SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                           --------------------------

                                   Form 10-K/A
                                (Amendment No. 1)

                        For Annual and Transition Reports
                     Pursuant to Sections 13 or 15(d) of the
                         Securities Exchange Act of 1934

[X]  Annual Report  pursuant to section 13 or 15(d) of the  Securities  Exchange
     Act of 1934

      For the year ended December 31, 2003

[_]  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: 000-26287

                               Axeda Systems Inc.
                               ------------------
             (Exact name of registrant as specified in its charter)

               Delaware                                      23-2763854
               --------                                      ----------
   (State or other jurisdiction of                        (I.R.S. Employer
    incorporation or organization)                      Identification Number)

                                 21 Oxford Road
                               Mansfield, MA 02048
                    (Address of Principal Executive Offices)
                           --------------------------

       Registrant's Telephone Number, Including Area Code: (508) 337-9200

        Securities registered pursuant to Section 12(b) of the Act: None.

                 Securities registered pursuant to Section 12(g)of the Act:
                     Common Stock, par value $.001 per share

Indicate by check mark whether the registrant (1) has filed all reports required
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  the  registrant's   knowledge,   in  the  definitive  proxy  statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

The aggregate  market value of such common stock held by  non-affiliates  of the
registrant,  based on the closing  price of such  shares on the NASDAQ  National
Market was approximately $25,072,838 as of June 30, 2003. Shares of common stock
held by each  executive  officer and  director  and each person  known to us who
beneficially owns 5% or more of our outstanding  common stock have been excluded
from this computation in that such persons may be deemed to be affiliates.  This
determination of affiliate status is not necessarily a conclusive  determination
for other purposes.

The number of shares of  registrant's  common stock  outstanding as of March 22,
2004 was 32,469,862.

                       DOCUMENTS INCORPORATED BY REFERENCE
None.

<PAGE>
                                Explanatory Note

      This Amendment No. 1 on Form 10-K/A (this "Amendment") amends Part III of
our Annual Report on Form 10-K for the year ended December 31, 2003, originally
filed on March 24, 2004 (the "Original Filing") in its entirety, to include the
information required by Items 10, 11, 12, 13 and 14 to Part III because our
proxy statement will not be filed within 120 days of the end of our year ended
December 31, 2003. In addition, in connection with the filing of this Amendment
and pursuant to the rules of the Securities and Exchange Commission, we are
including with this Amendment certain currently dated certifications as Exhibits
31.1, 31.2 and 32.1.

      Except as described above, no other changes have been made to the Original
Filing. This Amendment continues to speak as of the date of the Original Filing,
and the registrant has not updated the disclosures contained therein to reflect
any events which occurred at a date subsequent to the filing of the Original
Filing.



<PAGE>



                                    PART III

ITEM 10.  Directors And Officers Of The Registrant

Directors
---------

Set forth below is information  regarding the members of our board of directors,
including  information  furnished by them as to their  principal  occupation  at
present and for at least the last five years,  certain other  directorships held
by them,  the year in which each became a  director,  and their ages as of April
26, 2004:
<TABLE>
<CAPTION>

         Name                          Age    Position                      Director Since   Term Expires
         ----                          ---    --------                      --------------   ------------
<S>                                    <C>                                  <C>              <C>
         Robert M. Russell, Jr.        52     Chief Executive Officer and   2001             2004
                                              Director
         Bruce J. Ryan                 60     Director                      2002             2004
         Paul A. Vais                  45     Director                      1998             2005
         James R. McDonald             47     Director                      2002             2005
         Walter L. Threadgill          58     Director                      1998             2006
         Dale E. Calder                42     President and Director        2001             2006
</TABLE>

ROBERT M.  RUSSELL JR. Mr.  Russell was  appointed  to our Board of Directors on
June  21,  2001  and was  appointed  Chief  Executive  Officer  by our  Board of
Directors  effective  August 6, 2001. From May 2000 until June 2001, Mr. Russell
was the President and Chief  Executive  Officer of Thomson  Learning's Life Long
Learning  Group.  From April 1994 to May 2000, Mr.  Russell  served,  first,  as
Senior Vice  President and General  Manager of McGraw  Hill's Sweets Group,  and
subsequently,  as President of McGraw-Hill's Construction Information Group. Mr.
Russell  also serves on the boards of directors  of Ohio  University  College of
Business and the National Building Museum (Washington D.C.), and was a regent of
the  American  Architectural  Foundation.  Mr.  Russell  holds a B.S.  from Ohio
University and is a graduate of the Yale Executive School of Management Program.

BRUCE J. RYAN. Mr. Ryan was appointed to our Board of Directors in January 2002.
Mr. Ryan is currently Chairman and Chief Executive Officer of InfiniCon Systems,
Inc. From February 1998 until  November  2002,  Mr. Ryan was the Executive  Vice
President  and Chief  Financial  Officer  of Global  Knowledge  Inc.,  a leading
worldwide IT training  company and a leader in e-learning  solutions.  From 1994
until October 1997, Mr. Ryan was Executive  Vice  President and Chief  Financial
Officer at Amdahl  Corporation.  Mr. Ryan held  several  executive  positions at
Digital  Equipment  Corporation  from 1969 until  1994,  including  Senior  Vice
President of Financial  Services,  Government and Professional  Industries.  Mr.
Ryan earned his Bachelor's degree in Business Administration from Boston College
and his MBA from  Suffolk  University.  Mr. Ryan  serves as a director  for Ross
Systems,  Inc., CNT Corp., and KVH Industries,  Inc. Mr. Ryan is the Chairman of
our audit committee and a member of the  compensation  committee of the Board of
Directors, but holds no other offices of ours.

