##### Table of Contents

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

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FORM
10-Q

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(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, 2003

OR

| | o | 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

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DATASTREAM SYSTEMS, INC.

Incorporated pursuant to the laws of the State of
Delaware

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Internal Revenue Service  Employer Identification No. 57-0813674

50 DATASTREAM PLAZA, GREENVILLE, SC 29605(864) 422-5001

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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 o

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

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, 2003: 20,216,822 shares,
$0.01 par value.

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##### Table of Contents

Datastream Systems, Inc.

FORM
10-Q

Quarter ended June 30, 2003

Index



|        |  |                      |    |                                                                                                                          | PageNo.
|------- |  | -------------------- | -- | ------------------------------------------------------------------------------------------------------------------------ | -------
|        |  |                      |    |                                                                                                                          |        
|PartI.  |  | FinancialInformation |   
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    | Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995                                       | 3      
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 1.              |    | Consolidated Financial Statements (unaudited)                                                                            |        
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    | Consolidated Balance Sheets -December 31, 2002 and June 30, 2003Assets                                                   | 4      
|        |  |                      |    | Liabilities and Stockholders Equity                                                                                     | 5      
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    | Consolidated Statements of Operations -For the three months ended June 30, 2002 and 2003                                 | 6      
|        |  |                      |    | For the six months ended June 30, 2002 and 2003                                                                          | 7      
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    | Consolidated Statement of Stockholders Equity and Comprehensive Income (Loss) -  For the six months ended June 30, 2003 | 8      
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    | Consolidated Statements of Cash Flows -  For the six months ended June 30, 2002 and 2003                                 | 9      
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    | Notes to the Consolidated Financial Statements                                                                           | 10     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 2.              |    | Managements Discussion and Analysis of Financial Condition and Results of Operations                                    | 14     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 3.              |    | Quantitative and Qualitative Disclosures About Market Risk                                                               | 17     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 4.              |    | Controls and Procedures                                                                                                  | 17     
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    |                                                                                                                          |        
|        |  |                      |    |                                                                                                                          |        
|PartII. |  | OtherInformation     | 18
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 1.              |    | Legal Proceedings                                                                                                        | 18     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 2.              |    | Changes in Securities and Use of Proceeds                                                                                | 18     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 3.              |    | Defaults Upon Senior Securities                                                                                          | 18     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 4.              |    | Submission of Matters to a Vote of Stockholders                                                                          | 18     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 5.              |    | Other Information                                                                                                        | 18     
|        |  |                      |    |                                                                                                                          |        
|        |  | Item 6.              |    | Exhibits and Reports on Form 8-K                                                                                         | 18     

|Signatures    | 20
|------------- | --
|              |   
|Exhibit Index | 21

2



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##### Table of Contents

| | PART I. | FINANCIAL INFORMATION
| | ------- | ---------------------


SAFE HARBOR STATEMENT UNDER THE PRIVATESECURITIES 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: a highly competitive market; our ability to keep pace with rapid technological changes and demands in our markets; volatility of our
quarterly results due to increasing sales cycles; solutions that require longer implementations and other professional services engagements; reduced profitability due to our hosting services strategy; our ability to generate revenue and profits from
our electronic procurement solution; significant delays in product development and our ability to be an innovator in the industry; third party relationships on which our success is substantially dependent; third party technologies on which our
future success is substantially dependent; our ability to detect software bugs or errors to avoid a correction to or delay in the release of our products; our ability to manage our international operations; deterioration of economic and political
conditions; continued acceptance of the Internet for business transactions; recruiting and retaining key employees; our ability to adequately protect our proprietary rights; security risks and concerns that may deter use of the Internet for our
applications; fluctuations in our stock price since our initial public offering; and our exposure to foreign exchange rate fluctuations. 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 Managements Discussion and Analysis of Financial Condition and Results of Operations in the
Companys Form 10-K for the fiscal year ended December 31, 2002, 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



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##### Table of Contents

| | ITEM 1. | Consolidated Financial Statements
| | ------- | ---------------------------------

D
atastream Systems, Inc. and Subsidiaries

Consolidated Balance Sheets

Assets(unaudited)



|                                                                                                                        |  | December31,2002 |            | June30,2003 |  
|----------------------------------------------------------------------------------------------------------------------- |  | --------------- | ---------- | ----------- | -
|                                                                                                                        |  |                 |            |             |  
|Current assets:                                                                                                         |  |                 |            |             |  
|Cash and cash equivalents                                                                                               |  | $               | 34,721,471 |             | $
|Accounts receivable, net of allowance for doubtful accounts of $1,396,984 and $1,451,810 in 2002 and 2003, respectively |  |                 | 18,116,426 |             |  
|Unbilled revenue, net of allowance of $100,000 in 2002 and 2003                                                         |  |                 | 2,003,107  |             |  
|Prepaid expenses                                                                                                        |  |                 | 1,033,465  |             |  
|Inventories                                                                                                             |  |                 | 26,992     |             |  
|Income tax receivable                                                                                                   |  |                 | 472,841    |             |  
|Deferred income taxes                                                                                                   |  |                 | 929,438    |             |  
|Other assets                                                                                                            |  |                 | 1,536,663  |             |  
|                                                                                                                        |  |                 |            |             |  
|Total current assets                                                                                                    |  |                 | 58,840,403 |             |  
|Investment                                                                                                              |  |                 | 2,000,000  |             |  
|Property and equipment, net                                                                                             |  |                 | 10,696,968 |             |  
|Deferred income taxes                                                                                                   |  |                 | 5,287,633  |             |  
|Other long term assets                                                                                                  |  |                 | 83,758     |             |  
|                                                                                                                        |  |                 |            |             |  
|Total assets                                                                                                            |  | $               | 76,908,762 |             | $
|                                                                                                                        |  |                 |            |             |  

See accompanying notes to consolidated financial statements.

