally, SFAS No. 142 requires that goodwill included in the
           carrying value of equity method investments no longer be amortized.
           In addition, an impairment test must be completed and any impairments
           identified must be treated as a cumulative effect of a change in
           accounting policies.

           The Company adopted SFAS No. 142, and in accordance with its
           guidelines the Company is currently in the process of performing the
           goodwill impairment test. The Company has completed the transitional
           impairment test, which did not result in an impairment charge. The
           Company completed its reassessment of previously recognized
           intangible assets and ceased amortization of identified intangible
           assets with indefinite lives.

           In accordance with SFAS No. 142, prior period amounts were not
           restated. The unaudited pro forma reconciliation of previously
           reported net income and earnings per share for the three and nine
           month periods ended September 30, 2002 and 2001, to the amounts
           adjusted for the elimination of goodwill amortization, are as
           follows:

<TABLE><CAPTION>
                                                  Three months ended            Nine months ended
                                                      September 30,               September 30,
                                                ------------------------    ------------------------
                                                   2001          2002          2001          2002
                                                ----------    ----------    ----------    ----------
                                                                     Unaudited
                                                ----------------------------------------------------
<S>                                             <C>           <C>           <C>           <C>
        Reported net income                     $      452    $    1,096    $      691    $    2,576
          Add:  Goodwill amortization                  297           --            937           --
                                                ------------------------    ------------------------
        Adjusted net income                     $      749    $    1,096    $    1,628    $    2,576

        Reported basic earnings per share       $     0.02    $     0.04    $     0.03    $     0.09
          Add:  Goodwill amortization                 0.01           --           0.03           --
                                                ------------------------    ------------------------
        Adjusted basic earnings per share       $     0.03    $     0.04    $     0.06    $     0.09
                                                ========================    ========================
        Reported diluted earnings per share     $     0.02    $     0.04    $     0.02    $     0.08
          Add:  Goodwill amortization                 0.01           --           0.03           --
                                                ------------------------    ------------------------
        Adjusted diluted earnings per share     $     0.03    $     0.04    $     0.05    $     0.08
                                                ========================    ========================
</TABLE>

           In October 2001, the FASB recently issued SFAS No. 144, "Accounting
           for the Impairment or Disposal of Long-Lived Assets," that is
           applicable to financial statements issued for fiscal years beginning
           after December 15, 2001. FASB's new rules on the asset impairment
           supersede SFAS No. 121, "Accounting for the Impairment of Long-Lived
           Assets and for Long-Lived Assets to be Disposed Of," and portions of
           APB Opinion No. 30, "Reporting the Results of Operations." SFAS No.
           144 provides a single accounting model for long-lived assets to be
           disposed of and significantly changes the criteria that must be met
           to classify an asset as "held-for-sale." Classification as
           "held-for-sale" is an important distinction since such assets are not
           depreciated and are stated at the lower of fair value and carrying
           amount. SFAS No. 144 also requires expected future operating losses
           from discontinued operations to be displayed in the period(s) in
           which the losses are incurred, rather than as of the measurement date
           as presently required. This pronouncement is not expected to have a
           material effect on the Company's financial position or operating
           results.

                                       10
<PAGE>

        f. Reclassification:

           Certain prior period amounts have been reclassified to conform to
           current period presentation.

NOTE 3: ACQUISITIONS

        a. Acquisition of the Middleware Company ("Middleware")

           In June 2002, the Company acquired all the outstanding shares of
           Middleware , a United States based services company, for
           consideration of approximately $6.0 million. Middleware provides
           consulting, training courses and other related services. The purchase
           price consisted of approximately $4.0 million paid in cash. In
           addition, the stockholders are entitled to up to an additional $2.0
           million of the Company's ordinary shares to be issued in the fourth
           quarter of 2002. The consideration includes $150,000 in estimated
           transaction costs. The stockholders also have the right to receive
           additional contingent consideration including consideration of 20% of
           revenue for achieving a set revenue minimum and consideration equal
           to the amount by which revenues exceed another set minimum revenue
           target up to a set maximum relating to the one year period subsequent
           to the closing.

