<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               AMENDMENT NO. 1 ON
                                   FORM 10-K/A
     For Annual and Transitional Reports Pursuant to Sections 13 or 15(d) of
                      The Securities Exchange Act of 1934


      [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

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

                           Commission File No. 0-25040
                                  APPLIX, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                               <C>
                 Massachusetts                       04-2781676
                 -------------                       ----------
        (State or other jurisdiction of            (I.R.S. Employer
         incorporation or organization)           Identification No.)

   112 Turnpike Road, Westboro, Massachusetts         01581-2831
   ------------------------------------------         ----------
    (Address of principal executive offices)          (Zip Code)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 870-0300

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                    Common Stock, $.0025 par value 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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]

         On March 15, 2000, the aggregate market value of Common Stock held by
non-affiliates of the registrant was $33,810,365 based on the closing price of
the Common Stock on the Nasdaq National Market on March 15, 2000. The number of
shares of Common Stock outstanding as of March 15, 2000 was 11,760,127.
<PAGE>   2
This Amendment on Form 10-K/A to the Registrant's Report on Form 10-K filed with
the Commission on April 2, 2001 is being filed for the purpose of amending the
Quarterly Operating Results for 2000 and 1999 contained in Management's
Discussion and Analysis of Financial Condition and Results of Operations,
amending the exhibit index .The amendment is a reclassification of a fourth
quarter adjustment. This adjustment has been reclassified to all four quarters.
The Net Income on an annual basis has not changed. In addition, a material
contract is being filed as an exhibit.

                                     PART II


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Incorporated by reference from Exhibit B attached hereto.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a) Index to Consolidated Financial Statements.

                  3. The Exhibits filed as a part of this Annual Report on Form
         10-K are the following:

<TABLE>
<S>                                <C>  <C>
                           3.1(1)  --   Restated Articles of Organization.

                           3.2(1)  --   By-laws.

                           4.1(2)  --   Form of Rights Agreement, dated as of
                                        September 18, 2000, between the Company and
                                        American Stock Transfer & Trust Company,
                                        which includes as Exhibit A the terms of the
                                        Series A Junior Participating Preferred
                                        Stock, as Exhibit B the Form of Rights
                                        Certificate, and as Exhibit C the Summary of
                                        Rights to Purchase Preferred Stock.

                         10.1(1)+  --   1994 Equity Incentive Plan.

                         10.2(1)+  --   1984 Stock Option Plan.

                          10.3(3)  --   Commercial Lease between the Registrant and
                                        Westboro II-III, Inc. dated January 5, 1996.

                          10.4(3)  --   Commercial Lease between the Registrant and
                                        Westboro I Real Estate Corp. dated January
                                        15, 1996.

                          10.5(4)  --   2000 Director Stock Option Plan.

                          10.6(5)  --   Secured Promissory Note and Pledge
                                        Agreement entered into on July 31, 2000
                                        between the Company and Alan Goldsworthy.

                          10.7(5)  --   Secured Promissory Note and Pledge
                                        Agreement entered into on July 31, 2000
                                        between the Company and Ed Terino.

                           10.8*   --   Single Tenant Commercial Lease by and
                                        between Westborough Land Realty Trust and
                                        the Registrant, dated January 23, 2001.
</TABLE>

<PAGE>   3

<TABLE>
<S>                                <C>  <C>
                           10.9*   --   Employment agreements dated June 27, 2000
                                        between the Registrant and Jitendra Saxena
                                        and Supplemental Agreement to Employment
                                        Agreement, dated March 19, 2001 between the
                                        Registrant and Jitendra Saxena.

                           10.10   --   Asset Purchase Agreement by and among
                                        Real-Time International, Inc., VistaSource,
                                        Inc., Applix, Inc., Veriteam, Inc.,
                                        VistaSource France, VistaSource GmbH and
                                        VistaSource UK, Ltd., dated as of March 14,
                                        2001.

                           21.1*   --   Subsidiaries of the Registrant.

                           23.1*   --   Consent of PricewaterhouseCoopers LLP.
</TABLE>


         (1)      Incorporated by reference from the Company's Registration
                  Statement on Form S-1 (File no. 33-85688).

         (2)      Incorporated by reference to the Company's Registration
                  Statement on Form 8-A dated September 20, 2000.

         (3)      Incorporated by reference to the Registrant's Report on Form
                  10-K for the fiscal year ended December 31, 1995, as filed
                  with the Commission on April 1, 1996.

