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 June 30, 2002
                                       OR

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

                 For the transition period from            to
                                                ----------    ----------

                        Commission File Number: 000-30827
   ---------------------------------------------------------------------------
                         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 June 30,  2002,  there  were  26,338,373  shares of the  Registrant's
ordinary shares, par value 0.02 NIS, outstanding.

<PAGE>
                         ClickSoftware Technologies Ltd.

                                    FORM 10-Q

                       FOR THE QUARTER ENDED JUNE 30, 2002


<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

<S>     <C>                                                                                                                <C>
 (a) Condensed Consolidated Balance Sheets as of June 30, 2002 and
     December 31, 2001.....................................................................................................   3

 (b) Condensed Consolidated Statements of Operations for the three and six
     months ended June 30, 2002 and June 30, 2001..........................................................................   4

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

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

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

Item 3. Quantitative and Qualitative Disclosures About Market Risks........................................................  24


PART II. OTHER INFORMATION

Item 1. Legal Proceedings..................................................................................................  25

Item 2. Changes in Securities and Use of Proceeds..........................................................................  25

Item 4. Submission of Matters to a Vote of Security Holders................................................................  25

Item 6. Exhibits and Reports on Form 8-K...................................................................................  25

Signatures.................................................................................................................  26

Exhibit 99.1...............................................................................................................  27

Exhibit 99.2 ..............................................................................................................  28


</TABLE>
                                       2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                         CLICKSOFTWARE TECHNOLOGIES LTD.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)


                                                                                            JUNE 30,          DECEMBER 31,
                                                                                              2002                2001
                                                                                       ------------------- -------------------

ASSETS

CURRENT ASSETS:
<S>                                                                                           <C>                  <C>
Cash and cash equivalents                                                                     $      4,789         $     8,125
Short-term investments                                                                               4,107               1,846
Trade receivables, net                                                                               5,189               6,623
Other receivables and prepaid expenses                                                               1,543               1,671

                                                                                       ------------------- -------------------
          Total current assets                                                                      15,628              18,265

Property and equipment, net                                                                          3,161               3,450
Severance pay deposits                                                                                 737                 652
                                                                                       ------------------- -------------------
          Total assets                                                                         $    19,526         $    22,367
                                                                                       =================== ===================

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Short-term loans                                                                               $        33         $       140
Accounts payable and accrued expenses                                                                3,156               2,785
Deferred revenues                                                                                      460                  68
                                                                                       ------------------- -------------------
       Total current liabilities                                                                     3,649               2,993
                                                                                       ------------------- -------------------

LONG-TERM LIABILITIES
   Long-term loans                                                                                       -                  21
   Accrued severance pay                                                                             1,416               1,379
                                                                                       ------------------- -------------------
       Total long-term liabilities                                                                   1,416               1,400
                                                                                       ------------------- -------------------
       Total liabilities                                                                             5,065               4,393
                                                                                       ------------------- -------------------

SHAREHOLDERS' EQUITY:

Ordinary shares of NIS 0.02 par value:
   Authorized -- 100,000,000 as of December 31, 2001 and June 30, 2002;
   Issued -- 26,285,464 shares as of December 31, 2001 and
   26,377,373 as of June 30, 2002.
   Outstanding-- 26,246,464 shares as of December 31, 2001 and
   26,338,373 shares as of June 30, 2002.

                                                                                                       102                 101
Additional paid-in capital                                                                          69,186              69,143
Deferred compensation                                                                                 (251)               (401)
Accumulated deficit                                                                                (54,533)            (50,826)
Less treasury shares at cost                                                                           (43)                (43)
                                                                                       ------------------- -------------------
       Total shareholders' equity                                                                   14,461              17,974
                                                                                       ------------------- -------------------
Total liabilities and shareholders' equity                                                     $    19,526          $   22,367
                                                                                       =================== ===================


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

                                       3

<PAGE>
<TABLE>
<CAPTION>
                                            CLICKSOFTWARE TECHNOLOGIES LTD.
                                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
                                                      (UNAUDITED)

                                                                                            THREE MONTHS ENDED JUNE 30,
                                                                                              2002                2001
                                                                                    -----------------------------------------
Revenues:
<S>                                                                                        <C>                 <C>
  Software license                                                                         $       2,476      $        2,883
  Service and maintenance                                                                          2,105               2,161
                                                                                    -----------------------------------------
     Total revenues                                                                                4,581               5,044
                                                                                    -----------------------------------------
Cost of revenues:
  Software license                                                                                   229                 138
  Service and maintenance                                                                          1,327               1,578
                                                                                    -----------------------------------------
     Total cost of revenues                                                                        1,556               1,716
                                                                                    -----------------------------------------
     Gross profit                                                                                  3,025               3,328
                                                                                    -----------------------------------------
Operating expenses:
  Research and development expenses, net                                                             590                 685
  Sales and marketing expenses                                                                     2,933               3,646
  General and administrative expenses                                                                965                 962
  Share-based compensation                                                                            75                  16
                                                                                    -----------------------------------------
     Total operating expenses                                                                      4,563               5,309
                                                                                    -----------------------------------------
     Operating loss                                                                              (1,538)             (1,981)
Interest and other income, net                                                                       172                 137
                                                                                    -----------------------------------------
     Net loss                                                                              $     (1,366)      $      (1,844)
                                                                                    -----------------------------------------
Basic and diluted net loss per share                                                       $      (0.05)      $       (0.07)
                                                                                    -----------------------------------------
Shares used in computing basic and diluted net loss per share                                 25,299,148          25,096,522
                                                                                    -----------------------------------------