           The acquisition was accounted for under the purchase method, and
           accordingly the purchase price has been allocated to the assets
           acquired and liabilities assumed based on their estimated fair value
           at the date of acquisition. The excess of the purchase price over the
           estimated fair value of the net assets acquired has been recorded as
           goodwill.

           According to SFAS No. 142, "Goodwill and Other Intangible Assets",
           this goodwill will not be amortized, but will be subject to annual
           impairment tests in accordance with the statement. The allocation of
           the purchase price for this acquisition is preliminary and the
           information was arranged before the allocation was finalized.

           The Company acquired tangible assets of approximately $500,000. Other
           intangible assets acquired had an estimated fair value of $3.6
           million. Based upon the preliminary valuation of tangible and
           intangible assets acquired, the Company has allocated the total cost
           of the acquisition assets as follows:

                                                September 30,
                                                    2002
                                                ------------
                                                 Unaudited
                                                ------------
                 Intangible assets              $      1,964
                 Goodwill                              1,620
                                                ------------
                                                $      3,584
                                                ============

           The operations are included in the Company's consolidated statements
           of operations from June 18, 2002.

                                       11
<PAGE>

        b. Acquisition of the W.Quinn Associates, Inc ("W. Quinn").

           In September 2001, the Company acquired all the outstanding ordinary
           shares of W. Quinn, a United States based company, for consideration
           of approximately $34.1 million. W. Quinn develops and markets storage
           resource and performance management solutions. The total purchase
           price consisted of $21.6 million paid in cash and $12.5 million paid
           by the issuance of 774,413 ordinary shares. The consideration
           included $1.5 million of transaction costs.

           The W. Quinn acquisition provided the W. Quinn shareholders with a
           right to receive additional ordinary shares based on achievement of
           certain post-acquisition revenue and performance targets during a
           twelve month period spanning five quarters, beginning the third
           quarter of 2001 and ending in the third quarter of 2002. The
           consideration was paid in the form of 675,509 ordinary shares issued
           in the fourth quarter of 2002. The associated goodwill and share
           issuance will be reflected in the Company's year end financial
           statements.


NOTE 4: SHAREHOLDERS' EQUITY

           Stock options plans:

             The following table summarizes information about stock options
             outstanding as of September 30, 2002:
<TABLE><CAPTION>
                                                                                Weighted
                                                               Number of         average
                                                                options      exercise price
                                                              ------------    ------------
<S>                                                             <C>          <C>
             Outstanding at December 31, 2001                    7,038,372    $      11.18
             Granted                                               604,100           11.26
             Exercised                                            (918,154)           4.65
             Forfeited                                            (379,679)          14.32
                                                              ------------    ------------

             Outstanding at September 30, 2002 (unaudited)       6,344,639    $      11.96
                                                              ============    ============
</TABLE>






                                       12
<PAGE>

NOTE 5: EARNINGS PER SHARE

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

           The following table presents the calculation of unaudited basic and
           diluted earnings per share (in thousands, except per share amounts):
<TABLE><CAPTION>

                                                   Three months ended           Nine months ended
                                                      September 30,               September 30,
                                                ------------------------    ------------------------
                                                   2001          2002          2001          2002
                                                ----------    ----------    ----------    ----------
                                                                     Unaudited
                                                ----------------------------------------------------
<S>                                             <C>           <C>           <C>           <C>
        Net Income                              $      452    $    1,096    $      691    $    2,576
                                                ------------------------    ------------------------

        Shares used in computing basic
          earnings per share                        26,942        28,866        26,390        28,590
        Effect of dilutive stock options             2,815         1,512         3,320         2,117
                                                ------------------------    ------------------------
        Shares used in computing diluted
          earnings per share                        29,757        30,378        29,710        30,707

        Basic earnings per share                $     0.02    $     0.04    $     0.03    $     0.09
                                                ========================    ========================
        Diluted earnings per share              $     0.02    $     0.04    $     0.02    $     0.08
                                                ========================    ========================


NOTE 6: COMPREHENSIVE INCOME

           The components of comprehensive income are as follows (in thousands):

