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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Amendment No. 1 toFORM
10-Q/A



| | x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002          
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------
|
| |   |  | OR                                                                                                                                                 
|
| | o |  | TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ___________

Commission File Number 0-25040

APPLIX, INC.
(Exact name of registrant as specified in its charter)

|                                                                             |  |                                                   
|---------------------------------------------------------------------------- |  | --------------------------------------------------
|MASSACHUSETTS
(State or other jurisdiction of
incorporation or organization) |  | 04-2781676
(I.R.S. Employer
Identification Number)

289 Turnpike Road, Westborough, Massachusetts 01581
(Address of principal executive offices)

(508) 870-0300
(Registrants telephone number)

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 o

Number of shares of the Registrants common stock, $0.0025 par value per
share, outstanding as of November 10, 2002: 12,365,179





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Explanatory Note

This
amendment No. 1 on Form 10-Q/A to the Registrants
Quarterly Report on Form 10-Q originally filed with the
Commission on November 13, 2002 is being filed for the purpose of
restating the registrants Condensed Consolidated Financial
Statements as of September 30, 2002 and for the six months then
ended, and restating the related Notes to Condensed Consolidated
Financial Statements. On February 28, 2003, the Company
announced that it had identified an error in its revenue reported for
two valid customer agreements. Revenue under the first of the two
agreements was originally recognized in the quarter ended
December 31, 2001. As a result, the Company is restating its
financial statements to defer $898,000 in license revenue from the
quarter ended December 31, 2001 and recognize that revenue
ratably over the one-year term of the agreement beginning in January
2002. The second agreement, executed on June 30, 2002 did not
adequately meet the criteria set forth in the Companys revenue
recognition policy. In accordance with the policy, the Company is
deferring $341,000 in revenue from the quarter ended September 30,
2002. See Note 2 of the Notes to Condensed Consolidated
Financial Statements for a summary of the significant effects of the
restatement. This amendment also reflects an expanded revenue
recognition policy under the Companys Summary of Significant
Accounting Policies in the Notes to Condensed Consolidated Financial
Statements. The Company has also corrected the classification of
certain amounts in the Condensed Consolidated Statement of Operations.

This
amendment does not reflect events occurring after the filing of the
original Quarterly Report Form 10-Q on November 13, 2002, or
modify or update the disclosures presented in the original Quarterly
Report on Form 10-Q, except to reflect the revision as described
above.

1



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TABLE OF CONTENTS



|                                                     |                                                                                                |                                                 |  |  |  |  |  | 
|---------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION                       
|                                                     | ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                           
|                                                     |                                                                                                | Condensed Consolidated Balance Sheet           
|                                                     |                                                                                                | Condensed Consolidated Statements of Operations
|                                                     |                                                                                                | Condensed Consolidated Statements of Cash Flows
|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                                     | ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                     | ITEM 4.  CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION                          
|                                                     | ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURE                                           
|CERTIFICATIONS                                      
|Ex-99.1 Section 906 Certification of CEO            
|Ex-99.2 Section 906 Certification of CFO            



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##### Table of Contents



APPLIX, INC.
Form 10-Q/A
For the Quarterly Period Ended September 30, 2002

Table of Contents

|                                                                                              |  |  |    |                                                                                                                 |  |      |   | 
|--------------------------------------------------------------------------------------------- |  |  | -- | --------------------------------------------------------------------------------------------------------------- |  | ---- | - | 
|                                                                                              |  |  |    |                                                                                                                 |  | Page
|                                                                                              |  |  |    |                                                                                                                 |  | No. 
|                                                                                              |  |  |    |                                                                                                                 |  |     
|Part I  Financial Information                                                                |  |  |    |                                                                                                                
|                                                                                              |  | 
|Item 1. Condensed Consolidated Financial Statements (unaudited):                              |  |  |    |                                                                                                                
|                                                                                              |  | 
|                                                                                              |  |  |    | Condensed Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001                            |  |      | 3 | 
|                                                                                              |  | 
|                                                                                              |  |  |    | Condensed Consolidated Statements of Operations for the three and nine months ended
September 30, 2002 and 2001 |  |      | 4 | 
|                                                                                              |  | 
|                                                                                              |  |  |    | Condensed Consolidated Statements of Cash Flows for the nine months ended September
30, 2002 and 2001           |  |      | 5 | 
|                                                                                              |  | 
|                                                                                              |  |  |    | Notes to Condensed Consolidated Financial Statements                                                            |  |      | 6 | 
|                                                                                              |  | 
|Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations |  |  | 12 |                                                                                                                
|                                                                                              |  | 
|Item 4. Control and Procedures                                                                |  |  | 25 |                                                                                                                
|                                                                                              |  | 
|Part II  Other Information                                                                   |  |  |    |                                                                                                                
|                                                                                              |  | 
|Item 6. Exhibits and Reports on Form 8-K                                                      |  |  | 26 |                                                                                                                
|                                                                                              |  | 
|Signature                                                                                     |  |  | 27 |                                                                                                                

iEnterprise is a registered trademark of Applix, Inc. and Applix, Applix
Integra, iTM1, iCustomerInsight, iHelpdesk and iService are trademarks of Applix, Inc. All other
trademarks and company names mentioned are the property of their respective
owners. All rights reserved.

Certain information contained in this
Quarterly Report on Form 10-Q/A is
forward-looking in nature. All statements included in this Quarterly Report on
Form 10-Q/A or made by management of Applix, Inc. (Applix or the Company) and
its subsidiaries, other than statements of historical facts, are
forward-looking statements. Examples of forward-looking statements include
statements regarding Applixs future financial results, operation results,
business strategies, projected costs, products, competitive positions and plans
and objectives of management for future operations. In some cases,
forward-looking statements can be identified by terminology such as may,
will, should, would, expect, plan, anticipates, intend,
believes, estimates, predicts, potential, continue, or the negative
of these terms or other comparable terminology. Any expectations based on these
forward-looking statements are subject to risks and uncertainties and other
important factors, including those discussed in the section below entitled
Factors That May Affect Future Results. These and many other factors could
affect Applixs future financial and operating results, and could cause actual
results to differ materially from expectations based on forward-looking
statements made in this document or elsewhere by Applix or on its behalf.
Applix does not undertake an obligation to update its forward-looking
statements to reflect future events or circumstances.

2



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PART I. FINANCIAL INFORMATION




ITEM 1. CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS




Applix, Inc.
Condensed Consolidated Balance Sheet(in thousands, except per share data)
(unaudited)

|                                                                                 |                                                                                                       |                |               |         |              |   |         |         |  
|-------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | -------------- | ------------- | ------- | ------------ | - | ------- | ------- | -
|                                                                                 |                                                                                                       |                | September 30, |         | December 31,
|                                                                                 |                                                                                                       | 2002(Restated) |               | 2001   
|                                                                                 |                                                                                                       |                |               |        
|Assets                                                                           |                                                                                                       |                |               |        
|Current assets:                                                                  |                                                                                                       |                |               |         |              |   |         |        
|                                                                                 | Cash and cash equivalents                                                                             |                | $             | 6,291   |              |   | $       | 8,228   |  
|                                                                                 | Accounts receivable, less allowance for doubtful
accounts of $1,675 and $1,446                        |                |               | 5,731   |              |   |         | 7,202   |  
|                                                                                 | Prepaid expenses and other current assets                                                             |                |               | 2,009   |              |   |         | 1,672   |  
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|Total current assets                                                             |                                                                                                       |                | 14,031        |         |              |   | 17,102  |        
|Restricted cash                                                                  |                                                                                                       |                | 1,050         |         |              |   | 1,050   |        
|Property and equipment, at cost                                                  |                                                                                                       |                | 14,708        |         |              |   | 14,251  |        
|Less accumulated amortization and depreciation                                   |                                                                                                       |                | (12,665       | )       |              |   | (11,722 | )      
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|                                                                                 |                                                                                                       |                | 2,043         |         |              |   | 2,529   |        
|Capitalized software costs, net of accumulated amortization of
$2,326 and $1,598 |                                                                                                       |                | 1,731         |         |              |   | 1,042   |        
|Goodwill, net of accumulated amortization
of $744, respectively (Note 2)         |                                                                                                       |                | 1,187         |         |              |   | 1,117   |        
|Intangible assets, net of accumulated amortization of $375 and $186              |                                                                                                       |                | 1,125         |         |              |   | 1,314   |        
|Other assets                                                                     |                                                                                                       |                | 856           |         |              |   | 784     |        
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|Total assets                                                                     |                                                                                                       | $              | 22,023        |         |              | $ | 24,938  |        
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|Liabilities and stockholders equity                                             |                                                                                                       |                |               |         |              |   |         |        
|Current liabilities:                                                             |                                                                                                       |                |               |         |              |   |         |        
|                                                                                 | Accounts payable                                                                                      |                | $             | 2,173   |              |   | $       | 2,137   |  
|                                                                                 | Accrued expenses                                                                                      |                |               | 5,348   |              |   |         | 6,898   |  
|                                                                                 | Deferred revenue                                                                                      |                |               | 7,581   |              |   |         | 6,711   |  
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|Total current liabilities                                                        |                                                                                                       |                | 15,102        |         |              |   | 15,746  |        
|Long term liabilities                                                            |                                                                                                       |                | 645           |         |              |   | 709     |        
|Commitments and contingencies (Note 11)                                          |                                                                                                       |                |              |         |              |   |        |        
|Stockholders equity:                                                            |                                                                                                       |                |               |         |              |   |         |        
|                                                                                 | Preferred stock, $.01 par value; 1,000,000 shares authorized;
none issued                             |                |               |        |              |   |         |        |  
|                                                                                 | Common stock, $.0025 par value; 30,000,000 shares authorized;
12,670,752 and 12,320,096 shares issued |                |               | 32      |              |   |         | 31      |  
|                                                                                 | Additional paid in capital                                                                            |                |               | 49,599  |              |   |         | 49,212  |  
|                                                                                 | Treasury stock, 306,198 shares, at cost                                                               |                |               | (1,077  | )            |   |         | (1,077  | )
|                                                                                 | Accumulated deficit                                                                                   |                |               | (40,884 | )            |   |         | (38,060 | )
|                                                                                 | Accumulated other comprehensive loss                                                                  |                |               | (274    | )            |   |         | (503    | )
|                                                                                 | Notes receivable from stockholders                                                                    |                |               | (1,120  | )            |   |         | (1,120  | )
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|Total stockholders equity                                                       |                                                                                                       |                | 6,276         |         |              |   | 8,483   |        
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        
|Total liabilities and stockholders equity                                       |                                                                                                       | $              | 22,023        |         |              | $ | 24,938  |        
|                                                                                 |                                                                                                       |                |               |         |              |   |         |        

See accompanying notes to condensed consolidated financial statements.