         (4)      Incorporated by reference to the Registrant's Report on Form
                  10-K for the fiscal year ended December 31, 1999, as filed
                  with the Commission on March 30, 2000.

         (5)      Incorporated by reference to the Registrant's Report on Form
                  10-Q for the quarter ended September 30, 2000, as filed with
                  the Commission on November 14, 2000.

         *        Previously filed.

         +        Management contract or compensatory plan.

                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to the
Registrant's Report on Form 10-K to be signed on its behalf as of June 15, 2001
by the undersigned, thereunto duly authorized.

                                           APPLIX, INC.

                                           By: /s/ Alan Goldsworthy
                                           Alan Goldsworthy
                                           President and Chief Executive Officer
<PAGE>   4
                                                                       EXHIBIT B
                                  APPLIX, INC.

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

         The Company was incorporated in 1983 to develop and market software
applications for the Unix workstation market. In 1986, the Company introduced
Alis, its first office automation product, which accounted for substantially all
of the Company's revenue through 1990. Alis was replaced in 1991 by the Aster*x
product family, which represented the next generation of UNIX applications and
tools. In September 1993, the Company introduced its Applixware suite of desktop
and development tools for accessing, analyzing and communicating information in
real time, to replace the Company's Aster*x product family, on which it was
based. In December 1994, the Company went public through an initial public
offering.

         In October 1995, the Company acquired Target Systems Corporation, which
developed and marketed customer interaction software, in a transaction accounted
for under the purchase method of accounting. Beginning November 1, 1995, the
Company's operating results have included the operating results of Target
Systems.

         In October 1996, the Company acquired Sinper Corporation, doing
business under the name TM1, which developed and marketed software used for
on-line analytical processing (OLAP), in a transaction accounted for under the
purchase method of accounting. Beginning November 1, 1996, the Company's
operating results have included the operating results of Sinper Corporation.

         These two acquisitions enabled Applix to expand its product offerings
to include customer analytics and business planning. Applix focuses on customer
analytics and business planning through iCRM, the Company's solution in the
customer relationship management (CRM) market and iPlanning, the Company's real
time multi-dimensional analysis software for business planning solutions.

         The Company acquired Veriteam, Inc. doing business as CoSource.com, in
December 1999 to expand into the Linux Market with an Internet accessible,
collaborative open source software development web site. In April 2000, the
Company announced the establishment of VistaSource, Inc. to focus on the
emerging Linux and open source markets. VistaSource, Inc. was established with
the assets the Applixware product suite and CoSource.com.

         In December 2000, the Board of Directors committed to a plan to dispose
of the operations of its VistaSource, Inc. subsidiary through a sale of the
business. On March 14, 2001, the Company signed a definitive agreement to sell
substantially all of the assets of the VistaSource business unit. The segment's
results of operations including revenue, operating expenses, other income and
expense and income taxes for fiscal 1998, 1999 and 2000, have been reclassified
in the accompanying statements of operations as discontinued operations. The
Company's balance sheet at December 31, 2000 reflects the net liabilities of the
VistaSource business unit as net liabilities of discontinued operations within
current liabilities. The balance sheet at December 31, 1999 and the statements
of cash flows for fiscal years 1998, 1999 and 2000
<PAGE>   5
have not been reclassified for the discontinued business. The estimated losses
associated with the disposition of VistaSource are estimated to be approximately
$3.6 million. Those losses for VistaSource include approximately $367,000 in
losses from operations from January 1, 2000 through the measurement date of
December 17, 2000, $2.2 million relating to the removal of the net assets of
VistaSource, $1.1 million in losses from operations from the measurement date
through the estimated date of disposal and $1.3 million in provisions for
employee severance and benefits, transaction costs, bank fees and other
contractual commitments. These losses are partially offset by expected proceeds
of $1.3 million from the divestiture.

RESULTS OF CONTINUING OPERATIONS
(UNAUDITED)

The following table sets forth, for the periods indicated, certain financial
data of the Company as a percentage of total revenue from continuing operations.