                                                   Three months ended           Nine months ended
                                                      September 30,               September 30,
                                                ------------------------    ------------------------
                                                   2001          2002          2001          2002
                                                ----------    ----------    ----------    ----------
                                                                     Unaudited
                                                ----------------------------------------------------
        Net income                              $      452    $    1,096    $      691    $    2,576
                                                ------------------------    ------------------------
        Other comprehensive income:
           Change in net unrealized gains
             on investments                            808            98         1,115          (170)
           Change in exchange rate differences         104           (35)           62           194
                                                ------------------------    ------------------------
                                                $    1,364    $    1,159    $    1,868    $    2,600
                                                ========================    ========================
</TABLE>

                                       13
<PAGE>

NOTE 7: GEOGRAPHIC INFORMATION

        a. Summary information about geographical areas (in thousands):

           The Company and its subsidiaries operate in one industry segment, the
           development and marketing of performance management software
           products. See Note 1 for a brief description of the Company's
           business. The following data is presented in accordance with SFAS No.
           131, "Disclosure About Segments of an Enterprise and Related
           Information." The following is a summary of operations within
           geographic areas based on customer's location.
<TABLE><CAPTION>
                                                            Three months ended            Nine months ended
                                                                September 30,               September 30,
                                                          ------------------------    ------------------------
                                                             2001          2002          2001          2002
                                                          ----------    ----------    ----------    ----------              ----
                                                                               Unaudited
                                                          ----------------------------------------------------
        Revenues from sales to unaffiliated customers:
<S>                                                       <C>           <C>           <C>           <C>
           United States                                  $    7,795    $   13,238    $   22,417    $   35,229
           North and South America (except the United
            States)                                              876           697         2,290         2,345
           Asia                                                  748         1,231         3,259         4,155
           United Kingdom                                        659           493         4,132         3,682
           Europe and others                                   4,250         3,691         6,447         9,253
                                                          ----------    ----------    ----------    ----------
                                                          $   14,328    $   19,350    $   38,545    $   54,664
                                                          ==========    ==========    ==========    ==========

        b. Summary information about geographical areas (in thousands):

                                                         December 31,  September 30,
                                                             2001          2002
                                                          ----------    ----------
                                                                 Unaudited
                                                          ------------------------
        Long-lived assets, by geographic region:
          Israel                                          $    3,956    $    3,384
          United States                                       45,635        48,014
          Europe and others                                    1,687         1,941
                                                          ----------    ----------
                                                          $   51,278    $   53,339
                                                          ==========    ==========
</TABLE>

                                       14
<PAGE>

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

     This Form 10-Q contains certain statements of a forward-looking nature
relating to future events or the future financial performance of Precise
Software Solutions Ltd. ("Precise"). Precise's actual future results may differ
significantly from these statements. In evaluating these statements, the various
factors identified in the caption "Factors Affecting Future Operating Results"
should be considered.

OVERVIEW

     Precise is a provider of software that assists organizations in monitoring
and optimizing the performance of their complex Information Technology
infrastructure. We were incorporated in November 1990. Initially, we focused on
developing and marketing performance management software for mainframe computer
systems. In 1995, we shifted our focus to Application Performance Management
software for Oracle database environments. In 1996, we released the initial
version of our Precise/SQL software, now called Precise/Indepth for Oracle, for
database monitoring. Since 1998, we have released or acquired new products and
continually updated our product suite making the following products generally
available:

     RELEASE       PRODUCT
     -------       -------
     1998          Precise/Pulse!, Precise/Presto for EMC, Precise/Interpoint

     2000          Precise/Insight, Precise/Savant

     2001          Precise/Foresight, Precise/Indepth for J2EE, Precise/Savvy
                   for Oracle, Web, J2EE, SAP R/3, BEA Tuxedo, and Siebel,
                   Precise/Indepth for DB2 UDB, Precise/Crosspoint,
                   Precise/Storage Central SRM, Precise i3 Suite

     2002          Precise/SiteStor SRM, Precise/Luminate, Precise/Indepth for
                   Transactions, Precise/Lightpoint, Precise/Indepth for SQL
                   Server, Precise/Sharkpoint

     We derive our revenues from the sale of software licenses and from
services. Our products are sold worldwide through a combination of our direct
sales force and indirect sales channels, including Original Equipment
Manufacturers, or OEMs, and resellers. Our services revenues consist primarily
of fees derived from annual maintenance and support agreements and consulting
and training, none of which are considered essential to the functionality of the
software license.

