UNITED STATES
                SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C.  20549

                              FORM 20-F

    _  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR

       X     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR

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

or the transition period from ___________________ to _________________
Commission file number ______

                                       MIND CTI LTD.
            (Exact name of Registrant as specified in its charter
                and translation of Registrant's name into English)

                                               ISRAEL
                    (Jurisdiction of incorporation or organization)

            Industrial Park, Building #7, Yoqneam, 20692, Israel
                     (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b)
of the Act.

Title of each class       Name of each exchange on which registered
None __________  ___________________________________

Securities registered or to be registered pursuant to Section 12(g) of the Act.
Ordinary Shares, nominal value NIS 0.01 per share
(Title of Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act.
None_______________________________________________________________
(Title of Class)
Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period
covered by the annual report.


 As of December 31, 2000, the Registrant had outstanding 20,556,220
 Ordinary Shares, nominal value NIS 0.01 per share.

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

Indicate by check mark which financial statement item the Registrant
has elected to follow.    _ Item 17    X     Item 18

                                                                            -2-


PART I
Unless the context requires otherwise, 'MIND',  ' us',  ' we'    and  'our'
refer to MIND  C.T.I. Ltd. and its subsidiaries.

Item 1.	Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2.	Offer Statistics and Expected Timetable

		Not applicable.

Item 3.	Key Information

A.	Selected Financial Data

We have derived the selected consolidated statement of operations data
presented below for the years ended December 31, 1998, 1999 and 2000
and the consolidated balance sheet data as of December 31, 1999 and 2000 from
our audited consolidated financial statements and notes set forth in Item 18
of this annual report.  We have derived the selected consolidated statement
of operations data presented below for the years ended December 31, 1996 and
1997 and the consolidated balance sheet data as of December 31, 1996, 1997
and 1998 from our audited consolidated financial statements that are not
included in this annual report.  Our consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in
the United States.  You should read the selected financial data in
conjunction with Item 5 "Operating and Financial Review and Prospects."

                                   Years Ended January 31,
                      ---------------------------------------
                       1996   1997    1998     1999    2000
                      ------  -----  -------  ------  -------
                       (In thousands, except per share data)
                      ---------------------------------------
Consolidated Statement
 of Operations Data:
Revenues:
  Sales of licenses     $584  $1,500  $3,385  $6,791   $12,476
Services                 316     491     685   1,405     3,137
                      ------  ------  ------  ------   -------
Total revenues..         900   1,991   4,070   8,196    15,613
Cost of revenues         253     432     631   1,326     2,203
                      ------  ------  ------  ------   -------
Gross profit...          647   1,559   3,439   6,870    13,410
Research and development,
  expenses, net          111     397   1,049   1,927     3,795
Selling, general and
  administrative
  expenses:
    Selling expenses     225     430   1,055   2,119     4,774
    General and
     administrative
       expenses          249     353     592   1,000     1,928
                      ------  ------  ------  ------   -------
Operating income          62     379     743   1,824     2,913
Financial and other income
 (expenses), net         (20)     77      99     137     1,080
Income before taxes
 on income                42     456     842   1,961     3,993
Taxes on income           12     114     201     447       245
                      ------  ------  ------  ------   -------
Net income                30     342     641   1,514     3,748
Accretion of mandatorily
 redeemable A preferred
 shares to mandatory
 redemption value          --      --      --      --   (8,894)
Amortization of beneficial
 conversion feature of
 redeemable convertible
 preferred shares         --       `      --      --    (7,223)
                      ------  ------  ------  ------   -------
Net income (loss)
 applicable to ordinary
 shares                  $30    $342    $641  $1,514  $(12,369)
Earnings (loss) for
 ordinary share:
  Basic                $0.00   $0.03   $0.05   $0.10    $(0.73)
                      ------  ------  ------  ------   -------
  Diluted              $0.00   $0.03   $0.05   $0.10    $(0.73)
Weighted average number
 of ordinary shares
 used in computation
 of earnings (loss) per
 ordinary share:
  Basic               10,390  11,163  12,246  14,667    16,897
                      ======  ======  ======  ======    ======


-3-



  Diluted             10,426  11,200  12,283  14,984    16,897
                      ======  ======  ======  ======    ======
Dividends per
 ordinary share         $ --   $0.02   $0.01   $0.03    $ 0.12
                      ======  ======  ======  ======    ======

                                       Years Ended January 31,
                            -----------------------------------------------
                                1996      1997      1998     1999     2000
                            --------  --------  --------  -------   -------
                                               (In thousands_
Consolidated Balance Sheet Data:
Cash and cash equivalents       $  1   $    39   $   803  $ 2,646  $ 43,373
Working capital                  (67)      974     1,181     4,415   46,607
Total assets                     690     2,087     3,217     7,493   52,948
Share capital and additional
paid-in capital                   21     1,102     1,103     3,442   60,831
Total shareholders' equity
(capital deficiency)              98     1,257     1,760     5,220   48,227

     B.     Capitalization and Indebtedness
              Not applicable.

     C.     Reasons for the Offer and Use of Proceeds
              Not applicable.

      D.     Risk Factors

     We bel?eve that the occurrence of any one or some combination of the
following factors would have a material adverse effect on our business,
financial condition and results of operations.

     Risks Relating to Our Business

     The slow down in expenditures by telecommunications service providers
could have a material adverse effect on our results of operations.

       The recent deterioration of the economy and economic uncertainty in the
telecommunications market resulted in a curtailment of capital investment by
telecommunications carriers and service providers beginning late in 2000.
Many new and small service providers have failed and existing service
providers have been reducing or delaying expenditures on new equipment and
applications  As a result, our revenues for the quarter ended March 31, 2001
were telecommunications-related expenditures will continue.  A decline in
capital expenditures may reduce our sales and could result in pressure on
the price of our products, both of which would have a material adverse
effect on our operating results.

     We have a limited operating history as a provider of billing and customer
care software. As a result, it is difficult to evaluate our business and
prospects.

     We first introduced our billing and customer care software for IP telephony
in 1997.  Until 1999, substantially all of our revenues were derived from sales
of our call management software for enterprises.  Sales of our billing and
customer care software and related services accounted for 43% of our revenues in
1999 and 78% of our revenues in 2000.  This product represents the strategic
focus of our business.  Because we have a limited operating history as a
provider of billing and customer care software, it is difficult to evaluate our
business and prospects.

     Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors, including the following:

     -     the timing of orders for our software.  Customers typically order our
billing and customer care software only after other vendors have provided the
infrastructure of their network.  There can be delays in that process.  It is
therefore difficult for us to predict the timing of orders for our products by
customers;

     -      the ability of our customers to expand their operations and increase
their subscriber base, including their ability to obtain financing;

     -     changes in our pricing policies or competitive pricing by our
competitors;

                                                                            -4-




      -     the timing of releases of new products by manufacturers of
telecommunications equipment with which our billing and customer care software
operates; and the timing of product introductions by competitors.

      In future quarters, our operating results may be below the expectations
of public market analysts and investors, and as a result, the price of our
ordinary shares may fall.  For example, our operating results for the quarter
ended March 31, 2001 were below expectations and the announcement of
our revised expectations resulted in a drop in the price of our ordinary shares.

     If the demand for Voice over IP and additional IP-based services does not
continue to grow, the demand for our billing and customer care software would
diminish substantially.

      Sales of our billing and customer care software and related services for
Voice over IP and additional IP-based services accounted for 43% of our revenues
in 1999 and 78% of our revenues in 2000.  As a result, our business depends on
the continued growth in demand for Voice over IP and additional IP-based
services.  Rapid growth in the demand for voice over IP services is a recent
phenomenon that may not continue.  If growth in the demand for Voice over IP
does not continue, we will face substantially diminished demand for our billing
and customer care software.  The failure of the Voice over IP market to continue
to grow and develop will have a material and adverse impact on our results of
operations and financial condition.

     In addition, we offer billing and customer care software to providers of
additional IP-based services.  The demand for these other IP-based services is
at a very early stage.  We cannot be sure that the market for these services
will grow.  In addition, there may never be significant demand for specialized
billing and customer care software for providers of these other IP-based
services.  This would limit the potential growth of our revenues.

     We have no operating history as a provider of billing and customer care
software for traditional wireline and wireless operators.  As a result, it is
difficult to evaluate our business in this market.

     Until March, 2001, our billing and customer care software was implemented
for Voice over IP and additional IP-based services only.  Following our

acquisition of Verabill, we plan to offer billing and customer care software to
operators of traditional wireline and wireless telephony worldwide.  We intend
to invest in research and development and in marketing in order to offer
enhanced software for this market.  We cannot be sure that our software will
achieve acceptance in this market segment.  In addition, there may never be
significant demand for new billing and customer care software for providers of
traditional services.

     If our products fail to achieve widespread market acceptance, our results
of operations will be harmed.

     Our future growth depends on the continued commercial acceptance and
success of our products.  We first introduced our billing and customer care
software for Voice over IP in 1997.  Accordingly, we cannot be sure that our
products will achieve widespread market acceptance.  In addition, the market for
billing and customer care software products for Voice over IP, as well as other
IP-based services, is in the early stages of development.  As a result, our
future performance will depend on the successful development, introduction and
consumer acceptance of new and enhanced versions of our products.  We are not
certain that we will be able to develop new and enhanced products to meet
changing market needs.  If our new and enhanced products are not well received
in the marketplace, our business and results of operations will be harmed.  We
cannot assure you that we will be successful in developing and marketing new
products.

     We depend on our marketing alliances and reseller arrangements with
manufacturers of IP telecommunications equipment to market our products.  If we
re unable to maintain our existing marketing alliances, or enter into new
alliances, our revenues and income will decline.

     We rely heavily on our marketing alliances and reseller arrangements with
major manufacturers of IP telecommunications equipment, including Cisco,
Clarent, Lucent and VocalTec to market our products to the customers of these
entities.  Our marketing alliances and reseller arrangements with these parties
are nonexclusive and do not contain minimum sales or marketing performance

                                                                            -5-

requirements.  In some instances, there is no formal contractual arrangement.
As a result, these entities may terminate these arrangements without notice,
cause or penalty.  There is also no guarantee that any of these parties will
continue to market our products.  Our arrangements with our resellers and
marketing allies do not prevent them from selling products of other companies,
including products that compete with ours.  Our marketing allies and resellers
also work with some of our competitors, and have invested in these competing
companies.  For example, Cisco Systems Inc. has invested in Portal Software
Inc., one of our competitors.

Moreover, our marketing allies and resellers may develop their own internal
billing and customer care software products that compete with ours and sell
them as part of their equipment.  We derive, and anticipate that we will
continue to derive, a significant portion of our revenues from customers that

have relationships with our marketing allies and resellers.  If we are unable
to maintain our current marketing alliances and reseller relationships, or if
these marketing allies and resellers develop their own competing billing and
customer care software products, our revenues and income will decline.

    If our software does not continue to integrate and operate successfully
ith the IP telecommunications equipment of the leading manufacturers, we may
be unable to maintain our existing customer base and/or generate new sales.

     The success of our software depends upon the continued successful
integration and operation of our software with the IP telecommunications
equipment of the leading manufacturers.  We currently target a customer base
that uses a wide variety of network infrastructure equipment and software
platforms, which are constantly changing.  In order to succeed, we must
continually modify our software as new IP telecommunications equipment
 is introduced.  If our product line fails to satisfy these demanding and
rapidly hanging technological challenges, our existing customers will be
dissatisfied.  As a result, we may be unable to generate future sales and our
business will  be materially adversely affected.

          If we fail to attract and retain qualified personnel we will not be
able to implement our business strategy or operate our business effectively.

     Our products require sophisticated research and development, sales and
marketing, software programming, and technical customer support.  Our
depends on our ability to attract, train, motivate and retain highly skilled
personnel within each of these areas of expertise. As part of our business
strategy, we intend to continue to increase the number of our employees who
perform each of these functions.  Qualified personnel in these areas are in
great demand and are likely to remain a limited resource for the foreseeable
future.  We cannot assure you that we will be able to attract and retain the
skilled employees we require.  In addition, the resources required to attract
and retain such personnel may adversely affect our operating margins.  The
failure to attract and retain qualified personnel may have a material adverse
effect on our business, results of operations and financial condition.

     We depend on a limited number of key personnel who would be difficult.
replace If we lose the services of these individuals, our business will be
harmed.

          Because our market is new and evolving, the success of our business
depends in large part upon the continuing contributions of our senior
management. Specifically, continued growth and success largely depend
on the managerial and technical skills of Monica Eisinger, our President and
Chief Executive Officer and one of our founders, and other members of senior
management.  Because the demand for highly qualified senior personnel in Israel
exceeds the supply of this type of personnel, it will be difficult to replace
members of our senior management if one or more of them were to leave us.
If either Ms. Eisinger or other members of the senior management team are
unable or unwilling to continue their employment with our company, our
business will be harmed.

     Our success depends on our ability to continually develop and market new
and more technologically advanced products and enhancements.

     The IP-based services market is characterized by:

     -     rapid technological advances like the development of new standards
for communications protocols;

     -     frequent new service offerings and enhancements by our customers,
such as value-added IP-based services and new rating plans; and

     -     changing customer needs.


                                                                            -6-



     We believe that our future success will largely depend upon our ability to
continue to enhance our existing products and successfully develop and market
new products on a cost-effective and timely basis.  We cannot assure you that
we will be successful in developing and marketing new products that respond
adequately to technological change.  Our failure to do so would have a material
adverse effect on our ability to market our own products.

     The growth of our business is dependent on the continuation of a favorable
regulatory environment, and any change in this environment could harm our
business.

     Federal, state and international regulatory bodies regulate the
telecommunications industry and the products that use telecommunications
networks.  Over the past decade, a variety of new entrants have begun to
provide telecommunications services and, in particular, Voice over IP services,
intensifying competition in that industry.  Future growth in the markets for our
products and services will depend in part on the continuation of a favorable
regulatory environment for Voice over IP services.  However, the growth of Voice
over IP has also led to close examination of its regulatory treatment in many
jurisdictions.  The provision of Voice over IP services is subject to change as
a result of future regulatory action, judicial decisions or legislation.  The
cost of providing Voice over IP services could increase as a result of any
regulatory changes that would require providers to pay charges applicable to
traditional telephone networks.  Any new regulations that increase the cost of
providing Voice over IP services could halt the growth of the Voice over IP
market.  As a result, the market for our billing and customer care software
could decline.

     Any future regulation of the Internet may slow its growth and result in a
decreased demand for our products and services.

     The demand for our products and services depends on the growth in Internet
usage since Voice over IP and other IP-based services are delivered mainly over
the Internet.  The adoption of any laws or regulations that affect the growth of
the Internet, or the Voice over IP industry, could result in decreased demand
for our products.

     From time to time, our software and the systems into which it is installed
contain undetected errors.  This may cause us to experience a significant
decrease in market acceptance and use of our software products and we
may subject to warranty and other liability.


     From time to time, our software, as well as the systems into which they are
integrated, contain undetected errors.  Because of this integration, it can be
difficult to determine the source of the errors.  As a result, and regardless of
the source of the errors, we could experience one or more of the following
adverse results:

     -     diversion of our resources and the attention of our personnel from
our research and development efforts to address these errors;

     -     negative publicity and injury to our reputation that may result in
loss of existing or future customers; and/or

     -     loss of or delay in revenue.

     In addition, we may be subject to claims based on errors in our software or
mistakes in performing our services.  Our licenses generally contain provisions
such as disclaimers of warranties and limitations on liability for special,
consequential and incidental damages, designed to limit our exposure to
potential claims.  However, not all of our contracts contain these provisions
and we cannot assure you that the provisions that exist will be enforceable.
For example, we have an agreement with Cisco relating to our provision of
billing and customer care software to China Unicom jointly with voice gateways
provided by Cisco.  This agreement requires us to indemnify Cisco for claims by
China Unicom relating to our software.  In addition, while we maintain product
liability insurance, we cannot assure you that this insurance will provide
sufficient, or any, coverage for these claims.  A product liability claim,
whether or not successful, could adversely affect our business by damaging our
reputation, increasing our costs, and diverting the attention of our management
team.

     If our billing and customer care software for Voice over IP fails to
achieve market acceptance among traditional telecommunications service
providers, we may suffer a decrease in market share, revenues and profitability.

     We believe that as the demand for Voice over IP services grow, traditional
telecommunications service providers will increasingly offer Voice over IP to
remain competitive and these providers will constitute a growing portion of the


                                                                            -7-



Voice over IP market.  These companies already have relationships with
traditional billing and customer care software providers for their telephony
services, and may wish to work with their current providers of billing and
customer care software to enhance and modify that software for Voice over IP
services.  If our billing and customer care software for Voice over IP fails to
achieve market acceptance among traditional telecommunications service
providers, we may suffer a decrease in market share, revenues and profitability.

     Because some of our customers require a lengthy approval process before
they order our products, our sales process is often subject to delays that may
decrease our revenues and seriously harm our business.

     In 2000, we derived 78% of our revenues from the sale of software and
related services to providers of Voice over IP services.  Before we can sell our
software to some of these customers, they must conduct a lengthy and complex
approval and purchase process.  Prospective customers must make a significant
commitment of resources to test and evaluate our products and to integrate them
into larger systems.  This evaluation process, which takes place before our
customers issue purchase orders, typically takes between three and six months.

The following factors, among others, affect the length of the approval process:

     -     the time involved for our customers to determine and announce their
specifications;

     -     the complexity of the networks being deployed;

     -     the timely delivery by IP telecommunications equipment manufacturers
of the hardware comprising the customer's network infrastructure;

     -     the build-up of the customer's network infrastructure; and

     -     the timely release of new versions of products comprising the
 customer's network infrastructure by the vendors of those products.

     Delays in product approval may decrease our revenues and could seriously
harm our business and results of operations.

     We may need additional capital to finance our operations in the future and
may not be able to obtain additional capital.

     We intend to continue to enhance our products, develop new product
offerings and expand our customer base in order to maintain our competitive
position.  If our cash flow from operations is not sufficient to meet our
capital expenditure and working capital requirements, we will need to raise
additional capital from other sources, such as the issuance of additional
equity.  If we issue additional equity, investors could experience dilution.  If
we are unable to raise additional capital through the issuance of equity or
otherwise, we cannot assure you that any third party will be willing or able to
provide additional capital on favorable terms.  If we are unable to obtain
additional capital, we may be required to reduce the scope of our business or
our anticipated growth, which would reduce our revenues.

      If we are unable to compete effectively in the marketplace, we may suffer
a decrease in market share, revenues and profitability.

      Competition in our industry is intense and we expect competition to
increase.  We compete primarily with young, emerging billing companies such as
Portal Software Inc. and Digiquant.  We also compete with telecommunications
equipment companies such as Clarent Corporation, which offers an internally
developed billing that is integrated into their hardware.  Finally, we believe
that the more established traditional billing and customer care companies, such
as Amdocs Ltd. and ADC Telecommunications Inc., are beginning to offer billing
and customer care software for Voice over IP.

     Some of our competitors have greater financial, technical, sales, marketing
and other resources, and greater name recognition than do we.  Current and
potential competitors have established, and may establish in the future,
cooperative relationships among themselves or with third parties to increase
their ability to address the needs of prospective customers.  Accordingly, new
competitors or alliances among competitors may emerge and rapidly acquire
significant market share.  As a result, our competitors may be able to adapt
more quickly than us to new or emerging technologies and changes in customer
requirements, and may be able to devote greater resources to the promotion and
sale of their products.  We cannot guarantee that we will be able to compete
effectively against current or future competitors or that competitive pressures
will not harm our financial results.


                                                                            -8-



     If we are unable to manage future expansion, if any, we may experience a
significant strain on our financial resources and personnel.

     Since inception, we have rapidly and substantially increased the scope of
our operations and the number of employees domestically and internationally.  On
December 31, 2000, we had 183 employees compared to a total of 122 employees on
December 31, 1999.  This expansion has placed, and any possible growth of our
future operations will place, a significant strain on our internal training
capabilities, our management systems and our operational, administrative and
financial resources.  We expect that we will need to continue to improve our
financial and managerial controls and reporting systems and procedures in order
to continue to expand and manage our workforce.  We cannot assure you that we
have made adequate provisions for the costs and risks

associated with our growth; that our systems, procedures or controls will be
adequate to support our operations as they continue to grow; or that we will be
able to market and sell our services successfully as our operations evolve.  If
we are unable to successfully manage our future expansion, our business will
suffer.

     We may seek to expand our business through acquisitions that could result
in diversion of resources and extra expenses, which could disrupt our business
and harm our financial condition.

