OPTIKA INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    Form 10-Q

(Mark one)
[X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                 For the quarterly period ended March 31, 2002

                                       OR
[ ]     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 0-28672

                                   Optika Inc.
             (Exact name of registrant as specified in its charter)

                  Delaware                                  95-4154552
       (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                   Identification No.)

        7450 Campus Drive, 2nd Floor                           80920
            Colorado Springs, CO                            (Zip Code)
  (Address of principal executive offices)

                                 (719) 548-9800
              (Registrant's telephone number, including area code)

        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 ____

            8,288,159 shares of the Registrant's Common Stock, $.001
            par value per share, were outstanding as of May 8, 2002
================================================================================
<PAGE>

                                      INDEX


                                                                          PAGE

PART 1 - FINANCIAL INFORMATION

  Item 1 -  Condensed Consolidated Financial Statements

     Condensed Consolidated Balance Sheets as of December 31, 2001
       and March 31, 2002 (Unaudited)                                      1

     Condensed Consolidated Statements of Operations for the
       three-month periods ended March 31, 2001 and 2002 (Unaudited)       2

     Condensed Consolidated Statements of Cash Flows for the
       three-month periods ended March 31, 2001 and 2002 (Unaudited)       3

     Notes to Condensed Consolidated Financial Statements (Unaudited)      4

  Item 2 - Management's Discussion and Analysis of Financial Condition
     and Results of Operations                                             6

  Item 3 - Quantitative and Qualitative Disclosures About Market Risk     13

PART II - OTHER INFORMATION

  Item 6 - Exhibits and Reports on Form 8-K                               13

  Signatures                                                              14



<PAGE>
                          OPTIKA INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)

                                                 December 31,       March 31,
                                                    2001              2002
                                              ----------------  ---------------
                                                                   (unaudited)
Assets
Current assets:
   Cash and cash equivalents................. $        1,746    $       1,840
   Short-term investments....................          5,950            5,954
   Accounts receivable, net..................          4,035            3,428
   Other current assets......................            537              472
                                              ----------------  ---------------
         Total current assets................         12,268           11,694
                                              ----------------  ---------------

Property and equipment, net..................          1,364            1,200
Other assets.................................            269              269
                                              ----------------  ---------------
                                              $       13,901    $      13,163
                                              ================  ===============
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable.......................... $          486    $         732
   Accrued expenses..........................          1,210              961
   Accrued compensation expense..............            861              390
   Deferred revenue..........................          3,949            4,161
                                              ----------------  ---------------
          Total current liabilities..........          6,506            6,244
                                              ----------------  ---------------

Stockholders' equity:
   Common stock; $.001 par value; 25,000,000
    shares authorized;8,214,713 and 8,266,284
    shares issued and outstanding at December
    31, 2001 and March 31, 2002, respectively              8                8
   Series A-1 preferred stock; $.001 par
    value; 731,851 shares authorized, issued
    and outstanding at December 31, 2001.....          5,199            5,199
   Additional paid-in capital................         29,051           29,101
   Accumulated deficit.......................        (26,863)         (27,389)
                                              ----------------  ---------------
          Total stockholders' equity.........          7,395            6,919
                                              ----------------  ---------------
                                              $       13,901    $      13,163
                                              ================  ===============

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

<PAGE>
                          OPTIKA INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                    (In thousands, except per share amounts)

                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                      2001           2002
                                                      ----           ----
Revenues:
  Licenses......................................  $  1,422       $    994
  Maintenance and other.........................     2,423          2,820
                                                  ----------     ----------
     Total revenues.............................     3,845          3,814
                                                  ----------     ----------
Cost of revenues:
  Licenses......................................       149             92
  Maintenance and other.........................       979            799
                                                  ----------     ----------
     Total cost of revenues.....................     1,128            891
                                                  ----------     ----------

Gross profit....................................     2,717          2,923
                                                  ----------     ----------
Operating expenses:
  Sales and marketing...........................     2,778          1,818
  Research and development......................     1,646          1,289
  General and administrative....................       515            376
  Restructuring and other charges...............     1,071              -
                                                  ----------     ----------
     Total operating expenses...................     6,010          3,483
                                                  ----------     ----------

Loss from operations............................    (3,293)          (560)
Other income, net...............................        97             34
                                                  ----------     ----------
Loss before income tax provision................    (3,196)          (526)
Income tax provision............................         7              -
                                                  ----------     ----------
Net loss .......................................    (3,203)          (526)
Preferred stock dividend .......................      (317)             -
Accretion of preferred stock and beneficial
 conversion feature.............................      (179)             -
                                                  ----------     ----------
Net loss applicable to common stockholders......  $ (3,699)      $    (526)
                                                  ==========     ==========

