================================================================================
                                  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  March 31, 2003
                                ---------------


                                       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

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).   Yes    No X

As of May 07, 2003,  14,606,530  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                           8

Item 3.        Quantitative and Qualitative Disclosure About Market Risk    12

Item 4.        Controls and Procedures                                      12

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

Item 1.        Legal Proceedings                                            12

Item 2.        Changes in Securities and Use of Proceeds                    13

Item 3.        Defaults upon Senior Securities                              13

Item 4.        Submission of Matters to a Vote of Security Holders          13

Item 5.        Other Information                                            13

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

               Signatures                                                   14





                                       2




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

Item 1.  CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------


                                          ASTEA INTERNATIONAL INC.
                                        CONSOLIDATED BALANCE SHEETS




                                                               March 31,            December 31,
                                                                2003                   2002
                                                            ---------------------------------------
    ASSETS                                 (Unaudited)
Current assets:
                                                                          
  Cash and cash equivalents                                   $  5,677,000       $ 4,967,000
  Restricted cash                                                  300,000           300,000
  Receivables, net of reserves of $655,000 and $1,018,000        6,099,000         7,936,000
  Prepaid expenses and other                                       831,000           691,000
                                                            ---------------------------------------
          Total current assets                                  12,907,000        13,894,000

Property and equipment, net                                        579,000           586,000
Capitalized software, net                                        1,319,000         1,349,000
Other assets                                                       614,000           614,000
                                                            ---------------------------------------
          Total assets
                                                               $15,419,000       $16,443,000
                                                            =======================================

          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                         $3,165,000        $3,418,000
  Deferred revenues                                              3,684,000         4,027,000
                                                            ---------------------------------------
          Total current liabilities                              6,849,000         7,445,000

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 translation adjustment                            (1,000,000)       (1,039,000)
   Accumulated deficit                                         (13,037,000)      (12,568,000)
   Less:  treasury stock at cost, 218,000 and 221,000             (215,000)         (217,000)
shares                                                      ---------------------------------------
                  Total stockholders' equity                     8,570,000         8,998,000
                                                            ---------------------------------------
                  Total liabilities and stockholders'
equity                                                         $15,419,000       $16,443,000
                                                            =======================================


                          See accompanying  notes to the consolidated  financial


                                       3


statements.




                            ASTEA INTERNATIONAL INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                      Three Months Ended
                                                          March 31,
                                                  2003                   2002
                                         ---------------------------------------------
 Revenues:
                                                              
    Software license fees                         $  1,022,000      $  1,466,000
    Services and maintenance                         2,966,000         2,487,000
                                                  ------------------------------
               Total revenues                        3,988,000         3,953,000
                                                  ------------------------------

 Costs and expenses:
     Cost of software license fees                     229,000           275,000
    Cost of services and maintenance                 1,645,000         1,632,000
    Product development                                507,000           440,000
     Sales and marketing                             1,574,000         1,259,000
     General and administrative                        518,000           629,000
                                                  ------------------------------
               Total costs and expenses              4,473,000         4,235,000
                                                  ------------------------------

 Loss from operations                                 (485,000)         (282,000)

     Interest income, net                               18,000            38,000
                                                  ------------------------------

 Loss before income taxes                             (467,000)         (244,000)

 Income tax expense                                       --              50,000
                                                  ------------------------------
 Net loss                                           $ (467,000)     $   (294,000)
                                                  ==============================

 Basic and diluted loss per share:
      Net loss per share                            $    (0.03)     $      (0.02)

 Shares outstanding used in computing basic
     loss per share                                 14,607,000        14,602,000
 Shares outstanding used in computing diluted
     loss per share
                                                    14,609,000        14,602,000


        See accompanying notes to the consolidated financial statements.