     Precise recognizes revenue in accordance with Staff Accounting Bulletin No.
101 (SAB 101), which summarizes the views of the staff of the U.S. Securities
and Exchange Commission in applying generally accepted accounting principles to
revenue recognition. Generally revenues from our OEMs are recognized when we
receive reports of fees due upon the sublicensing of our products by the OEMs.
Software license revenues on sales to resellers and end users are recognized
when:

     persuasive evidence of an agreement exists;

     the product has been delivered;

     all license payments are due within one year;

     vendor-specific objective evidence exists;

     the license fee is fixed or determinable; and

     collection of the fee is probable.

                                       15
<PAGE>

     Maintenance-related service revenues are recognized ratably over the term
of the maintenance agreement, which is typically one year. Consulting and
training revenues are recognized after the services are rendered.

RESULTS OF OPERATIONS

     The following table presents certain condensed consolidated statement of
operations data as a percentage of total revenues for the periods indicated:

                                          Three months ended   Nine months ended
                                             September 30,        September 30,

Percent of Total Revenues:                  2001      2002       2001      2002
                                            ----      ----       ----      ----
  Revenues:
   Software licenses                          79%       65%        80%       70%
   Services                                   21        35         20        30
                                            ----      ----       ----      ----
       Total revenues                        100       100        100       100
  Cost of revenues:
   Software licenses                           1         1          1         1
   Services                                    5        10          5         8
                                            ----      ----       ----      ----
       Total cost of revenues                  6        11          6         9
                                            ----      ----       ----      ----
Gross profit                                  94        89         94        91
Operating expenses:
  Research and development                    20        17         20        17
  Sales and marketing                         60        55         63        57
  General and administrative                  13        11         13        12
  Amortization of deferred stock
    compensation                               3         1          4         1
  Amortization of goodwill and
    intangible assets                          6         5          6         5
                                            ----      ----       ----      ----
       Total operating expenses              102        89        106        92
                                            ----      ----       ----      ----
Operating income (loss)                       (8)        0        (12)       (1)
Financial income and other, net               11         6         14         6
                                            ----      ----       ----      ----
Income before income taxes                     3         6          2         5
Income taxes                                --        --         --        --
                                            ----      ----       ----      ----
Net income                                     3%        6%         2%        5%
                                            ----      ----       ----      ----


REVENUES

     We derive our revenues from the sale of software licenses and from services
consisting primarily of maintenance fees, and, to a lesser extent, professional
services. Total revenues were $19.3 million for the three months ended September
30, 2002 and $14.3 million for the comparable quarter of 2001, representing an
increase of $5.0 million, or 35%, and were $54.7 million for the nine months
ended September 30, 2002 and $38.5 million for the comparable period of 2001,
representing an increase of $16.2 million, or 42%.

     Revenues from sales of software licenses were $12.6 million for the three
months ended September 30, 2002 and $11.3 million for the comparable quarter of
2001, representing an increase of $1.3 million, or 11%, and were $38.2 million
for the nine months ended September 30, 2002 and $30.7 million for the
comparable period in 2001, representing an increase of $7.5 million, or 24%. The
increase in software license revenues during the three and nine month periods is
attributable to the expansion of our direct sales force, increased recurring
sales to our installed customer base, the addition and acquisition of new
products, and an increased average deal size, partially offset by a decrease in
revenues from our strategic partner channel.

     Revenues from services were $6.8 million for the three months ended
September 30, 2002 and $3.0 million for the comparable quarter of 2001,
representing an increase of $3.8 million, or 124%, and were $16.5 million for
the nine months ended September 30, 2002 and $7.8 million for the comparable
period of 2001, representing an increase of $8.7 million, or 111%. The increase
in services revenue during the three and nine month periods ended September 30,
2002 over the comparable periods in 2001 is attributable to additional
maintenance agreements resulting from new sales of software licenses, renewals
of annual maintenance agreements with existing customers, and additional
professional services revenue, in part due to the acquisition of the Middleware
Company in June 2002.

