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 September 30, 2001
                                       OR

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

                        For the transition period from to


                        Commission File Number: 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 September 30, 2001, there were 26,180,191  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 September 30, 2001


PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

     <S>                                                                                                                   <C>
     (a) Condensed Consolidated Balance Sheets as of September 30, 2001 and
         December 31, 2000.................................................................................................   3

     (b) Condensed Consolidated Statements of Operations for the three and nine
         months ended September 30, 2001 and September 30, 2000............................................................   4

     (c) Condensed Consolidated Statements of Cash Flows for nine months ended
         September 30, 2001 and September 30, 2000.........................................................................   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.......................................................  24


PART II. OTHER INFORMATION

Item 1. Legal Proceedings..................................................................................................  26

Item 2. Changes in Securities and Use of Proceeds..........................................................................  26

Item 4. Submission of Matters to a Vote of Security Holders................................................................  26

Item 6. Exhibits and Reports on Form 8-K...................................................................................  27

Signatures.................................................................................................................  29
</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)



                                                                   September 30,                         December 31,
                                                                       2001                                  2000
                                                          --------------------------------     ----------------------------------
ASSETS                                                              (Unaudited)
                                                          --------------------------------     ----------------------------------

CURRENT ASSETS:
<S>                                                                  <C>                                   <C>
Cash and cash equivalents                                            $ 10,004                           $    4,438
Short-term investments                                                  2,088                               16,878
Trade receivables                                                       4,664                                4,375
Other receivables and prepaid expenses                                  1,908                                1,466
                                                          --------------------------------     ----------------------------------
          Total current assets                                         18,664                               27,157

Property and equipment, net                                             3,646                                3,772
Severance pay deposits                                                    593                                  526
                                                          --------------------------------     ----------------------------------

          Total assets                                               $ 22,903                           $   31,455
                                                          ================================     ==================================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Short-term debt                                                     $      61                           $      146
Accounts payable and accrued expenses                                   2,741                                3,274
Deferred revenues                                                         227                                  127
                                                          --------------------------------     ----------------------------------
       Total current liabilities                                        3,029                                3,547
                                                          --------------------------------     ----------------------------------

LONG-TERM LIABILITIES
   Long-term debt                                                          57                                  103
   Accrued severance pay                                                1,399                                1,343
                                                          --------------------------------     ----------------------------------
       Total long-term liabilities                                      1,456                                1,446
                                                          --------------------------------     ----------------------------------
       Total liabilities                                                4,485                                4,993
                                                          --------------------------------     ----------------------------------

SHAREHOLDERS' EQUITY:
Preferred shares of NIS 0.02 par value:
   Authorized -- 5,000,000 as of December 31, 2000
   and September 30, 2001; Issued and outstanding --
   none as of December 31, 2000 and September 30, 2001.                     -                                    -
                                                                            -                                    -
Ordinary shares of NIS 0.02 par value:
   Authorized -- 100,000,000 as of December 31, 2000 and
   September 30, 2001; Issued -- 26,064,539 shares as of
   December 31, 2000 and 26,202,191 as of September 30,
   2001.  Outstanding-- 26,064,539 shares as of December
   31, 2000 and 26,180,191 shares as of September 30,
   2001.                                                                  101                                  100


Additional paid-in capital                                             69,104                               69,169
Deferred compensation                                                    (555)                              (1,120)
Treasury shares - 22,000 shares at cost as of
   September 30, 2001, none as of December 31,
   2000.                                                                (25)                                   -
Accumulated deficit                                                   (50,207)                             (41,687)
                                                          --------------------------------     ----------------------------------
       Total shareholders' equity                                      18,418                               26,462
                                                          --------------------------------     ----------------------------------
Total liabilities and shareholders' equity                          $  22,903                           $   31,455
                                                          ================================     ==================================
</TABLE>

