SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

          ------------------------------------------------------------

                                    FORM 10-Q

                                   (Mark One)

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

                  For the quarterly period ended March 31, 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: 333-30274
   ---------------------------------------------------------------------------
                         ClickSoftware Technologies Ltd.
             (Exact name of Registrant as specified in its charter)

         ISRAEL                                    Not Applicable
 (State or other jurisdiction of                  (I.R.S. Employer
  incorporation or organization)               Identification Number)

                               34 Habarzel Street
                                Tel Aviv, Israel
                    (Address of principal executive offices)

                                (972-3) 765-9400
              (Registrant's telephone number, including area code)


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
                                     ---    ---

     As of March 31,  2002,  there were  26,247,954  shares of the  Registrant's
ordinary shares, par value 0.02 NIS, outstanding.


                                       1
<PAGE>
<TABLE>
<CAPTION>

                         ClickSoftware Technologies Ltd.

                                    FORM 10-Q

                      FOR THE QUARTER ENDED MARCH 31, 2002


PART I. FINANCIAL INFORMATION

Item 1.   Financial Statements

 <S>                                                                                                                        <C>
 (a)    Condensed Consolidated Balance Sheets as of March 31, 2002 and
        December 31, 2001..................................................................................................   3

 (b)    Condensed Consolidated Statements of Operations for the three
        months ended March 31, 2002 and March 31, 2001.....................................................................   4

 (c)    Condensed Consolidated Statements of Cash Flows....................................................................   5

 (d)    Notes to Condensed Consolidated Financial Statements...............................................................   6

Item 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations..............................................................................................   7

Item 3. Quantitative and Qualitative Disclosures About Market Risks........................................................  20


PART II. OTHER INFORMATION

Item 1. Legal Proceedings..................................................................................................  21

Item 2. Changes in Securities and Use of Proceeds..........................................................................  21

Item 4. Submission of Matters to a Vote of Security Holders................................................................  21

Item 6. Exhibits and Reports on Form 8-K...................................................................................  21

Signatures.................................................................................................................  22


</TABLE>
                                       2
<PAGE>

PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                         CLICKSOFTWARE TECHNOLOGIES LTD.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)


                                                                                           March 31,          December 31,
                                                                                              2002                2001
                                                                                       ------------------- -------------------
ASSETS

CURRENT ASSETS:
<S>                                                                                           <C>                  <C>
Cash and cash equivalents                                                                     $      7,034         $     8,125
Short-term investments                                                                               2,359               1,846
Trade receivables                                                                                    4,723               6,623
Other receivables and prepaid expenses                                                               2,212               1,671

                                                                                       ------------------- -------------------
          Total current assets                                                                      16,328              18,265

Property and equipment, net                                                                          3,370               3,450
Severance pay deposits                                                                                 671                 652
                                                                                       ------------------- -------------------
          Total assets                                                                         $    20,369         $    22,367
                                                                                       =================== ===================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Short-term debt                                                                                $        80         $       140
Accounts payable and accrued expenses                                                                2,869               2,785
Deferred revenues                                                                                      321                  68
                                                                                       ------------------- -------------------
       Total current liabilities                                                                     3,270               2,993
                                                                                       ------------------- -------------------

LONG-TERM LIABILITIES
   Long-term debt                                                                                        9                  21
   Accrued severance pay                                                                             1,377               1,379
                                                                                       ------------------- -------------------
       Total long-term liabilities                                                                   1,386               1,400
                                                                                       ------------------- -------------------
       Total liabilities                                                                             4,656               4,393
                                                                                       ------------------- -------------------

SHAREHOLDERS' EQUITY:

Preferred shares of NIS 0.02 par value:
   Authorized -- 5,000,000 as of December 31, 2001 and March 31, 2002; Issued and
   outstanding -- none as of December 31, 2001 and March 31, 2002.                                       -                   -
                                                                                                         -                   -
Ordinary shares of NIS 0.02 par value:
   Authorized -- 100,000,000 as of December 31, 2001 and March 31, 2002; Issued
   -- 26,285,464 shares as of December 31, 2001 and 26,286,954 as of March 31,
   2002.
   Outstanding-- 26,246,464 shares as of December 31, 2001 and 26,247,954 shares
   as of March 31, 2002.

                                                                                                       102                 101
Additional paid-in capital                                                                          69,147              69,143
Deferred compensation                                                                                 (326)               (401)
Accumulated deficit                                                                                (53,167)            (50,826)
Less treasury shares at cost                                                                           (43)                (43)
                                                                                       ------------------- -------------------
       Total shareholders' equity                                                                   15,713              17,974
                                                                                       ------------------- -------------------
Total liabilities and shareholders' equity                                                     $    20,369          $   22,367
                                                                                       =================== ===================


            See notes to condensed consolidated financial statements.
                                       3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                              CLICKSOFTWARE TECHNOLOGIES LTD.
                                           CONSOLIDATED STATEMENTS OF OPERATIONS
                                    (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                        (UNAUDITED)

                                                                                            THREE MONTHS ENDED MARCH 31,
                                                                                              2002                2001
                                                                                    -----------------------------------------
Revenues:
<S>                                                                                        <C>                 <C>
  Software license                                                                         $       1,605       $       3,103
  Service and maintenance                                                                          2,086               1,413
                                                                                    -----------------------------------------
     Total revenues                                                                                3,691               4,516
                                                                                    -----------------------------------------
Cost of revenues:
  Software license                                                                                     -                  74
  Service and maintenance                                                                          1,314               1,372
                                                                                    -----------------------------------------
     Total cost of revenues                                                                        1,314               1,446
                                                                                    -----------------------------------------
     Gross profit                                                                                  2,377               3,070
                                                                                    -----------------------------------------
Operating expenses:
  Research and development expenses, net                                                             817                 974
  Sales and marketing expenses                                                                     2,858               3,666
  General and administrative expenses                                                                988                 827
  Reorganization expenses                                                                              -                 294
  Share-based compensation                                                                            75                 171
                                                                                    -----------------------------------------
     Total operating expenses                                                                      4,738               5,932
                                                                                    -----------------------------------------
     Operating loss                                                                              (2,361)             (2,862)
Interest and other income, net                                                                        20                 333
                                                                                    -----------------------------------------
     Net loss                                                                             $      (2,341)      $      (2,529)
                                                                                    -----------------------------------------
Basic and diluted net loss per share                                                      $       (0.09)      $       (0.10)
                                                                                    -----------------------------------------
Shares used in computing basic and diluted net loss per share                                 25,236,002          24,976,284
                                                                                    -----------------------------------------


            See notes to condensed consolidated financial statements.
                                       4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                          CLICKSOFTWARE TECHNOLOGIES LTD.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (IN THOUSANDS)
                                    (UNAUDITED)


                                                                                               THREE MONTHS ENDED
                                                                                                    MARCH 31
                                                                                            2002                2001
                                                                                    -----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                            <C>                 <C>
Net loss                                                                                       $ (2,341)           $ (2,529)

Adjustments to reconcile net loss to net cash used in operating activities
Expenses not affecting operating cash flows:
  Depreciation                                                                                       255                 260
  Amortization of deferred compensation                                                               75                 171
  Unrealized gain from investments                                                                    40                 220
  Severance pay, net                                                                                (21)                (50)
Changes in operating assets and liabilities:
  Trade receivables                                                                                1,900             (1,430)
  Other receivables and other prepaid
    expenses                                                                                       (541)                (80)
  Accounts payable and accrued expenses                                                               84                 512
  Deferred revenues                                                                                  253                 104
                                                                                    -----------------------------------------
Net cash used in operating activities                                                              (296)             (2,822)
                                                                                    -----------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from )investments in) short-term investments, net                                         (553)               5,593
Purchases of equipment                                                                             (175)               (456)
                                                                                    -----------------------------------------
Net cash provided by (used in) investing activities                                                (728)               5,137
                                                                                    -----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Receipt (repayment) of short-term debt                                                              (60)                  11
Repayment of long-term debt                                                                         (12)                 (9)
Employee options exercised                                                                             5                  51
                                                                                    -----------------------------------------
Net cash provided by (used in) financing activities                                                 (67)                  53
                                                                                    -----------------------------------------
Increase (decrease) in cash and cash equivalents                                                 (1,091)               2,368
Cash and cash equivalents at beginning of period                                                   8,125               4,438
                                                                                    -----------------------------------------
Cash and cash equivalents at end of period                                                     $   7,034           $   6,806
                                                                                    =========================================

Supplemental cash flow information:
Cash paid for interest                                                                                 3                  21
                                                                                    =========================================




            See notes to condensed consolidated financial statements.
                                       5
</TABLE>
<PAGE>
                         CLICKSOFTWARE TECHNOLOGIES LTD.

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
        (INFORMATION AS OF MARCH 31, 2002 AND FOR THE THREE MONTHS ENDED
                       MARCH 31, 2002 AND MARCH 31, 2001)
               (IN THOUSANDS EXCEPT SHARE DATA AND SHARE NUMBERS)


1.        Condensed   Consolidated   Financial   Statements.   The  accompanying
          condensed interim consolidated financial statements have been prepared
          by the Company without audit and reflect all  adjustments,  consisting
          of normal  recurring  adjustments  and  accruals,  which  are,  in the
          opinion  of  management,  necessary  for a  fair  presentation  of the
          financial position of the Company as of March 31, 2002 and the results
          of operations and cash flows for the interim  periods  indicated.  The
          results of operations presented are not necessarily  indicative of the
          results to be  expected  for future  quarters  or for the year  ending
          December 31, 2002.  The  statements  have been  prepared in accordance
          with the  regulations  of the  Securities  and Exchange  Commission in
          respect of interim  reporting;  accordingly,  certain  information and
          footnote  disclosures normally included in annual financial statements
          prepared in accordance with generally accepted  accounting  principles
          have been condensed or omitted.  These financial  statements should be
          read in conjunction  with the audited  financial  statements and notes
          thereto of ClickSoftware for the year ended December 31, 2001 that are
          included in  ClickSoftware's  Form 10-K filed with the  Securities and
          Exchange Commission.