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

                                                                                             SIX MONTHS ENDED JUNE 30,
                                                                                              2002                2001
                                                                                    -----------------------------------------
Revenues:
  Software license                                                                         $       4,081      $        5,986
  Service and maintenance                                                                          4,191               3,574
                                                                                    -----------------------------------------
     Total revenues                                                                                8,272               9,560
                                                                                    -----------------------------------------
Cost of revenues:
  Software license                                                                                   229                 212
  Service and maintenance                                                                          2,641               2,950
                                                                                    -----------------------------------------
     Total cost of revenues                                                                        2,870               3,162
                                                                                    -----------------------------------------
     Gross profit                                                                                  5,402               6,398
                                                                                    -----------------------------------------
Operating expenses:
  Research and development expenses, net                                                           1,407               1,659
  Sales and marketing expenses                                                                     5,791               7,312
  General and administrative expenses                                                              1,953               1,789
  Reorganization expenses                                                                              -                 294
  Share-based compensation                                                                           150                 187
                                                                                    -----------------------------------------
     Total operating expenses                                                                      9,301              11,241
                                                                                    -----------------------------------------
     Operating loss                                                                               (3,899)             (4,843)
Interest and other income, net                                                                       192                 470
                                                                                    -----------------------------------------
     Net loss                                                                              $      (3,707)      $      (4,373)
                                                                                    -----------------------------------------
Basic and diluted net loss per share                                                       $       (0.15)      $       (0.17)
                                                                                    -----------------------------------------
Shares used in computing basic and diluted net loss per share                                 25,105,598          25,037,092
                                                                                    -----------------------------------------
</TABLE>
            See notes to condensed consolidated financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                          CLICKSOFTWARE TECHNOLOGIES LTD.
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (IN THOUSANDS)
                                    (UNAUDITED)


                                                                                                SIX MONTHS ENDED
                                                                                                    JUNE 30
                                                                                            2002                2001
                                                                                    -----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                            <C>                 <C>
Net loss                                                                                   $      (3,707)          $  (4,373)

Adjustments to reconcile net loss to net cash used in operating activities
Expenses not affecting operating cash flows:
  Depreciation                                                                                       520                 487
  Amortization of deferred compensation                                                              150                 187
  Unrealized gain from investments                                                                   104                 319
  Severance pay, net                                                                                 (48)                (16)
Changes in operating assets and liabilities:
  Trade receivables                                                                                1,434              (2,189)
  Other receivables and other prepaid
    expenses                                                                                         128                (422)
  Accounts payable and accrued expenses                                                              371                 281
  Deferred revenues                                                                                  392                 (25)
                                                                                    -----------------------------------------
Net cash used in operating activities                                                               (656)             (5,751)
                                                                                    -----------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase (Decrease)in short-term investments, net                                                 (2,365)             11,190
Purchases of equipment                                                                              (231)               (561)
                                                                                    -----------------------------------------
Net cash provided by (used in) investing activities                                               (2,596)             10,629
                                                                                    -----------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term loans                                                                       (107)                (67)
Repayment of long-term loans                                                                         (21)                (39)
Employee options exercised                                                                            44                 177
                                                                                    -----------------------------------------
Net cash provided by (used in) financing activities                                                  (84)                 71
                                                                                    -----------------------------------------
Increase (decrease) in cash and cash equivalents                                                  (3,336)              4,949
Cash and cash equivalents at beginning of period                                                   8,125               4,438
                                                                                    -----------------------------------------
Cash and cash equivalents at end of period                                                 $       4,789            $  9,387
                                                                                    =========================================

Supplemental cash flow information:
Cash paid for interest                                                                                 5                   4
                                                                                    =========================================



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

                                        5
<PAGE>

                         CLICKSOFTWARE TECHNOLOGIES LTD.

            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     (INFORMATION AS OF JUNE 30, 2002 AND FOR THE THREE AND SIX MONTHS ENDED
                        JUNE 30, 2002 AND JUNE 30, 2001)
               (IN THOUSANDS EXCEPT SHARE DATA AND SHARE NUMBERS)


1.        CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

          The accompanying  condensed interim consolidated  financial statements
          of ClickSoftware  Technologies Ltd. ("ClickSoftware" or the "Company")
          are  unaudited  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 June  30,  2002  and the  results  of
          operations  and  cash  flows  for the  interim  periods  indicated  in
          conformity with generally accepted accounting principles applicable to
          interim  periods.   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.  The results of  operations  presented  are not
          necessarily  indicative  of the  results  to be  expected  for  future
          quarters or for the year ending  December  31, 2002.  These  financial
          statements  should be read in conjunction  with the audited  financial
          statements  and notes  thereto  of  ClickSoftware  for the year  ended
          December 31, 2001 that are included in ClickSoftware's Form 10-K filed
          with the Securities and Exchange Commission.

2.        SIGNIFICANT ACCOUNTING POLICIES

          The significant  accounting policies described in the annual financial
          statements,  have been applied on a consistent  basis in the condensed
          consolidated financial statements.

          During the six months period ended June 30, 2002, the Company  applied
          the  following   accounting  policy  in  respect  to  long-term  fixed
          contracts:

          Revenues   under    fixed-price    contracts   are   recorded   on   a
          percentage-of-completion  method on the cost-to-cost basis.  Provision
          for  anticipated  losses on long-term  contracts  are recorded in full
          when such losses become evident.


3.        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 an diluted 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.  Diluted net loss per  ordinary  share is the same as basic
          net loss per ordinary share for all periods presented,  as the effects
          of the Company's potential ordinary shares were antidilutive

          The  Calculation  of diluted net loss per share  excluded  outstanding
          stock options because their inclusion would be antidilutive. There are
          approximately  4,105,992 stock options  upstanding as of June 30, 2002
          and approximately  3,266,161 stock options  outstanding as of June 30,
          2001.

                                       6

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


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


OVERVIEW

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

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

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

Service and maintenance  revenues are comprised of revenues from implementation,
consulting,  training,  release  updates  and  customer  service  support  fees.
Consulting  services are billed at an agreed-upon  rate plus incurred  expenses.
Clients licensing our products generally purchase consulting agreements from us.
Consulting revenues are recognized on a straight-line basis over the life of the
agreement. Customer support is charged as a percentage of license fees depending
upon the level of support  coverage  requested by the customer.  A fee of 18% of
license fees is typically  charged for five day a week,  eight hour coverage and

                                       7
<PAGE>

24% of license fees is typically charged for seven day a week,  twenty-four hour
coverage.  Our products are marketed worldwide through a combination of a direct
sales  force,  consultants  and  various  business  relationships  we have  with
implementation and technology companies and resellers.

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

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

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

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.