3



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Applix, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |        |        |     | 
|--------------------------------------------------------------- | ----------------------------------------- | ------------------------ | ------------------------------ | ----- | ------------------ | --- | ----------------- | ----- | -------------- | -- | ------ | ------ | ------ | ----- | ------ | ------ | ------ | --- | 
|                                                                |                                           |                          |                                |       | Three Months Ended |     | Nine Months Ended
|                                                                |                                           |                          |                                |       | September 30,      |     | September 30,    
|                                                                |                                           |                          |                                |       |                    |     |                  
|                                                                |                                           |                          |                                |       | 2002(Restated)     |     | 2001              |       | 2002(Restated) |    | 2001  
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |       
|Revenues:                                                       |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                | Software license                          |                          | $                              | 3,231 |                    |     | $                 | 4,240 |                |    | $      | 11,682 |        |       | $      | 14,591 |       
|                                                                | Professional services and maintenance     |                          |                                | 4,951 |                    |     |                   | 4,618 |                |    |        | 15,082 |        |       |        | 16,038 |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                |                                           | Total revenues           |                                |       | 8,182              |     |                   |       | 8,858          |    |        |        | 26,764 |       |        |        | 30,629 |    
|Cost of revenues:                                               |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                | Software license                          |                          |                                | 503   |                    |     |                   | 298   |                |    |        | 1,275  |        |       |        | 852    |       
|                                                                | Professional services and maintenance     |                          |                                | 2,341 |                    |     |                   | 3,208 |                |    |        | 7,606  |        |       |        | 10,839 |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                |                                           | Total cost of revenues   |                                |       | 2,844              |     |                   |       | 3,506          |    |        |        | 8,881  |       |        |        | 11,691 |    
|Gross margin                                                    |                                           |                          | 5,338                          |       |                    |     | 5,352             |       |                |    | 17,883 |        |        |       | 18,938 |       
|Operating expenses:                                             |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                | Product development                       |                          |                                | 1,615 |                    |     |                   | 1,698 |                |    |        | 4,060  |        |       |        | 5,513  |       
|                                                                | Sales and marketing                       |                          |                                | 3,431 |                    |     |                   | 4,610 |                |    |        | 10,415 |        |       |        | 17,485 |       
|                                                                | General and administrative                |                          |                                | 1,338 |                    |     |                   | 1,148 |                |    |        | 3,834  |        |       |        | 3,449  |       
|                                                                | Compensation expenses and amortization of |                          |                                |      |                    |     |                   |       |                |    |        |       |        |       |        |        |       
|                                                                |                                           |                          | acquired intangibles ( Note 7) |       |                    | 616 |                   |       |                | 62 |        |        |        | 1,792 |        |        |        | 124 | 
|                                                                | Restructuring expense                     |                          |                                | 398   |                    |     |                   | 438   |                |    |        | 361    |        |       |        | 950    |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                |                                           | Total operating expenses |                                |       | 7,398              |     |                   |       | 7,956          |    |        |        | 20,462 |       |        |        | 27,521 |    
|Operating loss                                                  |                                           |                          | 2,060                          |       |                    |     | (2,604            | )     |                |    | (2,579 | )      |        |       | (8,732 | )     
|Interest and other income (expense), net                        |                                           |                          | 112                            |       |                    |     | (24               | )     |                |    | (9     | )      |        |       | 234    |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|Loss from continuing operations before income taxes             |                                           |                          | (2,172                         | )     |                    |     | (2,678            | )     |                |    | (2,588 | )      |        |       | (8,498 | )     
|Provision (benefit) for income taxes                            |                                           |                          | (50                            | )     |                    |     | 50                |       |                |    | 110    |        |        |       | 169    |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|Net loss from continuing operations                             |                                           |                          | (2,122                         | )     |                    |     | (2,678            | )     |                |    | (2,698 | )      |        |       | (8,667 | )     
|Gain (loss) from discontinued operation                         |                                           |                          | (42                            | )     |                    |     | 363               |       |                |    | (128   | )      |        |       | 1,081  |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|Net loss                                                        |                                           | $                        | (2,164                         | )     |                    | $   | (2,315            | )     |                | $  | (2,824 | )      |        | $     | (7,586 | )     
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|Net income (loss) per share, basic and diluted                  |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                | Continuing operations                     |                          | $                              | (0.17 | )                  |     | $                 | (0.22 | )              |    | $      | (0.22  | )      |       | $      | (0.73  | )     
|                                                                | Discontinued operation                    |                          |                                | 0.00  |                    |     |                   | 0.03  |                |    |        | (0.01  | )      |       |        | 0.09   |       
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|                                                                |                                           | Total loss per share     |                                | $     | (0.18              | )   |                   | $     | (0.19          | )  |        | $      | (0.23  | )     |        | $      | (0.64  | )  
|                                                                |                                           |                          |                                |       |                    |     |                   |       |                |    |        |        |        |       |        |       
|Weighted average number of basic and
diluted shares outstanding |                                           |                          | 12,282                         |       |                    |     | 11,934            |       |                |    | 12,184 |        |        |       | 11,808 |       

See accompanying notes to condensed consolidated financial statements.

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Applix, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |        |   |        |        |  
|------------------------------------------------ | ----------------------------------------------------------------------------------------- | -------------------------------------------- | -------------------------------------------------------- | ------------------------------------- | - | ----------------- | ------ | ------ | - | ------ | ------ | -
|                                                 |                                                                                           |                                              |                                                          |                                       |   | Nine Months Ended
|                                                 |                                                                                           |                                              |                                                          |                                       |   | September 30,    
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                  
|                                                 |                                                                                           |                                              |                                                          |                                       |   | 2002(Restated)    |        | 2001  
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|Cash flows from operating activities:            |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 | Net loss                                                                                  |                                              | $                                                        | (2,824                                | ) |                   | $      | (7,586 | )
|                                                 | Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |                                              |                                                          |                                       |   |                   |        |        |  
|                                                 |                                                                                           |                                              |                                                          | Depreciation                          |   |                   | 847    |        |   |        | 917    |  
|                                                 |                                                                                           |                                              |                                                          | Amortization                          |   |                   | 917    |        |   |        | 796    |  
|                                                 |                                                                                           |                                              |                                                          | Provision for doubtful accounts       |   |                   | 229    |        |   |        |       |  
|                                                 |                                                                                           |                                              |                                                          | Gain from discontinued operations     |   |                   |       |        |   |        | (1,081 | )
|                                                 |                                                                                           | Changes in operating assets and liabilities: |                                                          |                                       |   |                   |        |        |   |       
|                                                 |                                                                                           |                                              | (Increase) decrease in accounts receivable               |                                       |   | (413              | )      |        |   | 4,015  |       
|                                                 |                                                                                           |                                              | Sale of accounts receivables                             |                                       |   | 1,655             |        |        |   |       |       
|                                                 |                                                                                           |                                              | Increase in other assets                                 |                                       |   | (409              | )      |        |   | (77    | )     
|                                                 |                                                                                           |                                              | Decrease in accounts payable                             |                                       |   | (33               | )      |        |   | (595   | )     
|                                                 |                                                                                           |                                              | Decrease in accrued liabilities                          |                                       |   | (1,784            | )      |        |   | (1,666 | )     
|                                                 |                                                                                           |                                              | Increase in deferred revenue                             |                                       |   | 870               |        |        |   | 1,713  |       
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 |                                                                                           |                                              |                                                          | Cash used in operating activities     |   |                   | (945   | )      |   |        | (3,589 | )
|Cash flows from investing activities:            |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 |                                                                                           |                                              | Property and equipment expenditures                      |                                       |   | (385              | )      |        |   | (314   | )     
|                                                 |                                                                                           |                                              | Capitalized software costs                               |                                       |   | (1,417            | )      |        |   | (582   | )     
|                                                 |                                                                                           |                                              | Payment for acquisitions, net of cash acquired           |                                       |   |                  |        |        |   | (967   | )     
|                                                 |                                                                                           |                                              | Net proceeds from sale of discontinued operation         |                                       |   |                  |        |        |   | 1,300  |       
|                                                 |                                                                                           |                                              | Cash paid upon sale of subsidiary                        |                                       |   |                  |        |        |   | (100   | )     
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 |                                                                                           |                                              |                                                          | Cash used in investing activities     |   |                   | (1,802 | )      |   |        | (663   | )
|Cash flows from financing activities:            |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 |                                                                                           |                                              | Proceeds from issuance of stock under stock plans        |                                       |   | 388               |        |        |   | 710    |       
|                                                 |                                                                                           |                                              | Increase in restricted cash                              |                                       |   |                  |        |        |   | (1,050 | )     
|                                                 |                                                                                           |                                              | Short-term borrowings                                    |                                       |   | 234               |        |        |   |       |       
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 |                                                                                           |                                              |                                                          | Cash provided by financing activities |   |                   | 622    |        |   |        | (340   | )
|Effect of exchange rate changes on cash          |                                                                                           |                                              | 188                                                      |                                       |   |                   | 4      |       
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|Decrease in cash and cash equivalents            |                                                                                           |                                              | (1,937                                                   | )                                     |   |                   | (4,588 | )     
|Cash and cash equivalents at beginning of period |                                                                                           |                                              | 8,228                                                    |                                       |   |                   | 12,546 |       
|                                                 |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|Cash and cash equivalents at end of period       |                                                                                           | $                                            | 6,291                                                    |                                       |   | $                 | 7,958  |       
|Restricted cash at end of period                 |                                                                                           | $                                            | 1,050                                                    |                                       |   | $                 | 1,050  |       
|Supplemental disclosure of cash flow information |                                                                                           |                                              |                                                          |                                       |   |                   |        |       
|                                                 |                                                                                           |                                              | Stock issued for acquisition of Dynamic Decisions        |                                       | $ |                  |        |        | $ | 227    |       
|                                                 |                                                                                           |                                              | Note payable issued for acquisition of Dynamic Decisions |                                       | $ |                  |        |        | $ | 558    |       
|                                                 |                                                                                           |                                              | Cash paid for income tax                                 |                                       | $ |                  |        |        | $ | 15     |       

See accompanying notes to condensed consolidated financial statements.

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##### Table of Contents






APPLIX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1.     The Company

Applix, Inc. (Applix or the Company) is a global provider of
enterprise performance management solutions that include interactive planning,
customer relationship management (CRM), and CRM analytics and business
intelligence. These combined products represent one principal business segment,
which Applix reports as its continuing operations. The Applix product family
integrates business planning, performance measurement and operational data to
enable companies to optimize business effectiveness and customer interaction
regardless of geography or structure. The Applix product family consist of
iTM1, iEnterprise and Applix Integra.

Applixs leading revenue product, iTM1, an on-line analytical processing
(OLAP) engine, helps improve business performance by enabling an organization
to capture date from across the extended enterprise and utilize
consistent reporting and analysis to make effective, real-time
decisions at all organizational levels.

The Companys CRM product, iEnterprise, consists of a suite of a collaborative CRM
solutions including application modules of iSales, iService, and iHelpdesk
applications, which enables an organization to better manage its mission
critical relationships with its customers, partners and employees.
The Companys CRM applications help an organization to sell to, market to, and service
its customers across multiple channels.

Applixs newest
product Applix Integra is an integration of the iTM1 and
iEnterprise technology platforms, enabling business performance management
solutions such as financial and operational planning, budgeting and forecasting
applications; and customer management solutions, CRM analytics, and other
CRM-related operational solutions such as Helpdesk and human resource solutions. The first
new analytics solution based on the Applix Integra technology is Applix
Interactive Planning, which unifies traditionally standalone processes,
including planning, forecasting, budgeting consolidations, reporting and
analysis into one coherent framework.

On March 30, 2001, the Company sold its Vistasource business unit,
previously reported as the Linux Division. This unit has been reported as a
discontinued operation for all periods presented.

2.     Revision of
Financial Statements to Account for Revenue Recognition

AS discussed in
Note 3, the Company recognizes revenues from software licensing
and service fees in accordance with Statement of Position
(SOP) 97-2 and SOP 98-9 (as defined in Note 3).
On February 28, 2003, the Company announced that it had
identified an error in its revenue reported for two valid customers
agreements, revenue under one of which was originally recognized in
December 2001. As a result, the Company is restating its financial
statements  to defer $898,000 in license revenue from the quarter
ended December 31, 2001 and to recognize that revenue ratably
over the one-year term of the agreement beginning in January 2002 and
is deferring $341,000 in revenue from the quarter ended June 30,
2002.

A summary of the significant effects of the
revision is as follows:

|                                                              |  |                                      |         |                                     |  |   |         |  
|------------------------------------------------------------- |  | ------------------------------------ | ------- | ----------------------------------- |  | - | ------- | -
|                                                              |  | Three Months EndedSeptember 30, 2002 |         | Nine Months EndedSeptember 30, 2002
|                                                              |  |                                      |         |                                    
|                                                              |  | (In thousands except per share data)
|Software license revenues as restated                         |  | $                                    | 3,007   |                                     |  | $ | 11,350  |  
|Software license revenues as previously reported              |  |                                      | 3,231   |                                     |  |   | 11,682  |  
|                                                             
|Net loss as previously reported                               |  | $                                    | (2,388  | )                                   |  | $ | (3,157  | )
|Net loss as restated                                          |  |                                      | (2,164  | )                                   |  |   | (2,824  | )
|                                                             
|Net loss per share, basic and
diluted, as previously reported |  | $                                    | (0.19   | )                                   |  | $ | (0.25   | )
|Net loss per share, basic and
diluted, as restated            |  | $                                    | (0.18   | )                                   |  | $ | (0.23   | )
|                                                             
|                                                              |  | September 30,2002                    |         | December 31,2001                   
|                                                              |  |                                      |         |                                    
|Deferred revenue as previously reported                       |  | $                                    | 7,016   |                                     |  | $ | 5,813   |  
|Deferred revenue as restated                                  |  |                                      | 7,581   |                                     |  |   | 6,711   |  
|                                                             
|Accumulated deficit as previously reported                    |  | $                                    | (40,319 | )                                   |  | $ | (37,162 | )
|Accumulated deficit as restated                               |  |                                      | (40,884 | )                                   |  |   | (38,060 | )

3.     Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
(GAAP) for interim financial information and pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) including
instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 2002 are not necessarily indicative of the results
that may be expected for the year ended December 31, 2002. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2001.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and all of its wholly owned subsidiaries. All intercompany accounts
and transactions have been eliminated.