<TABLE>
<CAPTION>
 For the years ended December 31,                      2000             1999              1998
                                                       ----             ----              ----
<S>                                                  <C>              <C>               <C>
 License revenue                                       59.0%            58.6%             72.8%
 Service revenue                                       41.0%            41.4%             27.2%
                                                      -----            -----             -----
                  Total revenue                       100.0%           100.0%            100.0%
 Cost of license revenue                                4.9%             3.9%              6.9%
 Cost of service revenue                               34.2%            31.3%             22.4%
                                                      -----            -----             -----
                  Gross margin                         60.9%            64.8%             70.7%
                                                      -----            -----             -----

 Operating expenses:
             Selling and marketing                     63.6%            54.1%             75.1%
             Research and development                  18.6%            19.2%             20.4%
             General and administrative                10.7%            12.2%             12.7%
                                                      -----            -----             -----
                  Total operating expenses             92.9%            85.5%            108.2%
                                                      -----            -----             -----

 Operating loss                                       (32.0%)          (20.7%)           (37.5%)
 Interest income - net                                  2.9%             2.8%              3.4%
 Provision for (benefit from) income taxes              8.9%            (6.4%)           (12.6%)
                                                      -----            -----             -----
 Net loss from continuing operations                  (38.0%)          (11.5%)           (21.5%)
                                                      =====            =====             =====
</TABLE>
<PAGE>   6
QUARTERLY OPERATING RESULTS FOR 2000 AND 1999
(UNAUDITED)

<TABLE>
<CAPTION>
(In thousands, except per share data)                       Q1 2000          Q2 2000          Q3 2000          Q4 2000
                                                            -------          -------          -------          -------
<S>                                                        <C>              <C>              <C>              <C>
Revenue from continuing operations                         $  9,277         $  8,938         $ 10,967         $ 11,057
Revenue from discontinued operation                           3,144            2,708            1,898            2,500
                                                           --------         --------         --------         --------
Revenue as previously reported in the 10-Q                 $ 12,421         $ 11,646         $ 12,865         $ 13,557
                                                           ========         ========         ========         ========

Gross margin from continuing operations                    $  5,280         $  5,101         $  7,209         $  6,907
Gross margin from discontinued operation                      2,628            1,979            1,183            1,827
                                                           --------         --------         --------         --------
Gross margin as previously reported in the 10-Q            $  7,908         $  7,080         $  8,392         $  8,734
                                                           ========         ========         ========         ========

Net loss from continuing operations                        ($ 1,544)        ($ 3,054)        ($ 1,124)        ($ 9,585)
Net income (loss) from discontinued operation                   747             (214)          (1,101)          (3,037)
                                                           --------         --------         --------         --------
Net loss                                                   ($   797)        ($ 3,268)        ($ 2,225)        ($12,622)
                                                           ========         ========         ========         ========

Weighted average number of basic and diluted shares
outstanding                                                  11,043           11,245           11,352           11,580
Net loss per share                                         ($  0.07)        ($  0.29)        ($  0.20)        ($  1.09)
</TABLE>

(UNAUDITED)

<TABLE>
<CAPTION>
(In thousands, except per share data)                       Q1 1999          Q2 1999          Q3 1999          Q4 1999
                                                            -------          -------          -------          -------
<S>                                                        <C>              <C>              <C>              <C>
Revenue from continuing operations                         $  8,249         $  7,963         $ 10,645         $ 10,014
Revenue from discontinued operation                           4,697            6,189            3,921            4,163
                                                           --------         --------         --------         --------
Revenue as previously reported in the 10-Q                 $ 12,946         $ 14,152         $ 14,566         $ 14,177
                                                           ========         ========         ========         ========

Gross margin from continuing operations                    $  5,341         $  4,990         $  7,185         $  6,403
Gross margin from discontinued operation                      3,969            5,531            3,367            3,543
                                                           --------         --------         --------         --------
Gross margin as previously reported in the 10-Q            $  9,310         $ 10,521         $ 10,552         $  9,946
                                                           ========         ========         ========         ========

Net loss from continuing operations                        $ (1,319)        $ (1,935)        $   (362)        $   (635)
Net income from discontinued operation                        1,714            2,590            1,209            1,118
                                                           --------         --------         --------         --------
Net income                                                 $    395         $    655         $    847         $    483
                                                           ========         ========         ========         ========

Weighted average number of basic and diluted shares
outstanding                                                  10,439           10,502           10,660           10,889
Net income per share                                       $   0.04         $   0.06         $   0.08         $   0.04
</TABLE>
<PAGE>   7
YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999

         Total revenue from continuing operations increased to $40,239,000 in
2000 from $36,871,000 in 1999. License revenue in 2000 of $23,735,000 was
approximately 10% higher than 1999 at $21,610,000 and represented 59% of revenue
from continuing operation for both years. Domestic license revenue from
continuing operations increased 28% to $11,011,000 from $8,621,000 in 1999.
International license revenue from continuing operations decreased 2% to
$12,724,000 in 2000 from $12,989,000 in 1999. The Company expects domestic
license revenue to increase as a percent of total license revenue in the future.
The Company's three largest customers (including resellers) comprised a total of
9% of total license revenue from continuing operations during 2000 and 7% of
total license revenue from continuing operations in 1999. The Company expects
license revenue as a percent of total revenue to increase in the future due to
increased revenue from channel partners.