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

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

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

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

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

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

                                       8
<PAGE>
CRITICAL ACCOUNTING POLICIES

          We prepare our  consolidated  financial  statements in conformity with
          accounting  principles  generally  accepted in the United  States.  As
          such,  we are  required  to  make  certain  estimates,  judgments  and
          assumptions  that we believe are reasonable based upon the information
          available. These estimates and assumptions affect the reported amounts
          of assets and liabilities at the date of the financial  statements and
          the  reported  amounts of  revenues  and  expenses  during the periods
          presented.  To fully  understand  and evaluate our reported  financial
          results,  we believe it is  important to  understand  our policies for
          revenue  recognition,  provision  for  doubtful  accounts and software
          development costs.

          REVENUE RECOGNITION

          We recognize  software  license revenues upon delivery of our software
          to customers, provided persuasive evidence of an agreement exists, the
          fee is fixed or determinable and collection of the related  receivable
          is  probable.   We  allocate  our  software   license  revenues  under
          arrangements  where we sell software and services  together  under one
          contract to each element based on our relative fair values, with these
          fair values being determined using the price charged when that element
          is sold  separately.  If fair value for a delivered  element  does not
          exist but the fair value does exist for all undelivered  elements,  we
          defer the fair value of the  undelivered  elements and  recognize  the
          remaining value for the delivered elements.

          We generally  recognize  software  license  revenues from resellers or
          distributors at the time of shipment,  provided that all other revenue
          recognition  criteria set forth in governing statements of position on
          software revenue recognition have been met.

          We recognize  services revenues from software  maintenance  agreements
          ratably over the term of the maintenance  period,  typically one year.
          We  recognize  services  revenues  from  training as the  services are
          performed.  Amounts  collected or billed prior to satisfying the above
          revenue recognition criteria are reflected as deferred revenue.

          Revenues   under    fixed-price    contracts   are   recorded   on   a
          percentage-of-completion  method on the cost-to-cost basis.  Provision
          for  anticipated  losses on long-term  contracts  are recorded in full
          when such losses become  evident.  We use estimates  based on costs to
          determine the  percentage  completion  of our long-term  contracts and
          thus its  revenue  recognition.  These  estimates  and  contracts  are
          reviewed  regularly  and are  adjusted  to  meet  the  Company's  best
          estimate at the time.  The  Company's  assumptions  used to form these
          estimates may require  adjustment  should  circumstances on a contract
          change.

          PROVISION FOR DOUBTFUL ACCOUNTS

          Occasionally,  our customers  experience financial difficulty after we
          record a sale  but  before  payment  has been  received.  We  maintain
          allowances for doubtful  accounts for estimated  losses resulting from
          the inability of our customers to make required payments on our normal
          payment terms.  These estimated  allowances are based primarily on our
          evaluation  of  the  financial  condition  of  our  customers.  If the
          financial  condition  of  any  of our  customers  was to  deteriorate,
          resulting in the  impairment  of their ability to make payments to us,
          additional allowances may be required.

          SOFTWARE DEVELOPMENT COSTS

          We account for software  development costs in accordance with SFAS No.
          86,  Accounting for the Costs of Computer  Software to Be Sold, Leased
          or Otherwise  Marketed.  Software  development costs incurred from the
          point of reaching technological  feasibility until the time of general
          product  release  should  be  capitalized.   We  define  technological
          feasibility as the completion of a working model.  Because we sell our
          products  in a market that is subject to rapid  technological  change,
          new product development and changing customer needs, we have concluded
          that   technological   feasibility  is  not   established   until  the
          development  stage of the  product  is nearly  complete.  For us,  the

                                       9
<PAGE>
          period in which we can capitalize  software  development costs is very
          short,  so the amounts that could be  capitalized  are not material to
          our financial statements. Therefore, we have charged all such costs to
          research and development expense in the period incurred.



RECENT ACCOUNTING PRONOUNCEMENTS

None.



RESULTS OF OPERATIONS

Our operating results for each of the three months and six months ended June 30,
2002 and 2001, expressed as a percentage of revenues are as follows:
<TABLE>
<CAPTION>
                                                                         THREE MONTHS                   SIX MONTHS
                                                                         ENDED JUNE 30                  ENDED JUNE 30
                                                          ----------------------------------------------------------------
                                                                       2002           2001           2002           2001
                                                          ----------------------------------------------------------------
Revenues:
<S>                                                                    <C>           <C>             <C>            <C>
  Software license                                                     54%           57%             49%            63%
  Service and maintenance                                              46%           43%             51%            37%
                                                          ----------------------------------------------------------------
     Total revenues                                                   100%          100%            100%           100%
Cost of revenues:
  Software license                                                      5%            3%              3%             2%
  Service and maintenance                                              29%           31%             32%            31%
                                                          ----------------------------------------------------------------
     Total cost of revenues                                            34%           34%             35%            33%
                                                          ----------------------------------------------------------------
     Gross profit                                                      66%           66%             65%            67%
                                                          ----------------------------------------------------------------
Operating expenses:
  Research and development expenses, net                               13%           14%             17%            17%
  Sales and marketing expenses                                         64%           72%             70%            77%
  General and administrative expenses                                  21%           19%             23%            19%
  Reorganization expenses                                                -             -               -             3%
  Share-based compensation                                              2%             -              2%             2%
                                                          ----------------------------------------------------------------
     Total operating expenses                                         100%          105%            112%           118%
                                                          ----------------------------------------------------------------
     Operating loss                                                   (34%)         (39%)           (47%)          (51%)
Interest and other income, net                                          4%            2%              2%             5%
                                                          ----------------------------------------------------------------
     Net loss                                                         (30%)         (37%)           (45%)          (46%)
                                                          ================================================================
</TABLE>
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED JUNE 30, 2002 AND 2001

REVENUES:  Company revenues  decreased by $0.4 million or 9% to $4.6 million for
the three  months  ended June 30, 2002 from $5.0  million  for the three  months
ended  June 30,  2001.  This  decrease  was the result of the  general  economic
conditions,   and  slower  than  expected  recovery  in  Information  Technology
spending.  Specifically,  increased  scrutiny of capital budgets has resulted in
unexpected delays in the larger  opportunities and smaller than expected initial
orders on the deals that did successfully close.