     We may pursue acquisitions of business, products and technologies, or the
establishment of joint venture arrangements, that could expand our business.
For example, in March 2001 we acquired the Verabill product line for wireless
carriers for $1 million.  The negotiation of potential acquisitions or joint
ventures as well as the integration of an acquired or jointly developed
business, technology or product could cause diversion of management's attention
from the day-to-day operation of our business.  This could impair our
relationships with our employees, customers, distributors, re-sellers and
marketing allies.  Future acquisitions could result in:

     -     potentially dilutive issuances of equity securities;

     -     the incurrence of debt and contingent liabilities;

     -     amortization of goodwill and other tangibles;

     -     research and development write-offs; and

     -     other acquisition-related expenses.

     Acquired businesses or joint ventures may not be successfully integrated
with our operations or with our technology.  If any acquisition or joint venture
were to occur, we may not receive the intended benefits of the acquisition or
joint venture.  In addition, we have limited experience with respect to
negotiating an acquisition and operating an acquired business.  If future
acquisitions disrupt our operations, our business may suffer.

     If we are unable to adequately protect our intellectual property or become
subject to a claim of infringement, our business may be materially adversely
affected.

     Our success and ability to compete depend substantially upon our internally
developed technology.  Any misappropriation of our technology could seriously
harm our business.  In order to protect our technology and products, we rely on
a combination of trade secret and trademark law.  Despite our efforts to protect
our intellectual property rights, unauthorized parties may attempt to copy or
otherwise obtain and use our software or technology or to develop software with
the same functionality.  Policing unauthorized use of our products is difficult
and we cannot be certain that the steps we have taken will prevent
misappropriation, particularly in foreign countries where the laws may not
protect our intellectual property rights as fully as in the United States.

     Although we have not received any notices from third parties alleging
infringement claims, third parties could claim that our current or future
products or technology infringe their proprietary rights.  We expect that
software developers will increasingly be subject to infringement claims as the
number of products and competitors providing software and services to the Voice
over IP industry increase and overlaps occur.  Any claim of infringement by a
third party could cause us to incur substantial costs defending against the
claim, even if the claim is invalid, and could distract our management from our
business.  Furthermore, a party making such a claim could secure a judgment that


                                                                            -9-



requires us to pay substantial damages.  A judgment could also include an
injunction or court order that could prevent us from selling our software.  Any
of these events could seriously harm our business.

     If anyone asserts a claim against us relating to proprietary technology or
information, we might seek to license their intellectual property or to develop
non-infringing technology.  We might not be able to obtain a license on
commercially reasonable terms or on any terms.  Alternatively, our efforts to
develop non-infringing technology could be unsuccessful.  Our failure to obtain
the necessary licenses or other right or to develop non-infringing technology
could prevent us from selling our software and could therefore seriously harm
our business.

     Some members of our board of directors may have conflicts of interest with
us, and some of these conflicts may be resolved in a manner adverse to us.

      Mr. Mohan, a member of our board of directors, is a general partner of
Summit Partners and a director of Martin and Associates, a company partially
owned by Summit Partners.  Martin and Associates is a provider of billing and
customer care software for local telephony providers, and might compete with us
in the future.  In addition, Mr. Rosen, who is also a member of our board of
directors, is a corporate executive of ADC Telecommunications Inc.  ADC
Telecommunications acquired Saville Systems plc, one of our competitors.  Mr.
Mohan and Mr. Rosen, as directors of our company, will have fiduciary duties,
including duties of loyalty, to our company but may also have conflicts of
interest with respect to matters potentially involving or affecting us, such as
acquisitions or other corporate opportunities that may be suitable for both us
and Summit Partners, Martin and Associates or ADC Telecommunications, as the
case may be.  Although we believe that these directors will be able to fulfill
their fiduciary duties to our shareholders despite their involvement with Summit
Partners and ADC Telecommunications, there could be potential conflicts of
interest when these directors are faced with decisions that could have different
implications for our company and either Summit Partners or ADC
Telecommunications.  These conflicts could be resolved in a manner adverse to us
which could harm our business.  For more information relating to how we handle
conflicts of interest, see Item 6 'Directors, Senior Management and Employees'
Approval of Specified Related Party Transactions under Israeli Law.'

     Because a substantial majority of our revenues are generated outside of
Israel, our results of operations could suffer if we are unable to manage
international operations effectively.

     During 2000, approximately 90% of our revenues were generated outside of
Israel.  Our sales outside of Israel are made in more than 20 countries.  We
currently have sales offices or sales forces located in New Jersey, United
States, Beijing, China, Tokyo, Japan and the Netherlands.  We plan to establish
additional facilities in other parts of the world.  In addition, we have an R&D
and support center in Jassy, Romania.  The expansion of our existing
international operations and entry into additional international markets will
require significant management attention and financial resources.  Our ability
to penetrate some international markets may be limited due to different
technical standards, protocols and requirements for our products in different
markets.  We cannot be certain that our investments in establishing facilities
in other countries will produce desired levels of revenue.  In addition,
conducting our business internationally subjects us to a number of risks,
including

-     staffing and managing foreign operations

-     increased risk of collection;

-     potentially adverse tax consequences;

-     the burden of compliance with a wide variety of foreign laws and
regulations;

-     burdens that may be imposed by tariffs and other trade barriers; and

-     political and economic instability.

     Our business may be negatively affected by exchange rate fluctuations.
Although most of our revenues are denominated in U.S. dollars and Euros,
approximately 60% of our expenses are incurred in New Israeli Shekels, or NIS.
As a result, we may be negatively affected by fluctuations in the exchange rate
between the Euro or the NIS and the U.S. dollar.  We cannot predict any future

                                                                            -10-



trends in the rate of inflation in Israel or the rate of devaluation of the NIS
against the U.S. dollar.  If the U.S. dollar cost of our operations in Israel
increases, our U.S. dollar-measured results of operations will be adversely
affected.  In addition, devaluation in the Euro or local currencies of our
customers relative to the U.S. dollar could cause customers to decrease or
cancel orders or default on payment.  We may choose to limit these exposures
by entering into hedging transactions.  However, hedging transactions may not
enable us to avoid exchange-related losses, and our business may be harmed by
exchange rate fluctuations.  The imposition of price or exchange controls or
other restrictions on the conversion of foreign currencies could affect our
ability to collect payments, which in turn, could have a material adverse effect
on our results of operations and financial condition.

     Breaches in the security of the data collected by our systems could
adversely affect our reputation and hurt our business.

     Customers rely on third-party security features to protect due privacy and
integrity of customer data.  Our products may be vulnerable to breaches in
security due to failures in the security mechanisms, the operating system, the
hardware platform or the networks linked to the platform.  MIND-iPhonEX, which
provides web access to information, presents additional security issues for our
customers.  Security vulnerabilities could jeopardize the security of
information stored in and transmitted through the computer systems of our
customers.  A party that is able to circumvent our security mechanisms could
misappropriate proprietary information or cause interruptions in the operations
of our customers.  Security breaches could damage our reputation and product
acceptance would be significantly harmed, which would cause our business to
suffer.

     Risks Relating to the Market for our Ordinary Shares

     Our share price has fluctuated and could continue to fluctuate
significantly.  The market for our ordinary shares, as well as the prices of
shares of other technology companies, has been volatile.  The price of our
ordinary shares has decreased significantly since our initial public offering in
August 2000.  A number of factors, many of which are beyond our control, may
cause the market price of our ordinary shares to fluctuate significantly, such
as:

     -     fluctuations in our quarterly revenues and earnings and those of our
publicly held competitors;

     -     shortfalls in our operating results from the levels forecast by
securities analysts;

     -     public announcements concerning us or our competitors;

     -     changes in pricing policies by us or our competitors;

     -     market conditions in our industry; and

     -     the general state of the securities market (particularly the
technology sector).

     We have no control over any of these matters and any of them may adversely
affect our business internationally.  In addition, trading in shares of
companies listed on the Nasdaq National Market in general and trading in shares
of technology companies in particular has been subjected to extreme price and
volume fluctuations that have been unrelated or disproportionate to operating
performance.  These broad market and industry factors may depress our share
price, regardless of our actual operating results.

     Substantial sales of our ordinary shares could adversely affect our share
price.

     Sales of a substantial number of ordinary shares could adversely affect the
market price of our ordinary shares by introducing a large number of sellers to
the market.  Given the likely volatility that exists for our ordinary shares,
such sales could cause the market price of the ordinary shares to decline.


     As of March 31, 2001, we had outstanding 20,566,220 ordinary shares.  All
of the ordinary shares sold in our initial public offering in August 2000 are
freely tradable without restriction or further registration under the federal
securities laws unless purchased by our 'affiliates,' as that term is defined in
Rule 144 under the Securities Act. 1 The remaining outstanding ordinary shares,
representing approximately 83.2% of the outstanding ordinary shares as of


                                                                            -11-



March 31, 2001 are 'restricted securities' under the Securities Act subject to
restrictions on the timing, manner and volume of sales of such shares.

     Holders of 16,341,820 ordinary shares have the right to require us to
register their shares on two occasions, and have incidental registration rights
with respect to those ordinary shares.  In addition, as of March 31, 2001 there
were outstanding options to purchase a total of 1,988,120 ordinary shares (of
which 322,400 were vested as of March 31, 2001) and we were authorized to grant
options to purchase 319,880 additional ordinary shares.  We have filed a
registration statement on Form S-8 covering all of the ordinary shares issuable
upon the exercise of options under our stock option plans, at which time these
shares will be immediately available for sale in the public market, subject to
the terms of the related options.

     Some of our shareholders continue to be able to control the outcome of
matters requiring shareholder approval.

     As of March 31, 2001, Monica Eisinger, Lior Salansky, ADC
Telecommunications Israel Ltd. and Summit Partners and its affiliates
beneficially own an aggregate of 16,033,740 ordinary shares representing
approximately 78.0% of the ordinary shares outstanding and 77.2% of the voting
shares.  These shareholders, if they vote together, are able to control the
outcome of various actions that require shareholder approval.  For example,
these shareholders could elect all of our directors, delay or prevent a
transaction in which shareholders might receive a premium over the prevailing
market price for their shares and prevent changes in control or management.
This concentration of ownership may adversely affect our share price.

     Risks Relating to Our Location in Israel

     Potential political, economic and military instability in Israel may harm
our results of operations.

     We are organized under the laws of the State of Israel and a substantial
portion of our assets, and our principal operations, are located in Israel.  Our
operations, financial condition and results of operations are directly
influenced by economic, political and military conditions in and affecting
Israel.  We could be adversely affected if major hostilities break out in the
Middle East or if trade between Israel and its present trading partners is
curtailed.  Since the establishment of the State of Israel in 1948, a state of
hostility has existed between Israel and the Arab countries in the region.  Any
future armed conflicts or political instability in the region could negatively
affect our business or harm our results of operations.  We cannot predict
whether a full resolution of these problems will be achieved, the nature of any
such resolution or any consequences that any of these factors may have on us.
The peace process between Israel and the Palestinian Authority has seriously
deteriorated due to the recent increased violence between Israelis and
Palestinians.  Israeli companies and companies doing business with them have
been subject to an economic boycott initiated by the Arab countries.  This
boycott and policies may seriously harm our operating results or the expansion
of our business.  We cannot predict the effect on the region of the increase in
the degree of violence between Israel and the Palestinians and the recent change
in the political situation as a result of the election of Ariel Sharon as
Israel's new prime minister.  The current situation in Israel could adversely
affect our operations if our customers and/or strategic allies believe that
instability in the region could affect our ability to fulfill our commitments.

     We currently participate in or receive tax benefits from government
programs.  These programs require us to meet certain conditions and these
programs and benefits may be terminated or reduced in the future.

     We receive tax benefits under Israeli law for capital investments that are
designated as 'Approved Enterprises.' To maintain our eligibility for these tax
benefits, we must continue to meet several conditions including making required
investments in fixed assets.  If we fail to comply with these conditions in the
future, the tax benefits received could be cancelled.  The Israeli government
has reduced the benefits available under this program in recent years and has
indicated that it may reduce or eliminate these benefits in the future.  These
tax benefits may not continue in the future at their current levels or at any
level.  From time to time, we submit requests for expansion of our Approved
Enterprise programs or for new programs.  These requests might not be approved.
The termination or reduction of these tax benefits could seriously harm our
business, financial condition and results of operations.  For more information

                                                                            -12

about Approved Enterprises, see Item 10 'Additional Information - Taxation - Law
for the Encouragement of Capital Investments, 1959" and Note 6 to our financial
statements contained in Item 18.

     Because we have received grants from the Office of the Chief Scientist, we
are subject to on-going restrictions.

     We have received grants in the past from the Office of the Chief Scientist
of the Israeli Ministry of Industry and Trade.  According to Israeli law, any
products developed with grants from the Office of the Chief Scientist are
required to be manufactured in Israel, unless we obtain prior approval of a
governmental committee.  As a condition to obtaining this approval, we may be
required to pay the office of the Chief Scientist up to 300% of the grants we
received.  In addition, we are prohibited from transferring to third parties the
technology developed with these grants without the prior approval of a
governmental committee.  Approval is not required for the export of any
products resulting from the funded technology.

     Our results of operations may be negatively affected by the obligation of
some of our key personnel to perform military service.

    Some of our executive officers and employees in Israel, including the Chief
Financial Officer, are obligated to perform up to 36 days of military reserve
duty annually.  Our operations could be disrupted by the absence for a
significant period of one or more of our executive officers or key employees due
to military service.  Any disruption in our operations would harm our business.

     It may be difficult to enforce a U.S. judgment against us, our officers
and directors or to assert U.S. securities laws claims in Israel.

     We are incorporated in the State of Israel.  Substantially all of our
executive officers and directors are nonresidents of the United States, and a
substantial portion of our assets and the assets of these persons are located
outside the United States. We have been informed by our legal counsel in Israel
that original actions may not be instituted in Israel to enforce civil
liabilities under the Securities Act and the Exchange Act.  However, Israeli
courts are authorized to enforce a United States final executory judgment in a
civil matter, including a monetary or compensatory judgment in a non-civil
matter provided that:

     -     the application for enforcement was filed within five years after the
judgment;

     -     adequate serve of process has been effected and the defendant has had
a reasonable opportunity to present his arguments and evidence;

     -     the judgment and the enforcement thereof are not contrary to the law,
public policy, security or sovereignty of the State of Israel;

     -     the judgment was obtained after due process before a court of
competent jurisdiction according to the rules of private international law
prevailing in Israel;

     -     the judgment was not obtained by fraud and does not conflict with any
 other valid judgment in the same matter between the same parties;

     -     an action between the same parties in the same matter is not pending
in any Israeli court at the time the lawsuit is instituted in the United States
court; and

     -     the U.S. court is not prohibited by law from enforcing judgments of
Israel courts.Therefore, it may be difficult for a shareholder, or any other
person or entity, to collect a judgment obtained in the United States against us
or any of these persons, or to effect service of process upon these persons in
the United States.

      Provisions of Israeli law and our articles of association may delay,
prevent or make difficult a change of control and therefore may depress the
price of our stock.

     Some of the provisions of our articles of association and Israeli law
could, together or separately:

     -    discourage potential acquisition proposals;

     -    delay or prevent a change in control; and

     -    limit the price that investors might be willing to pay in the future
for our ordinary shares.

     In particular, our articles of association provide that our board of
directors will be divided into three classes that serve staggered three-year
terms.  In addition, Israeli corporate law regulates mergers and acquisitions of


                                                                            -13


shares through tender offers, requires approvals for transactions involving
significant shareholders and regulates other matters that may be relevant to
these types of transactions.  See Item 10 'Additional Information - Mergers and
Acquisitions under Israeli Law.' Furthermore, Israeli tax law treats stock-for-
stock acquisitions between an Israeli company and a foreign company less
favorably than does U.S. tax law.  For example, Israeli tax law may subject a
shareholder who exchanges his ordinary shares for shares in another corporation
to taxation on half the shareholder's shares two years following the exchange
and on the balance of the shares four years thereafter even if the shareholder
has not yet sold the new shares.  Finally, the terms of the grants we received
in the past from the Office of the Chief Scientist require prior approval of the
acquisition of any shares by a non-Israeli acquirer or the acquisition of 25% of
our shares by an Israeli acquirer, excluding the shares listed on Nasdaq.
Item 4.	     Information on the Company
A.     History and Development of the Company.
General
     MIND C.T.I. Ltd.  was incorporated on April 6,1995 as a company with
limited liability under the laws of the State of Israel.  Our principal
executive offices are located at Industrial Park, Building 7, Yoqneam 20692,
Israel.  Our telephone number is 1-888-270-4056.  Our agent in the United
States is MIND C.T.I. Inc. and its principal offices are located at 777 Terrace
Avenue, Hasbrouck Heights, New Jersey 07604.

Developments since January 1, 2000

     We completed our initial public offering on August 8, 2000.  In this
offering, we sold 3,450,000 of our ordinary shares at a price of $10.00 per
share.  We realized net proceeds of $29.9 million from this offering.
     In late 2000 we began offering billing and customer care for multiple IP
services, including content, data, web hosting, unified messaging and dial-up
services.
     On March 25, 2001, MIND acquired from Veramark Technologies Inc. all the
rights for the VeraBill product line, a mediation, provisioning and billing
solution for wireline and wireless mid-size carriers, for $1 million.

      Following the Verabill acquisition, we plan to offer billing and customer
care software to operators of traditional wireline and wireless telephony world
wide.  We intend to invest in research and development and in marketing in order
to offer enhanced solutions for this market.

B.     Business Overview

Overview

     We develop, manufacture and market real-time billing and customer care
software for multiple IP-based services, including Voice over IP, data, content,
web hosting, unified messaging and dial-up services.  We expect that our
software will also support other services that may be offered in the future by
operators over the IP infrastructure.  The basic difference between billing for
these services is the method of rating (calculating the cost) of each service.
For example, voice is rated by duration and destination, data is rated either by
packets or by bytes, and content is rated by its nature.
     Voice over IP, also known as Internet telephony, is the real-time
transmission of voice communications over the public Internet and private
networks based on Internet Protocol, commonly known as IP.  Internet Protocol is
the process by which data is transmitted from one computer to another on the
Internet.  Our billing and customer care software, known as MIND-iPhonEX,
enables providers of multiple IP-based services to meet complex, mission-
critical billing and customer care needs.  MIND-iPhonEX is scalable, which means
that it is easily adapted to changes in the size and configuration of a service
provider's network.  It operates on the IP telecommunications equipment of major
manufacturers, such as Cisco Systems Inc. and Lucent Technologies Inc.  We also
provide professional services, primarily to our billing and customer care

                                                                            -14


customers, consisting of customization, installation, customer support, training
and maintenance services and project management.  Our professional services
include advice to our customers regarding the deployment of billing and customer
care software over their IP networks, consisting of consulting services relating
to our customers' IP networks in order to deploy billing and customer care
software.  We have installed MIND-iPhonEX for a large base of customers
worldwide, including:

      -    Traditional telecommunications service providers that also offer
Voice over IP telephony, such as Verizon, Sovintel, China Ministry of Post and
Telecommunication China Telecom), and China United Telecommunications Corp.
(China Unicom);

      -    Internet telephony service providers that primarily offer Voice over
IP services and do not offer traditional telephone services, including, among
others, Webway Communications Holdings Inc., Teltran International, NewWave
Communications and Capcom International; and

     -     Internet service providers that also provide Voice over IP services,
such as Exonet Communications SA and NetOne SA.

     In addition to our billing and customer care software, we offer two call
management systems used by organizations for call accounting, traffic analysis
and fraud detection.  Our enterprise software which we call PhonEX, has been
installed in many locations throughout the world for customers including Credit
Suisse First Boston, Deutsche Post and ST Microelectronics.  Our other
enterprise software which we call MEIPS, is a new product directed at the same
market segment where IP switches are implemented.

      We believe that as providers of multiple IP-based services expand their
offerings, they will need billing and customer care software that allows them to
monitor and bill their customers based on type and content of the services
provided.  We have developed and have begun providing billing and customer care
software to meet this need to track and account for a variety of IP-based
services, including, cable television, Internet dial-up services, IP messaging
and other similar services.

Our Market Opportunity

     Voice Over IP Industry Background

     Traditional telephone communications are transmitted through networks based
on circuit switching technology that requires an open connection to be
established and maintained between calling parties for the entire path and
duration of a call.  Voice over IP is transmitted through the public Internet
and private networks based on Internet Protocol that were initially developed
for transmitting data, such as e-mail.  These networks do not require an open
circuit for the entire path or duration of the transmission.  In a network using
IP technology, the data is divided into compressed packets that are sent to a
final destination where they are reassembled back to their original order.  In
this type of network, multiple streams of information can travel through
different paths in the network, allowing a more efficient use of the network.

      In recent years, the improvements in the technologies used in IP networks
have led to an increase in the use of this type of network to transmit both
voice and data over what are known as convergent networks.  The Voice over IP
market has emerged from these technological advances.