4



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##### Table of Contents

Datastream Systems, Inc. and Subsidiaries

Consolidated Balance Sheets (Continued)

Liabilities and Stockholders Equity(unaudited)



|                                                                                                                                                     |  | December 31,2002 |             | June 30,2003 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | ----------- | ------------ | -
|                                                                                                                                                     |  |                  |             |              |  
|Current liabilities:                                                                                                                                 |  |                  |             |              |  
|Accounts payable                                                                                                                                     |  | $                | 2,913,611   |              | $
|Other accrued liabilities                                                                                                                            |  |                  | 9,348,113   |              |  
|Income taxes payable                                                                                                                                 |  |                  |            |              |  
|Unearned revenue                                                                                                                                     |  |                  | 15,105,756  |              |  
|                                                                                                                                                     |  |                  |             |              |  
|Total liabilities                                                                                                                                    |  |                  | 27,367,480  |              |  
|Stockholders equity:                                                                                                                                |  |                  |             |              |  
|Preferred stock, $1 par value, 1,000,000 shares authorized; none issued                                                                              |  |                  |            |              |  
|Common stock, $.01 par value, 40,000,000 shares authorized; 21,090,200 shares issued at December 31, 2002, 21,354,615 shares issued at June 30, 2003 |  |                  | 210,902     |              |  
|Additional paid-in capital                                                                                                                           |  |                  | 87,196,093  |              |  
|Accumulated deficit                                                                                                                                  |  |                  | (28,761,966 | )            |  
|Other accumulated comprehensive loss                                                                                                                 |  |                  | (1,877,654  | )            |  
|Treasury stock, at cost;                                                                                                                             |  |                  |             |              |  
|1,028,600 shares at December 31, 2002,                                                                                                               |  |                  |             |              |  
|1,154,400 shares at June 30, 2003                                                                                                                    |  |                  | (7,226,093  | )            |  
|                                                                                                                                                     |  |                  |             |              |  
|Total stockholders equity                                                                                                                           |  |                  | 49,541,282  |              |  
|                                                                                                                                                     |  |                  |             |              |  
|Total liabilities and stockholders equity                                                                                                           |  | $                | 76,908,762  |              | $
|                                                                                                                                                     |  |                  |             |              |  

See accompanying notes to consolidated financial statements.

5



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Datastream Systems, Inc. and Subsidiaries

Consolidated Statements of Operations(unaudited)Three months ended June 30, 2002 and 2003



|                                                                                  |  | June30,2002 |            | June30,2003 |  
|--------------------------------------------------------------------------------- |  | ----------- | ---------- | ----------- | -
|                                                                                  |  |             |            |             |  
|Revenues:                                                                         |  |             |            |             |  
|Software product                                                                  |  | $           | 6,838,414  |             | $
|Services and support                                                              |  |             | 15,975,126 |             |  
|                                                                                  |  |             |            |             |  
|Total revenues                                                                    |  |             | 22,813,540 |             |  
|Cost of revenues:                                                                 |  |             |            |             |  
|Cost of product revenues                                                          |  |             | 265,404    |             |  
|Cost of services and support revenues                                             |  |             | 7,811,020  |             |  
|                                                                                  |  |             |            |             |  
|Total cost of revenues                                                            |  |             | 8,076,424  |             |  
|                                                                                  |  |             |            |             |  
|Gross profit                                                                      |  |             | 14,737,116 |             |  
|Operating expenses:                                                               |  |             |            |             |  
|Sales and marketing                                                               |  |             | 8,926,243  |             |  
|Product development                                                               |  |             | 2,624,870  |             |  
|General and administrative                                                        |  |             | 2,696,492  |             |  
|                                                                                  |  |             |            |             |  
|Total operating expenses                                                          |  |             | 14,247,605 |             |  
|                                                                                  |  |             |            |             |  
|Operating income                                                                  |  |             | 489,511    |             |  
|Other income (expense), net                                                       |  |             | 83,401     |             |  
|                                                                                  |  |             |            |             |  
|Income before income taxes                                                        |  |             | 572,912    |             |  
|Income tax expense                                                                |  |             | 200,622    |             |  
|                                                                                  |  |             |            |             |  
|Net income                                                                        |  | $           | 372,290    |             | $
|                                                                                  |  |             |            |             |  
|Basic net income per share                                                        |  | $           | .02        |             | $
|                                                                                  |  |             |            |             |  
|Diluted net income per share                                                      |  | $           | .02        |             | $
|                                                                                  |  |             |            |             |  
|Basic weighted average number of common shares outstanding                        |  |             | 20,165,733 |             |  
|                                                                                  |  |             |            |             |  
|Diluted weighted average number of common and potential common shares outstanding |  |             | 20,628,580 |             |  
|                                                                                  |  |             |            |             |  

See accompanying notes to consolidated financial statements.

