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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

**FORM10-Q**
| x | **QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---|----------------------------------------------------------------------------------------------|

**For the Quarterly Period Ended June 30, 2001**
| o | **TRANSITION REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---|-----------------------------------------------------------------------------------------------|

**Commission File Number      000-30389**

**EXETECHNOLOGIES, INC.******(Exact name of registrant as specified inits charter)

 

| **Delaware**                                                    | **751719817**                            |
|-----------------------------------------------------------------|------------------------------------------|
| (State or other  jurisdiction of incorporation or organization) | (I.R.S. Employer  Identification Number) |
|                                                            |                                     |
| **8787  Stemmons Freeway**                                      |
| **Dallas,  Texas 75247**                                        |
| (Address including zip  code of principal executive offices)    |
| **(214)  775-6000**                                             |
| (Registrant’s  telephone number, including area code)      |

 

Indicateby check mark whether the registrant (1)  has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.  Yes  x    NO o

Indicate the number of shares outstandingof each of the issuer’s classes of common stock, as of July 31, 2001.

Commonstock, $0.01 par value, 45,581,505 shares outstanding.

----

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**EXE TECHNOLOGIES, INC. AND SUBSIDIARIESINDEX TO FORM 10-Q**

 

| **PART I.**                     | **FINANCIAL INFORMATION**                                                                   |
|---------------------------------|---------------------------------------------------------------------------------------------|
|                            |                                                                                        |
| Item 1.                         | Financial Statements                                                                        |
|                            |                                                                                        |
|                            | Consolidated Balance Sheets                                                                 |
|                            |                                                                                        |
|                            | Consolidated  Statements of Operations                                                      |
|                            |                                                                                        |
|                            | Consolidated  Statements of Cash Flows                                                      |
|                            |                                                                                        |
|                            | Notes to  Consolidated Financial Statements                                                 |
|                            |                                                                                        |
| Item  2.                        | Management’s  Discussion and Analysis of Financial Conditionand  Results of Operations |
|                            |                                                                                        |
| Item  3.                        | Quantitative  and Qualitative Disclosures About Market Risk                                 |
|                            |                                                                                        |
| **PART II.**                    | **OTHER INFORMATION**                                                                       |
|                            |                                                                                        |
| Item  2.                        | Changes  in Securities and Use of Proceeds                                                  |
|                            |                                                                                        |
| Item  4.                        | Submission  of Matters to a Vote of Security Holders                                        |
|                            |                                                                                        |
| Item 6.                         | Exhibits  and Reports on Form 8-K                                                           |
|                            |                                                                                        |
| Signatures                      |                                                                                        |
|                            |                                                                                        |
| Index to  Exhibits and Exhibits |

 

**PART I.            FINANCIALINFORMATION**

**ITEM 1.            FINANCIALSTATEMENTS**

**EXE TECHNOLOGIES, INC. ANDSUBSIDIARIESCONSOLIDATED BALANCE SHEETS**

|                                           | **As** **of  December 31,  2000**                                                                                                                                         |        | **As of  June 30,****2001** |        |
|------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|-----------------------------|-------------|
|                                           | ****                                                                                                                                                                           | ** **  | ****                        | ** **  |
|                                           |                                                                                                                                                                           | ** **  | **(unaudited)**             | ** **  |
| **Assets**                                     |                                                                                                                                                                           |        |                        |        |
| **Current assets:**                            |                                                                                                                                                                           |        |                        |        |
|                                           | Cash  and cash equivalents                                                                                                                                                     | $           | 39,820,056                  |        | $ | 33,159,636 |   |
|                                           | Marketable securities                                                                                                                                                          | 9,147,506   |                        | 4,007,030   |   |
|                                           | Accounts receivable, net of  allowance for doubtful accounts and adjustments of approximately $5,168,000  and $4,096,000 at December 31, 2000 and June 30, 2001, respectively  | 33,029,674  |                        | 32,473,152  |   |
|                                           | Other  receivables and advances                                                                                                                                                | 614,781     |                        | 755,977     |   |
|                                           | Prepaid  and other current assets                                                                                                                                              | 3,180,221   |                        | 3,532,572   |   |
|                                           |                                                                                                                                                                                |        |                             |        |
|                                           | Total current assets                                                                                                                                                           | 85,792,238  |                        | 73,928,367  |   |
| Marketable  securities, long-term              | 10,235,457                                                                                                                                                                     |        | 13,703,817                  |        |
| Property  and equipment, net                   | 8,233,891                                                                                                                                                                      |        | 8,013,923                   |        |
| Other  assets                                  | 2,175,655                                                                                                                                                                      |        | 2,811,857                   |        |
| Intangible  assets, net                        | 10,142,402                                                                                                                                                                     |        | 36,934,283                  |        |
|                                           |                                                                                                                                                                                |        |                             |        |
|                                           |                                                                                                                                                                           |        |                        |        |
|                                           | Total assets                                                                                                                                                                   | $           | 116,579,643                 |        | $ | 135,392,247 |   |
|                                           |                                                                                                                                                                                |        |                             |        |
|                                           |                                                                                                                                                                           |        |                        |        |
| **Liabilities and  Stockholders’ Equity** |                                                                                                                                                                           |        |                        |        |
| **Current liabilities:**                       |                                                                                                                                                                           |        |                        |        |
|                                           | Accounts payable                                                                                                                                                               | $           | 6,065,703                   |        | $ | 6,110,815 |   |
|                                           | Accrued expenses                                                                                                                                                               | 9,931,202   |                        | 13,081,341  |   |
|                                           | Accrued payroll and benefits                                                                                                                                                   | 2,812,071   |                        | 2,699,664   |   |
|                                           | Deferred revenue                                                                                                                                                               | 10,431,348  |                        | 10,496,504  |   |
|                                           | Current portion of long-term debt  and capital lease obligations                                                                                                               | 192,883     |                        | 315,771     |   |
|                                           |                                                                                                                                                                           |             |                        |             |   |
|                                           | Total current liabilities                                                                                                                                                      | 29,433,207  |                        | 32,704,095  |   |
|                                           | Long-term debt and capital lease  obligations, net of current portion                                                                                                          | 102,477     |                        | 52,343      |   |
|                                           | Long-term accrued expenses, net  of current portion                                                                                                                            | -           |                        | 5,096,809   |   |
|                                           | Minority interest                                                                                                                                                              | -           |                        | 109,102     |   |
|                                           | Commitments and contingencies                                                                                                                                                  |        |                        |        |   |
| **Stockholders’ equity:**                 |                                                                                                                                                                           |        |                        |        |
|                                           | Preferred stock, $.01 par  value:  shares authorized -  20,000,000;  none issued or  outstanding                                                                     | -           |                        | -           |   |
|                                           | Common stock, voting, $.01 par  value:  shares authorized -  150,000,000; shares issued - 44,487,495 and 46,559,646 at December 31, 2000  and June 30, 2001, respectively | 444,875     |                        | 465,596     |   |
|                                           | Additional paid-in capital                                                                                                                                                     | 149,691,336 |                        | 180,360,869 |   |
|                                           | Note receivable from stockholder                                                                                                                                               | -           |                        | (211,750    | ) |
|                                           | Treasury stock, at cost, 999,483  shares of common stock at December 31, 2000 and June 30, 2001                                                                                | (3,431,464  | )                           | (3,431,464  | ) |
|                                           | Accumulated deficit                                                                                                                                                            | (55,677,267 | )                           | (74,409,151 | ) |
|                                           | Deferred compensation                                                                                                                                                          | (3,688,059  | )                           | (5,335,548  | ) |
|                                           | Other comprehensive loss                                                                                                                                                       | (295,462    | )                           | (8,654      | ) |
|                                           |                                                                                                                                                                           |             |                        |             |   |
|                                           | Total stockholders’ equity                                                                                                                                                | 87,043,959  |                        | 97,429,898  |   |
|                                           |                                                                                                                                                                           |             |                        |             |   |
|                                           | Total liabilities and  stockholders’ equity                                                                                                                               | $           | 116,579,643                 |        | $ | 135,392,247 |   |
|                                           |                                                                                                                                                                                |        |                             |        |
|                                                |                                                                                                                                                                                |             |                             |             |  |  |  |  |  |  |