            See notes to condensed consolidated financial statements.
                                       3
<PAGE>
<TABLE>
<CAPTION>
                         CLICKSOFTWARE TECHNOLOGIES LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except share and per share amounts)
                                   (Unaudited)
                                                                  THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                     SEPTEMBER 30,                 SEPTEMBER 30,
                                                                 2001             2000          2001           2000
                                                        ------------------------------------------------------------------
Revenues:
<S>                                                            <C>             <C>            <C>           <C>
  Software license                                            $      1,042     $     3,320    $      7,028  $       8,406
  Service and maintenance                                            1,697           1,469           5,197          4,202
                                                        ------------------------------------------------------------------
     Total revenues                                                  2,739           4,789          12,225         12,608
                                                        ------------------------------------------------------------------
Cost of revenues:
  Software license                                                      95             117             307            250
  Service and maintenance                                            1,292           1,353           4,168          3,917
                                                        ------------------------------------------------------------------
     Total cost of revenues                                          1,387           1,470           4,475          4,167
                                                        ------------------------------------------------------------------
     Gross profit                                                    1,352           3,319           7,750          8,441
                                                        ------------------------------------------------------------------
Operating expenses:
  Research and development expenses, net                               801             941           2,460          3,346
  Sales and marketing expenses                                       3,099           3,443          10,411          9,782
  General and administrative expenses                                1,575             838           3,364          2,595
  Reorganization expenses                                                0               0             294             0-
                                                        ------------------------------------------------------------------
  Share-based compensation                                             134             277             321            987
                                                        ------------------------------------------------------------------
     Total operating expenses                                        5,609           5,499          16,850         16,710
                                                        ------------------------------------------------------------------
     Operating loss                                                (4,257)         (2,180)         (9,100)        (8,269)
Interest and other income, net                                         110             329             580            328
                                                        ------------------------------------------------------------------
     Net loss                                                 $    (4,147)    $     (1,851) $      (8,520)  $     (7,941)

                                                        ------------------------------------------------------------------
Basic and diluted net loss per share                          $     (0.16)    $      (0.07) $       (0.34)  $      (0.37)

Shares used in computing basic and diluted
  net loss per share                                           25,154,690      24,699,121      25,070,748     21,554,795

</TABLE>
            See notes to condensed consolidated financial statements.
                                       4
<PAGE>
<TABLE>
<CAPTION>

                         CLICKSOFTWARE TECHNOLOGIES LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)


                                                                                                    NINE MONTHS ENDED
                                                                                                       SEPTEMBER 30
                                                                                                2001                 2000
                                                                                        -------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                                <C>                   <C>
Net loss                                                                                           $ (8,520)             $ (7,941)

Adjustments to reconcile net loss to net cash used in operating activities
Expenses not affecting operating cash flows:
  Depreciation                                                                                           719                   457
  Amortization of deferred compensation                                                                  321                   987
  Unrealized gain from investments                                                                       319                 (426)
  Severance pay, net                                                                                    (11)                   349
Changes in operating assets and liabilities:
  Trade receivables                                                                                    (289)               (2,424)
  Other receivables and other prepaid
    expenses                                                                                           (442)                 (658)
  Accounts payable and accrued expenses                                                                (533)                   142
  Deferred revenues                                                                                      100                 (861)
                                                                                        -------------------------------------------
Net cash used in operating activities                                                                (8,336)              (10,375)
                                                                                        -------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from (investment in) short term investments, net                                             14,471              (15,092)
Purchases of equipment                                                                                 (593)               (2,153)
                                                                                        -------------------------------------------
Net cash provided by (used in) investing activities                                                   13,878              (17,245)
                                                                                        -------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term debt                                                                            (85)                 (169)
Repayment of long-term debt                                                                             (46)                  (99)
Net proceeds from issuance of Ordinary
  shares                                                                                                   -                28,344
Net proceeds from warrants exercised                                                                       -                   579
Purchase of treasury stock                                                                              (25)                     -
Employee options exercised                                                                               180                   459
                                                                                        -------------------------------------------
Net cash provided by financing activities                                                                 24                29,114
                                                                                        -------------------------------------------
Increase in cash and cash
  equivalents                                                                                          5,566                 1,494
Cash and cash equivalents at beginning of
  period                                                                                               4,438                 7,838
                                                                                        -------------------------------------------
Cash and cash equivalents at end of period                                                          $ 10,004               $ 9,332
                                                                                        ===========================================


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

                         ClickSoftware Technologies Ltd.