6



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Datastream Systems, Inc. and Subsidiaries

Consolidated Statements of Operations(unaudited)Six months ended June 30, 2002 and 2003



|                                                                                  |  | June30,2002 |            | June30,2003 |  
|--------------------------------------------------------------------------------- |  | ----------- | ---------- | ----------- | -
|                                                                                  |  |             |            |             |  
|Revenues:                                                                         |  |             |            |             |  
|Software product                                                                  |  | $           | 12,630,813 |             | $
|Services and support                                                              |  |             | 31,779,725 |             |  
|                                                                                  |  |             |            |             |  
|Total revenues                                                                    |  |             | 44,410,538 |             |  
|Cost of revenues:                                                                 |  |             |            |             |  
|Cost of product revenues                                                          |  |             | 625,539    |             |  
|Cost of services and support revenues                                             |  |             | 15,742,187 |             |  
|                                                                                  |  |             |            |             |  
|Total cost of revenues                                                            |  |             | 16,367,726 |             |  
|                                                                                  |  |             |            |             |  
|Gross profit                                                                      |  |             | 28,042,812 |             |  
|Operating expenses:                                                               |  |             |            |             |  
|Sales and marketing                                                               |  |             | 16,846,238 |             |  
|Product development                                                               |  |             | 5,301,298  |             |  
|General and administrative                                                        |  |             | 5,515,275  |             |  
|                                                                                  |  |             |            |             |  
|Total operating expenses                                                          |  |             | 27,662,811 |             |  
|                                                                                  |  |             |            |             |  
|Operating income                                                                  |  |             | 380,001    |             |  
|Other income (expense), net                                                       |  |             | 144,887    |             |  
|                                                                                  |  |             |            |             |  
|Income before income taxes                                                        |  |             | 524,888    |             |  
|Income tax expense                                                                |  |             | 181,893    |             |  
|                                                                                  |  |             |            |             |  
|Net income                                                                        |  | $           | 342,995    |             | $
|                                                                                  |  |             |            |             |  
|Basic net income per share                                                        |  | $           | .02        |             | $
|                                                                                  |  |             |            |             |  
|Diluted net income per share                                                      |  | $           | .02        |             | $
|                                                                                  |  |             |            |             |  
|Basic weighted average number of common shares outstanding                        |  |             | 20,155,510 |             |  
|                                                                                  |  |             |            |             |  
|Diluted weighted average number of common and potential common shares outstanding |  |             | 20,645,798 |             |  
|                                                                                  |  |             |            |             |  

See accompanying notes to consolidated financial statements

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Datastream Systems, Inc. and Subsidiaries

Consolidated Statement of Stockholders Equity and Comprehensive Income
(Loss)(unaudited)

Six months ended June 30, 2003



|                                        |  | CommonStock |         | AdditionalPaid-InCapital |   | RetainedEarnings(Deficit) |  | OtherAccumulatedComprehensiveIncome(Loss) |             | TreasuryStock |   | TotalStockholdersEquity |  
|--------------------------------------- |  | ----------- | ------- | ------------------------ | - | ------------------------- |  | ----------------------------------------- | ----------- | ------------- | - | ------------------------ | -
|                                        |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  
|Balance at December 31, 2002            |  | $           | 210,902 |                          | $ | 87,196,093                |  | $                                         | (28,761,966 | )             | $ | (1,877,654               | )
|Comprehensive income                    |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  
|Net income                              |  |             |        |                          |   |                          |  |                                           | 1,210,200   |               |   |                         |  
|Foreign currency translation adjustment |  |             |        |                          |   |                          |  |                                           |            |               |   | 90,907                   |  
|                                        |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  
|Total comprehensive income              |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  
|Exercise of stock options               |  |             | 2,499   |                          |   | 1,603,680                 |  |                                           |            |               |   |                         |  
|Stock issued for Employee               |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  
|Stock Purchase Plan                     |  |             | 146     |                          |   | 79,349                    |  |                                           |            |               |   |                         |  
|Acquisition of 125,800 shares           |  |             |        |                          |   |                          |  |                                           |            |               |   |                         |  
|                                        |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  
|Balance at June 30, 2003                |  | $           | 213,547 |                          | $ | 88,879,122                |  | $                                         | (27,551,766 | )             | $ | (1,786,747               | )
|                                        |  |             |         |                          |   |                           |  |                                           |             |               |   |                          |  

See accompanying notes to consolidated financial statements.

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Datastream Systems, Inc. and Subsidiaries

Consolidated Statements of Cash Flows(unaudited)

