SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-K/A

                         (AMENDMENT NO. 1 TO FORM 10-K)
                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTIONS 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
(Mark One)

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

For the fiscal year ended December 31, 2001
                          -----------------
                                         OR

[_]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE  ACT  OF  1934  For  the  transition  period  from  __________  to
     __________

                         Commission File Number 0-23611

                                DSET CORPORATION
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


         New Jersey                                     22-3000022
-------------------------------              ----------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
 Incorporation or Organization)

1160 U. S. Highway 22, Bridgewater, New Jersey                        08807
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                             (Zip Code)

Registrant's telephone number, including area code (908) 526-7500
                                                   -----------------------------
Securities registered pursuant to Section 12(b) of the Act:

          Title of each class          Name of Each Exchange on Which Registered
----------------------------------     -----------------------------------------
                 None                             Not applicable

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

                           Common Stock, no par value
-------------------------------------------------------------------------------
                                (Title of Class)


--------------------------------------------------------------------------------
                                (Title of Class)


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

Yes:             X                       No:
            -----------                     -----------

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-K/A or any  amendment to
this Form 10-K/A. [_]

     State  the  aggregate  market  value of the  voting  common  stock  held by
non-affiliates of the registrant: $1,656,698 at April 23, 2002 based on the last
sales price on that date.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of April 23, 2002.

        Class                                        Number of Shares
        -----                                        ----------------
        Common Stock, no par value                       5,082,402



<PAGE>

                                EXPLANATORY NOTE

     This  Amendment  No. 1 on Form 10-K/A amends the Annual Report on Form 10-K
of DSET  Corporation  (the  "Company,"  "DSET,"  "we" or "us"),  filed  with the
Securities  and Exchange  Commission on April 1, 2002, for the fiscal year ended
December 31, 2001. This Form 10-K/A is being filed solely to add the information
required  by Part III (Items 10, 11, 12 and 13) of Form 10-K.  Unless  otherwise
indicated,  all per share  amounts  set forth in this Form  10-K/A  reflect  the
one-for-four reverse stock split  capitalization  effected by us as of the close
of business on August 21, 2001.


<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

Board of Directors

     We  currently  have seven  directors.  As set forth in our  certificate  of
incorporation,  the terms of office of the members of the board of directors are
divided into three  classes:  Class I, whose term will expire at the 2002 Annual
Meeting of  shareholders;  Class II,  whose term will  expire at the 2003 Annual
Meeting  of  shareholders;  and Class III,  whose  term will  expire at the 2004
Annual Meeting of shareholders.  The current Class I directors are Arun Inam and
Carl Pavarini, the current Class II directors are C. Daniel Yost and Binay Sugla
and the  current  Class III  directors  are  William P.  McHale,  Jr.,  Jacob J.
Goldberg  and Andrew D.  Lipman.  At each annual  meeting of  shareholders,  the
successors  to  directors  whose terms then expire will be elected to serve from
the time of election and qualification  until the third annual meeting following
election.  Our bylaws  permit our board of directors to increase or decrease the
size of our board of directors.  Any additional  directorships resulting from an
increase in the number of directors will be distributed  among the three classes
so that,  as nearly as  possible,  each class will  consist of  one-third of the
total number of  directors.  This  classification  of the board of directors may
have the effect of delaying or  preventing  changes in control or  management of
DSET.

         The current composition of our board of directors is as follows:

<TABLE>
<CAPTION>

                                               Served as a                       Position(s) with
Name                                 Age     Director Since                        the Company
----                                 ---    ----------------                      --------------

<S>                                  <C>          <C>                   <C>
William P. McHale, Jr...........     53           1997                  Chief Executive Officer, Chairman of
                                                                         the Board and  Class III Director

Jacob J. Goldberg.............       55           1999                          Class III Director

C. Daniel Yost................       53           1999                          Class II Director

Andrew D. Lipman..............       50           1999                          Class III Director

Binay Sugla, Ph.D.............       42           2001                   President and Class II Director

Arun Inam.....................       39           2002                           Class I Director

Carl Pavarini.................       53           2002                           Class I Director
</TABLE>


     The principal  occupations and business  experience,  for at least the past
five years, of each above-named individual is as follows:

     Mr.  McHale  joined DSET in January 1997 as President  and Chief  Operating
Officer and was elected to our board of directors in January 1997. In July 1997,
he became Chief Executive Officer and in June 2000 became Chairman of the Board.
Prior to joining DSET,  Mr. McHale was Vice  President of Sales and Marketing at
F3 Software  Corporation  from January 1995 to December 1996.

                                      -2-
<PAGE>

From  February  1991 to December  1994,  Mr. McHale owned and operated a private
firm where he periodically  provided senior  management or consulting  services.
Mr.  McHale  also served as  President  and Chief  Executive  Officer of each of
Mitchell  Management  Systems from November 1989 to January 1991,  and Component
Software Corporation from July 1992 to July 1994. Prior to that, Mr. McHale held
various sales and  marketing  positions at IBM,  Wang  Laboratories  and Digital
Equipment Corporation.

     Mr. Goldberg has been a director of DSET since March 1999. From August 1997
until his retirement in March 2000, Mr.  Goldberg served as President of Telecom
Industry  Services for Bell  Atlantic.  From  January  1994 to August 1997,  Mr.
Goldberg  served as Vice  President  of Wholesale  Markets for NYNEX  overseeing
marketing,  sales and customer service provided to NYNEX's wholesale  customers.
Prior to that, from 1989 to December 1993, Mr. Goldberg served as Vice President
of Network  Interconnection  Marketing and Sales and Managing Director of access
markets at NYNEX.  Mr.  Goldberg serves on the board of directors of a number of
privately held companies.

