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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A

                                AMENDMENT NO. 1

[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, 2001

                                       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: 000-26735

                          TELEMATE.NET SOFTWARE, INC.
             (Exact Name of Registrant as Specified in Its Charter)


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<S>                                                                            <C>
                          GEORGIA                                                           58-1656726
(State or Other Jurisdiction of Incorporation or Organization)                 (I.R.S. Employer Identification No.)

             400 GALLERIA PARKWAY, SUITE 200                                                  30339
                    ATLANTA, GEORGIA                                                        (Zip Code)
        (Address of Principal Executive Offices)
</TABLE>

       Registrant's telephone number, including area code: (678) 589-1623

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 [ ]


The number of shares of the issuer's class of capital stock as of May 11, 2001,
the latest practicable date, is as follows: 9,205,743 shares of Common Stock,
$0.01 par value.


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<PAGE>   2


                          TELEMATE.NET SOFTWARE, INC.
                                  FORM 10-Q/A
                          QUARTER ENDED MARCH 31, 2001

                               TABLE OF CONTENTS
                                EXPLANATORY NOTE

         This Report on Form 10-Q/A amends and restates in its entirety Item 2
of the Quarterly Report on Form 10-Q of Telemate.Net Software, Inc., a Georgia
corporation (the "Company"), for the quarter ended March 31, 2001.

                                     PART I
                             FINANCIAL INFORMATION


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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.             3


SIGNATURES.                                                                                                  10
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                                  Form 10-Q/A
                                  Page 2 of 10
<PAGE>   3
PART I
                             FINANCIAL INFORMATION

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

         Certain of the information included in this report, including
statements regarding our growth and operating strategy, liquidity and capital
expenditures, trends in our industry, and proposed merger with Verso
Technologies, Inc. constitute "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended, and we intend that such
forward-looking statements be subject to the safe harbors created thereby.
Examples of words indicating forward-looking statements include "believe,"
"expect", "goal," "plan," "intend," "estimate," "may," and "will" or similar
words. These forward-looking statements reflect our current views with respect
to future events and financial performance, but are subject to many
uncertainties and factors relating to our operations and business environment
that may cause our actual results to be materially different from any future
results expressed or implied by such forward-looking statements. For further
information about these and other factors that could affect our future results,
please see Exhibit 99.1 attached to this quarterly report.

OVERVIEW

         Telemate.Net Software, Inc. is a leading provider of network usage
management solutions for businesses worldwide. Our Internet access management,
eBusiness intelligence, and call accounting offerings enable companies to ensure
productivity, reduce unnecessary expenses, enhance network performance, mitigate
risk, and maximize e-commerce effectiveness. We expect the anticipated release
of our new WebFilter product in the second quarter of 2001 to be as a critical
milestone in our business. A combined Internet filtering and reporting
appliance, WebFilter utilizes automated content recognition technology to
deliver adaptive Internet filtering. This advanced architecture provides users
with more accurate categorization of Internet activity than that of the "hit" or
"keyword" lists currently used by competitors.

         Our revenue consists of product and service revenue. Product revenue is
derived primarily from licensing our software products. We also resell
complementary hardware, which has historically accounted for less than 10% of
our total annual revenue. Service revenue consists of fees paid for maintenance
services, product updates, and professional services. Maintenance services
include diagnosis and bug fixes in the current version of the product and
telephone consultation to discuss general support questions. Product updates
include


                                  Form 10-Q/A
                                  Page 3 of 10

<PAGE>   4


error correction and minor enhancements to the product models purchased, and
periodic updates to tariff information for call accounting products.
Substantially all of our license agreements are perpetual. Support agreements
are typically for a term of one year and renew automatically upon payment of an
annual maintenance fee by the customer. This support fee typically represents
20% of the current list price of licensed products. Professional services
include installation, training, and custom report generation.

         We recognize revenue from software licenses in accordance with the
American Institute of Certified Public Accountants Statement of Position 97-2,
Software Revenue Recognition, and Statement of Position 98-9, Modification of
SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions.
Revenue derived from software license fees and hardware is typically recognized
upon shipment. Revenue generated from software support services primarily
involves annual contracts and is recognized ratably over the service period.
Revenue related to professional services is recognized as services are
provided. Deferred revenue generally represents advance payments received from
customers and billings invoiced to customers for software support and
professional services in advance of the time revenue is recognized.

