================================================================================
                                  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          September 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.)

       240 Gibraltar Road, 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 November 04, 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

           Consolidated Balance Sheets (Unaudited)                             3

           Consolidated Statements of Operations (Unaudited)                   4

           Consolidated Statements of Cash Flows (Unaudited)                   5

           Notes to Unaudited Consolidated Financial Statements                6

Item 2.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                 7

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                                   15

           Signatures                                                         16

           Certifications                                                     17


                                       2






PART I - FINANCIAL INFORMATION
------------------------------
Item 1.  CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

                                         ASTEA INTERNATIONAL INC.
                                         ------------------------
                                       CONSOLIDATED BALANCE SHEETS
                                       ---------------------------


                                                                     September 30,          December 31,
                                                                         2002                    2001
                                                                     ------------           ------------
                                                                     (Unaudited)
                                                                                      
                           ASSETS
Current assets:
  Cash and cash equivalents                                          $  4,706,000           $  4,071,000
  Investments available for sale                                                -              2,987,000
  Restricted cash                                                         300,000                      -
  Receivables, net of reserves of $788,000 and $955,000                 7,598,000              7,343,000
  Prepaid expenses and other                                              799,000                822,000
                                                                     -----------------------------------
          Total current assets                                         13,403,000             15,223,000

Property and equipment, net                                               522,000                617,000
Capitalized software development costs, net                             1,222,000              1,412,000
Other assets                                                              615,000                763,000
                                                                     -----------------------------------
          Total assets                                               $ 15,762,000           $ 18,015,000
                                                                     ===================================

            LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                                     $       -           $     34,000
  Accounts payable and accrued expenses                                 3,245,000              3,627,000
  Deferred revenues                                                     3,893,000              4,249,000
                                                                     -----------------------------------
          Total current liabilities                                     7,138,000              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 issued                                        148,000                148,000
   Additional paid-in capital                                          22,674,000             22,674,000
   Cumulative currency translation adjustment                          (1,256,000)
                                                                                              (1,113,000)
   Accumulated deficit                                                (12,868,000)           (11,239,000)
   Less treasury stock, at cost, 221,000 and 227,000 common
      shares                                                             (217,000)              (222,000)
                                                                     -----------------------------------
          Total stockholders' equity                                    8,624,000             10,105,000
                                                                     -----------------------------------
          Total liabilities and stockholders' equity                 $ 15,762,000           $ 18,015,000
                                                                     ===================================


                     See accompanying notes to the consolidated financial statements.

                                                    3






                                                   ASTEA INTERNATIONAL INC.
                                                   ------------------------
                                            CONSOLIDATED STATEMENTS OF OPERATIONS
                                            -------------------------------------
                                                         (Unaudited)

                                                                  Three Months                          Nine Months
                                                              Ended September 30,                    Ended September 30,
                                                        --------------------------------------------------------------------
                                                             2002              2001               2002               2001
                                                             ----              ----               ----               ----
                                                                                                    
Revenues:
    Software license fees                               $  2,386,000      $    777,000       $  4,563,000       $  4,546,000
    Services and maintenance                               2,460,000         2,673,000          7,539,000          8,289,000
                                                        --------------------------------------------------------------------

         Total revenues                                    4,846,000         3,450,000         12,102,000         12,835,000
                                                        --------------------------------------------------------------------

Costs and expenses:
    Cost of software license fees                            352,000           245,000            948,000            847,000
    Cost of services and maintenance                       1,619,000         1,414,000          4,938,000          4,915,000
    Product development                                      568,000           779,000          1,511,000          2,032,000
    Sales and marketing                                    1,562,000         1,206,000          4,393,000          4,027,000
    General and administrative                               535,000           439,000          1,822,000          1,863,000
                                                        --------------------------------------------------------------------

         Total costs and expenses                          4,636,000         4,083,000         13,612,000         13,684,000
                                                        --------------------------------------------------------------------