     Voice over IP offers a number of advantages to subscribers over traditional
telephony.  Providers of Voice over IP services can offer their subscribers
enhanced voice and data communications services and applications, such as:

     -    unified messaging services permitting single source retrieval of voice
mail, e-mail and faxes through the Internet or by phone or any other Internet-
capable devices;

     -    personal computer-to-phone services allowing subscribers to place
personal computer and speak to a party who uses a standard telephone; and

                                                                            -15

     -    web-based services that allow a live voice connection from any web
site to any regular telephone over the Internet while continuing to view the
web-site.

     In addition, Voice over IP service providers typically enjoy lower capital
costs because the infrastructure for networks based on Internet Protocol is less
expensive than that for traditional telecommunications networks.  To date,
typically Voice over IP providers bypass the international settlement process,
which represents a significant portion of international long distance tariffs.
As a result, Voice over IP service providers are able to offer their customers
lower rates for telephony services.

     IP-Based Services Industry Background

     IP is establishing itself as the infrastructure of choice for voice, data
and video content transmission.  Content is compressed into electronic data
packets that are transmitted individually to the final destination.  Each packet
can follow a different route as each packet contains the IP address of its
destination.  Upon arrival, the content is decompressed and reconstituted into
its original format.  Packet-based transmission optimizes a network's capacity
by utilizing spectrum only during the actual transmission.  As data networks are
not regulated and distance is irrelevant, IP networks represent a cost-efficient
infrastructure for telecommunication carriers.
Our business opportunity in IP services billing and customer care is derived
from:

     -     Our existing customers that deployed IP networks to offer Voice over
IP services and are now expanding their offerings to additional IP services.

     -     Emerging service providers such as application services providers, or
ASPs, and integrated communication providers, or ICPs, and others that require
new billing solutions to accommodate their complex business models.

     -     Traditional telecommunications service providers, internet service
providers, or ISPs, and wireless and cable operators that are expanding and
migrating their existing infrastructure to IP, require new billing solutions.

Billing and Customer Care Industry

     Billing and customer care software is among the key components of any
telephony service provider's systems because they enable the service provider to
track and bill for usage, manage revenues and customer relations and devise
marketing programs and rate plans.  In today's intensely competitive
telecommunications market, sophisticated billing and customer care software can
provide a competitive advantage as service providers attempt to differentiate
themselves by providing superior features, like cross-discounting and a single
bill for multiple services.  As service providers broaden their service
offerings to include multiple IP-based services, the demand for more
sophisticated billing and customer care software suitable for these services, is
growing.  We believe that as providers of IP-based services continue to expand
their service offerings, they will increasingly need products that allow them to
monitor and bill their subscribers based on the type and content of services
provided.  As a result, we believe that this trend will increase the demand for
sophisticated billing and customer care products for what is known as convergent
billing.

     Many existing billing and customer care software products do not meet the
demands of the increasingly competitive and dynamic environment of multiple IP-
based services.  Traditional billing systems are typically designed to support a
particular type of service provider--for instance, either wireline or wireless -
and a specific size of network.  As a result, these billing systems require time
and expense to accommodate a growing subscriber base or new products and
features.  Traditional billing systems are also generally unable to efficiently
support multiple services or convergent networks.  In addition, traditional
billing systems are typically limited to periodic or "batch-oriented"
processing, and cannot provide the real-time processing typically required by
providers of IP-based services.

     Providers of multiple IP-based services typically require billing and
customer care products that can handle authentication, authorization and
accounting needs in real-time in order to determine the types of services to
which the subscriber is entitled, as well as any applicable limits to the
availability of the services.  This real-time functionality is particularly
important for pre-paid billing plans.  Finally, billing and customer care
software products need to be capable of being easily adaptable to changes in the
size and configuration of a Voice over IP provider's system, or scalable, to
enable rapid growth in subscriber base, and to permit easy adaptation to
emerging products and services.

                                                                            -16


Our Solution

     We develop, market and support real-time, scalable billing and customer
care software for providers of multiple IP-based services that are designed to
meet their complex, mission-critical provisioning, authentication,
authorization, accounting and reporting needs.  We have installed MIND-iPhonEX
for a large base of customers, with over 100 installations worldwide.  Our
billing and customer care software provides our customers with the following
benefits:

     -     Real-Time Solution.  IP services providers require a system that
enables caller authentication, authorization and accounting and, if needed,
cut-off, all in real-time. We believe that MIND-iPhonEX is one of the few
billing and customer care products designed for IP services that offers real-
time functionality for both prepaid and postpaid billing plans, and that has a
real-time rating engine able to support multiple services and time zones and
multi-currency billing.

     -     Scalability.  MIND-iPhonEX is designed to be easily adapted to
changes in the size and configuration of a service provider's network.  Our
products can permit the network of a service provider to grow from accommodating
a small number of subscribers to a large number of subscribers, primarily
through the addition of hardware.  This feature allows a service provider to
expand its infrastructure and its subscriber base without
the need to redesign or replace its billing and customer care software.  This
scalability of our software is important since many IP service providers begin
with a relatively small subscriber base and experience rapid growth.  For
example, we designed and provided a billing and customer care solution for China
Unicom, which started offering Voice over IP services in 1999.  When China
Unicom first deployed our software in May 1999, it was capable of supporting one
million users.  Our software was upgraded to five million in November 1999, and
20 million users in June 2000. Increases in the potential number of users have
been, and future increases will be, accomplished without the need to modify or
replace our installed software.

     -     Interoperability.  Currently, there are no industry-accepted
standards for the interface between IP telecommunications equipment and IP
billing products.  Our IP billing system is fully interoperable with the IP
telecommunications equipment of most of the leading manufacturers, including
Cisco, Lucent, Netspeak, Clarent and VocalTec, for Voice over IP and data
services.  This interoperability provides us with a  competitive advantage, as
it enables our customers to use networks composed of  equipment manufactured by
multiple vendors.  It also allows providers to upgrade an existing network with
new and different equipment without changing their billing and  customer care
products.

      -    Improved Time to Market.  MIND-iPhonEX is a modular, extensible
software product based on software architecture designed for easy adaptability
and implementation. These features allow each of our customers to tailor our
products to meet their individual needs in terms of the number of subscribers
serviced and the variety of services provided.  In addition, due to its
adaptable design, MIND-iPhonEX can be  customized relatively quickly, enabling
our customers to improve their time to market  as they initially implement their
networks and, later, as they add and modify the  services they provide.

Our Strategy

     Our objective is to be a leader in the market for billing and customer care
software for multiple IP-based services as the market for these products grows.
The key elements of our strategy include:

     -    Leverage our brand name recognition and technical expertise.  We were
one of the first to provide billing and customer care software for IP telephony,
introducing MIND-iPhonEX in 1997.  We have installed MIND-iPhonEX for a large
customer base, including Verizon, China United Telecommunications Corp. (China
Unicom), Exonet Communications SA, China Ministry of Post and Telecommunications
(China Telecom), Red Cube Ipirion Inc and Contactica Limited (Kiwwi).  We
believe that our early position in the market and our reputation for offering
high quality, reliable billing and customer care software has provided us with
significant brand name recognition among Voice over IP providers. We intend to
leverage our reputation, brand name recognition and expertise to be a
 leader in the market for billing and customer care software for multiple IP-
based services.

     -     Enhance alliances with industry leaders.  We have established
cooperative relationships with leading manufacturers of IP telecommunications
equipment such as Cisco, Lucent, Netspeak, Clarent and VocalTec.  We team with
these industry leaders in marketing activities, as well as in the research and
development and implementation stages of product development and enhancement.
Our alliances allow us to broaden our marketing capabilities significantly,
support new features offered by equipment vendors as these features are
introduced to the market, and maintain our technology leadership over our

                                                                            -17



competitors.  We intend to continue to leverage these alliances in order to
solidify and expand our market presence.

     -     Maintain and expand our technological expertise.  We believe that our
reputation in  the market is due in large part to our technological expertise.
We make significant  investments in our research and development to continually
enhance our products to  meet the changing needs in the Voice over IP industry.
We intend to continue our  commitment to technology, both to enhance our
existing products and to develop new  products for growing markets.

     -    Offer convergent IP billing products.  As providers of IP-based
services continue to broaden their service offerings, we believe that they will
increasingly need billing and customer care products to monitor and bill their
customers based on the type and content of the services provided. For example,
instead of the flat fee for access  pricing model, Internet service providers
may want to bill subscribers based on the  type and content of the services
used.  We intend to leverage our position in the market for billing and customer
care software for Voice over IP and our technological expertise to be a leading
provider of convergent billing products.

    -     Expand professional services opportunities.  As IP-based service
offerings become more complex, our customers increasingly require consulting
services, especially for customization, as well as for project management,
installation and training, technical support and maintenance.  This provides us
with the opportunity to increase our revenue base from existing customers.  We
have begun to capitalize on this opportunity and, as a result, fees from
providing professional services are expected to increase as a percentage of our
revenues.

Our Products and Services

     Billing and Customer Care Products for Multiple IP Services

     MIND-iPhonEX is a real-time, fully scalable billing and customer care
product for Voice, data and content IP service providers that meets their
mission-critical needs and is interoperable with the IP telecommunications
equipment of major manufacturers.  MIND-iPhonEX was among the recipients of
several industry awards, including Communications Solutions 1999 and 2000
Product of the Year, Internet Telephony 1998 and 1999 Product of the Year, the
Best of the CTI Expo in 1999 and Product of the Year 2000 - CASP Magazine
(Communications ASP).

     Our highly functional and adaptable product enables our customers to
quickly deploy IP networks and to rapidly grow and add new services.  MIND-
iPhonEX supports both prepaid billing plans, in which customers pre-pay for the
services, or postpaid billing plans, in which customers pay for the services
after using them, on the basis of either limited or unlimited credit lines.  The
key functionalities of MIND-iPhonEX are as follows:

    -     Provisioning.  Provisioning involves setting up the ability of a
subscriber to use IP services.  MIND-iPhonEX enables subscribers to register for
service quickly and efficiently.  The registration process collects the data
needed to connect and bill  the subscriber for service.  Once the data is
collected and verified, MIND-iPhonEX  creates customer accounts and activates
the services in real-time.  MIND-iPhonEX features web-enabled registration and
payment applications so that customers may register online for the service and
start using it immediately.  It also allows subscribers to charge their credit
cards online and to recharge pre-paid calling cards that have reached their
limit.

     -    Authentication.  MIND-iPhonEX authenticates subscribers who dial into
the network to use the service.  Authentication is based on a number of methods,
including user codes, passwords and caller line identification.  The
identification information is passed to the MIND-iPhonEX system, where the
subscriber is authenticated and then permitted to use the service.

     -    Authorization.  The MIND-iPhonEX system authorizes a particular
usage by:

    -     reviewing the destination of a call to determine whether a call to
this destination is permitted or reviewing the amount of data and the type of
content to determine whether the data session is permitted;

                                                                            -18-


      -   reviewing the amount of money remaining on the subscriber's prepaid
card and prerating the call or data session that the subscriber desires to make,
using the rating engine described below; or

 -     reviewing the balance of a credit limit of a pre-paid plan and
calculating the resulting cut off time, if any, of the call or data session .

 Based on this data, MIND-iPhonEX authorizes the desired session, either for an
 unlimited or a limited time, and will automatically inform the network to cut-
off the session if the limit is reached.

     -     Accounting.  When each call is completed, MIND-iPhonEX uses the
rating engine described below to determine the amount to be charged to the
subscriber and updates the balance of the account in real-time.  In addition,
the call detail records are stored on the MIND-iPhonEX system for invoicing and
reporting.

      -    Interconnect Billing.  The networks operated by our customers are
typically interconnected with the networks of other telecommunications service
providers. Interconnecting providers need to charge other providers for carrying
each other's  services over their networks.  MIND-iPhonEX generates reports that
enable providers to  bill for traffic and services that are being transported
across their networks by other providers.

     -     Multiple Services and Products.  MIND-iPhonEX allows service
providers to provide to  their customers services such as Web access, Web
hosting, e-mail and unified messaging, accounts hosting, application hosting,
domain registration, e-learning, e-commerce, voice and fax over IP, e-gaming,
Web TV, and Virtual Private Networks. Service providers need the ability to
bundle groups of services into tailor-made packages for which they can offer
special rates, discounts, and promotions.  There are different classes of
customers with respect to the availability, bandwith, and quality of service
requirements for these services.  MIND-iPhonEX offers an easy way to define
these services, combine them into products, and rate each service and product
differently.

     -     Rating Engine.  MIND-iPhonEX offers a real-time and flexible rating
engine that allows service providers to offer subscribers a wide variety of
billing plans.  This flexibility also allows service providers to set different
tariff parameters.  For  example, our billing and customer care software can
support different rates for  individual customers and for different customer
groups, different rates for different types of data transferred, rates based on
the day of the week and time of the day and rates based on the origin and
destination of the call.  MIND-iPhonEX also allows international service
providers to define rates in different currencies using the product's multi-
currency and multi-time zone functionality.

     -     Support for Customer Relationship Management.  The Customer
Relationship Journal is a feature of the MIND-iPhonEX that enables service
providers to keep track of all subscriber-related events, including subscriber
inquiries, payments and customer information updates.  The Journal also stores a
history of all interactions between the service provider and the subscriber.
This tool helps the service provider identify valued customers and build
positive customer relationships.

     -     Subscriber web interface.  MIND-iPhonEX has a user friendly
subscriber web interface that allows subscribers to resolve billing inquiries
themselves.  Individual customers can obtain real time information about their
account, including details of calls made that have not yet been invoiced, like
the time, destination, length and cost of each call.  The subscriber can also
browse invoices, call details and payment history records.  This feature is
convenient for subscribers and efficient for service providers as it reduces
service costs.

     -     Customer Support Representative web interface.  MIND-iPhonEX has a
user friendly customer support representative web interface that allows
operators of the system to  perform customer care from any location.  The
Customer Support Representative web interface is an extension of the management
capabilities of the service provider's system.  This feature is of particular
significance to service providers who have remote operations centers and are
required to provide local support of their system in more than one location.

     -     Call Management and Traffic Analysis Reports.  MIND-iPhonEX's Call
Management and Traffic Analysis features allow service providers to generate
reports and graphic analyses of usage activity.  These reports contain
information regarding peak hours, usage loads to different destinations, the
number of sessions per minute for a  specific gateway or group of gateways, the
duration of sessions and other parameters.  These features enable service
providers to analyze subscriber behavior and use the information to

                                                                            -19-


improve their marketing and business development strategies.  In
addition, the traffic analyses reports assist service providers in planning the
growth and development of their networks.

     -     Fraud Detection.  MIND-iPhonEX contains a fraud detection tool that
enables detection of  'stolen' calls and telephone misuse.  MIND-iPhonEX Guard
detects, locates and warns  of any suspicious activity by activating alarms in
real-time.  It is easily customized  to suit the needs of each service provider
and allows a provider to build fraud  inquiries based on a defined set of
parameters.  When these specific parameters are  violated, MIND-iPhonEX Guard
activates an alarm at four different alarm levels.   Different actions may be
implemented at each level.  For instance, the operator may be  alerted to
possible fraud via e-mail, fax, pager, audio or visual alarms.

     Professional Services

     We provide professional services to our customers, consisting primarily of
project management, customization, installations, customer support, training and
maintenance services.  As IP-based service offerings become more complex, more
customers require customization services to add specialized features to their
systems.  We typically incorporate additional or specialized features developed
for a particular customer into future versions of our products.  In order to
meet the needs of our customers, we created a new professional services division
that has grown from 8 employees on January 1, 2000 to 45 employees on December
31, 2000.

     Enterprise Software

     Our enterprise product, known as PhonEX, is used by corporations for call
accounting, traffic analysis and fraud detection.  PhonEX is a call management
system that collects, records and stores all call information in a customized
database.  The system:
-    allows customers to generate near real-time reports on the enterprise's
telephone use;

-    produces sophisticated reports and graphics for easy and effective analysis
of call activity; and

-    allows customers to allocate telephone expenses to specific departments,
individual clients or projects.

     These functions allow organizations to more effectively manage their
telecommunications resources.  PhonEX is easy to install and configure, user-
friendly and compatible with any switchboard system.  PhonEX also performs call
management and traffic analysis as well as fraud management in the same manner
as MIND-iPhonEX.  In addition, PhonEX is a multi-lingual and multi-currency
system, which means that reports can be generated in any currency defined in the
system, or in two currencies simultaneously.

     Manufacturers of IP telecommunications equipment have begun to develop and
market Voice over IP systems for enterprises.  Our new enterprise solution,
known as MEIPS, is used to provide call accounting, traffic analysis and fraud
detection for enterprises that use IP telephony. MEIPS provides substantially
the same features as PhonEX.  We intend to further develop and market this
product as the emerging market for Voice over IP systems for enterprises grows.

Technology

     MIND-iPhonEX has an open architecture, which was developed using industry
standards-based application programming interfaces that enables it to readily
integrate with other software applications.  These application program
interfaces create an object-oriented, multi-layered architecture that supports a
distributed environment.  Our object-oriented technology enables the design and
implementation of software on the basis of reusable business objects rather than
complex procedural code.  Our multi-layered architecture organizes these
applications in layers of related information that support the top tier
interface between the user and the application.  We implement our application in
a distributed configuration.  This allows various modules to be installed on
different servers.  We believe that our technology allows us to offer products
with the following benefits:

     -     fast integration and interoperability with the IP telecommunications
equipment of major manufacturers;

                                                                            -20-


     -     modular architecture that allows MIND-iPhonEX to be easily scalable
and enables us to customize our software relatively quickly;

     -     reliable products that ensure 24x7 service for mission-critical
applications and are designed to support network operating centers of IP
telephony service providers to ensure no single point of failure in their
networks.  In the case of a failure of the network, MIND-iPhonEX has an
automatic fail-over mechanism to ensure minimum loss of service;

     -     secured at all levels of the architecture.  Each user of the system
may be assigned to different security groups.  Service providers are therefore
able to determine and audit who has access to the system.  In addition,firewalls
can be installed to prevent unauthorized access to the system;

      -    rapid development of new applications, features and services; and

      -    easy interface with legacy systems and external software.

MIND-iPhonEX has a four-tier architecture, consisting of the following tiers:

      -    Client Application Tier: This is the top tier graphic user interface
between the user and the application.  It includes client applications for
customer registration, customer care and billing administration;
     -    Business Object Tier: This tier includes the business logic and rules
of the billing system.  This tier manages accounts, services, events and
tariffs.  It includes an object request broker that facilities the transfer of
information requested by the client application tier from the database object
tier;

     -    Database Object Tier: This tier brings together data objects that
define the accounts, services and tariffs; and

     -    Database Tier: This tier includes the Oracle database server and
management software where the actual billing and customer care information is
stored.

Sales and Marketing

     Sales

     Billing and Customer Care Software

     We conduct our sales and marketing activities primarily through our
marketing and co-operative alliances with hardware platform developers and
software application developers such as Cisco, Lucent and Vocal Tec, under which
we market and sell our software to the customers of those entities.  These
marketing allies and re-sellers provide us with a global extension of our direct
sales force and are a significant source of leads and referrals.  We perform
co-development with our marketing allies to support new software and product
releases to maintain interoperability of our software with their gateways and
other equipment.  We also engage in joint marketing activities with them
including joint responses to requests for proposals, sharing booths in trade
shows, distributing each others'  marketing information and cross links and
references to web sites.  We believe these relationships also help validate our
technology and facilitate broad market acceptance of our software.

     Our contracts with our marketing allies, distributors and resellers are
nonexclusive and may be terminated at any time with notice.  For example, we
entered into a non-exclusive agreement with Cisco Systems, Inc. on January 1,
2000 under which we agreed to participate in Cisco's New World Ecosystem
Program.  The Ecosystem Program was established by Cisco to facilitate the
establishment of a network of vendors of complementary products and services
that are interoperable with Cisco's equipment and each other.  Under the
terms of the agreement, we cooperate with Cisco in marketing and distributing
products and services that Cisco desires to include in the Ecosystem Program
from time to time.  The agreement is terminable on 60 days' written notice by
either party.

     As of December 31, 2000, our sales and marketing force consisted of 48
employees who are responsible for sales both directly and through resellers.
Our sales organization is managed from our corporate headquarters in Yoqneam,
Israel.  We currently have sales offices in Yoqneam, Israel, Hasbrouk Heights,
New Jersey, Beijing, China and Tokyo, Japan.

                                                                            -21-



     Enterprise Software

     In Europe, our enterprise software is sold by our appointed distributors
and directly through our sales force.  Under an agreement entered into in
February 1998, we appointed Telesens AG as an exclusive distributor of our
enterprise software in Germany.  In addition, we have non-exclusive agreements
with Nice Systems, Bosch Telecom (through our distributor, Telesens AG) and
Telrad for the sale of our enterprise software.  We also sell our enterprise
software through resellers in Europe, the United States and Israel.

     Marketing

     Our marketing programs are focused on creating awareness, interest and
preference for our products and services.  We engage in a variety of marketing
activities, including:

     -     participating in industry trade shows and special events, including
as panelists and presenters at industry conferences;

     -     advertising in industry media;

     -     contributing articles to billing and Voice over IP industry
magazines;

     -     conducting ongoing public and press relations programs; and

     -     conducting training seminars for vendors and system integrators.

