================================================================================
                                  UNITED STATES
                       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          June 30, 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: 0-26330

                            ASTEA INTERNATIONAL INC.
             (Exact name of registrant as specified in its charter)

                       Delaware                                23-2119058
        ---------------------------------------           --------------------
         (State or other jurisdiction of                  (I.R.S. Employer
        incorporation or organization)                    Identification No.)

  455 Business Center Drive, Horsham,  PA                   19044
  ------------------------------------------            ------------
     (Address of principal executive offices)             (Zip Code)

       Registrant's telephone number, including area code: (215) 682-2500
                                                           ---------------

                                      N/A
             (Former name, former address and former fiscal year, if
                           changed since last report)


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


As of August 12, 2002,  14,604,030 shares of the registrant's  Common Stock, par
value $.01 per share, were outstanding.







                            ASTEA INTERNATIONAL INC.

                                    FORM 10-Q
                                QUARTERLY REPORT
                                      INDEX
                                                                        Page No.

Facing Sheet                                                               1

Index                                                                      2

PART I - FINANCIAL INFORMATION
------------------------------

Item 1.     Consolidated Financial Statements (Unaudited)

            Consolidated Balance Sheets                                     3

            Consolidated Statements of Operations                           4

            Consolidated Statements of Cash Flows                           5

            Notes to Consolidated Financial Statements                      6

Item 2.     Management's Discussion and Analysis of Financial
            Condition and Results of Operations                             8

Item 3.     Quantitative and Qualitative Disclosure About Market Risk      13

PART II - OTHER INFORMATION
----------------------------

Item 1.     Legal Proceedings                                              14

Item 2.     Changes in Securities and Use of Proceeds                      14

Item 3.     Defaults upon Senior Securities                                14

Item 4.     Submission of Matters to a Vote of Security Holders            14

Item 5.     Other Information                                              14

Item 6.     Exhibits and Reports on Form 8-K                               14

            Signatures                                                     15










                                       2



PART I - FINANCIAL INFORMATION


Item 1.  CONSOLIDATED FINANCIAL STATEMENTS




                                       ASTEA INTERNATIONAL INC.
                                      CONSOLIDATED BALANCE SHEETS

                                                                      June 30,           December 31,
                                                                        2002                 2001
                                                                     (Unaudited)
                                                                    ------------         ------------
                                ASSETS
                                                                                   
Current assets:
  Cash and cash equivalents                                         $  4,547,000         $  4,071,000
  Investments available for sale                                       1,000,000            2,987,000
  Receivables, net of reserves of $884,000 and $955,000                6,755,000            7,343,000
  Prepaid expenses and other                                             779,000              822,000
                                                                    ------------         ------------
          Total current assets                                        13,081,000           15,223,000

Property and equipment, net                                              529,000              617,000
Capitalized software, net                                              1,302,000            1,412,000
Other assets                                                             597,000              763,000
                                                                    ------------         ------------
          Total assets                                              $ 15,509,000         $ 18,015,000
                                                                    ============         ============

          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                 $       --           $     34,000
  Accounts payable and accrued expenses                                3,167,000            3,627,000
  Deferred revenues                                                    3,949,000            4,249,000
                                                                    ------------         ------------
          Total current liabilities                                    7,116,000            7,910,000

Stockholders' equity:
   Preferred stock, $.01 par value, 5,000,000 shares
      authorized, none issued                                               --                   --
   Common stock, $.01 par value, 25,000,000 shares
      authorized, 14,825,000 outstanding                                 148,000              148,000
   Additional paid-in capital                                         22,674,000           22,674,000
   Cumulative translation adjustment                                  (1,115,000)          (1,256,000)
   Accumulated deficit                                               (13,097,000)         (11,239,000)
   Less:  treasury stock at cost, 221,000 and 227,000 shares            (217,000)            (222,000)
                                                                    ------------         ------------
        Total stockholders' equity                                     8,393,000           10,105,000
                                                                    ------------         ------------
        Total liabilities and stockholders' equity                  $ 15,509,000         $ 18,015,000
                                                                    ============         ============

                   See accompanying notes to the consolidated financial statements.