Operating income (loss) from continuing
    operations                                               210,000          (633,000)        (1,510,000)          (849,000)

Interest income, net                                          19,000            73,000             83,000            262,000
                                                        --------------------------------------------------------------------

Income (loss) from continuing operations                     229,000          (560,000)        (1,427,000)          (587,000)

Income tax expense                                                 -                 -           (200,000)                 -
                                                        --------------------------------------------------------------------

Net income (loss)                                       $    229,000      $   (560,000)      $ (1,627,000)      $   (587,000)
                                                        ====================================================================

Basic and diluted earnings (loss) per share             $       0.02      $      (0.04)      $      (0.11)      $      (0.04)
                                                        ====================================================================

Share outstanding used in computing basic earnings
    (loss) per share
                                                          14,604,000        14,612,000         14,602,000         14,640,000
                                                        ====================================================================


                               See accompanying notes to the consolidated financial statements.

                                                              4






                                         ASTEA INTERNATIONAL INC.
                                         ------------------------
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   -------------------------------------
                                                (Unaudited)
                                                                                 For the Nine Months
                                                                                 Ended September 30,
                                                                            -----------------------------
                                                                                 2002             2001
                                                                            -----------------------------

                                                                                        
Cash flows from operating activities:
   Net loss                                                                 $(1,627,000)      $  (587,000)
   Adjustments to reconcile net loss to net cash (used in) provided by
        operating activities:
            Depreciation and amortization                                       943,000         1,087,000
            Changes in operating assets and liabilities:
            Receivables                                                        (152,000)        2,883,000
            Prepaid expenses and other                                          222,000           415,000
            Other assets                                                        148,000                 -
            Accounts payable and accrued expenses                              (636,000)       (1,340,000)
            Deferred revenues                                                  (186,000)       (1,867,000)
                                                                            -----------------------------
   Net cash (used in) provided by operating activities                       (1,288,000)          591,000
                                                                            -----------------------------

Cash flows from investing activities:
           Sales of investments available for sale                            2,987,000           528,000
           Purchases of restricted investments                                 (300,000)                -
           Purchases of property and equipment                                 (262,000)         (230,000)
           Capitalized software development costs                              (428,000)         (450,000)
                                                                            -----------------------------
   Net cash provided (used in)  by investing activities                       1,997,000          (152,000)
                                                                            -----------------------------

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)          (97,000)
          Purchases of treasury stock                                                 -          (228,000)
                                                                            -----------------------------
   Net cash used in financing activities                                        (31,000)         (322,000)
                                                                            -----------------------------
   Effect of exchange rate changes on cash and cash equivalents                 (43,000)           42,000
                                                                            -----------------------------

   Net increase in cash and cash equivalents                                    635,000           159,000
   Cash and cash equivalents balance, beginning of period                     4,071,000         5,208,000
                                                                            -----------------------------
   Cash and cash equivalents balance, end of period                         $ 4,706,000       $ 5,367,000
                                                                            =============================

                     See accompanying notes to the consolidated financial statements.

                                                    5





Item 1.   CONSOLIDATED FINANCIAL STATEMENTS (Continued)
-------------------------------------------------------

                            ASTEA INTERNATIONAL INC.
                            ------------------------
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
              ----------------------------------------------------



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

The  consolidated  financial  statements at September 30, 2002 and for the three
and nine month periods ended September 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 nine months
ended September 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 nine months of 2002, the Company made payments of $297,000  related to
the 2001 Restructuring  Plan,  including  severance  obligations of $139,000 and
lease  obligations  of $158,000.  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
September 30, 2002, $57,000 of restructuring charges remains unpaid.

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 nine
months ended September 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 the provision
periodically in the future as circumstances change.

4.   RESTRICTED CASH
     ---------------

On  September  11,  2002,  $300,00  of cash  was  pledged  as  collateral  on an
outstanding letter of credit related to a lease obligation and was classified as
restricted  cash on the balance sheet.  The letter of credit is due to expire on
September 11, 2003, but may be extended until September, 2004.