Customers

     Billing and Customer Care Software

     We currently provide over 100 traditional telecommunications service
providers, Internet telephony service providers and Internet service providers
with our billing and customer care software.  Some key customers are as follows:

   Traditional
Telecommunications      Internet Telephony
Service Providers        Service Providers      Internet Service Providers
--------------------------------------------------------------------------
China Telecom     CallServe Communications Ltd  China NetCom Corporation Ltd.
China Unicom      Capcom International          Exonet Communications SA
Deutsche Telekom  GlobalTel Australia Pty. Ltd  NetOne SA
France Telecom    Intersat S.A.
Sovintel          Teltran InternationalV
Verizon           Webway Communications Holdings Inc.
--------------------------------------------------------------------------

     Enterprise Software

     Our enterprise software has been installed in locations throughout the
world, for customers including ABN Amro, Bosch Telecom, CellCom, the largest
cellular telecommunications provider in Israel, Credit Suisse First Boston,
Deutsche Post, the Israeli Defense Forces, Israel Electric Corp. Limited and
STMicroElectronics.

Competition

     Billing and Customer Care Software

     Competition in the market for billing and customer care software is intense
and we expect competition to increase.  We compete primarily with young,
emerging billing companies such as Portal Software Inc. and Digiquant.  We
believe that the more established traditional billing and customer care
companies, such as Amdocs Ltd. and ADC Telecommunications, Inc. will begin to
offer billing and customer care software products for Voice over IP and multiple
IP services.

     We believe that our competitive advantage is based on:

     -     our ability to provide a real-time, scalable, interoperable and
reliable billing and customer care software;

                                                                            -22-


     -     our ability to rapidly deploy our software; and

     -     our reputation of providing proven, high-quality billing and
customer care software.

     However, we depend on our marketing alliances with manufacturers of IP
telecommunications equipment and reseller arrangements to market our billing and
customer care software.  Some of our marketing allies and resellers also work
with some of our competitors.  For example, Cisco has invested in Portal
Software Inc.  Our marketing alliances and reseller arrangements are for the
most part non-exclusive and do not contain minimum sales or marketing
performance requirements.  We may not be able to compete effectively with our
competitors under these circumstances.  Many of our competitors have greater
financial, personnel and other resources, have longer and more established
relationships with service providers and may be able to offer more aggressive
pricing or devote greater resources to the promotion of their products.  In
addition, one or more of our competitors could develop superior products and
these products could achieve greater market acceptance than our product.

Enterprise Software

     Our main competitors in the market for enterprise software products include
Veramark Technologies, Inc., Mer Telemanagement Solutions Inc. and Telco
Research Corp.  To compete effectively, companies must be able to offer adequate
technical support and ongoing product development and customization services.
In addition, multinational companies prefer call accounting systems that can be
installed at their various offices throughout the world, and therefore require
call accounting products that are multilingual and support the local
telecommunication requirements.  The principal factors upon which we compete are
customer support, ease of use, compatibility with any switchboard system and the
multi-lingual and multi-currency nature of our system.

Legal Proceedings

     We are not a party to any material legal proceedings.

C.     Organizational Structure

     Set forth below is a list of our significant subsidiaries:

     -     MIND C.T.I. Inc., a wholly owned subsidiary, incorporated in the
State of New Jersey;

     -     MIND Software SRL, a wholly owned subsidiary, incorporated in
Romania;

     -     MINDIA Software BV, a wholly owned subsidiary, incorporated in the
Netherlands; and

     -     MIND Japan KK, a subsidiary incorporated in Japan and in which we
hold an 80% ownership interest.

D.     Property, Plant and Equipment

     Our headquarters are located in Yoqneam, Israel, approximately 50 miles
north of Tel Aviv.  We lease approximately 22,000 square feet at our Yoqneam
headquarters.  We received approval under the Approved Enterprise program in
Israel to expand our facilities in Yoqneam.  We expect that construction of a
new facility will take from two to three years.  We also lease 2,000 square feet
of office space in New Jersey, 1,000 square feet in Beijing, China, 412 square
feet in Jassy, Romania and 270 square feet in Tokyo, Japan.  The offices in New
Jersey, Beijing and Tokyo are used primarily for sales and customer support,
while the office in Jassy is used primarily for research and development and for
customer support.

Item 5.      Operating and Financial Review and Prospects

     Statements in this Annual Report concerning our business outlook or future
economic performance; anticipated revenues, expenses or other financial items;
introductions and advancements in development of products, 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 the United
States Federal Securities Laws.  Forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to

                                                                            -23-

differ materially from those stated in such statements.  Factors that could
cause or contribute to such differences include, but are not limited to, those
set forth under 'Risk Factors' in this Annual Report as well as those discussed
elsewhere in this Annual Report and in our other filings with the Securities and
Exchange Commission.

     The following discussion and analysis is based on and should be read in
conjunction with our financial statements, including the related notes contained
in Item 18.

A.     Operating Results

Overview

     We were incorporated in Israel in 1995 and started providing our enterprise
software product to large organizations in that year.  In 1997, we introduced
our billing and customer care software for Voice over IP.  We generate revenues
from the sales of licenses for our billing and customer care and enterprise
software, and from fees for professional services.  In 2000, 80% of our revenues
were derived from license fees and 20% were derived from professional services.
Of the total license fees in 2000, 64% were derived from providing our billing
and customer care software and 36% were derived from providing our enterprise
software.  In the future, we expect sales of licenses for our billing and
customer care software to remain the primary source of our revenues.

     Sales to a single distributor of our enterprise software represented 32.3%
of our revenues in 1998, 19.2% of our revenues in 1999 and 2.5% of our revenues
in 2000.  In August 2000, we changed our strategy to focus our business on our
billing and customer care software.  In 1999, 33.8% of our revenues were derived
from our 10 largest customers, excluding the single distributor.  In 2000, 25.1%
of our revenues were derived from our 10 largest customers, excluding the single
distributor.  We expect to continue to derive substantial revenues from a small
number of changing customers.  None of these customers, however, is expected to
represent more than 10% of our annual revenues.

     The currency of the primary economic environment in which we operate is the
U.S. dollar.  Most of our revenues are derived from sales outside Israel which
are denominated primarily in U.S. dollars.  To the extent that our revenues are
derived in NIS, contract amounts are stated in dollars and paid in NIS linked to
changes in the exchange rate of the U.S. dollar to the NIS.  In addition, most
of our marketing costs are incurred outside Israel, primarily in U.S. dollars.
Transactions and balances originally denominated in U.S. dollars are presented
at their original amounts.  Balances in non-dollar currencies are translated
into U.S. dollars using historical and current exchange rates for non-monetary
and monetary balances, respectively.  For non-dollar transactions and other
items reflected in our income statements, the following exchange rates are used:

     -     for transactions, exchange rates at the transaction dates or average
rates; and

     -     for other items (derived from non-monetary balance sheet items such
as depreciation and amortization, changes in inventories or similar items),
historical exchange rates.

     The resulting currency transaction gains or losses are reported as
financial income or expenses as appropriate.

     Our financial statements are prepared in accordance with generally accepted
accounting principles in the United States.

     Revenues.  Our revenues from licenses are recognized on the basis set forth
in Statement of Position 97-2 (SOP 97-2) of the American Institute of Certified
Public Accountants.  Our revenues from licenses are recognized when delivery has
occurred, persuasive evidence of an agreement exists, the sales price is fixed
or determinable and collectibility is probable.  Customization of our products,
if any, is performed before delivery occurs.  In cases where we install our
software products, the revenue recognition is deferred until the installation is
completed.  We seldom grant a right of return of products sold to customers,
distributors and resellers.  Revenues from providing professional services are
priced on a fixed price basis and recognized ratably over the period of the
agreement, or as services are performed.

     We are paid a one-time license fee by our customers for the right to use
our billing and customer care or our enterprise call management software
products, and additional fees to expand the scale of the network supported by
our software.  We price our licenses for our billing and customer care software

                                                                            -24-


based on (1) traffic volume, which is measured by factors such as minutes per
month, number of lines used and number of subscribers, and (2) the functionality
of the system based on application modules that are added to the software.
Licenses for our enterprise software are priced based on the number of
extensions in the customer's switchboard, as well as the functionality of the
system based on application modules that are added to the software.  In relation
to our professional services, other than maintenance services, we quote a fixed
price based on the type of service offered, estimated direct labor costs and the
expenses that we will incur to provide these services.  Fees for maintenance
services are based on a fixed percentage of the license fee and are paid

     We provide a revenue breakdown for our customer care and billing Voice over
IP software and our enterprise call management software.  These products are
sold to different customers and serve different markets.  We believe that this
information provides a better understanding of our performance and allows
investors to make a more informed judgment about our business.

     Cost of Revenues.  The cost of revenues relating to providing our billing
and customer care and enterprise software consists primarily of direct labor
costs and overhead expenses related to software installation.  Cost of revenues
also include software license fees to Oracle, materials, documentation,
packaging and shipping costs.  Our cost of professional services revenues
consists primarily of direct labor costs and travel expenses.  Our revenues from
the sale of our licenses have a higher gross margin than that from providing our
professional services. We incur variable direct labor costs when we provide
professional services.  There are no comparable variable labor costs incurred
when we license our software.

     Research and Development Expenses, net.  Our research and development
expenses consist primarily of compensation and overhead costs for research and
development personnel and depreciation of testing and other equipment.  Research
and development costs related to software products are expensed as incurred
until the 'technological feasibility' of the product has been established.
Because of the relatively short time period between 'technological feasibility'
and product release, and the insignificant amount of costs incurred during that
period, no software development costs have been capitalized.

     Grants from the Office of the Chief Scientist of the Israeli Ministry of
Industry and Trade for development of approved projects are recognized as a
reduction of expense as the related cost is incurred.  We have in the past used
these grants and repaid them.  However, we currently do not use nor do we intend
to use a material amount of grants from the Office of the Chief Scientist in the
future.  We expect to continue to make substantial investments in research and
development.

     Selling Expenses.  Our selling expenses consist primarily of compensation,
overhead and related costs for sales and marketing personnel, the operation of
international sales offices, sales commissions, marketing programs, public
relations, promotional materials, travel expenses and trade show expenses and
exhibition expenses.

     General and Administrative Expenses.  Our general and administrative
expenses consist primarily of compensation, overhead and related expenses for
executives, accounting and human resources personnel, professional fees,
provisions for doubtful accounts and other general corporate expenses.

     Financial and Other Income, net.  Our financial and other income, net
consists primarily of interest earned on bank deposits, gains on trading
securities, gains and losses from the conversion of monetary balance sheet items
denominated in non-dollar currencies into dollars, net of financing costs and
bank charges in real terms as well as the devaluation of monetary assets and
monetary liabilities.

     Conversion and Redemption Feature of Preferred Shares.  An amount of
$5,778,000 in connection with the issuance of the Series A preferred shares and
$1,445,000 in connection with the issuance of the Series B preferred shares, in
each case representing a beneficial conversion feature, was amortized against
retained earnings (accumulated deficit) over a period that commenced upon
issuance of the preferred shares on March 30, 2000, and ended in August 2000
upon the completion of our initial public offering.  These amounts were
calculated as the difference between the per share conversion price and the
deemed fair value of an ordinary share, which was estimated by us at $8.00 per
ordinary share at the issuance date, multiplied by the applicable number of
equivalent ordinary shares.

                                                                            -25-


     We, our existing shareholders and the investors in the Series A and Series
B preferred shares entered into a redemption agreement on March 30, 2000,
concurrently with the purchase of the preferred shares.  The redemption
agreement provided that if a liquidity event did not occur by March 30, 2005,
the holders of the preferred shares would be entitled to cause a sale of our
company or redemption of the preferred shares at an amount equal to the higher
of (a) fair market value of the preferred shares or (b) the amount as determined
in the case of a liquidity event.

     As a result of the redemption provisions, we recognized a non-cash charge
to accumulated deficit, which was accreted for the period ended on the date of
our initial public offering in an amount of $8,894,000.  This amount reflects
the difference between the redemption value of the Series A preferred shares and
the net proceeds we have received for the issuance of those shares.  The Series
A and B preferred shares were converted into our ordinary shares upon
consummation of our initial public offering in August 2000, and non-cash charges
in the amount of $16.1 million were recorded in our financial statements for
2000 for accretion and amortization of the beneficial conversion feature.

     Taxes on Income.  Israeli companies are generally subject to income tax at
the corporate tax rate of 36%.  Our facilities, however, have been granted
'approved enterprise' status under the Law for the Encouragement of Capital
Investments, 1959.  Income derived from the approved enterprise is tax exempt
for a period of ten years commencing in the first year in which we earn taxable
income from the approved enterprise, since we have elected the 'alternative
benefits scheme' (involving a waiver of investment grants).  In the event of
distribution of cash dividends from income that was tax exempt, we would have to
pay 25% tax in respect of the amount distributed.  As a result of dividends paid
by us with respect to 1998, 1999 and 2000, we were subject to this tax with
respect to the amount distributed.  We do not expect to make dividend payments
in the foreseeable future.  Our effective tax rate after 2005 will continue to
be reduced depending upon future capital investments and approved enterprise
certifications.  These tax benefits may not be applied to reduce the tax rate
for any income derived by our foreign subsidiaries.  There is a proposal in
Israel to replace the ten-year tax exemption available to 'approved enterprises'
with a 10% tax.  For more information on the proposed Israeli tax reform, see
Item 10 'Taxation - Proposed Tax Reform.'

     The following discussion of our results of operations for the years ended
December 31, 1998, 1999 and 2000, including the percentage data in the following
table, is based upon our statements of operations contained in our financial
statements for those periods, and the related notes, included in this annual
report:

                                      Years Ended December 31,
                               -------------------------------------
                                 1998          1999         2000
                               ---------    ----------    ---------
Revenues                           100.0%        100.0%       100.0%
Cost of revenue                      5.5          16.2         14.1
Gross profit                        84.5          83.8         85.9
Research and development
 expenses, net                      25.8          23.5         24.3
Selling, general and
 administrative expenses:
Selling expenses                    25.9          25.8         30.5
General and administrative
 expenses                           14.5          12.2         12.4
                               ---------    ----------    ---------
Operating Income                    18.3          22.3         18.7
Financial and other
 income, net                         2.4           1.6          6.9
                               ---------    ----------    ---------
Income before taxes on
 income                             20.7          23.9         25.6
Taxes on income                      4.9           5.4          1.6
                               ---------    ----------    ---------
Net income                          15.8%         18.5%        24.0%
                               =========    ==========    =========

-26-


The following table presents the geographic distribution of our sales.

                                     Years Ended December 31,
                                -------------------------------------
                                    1998          1999         2000
                                -----------    ---------    ---------
United States, Latin
America and Canada                      7.4%        25.2%          37%
Asia Pacific and other                  2.9         10.9           22
Europe                                 57.4         41.3           31
Israel                                 22.3         22.6           10
                                -----------    ---------    ---------
Total                                 100.0%       100.0%       100.0%

     As shown in the above table, our sales in North America and Asia Pacific
increased over prior periods as a percentage of sales during the years ended
December 31, 1998, 1999 and 2000, while sales of our products in Europe and in
Israel decreased as a percentage of sales during those periods.

     Our revenues from sales in North America, Latin America and Asia Pacific,
both in absolute dollars and as a percentage of revenues, increased because of
the growth of the market for Voice over IP services in these areas.  The
percentage of our revenues from sales in Europe decreased because Voice over IP
services are not universally offered in Europe and because of our growing
worldwide expansion.  The percentage of our revenues from sales in Israel
decreased because Voice over IP services are not yet offered in Israel.

Comparison of Years ended December 31, 1999 and 2000

     Revenues.  Revenues increased from $8.2 million in 1999 to $15.6 million in
2000, an increase of $7.4 million, or 90.5%.

     This increase was primarily attributable to an increase of $5.7 million, or
83.7 %, in license fees, comprised of an increase of $ 6.7 million, or 236.6
%,relating to our billing and customer care software, partially offset by a
decrease of $986,000 or 26.4 %, relating to our enterprise software.  The
increase in revenue from customer care and billing software is attributable to
both an increase in the average price for each transaction and an increase in
the number of transactions.  The decrease in revenues from enterprise software
is attributable to the demand for year 2000 compliant software during 1999.  As
a result, sales of enterprise software decreased after January 1, 2000.

     The remainder of the increase in revenues was related to an increase in
revenues from professional services of $1.7 million, or 123.3%, primarily
attributable to the increase in the sales of licenses for our billing and
customer care software.

     Cost of Revenues.  Cost of revenues increased from $1.3 million in 1999 to
$2.2 million in 2000, an increase of $875,000, or 66.1 %.  This increase was due
to higher costs associated with our increased revenues, as well as increased
compensation to our employees.  Gross profit as a percentage of revenues
increased from 83.9 % in 1999 to 85.9% in 2000.  This increase was due to the
increase in our sales of licenses for our billing and customer care software as
a percentage of our total revenues.

     Research and Development, net.  Research and development expenses, net
increased from $1.9 million in 1999 to $3.8 million in 2000, an increase of $1.9
million, or 96.9 %.  This increase was primarily attributable to an increase in
personnel-related expenses resulting from increasing the number of our research
and development employees during 2000 associated with the continued development
of our billing and customer care software, as well as increased compensation to
our employees.  Research and development expenses, net increased as a percentage
of revenues from 23.5 % in 1999 to 24.3 % in 2000.

     Selling Expenses   Selling expenses increased from $2.1 million in 1999 to
$4.8 million in 2000, an increase of $2.7 million, or 125.3 %.  This increase
was primarily attributable to an increase of $1.3 million in personnel and
related expenses, an increase of $343,000 in public relations, advertising and
other promotional expenses and an increase of $299,000 in expenses related to
the expansion of our sales office in the United States and the opening of our
marketing offices in China and in Japan.  Selling expenses increased as a
percentage of revenues from 25.8%  in 1999 to 30.5 % in 2000.  We expect that
these expenses will increase in the future because of our existing worldwide
offices, additional offices we expect to open internationally and an increase in
personnel to support our sales growth.

                                                                            -27-


     General and Administrative Expenses.  General and administrative expenses
increased from $1.0 million in 1999 to $1.9 million in 2000, an increase of
$928,000 , or 92.8 %.  This increase was primarily attributable to an increase
of $620,000 in the provision for doubtful accounts to reflect both the increase
in our revenues and the shift in our revenue sources from a limited number of
established resellers to numerous and diversified end-customers, and an increase
of $555,000 in personnel expenses.  General and administrative expenses as a
percentage of revenues increased from 12.2 % in 1999 to 12.4% in 2000.  We
expect that these expenses will increase in the future as we expand our
infrastructure to support increased sales.

     Taxes on Income.  Taxes on income decreased from $447,000 in 1999 to
$245,000 in 2000.  This represented an effective tax rate of 22.8 % in 1999 and
6.1 % in 2000.  Through March 31, 2000, we distributed as a dividend to our
shareholders all of our earnings from tax exempt income.  Under Israeli law, we
are required to pay a 25% tax on the amounts distributed.  Effective April 1,
2000, we have adopted a policy to retain our earnings to support our growth and
do not expect to pay dividends for the foreseeable future.  As a result, we
expect our effective income tax rate to be reduced as the substantial majority
of any income we earn is expected to be exempt from tax.

     Net Income.  Net income increased from $1.5 million in 1999 to $3.7 million
in 2000, an increase of $2.2 million, or 147.6 %.  Net income increased as a
percentage of revenues from 18.5 % in 1999 to 24.0 % in 2000.

Comparison of Years Ended December 31, 1998 and 1999

     Revenues.  Revenues increased from $4.1 million in 1998 to $8.2 million in
1999, an increase of $4.1 million, or 101.4%.  This increase was primarily
attributable to an increase of $3.4 million, or 100.6%, in license fees,
comprised of an increase of $2.0 million, or 279.2%, relating to our billing and
customer care software and an increase of $1.4 million, or 51.4%, relating to
our enterprise software.  Approximately 60% of the increase in revenues relating
to our billing and customer care software was attributable to an increase in our
average product price, with the balance attributable to an increase in the
number of systems sold.  Revenues relating to our enterprise software increased
primarily due to sales to new customers in Israel.

     The remainder of the increase in revenues of $720,000, or 105.1%, was
related to an increase in revenues from professional services, primarily
attributable to the increase in the sales of billing and customer care software.

      Cost of Revenues.  Cost of revenues increased from $631,000 in 1998 to
$1.3 million in 1999, an increase of $695,000, or 110.1%.  This increase was
attributable to higher costs associated with our increased revenues.  Gross
profit as a percentage of revenues decreased moderately from 84.5% in 1998 to
83.8% in 1999.