SOFTWARE  LICENSE:  Software  license revenues were $2.5 million or 54% of total
revenues for the three  months  ended June 30, 2002,  and $2.9 million or 57% of
total  revenues  for the three  months  ended June 30,  2001.  The  decrease  in
software  license  revenues  was the  result of slower  than  expected  economic
recovery in domestic and international  opportunities  during the second quarter
of 2002.
                                       10
<PAGE>
SERVICE AND MAINTENANCE:  Service and maintenance  revenues were $2.1 million or
46% of revenues for the three  months  ended June 30, 2002,  and $2.2 million or
43% of total  revenue in the three months  ended June 30, 2001.  The decrease in
service and  maintenance  revenues on an absolute  basis was  primarily due to a
decrease in license revenues in the first quarter of 2002.

COST OF REVENUES:  Cost of revenues were $1.6 million or 34% of revenues for the
three months  ended June 30,  2002,  and $1.7 million or 34% of revenues for the
three  months  ended June 30,  2001.  The decrease in the cost of revenues on an
absolute  basis was  primarily  due to a decrease  in service  deployment  costs
offset by an increase in third party licensing and deployment costs.

COST OF SOFTWARE LICENSES: Cost of software license revenues were $229,000 or 5%
of revenues  for the three  months  ended June 30,  2002,  and $138,000 or 3% of
revenue for the three months  ended June 30,  2001.  The increase in the cost of
software  licenses  was due to an increase in new third  parties'  licenses  and
adaptors sold to new customers in the second quarter of 2002.

COST OF SERVICE AND  MAINTENANCE:  Cost of service and maintenance  revenues was
$1.3 million or 29% of revenues  for the three  months ended June 30, 2002,  and
$1.6 million or 31% of revenues  for the three  months ended June 30, 2001.  The
decrease  in the cost of  service  and  maintenance  on an  absolute  basis  was
primarily due to lower license revenue generated in the first quarter of 2002 as
well as service  improvements  reducing  implementation time associated with our
products.

GROSS  PROFIT:  Gross profit as a  percentage  of revenues was 66% for the three
months  ended June 30, 2002 which is the same as the 66%  reported for the three
months ended June 30, 2001.

OPERATING  EXPENSES:  Total  operating  expenses  were $4.6  million  or 100% of
revenues for the three  months ended June 30, 2002,  and $5.3 million or 105% of
revenues for the three  months  ended June 30,  2001.  The decrease in operating
expenses was primarily due to the decreases in sales and marketing costs.

RESEARCH AND DEVELOPMENT EXPENSES,  NET: Research and development expenses,  net
of related  grants,  were $590,000 or 13% of revenues for the three months ended
June 30,  2002,  and $685,000 or 14% of revenues for the three months ended June
30, 2001. The decrease in research and development expenses on an absolute basis
is due to cost controls implemented during the past twelve months.

SALES AND MARKETING EXPENSES:  Sales and marketing expenses were $2.9 million or
64% of revenues for the three  months  ended June 30, 2002,  and $3.6 million or
72% of revenues for the three months ended June 30, 2001. The absolute  decrease
in sales and marketing expenses was due to cost controls  implemented during the
year as well as the decrease in revenues that reduced related variable expenses.

GENERAL AND ADMINISTRATIVE  EXPENSES:  General and administrative  expenses were
$965,000  or 21% of  revenues  for the three  months  ended June 30,  2002,  and
$962,000  or 19% of  revenues  for the three  months  ended June 30,  2001.  The
absolute increase in general and administrative expenses was due primarily to an
increase in the  provision  for doubtful  accounts  amounting to $506,000 in the
quarter  ended June 30, 2002 as compared to $207,000 for the quarter  ended June
30, 2001, offset by a significant  decrease in other general and  administrative
expenses.

SHARE-BASED  COMPENSATION:  Share-based  compensation for the three months ended
June 30, 2002 amounted to $75,000 of previously recorded deferred  compensation.
Share based  compensation  for the three months ended June 30, 2001  amounted to
$16,000.

During the quarter, the U.S. dollar amount of expenses incurred in NIS decreased
as a result of  depreciation  of the NIS by 17% in the  second  quarter  of 2002
compared to the second quarter of 2001.


                                       11
<PAGE>
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 2002 AND 2001

REVENUES: Company revenues decreased $1.2 million or 13% to $8.3 million for the
six months  ended June 30, 2002 from $9.5  million for the six months ended June
30, 2001. This decrease was the result of the general economic  conditions,  and
slower than expected recovery in Information Technology spending.  Specifically,
increased  scrutiny of capital  budgets has  resulted  in  unexpected  delays in
larger  opportunities and smaller than expected initial orders on the deals that
did successfully close.

SOFTWARE  LICENSE:  Software  license revenues were $4.1 million or 49% of total
revenues  for the six months  ended June 30,  2002,  and $6.0  million or 63% of
total  revenues for the six months ended June 30, 2001. The decrease in software
license  revenues was the result of slower that  expected  economic  recovery in
domestic and international opportunities during the first and second quarters of
2002.

SERVICE AND MAINTENANCE:  Service and maintenance  revenues were $4.2 million or
51% of revenues for the six months ended June 30, 2002,  and $3.5 million or 37%
of total revenue in the six months ended June 30, 2001.  The increase in service
and  maintenance  revenues  was  primarily  due to an  increase  in  maintenance
contracts during the first two quarters of 2002.

COST OF REVENUES:  Cost of revenues were $2.9 million or 35% of revenues for the
six months ended June 30, 2002,  and $3.1 million or 33% of revenues for the six
months ended June 30, 2001.  The decrease in the cost of revenues on an absolute
basis was primarily due to a decrease in service deployment costs resulting from
operational efficiencies offset by a small increase in third party licensing and
deployment costs.

COST OF SOFTWARE LICENSES: Cost of software license revenues were $229,000 or 3%
of revenue for the six months ended June 30, 2002, and $212,000 or 2% of revenue
for the six months  ended June 30,  2001.  The  increase in the cost of software
licenses was due to increase in new third parties' licenses and adaptors sold in
the second quarter of 2002.

COST OF SERVICE AND  MAINTENANCE:  Cost of service and maintenance  revenues was
$2.6 million or 32% of revenues for the six months ended June 30, 2002, and $2.9
million or 31% of revenues for the six months ended June 30, 2001.  The decrease
in the cost of service and maintenance on an absolute basis was primarily due to
service improvements reducing implementation time associated with our products.