                                                  3



                                       ASTEA INTERNATIONAL INC.
                                 CONSOLIDATED STATEMENTS OF OPERATIONS





                                                        Three Months                              Six Months
                                                       Ended June 30,                           Ended June 30,
                                             ------------------------------------ --- -----------------------------------
                                                  2002                2001                2002                 2001
                                             ---------------    -----------------     --------------      ---------------
                                                         (Unaudited)                             (Unaudited)
Revenues:
                                                                                               
     Software license fees                  $    710,000         $  1,487,000         $  2,177,000         $  3,768,000
     Services and maintenance                  2,592,000            2,899,000            5,079,000            5,617,000
                                            ------------         ------------         ------------         ------------

          Total revenues                       3,302,000            4,386,000            7,256,000            9,385,000
                                            ------------         ------------         ------------         ------------

Costs and expenses:
     Cost of software license fees               320,000              373,000              596,000              602,000
     Cost of services and maintenance          1,687,000            1,655,000            3,319,000            3,501,000
     Product development                         502,000              669,000              942,000            1,252,000
     Sales and marketing                       1,572,000            1,383,000            2,831,000            2,822,000
     General and administrative                  659,000              584,000            1,288,000            1,424,000
                                            ------------         ------------         ------------         ------------

          Total costs and expenses             4,740,000            4,664,000            8,976,000            9,601,000
                                            ------------         ------------         ------------         ------------

Loss from operations
     before interest and taxes                (1,438,000)            (278,000)          (1,720,000)            (216,000)

Net interest income                               26,000               82,000               64,000              189,000
                                            ------------         ------------         ------------         ------------
Loss before income tax                        (1,412,000)            (196,000)          (1,656,000)             (27,000)
Income tax expense                              (150,000)                  --             (200,000)                  --
                                            ------------         ------------         ------------         ------------

Net loss                                    $ (1,562,000)        $   (196,000)        $ (1,856,000)        $    (27,000)
                                            ============         ============         ============         ============

Basic and diluted net loss per share        $      (0.11)        $      (0.01)        $      (0.13)        $          -
                                            ============         ============         ============         ============

Shares outstanding used in
     computing basic and diluted net
     loss per share                           14,602,000           14,661,000           14,602,000           14,657,000
                                            ============         ============         ============         ============



                            See accompanying notes to the consolidated financial statements.








                                                  4



                                            ASTEA INTERNATIONAL INC.
                                      CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                     For the Six Months
                                                                                       Ended June 30,
                                                                              ---------------------------------
                                                                                   2002             2001
                                                                                        (Unaudited)
                                                                              ---------------------------------
                                                                                            
Cash flows from operating activities:
   Net loss                                                                   $(1,856,000)        $   (27,000)
   Adjustments to reconcile net loss to net cash (used in) provided by
        operating activities:
        Depreciation and amortization                                             621,000             738,000
        Changes in operating assets and liabilities:
            Receivables                                                           736,000           1,666,000
            Prepaid expenses and other                                             37,000             225,000
            Other assets                                                          165,000                  --
            Accounts payable and accrued expenses                                (427,000)           (983,000)
            Deferred revenues                                                    (315,000)         (1,411,000)
                                                                              -----------         -----------
   Net cash (used in) provided by operating activities                         (1,039,000)            208,000
                                                                              -----------         -----------

Cash flows from investing activities:
            Sales (purchases) of short-term investments                         1,988,000            (510,000)
            Purchases of property and equipment                                  (113,000)           (114,000)
            Capitalized software development costs                               (308,000)           (300,000)
                                                                              -----------         -----------
   Net cash provided by (used in) investing activities                          1,567,000            (924,000)
                                                                              -----------         -----------

Cash flows from financing activities:
            Proceeds from exercise of stock options and employee
                stock purchase plan                                                 3,000               3,000
            Net repayments of long-term debt                                      (34,000)            (68,000)
            Purchases of treasury stock                                                --            (210,000)
                                                                              -----------         -----------
   Net cash used in financing activities                                          (31,000)           (275,000)
                                                                              -----------         -----------
   Effect of exchange rate changes on cash and cash equivalents                   (21,000)             40,000
                                                                              -----------         -----------

   Net increase (decrease) in cash and cash equivalents                           476,000            (951,000)
   Cash and cash equivalents balance, beginning of period                       4,071,000           5,208,000
                                                                              -----------         -----------
   Cash and cash equivalents balance, end of period                           $ 4,547,000         $ 4,257,000
                                                                              ===========         ===========


                       See accompanying notes to the consolidated financial statements.