     Mr. Yost has been a director  of DSET since  September  1999.  Mr. Yost has
over 26 years  of  experience  in  telecommunications  and  business.  Mr.  Yost
currently  sits on the board of  directors  of ADC  Telecommunications  Inc.,  a
publicly  traded global  supplier of  transmission  and  networking  systems for
telecommunications  networks, Redstone Telecom, a publicly traded United Kingdom
telecommunications  service,  and Ace  Cash  Express  Inc.,  a  publicly  traded
provider of retail  financial  services.  Mr. Yost has served as  President  and
Chief Operating Officer of Allegiance Telecom, a publicly traded company,  since
February  1998.  He was  elected to  Allegiance  Telecom's  board in March 1998.
Before joining Allegiance Telecom, from July 1997 to February 1998, he served as
President and Chief Operating Officer at NETCOM On-Line Communication  Services,
Inc.,  a leading  Internet  service  provider.  Mr. Yost  managed all aspects of
domestic  operations,   including  development  and  implementation  of  overall
strategic  direction.  Prior to that, from April 1994 to July 1997, Mr. Yost was
President of the Southwest region of AT&T Wireless  Services,  Inc. Mr. Yost has
also served as President of McCaw Cellular  Communications/LIN  Broadcasting  in
the Southwest region and was President, General Manager, and founder of MetroCel
Cellular Telephone Company.

     Mr. Lipman has been a director of DSET since  November  1999. Mr. Lipman is
currently  the Vice  Chairman of the  Washington  D.C. law firm  Swidler  Berlin
Shereff  Friedman,  LLP, and a Senior  Partner in the firm's  Telecommunications
Group. Mr. Lipman has over twenty years of experience in the  telecommunications
industry and has advised various Internet,  technology,  and  telecommunications
companies establishing  operations in Europe and Asia. Mr. Lipman also served as
Vice President of legal and regulatory  affairs at  Metropolitan  Fiber Systems.
Mr.  Lipman  serves on the  board of  directors  of  several  public  companies,
including  NuSkin  International,  a creator and  distributor  of personal  care
products,  The Management  Network Group, Inc., a leading provider of consulting
services to the global telecommunications industry, and NHC Communications Inc.,
a leading manufacturer of physical-layer high-speed Switched Accessed Solutions.

     Dr. Binay Sugla has been a director of DSET since January  2002.  Dr. Sugla
was the president,  chief executive  officer and a director of ISPsoft Inc. from
its  inception  in April 1999 until the merger of ISPsoft  with and into DSET in
January  2002.  Prior to founding  ISPsoft,  Dr. Sugla was a Director of Network
Services and Management at Bell Laboratories.  During a fifteen year career with
Bell Labs which started in 1985,  Dr. Sugla created  numerous  provisioning  and
similar  technologies,  including an Internet  protocol  management  program;  a
number of these technologies

                                      -3-
<PAGE>

have been  deployed to carriers.  Dr. Sugla  received the Bell Labs  President's
Award for Product Development.  Dr. Sugla received his Ph.D. from the University
of Massachusetts at Amherst in 1985 and received a Bachelor of Technology degree
from IIT Kanpur in 1981.

     Arun Inam has been a director  of DSET since  January  2002.  Dr. Inam is a
Managing Director at Signal Lake Venture Fund, which he joined in February 2001.
Prior to his  tenure at Signal  Lake,  Dr.  Inam was Vice  President  for Global
Strategy & New Ventures at Motorola,  where he reported to the  President of the
commercial,  government,  and  industrial  solutions  sector.  Prior to  joining
Motorola in 1999, Dr. Inam spent six years as a senior management  consultant at
Monitor  Company and Braxton  Associates.  From 1985 to 1994, Dr. Inam conducted
and managed research in high-speed electronics and optics at Bell Communications
Research  (Bellcore).  Dr.  Inam holds a Ph.D.  in  physics,  and has studied at
Rutgers, Carnegie Mellon, the University of Paris and at the Indian Institute of
Technology.

     Carl Pavarini has been a director of DSET since January 2002. Dr.  Pavarini
is a professor at Rensselaer Polytechnic  Institute's Lally School of Management
and  Technology  and  visiting  executive  and adjunct  professor at the Stevens
Institute of  Technology  School of  Engineering.  He has also taught in the MBA
program  at the  Columbia  University  Graduate  School  of  Business.  Prior to
becoming a professor, Dr. Pavarini worked at Lucent Technologies and AT&T, where
he worked for over fifteen years until his retirement in 1999. During his tenure
at Lucent and AT&T, Dr. Pavarini was a corporate officer and held responsibility
for a number of product  divisions.  Dr. Pavarini also worked for over ten years
in research and engineering development at AT&T Bell. Dr. Pavarini holds a Ph.D.
in systems  engineering from Rensselaer  Polytechnic  Institute and has attended
the  MIT  Sloan  Program  for  Senior  Managers  and  the  INSEAD  International
Management Program.

     None of our directors is related to any other  director or to any executive
officer or key employee of the Company.

Executive Officers

     The following table identifies our current executive officers:

                               Capacities in                    In Current
Name                     Age   Which Served                 Position(s) Since
----                     ---   -------------                -----------------

William P. McHale, Jr...  53   Chief Executive Officer and      July 1997
                               Chairman of the Board

Binay Sugla, Ph.D.......  42   President                        January 2002

Bruce M. Crowell(1).....  47   Vice President, Chief            August 1999
                               Financial Officer and
                               Secretary

Jeffrey S. Gill (2).....  35   Vice President, Professional     July 2000
                               Services

                                      -4-
<PAGE>


(1)  Mr.  Crowell  joined  DSET in August  1999,  and  currently  serves as Vice
     President and Chief Financial  Officer.  Prior to joining DSET, Mr. Crowell
     served as a Vice President and Chief Financial  Officer of EPL Technologies
     from January 1998 to July 1999. Prior to that, from January 1994 to January
     1998, Mr. Crowell served as Vice President and Chief Financial  Officer for
     Datron Inc., a firm specializing in aerospace and defense technologies. Mr.
     Crowell has 25 years of corporate financial  experience,  including serving
     as the  Chief  Financial  Officer  of two  publicly-traded  companies.  Mr.
     Crowell  has also served in various  financial  capacities  with  companies
     specializing in systems  integration and  electronics,  including  software
     applications for industries such as telecommunications and aerospace.

