|UNITED STATESSECURITIES
AND EXCHANGE COMMISSIONWashington,
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, 2001


OR


Transition report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Commission
File Number: 0-31151






RADVIEW SOFTWARE LTD.(Exact name of registrant as
specified in its charter)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Israel(State or other jurisdiction ofincorporation or organization) | Not applicable(I.R.S. EmployerIdentification No.)
|------------------------------------------------------------------- | -------------------------------------------------

|7 New England Executive
ParkBurlington, MA 01803(Address of principal executive offices)


Telephone Number (781)
238-1111(Registrants telephone number, including area code)


None(Former name,
former address and former fiscal year, if changed since last report)



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


As of
July 31, 2001, there were 16,315,972 shares of the Registrants Ordinary Shares
outstanding.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|RADVIEW
SOFTWARE LTD. AND SUBSIDIARIES


Form 10-Q
INDEX


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

|        |  | Page No.                                                                                                 
|------- |  | ---------------------------------------------------------------------------------------------------------
|Item 1. |  | Condensed Consolidated Financial Statements:                                                             
|       
|        |  | Condensed Consolidated Balance Sheets as of June 30, 2001 andDecember 31, 2000                           
|       
|        |  | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2001 and 2000
|       
|        |  | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2001 and 2000          
|       
|        |  | Notes to Condensed Consolidated Financial Statements                                                     
|       
|Item 2. |  | Managements Discussion and Analysis of Financial Condition andResults of Operations                     
|       
|Item 3. |  | Quantitative and Qualitative Disclosures About Market Risk                                               

|PART II. OTHER
INFORMATION
|--------------------------

|Item 2. |  | Changes in Securities and Use of Proceeds           |  | 14 | 
|------- |  | --------------------------------------------------- |  | -- | 
|       
|Item 4. |  | Submission of Matters to a Vote of Security Holders |  | 14 | 
|       
|Item 5. |  | Other Information                                   |  | 15 | 
|       
|Item 6. |  | Exhibits and Reports on Form 8-K                    |  | 15 | 
|       
|        |  | Signatures                                          |  | 16 | 

|2
|-

|PART I 
FINANCIAL INFORMATION


RADVIEW
SOFTWARE LTD. AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEETS(In
thousands, except share data)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                       | June 30,2001 |            | December 31,2000 |          
|---------------------------------------------------------------------- | ------------ | ---------- | ---------------- | ---------
|ASSETS                                                                
|Current Assets:                                                        |              |            |                  |          
|Cash and cash equivalents                                              |              | $ 20,197   |                  | $ 33,469 
|Accounts receivable, net                                               |              | 1,986      |                  | 2,473    
|Prepaid and other current assets                                       |              | 512        |                  | 728      
|                                                                       |              |            |                  |          
|Total current assets                                                   |              | 22,695     |                  | 36,670   
|                                                                       |              |            |                  |          
|Property and Equipment, net                                            |              | 2,460      |                  | 2,503    
|Other Assets                                                           |              | 668        |                  | 540      
|                                                                       |              |            |                  |          
|Total Assets                                                           |              | $ 25,823   |                  | $ 39,713 
|                                                                       |              |            |                  |          
|LIABILITIES AND SHAREHOLDERS EQUITY                                   |             
|Current Liabilities:                                                   |             
|Current maturities of long-term loans                                  |              | $         |                  | $   3,814
|Accounts payable                                                       |              | 1,361      |                  | 2,004    
|Accrued expenses                                                       |              | 3,363      |                  | 2,802    
|Deferred revenue                                                       |              | 1,543      |                  | 1,459    
|                                                                       |              |            |                  |          
|Total current liabilities                                              |              | 6,267      |                  | 10,079   
|                                                                       |              |            |                  |          
|Long-term Liabilities:                                                 |             
|Accrued severance                                                      |              | 723        |                  | 630      
|                                                                       |              |            |                  |          
|Total Liabilities                                                      |              | 6,990      |                  | 10,709   
|                                                                       |              |            |                  |          
|Shareholders Equity:                                                  |             
|Ordinary shares, NIS 0.01 par value                                   |             
|Authorized  40,000,000 shares;                                        |             
|Issued and outstanding  16,366,572 shares and 16,366,572 shares       |             
|at June 30, 2001 and December 31, 2000, respectively                   |              | 42         |                  | 42       
|Additional paid-in capital                                             |              | 57,475     |                  | 58,688   
|Deferred compensation                                                  |              | (3,909     | )                | (5,723   
|Accumulated deficit                                                    |              | (34,727    | )                | (24,003  
|Treasury shares, at cost  50,600 shares and 0 shares at June 30, 2001 |             
|and December 31, 2000, respectively                                    |              | (48        | )                |         
|                                                                       |              |            |                  |          
|Total Shareholders Equity                                             |              | 18,833     |                  | 29,004   
|                                                                       |              |            |                  |          
|Total Liabilities and Shareholders Equity                             |              | $ 25,823   |                  | $ 39,713 
|                                                                       |              |            |                  |          

|The accompanying notes
are an integral part of these condensed consolidated financial statements.