                                                       5




Item 1. CONSOLIDATED FINANCIAL STATEMENTS (Continued)

                            ASTEA INTERNATIONAL INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1. BASIS OF PRESENTATION
   ----------------------

The consolidated financial statements at June 30, 2002 and for the three and six
month  periods  ended June 30,  2002 and 2001 of Astea  International  Inc.  and
subsidiaries   (the   "Company")  are  unaudited  and  reflect  all  adjustments
(consisting only of normal recurring  adjustments)  which are, in the opinion of
management,  necessary for a fair  presentation  of the  financial  position and
operating results for the interim periods. The consolidated financial statements
should be read in conjunction  with the  consolidated  financial  statements and
notes thereto,  together with Management's  Discussion and Analysis of Financial
Condition  and Results of  Operations,  contained in the  Company's  2001 Annual
Report on Form 10-K which are hereby incorporated by reference in this quarterly
report on Form  10-Q.  Results of  operations  and cash flows for the six months
ended June 30, 2002 are not  necessarily  indicative  of the results that may be
expected for the full year.

2. RESTRUCTURING CHARGES
   ---------------------

During the fourth quarter of 2001, the Company  recorded a restructuring  charge
of  $409,000 in  connection  with  severance  costs to  downsize  the  Company's
employment rolls ($211,000) and eliminate excess office space ($198,000). During
the first six months of 2002,  the Company made payments of $229,000  related to
the 2001 Restructuring  Plan,  including  severance  obligations of $139,000 and
lease  obligations  of $90,000.  During the second  quarter of 2002, the Company
evaluated  its  restructuring  accrual  based  on the  then  current  facts  and
determined  that  $55,000  related  to  severance  costs was not  needed for the
purposes of the 2001 plan and, accordingly, the accrual was reversed. As of June
30, 2002, $125,000 of restructuring charges remains outstanding.

3. INCOME TAX EXPENSE
   ------------------

The  Company  accounts  for  income  taxes  in  accordance  with  SFAS  No.  109
"Accounting  for Income  Taxes"  which  requires  that  deferred  tax assets and
liabilities  be  recognized  using enacted tax rates for the effect of temporary
differences  between the book and tax basis of recorded assets and  liabilities.
SFAS No. 109 also  requires  that  deferred tax assets be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred
tax asset will not be realized.

The realizability of the deferred tax assets is evaluated quarterly by assessing
the  valuation  allowance  and by  adjusting  the  amount of the  allowance,  if
necessary.  The factors used to assess the  likelihood  of  realization  are the
forecast of future  taxable  income and available tax planning  strategies  that
could be  implemented  to realize  the net  deferred  tax asset.  During the six
months  ended June 30, 2002,  the Company  recorded a tax expense of $200,000 to
increase its valuation  allowance related to its net deferred tax asset based on
an  assessment  of what  portion  of the  asset  is more  likely  than not to be
realized,  in  accordance  with FSAS No.  109.  The  Company  will  review  this
provision periodically in the future as circumstances change.






                                       6







4. STOCKHOLDERS' EQUITY/COMPREHENSIVE LOSS
   ---------------------------------------

The reconciliation of stockholders'  equity and comprehensive loss from December
31, 2001 to June 30, 2002 is summarized as follows:



                                                                Cumulative
                                                                 Currency
                                 Common         Additional     Translation     Accumulated       Treasury      Comprehensive
                                   Stock         Paid-In        Adjustment       Deficit           Stock       Income (Loss)
                                   -----         --------       ----------       -------           -----       -------------
                                                 Capital
                                                                                          
Balance at December 31, 2001       $148,000      $22,674,000   $(1,256,000)    $(11,239,000)      $(222,000)   $            -
Issuance of common stock
  Under employee stock
  Purchase plan                           -                              -           (2,000)          5,000                 -
Cumulative translation
   Adjustment                             -                -       141,000                -               -           141,000
Net loss for the period                   -                -             -       (1,856,000)              -        (1,856,000)
                                 ------------ ---------------- -------------- ---------------- --------------- ----------------

Balance at June 30, 2002           $148,000      $22,674,000   $(1,115,000)    $(13,097,000)      $(217,000)   $   (1,715,000)
                                 ============ ================ ============== ================ =============== ================



5. MAJOR CUSTOMERS
   ---------------

In the second  quarter of 2002,  the Company had one customer that accounted for
11% of its total  revenues.  In the second  quarter of 2001, the Company did not
have any customers that accounted for 10% or more of its total revenues. For the
first six months of 2002 and 2001,  there were no customers  that  accounted for
10% of total revenues.

