                                       16
<PAGE>

COST OF REVENUES

     Cost of revenues consists of costs associated with generating software
license and service revenues. Cost of revenues was $2.2 million for the three
months ended September 30, 2002 and $835,000 for the comparable quarter of 2001,
representing an increase of $1.4 million, or 163%, and were $4.9 million for the
nine months ended September 30, 2002 and $2.4 million for the comparable period
of 2001, representing an increase of $2.5 million, or 103%.

     Cost of software license revenues in 2002 consists primarily of production
costs and third party software royalties and in the comparable periods of 2001,
cost of software license revenues consists primarily of royalties to the
government of Israel as consideration for research and development grants
received in previous years, production costs and third party software royalties.
Cost of software license revenues was $237,000 for the three months ended
September 30, 2002 and $69,000 for the comparable quarter of 2001, representing
an increase of $168,000, and were $490,000 for the nine months ended September
30, 2002 and $181,000 for the comparable period in 2001, representing an
increase of $309,000.

     Cost of service revenues consists primarily of costs related to personnel
providing customer support and professional services. Cost of service revenues
was $2.0 million for the three months ended September 30, 2002 and $766,000 for
the comparable quarter of 2001, representing an increase of $1.2 million, or
156%, and were $4.4 million for the nine months ended September 30, 2002 and
$2.2 million for the comparable period of 2001, representing an increase of $2.2
million, or 97%. The increase is due to an increase in the number of customer
support and professional services personnel.

RESEARCH AND DEVELOPMENT

     Research and development expenses consist primarily of costs related to
research and development personnel, including salaries and other
personnel-related expenses, sub-contracting fees, facilities and computer
equipment used in our product and technology development. Research and
development expenses were $3.2 million for the three months ended September 30,
2002 and $2.9 million for the comparable period of 2001, representing an
increase of $0.3 million, or 12%, and were $9.6 million for the nine months
ended September 30, 2002 and $7.8 million for the comparable period of 2001,
representing an increase of $1.8 million, or 24%. The increases for these
periods were primarily related to the increase in the number of software
developers and quality assurance personnel engaged in the continuing enhancement
of our software suite, which included the release of six new products in the
nine month period ended September 30, 2002.

SALES AND MARKETING

     Sales and marketing expenses consist primarily of salaries and other
personnel-related expenses, commissions and other costs associated with our
sales and marketing efforts. Sales and marketing expenses were $10.7 million for
the three months ended September 30, 2002 and $8.7 million for the comparable
quarter of 2001, representing an increase of $2.0 million, or 24%, and were
$31.1 million for the nine months ended September 30, 2002 and $24.4 million for
the comparable period in 2001, representing an increase of $6.7 million, or 27%.
The increase is due primarily to an increase in payroll and related expenses
attributable to the increase in the number of people comprising our direct sales
force and increased commission expenses associated with the increase in revenue.

GENERAL AND ADMINISTRATIVE

     General and administrative expenses consist primarily of salaries and other
personnel-related expenses from our administrative and finance personnel,
facilities, computer equipment and professional services fees. General and
administrative expenses were $2.2 million for the three months ended September
30, 2002 and $1.9 million for the comparable quarter of 2001, representing an
increase of $0.3 million, or 14%, and were $6.5 million for the nine months
ended September 30, 2002 and $5.0 million for the comparable period in 2001,
representing an increase of $1.5 million, or 29%. The increase is attributable
to an increased number of employees in our administrative and finance
departments to support our growing organization.

                                       17
<PAGE>

AMORTIZATION OF STOCK-BASED COMPENSATION

     Deferred stock-based compensation represents compensation costs related to
the grant of options to purchase ordinary shares at less than fair market value.
Our stock-based compensation expenses decreased to $72,000 for the three months
ended September 30, 2002 from $404,000 for the comparable period in 2001,
representing a decrease of $332,000, or 82%, and decreased to $335,000 for the
nine months ended September 30, 2002 from $1.6 million for the comparable period
of 2001, representing a decrease of $1.3 million, or 79%. The deferred
compensation is amortized over the vesting period of the underlying options,
generally three to four years. The decrease for these periods is due to a
portion of the deferred compensation balance being fully amortized at September
30, 2002. We had a $144,000 deferred compensation balance at September 30, 2002.

