UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10Q

(Mark One)
__X__           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2002

                                       OR

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

           For the transition period from ______________to_______________


                       COMMISSION FILE NUMBER:   000-25590


                              DATASTREAM SYSTEMS, INC.

           Incorporated pursuant to the laws of the State of Delaware
                   -------------------------------------------

        Internal Revenue Service  -- Employer Identification No. 57-0813674
                      50 DATASTREAM PLAZA, GREENVILLE, SC 29605

                                 (864) 422-5001
                   -------------------------------------------

                                 NOT APPLICABLE
            (Former Name, Former Address, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ___

APPLICABLE ONLY TO CORPORATE  ISSUERS:  Indicate the number of shares
outstanding of the issuer's common stock as of the latest  practicable date:
August 12, 2002: 20,159,244 shares, $0.01 par value.



                                       1
<PAGE>



                              Datastream Systems, Inc.

                                    FORM 10-Q

                           Quarter ended June 30, 2002

                                      Index

                                                                        Page No.

Part I.        Consolidated Financial Information

               "Safe Harbor" Statement under the Private Securities
                   Litigation Reform Act of 1995                              3

Item 1.        Consolidated Financial Statements (unaudited)

               Consolidated Balance Sheets-
                   December 31, 2001 and June 30, 2002
                    Assets                                                    4
                    Liabilities and Stockholders' Equity                      5

               Consolidated Statements of Operations -
                    for the three months ended June 30, 2001 and 2002         6
                    for the six months ended June 30, 2001 and 2002           7

               Consolidated Statement of Changes in Stockholders' Equity
                    and Comprehensive Loss  -
                    for the six months ended June 30, 2002                    8

               Consolidated Statements of Cash Flows  -
                    for the six months ended June 30, 2001 and 2002           9

               Notes to the Consolidated Financial Statements                10

Item 2.        Management's Discussion and Analysis of
                    Financial Condition and Results of Operations            12

Item 3.        Quantitative and Qualitative Disclosures About
                    Market Risk                                              14

Part II.       Other Information                                             15

Item 1.        Legal Proceedings                                             15

Item 2.        Changes in Securities and Use of Proceeds                     15

Item 3.        Defaults Upon Senior Securities                               15

Item 4.        Submission of Matters to a Vote of Stockholders               15

Item 5.        Other Information                                             15

Item 6.        Exhibits and Reports on Form 8-K                              15

Signature                                                                    16




                                       2
<PAGE>



PART I.     CONSOLIDATED FINANCIAL INFORMATION


                    "SAFE HARBOR" STATEMENT UNDER THE PRIVATE
                     SECURITIES LITIGATION REFORM ACT OF 1995

     From time to time, we make oral and written statements that may constitute
"forward looking statements" (rather than historical facts) as defined in the
Private Securities Litigation Reform Act of 1995 or by the Securities and
Exchange Commission (the "SEC") in its rules, regulations and releases,
including Section 27A of the Securities Act of 1933, as amended (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). We desire to take advantage of the "safe harbor" provisions in
the Private Securities Litigation Reform Act of 1995 for forward looking
statements made from time to time, including, but not limited to, the forward
looking statements made in this Quarterly Report on Form 10-Q (the "Report"), as
well as those made in other filings with the SEC.

     Forward looking statements can be identified by our use of forward looking
terminology such as "may," "will," "expect," "anticipate," "estimate,"
"believe," "continue" or other similar words. Such forward looking statements
are based on our management's current plans and expectations and are subject to
risks, uncertainties and changes in plans that could cause actual results to
differ materially from those described in the forward looking statements. In the
preparation of this Report, where such forward looking statements appear, we
have sought to accompany such statements with meaningful cautionary statements
identifying important factors that could cause actual results to differ
materially from those described in the forward looking statements. Such factors
include, but are not limited to: the increasing competitiveness of the market
for asset lifecycle management solutions; our ability to keep pace with rapid
technological changes and demands in our markets in order to remain competitive;
increasing sales cycles and other factors that may result in volatility of our
quarterly results; our ability to successfully implement an application service
provider business model; the stability of certain of our strategic
relationships, including those with iProcure network suppliers and technology
providers; our ability to develop products timely to be an innovator in the
industry; increasing competition in markets for our products; our ability to
protect our proprietary technology; risks associated with security that may
deter the use of the Internet for conducting electronic commerce; risks
associated with managing international operations including, but not limited to,
exposure to foreign exchange fluctuations and our ability to successfully
compete in foreign markets; retaining our key personnel; and changes in economic
conditions generally, both domestic and international. The preceding list of
risks and uncertainties, however, is not intended to be exhaustive, and should
be read in conjunction with other cautionary statements that we make herein
including, but not limited to, the "Risk Factors" set forth in the Company's
Form 10-K for the fiscal year ended December 31, 2001, as well as other risks
and uncertainties identified from time to time in our SEC reports, registration
statements and public announcements.