         Service revenue from continuing operations increased 8% to $16,504,000
in 2000 from $15,261,000 in 1999 and represented 41% of total revenue from
continuing operations for both years. The Company expects service revenue from
continuing operations to decrease as a percent of total revenue.

         Gross margin from continuing operations decreased to 61% in 2000 from
65% in 1999. License revenue gross margin from continuing operations decreased
to 92% in 2000 from 93% in 1999. Service revenue gross margin from continuing
operations decreased to 17% in 2000 from 25% in 1999, due to an increase in the
number of support and consulting personnel and lower utilization of consulting
resources in 2000 versus 1999.

         Selling and marketing expenses from continuing operations, which
include domestic sales and marketing expenses and the cost of the Company's
international operations, increased 28% to $25,580,000 in 2000 from $19,957,000
in 1999. Selling and marketing expenses from continuing operations increased as
a percentage of total revenue to 64% from 54% in 1999. The Company invested an
incremental $ 5 - $ 5.5 million in sales and marketing initiatives in 2000 to
reposition and rebrand the iCRM and iPlanning solutions and expand its sales
organization. The additional expenditures related primarily to these increased
staffing levels associated with hiring additional sales representatives and
additional spending for marketing programs.

         Research and development expenses from continuing operations, which
consist primarily of employee salaries, benefits and related expenses, increased
6% to $7,502,000 in 2000 from $7,101,000 in 1999, representing 19% of total
revenue from continuing operations for both years. The increase in research and
development costs is primarily due to adding thin client and distinct features
and functionality to the iCRM and iPlanning solutions.

         General and administrative expenses from continuing operations, which
include the costs of the Company's finance, human resources and administrative
functions, decreased 4% to $4,292,000 in 2000 from $4,485,000 in 1999, and
decreased slightly as a percentage of total revenue to 11% in 2000 from 12% in
1999. The general and administrative expenses from continuing operations
includes corporate overhead costs which supported continuing and discontinued
operations. The Company expects that the general and administrative costs as a
percent of revenue will decrease in the future as the corporate
<PAGE>   8
overhead costs related to VistaSource will be reduced or eliminated in
connection with the disposition of VistaSource.

         Net interest income from continuing operations increased to $1,153,000
in 2000 from $1,031,000 in 1999 due to slightly higher interest rates.

         The Company recorded a provision for income taxes of $3.6 million in
2000. This provision includes $7,832,000 relating to the establishment of a
valuation allowance against the deferred tax asset that was established
following the decision to dispose of VistaSource and based on the Company's
historical operating losses from continuing operations. The valuation allowance
was established during the fourth quarter of 2000 and reflects the reversal of
the income tax benefits recognized in the first three quarters of 2000 as well
as the deferred tax asset at December 31, 1999. The Company also recorded a
provision for income taxes of $566,000 in 2000 in connection with taxable income
in its foreign subsidiaries.

         Net loss from continuing operations was $15,307,000 compared to
$4,251,000 in 1999. The increase in net loss was primarily attributed to
increased sales and marketing costs of $5.6 million and the establishment of a
valuation allowance on the Company's deferred tax asset of $7.8 million. The
increase in sales and marketing costs was attributed to the Company's previous
announced plans to reposition its customer analytics and business planning
software business which resulted in incremental spending of $5.0 - $5.5 million.

         The net loss from discontinued operation was $367,000 compared to the
net income from discontinued operation of $6,631,000 in 1999. The reduced net
income from discontinued operation was attributed to lower revenue from the
VistaSource business unit of $9 million and increased operating expenses
associated with the repositioning of VistaSource, Inc.