Revenue Recognition

The Company generates
revenues mainly from licensing the rights to use its software products
and providing services. The Company sells products primarily through
a direct sales force, indirect channel partners and Original
Equipment Manufacturers (OEMs). The Company accounts for
software revenue transactions in accordance with Statement of
Position (SOP) 97-2, Software Revenue Recognition,
as amended. Revenues from software arrangements are recognized when:

|  |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Persuasive evidence of an arrangement exists,
which is typically when a non-cancelable sales and software license
agreement has been signed, or purchase order has been received;                                                                                                                                                                                                                                                                                                         
| |  | Delivery has occurred. If the assumption by
the customer of the risks and rewards of its licensing rights occurs
upon the delivery to the carrier (FOB Shipping Point), then delivery
occurs upon shipment (which is typically the case). If assumption of
such risks and rewards occurs upon delivery to the customer (FOB
Destination), then delivery occurs upon receipt by the customer. In
all instances delivery includes electronic delivery of authorization
keys to the customer;
| |  | The customers fee is deemed to be fixed
or determinable and free of contingencies or significant
uncertainties;                                                                                                                                                                                                                                                                                                                                                                          
| |  | Collectibility is probable; and                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Vendor specific objective evidence of fair
value exists for all undelivered elements, typically maintenance and
professional services.                                                                                                                                                                                                                                                                                                                                                    

The Company also uses
the residual method under SOP 98-9, Modification of
SOP 97-2, Software Revenue Recognition with Respect to Certain
Transactions. Under the residual method, the fair value of the
undelivered elements is deferred and the remaining portion of the
arrangement fee is allocated to the delivered elements and is
recognized as revenue, assuming all other conditions for revenue
recognition have been satisfied. Substantially all of the
Companys product revenue is recognized in this manner. If the
Company cannot determine the fair value of any undelivered element
included in an arrangement, the Company will defer revenue until all
elements are delivered, until services are performed or until fair
value discounts for future purchases of other software products or
services to its customers as part of an arrangement, utilizing the
residual method the Company defers the value of the discount and
recognizes such discount to revenue as the related product or service
is delivered.

As part of an
arrangement, end-user customers typically purchase maintenance
contracts as well as professional services from the Company.
Maintenance services include telephone and Web based support as well
as rights to unspecified upgrades and enhancements, when and if the
Company makes them generally available. Substantially all of the
Companys software license revenue is earned from perpetual
licenses of off-the-shelf software requiring no modification or
customization. Therefore, professional services are deemed to be
non-essential to the functionality of the software and typically are
for implementation planning, loading of software, training, building
simple interfaces and running test data.

Revenues from
maintenance services are recognized ratably over the term of the
maintenance contract period, which is typically one year, based on
vendor specific objective evidence of fair value. Vendor specific
objective evidence of fair value is based upon the  amount charged
when maintenance is purchased separately, which is typically the
contracts renewal rate.

Revenues from
professional services are generally recognized based on vendor
specific objective evidence of far value when: (1) a
non-cancelable agreement for the services has been signed or a
customers purchase order has been received; and (2) the
professional services have been delivered. Vendor specific objective
evidence of fair value is based upon the price charged when these
services are sold separately and is typically an hourly rate for
professional services and a per class rate for training. Revenues for
consulting services are generally recognized on a time and material
basis as services are delivered. Based upon the Companys
experience in completing product implementations, it has determined
that these services are typically delivered within 3 months or
less subsequent to the contract signing.

The Companys
license arrangements with its end-user customers and indirect channel
partners do not include any rights of return or price protection, nor
do arrangements with indirect channel partners include any
sell-through contingencies. In those instances where the Company has
granted a customer rights to when-and-if available additional
products, the Company recognizes the arrangement fee ratably over the
term of the agreement.

Generally, the
Companys arrangements with end-user customers and indirect
channel partners do not include any acceptance provisions. In those
cases in which significant uncertainties exist with respect to
customer acceptance or in which specific customer acceptance criteria
are included in the arrangement, the Company defers the entire
arrangement fee and recognizes revenue, assuming all other conditions
for revenue recognition have been satisfied, when the uncertainty
regarding acceptance is resolved as generally evidenced by written
acceptance by the customer. The Companys arrangements with
indirect channel partners and end-user customers do include a
standard warranty provision whereby the Company will use reasonable
efforts to cure material nonconformity or defects of the
software from the Companys published specifications. The
standard warranty provision does not provide the indirect channel
partners or end-user customer with the right of refund. In very
limited instances, the Company has granted the right to refund for an
extended period if the arrangement is terminated because the product
does not meet the Companys published technical specifications,
and the Company is unable reasonably to cure the nonconformity or
defect. Generally, the Company determines that this warranty
provision is not an acceptance provision and therefore should be
accounted for as a warranty in accordance with SFAS No. 5.

At the time the
Company enters into an arrangement, the Company assesses the
probability of collection of the fee and the payment terms granted
to the customer. For end-user customers and indirect channel partners,
the Companys typical payment terms are due within 30 days
of invoice date. However, in those cases where payment terms are
greater than 30 days, the Company does not recognize revenue from
the arrangement fee unless the payment is due within 90 days. If
the payment terms for the arrangement are considered extended
(greater than 90 days), the Company defers revenue under these
arrangements and such revenue is recognized assuming all other
conditions for revenue recognition have been satisfied, when the
payment of the arrangement fee becomes due.

In those instances in
which indirect channel partners provide first level maintenance
services to the end-user customer and the Company provides second
level maintenance support to the indirect channel partner, the
Company accounts for amounts received in these arrangements in
accordance with EITF 99-19, Reporting Revenue Gross as a Principal
versus Net as an Agent. In initial and renewal years for which the
Company receives a net fee from the indirect channel partner to
provide second level support to the indirect channel partner, such
amount is recorded as revenue over the term of the maintenance period
at the net amount received since the Company does not collect the
fees from the end-user customer, it does not have latitude in
establishing the price paid by the end-user customer for maintenance
services, and it does not have the latitude to select the supplier
providing first level support. However, in those circumstances where
the Company renews maintenance contracts directly with the end-user
customers, receives payment for the gross amount of the maintenance fee, has the ability to select the supplier for first
level support, and the Company believes that it is the primary
obligor for first level support to the end customer, the Company
records revenue for the gross amounts received. In such
circumstances, the Company remits a portion of the payment received
to the indirect channel partner to provide first level support to the
end-user customer, and such amounts are capitalized and amortized
over the maintenance period.

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Software Development Costs

Software development costs associated with new products and enhancements
to existing software products are charged to research and development expense
as incurred. The Company capitalizes eligible software development costs
incurred between the time that the products technological feasibility has been established and the general release of the
product to customers. Such capitalized software development costs are then
amortized on a product-by-product basis generally over one to two years and are
included in the cost of software license revenue.

The Company evaluates the net realizable value of capitalized software on
an ongoing basis, relying on a number of factors including demand for a
product, operating results, business plans and economic projections. In
addition, the Company considers nonfinancial data such as market trends,
product development cycles and changes in managements market emphasis.

Intangible Assets and Goodwill

The Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 141 Business Combinations (SFAS
141) and SFAS No. 142 Goodwill and Other Intangible Assets (SFAS 142) in
July 2001. SFAS 141 requires that all business combinations be accounted for
using the purchase method. SFAS 141 also specifies criteria for recognizing and
reporting intangible assets apart from goodwill. SFAS 142 requires that
goodwill not be amortized but instead tested for impairment at least annually
and more frequently upon the occurrence of certain events in accordance with
the provisions of SFAS 142. SFAS 142 also requires that intangible assets with
an indefinite life should not be amortized until their life is determined to be
finite and all other intangible assets must be amortized over their estimated
useful life.

The Company adopted the provisions of SFAS 141 and SFAS 142 effective
January 1, 2002. SFAS 141 and SFAS 142 required the Company to perform the
following as of January 1, 2002: (i) review goodwill and intangible assets for
possible reclasses; (ii) reassess the lives of intangible assets; and (iii)
perform a transitional goodwill impairment test. The Company has reviewed its
goodwill and intangible assets for possible reclassification of which there
were none and has reviewed the useful lives of its identifiable intangible
assets and determined that the original estimated lives remain appropriate. The
Company performed the first of the required impairment tests of goodwill using
the Income Approach, a present value technique, which indicated that impairment
did not appear to exist as a result of adoption of SFAS 142. A reconciliation
of previously reported net loss and loss per share to the amounts adjusted for
the exclusion of goodwill amortization, net of related income tax effect, is as
follows:

|                                  |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|--------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                  |  | Three Months Ended |        | Nine Months Ended
|                                  |  | September 30,      |        | September 30,    
|                                  |  |                    |        |                  
|                                  |  | 2002               |        | 2001              |  | 2002 |        | 2001
|                                  |  |                    |        |                   |  |      |        |     
|Net loss                          |  | $                  | (2,164 | )                 |  | $    | (2,315 | )    |  | $ | (2,824 | ) |  | $ | (7,586 | )
|Goodwill amortization, net of tax |  |                    |       |                   |  |      | 85     |      |  |   |       |   |  |   | 169    |  
|Adjusted net loss                 |  | $                  | (2,164 | )                 |  | $    | (2,230 | )    |  | $ | (2,824 | ) |  | $ | (7,417 | )
|Loss per share,                   |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|basic and diluted:                |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|As reported                       |  | $                  | (0.18  | )                 |  | $    | (0.19  | )    |  | $ | (0.23  | ) |  | $ | (0.64  | )
|Adjusted                          |  | $                  |       |                   |  | $    | (0.19  | )    |  | $ |       |   |  | $ | (0.63  | )

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Amortization expense related to an intangible asset, the customer
relationships acquired in the Dynamic Decisions acquisition, totaled $62,500
and $0 during the three months ended September 30, 2002 and 2001, respectively.
For nine months ended September 30, 2002 and 2001, amortization expense was
$187,500, respectively. The estimated aggregate future amortization
expenses for this intangible asset remaining as of September 30, 2002 are as
follows:

|                  |  |   |         |  | 
|----------------- |  | - | ------- |  | 
|Remainder of 2002 |  | $ | 62,500  | 
|2003              |  |   | 250,000 | 
|2004              |  |   | 250,000 | 
|2005              |  |   | 250,000 | 
|2006              |  |   | 250,000 | 
|2007              |  |   | 62,500  | 

Impairment of Long-Lived Assets

The Company tests goodwill for impairment in accordance with SFAS 142,
which requires goodwill to be tested for impairment at the reporting unit level
at least annually and more frequently upon occurrence of certain events, as
defined by SFAS 142. Goodwill is tested for impairment annually in a two-step
process. First, the Company determines if the fair value of its reporting
unit exceeds the carrying amount of the reporting unit. If the fair value does
not exceed the carrying amount, goodwill of the reporting unit is potentially
impaired, and the Company must then measure the impairment loss by comparing
the implied fair value of the goodwill, as defined by SFAS 142, to its
carrying amount. The fair value of the reporting unit is estimated using the
Income Approach, a present value technique.

On January 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.(SFAS 144). SFAS 144 addresses
the financial accounting and reporting for the impairment of long-lived assets.
The adoption of SFAS 144 did not have a material impact to the Companys
results of operations or financial position. In accordance with SFAS 144, the
Company evaluates the recoverability of long-lived assets, including intangible
assets and other goodwill, for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable based on expected undiscounted cash flows attributable to that
asset. The amount of any impairment loss is measured as the difference between
the carrying value and the fair value of the impaired asset and charged to
expense in the period identified. The rates that would be utilized to discount
net cash flows to net present value would take into account the time value of
money and investment risk factor. Management believes that no such events have
occurred.

Foreign Currency Translations

The Company considers the functional currency of its foreign subsidiaries
to be the local currency, and accordingly, the foreign currency is translated
into U.S. dollars using exchange rates in effect at period end for assets and
liabilities and average exchange rates during each reporting period for the
results of operations. Adjustments resulting from translation of foreign
subsidiary financial statements are reported on the balance sheet in
accumulated other comprehensive income (loss). Transaction gains and losses
that arise from exchange rate changes included in income are immaterial for all
periods presented.

Use of Estimates

The Companys unaudited condensed consolidated financial statements have
been prepared in accordance with GAAP. The preparation of the financial
statements requires that the Company make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results
could differ significantly from those estimates made by management with respect
to these items and other items, which require managements estimates. Estimates
and assumptions in these financial statements relate to, among other items, the
useful lives of fixed assets, capitalized software costs and intangible assets,
valuation of deferred tax assets, the allowance for doubtful accounts and
accrued liabilities.