     Research and Development, net.  Research and development expenses, net
increased from $1.0 million in 1998 to $1.9 million in 1999, an increase of
$878,000, or 83.7%.  This increase was primarily attributable to an increase in
the number of research and development personnel whom we employed.  Research and
development expenses, net as a percentage of revenues decreased from 25.8% in
1998 to 23.5% in 1999.

     Selling Expenses.  Selling expenses increased from $1.1 million in 1998 to
$2.1 million in 1999, an increase of $1.0 million, or 100.9%.  This increase was
primarily attributable to an increase of $420,000 in personnel-related expenses
resulting from increasing the number of our sales and marketing employees in
1999, an increase of $437,000 in promotional expenses and an increase of
$209,000 because 1999 was the first full year of operation of our marketing
office in the United States.  This increase of our selling expenses was in
response to current and expected growth in the market for our products.  Selling
expenses, as a percentage of revenues decreased from 25.9% in 1998 to 25.8% in
1999.

     General and Administrative Expenses.  General and administrative expenses
increased from $592,000 in 1998 to $1.0 million in 1999, an increase of $408,000
or 68.9%.  This increase was primarily attributable to an increase of $261,000
in the provision for doubtful accounts, of $87,000 in occupancy costs and
$61,000 in personnel expenses.  General and administrative expenses as a
percentage of revenues decreased from 14.5% in 1998 to 12.2% in 1999.

                                                                            -28-



     Taxes on Income.  Taxes on income increased from $201,000 in 1998 to
$447,000 in 1999.  This represented an effective tax rate of 23.9% for 1998 and
22.8% for 1999.  The taxes paid resulted primarily from a 25% tax we are
required to pay under Israeli law on dividends paid by us from tax exempt
income.

     Net Income.  Net income increased from $641,000 in 1998 to $1.5 million in
1999, an increase of $873,000, or 136.2%.  Net income increased as a percentage
of revenues from 15.8% in 1998 to 18.5% in 1999.

     Impact of Foreign Currency Fluctuations on Results of Operations
The dollar cost of our operations is influenced by the extent to which any
inflation in Israel is offset, on a lagging basis, or is not offset by the
devaluation of the NIS in relation to the dollar.  When the rate of inflation in
Israel exceeds the rate of devaluation of the NIS against the dollar, companies
experience increases in the dollar cost of their operations in Israel.  Unless
offset by a devaluation of the NIS, inflation in Israel will have a negative
effect on our profitability as we receive payment in dollars or dollar-linked
NIS for all of our sales while we incur a portion of our expenses, principally
salaries and related personnel expenses, in NIS.

     In addition, a portion of our revenues is denominated in Euro derived from
sales to customers in Europe.  Devaluation in the local currencies of our
customers relative to the U.S. dollar could cause our customers to cancel or
decrease orders or default on payment.  Further, a strengthening of these
currencies versus other currencies could make our products less competitive in
foreign markets and collection of receivables more difficult.

     The following table presents information about the rate of inflation in
Israel, the rate of devaluation of the NIS against the U.S. dollar, and the rate
of inflation of Israel adjusted for the devaluation:

Years Ended   Israeli    Israeli     Israel Inflation
December 31,  Inflation  Devaluation   Adjusted for
 Inflation     Rate       Rate         Devaluation
------------  ---------  ---------  ------------------
1995             8.1%       3.9%            4.1%
1996            10.6        3.7             6.6
1997             7.0        8.8            (1.7)
1998             8.6        7.6            (7.7)
1999             1.3       (0.1)            1.4
2000             0.0       (2.0)           (2.1)

     We cannot assure you that we will not be materially and adversely affected
in the future if inflation in Israel exceeds the devaluation of the NIS against
the U.S. dollar or if the timing of the devaluation lags behind inflation in
Israel.

     A devaluation of the NIS in relation to the U.S. dollar has the effect of
reducing the U.S. dollar amount of any of our expenses or liabilities which are
payable in NIS, unless these expenses or payables are linked to the U.S. dollar.
This devaluation also has the effect of decreasing the U.S. dollar value of any
asset which consists of NIS or receivables payable in NIS, unless the
receivables are linked to the U.S. dollar.  Conversely, any increase in the
value of the NIS in relation to the U.S. dollar has the effect of increasing the
U.S. dollar value of any unlinked NIS assets and the U.S. dollar amounts of any
unlinked NIS liabilities and expenses.

     Because exchange rates between the NIS and the U.S. dollar fluctuate
continuously, with a historically declining trend in the value of the NIS,
exchange rate fluctuations and especially larger periodic devaluations will have
an impact on our profitability and period-to-period comparisons of our results.
The effects of foreign currency re-measurements are reported in our consolidated
financial statements in current operations.

B.     Liquidity and Capital Resources

     Since our inception, we have financed our operations mainly through cash
generated by operations.  We supplemented this source by two private rounds of
equity financing and our initial public offering in August 2000.

     Our first round of financing in an amount of $1.0 million closed in August
1997.  A follow-on exercise of a warrant during January 1999 yielded an
additional $2.3 million.  Our second round of financing, in an amount of $12.0
million, was completed in the first quarter of 2000.  We sold 3,450,000 of our

                                                                            -29-


ordinary shares in our initial public offering in August 2000, with net proceeds
to us of $29.9 million.  As of December 31, 2000, we had approximately $43.4
million in cash and cash equivalents and our working capital was $46.6 million.

     Our operating activities provided cash in the amount of $1.5 million in
1998, $1.0 million in 1999 and $2.5 million in 2000.  Cash provided by operating
activities in 1998 was primarily attributable to our net income of $641,000 and
non-cash expenses related to depreciation and amortization in the amount of
$128,000 and a decrease in trading securities in the amount of $581,000 mainly
as a result of the sale of a portion of these securities.  Cash provided by
operating activities in 1999 was primarily attributable to our net income of
$1.5 million and non-cash expenses related to depreciation and amortization in
the amount of $196,000, partially offset by an increase in trade receivables.
Cash provided by operating activities in 2000 was primarily attributable to our
net income of $3.7 million, an increase in payables and accruals of $2.5 million
and non-cash expenses relating to depreciation and amortization in the amount of
$379,000, offset in part by an increase in receivables.

     We used cash in investing activities of $422,000 in 1998, $1.1 million in
1999 and $897,000 in 2000.  Our principal investment activities were the
purchase of property and equipment and the investment of cash in short-term bank
deposits.

     In 1998, our financing activities used approximately $338,000, primarily
attributable to the payment of a dividend.  Our financing activities provided
$1.9 million in 1999 primarily attributable to the proceeds of $2.3 million from
the issuance of preferred ordinary shares, partially offset by a dividend paid
in the amount of $393,000.  Our financing activities provided $39.1 million in
2000 primarily attributable to our initial public offering in August 2000 and
issuance of preferred shares in March 2000, offset in part by dividends paid to
shareholders in the first quarter of 2000.

     During 1998, 1999 and 2000, the aggregate amount of our capital
expenditures was $2.3 million.  These expenditures were principally for the
purchase of testing and other equipment.  Although we have no material
commitments for capital expenditures, we anticipate an increase in capital
expenditures and lease commitments consistent with our anticipated growth in
operations, infrastructure and personnel.

     As of December 31, 2000, we do not have any outstanding loans or lines of
credit.

     In 1998, a dividend in the amount of approximately $266,000 was paid.  In
1999, a dividend in the amount of approximately $393,000 was declared and paid.
In the first quarter of 2000, we declared a $2,013,000 dividend that was paid in
the second quarter of 2000.  We do not intend to make dividend payments in the
future.

C.     Research and Development, Patents and Licenses, etc.

     We believe that significant investment in research and development is
essential to maintaining and expanding our technological expertise in the market
for billing and customer care software for multiple IP-based services and to our
strategy of being a leading provider of new and innovative convergent Internet
billing products.  We work closely with our partners, customers and distribution
channels, who provide significant feedback for product development and
innovation.

     We have invested significant time and resources to create a structured
process for undertaking research and product development.  We believe that the
method that we use for our product development and testing is well suited for
identifying market needs, addressing the activities required to release new
products, and bringing development projects to market successfully.  Our product
development activities also include the release of new versions of our products.
Although we expect to develop new products internally, we may, based upon timing
and cost considerations, acquire or license technologies or products from third
parties.

     Our research and development personnel include engineers and software
developers with experience in the development and design of billing and customer
care software.  As of December 31, 2000, our research and development department
consisted of 69 employees.  We currently have research and development
facilities in Yoqneam, Israel and in Jassy, Romania.

                                                                            -30-


     Net research and development expenses for 1998 were $1.0 million, for 1999
were $1.9 million and for 2000 were $3.7 million.

D.     Trend Information

     Our total revenues experienced a shift from our historical business,
enterprise software that represented 57% of our total revenues in 1999 and
decreased to 22% of our total revenues in 2000, to our customer care and billing
software, that represented 78% of our total revenues in 2000.  Our enterprise
software is marketed mainly through a small number of resellers to a large
number of end-customers.  By contrast, our customer care and billing software is
marketed mainly to a smaller number of end-customers with a significantly higher
average transaction size.  This shift increases our dependence on a smaller
number of end-customers.

     In most cases, our enterprise software is sold through resellers.  These
sales include installation and first-line support that is performed by the
distributors.  Direct sales of customer and billing software necessitates an
enhanced internal professional services team in order to provide installation,
training and support to end-users.  Gross margins from professional services,
which rely heavily on personal services, are significantly lower than gross
margins on the sale of software products.  The trend to more direct sales
increases revenues from professional services.  Accordingly, our gross margins
are expected to decrease in the future.

     We have experienced an increase in the percentage of quarterly revenues
that occur during the last few weeks of a quarter.  This trend has reduced our
ability to forecast quarterly operating results and increased the risk that
revenues expected in a quarter will not be realized until the following quarter.

     The recent deterioration of the economy and economic uncertainty in the
telecommunications market resulted in a curtailment of capital investment by
telecommunications carriers and service providers beginning late in 2000.  Many
new and small service providers have failed and existing service providers have
been reducing or delaying expenditures on new equipment and applications.  As a
result, our revenues for the quarter ended March 31, 2001 were lower than for
the comparable quarter in 2000.  We believe that this slow down in
telecommunications-related expenditures will continue, affecting our sales and
putting pressure on the price of our products.

Item 6.	    Directors, Senior Management and Employees

A.     Directors and Senior Management

     The following table sets forth certain information regarding our directors
and executive officers as of the date of filing of this annual report:

Name                Age            Position

Monica Eisinger      43          President, Chairman of the
                                 Board of Directors and
                                 Chief Executive Officer
Elad Naggar          31           Chief Financial Officer
Sagee Aran           37           Vice President - Professional
                                                   Services
Zeev Braude          35           Vice President - Marketing and
                                                   Business Development
Sharon David         41           Vice President-Sales
Ilan Melamed         36            Vice President    - U.S. Operations,
                                                        MIND C.T.I.
Ami Amir             57            Director
Kevin P. Mohan       37            Director
Amnon Neubach        57            Director
Ilan Rosen           44            Director
Lior Salansky        36            Director

The background of each of our directors and executive officers is as follows:

     Monica Eisinger.  Ms. Eisinger is a founder of our company and has been
President, Chairman and Chief Executive Officer of our company since inception.
Prior to founding MIND, Ms. Eisinger served as an information systems consultant
to Raphael, the Israeli Armaments Industry and directed over 40 projects.  Ms.
Eisinger holds a B.Sc. in Computer Sciences and a Masters Degree in
Telecommunications (with expertise in Voice and Data Integration over the
Ethernet) from the Technion, Israel Institute of Technology.

                                                                            -31-

     Elad Naggar.  Mr. Naggar joined our company as Chief Financial Officer in
December 2000.  Prior to joining our company, he worked for several months in
2000 for an Internet start-up, AdaptiView Technologies Inc.  From October 1997
to April 2000, Mr. Naggar served as an International Tax Practitioner at
PricewaterhouseCoopers Israel (Kesselman and Kesselman) where he planned
international business operations and multinational corporate structures for
leading technology companies.  From March 1993 to October 1997, he served as an
international law expert and diplomatic negotiator for the Israeli government.
Mr. Naggar holds an L.L.M. and an M.B.A. from Tel Aviv University.

     Sagee Aran.  Mr. Aran joined our company in March 2000 as Vice President of
Professional Services.  Prior to joining our company, he worked for seven years
at HISH Ltd., a company specializing in process engineering and management, at
which he held a number of positions including Operations Manager and
International Sales and Marketing Manager.  Mr. Aran holds a B.Sc. in
Engineering from the Technion, Israel Institute of Technology.

     Zeev Braude.  Mr. Braude has worked at our company since our inception
serving in a number of positions, the most recent of which was Vice President of
Product Line Management. Mr. Braude has been Vice President of Marketing and
Business Development of our company since February 2000.  Mr. Braude holds a
B.Sc. in Computer Engineering from the Technion, Israel Institute of Technology.

     Sharon David.  Mr. David joined our company as Vice President of Sales in
February 2001.  From September 1996 to February 2001, he held several sales
positions, including Area Vice President for Central and Eastern Europe at
Comverse Network Systems, a division of Comverse Technology, Inc.  Prior
thereto, from May 1985 to September 1996 Mr. David held several sales positions
at Israeli Aircraft Industries, including Sales Manager and Sales Director,
operating in the North American and Western European markets.

     Ilan Melamed.  Mr. Melamed has served as General Manager of our U.S. office
since September 1998 and as Vice President-U.S. Operations of MIND C.T.I. Inc.
since May 2000. Prior to joining our company, Mr. Melamed was employed by Israel
Aircraft Industries for five years, at which he held a number of positions
including the Director of the Israel Aircraft Industries office in Colombia.  He
holds a Bachelor of Arts degree in Business Administration from Hebrew
University.

     Ami Amir.  Mr. Amir joined our company as an external director in February
2001.  Mr. Amir founded RADVision Ltd. in 1993 and has served as its CEO since
its inception, until April 19, 2001.  From 1987 to 1992, Mr. Amir served as
President of RAD Data Communications Inc.  Prior to 1987, Mr. Amir held senior
engineering positions in Simtech Advanced Training and Simulation Systems Ltd.,
Tadiran Electronic Industries and Elbit Systems Ltd. Mr. Amir holds a B.Sc. in
Electronics and Computer Science from the Technion, Israel Institute of
Technology.

     Kevin P. Mohan.  Mr. Mohan has served as a director of our company since
March 2000. Mr. Mohan is a general partner of Summit Partners, a venture capital
firm, where he has been employed since 1994.  He received an A.B. in Economics
from Harvard College, a J.D. from Harvard Law School, and a Masters in Business
Administration from Harvard Business School. Mr. Mohan also serves as a director
on the boards of several privately held companies.

     Amnon Neubach.  Mr. Neubach joined our company as an external director in
February 2001.  Mr. Neubach has served as Chairman of the Board of Pelefone
Communications Ltd., a company founded by Bezek and Motorola, since January
2001, Mr. Neubach served as an economic consultant to several companies in the
private sector since 1997.  From 1995-1997, Mr. Neubach served as country
advisor to Goldman Sachs in Israel, and from 1990-1994 he served as the Minister
of Economic Affairs in the Israeli Embassy in Washington, D.C.  Mr. Neubach
holds a Bachelor's Degree in Economics and Business Administration and a Masters
in Economics, both from Bar Ilan University.

     Ilan Rosen.  Mr. Rosen has served as a director of our company since August
1997.  Since November 1996, Mr. Rosen has been employed by ADC
Telecommunications Israel, Ltd., where he has held several positions, including
Corporate Vice President.  He currently serves as the Managing Director of ADC
Telecommunications Inc's venture capital unit in Israel.  Prior thereto and
since 1993, Mr. Rosen was the President of ADASHA, Development & Investments
Ltd. which listed on the Tel Aviv Stock Exchange under his direction.  He holds
a Bachelor of Science in Mechanical Engineering and a Masters in Business
Administration, both from Tel Aviv University.

                                                                            -32-



     Lior Salansky.  Mr. Salansky is a founder of our company and has served as
a director since our inception.  He has served in a number of positions within
our company from inception until February 2000, including Vice President of
Business Development, R&D Manager and software developer.  He holds a Bachelor's
 Degree in Computer Science from the Technion, Israel Institute of Technology.

B.     Compensation of Directors and Officers

     The aggregate direct remuneration paid to all persons who served in the
capacity of director or executive officer during 2000 was approximately
$778,000, including approximately $74,000 which was set aside for pension and
retirement benefits.  This does not include amounts expended by us for
automobiles made available to our officers, expenses, including business,
travel, professional and business association dues and expenses, reimbursed to
officers and other fringe benefits commonly reimbursed or paid by companies in
Israel.

     As of March 31, 2001, options to purchase 769,000 ordinary shares granted
to our directors and executive officers under our option plans were outstanding.
The weighted average exercise price of these options is $5.45 per share.  These
options set vest over three to five years, commencing on the date of grant.  Any
ption not exercised by January 1, 2006 will expire.

C.     Board Practices

Board of Directors

     Our board is divided into three classes of directors, denominated Class I,
Class II and Class III.  The initial term of each class will expire as follows:
Class I in 2001, Class II in 2002 and Class III in 2003.  Monica Eisinger is a
member of Class I, Lior Salansky is a member of Class II, and Kevin P. Mohan and
Ilan Rosen are members of Class III.  At each annual general meeting of
shareholders beginning in 2001, directors will be elected by a simple majority
of the votes cast for a three-year term to succeed the directors whose terms
then expire.  There is no legal limit on the number of terms that may be served
by directors who are not external directors.  Our external directors, each of
was appointed for a three-year term and may be re-appointed for an additional
three-year term pursuant to the Israeli Companies Law, are not members of any
class.  Mr. Ami Amir and Mr. Amnon Neubach are our external directors.

Israeli Companies Law

     We are subject to the provisions of the Israeli Companies Law, 5759-1999,
which became effective on February 1, 2000 and regulations adopted thereunder.

External Directors

     Nasdaq Requirements

     We have obtained an exemption from Nasdaq's independent director
requirements based on our compliance with the corresponding requirements under
the Israeli Companies Law.  See 'Qualifications of External Directors' below for
information about the Israeli law requirements.

     Qualifications of External Directors

     Under the Israeli Companies Law, companies incorporated under the laws of
Israel whose shares are listed for trading on a stock exchange or have been
offered to the public in or outside of Israel are required to appoint two
external directors.  The Companies Law provides that a person may not be
appointed as an external director if the person or the person's relative,
partner, employer or any entity under the person's control has, as of the date
of the person's appointment to serve as an external director, or had, during the
two years preceding that date, any affiliation with:

     -     the company;

                                                                            -33-

     -     any entity controlling the company;

     -     or any entity controlled by the company or by its controlling entity.

      The term affiliation includes:

     -     an employment relationship;

     -     a business or professional relationship maintained on a regular
basis;

     -     control; and

     -     service as an office holder.

     The Companies Law defines the term 'office holder' of a company to include
a director, the chief executive officer, the chief financial officer and any
officer of the company that reports directly to the chief executive officer.

     No person can serve as an external director if the person's position or
other business creates, or may create, conflict of interests with the person's
responsibilities as an external director or may otherwise interfere with the
person's ability to serve as an external director.

     Until the lapse of two years from termination of office, a company may not
engage an external director to serve as an office holder and cannot employ or
receive services from that person, either directly or indirectly, including
through a corporation controlled by that person.

     Election of External Directors

     External directors are to be elected by a majority vote at a shareholders'
meeting, provided that either:

     -     at least one third of the shares of non-controlling shareholders
voted at the meeting vote in favor of the election; or

     -     the total number of shares of non-controlling shareholders voted
against the election of the external director does not exceed one percent of the
aggregate voting rights in the company.

     The initial term of an external director is three years and may be extended
for an additional three years.  External directors may be removed from office
only by the same percentage of shareholders as is required for their election,
or by a court, and then only if the external directors cease to meet the
statutory qualifications for their appointment or if they violate their duty of
loyalty to the company.  Each committee of a company's board of directors is
required to include at least one external director, except for the audit
committee which is required to include all the external directors.  Our
shareholders have elected Mr. Ami Amir and Mr. Amnon Neubach as external
directors in an extraordinary general shareholders meeting held on February 12,
2001 for an initial term of three years.

Audit Committee

     Nasdaq Requirements

     We have obtained an exemption from Nasdaq's audit committee requirements
based on our compliance with the corresponding requirements under the Israeli
Companies Law.  See '--Israeli Companies Law Requirements' below for more
information.

     Israeli Companies Law Requirements

Under the Israeli Companies Law, our board of directors is required to appoint
an audit committee, comprised of at least three directors including all of the
external directors, but excluding:

     -     the chairman of the board of directors; and

     -     a controlling shareholder or a relative of a controlling shareholder
and any director employed by the company or who provides services to the company
on a regular basis.