     We do not have, and expressly disclaim, any obligation to release publicly
any updates or any changes in our expectations or any changes in events,
conditions or circumstances on which any forward-looking statement is based.



                                       3
<PAGE>




ITEM 1.  Consolidated Financial Statements

                                 Datastream Systems, Inc. and Subsidiaries

                                        Consolidated Balance Sheets

                                                   Assets
                                                (unaudited)
<TABLE>

                                                                 December 31,      June 30,
                                                                   2001              2002
                                                                   ----              ----
<S>                                                               <C>           <C>

Current assets:
    Cash and cash equivalents                                     $25,396,939   $31,003,974
    Accounts receivable, net of allowance for doubtful accounts
        of $1,868,072 and $2,016,508, respectively                 17,483,350    18,433,209
    Unbilled revenue, net of allowance of
        $320,000 and $100,000, respectively                         2,675,670     2,315,133
    Prepaid expenses                                                1,270,568     1,881,324
    Inventories                                                        17,765        14,428
    Income tax receivable                                           1,098,919       347,648
    Deferred income taxes                                             981,488       981,488
    Other assets                                                    1,728,295     1,831,032
                                                                  -----------   -----------
           Total current assets                                    50,652,994    56,808,236

Investments                                                         2,000,000     2,000,000
Property and equipment, net                                        12,031,550    10,687,844
Deferred income taxes                                               6,664,009     5,912,137
Other long term assets                                                 68,750       102,723
                                                                  -----------   -----------

           Total assets                                           $71,417,303   $75,510,940
                                                                  ===========   ===========
</TABLE>
See accompanying notes to consolidated financial statements.




                                       4
<PAGE>






                                 Datastream Systems, Inc. and Subsidiaries

                                  Consolidated Balance Sheets (Continued)

                                    Liabilities and Stockholders' Equity
                                                (unaudited)

<TABLE>
                                                                           December 31,      June 30,
                                                                                2001           2002
                                                                                ----           ----
<S>                                                                        <C>            <C>
Current liabilities:
    Accounts payable                                                      $   2,432,947  $  2,582,977
    Other accrued liabilities                                                 8,019,997     8,990,909
    Current portion of long-term debt                                             9,995         8,639
    Unearned revenue                                                         12,330,840    15,212,087
                                                                             ----------    ----------
           Total liabilities                                                 22,793,779    26,794,612

Stockholders' equity:
    Preferred stock, $1 par value, 1,000,000 shares authorized;                      -             -
        none issued
    Common stock, $.01 par value, 40,000,000 shares authorized;                 210,006       210,637
        21,000,668 shares issued at December 31, 2001,
        21,063,639 shares issued at June 30, 2002
    Additional paid-in capital                                               86,501,216    87,009,301
    Accumulated deficit                                                     (30,602,457)  (30,259,462)
    Other accumulated comprehensive loss                                     (1,303,570)   (1,753,976)
    Treasury stock, at cost;
        859,000 shares at December 31, 2001,
        899,000 shares at June 30, 2002                                      (6,181,671)   (6,490,172)
                                                                            -----------   -----------
           Total stockholders' equity                                        48,623,524    48,716,328
                                                                             ----------    ----------

           Total liabilities and stockholders' equity                     $  71,417,303  $ 75,510,940
                                                                             ==========    ==========
</TABLE>
See accompanying notes to consolidated financial statements.




                                       5
<PAGE>




                                   Datastream Systems, Inc. and Subsidiaries

                                    Consolidated Statements of Operations
                                                 (unaudited)
                                  Three months ended June 30, 2001 and 2002

<TABLE>
                                                                    June 30,         June 30,
                                                                      2001             2002
                                                                      ----             ----
<S>                                                             <C>              <C>
Revenues:
    Product                                                     $   6,474,906    $   6,838,414
    Service and support                                            16,538,184       15,975,126
                                                                   ----------      -----------
        Total revenues                                             23,013,090       22,813,540

Cost of revenues:
    Cost of product revenues                                          135,354          265,404
    Cost of service and support revenues                            9,063,107        7,811,020
                                                                    ---------       ----------
        Total cost of revenues                                      9,198,461        8,076,424
                                                                    ---------        ---------

        Gross profit                                               13,814,629       14,737,116