Reclassifications

Certain prior year amounts have been reclassified to conform to the
current year presentation.

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4.     Net Income (Loss) Per Share

Net income (loss) is computed in accordance with SFAS No. 128, Earnings
Per Share. Basic net income (loss) per share is computed by dividing net
income (loss) available to common stockholders by the weighted average number
of common shares outstanding during the period. Dilutive net income (loss) is
computed using the weighted average number of common shares outstanding during
the period, plus the dilutive effect, if any, of potential common shares, which
consists of stock options.

For the three months ended September 30, 2002 and 2001, the Company
excluded potential dilutive common stock equivalents of 92,993 and 574,
respectively, from its calculation of diluted net income (loss) per share. The
Company had an additional 3,533,841 and 3,671,547 of antidilutive common stock
equivalents outstanding for the three months ended September 30, 2002 and 2001,
respectively, which would not be included in the fully dilutive calculation of
net income (loss) per share had the Company reported net income as the stock
option exercise price exceeded the average market price for the respective
periods.

5.     Comprehensive Income or Loss

Comprehensive income includes foreign currency translation gains and
losses, pertaining to the Companys foreign subsidiaries not using the U.S.
dollar as their functional currency, that have been excluded from net income
and reflected instead as a separate component of stockholders equity.

|                           |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|-------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                           |  | Three Months Ended |        | Nine Months Ended
|                           |  | September 30       |        | September 30     
|                           |  | (In thousands)     |        | (In thousands)   
|                           |  |                    |        |                  
|                           |  | 2002               |        | 2001              |  | 2002 |        | 2001
|                           |  |                    |        |                   |  |      |        |     
|Net loss                   |  | $                  | (2,164 | )                 |  | $    | (2,315 | )    |  | $ | (2,824 | ) |  | $ | (7,586 | )
|Other comprehensive income |  |                    | 35     |                   |  |      | 40     |      |  |   | 229    |   |  |   | 40     |  
|                           |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  
|Total comprehensive loss   |  | $                  | (2,129 | )                 |  | $    | (2,275 | )    |  | $ | (2,595 | ) |  | $ | (7,546 | )
|                           |  |                    |        |                   |  |      |        |      |  |   |        |   |  |   |        |  

6.     Segments and Geographical Information

The Company and its subsidiaries are principally engaged in the design,
development, marketing and support of the Companys interactive planning,
analytics and business intelligence and customer relationship management
businesses. The Company generates substantially all of its revenues from the
licensing of the Companys software products and related professional services
and maintenance services. The financial information is accompanied by
disaggregated information about revenues and expenses by geographic region for
purposes of making operating decisions and assessing each geographic regions
financial performance. The Company considers itself to be in a single industry
segment, in the market of software solutions for business performance
management, which provides the continuous management and monitoring of
financial, operational, customer and organizational performance across the
enterprise.

7.     Acquisition

On March 31, 2001, the Company acquired all of the outstanding capital
stock of Dynamic Decisions Pty Limited (Dynamic Decisions) for total cost of
approximately $5,867,000 consisting of $5,640,000 in maximum cash consideration
to be paid and 100,000 shares of the Companys common stock. The acquisition
was accounted for under the purchase method of accounting, and the purchase
price was allocated based on the estimated fair value of the assets acquired
and liabilities assumed. An intangible asset, acquired customer relationships
of $1,500,000, was recorded based on the fair value of the asset at the time of
acquisition and is being amortized on a straight-line basis over its estimated
useful life of six years. The excess of the purchase price over the fair value
of the net assets acquired of $934,000 was recorded as goodwill. Goodwill is no
longer amortized under the provision of SFAS 142. Per the terms of the
purchase and sale agreement, total maximum cash consideration relating to the
purchase of Dynamic Decisions was $5,150,000 payable in installments over a
maximum of 30 months beginning on July 1, 2001. As of September 30, 2002, the
Company had paid $1,267,000 of the maximum cash consideration, which has been
accounted for as purchase price, and three additional cash payments made in
2002 totaling $1,605,000, which have been accounted for as compensation expense
within operating expenses as the payments were contingent upon the continued
employment of two key executives of Dynamic Decisions. The remaining cash
payments will continue to be accounted for as compensation expense within
operating expense as they are contingent upon future employment of the two key
executives. The results of operations of Dynamic Decisions are included in the
financial statements from the date of acquisition.

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Unaudited pro forma revenues, net income (loss), and net income (loss) per
share shown below for the nine months ended September 30, 2001 assumes the
acquisition of Dynamic Decisions occurred on January 1, 2001.

|                                                    |  |                   |        |  
|--------------------------------------------------- |  | ----------------- | ------ | -
|                                                    |  | Nine Months Ended
|                                                    |  | September 30,    
|                                                    |  | 2001             
|                                                    |  |                  
|(In thousands, except per share amounts)            |  | (Unaudited)      
|Revenues                                            |  | $                 | 31,186 |  
|Net income (loss)                                   |  | $                 | (7,244 | )
|                                                    |  |                   |        |  
|Total basic and diluted net income (loss) per share |  | $                 | (0.71  | )
|                                                    |  |                   |        |  

8.     Restructuring Charges

In 2002 and 2001, the Company adopted several plans of restructuring aimed
at reducing operating costs company-wide, strengthening the Companys financial
position and reallocating resources to pursue the Companys future operating
strategies.

In the second quarter of 2001, the Company adopted a plan of restructuring
aimed at reducing operating costs company-wide. In connection with this plan,
28 non-management employees, primarily sales, marketing, and administrative
personnel, and 2 executive level employees, were terminated. The Companys
restructuring plan also included the closure of the Companys sales office in
France. As a result of the restructuring plan, the Company recorded a
restructuring charge of $512,000 for the three months ended June 30, 2001. The
restructuring charge consisted of $449,000 for severance costs and $63,000 for
the loss on disposal of the Companys French subsidiary, which was sold on June
30, 2001. In connection with the sale, the Company paid $100,000 to the
purchaser, which is included in the restructuring charge. No amounts remain
accrued at September 30, 2002.

In the third quarter of 2001, the Company adopted a plan of restructuring
to further reduce operating costs. In connection with this plan, the Company
recorded an additional restructuring charge of $438,000 for severance related
to the termination of 26 non-management employees, primarily sales, marketing,
and administrative personnel. Subsequent to the initial recording of the
charge, adjustments totaling $90,000 were recorded, reducing the charge to
$348,000. No amounts remained accrued at September 30, 2002.

In the fourth quarter of 2001, the Company adopted a plan of restructuring
to further reduce operating costs. The plan included the further reduction of
headcount of one senior level executive and 16 non-management employees,
primarily professional services, sales, and administrative personnel. The plan
also included the closure of several domestic offices and the consolidation of
space within one European office and the abandonment of leasehold improvements
and support assets associated with these locations, which were removed from
service shortly after the implementation of the plan. As a result of the
restructuring plan, the Company recorded a charge of $840,000, which included
$92,000 in non-cash charges relating to impaired assets. In the second quarter
of 2002, the Company negotiated an early lease cancellation for a certain
office lease for an amount less than the remaining lease obligation, which
reduced the charge by $140,000.

In the second quarter of 2002, the Company adopted a plan of restructuring
to further reduce operating costs. The plan included the further reduction of
headcount of five non-management employees, four sales people and one
administrative employee. The plan also included the closure of two foreign
offices. As a result of the restructuring plan, the Company recorded a charge
of $106,000, which is comprised of $77,000 for workforce reduction and $32,000
for office closures offset by an adjustment of $3,000 for severance.

In the third quarter of 2002, the Company adopted a plan of restructuring
to further reduce operating costs. The plan included a reduction of headcount
of twenty-one non-management and three management employees, primarily
professional services, sales, marketing, and customer support personnel. The
plan also included the closure of one foreign office. As a result of the
restructuring plan, the Company recorded a charge of $398,000, which is
comprised of $372,000 for workforce reduction, $20,000 related termination
costs, and $6,000 for office closure.

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The components of the restructuring cash charges, as well as the Companys
2002 payments made against accruals are detailed as follows:

|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |               |  |   |         |    |  |   |         |  |  |   |          |   |  |   |         | 
|----------------------------- |  | ------------ | ------- | ------- |  | ----------- | -------- | ------- |  | ---------- | -------- | ----------- |  | ------- | -------- | ------------- |  | - | ------- | -- |  | - | ------- |  |  | - | -------- | - |  | - | ------- | 
|                              |  |              |         |         |  |             |          |         |  | Q2         |          |             |  |         |          |               |  |   |         | Q3 |  |   |         |  |  |   |          |  
|                              |  | Balance at   |         | Q1      |  | Adjustment/ |          | Q2      |  | Balance at |          | Adjustment/ |  | Q3      |          | Balance at   
|Cash charges                  |  | December 31, |         | Payment |  | Charge      |          | Payment |  | June 30,   |          | Charge      |  | Payment |          | September 30,
|Restructuring                 |  | 2001         |         | made    |  | incurred    |          | made    |  | 2002       |          | incurred    |  | made    |          | 2002         
|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |              
|Work force reduction          |  | $            | 311,000 |         |  | $           | (232,000 | )       |  | $          | 72,000   |             |  | $       | (77,000  | )             |  | $ | 74,000  |    |  | $ | 372,000 |  |  | $ | (261,000 | ) |  | $ | 185,000 | 
|Office closures               |  |              | 274,000 |         |  |             | (4,000   | )       |  |            | (108,000 | )           |  |         |         |               |  | $ | 162,000 |    |  |   | 6,000   |  |  |   | (100,000 | ) |  | $ | 68,000  | 
|Other contractual obligations |  |              | 111,000 |         |  |             | (4,000   | )       |  |            |          |             |  |         | (24,000  | )             |  | $ | 83,000  |    |  |   | 20,000  |  |  |   | (18,000  | ) |  | $ | 85,000  | 
|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |               |  |   |         |    |  |   |         |  |  |   |          |   |  |   |         | 
|Total restructuring           |  | $            | 696,000 |         |  | $           | (240,000 | )       |  | $          | (36,000  | )           |  | $       | (101,000 | )             |  | $ | 319,000 |    |  | $ | 398,000 |  |  | $ | (379,000 | ) |  | $ | 338,000 | 
|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |               |  |   |         |    |  |   |         |  |  |   |          |   |  |   |         | 

9.     Discontinued Operation

In December 2000, the Company committed to a plan to dispose of the
operations of its VistaSource business. On March 30, 2001, the Company
completed the sale of the VistaSource business unit to Real Time International,
Inc. (Real-Time), a subsidiary of Parallax Capital Partners, LLC, for
$1,300,000 and a 19% equity interest in Real-Time. The results of operations
including revenue, operating expenses, other income and expense, and income
taxes of the VistaSource business unit for 2001 have been reclassified in the
accompanying statements of operations as a discontinued operation. The
Companys balance sheet at September 30, 2002 reflects no remaining liabilities
from its discontinued operation and its balance sheet at December 31, 2001
reflects the net liabilities of the VistaSource business as net liabilities of
discontinued operation within current liabilities. The Company recorded a gain
of $718,000 on the disposal of the discontinued operations in the first quarter
of 2001 due to the actual results of operations through the date of disposal,
changes in the net assets delivered at closing and changes in estimates of
certain obligations. The Companys results of operations for the three and nine
months ended September 30, 2002 included $42,000 and $127,000, respectively, in
expenses relating to certain defense costs incurred from a claim filed against
VistaSource (Note 10), which were not accrued for on the Companys balance
sheet.

10.     Non-recourse Sale of Receivables

The Company has a non-recourse accounts receivable purchase arrangement
with a bank, pursuant to which the Company and the bank may agree from time to
time for the Company to sell qualifying accounts receivable to the bank, in an
aggregate amount of up to $2 million outstanding, at a purchase price equal to
the balance of the accounts less a discount rate and a fee. On or about
September 30, 2002, the Company factored certain accounts receivable to the
bank pursuant to the purchase arrangement in the amount of $941,000. On or
about December 31, 2001, the Company factored certain accounts receivable to
the bank pursuant to the purchase agreement in the amount of $729,000.