3
|-------------------------------------------------------------------------------------------------------

|RADVIEW
SOFTWARE LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share data)(Unaudited)
|-------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                  | Three Months EndedJune 30, |            | Six Months EndedJune 30, |           
|----------------------------------------------------------------------------------------------------------------- | -------------------------- | ---------- | ------------------------ | ----------
|
|Revenues:                                                                                                         |                            |            |                          |           
|Software licenses                                                                                                 |                            | $ 1,900    |                          | $ 2,325   
|Service                                                                                                           |                            | 703        |                          | 376       
|                                                                                                                  |                            |            |                          |           
|Total Revenues                                                                                                    |                            | 2,603      |                          | 2,701     
|                                                                                                                  |                            |            |                          |           
|Cost of Sales:                                                                                                    |                           
|Software licenses                                                                                                 |                            | 62         |                          | 135       
|Service                                                                                                           |                            | 357        |                          | 108       
|                                                                                                                  |                            |            |                          |           
|Total Cost of Sales                                                                                               |                            | 419        |                          | 243       
|                                                                                                                  |                            |            |                          |           
|Gross Profit                                                                                                      |                            | 2,184      |                          | 2,458     
|                                                                                                                  |                            |            |                          |           
|Operating Expenses:                                                                                               |                           
|Sales and marketing                                                                                               |                            | 4,618      |                          | 2,076     
|Research and development                                                                                          |                            | 1,823      |                          | 1,318     
|General and administrative                                                                                        |                            | 876        |                          | 717       
|Stock-based compensation                                                                                          |                            | 303        |                          | 392       
|Nonrecurring expenses                                                                                             |                            |           |                          |          
|                                                                                                                  |                            |            |                          |           
|Total Operating Expenses                                                                                          |                            | 7,620      |                          | 4,503     
|                                                                                                                  |                            |            |                          |           
|Operating loss                                                                                                    |                            | (5,436     | )                        | (2,045    
|                                                                                                                 
|Interest income (expense)                                                                                         |                            | 197        |                          | (34       
|Other income (expense)                                                                                            |                            | (32        | )                        | 3         
|                                                                                                                  |                            |            |                          |           
|Net loss                                                                                                          |                            | $(5,271    | )                        | $(2,076   
|                                                                                                                  |                            |            |                          |           
|Net loss per share attributable to ordinary    shares (Note 3(a)):                                                |                            |            |                          |           
|Net loss per share  Basic and diluted                                                                            |                            | $  (0.32   | )                        | $  (0.49  
|                                                                                                                  |                            |            |                          |           
|Weighted average shares outstanding                                                                              |                           
|Basic and diluted                                                                                                 |                            | 16,352     |                          | 4,215     
|                                                                                                                  |                            |            |                          |           
|Pro forma net loss per share attributable to                                                                      |                           
|ordinary shares (Note 3(b)):                                                                                      |                           
|Pro forma net loss per share                                                                                     |                           
|Basic and diluted                                                                                                 |                            | $  (0.32   | )                        | $  (0.17  
|                                                                                                                  |                            |            |                          |           
|Weighted average shares outstanding                                                                              |                           
|Basic and diluted                                                                                                 |                            | 16,352     |                          | 11,915    
|                                                                                                                  |                            |            |                          |           
|                                                                                                          
|(1) The following summarizes the
        departmental allocation of the 
        stock-based compensation charge: |                           
|Sales and marketing                                                                                               |                            | $      157 |                          | $      188
|Research and development                                                                                          |                            | 84         |                          | 71        
|General and administrative                                                                                        |                            | 62         |                          | 133       
|                                                                                                                  |                            |            |                          |           
|Total stock-based compensation                                                                                    |                            | $      303 |                          | $      392
|                                                                                                                  |                            |            |                          |           

|The accompanying notes
are an integral part of these condensed consolidated financial statements.
|-------------------------------------------------------------------------------------------------

|RADVIEW
SOFTWARE LTD. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
|--------------------------------------------------------------------------------------------------------------

|                                                                             | Six Months EndedJune 30, |            
|---------------------------------------------------------------------------- | ------------------------ | -----------
|
|Cash Flows from Operating Activities:                                        |                          |            
|Net loss                                                                     |                          | $(10,724   
|Adjustments to reconcile net loss to net cash used in operating activities  |                         
|Depreciation and amortization                                                |                          | 541        
|Amortization of deferred compensation                                        |                          | 601        
|Interest on long-term loans                                                  |                          |           
|Accrued severance pay                                                        |                          | 93         
|Changes in operating assets and liabilities                                 |                         
|Accounts receivable                                                          |                          | 487        
|Prepaid expenses and other current assets                                    |                          | 216        
|Accounts payable                                                             |                          | (643       
|Accrued expenses                                                             |                          | 561        
|Deferred revenue                                                             |                          | 84         
|                                                                             |                          |            
|Net cash used in operating activities                                        |                          | (8,784     
|                                                                             |                          |            
|Cash Flows from Investing Activities:                                        |                         
|Purchases of short-term investments                                          |                          |           
|Purchases of property and equipment                                          |                          | (498       
|Increase in other assets                                                     |                          | (128       
|                                                                             |                          |            
|Net cash used in investing activities                                        |                          | (626       
|                                                                             |                          |            
|Cash Flows from Financing Activities:                                        |                         
|Increase in short-term bank loans                                            |                          |           
|Long-term loans received                                                     |                          |           
|Repayment of long-term loans                                                 |                          | (3,814     
|Proceeds from shares issued                                                  |                          |           
|Payment of offering costs from initial public offering                       |                          |           
|Purchases of treasury shares                                                 |                          | (48        
|                                                                             |                          |            
|Net cash used in financing activities                                        |                          | (3,862     
|                                                                             |                          |            
|Decrease in cash and cash equivalents                                        |                          | (13,272    
|Cash and cash equivalents, beginning of period                               |                          | 33,469     
|                                                                             |                          |            
|Cash and cash equivalents, end of period                                     |                          | $ 20,197   
|                                                                             |                          |            
|Cash paid during period for interest                                         |                          | $        56
|                                                                             |                          |            

|The accompanying notes
are an integral part of these condensed consolidated financial statements.