GROSS  PROFIT:  Gross  profit as a  percentage  of revenues  was 65% for the six
months  ended June 30, 2002 as compared to 67% for the six months ended June 30,
2001.  The decrease in the gross profit is due to the decrease in higher  margin
license revenues as a percentage of revenues.

OPERATING  EXPENSES:  Total  operating  expenses  were $9.3  million  or 112% of
revenues for the six months ended June 30,  2002,  and $11.2  million or 118% of
revenues  for the six months  ended June 30,  2001.  The  decrease in  operating
expenses was primarily  due to the  decreases in sales and  marketing  costs and
one-time  reorganization  expenses as a percentage  of revenues  incurred in the
first quarter of 2001.

RESEARCH AND DEVELOPMENT EXPENSES,  NET: Research and development expenses,  net
of related grants, were $1.4 million or 17% of revenues for the six months ended
June 30, 2002, and $1.7 million or 17% of revenues for the six months ended June
30, 2001. The decrease in research and development expenses on an absolute basis
is due to cost controls implemented during the past few quarters.

SALES AND MARKETING EXPENSES:  Sales and marketing expenses were $5.8 million or
70% of revenues for the six months ended June 30, 2002,  and $7.3 million or 77%
of revenues for the six months  ended June 30,  2001.  The 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
$2.0 million or 23% of revenues for the six months ended June 30, 2002, and $1.8
million or 19% of revenues for the six months ended June 30, 2001.  The absolute
increase in general and administrative expenses was due primarily to an increase

                                       12
<PAGE>

in the provision for doubtful accounts  amounting to $885,000 for the six months
ended June 30,  2002,  compared  to a provision  of $307,000  for the six months
ended June 30, 2001.

Reorganization  costs:  Reorganization  costs were 0.3 or 3% of revenues for the
six months ended June  30,2001.These  expenses were primarily  costs  associated
with severance  payments to terminated  employees.  There were no reorganization
costs in the six months ended June 30,2002.

SHARE-BASED COMPENSATION: Share-based compensation for the six months ended June
30, 2002  amounted to $150,000 of  previously  recorded  deferred  compensation.
Share based  compensation  for the six months  ended June 30,  2001  amounted to
$187,000.  The decrease in  share-based  compensation  is attributed to the fact
that the amortization of the share-based  compensation  progressively  decreases
over the four-year amortization period.

During the first six months of 2002, the U.S. dollar amount of expenses incurred
in NIS decreased as a result of depreciation of the NIS by 15% in the six months
ended June 30, 2002 compared to the six months ended June 30,2001.

LIQUIDITY AND CAPITAL RESOURCES

As of June  30,  2002 we had  cash  and cash  equivalents  of $4.8  million  and
short-term investments of $4.1 million totaling of $8.9 million.

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

Net cash used in  operating  activities  primarily  consisted  of net  losses in
addition  to changes  in trade  receivables,  prepaid  expenses  and  changes in
accounts payable,  partially offset by amortization of deferred compensation and
depreciation,  as applicable.  For the six months ended June 30, 2002, cash used
in  operations  was  $656,000,  comprised  of our net  loss of $3.7  million,  a
decrease in trade receivables of $1.4 million,  an decrease in other receivables
of  $128,000,  an  increase  in  accounts  payable of  $371,000,  an increase in
deferred revenue of $392,000,  partially offset by non-cash charges of $726,000.
For the six  months  ended  June 30,  2001,  cash  used in  operations  was $5.8
million,  comprised  of our net  loss of $4.4  million,  an  increase  in  trade
receivables of $2.2 million,  an increase in other  receivables of $422,000,  an
increase  in accounts  payable of  $281,000,  a decrease in deferred  revenue of
$25,000, partially offset by non-cash charges of $977,000.

Net cash used in investing activities for the six months ended June 30, 2002 was
$2.6 million,  of which $2.4 million was invested in short-term  investments and
$231,000 was invested primarily in purchases of equipment and systems, including
computer equipment and fixtures and furniture.  Net cash provided from investing
activities  for the six months ended June 30, 2001 was $10.6  million,  of which
$11.2 million provided from the sale of short-term  investments and $561,000 was
invested  primarily in leasehold  improvements  and  purchases of equipment  and
systems, including computer equipment and fixtures and furniture.

As of June 30, 2002 we had outstanding trade  receivables of approximately  $5.2
million. Our trade receivables  typically have 30 to 180 day terms,  although we
have also  negotiated  longer  payment  plans with some of our clients.  Current
economic  conditions  have  increased the  difficulties  in collecting  accounts
receivables and the typical collection period has lengthened. For the six months
ended June 30, 2002 our DSO (Day Sales  Outstanding) was 102 days, a decrease of
15 days from 117 for the six months ended June 30, 2001.

Since inception,  we have received aggregate payments from the Government of the
State  of  Israel  in the  amount  of  $5.9  million  related  to  research  and
development.  As of June 30, 2002, we have paid or accrued  royalties related to
these funds in the amount of $2.2 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 June 30, 2002.


                                       13
<PAGE>
The  Company  also  has an  aggregate  of  $33,000  in term  loans  relating  to
borrowings for working capital.

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.
This letter of credit will mature in September  2003.  The other is for $817,000
and secures our performance  pursuant to projects with the Government of Israel.
Portions of this letter will mature  between  August 2002 and February  2003 and
are subject to renewal. 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.  This  letter  of credit  will  mature  on the  earlier  of
ClickSoftware   achieving   four   profitable   quarters,   or  June  30,  2007.
Additionally,  Bank Leumi in the Silicon Valley has issued a letter of credit on
our behalf in the amount of $1.7 million to secure our  performance of a project
in Australia.  This letter of credit will mature between October 2002 and August
2003.

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

FACTORS THAT MAY AFFECT FUTURE RESULTS

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

RISKS RELATED TO OUR BUSINESS

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

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

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

          o    the volume and timing of customer orders;


                                       14
<PAGE>
          o    internal budget constraints and approval processes of our current
               and prospective clients;
          o    the length and unpredictability of our sales cycle;
          o    the mix of revenue generated by product licenses and professional
               services;
          o    the mix of revenue between domestic and foreign sources;
          o    announcements   or  introductions  of  new  products  or  product
               enhancements by us or our competitors;
          o    changes  in  prices  of and the  adoption  of  different  pricing
               strategies for our products and those of our competitors;
          o    timing and amount of sales and marketing expenses;
          o    changes in our business and partner relationships;
          o    technical  difficulties or "bugs"  affecting the operation of our
               software;
          o    foreign currency exchange rate fluctuations; and
          o    general economic conditions.