(2)  Mr. Gill joined DSET in July 2000 as Vice President, Professional Services.
     From  February  2000 to July 2000,  Mr. Gill  served as Business  Unit Vice
     President  of Cap Gemini  Ernst & Young,  managing  all aspects of software
     development and  professional  services,  inclusive of new business growth,
     for a Fortune 10 telecommunications  firm. From June 1998 to February 2000,
     Mr. Gill served as the  Program  Director of Cap Gemini  Telecommunications
     where  he  assumed   responsibility   for  the   management   of   business
     requirements,  software  development  and quality  assurance as well as all
     relevant financial corporate commitments. From April 1997 to June 1998, Mr.
     Gill served as  Engagement/Program  Manager of Beechwood Data Systems where
     he was accountable for all aspects of customer  satisfaction as well as P&L
     commitments to the  corporation.  From October 1995 to April 1997, Mr. Gill
     served as Senior Project Manager of IMI Systems where he performed  project
     management   duties   for  an   enterprise   wide  MRP   deployment   at  a
     telecommunications  manufacturing  firm.  Prior to that Mr.  Gill served in
     various  capacities  at AT&T  where he had  increasing  project  management
     responsibilities   in  customer   relationship   management,   billing  and
     provisioning applications.

     Our executive  officers are elected  annually by our board of directors and
serve  until  their  successors  are duly  elected  and  qualified.  None of our
executive  officers is related to any other executive officer or to any director
of the Company.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934, as amended,  requires
our directors,  officers and  shareholders who beneficially own more than 10% of
any class of our  equity  securities  registered  pursuant  to Section 12 of the
Exchange  Act to file  initial  reports of  ownership  and reports of changes in
ownership with respect to our equity securities with the Securities and Exchange
Commission.  All  reporting  persons are  required by  Securities  and  Exchange
Commission  regulation  to  furnish  us with  copies  of all  reports  that such
reporting persons file with the Securities and Exchange  Commission  pursuant to
Section 16(a).

     Based  solely on our review of the copies of such forms  received by us and
upon written  representations of our reporting persons received by us, each such
reporting person has filed all of their  respective  reports pursuant to Section
16(a) on a timely basis.

                                      -5-
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION.

Compensation of Directors

     Directors who are not  employees or affiliates of DSET or its  subsidiaries
(an  "Outside  Director"),  who  currently  consist  of  Messrs.  Lipman,  Yost,
Goldberg,  Inam and Pavarini,  receive an annual stipend of $10,000 per year and
$2,000 for each meeting of the board of directors or committee  meeting attended
in person.  In addition,  each director receives $2,000 for each meeting held by
conference  call which lasts two hours or more and $1,000 for each  meeting held
by conference call under two hours in length.  Beginning with the Annual Meeting
of shareholders in 2001, effective with each re-election of an Outside Director,
each such Outside  Director  automatically  shall be granted options to purchase
5,000 shares of our common stock,  at an exercise price equal to the fair market
value of our  common  stock  on the date of  grant,  vesting  over a  three-year
period.  All directors are  reimbursed  for  reasonable  expenses  incurred as a
result of their attendance at board meetings.

     In January  2001,  Mr.  Goldberg  executed a consulting  agreement  with us
pursuant to which he received $56,000 in 2001 in connection with the performance
of certain  consulting  services.  Such services  included,  among other things,
attending  industry shows and  conferences,  calling on customer  accounts,  and
assisting  with  marketing  and  strategic  planning,  all on behalf of DSET. In
January 2002, we renewed such arrangement with Mr. Goldberg for fiscal year 2002
on the same terms.

     Pursuant  to our 1998  Stock  Plan,  we granted  to Mr.  Lipman  options to
purchase  6,250 shares of our common stock on November 15, 1999,  at an exercise
price of $69.50 per share.  The options  vest to the extent of  one-third of the
shares on each of November 15, 2000,  2001 and 2002.  Pursuant to our 1998 Stock
Plan,  we granted to Mr. Lipman  options to purchase  1,250 shares of our common
stock on August 9, 2000, at an exercise price of $101.50 per share.  The options
vest to the extent of  one-third  of the shares on each of August 9, 2001,  2002
and 2003.  Pursuant to our 1998 Stock Plan, we granted to Mr. Lipman  options to
purchase 1,250 shares of our common stock on June 13, 2001, at an exercise price
of $3.44 per share. The options vest to the extent of one-third of the shares on
each of June 13,  2002,  2003 and 2004.  Pursuant  to our 1998  Stock  Plan,  we
granted to Mr.  Lipman  options to purchase  5,625 shares of our common stock on
June 13, 2001, at an exercise price of $3.44 per share.  The options vest to the
extent  of  one-third  of the  shares on June 13,  2002 and 8 1/3% each  quarter
thereafter. Pursuant to our 1998 Stock Plan, we granted to Mr. Lipman options to
purchase  12,500  shares of our common stock on February 1, 2002, at an exercise
price of $0.98 per share.  The options  vest to the extent of  one-third  of the
shares on February 1, 2003 and 8 1/3% each quarter thereafter.