5
|------------------------------------------------------------------------------------------------------

|RADVIEW
SOFTWARE LTD. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Unaudited)


1. Operations


RadView
Software Ltd. (the Company) is an Israeli corporation. The Company develops, markets and
supports software that enables organizations to verify the scalability, efficiency and
reliability of Web applications, and facilitates their rapid development.


2. Significant
Accounting Policies


The
Companys consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States. The significant policies followed in
the preparation of the consolidated financial statements, applied on a consistent basis,
are as follows:


(a) Financial Statements in U.S.
Dollars


The
consolidated financial statements of the Company have been prepared in U.S. dollars
because the currency of the primary economic environment in which the operations of the
Company are conducted is the U.S. dollar. Substantially all of the Companys sales are in
U.S. dollars. Most purchases of materials, components and most marketing costs are
denominated in U.S. dollars. Therefore, the functional currency of the Company is the
U.S. dollar.


Transactions
and balances denominated in U.S. dollars are presented at their original amounts.
Transactions and balances in other currencies are translated into U.S. dollars in
accordance with the principles set forth in Financial Accounting Standards Board of the
United States (FASB) Statement of Accounting Standards (SFAS) No. 52, Foreign Currency
Translation. Accordingly, items have been translated as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | Monetary
Items  At the exchange rate in effect on the balance sheet date.
| |  | - |  | --------------------------------------------------------------------------

| |  |  |  | Nonmonetary
Items  At historical exchange rates.
| |  | - |  | -------------------------------------------------

| |  |  |  | Revenue
and Expense Items  At the exchange rates in effect as of the date of recognition of
those items (excluding depreciation and other items deriving from nonmonetary items).
| |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|All
exchange gains and losses from the above-mentioned translation (which were immaterial for
all periods presented) are reflected in the statements of operations. The representative
rates of exchange as of June 30, 2001 and 2000 were U.S. $1.00 to 4.173 New Israeli
Shekel (NIS) and 4.093 NIS, respectively.


(b) Interim Financial Statements


The
accompanying consolidated balance sheet as of June 30, 2001 and the consolidated
statements of operations for the three and six months ended June 30, 2001 and 2000 and
the consolidated statements of cash flows for the six months ended June 30, 2001 and
2000, are unaudited but, in the opinion of management, include all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of results
for these interim periods. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted accounting
principles have been omitted, although the Company believes that the disclosures included
are adequate to make the information presented not misleading. The results of operations
for the three and six months ended June 30, 2001 are not necessarily indicative of the
results to be expected for the entire fiscal year. These financial statements should be
read in conjunction with the consolidated financial statements and related notes included
in the Companys Form 10-K filed with the SEC on March 29, 2001.


(c) Principles of Consolidation


The
consolidated financial statements include the accounts of the Company and its wholly
owned subsidiaries. All material intercompany balances and transactions have been
eliminated in consolidation.




6
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(d) Revenue Recognition



The
Company recognizes revenue in accordance with Statement of Position (SOP) 97-2, Software
Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions. SOP 98-9 requires use of the residual
method for recognition of revenues when vendor-specific objective evidence exists for
undelivered elements but does not exist for delivered elements of a software arrangement.
If fair value for a delivered element does not exist but the fair value does exist for
all undelivered elements, the Company defers the fair value of the undelivered elements
and recognizes the remaining value for the delivered elements.


Revenues
from software product licenses are recognized upon delivery of the software provided
there is persuasive evidence of an arrangement, the fee is fixed or determinable and
collection of the related receivable is probable. Revenues under multiple element
arrangements, which may include software, software maintenance and training, are
allocated to each element based on their respective fair values, based on vendor-specific
objective evidence. This objective evidence represents the price of products and services
when sold separately. Revenue is recognized for software licenses sold to resellers or
distributors at the time of shipment, provided that all revenue recognition criteria set
forth in SOP 97-2 are fulfilled.


Revenues
from software maintenance agreements are recognized ratably over the term of the
maintenance period, which is typically one year. Revenues from training arrangements are
recognized as the services are performed.


Amounts
collected or billed prior to satisfying the above revenue recognition criteria are
reflected as deferred revenue. Deferred revenue primarily represents deferred maintenance
revenue.


(e) Cash Equivalents


Cash
equivalents are highly liquid investments with original maturities of less than 90 days.
The Company accounts for investments under SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Under SFAS No. 115, investments for which the
Company has the positive intent and ability to hold to maturity, consisting of cash
equivalents, are reported at amortized cost, which approximates fair market value.