Basic and diluted net loss per common share.....  $  (0.45)      $   (0.06)
                                                  ==========     ==========
Basic and diluted weighted average number of
 common shares outstanding......................     8,150           8,246
                                                  ==========     ==========

  The accompanying notes are an integral part of these
     condensed consolidated financial statements.
<PAGE>
                          OPTIKA INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)

                                                  Three Months Ended March 31,
                                                  ----------------------------
                                                      2001           2002
                                                      ----           ----
Cash Flows From Operating Activities:
Net loss........................................  $ (3,203)      $   (526)
Adjustments to reconcile net loss to net cash
 provided (used) by operating activities:
   Depreciation and amortization................       294            172
   Loss on disposal of assets...................       195              -
   Changes in assets and liabilities:
      Accounts receivable, net..................       258            607
      Other assets..............................       186             65
      Accounts payable..........................      (275)           246
      Accrued expenses and accrued compensation
       expense..................................       570           (720)
      Deferred revenue..........................      (324)           212
                                                  ----------     ----------
Net cash provided (used) by operating activities    (2,299)            56
                                                  ----------     ----------

Cash Flows From Investing Activities:
Capital expenditures............................       (14)            (8)
Sale (purchase) of short-term investments.......     4,856             (4)
                                                  ----------     ----------
Net cash provided (used) by investing activities     4,842            (12)
                                                  ----------     ----------

Cash Flows From Financing Activities:
Proceeds from issuance of common stock..........        91             50
                                                  ----------     ----------
Net cash provided by financing activities.......        91             50
                                                  ----------     ----------

Net increase in cash and cash equivalents.......     2,634             94
Cash and cash equivalents at beginning of period     2,192          1,746
                                                  ----------     ----------
Cash and cash equivalents at end of period......  $  4,826       $  1,840
                                                  ==========     ==========

  The accompanying notes are an integral part of these
     condensed consolidated financial statements.
<PAGE>

                          OPTIKA INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

1.      Basis of Presentations

     The unaudited condensed consolidated financial statements included herein
reflect all adjustments, consisting only of normal recurring adjustments, which
in the opinion of management are necessary to fairly present our consolidated
financial position, results of operations, and cash flows for the periods
presented. Certain information and footnote disclosures normally included in
audited financial information prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the Securities
and Exchange Commission's (SEC's) rules and regulations. The consolidated
results of operations for the period ended March 31, 2002 are not necessarily
indicative of the results to be expected for any subsequent quarter or for the
entire fiscal year ending December 31, 2002. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended December 31, 2001,
included in the Annual Report on Form 10-K for the year ended December 31, 2001
of Optika Inc. (the "Company").

2.      Net Loss Per Common Share

     Basic loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period. Diluted earnings
per share is computed using the weighted average number of common shares
outstanding plus all dilutive potential common shares outstanding. During the
first three months of 2001, 1,246,600 options to purchase our common stock were
granted. During the first three months of 2002, 150,500 options to purchase our
common stock were granted.

     Net loss applicable to common stockholders during the three months ended
March 31, 2001 includes certain adjustments included in the earnings per share
computation relating to the $15 million convertible preferred stock private
placement with Thomas Weisel Capital Partners L.P., which closed in February
2000 and the exchange of those preferred shares in May 2001. Net loss per share
for the three months ended March 31, 2001 includes an adjustment that is
comprised of the accumulating 8% dividend on the convertible preferred stock and
an allocation of the discount associated with the preferred stock issuance,
prorated for the portion of the period that the preferred stock was outstanding.

     The following is the reconciliation of the numerators and denominators of
the basic and diluted loss per share computations (in thousands except per share
data):

                                                         Three Months Ended
                                                             March 31,
                                                         2001         2002
                                                      -----------------------
Basic Earnings Per Share:
  Net loss applicable to common stockholders...       $  (3,699)   $    (526)
  Basic weighted average common shares
    outstanding................................           8,150        8,246
  Basic net loss per common share..............       $   (0.45)   $   (0.06)
Effect of Dilutive Securities:
  Options and warrants.........................              --           --
  Diluted weighted average common shares
    outstanding................................           8,150        8,246
  Diluted net loss per common share............       $   (0.45)   $   (0.06)

In 2001 and 2002, all options and warrants were excluded from the dilutive stock
calculation because of their antidilutive effect on net loss per share.