     Pursuant to our 1998 Stock Plan, we granted to Mr. Yost options to purchase
6,250 shares of our common stock on September 14, 1999, at an exercise  price of
$49.12 per share.  The options  vest to the extent of one-third of the shares on
each of September 14, 2000,  2001 and 2002.  Pursuant to our 1998 Stock Plan, we
granted to Mr. Yost  options to  purchase  1,250  shares of our common  stock on
August 9, 2000, at an exercise  price of $101.50 per share.  The options vest to
the extent of one-third of the shares on each of August 9, 2001,  2002 and 2003.
Pursuant  to our 1998 Stock  Plan,  we granted to Mr.  Yost  options to purchase
1,250 shares of our common stock on June 13,


                                      -6-
<PAGE>

2001, at an exercise price of $3.44 per share. The options vest to the extent of
one-third of the shares on each of June 13, 2002, 2003 and 2004. Pursuant to our
1998 Stock Plan, we granted to Mr. Yost options to purchase  5,625 shares of our
common  stock on June 13,  2001,  at an exercise  price of $3.44 per share.  The
options  vest to the extent of  one-third  of the shares on June 13,  2002 and 8
1/3% each quarter thereafter. Pursuant to our 1998 Stock Plan, we granted to Mr.
Yost options to purchase  12,500 shares of our common stock on February 1, 2002,
at an  exercise  price of $0.98 per  share.  The  options  vest to the extent of
one-third of the shares on February 1, 2003 and 8 1/3% each quarter thereafter.

     Pursuant  to our 1998 Stock  Plan,  we granted to Mr.  Goldberg  options to
purchase  6,250 shares of common stock on March 9, 1999, at an exercise price of
$43.00 per share.  The options  vest to the extent of one-third of the shares on
each of March 9,  2000,  2001 and 2002.  Pursuant  to our 1998  Stock  Plan,  we
granted to Mr. Goldberg  options to purchase 1,250 shares of our common stock on
August 9, 2000, at an exercise  price of $101.50 per share.  The options vest to
the extent of one-third of the shares on each of August 9, 2001,  2002 and 2003.
Pursuant to our 1998 Stock Plan, we granted to Mr. Goldberg  options to purchase
1,250 shares of our common stock on June 13, 2001, at an exercise price of $3.44
per share.  The options vest to the extent of one-third of the shares on each of
June 13, 2002, 2003 and 2004. Pursuant to our 1998 Stock Plan, we granted to Mr.
Goldberg  options to purchase 5,625 shares of our common stock on June 13, 2001,
at an  exercise  price of $3.44 per  share.  The  options  vest to the extent of
one-third  of the shares on June 13,  2002 and 8 1/3% each  quarter  thereafter.
Pursuant to our 1998 Stock Plan, we granted to Mr. Goldberg  options to purchase
12,500 shares of our common stock on February 1, 2002,  at an exercise  price of
$0.98 per share.  The options  vest to the extent of  one-third of the shares on
February 1, 2003 and 8 1/3% of each quarter thereafter.

     Pursuant to our 1998 Stock Plan, we granted to Mr. Inam options to purchase
12,500 shares of our common stock on February 1, 2002,  at an exercise  price of
$0.98 per share.  The options  vest to the extent of  one-third of the shares on
February 1, 2003 and 8 1/3% each quarter thereafter.

     Pursuant  to our 1998 Stock  Plan,  we granted to Mr.  Pavarini  options to
purchase  12,500  shares of our common stock on February 1, 2002, at an exercise
price of $0.98 per share.  The options  vest to the extent of  one-third  of the
shares on February 1, 2003 and 8 1/3% each quarter thereafter.


                                      -7-
<PAGE>


SUMMARY OF COMPENSATION IN FISCAL 2001, 2000, AND 1999

     The following Summary Compensation Table sets forth information  concerning
compensation for services in all capacities  awarded to or earned by each person
who served as our Chief  Executive  Officer at any time  during 2001 and each of
our other executive  officers whose aggregate  earnings exceeded $100,000 at the
end of 2001  (referred  to herein as, the "Named  Executives")  during the years
ended December 31, 2001, 2000, and 1999.


<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------------------------------------------
                                                                                             Long-Term
                                                           Annual Compensation             Compensation
                                                                                               Awards
                                                   ---------------------------------------------------------
                                                                                             Securities
                                                                                            Underlying            All Other
                                                         Salary             Bonus             Options            Compensation
    Name and Principal Position          Year             ($)                ($)                (#)                  ($)
                (a)                       (b)             (c)                (d)                (g)                  (i)
------------------------------------- ------------ ------------------- ---------------- -------------------- ---------------------

<S>                                      <C>             <C>               <C>                 <C>               <C>
 William P. McHale, Jr.(1)....           2001            255,445           169,280             50,000            1,205(2)
     President, Chief Executive          2000            249,231            83,750             18,750            7,542(3)
     Officer and Chairman of the         1999            196,835           140,000                 --            7,419(4)
     Board

 Bruce M. Crowell(5)..........           2001            218,462            51,875             15,000            6,988(6)
     Vice President, Chief               2000            199,808            53,083(7)           5,375            6,870(8)
     Financial Officer and Secretary     1999             73,077            18,892             19,500            4,888(9)

 Jeffrey S. Gill(10)..........           2001            196,154            39,000             10,000             367(11)
     Vice President, Professional        2000             80,308            32,500             14,000             126(12)
     Services

 Jimmy C. Jobe(13)............           2001            111,538            17,000             12,500         130,272(14)
     Senior Vice President, Product      2000            180,000            15,000                 --             558(15)
     Development and Product
     Management

 Paul R. Smith(16) ...........           2001             33,924                --                 --         109,410(17)
     Senior Vice President,              2000            180,000            30,833                 --          13,056(18)
     Strategic Planning and Product      1999            188,462             6,000              6,250          21,378(19)
     Development
</TABLE>
-----------

(1)  Mr. McHale was elected Chairman of the Board in June 2000.