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


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

FAILURE TO EXPAND OUR SALES AND MARKETING  ORGANIZATIONS COULD LIMIT OUR ABILITY
TO SELL ADDITIONAL PRODUCTS AND SERVICES, WHICH WOULD IMPAIR OUR ABILITY TO GROW
OUR BUSINESS AND INCREASE  REVENUES.  We are  expanding  our direct and indirect
sales  operations  to increase  market  awareness  of our  products and generate
increased  revenues.  We cannot be certain that we will be  successful  in these
efforts.  In addition to normal  turnover of  personnel,  we are  attempting  to
expand our direct sales force in Asia  Pacific and Africa.  As of June 30, 2002,
we employed 48 individuals in our sales and marketing organizations.  Because 12
of these sales and marketing  personnel joined us within the last twelve months,
we will be required to devote significant resources to the training of these new
sales  personnel.  In addition,  we might not be able to hire or retain the kind
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.  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. Moshe BenBassat,  Mr. Shimon Rojany our Chief Financial
Officer,  and Mr. Corey Leibow,  our Chief  Operating  Officer.  Although  these
agreements  request sixty days  notification  prior to departure,  relationships
with these  officers and key employees  are at will.  The loss of any of our key
personnel could harm our ability to execute our business strategy and compete.

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

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

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

Because the market for service and delivery  optimization  software is evolving,
it is  difficult  to  determine  what  portion  of the  market  each  competitor
currently controls. However, competition could result in price reductions, fewer
customer  orders,  reduced gross margin and loss of market  share,  any of which
could cause our business to suffer. We may not be able to compete  successfully,
and  competitive  pressures  may  harm our  business.

                                       16
<PAGE>

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
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.


                                       17
<PAGE>
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 require
us to make  changes in our  business  or  significantly  harm our  business.  We
believe that our products do not infringe the  intellectual  property  rights of
third parties.  However, we cannot assure you that we will prevail in all future
intellectual property disputes.

We expect that  software  products may be  increasingly  subject to  third-party
infringement  or ownership  claims as the number of  competitors in our industry
segment grows and the  functionality of products in different  industry segments
overlaps.  Third  parties  may  make a  claim  of  infringement  or  conflicting
ownership  rights  against us with respect to our products and  technology.  Any
claims, with or without merit, could:

          o    be time-consuming to defend;
          o    result in costly litigation;
          o    divert management's attention and resources; or
          o    cause product shipment delays.

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

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

OUR BUSINESS MAY BECOME  INCREASINGLY  SUSCEPTIBLE TO NUMEROUS RISKS  ASSOCIATED
WITH  INTERNATIONAL  OPERATIONS.  Significant  portions of our operations  occur
outside the United States. Our facilities are located in North America,  Israel,
the European continent,  and the United Kingdom,  and our executive officers and
other  key  employees  are  dispersed  throughout  the  world.  This  geographic
dispersion  requires  significant  management  resources  that may place us at a
disadvantage  compared  to our  locally  based  competitors.  In  addition,  our
international operations are generally subject to a number of risks, including:

          o    foreign currency exchange rate fluctuations;
          o    longer sales cycles;
          o    multiple,   conflicting  and  changing   governmental   laws  and
               regulations;
          o    expenses   associated  with  customizing   products  for  foreign
               countries;
          o    protectionist  laws  and  business  practices  that  favor  local
               competition;
          o    difficulties in collecting accounts receivable; and
          o    political and economic instability.

                                       18
<PAGE>
We expect  international  revenues  to  continue  to account  for a  significant
percentage of total  revenues and we believe that we must continue to expand our
international  sales  and  professional  services  activities  in  order  to  be
successful.  Our international  sales growth will be limited if we are unable to
expand  our   international   sales   management   and   professional   services
organizations,  hire  additional  personnel,  customize  our  products for local
markets and establish relationships with additional international  distributors,
consultants  and other third  parties.  If we fail to manage our  geographically
dispersed organization,  we may fail to meet or exceed our business plan and our
revenues may decline.

ANY FUTURE  ACQUISITIONS OF COMPANIES OR TECHNOLOGIES  MAY RESULT IN DISTRACTION
OF OUR MANAGEMENT AND DISRUPTIONS TO OUR BUSINESS.  Although not currently under
consideration,  we may acquire or make investments in complementary  businesses,
technologies, services or products if appropriate opportunities arise. From time
to time we may engage in discussions and negotiations  with companies  regarding
our acquiring or investing in such companies' businesses,  products, services or
technologies.  We cannot make assurances that we will be able to identify future
suitable  acquisition or investment  candidates,  or if we do identify  suitable
candidates,  that we will be able to make such  acquisitions  or  investments on
commercially  acceptable terms or at all. Our management has limited  experience
in  acquiring  companies  or  technologies.  If we  acquire or invest in another
company,  we  could  have  difficulty  assimilating  that  company's  personnel,
operations,  technology or products and service offerings.  In addition, the key
personnel  of the  acquired  company  may  decide  not to  work  for  us.  These
difficulties  could disrupt our ongoing  business,  distract our  management and
employees, increase our expenses and adversely affect our results of operations.
Furthermore, we may incur indebtedness to pay for any future acquisitions. As of
the date of this  statement,  we have neither begun  discussions  nor entered an
agreement to make any such material investment or acquisition transaction.