                                       7



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

Overview

This document contains various  forward-looking  statements and information that
are  based  on  management's   beliefs,   assumptions  made  by  management  and
information  currently  available to management.  Such statements are subject to
various  risks and  uncertainties,  which  could  cause  actual  results to vary
materially from those contained in such forward-looking  statements.  Should one
or more of these  risks  or  uncertainties  materialize,  or  should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
anticipated,  estimated,  expected or  projected.  Certain of these,  as well as
other risks and  uncertainties,  are  described in more detail herein and in the
Company's  Annual  Report on Form 10-K for the fiscal  year ended  December  31,
2001.

The Company  develops,  markets and supports  Customer  Relationship  Management
(CRM) software  solutions for companies that sell and service capital equipment.
Clients include Fortune 500 to mid-size  companies that automate equipment sales
and service  business  processes to increase  competitive  advantages,  top-line
revenue  growth,  profitability  and customer  loyalty.  The Company  supports a
global  client base with a worldwide  sales and service  network  that  conducts
business  through  Company  facilities  in the United  States,  United  Kingdom,
Australia, the Netherlands, and Israel.

The  Company  has been in the  process  of making  the  transition  from a field
service software provider to a provider of comprehensive suite of CRM solutions.
In addition  to field  service,  the CRM suite also  streamlines  and  automates
processes  for managing  sales and  marketing,  multi-channel  customer  contact
centers and professional  services.  The Company continues to focus on companies
in industries that sell and service equipment.

The Company continues to make a significant investment in product development in
support of the transition.  As economic conditions throughout the world continue
to  deteriorate,   the  Company  diligently  monitors  costs  and  manages  them
aggressively. The Company believes that its investment in development along with
its continued  commitment to marketing its CRM suite will favorably position the
Company when economic conditions improve in the future.

Critical Accounting Policies

Financial  Reporting  Release  No.  60,  which  was  recently  released  by  the
Securities  and  Exchange  Commission,  requires  all  companies  to  include  a
discussion of critical accounting policies or methods used in the preparation of
its  financial  statements.   The  significant   accounting  policies  of  Astea
International  Inc.  are  described  in Note 2 of the Notes to the  Consolidated
Financial  Statement of Operations  Procedures in the Company's Annual Report on
Form 10-K. The significant accounting policies that the Company believes are the
most  critical to aid in fully  understanding  its  reported  financial  results
include the following:

Revenues

Revenue is recognized in accordance with Statement of Position (SOP) 97-2, which
provides  guidelines  on  the  recognition  of  software  license  fee  revenue.
Principally,   revenue  may  be  recognized  when  persuasive   evidence  of  an
arrangement  exists,  delivery  has  occurred,  the  license  fee is  fixed  and
determinable and the collection of the fee is probable.  The Company allocates a
portion of its software revenue to post-contract  support activities or to other
services or products  provided to the customer free of charge or at non-standard
discounts when provided in conjunction with the licensing  arrangement.  Amounts
allocated are based upon standard prices charged for those services or products.
Software  license  fees for  resellers or other  members of the  indirect  sales
channel are based on a fixed percentage of the Company's  standard  prices.  The
Company  recognizes  software  license revenue for such contracts based upon the
terms and conditions provided by the reseller to its customer.

Revenue from  post-contract  support is recognized  ratably over the term of the
contract on a straight-line  basis.  Consulting and training  service revenue is
generally  recognized at the time the service is  performed.  Fees from licenses
sold together with consulting  services are generally  recognized upon shipment,
with the consulting fee recognized as the services are performed,  provided that
the contract has been executed, delivery of the software has occurred, fees


                                       8


are fixed and  determinable  and collection is probable.  In instances where the
aforementioned  criteria have not been met, both the license and the  consulting
fees are  recognized  under the  percentage  of  completion  method of  contract
accounting.

In limited instances, the Company will enter into contracts for which revenue is
recognized  under contract  accounting.  The  accounting  for such  arrangements
requires  judgement,  which  impacts  the  timing  of  revenue  recognition  and
provision for estimated losses, if applicable.

Capitalized Software and Research Development Costs

Our  policy  on  capitalized   software  costs  determines  the  timing  of  our
recognition of certain  development  costs. In addition,  this policy determines
whether  the cost is  classified  as  development  expense  or cost of  software
license  fees.   Management  is  required  to  use  professional   judgement  in
determining whether development costs meet the criteria for immediate expense or
capitalization.