                                       4






                            ASTEA INTERNATIONAL INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                                                Three Months Ended
                                                                                     March 31,
                                                                              2003               2002
                                                                          ------------------------------
Cash flows from operating activities:
                                                                                      
   Net loss                                                                $  (467,000)     $  (294,000)
   Adjustments to reconcile net loss to net cash provided by (used in)
        operating activities:
           Depreciation and amortization                                       239,000          329,000
   Changes in operating assets and liabilities:
            Receivables                                                      1,856,000          172,000
            Prepaid expenses and other                                        (146,000)        (156,000)
            Other assets                                                          --             33,000
            Accounts payable and accrued expenses                             (234,000)        (114,000)
            Accrued restructuring                                                 --           (156,000)
            Deferred revenues                                                 (312,000)         167,000
                                                                           ------------------------------
   Net cash provided by (used in) operating activities                        936,000           (19,000)
                                                                           ------------------------------
Cash flows from investing activities:
            Purchases of investments                                              --             (9,000)
            Purchases of property and equipment                                (84,000)         (67,000)
            Capitalized  software development costs                           (120,000)        (188,000)
                                                                           ------------------------------
   Net cash used in investing activities                                      (204,000)        (264,000)
                                                                           ------------------------------
Cash flows from financing activities:
            Proceeds from exercise of stock options and employee stock
purchase plan                                                                    1,000            2,000
            Repayments of debt                                                    --            (21,000)
                                                                           ------------------------------
   Net cash provided by (used in) financing activities                           1,000          (19,000)
                                                                           ------------------------------
   Effect of exchange rate changes on cash
                                                                               (23,000)          11,000
                                                                           ------------------------------
   Net increase (decrease) in cash and cash equivalents                        710,000         (291,000)
   Cash, beginning of period                                                 5,267,000        4,071,000
                                                                           ------------------------------
   Cash, end of period                                                     $ 5,977,000        3,780,000
                                                                           ==============================



         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 March 31, 2003 and for the three month
periods  ended  March  31,  2003  and  2002  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  2002 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 three months
ended March 31, 2003 are not  necessarily  indicative of the results that may be
expected for the full year.


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

The reconciliation of Stockholders'  Equity and comprehensive loss from December
31, 2002 to March 31, 2003 is summarized as follows:



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

                                                                                          
Balance at December 31, 2002      $148,000    $22,674,000     $(1,039,000)    $(12,568,000) $ (217,000)     $    --
Issuance of common stock
   under employee stock
   purchase plan                       --              --                           (2,000)      2,000           --
Cumulative translation
   adjustment                          --              --          39,000              --           --         39,000
Net loss                               --              --           --            (467,000)         --       (467,000)
                                 -------------------------------------------------------------------------------------
Balance at March 31, 2003         $148,000    $22,674,000    $ (1,000,000)    $(13,037,000) $ (215,000)    $ (428,000)
                                 =====================================================================================




3. RECENT ACCOUNTING PRONOUNCEMENTS
-----------------------------------

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition  and Disclosure,  an amendment of FASB Statement No. 123
("SFAS 148"). SFAS 148 amends FASB Statement No. 123, Accounting for Stock-Based
Compensation,  to provide  alternative  methods of transition for an entity that
voluntarily changes to the fair value based method of accounting for stock-based
employee  compensation.  It  also  amends  the  disclosure  provisions  of  that
Statement  to require  prominent  disclosure  about the effects on reported  net
income of an entity's  accounting  policy  decisions with respect to stock-based
employee  compensation.  Finally,  this Statement amends  Accounting  Principles
Board ("APB") Opinion No. 28, Interim Financial Reporting, to require disclosure
about those effects in interim financial information.  SFAS 148 is effective for
financial  statements  for fiscal  years ending  after  December  15, 2002.  The
Company  plans to  continue  to use the  intrinsic  valuation  method  for stock
compensation.

Stock Compensation

The Company  accounts for options and the employee stock purchase plan under the
recognition  and  measurement  principles of Accounting  Principles  Board (APB)
Opinion No. 25,  "Accounting  for Stock  Issued to  Employees."  No  stock-based
employee  compensation  cost is reflected in net income,  as all options granted
under  those  plans  had an


                                       6


exercise price equal to the market value of the underlying common stock on the
date of grant. Had compensation cost for the Company's stock options and
employee stock purchase plan been determined consistent with SFAS No. 123,
"Accounting for Stock-Based Compensation," the Company's net loss and basic and
diluted net loss per share would have been:




                                                                March 31,             March 31,
                                                                  2003                   2002
                                                            -----------------------------------------
                                                               (unaudited)             (unaudited)

                                                                        
Net loss - as reported                                     $      (467,000)   $            (293,000)