PAUL A. VAIS. Mr. Vais has served as one of our directors  since April 1998. Mr.
Vais has been a General Partner of Apax Partners,  a venture capital firm, since
March 1997.  From March 1995 to December 1996, Mr. Vais served as Vice President
of Enterprise  Partners V.C., a venture capital firm. From October 1994 to March
1995, Mr. Vais served as a consultant for  International  Business  Machines and
several early stage companies,  providing  expertise in strategic  marketing and
technology development.  Mr. Vais also worked at NeXT Computer,  Inc., from July
1988 to October  1994,  where he served as the  Executive  Director of Worldwide
Marketing and with Apollo Computer, an engineering workstation company. Mr. Vais
serves as a director of many companies,  including  Oblix,  Inc.,  JAMDAT Mobile
Inc.,  Bluearc  Corporation and Cometa  Networks,  Inc. Mr. Vais holds a B.A. in
Computer Science from the University of California at Berkeley.  Mr. Vais is the
Chairman of our compensation  committee of the Board of Directors,  but holds no
other offices of ours.

JAMES R. MCDONALD. Dr. McDonald was appointed to our Board of Directors in April
2002. Dr.  McDonald has held the Rolls-Royce  Chair in Power  Engineering at the
University of Strathclyde since 1994. Dr. McDonald has also been the Director of
the  Rolls-Royce  University  Technology  Centre  in  Power  Engineering  at the
University of Strathclyde since 1996 and the Director of the Centre for Economic
Renewable Power Delivery (a  Strathclyde/Glasgow  University  Partnership) since
1998. Dr. McDonald is a Technical Director of Dynamic Knowledge  Corporation,  a
company  specializing in knowledge  management methods and tools for intelligent
decision   support    applications,    and   a   Member   of   the   Rolls-Royce
Electro-Mechanical and Controls Advisory Board. Dr. McDonald is also a Technical
Director of Smart Energy Ltd., a company  specializing  in fuel cell  packaging,
control and  application  engineering  for  distributed  generation and electric
vehicles.  Dr. McDonald is a Director of McDonald,  Green and Associates.  He is
also a Director for the Centre for Electrical Power  Engineering,  University of
Strathclyde and a Director of the Institute for Energy & Environment, University
of Strathclyde,  a leading electrical power engineering group. He is a Chartered
Engineer (C. Eng.),  Fellow of the Institution of Electrical  Engineers  (FIEE),
Senior Member of the Institute of Electrical and Electronics Engineers (SMIEEE),
Fellow of the  Institute  of Physics  (FInstP),  Fellow of the Royal  Academy of
Engineering  (FREng) and Fellow of the Royal Society of Edinburgh (FRSE). He has
held  non-executive  board  positions  with ASCADA (now owned by  GE-Harris),  a
company  specializing in real-time  network control and operations  software and
Diagnostic  Monitoring  Systems, a University  spin-out company  specializing in
sensing and data  acquisition  systems for plant asset  management.  In February
2004,  Dr.  McDonald  was  appointed  Energy  Advisor  to Abu  Dhabi  Water  and
Electricity  Authority  (ADWEA).  Dr.  McDonald  earned his  Bachelor  degree in
Electrical  and  Electronic  Engineering,  a Masters  degree in  Electrical  and
Electronic  Engineering,  and his PhD in Dynamic  Pricing in  Electrical  Energy
Systems,  from the University of  Strathclyde.  Dr.  McDonald is a member of the
audit and compensation committees of the Board of Directors,  but holds no other
offices of ours.

WALTER L. THREADGILL.  Mr.  Threadgill has served as one of our directors since
January 1998. Since February 1996, Mr. Threadgill has served as Managing General
Partner of Atlantic  Coastal  Ventures,  L.P., a venture capital firm. From June
1979 to February 2000, Mr.  Threadgill  served as President and Chief  Executive
Officer of Multimedia  Broadcast  Investment  Corporation  (or MBIC),  a venture
capital company specializing in broadcast financing. He also serves on the board
of directors of Pingtone  Communications,  Inc. Mr.  Threadgill  holds a B.A. in
Business  Administration from Bernard M. Baruch College,  City University of New
York, an M.B.A.  from Long Island  University and an M.A. in  International  and
Telecommunications Law from Antioch School of Law. Mr. Threadgill is a member of
the audit and  compensation  committees of the Board of Directors,  but holds no
other offices of ours.

DALE E. CALDER.  Mr.  Calder was  appointed to our Board of Directors and as our
President  in December  2001.  From  October  1998  through our  acquisition  of
eMation, Ltd. in December 2001, Mr. Calder was the President and Chief Executive
Officer of eMation,  Ltd.  (which  changed  its name from PC Soft  International
(1988) Ltd. in February  2000).  From 1996 to October 1998, Mr. Calder served as
the President of  FactorySoft.  FactorySoft,  which was founded by Mr. Calder in
1996 and was  acquired by PC Soft  International  (1988)  Ltd. in October  1998,
produced  connectivity  tools for the automation  industry.  Mr. Calder attended
Duke  University and the University of North Carolina at Charlotte and graduated
from the University of North  Carolina with a degree in Electrical  Engineering.
Mr. Calder also attended the MBA program at Carnegie-Mellon University.

Executive Officers
------------------

Set forth below is  information  regarding  our  executive  officer who is not a
director,  including  his name,  age,  title and biography as of April 26, 2004.
Information  concerning  executive  officers who are also directors is contained
above under the heading "Directors" in this Part III, Item 10.

Name                  Age    Position
----                  ---    --------
Thomas J. Fogarty     41     Executive Vice President, Chief Financial Officer
                              and Treasurer

THOMAS J. FOGARTY.  Mr. Fogarty joined us in May 2000 as Senior Vice  President,
Corporate  Services and Chief  Financial  Officer and was appointed as Executive
Vice President and Chief  Financial  Officer in December 2001.  Prior to joining
us, from September 1999 to May 2000, Mr. Fogarty served as Senior Vice President
and Chief Financial Officer of DecisionOne Corporation,  a multi-vendor computer
software and hardware maintenance company. From October 1995 to August 1999, Mr.
Fogarty  served as Vice  President  and Treasurer of  DecisionOne.  From 1985 to
October 1995,  Mr. Fogarty held various  positions  with Bell Atlantic  Business
Systems Services, including Vice President and Treasurer. Mr. Fogarty holds both
a B.B.A.  in accounting and an M.B.A.  from the Wharton School at the University
of Pennsylvania.