2.        Net Loss  Per  Share.  ClickSoftware  computes  net loss per  share of
          ordinary shares in accordance  with Statement of Financial  Accounting
          Standards No. 128,  "Earnings  per Share" ("SFAS No. 128").  Under the
          provisions  of SFAS No. 128 basic net loss per share  ("Basic EPS") is
          computed by dividing net loss by the weighted average number of shares
          of common  stock  outstanding,  excluding  ordinary  shares  held by a
          trustee  reserved for allocation  against employee options granted but
          not yet exercised. The following is a reconciliation of the numerators
          and  denominators  used in  computing  basic and  diluted net loss per
          share (in thousands except per share amounts):

<TABLE>
<CAPTION>
                                                                                                          THREE MONTHS
                                                                                                         ENDED MARCH 31,
                                                                                                      2002            2001

<S>                                                                                                      <C>             <C>
         Net loss attributable to ordinary shareholders                                                  (2,341)         (2,529)
                                                                                                 --------------------------------
         Basic and diluted:
            Weighted average shares used in computing
              basic and diluted net loss per ordinary share                                           25,236,002      24,976,284
                                                                                                 --------------------------------

            Basic and diluted net loss per ordinary share                                                 (0.09)          (0.10)
                                                                                                 ================================


</TABLE>
                                       6
<PAGE>

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


This report contains certain forward-looking statements (as such term is defined
in Section 27A of the  Securities  Act of 1933 and Section 21E of the Securities
Exchange  Act of 1934)  and  information  relating  to us that are  based on the
beliefs  of our  management  as well  as  assumptions  made  by and  information
currently available to our management, including statements related to products,
markets,  and future  results of operations and  profitability,  and may include
implied statements concerning market acceptance of our products, and our growing
leadership role in the marketplace.  In addition,  when used in this report, the
words  "likely,"  "will,"  "suggests,"  "may," "would,"  "could,"  "anticipate,"
"believe,"   "estimate,"  "expect,"  "intend,"  "plan,   "predict"  and  similar
expressions  and their  variants,  as they relate to us or our  management,  may
identify forward-looking  statements. Such statements reflect our judgment as of
the date of this annual report on Form 10-K with respect to future  events,  the
outcome of which is subject to certain  risks,  including  the risk  factors set
forth  herein,  which may have a significant  impact on our business,  operating
results  or   financial   condition.   Investors   are   cautioned   that  these
forward-looking statements are inherently uncertain. Should one or more of these
risks or  uncertainties  materialize,  or should  underlying  assumptions  prove
incorrect,  actual results or outcomes may vary  materially from those described
herein. We undertake no obligation to update forward-looking statements, whether
as a result of new information, future events or otherwise.

OVERVIEW

Prior to 1996,  our operations  were primarily  related to consulting and custom
software solutions. In late 1996, we engaged in a comprehensive reexamination of
our strategy and changed our strategic focus to concentrate on providing service
optimization  software  products based on our W-6 Service Scheduler and TechMate
technologies.  This change in focus was intended to allow us to license software
products useable by multiple clients, rather than developing customized software
for each client.  In connection with this change of strategy,  we  de-emphasized
our  consulting  business.  At that time we also spun off our  textile  software
operations  to our then  existing  shareholders  and  discontinued  our  defense
application  business.  Since early 1997, we have invested significant resources
in  developing  products  based  on  our  W-6  Service  Scheduler  and  TechMate
technologies,  including  increasing  the number of our  employees  involved  in
research and development, sales and marketing, and professional services.

We  believe  that in  today's  economy  successful  businesses  must  constantly
increase the performance of existing service  resources.  Our products emphasize
the  use of  optimization  tools  for  performance  enhancement  in the  service
environment and also offer the ability to capture the benefits and  efficiencies
of the internet.  Accordingly, in September 1999, we began marketing our product
lines under new names,  CLICKSCHEDULE  and CLICKFIX and in May 2000,  we changed
our company name to ClickSoftware Technologies Ltd.

We derive revenues from software licensing and service and maintenance fees. Our
operating history shows that a significant  percentage of our quarterly revenues
come from orders placed toward the end of a quarter.  Software  license revenues
are comprised of perpetual or annual  software  license fees  primarily  derived
from  contracts  with our direct  sales  clients and our  indirect  distribution
channels.  We recognize  revenues in accordance  with the American  Institute of
Certified  Public  Accountants  Statement of Position  97-2,  "Software  Revenue
Recognition,"  or SOP 97-2, as amended by Statement of Position 98-4.  Under SOP
97-2, we recognize  software license revenues when a software license  agreement
has been  executed or a  definitive  purchase  order has been  received  and the
product has been  delivered  to our clients,  no  significant  obligations  with
regard  to  implementation  remain,  the  fee is  fixed  and  determinable,  and
collectability is probable.

Service and maintenance  revenues are comprised of revenues from implementation,
consulting,  training,  release  updates  and  customer  service  support  fees.
Consulting  services are billed at an agreed-upon  rate plus incurred  expenses.
Clients licensing our products generally purchase consulting agreements from us.
Consulting revenues are recognized on a straight-line basis over the life of the
agreement. Customer support is charged as a percentage of license fees depending
upon the level of support  coverage  requested by the customer.  A fee of 18% of
license fees is typically  charged for five day a week,  eight hour coverage and
24% of license fees is typically charged for seven day a week,  twenty-four hour
coverage.  Our products are marketed worldwide through a combination of a direct
sales  force,  consultants  and  various  business  relationships  we have  with
implementation and technology companies and resellers.

Cost of  revenues  consists  of cost of software  license  revenues  and cost of
service and maintenance revenues.  Cost of software license revenues consists of
expenses related to media duplication and packaging of our products and costs of

                                       7
<PAGE>

software  purchased  or  licensed  for resale.  Cost of service and  maintenance
revenues   consists  of  expenses  related  to  salaries  and  expenses  of  our
professional services organizations,  costs related to third-party  consultants,
and equipment costs.

Operating expenses are categorized into research and development expenses, sales
and marketing  expenses,  general and administrative  expenses,  and share based
compensation.

Research and  development  expenses  consist  primarily  of  personnel  costs to
support product development, net of grants received from the Chief Scientist. In
return for some of these grants, we are obligated to pay the Israeli  Government
royalties as described below which are included in sales and marketing expenses.
Software  research and development  costs incurred prior to the establishment of
technology  feasibility  are  included in research and  development  expenses as
incurred.

General and  administrative  expenses consist primarily of personnel and related
costs  for  corporate  functions,   including  information  services,   finance,
accounting, human resources,  facilities, legal and costs related to activity as
public company.

Share based  compensation  represents the aggregate  difference,  at the date of
grant,  between the  respective  exercise  price of stock options and the deemed
fair market value of the underlying stock. Share based compensation is amortized
over the vesting period of the underlying options, generally four years.

Interest and other income (expenses) include interest income earned on our cash,
cash equivalents and short-term  investments,  offset by interest  expense,  and
also includes the effects of foreign currency translations.

The  functional  currency of our  operations  is the U.S.  dollar,  which is the
primary currency in the economic environment in which we conduct our business. A
significant portion of our research and development  expenses is incurred in New
Israeli  Shekels ("NIS") and a portion of our revenues and expenses are incurred
in British Pounds and the European Community Euro. The results of our operations
are subject to  fluctuations  in these  exchange  rates which are  influenced by
various global economic factors.

The effects of foreign currency  exchange rates on our results of operations for
the years ended December 31, 1999, 2000 and 2001 were immaterial.

Our tax rate will  mainly  reflect a mix of the U.S.  statutory  tax rate on our
U.S. income, the U.K statutory tax rate on our U.K income, the Belgium statutory
tax rate on our Belgium income and the Israeli tax rate discussed below. Israeli
companies  are  generally  subject  to income  tax at the rate of 36% of taxable
income.  The  majority of our income,  however,  is derived  from our  company's
capital investment  program with "Approved  Enterprise" status under the Law for
the  Encouragement  of Capital  Investments,  and is eligible  therefore for tax
benefits.  As a result of these benefits, we will have a tax exemption on income
derived  during the first two years in which this  investment  program  produces
taxable  income,  and a reduced tax rate of 15-25% for the next 5 to 8 years. In
the event of a  distribution  of a cash  dividend out of retained  earnings that
were exempt from tax due to its Approved Enterprise status, we would be required
to  pay  25%  corporate  income  tax on  income  from  which  the  dividend  was
distributed.  All of these tax  benefits are subject to various  conditions  and
restrictions.  There  can be no  assurance  that we  will  obtain  approval  for
additional Approved Enterprise Programs,  or that the provisions of the law will
not change.

CRITICAL ACCOUNTING POLICIES

The  Company's  critical  accounting  policies,  including the  assumptions  and
judgments  underlying  them,  are  disclosed  in the  Notes to the  Consolidated
Financial  Statements included in our annual report on Form 10-K. These policies
have been consistently applied in all material respects and address such matters
as revenue  recognition,  including assessing clients' credit worthiness.  While
the estimates and judgments  associated  with the  application of these policies
may be affected by different assumptions or conditions, the Company believes the
estimates and judgments  associated with the reported amounts are appropriate in
the circumstances.