                                                                            -34-


     The role of the audit committee is to examine flaws in the business
management of the company, in consultation with the internal auditor and
The company's independent accountants, suggest appropriate courses of action,
and to approve specified related party transactions.  Our audit committee
consists of our external directors and one additional director, Mr. Ilan Rosen.

     Approval of Related Party Transactions

     The approval of the audit committee is required to effect specified actions
and transactions with office holders, controlling shareholders and entities in
which they have a personal interest.  An audit committee may not approve an
action or a transaction with related parties or with its office holders unless
at the time of approval the two external directors are serving as members of the
audit committee and at least one of whom was present at the meeting in which any
approval was granted.

Internal Auditor

     Under the Companies Law, the board of directors must appoint an internal
auditor proposed by the audit committee.  The role of the internal auditor is to
examine, inter alia, whether the company's actions comply with the law and
orderly business procedure.  The internal auditor may not be an interested
party, an office holder, or a relative of any of the foregoing, nor may the
internal auditor be the company's independent accountant or its representative.
The Companies Law defines the term 'interested party' to include a person who
has holds 5% or more of the company's outstanding share capital or voting
rights, a person who has the right to appoint one or more directors or the
general manager, or any person who serves as a director or as the general
manager.  Mr. Gideon Douvshani, CPA, serves as our internal auditor.

Approval of Specified Related Party Transactions Under Israeli Law

     Fiduciary Duties of Office Holders

     The Israeli Companies Law imposes a duty of care and a duty of loyalty on
all office holders of a company.  The duty of care requires an office holder to
act with the level of care with which a reasonable office holder in the same
position would have acted under the same circumstances.  The duty of care
includes a duty to use reasonable means to obtain:

     -     information on the advisability of a given action brought for his
approval or performed by him by virtue of his position; and

     -     all other important information pertaining to these actions.

The duty of loyalty of an office holder includes a duty to:

     -     refrain from any conflict of interest between the performance of his
duties in the company and the performance of his other duties or his personal
affairs;

     -     refrain from any activity that is competitive with the company;

     -     refrain from exploiting any business opportunity of the company to
receive a personal gain for himself or others; and

     -     disclose to the company any information or documents relating to a
 company's affairs which the office holder has received due to his position as
an office holder.

     Disclosure of Personal Interest of an Office Holder

     The Israeli Companies Law requires that an office holder of a company
disclose to the company any personal interest that he may have and all related
material information known to him, in connection with any existing or proposed
transaction by the company.  The disclosure is required to be made promptly and
in any event no later than the board of directors meeting in which the
transaction is first discussed.  If the transaction is an extraordinary
transaction, the office holder must also disclose any personal interest held by:

                                                                            -35-


     -     the office holder's spouse, siblings, parents, grandparents,
descendants, spouse's  descendants and the spouses of any of these people; or

     -     any corporation in which the office holder is a 5% or greater
shareholder, director or general manager or in which he has the right to appoint
at least one director the general manager.

Under Israeli law, an extraordinary transaction is a transaction:

    -     other than in the ordinary course of business;

    -     otherwise than on market terms; or

    -     that is likely to have a material impact of the company's
profitability, assets or liabilities.

     Once an office holder complies with the above disclosure requirement, the
board of directors may approve a transaction between the company and an office
holder, or a third party in which an office holder has a personal interest.  A
transaction that is adverse to the company's interest may not be approved.

     If the transaction is an extraordinary transaction, approval of both the
audit committee and the board of directors is required.  Under specific
circumstances, shareholder approval may also be required.  A director who has a
personal interest in a matter which is considered at a meeting of the board of
directors or the audit committee may not be present at this meeting or vote on
this matter, unless a majority of the members of the board of directors or the
audit committee, as the case may be, has a personal interest in the matter.  If
a majority of members of the board of directors have a personal interest
therein, shareholder approval is also required.

     Disclosure of Personal Interests of a Controlling Shareholder

     Under the Israeli Companies Law, the disclosure requirements which apply to
an office holder also apply to a controlling shareholder of a public company.  A
controlling shareholder is a shareholder who has the ability to direct the
activities of a company, including a shareholder that owns 25% or more of the
voting rights if no other shareholder owns more than 50% of the voting rights,
but excluding a shareholder whose power derives solely from his or her position
on the board of directors or any other position with the company.
Extraordinary transactions with a controlling shareholder or in which a
controlling shareholder has a personal interest, and the engagement of a
controlling shareholder as an office holder or employee, require the approval of
the audit committee, the board of directors and the shareholders of the company
in that order.  The shareholder approval must be by a majority of the shares
voted on the matter, provided that either:

-     at least one-third of the shares of shareholders who have no personal
interest in the transaction and who vote on the matter vote in favor thereof; or

-     the shareholders who have no personal interest in the transaction who vote
against the transaction do not represent more than one percent of the voting
rights in the company.

     Shareholders generally have the right to examine any document in the
company's possession pertaining to any matter that requires shareholder
approval.  If this information is made public in Israel or elsewhere, we will
file the information with the Securities and Exchange Commission in the United
States.

     For information concerning the direct and indirect personal interests of an
office holder and principal shareholders in specified transactions with us, see
Item 7 'Related Party Transactions. '

Remuneration of Members of the Board of Directors

     Under our articles of association, no director may be paid any remuneration
by the company for his services as director except as may be approved by a
shareholders' resolution, except for reimbursement of expenses incurred in
connection with fulfilling his duties as a director.  Our external directors are
entitled to consideration and reimbursement of expenses only as provided in
regulations promulgated under the Companies Law and are otherwise prohibited

                                                                            -36-


from receiving any other consideration, directly or indirectly, in connection
with their service as external directors.  In accordance with these regulations,
our shareholders approved an annual fee of $8,000 and a participation fee of
$400 for attendance at a meeting of the board or a committee thereof to be paid
to each of our external directors.  Except for the external directors, we do not
pay cash remuneration to our directors for their services as directors.

Executive Officers

     Our executive officers are elected by our board of directors and serve at
the discretion of our board of directors.  We maintain written employment
agreements with our executive officers.  Each agreement terminates on between 30
days and 4 months' written notice and provides for standard terms and conditions
of employment.  All of our executive officers have agreed not to compete with us
for 12 months (or 24 months in the case of Monica Eisinger) following the
termination of their employment with us.  Monica Eisinger is entitled to six
months' severance pay upon termination of her employment by either her or us,
other than for cause.  Mr. Salansky is a former executive officer who resigned
in February 2000.  His employment agreement contained a non-compete agreement
prohibiting him from competing with us for a period of 24 months.  Mr. Itzhak
Davidesko and Mr. Yaron Amir are former executive officers and their employment
agreements contain a non-compete clause prohibiting them from competing with us
for a period of 12 months.  Under recent Israeli case law, the non-competition
undertakings of employees may not be enforceable.

D.     Employees

     As of December 31, 2000 we employed 183 employees, 24 of whom are part-time
employees.  Of these employees, 154 were employed in Israel, 7 in China, 20 by
our U.S. subsidiary, l in Japan and 1 in the Netherlands .  We employed 69
employees in research and development, 46 in professional services and customer
support, 48 in sales and marketing, and 20 in general and administration.  This
represents an increase from the total number of 122 employees as of December 31,
1999 and 86 as of December 31, 1998.  Of our 122 employees as of December 31,
1999, 112 were employed in Israel and 10 were employed by our U.S. subsidiary;
55 were employed in research and development, 30 in professional services and
customer support, 22 in sales and marketing and 15 in general and
administration.  Of our 86 employees as of December 31, 1998, 86 were employed
in Israel and 4 were employed by our U.S. subsidiary; 41 were employed in
research and development, 20 in professional services and customer support, 16
in sales and marketing and 9 in general and administration.

     We are subject to Israeli labor laws and regulations with respect to our
Israeli employees.  These laws principally concern matters such as paid annual
vacation, paid sick days, length of the work day and work week, minimum wages,
pay for overtime, insurance for work-related accidents, severance pay and other
conditions of employment.

     Furthermore, by order of the Israeli Ministry of Labor and Welfare, all
employers and employees are subject to provisions of collective bargaining
agreements between the Histadrut, Federation of Labor, and the Coordination
Bureau of Economic Organizations in Israel.  These provisions principally
concern cost of living increases, recreation pay, commuting expenses and other
conditions of employment.  We provide our employees with benefits and working
conditions above the required minimums.  Our employees are not represented by a
labor union.  To date, we have not experienced any work stoppages and our
relationships with our employees are good.

E.     Share Ownership

                    Total Shares
                    Beneficially      Percentage of        Number of
Name                   Owned          Ordinary Shares      Options

Monica Eisinger      5,040,000            24.5%                --
Lior Salansky        3,899,140            19.0%                --
Kevin P. Mohan (1)      --                 --                  --
Ilan Rosen              --                 --               30,000(2)
Ami Amir                --                 --                  --
Amnon Neubach           --                 --                  --

 (1)     Summit Ventures V, L.P. is the beneficial owner of 2,592,600 shares
    - see Item 7A    - Owned   Major Shareholders Owned   .  Mr. Mohan is a
member of Summit Partners LLC, the sole general partner of Summit Partners
V, L.P. which is the sole general partner of Summit Ventures V, L.P., Summit
Ventures V Companion Fund, L.P., Summit V Advisors  Fund (QP), L.P., and

                                                                            -37-


Summit V Advisors Fund, L.P. Summit Partners, LLC, through an investment
committee, has voting and dispositive authority over the shares held by these
entities and Summit Investors III, L.P.  Mr. Mohan does not have voting and
dispositive authority over these shares and disclaims beneficial ownership
except to the extent of his pecuniary interest in these shares.

(2)     The exercise price of the options is $5.00 per share.  The options vest
on February 1, 2003, and if not exercised by January 1, 2006, will expire.

     We have established stock option plans to provide for the issuance of
options to our directors, officers and employees.  Under the plans, options to
purchase our ordinary shares may be issued from time to time to our directors,
officers and employees at exercise prices and on other terms and conditions as
determined by our Board of Directors.  Our Board of Directors determines the
exercise price and the vesting period of options granted.  The option plans
permit the issuance of options to acquire up to 2,308,000 ordinary shares.  As
of March 31, 2001, options to purchase 1,988,120 ordinary shares are outstanding
and options for 2,000 ordinary shares have been exercised.  The options vest
over three to five years, commencing on the date of grant.  Any option not
exercised by January 1, 2006 will expire, except for 50,000 options that will
expire on December 31, 2001.

Item 7     Major Shareholders and Related Party Transactions

A.     Major Shareholders

     The following table sets forth certain information regarding the beneficial
ownership of our ordinary shares as of March 31, 2001 by:

     -     each person who is known to own beneficially more than 5% of the
outstanding ordinary  shares; and

     -     all directors and executive officers as a group.
     Unless otherwise noted below, each shareholder's address is c/o
MIND C.T.I. Ltd., Industrial Park, Building 7, Yoqneam 20692, Israel.

                             Total Shares            Percentage of
Name and Address of          Beneficially            Ordinary
Beneficial Owners               Owned                Shares (2)
--------------------        --------------        ----------------
Monica Eisinger                5,040,000(3)              24.5%
Lior Salansky                  3,899,140(3)(4)           19.0%
     Snir Street
     Yoqneam Illit, Israel
ADC Telecommunications
Israel Ltd.(5)                 4,502,000                 21.9%
    10 HaSadnaot Street
    Herzlia 46120, Israel
Summit Partners(6) (7)         2,592,600(8)              12.6%
Kevin Mohan(9)                 2,592,600(8)              12.6%
All directors and
 Executive officers
 as a group (11 persons)(10)   9,165,600                 44.9%

(1)     Shares beneficially owned include shares that may be acquired pursuant
 to options that are exercisable within 60 days of March 31, 2001 and are
treated as outstanding only for purposes of determining the percentage owned by
such person or group.

(2)     Based on 20,566,220 ordinary shares outstanding on March 31, 2001.

(3)     The shares owned by Ms. Eisinger and Mr. Salansky include 140,000 shares
owned by MIND Israel Ltd.  Each of Ms. Eisinger and Mr. Salansky is considered a
2915:     beneficial owner of these shares.

(4)     Pursuant to Mr. Salansky's obligation to persons who previously
purchased shares from him, Mr. Salansky has transferred an aggregate of 117,060
ordinary shares, including an aggregate of 19,100 ordinary shares to three of
our current and former officers.  Please see Item 7B - 'Related Party
Transactions Investment by Summit Partners' for a description of this
arrangement.

(5)     ADC Telecommunications Ltd. is a wholly-owned subsidiary of ADC
Telecommunications, Inc., a Minnesota company whose shares are publicly traded
on the Nasdaq Stock Market.  The address of ADC Telecommunications is 12501
Whitewater Drive, Minnetonka, MN 55343.
                                                                            -38-


(6)     The address of Summit Partners is 600 Atlantic Avenue, Suite 2800,
Boston, MA 02210.

(7)     Summit Partners is the name used to refer to a group of investment
partnerships. Shares reflected include 1,731,100 shares held by Summit Ventures,
V, L.P. 644,180 shares held by Summit V Advisors Fund (QP) L.P., 41,600 shares
held by Summit V Advisors Fund, L.P. and 39,600 shares held by Summit Investors
each of Summit Ventures V, L.P., Summit Ventures V Companion Fund, L.P., Summit
V Advisors Fund (QP) L.P. and Summit V Advisors Fund, L.P. is Summit Partners V,
L.P., the general partner of which is Summit Partners, LLC. Mr. Mohan is a
member of Summit Partners, LLC.  Based on the initial offering price of $10.00
per share, Summit Partners has not been required to transfer any ordinary shares
to Mr.Salansky.  Please see 'Related Party Transactions Investment by Summit
Partners. '

(8)     650,000 of the shares held by Summit Partners and its affiliates are
non-voting shares.  These non-voting shares will be automatically converted into
voting shares upon transfer to a third party unless that third party would then
own in excess of 10% of the then outstanding ordinary shares.

(9)     Represents shares described in note (7) above, beneficially owned by
Summit Ventures V, L.P.  Mr. Mohan, one of our directors, is a member of Summit
Partners LLC, the sole general partner of Summit Partners V, L.P. which is the
sole general partner of Summit Ventures V, L.P., Summit Ventures V Companion
Fund, L.P., Summit V Advisors Fund (QP), L.P., and Summit V Advisors Fund,
L.P. Summit Partners, LLC, through an investment committee, has voting and
dispositive authority over the shares held by these entities and Summit
Investors III, L.P. Mr. Mohan does not have voting and dispositive authority
over these shares and disclaims beneficial ownership except to the extent of
his pecuniary interest in these shares.

(10)    Includes 59,000 shares which may be acquired upon the exercise of
options.

     As of March 31, 2001, 20,556,220 of our ordinary shares were outstanding.
At such date, there were 32 holders of record of our ordinary shares in the
United States who collectively held approximately 11.5% of our outstanding
ordinary shares.  In addition to this amount, there were also 3,790,600
shares held by the Depositary Trust Company in the United States.

     As part of a private placement during March 2000, Summit Partners acquired
Series A and Series B Preferred shares of MIND.  These preferred shares were
converted into 2,592,600 ordinary shares (of which 650,000 shares are non-voting
shares) immediately prior to our initial public offering in August 2000.
Consequently, as set forth in the table above, Summit Partners owns 12.6% of our
outstanding ordinary shares.

     In connection with our private placement in March 2000, Lior Salansky sold
Series B Preferred shares to the Series B investors, and an aggregate of 468,240
ordinary shares to certain other purchasers.  Immediately prior to our public
offering in August 2000, Lior Salansky beneficially owned 4,016,200 ordinary
shares, representing 23.5% of our outstanding ordinary shares.  Mr. Salansky
transferred an aggregate of 117,060 ordinary shares immediately following our
initial public offering pursuant to obligations under the share purchase
agreement relating to the ordinary shares that he sold in connection with the
private placement.  Consequently, Mr. Salansky currently beneficially owns
3,899,140 ordinary shares, representing 19.0% of our outstanding ordinary
shares.  See Item 7 'Related Party Transactions  - Investment by Summit' for a
description of these transactions.

     In January 1999, ADC Telecommunications Israel Ltd. exercised an option to
purchase an additional number of our ordinary shares granted to it pursuant to
an investment agreement dated August 1997, and subsequently increased its
holdings from 15.1% to 30.2% of our then issued and outstanding ordinary shares.

     The major shareholders have the same voting rights as other shareholders,
except that 650,000 of the shares held by Summit Partners and its affiliates are
non-voting shares.

B.     Related Party Transactions

Investment by Summit

     Share Purchase Agreement. In March 2000, we raised approximately $12
million in a private placement of our securities to a group of funds led by

                                                                            -39-


Summit Ventures V, L.P. We issued to these investors 111,111 Series A preferred
shares. In connection with the same transaction, the investors also purchased
27,778 Series B preferred shares from Lior Salansky, one of our directors, for
an aggregate price of $3 million. The Series B preferred shares were issued to
Mr. Salansky on March 30, 2000 in exchange for 555,560 existing ordinary shares
owned by Mr. Salansky. Mr. Salansky has no relationship to the entities
affiliated with Summit Ventures V, L.P. The Series B investors have agreed to
transfer Series B preferred shares to Mr. Salansky under specified circumstances
because when those shares were purchased from him there was an agreement that if
MIND reached certain valuation targets, a portion of the shares purchased from
Mr. Salansky would be returned, thereby increasing the effective per share price
of the shares initially purchased from him.

     Each Series A preferred share was converted into 20 ordinary shares, or an
aggregate 2,222,220 ordinary shares.

     Each Series B preferred share was converted into 20 ordinary shares, or an
aggregate of 555,560 ordinary shares.  The investors agreed to transfer to Mr.
Salansky for no consideration an amount of ordinary shares equal to the
difference between the number of ordinary shares into which their Series B
preferred shares were converted and the number of ordinary shares into which an
equal amount of Series A preferred shares would have been converted.  As our
initial public offering price was $10.00 per share, no ordinary shares were
transferred to Mr. Salansky.

     Simultaneously with the sale of the Series B preferred shares by Mr.
Salansky described above, Mr. Salansky also sold an aggregate of 468,240
ordinary shares owned by him for a total purchase price of $2,499,481. The share
purchase agreement relating to the sale of those shares provides that if we
consummate an initial public offering within a period of 12 months from the date
of the agreement at a specified valuation, Mr. Salansky will be deemed to have
sold up to an aggregate of 585,300 ordinary shares to the purchasers.  As our
initial public offering price was $10.00 per share, Mr. Salansky transferred an
additional 117,060 ordinary shares to those purchasers.

     Upon conversion of the preferred shares, 650,000 non-voting ordinary shares
were issued to Summit Ventures, V, L.P.  These non-voting ordinary shares will
be automatically converted into ordinary shares on a one-for-one basis upon
transfer to a third party unless that third party would then own in excess of
10% of the then outstanding ordinary shares.

     Summit Ventures V, L.P. and its related funds have no relationship with us
other than their investment in the Series A and Series B preferred shares
converted into ordinary and non-voting shares as described above.  Kevin P.
Mohan, a member of Summit Partners, LLC, the sole general partner of the sole
general partner of Summit Partners V, L.P., is one of our directors. Eleven
individuals, including Mr. Mohan, are members of Summit Partners, LLC.

     Registration Rights Agreement. In connection with the investment, we
granted to our principal shareholders, and transferees of their shares, two
demand registration rights and unlimited incidental registration rights.

     Shareholders' Agreement.  In connection with the investment, we and our
principal shareholders entered into a shareholders' agreement.  The shareholders
granted each other certain co?sale and first refusal rights, accepted certain
restrictions on the transfer of their shares and agreed upon the appointment of
directors and the formation of committees of the Board of Directors.  In
addition, we granted the shareholders certain pre-emptive rights relating to the
issuance of new securities.  The shareholders' agreement between us and our
principal shareholders also provides that if Monica Eisinger or Lior Salansky
desire to sell all or any part of the shares owned by them, other than in the
public market, Summit and ADC and Ms. Eisinger or Mr. Salansky are entitled to
sell a pro rata portion of the shares proposed to be sold.  Except for these
limited co-sale rights, the shareholders agreement terminated immediately prior
to the closing of our initial public offering in August 2000.

     Repurchase of Management Shares. In connection with the investment, we
repurchased an aggregate of 30 management shares, 10 each from Monica Eisinger,
Lior Salansky and ADC Telecommunications Ltd. The repurchase was at nominal
value.

                                                                            -40-


C.   Interests of Experts and Counsel

     Not applicable.

Item 8.     Financial Information

     See Item 18.

Item 9.	The Offer and Listing

A.     Offer and Listing Details

     Our ordinary shares have been quoted on the Nasdaq National Market under
the symbol MNDO.  Since August 8, 2000, the following table sets forth, for the
periods indicated, the high and low sales prices of our ordinary shares as
 reported on the Nasdaq National Market.