3.      Restructuring and other charges

     On February 6, 2001, we strategically reduced our workforce by 42 employees
to align our expenses more closely with revenues. This reduction in force
resulted in approximately $1.1 million of restructuring charges in the first
quarter of 2001. This restructuring charge consisted of $652,000 of severance
costs, $240,000 of lease termination and $179,000 of asset write-offs. All
remaining costs will be paid before the end of 2002. The table below outlines
the restructuring accrual activity through March 31, 2002 (in thousands):

                               Severance     Lease        Asset
                                 Costs    Termination   Write-Offs     Total
                               ---------  -----------   ----------    --------

Restructuring charge            $  652       $  240       $  179      $ 1,071
Usage                             (632)        (216)        (179)      (1,027)
                                -------      -------      -------     --------
Balance March 31, 2002          $   20       $   24       $   --      $   44
                                =======      =======      =======     ========

4.      Contingencies

     We are, from time to time, subject to certain claims, assertions or
litigation by outside parties as part of our ongoing business operations. The
outcome of any such contingencies are not expected to have a material adverse
effect upon our business, results of operations and financial condition. We are
currently not a party to any significant legal proceedings.

5.      New Accounting Pronouncement

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations", which
is effective immediately. SFAS No. 141 requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001
and eliminates the pooling-of-interests method. The adoption of this standard
did not impact our consolidated financial statements.

     In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets", which is effective January 1, 2002. SFAS No. 142 requires that goodwill
and other intangible assets with indefinite useful lives no longer be amortized,
but instead is tested for impairment at least annually. The adoption of this
standard did not impact our consolidated financial position, results of
operations, or cash flows.

     In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations", which is effective for fiscal years beginning after
June 15, 2002. SFAS No. 143 requires that the fair value of a liability for an
asset retirement obligation be recognized in the period in which it is incurred
if a reasonable estimate of fair value can be made. The adoption of this
standard will not impact our consolidated financial position, results of
operations, or cash flows.

     In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 supersedes SFAS No.
121, "Accounting for the impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," and replaces the accounting and reporting provisions
for segments of a business to be disposed of under Accounting Principles Board
("APB") Opinion No. 30, "Reporting Results of Operations-Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions." SFAS No. 144 maintains the
requirement that an impairment loss be recognized for a long-lived asset to be
held and used if its carrying value is not expected to be recoverable from its
undiscounted cash flows. SFAS No. 144 requires that long-lived assets to be
disposed of, other than by sales, be considered held and used until actually
disposed of and requires that depreciable lives be revised in accordance with
APB Opinion No. 20, "Accounting Changes." SFAS No. 144 also requires that
long-lived assets to be disposed of by sale be measured at the lower of carrying
amount or fair value less selling costs, but retains the requirement to report
discontinued operations separately from continuing operations and extends that
reporting to a component of an entity that has either been disposed of or is
classified as held for sale. The provisions of SFAS No. 144 are effective for
fiscal years beginning after December 15, 2001. The adoption of this standard
did not impact our consolidated financial position, results of operations, or
cash flows.

<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     This management's discussion and analysis of financial condition and
results of operations includes a number of forward-looking statements which
reflect our current views with respect to future events and financial
performance. These forward-looking statements are subject to risks and
uncertainties, including those discussed below under the caption "Business
Risks", that could cause actual results to differ materially from historical
results or those anticipated.

Overview

     Optika(R) Inc. is a leading provider of imaging, workflow and collaboration
software. Optika's Acorde family of enterprise content management (ECM) software
solutions, including Acorde Context(TM), Acorde Process(TM) and Acorde
Resolve(TM), allow companies to effectively and cost-efficiently manage
paper-intensive or complex business processes and transactions. Acorde provides
the ability to access and store multiple formats of business content, both
digital and non-digital; automate processes across the organization and
externally with partners and customers; and enable online collaboration around
these paper-intensive or complex processes in real and near time. Built on a
three-tier, scalable and extensible platform, Acorde delivers a variety of
client desktops, including Windows and Web and easily integrates with enterprise
resource planning (ERP), line-of-business (LOB) and other third-party
applications. The Acorde product family allows organizations to improve
processing efficiency, reduce operating costs and increase customer and trading
partner service and satisfaction.

     The license of our software products is typically an executive-level
decision by prospective end-users and generally requires our sales staff and our
Advantage Partner's, or APs, to engage in a lengthy and complex sales cycle
(typically between six and twelve months from the initial contact date). We
distribute our products through a direct sales force and a network of APs. For
2001, approximately 67% of our license revenues were derived from our APs and
the remaining license fees were derived from direct sales. However, no
individual customer accounted for more than 10% of our total revenues. For the
years ended December 31, 2001, 2000 and 1999, we generated approximately 12%,
15% and 17%, respectively, of our total revenues from international sales. Our
revenues consist primarily of license revenues, which are comprised of one-time
fees for the license of our products, service revenues, and maintenance
revenues, which are comprised of fees for upgrades and technical support. Our
APs, which are responsible for the installation and integration of the software
for their customers, enter into sales agreements with the end-user, and license
software directly from us. We license software directly to the end-user through
software license agreements. Annual maintenance agreements are also entered into
between the APs and the end-user, and the APs then purchase maintenance services
directly from us. For 2001 and 2000, approximately 39% and 33%, respectively, of
our total revenues were derived from software licenses and approximately 44% and
47%, respectively, of our total revenues were derived from maintenance
agreements. For 2001 and 2000, other revenues, which are comprised of training,
consulting and implementation services, and third-party hardware and software
products, accounted for 17% and 20%, respectively, of our total revenues.