RECENT ACCOUNTING PRONOUNCEMENTS

None.

                                       8
<PAGE>
RESULTS OF OPERATIONS

Our  operating  results  for each of the three  months  ended March 31, 2002 and
2001, expressed as a percentage of revenues are as follows:
<TABLE>
<CAPTION>


                                                                                                  THREE MONTHS
                                                                                                 ENDED MARCH 31
                                                                                    -----------------------------------------
                                                                                            2002                2001
                                                                                    -----------------------------------------
Revenues:
<S>                                                                                                   <C>                <C>
  Software license                                                                                    43%                70%
  Service and maintenance                                                                             57%                30%
                                                                                    -----------------------------------------
     Total revenues                                                                                  100%               100%
Cost of revenues:
  Software license                                                                                      -                 2%
  Service and maintenance                                                                             36%                30%
     Total cost of revenues                                                                           36%                32%
                                                                                    -----------------------------------------
     Gross profit                                                                                     64%                68%
                                                                                    -----------------------------------------
Operating expenses:
  Research and development expenses, net                                                              22%                22%
  Sales and marketing expenses                                                                        77%                82%
  General and administrative expenses                                                                 27%                18%
  Reorganization expenses                                                                               -                 7%
  Share-based compensation                                                                             2%                 4%
                                                                                    -----------------------------------------
     Total operating expenses                                                                        128%               133%
                                                                                    -----------------------------------------
     Operating loss                                                                                 (64%)              (63%)
Interest and other income, net                                                                         1%                 7%
                                                                                    -----------------------------------------
     Net loss                                                                                       (63%)              (56%)
                                                                                    =========================================
</TABLE>

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED MARCH 31, 2002 AND 2001

REVENUES: Company revenues decreased $0.8 million or 18% to $3.7 million for the
three  months  ended March 31, 2002 from $4.5 million for the three months ended
March 31, 2001. This decrease was the result of the general economic conditions,
and  slower  than  expected   recovery  in  Information   Technology   spending.
Specifically,  increased  scrutiny of capital budgets has resulted in unexpected
delays  in the  larger  opportunities  that  were  forecasted  to close in first
quarter  and  smaller  than  expected  initial  orders  on the  deals  that  did
successfully close.

SOFTWARE  LICENSE:  Software  license revenues were $1.6 million or 43% of total
revenues for the three  months ended March 31, 2002,  and $3.1 million or 70% of
total  revenues  for the three  months  ended March 31,  2001.  The  decrease in
software license revenues was the result of delays in domestic and international
opportunities during the first quarter of 2002.

SERVICE AND MAINTENANCE:  Service and maintenance  revenues were $2.1 million or
57% of revenues for the three  months ended March 31, 2002,  and $1.4 million or
30% of total  revenue in the three months ended March 31, 2001.  The increase in
service  and   maintenance   revenues  was  primarily  due  to  an  increase  in
professional  services fees in  connection  with  implementations  performed for
clients going into production during the first quarter of 2002.

COST OF REVENUES:  Cost of revenues were $1.3 million or 36% of revenues for the
three months  ended March 31, 2002,  and $1.4 million or 32% of revenues for the
three months  ended March 31,  2001.  The decrease in the cost of revenues on an
absolute  basis  was  primarily  due to the  decrease  in the  amount  of  costs
associated  with the  decrease  in third  party  license  revenues  in the first
quarter.

COST OF SOFTWARE LICENSES: There was no cost of software license revenues for
the three months ended March 31, 2002. Cost of software license revenues for the
three months ended March 31, 2001 were $74,000 or 2% of revenues. The decrease
in the cost of software licenses was due to no new third parties' licenses being
sold in the first quarter of 2002.


                                       9
<PAGE>
COST OF SERVICE AND  MAINTENANCE:  Cost of service and maintenance  revenues was
$1.3 million or 36% of revenues  for the three months ended March 31, 2002,  and
$1.4 million or 30% of revenues  for the three months ended March 31, 2001.  The
decrease  in the cost of  service  and  maintenance  on an  absolute  basis  was
primarily due to service  improvements  reducing  implementation time associated
with our products.

GROSS  PROFIT:  Gross profit as a  percentage  of revenues was 64% for the three
months  ended March 31, 2002 as compared to 68% for the three months ended March
31,  2001.  The  decrease in the gross  profit is due to the  decrease in higher
margin license revenues.

OPERATING  EXPENSES:  Total  operating  expenses  were $4.7  million  or 128% of
revenues for the three months ended March 31, 2002,  and $5.9 million or 131% of
revenues for the three  months  ended March 31, 2001.  The decrease in operating
expenses was primarily  due to the  decreases in sales and  marketing  costs and
one-time  reorganization  expenses as a percentage  of revenues  incurred in the
first quarter of 2001.

RESEARCH AND DEVELOPMENT EXPENSES,  NET: Research and development expenses,  net
of related  grants,  were $817,000 or 22% of revenues for the three months ended
March 31, 2002, and $974,000 or 22% of revenues for the three months ended March
31, 2001. The decrease in research and development expenses on an absolute basis
is due to cost controls implemented during the past twelve months.

SALES AND MARKETING EXPENSES:  Sales and marketing expenses were $2.9 million or
77% of revenues for the three  months ended March 31, 2002,  and $3.7 million or
82% of revenues for the three months ended March 31, 2001. The absolute decrease
in sales and marketing expenses was due to cost controls  implemented during the
year of 2001 as well as the decrease in revenues that reduced  related  variable
expenses.

GENERAL AND ADMINISTRATIVE  EXPENSES:  General and administrative  expenses were
$988,000 or 27% of revenues  for the three  months  ended  March 31,  2002,  and
$827,000 or 18% of revenues  for the three  months  ended  March 31,  2001.  The
absolute increase in general and administrative expenses was due primarily to an
increase in the provision for doubtful accounts amounting to $279,000.

SHARE-BASED  COMPENSATION:  Share-based  compensation for the three months ended
March 31, 2002 amounted to $75,000 of previously recorded deferred compensation.
Share based  compensation  for the three months ended March 31, 2001 amounted to
$171,000.  The decrease in  share-based  compensation  is attributed to the fact
that the amortization of the share-based  compensation  progressively  decreases
over the four-year amortization period.

During the quarter, the U.S. dollar amount of expenses incurred in NIS decreased
as a result of depreciation of the NIS in the first quarter of 2002.

LIQUIDITY AND CAPITAL RESOURCES

As of  March  31,  2002 we had cash and cash  equivalents  of $7.0  million  and
short-term investments of $2.4 million for a total of $9.4 million.

From  inception  through our IPO on June 22, 2000,  we financed  our  operations
primarily  through the private  placement of equity  securities,  which  through
December 31, 1999 totaled  approximately  $32.0 million,  net of issuance costs.
Our initial public stock offering of ordinary shares realized $28.3 million, net
of underwriter discount and other issuance costs.

Net cash used in  operating  activities  primarily  consisted  of net  losses in
addition  to changes  in trade  receivables,  prepaid  expenses  and  changes in
accounts payable,  partially offset by amortization of deferred compensation and
depreciation,  as  applicable.  For the three months ended March 31, 2002,  cash
used in operations  was $296,000,  comprised of our net loss of $2.3 million,  a
decrease in trade receivables of $1.9 million,  an increase in other receivables
of $541,000, an increase in accounts payable of $84,000, an increase in deferred
revenue of $253,000,  partially offset by non-cash charges of $349,000.  For the
three months ended March 31, 2001,  cash used in  operations  was $2.8  million,
comprised of our net loss of $2.5 million,  an increase in trade  receivables of
$1.4  million,  an increase  in other  receivables  of  $80,000,  an increase in
accounts  payable of  $512,000,  an increase in  deferred  revenue of  $104,000,
partially offset by non-cash charges of $601,000.

Net cash used in investing  activities for the three months ended March 31, 2002
was  $728,000,  of which  $553,000 was invested in  short-term  investments  and
$175,000 was invested primarily in purchases of equipment and systems, including
computer equipment and fixtures and furniture.  Net cash provided from investing
activities for the three months ended March 31, 2001 was $5.1 million,  of which
$5.6 million  provided from the sale of short-term  investments and $456,000 was

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<PAGE>

invested  primarily in leasehold  improvements  and  purchases of equipment  and
systems, including computer equipment and fixtures and furniture.

As of March 31, 2002 we had outstanding trade receivables of approximately  $4.7
million. Our trade receivables  typically have 30 to 180 day terms,  although we
have also  negotiated  longer  payment  plans with some of our clients.  Current
economic  conditions  have  increased the  difficulties  in collecting  accounts
receivables  and the typical  collection  period has  lengthened.  For the three
months  ended March 31, 2002 our DSO (Day Sales  Outstanding)  was 115 days,  an
increase of 14 days from 101 for the three months ended December 31, 2001.

Since inception,  we have received aggregate payments from the Government of the
State  of  Israel  in the  amount  of  $5.6  million  related  to  research  and
development.  As of March 31, 2002, we have paid or accrued royalties related to
these funds in the amount of $2.1 million.

We have a $1.0 million unsecured line of credit with an Israeli bank. No amounts
were outstanding under this line of credit as of March 31, 2002.

The  Company  also  has an  aggregate  of  $46,000  in term  loans  relating  to
borrowings for working capital. We have a loan in US Dollars bearing an interest
rate of 7.1%  and a loan in New  Israeli  Shekels  linked  to the  Israeli  CPI,
currently  bearing an  interest  rate of 5.4%.  Additional  loans are in British
Pounds bearing an average interest rate of 9.0%.