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (INFORMATION AS OF SEPTEMBER 30, 2001 AND FOR THE THREE AND NINE MONTHS
                                     ENDED
                   SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000)

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  September  30, 2001 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, 2001. The statements  have been prepared
          in accordance  with the  regulations  of the  Securities  and Exchange
          Commission;  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, 2000 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>
                                                                                      NINE MONTHS
                                                                                  ENDED SEPTEMBER 30
                                                                                  2001            2000
                                                          (in thousands except share data and share numbers)

        <S>                                                                      <C>            <C>
         Net loss attributable to ordinary shareholders                                (8,520)        (7,941)
         Basic and diluted:
            Weighted average shares used in computing
             basic and diluted net loss per ordinary
             share
                                                                                   25,070,748     21,554,795

          Basic and diluted net loss per ordinary
             share                                                                     (0.34)         (0.37)
                                                                           ==================================
</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 the judgment of the
Company  as of the date of this  quarterly  report on Form 10-Q 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.   ClickSoftware  undertakes  no  obligation  to  update  forward-looking
statements, whether as a result of new information, future events or otherwise.

OVERVIEW

ClickSoftware  Technologies  Ltd.  ("ClickSoftware"  or the  "Company")  derives
revenues from software licensing, service and maintenance fees. 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.  License fees are based on an initial fee  determined by
the  number  of  service  resources  to  be  scheduled,   followed  by  periodic
maintenance fees.

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 professional service revenues
from  implementation,  and  revenues  from  consulting,  training,  and customer
service support fees.  Clients licensing our products generally purchase support
service  agreements  from us.  Professional  service and  training  revenues are
billed at an agreed-upon  rate plus incurred  expenses,  and are recognized when
provided.  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, and
are  recognized  over the  duration of the support  provided.  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.

We also offer software  license pricing  structures to our clients which include
lower initial  license fees followed by monthly  payments based on the number of
scheduling  transactions conducted. To date, however, no significant revenue has
been recognized on this basis.

                                       7
<PAGE>

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.  Cost of
service and  maintenance  revenues  consists of  expenses  related to  salaries,
expenses  of  our  professional   services   organizations,   costs  related  to
third-party consultants, and equipment costs.

We believe that as our client base  reaches  maturity,  and as existing  clients
purchase additional  licenses,  the trend of percentage of revenues derived from
license fees will increase as a percentage of revenues  while the  percentage of
revenues  derived from service and maintenance fees will increase on an absolute
basis but decrease as a percentage of revenues as compared to historic periods.

Operating  expenses are categorized  into net research and development  expenses
(net of  grants),  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.

Sales and marketing  expenses  consist  primarily of personnel and related costs
for marketing and sales functions,  including related travel, direct advertising
costs, expenditures on trade shows, market research and promotional printing.

In previous  years we received  grants  from the Fund for the  Encouragement  of
Marketing  Activities  established  by the  Government of Israel.  In return for
these  grants,  we are  obligated  to pay the Israeli  Government  royalties  as
described below. We expect that sales and marketing expenses will increase on an
absolute basis over the next quarters as we hire additional  sales and marketing
personnel,  continue to promote our brand, and increase our international  sales
efforts.

General and  administrative  expenses consist primarily of personnel and related
costs  for  corporate  functions,   including  information  services,   finance,
accounting, human resources, facilities, bad debt expenses, legal, and directors
and officers liability insurance.

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,  net, includes interest income earned on our cash and
cash equivalents,  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  expense is incurred in New
Israeli Shekels  ("NIS") and a significant  portion of our revenues and expenses
are incurred in British  Pounds and the Euro.  The results of our operations are
subject to  fluctuations  in these exchange rates that are influenced by various
global economic  factors,  including  inflation rates and economic growth within
each nation.

The effects of foreign currency  exchange rates on our results of operations for
the three and nine months ended September 30, 2000 and 2001 were immaterial.