Critical Accounting Policies

     Our significant accounting policies are described in Note 1 in the Notes to
Consolidated Financial Statements included in our Annual Report on Form 10-K for
the year ended December 31, 2001. The accounting policies used in preparing our
interim consolidated financial statements for the quarter ended March 31, 2002
are the same as those described in our Annual Report on Form 10-K.

     Our critical accounting policies are those having the most impact to the
reporting of our financial condition and results and those requiring significant
judgments and estimates. These policies include those related to (1) revenue
recognition, (2) income taxes, (3) accounting for preferred stock, and (4)
restructuring charges. Our critical accounting policies are described in more
detail in the section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form 10-K
for the year ended December 31, 2001. With respect to these critical accounting
policies, our management believes that the application of judgments and
assessments is consistently applied and produces financial information which
fairly depicts the results of operations for all periods presented.

Revenues

     Total revenues remained constant at $3.8 million for the quarters ended
March 31, 2001 and 2002.

     Licenses. License revenues decreased 30% from $1.4 million during the
quarter ended March 31, 2001 to $994,000 for the quarter ended March 31, 2002.
License revenues represented 37% and 26% of the total revenues for the quarter
ended March 31, 2001 and 2002, respectively. The decrease in license revenues
during the first quarter of 2002 was due to several factors that include a
seasonal drop in our business from the fourth to first quarter, the continuing
economic challenges and the timing of some orders pushed out of the first
quarter. License revenues generated outside of the United States accounted for
approximately 22% of our license revenues for the quarter ended March 31, 2002,
compared to 10% in the corresponding prior period.

     Maintenance and Other. Maintenance revenues, exclusive of other revenue,
remained constant at $1.8 million for the quarters ended March 31, 2001 and
March 31, 2002. Maintenance revenue represented 47% and 48% of the total
revenues for the quarter ended March 31, 2001 and 2002, respectively. Other
revenue, consisting primarily of consulting services, training and consulting
fees represented 16% and 26% of total revenues for the quarter ended March 31,
2001 and 2002, respectively. The increase in other revenue as a percentage of
total revenue was primarily due to increased consulting, project management and
implementation services resulting from our direct sales.

Cost of Revenues

     Licenses. Cost of licenses consists primarily of royalty payments to
third-party vendors and costs of product media, duplication, packaging and
fulfillment. Cost of licenses decreased slightly from $149,000 or 10% of license
revenues to $92,000 or 9% of license revenues for the quarter ended March 31,
2001 and 2002, respectively. The decrease in absolute dollar cost of licenses
was attributable to the decreased third-party royalty costs of license revenue.

     Maintenance and Other. Costs of maintenance and other consist of the direct
and indirect costs of providing software maintenance and support, training and
consulting services to our APs and end-users, and the cost of third-party
software products. Cost of maintenance and other decreased in absolute dollars
from $979,000 or 40% of maintenance and other revenues to $799,000 or 28% of
maintenance and other revenues for the quarters ended March 31, 2001 and 2002,
respectively. The decrease in cost of maintenance and other is primarily a
result of the decreased direct third party contracting and the consolidation of
the executive management and certain other redundant positions within the
department.

Operating Expenses

     Sales and Marketing. Sales and marketing expenses consist primarily of
salaries, commissions and other related expenses for sales and marketing
personnel, marketing, advertising and promotional expenses. Sales and marketing
expenses decreased from $2.8 million, or 72% of total revenues, for the quarter
ended March 31, 2001 to $1.8 million, or 48% of total revenues, for the quarter
ended March 31, 2002. The decrease in sales and marketing expenses is primarily
attributable to our restructuring activities in February 2001. We anticipate
that sales and marketing expenses will continue to increase slightly in absolute
dollars over the quarter ended March 31, 2002, as we continue to make strategic
hires and increase demand generation activity.

     Research and Development. Research and development expenses consist
primarily of salaries and other related expenses for research and development
personnel, contractors, as well as the cost of facilities and equipment.
Research and development expenses decreased from $1.6 million, or 43% of total
revenues, for the quarter ended March 31, 2001 to $1.3 million, or 34% of total
revenues, for the quarter ended March 31, 2002. The decrease in research and
development expenses is primarily the result of our restructuring activities in
February 2001. We anticipate that research and development expenses will remain
flat over future quarters.