* *

*See accompanying notes.*

**EXE TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OFOPERATIONS(UNAUDITED)**

|                                                                           | **Three Months  Ended June 30,**                 |       | **Six Months Ended** **June 30,** |       |
|--------------------------------------------------------------------------------|-------------------------------------------------------|------------|----------------------------------------|------------|
|                                                                           | ****                                                  |       | ****                                   |       |
|                                                                           | **2000**                                              |       | **2001**                               |       | **2000** |   | **2001** | ** ** |
| **Revenue:**                                                                   |                                                  |       |                                   |       |   |   |   |   |
|                                                                           | Software license                                      | $          | 8,701,167                              |       | $ | 6,147,436 |   | $ | 16,596,642 |   | $ | 16,132,618 |   |
|                                                                           | Services and maintenance                              | 17,631,991 |                                   | 16,757,063 |   | 33,666,301 |   | 34,429,139 |   |
|                                                                           | Resale of software and equipment                      | 1,744,930  |                                   | 2,412,377  |   | 3,293,332 |   | 4,112,350 |   |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
|                                                                           | Total revenue                                         | 28,078,088 |                                   | 25,316,876 |   | 53,556,275 |   | 54,674,107 |   |
| **Costs and expenses:**                                                        |                                                  |       |                                   |       |   |   |   |   |
|                                                                           | Cost of software licenses                             | 87,012     |                                   | 84,158     |   | 165,967 |   | 130,459 |   |
|                                                                           | Cost of services and maintenance                      | 14,280,374 |                                   | 10,980,577 |   | 27,386,089 |   | 22,616,503 |   |
|                                                                           | Cost of resale of software and  equipment             | 1,444,020  |                                   | 1,989,929  |   | 2,781,831 |   | 3,316,041 |   |
|                                                                           | Sales and marketing                                   | 6,520,536  |                                   | 7,928,987  |   | 12,492,959 |   | 15,241,216 |   |
|                                                                           | Research and development                              | 2,277,450  |                                   | 3,989,260  |   | 4,131,413 |   | 7,836,946 |   |
|                                                                           | General and administrative                            | 3,419,835  |                                   | 5,621,392  |   | 6,782,620 |   | 10,039,759 |   |
|                                                                           | Amortization of intangibles                           | 1,139,829  |                                   | 2,316,591  |   | 2,279,658 |   | 4,203,504 |   |
|                                                                           | Warrant and stock compensation  expense allocated to: |       |                                   |       |   |   |   |   |   |
|                                                                           | Cost of services and maintenance                      | 195,616    |                                   | 128,397    |   | 498,947 |   | 276,619 |   |
|                                                                           | Sales and marketing                                   | 475,732    |                                   | 49,500     |   | 976,992 |   | 240,936 |   |
|                                                                           | Research and development                              | 5,486      |                                   | 58,487     |   | 7,772 |   | 94,076 |   |
|                                                                           | General and administrative                            | 181,887    |                                   | 130,204    |   | 439,773 |   | 316,090 |   |
|                                                                           | Employee severance and lease  abandonment costs       | -          |                                   | 9,500,000  |   | - |   | 9,930,080 |   |
|                                                                           |                                                  |            |                                   |            |   |  |   |  |   |
|                                                                           | Total costs and expenses                              | 30,027,777 |                                   | 42,777,482 |   | 57,944,021 |   | 74,242,229 |   |
|                                                                           |                                                  |            |                                   |            |   |  |   |  |   |
| Operating  loss                                                                | (1,949,689                                            | )          | (17,460,606                            | )          | (4,387,746 | ) | (19,568,122 | ) |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
|                                                                           |                                                  |       |                                   |       |   |   |   |   |
| **Other income (expense):**                                                    |                                                  |       |                                   |       |   |   |   |   |
| Interest  income                                                               | 117,846                                               |       | 664,146                                |       | 223,165 |   | 1,495,245 |   |
| Interest  expense                                                              | (524,365                                              | )          | (12,304                                | )          | (936,173 | ) | (20,008 | ) |
| Other                                                                          | (253,373                                              | )          | 17,464                                 |       | (396,695 | ) | (386,951 | ) |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
| Total  other income (expense)                                                  | (659,892                                              | )          | 669,306                                |       | (1,109,703 | ) | 1,088,286 |   |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
| Loss  before minority interest and taxes                                       | (2,609,581                                            | )          | (16,791,300                            | )          | (5,497,449 | ) | (18,479,836 | ) |
| Minority  interest in subsidiary income                                        | -                                                     |       | (1,778                                 | )          | - |   | (100,671 | ) |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
| Loss  before taxes                                                             | (2,609,581                                            | )          | (16,793,078                            | )          | (5,497,449 | ) | (18,580,507 | ) |
| Income  tax provision                                                          | -                                                     |       | 151,377                                |       | - |   | 151,377 |   |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
| Net  loss                                                                      | $                                                     | (2,609,581 | )                                      | $          | (16,944,455 | ) | $ | (5,497,449 | ) | $ | (18,731,884 | ) |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
|                                                                           |                                                  |       |                                   |       |   |   |   |   |
| Net  loss per common share – basic and diluted                            | $                                                     | (0.16      | )                                      | $          | (0.37 | ) | $ | (0.34 | ) | $ | (0.42 | ) |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
|                                                                           |                                                  |       |                                   |       |   |   |   |   |
| Weighted  average number of common shares outstanding - basic and diluted | 16,266,531                                            |       | 45,432,434                             |       | 16,261,059 |   | 45,086,391 |   |
|                                                                           |                                                       |       |                                        |       |  |   |  |   |
|                                                                                |                                                       |            |                                        |            |  |  |  |  |  |  |  |  |  |  |