                                       8
<PAGE>
RESULTS OF OPERATIONS

Our operating  results for each of the three and nine months ended September 30,
2001 and 2000, expressed as a percentage of revenues are as follows:
<TABLE>
<CAPTION>
                                                               ------------------------------------------------------------
                                                                          THREE MONTHS                  NINE MONTHS
                                                                        ENDED SEPTEMBER 30           ENDED SEPTEMBER 30
                                                               ------------------------------------------------------------
                                                                         2001          2000            2001           2000
                                                               ------------------------------------------------------------
Revenues:
<S>                                                                      <C>            <C>             <C>            <C>
  Software license                                                       38%            69%             57%            67%
  Service and maintenance                                                62%            31%             43%            33%
                                                               ------------------------------------------------------------
     Total revenues                                                     100%           100%            100%           100%
Cost of revenues:
  Software license                                                        3%             2%              3%             2%
  Service and maintenance                                                47%            29%             34%            31%
     Total cost of revenues                                              50%            31%             37%            33%
                                                               ------------------------------------------------------------
     Gross profit                                                        50%            69%             63%            67%
                                                               ------------------------------------------------------------
Operating expenses:
  Research and development expenses, net                                 29%            20%             20%            27%
  Sales and marketing expenses                                          113%            72%             85%            77%
  General and administrative expenses                                    58%            17%             28%            21%
  Reorganization expenses                                                  -              -              2%              -
  Share-based compensation                                                5%             6%              3%             8%
                                                               ------------------------------------------------------------
     Total operating expenses                                           205%           115%            138%           133%
                                                               ------------------------------------------------------------
     Operating loss                                                   (155%)          (46%)           (75%)          (66%)
Interest and other income, net                                           4%             7%              5%             3%
                                                               ------------------------------------------------------------
     Net loss                                                         (151%)          (39%)           (70%)          (63%)
                                                               ============================================================
</TABLE>

RESULTS OF OPERATIONS FOR THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

REVENUES: Company revenues decreased $2.1 million or 43% to $2.7 million for the
three  months  ended  September  30, 2001 from $4.8 million for the three months
ended September 30, 2000.  This decrease was the result of the general  economic
conditions and extraordinary events occurring at the end of the third quarter.

SOFTWARE  LICENSE:  Software  license revenues were $1.0 million or 38% of total
revenues for the three months ended  September 30, 2001, and $3.3 million or 69%
of total revenues for the three months ended September 30, 2000. The decrease in
software license revenues was the result of delays in domestic and international
opportunities  during the last three weeks of September due to the extraordinary
events occurring on September 11th, 2001.

SERVICE AND MAINTENANCE:  Service and maintenance  revenues were $1.7 million or
62% of revenues for the three months ended  September 30, 2001, and $1.5 million
or 31% of total  revenue in the three  months  ended  September  30,  2000.  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 third quarter of 2001.

                                       9
<PAGE>

COST OF REVENUES:  Cost of revenues were $1.4 million or 50% of revenues for the
three months ended  September 30, 2001,  and $1.5 million or 31% of revenues for
the three months ended  September 30, 2000. 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 third
quarter.

COST OF SOFTWARE LICENSES:  Cost of software license revenues were $95,000 or 3%
of total revenues for the three months ended September 30, 2001 and, $117,000 or
2% of revenues for the three months ended  September  30, 2000.  The decrease in
the  cost of  software  licenses  is due to the  fewer  sales of  licenses  that
resulted in fewer sales of third parties' licenses.

COST OF SERVICE AND  MAINTENANCE:  Cost of service and maintenance  revenues was
$1.3 million or 47% of revenues for the three months ended  September  30, 2001,
and $1.4 million or 29% of revenues for the three  months  ended  September  30,
2000.  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 product.

GROSS  PROFIT:  Gross profit as a  percentage  of revenues was 50% for the three
months  ended  September  30, 2001 as compared to 69% for the three months ended
September  30, 2000.  The decrease in the gross profit is due to the decrease in
license revenues.

OPERATING  EXPENSES:  Total  operating  expenses  were $5.6  million  or 205% of
revenues for the three months ended September 30, 2001, and $5.5 million or 115%
of revenues  for the three  months ended  September  30,  2000.  The increase in
operating  expenses  was  primarily  due to the  increase in the  provision  for
doubtful accounts amounting to $900,000.

RESEARCH AND DEVELOPMENT EXPENSES,  NET: Research and development expenses,  net
of related  grants,  were $800,000 or 29% of revenues for the three months ended
September  30, 2001,  and $900,000 or 20% of revenues for the three months ended
September  30, 2000.  For the third quarter of 2001 we recognized a research and
development  grant from  Israel's  Chief  Scientist  in the  amount of  $300,000
compared to $500,000  recognized for the three months ended  September 30, 2000.
The decrease in absolute  basis is due to cost controls  implemented  during the
nine months ended  September 30, 2001 and is also due to the temporary  transfer
of R&D software engineers to professional services to support the implementation
process with several European customers.

