As filed with the Securities and Exchange
                          Commission on April 23, 2002

                                                 Registration No. 333-
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  -------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933


                                DSET CORPORATION
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)


                                1160 US Highway 22 East
       New Jersey           Bridgewater, New Jersey 08807        22-3000022
--------------------------- ------------------------------- --------------------
(State or Other Jurisdiction    (Address of Principal         (I.R.S. Employer
   of Incorporation or             Executive Offices)        Identification No.)
      Organization)                    (Zip Code)


               ISPsoft 2000 Stock Plan (assumed January 31, 2002)
               DSET Corporation 2001 Employee Stock Purchase Plan
                  DSET Corporation 1998 Stock Plan, as amended
--------------------------------------------------------------------------------
                           (Full Title of the Plans)

                             William P. McHale, Jr.
                             Chief Executive Officer
                                DSET Corporation
                            1160 U.S. Highway 22 East
                          Bridgewater, New Jersey 08807
--------------------------------------------------------------------------------
                            (Name and Address of Agent
                                   for Service)

                                 (908) 526-7500
--------------------------------------------------------------------------------
                     (Telephone Number, Including Area Code,
                              of Agent for Service)

                                    Copy To:

                            Richard Mattessich, Esq.
                              Tod K. Reichert, Esq.
                                Hale and Dorr LLP
                              650 College Road East
                               Princeton, NJ 08540
                                 (609) 750-7600
<PAGE>

<TABLE>



                         CALCULATION OF REGISTRATION FEE

======================================================================================================================
                                                                Proposed             Proposed
                                              Amount            Maximum               Maximum             Amount of
           Title of Securities           to be Registered    Offering Price          Aggregate          Registration
            to be Registered                    (1)            Per Share           Offering Price           Fee
-----------------------------------------------------------------------------------------------------------------------
<S>                                          <C>               <C>               <C>                     <C>

  Common Stock, no par value
    per share:
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to prior option grants
    under the ISPsoft 2000
    Stock Plan....................             241,483          $1.97(2)         $  475,721.51(2)        $  113.70
-----------------------------------------------------------------------------------------------------------------------
  Shares issued pursuant
    to the 2001 Employee Stock
    Purchase Plan.................              44,059         $0.9775(3)        $   43,067.67(3)        $   10.30
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to the 2001 Employee
    Stock Purchase Plan...........             205,941          $0.45(4)         $   92,673.45(4)        $   22.15
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to prior option grants
    under the 1998 Stock Plan.....             771,987          $9.657(5)        $7,455,078.46(5)        $1,095.82(6)
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to future option grants
    under the 1998 Stock Plan.....             200,214          $0.45(4)         $   90,096.30(4)        $   21.54
-----------------------------------------------------------------------------------------------------------------------
  Total:                                     1,463,684                           $8,156,637.39           $1,263.51
=======================================================================================================================
</TABLE>


(1)  For the sole purpose of  calculating  the  registration  fee, the number of
     shares  under  this  Registration  Statement  has been  divided  among five
     subtotals.

(2)  Pursuant to Rule 457(h),  these prices are calculated based on the weighted
     average  exercise price of $1.97 per share covering  241,483 shares subject
     to stock options granted under the ISPsoft 2000 Stock Plan.

(3)  Pursuant to Rule 457(h),  these prices are calculated based on the purchase
     price of $0.9775 per share covering 44,059 shares  purchased under the 2001
     Employee Stock Purchase Plan.

(4)  Pursuant to Rule 457(h) and 457(c),  these prices are estimated  solely for
     the  purpose of  calculating  the  registration  fee and are based upon the
     average of the bid and asked  prices of DSET's  Common  Stock on the Nasdaq
     National Market on April 19, 2002.

                                      -ii-
<PAGE>

(5)  Pursuant to Rule 457(h),  these prices are calculated based on the weighted
     average  exercise price of $9.657 per share covering 771,987 shares subject
     to stock options granted under the 1998 Stock Plan.

(6)  The Registrant previously paid the registration fee with respect to 297,201
     of such shares in connection with the filing of its Registration  Statement
     on Form S-8 (File No. 333-92311) on December 8, 1999.

         Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers an indeterminate number of shares as may be
issued as a result of the anti-dilution provisions of the ISPsoft 2000 Stock
Plan (assumed January 31, 2002), the DSET 2001 Employee Stock Purchase Plan and
the DSET 1998 Stock Plan, as amended.