*See accompanying notes.
**EXETECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)**
 **Six Months Ended June 30,**  ****** ** **2000** **2001**** ****Cash Flow from Opertating  Activities:**    Net  loss$(5,497,449)$(18,731,884) Adjustments to reconcile net loss  to net cash provided by (used in) operating activities:     Depreciation and amortization4,335,388 6,178,452  Provision for losses on  receivables4,379,857 2,591,418  Amortization of deferred  compensation1,096,072 753,371  Issuance of warrants for services827,412 174,350  Minority interest- 109,102  Changes in operating assets and  liabilities, net of the acquired balances:     Accounts receivable(6,401,215)(1,673,115) Other receivables and advances502,312 (141,196) Prepaids and other assets(1,452,898)(289,304) Other long-term assets(123,831)(607,598) Accounts payable2,287,151 (757,499) Accrued payroll and benefits(219,484)(544,781) Deferred revenue(1,967,928)(889,102) Income tax payable124,087 (61,901) Accrued expenses694,500 8,197,481  Other301,516 (132,185)     Net cash used in operating  activities(1,114,510)(5,824,391)     **Cash Flow from Investing  Activites:**    Purchases  of property and equipment(830,007)(1,132,629)Proceeds  from sale of marketable securities- 13,922,116 Purchase  of marketable securities- (12,250,000)Cash  paid for AllPoints acquisition- (1,618,109)    Net cash used in investing  activities(830,007)(1,078,622)     **Cash Flow from Financing  Activities:**    Issuance  of common stock for options and warrants206,191 1,114,665 Payments  on long-term debt(131,143)(122,072)Proceeds  from revolving line of credit2,913,656 - Purchase  of treasury stock(222,552)- Retirement  of AllPoints line of credit- (750,000)    Net cash provided by financing  activities2,766,152 242,593    Net  increase (decrease) in cash and cash equivalents821,635 (6,660,420)Cash  and cash equivalents at beginning of year8,932,073 39,820,056    Cash  and cash equivalents at end of period$9,753,708 $33,159,636         **Supplemental Cash Flow  Information:**    Cash  paid for interest$905,775 $25,112    Cash  paid for income taxes$1,968 $122,561    
*See accompanying notes.*
**EXETECHNOLOGIES, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIALSTATEMENTS(UNAUDITED)**

**1.  Principles of Consolidation and Basis of Presentation**

             EXETechnologies, Inc. (the Company or EXE) is a leading provider of fulfillment,warehousing and distribution software for e-commerce and traditional saleschannels.  The accompanying unauditedconsolidated financial statements include the accounts of EXE Technologies,Inc. and our majority-owned subsidiaries. All significant intercompany balances and transactions have beeneliminated in consolidation.

             Theaccompanying unaudited consolidated financial statements have been prepared inaccordance with generally accepted accounting principles for interim financialinformation and with the instructions to Form 10-Q and Article 10 of RegulationS-X.  Accordingly, they do not includeall of the information and footnotes required by generally accepted accountingprinciples for fiscal year end financial statements.  In the opinion of management, all adjustments (consisting only ofnormal recurring entries) considered necessary for a fair presentation of theresults have been included for the interim periods presented.  Operating results for the three and sixmonth periods ended June 30, 2001 are not necessarily indicative of the resultsthat may be expected for any other interim period or for the year endingDecember 31, 2001.  These statementsshould be read in conjunction with the Company’s audited financial statementsfor the year ended December 31, 2000.

**2.  Acquisition of AllPoints Systems, Inc.**

             OnJanuary 25, 2001, the Company completed the acquisition of AllPoints Systems,Inc. (AllPoints). The transaction was completed in a stock-for-stock merger inwhich EXE issued 1,590,357 shares of EXE common stock and assumed options foran additional 409,606 shares of EXE common stock in exchange for all of theoutstanding securities of AllPoints. The transaction was accounted for as a purchase.  The purchase price was approximately $30.2million, which includes approximately $2.4 million of net liabilities assumedand transaction costs of approximately $1.6 million.  The purchase price allocation includes approximately $4.3 millionof identifiable intangible assets and approximately $26.7 million of goodwill.The goodwill is being amortized over 6 years. The Company recorded deferred compensation related to AllPoints optionsassumed by EXE of approximately $1.9 million. In addition, the Company paid offand terminated AllPoints' $750,000 line of credit.
             Thefollowing summary, prepared on an unaudited pro forma basis, reflects thecondensed consolidated results of operations for the six months ended June 30,2000 and 2001 assuming AllPoints had been acquired at the beginning of theperiods presented:
 **Pro Forma (Unaudited)**  **Six Months Ended June 30,**  ****  **2000** **2001**   ** ** ** **Revenue$57,776,291 $54,862,479 Net loss(7,988,349)(19,512,341)        Net loss per common  share - basic and diluted$(0.45)$(0.43)   
 

             Thepro forma results are not necessarily indicative of what would have occurred ifthe acquisition had been in effect for the periods presented.  In addition they are not intended to be aprojection of future results and do not reflect any synergies that might beaffected from combined operations.

**3.  DeferredCompensation**

             TheCompany recorded deferred compensation expense for differences between theexercise price and the deemed fair market value of the Company’s common stockon the grant date for certain options granted. Deferred compensation of approximately $4.6 million was incurred during2000 and $2.6 million was incurred during the six months ended June 30,2001.  The deferred compensation isamortized ratably over the vesting period of the individual options, generallythree to four years.  Compensationexpense relating to stock options recognized for the three months ended June30, 2000 and 2001 was approximately $0.5 million and $0.4 million,respectively.  Compensation expenserelating to stock options recognized for the six months ended June 30, 2000 and2001 was approximately $1.1 million and $0.8 million, respectively.

**4.  Earnings Per Share**

             TheCompany computes net income (loss) per share in accordance with the provisionsof SFAS No. 128, “Earnings per Share.” Basic net income (loss) per common shareis computed using the weighted average number of shares of common stockoutstanding during each period.
             Diluted net income (loss) percommon share is computed using the weighted average number of shares of commonstock outstanding during each period and common equivalent shares consisting ofpreferred stock, warrants and stock options (using the treasury stock method),if dilutive. Diluted loss per common share is the same as basic loss per commonshare for all periods presented because all potentially dilutive securitieswere anti-dilutive. The following table sets forth anti-dilutive securitieswhich have been excluded from diluted earnings per share for the periodspresented:
 **As of June 30,**   ****   **2000** **2001**      Common stock options5,313,212 9,081,625 Warrants865,000 - Preferred stock17,687,562 -    Total anti-dilutive  securities excluded23,865,774 9,081,625    
 

**5.  Comprehensive Loss**

             Comprehensive loss includes foreigncurrency translation gains (losses) and unrealized gains (losses) on securitiesavailable for sale.  The following tablesets forth the calculation of comprehensive loss for the periods presented:
 **Three Months Ended June 30,** **Six Months Ended June 30,**  ****** ******** ** **2000** **2001** **2000** **2001**** **  ** ** ** ** ** ** ** **Net loss$(2,609,581)$(16,944,455)$(5,497,449)$(18,731,884)Foreign currency  translation gains (losses)444,325 (2,490)374,718 171,951 Unrealized gain (loss)  on securities available for sale- (385)- 114,857      Total comprehensive  loss$(2,165,256)$(16,947,330)$(5,122,731)$(18,445,076)              
 

**6.  DerivativeFinancial Instruments**

             Effective January 1, 2001, theCompany adopted the provisions of Financial Accounting Standards BoardStatement No. 133, *Accounting for Derivative Instruments and HedgingActivities,*(FASB 133).  Theadoption of FASB 133 had no material impact on the Company's financial positionor operating results for the three and six months ended June 30, 2001.