Calendar Year                             Price Per Share
                                     High                    Low
2000 (commencing
    August 8, 2000)                $14.12                  $6.50

Calendar Period                           Price Per Share
                                     High                    Low
2001   First Quarter               $8.87                   $1.53
       Second Quarter
      (thru April 23, 2001)        $1.99                   $1.34
2000   Third Quarter (commencing
       August 8, 2000)             $14.12                  $7.25
       Fourth Quarter              $13.00                  $6.25

Calendar Month	                            Price Per Share
                                     High                    Low
2001   March                        $6.37                  $1.53
       February                     $8.87                  $6.43
       January                      $8.87                  $5.25
2000   December                     $8.50                  $6.25
       November                     $13.00                 $7.56
       October                     $13.00                  $7.25

B.     Plan Of Distribution

       Not applicable

C.     Markets

       Our ordinary shares are quoted on the Nasdaq National Market under the
symbol MNDO.

D.     Selling Shareholders

       Not applicable

E.     Dilution

       Not applicable

F.     Expenses of the Issue

       Not applicable

ITEM 10	     Additional Information

A.     Share Capital

       Not applicable

B.     Memorandum and Articles of Associations

Objects and Purposes

     We were first registered under Israeli law on April 6, 1995 as a private
company, and on August 11, 2000 became a public company.  Our registration
number with the Israeli registrar of companies is 51-213448-7.  The full details
of our objects and purposes can be found in Section 2 of our Memorandum of

                                                                            -41-

Association filed with the Israeli registrar of companies.  Among the objects
and purposes stipulated are the following: 'to engage in any kind of commercial
and/or productive business and to engage in any action or endeavor which the
company's managers consider to be beneficial to the company.

Transfer of Shares and Notices

     Fully paid ordinary shares are issued in registered form and may be freely
transferred pursuant to our articles of association unless such transfer is
restricted or prohibited by another instrument.  Unless otherwise prescribed by
law, each shareholder of record will be provided at least 21 calendar days'
prior notice of any general shareholders meeting.

Election of Directors

     The ordinary shares do not have cumulative voting rights in the election of
directors.  Thus, the holders of ordinary shares conferring more than 50% of the
voting power have the power to elect all the directors, to the exclusion of the
remaining shareholders.  Our board is divided into three classes of directors
serving staggered three year terms, in addition to our external directors, who
are not members of any class.

Dividend and Liquidation Rights

     Dividends on our ordinary shares may be paid only out of profits and other
surplus, as defined in the Israeli Companies Law, as of the end of the most
recent fiscal year or as accrued over a period of two years, whichever is
higher.  Our board of directors is authorized to declare dividends, provided
that there is no reasonable concern that the dividend will prevent us from
satisfying our existing and foreseeable obligations as they become due.  In the
event of our liquidation, after satisfaction of liabilities to creditors, our
assets will be distributed to the holders of ordinary shares in proportion to
their respective holdings.  This liquidation right may be affected by the grant
of preferential dividends or distribution rights to the holders of a class of
shares with preferential rights that may be authorized in the future.

Voting, Shareholders' Meetings and Resolutions

     Holders of ordinary shares have one vote for each ordinary share held on
all matters submitted to a vote of shareholders.  Non-voting ordinary shares are
identical in all respects to the ordinary shares except that they do not carry
voting rights.  Non-voting ordinary shares will be automatically converted into
ordinary shares on a one-for-one basis upon transfer to a third party unless
that third party would then own in excess of 10% of the then outstanding
ordinary shares.  Non-voting ordinary shares may also be converted into equal
number of ordinary shares, except to the extent such holder would than hold 10%
or more of the then outstanding ordinary shares.

     These voting rights may be affected by the grant of any special voting
rights to the holders of a class of shares with preferential rights that may be
authorized in the future.  The quorum required for an ordinary meeting of
shareholders consists of at least two shareholders present in person or by proxy
who hold or represent between them at least 25% of the outstanding voting shares
unless otherwise required by applicable rules.  A meeting adjourned for lack of
a quorum generally is adjourned to the same day in the following week at the
same time and place or any time and place as the Chairman may designate with the
consent of the shareholders voting on the matter adjourned.  At such reconvened
meeting the required quorum consists of any two members present in person or by
proxy.

     Under the new Israeli Companies Law, unless otherwise provided in the
articles of association or applicable law, all resolutions of the shareholders
require a simple majority of the shares present, in person or by proxy, and
voting on the matter.  However, our articles of association require approval of
75% of the shares present and voting to remove directors or change the structure
of our staggered board of directors.

     Under the Companies Law, each and every shareholder has a duty to act in
good faith in exercising his rights and fulfilling his obligations towards the
company and other shareholders and refrain from abusing his power in the
company, such as in voting in the general meeting of shareholders on the
following matters:

     -     any amendment to the articles of association;

                                                                            -42-

     -     an increase of the company's authorized share capital;

     -     a merger; or

     -     approval of certain actions and transactions which require
shareholder approval.

     In addition, each and every shareholder has the general duty to refrain
from depriving rights of other shareholders.  Furthermore, any controlling
shareholder, any shareholder who knows that it possesses the power to determine
the outcome of a shareholder vote and any shareholder that, pursuant to the
provisions of the articles of association, has the power to appoint or to
prevent the appointment of an office holder in the company or any other power
toward the company is under a duty to act in fairness towards the company.  The
Companies Law does not describe the substance of this duty of fairness.  These
various shareholder duties, which typically do not apply to shareholders of
U.S companies, may restrict the ability of a shareholder to act in what the
shareholder perceives to be its own best interests.

Restrictions on Non-Israeli Residents

     The ownership or voting of our ordinary shares by non-residents of Israel,
except with respect to citizens  of countries which are in a state of war with
Israel, is not restricted in any way by our Memorandum of Association or
Articles of Association or by the laws of the State of Israel.

Mergers and Acquisitions under Israeli Law

     The Israeli Companies Law includes provisions that allow a  merger
transaction and requires that each company that is party to a merger approve the
transaction by its board of directors and a vote of the majority of its shares,
voting on the proposed merger at a shareholders' meeting called on at least 21
days' prior notice.  For purposes of the shareholder vote, unless a court rules
otherwise, the merger will not be deemed approved if a majority of the shares
held by parties other than the other party to the merger, or by any person who
holds 25% or more of the shares of the right to appoint 25% or more of the
directors of the other party, vote against the merger.  Upon the request of a
creditor of either party of the proposed merger, the court may delay or prevent
the merger if it concludes that there exists a reasonable concern that as a
result of the merger, the surviving company will be unable to satisfy the
obligations of any of the parties to the merger.  In addition, a merger may not
be completed unless at least 70 days have passed from the time that a proposal
of the merger has been filed with the Israeli Registrar of Companies.

     The Companies Law also provides that an acquisition of shares of public
company must be made by means of tender offer if as a result of the acquisition
the purchaser would become a 25% shareholder of the company and there is no 25%
or more shareholder in the company.  If there already is another 25%, but less
than 50%, shareholder in the company, the Companies Law provides that an
acquisition of shares of a public company must be made by means of a tender
offer if as a result of the acquisition the purchaser would become a 45%
shareholder of the company.  This rule does not apply if someone else is
already a majority shareholder in the company.  If following any acquisition of
shares, the acquirer will hold 90% or more of the company's shares, the
acquisition may not be made other than through a tender offer to acquire all of
the shares of such class.  If more than 95% of the outstanding shares are
tendered in the tender offer, all the shares that the acquirer offered to
purchase will be transferred to it.  However, the remaining minority
shareholders may seek to alter the consideration by court order.

     Finally, Israeli tax law treats stock-for-stock acquisitions between an
Israeli company and a foreign company less favorably than does U.S. tax law.
For example, Israeli tax law subjects a shareholder who exchanges his ordinary
shares for shares in another corporation to taxation on half the shareholder's
shares two years following the exchange and on the balance four years
thereafter even if the shareholder has not yet sold the new shares.

Modification of Class Rights

     Our articles of association provide that the rights attached to any class
(unless otherwise provided by the terms of such class), such as voting, rights
to dividends and the like, may be varied by written consent of holders of a

                                                                            -43-

majority of the issued shares of that class, or by adoption by the holders of a
majority of the shares of that class at a separate class meeting.

Board of Directors

     According to the Companies Law and our Articles of Association, the
management of our business is vested in our board of directors.  The board of
directors may exercise all such powers and may take all such actions that are
not specifically granted to our shareholders.  As part of its powers, our
board of directors may cause the company to borrow or secure payment of any
sum or sums of money, at such times and upon such terms and conditions as it
thinks fit, including the grants of security interests on all or any part of the
property of the company.

     A resolution proposed at any meeting of the board of directors shall be
deemed adopted if approved by a majority of the directors present and voting on
the matter.  For additional information, please see Item 6C 'Board Practices'.

Exculpation of Office Holders

     Under the Companies Law, an Israeli company may not exempt an office holder
from liability for a breach of his duty of loyalty, but may exempt in advance an
office holder from his liability to the company, in whole or in part, for a
breach of his duty of care provided the articles of association of the company
allow it to do so.  Our articles allow us to exempt our office holders to the
fullest extent permitted by law.

     Insurance of Office Holders

     Our articles of association provide that, subject to the provisions of the
Companies Law, we may enter into a contract for the insurance of the liability
of any of our office holders, with respect to an act performed in the capacity
of an office holder for:

     -     a breach of his duty of care to us or to another person;

     -     a breach of his duty of loyalty to us, provided that the office
holder acted in good faith and had reasonable cause to assume that his act would
not prejudice our interests; or

     -     a financial liability imposed upon him in favor of another person.

     Indemnification of Office Holders

     Our articles of association provide that we may indemnify an office holder
against the following obligations and expenses imposed on the office holder with
respect to an act performed in the capacity of an office holder:

     -     a financial obligation imposed on him in favor of another person by a
court judgment,including a compromise judgment or an arbitrator's award approved
by the court; and reasonable litigation expenses, including attorneys' fees,
expended by the office holder or charged to him by a court in connection with:

     -     proceedings we institute against him or instituted on our behalf or
by another person;

     -     a criminal charge from which he was acquitted; or

     -     a criminal proceeding in which he was convicted of an offense that
does not require proof of criminal intent.

      Our articles of association also include provisions:

     -     authorizing us to undertake to indemnify an office holder as
described above, provided that the undertaking is limited to types of events
which our board of directors deems to be anticipated when the undertaking is
given and to an amount determined by our board of directors to be reasonable
under the circumstances; and

-     authorizing us to retroactively indemnify an officer or director.

                                                                            -44-


Limitations on Exculpation, Insurance and Indemnification
     The Israeli Companies Law provides that a company may not exculpate or
indemnify an office holder, or enter into an insurance contract which would
provide coverage for any monetary liability incurred as a result of any of
the following:

     -     a breach by the office holder of his duty of loyalty unless, with
respect to insurance coverage, the office holder acted in good faith and had
a reasonable basis to believe that the act would not prejudice the company;

     -     a breach by the office holder of his duty of care if the breach was
done intentionally or recklessly;

     -     any act or omission done with the intent to derive an illegal
personal benefit; or

     -     any fine levied against the office holder.

     In addition, under the Companies Law, indemnification of, and procurement
of insurance coverage for, our office holders must be approved by our audit
committee and our board of directors and, if the beneficiary is a director, by
our shareholders.

     We have agreed to exempt from liability and indemnify our office holders to
the fullest extent permitted under the Companies Law.  We have obtained
directors and officers liability insurance for the benefit of our office
holders.

C.     Material Contracts

       Not applicable.

D.     Exchange Controls

       There are currently no Israeli currency control restrictions on payments
of dividends or other distributions with respect to our ordinary shares or the
proceeds from the sale of the shares, except for the obligation of Israeli
residents to file reports with the Bank of Israel regarding certain
transactions.  However, legislation remains in effect pursuant to which currency
controls can be imposed by administrative action at any time.

E.     Taxation

Israeli Tax Considerations

     The following is a summary of the current tax structure applicable to
companies in Israel, with special reference to its effect on us.  The following
also contains a discussion of the material Israeli and United States tax
consequences to persons purchasing our ordinary shares.  To the extent that the
discussion is based on tax legislation which has not been subject to judicial or
administrative interpretation, we cannot assure you that the tax authorities
will accept the views expressed in the discussion in question.

     Prospective purchasers of our ordinary shares should consult their own tax
advisors as to the United States, Israeli or other tax consequences of the
purchase, ownership and disposition of ordinary shares, including, in
particular, the effect of any foreign, state or local taxes.

     General Corporate Tax Structure

     The regular rate of corporate tax in Israel to which Israeli companies are
subject is 36%.  As described below, the tax rate payable by a company which
derives income from an 'Approved Enterprise' may be considerably less.

     Law for the Encouragement of Capital Investments, 1959

     The Law for Encouragement of Capital Investments, 1959, provides that upon
application to the Investment Center of the Ministry of Industry and Trade of
the State of Israel, a proposed capital investment in eligible facilities may be
designated as an 'Approved Enterprise.'  Each certificate of approval for an
Approved Enterprise relates to a specific investment program delineated both by
its financial scope, including its capital sources, and by its physical

                                                                            -45-


characteristics, such as the equipment to be purchased and utilized pursuant to
the program.  The tax benefits derived from any such certificate of approval
relate only to taxable income derived from growth in manufacturing revenues
attributable to the specific Approved Enterprise.  If a company has more than
one approval or only a portion of its capital investments are approved, its
effective tax rate is the result of a weighted combination of the applicable
rates.  The benefits under the law are usually not available with respect to
income derived from products manufactured outside of Israel.

     Taxable income of a company derived from an Approved Enterprise is subject
to tax at the maximum rate of 25%, rather than the regular rate of 36%, for the
benefit period.  That income is eligible for further reductions in tax rates
depending on the percentage of the foreign investment in the company's share
capital (conferring rights to profits, voting and appointment of directors) and
the percentage of its combined share and loan capital owned by non-Israeli
residents ('foreign investment level').  The tax rate is:

     -     20% if the foreign investment level is 49% or more but less than 74%;

     -     15% if the foreign investment level is 74% or more but less than 90%;
and

     -     10% if the foreign investment level is 90% or more.

     The lowest level of foreign investment during the year will be used to
determine the relevant tax rate for that year.  These tax benefits are granted
for a limited period not exceeding seven years, or ten years for a company whose
foreign investment level exceeds 25% from the first year in which the Approved
Enterprise has taxable income.

     The period of benefits may in no event, however, exceed the lesser of 12
years from the year in which production commenced and 14 years from the year of
receipt of Approved Enterprise status.

     A company owning an Approved Enterprise may elect to receive, in lieu of
the foregoing, an alternative package of benefits.  Under the alternative
package, the company's undistributed income derived from an Approval Enterprise
will be exempt from tax for a period of between two and ten years from the first
year of taxable income, depending on the geographic location of the Approved
Enterprise within Israel, and the company will be eligible for the tax benefits
under the law for the remainder of the benefit period.  A bill submitted to the
Israeli parliament by the Israeli government on July 26, 2000 proposes, among
other things, to increase the tax rate from zero to 10% during the exempt period
under the alternative package of benefits.

     The Investment Center bases its decision of whether to approve or reject a
company's application for designation as an Approved Enterprise on criteria set
forth in the law and related regulations, the then prevailing policy of the
Investment Center and the specific objectives and financial criteria of the
applicant.  Accordingly, a company cannot be certain in advance whether its
application will be approved.  In addition, the benefits available to an
Approved Enterprise are conditional upon compliance with the conditions
stipulated in the law and related regulations and the criteria set forth in the
specific certificate of approval.  In the event that a company violates these
conditions, in whole or in part, it may be required to refund all or a portion
of its tax benefits, linked to the Israeli consumer price index and interest.
These conditions include:

     -     adhering to the business plan contained in the application to the
Investment Center;

     -     financing at least 30% of the investment in property, plant and
equipment with the  proceeds of the sale of ordinary shares;

     -     filing regular reports with the Investment Center with respect to the
Approved  Enterprise; and

     -     obtaining the approval of the Investment Center for changes in the
ownership of a company.

     Most of our manufacturing facilities in Yoqneam have been granted the
status of Approved Enterprise.  Since our manufacturing facilities are
located in 'Area A' and since we elected to receive the alternative package
of benefits (involving waiver of investment grants), our income derived from
each Approved Enterprise is tax exempt for a period of ten years commencing

                                                                            -46-


in the first year in which we earn taxable income from each Approved
Enterprise.  To date, we have two Approved Enterprises, as follows:

     -     the first Approved Enterprise commenced operations in 1995 and
income derived from this Approved Enterprise is exempt from tax for a period of
ten years through 2004;

     -     the second Approved Enterprise requires that we invest approximately
$6.4 million in  property, plant and equipment pursuant to an approved
investment plan; and

     -     after we have invested 80% of this amount, income from this Approved
Enterprise will  be exempt from tax for a period of ten years.

     Dividends paid out of income derived from an Approved Enterprise during the
tax exemption period will be subject to corporate tax in respect of the amount
distributed, including withholding tax thereon, at the rate that would have
been applicable had the company not elected the alternative package of
benefits.  The dividend recipient is taxed at a reduced rate of 15%,
applicable to dividends from an Approved Enterprise, if the dividend is
paid during the same benefit period and at any time up to 12 years thereafter.
The withholding tax rate will be up to 25% after such period.  If the foreign
investment level in the company exceeds 25%, the 12-year limitation period does
not apply.  This tax should be withheld by the company at source, regardless of
whether the dividend is converted into foreign currency.

     When dividends are distributed from the Approved Enterprise, they are
generally considered to be attributable to the entire enterprise and their
effective tax rate is a result of a weighted combination of the applicable tax
rates.  In the event that we pay a cash dividend from income that is derived
from our Approved Enterprises pursuant to the alternative package of benefits,
which income would otherwise be tax-exempt, we would be required to pay tax on
the amount of income distributed as dividends at the rate which would have been
applicable if we had not elected the alternative package of benefits, that rate
is ordinarily up to 25% and to withhold at source on behalf on the recipient of
the dividend an additional 15% of the amount distributed.  Through May 31, 2000
we distributed most of our income and paid corporate tax at the rate of 25%.
Since then we did not distribute additional amounts as dividends.  In the
future, we intend to reinvest the amount of our income and not to distribute
such income as a dividend.

     The law also provides that an Approved Enterprise is entitled to
accelerated depreciation on its property and equipment that are included in an
approved investment program.

     Law for the Encouragement of Industry (Taxes), 1969

     Under the Law for the Encouragement of Industry (Taxes), 1969, or the
Industry Encouragement Law, a company qualifies as an 'Industrial Company' if it
is resident in Israel and at least 90% of its income in a given tax year,
determined in NIS, exclusive of income from capital gains, interest and
dividends, is derived from Industrial Enterprises owned by that company.  An
'Industrial Enterprise' is defined as an enterprise whose major activity in a
particular tax year is industrial activity.

     Industrial Companies qualify for accelerated depreciation rates for
machinery, equipment and buildings used by an Industrial Enterprise.  An
Industrial Company owning an Approved Enterprise, as described below, may choose
between the above depreciation rates and the depreciation rates available to
Approved Enterprises.

     Pursuant to the Industry Encouragement Law, an Industrial Company is also
entitled to amortize the purchase price of know-how and patents over a period of
eight years beginning with the year in which such rights were first used.

     Eligibility for the benefits under the law is not subject to receipt of
prior approval from any governmental authority.  We believe that we currently
qualify as an Industrial Company within the definition of the Industry
Encouragement Law.  However, the definition may be amended from time to time
and the Israeli tax authorities, which reassess our qualifications annually
may determine that we no longer qualify as an Industrial Company.  As a
result of either of the foregoing, the benefits described above might
not be available in the future.

                                                                            -47-


     Taxation Under Inflationary Conditions


     The Income Tax (Inflationary Adjustment) Law, 1985, commonly referred to
as the Inflationary Adjustments Law, attempts to overcome some of the
problems presented to a traditional tax system by rapid inflation.  The
Inflationary Adjustments Law provides tax deductions and adjustments to
depreciation deduction and tax loss carry forwards to mitigate the effects
resulting from an inflationary economy.  Our taxable income is determined
under this law.

     The Israeli Income Tax Ordinance and regulations promulgated thereunder
allow 'Foreign-Invested Companies,' which maintain their accounts in U.S.
dollars in compliance with the regulations to adjust their tax returns
based on exchange rate fluctuations of the NIS against the U.S. Dollar rather
than changes in the Israeli consumer price index, or CPI, in lieu of the
principles set forth by the Inflationary Adjustments Law.  For these purposes,
a Foreign-Invested Company is a company more than 25% of the share capital of
which in terms of rights to profits, voting and appointment of directors, and
of the combined share capital of which including shareholder loans and capital
notes, is held by persons who are not residents of Israel.  A company that
elects to measure its results for tax purposes based on the dollar exchange
rate cannot change the election for a period of three years following the
election.  We adjust our tax returns based on the changes in the Israeli CPI.
Because we qualify as a 'Foreign-Invested Company,' we are entitled to measure
our results for tax purposes on the basis of changes in the exchange rate of
the U.S. dollar in future tax years.