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


                                     -iii-
<PAGE>




                                EXPLANATORY NOTE

     This Registration Statement contains two parts:

     The first part contains a Reoffer Prospectus (the "Prospectus") prepared in
accordance with the  requirements  of Part I of Form S-3. The Prospectus  covers
reoffers  and  resales  of shares of common  stock,  no par value  (the  "Common
Stock"),  of DSET Corporation  ("DSET") by: (i) certain  affiliates of DSET with
respect to options  granted and shares issued prior to the date hereof  pursuant
to ISPsoft's  2000 Stock Plan,  DSET's 2001  Employee  Stock  Purchase  Plan and
DSET's  1998  Stock  Plan,  as amended  (collectively,  the  "Plans");  (ii) all
non-affiliates  who hold less than 1,000 shares pursuant to option exercises and
shares issued under the Plans prior to the date hereof;  and (iii) certain other
non-affiliates listed on the Selling Shareholder table herein.

     The  second  part  contains   "Information  Required  in  the  Registration
Statement"  pursuant to Part II of Form S-8 with respect to option exercises and
share purchases by  non-affiliates  pursuant to the Plans subsequent to the date
hereof.


                                      -iv-



<PAGE>




                                   PROSPECTUS

                   S-3 Reoffer Prospectus dated April 23, 2002

                                DSET CORPORATION

                          56,629 Shares of Common Stock
                   Issuable under the ISPsoft 2000 Stock Plan

                          44,059 Shares of Common Stock
               Issued under the 2001 Employee Stock Purchase Plan

                         602,388 Shares of Common Stock
                 Issuable under the 1998 Stock Plan, as amended

         This Prospectus relates to the public resale, from time to time, of
703,076 shares of our Common Stock (the "Shares") by certain shareholders
identified below in the section entitled "The Selling Shareholders." These
Shares have been or may be acquired: (i) upon the exercise of stock options
granted pursuant to the ISPsoft 2000 Stock Plan and our 1998 Stock Plan; or (ii)
pursuant to our 2001 Employee Stock Purchase Plan (collectively, the ISPsoft
2000 Stock Plan, the 1998 Stock Plan and the 2001 Employee Stock Purchase Plan
referred to herein as the "Plans"). Options may be granted or shares of our
Common Stock may be issued pursuant to the 1998 Stock Plan or the 2001 Employee
Stock Purchase Plan in amounts and to persons not presently known by us. Such
information, when known, may be included in an amendment to this Prospectus.

         We will not receive any of the proceeds from the sale by the Selling
Shareholders of the Shares covered by this Prospectus.

         We have not entered into any underwriting arrangements in connection
with the sale of Shares. The Shares may be sold from time to time by the Selling
Shareholders or by permitted pledgees, donees, transferees or other permitted
successors in interest and may be made on the Nasdaq National Market at prices
and at terms then prevailing or at prices related to the then current market
price, or in negotiated transactions.

         Our Common Stock is traded on the Nasdaq National Market under the
symbol "DSET." On April 19, 2002, the closing sale price of our Common Stock on
the Nasdaq National Market was $0.45 per share.

         All per share amounts set forth in this Prospectus reflect the
one-for-four reverse stock split capitalization effected by us as of the close
of business on August 21, 2001.

          INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 6.

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                 The date of this Prospectus is April 23, 2002.