     General and Administrative. General and administrative expenses consist
primarily of salaries and other related expenses of administrative, executive
and financial personnel, and outside professional fees. General and
administrative expenses decreased from $515,000, or 13% of total revenues, for
the quarter ended March 31, 2001 to $376,000, or 10% of total revenues, for the
quarter ended March 31, 2002. The decrease in general and administrative
expenses was primarily due to our restructuring activities in February 2001. We
anticipate that general and administrative expenses will remain relatively flat
throughout the year.

     Restructuring and other charges. On February 6, 2001, we strategically
reduced our workforce by 42 employees to align our expenses more closely with
revenues. This reduction in force resulted in approximately $1.1 million of
restructuring charges to earnings in the first quarter of 2001 and approximately
$1.0 million in reduced quarterly expenses.

     Other Income, net. Other income, net consists primarily of interest earned
on our investing activities. Net other income was $97,000 during the quarter
ended March 31, 2001 compared to net other income of $34,000 during the quarter
ended March 31, 2002, primarily as a result of interest income derived from the
proceeds of our preferred stock issuance.

     Income Tax Expense. During the quarter ended March 31,2002, we recorded a
full valuation allowance against our carryforward tax benefits that were
generated in 2002, to the extent that we believe it is more likely than not that
all of such benefits will not be realized in the near term. Our assessment of
this valuation allowance was made using all available evidence, both positive
and negative. In particular we considered both our historical results and our
projections of profitability for only reasonably foreseeable future periods.

Liquidity and Capital Resources

     Cash and cash equivalents and short-term investments at March 31, 2002 were
$7.8 million, increasing by approximately $98,000 from December 31, 2001. The
increase in cash and cash equivalents is primarily due to the first quarter net
loss offset by strong accounts receivable collections.

     For the quarter ended March 31, 2001, net cash used by operating activities
was $2.3 million compared to net cash provided by operating activities of
$56,000 for the quarter ended March 31, 2002. The cash provided by operating
activities for the quarter ended March 31, 2002 was a direct result of the first
quarter net loss offset primarily by strong accounts receivables collections.

     Cash provided by investing activities was $4.8 million for the quarter
ended March 31, 2001 compared to cash used of $12,000 for the quarter ended
March 31, 2002. Cash provided from investing for the quarter ended March 31,
2001 was from the sale of short-term investments.

     Cash provided by financing activities was $91,000 for the quarter ended
March 31, 2001. Cash provided by financing activities was $50,000 for the
quarter ended March 31, 2002. Cash provided by financing activities are a result
of common stock sales through our employee stock purchase plan and stock option
exercises within the quarter.

     At March 31, 2002, our principal sources of liquidity included cash and
short-term investments of $ 7.8 million. In addition, we have a secured credit
facility for up to $3.0 million, bearing interest at the bank's prime rate. As
of March 31, 2002, we had $2.8 million available for borrowing and no other debt
outstanding.

     We believe that our current cash and short-term investments, together with
anticipated cash flows from our operations and the availability of our bank
credit facility, will be sufficient to meet our working capital and capital
expenditure requirements for at least the next 12 months.

Business Risks

     In evaluating our business, you should carefully consider the business
risks discussed in this section.

     Operating Result Fluctuations. Our sales and other operating results have
varied significantly in the past and may vary significantly in the future as a
result of potential factors such as:

o The size and timing of significant orders and their fulfillment
o Rate of rollout, demand and customer adoption of our product offerings
o Ability of third party products embedded or to be embedded in our products
  and our ability to negotiate license agreements with such third parties on
  favorable terms
o Changes in pricing policies by us or our competitors
o The number, timing and significance of product enhancements and new
  product announcements by us and our competitors
o Changes in the level of our operating expenses
o Warranty and customer support expenses
o Changes in our end-users' financial condition and budgetary processes
o Changes in our sales, marketing and distribution channels
o Product life cycles
o Software bugs and other product quality problems
o The cancellation of licenses during the warranty period or nonrenewal
  of maintenance agreements
o Customization and integration problems with the end-user's legacy system
o Changes in our business strategy
o Changes in accounting pronouncements
o The level of international expansion and foreign currency exchange rates
o Seasonal trends