Our bank in Israel has issued two standby  letters of credit on our behalf.  One
is for $125,000 for tenant improvements related to our facilities in Israel. The
other is for $836,000 and secures our performance  pursuant to projects with the
Government of Israel.  Additionally,  Silicon Valley Bank has issued a letter of
credit on our behalf in the amount of $205,560 to assure  performance  under the
terms of our Campbell, CA lease.

Our capital requirements depend on numerous factors, including market acceptance
of our products, the resources we devote to developing,  marketing,  selling and
supporting  our  products,  the  timing and  extent of  establishing  additional
international  operations  and other  factors.  We intend to continue  investing
significant  resources in our sales and marketing  and research and  development
operations  in the future.  We believe  that our current  cash  balance  will be
sufficient to fund our expenses until we reach profitability.

FACTORS THAT MAY AFFECT FUTURE RESULTS

You should  carefully  consider the following  factors and other  information in
this statement before you decide to invest in our ordinary shares. If any of the
negative events referred to below occur, our business,  financial  condition and
results of operations  could suffer.  In any such case, the trading price of our
ordinary shares could decline, and you may lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

THE ECONOMIC  OUTLOOK MAY ADVERSELY  AFFECT THE DEMAND FOR OUR CURRENT  PRODUCTS
AND THE COMPANY'S  RESULTS OF OPERATIONS.  Current  predictions  for the general
economy indicate uncertain  economic  conditions.  Weak economic  conditions may
cause continued  reductions in information  technology  spending  generally.  We
experienced  and may continue to experience an adverse  impact on the demand for
our  products,  which  would  adversely  affect our  results of  operations.  In
addition,  predictions  regarding  economic  conditions  have  a low  degree  of
certainty,  and further  predicting the effects of the changing  economy is even
more difficult. We may not accurately gauge the effect of the general economy on
our business.  As a result,  we may not react to such  changing  conditions in a
timely  manner  which,  may  result  in an  adverse  impact  on our  results  of
operations.  Any such  adverse  impacts  to our  results  of  operations  from a
changing economy may cause the price of our ordinary shares to decline.

WE HAVE NOT ACHIEVED  PROFITABILITY.  We expect to continue to incur significant
sales and marketing and research and development expenses. Some of our expenses,
such as administrative and management payroll and rent and utilities,  are fixed
in the short  term and cannot be quickly  reduced  to  respond to  decreases  in
revenues.  As a result, we will need to generate significant revenues to achieve
and maintain profitability, which we may not be able to do.

OUR QUARTERLY  OPERATING  RESULTS ARE SUBJECT TO FLUCTUATIONS  AND IF WE FAIL TO
MEET THE EXPECTATIONS OF SECURITIES  ANALYSTS OR INVESTORS,  OUR SHARE PRICE MAY
DECREASE. Our quarterly operating results are difficult to predict and are not a
good measure for  comparison.  Our  operating  history  shows that a significant
percentage of our quarterly revenues come from orders placed toward the end of a
quarter. From time to time, we anticipate a sale of significant size to a single
customer.  A delay in the  completion  of any sale past the end of a  particular
quarter could  negatively  impact  results for that  quarter,  and such negative
impact could be significant  for the delay of a sale of significant  size.  Even
without the delay of a significant sale, our future quarterly  operating results

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<PAGE>

may  fluctuate  significantly  and may not meet the  expectations  of securities
analysts or  investors.  If this occurs,  the price of our  ordinary  shares may
decrease.  The factors that may cause  fluctuations  in our quarterly  operating
results include the following:
     *    the volume and timing of customer orders;
     *    internal budget  constraints and approval processes of our current and
          prospective clients;
     *    the length and unpredictability of our sales cycle;
     *    the mix of revenue  generated  by product  licenses  and  professional
          services;
     *    the mix of revenue between domestic and foreign sources;
     *    announcements or introductions of new products or product enhancements
          by us or our competitors;
     *    changes in prices of and the adoption of different pricing  strategies
          for our products and those of our competitors;
     *    timing and amount of sales and marketing expenses;
     *    changes in our business and partner relationships;
     *    technical  difficulties  or  "bugs"  affecting  the  operation  of our
          software;
     *    foreign currency exchange rate fluctuations; and
     *    general economic conditions.

FAILURE  OF THE  MARKET  TO ACCEPT  OUR  PRODUCTS  WOULD  ADVERSELY  AFFECT  OUR
PROFITABILITY.  Historically,  all of our operating  revenue has come from sales
of, and services related to, our ClickSchedule product and our ClickFix product,
to clients seeking application  software that enables efficient  provisioning of
services in enterprise environments. During the year ended December 31, 2000, we
introduced three products that, together with our existing products,  constitute
a suite of products that offers a more comprehensive  solution to our customers.
On November 28, 2001 we released version 7.0 of our Service  Optimization  Suite
that utilizes dynamic load balancing  architecture,  which dynamically redirects
requests   among  a  group  of   ClickSoftware   servers   running  our  product
applications.  This  increases the  scalability  of our products by enabling our
customers to optimize  additional  resources by adding hardware to this group of
ClickSoftware  servers.  The  growth  of our  company  depends  in  part  on the
development of market  acceptance of these  products.  We have no guarantee that
the sales of these products will develop as quickly as we anticipate, or at all.
Lack of  long-term  demand for our new  products  would have a material  adverse
effect on our business and operating results.


OUR SALES AND IMPLEMENTATION CYCLES DEPEND ON FACTORS OUTSIDE OUR CONTROL, WHICH
MAY CAUSE QUARTERLY LICENSE AND SERVICE FEES REVENUES TO VARY SIGNIFICANTLY FROM
PERIOD TO PERIOD.  To date, our customers have taken typically from three months
to nine months to evaluate our offering before making their purchase  decisions.
In  addition,  depending  on the  nature  and  specific  needs of a client,  the
implementation  of our  products  typically  takes two to six  months.  Sales of
licenses  and  implementation  schedules  are  subject to a number of risks over
which we have little or no control,  including clients'  budgetary  constraints,
clients' internal acceptance reviews, the success and continued internal support
of clients' own  development  efforts,  the efforts of businesses  with which we
have  relationships,  the nature,  size and  specific  needs of a client and the
possibility of cancellation of projects by clients. The uncertain outcome of our
sales  efforts and the length of our sales cycles  could  result in  substantial
fluctuations in license  revenues.  Historically,  a significant  portion of our
sales in any given quarter occur in the last two weeks of the quarter;  if sales
forecasted from a specific  client for a particular  quarter are not realized in
that quarter,  we are unlikely to be able to generate  revenues  from  alternate
sources in time to compensate  for the  shortfall.  As a result,  and due to the
relatively  large  size of some  orders,  a lost or  delayed  sale  could have a
material  adverse  effect  on  our  quarterly  revenue  and  operating  results.
Moreover,  to the extent that  significant  sales occur  earlier than  expected,
revenue  and  operating  results  for  subsequent  quarters  could be  adversely
affected.

FAILURE TO EXPAND OUR SALES AND MARKETING  ORGANIZATIONS COULD LIMIT OUR ABILITY
TO SELL ADDITIONAL PRODUCTS AND SERVICES, WHICH WOULD IMPAIR OUR ABILITY TO GROW
OUR BUSINESS AND INCREASE  REVENUES.  We are  expanding  our direct and indirect
sales  operations  to increase  market  awareness  of our  products and generate
increased  revenues.  We cannot be certain that we will be  successful  in these
efforts.  In addition to normal  turnover of  personnel,  we are  attempting  to
expand our direct sales force in Asia Pacific and Africa.  As of March 31, 2002,
we employed 48 individuals in our sales and marketing organizations.  Because 12
of these sales and marketing  personnel joined us within the last twelve months,
we will be required to devote significant resources to the training of these new
sales  personnel.  In addition,  we might not be able to hire or retain the kind

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<PAGE>

and number of sales and marketing personnel we are targeting because competition
for qualified sales and marketing personnel in our market is intense.

WE DEPEND ON KEY PERSONNEL,  AND THE LOSS OF ANY KEY PERSONNEL  COULD AFFECT OUR
ABILITY TO COMPETE AND OUR ABILITY TO ATTRACT  ADDITIONAL  KEY  PERSONNEL MAY BE
IMPAIRED.  We believe our future success will depend on the continued service of
our executive  officers and other key sales and marketing,  product  development
and professional  services personnel.  Dr. Moshe BenBassat,  our Chief Executive
Officer,  has  individually   participated  in  and  has  been  responsible  for
overseeing much of the research and development of our core technologies. At the
beginning of 2001, Mr. Shimon Rojany, our CFO, announced his plan to retire, but
has recently decided to indefinitely  withdraw his retirement  plans. Mr. Rojany
is committed to continuing his employment with the Company.  The services of Dr.
BenBassat  and other  members of our senior  management  team and key  personnel
would be very difficult to replace and the loss of any of these  employees could
harm our business  significantly.  We have  employment  agreements  with,  among
others,  Dr. BenBassat,  Mr. Rojany,  and Mr. Corey Leibow,  our Chief Operating
Officer.  Although these  agreements  request sixty days  notification  prior to
departure,  relationships with these officers and key employees are at will. The
loss of any of our key personnel  could harm our ability to execute our business
strategy and compete.