Operating expenses:
    Sales and marketing                                             9,468,298        8,926,243
    Product development                                             3,376,297        2,624,870
    General and administrative                                      2,459,310        2,696,492
    Goodwill amortization                                             755,416                -
                                                                   ----------      -----------

        Total operating expenses                                   16,059,321       14,247,605
                                                                   ----------       ----------

        Operating income (loss)                                    (2,244,692)         489,511

Other income, net                                                     218,108           83,401
                                                                      -------           ------

        Income (loss) before income taxes                          (2,026,584)         572,912

Income tax expense (benefit)                                         (364,768)         200,622
                                                                     ---------         -------

Net income (loss)                                                $ (1,661,816)      $  372,290
                                                                 =============      ==========

    Basic net income (loss) per share                            $       (.08)      $      .02
                                                                 =============      ==========
    Diluted net income (loss) per share                          $       (.08)      $      .02
                                                                 =============      ==========

    Basic weighted average number of common
        shares outstanding                                         20,510,383       20,165,733
                                                                   ==========       ==========
    Diluted weighted average number of common and
        potential common shares outstanding                        20,510,383       20,628,580
                                                                   ==========       ==========
</TABLE>
See accompanying notes to consolidated financial statements.



                                       6
<PAGE>




                                 Datastream Systems, Inc. and Subsidiaries

                                   Consolidated Statements of Operations
                                               (unaudited)
                                  Six months ended June 30, 2001 and 2002

<TABLE>
                                                                    June 30,         June 30,
                                                                      2001             2002
                                                                      ----             ----
<S>                                                            <C>               <C>
Revenues:
    Product                                                    $   13,908,441    $  12,630,813
    Service and support                                            33,637,536       31,779,725
                                                                  -----------       ----------
        Total revenues                                             47,545,977       44,410,538

Cost of revenues:
    Cost of product revenues                                          802,193          625,539
    Cost of service and support revenues                           18,063,054       15,742,187
                                                                  -----------       ----------
        Total cost of revenues                                     18,865,247       16,367,726
                                                                   ----------       ----------

        Gross profit                                               28,680,730       28,042,812

Operating expenses:
    Sales and marketing                                            19,384,143       16,846,238
    Product development                                             6,749,002        5,301,298
    General and administrative                                      4,920,847        5,515,275
    Goodwill amortization                                           1,510,831                -
                                                                    ---------          -------

        Total operating expenses                                   32,564,823       27,662,811
                                                                   ----------       ----------

        Operating income (loss)                                    (3,884,093)         380,001

Other income, net                                                     311,549          144,887
                                                                      -------          -------

        Income (loss) before income taxes                          (3,572,544)         524,888

Income tax expense (benefit)                                         (667,559)         181,893
                                                                     ---------         -------

Net income (loss)                                               $  (2,904,985)     $   342,995
                                                                ==============     ===========

    Basic net income (loss) per share                           $        (.14)     $       .02
                                                                ==============     ===========
    Diluted net income (loss) per share                         $        (.14)     $       .02
                                                                ==============     ===========

    Basic weighted average number of common
        shares outstanding                                         20,504,126       20,155,510
                                                                   ==========       ==========
    Diluted weighted average number of common and
        potential common shares outstanding                        20,504,126       20,645,798
                                                                   ==========       ==========
</TABLE>
See accompanying notes to consolidated financial statements.




                                       7
<PAGE>


<TABLE>

                                Datastream Systems, Inc. and Subsidiaries

                 Consolidated Statement of Stockholders' Equity and Comprehensive Loss
                                            (unaudited)

                                     Six months ended June 30, 2002


                                                                                Other
                                                Additional                  Accumulated                     Total
                                     Common       Paid-In     Accumulated  Comprehensive    Treasury    Stockholders'
                                      Stock       Capital       Deficit        Loss           Stock        Equity
                                      -----       -------       -------        ----           -----        ------

<S>                             <C>          <C>            <C>             <C>         <C>           <C>

Balance at December 31, 2001     $   210,006 $  86,501,216  $(30,602,457)   $(1,303,570) $(6,181,671)  $  48,623,524

Comprehensive loss
    Net income                             -             -       342,995              -           -          342,995
    Foreign currency translation
         adjustment                        -             -            -        (450,406)          -        (450,406)
                                                                                                           ---------
Total comprehensive loss                                                                                   (107,411)

Exercise of stock options                456       247,344             -              -           -          247,800

Stock issued for employee
    stock purchase plan                  175        91,018             -              -           -           91,193

Amortization of compensatory
    stock options                          -        55,938             -              -           -           55,938

Acquisition of 40,000 shares               -             -             -              -     (308,501)       (308,501)

Warrants issued                            -       113,785             -              -           -          113,785
                                        ------    ---------    -----------     ---------   ----------       ---------



Balance at June 30, 2002         $   210,637 $  87,009,301  $ (30,259,462)  $(1,753,976) $(6,490,172)  $  48,716,328
                                 =========== =============  ==============  ============ ============  ==============
</TABLE>
See accompanying notes to consolidated financial statements.