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

WE ARE  INCORPORATED  IN ISRAEL  AND HAVE  IMPORTANT  FACILITIES  AND  RESOURCES
LOCATED IN  ISRAEL,  WHICH  COULD BE  NEGATIVELY  AFFECTED  DUE TO  MILITARY  OR
POLITICAL  TENSIONS.  We are incorporated  under the laws of the State of Israel
and our research and  development  facilities as well as  significant  executive
offices  are  located  in Israel.  Although  substantial  portions  of our sales
currently are to customers outside of Israel,  political,  economic and military
conditions in Israel could  nevertheless  directly affect our operations.  Since
the  establishment  of the State of Israel in 1948, a number of armed  conflicts
have taken place between Israel and its Arab neighbors and a state of hostility,
varying in degree and intensity,  has led to security and economic  problems for
Israel.  Since September 2000, a continuous  armed conflict with the Palestinian
authority  has been  taking  place.  Despite  our  history of  avoiding  adverse
effects,  in the future we could be adversely  affected by any major hostilities
involving  Israel,  the  interruption or curtailment of trade between Israel and
its trading  partners,  a significant  increase in  inflation,  or a significant
downturn in the economic or financial condition of Israel. Despite past progress
towards peace between Israel and its Arab  neighbors,  the future of these peace
efforts is  uncertain.  Several Arab  countries  still  restrict  business  with
Israeli companies, which may limit our ability to make sales in those countries.
We could be adversely  affected by restrictive laws or policies directed towards
Israel or Israeli businesses.

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

WE ARE SUBJECT TO A RECENTLY  ADOPTED NEW COMPANIES  LAW, WHICH HAS NOT YET BEEN
INTERPRETED.  Because we are incorporated under the laws of the State of Israel,
the Companies Law of Israel, which became effective on February 1, 2000, governs

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<PAGE>
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 SUBJECT TO A RECENTLY  ADOPTED NEW TAX LAW, THE CONSEQUENCES OF WHICH ARE
NOT CLEAR. On July 24, 2002, the Israeli  parliament,  the Knesset,  enacted the
Law for  Amendment  of the Income Tax  Ordinance.  The  amendment  substantially
changes  Israeli  taxation in Israel in several  areas,  including:  (a) gradual
reduction of the direct tax burden on personal work income;  (b) taxation of the
capital market and savings;  (c) increased taxation of income outside of Israeli
residents  outside Israel;  (d) elimination of many exemptions and  preferential
tax rates; and (e) encouragement of business and technological  activities.  The
Amendment  is  extensive  and  significantly  changes  part of the  current  tax
principles  under Israeli tax law. In order to implement  part of the amendment,
the  Minister of Finance was  authorized  to  promulgate  regulations  under the
amendment.  Such  regulations  have not been  promulgated yet. The amendment was
enacted  and major  parts of it will become  effective  on January 1, 2003.  The
Company is currently  reviewing  the  possible  implications  of the  amendment.
However,  it is not  possible,  at this stage,  to  estimate  the effect of this
amendment on the financial statements.


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


WE ARE AN INTERNATIONAL COMPANY AND OUR INTERNATIONAL  OPERATIONS ARE EXPANDING.
OUR RISK EXPOSURE TO FOREIGN CURRENCY FLUCTUATIONS IS INCREASING, AND WE MAY NOT
BE ABLE TO FULLY MITIGATE THE RISK. Our revenue from the UK has grown both on an
absolute  dollar  basis  as well  as a  percentage  of  total  revenues.  We are
expanding  operations  in  other  areas  of  Europe,  and  income  and  expenses
recognized in the European  Community  Euro will  increase.  In 2001, 26% of our
costs  were  incurred  in GBP and  Euro.  We incur a  portion  of our  expenses,
principally  salaries and related personnel expenses in Israel, in NIS. In 2001,
24% of our costs were  incurred  in NIS.  We are also  experiencing  a growth in
revenue and expenses in Israel, and we anticipate recognizing revenue from other
international  sources.  Presently our risk to foreign currency  fluctuations is
minimal, but if our foreign accounts receivable balances increase, the risk will
increase.  We cannot assure that we will be able to adequately protect ourselves
against such risk.

THE GOVERNMENT PROGRAMS IN WHICH WE CURRENTLY PARTICIPATE AND TAX BENEFITS WHICH
WE CURRENTLY  RECEIVE  REQUIRE US TO SATISFY  PRESCRIBED  CONDITIONS  AND MAY BE
DELAYED,  TERMINATED OR REDUCED IN THE FUTURE. THIS WOULD INCREASE OUR COSTS AND
TAXES.  We receive grants from the Government of the State of Israel through the
Office of the Chief  Scientist  of the  Ministry of Industry  and Trade,  or the
Chief Scientist,  for the financing of a significant portion of our research and
development  expenditures in Israel,  and we may apply for additional  grants in
the future.  We cannot assure you that we will continue to receive grants at the
same rate or at all. The Chief  Scientist  budget has been subject to reductions
that may  affect the  availability  of funds for Chief  Scientist  grants in the
future.  The percentage of our research and  development  expenditures  financed
using grants from the Chief  Scientist may decline in the future,  and the terms
of such  grants may become less  favorable.  In  connection  with  research  and
development  grants  received  from the Chief  Scientist,  we must make  royalty
payments  to the  Chief  Scientist  on the  revenues  derived  from  the sale of
products,  technologies  and services  developed  with the grants from the Chief
Scientist.  From time to time,  the  Government  of Israel  changes  the rate of

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<PAGE>
royalties  we must pay, so we are unable to  accurately  predict  this rate.  In
addition,  our ability to manufacture  products or transfer  technology  outside
Israel without the approval of the Chief Scientist is restricted  under law. Any
manufacture  of  products or transfer  of  technology  outside  Israel will also
require the company to pay  increased  royalties  to the Chief  Scientist  up to
300%.  We currently  conduct all of our  manufacturing  activities in Israel and
intend to  continue  doing so in the  foreseeable  future and  therefore  do not
believe  there will be any  increase  in the amount of  royalties  we pay to the
Chief  Scientist.  Currently the office of the Chief Scientist does not consider
the  licensing of our software in the ordinary  course of business a transfer of
technology  and we do not intend to transfer any  technology  outside of Israel.
Consequently,  we do not  anticipate  having to pay  increased  royalties to the
Chief  Scientist  for the  foreseeable  future.  In  connection  with our  grant
applications,  we have made representations and covenants to the Chief Scientist
regarding our research and  development  activities in Israel.  The funding from
the Chief  Scientist  is subject to the  accuracy of these  representations  and
covenants.  If we fail to  comply  with  any of  these  conditions,  we could be
required to refund  payments  previously  received  together  with  interest and
penalties and would likely be denied receipt of these grants thereafter.