Six months ended June 30, 2002 and 2003



|                                                                                  |  | June30,2002 |            | June30,2003 |  
|--------------------------------------------------------------------------------- |  | ----------- | ---------- | ----------- | -
|                                                                                  |  |             |            |             |  
|Cash flows from operating activities:                                             |  |             |            |             |  
|Net income                                                                        |  | $           | 342,995    |             | $
|Adjustments to reconcile net income to net cash provided by operating activities: |  |             |            |             |  
|Depreciation                                                                      |  |             | 2,071,502  |             |  
|Amortization                                                                      |  |             | 79,812     |             |  
|Loss on write-down of investment                                                  |  |             |           |             |  
|Change in allowances for doubtful accounts                                        |  |             | (71,564    | )           |  
|Stock based compensation                                                          |  |             | 55,938     |             |  
|Deferred income taxes                                                             |  |             | 751,872    |             |  
|Changes in operating assets and liabilities:                                      |  |             |            |             |  
|Accounts receivable                                                               |  |             | (1,098,295 | )           |  
|Unbilled revenue                                                                  |  |             | 580,537    |             |  
|Prepaid expenses                                                                  |  |             | 751,271    |             |  
|Inventories                                                                       |  |             | 3,337      |             |  
|Income taxes receivable                                                           |  |             | (610,756   | )           |  
|Other assets                                                                      |  |             | (102,737   | )           |  
|Accounts payable                                                                  |  |             | 150,030    |             |  
|Other accrued liabilities                                                         |  |             | 970,912    |             |  
|Income taxes payable                                                              |  |             |           |             |  
|Unearned revenue                                                                  |  |             | 2,881,247  |             |  
|                                                                                  |  |             |            |             |  
|Net cash provided by operating activities                                         |  |             | 6,756,101  |             |  
|                                                                                  |  |             |            |             |  
|Cash flows from investing activities:                                             |  |             |            |             |  
|Additions to property and equipment                                               |  |             | (727,796   | )           |  
|                                                                                  |  |             |            |             |  
|Net cash used in investing activities                                             |  |             | (727,796   | )           |  
|                                                                                  |  |             |            |             |  
|Cash flows from financing activities:                                             |  |             |            |             |  
|Proceeds from exercise of stock options                                           |  |             | 247,800    |             |  
|Proceeds from issuances of shares under employee stock purchase plan              |  |             | 91,193     |             |  
|Cash paid to acquire treasury stock                                               |  |             | (308,501   | )           |  
|Principal payments on long-term debt                                              |  |             | (1,356     | )           |  
|                                                                                  |  |             |            |             |  
|Net cash provided by financing activities                                         |  |             | 29,136     |             |  
|                                                                                  |  |             |            |             |  
|Foreign currency translation adjustment                                           |  |             | (450,406   | )           |  
|Net increase in cash and cash equivalents                                         |  |             | 5,607,035  |             |  
|Cash and cash equivalents at beginning of period                                  |  |             | 25,396,939 |             |  
|                                                                                  |  |             |            |             |  
|Cash and cash equivalents at end of period                                        |  | $           | 31,003,974 |             | $
|                                                                                  |  |             |            |             |  

See accompanying notes to consolidated financial statements.

9



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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 consolidated 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, 2002 filed with the SEC on March 27, 2003. 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 Performance Management. The Company manages the Asset Performance 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, 2002 and 2003:



|                        |  | UnitedStates |            | Europe |   | LatinAmerica |   | Asia |           | Total |  
|----------------------- |  | ------------ | ---------- | ------ | - | ------------ | - | ---- | --------- | ----- | -
|                        |  |              |            |        |   |              |   |      |           |       |  
|June 30, 2002:          |  |              |            |        |   |              |   |      |           |       |  
|                        |  |              |            |        |   |              |   |      |           |       |  
|Total revenues          |  | $            | 14,811,816 |        | $ | 5,018,539    |   | $    | 1,629,243 |       | $
|Operating income (loss) |  |              | 621,278    |        |   | (189,199     | ) |      | 227,919   |       |  
|Total assets            |  |              | 52,284,050 |        |   | 13,983,713   |   |      | 3,804,065 |       |  
|                        |  |              |            |        |   |              |   |      |           |       |  
|June 30, 2003:          |  |              |            |        |   |              |   |      |           |       |  
|                        |  |              |            |        |   |              |   |      |           |       |  
|Total revenues          |  | $            | 14,816,207 |        | $ | 5,569,773    |   | $    | 1,481,810 |       | $
|Operating income (loss) |  |              | 1,501,258  |        |   | 249,048      |   |      | (12,194   | )     |  
|Total assets            |  |              | 53,779,071 |        |   | 16,636,575   |   |      | 3,353,334 |       |  

For the six months ended June 30, 2002 and 2003:



|                        |  | UnitedStates |            | Europe |   | LatinAmerica |   | Asia |           | Total |  
|----------------------- |  | ------------ | ---------- | ------ | - | ------------ | - | ---- | --------- | ----- | -
|                        |  |              |            |        |   |              |   |      |           |       |  
|June 30, 2002:          |  |              |            |        |   |              |   |      |           |       |  
|                        |  |              |            |        |   |              |   |      |           |       |  
|Total revenues          |  | $            | 28,443,815 |        | $ | 9,597,353    |   | $    | 3,378,011 |       | $
|Operating income (loss) |  |              | 475,220    |        |   | (533,088     | ) |      | 350,444   |       |  
|Total assets            |  |              | 52,284,050 |        |   | 13,983,713   |   |      | 3,804,065 |       |  
|                        |  |              |            |        |   |              |   |      |           |       |  
|June 30, 2003:          |  |              |            |        |   |              |   |      |           |       |  
|                        |  |              |            |        |   |              |   |      |           |       |  
|Total revenues          |  | $            | 29,431,658 |        | $ | 11,050,896   |   | $    | 2,674,040 |       | $
|Operating income (loss) |  |              | 2,865,047  |        |   | 570,264      |   |      | (234,784  | )     |  
|Total assets            |  |              | 53,779,071 |        |   | 16,636,575   |   |      | 3,353,334 |       |  

10



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##### Table of Contents

The United States revenues include international revenues of approximately $913,000 and $529,000 for the second quarters of 2002 and 2003, respectively, and
approximately $1,566,000 and $ 1,022,000 for the first six months of 2002 and 2003, respectively.