         We identify revenue as call accounting revenue or Internet/integrated
revenue based upon the types of data sources licensed and the delivery of call
accounting product features. If a customer is delivered tariff information for
all data sources they have licensed, the product revenue is identified as call
accounting. All other product revenue is identified as Internet/integrated.
Service revenue is identified based on the associated product identification.

         We sell our products through a combination of direct sales and
third-party resellers and distributors. While our direct sales force is expected
to continue to generate a proportion of future revenue, we are increasingly
utilizing indirect distribution channels, such as network resellers, systems
integrators and distributors, as an important complement to our direct sales
force. Distributors and resellers purchase our products for resale at a discount
from our standard price list. This discount ranges from 20% to 65% and varies
based on a number of factors including their volume of business, whether they
distribute to other resellers, and whether they provide product support.

         We also maintain relationships with leading networking and network
security product vendors that help to market and distribute our products. These
vendors assist in the sales and marketing of our products by bundling them with
their own products, selling our products through their sales forces, and
promoting our products at trade shows, seminars and through their web sites. We
have entered into marketing partnerships with major firewall and proxy server
suppliers including Cisco Systems, Checkpoint Software Technologies, Microsoft
Corporation, and Symantec/Axent. We expect to continue to focus our sales
resources on strengthening existing relationships and creating new strategic
relationships.

         The Cisco partnership is comprised of an OEM agreement and a
cooperative marketing agreement. Cisco buys and resells our VoIP reporting
application and we are provided a web link from relevant product pages on the
Cisco web site. In addition, for a fee we are able to appear within Cisco's
tradeshow space. The initial term of the February 2000 agreement is for three
years. The Check Point partnership is a cooperative marketing agreement. Our
Internet products report on Check Point's firewall products and in turn we
receive a link on Check Point's web site. In addition, for a fee we can be in
Check Point's booth at tradeshows. The agreement is renewable on an annual
basis through 2002. The Microsoft partnership is a cooperative marketing
agreement. Our Internet products generate reports on Microsoft's firewall
products and in turn we receive a link on Microsoft's web site. As long as our
products meet Microsoft's criteria, we can maintain this relationship. In
addition, for a fee we can be in Microsoft's booth at tradeshows. We have a
reseller agreement with Axent, which has been acquired by Symantec. The
agreement allows for cooperative marketing programs. Such programs have been
utilized over the last several years. With the acquisition of Axent by
Symantec, we expect less cooperative marketing efforts. We expect to continue
to focus our sales resources on strengthening existing relationships and
creating new strategic relationships.

                                  Form 10-Q/A
                                  Page 4 of 10


<PAGE>   5

PROPOSED MERGER

         On May 4, 2001, we entered into an Agreement and Plan of Merger with
Verso Technologies, Inc., a Minnesota corporation, and Titan Acquisition Sub,
Inc., a Delaware corporation to be reincorporated in Georgia prior to closing
and a wholly-owned subsidiary of Verso, in which each outstanding share of our
common stock will be converted into the right to receive an aggregate number of
Verso shares valued at $30 million, subject to reduction on a dollar-for-dollar
basis if our available cash at closing after restructuring charges and other
adjustments falls below $20 million. The number of Verso shares to be issued
will be based on the average closing price of Verso shares from April 20 through
May 17, 2001, but cannot be less than $.85 per share or exceed $1.15 per share.

         The merger with Verso is intended to constitute a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended, and is to be
accounted for as a purchase transaction. Consummation of the merger is subject
to various conditions, including, among other things, receipt of the necessary
approvals of our shareholders and the shareholders of Verso, regulatory
approvals, and customary closing conditions.

         In connection with the proposed merger, a joint proxy statement and
Registration Statement on Form S-4 will be filed with the SEC. We will jointly
mail with Verso the Joint Proxy Statement/Prospectus to our shareholders and
shareholders of Verso containing additional information about the proposed
merger after approval from the SEC. The transaction is expected to close in the
third quarter of 2001, but this expectation is subject to many factors,
including whether the SEC reviews the Joint Proxy Statement/Prospectus. In the
event the transaction does not close, under certain circumstances a break-up fee
of $4 million plus expenses of up to $1 million would be payable.