(2)  Includes  compensation  relating  to life  insurance  premiums  paid on his
     behalf of $1,205.

                                      -8-
<PAGE>


(3)  Includes  contributions  by the Company under the 401(k) Plan of $6,300 and
     compensation  relating  to life  insurance  premiums  paid on his behalf of
     $1,242.

(4)  Includes  contributions  by the Company under the 401(k) Plan of $6,000 and
     compensation  relating  to life  insurance  premiums  paid on his behalf of
     $1,419.

(5)  Mr.  Crowell  joined the  Company in August 1999 as Vice  President,  Chief
     Financial Officer and Secretary.

(6)  Includes  contributions  by  DSET  under  the  401(k)  Plan of  $6,300  and
     compensation  relating  to life  insurance  premiums  paid on his behalf of
     $688.

(7)  Includes a relocation allowance of $29,646.

(8)  Includes  contributions by the Company under the 401(k) Plan of $6,240, and
     compensation  relating  to life  insurance  premiums  paid on his behalf of
     $630.

(9)  Includes  contributions  by the Company under the 401(k) Plan of $4,690 and
     compensation  relating  to life  insurance  premiums  paid on his behalf of
     $198.

(10) Mr. Gill joined the  Company in July 2000 as Vice  President,  Professional
     Services.

(11) Includes  compensation  relating  to life  insurance  premiums  paid on his
     behalf of $367.

(12) Includes  compensation  relating  to life  insurance  premiums  paid on his
     behalf of $126.

(13) Mr. Jobe left DSET effective July 13, 2001.

(14) Includes compensation related to severance and accrued vacation payments of
     $129,904 and life insurance premiums paid on his behalf of $368.

(15) Includes compensation related to life insurance premiums paid on his behalf
     of $558.

(16) Mr. P. Smith resigned from DSET effective March 1, 2001.

(17) Includes compensation related to severance and accrued vacation payments of
     $108,027 and an automobile allowance of $1,383.

(18) Includes  contributions  by  DSET  under  the  401(k)  Plan of  $6,300,  an
     automobile allowance of $5,900 and compensation  relating to life insurance
     premiums paid on his behalf of $856.

(19) Includes contributions by DSET under the 401(k) Plan of $6,000, commissions
     of $7,779, an automobile  allowance of $6,250 and compensation  relating to
     life insurance premiums paid on his behalf of $1,349.

                                      -9-

<PAGE>


OPTION GRANTS IN 2001

     The following table sets forth information  concerning individual grants of
stock  options  made  pursuant to our 1998 Stock Plan during 2001 to each of the
Named Executives. We have never granted any stock appreciation rights.

<TABLE>
<CAPTION>


                        OPTION GRANTS IN LAST FISCAL YEAR
--------------------------------------------------------------------------------------------------------------------------
                                                    Individual Grants
--------------------------------------------------------------------------------------------------------------------------
                                                                                             Potential Realizable
                                                                                                    Value at
                                                Percent of                                    Assumed Annual Rates
                                 Number of        Total                                             of Stock
                                Securities        Options                                    Price Appreciation for
                                Underlying      Granted to     Exercise                              Option
                                  Options        Employees     or Base                              Term (2)
                                  Granted       in Fiscal       Price                      ---------------------------
         Name                     (#)(1)          Year(1)       ($/Sh)     Expiration Date     5%($)         10%($)
         (a)                        (b)            (c)           (d)            (e)             (f)            (g)
--------------------------- ---------------- -------------- ------------ ---------------- ----------- ----------------
<S>                              <C>             <C>            <C>           <C>             <C>           <C>
William P. McHale, Jr......      50,000          23.23%         6.752         3/11/11         212,315       538,047

Bruce M. Crowell...........      15,000           6.97%          8.50         1/11/11          80,184       203,202

Jeffrey S. Gill............      10,000           4.65%          8.50         1/11/11          53,456       135,468

Jimmy C. Jobe..............      12,500           5.81%          8.50         1/11/11          66,820       169,335

Paul R. Smith..............          --             --             --              --              --            --
</TABLE>
-----------

(1)  Based on an  aggregate  of 215,253  options  granted to  employees in 2001,
     including options granted to the Named Executives.

(2)  Based on a grant date fair market  value  equal to the grant date  exercise
     price per share of the applicable  option for each of the Named  Executives
     and assumes no adjustments to the grant date exercise price.

                                      -10-

<PAGE>


Aggregated Option Exercises in 2001 and Year End Option Values

         The following table sets forth information concerning each exercise of
options during 2001 by each of the Named Executives and the year end value of
unexercised in the money options.

<TABLE>
<CAPTION>


                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES
---------------------------------------------------------------------------------------------
                                                               Number of
                                                               Securities        Value of
                                                               Underlying       Unexercised
                                                               Unexercised      In-the-Money
                                                                Options at       Options at
                                                                 Fiscal            Fiscal
                                 Shares                         Year-End          Year-End
                               Acquired on       Value            (#)              ($)(1)
                                Exercise       Realized        Exercisable/      Exercisable/
               Name                (#)            ($)         Unexercisable     Unexercisable
               (a)                 (b)            (c)              (d)               (e)
---------------------------  -------------- --------------  ----------------  ----------------
<S>                                 <C>           <C>        <C>                    <C>
William P. McHale, Jr......         --            --          72,406/81,250         $0/$0
Bruce M. Crowell...........         --            --           9,748/30,127         $0/$0
Jeffrey S. Gill............         --            --           3,500/20,500         $0/$0
Jimmy C. Jobe..............         --            --                --               --
Paul R. Smith..............         --            --                --               --
</TABLE>
-----------

(1)  Based on a year-end fair market value of the underlying securities equal to
     $1.15 less the exercise  price payable for such shares,  which  calculation
     results in a negative value.