                                        6




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

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



                                                              Cumulative
                                                Additional      Currency
                                   Common        Paid-In      Translation     Accumulated       Treasury       Comprehensive
                                    Stock        Capital       Adjustment        Deficit          Stock            Loss
                                    -----        -------       ----------        -------          -----            ----

                                                                                            
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                              -              -        143,000               -               -         143,000
Net loss for the period                    -              -              -      (1,627,000)              -      (1,627,000)
                                ------------------------------------------------------------------------------------------

Balance at September 30, 2002   $    148,000   $ 22,674,000   $ (1,113,000)   $(12,868,000)   $   (217,000)   $ (1,484,000)
                                ==========================================================================================


6.   MAJOR CUSTOMERS
     ---------------

In the third quarter of 2002,  the Company had two customers  that accounted for
more than 10% of its total  revenues.  In the third quarter of 2001, the Company
did not have any customers that accounted for 10% or more of its total revenues.
For the  first  nine  months  of 2002 and  2001,  the  Company  did not have any
customers that accounted for 10% or more of its total revenues.

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  Service  Lifecycle  Management
solutions  for  companies  that  market,   sell,  service  and  support  capital
equipment.  The applications extend traditional Customer Relationship Management
(CRM) to  encompass  supply  chain  and  logistics  functionality,  all honed to
service-oriented  businesses.  Clients include Fortune 500 to mid-size companies
in diverse industries such as Medical Technology,  Instrumentation and Controls,
Information Technology Services Imaging Equipment, Telecommunications,  Point Of
Sale (POS) and Building  (HVAC)  Systems.  The Company  supports a global client
base with a worldwide sales and service network.

Over the past few years,  the  Company  has been  making the  transition  from a
traditional  field  service  automation   provider  to  a  provider  of  broader
applications   spanning   the  Service   Lifecycle.   The  suite  now   includes
functionality  for the market,  sales,  service  delivery,  and support of field
services.  This extension  allows the Company to provide a broader  footprint to
organizations  that may  derive a  significant  portion  of their  sales  and/or
revenues from the support of aftermarket industries.

The Company continues to make a significant investment in product development in
support of the  transition.  The Company  diligently  monitors costs and manages
them  aggressively,  in part by remaining  focused on key core  competencies and
markets for which it can demonstrate clear potential Return on Investment.

                                       7



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 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,  Recession  of SFAS Nos. 4, 44 and
64, Amendment of SFAS No. 13 and Technical Corrections.  SFAS No. 4 required all
gains and losses from the extinguishment of debt to be reported as extraordinary
items and SFAS No. 64 related to the same matter.  SFAS No. 145  requires  gains
and losses from certain debt  extinguishment not to be reported as extraordinary
items when the use of debt extinguishment is part of a risk management strategy.
SFAS No. 44 was issued to establish transitional requirement for motor carriers.
Those  transitions  are completed,  therefore SFAS No. 145 rescinds SFAS No. 44.
SFAS No. 145 also amends SFAS No. 13  requiring  sale-leaseback  accounting  for
certain  lease  modifications.  SFAS  No.  145 is  effective  for  fiscal  years
beginning  after  May  15,  2002.  The  provisions  relating  to  sale-leaseback
accounting  are effective for  transactions  after May 15, 2002. The adoption of
SFAS No 145 is not expected to have a material impact on the Company's financial
position or results of operations.