                                                                8
<PAGE>






                                Datastream Systems, Inc. and Subsidiaries

                                  Consolidated Statements of Cash Flows
                                               (unaudited)

                                 Six months ended June 30, 2001 and 2002

<TABLE>
                                                                     June 30,         June 30,
                                                                       2001             2002
                                                                       ----             ----
<S>                                                             <C>                 <C>
Cash flows from operating activities:
    Net income (loss)                                           $  (2,904,985)      $  342,995
    Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
        Depreciation                                                2,454,111        2,071,502
        Goodwill amortization                                       1,510,831                -
        Other amortization                                            137,500           79,812
        Provision for doubtful accounts                              (578,955)         (71,564)
        Stock based compensation                                       16,544           55,938
        Issuance of shares in legal settlement                      1,250,000                -
        Changes in operating assets and liabilities:
          Accounts receivable                                       5,232,605       (1,098,295)
          Unbilled receivable                                        (175,250)         580,537
          Income taxes receivable                                     698,726         (610,756)
          Prepaid expenses                                            (36,544)         751,271
          Inventories                                                 118,183            3,337
          Deferred income taxes                                    (1,050,000)         751,872
          Other assets                                               (149,671)        (102,737)
          Accounts payable                                           (328,769)         150,030
          Other accrued liabilities                                (2,498,092)         970,912
          Unearned revenue                                          1,878,079        2,881,247
                                                                    ---------        ---------
          Net cash provided by operating activities                 5,574,313        6,756,101
                                                                    ---------        ---------

Cash flows from investing activities:
    Additions to property and equipment                            (1,839,146)        (727,796)
                                                                   -----------        ---------
    Net cash used in investing activities                          (1,839,146)        (727,796)
                                                                   -----------        ---------

Cash flows from financing activities:
    Proceeds from exercise of stock options                           487,969          247,800
    Proceeds from issuances of shares under employee
          stock purchase plan                                         236,044           91,193
    Purchases of treasury stock                                      (322,738)        (308,501)
    Principal payments on long-term debt                              (37,327)          (1,356)
                                                                   -----------        ---------
         Net cash provided by financing activities                    363,948           29,136
                                                                   -----------        ---------

Foreign currency translation adjustment                              (753,229)        (450,406)

Net increase in cash and cash equivalents                           3,345,886        5,607,035
Cash and cash equivalents at beginning of period                   15,487,515       25,396,939
                                                                   ----------       ----------

Cash and cash equivalents at end of period                      $  18,833,401    $  31,003,974
                                                                =============    =============

</TABLE>
See accompanying notes to consolidated financial statements.




                                       9
<PAGE>




                    Datastream Systems, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


1.  Basis of Presentation

    The interim financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (SEC), although the Company believes
that the disclosures made are adequate to make the information presented not
misleading. In the opinion of management, such unaudited information reflects
all adjustments, consisting only of normal recurring accruals and other
adjustments as disclosed herein, necessary for a fair presentation of the
unaudited information. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes
contained in the Company's Form 10-K for the year ended December 31, 2001 filed
with the SEC on March 29, 2002. Other than as indicated herein, there have been
no significant changes from the financial data published in those reports.

    Results for interim periods are not necessarily indicative of results
expected for the full year.

2. Segment and Geographic Information

        The Company has identified one business segment for reporting purposes:
Asset Lifecycle Management. The Company manages the Asset Lifecycle Management
business over geographical regions. The principal areas of operation include the
United States, Europe, Latin America and Asia. Financial information concerning
the Company's operations in different geographical regions is as follows:

For the three months ended June 30, 2001 and 2002:

                             United                Latin
                             States     Europe    America     Asia       Total

      June 30, 2001:

      Total revenues     14,953,611  4,906,280  1,895,923  1,257,276 23,013,090
      Operating loss     (1,235,746)  (640,543)  (226,523)  (141,880)(2,244,692)
      Total assets       60,426,692 13,519,295  4,721,155  3,639,187 82,306,329

      June 30, 2002:

      Total revenues     14,811,816  5,018,539  1,629,243  1,353,942 22,813,540
      Operating income
        (loss)              621,277   (189,199)   227,919   (170,487)   489,510
      Total assets       52,284,050 13,983,713  3,804,065  5,439,112 75,510,940


For the six months ended June 30, 2001 and 2002:

                             United                Latin
                             States     Europe    America     Asia       Total

      June 30, 2001:

      Total revenues     31,276,009  9,963,642  3,697,706  2,608,620 47,545,977
      Operating loss     (3,704,936)  (123,349)   (43,028)   (12,780)(3,884,093)
      Total assets       60,426,692 13,519,295  4,721,155  3,639,187 82,306,329

      June 30, 2002:

      Total revenues     28,443,815  9,597,353   3,378,011  2,991,359 44,410,538
      Operating income
        (loss)              475,220   (533,088)    350,444     87,425    380,001
      Total assets       52,284,050 13,983,713   3,804,065  5,439,112 75,510,940


The United States revenues include international revenues of approximately
$1,018,000 and $913,000 for the second quarters of 2001 and 2002, respectively
and approximately $1,694,000 and $1,566,000 for the first six months of 2001 and
2002, respectively.

                                       10
<PAGE>

3.  Reconciliation of Basic and Diluted Income Per Share

        Basic net income (loss) per share is computed by dividing net income
(loss) by the weighted average number of common shares outstanding. Diluted net
income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common and potential dilutive common shares
outstanding. Diluted weighted average common and potential dilutive common
shares include common shares and stock options using the treasury stock method,
except when those shares result in antidilution. At June 30, 2001, basic loss
per share equaled diluted loss per share. The reconciliation of basic and
diluted income per share as of June 30, 2002 is as follows:

                                                                    Per Share
                                      Income          Shares          Amount
                                      ------          ------        ---------
For the three months ended:

June 30, 2002:
  Basic income per share         $       372,290      20,165,733  $         .02
                                                                    ===========
 Effect of dilutive
  securities:
     Stock options                             -         462,847
                                   --------------   -------------
Diluted income per share         $       372,290      20,628,580  $         .02
                                   ==============  ==============   ===========

For the six months ended:

June 30, 2002:
  Basic income per share         $       342,995      20,155,510  $         .02
                                                                    ===========
Effect of dilutive
 securities:
     Stock options                             -         490,288
                                   --------------  --------------

  Diluted income per share       $       342,995      20,645,798  $         .02
                                   ==============  ==============   ===========

Antidilutive shares totaling 3,434,011 and 3,406,570 were excluded from the
diluted net income (loss) calculation for the three and six months ended June
30, 2002, respectively.

4. Recent Accounting Pronouncements

        In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 141, "Business
Combinations" (SFAS 141), and Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141 requires that
the purchase method of accounting be used for all business combinations
initiated after June 30, 2001. SFAS 141 also specifies criteria that intangible
assets acquired in a purchase method business combination must meet to be
recognized and reported apart from goodwill. SFAS 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead be tested for impairment. The effective date of SFAS 142 was January 1,
2002.

        In August 2001, FASB issued Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS
144). SFAS 144 supersedes SFAS 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of", and the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30, "Reporting
the Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions". SFAS 144 essentially combines the requirements of SFAS 121 and
APBO 30 into one single accounting standard. The effective date of SFAS 144 was
January 1, 2002.

        As reported in the Company's third quarter 2001, significant events
occurred which triggered the impairment of its goodwill under FAS 121.
Therefore, no amortization has been recorded since that time and adoption of
SFAS 142 did not impact the Company. Goodwill amortization for the three months
and six months ended June 30, 2001 was $755,415 and $1,510,831, respectively. If
SFAS 142 had been effective in those periods, operating loss would have been
reduced by the amount of amortization.

5. Commitments and Contingencies

        The Company is occasionally involved in legal proceedings and other
claims arising out of its operations in the normal course of business. None of
such current claims are expected, individually or in the aggregate, to have a
material adverse affect on the Company.



                                       11
<PAGE>

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

      This Report contains certain forward-looking statements with respect to
the Company's operations, industry, financial condition and liquidity. These
statements reflect the Company's assessment of a number of risks and
uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of certain
factors set forth in this Report. An additional statement made pursuant to the
Private Securities Litigation Reform Act of 1995 and summarizing certain of the
principal risks and uncertainties inherent in the Company's business is included
in Part I of this Report under the caption "`Safe Harbor' Statement Under the
Private Securities Litigation Reform Act of 1995". Readers of this Report are
encouraged to read such statement carefully.

Overview

     Datastream is a leading provider of asset lifecycle management solutions.
These solutions enable businesses, government agencies and other organizations
to maximize the performance and profitability of assets. One important component
of this lifecycle is the procurement of spare parts used to maintain assets.
Datastream's iProcure solution automates this process by connecting suppliers
with buyers of industrial spare parts through the Internet. Combined, these
offerings create a complete, scaleable asset lifecycle management solution
representing a unique value proposition to the market.