Recent Accounting Standards

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB statements No.
4, 44 and 64,  Amendment of FASB  Statement No. 13, and  Technical  Corrections"
("SFAS 145").  The  rescission of FASB No. 4,  "Reporting  Gains and Losses from
Extinguishment of Debt" applies to us. FASB No. 4 required that gains and losses
from extinguishments of debt were included in the determination of net income be
aggregated and, if material, classified as an extraordinary item, net of related
income tax effect.  SFAS 145 is effective for our fiscal year beginning  January
1, 2003.  Effective January 1, 2003,  pursuant to SFAS 145, the treatment of the
early  extinguishments  of debt  will be  included  in "other  expenses"  in the
financial  statements.  Currently,  the  Company is  assessing,  but has not yet
determined,  how the adoption of SFAS 145 will impact its financial position and
results of operations.

Results of Operations

Comparison of Three Months Ended June 30, 2002 and 2001

Revenues

Total revenues decreased $1,084,000,  or 25%, to $3,302,000 for the three months
ended June 30, 2002 from  $4,386,000  for the three  months ended June 30, 2001.
Software license fee revenues decreased  $777,000,  or 52%, from the same period
last year.  Services  and  maintenance  fees for the three months ended June 30,
2002 amounted to $2,592,000, an 11% decrease from the same quarter in 2001.

The Company's international operations contributed $1,035,000 of revenues in the
second quarter of 2002, which was comparable to the $1,033,000 of total revenues
generated  during  the second  quarter  of 2001.  The  Company's  revenues  from
international  operations  amounted to 31.3% of the total revenue for the second
quarter in 2002 as compared to 23.6% of total  revenues  for the same quarter in
2001.

Software license fee revenues decreased 52% to $710,000 in the second quarter of
2002  from   $1,487,000  in  the  second   quarter  of  2001.  The  decrease  is
substantially  attributable to a decline in AllianceEnterprise license revenues,
which decreased  $656,000 or 48%, to $710,000 in the second quarter of 2002 from
$1,366,000 in the second  quarter of 2001.  There were no sales of DISPATCH-1 in
the second  quarter of 2002  compared to $121,000 of license fee revenues in the
second quarter of 2001.  AllianceEnterprise  license revenue  represents 100% of
total  software  license fee revenues in the second quarter of 2002, up from 92%
in the second quarter of 2001.

Services and  maintenance  revenues  decreased  11% to  $2,592,000 in the second
quarter of 2002 from  $2,899,000  in the second  quarter of 2001.  The  decrease
relates to service and  maintenance  revenues from  DISPATCH-1,  which decreased
$474,000 to $941,000 from  $1,415,000 in the second  quarter of 2001.  Partially
offsetting this decline was an 11% increase in  AllianceEnterprise  services and
maintenance  from  $1,484,000 in the second quarter of 2001 to $1,651,000 in the
second quarter of 2002.



                                       9


Costs of Revenues

Cost of software license fees decreased 14% to $320,000 in the second quarter of
2002 from  $373,000  in the  second  quarter  of 2001.  Included  in the cost of
software  license fees is the fixed cost of capitalized  software  amortization.
Capitalized  software  amortization  was $200,000 in both the second  quarter of
2002 and 2001.  The  decrease in the cost of software  license  fees  represents
decreased third party software costs attributable to the mix of products sold in
conjunction  with the  Company's  products  in the second  quarter of 2002.  The
software  licenses gross margin percentage was 55% in the second quarter of 2002
compared to 75% in the second quarter of 2001. This decrease in gross margin was
primarily attributable to lower software license sales.

Cost of  services  and  maintenance  increased  2% to  $1,687,000  in the second
quarter of 2002 from  $1,655,000 in the second quarter of 2001. The services and
maintenance  gross  margin  percentage  was 35% in the  second  quarter  of 2002
compared to 43% in the second  quarter of 2001.  The  decrease  in services  and
maintenance  gross  margin was  primarily  due to lower  utilization  of service
professionals.

Product Development

Product  development  expense decreased 25% to $502,000 in the second quarter of
2002 from $669,000 in the second  quarter of 2001. The decrease is primarily due
to the strengthening of the U.S. dollar.  Product development as a percentage of
revenues,  however,  remained  unchanged at 15% in the second quarter of 2002 as
compared to the second quarter of 2001.

Sales and Marketing

Sales and marketing expense increased 14% to $1,572,000 in the second quarter of
2002 from $1,383,000 in the second quarter of 2001. This increase is principally
due to certain  hiring costs of sales and marketing  personnel  that occurred in
the  second  quarter  of 2002 as well as  increased  costs  associated  with the
development of an aggressive  marketing campaign to introduce new products which
are expected to generate sales in future  periods.  As a percentage of revenues,
sales and  marketing  expenses  increased  to 48% in 2002 from 32% in the second
quarter of 2001.