In June  2002,  the  FASB  issued  Statement  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities". The standard requires companies to
recognize  costs  associated  with  exit or  disposal  activities  when they are
incurred  rather than at the date of  commitment  to an exit or  disposal  plan.
Examples of costs  covered by the standard  include lease  termination  cost and
certain  employee  severance  costs that are  associated  with a  restructuring,
discontinued  operation,  plant  closing,  or other exit or  disposal  activity.
Previous  accounting  guidance  provided  by EITF  Issue  No.  94-3,  "Liability
Recognition of Certain Employee  Termination Benefits and Other Costs to Exit an
Activity  (including  Certain Costs Incurred in a Restructuring)" is replaced by
this Statement. Statement 146 is to be applied prospectively to exit or disposal
activities  initiated  after December 31, 2002.  Management  does not anticipate
that the  adoption  of this  Statement  will  have a  significant  effect on the
Company's financial statements.

                                       8



Results of Operations
---------------------

Comparison of Three Months Ended September 30, 2002 and 2001
------------------------------------------------------------

Revenues
--------

Revenues increased $1,396,000,  or 40%, to $4,846,000 for the three months ended
September  30, 2002 from  $3,450,000  for the three months ended  September  30,
2001. Software license fee revenues increased $1,609,000, or 207%, from the same
period last year.  Services  and  maintenance  fees for the three  months  ended
September 30, 2002 amounted to $2,460,000,  an 8% decrease from the same quarter
in 2001.

The Company's international operations contributed $1,291,000 of revenues in the
third quarter 2002  compared to  $1,264,000 in the third quarter of 2001,  which
represents a 2% increase. The increase is primarily the result of an increase in
sales in Japan.

Software license fee revenues  increased 207% to $2,386,000 in the third quarter
of 2002 from $777,000 in the third quarter of 2001. The increase is attributable
to an increase in AllianceEnterprise  revenues of $1,679,000 offset by a decline
in  DISPATCH-1  licenses  of  $70,000.  AllianceEnterprise  license  fee revenue
increased $1,679,000 from $664,000 in the third quarter of 2001 to $2,343,000 in
the third  quarter of 2002. As expected,  current  sales of DISPATCH-1  were not
significant,  contributing only 2% of total software license fee revenues in the
third quarter of 2002 compared to 15% of total license fee revenues in the third
quarter of 2001.  The Company is confident that  projections  for the CRM market
will hold true to form  allowing the Company to  capitalize in the future on its
investment in product development through increased software license sales.

Services  and  maintenance  revenues  decreased  8% to  $2,460,000  in the third
quarter  of 2002 from  $2,673,000  in the third  quarter of 2001.  The  decrease
primarily  relates to service and maintenance  revenues from  DISPATCH-1,  which
decreased  $461,000 to $908,000  from  $1,369,000  in the third quarter of 2001.
Most of the decline is attributable to the sale of DISPATCH-1  source code which
provides those customers the ability to perform all service and maintenance work
themselves instead of using Astea staff.  Service and maintenance  revenues from
ServiceAlliance  increased by $248,000 or 19% to $1,552,000 in the third quarter
of  2002  from  $1,304,000  in the  third  quarter  of  2001.  The  increase  is
attributable   to  the  growing   number  of  customers   using  the   Company's
AllianceEnterprise software.

Costs of Revenues
-----------------

Cost of software  license fees increased 44% to $352,000 in the third quarter of
2002  from  $245,000  in the  third  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 third  quarters of
2002 and 2001.  The  increase in the cost of software  license  fees  represents
additional third party software costs attributable to certain products sold. The
software  licenses gross margin  percentage was 85% in the third quarter of 2002
compared to 68% in the third  quarter of 2001.  The increase in gross margin was
attributable to the increase in license sales in 2002.

Cost of  services  and  maintenance  increased  14% to  $1,619,000  in the third
quarter of 2002 from  $1,414,000 in the third quarter of 2001.  The services and
maintenance gross margin percentage was 34% and 47% in the third quarter of 2002
and 2001,  respectively.  The decrease in gross margin was attributable to costs
associated with certain non-billable projects undertaken during the quarter.