3. Earnings
Per Share


(a) Net Loss Per Share


Basic
and diluted net loss per share is presented in conformity with SFAS No. 128, Earnings Per
Share, for all periods presented. Basic and diluted net loss per ordinary share was
determined by dividing net loss attributable to ordinary shareholders by the weighted
average ordinary shares outstanding during the period. 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 additional ordinary shares were antidilutive.


The
following table summarizes the securities outstanding as of each period end that were not
included in the calculation of diluted net loss per share as their inclusion would be
antidilutive.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                          | As of June 30, |      
|----------------------------------------- | -------------- | -----
|
|                                          | (In thousands) |      
|Stock options to purchase ordinary shares |                | 4,203
|Warrants to purchase ordinary shares      |                |     
|Convertible preferred shares              |                |     

|In
accordance with the Securities and Exchange Commission Staff Accounting Bulletin No. 98,
Earnings Per Share in an Initial Public Offering, the Company determined that there were
no nominal issuances of the Companys ordinary shares prior to the Companys initial
public offering, completed in August 2000.




7
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) Pro Forma Net Loss Per Share


Pro
forma net loss per share has been computed as described above and also gives effect to
preferred shares that were converted upon the completion of the Companys initial public
offering in August 2000, using the if-converted method, from the original date of
issuance.


The
following table reflects the reconciliation of the shares used in the computation of pro
forma net loss per share.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                     | Three monthsended June 30, |        | Six monthsended June 30, |       
|---------------------------------------------------- | -------------------------- | ------ | ------------------------ | ------
|
|                                                     | (In thousands)             |       
|Pro forma basic and diluted:                         |                            |        |                          |       
|Weighted average ordinary shares outstanding used in |                           
|computing net loss per share                         |                            | 16,352 |                          | 4,215 
|Weighted average ordinary shares issuable upon the   |                           
|conversion of preferred shares                       |                            |       |                          | 5,249 
|Weighted average ordinary shares issuable upon the   |                           
|exercise of outstanding warrant                      |                            |       |                          | 143   
|Weighted average ordinary shares issuable upon       |                           
|exercise of outstanding options held by certain      |                           
|shareholders                                         |                            |       |                          | 2,050 
|Weighted average ordinary shares to be issued to     |                           
|certain Series A preferred shareholders              |                            |       |                          | 258   
|                                                     |                            |        |                          |       
|Weighted average ordinary shares outstanding used in |                           
|computing pro forma basic and diluted net loss       |                           
|per share                                            |                            | 16,352 |                          | 11,905
|                                                     |                            |        |                          |       

|4.
Nonrecurring Charge


Nonrecurring
charges include a $237,000 payment to a landlord incurred upon the termination of a
facility lease agreement in March 2001.


5. Shareholders
Equity


During
the quarter ended June 30, 2001, the Company granted options to purchase an aggregate of
813,000 ordinary shares to employees and affiliates at exercise prices equal to the then
current fair market value on the date of grant.


During
the quarter ended June 30, 2001, the Companys board of directors approved a stock
repurchase program under which the Company may repurchase up to $2.5 million of the
Companys ordinary shares. Purchases will be made based on market conditions from
time-to-time at the discretion of management in open market purchases or privately
negotiated transactions. During the quarter ended June 30, 2001, the Company repurchased
50,600 shares at an aggregate cost of $48,000.


6.
Comprehensive Income (Loss)


SFAS
No. 130, Reporting Comprehensive Income, requires disclosure of all components of
comprehensive income (loss) on an annual and interim basis. Comprehensive income (loss)
is defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. The Companys
comprehensive loss is equal to its net loss for all periods presented.




8
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|7. Disclosures
About Segments of an Enterprise


The
Company has adopted SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 131 establishes standards for reporting information regarding
operating segments in annual financial statements and requires selected information for
those segments to be presented in interim financial reports issued to shareholders. SFAS
No. 131 also establishes standards for related disclosures about products and services
and geographic areas. Operating segments are identified as components of an enterprise
about which separate discrete financial information is available for evaluation by the
chief operating decision maker, or decision-making group, in making decisions how to
allocate resources and assess performance.


The
Companys chief operating decision makers, as defined under SFAS No. 131, are the Chief
Executive Officer and the Chief Financial Officer. To date, the Company has viewed its
operations and has managed its business as principally one operating segment.


The
Companys revenues by geographic area are as follows:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|               | Three monthsended June 30, |        | Six monthsended June 30, |       
|-------------- | -------------------------- | ------ | ------------------------ | ------
|
|               | (In thousands)             |       
|United States  |                            | $1,829 |                          | $2,266
|Europe         |                            | 437    |                          | 229   
|Israel         |                            | 164    |                          | 149   
|Other          |                            | 173    |                          | 57    
|               |                            |        |                          |       
|Total revenues |                            | $2,603 |                          | $2,701
|               |                            |        |                          |       

|8. Recent
Accounting Pronouncements


In
June 1998, the Financial Accounting Standards Board issued Statements of Financial
Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, which establishes accounting and reporting standards for derivative
instruments and hedging activities. It requires that an entity recognize all derivatives
as either assets or liabilities in the statement of financial position and measure those
instruments at fair value. To date, the Company has not engaged in derivative and hedging
activities, and accordingly the adoption of the SFAS No. 133 did not have a material
impact on its financial reporting and related disclosures.