         The loss on the disposal of VistaSource was $3.2 million attributed to
estimated expenses of $2.4 million to operate the business through its
disposition in the end of March 2001, $2.2 million relating to the removal of
the net assets of VistaSource, offset by $1.3 million in the expected proceeds
from the distribution.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

         Total revenue from continuing operations increased to $36,871,000 in
1999 from $29,062,000 in 1998. License revenue from continuing operations in
1999 increased 2% to $21,610,000 from $21,153,000 in 1998. Domestic license
revenue from continuing operations decreased 13% to $7,177,000 from $8,283,000
in 1998. Domestic license revenue declined in 1999 primarily due to a
termination of an OEM agreement with Hyperion Software, Inc., which acquired a
competitive product, and attrition in the Company's domestic sales organization.
International license revenue from continuing operations increased 13% to
$14,482,000 in 1999 from $12,869,000 in 1998 due to continued demand for the
Company's products in the international marketplace and to an expanded
international presence. The Company's three largest customers (including
resellers) comprised a total of 7% of total license revenue during 1999 and 12%
of total license revenue in 1998.

         Service revenue from continuing operations increased 93% to $15,261,000
(or 41% of total revenue from continuing operations) in 1999 from $7,909,000 (or
27% of total revenue from continuing operations) in

<PAGE>   9
1998. This increase was due to increased maintenance revenue as well as a
continued emphasis by the Company on selling training and consulting services
for its iCRM and iPlanning solutions.

         Gross margin from continuing operations decreased to 65% in 1999 from
71% in 1998. License revenue gross margin from continuing operations increased
to 93% in 1999 from 91% in 1998 due to the reduction of documentation and
operations support expense, which was partially offset by an increase in royalty
costs. The increase in royalty expense was due to higher royalty costs
associated with the Applix iPlanning solution. Service revenue gross margin from
continuing operations increased to 25% in 1999 from 18% in 1998 due to improved
utilization of consulting resources and decreased use of third party
consultants.

         Selling and marketing expenses from continuing operations decreased 9%
to $19,957,000 in 1999 from $21,852,000 in 1998. Selling and marketing expenses
from continuing operations decreased as a percentage of total revenue to 54%
from 75% in 1998 due to attrition in staffing and lower spending in marketing
programs.

         Research and development expenses from continuing operations increased
20% to $7,101,000 in 1999 from $5,918,000 in 1998, but decreased slightly as a
percentage of total revenue to 19% from 20% in 1998. The increase in spending
was related to the investment in product development.

         General and administrative expenses from continuing operations
increased 22% to $4,485,000 in 1999 from $3,678,000 in 1998, and increased
slightly as a percentage of total revenue between these years from 12% to 13%.
The increase in expenses was primarily due to the increase in staffing levels,
recruiting costs and additional facilities costs. The general and administrative
expenses from continuing operations include overhead costs associated with
VistaSource.

         Net interest income from continuing operations increased to $1,031,000
in 1999 from $985,000 in 1998 due to slightly higher interest rates and slightly
higher cash balances available for investments during 1999.

         The benefit from income taxes was $2.3 million representing a 36% tax
rate for continuing operations.

         The net income from discontinued operations was $6.6 million in 1999
compared to $7.4 million in 1998. The decrease in net income was attributed to
lower revenues associated with VistaSource's legacy business.

LIQUIDITY AND CAPITAL RESOURCES

         The Consolidated Statements of Cash Flows for fiscal years 2000, 1999
and 1998 include the cash flows from the VistaSource segment on a
fully-consolidated basis and have not been restated to reflect discontinued
operations.

         The Company generated cash from operations in 1998 and 1999. In fiscal
2000, the Company used cash from operations of $8,972,000. The Company invested
an incremental $5 - $5.5 million in sales and marketing initiatives in 2000 to
reposition and rebrand the iCRM and iPlanning solutions and expand its sales
organization. In addition, this increase in the use of cash resulted from the
fiscal 2000 net loss totaling
<PAGE>   10
$18,912,000, partially offset by the establishment of a valuation allowance
against deferred tax assets of $3,001,000, non-cash depreciation and
amortization expenses of $3,935,000, and provision for loss on discontinued
operation of $3,238,000 during fiscal 2000. The Company's increase in cash used
for working capital is attributable to an increase of $1.2 million in accounts
receivable and a use of cash of $1.0 million relating to a decrease in deferred
revenue which were partially offset by cash provided by other assets, accounts
payable and accrued liabilities totaling $1.7 million. The increase in the
accounts receivable related to the increase in revenue in the fourth quarter of
2000 coupled with some deterioration of the aging of the accounts receivable
related to several customer accounts with balances greater than $100,000 that
were outstanding for more than 90 days. Management assesses the collectibility
of accounts when revenue is recognized and subsequently reviews receivables for
collectibility on a regular basis.