             As of June 30, 2001, the Companyhad outstanding forward currency exchange contracts of $3.0 million to sellJapanese yen and $3.5 million to sell British Pounds Sterling which hedge netbalance sheet exposures.  Gains andlosses arising from the changes in the fair value of forward currency exchangecontracts is recognized as a component of other income (expense).  At June 30, 2001, the current marketsettlement values of the forward contracts were not significant.  There were no forward contracts outstandingat December 31, 2000.
**7.  Recent AccountingPronouncements**

             InJune 2001, the Financial Accounting Standards Board issued Statements ofFinancial Accounting Standards No. 141, *BusinessCombinations*, and No. 142, *Goodwilland Other Intangible Assets*, effective for fiscal years beginningafter December 15, 2001.  Under the newrules, goodwill and intangible assets deemed to have indefinite lives will nolonger be amortized but will be subject to annual impairment tests inaccordance with these statements.  Otherintangible assets will continue to be amortized over their useful lives.

             TheCompany will apply the new rules on accounting for goodwill and otherintangible assets beginning in the first quarter of 2002.  Application of the nonamortizationprovisions of the Statement is expected to result in an increase in net incomeof approximately $9.0 million or $0.20 per share in 2002 as a result ofnonamortization of existing goodwill. The Company will perform the first of the required impairment tests ofgoodwill and indefinite lived intangible assets as of January 1, 2002.  The effect of these tests on the earningsand financial position of the Company have yet to be determined but may resultin a significant charge to earnings in a future period.

**8.  Segments**

             TheCompany is engaged in the design, development, marketing and support offulfillment, warehousing and distribution software for e-commerce andtraditional sales channels.  Allfinancial information is reviewed on a consolidated basis with additionalinformation by geographic region used to make operating decisions and assessthe results of the Company.  TheCompany’s geographic information as of and for the three and six months endedJune 30, 2000 and 2001 is as follows:
 **United States** **Europe and the Middle  East** **Asia Pacific** **Eliminations** **Total**** **  ** ** ** ** ** ** ** ** ** **Three  months ended June 30, 2000 ** ** ** ** ** ** ** ** ** ** Revenue$17,062,292 $5,387,573 $5,628,223 $- $28,078,088  Amortization of intangibles1,139,829 - - - 1,139,829  Warrant and stock compensation  expense858,721 - - - 858,721  Operating income (loss)(1,534,816)(903,276)488,403 - (1,949,689)           Six  months ended June 30, 2000 ** ** ** ** ** ** ** ** ** ** Revenue31,538,055 11,480,598 10,537,622 - 53,556,275  Amortization of intangibles2,279,658 - - - 2,279,658  Warrant and stock compensation  expense1,923,484 - - - 1,923,484  Operating income (loss)(3,814,043)(907,794)334,091 - (4,387,746)           As  of June 30, 2000           Property and equipment, net6,882,826 856,444 1,019,429 - 8,758,699  Total assets59,627,292 9,259,622 2,615,368 (3,346,752)68,155,530 
 
 **United States** **Europe and the  Middle East** **Asia Pacific** **Eliminations** **Total**** **           Three months ended June 30, 2001           Revenue13,703,635 4,685,914 6,927,327 - 25,316,876  Amortization  of intangibles2,285,434 13,347 17,810 - 2,316,591  Warrant  and stock compensation expense212,318 66,938 87,332 - 366,588  Employee  severance and loss on lease   abandonment costs8,178,706 730,108 591,186 - 9,500,000  Operating  income (loss)(15,381,757)(1,839,304)(239,545)- (17,460,606)           Six months ended June 30, 2001           Revenue29,940,803 9,496,007 15,237,297 - 54,674,107  Amortization  of intangibles4,154,468 27,174 21,862 - 4,203,504  Warrant  and stock compensation expense537,311 169,398 221,012 - 927,721  Employee  severance and loss on lease    abandonment costs8,608,786 730,108 591,186 - 9,930,080  Operating  income (loss)(17,711,580)(2,744,901)888,359 - (19,568,122)           As of June 30, 2001           Property  and equipment, net5,658,480 1,518,139 837,304 - 8,013,923  Total  assets$129,450,245 $2,833,248 $6,216,788 $(3,108,034)$135,392,247 
 

**9.  Employee Severanceand Lease Abandonment**

             Duringthe six months ended June 30, 2001, the Company implemented and announced plansto reduce costs and improve operating efficiency.  During the three months ended March 31, 2001, the Companyrecorded a charge of approximately $430,000 for costs associated with severanceand other employee related costs for the termination of 18 services, sales andmarketing, development and administrative employees.  In response to the continued global slowdown in customer spendingfor large-scale IT projects, the Company launched additional cost reductionactions during the three months ended June 30, 2001.  These actions resulted in a charge of $9,500,000 that includedapproximately $1,956,000 for severance and other employee related costs for thetermination of 119 services, sales and marketing, development andadministrative employees, $7,440,000 for the abandonment of certain leasedoffice space, less estimated sublease recoveries, at the Company's NorthAmerican and United Kingdom facilities, and $104,000 for other costs associatedwith the downsizing of operations at the Company's Hong Kong office.

             TheCompany has recorded approximately $557,000 of cash charges against thereserves established for these 2001 cost reduction actions.  The remaining liability at June 30, 2001 isapproximately $9,373,000 and is expected to be paid through 2007.**ITEM 2.****MANAGEMENT’S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**
 

**Overview**

             EXETechnologies, Inc. is a leading provider of fulfillment, warehousing anddistribution software for e-commerce and traditional sales channels.  Our software allows companies to efficientlymanage and control the flow of inventory throughout the supply chain using theInternet and traditional communication methods.  Companies use our software to reduce distribution costs, manageinventory across the supply chain, and increase customer loyalty andsatisfaction.  We provide global serviceand support for our software from established facilities in North America,Europe, the Middle East, Asia, and Australia.

             Wederive our revenue from the sale of software licenses; product relatedconsulting, training, maintenance and support (collectively, “services andmaintenance”); and the resale of software and equipment.