                                       9




Product Development
-------------------

Product  development  expense  decreased 27% to $568,000 in the third quarter of
2002 from  $779,000 in the third  quarter of 2001.  As a percentage of revenues,
product  development  decreased  from 23% in the third quarter of 2001 to 12% in
the third quarter of 2002. This decrease  primarily results from the significant
increase in sales during the third quarter of 2002 as well as the  strengthening
of the U.S.  dollar  against  the  Israel  shekel,  which is where  the  Company
performs most of its development.  Despite this decrease,  development  employee
headcount   remained   unchanged.   Additionally,   cost  containment   measures
implemented  at year-end 2001 enabled the Company to realize cost savings during
2002.  The Company  maintains  its  commitment  to expanding  and  improving the
capabilities  of its  AllianceEnterprise  Suite of CRM  software  products.  The
Company is developing its software using Microsoft and Internet  technologies to
integrate  and automate  business  processes  for managing  equipment  sales and
service delivery.

Sales and Marketing
-------------------

Sales and marketing  expense increased 30% to $1,562,000 in the third quarter of
2002 from $1,206,000 in the third quarter of 2001. The increase is primarily the
result of increased sales commissions  resulting from higher sales. In addition,
the Company has  implemented an aggressive  marketing  campaign to introduce its
newest  version of  AllianceEnterprise.  As a percentage of revenues,  sales and
marketing expenses decreased to 32% in 2002 compared to 35% in the third quarter
of 2001.  This  decrease in the  percentage  reflects the  Company's  success in
generating new sales from its marketing strategies.

General and Administrative
--------------------------

General  and  administrative  expenses  increased  22% to  $535,000 in the third
quarter of 2002 from  $439,000  in the third  quarter of 2001.  The  increase in
general and  administrative  expenses results from unfavorable  foreign exchange
comparisons.

Interest Income, net
--------------------

Net interest  income  decreased  $54,000 to $19,000 in the third quarter of 2002
from  $73,000  in  the  third  quarter  of  2001.   The  decrease  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 increased by $27,000,
or 2%,  to  $1,291,000  in third  quarter  of 2002 from  $1,264,000  in the same
quarter  in 2001.  This  increase  is due to an  increase  in  sales  in  Japan.
International  Operations  generated  a  $131,000  loss for the 3  months  ended
September  30, 2002  compared  to  generating  net income of $130,000  for the 3
months ended  September 30, 2001. The decline in performance is primarily due to
the general global economic slowdown.


Comparison of Nine Months Ended September 30, 2002 and 2001
-----------------------------------------------------------

Revenues
--------

Revenues  decreased  $733,000,  or 6%, to $12,102,000  for the nine months ended
September  30, 2002 from  $12,835,000  for the nine months ended  September  30,
2001. The global  downturn in economic  conditions  has negatively  impacted the
Company due to the  worldwide  reduction  in capital  spending  for new business
software.  Software license fee revenues remained relatively  unchanged from the
same period last year while  services and  maintenance  fees for the nine months
ended September 30, 2002 decreased $750,000 from the same nine months in 2001.

The Company's international operations contributed $3,527,000 of revenues in the
first nine  months of 2002  compared to  $4,095,000  in the first nine months of
2001.  This  represents a 14% decrease from the same period last year and 29% of
total  revenues in the first nine months of 2002.  The decrease in revenues is a
direct result of the continued effects of the downturn in the global economy.

                                       10



Software  license fee  revenues  slightly  increased in the first nine months of
2002 to $4,563,000 from $4,546,000 during the same period in 2001.

Services and maintenance  revenues  decreased 9% to $7,539,000 in the first nine
months of 2002 from  $8,289,000  in the first nine months of 2001.  The decrease
primarily  relates to service and maintenance  revenues from  DISPATCH-1,  which
decreased  $1,288,000 to $2,911,000  from $4,199,000 in the first nine months of
2001. Service and maintenance revenues from AllianceEnterprise  increased 13% to
$4,628,000  in the first nine months of 2002 from  $4,090,000  in the first nine
months of 2001. The Company expects to experience continued declines in revenues
for its legacy product, DISPATCH-1.