In accordance with SFAS 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, the Company recognized a
sale for those accounts receivable balances for which there was no future
obligation to the customer, in the amount of $785,000 and $361,000 for
September 30, 2002 and December 31, 2001, respectively. The Company has
concluded that these accounts have been legally isolated, and accordingly, this
amount has been derecognized from the Companys accounts receivable balance at
December 31, 2001 and September 30, 2002, respectively. The loss from the sale
of the financial assets and retained interest for cash collection were not
material to the Companys results of operations or financial position. The
remainder of $156,000 and $368,000 has been recorded as a financing transaction
and recognized as a liability at September 30, 2002 and December 31, 2001,
respectively.

11.     Commitments and Contingencies

On February 8, 2002, a customer of the Companys divested business unit
filed a claim in Germany against the Companys German subsidiary, Veriteam
GmbH. The claim alleges a breach of contract pertaining to software sold and
implemented by the divested business unit on behalf of the Company. The
customer is seeking repayment for the cost of the software and related services
of approximately $800,000. The Company has answered the customers claim,
denying the claims allegations. Due to the early nature of the claim, the
Company has been unable to fully assess the likely outcome of the claim.
However, the Company intends to vigorously defend its position.

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12.     Restricted Cash

On August 1, 2001, the Company established a $1,050,000 irrevocable
standby letter of credit in connection with the execution of an agreement to
lease certain office space. The irrevocable standby letter of credit is
collateralized by a restricted cash deposit of $1,050,000. The funds can be
drawn down over the term of the lease, provided the Company has not defaulted
on the office lease. The irrevocable standby letter of credit and underlying
security deposit (restricted cash) requirement of $1,050,000 will be reduced
starting the first day of the second lease year as follows:

|                                      |  |           |         | 
|------------------------------------- |  | --------- | ------- | 
|                                      |  | Reduction
|                                      |  | Amount   
|                                      |  |          
|Second lease year (December 31, 2002) |  | $         | 116,667 | 
|Third lease year (December 31, 2003)  |  | $         | 116,667 | 
|Fourth lease year (December 31, 2004) |  | $         | 175,001 | 
|Fifth lease year (December 31, 2005)  |  | $         | 233,330 | 
|Sixth lease year (December 31, 2006)  |  | $         | 283,335 | 

At the end of the sixth year, the Company can reduce the letter of credit
to $125,000 or substitute $125,000 in cash in lieu of the letter of credit.




ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview of the Companys Operations

Applix, Inc. (Applix or the Company) is a global provider of
enterprise business performance management solutions that include applications
for interactive planning, analytics and business intelligence and customer
relationship management (CRM). Applixs current product family is built on
the Integra platform, which integrates business planning, performance
measurement and operational data to enable companies to optimise business
effectiveness and customer interaction regardless of geography or structure.
Integra is an integration of Applixs two existing technology platforms, iTM1
and iEnterprise. Applix Integra enables business
performance management solutions such as financial and operational planning,
budgeting and forecasting applications; and customer management, CRM analytics,
and other CRM-related operational solutions such as Helpdesk and
human resource solutions.
The first new solution based on the Applixs Integra technology, announced
with the general release of Applix Integra 1.1 in October 2002, is Applix
Interactive Planning. This solution unifies traditionally standalone
processes, including planning, forecasting, budgeting consolidations, reporting
and analysis in one coherent framework. The Companys analytic and CRM
solutions owe their adaptability to iTM1 and iEnterprise technology platforms
that power them. Applix continues to enhance these technology platforms and is
currently leading its marketing and sales strategy with Applix Integra, which
combines the power of the technologies.

Applixs leading revenue product, iTM1, an on-line analytical processing
(OLAP) engine, helps improve business performance by enabling an organization
to make effective, real-time decision making at all organizational levels
through the use of consistent reporting and analysis by capturing data from
across the extended enterprise.

The Companys CRM product, iEnterprise, consists of a suite of a collaborative CRM
solutions including application modules of iSales, iService, and iHelpdesk
applications, which enables an organization to better manage its mission
critical relationships with its customer, partner and employee.
The Companys CRM applications help an organization to sell to, market to, and service
its customers across multiple channels.

Applix Integra is an integration of the iTM1 and iEnterprise technology
platforms, enabling business performance management solutions such as financial
and operational planning, budgeting and forecasting applications; and Customer
management solutions, CRM analytics, and other CRM-related operational
solutions such as Helpdesk and human resource solutions. The first new analytics solution
based on the Applix Integra technology is Applix Interactive Planning, which
unifies traditionally standalone processes, including planning, forecasting,
budgeting consolidations, reporting and analysis in one coherent framework.

In December 2000, the Company committed to a plan to dispose of the
operations of its VistaSource business. On March 30, 2001, the Company
completed the sale of the VistaSource business unit to Real Time International,
Inc. (Real-Time), a subsidiary of Parallax Capital Partners, LLC, for
$1,300,000 and a 19% equity interest in Real-Time. The results of operations
including revenue, operating expenses, other income and expense, and income
taxes of the VistaSource business unit for 2001 have been reclassified in the
accompanying statements of operations as a discontinued operation. The
Companys balance sheet at June 30, 2002 reflects no remaining liabilities from
its discontinued operation and its balance sheet at December 31, 2001 reflects
the net liabilities of the VistaSource business as net liabilities of
discontinued operation within current liabilities. The Company recorded a gain
of $718,000 on the disposal of the discontinued operations in the first quarter
of 2001 due to the actual results of operations through the date of disposal,
changes in the net assets delivered at closing and changes in estimates of
certain obligations. The Companys result of operations for the three and nine
months ended September 30, 2002 included $42,000 and $127,000, respectively, in
expenses relating to certain defense costs incurred from a claim filed against
VistaSource (Note 10), which were not accrued for on the Companys balance
sheet.

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On March 31, 2001, the Company acquired all of the outstanding capital
stock of Dynamic Decisions Pty Limited for total cost of approximately
$5,867,000 consisting of $5,640,000 in maximum cash consideration to be paid
and 100,000 shares of the Companys common stock. The acquisition was accounted
for under the purchase method of accounting, and the purchase price was
allocated based on the estimated fair value of the assets acquired and
liabilities assumed. An intangible asset, acquired customer relationships of
$1,500,000, was recorded based on the fair value of the asset at the time of
acquisition and is being amortized on a straight-line basis over its estimated
useful life of six years. The excess of the purchase price over the fair value
of the net assets acquired of $934,000 was recorded as goodwill. Goodwill is no
longer amortized under the provision of SFAS 142.

Per the terms of the purchase and sale agreement, total maximum cash
consideration relating to the purchase of Dynamic Decisions was $5,150,000
payable in installments over a maximum of 30 months beginning on July 1, 2001.
As of September 30, 2002, the Company had paid $1,267,000 of the maximum cash
consideration, which has been accounted for as purchase price, and three
additional cash payments made in 2002 totaling $1,605,000, which have been
accounted for as compensation expense within operating expenses as the payments
were contingent upon the continued employment of two key executives of Dynamic
Decisions. The remaining cash payments will continue to be accounted for as
compensation expense with operating expense as they are contingent upon the
future employment of the two key executives. The results of operations of
Dynamic Decisions are included in the financial statements from the date of
acquisition.

The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in this
Quarterly Report and with the Financial Statements and Managements Discussion
and Analysis of Financial Condition and Results of Operations contained in the
Companys Annual Report on Form 10-K for the year ended December 31, 2001 filed
with the Securities and Exchange Commission.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

This Managements Discussion and Analysis of Financial Condition and
Results of Operations discusses the Companys condensed consolidated financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management bases
its estimates and assumptions on expected or known trends or events, historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.

Management believes the following critical accounting policies, among
others, involve the more significant judgments and estimates used in the
preparation of its consolidated financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with Statement of Position
(SOP) 97-2, Software Revenue Recognition (SOP 97-2), and SOP 98-9,
Software Revenue Recognition with Respect to Certain Transactions. SOP 97-2
requires that four basic criteria must be met before revenue can be recognized:
(1) persuasive evidence of an arrangement exists via a valid executed customer
order and/or signed license agreement; (2) physical or electronic delivery has
occurred including availability of license keys or services rendered; (3) the
fee is fixed or determinable representing amounts that are due unconditionally
with no future obligations under customary payment terms; and (4)
collectibility is probable. In the event that the Company is unable to meet any
one or all of the above criteria on a timely basis, revenue recognized for any
reporting period could be adversely affected.

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Accounts Receivable and Bad Debt

The Company maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its customers to make required payments.
The Company continuously monitors collections and payments from its customers
and determines the allowance for doubtful accounts based upon historical
experience and specific customer collection issues. If the financial condition
of the Companys customers were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required. The
Company generally invoices the customer in the same local currency as to be
paid by the customer. The Company does not hedge its foreign customer
receivables due to the relatively small exposure from foreign currency rate
fluctuations.

Capitalized Software Development Costs

The Companys policy for capitalized software development costs is to
capitalize eligible design and development costs relating to its software
products incurred between the time that the products technological feasibility
is established and the general release of the product to customers. This policy
requires management to use professional judgment in determining what
development costs are eligible and at what point technological feasibility has
been reached. Capitalized software development costs are amortized as a cost of
software license revenue over the estimated product life, and development costs
not capitalized under the policy are classified as a development expense in the
same period as incurred. If management determines that the recoverability of
these unamortized capitalized software costs is not probable, these costs may
require adjustment to their net realizable value, which could affect the
results of the reporting period.

Accounting For Cost-Based Investments

The Company has two cost-based investments, which have a zero value at
September 30, 2002 and December 31, 2001. In assessing potential impairment for
cost-based investments, the Company considers various factors including but not
limited to a companys financial performance, anticipated funding needs,
comparable companies performance, and volatility inherent in the external
market for these investments. If these factors are not supportive of the
carrying value of the investment, the Company may record impairment charges not
previously recognized to reflect managements best estimate of recoverability.
With the divestment of its VistaSource business unit, the Company retained a
cost-based investment in Real-Time International, Inc. that was deemed to have
no value at the date of the transaction. The Company also has a cost-based
investment in TurboLinux, Inc., which was determined to be impaired, resulting
in recognition of a $1,250,000 impairment loss in 2001.

Goodwill and Other Intangible Assets and Related Impairment

During 2001, the Company completed its acquisition of Dynamic Decisions
and recorded goodwill in the amount of $934,000 associated with the excess
purchase price over the fair value of the net assets acquired and identifiable
intangible assets of $1,500,000 assigned to identified customer relationships.
The amounts assigned to the identifiable assets and liabilities acquired in
connection with the acquisition were based on estimated fair values at the date
of acquisition. The fair values were determined by the Companys management,
based in part upon information supplied by the management of the acquired
business and a valuation prepared by an independent appraiser. The valuation of
identified customer relationships has been based primarily upon future cash
flow projections discounted to present value using a risk-adjusted discount
rate.

In assessing the recoverability of the Companys goodwill and other
intangible assets, the Company must make assumptions regarding estimated future
cash flows and other factors including legal factors, market conditions and
operational performance of its acquired businesses to determine the fair value
of the respective assets. If these estimates or their related assumptions
change in the future, the Company may be required to record impairment charges
for these assets not previously recorded. In addition, the estimated lives of
goodwill and other intangible assets are based on current facts. If events
change, and the Company has overestimated the economic life of these assets,
the Company will begin to amortize the remaining unamortized carrying value of
these assets over the newly estimated life, which may result in additional
amortization expense.

Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets (SFAS
142) and is now required to analyze its goodwill for impairment during the
first six months of fiscal 2002, and subsequently on an annual basis
thereafter, unless facts or circumstances arise earlier which indicate
impairment. Any resulting impairment loss could have a material adverse impact
on financial condition and results of operations. The Company performed the
first of the required impairment tests of goodwill using the Income Approach, a
present value technique, which indicated that an impairment does not appear to
exist as a result of adoption of SFAS 142. The Company expects to complete the
annual test in the fourth quarter of 2002.

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Restructuring

During 2002 and 2001, the Company recorded charges in connection with its
restructuring programs. These charges include estimates pertaining to employee
separation costs and the settlements of contractual obligations resulting from
the Companys actions. Although the Company does not anticipate significant
changes, the actual costs may differ from these estimates, which would result
in adjustments to the original estimates.

Deferred Taxes

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 Accounting for Income Taxes (FAS
109) which requires that deferred tax assets and liabilities be recognized
using enacted tax rates for the effect of temporary differences between the
book and tax bases of recorded assets and liabilities. FAS 109 also requires
that deferred tax assets be reduced by a valuation allowance if it is more
likely than not that some portion or all of the deferred tax asset will not be
realized. The Company evaluates quarterly realizability of its deferred tax
assets by assessing its valuation allowance and by adjusting the amount of such
allowance, if necessary. At September 30, 2002 and December 31, 2001, the
Companys deferred tax assets were fully reserved. In the event the Company
were to determine in the future that it would be able to realize its deferred
tax assets in excess of its net-recorded amount, an adjustment to the deferred
tax asset would increase income in the period such determination was made.