         Telemate.Net also entered into an agreement to purchase up to 500,000
shares of Verso's non-voting Series B Preferred Stock for an aggregate purchase
price of $10.0 million to help finance an acquisition meeting certain specific
criteria. The preferred stock would accrue dividends at 10% per annum through
December 31, 2001, increasing to 15% after December 31, 2001 should such shares
remain outstanding after that time, and will have a liquidation preference and
certain conversion rights. The preferred stock will be redeemable at par value
by Verso on or before December 31, 2001, or with a 25% premium at the option of
Telemate.Net after December 31, 2001.

         On May 7, 2001, in connection with the proposed merger, we announced
our plan to reduce our workforce by approximately 90 employees, or approximately
60%, over the next several months to preserve cash, accelerate profitability,
and eliminate redundant positions in anticipation of the upcoming merger
transaction. We will provide employees affected by the reduction with severance
packages and outplacement counseling. Management anticipates a one-time
restructuring charge of between $2.5 million and $3.0 million in the second
quarter of 2001 in connection with the reduction in force.


                                  Form 10-Q/A
                                  Page 5 of 10
<PAGE>   6


RESULTS OF OPERATIONS

         The following tables set forth our Internet/integrated and call
accounting revenue, both in absolute dollars and as a percentage of total
revenue:


                              REVENUE INFORMATION
                          (Unaudited and in thousands)


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                                                                                             THREE MONTHS ENDED
                                                                                                  MARCH 31,
                                                                                          ---------------------------
                                                                                            2001               2000
                                                                                          --------           --------

<S>                                                                                       <C>                <C>
REVENUE:
            INTERNET/INTEGRATED:
                 Product revenue ...............................................          $    216           $    719
                 Services revenue ..............................................               375                744
                                                                                          --------           --------
                TOTAL INTERNET/INTEGRATED REVENUE ..............................               591              1,463
            CALL ACCOUNTING:
                 Product revenue ...............................................               392                387
                 Services revenue ..............................................             1,176              1,268
                                                                                          --------           --------
                TOTAL CALL ACCOUNTING REVENUE ..................................             1,568              1,655
            TOTAL:
                 Product revenue ...............................................               608              1,106
                 Services revenue ..............................................             1,551              2,012
                                                                                          --------           --------
                        TOTAL REVENUE ..........................................          $  2,159           $  3,118
                                                                                          ========           ========

PERCENTAGE OF TOTAL REVENUE:
            INTERNET/INTEGRATED:
                 Product revenue ...............................................              10.0%              23.1%
                 Services revenue ..............................................              17.3               23.9
                                                                                          --------           --------
                TOTAL INTERNET/INTEGRATED REVENUE...............................              27.3               47.0
            CALL ACCOUNTING:
                 Product revenue ...............................................              18.2               12.4
                 Services revenue ..............................................              54.5               40.6
                                                                                          --------           --------
                TOTAL CALL ACCOUNTING REVENUE ..................................              72.7               53.0
            TOTAL:
                 Product revenue ...............................................              28.2               35.5
                 Services revenue ..............................................              71.8               64.5
                                                                                          --------           --------
                        TOTAL REVENUE ..........................................             100.0%             100.0%
                                                                                          --------           --------
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Three Months Ended March 31, 2001 and 2000

         Revenue. Total revenue was $2.2 million for the three months ended
March 31, 2001, down 30.8% from $3.1 million for the first quarter of 2000.
Total product revenue was $608,000, or 28.2% of total revenue, in the three
months ended March 31, 2001, representing a 45.0% decrease from $1.1 million,
or 35.5% of total revenue, for the same period in 2000. Revenue from the resale
of complementary hardware included in product revenue was


                                  Form 10-Q/A
                                  Page 6 of 10
<PAGE>   7


$102,000, representing 4.7% of total revenue for the three months ended March
31, 2001, a decrease from $446,000, or 14.3% of total revenue for the same
period in 2000. Total service revenue was $1.6 million, or 71.8% of total
revenue, in the three months ended March 31, 2001, representing a 22.9% decrease
from $2.0 million, or 64.5% of total revenue, for the same period in 2000.
During the first quarter of 2001, a sales agreement with a third-party
contractor to provide software, hardware, and installation services for a single
customer at 51 different sites represented approximately 4.7% of total revenue,
compared to approximately 19.7% in the same quarter of 2000. We do not believe
this agreement will generate significant revenue in the future.