                                      -11-
<PAGE>


EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS

     William P. McHale,  Jr., Chief Executive Officer and Chairman of the Board,
entered into an employment  agreement  with us in November 1998. He is currently
entitled to receive an annual  salary in 2002 of $223,125 and is eligible for an
annual  bonus of up to  $175,875,  the amount and payment of which is within the
discretion  of the  Compensation  Committee.  We have also  agreed,  subject  to
certain restrictions, to pay Mr. McHale twelve months salary continuation in the
event that Mr. McHale is terminated without cause or upon a change in control of
DSET. We have also agreed that, under certain circumstances,  stock options held
by Mr. McHale shall  accelerate  in the event Mr.  McHale is terminated  without
cause in  connection  with a change in  control  of DSET.  See Item 13  "Certain
Relationships and Related  Transactions"  for a loan transaction  between us and
Mr. McHale.

     Binay Sugla,  President,  entered into an employment agreement with us upon
consummation  of the merger of ISPsoft Inc. with and into us in January 2002. He
currently  is  entitled to receive an annual  salary in 2002 of $207,000  and is
eligible for an annual bonus of up to $155,250,  the amount and payment of which
is within the discretion of the board of directors or Compensation Committee. We
have also  agreed,  subject to certain  restrictions,  to pay Mr.  Sugla  twelve
months salary  continuation  in the event that Mr. Sugla is  terminated  without
cause or upon a change in  control  of DSET.  We have also  agreed  that,  under
certain  circumstances,  stock options held by Mr. Sugla shall accelerate in the
event Mr.  Sugla is  terminated  without  cause in  connection  with a change in
control of DSET.

     Bruce M. Crowell,  Vice President,  Chief Financial  Officer and Secretary,
has been in this  position with us since August 1999.  Mr.  Crowell is currently
entitled to receive an annual  salary in 2002 of $190,000 and is eligible for an
annual  bonus  of up to  $57,500.  We  have  also  agreed,  subject  to  certain
restrictions, to pay Mr. Crowell nine months salary continuation and benefits in
the event  that Mr.  Crowell  is  terminated  without  cause or upon a change in
control of DSET. We have also agreed that,  under certain  circumstances,  stock
options  held by Mr.  Crowell  shall  accelerate  in the  event Mr.  Crowell  is
terminated without cause in connection with a change in control of DSET.

     Jeffrey S. Gill,  Vice President,  Professional  Services joined us in July
2000.  Mr. Gill is  currently  entitled  to receive an annual  salary in 2002 of
$180,000  and is eligible  for an annual  bonus of up to  $36,000.  We have also
agreed,  subject  to certain  restrictions,  to pay Mr.  Gill six months  salary
continuation and benefits in the event that Mr. Gill is terminated without cause
or upon a change in control of DSET.  We have also agreed  that,  under  certain
circumstances,  stock options held by Mr. Gill shall accelerate in the event Mr.
Gill is terminated without cause in connection with a change in control of DSET.

     We have also  agreed,  subject  to  certain  restrictions  and other  terms
specific to each agreement, to pay certain members of our management team salary
continuation  in an amount  ranging from three to six months and benefits in the
event  that any one of them are  terminated  without  cause or upon a change  in
control of DSET. We have also agreed that,  under certain  circumstances,  stock
options held by certain members of our management  team shall  accelerate in the
event they are terminated  without cause in connection  with a change in control
of DSET.

     Each of our executive  officers has agreed to maintain the  confidentiality
of company  information  and, for a period of time following the  termination of
employment, not to solicit our

                                      -12-
<PAGE>

customers or employees.  In addition, Mr. McHale has agreed that during the term
of his  employment  and thereafter for a period of one year, he will not compete
with us in any state or territory of the United  States,  or any other  country,
where we do  business  by engaging  in any  capacity  in any  business  which is
competitive with our business. Mr. Sugla has agreed that until the expiration of
one year after the  termination  of his  employment,  he shall not,  directly or
indirectly,  engage in any business  enterprise or employment  which is directly
competitive with our products or services.

     We have  executed  indemnification  agreements  with each of our  executive
officers and directors  pursuant to which we have agreed to indemnify such party
to the full extent  permitted  by law,  subject to certain  exceptions,  if such
party becomes  subject to an action  because such party is a director,  officer,
employee, agent or fiduciary of DSET.

     We  generally  require our  employees to maintain  the  confidentiality  of
company information and to assign inventions to us.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     The Compensation Committee currently consists of Jacob J. Goldberg,  Andrew
D.  Lipman  and Carl  Pavarini.  From  January  1,  2001 to June 13,  2001,  the
Compensation  Committee  was  comprised of Jacob J. Goldberg and Bruce R. Evans,
when Mr. Lipman  replaced Mr. Evans who decided not to stand for  re-election at
the 2001 Annual Meeting of  shareholders.  On February 1, 2002, the Compensation
Committee was  reconstituted to include Messrs.  Goldberg,  Lipman and Pavarini.
There are no, and during 2001 there were no, Compensation Committee Interlocks.