Add:  Stock-based compensation included in net
   income as reported, net or related tax effects                       --                     --
Deduct stock-based compensation determined under
   fair value based methods for all awards, net of
   related tax effects                                             (84,000)                (121,000)

Net loss - pro forma                                       $      (551,000)   $            (414,000)

Basic and diluted loss per share - as reported             $         (0.03)   $               (0.02)
Basic and diluted loss per share - pro forma               $         (0.04)   $               (0.03)

The weighted  average fair value of those  options  granted  during the quarters
ended March 31, 2003 and 2002 was  estimated  at $0.56 and $0.86,  respectively.
The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions:  risk-free  interest  rate of  3.73%  and  5.20%  for 2003 and 2002
grants,  respectively;  an expected  life of six years;  volatility  of 145% and
147%; and a dividend yield of zero for 2003 and 2002 grants, respectively.



                                       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,
2002.

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.

Over the past year, 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 and Estimates
------------------------------------------

The Company's significant accounting policies are more fully 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  preparation  of  financial
statements in conformity with accounting  principles  generally  accepted within
the United States  requires  management to make  estimates  and  assumptions  in
certain circumstances that affect amounts reported in the accompanying financial
statements  and  related  notes.  In  preparing   these  financial   statements,
management has made its best estimates and judgments of certain amounts included
in the  financial  statements,  giving due  consideration  to  materiality.  The
Company does not believe there is a great  likelihood that materially  different
amounts would be reported  related to the accounting  policies  described below;
however,  application  of these  accounting  policies  involves  the exercise of
judgments  and the use of  assumptions  as to  future  uncertainties  and,  as a
result, actual results could differ from these estimates.

Revenue Recognition

Revenues are recognized in accordance  with  Statement of Operations  Procedures
(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.


                                       8



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,
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.

Accounts Receivable

The Company evaluates the adequacy of its allowance for doubtful accounts at the
end of each quarter.  In performing this  evaluation,  the Company  analyzes the
payment  history  of  its  significant   past  due  accounts,   subsequent  cash
collections  on  these  accounts  and  comparative   accounts  receivable  aging
statistics.  Based on this information,  along with consideration of the general
strength  of the  economy,  the  Company  develops  what  it  considers  to be a
reasonable   estimate  of  the   uncollectible   amounts  included  in  accounts
receivable.  This estimate involves  significant  judgement by the management of
the  Company.  Actual  uncollectible  amounts  may  differ  from  the  Company's
estimate.

Capitalized Software Research and Development Costs

The Company accounts for its internal  software  development costs in accordance
with Statement of Financial  Accounting  Standards  ("SFAS") No. 86, "Accounting
for the Costs of Computer  Software to be Sold,  Leased or Otherwise  Marketed."
Accordingly,   all  costs   incurred   subsequent  to  attaining   technological
feasibility  are  capitalized  and  amortized  over a period not to exceed three
years.  Technological  feasibility is attained when software products reach Beta
release. Costs incurred prior to the establishment of technological  feasibility
are charged to product development  expense.  The establishment of technological
feasibility and the ongoing assessment of recoverability of capitalized software
development costs require  considerable  judgement by management with respect to
certain external  factors,  including,  but not limited to,  anticipated  future
revenues,   estimated  economic  life  and  changes  in  software  and  hardware
technologies.  Upon the general  release of the software  product to  customers,
capitalization  ceases and such  costs are  amortized,  using the  straight-line
method,  on a  product-by-product  basis  over  the  estimated  life,  which  is
generally three years. All research and development  expenditures are charged to
research and development expense in the period incurred.


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

Comparison of Three Months Ended March 31, 2003 and 2002
---------------------------------------------------------

Revenues
--------

Revenues  increased  $35,000,  or 1%, to  $3,988,000  for the three months ended
March 31,  2003 from  $3,953,000  for the three  months  ended  March 31,  2002.
Software license fee revenues decreased  $444,000,  or 30%, from the same period
last year.  Services and  maintenance  fees for the three months ended March 31,
2003 amounted to $2,966,000, a 19% increase from the same quarter in 2002.

The Company's international operations contributed $1,363,000 of revenues in the
first quarter of 2003 compared to $1,201,000 in the first quarter of 2002.  This
represents  a 13%  increase  from the  same  period  last  year and 34% of total
revenues  in the first  quarter  2003.  The  increase  in revenues is due to the
increase in sales from the Company's operations in Japan.