SALES AND MARKETING EXPENSES:  Sales and marketing expenses were $3.1 million or
113% of revenues for the three months ended September 30, 2001, and $3.4 million
or 72% of revenues for the three months ended  September 30, 2000.  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
$1.6 million or 58% of revenues for the three months ended  September  30, 2001,
and $800,000 or 17% of revenues for the three months ended  September  30, 2000.
The absolute increase in general and  administrative  expenses was due primarily
to increase in the provision for doubtful accounts amounting to $900,000.

SHARE-BASED  COMPENSATION:  Share based  compensation for the three months ended
September  30,  2001  amounted  to  $100,000  of  previously  recorded  deferred
compensation.  Share based compensation for the three months ended September 30,
2000 amounted to $300,000.  The decrease in share-based  compensation  is due to
termination of options  associated with the corporate  restructuring  during the
first  quarter  on  2001.  Additionally,  the  amortization  of the  share-based
compensation progressively decreases over the three-year amortization period.

                                       10
<PAGE>


RESULTS OF OPERATIONS FOR NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000

REVENUES:  Company  revenues  decreased  $400,000 or 3% to $12.2 million for the
nine months  ended  September  30,  2001 from $12.6  million for the nine months
ended September 30, 2000.  This decrease was the result of the general  economic
conditions and extraordinary events occurring at the end of the third quarter.

SOFTWARE  LICENSE:  Software  license revenues were $7.0 million or 57% of total
revenues for the nine months ended  September 30, 2001,  and $8.4 million or 67%
of total revenues for the nine months ended  September 30, 2000. The decrease in
software license revenues was the result of delays in domestic and international
opportunities during the last three weeks of September.

SERVICE AND MAINTENANCE:  Service and maintenance  revenues were $5.2 million or
43% of revenues for the nine months ended  September 30, 2001,  and $4.2 million
or 33% of total  revenue for the nine  months  ended  September  30,  2000.  The
increase in service and maintenance  revenues was primarily due to the increased
professional  services fees in connection  with  implementation  for new clients
going into production during the nine months ended September 30, 2001.

COST OF REVENUES:  Cost of revenues were $4.5 million or 37% of revenues for the
nine months ended  September  30, 2001,  and $4.2 million or 33% of revenues for
the nine months ended  September 30, 2000.  The increase in the cost of revenues
on an  absolute  and  percentage  basis was due to the  increase  in service and
maintenance revenues as a percentage of total revenues.

COST OF SOFTWARE LICENSES: Cost of software license revenues were $307,000 or 3%
of total revenues for the nine months ended September 30, 2001 and,  $250,000 or
2% of revenues for the nine months ended  September 30, 2000. The small increase
in the  cost of  software  licenses  is due to the  costs  associated  with  the
increase in sales of higher cost third parties' licenses.

COST OF SERVICE AND  MAINTENANCE:  Cost of service and maintenance  revenues was
$4.2 million or 34% of revenues for the nine months  ended  September  30, 2001,
and $3.9  million or 31% of revenues  for the nine months  ended  September  30,
2000. The increase in cost of service and  maintenance  was primarily due to the
increased amount of services  performed for a larger number of clients that went
into production during the nine months ended September 31 of 2001.

GROSS  PROFIT:  Gross  profit as a  percentage  of revenues was 63% for the nine
months  ended  September  30, 2001 as compared to 67% for the nine months  ended
September 30, 2000. The decrease in the gross profit is due to the change in the
mix between license and services and maintenance revenues.

OPERATING  EXPENSES:  Total  operating  expenses  were $16.9  million or 138% of
revenues for the nine months ended September 30, 2001, and $16.7 million or 133%
of revenues for the nine months ended September 30, 2000.

                                       11
<PAGE>

RESEARCH AND DEVELOPMENT EXPENSES,  NET: Research and development expenses,  net
of related  grants,  were $2.5  million or 20% of  revenues  for the nine months
ended  September  30,  2001,  and $3.3  million or 27% of revenues  for the nine
months ended  September 30, 2000. For the nine months ended  September 30, 2001,
we recognized a research and development  grant from Israel's Chief Scientist in
the amount of $1.0  million.  For the nine months ended  September  30, 2000, we
recognized $0.6 million of such grant.  Research and development  costs declined
as a  result  of cost  controls  implemented  during  the nine  months  ended in
September 30, 2001.