3.Reconciliation of Basic and Diluted Net Income (Loss) Per Share

Basic net income per share is computed by dividing net
income by the weighted average number of common shares outstanding. Diluted net income per share is computed by dividing net income 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. The reconciliation of basic and diluted income per share as of June 30, 2003 is as
follows:



|                               |  | Income |           | Shares |            | PerShareAmount |  
|------------------------------ |  | ------ | --------- | ------ | ---------- | -------------- | -
|                               |  |        |           |        |            |                |  
|For the three months ended:    |  |        |           |        |            |                |  
|June 30, 2002:                 |  |        |           |        |            |                |  
|Basic net income per share     |  | $      | 372,290   |        | 20,165,733 |                | $
|                               |  |        |           |        |            |                |  
|Effect of dilutive securities: |  |        |           |        |            |                |  
|Stock options                  |  |        |          |        | 462,847    |                |  
|                               |  |        |           |        |            |                |  
|Diluted net income per share   |  | $      | 372,290   |        | 20,628,580 |                | $
|                               |  |        |           |        |            |                |  
|June 30, 2003:                 |  |        |           |        |            |                |  
|Basic net income per share     |  | $      | 252,462   |        | 20,085,679 |                | $
|                               |  |        |           |        |            |                |  
|Effect of dilutive securities: |  |        |           |        |            |                |  
|Stock options                  |  |        |          |        | 676,956    |                |  
|                               |  |        |           |        |            |                |  
|Diluted net income per share   |  | $      | 252,462   |        | 20,762,635 |                | $
|                               |  |        |           |        |            |                |  
|For the six months ended:      |  |        |           |        |            |                |  
|June 30, 2002:                 |  |        |           |        |            |                |  
|Basic net income per share     |  | $      | 342,995   |        | 20,155,510 |                | $
|                               |  |        |           |        |            |                |  
|Effect of dilutive securities: |  |        |           |        |            |                |  
|Stock options                  |  |        |          |        | 490,288    |                |  
|                               |  |        |           |        |            |                |  
|Diluted net income per share   |  | $      | 342,995   |        | 20,645,798 |                | $
|                               |  |        |           |        |            |                |  
|June 30, 2003:                 |  |        |           |        |            |                |  
|Basic net income per share     |  | $      | 1,210,200 |        | 20,051,459 |                | $
|                               |  |        |           |        |            |                |  
|Effect of dilutive securities: |  |        |           |        |            |                |  
|Stock options                  |  |        |          |        | 420,877    |                |  
|                               |  |        |           |        |            |                |  
|Diluted net income per share   |  | $      | 1,210,200 |        | 20,472,336 |                | $
|                               |  |        |           |        |            |                |  

Antidilutive shares totaling 3,434,011 and 1,537,561 were excluded from the diluted net income
calculation for the three months ended June 30, 2002 and 2003, respectively and antidilutive shares totaling 3,406,570 and 2,823,206 were excluded from the diluted net income calculation for the six months ended June 30, 2002 and 2003, respectively.

11



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##### Table of Contents

4.Stock Option Plans

The Company applies the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25,Accounting for Stock Issued to
Employees,as amended, to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise
price. SFAS No. 123,Accounting for Stock-Based Compensation,established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee
compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic-value-based method of accounting described above, and has adopted only the disclosure requirements of SFAS No. 123. The following
table illustrates the effect on net income if the fair-value-based method had been applied to all outstanding and unvested awards for the three months and six months ended June 30, 2002 and 2003.



|                                                                                                                            |  | Threemonthsended |         
|--------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | --------
|                                                                                                                            |  |                  |         
|                                                                                                                            |  | June30,2002      |         
|                                                                                                                            |  |                  |         
|For the three months ended:                                                                                                 |  |                  |         
|Net income as reported                                                                                                      |  | $                | 372,290 
|Add: stock-based employee compensation expense included in reported net income, net of tax                                  |  |                  | 27,969  
|Deduct: total stock-based employee compensation expense determined under fair-value-based method for all awards, net of tax |  |                  | 711,805 
|                                                                                                                            |  |                  |         
|Pro forma net loss                                                                                                          |  | $                | (311,546
|Basic net income (loss) per share:                                                                                          |  |                  |         
|As reported                                                                                                                 |  | $                | .02     
|Pro forma                                                                                                                   |  | $                | (.02    
|Diluted net income (loss) per share:                                                                                        |  |                  |         
|As reported                                                                                                                 |  | $                | .02     
|Pro forma                                                                                                                   |  | $                | (.02    



|                                                                                                                            |  | Sixmonthsended |           
|--------------------------------------------------------------------------------------------------------------------------- |  | -------------- | ----------
|                                                                                                                            |  |                |           
|                                                                                                                            |  | June30,2002    |           
|                                                                                                                            |  |                |           
|Net income as reported                                                                                                      |  | $              | 342,995   
|Add: stock-based employee compensation expense included in reported net income, net of tax                                  |  |                | 55,938    
|Deduct: total stock-based employee compensation expense determined under fair-value-based method for all awards, net of tax |  |                | 1,878,275 
|                                                                                                                            |  |                |           
|Pro forma net loss                                                                                                          |  | $              | (1,479,342
|Basic net income (loss) per share:                                                                                          |  |                |           
|As reported                                                                                                                 |  | $              | .02       
|Pro forma                                                                                                                   |  | $              | (.07      
|Diluted net income (loss) per share:                                                                                        |  |                |           
|As reported                                                                                                                 |  | $              | .02       
|Pro forma                                                                                                                   |  | $              | (.07      

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##### Table of Contents

5.Recent Accounting
Pronouncements

In May 2003, the Financial Accounting Standards Board (FASB) issued SFAS No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a
financial instrument that is within its scope as a liability, or an asset in certain circumstances. This Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. The adoption of this Statement is not expected to have a material effect on the Companys consolidated financial statements.