Results of Operations

      Total Revenues. Total revenues of $22,813,540 in the second quarter of
2002 decreased 0.9% from $23,013,090 in the second quarter of 2001. Total
revenues decreased 7% to $44,410,538 for the first six months of 2002 from
$47,545,977 for the first six months of 2001, due principally to product, sales
and marketing transitions, unfavorable market conditions, longer sales cycles
and decreased service and support revenue resulting from decreased license
revenues. International revenues were approximately $8,915,000 (39% of total
revenues) in the second quarter of 2002 and approximately $9,077,000 (39% of
total revenues) in the second quarter of 2001. International revenues were
approximately $17,533,000 (39% of total revenues) for the first six months of
2002 and approximately $17,964,000 (38% of total revenues) for the first six
months of 2001. See Note B to consolidated financial statements.

      Product revenues increased 6% to $6,838,414 (30% of total revenues) in the
second quarter of 2002 from $6,474,906 (28% of total revenues) in the second
quarter of 2001, as a result of increased sales of Datastream 7i, which has a
higher license fee than the MP2 product family, partially offset by lower
license sales in the MP2 product family. Product revenues decreased 9% to
$12,630,813 (28% of total revenues) in the first six months of 2002 from
$13,908,441 (29% of total revenues) in the first six months of 2001. The
decrease was a result of longer sales cycles due to product transition and
macroeconomic factors in the first half of 2002 relative to the first half of
2001.

      Service and support revenues decreased 3% to $15,975,126 (70% of total
revenues) in the second quarter of 2002 from $16,538,184 (72% of total revenues)
in the second quarter of 2001. The decrease is partially a result of decreased
software license revenues in prior quarters resulting in a decrease in
installation, training and services revenue, offset by an increase in support
revenue. Service and support revenues decreased 6% to $31,779,725 (72% of total
revenues) in the first six months of 2002 from $33,637,536 (71% of total
revenues) in the first six months of 2001.

      Cost of Revenues. Cost of revenues decreased 12% to $8,076,424 (35% of
revenues) in the second quarter of 2002, as compared to $9,198,461 (40% of total
revenues) in the second quarter of 2001. The decrease in cost of revenues is due
to cost savings in the services and support department as a result of improved
utilization and improved organizational efficiency. Cost of revenues decreased
13% to $16,367,726 (37% of total revenues) in the first six months of 2002 from
$18,865,247 (40% of total revenues) in the first six months of 2001.

      Sales and Marketing Expenses. Sales and marketing expenses decreased 6% to
$8,926,243 (39% of total revenues) in the second quarter of 2002 from $9,468,298
(41% of total revenues) in the second quarter of 2001. The decrease is due to
consolidation of sales activities and reduction of certain marketing activities.
Sales and marketing expenses decreased 13% to $16,846,238 (38% of total
revenues) in the first six months of 2001 from $19,384,143 (41% of total
revenues) in the first six months of 2001.

      Product Development Expenses. Total product development expenditures
decreased 22% to $2,624,870 (12% of total revenues) in the second quarter of
2002 from $3,376,297 (15% of total revenues) in the second quarter of 2001. The
decrease in total product development expense resulted from cost savings
realized upon consolidation of the MP2, MP5i and iProcure development teams and
a reduction in outside contract labor costs. Total product development
expenditures decreased 21% to $5,301,298 (12% of total revenues) in the first
six months of 2002 from $6,749,002 (14% of total revenues) in the first six
months of 2001.


                                       12
<PAGE>

      General and Administrative Expenses. General and administrative expenses
increased 10% to $2,696,492 (12% of total revenues) in the second quarter of
2002 from $2,459,310 (11% of total revenues) in the second quarter of 2001, due
primarily to increased administrative costs in Europe and increased professional
fees in the United States. General and administrative expenses increased 12% to
$5,515,275 (12% of total revenues) in the first six months of 2002 from
$4,920,847 (10% of total revenues) in the first six months of 2001.

      Goodwill  Amortization.  The  Company  wrote off the  remaining  balance
of  goodwill in the third quarter of 2001, therefore, no amortization expense
was incurred in 2002.

      Other income, net. Other income, net decreased to $83,401 in the second
quarter of 2002 from $218,108 in the second quarter of 2001. The decrease was
due to a decrease in return on investments during the second quarter of 2002 due
primarily to a reduction in yields on cash equivalent investment instruments.
Other income, net decreased to $144,887 in the first six months of 2002 from
$311,549 in the first six months of 2001.