Audit Committee
---------------

The audit committee of our Board of Directors  consists of Bruce J. Ryan, Walter
L.  Threadgill  and James R. McDonald.  The audit  committee met 10 times during
2003.  The  audit  committee  oversees:  (1)  the  integrity  of  our  financial
statements, (2) the appointment, compensation, qualifications,  independence and
work of our independent  auditors,  (3) our compliance with legal and regulatory
requirements,  and (4) the performance of our internal controls function. A copy
of our audit committee charter, which was reviewed and updated in November 2002,
is available at  www.axeda.com.  The Board of Directors has determined  that Mr.
Ryan is an audit committee  "financial  expert" as defined by the Securities and
Exchange  Commission.  The Board of Directors  has  determined  that each of the
members of this Committee is an  "independent  director" as defined in Rule 4200
of the  Marketplace  Rules of the  NASDAQ  National  Market  and also  meets the
additional  criteria for  independence of Audit  Committee  members set forth in
Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended.

Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

Section  16(a)  of the  Securities  Exchange  Act of  1934,  requires  that  our
directors and executive officers, and persons who beneficially own more than 10%
of a  registered  class of our equity  securities,  file with the United  States
Securities and Exchange  Commission initial reports of beneficial  ownership and
reports of changes in  beneficial  ownership  of common  stock and other  equity
securities.  Officers,  directors and greater than 10% stockholders are required
by the Securities Exchange Act of 1934, as amended, to furnish us with copies of
all Section 16(a) reports they file.

Based  solely  upon  review of the copies of such  reports  furnished  to us and
written  representations  that no  other  reports  were  required,  the  Company
believes that during the year ended December 31, 2003,  its officers,  directors
and holders of more than 10% of the common stock complied with all Section 16(a)
filing requirements.

Code of Business Conduct
------------------------

We have adopted a Code of Business Conduct applicable to all employees and Board
members.  A copy of the Code of Business  Conduct may be obtained  upon request,
without  charge,  by writing to us at 21 Oxford Road,  Mansfield,  Massachusetts
02048, Attn:  Director,  Investor Relations.  Amendments to the Code of Business
Conduct  and  any  waivers  from  provisions  of the  Code of  Business  Conduct
requiring  disclosure under applicable  Securities and Exchange Commission rules
will be disclosed on our website at www.axeda.com.

ITEM 11.  Executive Compensation

Summary Compensation
--------------------

The  following  table sets forth  compensation  information  with respect to the
compensation received for services rendered to us by our Chief Executive Officer
and our other three most highly compensated  executive officers whose salary and
bonus  for 2003 was in  excess  of  $100,000  (together,  the  "Named  Executive
Officers"),  in each case for services  rendered in all capacities to us and our
subsidiaries during the last three years.
<TABLE>
<CAPTION>

                                                                              Long-term
                                                                         Compensation Awards-
           Name and                                                           Securities             All Other
      Principal Position        Year       Salary           Bonus        Underlying Options        Compensation
      ------------------        ----       ------           -----        ------------------        ------------
                                             ($)             ($)                 (#)                    ($)
                                             ---             ---                 ---                    ---
<S>                             <C>        <C>              <C>                 <C>                <C>
Robert M. Russell Jr. (1)       2003       $330,000         $100,000               -               $4,000 (4)
   Chief Executive Officer and  2002       $330,000          276,725            200,000             4,866 (4)
     Chairman of the Board      2001        133,913           73,881            681,000               -

Dale E. Calder (2)              2003       $220,000         $100,000               -               $6,000 (4)
   President and Director       2002        221,855          151,150             75,000             5,500 (4)
                                2001         11,747          350,000            500,000             5,000 (4)

Thomas J. Fogarty               2003       $220,000         $100,000            100,000            $6,000 (4)
   Executive Vice President,    2002        220,000          140,920             75,000             4,750 (4)
     Chief Financial Officer    2001        205,000          172,500            150,000               -
       and Treasurer

John C. Roberts (3)             2003       $158,334          $90,345             55,000            $1,763 (4)
   General Counsel, Senior      2002        132,899           37,500             60,000               -
     Vice President and
       Secretary
</TABLE>

(1) Hired in August 2001.
(2) Hired in December 2001.
(3) Hired in January 2002.
(4) Employer matching contributions to Company 401(k) plans.

<PAGE>
Option Grants in 2003
---------------------

The  following  table sets forth option  grants for the year ended  December 31,
2003 to our Chief Executive Officer, and our Named Executive Officers.  No stock
appreciation rights were granted to any such person during 2003.

<TABLE>
<CAPTION>

                                            Percent of
                                              Total                                         Potential Realizable
                                             Options                                           Value at Assumed
                         Number of Shares   Granted to             Market                            Annual Rates of
                         of Securities     Granted to   Exercise   Price on
                            Underlying      Employees   Price Per   Date of   Expiration        Stock Price Appreciation for
Name                    Options Granted       (1)      Share (2)     Grant     Date                 Option Term (3)
----                    ---------------       ---      ---------     -----     ----        ----------------------------------------
                                                                                               0%          5%        10%
                                                                                             -------    --------   --------
<S>                               <C>            <C>        <C>       <C>     <C>            <C>         <C>       <C>
Robert M. Russell Jr.                   -            -          -         -           -          -           -         -
Dale E. Calder                          -            -          -         -           -          -           -         -
Thomas J. Fogarty                 100,000        7.52%      $0.01     $0.39   4/28/2013      $38,000     $65,074   $108,678
John C. Roberts (4)                55,000        4.14%      $1.45     $1.45   9/24/2013      $   -       $ 6,495   $ 20,685
</TABLE>

(1)  Based on an aggregate of 1,329,000  options  granted to employees under our
     stock option plan during 2003.

(2)  The exercise  price for all stock option grants is the fair market value of
     our  common  stock on the date of the grant,  except  for the stock  option
     grant for Mr. Fogarty having an exercise price of $0.01 as reflected in the
     table above.  The exercise price may be paid in cash, with shares of common
     stock or through a cashless exercise. Mr. Fogarty's options vested in equal
     monthly  installments  over 1 year, and are fully vested as of December 31,
     2003. If we are  acquired,  all options that are not assumed or replaced by
     the  successor  corporation  will  automatically  accelerate  in  full.  In
     addition,  Messrs.  Russell,  Calder and  Fogarty's  employment  agreements
     provide for the immediate  vesting of all outstanding  options in the event
     they  are  terminated   without  cause  or  as  otherwise  defined  in  the
     agreements.