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities(SFAS 149). This Statement amends and clarifies financial accounting
and reporting for derivative instruments and for hedging activities under FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS 133) to improve financial reporting by requiring that contracts with
comparable characteristics be accounted for similarly. This Statement is generally effective for contracts entered into or modified after June 30, 2003. The adoption of SFAS 149 is not expected to have a material effect on the Companys
consolidated financial statements.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51 (FIN
46). This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the interpretation and sets forth additional disclosures about such interests. FIN 46 is effective for the Companys
fiscal year ending December 31, 2003. The adoption of FIN 46 did not have a material effect on the Companys consolidated financial statements.

In July 2003, the Emerging
Issues Task Force (EITF) reached a consensus on EITF 03-5, Applicability of AICPA SOP 97-2 to Non-Software Deliverables. EITF 03-5 provides accounting guidance on whether non-software deliverables (e.g., non-software related equipment or
services) included in an arrangement that contains software are within the scope of SOP 97-2. In general, any non-software deliverables are within the scope of 97-2 if the software deliverable is essential to the functionality of the non-software
deliverables. Companies are required to adopt this consensus in the first reporting period (annual or interim) beginning after ratification by the Financial Accounting Standard Board. The Company believes the adoption of EITF 03-5 will not have a
material impact on the Companys financial position or results of operations.

The EITF recently reached a consensus on its tentative conclusions for EITF 00-21,
Revenue Arrangements with Multiple Deliverables. EITF 00-21 provides accounting guidance for customer solutions where delivery or performance of products, services and/or performance may occur at different points in time or over
different periods of time. Companies are required to adopt this consensus for fiscal periods beginning after June 15, 2003. The Company believes the adoption of EITF 00-21 will not have a material impact on the Companys financial position or
results of operations

6.Commitments and
Contingencies

The Company is occasionally involved in claims arising out of its operations in the normal course of business. No such current claims are expected, individually
or in the aggregate, to have a material adverse effect on the Company.

7.Subsequent Event

On August 8, 2003, Datastream received notice from a private company investee (the Investee) that it intends to raise additional
financing, which would be dilutive to Datastreams ownership position in the Investee and at an implied valuation below the carrying value of Datastreams original $2.0 million investment.

Accordingly, Datastream has decreased its long-term investment on its Consolidated Balance Sheet as of June 30, 2003 to $499,464 from $2.0 million and recorded an impairment charge of approximately $1.5 million through
other income (expense), net on its Consolidated Statements of Operations for the three and six months ended June 30, 2003. See Managements Discussion and Analysis of Financial Condition and Results of OperationsSubsequent
Event.

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##### Table of Contents

| | 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

For over seventeen
years, Datastream has been a leading provider of asset management software and services to enterprises worldwide, including more than 65 percent of the Fortune 500. Datastreams flagship product, Datastream 7i, delivers a complete Asset
Performance Management infrastructure by combining an Internet architecture with broad enterprise asset management functionality, integrated procurement, advanced analytics and multi-site capability. Because Datastream 7i is completely designed and
built around the flexibility, speed and reliability of the Internet, customers achieve organizational transparency of asset performance in a manner unique to the marketplace.

Subsequent Event

The Company has historically recorded a $2.0 million investment in a private company (the Investee) as a long-term investment. On August
8, 2003, Datastream received notice from the Investee that it intends to raise additional financing (the Financing) which would be dilutive to Datastreams ownership position in the Investee and at an implied valuation below the
carrying value of Datastreams $2.0 million investment.

Statement on Accounting Standards (SAS) No. 1 requires that a companys financial statements be adjusted for any
changes in estimates resulting from additional evidence with respect to conditions that existed at the date of the balance sheet and affect the estimates inherent in the process of preparing financial statements. SAS No. 1requires that all information that becomes available prior to the filing of a companys financial statements should be used by management in its evaluation of the conditions on which such estimates were based, even if
this information becomes available following a companys public announcement of earnings. Consequently, pursuant to the requirements of SAS No. 1, Datastream determined that the adjustments should be recorded in the second quarter of 2003
rather than in the third quarter of 2003. Accordingly, Datastream has decreased its long-term investments on its Consolidated Balance Sheet as of June 30, 2003 to $499,464 from $2.0 million and recorded an impairment charge of approximately $1.5
million through other income (expense), net on its Consolidated Statements of Operations for the three and six months ended June 30, 2003, as contained in this Quarterly Report on Form 10-Q.

Such adjustments were not recorded at the time the Company released its earnings for the quarter ended June 30, 2003, which were furnished pursuant to a Current Report on Form 8-K dated July 22, 2003, as the Company had
not received notice of the Financing and the information contained therein. Because the Companys investment in the Investee does not have a readily available market value and because the Financing has not yet been finalized, it is unknown if
any further adjustments to the carrying value of the Companys investment in the Investee will occur in future periods.