SALES AND MARKETING EXPENSES: Sales and marketing expenses were $10.4 million or
85% of revenues for the nine months ended  September 30, 2001,  and $9.8 million
or 77% of revenues for the nine months ended  September  30, 2000.  The absolute
increase in sales and  marketing  expenses was due to the  additional  sales and
marketing costs related to the restructuring of our salesforce.

GENERAL AND ADMINISTRATIVE  EXPENSES:  General and administrative  expenses were
$3.4 million or 28% of revenues for the nine months  ended  September  30, 2001,
and $2.6  million or 21% of revenues  for the nine months  ended  September  30,
2000. The absolute increase in general and administrative expenses was primarily
due to the increase in the  provision  for doubtful  accounts  amounting to $1.2
million.

REORGANIZATION  EXPENSES:  Reorganization  expenses  were $0.3  million or 2% of
revenues  for  the  nine  months  ended  September  30,  2001.   There  were  no
reorganization expenses for the nine months ended September 30, 2000.

SHARE-BASED  COMPENSATION:  Share based  compensation  for the nine months ended
September  30,  2001  amounted  to  $300,000  of  previously  recorded  deferred
compensation.  Share based  compensation for the nine months ended September 30,
2000 amounted to $1.0 million.  The decrease in share-based  compensation is due
to termination of options associated with the corporate restructuring during the
first  quarter  on  2001.  Additionally,  the  amortization  of the  share-based
compensation progressively decreases over the three-year amortization period.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001 we had cash and cash  equivalents  of $10.0 million and
short-term investments of $2.1 million for a total of $12.1 million.

From inception through our IPO on September 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 increases in trade  receivables,  prepaid  expenses and decreases in
accounts payable,  partially offset by amortization of deferred compensation and
depreciation,  as applicable. For the nine months ended September 30, 2001, cash
used in operations was $8.3 million,  comprised of our net loss of $8.5 million,
an increase in trade  receivables of $289,000,  an increase in other receivables
of $442,000, a decrease in accounts payable of $533,000, an increase in deferred
revenue of $100,000,  partially offset by non-cash charges of $1.3 million.  For
the nine months ended  September  30, 2000,  cash used in  operations  was $10.4
million,  comprised  of our net  loss of $7.9  million,  an  increase  in  trade
receivables of $2.4 million,  an increase in other  receivables of $658,000,  an
increase  in accounts  payable of  $142,000,  a decrease in deferred  revenue of
$861,000, partially offset by non-cash charges of $1.4 million.

                                       12
<PAGE>

Net cash provided from investing  activities for the nine months ended September
30, 2001 was $13.9 million, of which $14.5 million was provided from the sale of
short-term  investments  and  $593,000  was  invested  primarily in purchases of
equipment and systems,  including computer equipment and fixtures and furniture.
Net cash used in investing  activities  for the nine months ended  September 30,
2000 was $17.2 million,  of which $15.1 million was used to purchase  short-term
investments  and $2.2 million was invested  primarily in leasehold  improvements
and  purchases  of equipment  and  systems,  including  computer  equipment  and
fixtures and furniture.

Net cash provided by financing activities during the nine months ended September
30, 2001 was $23,000 and $29.1  million for the nine months ended  September 30,
2000.  In June 2000,  the  Company  completed  an  initial  public  offering  of
4,000,000  ordinary  shares at a price of $7.00 per  share.  In July  2000,  the
Underwriters   exercised  their  overallotment   option  and  purchased  600,000
additional  ordinary  shares at a price of $7.00 per share.  The proceeds to the
Company from the offering were approximately  $28.3 million (net of underwriters
discount and issuance expenses).

As of September 30, 2001 we had outstanding  trade  receivables of approximately
$4.7 million. Our trade receivables  typically have 30 to 90 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.  As of September
30, 2001 our DSO (Day Sales  Outstanding)  was 153 days,  an increase of 36 days
from 117 at June 30,2001

Since inception,  we have received aggregate payments from the Government of the
State  of  Israel  in the  amount  of  $4.8  million  related  to  research  and
development and $707,000  related to marketing  activities.  As of September 30,
2001, we have paid or accrued  royalties related to these funds in the amount of
$1.9 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 September 30, 2001.

The  Company  also has an  aggregate  of  $118,000  in term  loans  relating  to
borrowings for working capital. We have a loan in US Dollars bearing an interest
rate of LIBOR plus 1% and a loan in New  Israeli  Shekels  linked to the Israeli
CPI, currently bearing an interest rate of 9.7%. Additional loans are in British
Pounds  bearing an average  interest  rate of 6.25%,  and US dollar loan bearing
interest rate of 7.1%.

