Delaware (State or other jurisdiction of incorporation or organization)

36-4088644 (I.R.S. Employer Identification Number)

				Page No.
PART I.    FINANCIAL INFORMATION
Item 1.		Financial Statements
		Condensed Consolidated Balance Sheets at June 30, 2002 (unaudited) and December 31, 2001		1
		Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2002 and June 30, 2001 (unaudited)		2
		Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 (unaudited)		3
		Notes to Condensed Consolidated Financial Statements (unaudited)		4
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		7
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		13
PART II.    OTHER INFORMATION
Item 1.		Legal Proceedings		15
Item 2.		Changes in Securities and Use of Proceeds		15
Item 3.		Defaults Upon Senior Securities		15
Item 4.		Submission of Matters to a Vote of Security Holders		15
Item 5.		Other Information		16
Item 6.		Exhibits and Reports on Form 8-K		16
SIGNATURES				17

		June 30, 2002				December 31, 2001
		(unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	27,253			$	40,677
Short-term investments			10,173				—
Trade accounts receivable, net			4,505				6,670
Income taxes receivable			—				158
Other current assets			1,446				2,534
Total current assets			43,377				50,039
Property and equipment, net			3,059				3,934
Other assets			583				721
Total assets		$	47,019			$	54,694
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	795			$	1,096
Billings in excess of revenue earned on contracts in progress			336				443
Deferred revenue			3,975				2,265
Accrued compensation			962				1,686
Accrued expenses and other current liabilities			1,488				2,274
Accrued restructuring			933				950
Current portion of capital lease obligations			822				815
Total current liabilities			9,311				9,529
Capital lease obligations, less current portion			305				727
Total liabilities			9,616				10,256
Shareholders’ equity:
Preferred stock			—				—
Common stock			40				40
Additional paid-in capital			84,997				85,081
Accumulated other comprehensive income—currency translation adjustment			170				125
Deferred compensation			(2,283	)			(3,334	)
Treasury stock			(111	)			—
Accumulated deficit			(45,410	)			(37,474	)
Total shareholders’ equity			37,403				44,438
Total liabilities and shareholders’ equity		$	47,019			$	54,694

		Three months ended June 30,								Six months ended June 30,
		2002				2001				2002				2001
Revenues
Product license		$	753			$	7,392			$	1,316			$	13,798
Service			4,669				6,620				9,443				11,883
Total revenues			5,422				14,012				10,759				25,681
Cost of revenues
Product license			157				481				332				652
Service (exclusive of $17 and $15 for the three months ended June 30, 2002 and 2001, respectively, and $29 and $28 for the six months ended June 30, 2002 and 2001, respectively, reported below as amortization of stock-based compensation)			2,533				3,259				4,583				6,256
Total cost of revenues			2,690				3,740				4,915				6,908
Gross profit			2,732				10,272				5,844				18,773
Operating expenses:
Sales and marketing (exclusive of $360 and $442 for the three months ended June 30, 2002 and 2001, respectively, and $732 and $999 for the six months ended June 30, 2002 and 2001, respectively, reported below as amortization of stock-based compensation)			2,609				7,001				6,596				15,142
Research and development (exclusive of $2 and $4 for the three months ended June 30, 2002 and 2001, respectively, and $5 and $10 for the six months ended June 30, 2002 and 2001, respectively, reported below as amortization of stock-based compensation)			1,320				2,676				2,886				5,283
General and administrative (exclusive of $21 and $87 for the three months ended June 30, 2002 and 2001, respectively, and $45 and $126 for the six months ended June 30, 2002 and 2001, respectively, reported below as amortization of stock-based compensation)			985				2,563				2,677				5,391
Amortization of stock-based compensation			400				548				811				1,163
Restructuring and other charges			1,213				—				1,213				—
Total operating expenses			6,527				12,788				14,183				26,979
Operating loss			(3,795	)			(2,516	)			(8,339	)			(8,206	)
Interest income			245				476				435				1,255
Interest expense			(13	)			(33	)			(32	)			(51	)
Other expense			—				—				—				(100	)
Other income, net			232				443				403				1,103
Loss before income taxes			(3,563	)			(2,073	)			(7,936	)			(7,103	)
Income tax benefit			—				(701	)			—				(2,541	)
Net loss		$	(3,563	)		$	(1,372	)		$	(7,936	)		$	(4,562	)
Basic and diluted loss per share		$	(0.09	)		$	(0.04	)		$	(0.20	)		$	(0.12	)
Weighted average shares outstanding—basic and diluted			40,243,053				38,545,031				40,259,062				38,451,574
Comprehensive loss:
Net loss		$	(3,563	)		$	(1,372	)		$	(7,936	)		$	(4,562	)
Foreign currency translation adjustment			45				71				46				(9	)
Comprehensive loss		$	(3,518	)		$	(1,301	)		$	(7,890	)		$	(4,571	)