In
July 2001, the Financial Accounting Standards Board (FASB) issued Statement on Financial
Accounting Standards (SFAS) No. 141, Business Combinations. SFAS No. 141 requires all
business combinations initiated after June 30, 2001 to be accounted for using the
purchase method. The adoption of SFAS No. 141 is not expected to have a material impact
on the Companys consolidated financial statements.


In
July 2001, the FASB also issued SFAS No. 142, Goodwill and Other Intangible Assets. Under
SFAS No. 142, goodwill is no longer subject to amortization over its estimated useful
life. Rather, goodwill is subject to at least an annual assessment for impairment by
applying a fair-value-based test. Also under SFAS No. 142, intangible assets acquired in
conjunction with a business combination should be separately recognized if the benefit of
the intangible asset is obtained through contractual or other legal rights, or if the
intangible asset can be sold, transferred, licensed, rented or exchanged, regardless of
the acquirers intent to do so. Intangible assets will continue to be amortized over
their respective useful lives under SFAS No. 142. The Company must adopt SFAS No. 142 on
January 1, 2001. The adoption of SFAS No. 142 is not expected to have a material impact
on the Companys consolidated financial statements.





9
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|MANAGEMENTS
DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS


Statements
in this Quarterly Report on Form 10-Q concerning RadViews business outlook or future
performance; anticipated revenues, expenses or other financial items; product
introductions and plans and objectives related thereto; and statements concerning
assumptions made or expectations as to any future events, conditions, performance or
other matters, are forward-looking statements as that term is defined under U. S.
federal securities laws. Forward-looking statements are subject to various risks,
uncertainties and other factors that could cause actual results to differ materially from
those stated in such statements. These risks, uncertainties and factors include, but are
not limited to: our limited operating history and history of losses; market acceptance of
our products; our ability to develop new products and enhance existing products; impact
of significant competition; and other factors detailed in RadViews filings with the
Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.


In
July 2001, the Company implemented a restructuring plan in an effort to lower operating
costs. The restructuring plan included the termination of approximately 20% of the
Companys work force and the termination of certain sales facility leases.. The Company
expects to record a restructuring charge of approximately $1.3 million in the third
quarter of 2001 consisting of idle lease space of $700,000 and employee severance costs
of $600,000.


As a
result of the restructuring, the Company expects to reduce quarterly operating expenses
by approximately 25% by the end of 2001. The Company expects that operating expenses, as
well as planned capital expenditures, will constitute a material use of the Companys
cash resources. In addition, the Company may utilize its cash resources to fund
acquisitions or investments in complementary businesses, technologies or product lines.


Results of
Operations


The
following table sets forth, as a percentage of total revenues, consolidated statement of
operations data for the periods indicated:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           | Three Months EndedJune 30, |       | Six Months EndedJune 30, |      
|-------------------------- | -------------------------- | ----- | ------------------------ | -----
|
|Revenues:                  |                            |       |                          |      
|Software licenses          |                            | 73.0  | %                        | 86.1 
|Service                    |                            | 27.0  |                          | 13.9 
|                           |                            |       |                          |      
|Total revenues             |                            | 100.0 |                          | 100.0
|Cost of Sales:             |                           
|Software licenses          |                            | 2.4   |                          | 5.0  
|Service                    |                            | 13.7  |                          | 4.0  
|                           |                            |       |                          |      
|Total cost of sales        |                            | 16.1  |                          | 9.0  
|                           |                            |       |                          |      
|Gross Profit               |                            | 83.9  |                          | 91.0 
|                           |                            |       |                          |      
|Operating Expenses:        |                           
|Sales and marketing        |                            | 177.4 |                          | 76.9 
|Research and development   |                            | 70.0  |                          | 48.8 
|General and administrative |                            | 33.7  |                          | 26.5 
|Stock-based compensation   |                            | 11.6  |                          | 14.5 
|Nonrecurring expenses      |                            | 0.0   |                          | 0.0  
|                           |                            |       |                          |      
|Total operating expenses   |                            | 292.7 |                          | 166.7
|                           |                            |       |                          |      
|Operating loss             |                            | (208. | 8)                       | (75.7
|                           |                            |       |                          |      
|Interest income (expense)  |                            | 7.5   |                          | (1.3 
|Other income (expense)     |                            | (1.2  | )                        | 0.1  
|                           |                            |       |                          |      
|Net loss                   |                            | (202. | 5%)                      | (76.9
|                           |                            |       |                          |      

10

|
|

|
|

## Three Months
and Six Months Ended June 30, 2001 and 2000

## Revenues

Total
Revenues. Total revenues were approximately $2.6 million for the three months ended June
30, 2001 and $2.7 million for the same period in the prior year. Total revenues were
approximately $4.9 million for the six months ended June 30, 2001 and $5.0 million for
the same period in the prior year.

Software
Licenses. Software license revenues were $1.9 million for the three months ended June 30,
2001 compared to $2.3 million in the same period of 2000, representing a decrease of
18.3%. Software license revenues were $3.5 million for the six months ended June 30, 2001
compared to $4.3 million in the same period of 2000, representing a decrease of 18.6%.
Software license revenues decreased due to lower unit volume sales in 2001 compared to
the same period of 2000.