IF WE FAIL TO EXPAND OUR PROFESSIONAL SERVICES ORGANIZATION,  WE MAY NOT BE ABLE
TO SERVICE  ADDITIONAL  CLIENTS AND INSTALL  ADDITIONAL  LICENSES.  We cannot be
certain  that we can attract or retain a sufficient  number of highly  qualified
professional services personnel to meet our business needs. Clients that license
our software typically engage our professional  services  organization to assist
with  the  installation  and  operation  of  our  software   applications.   Our
professional  services  organization  also  provides  assistance  to our clients
related to the maintenance,  management and expansion of their software systems.
Growth in licenses of our software will depend in part on our ability to provide
our clients with these services.  In addition, we will be required to expand our
professional  services  organization  to enable us to  continue  to support  our
existing  installed  base of  customers.  As a result,  we plan to increase  the
number of our service  personnel in order to meet these needs.  Competition  for
qualified  services  personnel  with the relevant  knowledge  and  experience is
intense, and we may not be able to attract and retain necessary personnel. If we
were not able to grow our  professional  services  organization,  our ability to
expand our service business would be limited.  In addition,  we could experience
delays in  recognizing  revenue  if our  professional  services  group  fails to
complete implementations in a timely manner.

IF WE FAIL TO EXPAND OUR  RELATIONSHIPS  WITH  THIRD  PARTIES  THAT CAN  PROVIDE
IMPLEMENTATION  AND  PROFESSIONAL  SERVICES TO OUR CLIENTS,  WE MAY BE UNABLE TO
INCREASE OUR REVENUES AND OUR BUSINESS COULD BE HARMED. In order for us to focus
more  effectively  on our core  business of developing  and  licensing  software
solutions,  we need to continue to establish  relationships  with third  parties
that can  provide  implementation  and  professional  services  to our  clients.
Third-party  implementation  and consulting firms can also be influential in the
choice of resource optimization applications by new clients. If we are unable to
establish and maintain  effective,  long-term  relationships with implementation
and professional services providers, or if these providers do not meet the needs
or  expectations  of our clients,  we may be unable to grow our revenues and our
business  could suffer.  As a result of the limited  resources and capacities of
many third-party implementation providers, we may be unable to attain sufficient
focus and resources from the  third-party  providers to meet all of our clients'
needs,  even  if  we  establish  relationships  with  these  third  parties.  If
sufficient  resources  are  unavailable,  we will be required  to provide  these
services internally,  which could limit our ability to meet other demands.  Even
if we are successful in developing relationships with third-party implementation
and professional services providers,  we will be subject to significant risk, as
we cannot  control  the level and  quality of service  provided  by  third-party
implementation and professional services partners.

OUR MARKET IS HIGHLY  COMPETITIVE AND ANY REDUCTION IN DEMAND FOR, OR PRICES OF,
OUR PRODUCTS COULD NEGATIVELY IMPACT OUR REVENUES,  REDUCE OUR GROSS MARGINS AND
CAUSE OUR SHARE PRICE TO DECLINE. The market for our products is competitive and
rapidly  changing.  We expect  competition  to increase in the future as current
competitors expand their product offerings and new companies enter the market.

Because the market for service and delivery  optimization  software is evolving,
it is  difficult  to  determine  what  portion  of the  market  each  competitor
currently controls. However, competition could result in price reductions, fewer
customer  orders,  reduced gross margin and loss of market  share,  any of which
could cause our business to suffer. We may not be able to compete  successfully,
and  competitive  pressures  may  harm our  business.  Some of our  current  and
potential competitors have greater name recognition, longer operating histories,
larger customer bases and significantly greater financial, technical, marketing,
public relations,  sales, distribution and other resources than us. In addition,
some  of  our  potential  competitors  are  among  the  largest  and  most  well
capitalized software companies in the world.
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<PAGE>
FAILURE TO FULLY DEVELOP OR MAINTAIN KEY BUSINESS  RELATIONSHIPS COULD LIMIT OUR
ABILITY  TO SELL  ADDITIONAL  LICENSES  THAT COULD  DECREASE  OUR  REVENUES  AND
INCREASE  OUR  SALES  AND  MARKETING  COSTS.  We  believe  that our  success  in
penetrating  our target  markets  depends in part on our  ability to develop and
maintain  business  relationships  with  software  vendors,  resellers,  systems
integrators,  distribution  partners  and  customers.  If we  fail  to  continue
developing  these  relationships,  our growth could be limited.  We have entered
into agreements  with third parties  relating to the integration of our products
with their product  offerings,  distribution,  reselling and consulting.  We are
currently  deriving  revenues  from these  agreements  but we may not be able to
derive  significant  revenues in the future from these agreements.  In addition,
our growth may be limited  if  prospective  clients do not accept the  solutions
offered by our strategic partners.

OUR MARKET MAY  EXPERIENCE  RAPID  TECHNOLOGICAL  CHANGES  THAT COULD  CAUSE OUR
PRODUCTS TO FAIL OR REQUIRE US TO REDESIGN OUR  PRODUCTS,  WHICH WOULD RESULT IN
INCREASED  RESEARCH AND DEVELOPMENT  EXPENSES.  Our market is  characterized  by
rapid technological change,  dynamic client needs and frequent  introductions of
new  products  and product  enhancements.  If we fail to  anticipate  or respond
adequately to technology developments and client requirements, or if our product
development  or  introduction  is delayed,  we may have lower  revenues.  Client
product  requirements  can change  rapidly as a result of computer  hardware and
software innovations or changes in and the emergence,  evolution and adoption of
new  industry  standards.  For  example,  we offer  Windows NT  versions  of our
products due to the market acceptance of Windows NT over the last several years.
While we interface smoothly with UNIX systems,  we currently do not provide UNIX
versions of our software. The actual or anticipated introduction of new products
has resulted and will  continue to result in some  reformulation  of our product
offerings. Technology and industry standards can make existing products obsolete
or  unmarketable  or result in delays in the  purchase  of such  products.  As a
result,  the life cycles of our  products are  difficult  to  estimate.  We must
respond  to  developments  rapidly  and  continue  to make  substantial  product
development  investments.  As is  customary in the  software  industry,  we have
previously  experienced delays in introducing new products and features,  and we
may  experience  such  delays in the future  that could  impair our  revenue and
operating results.

OUR PRODUCTS COULD BE SUSCEPTIBLE TO ERRORS OR DEFECTS THAT COULD RESULT IN LOST
REVENUES,  LIABILITY OR DELAYED OR LIMITED MARKET  ACCEPTANCE.  Complex software
products such as ours often contain errors or defects,  particularly  when first
introduced or when new versions or enhancements are released.  In the past, some
of  our  products   have   contained   errors  and  defects  that  have  delayed
implementation  or required  us to expend  additional  resources  to correct the
problems. Despite internal testing and testing by current and potential clients,
and despite the history of use by our installed  base of customers,  our current
and future products may contain as yet undetected serious defects or errors. Any
such defects or errors could  result in lost  revenues,  liability or a delay in
market acceptance of these products,  any of which would have a material adverse
effect on our business, operating results and financial condition.

The  performance  of our  products  also  depends in part upon the  accuracy and
continued  availability  of  third-party  data.  We rely on third  parties  that
provide  information such as street and address  locations and mapping functions
that we incorporate into our products.  If these parties do not provide accurate
information,  or if we are unable to maintain our  relationships  with them, our
reputation and competitive position in our industry could suffer and we could be
unable to develop or enhance our products as required.

OUR  INTELLECTUAL  PROPERTY  COULD BE USED BY THIRD PARTIES  WITHOUT OUR CONSENT
BECAUSE  PROTECTION  OF OUR  INTELLECTUAL  PROPERTY IS LIMITED.  Our success and
ability to compete are  substantially  dependent upon our  internally  developed
technology,  which we protect  through a combination of copyright,  trade secret
and  trademark  law.  However,  we may  not be able to  adequately  protect  our
intellectual  property  rights,  which  may  significantly  harm  our  business.
Specifically,  we may not be able to protect our trademarks for our company name
and our product names, and unauthorized parties may attempt to copy or otherwise
obtain and use our  products or  technology.  Policing  unauthorized  use of our
products and  technology is  difficult,  particularly  in countries  outside the
U.S.,  and we  cannot  be  certain  that the steps we have  taken  will  prevent
infringement or misappropriation of our intellectual property rights.

Our  end-user  licenses are designed to prohibit  unauthorized  use,  copying or
disclosure of our software and technology in the United States, Israel and other
foreign countries. However, these provisions may be unenforceable under the laws
of some jurisdictions and foreign  countries.  Unauthorized third parties may be
able to copy some portions of our products or reverse engineer or obtain and use
information and technology  that we regard as  proprietary.  Third parties could
also independently develop competing technology or design around our technology.
If we are unable to  successfully  detect  infringement  and/or to  enforce  our
rights to our technology,  we may lose  competitive  position in the market.  We
cannot assure you that our means of protecting our intellectual  property rights
in the United  States,  Israel or elsewhere  will be adequate or that  competing
companies will not independently develop similar technology.  In addition,  some
of our  licensed  users  may  allow  additional  unauthorized  users  to use our
software,  and if we do not detect  such use,  we could lose  potential  license
fees.


                                       14
<PAGE>

OUR TECHNOLOGY AND OTHER INTELLECTUAL PROPERTY MAY BE SUBJECT TO INFRINGEMENT
CLAIMS. Substantial litigation regarding technology rights and other
intellectual property rights exists in the software industry both in terms of
infringement and ownership issues. A successful claim of patent, copyright or
trademark infringement or conflicting ownership rights against us could require
us to make changes in our business or significantly harm our business. We
believe that our products do not infringe the intellectual property rights of
third parties. However, we cannot assure you that we will prevail in all future
intellectual property disputes.