     A significant portion of our revenues have been, and we believe will
continue to be, derived from a limited number of orders, and the timing of such
orders and their fulfillment have caused, and are expected to continue to cause,
material fluctuations in our operating results. Revenues are also difficult to
forecast because the markets for our products are rapidly evolving, and our
sales cycle and the sales cycle of our APs is lengthy and varies substantially
from end-user to end-user. To achieve our quarterly revenue objectives, we
depend upon obtaining orders in any given quarter for shipment in that quarter.
Product orders are typically shipped shortly after receipt. Consequently, order
backlog at the beginning of any quarter has in the past represented only a small
portion of that quarter's revenues. Furthermore, we have often recognized most
of our revenues in the last month, or even in the last weeks or days, of a
quarter. Accordingly, a delay in shipment near the end of a particular quarter
may cause revenues in a particular quarter to fall significantly below our
expectations and may materially adversely affect our operating results for such
quarter. Conversely, to the extent that significant revenues occur earlier than
expected, operating results for subsequent quarters may fail to keep pace with
results of previous quarters or even decline. We also have recorded generally
lower sales in the first quarter than in the immediately preceding fourth
quarter, as a result of, among other factors, end-users' purchasing and
budgeting practices and our sales commission practices. To the extent that
future international operations constitute a higher percentage of total
revenues, we anticipate that we may also experience relatively weaker demand in
the third quarter as a result of reduced sales in Europe during the summer
months. Significant portions of our expenses are relatively fixed in the short
term. Accordingly, if revenue levels fall below expectations, operating results
are likely to be disproportionately and adversely affected. As a result of these
and other factors, we believe that our quarterly operating results will vary in
the future, and that period-to-period comparisons of our results of operations
are not necessarily meaningful and should not be relied upon as indications of
future performance. Furthermore, due to all of the foregoing factors, it is
likely that in some future quarter our operating results will be below the
expectations of public market analysts and investors. In such event, the price
of our common stock would likely decline and such decline could be significant.

     Product Offerings. The Optika Acorde family of products account for
substantially all of our current license revenue. Our future financial
performance will depend in general on the acceptance of our product offerings,
and in particular on the successful development, introduction and customer
acceptance of new and enhanced versions of our products.

     Capital Requirements. We believe that our existing cash balances and liquid
resources will be sufficient to fund our operating activities, capital
expenditures and other obligations through at least the next twelve months.
Recently capital market conditions have materially and adversely affected the
ability of many technology companies to raise additional capital in both private
and public markets. If market conditions do not improve and we are not
successful in generating sufficient cash flow from operations or in raising
additional capital when required in sufficient amounts and on terms acceptable
to us, we may be required to reduce our planned expenditures and scale back the
scope of our business plan, either of which could have a material adverse effect
on our business.

     Key Employees. Most of our senior management team has joined us within the
last five years. These individuals may not be able to achieve and manage growth,
if any, or build an infrastructure necessary for us to operate. Our ability to
compete effectively and to manage any future growth will require that we
continue to assimilate new personnel and to train and manage our work force. Our
future performance depends to a significant degree upon the continuing
contributions of our key management, sales, marketing, customer support, and
product development personnel. We have at times experienced, and continue to
experience, difficulty in recruiting qualified personnel, particularly in sales,
software development and customer support. We believe that there may be only a
limited number of persons with the requisite skills to serve in those positions,
and that it may become increasingly difficult to hire such persons. Competitors
and others have in the past, and may in the future, attempt to recruit our
employees. We have from time to time experienced turnover of key management,
sales and technical personnel. The loss of key management, sales or technical
personnel, or the failure to attract and retain key personnel, could harm our
business.

     Sales and Distribution Channels. Our future results of operations will
depend on the success of our marketing and distribution strategy, which relies,
to a significant degree, upon APs to sell and install our software, and provide
post-sales support. These relationships are usually established through formal
agreements that generally do not grant exclusivity, do not prevent the
distributor from carrying competing product lines and do not require the
distributor to purchase any minimum dollar amount of our software. Some APs may
not continue to represent Optika or sell our products. Other APs, some of which
have significantly greater financial, marketing and other resources than us, may
develop or market software products that compete with our products or may
otherwise discontinue their relationship with, or support of, us. Some of our
APs are small companies that have limited financial and other resources that
could impair their ability to pay us. Selling through indirect channels may
hinder our ability to forecast sales accurately, evaluate customer satisfaction
or recognize emerging customer requirements. Our future results of operations
also depend on the success of our efforts to build a direct sales force. We have
only limited experience in selling our products directly.

     Product Updates and Releases. The markets for our products are
characterized by rapid technological change, changes in customer requirements,
frequent new product introductions and enhancements, and emerging industry
standards. Our future performance will depend in significant part upon our
ability to respond effectively to these developments. The introduction of
products embodying new technologies and the emergence of new industry standards
can render existing products obsolete, unmarketable or noncompetitive. We are
unable to predict the future impact of such technology changes on our products.
Moreover, the life cycles of our products are difficult to estimate. Our future
performance will depend in significant part upon our ability to enhance current
products, and to develop and introduce new products and enhancements that
respond to evolving customer requirements. The inability, for technological or
other reasons, to develop and introduce new products or enhancements in a timely
manner in response to changing customer requirements, technological change or
emerging industry standards, or maintain compatibility with heterogeneous
computing environments, would have a material adverse effect on our business and
results of operations.