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 $695,000 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.


                                       13
<PAGE>
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 a reduction in information  technology spending  generally.  Consequently,
there may be 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  that 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
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, 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;

                                       14
<PAGE>

     *    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  ADVERSLY  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.  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 part 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 North  America.  As of September  30, 2001,  we
employed 51 individuals in our sales and marketing organizations.  Because 17 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
and number of sales and marketing personnel we are targeting because competition
for qualified sales and marketing personnel in our market is intense.

                                       15
<PAGE>

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 continue 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.


                                       16
<PAGE>

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.

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

                                       17
<PAGE>

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.

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 cause 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

                                       18
<PAGE>

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.

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.
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.

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

                                       19
<PAGE>

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.

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 the 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 of Worldwide
Markets and Product  Group,  and Hannan  Carmeli,  our Senior Vice  President of
Worldwide Professional 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.

                                       20
<PAGE>

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,  will
govern 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.

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 in
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. We incur a portion of
our expenses, principally salaries and related personnel expenses in Israel, in
NIS. In 2000, 27% of our costs were incurred in NIS. We are also experiencing a
growth in 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 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, which
does not allow us to accurately predict what this rate will be. 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.


                                       21
<PAGE>

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.

OUR OFFICERS,  DIRECTORS AND AFFILIATED  ENTITIES OWN A LARGE  PERCENTAGE OF OUR
COMPANY  AND  COULD  SIGNIFICANTLY  INFLUENCE  THE  OUTCOME  OF  ACTIONS.  As of
September 30, 2001, our executive  officers,  directors and entities  affiliated
with them beneficially  owned  approximately  33.8% 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
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.


                                       22
<PAGE>

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 September 30, 2001, we had 26,180,191 (net
of 22,000  shares held in  treasury),  ordinary  shares  outstanding,  including
shares held by a trustee for issuance under outstanding options. In addition, as
of September 30, 2001, we had 2,862,248  ordinary  shares issuable upon exercise
of outstanding  options,  and 2,321,274  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.

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;
     *    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

                                       23
<PAGE>

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, our passive  income,  or our assets that produce  passive  income,
exceeds  specified  levels,  we  may  be  characterized  as  a  passive  foreign
investment  company for United States  federal  income tax  purposes.  We do not
currently  anticipate that this will happen,  but, if it does, our  shareholders
will be subject to adverse United States tax consequences. 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 have been subject to electrical  blackouts
as a consequence of recent shortages of available electrical power. In the event
these  blackouts  resume  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.

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

                                       24
<PAGE>

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.  As a  result,  we do  not
anticipate  material losses as a result of foreign  exchange rate  fluctuations.
Due to the  short-term  nature of our term  investments,  we have concluded that
there is no material market risk exposure.  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 September 30, 2001, we had cash and cash  equivalents
of $12.1 million that consist of cash and highly liquid short-term  investments.
Our 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 September 30, 2001, we had total  short-term debt of $61,000 and long-term
debt net of current  maturities  of $57,000 that bear interest at rates that are
linked  to LIBOR or the  Israeli  consumer  price  index or GBP.  We also have a
revolving,  accounts  receivable-based,  secured  credit  facility of up to $2.5
million for working capital purposes.  Amounts  outstanding bear interest at the
U.S.  prime  rate plus 1%. As of  September  30,  2001,  there  were no  amounts
outstanding under this facility.

ClickSoftware  maintains a short-term  investment portfolio primarily consisting
of corporate debt  securities  with  maturities of twelve months or less.  These
securities  are subject to interest rate risk and will rise and fall in value if
market  interest rates change.  The extent of this risk is not  quantifiable  or
predictable due to the variability of future interest rates.  ClickSoftware does
not expect any material loss with respect to its investment portfolio.