      Tax Rate. The Company's effective tax rate was 35% for the second quarter
of 2002 as compared to 18% for the second quarter of 2001. The increase in the
effective tax rate is due to the elimination of goodwill and related
amortization, which significantly reduced the Company's permanent book/tax
differences. The Company's effective tax rate was 35% for the first six months
of 2002 as compared to 19% for the first six months of 2001.

      Net income (loss). Net income (loss) improved to $372,290 (2% of total
revenues) in the second quarter of 2002 from $(1,661,816) ((7%) of total
revenues) in the second quarter of 2001. The improvement is attributed to
increased operational efficiency and a reduction in total operating costs. Net
income (loss) improved to $342,995 (1% of total revenues) for the first six
months of 2001 from $(2,904,985) ((6%) of total revenues) for the first six
month of 2002.

Liquidity and Capital Resources

      The Company has funded its operating activities primarily from cash
generated from operations. The Company ended its second quarter of 2002 with
$31,003,974 in cash and cash equivalents.

        Subsequent to the end of the second quarter, on July 23, 2002 the
Company announced that its board of directors had authorized the repurchase of
up to 500,000 shares of Datastream's outstanding common stock. This plan expires
on July 23, 2003. As of June 30, 2002, the Company has repurchased 899,000
shares (40,000 shares in 2002) under separate stock repurchase plans. The
repurchased shares will be used for general corporate purposes, including grants
of employee stock options. The shares are classified as treasury stock on the
balance sheet and are reported at cost.

      In connection with entering into a software development and licensing
agreement with GE Fanuc North America, Inc. ("GE Fanuc"), Datastream issued a
warrant to GE Fanuc to purchase up to 50,000 shares of common stock of the
Company. The warrant was exercisable on the date of issuance and remains
exercisable for three years from the date of issuance. The exercise price per
share is $6.95, which was the market price of the Company's common stock on the
date of issuance of the warrant. The warrant agreement allows for net issuance
at the option of GE Fanuc and provides "piggy back" registration rights for the
underlying common stock.

      The Company has accounted for the warrant using the guidance of Emerging
Issues Task Force (EITF) 96-18, Accounting for Equity Instruments That Are
Issued to Other Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services and EITF 00-25, Vendor Income Statement Characterization of
Consideration Paid to a Reseller of the Vendor's Products. As a result, on the
date of issuance the Company recorded the fair value of the warrant as a credit
to Additional Paid-In Capital and a debit to prepaid commissions. The Company
will record amortization of the prepaid commissions as a reduction of revenue
over the three years the warrant is exercisable. The impact to the financial
condition of the Company will be immaterial over the three year period.

      As of June 30, 2002, the Company had no long-term debt commitments and no
material commitments for capital expenditures. The Company believes that its
current cash balances, cash flows from operations and investments available for
sale will be sufficient to meet its working capital and capital expenditure
needs for at least the next 12 months.


                                       13
<PAGE>

Other Events

      Larry G. Blackwell, the Company's President and Chief Executive Officer
and Chairman of its Board of Directors, has informed the Company that on May 17,
2002, he entered into an amended divorce decree with his ex-spouse, Ms. Sharron
Blackwell, pursuant to which he placed in Ms. Blackwell's name title to a total
of 1,242,488 shares (the "Shares") of the Company's common stock as part of
completing the division of their marital property. The original 1992 divorce
decree apportioned to Ms. Blackwell a percentage of the shares of the Company
owned by Mr. Blackwell, but the shares remained titled in Mr. Blackwell's name,
as contemplated by the terms of such original decree, with the arrangement that
Ms. Blackwell would receive such percentage of the proceeds of any sale of
shares by Mr. Blackwell. By placing title of the Shares in Ms. Blackwell's name,
she will no longer need to wait for Mr. Blackwell to make a sale of shares to
realize the benefit of her percentage interests, and she will no longer have any
interest in any sales by Mr. Blackwell. Although the Shares are freely
transferable by Ms. Blackwell, she has agreed to restrict the number of these
shares that she may decide to sell to a maximum of 100,000 shares per calendar
quarter for so long as Mr. Blackwell is the Chief Executive Officer of the
Company.

Critical Accounting Polices

      Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and potentially result in materially
different results under different assumptions and conditions. The Company's
critical accounting policies include revenue recognition, income taxes,
impairment of goodwill and other long -term assets, functional currencies for
the purpose of consolidation and allowance for doubtful accounts. For a detailed
discussion on the application of these and other accounting policies, see the
Company's Form 10-K filed for the year ended December 31, 2001.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

      The Company did not experience any material changes in market risk in
the second quarter of 2002.