     In December  1995, we sold an aggregate of 676,361  shares of capital stock
at an aggregate  purchase price of $10.0 million to Summit Ventures IV, L.P. and
Summit  Investors II, L.P.  (collectively,  "Summit").  In connection  with such
transaction,  Bruce R. Evans,  a general  partner of Summit,  was elected to our
board of directors as Summit's  designee.  In September  1996,  we,  pursuant to
certain  covenants  in the  transaction  documents,  issued  to  Summit,  for no
additional  consideration,  warrants (the "Summit Warrants") to purchase up to a
maximum of 185,331  shares of our common  stock.  The shares of our common stock
currently held by Summit  including the shares of our common stock issuable upon
the exercise of the Summit Warrants are entitled to certain demand and piggyback
registration  rights.  During 1999,  138,998  warrants were exercised,  of which
16,718  underlying  common  shares  were  purchased  by us for their  fair value
aggregating  approximately $303,000,  which were used to fund the exercise price
of these warrants.  During 2000, 46,333 warrants were exercised,  of which 4,204
underlying  common shares were purchased by us for their fair value  aggregating
approximately  $92,000,  which  were  used to fund the  exercise  price of these
warrants.  At December 31, 2000,  Summit no longer held any warrants to purchase
shares of our common stock.  All per share  amounts set forth in this  paragraph
are on a pre one-for-four reverse stock split basis.

     In January  2001,  Mr.  Goldberg  executed a consulting  agreement  with us
pursuant to which he received $56,000 in 2001 in connection with the performance
of certain  consulting  services.  Such services  included,  among other things,
attending  industry shows and  conferences,  calling on customer  accounts,  and
assisting with  marketing and strategic  planning,  all on behalf of DSET.  This

                                      -13-
<PAGE>

amount was in addition to his director compensation. In January 2002, we renewed
such arrangement with Mr. Goldberg for fiscal year 2002 on the same terms.


                                      -14-
<PAGE>



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     There were,  as of March 31, 2002,  approximately  79 holders of record and
approximately  3,500 beneficial holders of our common stock. The following table
sets forth certain  information,  as of March 31, 2002, with respect to holdings
of our common stock by (i) each person known by us to be the beneficial owner of
more than 5% of the total  number of shares of common  stock  outstanding  as of
such date,  based on currently  available  Schedules  13D and 13G filed with the
Securities  and Exchange  Commission,  (ii) each of our  directors and the Named
Executives, and (iii) all directors and officers as a group.

<TABLE>
<CAPTION>

                                                                    Amount and Nature of            Percent
Name and Address of Beneficial Owner(1)                           Beneficial Ownership(1)          of Class(2)
------------------------------------                              ----------------------           -----------
(i)  Certain Beneficial Owners:
<S>                                                                      <C>                          <C>
     SGM Capital Limited..................................               742,521(3)                   14.6%
        Guinness Flight House, P.O. Box 290
        Guernsey, GY13RP
     NV Partners II L.P...................................               737,134(4)                   14.5%
        c/o Stephen Socolof
        600 Mountain Avenue
        Murray Hill, NJ  07974
     Signal Lake Venture Fund, L.P........................               422,381(5)                    8.3%
        c/o Barton W. Stuck
        578 Post Road East
        Suite 667
        Westport, CT  06880
     FMR Corporation......................................                286,250                      5.6%
        82 Devonshire Street
        Boston, MA  02109-3614
     Martinson Family Foundation and Related Party........               260,400(6)                    5.1%
        1009 Lenox Drive
        Lawrenceville, NJ  08648

(ii) Directors and Named Executives:
     William P. McHale, Jr................................               121,017(7)                    2.3%
     Binay Sugla..........................................               363,335(8)                    7.0%
     Jacob J. Goldberg....................................                6,666(9)                      *
     C. Daniel Yost.......................................               4,582(10)                      *
     Andrew D. Lipman.....................................               4,582(11)                      *
     Arun Inam............................................                   --                         *
     Carl Pavarini........................................                   --                         *
     Bruce M. Crowell.....................................               40,628(12)                     *
     Jeffrey S. Gill......................................               8,491(13)                      *

(iii) All Directors and officers as a group
     (9 persons):......................................                 549,301(14)                   10.4%
</TABLE>
-----------

* Less than 1%

(1)  Except  as set  forth  in the  footnotes  to  this  table  and  subject  to
     applicable community property law, the persons named in the table have sole
     voting and investment power with respect to all shares.
                                      -15-
<PAGE>

(2)  Applicable  percentage  of ownership  for each holder is based on 5,082,402
     shares of our common stock  outstanding on March 31, 2002,  plus any common
     stock equivalents and presently  exercisable stock options or warrants held
     by each such holder, and options or warrants held by each such holder which
     will become exercisable within 60 days after March 31, 2002.

(3)  Includes  742,521  shares of common  stock  issued in  connection  with our
     merger with ISPsoft,  Inc.,  74,252 shares of which were  deposited with an
     escrow agent to secure certain indemnification obligations relating to such
     merger.

(4)  Includes  737,134  shares of common  stock  issued in  connection  with our
     merger with ISPsoft  Inc.,  69,088 shares of which were  deposited  with an
     escrow agent to secure certain indemnification obligations relating to such
     merger.

(5)  Includes  422,381  shares of common  stock  issued in  connection  with our
     merger with ISPsoft  Inc.,  34,531 shares of which were  deposited  with an
     escrow agent to secure certain indemnification obligations relating to such
     merger.

(6)  Includes  85,400  shares  of common  stock  held by John H.  Martinson  and
     175,000 shares of common stock held by the Martinson Family  Foundation for
     which Mr. Martinson serves as a trustee.

(7)  Includes 98,447 shares of common stock underlying  options which are or may
     be  exercisable  as of March 31, 2002 or 60 days after such date.  Includes
     4,002 shares held by Mr.  McHale's wife and 639 shares held by Mr. McHale's
     minor child.