AMORTIZATION OF GOODWILL AND INTANGIBLE ASSETS

     The goodwill and intangible asset amortization consists primarily of
charges to expense reducing the goodwill and intangible assets associated with
acquisitions and purchased technology. Amortization expense was $1.0 million for
the three months ended September 30, 2002 and $800,000 for the comparable
quarter of 2001, representing an increase of $200,000, or 18%, and were $2.6
million for the nine months ended September 30, 2002 and $2.1 million for the
comparable period in 2001, representing an increase of $500,000, or 24%. The
increase is primarily related to acquisitions and purchased technology,
partially offset by the elimination of goodwill amortization as a result of our
adoption of SFAS No. 142.

FINANCIAL INCOME AND OTHER, NET

     Financial income and other, net was $1.1 million for the three months ended
September 30, 2002 and $1.6 million for the comparable quarter of 2001,
representing a decrease of $0.5 million, or 33%, and was $3.1 million for the
nine months ended September 30, 2002 and $5.5 million for the comparable period
in 2001, representing a decrease of $2.4 million, or 43%. The decrease is
attributable to less interest earned on our investments due to a general decline
in interest rates.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 2002, our principal source of liquidity was $141 million
of cash and cash equivalents and marketable securities compared to $136 million
at December 31, 2001. As of September 30, 2002, we had $96,000 of long-term debt
outstanding relating to obligations under capital leases and an obligation for
severance pay to Israeli employees of $1.3 million that is fully provided for by
monthly deposits with severance pay funds, insurance policies and by an accrual.
As of September 30, 2002, our accumulated deficit was $22.8 million.

     Net cash provided by operating activities was $6.3 million and $4.8 million
for the nine month periods ended September 30, 2002 and 2001, respectively. Net
cash provided by operating activities for the nine months ended September 30,
2002 was primarily the result of net income for the period, the amortization of
deferred stock compensation, amortization of intangible assets, depreciation and
an increase in deferred revenue for the period. These additive cash items were
offset primarily by increases in other accounts receivable and prepaid expenses
and trade receivables, as well as a decrease in trade payables and employees and
payroll accruals, which reduced the cash provided by operations for the period.
Net cash provided by operating activities for the nine months ended September
30, 2001 was primarily the result of decreases in other accounts receivable and
prepaid expenses, an increase in deferred revenues, an increase in employees and
payroll accrual, an increase in accrued expenses, amortization of deferred
stock-based compensation, amortization of goodwill and intangible assets, and
depreciation, offset by an increase in trade receivables and a decrease in other
accounts payable for the period.

     Net cash used in investing activities was $24.0 million and $46.2 million
for the nine-month periods ended September 30, 2002 and 2001, respectively.
Investing activities for both the nine months ended September 30, 2002 and 2001
consisted of purchases of available-for-sale marketable securities, purchases of
other assets, acquisitions and capital expenditures, offset by proceeds from the
sale and redemption of marketable securities. The majority of our capital
investments were for computers, peripheral equipment and software.

                                       18
<PAGE>

     Net cash provided by financing activities was $5.6 million and $2.3 million
for the nine-month periods ended September 30, 2002 and 2001, respectively. Net
cash provided by financing activities for both the nine-months ended September
30, 2002 and 2001 were primarily from the proceeds from the exercise of options
and issuance of shares.

     We believe that our existing cash equivalents and marketable securities
will be sufficient to meet our anticipated cash needs for working capital and
capital expenditures for at least the next 12 months. Thereafter, if we do not
have available sufficient cash to finance our operations, we may be required to
obtain additional debt or equity financing. We cannot be certain that we will be
able to obtain, if required, additional financing on acceptable terms, or at
all.