Results of Operations

Total Revenues.Total revenues increased 3% to $23,388,559 in the second quarter of 2003 from $22,813,540 in the second quarter of 2002. Total revenues
increased 4% to $46,172,791 for the first six months of 2003 from $44,410,538 for the first six months of 2002, due principally to the transition to Datastream 7i, which has a larger average deal size, and an increase in support renewal contracts.
International revenues were approximately $9,101,000 (39% of total revenues) in the second quarter of 2003 and approximately $8,915,000 (39% of total revenues) in the second quarter of 2002. International revenues were approximately $17,763,000 (38%
of total revenues) for the first six months of 2003 and approximately $17,533,000 (39% of total revenues) for the first six months of 2002. See Note 2 to the consolidated financial statements.

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##### Table of Contents

Software product revenues decreased 8% to $6,271,635 (27% of total revenues) in the second quarter of 2003 from $6,838,414 (30% of total
revenues) in the second quarter of 2002, as a result of extended sales cycles associated with Datastream 7i. Software product revenues increased 1% to $12,793,281 (28% of total revenues) for the first six months of 2003 from $12,630,813 (28% of
total revenues) for the first six months of 2002.

Services and support revenues increased 7% to $17,116,924 (73% of total revenues) in the second quarter of 2003
from $15,975,126 (70% of total revenues) in the second quarter of 2002. Services and support revenues increased 5% to $33,379,510 (72% of total revenues) for the first six months of 2003 from $31,779,725 (72% of total revenues) for the first six
months of 2002. For both periods, support revenue increased due to increased software license deal size and an increase in average customer support renewal revenue. The increase in support revenue was partially offset by a decrease in service
revenue due to general economic conditions and increased competition by third party service providers.

Cost of Revenues. Cost of
revenues decreased 2% to $7,933,070 (34% of total revenues) in the second quarter of 2003, as compared to $8,076,424 (35% of total revenues) in the second quarter of 2002. Cost of revenues decreased 4% to $15,712,085 (34% of total revenues) for the
first six months of 2003, as compared to $16,367,726 (37% of total revenues) for the first six months of 2002. The decrease in cost of revenues for the three and six month periods ending June 30, 2003 is due to decreased service revenues and overall
reductions in internal and third party service costs.

Sales and Marketing Expenses.Sales and marketing expenses decreased 11% to
$7,975,082 (34% of total revenues) in the second quarter of 2003 from $8,926,243 (39% of total revenues) in the second quarter of 2002. Sales and marketing expenses decreased 10% to $15,226,354 (33% of total revenues) for the first six months of
2003 from $16,846,238 (38% of total revenues) for the first six months of 2002. The decrease in sales and marketing expenses is due to cost savings resulting from lower advertising and marketing expenditures, lower sales commissions and higher sales
productivity.

Product Development Expenses.Total product development expenditures increased 15% to $3,019,990 (13% of total revenues)
in the second quarter of 2003 from $2,624,870 (12% of total revenues) in the second quarter of 2002. Total product development expenditures increased 11% to $5,890,310 (13% of total revenues) for the first six months of 2003 from $5,301,298 (12% of
total revenues) for the first six months of 2002. The increase in total product development expense is a result of increased investment in asset performance management functionality, mobile solutions and web services.

General and Administrative Expenses.General and administrative expenses decreased marginally to $2,690,858 (12% of total revenues) in the second quarter of
2003 from $2,696,492 (12% of total revenues) in the second quarter of 2002. General and administrative expenses increased 12% to $6,196,952 (13% of total revenues) for the first six months of 2003 from $5,515,275 (12% of total revenues) for the
first six months of 2002. The increase for the six month period ending June 30, 2003 is due to provisions for accounts receivable specifically identified as uncollectible and reduction in foreign currency gains on transactions denominated in a
foreign currency due to fluctuating currency rates.

Other income (expense), net. Other income (expense), net decreased significantly to
($1.4) million in the second quarter of 2003 from $83,401 in the second quarter of 2002 and to ($1.3) million for the first six months of 2003 from $144,887 for the first six months of 2002. The decrease was due to a write down of the Companys
long-term investment from $2.0 million to $499,464. (See Note 7).

Tax Rate. The Companys effective tax rate was 39% for the
second quarter of 2003 as compared to 35% for the second quarter of 2002. The Companys effective tax rate was 36% for the first six months of 2003 as compared to 35% for the first six months of 2002. The increase in the effective tax rate
during 2003 is due to increased income in the United States and the potential inability to utilize net operating losses generated in certain foreign locations in 2003.

Net income.Net income decreased to $252,462 (1% of total revenues) in the second quarter of 2003 from a net income of $372,290 (2% of total revenues) in the second quarter of 2002. The
decrease is due to a write-down of the Companys investment of approximately $1.5 million (see note 7) offset by increased Datastream 7i revenues. Net income improved to $1,210,200 (3% of total revenues) for the first six months of 2003 from a
net income of $342,995 (1% of total revenues) for the first six months of 2002. The improvement is attributed to increased Datastream 7i revenues and decreased service, sales and marketing expenditures.

15



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##### Table of Contents

Financial Condition

Consolidated total assets were $80.1 million at June 30,
2003, an increase of approximately $3.2 million, or 4% from $76.9 million at December 31, 2002. The increase was primarily due to a $6.1 million increase in cash and cash equivalents partially offset by a $1.8 million reduction in accounts
receivable and unbilled revenue as a result of improved collections on customer accounts and a $1.5 million reduction in the carrying value of its long-term investment due to the investees notice of financing received on August 8, 2003 (see
Note 7).