(3)  The  potential  realizable  value  is  calculated  based on the term of the
     option at its time of grant, which is ten years. It is calculated  assuming
     that  the  fair  market  value  of our  common  stock  on the date of grant
     appreciates at the indicated annual rate compounded annually for the entire
     term of the option and that the  option is  exercised  and sold on the last
     day of its term for the appreciated  stock price.  The values shown are net
     of the option  exercise price,  but do not include  deductions for taxes or
     other expenses  associated  with the exercise of the options or the sale of
     the  underlying  shares of common stock.  The actual gains,  if any, on the
     stock option exercises will depend on the future  performance of the common
     stock, the option holder's  continued  employment or services to us through
     the period that exercise  rights vest and the date on which the options are
     exercised.

(4)  Mr. Roberts' options were granted in September 2003. Under the terms of the
     option agreement his options become exercisable as to 25% in September 2004
     with the remainder vesting over three years in equal monthly  installments.
     Mr.  Roberts'  employment  terminated  effective March 31, 2004. He entered
     into an Independent  Contractor  Agreement with us covering the period from
     April 1, 2004  through  July 1, 2004,  under which his options  continue to
     vest during the term of such agreement.  Therefore,  unless the Independent
     Contractor  Agreement is extended by the parties through at least September
     2004, Mr. Roberts'  options will, upon expiration of such agreement,  lapse
     without any portion having vested.

<PAGE>

Aggregate Option Exercises in 2003 and Year-end Option Values
-------------------------------------------------------------

The following table sets forth certain information concerning option holdings at
December  31,  2003 with  respect  to each  Named  Executive  Officer.  No stock
appreciation  rights were  outstanding at December 31, 2003. No Named  Executive
Officer exercised any options or stock appreciation rights during 2003.

<TABLE>
<CAPTION>

                                                                                            Value of Unexercised
                                Shares                         Securities Underlying            In-The-Money
                              Acquired on       Value         Unexercised Options at             Options at
Name                           Exercise        Realized              Year-End                   Year-End (1)
----                           --------        --------     --------------------------   -------------------------
                                                            Exercisable  Unexercisable   Exercisable  Unexercisable
                                                            -----------  -------------   -----------  -------------
<S>                           <C>              <C>               <C>             <C>      <C>            <C>
Robert M. Russell Jr.               -               -      513,663         367,337        $349,323       $190,527
Dale E. Calder                      -               -      521,874          53,126         425,343         49,407
Thomas J. Fogarty                   -               -      343,538          86,462         324,093         49,407
John C. Roberts                     -               -       29,790          85,210          18,362         13,738
</TABLE>

(1)  Determined by subtracting  the exercise price from the fair market value of
     our common  stock at  December  31,  2003 of $1.36 per share,  based on the
     closing  selling price of our common stock on the NASDAQ National Market on
     such date, and multiplying by the applicable number of securities.


<PAGE>
Director Compensation
---------------------

Directors   who  are  not  currently  our  employees  are  eligible  to  receive
discretionary  option grants and stock  issuances under our 1999 Stock Incentive
Plan for their service on the Board of Directors.  These  directors are entitled
to receive an automatic  option grant to purchase  20,000  shares at the time of
their  initial  election  or  appointment  to the Board of  Directors,  and each
director who has served for at least six months receives grants of 5,000 options
at each  annual  meeting of  stockholders  while they serve as  directors.  Each
automatic  option will be immediately  exercisable for all of the option shares;
however,  any unvested shares purchased under such option will be subject to our
repurchase,  at the exercise  price paid per share,  should the  director  cease
Board  service  prior to vesting  in those  shares.  The shares  subject to each
initial  20,000-share  automatic  option grant will vest in a series of four (4)
successive equal annual installments upon the director's completion of each year
of Board service over the four (4)-year period measured from the grant date. The
shares  subject  to each  annual  5,000-share  automatic  grant will vest upon a
director's  completion of one (1)-year of Board service  measured from the grant
date.  However,  the shares subject to each  outstanding  automatic option grant
will immediately vest in full upon certain changes in control or ownership of us
or upon a  director's  death or  disability  while a Board  member.  Following a
director's  cessation of Board  service for any reason,  each option will remain
exercisable for a 12-month period and may be exercised  during that time for any
or all shares in which the  director is vested at the time of such  cessation of
Board service.

Messrs.  Vais and  Threadgill  each received an option grant to purchase  20,000
shares  of our  common  stock  on the date of our 2003  annual  meeting  with an
exercise  price of $1.57,  and are  entitled  to receive a grant of an option to
purchase 20,000 shares of our common stock,  with an exercise price equal to the
fair  market  value of our  common  stock on the date of grant,  at each  annual
meeting of stockholders while each serves as a director,  of which 5,000 will be
an automatic  option  grant,  and the  remaining  15,000 will vest  immediately.
Messrs.  Vais and Threadgill do not receive any monetary  compensation for their
service on the Board of Directors or committees thereof,  but are reimbursed for
reasonable expenses relating to such service.

Dr.  McDonald and Mr. Ryan each received a grant of an option to purchase 25,000
shares  of our  common  stock  on the date of our 2003  annual  meeting  with an
exercise price of $1.57. They are each entitled to receive an option to purchase
25,000  shares of our common  stock  with an  exercise  price  equal to the fair
market value of our common stock on the date of grant, at each annual meeting of
stockholders while they serve as directors,  of which 5,000 will be an automatic
option grant, and the remaining 20,000 will vest immediately.

Dr.  McDonald and Mr. Ryan are also entitled to receive $2,000 for each Board of
Directors  meeting they attend and $1,000 for each committee meeting they attend
while they are  non-employee  Board  members,  and are reimbursed for reasonable
expenses  relating to their service on the Board of Directors.  In addition,  as
Chairman of the audit committee of the Board of Directors,  Mr. Ryan is entitled
to receive an  additional  $1,000  for each audit  committee  meeting he attends
while he is a non-employee Board member.