We expect that  software  products may be  increasingly  subject to  third-party
infringement  or ownership  claims as the number of  competitors in our industry
segment grows and the  functionality of products in different  industry segments
overlaps.  Third  parties  may  make a  claim  of  infringement  or  conflicting
ownership  rights  against us with respect to our products and  technology.  Any
claims, with or without merit, could:
     *    be time-consuming to defend;
     *    result in costly litigation;
     *    divert management's attention and resources; or
     *    cause product shipment delays.

Further,  if an infringement or ownership claim is successfully  brought against
us, we may have to pay damages or royalties,  enter into a licensing  agreement,
and/or  stop  selling  the product or using the  technology  at issue.  Any such
royalty or licensing agreements may not be available on commercially  reasonable
terms, if at all.

From  time to time,  we may  encounter  disputes  over  rights  and  obligations
concerning  intellectual  property.  We also  indemnify  some  of our  customers
against claims that our products  infringe the  intellectual  property rights of
others.  We have only conducted a partial search for existing  patents and other
intellectual property registrations,  and we cannot assure you that our products
do not infringe any issued patents. In addition,  because patent applications in
the United  States and Israel  are not  publicly  disclosed  until the patent is
issued, applications may have been filed which would relate to our products.

OUR BUSINESS MAY BECOME  INCREASINGLY  SUSCEPTIBLE TO NUMEROUS RISKS  ASSOCIATED
WITH  INTERNATIONAL  OPERATIONS.  Significant  portions of our operations  occur
outside the United States. Our facilities are located in North America,  Israel,
the European continent,  and the United Kingdom,  and our executive officers and
other  key  employees  are  dispersed  throughout  the  world.  This  geographic
dispersion  requires  significant  management  resources  that may place us at a
disadvantage  compared  to our  locally  based  competitors.  In  addition,  our
international operations are generally subject to a number of risks, including:
     *    foreign currency exchange rate fluctuations;
     *    longer sales cycles;
     *    multiple, conflicting and changing governmental laws and regulations;
     *    expenses associated with customizing products for foreign countries;
     *    protectionist   laws  and   business   practices   that  favor   local
          competition;
     *    difficulties in collecting accounts receivable; and
     *    political and economic instability.

We expect  international  revenues  to  continue  to account  for a  significant
percentage of total  revenues and we believe that we must continue to expand our
international  sales  and  professional  services  activities  in  order  to  be
successful.  Our international  sales growth will be limited if we are unable to
expand  our   international   sales   management   and   professional   services
organizations,  hire  additional  personnel,  customize  our  products for local
markets and establish relationships with additional international  distributors,
consultants  and other third  parties.  If we fail to manage our  geographically
dispersed organization,  we may fail to meet or exceed our business plan and our
revenues may decline.

ANY FUTURE  ACQUISITIONS OF COMPANIES OR TECHNOLOGIES  MAY RESULT IN DISTRACTION
OF OUR MANAGEMENT AND DISRUPTIONS TO OUR BUSINESS.  Although not currently under
consideration,  we may acquire or make investments in complementary  businesses,
technologies, services or products if appropriate opportunities arise. From time
to time we may engage in discussions and negotiations  with companies  regarding
our acquiring or investing in such companies' businesses,  products, services or
technologies.  We cannot make assurances that we will be able to identify future
suitable  acquisition or investment  candidates,  or if we do identify  suitable
candidates,  that we will be able to make such  acquisitions  or  investments on
commercially  acceptable terms or at all. Our management has limited  experience
in  acquiring  companies  or  technologies.  If we  acquire or invest in another
company,  we  could  have  difficulty  assimilating  that  company's  personnel,
operations,  technology or products and service offerings.  In addition, the key
personnel  of the  acquired  company  may  decide  not to  work  for  us.  These
difficulties  could disrupt our ongoing  business,  distract our  management and
employees, increase our expenses and adversely affect our results of operations.

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<PAGE>

Furthermore, we may incur indebtedness to pay for any future acquisitions. As of
the date of this  statement,  we have neither begun  discussions  nor entered an
agreement to make any such material investment or acquisition transaction.

FUTURE ACQUISITIONS MAY RESULT IN DILUTION TO OUR CURRENT  SHAREHOLDERS.  In the
future we may acquire complementary  business through the issuance of additional
ordinary  shares.  Additional  issuances of ordinary  shares could  decrease the
value of our ordinary  shares and reduce the net tangible  book value per share.
Consequently,  an acquisition in which we issue additional shares could actually
decrease the value of your investment in  ClickSoftware.  As of the date of this
statement,  we have neither begun  discussions  nor entered an agreement to make
any material acquisition that would result in the issuance of additional shares.

WE ARE  INCORPORATED  IN ISRAEL  AND HAVE  IMPORTANT  FACILITIES  AND  RESOURCES
LOCATED IN  ISRAEL,  WHICH  COULD BE  NEGATIVELY  AFFECTED  DUE TO  MILITARY  OR
POLITICAL  TENSIONS.  We are incorporated  under the laws of the State of Israel
and our research and  development  facilities as well as  significant  executive
offices  are  located  in Israel.  Although  substantial  portions  of our sales
currently are to customers outside of Israel,  political,  economic and military
conditions in Israel could  nevertheless  directly affect our operations.  Since
the  establishment  of the State of Israel in 1948, a number of armed  conflicts
have taken place between Israel and its Arab neighbors and a state of hostility,
varying in degree and intensity,  has led to security and economic  problems for
Israel.  Since September 2000, a continuous  armed conflict with the Palestinian
authority has been taking place.

Despite  our  history of  avoiding  adverse  effects,  in the future we could be
adversely  affected by any major hostilities  involving Israel, the interruption
or curtailment of trade between Israel and its trading  partners,  a significant
increase in inflation,  or a  significant  downturn in the economic or financial
condition of Israel.  Despite past progress towards peace between Israel and its
Arab  neighbors,  the future of these peace efforts is  uncertain.  Several Arab
countries still restrict  business with Israeli  companies,  which may limit our
ability to make sales in those  countries.  We could be  adversely  affected  by
restrictive laws or policies directed towards Israel or Israeli businesses.

CERTAIN  OF OUR  OFFICERS  AND  EMPLOYEES  ARE  REQUIRED  TO SERVE IN THE ISRAEL
DEFENSE  FORCES AND THIS COULD  FORCE THEM TO BE ABSENT  FROM OUR  BUSINESS  FOR
EXTENDED  PERIODS.  David Schapiro,  our Executive Vice  President,  Markets and
Product,  and Hannan Carmeli,  our Senior Vice President,  Product  Services and
Operations,  as well as other male  employees  located  in Israel are  currently
obligated to perform up to 39 days of annual  reserve duty in the Israel Defense
Forces and are subject to being called for active military duty at any time. The
loss or extended  absence of any of our officers and key  personnel due to these
requirements could harm our business.

WE ARE SUBJECT TO A RECENTLY  ADOPTED NEW COMPANIES  LAW, WHICH HAS NOT YET BEEN
INTERPRETED.  Because we are incorporated under the laws of the State of Israel,
the Companies Law of Israel, which became effective on February 1, 2000, governs
your  rights as a  shareholder.  Certain  obligations  and  fiduciary  duties of
directors,  officers and  shareholders  under the new  Companies Law are new and
have not been  interpreted or reviewed by the Israeli courts.  In addition,  not
all of  the  regulations  have  been  promulgated  to  date.  As a  result,  our
shareholders  may have more  difficulty  and  uncertainty  in  protecting  their
interests  in the case of  actions by our  directors,  officers  or  controlling
shareholders  or  third  parties  than  would   shareholders  of  a  corporation
incorporated in a state or other jurisdiction in the United States.

THE RATE OF  INFLATION IN ISRAEL MAY  NEGATIVELY  IMPACT OUR COSTS IF IT EXCEEDS
THE RATE OF DEVALUATION OF THE NIS AGAINST THE DOLLAR.  Substantially all of our
revenues are  denominated  in dollars or are  dollar-linked,  but a  significant
portion of our  research  and  development  expense is  incurred  in New Israeli
Shekels  ("NIS")  and a portion of our  revenues  and  expenses  is  incurred in
British  Pounds and the European  Community  Euro. The results of our operations
are subject to  fluctuations  in these  exchange  rates which are  influenced by
various global economic factors,  including  inflation rates and economic growth
within each nation. In 2000, 27%, and in 2001, 24% of our costs were incurred in
NIS.  As a result,  we are  exposed  to the risk that the rate of  inflation  in
Israel will exceed the rate of  devaluation of the NIS in relation to the dollar
or that the timing of this devaluation  will lag behind inflation in Israel.  In
that event,  the dollar cost of our  operations  in Israel will increase and our
dollar-measured results of operations will be adversely affected.

WE ARE AN INTERNATIONAL COMPANY AND OUR INTERNATIONAL  OPERATIONS ARE EXPANDING.
OUR RISK EXPOSURE TO FOREIGN CURRENCY FLUCTUATIONS IS INCREASING, AND WE MAY NOT
BE ABLE TO FULLY MITIGATE THE RISK. Our revenue from the UK has grown both on an
absolute  dollar  basis  as well  as a  percentage  of  total  revenues.  We are
expanding  operations  in  other  areas  of  Europe,  and  income  and  expenses
recognized in the European  Community  Euro will  increase.  In 2001, 26% of our
costs  were  incurred  in GBP and  Euro.  We incur a  portion  of our  expenses,
principally  salaries and related personnel expenses in Israel, in NIS. In 2001,
24% of our costs were  incurred  in NIS.  We are also  experiencing  a growth in

                                       16
<PAGE>

revenue and expenses in Israel, and we anticipate recognizing revenue from other
international  sources.  Presently our risk to foreign currency  fluctuations is
minimal, but if our foreign accounts receivable balances increase, the risk will
increase.  We cannot assure that we will be able to adequately protect ourselves
against such risk.