             Werecognize license revenue under Statement of Position, or SOP, No. 97-2.  Under SOP No. 97-2, software license revenueis recognized upon execution of a contract and delivery of the software,provided that the license fee is fixed and determinable, no significantproduction, modification or customization of the software is required,vendor-specific objective evidence of fair value exists to allow the allocationof the total fee to elements of the arrangement and collection of the licensefee is considered probable by management. Product related maintenance and support revenue is recognized ratablyover the term of the contract, which is typically one year, and revenue fromproduct related consulting and training is recognized as such services are performed.

             OnJanuary 25, 2001 we completed the acquisition of AllPoints Systems, Inc.(AllPoints) of Norwood, Massachusetts. The transaction was completed in a stock-for-stock merger in which weissued 1,590,357 shares of our common stock and assumed options for anadditional 409,606 shares of our common stock in exchange for all of theoutstanding securities of AllPoints. The acquisition was intended to strengthen our global leadership bydeepening our vertical market presence and expanding our software and serviceofferings.  The transaction wasaccounted for as a purchase.

             Duringthe six months ended June 30, 2001, we implemented and announced plans toreduce costs and improve operating efficiency. During the three months ended March 31, 2001, we recorded a charge of$0.4 million for costs associated with severance and other employee relatedcosts for the termination of 18 services, sales and marketing, development andadministrative employees.  Additionally,during the three months ended June 30, 2001, we recorded a charge of $9.5million that included approximately $2.0 million for severance and otheremployee related costs for the termination of 119 services, sales andmarketing, development and administrative employees, $7.4 million for the abandonmentof certain leased office space, less estimated sublease recoveries, at ourNorth American and United Kingdom facilities, and $0.1 million for other costsassociated with the downsizing of operations at our Hong Kong office.****Results of Operations**

**Three Months Ended June 30,2001 Compared to the Three Months Ended June 30, 2000**

**Revenue**

             *TotalRevenue.*  Total revenuedecreased by $2.8 million, or 9.8%, to $25.3 million for the three months endedJune 30, 2001, from $28.1 million for the three months ended June 30,2000.  International revenue accountedfor 45.9% of total revenue during the three months ended June 30, 2001 and39.2% of total revenue during the three months ended June 30, 2000.  No single customer accounted for more than10.0% of total revenue during the three months ended June 30, 2001 or 2000.

             *SoftwareLicense.*  Software licenserevenue decreased $2.6 million, or 29.3%, to $6.1 million for the three monthsended June 30, 2001, from $8.7 million for the three months ended June 30,2000.  Software license revenue as apercentage of total revenue was 24.3% for the three months ended June 30, 2001versus 31.0% for the three months ended June 30, 2000.  These decreases were the result of a globalslowdown in customer spending for large-scale IT projects.  Sales of our EXceed Fulfill and predecessorproducts decreased by $1.5 million for the three months ended June 30, 2001, ascompared to the three months ended June 30, 2000, while sales of our EXceed 2000warehouse management system product decreased $1.1 million. Our EXceed Fulfilland predecessor products accounted for 96.9% of total software license revenueduring the three months ended June 30, 2001 and 85.7% of total software licenserevenue during the three months ended June 30, 2000.

             *Services andMaintenance.*  Services andmaintenance revenue decreased $0.8 million, or 5.0%, to $16.8 million for thethree months ended June 30, 2001 from $17.6 million for the three months endedJune 30, 2000.  Services and maintenancerevenue from our EXceed 2000 warehouse management system and mainframe productsdecreased $0.4 million for the three months ended June 30, 2001, whileproduct-related training revenue also decreased $0.4 million.  Services and maintenance revenue as apercentage of total revenue was 66.2% for the three months ended June 30, 2001versus 62.8% for the three months ended June 30, 2000.  The increase in services and maintenancerevenue as a percentage of total revenue was due to the decline in softwarelicense revenue attributed to the global slowdown in customer spending forlarge-scale IT projects.  Our EXceedFulfill and predecessor products accounted for 57.8% of total services andmaintenance revenue for the three months ended June 30, 2001 versus 55.4% oftotal services and maintenance revenue for the three months ended June 30,2000.

             *ResaleSoftware and Equipment.* Resale software and equipment revenue increased $0.7 million, or 38.3%,to $2.4 million for the three months ended June 30, 2001, from $1.7 million forthe three months ended June 30, 2000. The increase was due to a large equipment sale to one of ourcustomers.  Resale software andequipment as a percentage of total revenue was 9.5% for the three months endedJune 30, 2001 versus 6.2% for the three months ended June 30, 2000.****Costs and Expenses**

             *Cost ofSoftware Licenses.*  Cost ofsoftware licenses consists primarily of royalties associated with software usedto develop our software products, the cost of reproduction, and the cost ofcomplementary software applications that we purchase to sell to ourcustomers.  Cost of software licensesrepresented 1.4% of software license revenue for the three months ended June30, 2001 and 1.0% for the three months ended June 30, 2000.

             *Cost ofServices and Maintenance.* Cost of services and maintenance consists primarily of salaries ofprofessional staff and costs associated with implementation, consulting andtraining services, hotline telephone support, new releases of software andupdating user documentation.  Cost ofservices and maintenance decreased $3.3 million, or 23.1%, to $11.0 million forthe three months ended June 30, 2001, from $14.3 million for the three monthsended June 30, 2000.  The decrease wasrelated primarily to a reduction in the number of full time and contractservices and maintenance employees.  Asa percentage of services and maintenance revenue, cost of services andmaintenance decreased to 65.5% for the three months ended June 30, 2001, from81.0% for the three months ended June 30, 2000.  The decrease in cost as a percentage of services and maintenancerevenue was due to an increase in productivity (i.e., higher revenue generatedper employee).

             *Cost ofResale Software and Equipment.* Cost of resale software and equipment consists primarily of the costs ofthe database software tools and hardware we purchase to resell to ourcustomers.  Cost of resale software andequipment increased $0.6 million, or 37.8%, to $2.0 million for the threemonths ended June 30, 2001, from $1.4 million for the three months ended June30, 2000.  The increase was due tohigher resale software and equipment sales for the three months ended June 30,2001.  As a percentage of resalesoftware and equipment revenue, cost of resale software and equipment was 82.5%for the three months ended June 30, 2001 and 82.8% for the three months endedJune 30, 2000.

             *Sales andMarketing.*  Sales andmarketing expenses consist primarily of salaries, commissions, bonuses,recruiting costs, travel, marketing materials and trade shows.  Sales and marketing expenses increased $1.4million, or 21.6%, to $7.9 million for the three months ended June 30, 2001,from $6.5 million for the three months ended June 30, 2000.  The increase was due primarily to anincrease in the number of sales and marketing personnel.  As a percentage of total revenue, sales andmarketing expenses increased to 31.3% for the three months ended June 30, 2001,from 23.2% for the three months ended June 30, 2000.  The increase in sales and marketing costs as a percentage oftotal revenue was a result of lower than anticipated revenue growth for thethree months ended June 30, 2001 due to the current economic environment.*             *Research andDevelopment.*  Research anddevelopment expenses consist primarily of salaries and other personnel-relatedcosts for our product development activities. Research and development expenses increased $1.7 million, or 75.2%, to$4.0 million for the three months ended June 30, 2001, from $2.3 million forthe three months ended June 30, 2000. The increase in research and development expenses was due primarily toan increase in the number of employees obtained through the AllPointsacquisition and hired externally to enhance our EXceed Collaborate Suite.  As a percentage of total revenue, researchand development expenses increased to 15.8% for the three months ended June 30,2001, from 8.1% for the three months ended June 30, 2000.