Compensation Committee Interlocks and Insider Participation
-----------------------------------------------------------

The  compensation  committee of our Board of Directors was formed in April 1999.
The  compensation  committee  consists of Messrs.  Vais,  Ryan,  Threadgill  and
McDonald. None of the above members of this committee was one of our officers or
employees at any time during 2003.

Other Information
-----------------

There  are no  family  relationships  among any of our  directors  or  executive
officers.

<PAGE>
Employment Agreements and Change in Control Arrangements
--------------------------------------------------------

In August  2001,  Mr.  Russell was  appointed  our Chief  Executive  Officer and
Chairman of the Board of Directors. We entered into an employment agreement with
Mr.  Russell in August 2001 for a three-year  term at a base salary of $330,000,
an annual cash bonus of $100,000,  which was guaranteed through the end of 2002,
and a $100,000  bonus if we reach  certain  revenue  goals.  If we exceed  those
revenue goals, his employment  agreement provides for a bonus equal to 1% of the
amount by which such goals are exceeded. Mr. Russell also received stock options
in August 2001 to  purchase  300,000  shares of our common  stock at an exercise
price of $1.65 per share and 331,000  shares of our common  stock at an exercise
price of $0.01 per  share,  and a stock  option  in  February  2002 to  purchase
100,000  shares of our  common  stock at an  exercise  price of $2.60 per share.
Pursuant to the  employment  agreement,  Mr. Russell will be paid the greater of
his  remaining  compensation  due  under  the  agreement  or  one  year's  total
compensation, and all stock options will become immediately and fully vested, if
his employment is terminated as a result of death or disability, or in the event
of his involuntary  termination  (as defined in the agreement,  which includes a
termination  upon a change  of  control).  We  entered  into a  salary  deferral
agreement with Mr. Russell in April 2003,  where Mr. Russell agreed to defer 10%
of his base salary for a one year period,  repayable  within  forty-five days of
the earlier of the termination of his employment,  the first  anniversary of the
date of the agreement, and a change in control.

Mr. Calder was appointed our President and to our Board of Directors in December
2001,  upon the closing of our  acquisition of eMation,  Ltd. We entered into an
employment  agreement  with  Mr.  Calder  in June  2001  for a  three-year  term
commencing on the closing at a base salary of $220,000,  an annual cash bonus of
up to $100,000, which was guaranteed for the first year, and a $100,000 bonus if
we reach  certain  revenue  goals.  If we exceed those  revenue  goals,  he will
further be  entitled  to receive a bonus equal to 1% of the amount by which such
goals were  exceeded.  Mr. Calder also received a sign-on bonus of $150,000.  We
assumed Mr.  Calder's  stock options on the closing of the eMation  acquisition,
which are now  exercisable to purchase  300,000 shares of our common stock at an
exercise price of $0.01 per share and options to purchase  200,000 shares of our
common stock at an exercise price of $2.14 per share. Pursuant to the agreement,
Mr. Calder will be paid the greater of his remaining  compensation due under the
agreement or twenty-four months total  compensation,  and all stock options will
become  immediately and fully vested,  if (i) we terminate his services  without
cause or do not renew his employment  agreement,  or (ii) Mr. Calder  terminates
his  employment  with us  following:  a breach by us of a  material  term of the
agreement  which is not cured within 30 days; a change of control (as defined in
the  agreement);  failure  to elect  and  appoint  Mr.  Calder as  Director  and
President or comparable position; or purported termination not effected pursuant
to the terms of the agreement.  We entered into a salary deferral agreement with
Mr.  Calder  in April  2003,  where Mr.  Calder  agreed to defer 10% of his base
salary for a one year period, repayable within forty-five days of the earlier of
the  termination  of his  employment,  the first  anniversary of the date of the
agreement, and a change in control.

In April 2000,  we entered into an employment  agreement  with Mr.  Fogarty,  in
which we hired Mr. Fogarty as our Chief Financial Officer for a two year term at
a base salary of $200,000  per year,  an annual cash bonus of $100,000 and stock
options to  purchase  105,000  shares of common  stock,  80,000 with an exercise
price of $6.64 per share and 25,000 with an  exercise  price of $0.01 per share.
In July 2001, we entered into an  employment  agreement  with Mr.  Fogarty for a
two-year  term to serve as our  executive  vice  president  and chief  financial
officer. Pursuant to such agreement, upon the closing of the eMation acquisition
on December 7, 2001 Mr.  Fogarty's  salary  increased to $220,000 per annum,  he
became entitled to a guaranteed cash bonus of $100,000 in the first year and was
granted options to purchase 50,000 shares of our common stock at the fair market
value of $2.00 per share and  options to purchase  100,000  shares of our common
stock at an exercise  price of $0.01 per share.  In addition,  Mr.  Fogarty also
received stock options in April 2003 to purchase an additional 100,000 shares of
our common stock at an exercise  price of $0.01 per share.  In December 2003, we
renewed the  employment  agreement with Mr. Fogarty for a one-year term to serve
as our executive vice president and chief financial officer.  Under this renewed
agreement,  Mr.  Fogarty's salary is $220,000 per annum, and he is entitled to a
quarterly  bonus of up to  $25,000.  Unless  notified  at least 60 days prior to
expiration,   this  agreement  automatically  extends  for  successive  one-year
periods.  In addition,  Mr. Fogarty also received stock options in March 2004 to
purchase an additional  120,000  shares of our common stock at an exercise price
of $1.17 per share.  Pursuant to the  agreement,  Mr.  Fogarty  will be paid one
year's salary,  bonus and benefits and all stock options will become immediately
and fully vested if (i) the agreement expires, (ii) his employment is terminated
as a result  of  death or  disability,  (iii)  in the  event of his  involuntary
termination (as defined in the  agreement),  or (iv) if he resigns upon 60 days'
prior written notice after completing 6 months of services under this agreement.
We entered  into a salary  deferral  agreement  with Mr.  Fogarty in April 2003,
where Mr.  Fogarty agreed to defer 10% of his base salary for a one year period,
repayable  within  forty-five  days of the  earlier  of the  termination  of his
employment,  the first anniversary of the date of the agreement, and a change in
control.