Results of Continuing Operations for the Three
and Nine Months Ended September
30, 2002 and 2001

The following table sets forth the consolidated statement of operations
data for the three and nine months ended September 30, 2002 and 2001, expressed
as a percentage of total revenues:

|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |      |       |  
|------------------------------------------- | ----------------------------------------------------------------------- | ------------------------ | ----- | ------------------ | ----- | ----------------- | ----- | ---- | ----- | ---- | ----- | ---- | ----- | - | ----- | ---- | ----- | -
|                                            |                                                                         |                          |       | Three Months Ended |       | Nine Months Ended
|                                            |                                                                         |                          |       | September 30,      |       | September 30,    
|                                            |                                                                         |                          |       |                    |       |                  
|                                            |                                                                         |                          |       | 2002               |       | 2001              |       | 2002 |       | 2001
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |     
|Software license revenue                    |                                                                         |                          | 39.5  | %                  |       |                   | 47.9  | %    |       |      | 43.6  | %    |       |   | 47.6  | %   
|Professional services and maintenance       |                                                                         |                          | 60.5  | %                  |       |                   | 52.1  | %    |       |      | 56.4  | %    |       |   | 52.4  | %   
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|                                            |                                                                         | Total revenue            |       |                    | 100.0 | %                 |       |      | 100.0 | %    |       |      | 100.0 | % |       |      | 100.0 | %
|Cost of software license revenue            |                                                                         |                          | 6.1   | %                  |       |                   | 3.4   | %    |       |      | 4.8   | %    |       |   | 2.8   | %   
|Cost of professional services and maintence |                                                                         |                          | 28.6  | %                  |       |                   | 36.2  | %    |       |      | 28.4  | %    |       |   | 35.4  | %   
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|                                            | Gross margin                                                            |                          |       | 65.2               | %     |                   |       | 60.4 | %     |      |       | 66.8 | %     |   |       | 61.8 | %    
|Operating expenses                          |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|                                            | Product development                                                     |                          |       | 19.7               | %     |                   |       | 19.1 | %     |      |       | 15.2 | %     |   |       | 18.0 | %    
|                                            | Sales and marketing                                                     |                          |       | 41.9               | %     |                   |       | 52.0 | %     |      |       | 38.9 | %     |   |       | 57.1 | %    
|                                            | General and administrative                                              |                          |       | 16.3               | %     |                   |       | 13.0 | %     |      |       | 14.3 | %     |   |       | 11.3 | %    
|                                            | Compensation expenses and amortization of
acquired intangibles (Note 7) |                          |       | 7.5                | %     |                   |       | 0.7  | %     |      |       | 6.7  | %     |   |       | 0.4  | %    
|                                            | Restructuring expenses                                                  |                          |       | 4.9                | %     |                   |       | 4.9  | %     |      |       | 1.3  | %     |   |       | 3.1  | %    
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|                                            |                                                                         | Total operating expenses |       |                    | 90.4  | %                 |       |      | 89.6  | %    |       |      | 76.4  | % |       |      | 89.8  | %
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|Operating loss                              |                                                                         |                          | -25.2 | %                  |       |                   | -29.4 | %    |       |      | -9.6  | %    |       |   | -28.5 | %   
|Interest and other income (expense), net    |                                                                         |                          | -1.4  | %                  |       |                   | 0.3   | %    |       |      | 0.0   | %    |       |   | 0.8   | %   
|Provision (benefit) for income taxes        |                                                                         |                          | -0.6  | %                  |       |                   | 0.6   | %    |       |      | 0.4   | %    |       |   | 0.6   | %   
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|Net loss from continuing operations         |                                                                         |                          | -25.9 | %                  |       |                   | -30.2 | %    |       |      | -10.1 | %    |       |   | -28.3 | %   
|Gain (loss) from discontinued operations    |                                                                         |                          | -0.5  | %                  |       |                   | 4.1   | %    |       |      | -0.5  | %    |       |   | 3.5   | %   
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     
|Net loss                                    |                                                                         |                          | -26.4 | %                  |       |                   | -26.1 | %    |       |      | -10.6 | %    |       |   | -24.8 | %   
|                                            |                                                                         |                          |       |                    |       |                   |       |      |       |      |       |      |       |   |       |     

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Revenues

Total revenues for the quarter ended September 30, 2002 were $8,182,000, a
8% decrease from revenues of $8,858,000 for the three months ended September
30, 2001. For the nine months ended September 30, 2002, revenues were
$26,764,000, a 13% decrease from revenues of $30,629,000 for the nine months
ended September 30, 2001. Software license revenues as a percentage of total
revenues decreased 8% for the three months ended September 30, 2002 from the
three months ended September 30, 2001, and 4% for the nine months ended
September 30, 2002 from the nine months ended September 30, 2001. The decrease
in the Companys overall revenues and software license revenues as percentage
of total revenues was primarily a result of the a combination of continued
deterioration in the information technology industry and weakness in the CRM and a greater than normal seasonal
revenues decline in Europe which is in a traditionally slower third quarter.
The weakness in the CRM market was partially offset by the
Companys continued strengthening in the business analytics market.

Software License

Software license
revenues decreased 24% for the three months ended
September 30, 2002 as compared to the three months ended September 30, 2001.
For the nine months ended September 30, 2002, software license revenues
decreased 20% as compared to the nine months ended September 30, 2001. Overall
software license revenues decreased primarily due to the continued weakness in
the CRM market. The decline was predominately in Europe. The overall decrease
in CRM software license revenues was partially offset by the Companys strength
in business analytics revenues, which increased 28% and 10% as a percentage of
the total software license revenues for the quarter ended September 30, 2002
compared to the three months ended September 30, 2001 and for the nine
months ended September 30, 2002 compared to the nine months ended September 30,
2001, respectively. Overall, the Companys software license revenues mix and
growth has been shifting more significantly towards business analytics. This
revenue mix shift is indicative of the decline and softness in the CRM market
and the strength and growth in the Companys business analytics products.

The following table sets forth the software license revenues by sales office
geography (in thousands):

|                                |  |                    |       |                    |  |                    |       |                    |  |   |        |        |  |   |        |       
|------------------------------- |  | ------------------ | ----- | ------------------ |  | ------------------ | ----- | ------------------ |  | - | ------ | ------ |  | - | ------ | ------
|                                |  | Three Months Ended |       | Three Months Ended |  | Nine Months Ended  |       | Nine Months Ended 
|Geography                       |  | September 30, 2002 |       | September 30, 2001 |  | September 30, 2002 |       | September 30, 2001
|                                |  |                    |       |                    |  |                    |       |                   
|North America                   |  | $                  | 1,559 | (48%)              |  | $                  | 1,594 | (38%)              |  | $ | 5,848  | (50%)  |  | $ | 5,961  | (41%) 
|PacRim                          |  |                    | 514   | (16%)              |  |                    | 652   | (15%)              |  |   | 1,541  | (13%)  |  |   | 1,805  | (12%) 
|Europe                          |  |                    | 1,158 | (36%)              |  |                    | 1,994 | (47%)              |  |   | 4,293  | (37%)  |  |   | 6,825  | (47%) 
|Total Software
License Revenues |  | $                  | 3,231 | (100%)             |  | $                  | 4,240 | (100%)             |  | $ | 11,682 | (100%) |  | $ | 14,591 | (100%)

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Domestic license
revenues decreased 2% to $1,559,000 for the three months
ended September 30, 2002 from $1,594,000 for the three months ended September
30, 2001. For the nine months ended September 30, 2002, domestic license
revenues decreased 2% to $5,848,000 from $5,961,000 for the nine months ended
September 30, 2001. The decrease was solely due to the continued weakness in
the CRM market. The decrease was partially offset by an increase in business
analytics revenues, including $205,000 in Applix Integra revenues in the third
quarter of 2002. International license revenues decreased 37% to $1,672,000
for the quarter ended September 30, 2002 from $2,646,000 for the same period in
2001. For the nine months ended September 30, 2002, international license
revenues decreased 32% to $5,834,000 from $8,630,000 compared to the nine
months ended September 30, 2001. The decrease was primarily due to the economic
conditions in Europe and continued weakness in the CRM market.

The Company markets its products through its direct sales force and
indirect partners. The Company continues to focus on complementing the direct
sales force with the indirect channel partners, which consist of original
equipment manufacturers (OEMs), value added resellers (VARS), independent
distributors and sales agents.

Professional Services and Maintenance

Professional services and maintenance revenues increased 7% for the three
months ended September 30, 2002 to $4,951,000, as compared to $4,618,000, for
the three months ended September 30, 2001. For the nine months ended September
30, 2002, professional services and maintenance revenues decreased 6% to
$15,082,000 from $16,038,000 for the nine months ended September 30, 2001. For
the three months ended September 30, 2002, maintenance revenues increased 19%
to $3,751,000 compared to $3,152,000 for the three months ended September 30,
2001, while consulting and training revenues decreased 18% to $1,200,000
compared to $1,466,000 for the three months ended September 30, 2001. For the
nine months ended September 30, 2002, maintenance revenues increased 20% to
$10,723,000 as compared to $8,963,000 for the nine months ended September 30,
2001, while consulting and training revenues decreased 38% to $4,359,000
compared to $7,075,000 for the nine months ended September 30, 2001. The
decrease in the absolute dollar amount of professional services and maintenance
revenues was due to a decline in professional services revenues, partially
offset by an increase in maintenance revenues. Professional services revenues
declined on a year-over-year basis as a result of the Companys focus on high quality consulting
engagements, greater reliance on external authorized Applix partners
and the increase in business analytics implementations, which require
fewer consulting hours to implement the solutions. The
Companys maintenance revenues have continued to increase both sequentially and
on a year-over-year basis, due to an improvement in the customer base
satisfaction with the software and support and their election to renew their
support agreements. The Company expects the maintenance revenues as a
component of total professional service and maintenance revenues to continue to
increase due to strong customer renewal rates and as they choose to extend
their support agreements. The Company expects professional service revenues to
decrease as a percentage of total professional services and maintenance
revenues due to the greater use of authorized Applix partners for professional
services and the increase in business analytics implementations, which require
fewer consulting hours to implement the solutions.

Domestic professional services and maintenance revenues increased 23% to
$1,858,000 for the three months ended September 30, 2002 from $1,508,000 for
the three months ended September 30, 2001. For the nine months ended September
30, 2002, domestic professional services and maintenance revenues increased 3%
to $5,748,000 from $5,575,000 for the nine months ended September 30, 2001.
Increases in maintenance renewal revenues were partially offset by a decrease
in professional services revenues, as the Company increased its use of outside
consulting resources.

International professional services and maintenance revenues decreased by
1% to $3,093,000 in the three months ended September 30, 2002 from $3,110,000
for the three months ended September 30, 2001. For the nine months ended
September 30, 2002, international professional services and maintenance
revenues decreased 11% to $9,334,000 compared to $10,463,000 for the same
period ended September 30, 2001. Increases in maintenance renewal revenues
were partially offset by a decrease in professional services revenues,
particularly in the CRM market, as the Company increased its use of outside
consulting resources.

Cost of Revenues

Cost of Software License Revenues

Cost of software license revenues consist primarily of third-party
software royalties, cost of product packaging, and documentation materials,
order fulfillment employees, and amortization of capitalized software costs.
The amortization of capitalized software costs begins upon general release of
the software to customers. Cost of software license revenues
increased 68% to
$502,000 for the three months ended September 30, 2002, compared
to $298,000
for the same quarter ended September 30, 2001. For the nine months ended
September 30, 2002, cost of software license revenues increased
50% to
$1,275,000 as compared to $852,000 for the same prior year period. As a
percentage of software license revenues, cost of software license revenues
increased to 16% in the three months ended September 30, 2002, as compared to
7% for the three months ended September 30, 2001. For the nine months ended
September 30, 2002, cost of software license revenues as percentage of software
license revenues increased to 11% compared to 6% a year earlier. Cost of
software license revenues increased in absolute dollars and as a percentage of
software license revenues primarily due to an increase in amortization of
capitalized software development costs and third-party royalties and the
decline in software license revenues.