THE GOVERNMENT PROGRAMS IN WHICH WE CURRENTLY PARTICIPATE AND TAX BENEFITS WHICH
WE CURRENTLY  RECEIVE  REQUIRE US TO SATISFY  PRESCRIBED  CONDITIONS  AND MAY BE
DELAYED,  TERMINATED OR REDUCED IN THE FUTURE. THIS WOULD INCREASE OUR COSTS AND
TAXES.  We receive grants from the Government of the State of Israel through the
Office of the Chief  Scientist  of the  Ministry of Industry  and Trade,  or the
Chief Scientist,  for the financing of a significant portion of our research and
development  expenditures in Israel,  and we may apply for additional  grants in
the future.  We cannot assure you that we will continue to receive grants at the
same rate or at all. The Chief  Scientist  budget has been subject to reductions
that may  affect the  availability  of funds for Chief  Scientist  grants in the
future.  The percentage of our research and  development  expenditures  financed
using grants from the Chief  Scientist may decline in the future,  and the terms
of such  grants may become less  favorable.  In  connection  with  research  and
development  grants  received  from the Chief  Scientist,  we must make  royalty
payments  to the  Chief  Scientist  on the  revenues  derived  from  the sale of
products,  technologies  and services  developed  with the grants from the Chief
Scientist.  From time to time,  the  Government  of Israel  changes  the rate of
royalties  we must pay, so we are unable to  accurately  predict  this rate.  In
addition,  our ability to manufacture  products or transfer  technology  outside
Israel without the approval of the Chief Scientist is restricted  under law. Any
manufacture  of  products or transfer  of  technology  outside  Israel will also
require the company to pay  increased  royalties  to the Chief  Scientist  up to
300%.  We currently  conduct all of our  manufacturing  activities in Israel and
intend to  continue  doing so in the  foreseeable  future and  therefore  do not
believe  there will be any  increase  in the amount of  royalties  we pay to the
Chief  Scientist.  Currently the office of the Chief Scientist does not consider
the  licensing of our software in the ordinary  course of business a transfer of
technology  and we do not intend to transfer any  technology  outside of Israel.
Consequently,  we do not  anticipate  having to pay  increased  royalties to the
Chief  Scientist  for the  foreseeable  future.  In  connection  with our  grant
applications,  we have made representations and covenants to the Chief Scientist
regarding our research and  development  activities in Israel.  The funding from
the Chief  Scientist  is subject to the  accuracy of these  representations  and
covenants.  If we fail to  comply  with  any of  these  conditions,  we could be
required to refund  payments  previously  received  together  with  interest and
penalties and would likely be denied receipt of these grants thereafter.

WE ANTICIPATE RECEIVING TAX BENEFITS FROM THE GOVERNMENT OF THE STATE OF ISRAEL,
HOWEVER  THESE  BENEFITS MAY BE DELAYED,  REDUCED OR  TERMINATED  IN THE FUTURE.
Pursuant to the Law for the Encouragement of Capital Investments, the Government
of the State of Israel  through  the  Investment  Center has  granted  "Approved
Enterprise"  status  to  three  of our  existing  capital  investment  programs.
Consequently,  we are eligible  for certain tax  benefits for the first  several
years in which we  generate  taxable  income.  We have  not,  however,  begun to
generate taxable income for purposes of this law and we do not expect to utilize
these  tax  benefits  for the near  future.  Once we begin to  generate  taxable
income,  our  financial   condition  could  suffer  if  our  tax  benefits  were
significantly  reduced.  The benefits  available to an approved  enterprise  are
dependent upon the fulfillment of certain conditions and criteria. If we fail to
comply with these  conditions  and  criteria,  the tax benefits  that we receive
could be partially or fully canceled and we could be forced to refund the amount
of the benefits we received,  adjusted for inflation and interest.  From time to
time, the Government of Israel has discussed  reducing or limiting the benefits.
We cannot assess whether these benefits will be continued in the future at their
current levels or at all.

IT MAY BE  DIFFICULT  TO ENFORCE A U.S.  JUDGMENT  AGAINST US, OUR  OFFICERS AND
DIRECTORS AND THE ISRAELI  ACCOUNTANTS  NAMED AS EXPERTS IN THIS STATEMENT OR TO
ASSERT U.S.  SECURITIES LAWS CLAIMS IN ISRAEL OR SERVE PROCESS ON  SUBSTANTIALLY
ALL OF OUR OFFICERS AND DIRECTORS AND THESE ACCOUNTANTS.  We are incorporated in
Israel and maintain  significant  operations  in Israel.  Some of our  executive
officers  and  directors  and the Israeli  accountants  named as experts in this
statement  reside outside of the United States and a significant  portion of our
assets and the assets of these  persons are located  outside the United  States.
Therefore,  it may be difficult for an investor,  or any other person or entity,
to enforce a U.S. court judgment against us or any of those persons or to effect
service of process upon these persons in the United States, based upon the civil
liability  provisions of the U.S.  federal  securities laws in an Israeli court.
Additionally,  it may be  difficult  for an  investor,  or any  other  person or
entity,  to enforce civil  liabilities  under U.S.  federal  securities  laws in
original actions instituted in Israel. We have appointed ClickSoftware Inc., our
U.S.  subsidiary,  as our agent to  receive  service  of  process  in any action
against us arising out of our original June 22, 2000 initial public offering. We
have not  given  our  consent  for our agent to accept  service  of  process  in
connection with any other claim. Furthermore,  if a foreign judgment is enforced
by an Israeli court, it will be payable in NIS.


                                       17
<PAGE>

OUR OFFICERS,  DIRECTORS AND AFFILIATED  ENTITIES OWN A LARGE  PERCENTAGE OF OUR
COMPANY AND COULD SIGNIFICANTLY INFLUENCE THE OUTCOME OF ACTIONS. As of December
31, 2001, our executive  officers,  directors and entities  affiliated with them
beneficially owned approximately 33.6% of our outstanding ordinary shares. These
shareholders,  if acting together,  would be able to significantly influence all
matters  requiring  approval  by our  shareholders,  including  the  election of
directors.  This concentration of ownership may also have the effect of delaying
or  preventing a change of control of our  company,  which could have a material
adverse effect on our stock price.  These actions may be taken even if our other
investors oppose them.

WE ARE  SUBJECT  TO  ANTI-TAKEOVER  PROVISIONS  THAT  COULD  DELAY OR PREVENT AN
ACQUISITION  OF  US,  EVEN  IF  AN  ACQUISITION   WOULD  BE  BENEFICIAL  TO  OUR
SHAREHOLDERS. Provisions of Israeli corporate and tax law and of our articles of
association may have the effect of delaying, preventing or making more difficult
a merger or other acquisition of us, even if doing so would be beneficial to our
shareholders.  In  addition,  any merger or  acquisition  of us will require the
prior  consent of the Chief  Scientist.  Israeli law  regulates  mergers,  votes
required to approve a merger,  acquisition  of shares  through tender offers and
transactions  involving significant  shareholders.  In addition, our articles of
association  provide for a staggered board of directors and for  restrictions on
business combinations with interested shareholders.  Any of these provisions may
make it more difficult to acquire our company. Accordingly, an acquisition of us
could  be  delayed  or  prevented   even  if  it  would  be  beneficial  to  our
shareholders.

OTHER ORDINARY  SHARES MAY BE SOLD IN THE FUTURE.  THIS COULD DEPRESS THE MARKET
PRICE FOR OUR ORDINARY  SHARES.  As of March 31, 2002, we had 26,247,954 (net of
39,000 shares held in treasury),  ordinary shares outstanding,  including shares
held by a trustee for issuance under  outstanding  options.  In addition,  as of
March 31, 2001,  we had  2,067,996  ordinary  shares  issuable  upon exercise of
outstanding  options,  and 1,696,192  additional  ordinary  shares  reserved for
issuance pursuant to our stock option plans and employee share purchase plan. If
our existing  shareholders or we sell a large number of our ordinary shares, the
price of our ordinary  shares could fall  dramatically.  Restrictions  under the
securities  laws limit the number of ordinary  shares  available for sale by our
shareholders  in the public market.  We have filed a  Registration  Statement on
Form S-8 to register for resale the ordinary  shares reserved for issuance under
our stock option plans.

IF WE  CONTINUE  TO  EXPERIENCE  SIGNIFICANT  LOSSES,  IF WE ARE UNABLE TO RAISE
ADDITIONAL FINANCING,  AND IF OUR TRADING PRICE DOES NOT INCREASE, WE MAY NOT BE
ABLE TO MEET THE  CONTINUED  LISTING  CRITERIA FOR THE NASDAQ  NATIONAL  MARKET,
WHICH WOULD ADVERSELY AFFECT OUR BUSINESS AND FINANCIAL CONDITION.

If we continue to  experience  losses  from our  operations  or we are unable to
raise  additional  funds as needed,  and if the  trading  price of our  ordinary
shares does not  increase,  we might not be able to maintain the  standards  for
continued quotation on The Nasdaq National Market, including a minimum bid price
requirement  of $1.00.  The Trading  price of our  ordinary  shares is currently
below $1.00.  If as a result of the  application of these listing  requirements,
our ordinary  shares were delisted from The Nasdaq  National  Market,  our stock
would  become  harder to buy and sell.  Further,  our  ordinary  shares could be
subject to certain rules placing additional  requirements on brokers-dealers who
sell or make a market in our securities.  Consequently,  if we were removed from
The Nasdaq National Market, the ability or willingness of broker-dealers to sell
or make a market in our ordinary shares might decline.  As a result, the ability
for investors to resell our ordinary shares could be adversely affected.