<PAGE>

We entered into an  employment  agreement  with Mr.  Roberts in January 2002, in
which we hired Mr. Roberts as Vice President and Associate General Counsel for a
one-year  term at a base salary of $140,000  per annum,  an annual cash bonus of
$37,500,  which was  guaranteed  for the first year, an option to purchase up to
30,000 shares of our common stock at an exercise  price of $2.53 per share,  and
an option to  purchase  up to 10,000  shares of our common  stock at an exercise
price of $0.01 per  share.  In  February  2003 we amended  into this  agreement,
whereby Mr. Roberts' was appointed  Acting General  Counsel,  and his salary was
increased  to  $160,000  per  annum,  and the  amount of annual  cash  bonus was
increased  to $75,000,  which bonus was  guaranteed  for the term ended  January
2004. In August 2003 Mr. Roberts was appointed General Counsel, and in September
2003, we entered into an employment agreement with him for a one-year term, and,
unless either party notifies the other prior to the  expiration,  this agreement
was subject to automatic renewal for successive one-year terms. Pursuant to such
agreement,  Mr. Roberts' salary remained  $160,000 per annum, he became entitled
to an annual  cash bonus of up to $75,000,  and was granted  options to purchase
55,000  shares of our common  stock at the fair market value of $1.45 per share.
Pursuant  to the  agreement,  Mr.  Roberts  was  entitled to be paid six months'
salary and benefits if (i) the  agreement was not renewed,  (ii) his  employment
was terminated as a result of death or disability,  or (iii) in the event of his
involuntary  termination (as defined in the agreement).  Mr. Roberts voluntarily
terminated his employment  with the Company  effective as of March 31, 2004. The
Company  entered into an Independent  Contractor  Agreement with Mr. Roberts for
the  provision  of legal  consulting  services to the Company from April 1, 2004
through July 1, 2004.  Under the  Consulting  Agreement,  Mr.  Roberts'  options
continue  to  vest  during  the  term of the  agreement  and he is  entitled  to
compensation of $3000 per month for up to 15 hours of service per month.

<PAGE>
ITEM 12.  Security  Ownership Of Certain  Beneficial  Owners And  Management and
          Related Stockholder Matters

The following table sets forth certain  information  known to us with respect to
the  beneficial  ownership of our common  stock as of April 26, 2004,  except as
noted in the footnotes below by:

o    all  persons  known to us who are  beneficial  owners  of 5% or more of our
     common stock;

o    each director;

o    our Chief Executive Officer and our Named Executive Officers; and

o    all current directors and executive officers as a group.

The  number  of  shares   beneficially   owned  and  the  percentage  of  shares
beneficially  owned are based on 32,469,862  shares  outstanding as of April 26,
2004,  adjusted  as  required  by  rules  of the SEC.  Beneficial  ownership  is
determined  in  accordance  with the rules of the SEC and  includes  voting  and
investment power with respect to such shares. All shares of common stock subject
to options currently  exercisable or exercisable  within 60 days after April 26,
2004 are deemed to be  outstanding  and to be  beneficially  owned by the person
holding  such  options  for the  purpose  of  computing  the  number  of  shares
beneficially  owned and the  percentage  ownership of such  person,  but are not
deemed  to be  outstanding  and to be  beneficially  owned  for the  purpose  of
computing the percentage  ownership of any other person.  Except as indicated in
the footnotes to the table and subject to applicable  community  property  laws,
based on  information  provided by the persons named in the table,  such persons
have sole voting and investment power with respect to all shares of common stock
shown as beneficially owned by them.

<TABLE>
<CAPTION>

                                                                         Number of      Percent of
Beneficial Owner                                                           Shares      Total Shares
----------------                                                           ------      ------------
<S>                                                                        <C>            <C>
Austin W. Marxe & David M. Greenhouse (1)                                  6,614,850     18.0%
Entities associated with Apax Partners, Inc. (2)                           3,400,063      9.3%
Entities   associated   with  Apax  Israel   Partners   II,  L.P.  and
  Apax-Leumi, Inc. (3)                                                     1,955,408      5.3%
Walter L. Threadgill (4)                                                     397,146      1.1%
Robert M. Russell Jr. (5)                                                    783,728      2.1%
John C. Roberts (6)                                                           36,457        *
Thomas J. Fogarty (7)                                                        468,798      1.3%
Dale E. Calder (8)                                                           687,390      1.9%
Paul A. Vais (9)                                                           3,432,563      9.4%
Bruce J. Ryan (10)                                                            67,500       *
James R. McDonald (11)                                                        45,000       *
All Directors and Executive Officers as a group (12)                       5,918,582     16.1%
</TABLE>

*Less than 1%

Except as otherwise noted below,  the address of each person listed on the table
is c/o Axeda Systems Inc., 21 Oxford Road, Mansfield, Massachusetts 02048.

(1)  Principal  Address is 153 E. 53rd Street,  55th Floor,  New York, NY 10022.
     Mr. Marxe and Mr.  Greenhouse  share voting and investing  control over all
     securities  owned by Special  Situations  Private  Equity Fund,  LP ("PE"),
     Special  Situations  Technology Fund, L.P. ("Tech") and Special  Situations
     Technology II., L.P. ("Tech II"), respectively.  2,426,600 shares of common
     stock and 1,434,450 warrants are held by PE, 282,000 shares of common stock
     and 167,650 warrants are held by Tech and 1,447,200 shares of common stock,
     856,950  warrants are held by Tech II. The  interests of Messrs.  Marxe and
     Greenhouse in the shares of Common Stock owned by PE, Tech, and Tech II are
     limited to the extent of their respective  pecuniary  interest.  All of the
     warrants listed above are exercisable within 60 days of April 26, 2004.