         Cash provided by investing activities totaled $10,697,000 in 2000
primarily because of a movement of short-term investments into cash, which the
Company required for operations. Additional investing activities included the
purchase of fixed assets in the amount of $2,655,000 and funding of capitalized
software development of $1,803,000.

         Cash provided by financing activities totaled $524,000, which was
comprised of proceeds from exercise of incentive stock options of $1,184,000
offset by the payment of notes payable of $660,000.

As of December 31, 2000, the Company had cash, cash equivalents and short-term
investments of $12,546,000 and working capital of $12,851,000.

         Management believes that the cash and cash equivalents currently
available will be sufficient to fund the Company's operations at least through
the next twelve months. The Company plans to spend approximately $1 million on
leasehold improvements during the next 12 months. The Company has no commitments
or specific plans for any other significant capital expenditures in the next
twelve months. Management believes that the Company will generate sufficient
revenue, raise additional capital or reduce certain discretionary spending to
support ongoing operations and achieve its intended business objectives. To
date, inflation has not had a material adverse effect on the Company's operating
results.

RECENT ACCOUNTING ANNOUNCEMENTS

In June 1998, The Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. The Company expects that SFAS
No. 133 will result in an increase in its reported assets and liabilities, but
does not expect a material effect on its result of operations. The Company will
adopt SFAS No. 133 as required by SFAS No. 137, "Deferral of the effective date
of FASB Statement No. 133," in 2001.
<PAGE>   11
RISK FACTORS



         This annual report on Form 10-K contains forward-looking statements.
For this purpose, any statements contained herein relating to future events or
developments may be considered to be forward-looking statements. Although not a
complete list of words that might identify forward-looking statements, we use
the words "believes," "anticipates," plans," "expects," "intends," and similar
expressions to identify forward-looking statements. There are a number of
important factors that could cause our actual results to differ materially from
those indicated by these forward-looking statements. Factors that could cause or
contribute to such differences include those discussed below, as well as those
discussed elsewhere in this Form 10-K.


OUR STOCK PRICE MAY BE ADVERSELY AFFECTED BY SIGNIFICANT FLUCTUATIONS IN OUR
QUARTERLY RESULTS.

         We expect to experience significant fluctuations in our future results
of operations due to a variety of factors, many of which are outside of our
control, including:

         -        demand for and market acceptance of our products and services;

         -        the size and timing of customer orders, particularly large
                  orders, some of which represent more than 10% of total revenue
                  during a particular quarter;

         -        introduction of products and services or enhancements by us
                  and our competitors;

         -        competitive factors that affect our pricing;

         -        the mix of products and services we sell;

         -        the hiring and retention of key personnel;

         -        our expansion into international markets;

         -        the timing and magnitude of our capital expenditures,
                  including costs relating to the expansion of our operations;

         -        changes in generally accepted accounting policies, especially
                  those related to the recognition of software revenue; and

         -        new government legislation or regulation.

         We typically receive a majority of our orders in the last month of each
fiscal quarter because our customers often delay purchases of products until the
end of the quarter and our sales organization and our individual sales
representatives strive to meet quarterly sales targets. As a result, any delay
in anticipated sales is likely to result in the deferral of the associated
revenue beyond the end of a particular quarter, which would have a significant
effect on our operating results for that quarter. In addition, most of our
operating expenses do not vary directly with net sales and are difficult to
adjust on the short term. As a result, if net sales for a particular quarter
were below expectations, we could not proportionately reduce operating expenses
for that quarter, and, therefore, that revenue shortfall would have a
disproportionate adverse effect on our operating results for that quarter. In
future quarters, our operating results may be below the expectations of public
market analysts and investors. In this event, the price of our common stock may
fall significantly.
<PAGE>   12
OUR BUSINESS WILL BE HARMED IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL
PROPERTY RIGHTS FROM MISUSE BY THIRD PARTIES.

         Our collection of trademarks is important to our business. The
protective steps we take or have taken may be inadequate to deter
misappropriation of our trademark rights. We have filed applications for
registration of some of our trademarks in the United States. Effective trademark
protection may not be available in every country in which we offer or intend to
offer our products and services. Failure to protect our trademark rights
adequately could damage our brand identity and impair our ability to compete
effectively. Furthermore, defending or enforcing our trademark rights could
result in the expenditure of significant financial and managerial resources.