             *General andAdministrative.*  General andadministrative expenses consist primarily of salaries and otherpersonnel-related costs of our finance, human resources, information systems,administrative, legal and executive departments, insurance costs and the costsassociated with legal, accounting, and other administrative services.  General and administrative costs increased$2.2 million, or 64.4%, to $5.6 million for the three months ended June 30,2001, from $3.4 million for the three months ended June 30, 2000.  The increase in general and administrativeexpenses was due to higher personnel-related expenses associated with the acquisitionof AllPoints, opening and staffing new offices in Benelux, France, and Germany,and upgrading our operations, human resources, information systems, andinvestor relations headquarters functions. As a percentage of total revenue, general and administrative expensesincreased to 22.2% for the three months ended June 30, 2001, from 12.2% for thethree months ended June 30, 2000. This increase was primarily due to lower thananticipated revenue growth for the three months ended June 30, 2001, due to thecurrent economic environment.

             *Amortizationof Intangibles.*  Amortizationof intangibles relates primarily to intangibles acquired in connection with the1997 acquisition of Dallas Systems and the 2001 acquisition of AllPoints.  Amortization of intangibles increased $1.2million to $2.3 million for the three months ended June 30, 2001, from $1.1million for the three months ended June 30, 2000.  The increase in amortization was due to intangibles acquired inconnection with the acquisition of AllPoints.

             *Non-CashWarrant and Stock Compensation.* Non-cash warrant and stock compensation expense relates to theamortization of deferred compensation recorded primarily in connection withstock options granted to employees.  Thedeferred compensation recorded represented the difference between the exerciseprice and the deemed fair value of our common stock on the date of grant ofthese options.  Non-cash warrant andstock compensation expense decreased $0.5 million to $0.4 million for the threemonths ended June 30, 2001, from $0.9 million for the three months ended June30, 2000.

             *EmployeeSeverance and Lease Abandonment Costs*.  In response to the continued global slowdown in customer spendingfor large-scale IT projects, we implemented a cost reduction plan during thethree months ended June 30, 2001.  Inconnection with this plan, we recorded a charge of $9.5 million that includedapproximately $2.0 million for severance and other employee related costs forthe termination of 119 services, sales and marketing, development andadministrative employees, $7.4 million for the abandonment of certain leasedoffice space, less estimated sublease recoveries, at our North American andUnited Kingdom facilities, and $0.1 million for other costs associated with thedownsizing of operations at our Hong Kong office.

             *Other Income(Expense).*  Other income(expense) consists of gains and losses from currency fluctuations, interestexpense and loan cost amortization on outstanding debt, and interest income oninvestments.  Other income (expense)increased $1.4 million to $0.7 million for the three months ended June 30,2001, from ($0.7) million for the three months ended June 30, 2000.  The increase was due to an increase ininterest income of $0.6 million, a decrease in interest expense of $0.5million, and a decrease in foreign exchange losses of $0.3 million.
             *Income Tax.*  An income tax provision of $0.2 million wasrecognized during the three months ended June 30, 2001, compared to no incometax provision or benefit during the same period in 2000.  The income tax provision in the three monthsended June 30, 2001 was primarily due to tax on income earned by foreignsubsidiaries while corresponding domestic tax benefit generated by foreign taxcredits was not recognized due to the uncertainty of the timing and amount offuture taxable income.

**Six Months Ended June 30, 2001Compared to the Six Months Ended June 30, 2000**

**Revenue**

             *TotalRevenue.*  Total revenueincreased by $1.1 million, or 2.1%, to $54.7 million for the six months endedJune 30, 2001, from $53.6 million for the six months ended June 30, 2000.  International revenue accounted for 45.2% oftotal revenue during the six months ended June 30, 2001 and 41.1% of totalrevenue during the six months ended June 30, 2000.  No single customer accounted for more than 10.0% of total revenueduring the six months ended June 30, 2001 or 2000.

             *SoftwareLicense.*  Software licenserevenue decreased $0.5 million, or 2.8%, to $16.1 million for the six monthsended June 30, 2001, from $16.6 million for the six months ended June 30,2000.  Software license revenue as apercentage of total revenue was 29.5% for the six months ended June 30, 2001versus 31.0% for the six months ended June 30, 2000.  These decreases were the result of a global slowdown in customerspending for large-scale IT projects. Sales of our EXceed Fulfill and predecessor products increased by $0.8million for the six months ended June 30, 2001, as compared to the six monthsended June 30, 2000, while sales of our EXceed 2000 warehouse management systemproduct decreased $1.3 million. Our EXceed Fulfill and predecessor productsaccounted for 95.3% of total software license revenue during the six monthsended June 30, 2001 and 87.6% of total software license revenue during the sixmonths ended June 30, 2000.

             *Services andMaintenance.*  Services andmaintenance revenue increased $0.7 million, or 2.3%, to $34.4 million for thesix months ended June 30, 2001 from $33.7 million for the six months ended June30, 2000.  Services and maintenancerevenue from our EXceed Fulfill and predecessor products increased $2.8million, while services and maintenance revenue from our EXceed 2000 warehousemanagement system and mainframe products decreased $1.7 million, and productrelated training revenue decreased $0.4 million for the six months ended June30, 2001.  Services and maintenancerevenue as a percentage of total revenue was 63.0% for the six months endedJune 30, 2001 versus 62.9% for the six months ended June 30, 2000.  Our EXceed Fulfill and predecessor productsaccounted for 59.4% of total services and maintenance revenue for the sixmonths ended June 30, 2001 versus 52.3% of total services and maintenancerevenue for the six months ended June 30, 2000.*             *ResaleSoftware and Equipment.* Resale software and equipment revenue increased $0.8 million, or 24.9%,to $4.1 million for the six months ended June 30, 2001, from $3.3 million forthe six months ended June 30, 2000.  Theincrease was due to a large equipment sale to one of our customers.  Resale software and equipment as apercentage of total revenue was 7.5% for the six months ended June 30, 2001versus 6.1% for the six months ended June 30, 2000.

**Costs and Expenses**

             *Cost ofSoftware Licenses.*  Cost ofsoftware licenses represented 0.8% of software license revenue for the sixmonths ended June 30, 2001 and 1.0% for the six months ended June 30, 2000.

             *Cost ofServices and Maintenance.* Cost of services and maintenance decreased $4.8 million, or 17.4%,to $22.6 million for the six months ended June 30, 2001, from $27.4 million forthe six months ended June 30, 2000.  Thedecrease was related primarily to a reduction in the number of full time andcontract services and maintenance employees. As a percentage of services and maintenance revenue, cost of servicesand maintenance decreased to 65.7% for the six months ended June 30, 2001, from81.3% for the six months ended June 30, 2000. The decrease in cost as a percentage of services and maintenance revenuewas due to an increase in productivity (i.e., higher revenue generated peremployee).