(8)  Includes 43,603 shares of common stock underlying  options which are or may
     be  exercisable  as of March 31,  2002 or 60 days  after  such  date.  Also
     includes  115,504 shares of common stock issued  personally to Dr. Sugla in
     connection  with our merger with ISPsoft Inc.,  11,550 shares of which were
     deposited   with  an  escrow  agent  to  secure   certain   indemnification
     obligations  relating to such merger.  Also includes an additional  204,228
     shares of common stock issued to other  shareholders  which were  deposited
     with an escrow agent to secure certain indemnification obligations relating
     to such merger.  Pursuant to the terms of an escrow agreement dated January
     31, 2002, by and among DSET,  American  Stock  Transfer & Trust Company and
     Dr. Sugla, Dr. Sugla as  Indemnification  Representation,  has the right on
     behalf of the indemnifying shareholders,  in his sole discretion, to direct
     the  escrow  agent in  writing  as to the  exercise  of any  voting  rights
     pertaining to the shares held in escrow.

(9)  Includes 6,666 shares of common stock  underlying  options which are or may
     be exercisable as of March 31, 2002 or 60 days after such date.

(10) Includes 4,582 shares of common stock  underlying  options which are or may
     be exercisable as of March 31, 2002 or 60 days after such date.

(11) Includes 4,582 shares of common stock  underlying  options which are or may
     be exercisable as of March 31, 2002 or 60 days after such date.

(12) Includes 18,684 shares of common stock underlying  options which are or may
     be exercisable as of March 31, 2002 or 60 days after such date.

(13) Includes 7,666 shares of common stock  underlying  options which are or may
     be exercisable as of March 31, 2002 or sixty days after such date.

(14) See Notes 7 through 13.


                                      -16-
<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Bruce R. Evans was  originally  appointed  to our board of directors as the
designee of Summit Ventures IV, L.P. and Summit  Investors II, L.P. See Item 11.
"Executive   Compensation  -  Compensation   Committee  Interlocks  and  Insider
Participation."  Mr.  Evans  elected  not to stand for  re-election  at the 2001
Annual  Meeting of  shareholders.  For  information  relating to Mr.  Goldberg's
consulting  arrangement with us, please see Item 11.  "Executive  Compensation -
Compensation Committee Interlocks and Insider Participation."

     On  November  17,  1998 and on August  18,  1999,  we loaned  $150,000  and
$102,728,  respectively,  to William P. McHale, Jr., our Chief Executive Officer
and Chairman of the Board, on an unsecured basis. Such loans carry an adjustable
interest  rate based on the Merrill  Lynch  Institutional  Funds Rate (6.35% per
annum at December 31, 2000). In 2000, we extended three  additional loans to Mr.
McHale totaling $902,728 with a 6% interest rate per annum with one due November
2000,  one due May 2001 and one due October 2001.  As of December 31, 2000,  Mr.
McHale paid  $527,728  against  these loans  leaving an  outstanding  balance of
$627,728,  inclusive of the two loans  originating  in November  1998 and August
1999. On March 1, 2001, we and Mr.  McHale  entered into both a promissory  note
and a pledge and  security  agreement  in order to  consolidate  all of the then
outstanding  loans by us to Mr. McHale.  The promissory  note is secured through
the pledge and  security  agreement  which  includes  as security  Mr.  McHale's
residence in New Jersey,  options to purchase our capital  stock  granted to Mr.
McHale,  Mr.  McHale's 401k account held with us and the benefits of a severance
agreement  between us and Mr.  McHale.  Effective  October 1, 2001,  Mr.  McHale
entered into a promissory  note in the amount of $624,112  which  cancelled  the
previous March 1, 2001  promissory  note. The interest rate for this most recent
promissory note is based on the lower of the alternative Federal short-term rate
or the statutory Federal  short-term rate for the month in which payment is made
and there is a forty-one  month payment  schedule with a balloon  payment due at
the end of the term. Additionally,  we amended the pledge and security agreement
to reflect the terms of the new promissory note.

     Our board of  directors  has  adopted a policy  requiring  that any  future
transactions between us and our officers, directors,  principal shareholders and
their affiliates be on terms no less favorable to us than could be obtained from
unrelated third parties and that any such transactions be approved by a majority
of the disinterested members of our board of directors.


                                      -17-
<PAGE>




                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the  registrant  has duly caused  Amendment No. 1 to this
report to be signed on its behalf by the undersigned,  thereunto duly authorized
on April 30, 2002.

                            DSET CORPORATION


                            By: /s/ William P. McHale, Jr.
                               ----------------------------------------------
                               William P. McHale, Jr.
                               Chief Executive Officer

<PAGE>



     Pursuant to the  requirements  of the  Securities and Exchange Act of 1934,
this  Amendment  to the Annual  Report on Form 10-K has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>


                    Signature                                      Title                             Date
--------------------------------------------       -------------------------------------       ----------------

<S>                                                <C>                                          <C>
/s/ William P. McHale, Jr.                         Chief Executive Officer and Chairman         April 30, 2002
--------------------------------------------       of the Board of Directors (Principal
    William P. McHale, Jr.                         Executive Officer)

/s/ Binay Sugla                                    President and Member of the Board of         April 30, 2002
--------------------------------------------
     Binay Sugla                                   Directors

/s/ Bruce M. Crowell                               Chief Financial Officer (Principal           April 30, 2002
--------------------------------------------
    Bruce M. Crowell                               Financial and Accounting Officer)

/s/ Jacob J. Goldberg                              Director                                     April 30, 2002
--------------------------------------------
    Jacob J. Goldberg

/s/ Arun Inam                                      Director                                     April 30, 2002
--------------------------------------------
     Arun Inam

/s/ Andrew D. Lipman                               Director                                     April 30, 2002
--------------------------------------------
     Andrew D  Lipman

/s/ Carl Pavarini                                  Director                                     April 30, 2002
--------------------------------------------
     Carl Pavarini

/s/ C. Daniel Yost                                 Director                                     April 30, 2002
--------------------------------------------
    C. Daniel Yost
</TABLE>