OUR PRODUCTS MAY CONTAIN DEFECTS THAT MAY BE COSTLY TO CORRECT, DELAY MARKET
ACCEPTANCE OF OUR PRODUCTS AND EXPOSE US TO LITIGATION.

         Despite testing by us and our customers, errors may be found in our
products after commencement of commercial shipments. If errors are discovered,
we may have to make significant expenditures of capital to eliminate them and
yet may not be able to successfully correct them in a timely manner or at all.
Errors and failures in our products could result in a loss of, or delay in,
market acceptance of our products and could damage our reputation and our
ability to convince commercial users of the benefits of our products.

         In addition, failures in our products could cause system failures for
our customers who may assert warranty and other claims for substantial damages
against us. Although our license agreements with our customers typically contain
provisions designed to limit our exposure to potential product liability claims,
it is possible that these provisions may not be effective or enforceable under
the laws of some jurisdictions. Our insurance policies may not adequately limit
our exposure to this type of claim. These claims, even if unsuccessful, could be
costly and time-consuming to defend.

IF WE DO NOT INTRODUCE NEW PRODUCTS AND SERVICES IN A TIMELY MANNER, OUR
PRODUCTS AND SERVICES WILL BECOME OBSOLETE, AND OUR OPERATING RESULTS WILL
SUFFER.

         The customer analytics and business planning software markets are
characterized by rapid technological change, frequent new product enhancements,
uncertain product life cycles, changes in customer demands and evolving industry
standards. Our products could be rendered obsolete if products based on new
technologies are introduced or new industry standards emerge.

         Enterprise computing environments are inherently complex. As a result,
we cannot accurately estimate the life cycles of our products. New products and
product enhancements can require long development and testing periods, which
requires us to hire and retain increasingly scarce, technically competent
personnel. Significant delays in new product releases or significant problems in
installing or implementing new products could seriously damage our business. We
have, on occasion, experienced delays in the scheduled introduction of new and
enhanced products and may experience similar delays in the future.
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         Our future success depends upon our ability to enhance existing
products, develop and introduce new products, satisfy customer requirements and
achieve market acceptance. We may not successfully identify new product
opportunities and develop and bring new products to market in a timely and
cost-effective manner.

FUTURE CAPITAL NEEDS.

         We believe, based upon our current business plan, that our current cash
and marketable securities should be sufficient to fund our operations as planned
for at least the next twelve months. However, we may need additional funds
sooner than anticipated if our performance deviates significantly from our
current business plan or if there are significant changes in competitive or
other market factors. Such funds, whether from equity or debt financing or other
sources, may not be available, or available on terms acceptable to us.

ATTEMPTS TO EXPAND BY MEANS OF BUSINESS COMBINATIONS AND ACQUISITIONS MAY NOT BE
SUCCESSFUL AND MAY DISRUPT OUR OPERATIONS OR HARM OUR REVENUES.

         We have in the past, and may in the future, buy businesses, products or
technologies. In the event of any future purchases, we will face additional
financial and operational risks, including:

         -        difficulty in assimilating the operations, technology and
                  personnel of acquired companies;

         -        disruption in our business because of the allocation of
                  resources to consummate these transactions and the diversion
                  of management's attention from our core business;

         -        difficulty in retaining key technical and managerial personnel
                  from acquired companies;

         -        dilution of our stockholders, if we issue equity to fund these
                  transactions;

         -        assumption of operating losses, increased expenses and
                  liabilities;

         -        our relationships with existing employees, customers and
                  business partners may be weakened or terminated as a result of
                  these transactions; and

         -        additional ongoing expenses associated with amortization of
                  goodwill and other purchased intangible assets.


IF WE ARE UNABLE TO HIRE AND RETAIN ADDITIONAL RESEARCH AND DEVELOPMENT,
SUPPORT, SALES AND MARKETING STAFF, WE WILL NOT HAVE SUFFICIENT RESOURCES TO
COMPETE AND GROW OUR REVENUES.

         We intend to hire a significant number of additional research and
development, support, sales and marketing and other personnel during 2001.
Competition for these individuals is intense, and we may not be able to attract,
assimilate or retain highly qualified personnel. Our future success and ability
to sustain our revenue growth also depend upon the continued service of our
executive officers and other key engineering, sales, marketing and support
personnel. Competition for qualified personnel in our industry is extremely
intense and characterized by rapidly increasing salaries, which may increase our
operating expenses or hinder our ability to recruit qualified candidates.