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Cost of Professional Services and Maintenance Revenues

The cost of professional services and maintenance revenues consists
primarily of personnel, facilities and system costs incurred to provide
consulting, training and customer support. Cost of professional services and
maintenance revenue from continuing operations decreased 27% to $2,341,000 for
the three months ended September 30, 2002 from $3,208,000 for the three months
ended September 30, 2001. Cost of professional services and maintenance revenue
as a percentage of professional services and maintenance revenue was
47% in the
third quarter of 2002 as compared to 69% during the same quarter of 2001. For
the three and nine months ended September 30, 2002, professional services and
maintenance revenue gross margin as a percentage of professional services
revenue improved to 53% and 50%, respectively, as compared to 29% and
32% for the same periods ended September 30, 2001. The improvement in professional
services and maintenance revenue gross margin is due to higher utilization of
the Companys service professionals, and a change in revenue mix from lower
margin consulting revenues to higher margin maintenance revenues.

Product Development

Product development expenses include costs associated with the development
of new products, enhancements of existing products and quality assurance
activities, and consist primarily of employee salaries, benefits, consulting
costs and the cost of software development tools. The Company capitalizes
product development costs during the required capitalization period once the
Company has reached technological feasibility through general release of its
software products. The Company considers technological feasibility to be met
once it has completed a working model that has met certain performance
criteria. Product development costs not meeting the requirements for
capitalization are expensed as incurred. Applix product development utilized a
total management (TQM) approach to software development and participates in a
self-management process measurement using Carnegie Mellons Software
Engineering Institutes Capability Maturity Model (self-assessment only).

Product development
decreased 4% to $1,615,000
for the three months ended September 30, 2002, from $1,698,000 for the three
months ended September 30, 2001. This represents 20% of the total revenue for
the three months ended September 30, 2002 as compared to 19% of the total
revenue for the three months ended September 30, 2001. Product development from
continuing operations decreased 26% to $4,060,000 for the nine months ended
September 30, 2002 from $5,513,000 for the nine months ended September 30,
2001. The decrease is due in part to the capitalization of product development
costs as a result of the development for the new Applix Integra technology
platform and related applications. The capitalization of product development
costs was $209,000 for the three months ended September 30, 2002 and $1,417,000
for the nine months ended September 30, 2002 compared to
$128,000 and $582,000
for the three and nine months ended September 30, 2001, respectively. The
Company anticipates that it will continue to devote substantial resources to
develop new products, new versions of its existing products including Applix
Integra and related Applix Integra applications. In October 2002, the Company
announced general release of its newest technology platform, Applix Integra
1.1, and the first analytics application, Applix Interactive Planning, based
upon the Applix Integra technology platform.

Sales and Marketing

Sales and marketing expenses consist primarily of salaries, commissions
and bonuses earned by sales and marketing personnel, field office expenses,
travel and entertainment, promotional and advertising expenses and the cost of
the Companys international operations, which are sales operations. Sales and
marketing expenses from continuing operations decreased 26% to $3,431,000 for
the three months ended September 30, 2002 from $4,610,000 for the three months
ended September 30, 2001. For the nine months ended September 30, 2002, sales
and marketing expenses decreased 40% to $10,415,000 from $17,485,000 for the
nine months ended September 30, 2001. As a percentage of total revenues, sales
and marketing expenses were 42% and 52% respectively, for the three months
ended September 30, 2002 and 2001, respectively. For the nine months ended
September 30, 2002 and 2001, sales and marketing expenses as a percentage of
total revenues were 39% and 57%, respectively. The decrease was primarily due
to the Companys cost control initiatives and the decrease in sales commissions
that resulted from a decrease in the Companys software license revenues. In
response to the weakening global economy, the Company reduced its expenditures
throughout 2001 and has continued to closely monitor its expenses during 2002.
The Companys cost controls initiatives included decreased staffing levels
associated with the Companys restructuring initiatives and reducing
advertising, travel and other discretionary expenditures. The Company expects
to continue to closely monitor discretionary expenditures and to continue its
cost control initiatives.

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General and Administrative

General and administrative expenses consist primarily of salaries and
occupancy costs for administrative, executive and finance, information
technology (IT) and human resource personnel. General and administrative
expenses from continuing operations increased 14% to $1,338,000 for the three
months ended September 30, 2002 from $1,148,000 for the three months ended
September 30, 2001. For the nine months ended September 30, 2002, general and
administrative expenses increased 11% to $3,834,000 compared to $3,449,000 for
the nine months ended September 30, 2001. The increase was primarily due to
increased rent and related costs of the Companys new corporate headquarters,
legal and auditing fees, and corporate insurance premiums. As a percentage of
total revenues, general and administrative expenses were 16% and 13%,
respectively, for the three months ended September 30, 2002 and
2001, and 14%
and 11%, respectively, for the nine months ended September 30, 2002 and 2001.
The increase in general and administrative expenses as the percentage of total
revenues as compared to the same period last year was due in part to the
decrease in total revenues.

Restructuring Expense

In 2001 and 2002, the Company adopted several plans of restructuring aimed
at reducing operating costs company-wide, strengthening the Companys financial
position, and reallocating resources to pursue the Companys future operating
strategies.

In the second quarter of 2001, the Company adopted a plan of restructuring
aimed at reducing operating costs company-wide. In connection with this plan,
28 non-management employees, primarily sales, marketing, and administrative
personnel, and 2 executive level employees, were terminated. The Companys
restructuring plan also included the closure of the Companys sales office in
France. As a result of the restructuring plan, the Company recorded a
restructuring charge of $512,000 for the three months ended June 30, 2001. The
restructuring charge consisted of $449,000 for severance costs and $63,000 for
the loss on disposal of the Companys French subsidiary, which was sold on June
30, 2001. In connection with the sale, the Company paid $100,000 to the
purchaser, which is included in the restructuring charge. No amounts remain
accrued at September 30, 2002.

In the third quarter of 2001, the Company adopted a plan of restructuring
to further reduce operating costs company-wide. In connection with this plan,
the Company recorded an additional restructuring charge of $438,000 for
severance related to the termination of 26 non-management employees, primarily
sales, marketing, and administrative personnel. Subsequent to the initial
recording of the charge, adjustments totaling $90,000 were recorded, reducing
the charge to $348,000. No amounts remained accrued at September 30, 2002.

In the fourth quarter of 2001, the Company adopted a plan of restructuring
to further reduce operating costs. The plan included the further reduction of
headcount of one senior level executive and 16 non-management employees,
primarily professional services, sales, and administrative personnel. The plan
also included the closure of several domestic offices and the consolidation of
space within one European office and the abandonment of leasehold improvements
and support assets associated with these locations, which were removed from
service shortly after the implementation of the plan. As a result of the
restructuring plan, the Company recorded a charge of $840,000, which included
$92,000 in non-cash charges relating to impaired assets. In the second quarter
of 2002, the Company negotiated an early lease cancellation for a certain
office lease for an amount less than the remaining lease obligation, which
reduced the charge by $140,000.

In the second quarter of 2002, the Company adopted a plan of restructuring
to further reduce operating costs. The plan included the further reduction of
headcount of five non-management employees, four sales people and one
administrative employee. The plan also included the consolidation of two
foreign offices. As a result of the restructuring plan, the Company recorded a
charge of $106,000 comprising of $74,000 for workforce reduction and $32,000
for office closures.

In the third quarter of 2002, the Company adopted a plan of restructuring
to further reduce operating costs. The plan included a reduction of headcount
of twenty-one non-management and three management employees, primarily
professional services, sales, marketing, and customer support personnel. The
plan also included the closure of one foreign office. As a result of the
restructuring plan, the Company recorded a charge of $398,000, which is
comprised of $372,000 for workforce reduction, $20,000 related termination
costs, and $6,000 for office closure.

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The components of the restructuring cash charges, as well as the Companys
2002 payments made against accruals are detailed as follows:

|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |               |  |   |         |    |  |   |         |  |  |   |          |   |  |   |         | 
|----------------------------- |  | ------------ | ------- | ------- |  | ----------- | -------- | ------- |  | ---------- | -------- | ----------- |  | ------- | -------- | ------------- |  | - | ------- | -- |  | - | ------- |  |  | - | -------- | - |  | - | ------- | 
|                              |  |              |         |         |  |             |          |         |  | Q2         |          |             |  |         |          |               |  |   |         | Q3 |  |   |         |  |  |   |          |  
|                              |  | Balance at   |         | Q1      |  | Adjustment/ |          | Q2      |  | Balance at |          | Adjustment/ |  | Q3      |          | Balance at   
|Cash charges                  |  | December 31, |         | Payment |  | Charge      |          | Payment |  | June 30,   |          | Charge      |  | Payment |          | September 30,
|Restructuring                 |  | 2001         |         | made    |  | incurred    |          | made    |  | 2002       |          | incurred    |  | made    |          | 2002         
|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |              
|Work force reduction          |  | $            | 311,000 |         |  | $           | (232,000 | )       |  | $          | 72,000   |             |  | $       | (77,000  | )             |  | $ | 74,000  |    |  | $ | 372,000 |  |  | $ | (261,000 | ) |  | $ | 185,000 | 
|Office closures               |  |              | 274,000 |         |  |             | (4,000   | )       |  |            | (108,000 | )           |  |         |         |               |  | $ | 162,000 |    |  |   | 6,000   |  |  |   | (100,000 | ) |  | $ | 68,000  | 
|Other contractual obligations |  |              | 111,000 |         |  |             | (4,000   | )       |  |            |          |             |  |         | (24,000  | )             |  | $ | 83,000  |    |  |   | 20,000  |  |  |   | (18,000  | ) |  | $ | 85,000  | 
|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |               |  |   |         |    |  |   |         |  |  |   |          |   |  |   |         | 
|Total restructuring           |  | $            | 696,000 |         |  | $           | (240,000 | )       |  | $          | (36,000  | )           |  | $       | (101,000 | )             |  | $ | 319,000 |    |  | $ | 398,000 |  |  | $ | (379,000 | ) |  | $ | 338,000 | 
|                              |  |              |         |         |  |             |          |         |  |            |          |             |  |         |          |               |  |   |         |    |  |   |         |  |  |   |          |   |  |   |         | 

Compensation Expenses and Amortization of Acquired Intangibles

Compensation expenses and amortization of acquired intangibles consist
primarily of contingent cash consideration relating to the Companys March 2001
acquisition of Dynamic Decisions and the amortization of goodwill and
identified intangible assets, consisting of customer relationships, associated
with the acquisition. Per the terms of the purchase and sale agreement, total
maximum cash consideration relating to the purchase of Dynamic Decisions was
$5,150,000 payable in installments over a maximum of 30 months beginning on
July 1, 2001. As of September 30, 2002, the Company had paid $1,267,000 of the
maximum cash consideration, which has been accounted for as purchase price. For
the three and nine months ended September 30, 2002, the Company made contingent
cash payments of $553,000 and $1,605,000, respectively, which have been
accounted for as compensation expense as the payments were contingent upon the
continued employment of two key executives of Dynamic Decisions. The remaining
cash payments will continue to be accounted for as compensation expense, as
they are contingent upon the future employment of the two key executives. For
three and nine months ended September 30, 2002, the amortizations of customer
base associated with the Dynamic Decisions acquisition were $62,000 and
$124,000 respectively.

Interest and Other Income (Expense), Net

Interest and other income (expense) 
increased to $(112,000) from
$(24,000), respectively, for the three months ended September 30, 2002 and 2001,
respectively. Interest and other income (expense) was $(9,000) for the nine
months ended September 30, 2002 and $234,000 for the nine months ended
September 30, 2001. These changes are primarily attributable to the amortization
of deferred financing costs relating to the Companys credit facilities,
decrease in interest income from a decline in the cash and cash equivalents
balance, decrease in average effective interest rates, and impact of foreign
currency fluctuations.

Provision (benefit) for Income Taxes

The Company recorded a benefit for income taxes of $(50,000) and a
provision for income tax of $110,000, respectively, for the three and nine
months ended September 30, 2002, compared to provision of $50,000 and $169,000,
respectively, for the same periods ended September 30, 2001.
These changes are primarily attributable to a lower taxable income in
certain foreign jurisdictions. The provision for
income taxes represents the Companys state and foreign income tax obligations.