(2)  Principal Address is 445 Park Avenue, New York, NY 10022. Represents 80,274
     shares of our common stock held by APA Excelsior IV/Offshore, L.P, a Cayman
     Islands Limited Partnership, 362,521 shares of our common stock held by The
     P/A Fund III,  L.P.,  20,332  shares of our common  stock held by  Patricof
     Private  Investment Club,  L.P.,  29,776 shares of our common stock held by
     Patricof  Private  Placement  Club II, L.P.,  454,924  shares of our common
     stock held by APA  Excelsior IV, L.P.,  and 2,452,236  shares of our common
     stock held by APA Excelsior V, L.P. Each of the entities  identified  above
     is managed or advised by Apax Partners,  Inc. and, as such,  Apax Partners,
     Inc.  may be deemed to have shared  voting and  dispositive  power with the
     General  Partners  of each  Partnership.  The above  numbers do not include
     1,955,408  shares of common stock owned by funds managed or advised by Apax
     Partners  Israel Ltd. and its affiliates and 847,589 shares of common stock
     owned   by   funds   managed   or   advised   by   Apax   Partners   &  Co.
     Beteiligungsberatung GmbH and its affiliates.
<PAGE>
(3)  Principal  address is 15 Portland  Place,  London,  England  W1B 1PT.  Apax
     Israel Partners II, L.P and Apax-Leumi, Inc. act as a group for the purpose
     of acquiring, holding, or disposing or securities. Apax Israel Partners II,
     L.P is the  general  partner  of  Apax  Israel  II  L.P.,  Apax  Israel  II
     Entrepreneur's  Club, and Apax Israel II Entrepreneur's  Club (Israel) L.P.
     and may be deemed to have shared  power to vote and shared power to dispose
     of 999,204  shares of common  stock owned by Apax  Israel II L.P.,  137,354
     shares of common stock owned by Apax Israel II (Israel) L.P., 12,600 shares
     of common  stock  owned by Apax  Israel II  Entrepreneur's  Club L.P.,  and
     10,102 shares of common stock owned by Apax Israel II  Entrepreneur's  Club
     (Israel). Apax-Leumi Inc. is the general partner of Israel Growth Fund L.P.
     and may be deemed to have the shared  power to vote and the shared power to
     dispose of the 807,683  shares of common stock owned by Israel  Growth Fund
     L.P.  The above  numbers do not include  3,400,063  shares of common  stock
     owned by funds managed or advised by Apax Partners, Inc. and its affiliates
     and 847,589  shares of common  stock  owned by funds  managed or advised by
     Apax Partners & Co. Beteiligungsberatung GmbH and its affiliates.

(4)  Principal  Address is 3101  South  Street  N.W.,  Washington,  D.C.  20007.
     Includes  364,646  shares of our  common  stock  held by  Atlantic  Coastal
     Ventures,  L.P.  and 32,500  shares of our common stock  issuable  upon the
     exercise of options that are exercisable by Mr.  Threadgill  within 60 days
     after  April 26,  2004.  Mr.  Threadgill  is a General  Partner of Atlantic
     Coastal  Ventures,  L.P. and one of our directors.  Mr.  Threadgill  shares
     voting and  investment  power with Donald F. Greene,  a General  Partner of
     Atlantic  Coastal  Ventures,  L.P. over the shares held by Atlantic Coastal
     Ventures.  Mr.  Threadgill  disclaims  beneficial  ownership  of all of our
     shares, excluding options to purchase common stock, except to the extent of
     his pecuniary interest in Atlantic Coastal Ventures, L.P.

(5)  Includes  660,828  shares of our common stock issuable upon the exercise of
     options that are exercisable within 60 days after April 26, 2004.

(6)  Includes  36,457  shares of our common stock  issuable upon the exercise of
     options that are exercisable within 60 days after April 26, 2004.

(7)  Includes  367,498  shares of our common stock issuable upon the exercise of
     options that are exercisable within 60 days after April 26, 2004.

(8)  Includes  531,249  shares of our common stock issuable upon the exercise of
     options that are exercisable within 60 days after April 26, 2004.

(9)  Includes  32,500  shares of our common stock  issuable upon the exercise of
     options that are exercisable  within 60 days after April 26, 2004. Mr. Vais
     is a Managing  Director of Apax Partners Inc. and is one of our  directors.
     Each of the  entities  identified  in Note 2 above is managed or advised by
     Apax Partners  Inc. and, as such,  Apax may be deemed to have shared voting
     and dispositive  power with the General  Partners of each  Partnership with
     respect to an aggregate of 3,400,063  shares of our common stock.  Mr. Vais
     disclaims  beneficial  ownership of all of our shares excluding  options to
     purchase  common stock,  except to the extent of his pecuniary  interest in
     Patricof Private Investment Club, L.P.

(10) Includes  57,500  shares of our common stock  issuable upon the exercise of
     options that are exercisable within 60 days after April 26, 2004.

(11) Includes  45,000  shares of our common stock  issuable upon the exercise of
     options that are exercisable within 60days after April 26, 2004.

(12) Includes 1,763,532 shares of our common stock issuable upon the exercise of
     options that are exercisable within 60 days after April 26, 2004.

<PAGE>

Equity Compensation Plan Information
------------------------------------

This table shows information about the securities authorized for issuance under
our equity compensation plans as of December 31, 2003:
<TABLE>
<CAPTION>

                                                (1)                    (2)                       (3)
                                                                                         Number of Securities
                                       Number of Securities     Weighted-Average       Remaining Available for
                                         to be Issued upon      Exercise Price of    Future Issuance Under Equity
                                            Exercise of       Outstanding Options,  Compensation Plans (Excluding
                                       Outstanding Options,   Warrants, and Rights     Securities Reflected in
Plan Category                          Warrants, and Rights        (per share)               Column (1) )
-------------                          --------------------        -----------               ------------
<S>                                          <C>                       <C>                      <C>
Equity Compensation Plan Approved by
Shareholders (A) (B)                         5,720,641                 $ 1.76                   521,326
                                             ---------                 ======                   =======
</TABLE>

(A)  On December 7, 2001, we acquired all of the outstanding  shares of eMation,
     Ltd., a private  company  organized  under the laws of the State of Israel,
     pursuant to a share purchase  agreement  amended and restated as of October
     5, 2001. In connection  with such  acquisition,  we assumed  options issued
     under eMation, Ltd.'s 2001 Stock Option Plan that became exercisable for up
     to 1,428,710  shares of our common stock,  530,000 of which are exercisable
     for  $0.01 per share and the  remaining  898,710  exercisable  at $2.14 per
     share. No options have been or will be granted under the eMation, Ltd. 2001
     Stock Option Plan subsequent to our acquisition of eMation, Ltd.