     Third Party Software. We license software from third parties, which is
incorporated into our products. These licenses expire from time to time. These
third-party software licenses may not continue to be available to us on
commercially reasonable terms. The loss of, or inability to maintain, any such
software licenses could result in shipment delays or reductions until equivalent
software could be developed, identified, licensed and integrated, which in turn
could materially and adversely affect our business and financial condition. In
addition, we generally do not have access to source code for the software
supplied by these third parties. Certain of these third parties are small
companies that do not have extensive financial and technical resources. If any
of these relationships were terminated or if any of these third parties were to
cease doing business, we may be forced to expend significant time and
development resources to replace the licensed software. Such an event would have
a material adverse effect upon our business and results of operations.

     Sales Cycle. The license of our software products is typically an
executive-level decision by prospective end-users, and generally requires our
APs and us to engage in a lengthy and complex sales cycle (typically between six
and twelve months from the initial contact date). In addition, the
implementation by customers of our products may involve a significant commitment
of resources by such customers over an extended period of time. For these and
other reasons, the sales and customer implementation cycles are subject to a
number of significant delays over which we have little or no control. Our future
performance also depends upon the capital expenditure budgets of our customers
and the demand by such customers for our products. Certain industries to which
we sell our products, such as the financial services industry, are highly
cyclical. Our operations may in the future be subject to substantial
period-to-period fluctuations as a consequence of such industry patterns,
domestic and foreign economic and other conditions, and other factors affecting
capital spending. Such factors may have a material adverse effect on our
business and results of operations.

     Competition. The market for our product offerings is intensely competitive
and can be significantly affected by new product introductions and other market
activities of industry participants. We anticipate that the collaborative
commerce market will also be highly competitive and subject to competitive
forces that do not currently exist. Our competitors offer a variety of products
and services to address the document management market and the emerging market
for e-business solutions. Because our products are designed to operate in
non-proprietary computing environments and because of low barriers to entry in
the marketplace, we expect additional competition from established and emerging
companies, as the market for our products continues to evolve. Current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties, to increase the ability of
their products to address the needs of our prospective customers. In addition,
several competitors have recently made, or attempted to make, acquisitions to
enter the market or increase their market presence. Accordingly, new competitors
or alliances among competitors may emerge and rapidly acquire significant market
share. Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which would have a material adverse
effect on our business and results of operations.

     Competitor Resources. Many of our current and potential competitors are
substantially larger than we are, have significantly greater financial,
technical and marketing resources and have established more extensive channels
of distribution. As a result, such competitors may be able to respond more
rapidly to new or emerging technologies and changes in customer requirements, or
to devote greater resources to the development, promotion and sale of their
products than we can. We expect our competitors to continue to improve the
performance of their current products and to introduce new products or new
technologies that provide added functionality and other features. Our failure to
keep pace with our competitors through new product introductions or enhancements
could cause a significant decline in our sales or loss of market acceptance of
our products and services, result in continued intense price competition, or
make our products and services or technologies obsolete or noncompetitive. To be
competitive, we will be required to continue to invest significant resources in
research and development, and in sales and marketing.

     Intellectual Property. Our performance depends in part on our ability to
protect our proprietary rights to the technologies used in our principal
products. We rely on a combination of copyright and trademark laws, trade
secrets, confidentiality provisions and other contractual provisions to protect
our proprietary rights, which are measures that afford only limited protection.
Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of our products, or to obtain and use information that
we regard as proprietary. In addition, the laws of some foreign countries do not
protect our proprietary rights as fully as do the laws of the United States. Our
means of protecting our proprietary rights in the United States or abroad may
not be adequate, and competitors may independently develop similar technologies.
Third parties may claim infringement by our products of their intellectual
property rights. We expect that software product developers will increasingly be
subject to infringement claims if the number of products and competitors in our
industry segment grows and the functionality of products in different industry
segments overlaps. Any such claims, with or without merit, and regardless of the
outcome of any litigation, will be time consuming to defend, result in costly
litigation, divert management's attention and resources, cause product shipment
delays, or require us to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be available on terms
acceptable to us, if at all. A successful claim of infringement against our
products and failure or inability to license the infringed or similar technology
may adversely affect our business and results of operations.

     International Operations. Sales outside the United States accounted for
approximately 12%, 15% and 17% of our revenues in 2001, 2000 and 1999,
respectively. We have only limited experience in developing localized versions
of our products and cannot assure you that we will be able to successfully
localize, market, sell and deliver our products internationally. Our inability
to successfully expand our international operations in a timely manner, or at
all, could materially and adversely affect our business and results of
operations. Our international revenues may be denominated in foreign currencies
or the U.S. dollar. We do not currently engage in foreign currency hedging
transactions; as a result, a decrease in the value of foreign currencies
relative to the U.S. dollar could result in losses from transactions denominated
in foreign currencies, could make our software less price-competitive, and could
have an adverse effect upon our business, results of operations, and financial
condition.