Services.
Service revenues were $703,000 for the three months ended June 30, 2001 compared to
$376,000 in the same period of 2000, representing an increase of 87.0%. Service revenues
were $1.4 million for the six months ended June 30, 2001 compared to $710,000 in the same
period of 2000, representing an increase of 102.8%. These increases were due to higher
maintenance and training revenues resulting from an increase in the Companys installed
customer base.

## Cost of
Revenues

Software
Licenses. Cost of software licenses consists principally of direct product costs, such as
product media and packaging, as well as royalties due to third parties. Cost of software
licenses decreased from $135,000, or 5.8% of software license revenue, for the three
months ended June 30, 2000 to $62,000, or 3.3% of software license revenue, for the same
period in 2001. Cost of software licenses decreased from $288,000, or 6.8% of software
license revenue, for the six months ended June 30, 2000 to $149,000, or 4.3% of software
license revenue, for the same period in 2001. These decreases were due to lower royalty
costs for third-party software in 2001.

Services.
Cost of services consists principally of personnel-related costs associated with customer
support and training. Cost of services increased from $108,000, or 28.7% of service
revenue, for the three months ended June 30, 2000 to $357,000, or 50.8% of service
revenue, for the same period in 2001. Cost of services increased from $160,000, or 22.5%
of service revenue, for the six months ended June 30, 2000 to $682,000, or 47.4% of
service revenue, for the same period in 2001. These increases were due to an increase in
the number of employees providing support and maintenance services.

## Operating
Expenses

Sales
and Marketing. Sales and marketing expenses consist principally of salaries and
commissions earned by sales personnel, recruiting costs, trade show costs, travel and
other marketing communication costs such as advertising and product promotion. Sales and
marketing expenses increased from $2.1 million, or 76.9% of total revenues, for the three
months ended June 30, 2000 to $4.6 million, or 177.4% of total revenues, for the same
period in 2001. Sales and marketing expenses increased from $3.5 million, or 70.5% of
total revenues, for the six months ended June 30, 2000 to $9.0 million, or 182.5% of
total revenues, for the same period in 2001. These increases were due to the expansion of
the Companys sales and marketing workforce from 37 to 65 employees from June 2000 to
June 2001 and increased spending on marketing programs, such as advertising, trade shows
and lead-generation activities. As a result of the restructuring in July 2001, the
Company expects that sales and marketing expenses will be lower in the second half of
2001 than in the six-month period ended June 30, 2001.

Research
and Development. Research and development expenses consist principally of salaries and
related expenses required to develop and enhance the Companys products. Research and
development expenses increased from $1.3 million, or 48.8% of total revenues, for the
three months ended June 30, 2000, to $1.8 million, or 70.0% of total revenues, for the
same period in 2001. Research and development expenses increased from $2.1 million, or
42.2% of total revenues, for the six months ended June 30, 2000, to $3.7 million, or
74.7% of total revenues, for the same period in 2001. These increases were due to an
increase in the number of research and development personnel from 32 to 52 employees from
June 2000 to June 2001 and related costs. As a result of the restructuring in July 2001,
the Company expects that research and development expenses will be lower in the second
half of 2001 than in the six-month period ended June 30, 2001.

11

|General
and Administrative. General and administrative expenses consist principally of executive,
finance and administrative salaries and related expenses and costs. General and
administrative expenses increased from $717,000, or 26.5% of total revenues, for the
three months ended June 30, 2000 to $876,000, or 33.7% of total revenues, for the same
period in 2001. General and administrative expenses increased from $1.4 million, or 27.9%
of total revenues, for the six months ended June 30, 2000 to $1.8 million, or 36.8% of
total revenues, for the same period in 2001. These increases were due to increased costs
associated with being a publicly-held company and an increase in the administrative costs
to accommodate the Companys growing U.S. operations. As a result of the restructuring in
July 2001, the Company expects that general and administrative expenses will be lower in
the second half of 2001 than in the six-month period ended June 30, 2001.


Stock-based
Compensation. Stock-based compensation expense decreased from $392,000 for the three
months ended June 30, 2000, to $303,000 for the same period 2001. This decrease resulted
from the cancellation of employee stock options for terminated employees for which
stock-based compensation was being recorded. Stock-based compensation expense increased
from $573,000 for the six months ended June 30, 2000, to $601,000 for the same period
2001. This increase resulted from amortization of stock-based compensation for a full six
months in 2001 as compared to 2000 in which amortization commenced in March 2000. As a
result of the restructuring in July 2001, the Company expects that stock-based
compensation expense will be lower in the second half of 2001 than in the six-month
period ended June 30, 2001.


Nonrecurring
Charges. Nonrecurring charges in the six months ended June 30, 2001 consist of a $237,000
payment to a landlord incurred upon the termination of a facility lease agreement in
March 2001.


Interest
Income (Expense), Net. Interest income (expense), net consists principally of interest
expense incurred in connection with long-term debt, offset by interest earned on cash
investments. There was interest expense of $34,000 for the three months ended June 30,
2000 compared to interest income of $197,000 for the same period in 2001. There was
interest expense of $75,000 for the six months ended June 30, 2000 compared to interest
income of $474,000 for the same period in 2001. The interest income resulted from
investment of the net proceeds of the Companys initial public offering in August 2000
and the decrease in interest expense resulted from the repayment of all outstanding
long-term debt during the first quarter of 2001.