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

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

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

WE ARE  SUBJECT  TO  ANTI-TAKEOVER  PROVISIONS  THAT  COULD  DELAY OR PREVENT AN
ACQUISITION  OF  US,  EVEN  IF  AN  ACQUISITION   WOULD  BE  BENEFICIAL  TO  OUR
SHAREHOLDERS. Provisions of Israeli corporate and tax law and of our articles of
association may have the effect of delaying, preventing or making more difficult
a merger or other acquisition of us, even if doing so would be beneficial to our

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<PAGE>

shareholders.  In  addition,  any merger or  acquisition  of us will require the
prior  consent of the Chief  Scientist.  Israeli law  regulates  mergers,  votes
required to approve a merger,  acquisition  of shares  through tender offers and
transactions  involving significant  shareholders.  In addition, our articles of
association  provide for a staggered board of directors and for  restrictions on
business combinations with interested shareholders.  Any of these provisions may
make it more difficult to acquire our company. Accordingly, an acquisition of us
could  be  delayed  or  prevented   even  if  it  would  be  beneficial  to  our
shareholders.

OTHER ORDINARY  SHARES MAY BE SOLD IN THE FUTURE.  THIS COULD DEPRESS THE MARKET
PRICE FOR OUR ORDINARY  SHARES.  As of June 30, 2002, we had 26,338,373  (net of
39,000 shares held in treasury),  ordinary shares outstanding,  including shares
held by a trustee for issuance under  outstanding  options.  In addition,  as of
June 30, 2002,  we had  2,389,305  ordinary  shares  issuable  upon  exercise of
outstanding  options,  and 1,634,979  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.

WE HAVE  APPLIED  TO MOVE OUR  LISTING  FROM THE NASDAQ  NATIONAL  MARKET TO THE
NASDAQ SMALLCAP  MARKET,  WHICH COULD ADVERSELY  AFFECT THE ABILITY TO TRADE AND
THE PRICE OF OUR ORDINARY SHARES. On August 12, 2002,  because we were unable to
meet the continued  listing criteria for the Nasdaq National Market,  we applied
to move our listing to the Nasdaq SmallCap Market.  There are no assurances that
our  application  will be  approved  or that we will be able to meet the  Nasdaq
SmallCap Market continued  listing  criteria in the future.  As a result of this
proposed  move to the Nasdaq  SmallCap  Market,  because  of  certain  secondary
trading restrictions,  our ordinary shares may become harder to buy and sell. We
cannot predict how the trading  market for our ordinary  shares will be affected
by our proposed move to the National  SmallCap  Market,  but  decreased  trading
volume may cause the price of our ordinary shares to fall.

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:

          o    fund additional marketing expenditures;
          o    develop new or enhance existing products and services;
          o    enhance our operating infrastructure;
          o    hire additional personnel;
          o    respond to competitive pressures;
          o    acquire complementary businesses or necessary technologies; or
          o    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

                                       22
<PAGE>

services or otherwise  respond to competitive  pressures would be  significantly
limited. Additionally, prior to the issuance of additional equity or convertible
debt securities to entities  outside of Israel,  we will need to obtain approval
from the Chief  Scientist  of the State of Israel and there can be no  assurance
that we will be able to obtain this consent in the future.

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

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

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

OUR STOCK PRICE COULD BE VOLATILE  AND COULD  DECLINE  SUBSTANTIALLY.  The stock
market has experienced significant price and volume fluctuations, and the market
prices of technology companies have been highly volatile. The price at which our
ordinary shares trades is likely to be volatile and may fluctuate  substantially
due to factors such as:

          o    announcements of technological innovations;
          o    announcements relating to strategic relationships;
          o    conditions affecting the software and Internet industries;
          o    trends related to the  fluctuations  of stock prices of companies
               such as ours;
          o    our historical  and  anticipated  quarterly and annual  operating
               results;
          o    variations  between our actual  results and the  expectations  of
               investors or published reports or analyses of ClickSoftware;
          o    announcements by us or others affecting our business,  systems or
               expansion plans; and
          o    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.

                                       23
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

INTEREST  RATE RISK.  As of June 30, 2002,  we had cash,  cash  equivalents  and
short-term  investments  of $8.9 million which consist of cash and highly liquid
short-term  investments.  Our short-term investments will decline in value by an
immaterial  amount  if market  interest  rates  increase,  and,  therefore,  our
exposure to interest  rate  changes  has been  immaterial.  Declines of interest
rates over time will,  however,  reduce our interest  income from our short-term
investments.

As of June 30, 2002,  we had total  short-term  loans and current  maturities of
$33,000. As of June 30,2002 we had $1.0 million unsecured line of credit.

The following table provides information about our investment  portfolio,  cash,
and long-term  loans as of June 30, 2002 and presents  principal  cash flows and
related weighted averages interest rates by expected maturity dates.
<TABLE>
<CAPTION>

                                                           YEAR OF MATURITY           TOTAL CARRYING
                                                        2002        2003        AFTER 2003         VALUE
                                                                (in thousands of dollars)

A) CASH AND CASH EQUIVALENTS AND INVESTMENT PORTFOLIO:
------------------------------------------------------

<S>                                                  <C>         <C>              <C>           <C>
Cash and equivalents                                 $ 4,789           -            -            $ 4,789
  Average interest rate                                 2.0%           -            -               2.0%
Commercial Papers                                    $ 1,800           -            -            $ 1,800
  Average interest rate                                 2.0%           -            -               2.0%
Bank Deposits                                              -      $2,000            -            $ 2,000
  Average interest rate                                    -        2.2%            -               2.2%
Copr Bonds                                           $   307           -            -            $   307
  Average interest rate                                 2.2%           -            -               2.2%

B) TERM DEBTS:
--------------
N.I.S indexed loans                                  $     2      $    2            -                  4
  Average interest rate                                 5.4%        5.4%            -               5.4%
Leases US$                                           $    12      $    1            -            $    13
  Average interest rate                                 7.1%        7.1%            -               7.1%
Leases GBP                                           $    10      $    6            -            $    16
  Average interest rate                                 3.5%        3.5%            -               3.5%
</TABLE>
                                       24
<PAGE>


PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings

         None

ITEM 2.  Changes in Securities and Use of Proceeds

         None

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

         None




ITEM 6.  Exhibits and Reports on Form 8-K
(a)      Exhibits:


         Exhibit Index

         Exhibit Number   Description

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

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

   (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 June 30, 2002.

                                       25
<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:  August 14, 2002

                                       26