FACTORS AFFECTING FUTURE OPERATING RESULTS

     This Form 10-Q contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements include the ability to attract
customers for Precise's products, ability to execute as designed, acceptance of
Precise's products in the market place, ability to manage existing and future
strategic relationships, ability to successfully integrate the operations of
acquired companies, as well as statements regarding the financial performance,
strategy and plans of Precise. Precise's actual experience may differ materially
from those discussed in the forward-looking statements. Factors that might cause
such a difference include the size of the market; timing and acceptance of
Precise's products in the market place; the future growth and acceptance of
Precise's products in the market place; Precise's ability to predict and respond
to market developments; the development, expansion and training of Precise's
sales force; risks associated with management of growth; risks associated with
existing and future strategic relationships and acquisitions; Precise being held
liable for defects or errors in its products; political, economic and business
fluctuations in the United States, Israel and Precise's international markets;
as well as risks of downturns in economic conditions generally or as a result of
recent events, and in the information technology and software industries
specifically; and risks associated with competition, and competitive pricing
pressures. For a more detailed description of the risk factors associated with
Precise, please refer to Precise's Annual Report on Form 10-K filed with the
Securities and Exchange Commission.

ITEM 3.  QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

     We own financial instruments as part of our investment portfolio that are
sensitive to market risks. The investment portfolio is used to preserve our
capital until it is required to fund operations, including research and
development activities. None of these market-risk sensitive instruments are held
for trading purposes. We do not own derivative financial instruments in our
investment portfolio. The investment portfolio contains instruments that are
subject to the risk of a decline in interest rates. Our investment portfolio
includes debt instruments that are United States government obligations. These
investments are subject to interest rate risk, and could decline in value if
interest rates fluctuate.

     We do not engage in currency hedging activities and hold no foreign
currency related derivative instruments that would subject our financial
condition or results of operations to risks associated with foreign currency
exchange rate fluctuations. We do, however, incur a portion of our expenditures
in foreign currencies, such as NIS, Euro and British pound sterling, that could
cause our results of operations to fluctuate.

ITEM 4.   CONTROLS AND PROCEDURES

    Within the 90 days prior to the date of this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Rule 13a-14 under the Securities
Exchange Act of 1934, as amended. Based upon that evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting them to
material information relating to the Company required to be included in the
Company's periodic SEC filings. There have been no significant changes in the
Company's internal controls or in other factors that could significantly affect
these controls subsequent to the date of that evaluation and no corrective
actions with regard to the significant deficiencies and material weaknesses.

                                       19
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Precise is not a party to any material pending legal proceedings, other
than ordinary routine litigation incidental to its business.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     a) Exhibits:

        10.1      Employment Agreement between Precise Software Solutions, Inc.
                  and Aki Ratner dated August 1, 2002
        10.2      Employment Agreement between Precise Software Solutions LTD
                  and Aki Ratner dated August 1, 2002
        10.3      Employment Agreement between Precise Software Solutions, Inc.
                  and Marc J. Venator dated September 3, 2002
        99.1      Certification of Principal Executive Officer
        99.2      Certification of Principal Financial Officer

     b) Precise did not file any current reports on Form 8-K during the three
        month period ended September 30, 2002.






                                       20
<PAGE>

                                   SIGNATURES

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


                                  PRECISE SOFTWARE SOLUTIONS LTD.


Date  11/14/02                By   /S/ Shimon Alon
                                  --------------------------------------------
                                  Shimon Alon, Chief Executive Officer

Date  11/14/02                By   /S/ Marc J. Venator
                                  --------------------------------------------
                                  Marc J. Venator, Chief Financial Officer

Date  11/14/02                By   /S/ Richard L. Forcier
                                  --------------------------------------------
                                  Richard L. Forcier, Chief Accounting Officer

















                                       21
<PAGE>

                                 CERTIFICATIONS

I, Shimon Alon, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of September 30, 2002;

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

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

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

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

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

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

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

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

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

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


 /S/ Shimon Alon                        Date: November 14, 2002
-----------------------------
Shimon Alon,
Chief Executive Officer

                                       22
<PAGE>

                                 CERTIFICATIONS

I, Marc Venator, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of September 30, 2002;

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

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

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

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

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

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

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

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

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

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


/S/ Marc J. Venator                        Date: November 14, 2002
---------------------------
Marc J. Venator,
Chief Financial Officer

                                       23