         Internet/Integrated Revenue. Total Internet/integrated revenue was
$591,000, or 27.3% of total revenue, in the three months ended March 31, 2001, a
59.6% decrease from $1.5 million, or 47.0% of total revenue, for the same period
in 2000. Internet/integrated product revenue was $216,000, or 10.0% of total
revenue, in the three months ended March 31, 2001, representing a 69.9% decrease
from $719,000 or 23.1% of total revenue, for the same period in 2000.
Internet/integrated service revenue was $375,000, or 17.3% of total revenue, in
the three months ended March 31, 2001, representing a 49.6% decrease from
$744,000, or 23.9% of total revenue, for the same period in 2000. The decrease
in Internet/integrated product and service revenue resulted in part from a
decrease in the sale of software, hardware, and the completion of professional
services in connection with the major customer referred to under Revenue above.
In addition, total Internet/integrated revenue was impacted by the shift in
focus from the sale of an integrated solution to distinct Internet and call
accounting applications.

         Call Accounting Revenue. Total call accounting revenue was $1.6
million, or 72.7% of total revenue, for the three months ended March 31, 2001, a
5.3% decrease from $1.7 million, or 53.0% of total revenue, for the same period
in 2000. Call accounting product revenue was $392,000, or 18.2% of total
revenue, for the three months ended March 31, 2001, representing a 1.3% increase
from $387,000, or 12.4% of total revenue, for the same period in 2000. Call
accounting service revenue was $1.2 million, or 54.5% of total revenue, in the
three months ended March 31, 2001, representing a 7.3% decrease from $1.3
million, or 40.6% of total revenue, for the same period in 2000. Although Call
Accounting product revenue was in line with last year, we saw a reduction in
sales of low margin hardware in the first quarter of 2001 and a corresponding
increase in software sales as a result of management's efforts to emphasize
profit contribution in this division, more focused sales efforts and improved
sales productivity. The decrease in Call Accounting service revenue was due in
part to a delay in the support renewal process during a new invoicing system
implementation which has now been completed.

         Cost of Product Revenue. Cost of product revenue was $224,000, or 10.4%
of total revenue, in the three months ended March 31, 2001, a 55.1% decrease
from $500,000, or 16.0% of total revenue, for the same period in 2000. This
decrease in product costs was primarily attributable to a reduction in lower
margin hardware sales as well as a reduction in direct product costs as a result
of reduced product revenue. Management believes the hardware component of
revenue will remain at the more traditional levels of prior years for the
remainder of the year. The decrease in the percentage of total revenue reflects
a change in revenue mix with service revenues having produced a higher
percentage of total revenue. In addition, the reductions in the aforementioned
hardware and royalty costs contributed to the decrease in the percentage of
total revenue.

         Cost of Service Revenue. Cost of service revenue was $631,000, or 29.2%
of total revenue, for the three months ended March 31, 2001, representing a
29.7% decrease from $897,000, or 28.8% of total revenue, for the same period in
2000. The decline in service costs resulted from decreased service personnel
costs after our reduction in force in October 2000. The increase in the
percentage of total revenue reflects a change in revenue mix with service
revenues having produced a higher percentage of total revenue. The reduction in
workforce during the second quarter 2001 will result in a further decline in
cost of service revenue over the remainder of the year.

         Research and Development Expenses. Research and development expenses
were $1.1 million, or 51.8% of total revenue, for the three months ended March
31, 2001, representing a 24.6% increase from $898,000, or 28.8% of total
revenue, for the same period in 2000. The increase in total research and
development expenses reflects


                                  Form 10-Q/A
                                  Page 7 of 10
<PAGE>   8


increased personnel expenses to accelerate new product development and existing
product enhancements. Due to our reduction in work force, we expect research and
development expenses to show a declining trend during the second quarter and to
remain flat for the remainder of the year.