WE RELY HEAVILY ON EXISTING MANAGEMENT AND KEY PERSONNEL.
<PAGE>   14
         We rely heavily on key personnel throughout the organization. In
particular, the loss of any of Alan Goldsworthy, Michael Scheib, William Lynch,
Edward Terino, or Craig Cervo or any of our staff of sales and development
professionals could prevent us from successfully executing our business
strategies. Any such loss of technical knowledge and industry expertise could
negatively impact our success. Moreover, if we should lose any of these critical
employees or a group thereof, particularly to a competing organization, we could
lose market share, and the Applix brand could be diminished.

WE MAY NOT BE ABLE TO MEET THE OPERATIONAL AND FINANCIAL CHALLENGES THAT WE
ENCOUNTER AS OUR INTERNATIONAL OPERATIONS EXPAND.

         Due to the Company's significant international operations, we face a
number of additional challenges associated with the conduct of business
overseas. For example:

         -        we may have difficulty managing and administering a
                  globally-dispersed business;

         -        fluctuations in exchange rates may negatively affect our
                  operating results;

         -        we may not be able to repatriate the earnings of our foreign
                  operations;

         -        we have to comply with a wide variety of foreign laws with
                  which we are not familiar;

         -        we may not be able to adequately protect our trademarks
                  overseas due to the uncertainty of laws and enforcement in
                  certain countries relating to the protection of intellectual
                  property rights;

         -        reductions in business activity during the summer months in
                  Europe and certain other parts of the world could negatively
                  impact the operating results of our foreign operations;

         -        export controls could prevent us from shipping our products
                  into and from some markets;

         -        multiple and possibly overlapping tax structures could
                  significantly reduce the financial performance of our foreign
                  operations;

         -        changes in import/export duties and quotas could affect the
                  competitive pricing of our products and services and reduce
                  our market share in some countries; and

         -        economic or political instability in some international
                  markets could result in the forfeiture of some foreign assets
                  and the loss of sums spent developing and marketing those
                  assets.

BECAUSE THE CUSTOMER ANALYTICS AND BUSINESS PLANNING MARKETS ARE HIGHLY
COMPETITIVE, WE MAY NOT BE ABLE TO SUCCEED.

         If we fail to compete successfully in the highly competitive and
rapidly changing customer analytics and business planning markets, we may not be
able to succeed. We face competition primarily from customer relationship
management software firms, emerging Internet customer interaction software
vendors and computer telephony software companies. We also face competition from
traditional call center technology providers, large enterprise application
software vendors, independent systems integrators, consulting firms and in-house
IT departments. Because barriers to entry into the software market are
relatively low, we expect to face additional competition in the future.

         Many of our competitors can devote significantly more resources to the
development, promotion and sale of products than we can, and many of them can
respond to new technologies and changes in customer preferences more quickly
than we can. Further, other companies with resources greater than ours may
attempt to gain market share in the customer analytics and business planning
markets by acquiring or forming strategic alliances with our competitors.
<PAGE>   15
BECAUSE WE DEPEND ON THIRD-PARTY SYSTEMS INTEGRATORS TO SELL OUR PRODUCTS, OUR
OPERATING RESULTS WILL LIKELY SUFFER IF WE DO NOT DEVELOP AND MAINTAIN THESE
RELATIONSHIPS.

         We rely in part on systems integrators to promote, sell and implement
our solution. If we fail to maintain and develop relationships with systems
integrators, our operating results will likely suffer. In addition, if we are
unable to rely on systems integrators to install and implement our products, we
will likely have to provide these services ourselves, resulting in increased
costs. As a result, our results of operation may be harmed. In addition, systems
integrators may develop, market or recommend products that compete with our
products. Further, if these systems integrators fail to implement our products
successfully, our reputation may be harmed.

BECAUSE THE SALES CYCLE FOR OUR PRODUCTS CAN BE LENGTHY, IT IS DIFFICULT FOR US
TO PREDICT WHEN OR WHETHER A SALE WILL BE MADE.

         The timing of our revenue is difficult to predict in large part due to
the length and variability of the sales cycle for our products. Companies often
view the purchase of our products as a significant and strategic decision. As a
result, companies tend to take significant time and effort evaluating our
products. The amount of time and effort depends in part on the size and the
complexity of the deployment. This evaluation process frequently results in a
lengthy sales cycle, typically ranging from three to eight months. During this
time we may incur substantial sales and marketing expenses and expend
significant management efforts. We do not recoup these investments if the
prospective customer does not ultimately license our product.