             *Cost ofResale Software and Equipment.* Cost of resale software and equipment increased $0.5 million, or19.2%, to $3.3 million for the six months ended June 30, 2001, from $2.8million for the six months ended June 30, 2000.  The increase was due to higher resale software and equipmentsales for the six months ended June 30, 2001. As a percentage of resale software and equipment revenue, cost of resalesoftware and equipment was 80.6% for the six months ended June 30, 2001 and84.5% for the six months ended June 30, 2000.

             *Sales andMarketing.* Sales andmarketing expenses increased $2.7 million, or 22.0%, to $15.2 million for thesix months ended June 30, 2001, from $12.5 million for the six months endedJune 30, 2000.  The increase was dueprimarily to an increase in the number of sales and marketing personnel.  As a percentage of total revenue, sales andmarketing expenses increased to 27.9% for the six months ended June 30, 2001,from 23.3% for the six months ended June 30, 2000.  The increase in sales and marketing costs as a percentage oftotal revenue was a result of lower than anticipated revenue growth for the sixmonths ended June 30, 2001 due to the current economic environment.

             *Research andDevelopment.*  Research anddevelopment expenses increased $3.7 million, or 89.7%, to $7.8 million for thesix months ended June 30, 2001, from $4.1 million for the six months ended June30, 2000.  The increase in research anddevelopment expenses was due primarily to an increase in the number ofemployees obtained through the AllPoints acquisition and hired externally toenhance our EXceed Collaborate Suite. As a percentage of total revenue, research and development expensesincreased to 14.3% for the six months ended June 30, 2001, from 7.7% for thesix months ended June 30, 2000.*             *General andAdministrative.* General andadministrative costs increased $3.2 million, or 48.0%, to $10.0 million for thesix months ended June 30, 2001, from $6.8 million for the six months ended June30, 2000.  The increase in general andadministrative expenses was due to higher personnel-related expenses associatedwith the acquisition of AllPoints, opening and staffing new offices in Benelux,France, and Germany, and upgrading our operations, human resources, informationsystems, and investor relations headquarters functions.  As a percentage of total revenue, generaland administrative expenses increased to 18.4% for the six months ended June30, 2001, from 12.7% for the six months ended June 30, 2000. This increase wasprimarily due to lower than anticipated revenue growth for the six months endedJune 30, 2001, due to the current economic environment.

             *Amortizationof Intangibles.*  Amortizationof intangibles increased $1.9 million to $4.2 million for the six months endedJune 30, 2001, from $2.3 million for the six months ended June 30, 2000.  The increase in amortization was due tointangibles acquired in connection with the acquisition of AllPoints.

             *Non-CashWarrant and Stock Compensation.* Non-cash warrant and stock compensation expense decreased $1.0 millionto $0.9 million for the six months ended June 30, 2001, from $1.9 million forthe six months ended June 30, 2000.

             *EmployeeSeverance and Lease Abandonment Costs*.  During the six months ended June 30, 2001, we implemented andannounced plans to reduce costs and improve operating efficiency.  During the three months ended March 31, 2000,we recorded a charge of $0.4 million for costs associated with severance andother employee related costs for the termination of 18 services, sales andmarketing, development and administrative employees.  Additionally, during the three months ended June 30, 2001, werecorded a charge of $9.5 million that included approximately $2.0 million forseverance and other employee related costs for the termination of 119 services,sales and marketing, development and administrative employees, $7.4 million forthe abandonment of certain leased office space, less estimated sublease recoveries,at our North American and United Kingdom facilities, and $0.1 million for othercosts associated with the downsizing of operations at our Hong Kongoffice.  As of June 30, 2001, theremaining liability was approximately $9.4 million and is expected to be paidthrough 2007.

             *Other Income(Expense).*  Other income(expense) increased $2.2 million to $1.1 million for the for the six monthsended June 30, 2001, from ($1.1) million for the six months ended June 30,2000.  The increase was due to anincrease in interest income of $1.3 million and a decrease in interest expenseof $0.9 million.

             *Income Tax.* An income tax provision of $0.2 million wasrecognized during the six months ended June 30, 2001, compared to no income taxprovision or benefit during the same period in 2000.  The income tax provision in the six months ended June 30, 2001was primarily due to tax on income earned by foreign subsidiaries whilecorresponding domestic tax benefit generated by foreign tax credits was notrecognized due to the uncertainty of the timing and amount of future taxableincome.****Liquidity and Capital Resources**

             Wehave funded our operations through the issuance of our preferred and commonstock, bank borrowings and cash flow from operations.  As of June 30, 2001 we had $33.2 million in cash and cashequivalents, $4.0 million in short-term marketable securities, $13.7 million inlong-term marketable securities and $41.2 million in working capital.

             Netcash used in operating activities was $5.8 million for the six months endedJune 30, 2001.  Cash used in operationswas primarily used to fund the $8.9 million operating loss, net of non-cashcharges for depreciation, amortization, provisions for losses on receivables,minority interest, and warrant and stock compensation expenses.  Additional uses of cash included an increasein accounts receivables and decreases in accounts payable and deferredrevenues, net of the assets and liabilities acquired in the AllPointsacquisition.  These uses were offset byan increase in accrued expenses, net of the liabilities acquired in theAllPoints acquisition, attributed to the cost reduction plan.  Net cash used in operating activities was$1.1 million for the comparable six months ended June 30, 2000.

             Netcash used in investing activities was $1.1 million for the six months endedJune 30, 2001.  We incurredapproximately $1.6 million in expenses associated with the AllPointsacquisition, purchased property and equipment of $1.1 million, and generated$1.6 million of cash from net sales of marketable securities.  Net cash used in investing activities was$0.8 million for the comparable six months ended June 30, 2000.

             Netcash provided by financing activities was $0.2 million for the six months endedJune 30, 2001.  We generated cash of $1.1million from the issuance of common stock, paid off and terminated AllPoints’$0.8 million line of credit, and reduced other long-term debt by $0.1million.  Net cash provided by financingactivities was $2.8 million for the comparable six months ended June 30, 2000,and arose primarily from the proceeds of a revolving line of credit.

             Webelieve that our existing working capital will be sufficient to fund ouroperations for at least the next year. However, there can be no assurance that we will not require additionalfinancing in the future.  We cannot besure that we will be able to obtain this additional financing, or that, if wecan, the terms will be acceptable to us.

**Recently Issued AccountingPronouncements**

             InJune 2001, the Financial Accounting Standards Board issued Statements ofFinancial Accounting Standards No. 141, *BusinessCombinations*, and No. 142, *Goodwilland Other Intangible Assets*, effective for fiscal years beginningafter December 15, 2001. Under the new rules, goodwill and intangible assetsdeemed to have indefinite lives will no longer be amortized but will be subjectto annual impairment tests in accordance with these statements. Otherintangible assets will continue to be amortized over their useful lives.