                                       9



Software  license fee revenues  decreased 30% to $1,022,000 in the first quarter
of  2003  from  $1,466,000  in the  first  quarter  of  2002.  The  decrease  is
attributable to AsteaAlliance  license revenues that decreased  $266,000 or 21%,
to $1,022,000 in the first quarter of 2003 from  $1,288,000 in the first quarter
of 2002.  There were no  DISPATCH-1  license  sales in the first quarter of 2003
compared  to  $178,000  in the first  quarter  of 2002.  The lack of  DISPATCH-1
license  revenue  was  anticipated  due to its  discontinuation.  The decline in
AsteaAlliance  license  revenue  results from the  continuation  of the economic
downturn which has extended the sales cycle for the AsteaAlliance product.

Services and  maintenance  revenues  increased  19% to  $2,966,000  in the first
quarter  of 2003 from  $2,487,000  in the first  quarter of 2002.  The  increase
primarily relates to service and maintenance  revenues from AsteaAlliance  which
increased  $811,000 to $2,236,000  from $1,425,000 in the first quarter of 2002.
The  increase  in  AsteaAlliance  service and  maintenance  revenues is a direct
result of license sales which took place in the last half of 2002.  The increase
in  AsteaAlliance  service and  maintenance  revenues was partially  offset by a
decrease of $332,000 in  DISPATCH-1  service  and  maintenance  revenues  due to
expected decreased demand.

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

Cost of software  license fees decreased 17% to $229,000 in the first quarter of
2003  from  $275,000  in the  first  quarter  of 2002.  Included  in the cost of
software  license fees is the fixed cost of capitalized  software  amortization.
Capitalized software amortization was $150,000 and $217,000 in the first quarter
of 2003 and 2002, respectively. In addition to lower amortization of capitalized
software  costs,  the cost of software  license fees also  decreased  due to the
lower level of software license sales in the first quarter of 2003. The software
licenses  gross margin  percentage was 78% in the first quarter of 2003 compared
to 81% in the  first  quarter  of  2002.  This  decrease  in  gross  margin  was
attributable  to the cost of certain third party costs  included in 2003 cost of
license fees and the  relationship  of the fixed cost of  amortized  capitalized
software to a lower level of sales in 2003.

Cost of services and maintenance increased 1% to $1,645,000 in the first quarter
of 2003 from  $1,632,000 in the first  quarter of 2002.  The increase in cost of
service and  maintenance is primarily  attributed to general wage increases from
last year to this year. The services and maintenance gross margin percentage was
45% in the first  quarter of 2003  compared to 34% in the first quarter of 2002.
The  increase in services and  maintenance  gross  margin was  primarily  due to
increased utilization of AsteaAlliance service professionals.

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

Product  development  expense  increased 15% to $507,000 in the first quarter of
2003 from  $440,000  in the first  quarter  of 2002.  The  increase  in  product
development expenses is attributable to the increase in development personnel in
the first  quarter  of 2003 and  decreased  capitalization  of  software  costs.
Product  development as a percentage of revenues was 13% in the first quarter of
2003 compared with 11% in the first quarter of 2002.

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

Sales and marketing  expense increased 25% to $1,574,000 in the first quarter of
2003 from  $1,259,000  in the first  quarter of 2002.  The increase in sales and
marketing is attributable to an increase in sales and marketing personnel.  As a
percentage of revenues,  sales and marketing  expenses increased to 39% from 32%
in the first quarter of 2002 in an increased effort to improving the recognition
and perception of the Company in the marketplace.

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

General  and  administrative  expenses  decreased  18% to  $518,000 in the first
quarter of 2003 from  $629,000  in the first  quarter of 2002.  The  decrease in
general and administrative  expenses is due to lower legal costs, rental expense
and outside consulting expense.



                                       10




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

Net interest income decreased  $20,000 from $38,000 in the first quarter of 2002
to $18,000 in the first quarter of 2003.  The decrease  resulted  primarily from
lower interest rates earned on invested  securities from the same period as last
year as well as a decrease in the amount of investments.