(B)  The number of shares  reserved for issuance under our 1999 Stock  Incentive
     Plan is  automatically  increased  on  January  1 of each year by an amount
     equal to 3% of the  shares  of our  common  stock  outstanding  on the last
     trading day of the  immediately  preceding  calendar  year, but in no event
     shall such annual increase  exceed  1,000,000  shares.  On January 1, 2003,
     600,000  additional  shares were reserved for issuance.  At our 2003 annual
     stockholders  meeting,  proposals  were  approved  increasing  the limit of
     600,000  shares on the  amount by which  the share  reserve  under the plan
     automatically  increases at the beginning of each year to 1,000,000 shares,
     and increasing  the number of shares  authorized for issuance over the term
     of our 1999 Stock  Incentive  Plan (prior to any automatic  increase) by an
     additional 500,000 shares.

<PAGE>
Item 13.  Certain Relationships and Related Transactions

We currently have indemnification agreements in place with each of our executive
officers and directors  containing  provisions  that may require us, among other
things, to indemnify our officers and directors against certain liabilities that
may arise by reason of their status or service as officers or  directors  (other
than  liabilities  arising from willful  misconduct of a culpable nature) and to
advance expenses incurred as a result of any proceeding against them as to which
they could be indemnified.

We have non-competition and confidentiality agreements in place with each of our
executive officers.

All future  transactions,  if any,  between us and our  officers,  directors and
principal  stockholders and their affiliates and any transactions between us and
any entity with which our officers,  directors or 5% stockholders are affiliated
will be approved by the audit committee or another independent body of our Board
of Directors and will be on terms no less favorable to us than could be obtained
from unaffiliated third parties.


Item 14.   Principal Accountant Fees and Services

The following table presents fees for  professional  audit services  rendered by
KPMG LLP for the audit of our annual consolidated  financial  statements for the
years ended  December 31, 2003 and December 31, 2002,  and fees billed for other
services rendered by KPMG LLP for those periods.

                             2003       2002
                         --------   --------
Audit fees (1) .......   $239,000   $381,000
Audit-related fees (2)     39,000     71,000
Tax fees (3) .........    118,000    219,000
All other fees .......       --         --
                         --------   --------
Total fees ...........   $396,000   $671,000
                         ========   ========


(1)  Audit  fees  consisted  of  amounts  incurred  for the audit of our  annual
     consolidated  financial  statements,  as well  as  reviews  of our  interim
     financial  statements,  performed on a quarterly  basis,  and  registration
     statements.

(2)  Audit-related  fees consisted  principally of technical  advisory  services
     performed in  connection  with the sales of 4,918,100  shares of our common
     stock to certain  accredited  investors in a private  investment  in public
     equity,  or PIPE,  financing in 2003, and technical  guidance on a range of
     other  financial  statement  and business  matters in 2002,  including  the
     exclusive  license of our PC  technologies in connection with our exit from
     that business in May 2002.

(3)  For 2003, tax fees consisted  principally of tax advisory  services such as
     European value-added tax and other foreign tax matters, as well as U.S. and
     foreign income tax  compliance and reporting.  For 2002, tax fees consisted
     principally  of tax  advisory  services  and U.S.  and  foreign  income tax
     compliance and reporting.

All of the audit fees,  audit-related  fees and tax fees,  were  approved by the
Audit  Committee of our Board of Directors.  The Company's  audit  committee has
sole  authority  to, and must,  pre-approve  all audit and  permitted  non-audit
services from the independent  auditors.  The audit committee has sole authority
to pre-approve  all audit fees and other terms of engagement of the  independent
auditors.  It may confer with Company  management  on these  matters but may not
delegate this responsibility to management.  All approvals of non-audit services
on behalf of the audit committee must be promptly reported to the officer of the
Company having primary  responsibility for the SEC reports filed by the Company.
The audit  committee is  authorized  from time to time to delegate to one of its
members the authority to grant  pre-approval  of audit and  permitted  non-audit
services,  provided that all decisions by that member to pre-approve any service
shall be reported to the full committee at its next scheduled meeting. The Audit
Committee  has  delegated to Mr.  Ryan,  the Chair of our Audit  Committee,  the
authority to approve  audit-related and non-audit services not prohibited by law
to be performed by our independent  accountants and associated fees on behalf of
the Audit Committee in accordance with Rule 10A-3 under the Securities  Exchange
Act of 1934.

The audit  committee  has  considered  whether  KPMG  LLP's  provision  of these
services is compatible with maintaining KPMG LLP's independence.

<PAGE>


                                     PART IV

ITEM 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a)(3) Exhibits.

The Exhibits listed in the  accompanying  Index to Exhibits are filed as part of
this report on Form 10-K/A.


<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
city of Mansfield, Commonwealth of Massachusetts on this 29th day of April 2004.

Axeda Systems Inc.

April 29, 2004

By:      /s/ Robert M. Russell Jr.
         -----------------------------------
             Robert M. Russell Jr.,
             Chief Executive Officer and Chairman of the Board


<PAGE>


                               AXEDA SYSTEMS INC.

                                  EXHIBIT INDEX

Pursuant to Item 601(a)(2) of Regulation S-K, this Exhibit Index immediately
precedes the exhibits. The following exhibits are included in this Form 10-K/A
(and are numbered in accordance with Item 601 of Regulation S-K):



<TABLE>
<CAPTION>

         Exhibit
         Number    Exhibit Title
         ------    -------------

<S>                <C>
         31.1      Certification of Chief Executive Officer required pursuant to Section 302 of the
                    Sarbanes-Oxley Act of 2002

         31.2       Certification of Chief Financial Officer required pursuant to Section 302 of the
                     Sarbanes-Oxley Act of 2002

         32.1       Certification of Chief Executive Officer and Chief Financial Officer required pursuant
                     to Section 906 of the Sarbanes-Oxley Act of 2002 and furnished herewith pursuant to
                     SEC Release No. 33-8238

</TABLE>