     Product Liability. Our license agreements typically contain provisions
designed to limit our exposure to potential product liability claims. These
limitations of liability provisions may not be effective under the laws of
certain jurisdictions. The sale and support of our products may entail the risk
of such claims, and we cannot assure you that we will not be subject to such
claims in the future. A successful product liability claim against us could have
a material adverse effect upon our business and results of operations. Software
products such as those we offer frequently contain errors or failures,
especially when first introduced or when new versions are released. We have in
the past released products that contained defects, and have discovered software
errors in certain of our new products and enhancements after introduction. We
could in the future lose or delay recognition of revenues as a result of
software errors or defects, the failure of our products to meet customer
specifications or otherwise. Our products are typically intended for use in
applications that may be critical to a customer's business. As a result, we
expect that our customers and potential customers have a greater sensitivity to
product defects than the market for general software products. Despite our
testing and testing by current and potential customers, errors or defects may be
found in new products or releases after commencement of commercial shipments,
and our products may not meet customer specifications, resulting in loss or
deferral of revenues, diversion of resources, damage to our reputation, or
increased service and warranty and other costs, any of which could have a
material adverse effect upon our business and operating results.

      Common Stock Price Volatility. The market price of our shares of common
stock has been, and is likely to continue to be, highly volatile and may be
significantly affected by factors such as:

o Actual or anticipated fluctuations in our operating results
o Announcements of technological innovations
o New products or new contracts by us or our competitors
o Sales of common stock by management, directors or other related parties
o Sales of significant amounts of common stock into the market
o Developments with respect to proprietary rights
o Conditions and trends in the software and other technology industries
o Adoption of new accounting standards affecting the software industry
o Changes in financial estimates by securities analysts and others
o General market conditions
o Other factors that may be unrelated to us or our performance

In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have particularly affected the market prices
for the common stock of technology companies. These broad market fluctuations
may adversely affect the market price of our common stock. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
such company. Such litigation may be brought against us in the future. Such
litigation, regardless of its outcome, would result in substantial costs and a
diversion of management's attention and resources that could have a material
adverse effect upon our business and results of operations.

     Change In Company Control. Certain provisions of our certificate of
incorporation, equity incentive plans, bylaws, and Delaware law may discourage
certain transactions involving a change in control of our company. Our
classified Board of Directors and the ability of the Board of Directors to issue
"blank check" preferred stock without further stockholder approval, may have the
effect of delaying, deferring or preventing a change in our control and may also
affect the market price of our stock. We also have a stockholders rights plan
under which all stockholders of record as of July 18, 2001 received one right
for each share of common stock then owned by them to purchase, upon the
occurrence of certain triggering events, one one-hundredth of a share of Series
B Preferred Stock at a price of $30, subject to adjustment. The rights are
exercisable only if a person or group acquires 15% or more of our common stock
in a transaction not approved by our Board of Directors. These provisions and
certain other provisions of our Amended and Restated Certificate of
Incorporation and certain provisions of our Amended and Restated Bylaws and of
Delaware law, could delay or make more difficult a merger, tender offer or proxy
contest.

ITEM 3. QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of March 31, 2002 we had $6 million in short-term investments that are
sensitive to market risks. Our investment portfolio is used to preserve our
capital until it is required to fund operations. We do not own any derivative
financial instruments. Due to the nature of our investment portfolio we are
primarily subject to interest rate risk.

     Our investment portfolio includes fixed rate debt instruments that are
primarily United States government and agency bonds of durations ranging from
one to four years. The market value of these bonds is subject to interest rate
risk, and could decline in value if interest rates increase. A hypothetical
increase or decrease in market interest rates by 10% from March 31, 2002 would
cause the fair market value of these short-term investments to change by an
insignificant amount.

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
        (a) Exhibits.  None.
        (b) Reports on Form 8-K.  During the quarter ended March 31, 2002, we
        filed a Current Report on Form 8-K dated January 23, 2002 under Item 5.
        Other Events, and Item 7. Exhibits.

<PAGE>

                                   SIGNATURES


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.

                                               OPTIKA INC.
                                               (Registrant)

              5/13/2002                         /s/ Mark K. Ruport
        ---------------------            ------------------------------------
               (Date)                               Mark K. Ruport
                                          President, Chief Executive Officer
                                                and Chairman of the Board



              5/13/2002                         /s/ Steven M. Johnson
        ---------------------             -----------------------------------
               (Date)                               Steven M. Johnson
                                          Chief Financial Officer, Executive
                                          Vice President, Secretary and Chief
                                                    Accounting Officer