Costs of Revenues
-----------------

Cost of software license fees increased 12% to $948,000 in the first nine months
of 2002 from $847,000 in the first nine months of 2001. The increase in the cost
of  software   license  fees  represents   higher  third  party  software  costs
attributable  to the mix of  products  sold in  conjunction  with the  company's
products in the first nine months of 2002.  The software  licenses  gross margin
percentage was 79% in the first nine months of 2002 compared to 81% in the first
nine months of 2001.  This decrease in gross margin was  attributable to the mix
of software licenses sold.

Cost of services and maintenance  increased  slightly to $4,938,000 in the first
nine  months  of 2002 from  $4,915,000  in the first  nine  months of 2001.  The
services  and  maintenance  gross  margin  percentage  was 35% in the first nine
months of 2002 compared to 41% in the first nine months of 2001. The increase in
services and maintenance costs was due to special,  extended projects undertaken
during the course of the year to forge new and stronger  relationships  with our
customers.

Product Development
-------------------

Product development expense decreased 26% to $1,511,000 in the first nine months
of 2002 from $2,032,000 in the first nine months of 2001. Product development as
a percentage of revenues  decreased to 12% in the first nine months of 2002 from
16% in the first nine months of 2001.  The decrease is  primarily  the result of
the strengthening of the U.S. dollar relative to the Israel shekel, the currency
used  in  Israel,  which  is the  location  for  most of the  Company's  product
development.  Despite this decrease,  development  employee  headcount  remained
unchanged.  In addition,  the decrease  reflects the  realization of the benefit
derived from implementing certain cost saving plans at year-end 2001.

The Company maintains its commitment to expanding and improving the capabilities
of its  AllianceEnterprise  Suite  of CRM  software  products.  The  Company  is
developing its software using  Microsoft and Internet  technologies to integrate
and  automate  business  processes  for  managing  equipment  sales and  service
delivery.

Sales and Marketing
-------------------

Sales and marketing  expense increased 9% to $4,393,000 in the first nine months
of 2002 from $4,027,000 in the first nine months of 2001. This increase resulted
primarily   from  an   aggressive   marketing   campaign   to   transition   the
AllianceEnterprise  Suite of  software  products  as well as higher  commissions
resulting from higher software license sales. As a percentage of revenues, sales
and marketing  expenses  increased  from 31% in 2001 to 36% in 2002,  which is a
reflection of the Company's  continued  effort to focus its marketing  effort on
effective  means to increase  market share and expand its presence  through both
direct and indirect channels.

General and Administrative
--------------------------

General and administrative  expense decreased 2% to $1,822,000 in the first nine
months of 2002 from  $1,863,000  in the first nine months of 2001.  The decrease
resulted from lower legal costs and lower bad debt expense.

                                       11




Interest Income, net
--------------------

Net interest  income  decreased  $179,000 to $83,000 in the first nine months of
2002 from  $262,000 in the first nine months of 2001.  The decrease 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 decreased by $568,000,
or 14%, to  $3,527,000  in the first nine months of 2002 from  $4,095,000 in the
same nine months of 2001. The decrease in revenue from international  operations
was primarily  attributable to decreased license sales due to the general global
economic slowdown.  International  operations  generated a $834,000 loss for the
nine months  ended  September  30, 2002  compared  to  generating  net income of
$381,000 for the nine months ended September 30, 2001.

Liquidity and Capital Resources
-------------------------------

Net cash used in operating  activities  was $1,288,000 for the nine months ended
September 30, 2002,  compared to $591,000 of cash provided by operations for the
nine months  ended  September  30,  2001.  The  increased  use of cash  resulted
primarily  from the  decline in net  earnings  compared  to the same period last
year.