Consolidated total liabilities were $28.3 million at June 30, 2003, an increase of approximately $0.9 million, or 3% from $27.4 million at December 31, 2002. The
increase was primarily due to a $1.6 million increase in unearned revenue as a result of increased support renewals and an increase in income taxes payable due to a higher net income, offset by a decrease in other accrued liabilities as a result of
approximately $500,000 of accrued expenses for corporate building renovations at December 31, 2002, which has since been paid.

Cash and cash equivalents increased 32% to $40.8
million at June 30, 2003 compared to $31.0 million at June 30, 2002. Cash and cash equivalents increased 18% at June 30, 2003 compared to December 31, 2002. Cash continues to improve as a result of increased sales, improved collections on accounts
receivable, improved days sales outstanding and decreased operating expenses.

Cash provided by operations increased 7% to $7.3 million at June 30, 2003 from $6.8 million at June
30, 2002. The increase was primarily a result of decreased operating costs and increased collections on accounts receivable and unbilled revenue.

Net cash used in investing
activities increased 216% to $2.3 million for the six months ended June 30, 2003 compared to approximately $728,000 for the six months ended June 30, 2002. The increase was due to building renovations at corporate headquarters during the first six
months of 2003.

Liquidity and Capital Resources

The Company has funded its operating activities
primarily with cash generated from operations. The Company ended its second quarter of 2003 with $40,805,878 in cash and cash equivalents, which are defined as highly liquid securities maturing in 90 days or less.

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 expired on July 23, 2003, and the board of directors is currently reviewing the adoption of a new stock repurchase plan. As of June 30, 2003, the Company has repurchased 1,154,400 shares under separate stock repurchase plans. The
repurchased shares may be used, when needed, 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.

As of June 30, 2003, the Company had no long-term debt commitments and no material commitments for capital expenditures. The Company believes that its current cash balances and cash flows from
operations will be sufficient to meet its working capital and capital expenditure needs for the next 12 months.

Critical Accounting Policies

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, 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, 2002.

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##### Table of Contents

| | 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 2003.

| | ITEM 4. | Controls and Procedures
| | ------- | -----------------------

The Companys management, with the participation of the Companys Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of the Companys disclosure controls and procedures as of June 30, 2003. Based on that evaluation, the Companys Chief Executive Officer and Chief Financial Officer have
concluded that, as of June 30, 2003, the Companys disclosure controls and procedures provide reasonable assurance that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There have been no
significant changes in the Companys internal controls over financial reporting during the quarter ended June 30, 2003 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over
financial reporting.

17



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##### Table of Contents

| | 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. No such current claims are expected, individually or in the aggregate, to have a material adverse effect on the Companys consolidated financial statements.

| | ITEM 2. | C
hanges in Securities and Use of Proceeds
| | ------- | ------------------------------------------

None

| | ITEM 3. | Defaults Upon Senior Securities
| | ------- | -------------------------------

None

| | ITEM 4. | S
ubmission of Matters to a Vote of Stockholders
| | ------- | ------------------------------------------------

The annual meeting of the Companys shareholders was held on June 5,
2003. At the annual meeting, the following nominees were elected to serve as Class I directors for a three-year term expiring at the 2006 annual meeting:



|Name of Director     |  | Votes For  |  | Authority Withheld
|-------------------- |  | ---------- |  | ------------------
|                     |  |            |  |                   
|James R. Talton, Jr. |  | 16,602,756 |  | 1,580,761         
|Robert C. Davis      |  | 17,414,022 |  | 769,495           

The following persons continued as directors following
the annual meeting: Larry G. Blackwell, Richard T. Brock, Ira D. Cohen, and John M. Sterling, Jr.

At the annual meeting, the shareholders voted to increase the
number of shares of common stock reserved for issuance under the Companys 1998 Stock Option Plan by 600,000 shares, from 3,250,000 to 3,850,000 shares. The results of that vote were as follows:



|For        |  | Against   |  | Abstain
|---------- |  | --------- |  | -------
|           |  |           |  |        
|14,830,551 |  | 3,334,362 |  | 18,604 

| | ITEM 5. | O
ther Information
| | ------- | ------------------

None

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

| | (a) | Exhibits
| | --- | --------

| | 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
| | ---- | --------------------------------------------------------------------------------------------------

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

| | 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------

| | 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents

| | (b) | Reports on Form 8-K
| | --- | -------------------

The Company filed a Current Report on Form 8-K pursuant to Item 5 on April 7, 2003 to report the
appointment of Robert C. Davis as a director of the Company.

The Company furnished a Current Report on Form 8-K pursuant to Items 7 and 9 (pursuant to Item 12)
on April 23, 2003 to announce its financial results for the quarter ended March 31, 2003.

The Company filed a Current Report on Form 8-K pursuant to Items 5 and
7 on May 6, 2003 to announce the resignation of its chief operating officer.

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##### Table of Contents

S
IGNATURES

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: August 14, 2003 |  |  | /s/ C.ALEXESTEVEZ                                                                 
|                      |  |  |                                                                                   
|                      |  |  | C. Alex EstevezChief Financial Officer (principalfinancial and accounting officer)



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##### Table of Contents

EXHIBIT INDEX



|ExhibitNumber | Description                                                                                                                                     
|------------- | ------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                 
|31.1          | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                              
|              |                                                                                                                                                 
|31.2          | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                              
|              |                                                                                                                                                 
|32.1          | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|              |                                                                                                                                                 
|32.2          | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|              |                                                                                                                                                 

21