General and Administrative

General and administrative  expenses increased 13% to $659,000 during the second
quarter of 2002 from $584,000 in the second  quarter of 2001. As a percentage of
revenue, general and administrative costs increased to 20% in the second quarter
of 2002 from 13% in the second quarter of 2001. The increase in expenses relates
primarily  to  the  weakening  of  the  U.S.   dollar   against   certain  major
international currencies during the second quarter of 2002.

Net Interest Income

Net interest income  decreased  $56,000 to $26,000 in the second quarter of 2002
from $82,000 in the second quarter of 2001.  The decrease of interest  income is
generally  attributable  to less cash on hand than in 2001 as well as an overall
reduction in interest rates paid on invested cash.

International Operations

Total revenue from the Company's  international  operations  remained relatively
unchanged during the second quarter of 2002 at $1,035,000 compared to $1,033,000
for the second quarter of 2001. International operations generated a net loss of
$454,000 for the second  quarter  ended June 30, 2002  compared to a net gain of
$147,000  in the same  quarter in 2001.  The  declining  results  are  primarily
attributable  to increased  costs relating to the hiring of personnel as well as
additional  costs on marketing  campaigns  expected to generate  sales in future
periods.


                                       10



Comparison of Six Months Ended June 30, 2002 and 2001

Revenues

Revenues  decreased  $2,129,000,  or 23%, to $7,256,000 for the six months ended
June 30, 2002 from  $9,385,000 for the six months ended June 30, 2001.  Software
license fee revenues  decreased  $1,591,000,  or 42%,  from the same period last
year.  Services  and  maintenance  fees for the six months  ended June 30,  2002
amounted to $5,079,000, a 10% decrease from the same six months in 2001.

The Company's international operations contributed $2,236,000 of revenues in the
first six months of 2002 compared to $2,831,000 in the first six months of 2001.
This  represents a 21% decrease  from the same period last year and 31% of total
revenues in the first six months of 2002.  The decline is due  primarily  to the
reduction in DISPATCH-1  sales which resulted from the planned  phase-out of the
Company's legacy product,  DISPATCH-1, as well as the general economic slow-down
that is occurring throughout the world.

Software  license fee  revenues  decreased  42% to  $2,177,000  in the first six
months  of  2002   from   $3,768,000   in  the   first   six   months  of  2001.
AllianceEnterprise  license revenues decreased $1,451,000, or 42%, to $1,999,000
in the first six months of 2002 from $3,450,000 in the first six months of 2001.
DISPATCH-1  license fee revenue  decreased  $140,000 or 44% from $318,000 in the
first six  months  of 2001 to  $178,000  in the first six  months of 2002 due to
decreasing  demand  for  this  product.  DISPATCH-1  accounted  for 8% of  total
software license fee revenues in both the first six months of 2002 and 2001. The
decline  in  DISPATCH-1  license  revenues  reflects  the  Company's  efforts to
transition to the next generation of software, AllianceEnterprise.

Services and maintenance  revenues  decreased 10% to $5,079,000 in the first six
months of 2002 from $5,617,000 in the six months of 2001. The decrease primarily
relates to service and  maintenance  revenues from  DISPATCH-1,  which decreased
$827,000 to $2,003,000 from $2,830,000 in the first six months of 2001. However,
this decrease was partially offset by an increase in AllianceEnterprise  service
and maintenance  revenue,  which increased by 10% to $3,076,000 during the first
six months of 2002 compared to $2,787,000 for the same period in 2001.

Costs of Revenues

Cost of software  license fees  decreased 1% to $596,000 in the first six months
of 2002 from  $602,000 in the first six months of 2001.  Included in the cost of
software  license fees is the fixed cost of capitalized  software  amortization.
Capitalized  software  amortization  was  $418,000 and $400,000 in the first six
months of 2002 and 2001,  respectively.  The  decrease  in the cost of  software
license fees represents decreased third party software costs attributable to the
mix of products sold in conjunction with the Company's products in the first six
months of 2002.  The software  licenses  gross margin  percentage was 73% in the
first six months of 2002  compared to 84% in the first six months of 2001.  This
decrease in gross margin was attributable to the decrease in license sales.

Cost of services and  maintenance  decreased 5% to  $3,319,000  in the first six
months of 2002 from $3,501,000 in the first six months of 2001. The services and
maintenance  gross margin  percentage was 35% and 38% in the first six months of
2002 and 2001,  respectively.  The decline in gross margin  resulted from higher
costs incurred on third party software.