Discontinued Operation

In December 2000, the Company committed to a plan to dispose of the
operations of its VistaSource business. On March 30, 2001, the Company
completed the sale of its VistaSource business unit to Real Time International,
Inc. (Real-Time), a subsidiary of Parallax Capital Partners, LLC, for
$1,300,000 and a 19% equity interest in Real-Time. The results of operations
including revenue, operating expenses, other income and expense, and income
taxes of the VistaSource business unit for 2001 have been reclassified in the
accompanying statements of operations as a discontinued operation. The
Companys balance sheet at September 30, 2002 reflects no remaining liabilities
from its discontinued operation and its balance sheet at December 31, 2001
reflects the net liabilities of the VistaSource business as net liabilities of
discontinued operation within current liabilities. The Company recorded a gain
of $718,000 on the disposal of the discontinued operations in the first quarter
of 2001 due to the actual results of operations through the date of disposal,
changes in the net assets delivered at closing and changes in estimates of
certain obligations. The Companys results of operations for the three and nine
months ended September 30, 2002 included $42,000 and $127,000, respectively, in
expenses relating to certain defense costs incurred from a claim filed against
VistaSource (Note 10), which were not accrued for on the Companys balance
sheet.

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Net Loss

The Company had net losses of $2,163,000 and $2,825,000, respectively, for
the three and nine months ended September 30, 2002, compared to $2,315,000 and
$7,586,000, respectively for the same periods ended September 30, 2001. The net
loss included contingent compensation payments related to the Companys 2001
acquisition of Dynamic Decisions for the three and nine month periods ending
September 30, 2002 of $553,000 and $1,605,000 respectively. Additionally, net
loss as a percentage of total revenue were 26% and 11%, respectively, for the
three and nine months ended September 30, 2002 compared to 26% and 25%,
respectively, for the same periods ended September 30, 2001. The total revenue
decrease in the third quarter of 2002 of $900,000 was significantly offset by
the Companys cost control initiatives in 2001 and 2002.

Liquidity and Capital Resources

The Company derives its liquidity and capital resources primarily from the
Companys cash flow from operating activities and from working capital. The
Companys cash and cash equivalent balance was $7,341,000 and $9,278,000 as of
September 30, 2002 and December 31, 2001, respectively, which included
restricted cash of $1,050,000. The Companys days sales outstanding (DSO) in
accounts receivable was 63 days as of September 30, 2002 and 74 days as of
December 31, 2001. The Company has secured a non-recourse accounts receivable
purchase facility. The Company's non-recourse accounts receivable purchase
arrangement allows the Company from time to time to sell qualifying accounts receivable to the
bank, in an aggregate amount of up to $2 million outstanding, at a purchase
price equal to the balance of the accounts less a discount rate and a fee. On
or about September 30, 2002, the Company factored certain accounts receivable
to the bank pursuant to the purchase arrangement in the amount of $941,000. The
Company sold $729,000 in accounts receivable as of December 31, 2001. The sales
had an immaterial impact on the Companys DSO by reducing
approximately 10 days
as of September 30, 2002 and by 4 days as of December 31, 2001. The Company
does not have any off-balance-sheet arrangements with unconsolidated entities
or related parties, and as such, the Companys liquidity and capital resources
are not subject to off-balance sheet risks from unconsolidated entities.

The Company has secured two revolving credit facilities with a bank,
providing for loans and other financial accommodations, totaling approximately
$5 million. As of September 30, 2002, the Company had no amounts outstanding
under these credit facilities. Because the Company is currently in default
under certain covenants with the bank, the Company currently has no
availability to borrow under either of these facilities. The facilities expire
on December 5, 2002.

In accordance with SFAS 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities, the Company recognized a
sale for those accounts receivable balances for which there was no future
obligation to the customer, in the amount of $785,000. The Company has
concluded that these accounts have been legally isolated, and accordingly, this
amount has been derecognized from the Companys accounts receivable balance at
September 30, 2002. The loss from the sale of the financial assets and retained
interest for cash collection were not material to the Companys results of
operations or financial position. The remainder of $156,000 has been recorded
as a financing transaction and recognized as a liability at September 30, 2002

Cash used by the Companys operating activities was $945,000 for the nine
months ended September 30, 2002 compared to cash used in operating activities
of $3,589,000 for the same period in the prior year. The net loss of
$2,824,000
for the nine months ended September 30, 2002 was partially offset by the
increase in operating assets and liabilities of $114,000, which was primarily
due to an increase in deferred revenue of $870,000, offset by payments for
accrued liabilities and the sale of receivables.

Cash used in investing activities totaled $1,802,000 for the nine months
ended September 30, 2002 compared to cash used in investing activities of
$663,000 for the same period ended in September 30, 2001. The increase in cash
used in investing activities resulted from the increase of capitalized software
cost of $1,417,000 and property and equipment expenditure of $385,000.

Cash provided by financing activities totaled $622,000 for the nine months
ended September 30, 2002, which consisted of net proceeds from factoring of
receivables to a bank for $234,000 and proceeds from issuance of stock under
stock plans of $388,000. This compares to total cash used in financing
activities of $340,000 for the same period ended September 30, 2001.

In connection with the Companys acquisition of Dynamic Decisions, the
Company expects to pay out additional contingent cash consideration of
$2,215,000 in five quarterly installments between October 1, 2002 and October
1, 2003.

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As of September 30, 2002, the Company had future cash commitments for the
cash payments pertaining to its obligation under its non-cancelable leases. The
Companys future minimum operating lease payments for its office facilities and
certain equipment are:

|                             |  |           |            | 
|---------------------------- |  | --------- | ---------- | 
|                             |  | Operating
|                             |  | Leases   
|                             |  |          
|2002                         |  | $         | 594,000    | 
|2003                         |  |           | 2,263,000  | 
|2004                         |  |           | 2,139,000  | 
|2005                         |  |           | 2,014,000  | 
|2006                         |  |           | 1,796,000  | 
|2007 and thereafter          |  |           | 11,674,000 | 
|                             |  |           |            | 
|Total minimum lease payments |  | $         | 20,480,000 | 
|                             |  |           |            | 

The Company has no commitments or specific plans for any significant
capital expenditures in the next 12 months.

The Company has incurred losses from continuing operations for the last
several years. As of September 30, 2002, the Company had an accumulated deficit
of $40,884,000. Operating losses and negative cash flows may continue because
of costs and expenses relating to brand development, marketing and other
promotional activities, continued development of the Companys information
technology infrastructure, expansion of product offerings and development of
relationships with other businesses. Managements plans include increasing
revenue and generating positive cash flows from operations. The Company made
progress during the nine months ended September 30, 2002 towards decreasing
operating losses as compared to the same period last year. Additionally, the
Company improved its 2002 cash flow and conserved its cash by effectively
controlling its spending. The Company currently expects that the principal
sources of funding for its operating expenses, capital expenditures and other
liquidity needs will be a combination of its available cash balances, funds
expected to be generated from operations and its non-recourse accounts receivable purchase
facility. The Company
believes that its currently available sources of funds will be sufficient to
fund its operations for at least the next 12 months. However, there are a
number of factors that may negatively impact the Companys available sources of
funds. The amount of cash generated from operations will be dependent upon such
factors as the successful execution of the Companys business plan, the market
acceptance of Applix Integra, and worldwide economic conditions including
information technology spending. Should the Company not meet its plans to
generate sufficient revenue or positive cash flows, it may need to raise
additional capital or reduce spending. Failure to do so could have an adverse
effect on the Companys ability to continue as a going concern.

FACTORS THAT MAY AFFECT FUTURE RESULTS

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;                                    
|
| |  |  | the acquisition and retention of key partners;                                                                                                        
|
| |  |  | changes in generally accepted accounting policies, especially those related to the recognition of software revenue; and                               
|
| |  |  | new government legislation or regulation.                                                                                                             

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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 in 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. If
our operating results are below the expectations of public market analysts and
investors, the price of our common stock may fall significantly.

OUR FUTURE SUCCESS IS DEPENDENT IN LARGE PART ON THE SUCCESS OF APPLIX INTEGRA.

We have devoted a substantial amount of resources to the development and
marketing of our new Applix Integra product. We believe that our future
financial performance will be dependent in large part on the success of Applix
Integra. Because Applix Integra just became available for commercial shipments
on October 21, 2002, we cannot yet assess its market acceptance or predict with
accuracy the amount of revenue it will generate.

WE MAY NOT BE ABLE TO FULFILL ANY FUTURE CAPITAL NEEDS.

We believe, based upon our current business plan, that our current cash
and cash equivalents, funds generated from operations and available credit
lines 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. If we elect to raise additional operating funds, such funds, whether
from equity or debt financing or other sources, may not be available, or
available on terms acceptable to us.

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 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.

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.

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 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 write-downs of goodwill
and other purchased intangible assets.                                                            

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WE RELY HEAVILY ON KEY PERSONNEL.

We rely heavily on key personnel throughout the organization. The loss of
any of our members of management, 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, the loss of any critical employees or
a group thereof, particularly to a competing organization, could cause us to
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 IN OUR INTERNATIONAL OPERATIONS.

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;                                                                                                                                          
|
| |  |  | 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 business intelligence firms. 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.

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
solutions. 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.

24



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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 six 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.

OUR BUSINESS WILL BE HARMED IF WE ARE UNABLE TO PROTECT OUR TRADEMARKS 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 Applix 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.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a multinational corporation, the Company is exposed to market risk,
primarily from changes in foreign exchange rates. These exposures may change
over time and could have a material adverse impact on the Companys financial
results. Most of the Companys international sales through its subsidiaries are
denominated in foreign currencies. Relative to foreign currency exposures
existing at September 30, 2002, a 10% unfavorable movement in foreign exchange
rates would not expose the Company to significant losses in earnings or cash
flows. To date, foreign currency fluctuations have not had a material effect on
the Companys operating results.

At September 30, 2002, the Company held $7,341,000 in cash equivalents,
including $1,050,000 of restricted cash, consisting primarily of money market
funds. Cash equivalents are classified as available for sale and carried at
fair value, which approximates cost. A hypothetical 10% increase in interest
rates would not have a material impact on the fair market value of these
instruments due to their short maturity, and the Companys intention that all
the securities will be sold within one year. There have been no significant
changes since September 30, 2002.




ITEM 4.  CONTROLS AND PROCEDURES

1.     Evaluation of disclosure controls and procedures. Based on their evaluation
of the Companys disclosure controls and procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) as of a date
within 90 days of the filing date of this Quarterly Report on Form 10-Q, the
Companys chief executive officer and chief financial officer have concluded

25



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that the Companys disclosure controls and procedures are designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms and are
operating in an effective manner.

2.     Changes in internal controls.There were no significant changes in the
Companys internal controls or in other factors that could significantly affect
these controls subsequent to the date of their most recent evaluation.




PART II.   OTHER INFORMATION




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K



|(A) |  | EXHIBITS
|--- |  | --------

99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|(B) |  | REPORTS ON FORM 8-K
|--- |  | -------------------

The Company filed no reports on Form 8-K during the quarter for which this
report was filed.

26



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##### Table of Contents






SIGNATURE

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

|                        |  |                                                                                                                                              
|----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|                        |  | APPLIX, INC.                                                                                                                                 
|                       
|Date: November 12, 2002 |  |                                                                                                                                              
|                       
|                        |  | By: /s/ Walt HilgerWalt Hilger
Chief Financial Officer and Treasurer (Duly
Authorized Officer and Principal Financial
and Accounting Officer)

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EXHIBIT INDEX

|        |      |             |  |                                                                                                                                                          
|------- | ---- | ----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |            
|Number  |      | Description
|        |      |            
|        | 99.1 |             |  | Certification of Chief Executive Officer Pursuant
    to 18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002
|       
|        | 99.2 |             |  | Certification of Chief Financial Officer Pursuant
    to 18 U.S.C. Section 1350, as Adopted Pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002

28



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CERTIFICATIONS

I, David Mahoney, certify that:



|1. |  | I have reviewed this quarterly
report of Applix, Inc. originally filed on a quarterly report on
Form 10-Q and amended by this quarterly report on
Form 10-Q/A;                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report; and                                                                                                                          
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of November 1, 2002;                                                                                                                           



|5. |  | The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      |  |                                                             
|--------------------- |  | ------------------------------------------------------------
|Dated: March 31, 2003 |  | /s/ David C. MahoneyDavid C. Mahoney
Chief Executive Officer

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##### Table of Contents



I, Walt Hilger, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Applix, Inc.;                                                                                                                                                                                                                                                           
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                     



| | a) |  | designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report; and                                                                                                                          
|
| | c) |  | presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of November 1, 2002;                                                                                                                           



|5. |  | The registrants other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrants auditors and the
audit committee of registrants board of directors (or persons performing
the equivalent function):
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a) |  | all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data and
have identified for the registrants auditors any material weaknesses
in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrants
internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                      |  |                                                   
|--------------------- |  | --------------------------------------------------
|Dated: March 31, 2003 |  | /s/ Walt HilgerWalt Hilger
Chief Financial Officer

30