         Sales and Marketing Expenses. Sales and marketing expenses were $2.1
million, or 97.4% of total revenue, for the three months ended March 31, 2001,
representing a 38.4% decrease from $3.4 million, or 109.4% of total revenue, for
the same period in 2000. The decrease in both absolute dollars and as a
percentage of total revenue were due to several factors, primarily the reduction
of sales and marketing personnel and more targeted, revenue-driving marketing
programs. The effects of our second quarter reduction in force will be seen in a
reduction in sales and marketing expenses for the remainder of the year.

         General and Administrative Expenses. General and administrative
expenses were $1.4 million, or 64.2% of total revenue, in the three months
ended March 31, 2001, representing a 29.9% increase from $1.1 million, or 34.2%
of total revenue, for the same period in 2000. This increase was primarily due
to personnel costs, insurance, and professional service fees largely related to
the requirements of being a public company. We expect general and
administrative costs to remain flat for the next several months.

         Other Interest Income. Other interest income was $356,000, or 16.5% of
total revenue, for the three months ended March 31, 2001, compared to $518,000,
or 16.6% of total revenue, for the same quarter of 2000. Proceeds from
investment of the funds received in the initial public offering account for the
interest income.

LIQUIDITY AND CAPITAL RESOURCES

         Historically, we have funded our business from cash generated from
operations and the issuance of long-term debt. However, in October 1999, we
completed our initial public offering that provided us approximately $42.8
million in net cash proceeds. We had cash and cash equivalents of $25.6 million
at March 31, 2001 and $38.5 million at March 31, 2000.

         Cash used in operating activities during the three months ended March
31, 2001 was $2.5 million, a 32.1% decrease from $3.7 million for the same
period in 2000. This change reflects the net impact of decreases in our net
loss, and changes in accounts receivable, accounts payable and deferred revenue.
Our investing activities primarily include expenditures for fixed assets to
support our operations. Net cash used in investing activities decreased to
$239,000 in the first three months of 2001, compared to $878,000 for the same
period in 2000. Net cash provided by financing activities was $31,000 for the
three-month period ended March 31, 2001, compared to $245,000 for the period
ended March 31, 2000. This change was due primarily to a decrease in the
exercise of stock options by our employees.

         Because we have not generated significant revenue from sales outside
the United States, we have not sustained material foreign currency exchange
losses and presently do not attempt to hedge our exposure to fluctuations in
foreign currency exchange rates. Should our revenue from international sales
increase and should such sales be denominated in foreign currencies, we intend
to adopt a hedging strategy against foreign currency fluctuations.

         We anticipate the second quarter 2001 reduction in work force to result
in a restructuring charge of between $2.5 million and $3.0 million. In


                                  Form 10-Q/A
                                  Page 8 of 10
<PAGE>   9

the event the pending merger transaction does not close, we remain confident
that our existing liquidity and capital resources, including the proceeds
resulting from the sale of our common stock in our initial public offering, will
be sufficient to satisfy our cash requirements for at least the next 12 months.
Beyond the next 12 months, we expect to remain cash flow positive from
operations and to fund any ongoing investments in capital equipment from cash
flow from operations and the remaining proceeds from the IPO. However, to the
extent that income from operations is insufficient to implement our business
strategies, or if we identify additional strategic investments in our business,
technology or products, we may be required to raise additional funds through
equity or debt financing. If adequate funds are not available on acceptable
terms or at all, our ability to implement our business strategies or take
advantage of unanticipated opportunities or otherwise respond to competitive
pressures would be limited. There can be no assurance that we will be able to
raise these additional funds on terms acceptable to us, or at all.


                                  Form 10-Q/A
                                  Page 9 of 10

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                                   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.


                                TELEMATE.NET SOFTWARE, INC.

Date:    October 12, 2001       /s/ Janet Van Pelt
                                -----------------------------------------------
                                Janet Van Pelt
                                Senior Vice President - Finance and Operations,
                                Chief Financial Officer, and Treasurer
                                (Principal Financial and Accounting Officer)


                                  Form 10-Q/A
                                 Page 10 of 10