     Withholding and Capital Gains Taxes Applicable to Non-Israeli Shareholders

     The State of Israel imposes income tax on nonresidents of Israel on income
accrued or derived from sources in Israel or received in Israel.  These sources
of income include passive income such as dividends, royalties and interest, as
well as non-passive income from services rendered in Israel.  These sources of
income include passive income such as dividends, royalties and interest, as well
as non-passive income from the services rendered in Israel.  We are required to
withhold income tax at the rate of 25%, or 15% for dividends of income
generated by an Approved Enterprise, on all distributions of dividends other
than bonus shares (stock dividends), unless a different tax rate is provided in
a treaty between Israel and the shareholder's country of residence.  Under the
income tax treaty between the United States and Israel, the maximum tax on
dividends paid to a holder of ordinary shares who is a U.S. resident (as defined
in the treaty) is 25%.

     Israeli law imposes a capital gains tax on the sale of securities and other
capital assets. Under current law, however, sales of the ordinary shares are
exempt from Israeli capital gains tax, for so long as the shares are quoted on
Nasdaq or listed on a stock exchange recognized by the Israeli Ministry of
Finance, provided that we continue to qualify as an Industrial Company or
Industrial Holding Company.  See '--Law for Encouragement of Industry (Taxes),
1969.' Under a possible interpretation of the Income Tax (Inflationary
Adjustment) Law, 1985, non-Israeli companies may be subject to Israeli
taxation on the sale of our shares regardless of whether our shares are traded
on a recognized stock exchange.  Furthermore, under the income tax treaty
between the U.S. and Israel, a holder of ordinary shares who is a U.S. resident
will be exempted from Israeli capital gains tax on the sale of ordinary shares
unless the holder owned, directly or indirectly, 10% or more of our voting
power at any time during the 12-month period before the sale.

     A non-resident of Israel who receives interest, dividend or royalty income
derived from or accrued in Israel, from which tax was withheld at the source,
is generally exempted from the duty to file tax returns in Israel with respect
to such income, provided such income was not derived from a business conducted
in Israel by the taxpayer and the taxpayer has no other taxable sources of
income in Israel.

     Proposed Tax Reform

     On July 26, 2000, the Israeli government submitted a bill to the Israeli
Parliament that would amend Israeli tax laws.  The bill, based on the
recommendations of the Public Committee on the Reform of Taxes on Income, aims
to broaden the categories of taxable income and to reduce the tax rates imposed
on employment income.

     The bill proposes, among other things, to impose a tax upon capital gains
at a rate of up to 25% upon individuals, including capital gains derived from
the sale of shares in publicly traded companies (which are currently exempt

                                                                            -48


from capital gains tax); to impose a tax on all income of Israeli residents
(individuals and corporations) regardless of the territorial source of income;
and to increase the tax rate from zero to 10% on the exempt period under the
alternative package of benefits for Approved Enterprises under the Law for the
Encouragement of Capital Investments, 1959.

     In order to be enacted as legislation, the bill must be approved by the
Israeli Parliament and published.  If implemented, the bill might result in the
imposition of Israeli capital gains taxes on non-Israeli residents who are not
eligible for an exemption under a relevant tax treaty.


     United States Federal Income Tax Considerations

     Subject to the limitations described in the next paragraph, the following
discussion describes the material United States federal income tax consequences
of the purchase, ownership and disposition of the ordinary shares to a U.S.
Holder.

     A U.S. Holder is:

     -     an individual citizen or resident of the United States;

     -     a corporation or another entity taxable as a corporation created or
organized under the laws of the United States or any political subdivision
thereof;

     -     an estate, the income of which is includable in gross income for
United States federal income tax purposes regardless of its source; or

     -     a trust, if a United States court is able to exercise primary
supervision over its administration and one or more United States persons who
have the authority to control all substantial decisions of the trust.

     Unless otherwise specifically indicated, this summary does not consider
United States tax consequences to a person that is not a U.S. Holder and
considers only U.S. holders that will own the ordinary shares as capital assets.

     This discussion is based on current provisions of the Internal Revenue Code
of 1986, as amended, referred to as the Code, current and proposed Treasury
regulations promulgated under the Code, and administrative and judicial
interpretations of the Code, all as in effect today and all of which are
subject to change, possibly with a retroactive effect.  This discussion does
not address all aspects of U.S. federal income taxation that may be relevant
to any particular U.S. holder based on the U.S. holder's particular
circumstances, like the tax treatment of U.S. holders who are broker-dealers
or who own, directly, indirectly or constructively, 10% or more of our
outstanding voting shares, U.S. holders holding the ordinary shares as part of
a hedging, straddle or conversion transaction, U.S. holders whose functional
currency is not the U.S. dollar, insurance companies, tax-exempt organizations,
 financial institutions and persons subject to the alternative minimum tax,
who may be subject to special rules not discussed below.  Additionally, the tax
treatment of persons who hold the ordinary shares through a partnership or other
passthrough entity is not considered, nor are the possible application of U.S.
federal estate or gift taxes or any aspect of state, local or non-U.S. tax laws.
     You are advised to consult your own tax advisor with respect to the
specific tax consequences to you of purchasing, holding or disposing of the
ordinary shares.

     Distributions on the Ordinary Shares

     A distribution paid by us with respect to the ordinary shares to a U.S.
holder will be treated as ordinary income to the extent that the distribution
does not exceed our current and accumulated earnings and profits, as
determined for U.S. federal income tax purposes.  The amount of any
distribution which exceeds these earnings and profits will be treated
first as a non-taxable return of capital reducing the U.S. holder's tax
basis in its ordinary shares to the extent thereof, and then as capital
gain from the deemed disposition of the ordinary shares.

     Dividends paid by us in NIS will be included in the income of U.S.
holders at the dollar amount of the dividend, based upon the spot rate of
exchange in effect on the date of the distributions. U.S. holders will have
a tax basis in the NIS for U.S. federal income tax purposes equal to that dollar
value.  Any subsequent gain or loss in respect of the NIS arising from exchange

                                                                            -49-


rate fluctuations will be taxable as ordinary income or loss and will be U.S.
source income or loss.

     Subject to the limitations set forth in the Code, U.S. holders may elect to
claim as a foreign tax credit against their U.S. federal income tax liability
the Israeli income tax withheld from dividends received in respect of the
ordinary shares.  The limitations on claiming a foreign tax credit include among
others, computation rules under which foreign tax credits allowable with respect
to specific classes of income cannot exceed the U.S. federal income payable with
respect each such class.  In this regard, dividends paid by us will generally be
foreign source 'passive income' for U.S. foreign tax credit purposes or, in the
case of a financial services entity, 'financial services income.' U.S. holders
that do not elect to claim a foreign tax credit may instead claim a deduction
for the Israeli income tax withheld.  The rules relating to foreign tax credits
are complex, and you should consult your own tax advisor to determine whether
and to what extent you would be entitled to this credit.

     Disposition of Ordinary Shares

     Upon the sale or exchange of the ordinary shares, a U.S. holder generally
will recognize capital gain or loss in an amount equal to the difference between
the amount realized on the sale or exchange and the U.S. holder's tax basis in
the ordinary shares.  The gain or loss recognized on the sale or exchange of the
ordinary shares generally will be long-term capital gain or loss if the U.S.
holder held the ordinary shares for more than one year at the time of the sale
or exchange.

     Gain or loss recognized by a U.S. holder on a sale, exchange or other
disposition of ordinary shares generally will be treated as U.S. source income
or loss for U.S. foreign tax credit purposes.

     Passive Foreign Investment Companies

     We will be a passive foreign investment company if either (1) 75% or more
of our gross income in a taxable year is passive income; or (2) 50% or more of
the value, determined on the basis of a quarterly average of our assets in a
taxable year are held for the production of, or produces, passive income.  If
we own (directly or indirectly) at least 25% by value of the stock of another
corporation, we will be treated for purposes of the foregoing test as owning
our proportionate share of the other corporation's assets and directly earning
our proportionate share of the other corporation's income.  If we are a
passive foreign investment company:

     -     a U.S. holder who has held our shares during more than one taxable
year during which we were a passive foreign investment company will be
required to report any gain on the disposition of the shares as ordinary
income rather than capital gain.  That U.S. holder will also be required to
compute the tax liability on that gain, as well as the dividends and others
distributions, as if the income had been earned ratably over each day in the
holding period of the shareholder;

     -     a U.S. holder must pay tax on amounts so allocated to prior
taxable years at the highest income tax rate for each taxable year during
which we were a passive foreign investment company and for which the items
are treated as having been earned regardless of the rate otherwise applicable
to that U.S. holder during those taxable years;

     -     the taxes attributable to the prior years will be subject to an
interest charge at the rate applicable to deficiencies for income tax; and

     -     a U.S. holder who acquires our shares in that corporation from a
decedent that will be denied the normally available step-up in tax bases in
fair market value for the shares at the date of death and instead will have
a tax basis equal to the decedent's tax basis.

     Our Status as a Passive Foreign Investment Company

     We were not a passive foreign investment company in 2000.  However,
passive foreign investment company status is determined as of the end of the
taxable year and is dependant on a number of factors, including the value of a
corporation's assets and the amount and type of its gross income.  In
particular, the value of our assets may be affected by factors outside our
control, including fluctuations in the value of our stock, which may be deemed

                                                                            -50-


to impute the value of our intangible assets.  Therefore, there can be no
assurance that we will not become a passive foreign investment company in 2001
or in a future year.

     We will notify U.S. holders in the event we conclude that we will be
treated as a passive foreign investment company for any taxable year to enable
U.S. holders to consider whether or not to elect to treat us as a 'qualified
electing fund' for U.S. federal income tax purposes or to elect to 'mark to
market' the ordinary shares.  If a U.S. holder makes one of these two elections,
distributions and gain will not be recognized ratably as ordinary income over
the U.S. holder's holding period or be subject to an interest charge as
described above.  Further, gain on the sale of the ordinary shares will be
characterized as capital gain and the denial of basis step-up at death described
above will not apply.  However, U.S. holders making one of the two elections
may be subject to current income recognition, even if we do not distribute any
Cash. Both of these elections are subject to a number of specific rules and
requirements, and you are urged to consult your tax advisor concerning these
elections if we become a passive foreign investment company.

     Backup Withholding

     A U.S. holder may be subject to backup withholding at rate of 31% with
respect to dividend payments and receipt of the proceeds from the disposition
of the ordinary shares. Backup withholding will not apply with respect to
payments made to certain exempt recipients, such as corporations and tax-exempt
organizations, or if a U.S. holder provides a tax payer identification number
(or certifies that he has applied for a taxpayer identification number),
certifies that such holder is not subject to backup withholding or otherwise
establishes an exemption.  Backup withholding is not an additional tax and may
be claimed as a credit against the U.S. federal income tax liability of a U.S.
holder, or alternatively, the U.S. holder may be eligible for a refund of any
excess amounts withheld under the backup withholding rules, in either case,
provided that the required information is furnished to the Internal Revenue
Service.

     Non-U.S. Holders of Ordinary Shares

     Except as provided below, a non-U.S. holder of ordinary shares except
certain former U.S. citizens and long-term residents of the United States
generally will not be subject to U.S. federal income or withholding tax on the
receipt of dividends on, and the proceeds from the disposition of, an ordinary
share, unless such item is effectively connected with the conduct by the non-
U.S. holder of a trade or business in the United States or, in the case of a
resident of a country which has an income tax treaty with the United States,
such item is attributable to a permanent establishment in the United States or,
in the case of an individual, a fixed place of business in the United States.
In addition, gain recognized by an individual non-U.S. holder will be subject
to tax in the United States if the non-U.S. holder is present in the United
States for 183 days or more in the taxable year of the sale and certain other
conditions are met.

     Non-U.S. holders will not be subject to information reporting or backup
withholding with respect to the payment of dividends on ordinary shares
unless the payment is made through a paying agent, or an office of a paying
agent, in the United States.  Non-U.S. holders generally will be subject to
information reporting and, under regulations generally effective January 1,
2001, to backup withholding at a rate of 31% with respect to the payment
within the United States of dividends on the ordinary shares unless the
holder provides its taxpayer identification number, certifies to its foreign
status, or otherwise establishes an exemption.

     Non-U.S. holders generally will be subject to information reporting and
backup withholding at a rate of 31% on the receipt of the proceeds from the
disposition of the ordinary shares to, or through, the United States office
of a broker, whether domestic or foreign, unless the holder provides a
taxpayer identification number, certifies to its foreign status or otherwise
establishes an exemption. Non-U.S. holders will not be subject to information
reporting or backup withholding with respect to the receipt of proceeds from
the disposition of the ordinary shares by a foreign office of a broker;
provided, however, that if the broker is a U.S. person or a 'U.S. related
person, 'information reporting (but not backup withholding) will apply unless
the broker has documentary evidence in its records of the non-U.S. holder's
foreign status or the non-U.S. holder certifies to its foreign status under
penalties of perjury or otherwise establishes an exemption.  For this purpose,
a 'U.S. related person' is a broker or other intermediary that maintains one
or more enumerated U.S. relationships.  Backup withholding is not an additional
tax and may be claimed as a credit against the U.S. federal income tax
liability of a U.S. holder, or alternatively, the U.S. holder may be eligible

                                                                            -51-


for a refund of any excess amounts withheld under the backup withholding rules,
in either case, provided that the required information is furnished to the
Internal Revenue Service.

     If a foreign judgment is enforced by an Israel court, it generally will be
payable in Israeli currency, which can then be converted into non-Israeli
currency and transferred out of Israel.  The usual practice in an action before
an Israeli court to recover an amount in a non-Israeli currency is for the
Israeli court to render judgment for the equivalent amount in Israeli currency
at a rate of exchange in force on the date thereof, but the judgment debtor may
make payment in foreign currency.  Pending collection, the amount of the
judgment of an Israeli court stated in Israeli currency ordinarily will be
linked to the Israeli consumer price index plus interest at the annual statutory
must bear the risk of unfavorable exchange rates.

F.     Dividends and paying agents

       Not applicable.

G.     Statement by Experts

       Not applicable.

H.     Documents on Display

     You may request a copy of our U.S. Securities and Exchange Commission
filings, at no cost, by writing or calling us at MIND C.T.I. Ltd., Industrial
Park, Building 7, Yoqneam, 20692, Israel, Attention:  Elad Naggar, Chief
Financial Officer, telephone 972-4-993-6666.

     A copy of each report submitted in accordance with applicable United States
law is available for review at our principal executive offices.
A copy of each document (or a translation thereof to the extent not in English)
concerning MIND that is referred to in this Annual Report on Form 20-F, is
available for public review at our principal executive offices at Industrial
Park, Building 7, Yoqneam, 20692, Israel.

I.     Subsidiary Information


       Not applicable.

Item 11.     Quantitative and Qualitative Disclosures about Market Risk

     We endeavor to limit our balance sheet exposure to the changes between the
U.S. dollar and other currencies by attempting to maintain a similar level of
assets and liabilities in any given currency, to the extent possible.  However,
this method of matching levels of assets and liabilities of the same currency is
not always possible to achieve.

     The following table sets forth our consolidated balance sheet exposure as
of December 31, 2000.
                                                      Current
                                                      Monetary
                                                       Asset
Currency                                           (Liability-net)
----------                                         (In thousands)
                                                -------------------
NIS                                               $        241
Other non-dollar currencies                       $      1,052
                                                  ------------
                                                  $      1,293
                                                    ==========

     The balance sheet exposure as of December 31, 2000 is $1.2 million in net
assets.  Our annual expenses in NIS are approximately $9.0 million.  An
increase of the value of the NIS against the U.S. dollar by 1% may result in an
increase in our operating expenses by approximately $90,000.

Item 12.     Description of Securities Other Than Equity Securities

                                                                            -52-


     Not applicable.

       PART II

Item 13.     Defaults, Dividend Arrearages and Delinquencies

     Not applicable.

Item 14.     Material Modifications to the Rights of Security Holders and Use
of Proceeds

E.     Use of Proceeds

     The effective date of our first registration statement, filed on Form F-1
under the Securities Act of 1933 (No. 333-12266) relating to the initial public
offering of our ordinary shares, was August 7, 2000. A total of 3,000,000 of
our ordinary shares were sold at a price of $10.00 per share to an underwriting
syndicate led by Lehman Brothers, U.S. Bancorp Piper Jaffray , CIBC World
Markets and Fidelity Capital Markets (the 'Underwriters').  The offering
commenced on August 8, 2000 and closed on August 11, 2000.  As part of the same
offering, an additional 450,000 of our ordinary shares were sold to the
Underwriters in connection with the exercise of their over-allotment option.
The initial public offering resulted in gross proceeds to us of $34.5 million,
$2.4 million of which was applied toward the underwriting discount. Expenses
related to the offering totaled approximately $2.1 million.  Net proceeds to us
were $29.9 million.  From the time of receipt through December 31, 2000, all
proceeds have been invested in highly liquid bank deposits.

     All of the foregoing offering-related expenses were direct or indirect
payments to persons other than (i) directors, officers or their associates: (ii)
persons owning ten percent (10%) or more of our ordinary shares; or (iii)
affiliates of MIND.

Item 15.     [Reserved]

Item 16.     [Reserved]

        PART III

Item 17.     Financial Statements

             Not applicable.

Item 18.     Financial Statements

Attached.

ITEM 19.     EXHIBITS

(a)     The following consolidated financial statements and related auditors'
report are filed as part of this Annual Report.

                                                     Page

Table of Contents to 2000 Consolidated
          Financial Statements                       F-1
Report of Independent Auditors                       F-2
Consolidated Financial Statements Balance Sheets     F-3 - F-4
Statements of Income                                 F-5
Statements of changes in shareholders' equity         F-6
Statements of cash flows                             F-7
Notes to financial statements                        F-9 - F-30

(b)     Exhibits:

        The following exhibits are filed as part of this Annual Report:

Exhibit        Exhibit
No.
1.1*           Memorandum of Association

1.2*           Articles of Association
4.1*           MIND 1998 Share Option Plan

4.2*           MIND 2000 Share Option Plan

8**            List of Subsidiaries

10.1*          Share Purchase Agreement by and among MIND C.T.I. Ltd., Lior
Salansky, Monica Eisinger, ADC Teledata Communications Ltd. and the Purchasers
listed therein, dated March 30, 2000

10.2*          Registration Rights Agreement by and among MIND C.T.I. Ltd., Lior
Salansky, Monica Eisinger, ADC Teledata Communications Ltd. and the Investors
listed therein, dated as of March 30, 2000

10.3*          Shareholders Agreement by and among MIND C.T.I. Ltd., Lior
Salansky, Monica Eisinger, ADC Teledata Communications Ltd. and the Purchasers
listed therein, as amended by an amendment agreement dated July 10, 2000

10.4*          Escrow Agreement by and among Lior Salansky, Oscar Gruss & Son,
Yaron Amir, Ilan Melamed, the Purchasers listed therein and Ravillan,
Volovelsky, Dinstein, Sneh & Co. as Trustees, dated April 6, 2000

10.5*          Share Purchase Agreement by and among Lior Salansky, Oscar Gruss
& Son Inc., Yaron Amir, Ilan Melamed and the Purchasers listed therein, dated
April 6, 2000

10.6*          Waiver between Summit, ADC Teledata Communications Ltd., Monica
Eisinger and Lior Salansky dated August 1, 2000

10.7**, Consent of Kesselman & Kesselman, independent auditors of MIND C.T.I.
Ltd.

*     Incorporated by reference to MIND C.T.I. Ltd's Registration
Statement (File 333-12266) F-1.

**    Filed herewith.


                                   SIGNATURES

     The Registrant hereby certifies that it meets all of the requirements for
filing on Form 20?F and has duly caused and authorized the undersigned to sign
this annual report on its behalf.


                                  MIND CTI LTD.

                           /s/ Monica Eisinger
                  ----------------------------

                  By:     Monica Eisinger
                    --------------------------
                  Title:  President
                    --------------------------
                           Date:   May __, 2001
   --------------------------

        EXHIBIT 8

   List of Subsidiaries

Name of Subsidiary   Jurisdiction of Incorporation

MIND C.T.I. Inc.     New Jersey

MIND Software SRL    Romania

MINDIA               Netherlands

MIND Japan KK        Japan

                                                                            -54-


        EXHIBIT 10.7

    Consent Of Independent Public Accountants

     We hereby consent to the incorporation by reference in this Annual Report
on Form 20-F of MIND C.T.I Ltd. for the year ended December 31, 2000, and in the
Registration Statements on Form S-8 (Registration No. 333-54632) of our Report
dated February 12, 2001, which appears on page F-2 of the consolidated financial
statements of MIND C.T.I Ltd.






      /s/ Kesselman & Kesselman
Tel-Aviv, Israel   Kesselman & Kesselman
May __, 2001   Certified Public Accountants (Isr.)




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