The Company's  investing  activities  generated  $1,997,000 of cash in the first
nine months of 2002 compared to using $152,000 in the first nine months of 2001.
The significant  difference from last year was the liquidation of investments in
2002 to fund the operations.

The Company used $31,000 for financing  activities  during the nine months ended
September 30, 2002 compared to using  $322,000 in the first nine months of 2001.
For the  nine  months  ended  September  30,  2002,  most of the  cash  used was
attributable  to the repayment of debt.  This was partially  offset by increased
proceeds from the exercise of stock options  through the employee stock purchase
plan. Most of the financing expenditures for the nine months ended September 30,
2001 was for the  purchase  of  $228,000  of  treasury  stock as  compared to no
purchases of treasury stock during 2002.

At September 30, 2002,  the Company had a working  capital ratio of 1.9:1,  with
cash and investments available for sale of $4,706,000. 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 unique 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 ServiceAlliance and other new product offerings, and to develop
     new products and product  enhancements  to  complement  its existing  field
     service offerings.

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  significant
     component of the Company's operations. International sales are subject to a
     variety

                                       12



     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 September 30, 2002, the Company's investments consisted
of U.S.  government agencies  securities,  commercial paper and corporate bonds.
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.


Item 4.    CONTROLS AND PROCEDURES
----------------------------------

Within the 90 days prior to the date of this report,  the Company carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  of the  effectiveness  of the design and operation of the Company's
disclosure  controls and  procedures  pursuant to Rule 13a-15 of the  Securities
Exchange Act of 1934. Based upon that evaluation,  the Company's Chief Executive
Officer and Chief  Financial  Officer  concluded  that the Company's  disclosure
controls  and  procedures  are  effective  in timely  alerting  them to material
information  relating to the Company  required to be disclosed in the  Company's
periodic SEC reports.  There have been no  significant  changes in the Company's
internal controls or in other factors which could significantly  affect internal
controls subsequent to the date the Company carried out its evaluation.


                                       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
-----------------------------------------------------------

There have been no changes in securities  during the quarter ended September 30,
2002.

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

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

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

At the Annual Meeting of Stockholders  held on August 21, 2002,  pursuant to the
Notice of Annual  Meeting of  Stockholders  dated July 22, 2002,  the  following
actions were adopted:

1.   The  election of a board of  directors to hold office until the next annual
     stockholders'  meeting  or until  their  respective  successors  have  been
     elected or appointed.

                                                       Number of Shares
                                                  Voted For          Withheld
                                                  ---------          --------
                  Zack B. Bergreen                11,679,132          201,072
                  Adrian A. Peters                11,697,172          183,032
                  Isidore Sobkowski               11,697,537          182,667

2.   The appointment of BDO Seidman, LLP as independent auditors for the Company
     for the fiscal year ending December 31, 2002.

                                              Number of Shares
                        Voted For Voted           Against             Abstained
                        ---------------           -------             ---------
                            11,716,992            155,756               7,456



No other matters were submitted to a vote of the Company's  stockholders  during
the third  quarter  of the  fiscal  year  covered  by this  report  through  the
solicitation of proxies or otherwise.

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) special
tax matter consultations.

                                       14



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.


                                       15



                                   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 7th day of November
2002.

                                        ASTEA INTERNATIONAL INC.


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

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


                                       16



                                 CERTIFICATIONS


I, Zack B. Bergreen, the Chief Executive Officer and Principal Executive Officer
of Astea International Inc. (the "Company"), certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Astea  International
     Inc.;
2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;
4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   the  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:    November 7, 2002

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


                                       17





I, Rick Etskovitz, the Chief Financial Officer and Principal Financial and Chief
Accounting Officer of Astea International Inc. (the "Company"), certify that:

1.   I have reviewed this quarterly  report on Form 10-Q of Astea  International
     Inc.;
2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;
4.  The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

11.  The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

12.  The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date:    November 7, 2002

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



                                       18