Product Development

Product development expense decreased 25% to $942,000 in the first six months of
2002 from $1,252,000 in the first six months of 2001.  Product  development as a
percentage  of  revenues  was 13% in the first six months of both 2002 and 2001.
The  decline  in cost is the  result  of the  strengthening  of the U.S.  dollar
relative to the Israel  shekel,  which is the location for most of the Company's
product development.

Sales and Marketing

Sales and marketing  expense  increased  less than 1% to $2,831,000 in the first
six  months  of 2002 from  $2,822,000  in the  first  six  months of 2001.  As a
percentage of revenues,  sales and marketing  expenses increased to 39% from 30%
in the first six months of 2001 due to lower  sales  during the first six months
of 2002 resulting from the worldwide economic slowdown.


                                       11


General and Administrative

General and administrative  expense decreased 10% to $1,288,000 in the first six
months of 2002 from  $1,424,000  in the first six months of 2001.  The  decrease
primarily relates to the Company's ongoing cost containment efforts, principally
using less personnel and less office space.

Net Interest Income

Net  interest  income  decreased  $125,000 to $64,000 in the first six months of
2002 from  $189,000 in the first six months of 2001.  This decrease is primarily
attributable  to less invested cash during 2002 as well as an overall  reduction
in interest rates earned on marketable securities.

International Operations

Total revenue from the Company's international  operations declined by $595,000,
or 21%, to  $2,236,000  in first six months of 2002 from  $2,831,000 in the same
six months of 2001.  The decrease in revenue from  international  operations was
primarily  attributable  to a decrease  in total  license  revenue of  $621,000.
Partially  offsetting the license revenue decline was an increase in service and
maintenance revenue of $26,000.  International operations resulted in a $703,000
loss for the six months  ended June 30,  2002 as  compared to income of $252,000
for the six months ended June 30, 2001.

Liquidity and Capital Resources

Net cash used in operating  activities  was  $1,039,000 for the six months ended
June 30, 2002  compared to $208,000  provided by  operations  for the six months
ended June 30, 2001.  The  increased  use of cash  resulted  primarily  from the
decline in net earnings compared to the same period last year.

The Company  generated  $1,567,000 in investing  activities during the first six
months of 2002  compared  to using  $924,000  of cash in the first six months of
2001. The increase in cash generated for investing  activities resulted from the
sale  of  investments  available  for  sale  in  2002,  which  was  used to fund
operations.

The Company used $31,000 for financing activities during the first six months of
2002 compared to using  $275,000  during the six months ended June 30, 2001. The
decrease in cash used for  investing  activities is primarily due to the lack of
purchases of treasury  stock during the first six months of 2002 compared to the
same period in 2001.

At June 30, 2002, the Company had a working  capital ratio of 1.84:1,  with cash
and  investments  available for sale of $5,547,000.  The Company defines working
capital  as the ratio of  current  assets to current  liabilities.  The  Company
believes that it has adequate cash resources to make the  investments  necessary
to  maintain  or improve its  current  position  and to sustain  its  continuing
operations for the foreseeable  future. The Company does not anticipate that its
operations or financial condition will be affected materially by inflation.

Variability of Quarterly Results and Potential Risks Inherent in the Business

The Company's  operations are subject to a number of risks,  which are described
in more detail in the Company's  prior SEC filings.  Risks which are peculiar to
the Company on a quarterly  basis,  and which may vary from  quarter to quarter,
include but are not limited to the following:

o    The Company's  quarterly  operating results have in the past varied and may
     in the future vary  significantly  depending  on factors  such as the size,
     timing and recognition of revenue from  significant  orders,  the timing of
     new product  releases and product  enhancements,  and market  acceptance of
     these new releases and enhancements,  increases in operating expenses,  and
     seasonality of its business.

o    The Company's future success will depend in part on its ability to increase
     licenses  of  AllianceEnterprise  and other new product  offerings,  and to
     develop new products and product  enhancements  to complement  its existing
     field service offerings.