Other
Income (Expense), Net. Other income (expense), net consists principally of currency
translation gains and losses. There was other income of $3,000 for the three months ended
June 30, 2000 compared to other expense of $32,000 for the same period in 2001. There was
other expense of $14,000 for the six months ended June 30, 2000 compared to other expense
of $11,000 for the same period in 2001. These changes were due to exchange rate
fluctuations.


Income
Taxes. The Company has estimated net operating loss carryforwards for Israeli tax
purposes totaling approximately $12 million through June 30, 2001 that would reduce
future Israeli income taxes, if any. These net operating losses may be carried forward
indefinitely and offset against future taxable income. The Company expects that during
the period in which these tax losses are utilized its income would be substantially tax
exempt. Therefore, the income tax rate of the Company during the tax-exempt period will
be zero. There will be no tax benefit available from these losses and no deferred income
taxes have been included in the Companys financial statements.


The
Companys U.S. subsidiary has net operating loss carryforwards for U.S. Federal and state
tax purposes totaling approximately $8 million through June 30, 2001. These losses are
available to offset any future U.S. taxable income of the U.S. subsidiary and will expire
between 2012 and 2021. The Company has recorded a full valuation allowance against its
deferred tax asset due to the uncertainty surrounding the ability and the timing of the
realization of these tax benefits.



12
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Liquidity and
Capital Resources


As of
June 30, 2001, cash and cash equivalents totaled $20.2 million compared to $33.5 million
as of December 31, 2000.


Cash
used in operating activities was $8.8 million for the six months ended June 30, 2001 and
$1.7 million for the same period in 2000. Cash used for the first six months of 2001 was
due to the net loss of $10.7 million and a $643,000 decrease in accounts payable, offset
in part by $541,000 of depreciation and amortization, $694,000 of other noncash charges,
a $487,000 decrease in accounts receivable, a $216,000 decrease in prepaid expenses, a
$561,000 increase in accrued expenses and a $84,000 increase in deferred revenue. Cash
used for the first six months of 2000 was due to a net loss of $3.1 million, a $667,000
increase in accounts receivable and a $76,000 increase in prepaid expenses, offset in
part by $284,000 of depreciation and amortization, $845,000 of other noncash charges, a
$168,000 increase in accounts payable, a $222,000 increase in accrued expenses and a
$664,000 increase in deferred revenue.


Cash
used in investing activities was $626,000 for the six months ended June 30, 2001 and $3.0
million for the same period in 2000. Cash used in investing activities for the first six
months of 2001 was primarily for purchases of property and equipment. Cash used in
investing activities for the first six months of 2000 was primarily to purchase $1.8
million of short-term investments and $1.0 million of property and equipment.


Cash
used in financing activities was $3.9 million for the six months ended June 30, 2001 and
$100,000 for the same period in 2000. Cash used in financing activities for the first six
months of 2001 consisted primarily of $3.8 million for the repayment of all outstanding
long-term debt. Cash used in financing activities for the first six months of 2000
consisted principally of $118,000 for the repayment of principal on related party loans.


During
the quarter ended June 30, 2001, the Companys board of directors approved a stock
repurchase program under which the Company may repurchase up to $2.5 million of the
Companys ordinary shares. Purchases will be made based on market conditions from
time-to-time at the discretion of management in open market purchases or privately
negotiated transactions. During the quarter, the Company repurchased 50,600 shares at an
aggregate cost of $48,000.


In
July 2001, the Company received a commitment letter from a bank with respect to a
one-year, $10.0 million revolving line of credit facility. Borrowings up to $7.5 million
under the facility will be secured by the Companys certificate of deposit in the amount
of $7.5 million and will bear interest at the banks prime rate. Borrowings against the
remaining $2.5 million of the facility will be subject to a borrowing base formula based
on eligible accounts receivable and will bear interest at the banks prime rate plus
0.75%. All borrowings under the facility will be secured by a lien on all of the
Companys assets and will be subject to certain financial covenants. This facility is
subject to the execution of definitive loan documents by the parties.


The
Company believes that its existing cash and cash equivalents will be sufficient to meet
its anticipated needs for working capital and capital expenditures for at least the next
12 months. The Company may find it necessary to obtain additional equity or debt
financing. In the event additional financing is required, the Company may not be able to
complete financing on acceptable terms or at all.


ITEM 3. QUALITATIVE AND
QUANTITATIVE DISCLOSURES ABOUT MARKET RISK


The
Company does not use derivative financial instruments in its investing portfolio. The
Company places its investments in instruments that meet high credit quality standards
such as money market funds, government securities, and commercial paper. The Company
limits the amount of credit exposure to any one issuer. The Company does not expect any
material loss with respect to its investment portfolio.


The
Company conducts business in various foreign currencies, primarily in Europe and the
Middle East. As a result, the Company is exposed to the effect of foreign currency
exchange rate fluctuations on the U.S. dollar value of foreign currency-denominated
revenues and expenses. The Company does not use foreign exchange forward contracts to
hedge its foreign currency denominated receivables. Looking forward, there can be no
assurance that changes in foreign currency rates, relative to the U.S. dollar, will not
materially adversely affect the consolidated results of the Company.