OUR NEED FOR  ADDITIONAL  FINANCING  IS  UNCERTAIN,  AS IS OUR  ABILITY TO RAISE
FURTHER FINANCING IF REQUIRED. We believe that our current cash balances will be
sufficient to fund our expenses until we reach profitability. However, we cannot
assure you that we will  attain  sufficient  revenues  to  achieve  or  maintain
profitability,  particularly  given current  economic  conditions  and potential
reductions in  information  technology  spending by our current and  prospective
customers.  We may need to raise additional capital to finance our operations or
for strategic  purposes,  and we may do so by selling  additional equity or debt
securities or by increasing the size of our credit facility. If additional funds
are raised through the issuance of equity or debt  securities,  these securities
could have  rights;  preferences  and  privileges  senior to those of holders of
ordinary shares, and the terms of these securities could impose  restrictions on
our  operations.  The sale of additional  equity or convertible  debt securities
could result in additional dilution to our shareholders.  In addition, we cannot
be certain that  additional  financing  will be available in amounts or on terms
acceptable  to us,  if at  all.  If we are  unable  to  obtain  this  additional
financing,  we may be  required  to  reduce  the  scope of our  planned  product
development  and marketing  efforts,  which could harm our  business,  financial
condition or operating  results.  If the economy continues to weaken or, for any
other  reason,  we are unable to meet our business  goals,  we may have to raise
additional funds to respond to business  contingencies  and may include the need
to:
     *    fund additional marketing expenditures;
     *    develop new or enhance existing products and services;


                                       18
<PAGE>
     *    enhance our operating infrastructure;
     *    hire additional personnel;
     *    respond to competitive pressures;
     *    acquire complementary businesses or necessary technologies; or
     *    fund more rapid expansion.

WE CANNOT  ASSURE  YOU THAT  ADDITIONAL  FINANCING  WILL BE  AVAILABLE  ON TERMS
FAVORABLE  TO US, OR AT ALL.  If  adequate  funds are not  available  or are not
available  on  acceptable  terms,  our  ability  to fund  our  operations,  take
advantage of  unanticipated  opportunities,  develop or enhance our products and
services or otherwise  respond to competitive  pressures would be  significantly
limited. Additionally, prior to the issuance of additional equity or convertible
debt securities to entities  outside of Israel,  we will need to obtain approval
from the Chief  Scientist  of the State of Israel and there can be no  assurance
that we will be able to obtain this consent in the future.

IF WE ARE  CHARACTERIZED  AS A PASSIVE FOREIGN  INVESTMENT  COMPANY,  OUR UNITED
STATES  SHAREHOLDERS  WILL BE SUBJECT TO ADVERSE TAX  CONSEQUENCES.  If, for any
taxable year,  either,  (1) 75% or more of our gross income is passive income or
(2) 50% or more of the fair market value of our assets,  including cash (even if
held as working capital),  produce or are held to produce passive income, we may
be characterized as a "passive foreign  investment  company" ("PFIC") for United
States  federal  income tax purposes.  We do not believe that we currently are a
PFIC nor do we anticipate  that we will be  characterized  a PFIC in the future,
but, if we do, our  shareholders  will be subject to adverse  United  States tax
consequences.

If we were to be  treated  as a PFIC,  our  shareholders  will be  required,  in
certain circumstances, to pay an interest charge together with tax calculated at
maximum rates on certain "excess  distributions"  including any gain on the sale
of  ordinary  shares.  In order to avoid this tax  consequence,  they (1) may be
permitted to make a "qualified electing fund" election (however the company does
not currently intend to take the action necessary for our shareholders to make a
"qualified  electing  fund"  election,  in which case, in lieu of such treatment
they would be required to include in their taxable income certain  undistributed
amounts of our income or (2) may elect to mark-to-market the ordinary shares and
recognize  ordinary income (or possible ordinary loss) each year with respect to
such  investment and on the sale or other  disposition  of the ordinary  shares.
Prospective investors should consult with their own tax advisors with respect to
the tax consequences applicable to them of investing in our ordinary shares.

business  interruptions could adversely affect our business.  Our operations are
vulnerable to interruption by fire, earthquake,  power loss,  telecommunications
failure and other events beyond our control.  In particular,  we have operations
in the San Francisco Bay Area,  an area that is known to be  susceptible  to the
risk of  earthquakes.  We do not have a detailed  disaster  recovery  plan.  Our
facilities  in the State of  California  are  currently  subject  to  electrical
blackouts as a consequence of a shortage of available  electrical  power. In the
event these blackouts  continue or increase in severity,  they could disrupt the
operations of our affected facilities.  In addition,  we do not carry sufficient
business  interruption  insurance to compensate us for losses that may occur and
any losses or damages incurred by us could have a material adverse effect on our
business.

Our stock price could be volatile  and could  decline  substantially.  The stock
market has experienced significant price and volume fluctuations, and the market
prices of technology companies have been highly volatile. The price at which our
ordinary shares trades is likely to be volatile and may fluctuate  substantially
due to factors such as:
     *    announcements of technological innovations;
     *    announcements relating to strategic relationships;
     *    conditions affecting the software and Internet industries;
     *    trends related to the  fluctuations  of stock prices of companies such
          as ours;
     *    our historical and anticipated quarterly and annual operating results;
     *    variations   between  our  actual  results  and  the  expectations  of
          investors or published reports or analyses of ClickSoftware;
     *    announcements  by us or others  affecting  our  business,  systems  or
          expansion plans; and
     *    general conditions and trends in technology industries.

In the past,  securities  class  action  litigation  has often  been  instituted
against  companies  following periods of volatility in the market price of their
securities.  This type of  litigation  could result in  substantial  costs and a
diversion of management's attention and resources.

                                       19
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY EXCHANGE RATE RISK. We develop products in Israel and sell them
primarily in North America and Europe. As a result,  our financial results could
be affected by factors  such as changes in foreign  currency  exchange  rates or
weak economic  conditions in foreign markets. As most of our sales are currently
made in U.S. dollars, a strengthening of the dollar could make our products less
competitive in foreign  markets.  Our interest income is sensitive to changes in
the general level of U.S. interest rates, particularly since the majority of our
investments are in short-term  instruments.  We regularly assess these risks and
have established  policies and business practices to protect against the adverse
effects of these and other potential  exposures.  However, due to the short-term
nature of our term  investments,  we have  concluded  that there is no  material
market risk  exposure and we do not  anticipate  material  losses as a result of
foreign  exchange  rate  fluctuations..   Therefore,   no  quantitative  tabular
disclosures are required. Additionally, although we do not presently participate
in hedging contracts related to foreign currency exchange rates, we may do so in
the future to protect against rate  fluctuations  affecting our foreign currency
accounts  receivable  balances.   We  do  not  participate  in  any  speculative
investments.

INTEREST  RATE RISK.  As of March 31, 2002, we had cash,  cash  equivalents  and
short-term  investments  of $9.4 million which consist of cash and highly liquid
short-term  investments.  Our short-term investments will decline in value by an
immaterial  amount  if market  interest  rates  increase,  and,  therefore,  our
exposure to interest  rate  changes  has been  immaterial.  Declines of interest
rates over time will,  however,  reduce our interest  income from our short-term
investments.

As of March 31, 2002,  we had total  short-term  debt and current  maturities of
$37,000  and  long-term  debt net of  current  maturities  of $9,000  which bear
interest at rates that are linked to LIBOR or the Israeli  consumer price index.
As of March 31,2002 we had $1.0 million unsecured line of credit.

The following table provides information about our investment  portfolio,  cash,
and long-term  debts as of March 31, 2002 and presents  principal cash flows and
related weighted averages interest rates by expected maturity dates.
<TABLE>
<CAPTION>
                                                           YEAR OF MATURITY            TOTAL CARRYING
                                                     2002       2003     AFTER 2003         VALUE
                                                          (in thousands of dollars)
A) Cash and cash equivalents and investment portfolio:
<S>                                                  <C>         <C>               <C>           <C>
Cash and equivalents                                 $ 7,292           -            -            $ 7,292
  Average interest rate                                 1.8%           -            -               1.8%

Commercial Papers                                      $ 600           -            -              $ 600
  Average interest rate                                 2.0%           -            -               2.0%
Bank Deposits                                                    $ 1,000                         $ 1,000
  Average interest rate                                             2.2%            -               2.2%
Asset backed Securities                                $ 501           -            -              $ 501
  Average interest rate                                 2.5%           -            -               2.5%
B) Term debts:
N.I.S indexed loans                                      $ 3         $ 2            -                  5
  Average interest rate                                 5.4%        5.4%            -               5.4%
Leases US$                                              $ 15         $ 1            -             $   16
  Average interest rate                                 7.1%        7.1%            -               7.1%
Leases GBP                                              $ 19         $ 6            -             $   25
  Average interest rate                                 3.5%        3.5%            -               3.5%



                                       20
</TABLE>
<PAGE>

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

         None

ITEM 2. Changes in Securities and Use of Proceeds

         None

ITEM 4. Submission of matters to a vote of security holders

         None


ITEM 6.  Exhibits and Reports on Form 8-K

   (a)    Exhibits:

       None.
(b)       Reports on for 8 - K:

         No reports on Form 8-K were filed with the Securities and Exchange
Commission during the three months ended March 31, 2002.


                                       21
<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.

                               CLICKSOFTWARE TECHNOLOGIES LTD.
                               (Registrant)

                               By:  /s/ SHIMON M. ROJANY
                               --------------------------
                               Shimon M. Rojany
                               Senior Vice President and Chief Financial Officer

Date:  May 14, 2002