                                       14
<PAGE>



PART II.     OTHER INFORMATION

Item 1.        Legal Proceedings

               The Company is occasionally involved in legal proceedings and
               other claims arising out of its operations in the normal course
               of business. None of such current claims are expected,
               individually or in the aggregate, to have a material adverse
               affect on the Company.

Item 2.        Changes in Securities and Use of Proceeds

               None

Item 3.        Defaults Upon Senior Securities

               None

Item 4.        Submission of Matters to a Vote of Stockholders

               The 2002 Annual Meeting of Stockholders was held on June 14,
               2002, at which time certain matters were submitted to the
               stockholders of Datastream for a vote. Present in person or by
               proxy at the meeting were holders of 19,158,246 shares of the
               issued and outstanding shares of Datastream's common stock, which
               represents 95% of the 20,143,139 shares of common stock issued
               and outstanding as of April 30, 2002, the record date for the
               Annual Meeting. Below is a brief description of each matter, as
               well as the number (and percentage) of shares represented at the
               meeting and entitled to vote and voting for, against or
               abstaining as to each matter.

            1.The stockholders  elected the following Class III directors
              to serve a three-year term expiring in 2005 by the following
              vote:

              Name                         For              Withhold Authority
              ----                         ---              ------------------
              Larry G. Blackwell      14,263,805 (74.4%)     4,894,441 (25.5%)
              John M. Sterling, Jr.   18,364,696 (95.8%)        793,550 (4.1%)

              Each of the following  directors  continued their term of office
              as a director after the Annual Meeting: Richard T. Brock, Ira D.
              Cohen and James R. Talton, Jr..

            2.The stockholders approved a proposal to increase the number
              of shares of common stock reserved for issuance  under the
              Datastream Systems,Inc. 1998 Stock Option Plan by 500,000 shares
              by the following vote:

               For                        Against                  Abstain
               ---                        -------                  -------
               16,085,811 (84.0%)      3,049,480 (15.9%)         22,955 (0.1%)

Item 5.        Other Information

               None

Item 6.        Exhibits and Reports on Form 8-K

               (a)    Exhibits

                      10.1 Datastream Systems, Inc. 1998 Stock Option Plan (as
                      amended through April 10, 2002) (incorporated herein by
                      reference to Appendix B to the Registrant's Proxy
                      Statement, dated and filed with the Securities and
                      Exchange Commission on May 10, 2002).

                      99.1 Statement of Chief Executive Officer and Chief
                      Financial Officer of Datastream Systems, Inc. Pursuant
                      to 18 U.S.C. Section 1350, as Adopted Pursuant to ss.906
                      of the Sarbanes-Oxley Act of 2002.

               (b)    Reports on Form 8-K

                      The Company filed a Current Report on Form 8-K on July 24,
                      2002 to report the Company's announcement of a stock
                      repurchase plan.



                                       15
<PAGE>




                                   SIGNATURES



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



                                            Datastream Systems, Inc.

Date:   08/14/02                            /s/ C. Alex Estevez
                                            C. Alex Estevez
                                            Chief Financial Officer (principal
                                            financial and accounting officer)



                                       16
<PAGE>







                                  EXHIBIT INDEX


Exhibit
Number             Exhibit Description

 10.1              Datastream Systems, Inc. 1998 Stock Option Plan (as
                   amended through  April 10, 2002)(incorporated herein by
                   reference to Appendix B to the Registrant's Proxy Statement,
                   dated and filed with the Securities and Exchange Commission
                   on May 10, 2002).


 99.1              Statement of Chief Executive Officer and Chief Financial
                   Officer of Datastream Systems, Inc. Pursuant to 18 U.S.C.
                   Section 1350, as Adopted Pursuant to Subsection 906 of the
                   Sarbanes-Oxley Act of 2002.



<PAGE>



                                                                 EXHIBIT 99.1


                    Statement of Chief Executive Officer AND
                           CHIEF FINANCIAL OFFICER of
                             DATASTREAM SYSTEMS, INC.
                        Pursuant to 18 U.S.C. Section 1350,
                             As Adopted Pursuant to
                  Subsection 906 of the Sarbanes-Oxley Act of 2002

        In connection with the Quarterly Report of Datastream Systems, Inc. (the
"Company") on Form 10-Q for the period ended June 30, 2002 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), the
undersigned, Larry G. Blackwell, President and Chief Executive Officer of the
Company, and C. Alex Estevez, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

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

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




/s/ Larry G. Blackwell                         /s/ C. Alex Estevez
----------------------                         -------------------
Larry G. Blackwell                             C. Alex Estevez
President and Chief Executive Officer          Chief Financial Officer
Datastream Systems, Inc.                       Datastream Systems, Inc.
August 14, 2002                                August 14, 2002