13
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II 
OTHER INFORMATION


Item 2.
Changes in Securities


(d) Use of Proceeds from
Sale of Registered Securities


On
August 9, 2000, in connection with the Companys initial public offering, the Securities
and Exchange Commission declared effective a Registration Statement on Form F-1
(No.333-41526) that registered 5,750,000 ordinary shares. The managing underwriters in
the offering were Donaldson Lufkin Jenrette, Wit SoundView, Piper Jaffrey, and DLJdirect.


On
August 15, 2000, the Company sold 4,000,000 of such ordinary shares at an initial public
offering price of $10.00 per share, generating gross offering proceeds of $40 million.
After deducting $2.8 million in underwriting discounts and approximately $1.9 million in
other related expenses, the net proceeds to the Company were approximately $35.3 million.


Through
June 30, 2001, the Company has used $15.1 million of the net proceeds from the initial
public offering as follows:
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | $1.5
million for capital expenditures;
| |  | - |  | --------------------------------------

| |  |  |  | $1.4
million for repayment of principal and accrued interest on a loan with Rad Data
Communications, Inc., a related party;
| |  | - |  | ---------------------------------------------------------------------------------------------------------------------------

| |  |  |  | $3.8
million for repayment of principal and accrued interest on long-term debt with a bank;
| |  | - |  | -------------------------------------------------------------------------------------------

| |  |  |  | $48,000
for the repurchase of ordinary shares; and
| |  | - |  | --------------------------------------------------

| |  |  |  | $8.4
million for working capital.
| |  | - |  | ---------------------------------

|Item 4. Submission of
Matters to a Vote of Security Holders.
|------------------------------------------------------------

|(a) |  | The
Companys Annual Meeting of Shareholders was held on May 16, 2001.
|--- |  | ----------------------------------------------------------------------

|(c) |  | The
following persons were elected at the Annual Meeting pursuant to the following vote
tabulation:
|--- |  | ---------------------------------------------------------------------------------------------------

| | Name |                  | Votes For |            | Votes Withheld |       
| | ---- | ---------------- | --------- | ---------- | -------------- | ------
| |      | Shai Beilis      |           | 12,831,266 |                | 16,300
| |      | Ilan Kinreich    |           | 12,831,266 |                | 16,300
| |      | William J. Geary |           | 12,831,266 |                | 16,300
| |      | Kathleen A. Cote |           | 12,831,266 |                | 16,300

| | In
addition to the election of directors, the Shareholders voted on the following:
| | ----------------------------------------------------------------------------------

| |  | (i) |  | A
proposal to ratify and approve the compensation arrangements for members of the Board of
Directors was approved, with 11,371,936 shares voted in favor, 104,315 shares voted
against, 6,800 abstentions and 1,364,515 broker non-votes;
| |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (ii) |  | A
proposal to ratify and approve the employment agreement of Ilan Kinreich, the Companys
Chief Executive Officer was approved, with 11,392,139 shares voted in favor, 84,940
shares voted against, 5,972 abstentions and 1,364,515 broker non-votes;
| |  | ---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (iii) |  | A
proposal to ratify and approve the increase in the share capital of the Company from
25,000,0000 to 40,000,000 ordinary shares was approved, with 12,020,698 shares voted in
favor, 821,168 shares voted against and 5,700 abstentions;
| |  | ----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (iv) |  | A
proposal to ratify and approve the amendment and restatement of the Companys Articles of
Association was approved, with 11,394,639 shares voted in favor, 82,340 shares voted
against, 6,072 abstentions and 1,364,515 broker non-votes;
| |  | ---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (v) |  | A
proposal to ratify and approve the increase in the number of shares available for
issuance under the Companys United States Share Incentive Plan from 650,000 to 1,750,000
ordinary shares was approved, with 10,666,130 shares voted in favor, 809,849 shares voted
against, 7,072 abstentions and 1,364,515 broker non-votes;
| |  | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14
|--

|
|

| |  | (vi) |  | A
proposal to ratify and approve the increase in the number of shares available for
issuance under the Companys Key Employee Share Incentive Plan from 3,661,862 to
4,061,862 ordinary shares was approved, with 10,638,677 shares voted in favor, 836,699
shares voted against, 7,675 abstentions and 1,364,515 broker non-votes; and
| |  | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | (vii) |  | A
proposal to ratify and approve the selection of Luboshitz Kasierer, a member of the firm
Arthur Andersen, as the Companys independent auditors for the fiscal year ending
December 31, 2001was approved, with 12,767,479 shares voted in favor, 75,562 shares voted
against, and 4,525 abstentions.
| |  | ----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Item 5.
Other Information


On
June 25, 2001, the Company received a letter from the Nasdaq Listing Qualifications
Division stating that the Companys ordinary shares had failed to maintain a minimum bid
price of $1.00 over 30 consecutive trading days as required by the rules of the Nasdaq
National Market. The letter stated that the Company would have until September 24, 2001
to regain compliance with this rule. The Company is evaluating alternatives to remain in
compliance with this rule. The Company expects that if it does not regain compliance with
this rule, it will apply to list its shares on the Nasdaq SmallCap Market.


Item 6.
Exhibits and Reports of Form 8-K


(a) Exhibit
Index



None.




(b) Reports on
Form 8-K:


No
reports on Form 8-K were filed in the three-month period ended June 30, 2001.




15
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|SIGNATURES


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



RADVIEW SOFTWARE LTD. (Registrant)





Brian E. LeClairVice President and
Chief Financial Officer


Dated: August 14, 2001


16
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------