             TheCompany will apply the new rules on accounting for goodwill and otherintangible assets beginning in the first quarter of 2002. Application of thenonamortization provisions of the Statement is expected to result in anincrease in net income of approximately $9.0 million or $0.20 per share in 2002as a result of nonamortization of existing goodwill. The Company will performthe first of the required impairment tests of goodwill and indefinite livedintangible assets as of January 1, 2002. The effect of these tests on the earningsand financial position of the Company have yet to be determined but may resultin a significant charge to earnings in a future period.

**Forward-Looking Statements**

             Inaddition to historical information, this filing and our Annual Report on Form10-K may contain forward-looking statements. Any statements contained herein (including without limitation statementsto the effect that the Company or its management “believes,” “expects,”“anticipates,” “plans,” and similar expressions) that relate to future eventsor conditions, including, among others, statements relating to the sufficiencyof working capital, should be considered forward-looking statements.  These forward-looking statements are subjectto certain risks and uncertainties that could cause actual results to differmaterially from those reflected in these forward-looking statements.  Factors that might cause such a differenceinclude, but are not limited to, those discussed in the section entitled“Management’s Discussion and Analysis of Financial Condition and Results ofOperations-Certain Factors That May Affect Future Results” in our Annual Reporton Form 10-K.  Readers are cautioned notto place undue reliance on these forward-looking statements, which reflectmanagement’s opinions only as of the date hereof.  The Company undertakes no obligations to revise or publiclyrelease the results of any revision to these forward-looking statements,whether as a result of new information, future events, or otherwise.

**ITEM 3.**            **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKETRISK**

             Wedevelop products in the United States and market our products in North America,Europe, the Middle East, Asia, and Australia. As a result, our financial results could be affected by factors such aschanges in foreign currency exchange rates or weak economic conditions inforeign markets.  Some of our revenue isdenominated in currencies other than the U.S. dollar, in particular theJapanese yen, the Singapore dollar and the Euro.  However, most of our sales are currently made in U.S. dollars anda strengthening of the dollar could make our products less competitive inforeign markets.

             Weused a portion of the proceeds obtained from our August 2000 initial publicoffering to repay all outstanding amounts under our revolving credit facilityand term loan, which we subsequently terminated.  To the extent that we enter into a new credit facility in thefuture, future interest expense could be subject to fluctuations based on thegeneral level of U.S. interest rates.

             Pendingtheir application, we have invested the remaining proceeds from our initialpublic offering in investment grade corporate and government securities andmoney market funds.  The primaryobjective of our investment activities is to preserve capital while at the sametime maximizing the income we receive from our investments withoutsignificantly increasing risk.  Some ofthe securities that we invest in may have market risk.  This means that a change in prevailinginterest rates may cause the principal amount of the investment tofluctuate.  For example, if we hold asecurity that was issued with a fixed interest rate at the then-prevailing rateand the prevailing interest rate later rises, the principal amount of our investmentwill probably decline.  As of June 30,2001 we had $28.6 million of securities which mature in 90 days or less, $4.0million of securities which mature between 90 days and one year, and $13.7million of securities which mature between one and two years.  We do not believe that we have any materialexposure to interest rate risk.****PARTII.           OTHERINFORMATION**

**ITEM 2. **          **CHANGES INSECURITIES AND USE OF PROCEEDS**

**(d)**         **Use ofProceeds**

             The Company completed its initialpublic offering of 8.0 million shares of its common stock pursuant to a RegistrationStatement on Form S-1 (Registration No. 333-35106, effective August 3, 2000) onAugust 9, 2000.  Total proceeds from theoffering, including the exercise of the over-allotment option, wereapproximately $63.9 million, net of underwriting discounts and commissions ofapproximately $5.0 million and other fees and expenses of approximately $1.8million.

             Approximately$16.6 million of the offering proceeds were used to pay off and terminate theCompany’s revolving line of credit and term loan in August 2000.  In January 2001, we completed theacquisition of AllPoints.  Approximately$2.4 million was spent on acquisition costs and debt retirement associated withthis transaction and approximately $5.8 million has been used to fundoperations.  The remainder of theproceeds have been invested in investment grade corporate and governmentsecurities and money market funds.  Weintend to use the remaining proceeds for research and development activities;expenditures on sales and marketing, consulting services, and general andadministrative personnel; systems costs; and working capital and generalcorporate purposes, including possible acquisitions of, or investments in,businesses and technologies that are complementary to our business.

**ITEM 4.            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

             TheCompany held its Annual Meeting of Stockholders on May 31, 2001, at which theCompany's stockholders voted to elect three Class I members to the Board ofDirectors. Adam C. Belsky, Michael J. Durham and Jeffrey R. Rodek were electedto serve until their successors are duly elected and qualified at the 2004annual meeting. There were 37,905,027 votes cast for the election of Mr.Belsky, 38,159,864 votes cast for the election of Mr. Durham and 38,158,364votes cast for the election of Mr. Rodek. There were 574,035 votes withheld from Mr. Belsky, 319,198 voteswithheld from Mr. Durham and 320,698 votes withheld from Mr. Rodek.  The stockholders also voted to ratify theselection of Ernst & Young LLP as independent auditors of the Company forthe fiscal year ending December 31, 2001. There were 38,424,611 votes cast for this proposal, 35,625 votes castagainst this proposal and 18,826 votes abstained.

**ITEM 6.            EXHIBITSAND REPORTS ON FORM 8-K**
**(a)****Exhibits**  10.1Amended  and Restated Employment Agreement dated June 29, 2001 between Kenneth J.  Powell and the Company.  10.2Promissory  Note dated June 25, 2001 between Mark R. Weaser and the Company.  10.3Pledge  Agreement dated June 25, 2001 between Mark R. Weaser and the Company.  10.4First  Amendment to Amended and Restated Employment Agreement dated June 25, 2001  between Mark R. Weaser and the Company.  **(b)****Reports  on Form 8-K**  None. 
 

**SIGNATURES**

             Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
 EXE  TECHNOLOGIES, INC.  Date:  August 10, 2001By:     /s/   MICHAEL A. BURSTEIN   Michael  A. Burstein  Senior  Vice President, Finance, Chief Financial Officer  and Treasurer   Date:  August 10, 2001By:     /s/   MICHAEL A. BURSTEIN   Michael  A. Burstein Senior  Vice President, Finance, Chief Financial Officer  and Treasurer
 

 

**INDEX TO EXHIBITS**
10.1Amended  and Restated Employment Agreement dated June 29, 2001 between Kenneth J.  Powell and the Company.  10.2Promissory  Note dated June 25, 2001 between Mark R. Weaser and the Company.  10.3Pledge  Agreement dated June 25, 2001 between Mark R. Weaser and the Company.  10.4First  Amendment to Amended and Restated Employment Agreement dated June 25, 2001  between Mark R. Weaser and the Company.
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