                                       25
<PAGE>



The  following  table  provides  information  about  ClickSoftware's  investment
portfolio,  cash,  and  long-term  debts as of  September  30, 2001 and presents
principal cash flows and related  weighted  averages  interest rates by expected
maturity dates.
<TABLE>
<CAPTION>

                                                    YEAR OF MATURITY
                                        2001    2002     2002 AFTER 2003         TOTAL CARRYING VALUE
                                                 (Dollars in thousands)

            A) CASH AND CASH EQUIVALENTS AND INVESTMENT PORTFOLIO:
            ------------------------------------------------------
<S>                                 <C>    <C>      <C>          <C>        <C>          <C>
Cash and equivalents                7,873   -        -                        -            7,873
  Average interest rate             3.0%    -        -             -                       3.0%
Commercial Papers                   998     -        -             -                       998
  Average interest rate             3.1%    -        -             -                       3.1%
Euro Dollar Bonds                   1,116   -        -             -                       1,116
  Average interest rate             4.0%    -        -             -                       4.0%
Taxable Auction Securities          1,600   -        -             -                       1,600
  Average interest rate             3.7%    -        -             -                       3.7%
Asset backed Securities             -       506      -             -                       506
  Average interest rate             -       3.7%     -             -                       3.7%
            A) Long-term debts:
Bank Loan                           15      30       -             -                       45
  Average interest rate             L+1%    L+1%     -             -                       L+1%
N.I.S indexed loans                 2       5        2             -                       9
  Average interest rate             9.7%    9.7%     9.7%          -                       9.7%
Leases US$                          3       7        8             -                       18
  Average interest rate             7.1%    7.1%     7.1%          -                       7.1%
Leases GBP                          4       18       17               7                    46
  Average interest rate             6.3%    6.3%     6.3%           6.3%                   6.3%

</TABLE>


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

     On September 6, 2001, the Annual Meeting of Shareholders of the Company was
held at 4:00 pm, local time, at the Company's offices at 655 Campbell Technology
Parkway, Suite 250, Campbell, California.


                                       26
<PAGE>


An election of an external director was held with the following individual being
elected to the Board of Directors of the Company:

                               Votes For               Votes Against or Withheld
 Janet Schinderman             23,586,660                        59,255

     Continuing   Class  II  directors  are  Roni  Einav  and  Nathan  Gantcher.
Continuing Class III directors are Dr. Moshe BenBassat, Eddy Shalev and James W.
Thanos. Dr. Israel Borovich is a continuing external director.

     Other matters voted upon at the meeting and the number of  affirmative  and
negative votes cast with respect to each such matter were as follows:

1.        To ratify  the  appointment  of  Arthur  Andersen  LLP as  independent
          accountants  of the Company for the 2001  fiscal  year.  The number of
          affirmative  votes for this  proposal  was  23,590,830,  the number of
          negative votes was 52,050 and the number of abstained votes was 3,035.

2.        To approve an  amendment  to the  Company's  2000 Share Option Plan in
          order to provide initial grants of 30,000 shares to new,  non-employee
          directors,   other  than  those   directors   classified  as  external
          directors,  and  annual  grants of 7,500  shares  to all  non-employee
          directors.  The  number of  affirmative  votes for this  proposal  was
          23,545,906,  the number of negative votes was 93,374 and the number of
          abstained votes was 6,635.

3.        To ratify and approve the grant of options, as described in the August
          6, 2001  Proxy  Statement,  to each of Israel  Borovich,  Roni  Einav,
          Nathan Gantcher, James Thanos and Janet Schinderman. Grants of options
          to purchase  30,000 shares at an exercise  price of $1.69 per share to
          each of Dr.  Borovich  and  Messrs.  Einav,  Gantcher  and Thanos were
          approved, and a grant to Ms. Schinderman that resulted in an option to
          purchase  24,036  shares at an  exercise  price of $1.26 per share was
          also approved.  The number of affirmative  votes for this proposal was
          23,534,440, the number of negative votes was 103,453 and the number of
          abstained votes was 8,022.

4.        To ratify  and  approve  the grant of a loan from the  Company  to Dr.
          BenBassat,  as  described in the August 6, 2001 Proxy  Statement.  The
          number of  affirmative  votes for this  proposal was  21,688,605,  the
          number of negative  votes was  1,952,882  and the number of  abstained
          votes was 4,428.

5.        To approve of the receipt and  consideration  by the annual meeting of
          the  directors'   report  and  the  Audited   Consolidated   Financial
          Statements for the Company.  The number of affirmative  votes for this
          proposal was  23,570,830,  the number of negative votes was 71,750 and
          the number of abstained votes was 3,335.



ITEM 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits:

None.

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<PAGE>

(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 September 30, 2001.


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<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:  November 13, 2001


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