                                       12


o    The Customer  Relationship  Management  (CRM) software  market is intensely
     competitive.

o    International  sales  for the  Company's  products  and  services,  and the
     Company's  expenses  related to these sales,  continue to be a  substantial
     component of the Company's operations. International sales are subject to a
     variety of risks,  including  difficulties  in  establishing  and  managing
     international   operations  and  in   translating   products  into  foreign
     languages.

o    The market  price of the  common  stock  could be  subject  to  significant
     fluctuations in response to, and may be adversely  affected by,  variations
     in quarterly  operating  results,  developments  in the software  industry,
     adverse  earnings  or  other  financial   announcements  of  the  Company's
     customers and general stock market conditions, as well as other factors.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
-----------------------------------------------------------------

         Interest Rate Risk.  The Company's  exposure to market risk for changes
in interest rates relate primarily to the Company's  investment  portfolio.  The
Company does not have any derivative financial instruments in its portfolio. The
Company  places its  investments  in  instruments  that meet high credit quality
standards.  The Company is adverse to principal  loss and ensures the safety and
preservation  of its invested  funds by limiting  default risk,  market risk and
reinvestment risk. As of June 30, 2002, the Company's  investments  consisted of
U.S.  government  agencies securities and commercial paper. The Company does not
expect any material loss with respect to its investment portfolio.

         Foreign  Currency  Risk.  The  Company  does not use  foreign  currency
forward exchange contracts or purchased currency options to hedge local currency
cash flows or for trading purposes.  All sales  arrangements with  international
customers are denominated in foreign  currency.  The Company does not expect any
material loss with respect to foreign currency risk.













                                       13




PART II - OTHER INFORMATION
---------------------------

Item 1. Legal Proceedings
-------------------------

From time to time,  the  Company is involved  in  litigation  relating to claims
arising out of its  operations in the normal course of business.  The Company is
not involved in any legal  proceedings,  which would, in  management's  opinion,
have a  material  adverse  effect  on  the  Company's  business  or  results  of
operations.

Item 2. Changes in Securities and Use of Proceeds
-------------------------------------------------

On June 13, 2002, the Company filed a registration  statement on Form S-3, which
was declared effective on July 22,2002,  to register restricted shares of common
stock purchased by individuals  from Fallen Angel Equity Fund,  L.P.,  which was
deemed an affiliate of the Company.

Effective July 26, 2002, the Company  transferred  the trading of its securities
from the Nasdaq National Market to the Nasdaq SmallCap Market. The transfer will
not  affect the  Company's  trading  symbol  (ATEA) or how shares are bought and
sold.

Item 3. Defaults Upon Senior Securities
---------------------------------------

There have been no defaults by the Company on any Senior  Securities  during the
quarter ended June 30, 2002.

Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------

No matters were  submitted to a vote of the  Company's  stockholders  during the
second   quarter  of  the  fiscal  year  covered  by  this  report  through  the
solicitation of proxies or otherwise.  The Annual Meeting of Stockholders of the
Company is scheduled for August 21, 2002.

Item 5. Other Information
-------------------------

In accord with Section  10A(I)(2)  of the  Securities  Exchange Act of 1934,  as
added  by  Section  202 of  the  Sarbanes-Oxley  Act of  2002,  the  Company  is
responsible for listing the non-audit services approved in the Second Quarter by
the  Company's  Audit  Committee to be performed by BDO Seidman,  the  Company's
external  auditor.  Non-audit  services are defined in the law as services other
than those  provided in  connection  with an audit or a review of the  financial
statements  of the  Company.  The  non-audit  services  approved  by  the  Audit
Committee  in the  Second  Quarter  are each  considered  by the  Company  to be
audit-related services which are closely related to the financial audit process.
Each of the services has been  approved in accord with a  pre-approval  from the
Committee's Chairman pursuant to delegated authority by the Committee.

During the quarterly period covered by this filing, the Audit Committee approved
additional  engagements of BDO Seidman for the following non-audit services: (1)
general tax  services  for  federal,  state and local tax  filings;  and (2) tax
matter consultations concerning sales and use taxes.

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

(A)      Exhibits

99.1     Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
         to Section 906 of the  Sarbanes-Oxley Act of 2002 - President and Chief
         Executive Officer

99.2     Certification  pursuant to 18 U.S.C.  Section 1350, as adopted pursuant
         to  Section  906 of the  Sarbanes-Oxley  Act of 2002 - Chief  Financial
         Officer

(B)      Reports on Form 8-K

         None.










                                       14





                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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 this 13th day of August
2002.

                                     ASTEA INTERNATIONAL INC.


                                     By:        /s/Zack Bergreen
                                                --------------------------------
                                                Zack Bergreen
                                                Chief Executive Officer
                                                (Principal Executive Officer)

                                     By:        /s/Fredric Etskovitz
                                                --------------------------------
                                                Fredric Etskovitz
                                                Chief Financial Officer
                                                (Principal Financial and
                                                Chief
                                                Accounting Officer)

















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