International Operations
------------------------

Total revenue from the Company's international operations increased by $162,000,
or 13%,  to  $1,363,000  in first  quarter of 2003 from  $1,201,000  in the same
quarter in 2002.  The  increase in revenue  from  international  operations  was
primarily attributable to the increase in revenues from Asia Pacific operations.
International  operations  generated  a net loss of  $82,000  loss for the first
quarter  ended March 31, 2003 compared to a loss of $284,000 in the same quarter
in 2002.

The Company has  reviewed  the impact of its  subsidiaries  dominated  in German
deutsche marks,  French francs,  and the Dutch guilder  converting into the Euro
beginning  January 1, 2002.  This  conversion has had no material  impact on its
systems related to the Company's  business  activities and financial  reporting.
The Company is not aware of any  circumstances  indicating that the introduction
of the  Euro  caused  or will  cause  material  misstatements  in the  Company's
accounting records or adversely affects business operations in the future.

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

Net cash  provided by  operating  activities  was  $936,000 for the three months
ended March 31,  2003  compared  to cash used in  operations  of $19,000 for the
three months ended March 31, 2002.  This increase in cash provided was primarily
attributable  to a significant  decrease in accounts  receivable  resulting from
collected balances.

The  Company's  investing  activities  used  $204,000 of cash in the first three
months of 2003  compared to using  $264,000 of cash in the first three months of
2002.  The  decrease  in cash used is  primarily  attributable  to a decrease in
capitalized software development costs.

The Company generated $1,000 of cash from financing  activities during the three
months ended March 31, 2003  compared to cash used of $19,000 in the first three
months of 2002.  The difference is due to repaying  outstanding  debt of $21,000
during the first quarter of 2002. The Company did not have any outstanding  debt
to pay during the first quarter of 2003.

At March 31, 2003, the Company had a working capital ratio of 1.9:1,  with cash,
cash equivalents and restricted cash of $5,977,000. 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  Board of  Directors  from  time to time  reviews  the
Company's forecasted operations and financial condition to determine whether and
when  payment of a dividend or dividends  is  appropriate.  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, sales automation and customer support offerings.


                                       11



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,  changes in earnings estimates by analysts,
     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 relates 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 March 31, 2003, the Company's  investments consisted of
U.S. government  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.

         The Company has  reviewed the impact of its  subsidiaries  dominated in
German deutsche marks,  French francs, and the Dutch guilder converting into the
Euro beginning  January 1, 2002.  This  conversion has had no material impact on
its  systems  related  to  the  Company's  business   activities  and  financial
reporting.  The Company is not aware of any  circumstances  indicating  that the
introduction  of the Euro  caused or will cause  material  misstatements  in the
Company's  accounting  records or adversely  affects business  operations in the
future.

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 control or in other factors which could significantly  affect
internal controls subsequent to the date the Company carried out its evaluation.

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.


                                       12




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

Our common  stock must  maintain a minimum bid price of $1.00 per share in order
to remain  eligible for  continued  listing on The Nasdaq  SmallCap  Market.  On
October 25, 2002, the staff of The Nasdaq Stock Market, Inc. notified us that we
were not in compliance with the minimum bid price requirement. The staff advised
us that we would be given until  April 21, 2003 within  which to comply with the
minimum bid price  requirement  in order to  maintain  our listing on The Nasdaq
SmallCap Market.  On April 22, 2003, the staff of The Nasdaq Stock Market,  Inc.
notified the Company  that it had not regained  compliance  in  accordance  with
Marketplace  Rule  4310( c )(8)(D).  The staff  advised us that it has given the
Company  a 90 day  extension,  or  until  July  21,  2003  in  order  to  regain
compliance.

Item 3.           Defaults Upon Senior Securities
-------------------------------------------------
There have been no defaults by the Company on any Senior  Securities  during the
quarter ended March 31, 2003.

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
first quarter of the fiscal year covered by this report through the solicitation
of proxies or otherwise.

Item 5.           Other Information
-----------------------------------
None.

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

         On March 31, 2003,  the Company filed a report on Form 8-K with respect
         to the press release  issued as of that date  reporting the results for
         the three months and year ended December 31, 2002.



                                       13



                                   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 May
2003.

                                       ASTEA INTERNATIONAL INC.


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

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



                                       14