<PAGE>

<TABLE>
<CAPTION>
                          PROSPECTUS TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
<S>                                                                                                              <C>
Special Note Regarding Forward-Looking Information.....................................................          4
DSET Corporation.......................................................................................          4
Risk Factors...........................................................................................          6
       We have incurred substantial losses in 2001, expect to continue to incur
         additional losses in the future and will not be successful until we reverse this
         trend.........................................................................................          6
       We may require substantial financing to continue operations which may be
         difficult to obtain and may dilute our existing owners' interests.............................          6
       There is a substantial doubt about our ability to continue as a going concern...................          7
       The liquidity of our Common Stock could be adversely affected if we are delisted
         from the Nasdaq National Market...............................................................          8
       If our Common Stock is delisted from the Nasdaq National Market, it may be
         subject to the "penny stock" regulations which may affect the ability of our
         shareholders to sell their shares.............................................................          8
       Our stock price has been volatile...............................................................          9
       Our lack of operating history in providing IP provisioning and management
         applications and services makes evaluating our future performance difficult...................          9
       Integrating ISPsoft's corporate structure and operations with DSET's will be
         challenging and the combined company may not realize the expected benefits
         of the merger.................................................................................          9
       In our competitive markets, potential customers may choose competitors because
         we are selling a new product in a new line of business, which would reduce our
         ability to increase our revenues..............................................................         10
       Customers who are concerned about our viability or integration may delay
         or cancel orders..............................................................................         10
       We may become involved in expensive patent litigation or other intellectual
         property proceedings, which could result in liability for damages or stop our
         development and commercialization efforts.....................................................         11
       There are a number of factors, which may cause substantial variability in our
         quarterly operating results...................................................................         11
       Our success depends on the success and sustainability of the market for advanced
          telecommunications products and services.....................................................         12
       Our inability to keep pace with rapid technological change could lead to declines
          in sales and operating margins...............................................................         13
       If we do not manage our corporate consolidation and potential growth on a cost-
          effective and timely basis, our business could suffer........................................         13
       Intense competition in our target market could decrease our profitability.......................         14
       Because we rely heavily on sales to a limited number of customers for a
          significant portion of revenue, the loss of any one such customer could cause
          our revenues to decline......................................................................         14
       A failure to protect our proprietary rights or to enforce our licensing rights may
          adversely affect our business................................................................         15
</TABLE>

                                      -2-
<PAGE>

<TABLE>

      <S>                                                                                                      <C>
       If our products contain defects, we could experience a decline in revenues and
          damages......................................................................................         15
       We rely on third-party software that may be difficult to replace................................         16
       The revenue from licensing and maintenance of our tools products may decline....................         16
       The competitive market for technical personnel may make it difficult for us to
          meet our current and future demands..........................................................         16
       If our direct sales process is ineffective, our revenues will decline...........................         17
       The uncertain length and variability of our product sales cycle makes our revenue
          stream less predictable......................................................................         17
       Dependence on software license revenues makes our operating results difficult to
          predict......................................................................................         18
       We depend on service revenues to increase our overall revenues; services may not
          achieve profitability........................................................................         18
       We are at risk of securities class action litigation due to our stock price volatility..........         18
       Government regulation and related litigation may adversely affect our customers
          and us.......................................................................................         19
       Potential acquisitions of or by us could be costly or unsuccessful..............................         19
       Anti-takeover provisions of shareholder rights plan, charter, by-laws and certain
          provisions under New Jersey law could reduce our stock price.................................         19
Use of Proceeds........................................................................................         21
The Selling Shareholders...............................................................................         21
Plan of Distribution...................................................................................         25
Legal Matters..........................................................................................         26
Experts................................................................................................         26
Information Incorporated by Reference..................................................................         26
Where You Can Find More Information....................................................................         27
Indemnification of Directors and Officers..............................................................         28
</TABLE>


                                      -3-
<PAGE>




               SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

         This Prospectus and the documents incorporated herein contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. For this purpose, any statements contained herein or
incorporated herein that are not statements of historical fact may be
forward-looking statements. For example, the words "may," "will," "continue,"
"believes," "expects," "anticipates," "intends," "estimates," "should" and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause DSET's results to differ
materially from those indicated by such forward-looking statements. These
factors include those set forth below in the section entitled "Risk Factors." In
particular, the development and marketing of software solutions and related
services to telecommunications services providers by DSET is subject to a number
of significant risks and uncertainties, including, but not limited to: (i) our
ability to continue as a going concern; (ii) risks associated with the
integration of ISPsoft with us following our recent acquisition of ISPsoft and
the potential acquisition of other businesses by us, including risks relating to
unanticipated liabilities or expenses, lower than expected revenues and the
commercialization of acquired technology or products; (iii) the need for
substantial financing to continue operations; (iv) the risk that our Common
Stock may be delisted from the Nasdaq National Market; (v) our dependence on the
market for advanced telecommunications products and services; (vi) rapid
technological change in our industry; (vii) our lack of an operating history in
providing Internet Protocol (IP)-based provisioning and management applications
and services; (viii) the failure to protect proprietary rights or enforce
licensing rights; and (ix) the loss of third-party software we utilize in our
products. The success of DSET depends to a large degree on continued growth in
the market for advanced telecommunications products and services, such as highly
scalable provisioning and electronic-bonding solutions. As a result of such
risks and others expressed from time to time in DSET's filings with the
Securities and Exchange Commission, DSET's actual results may differ materially
from the results discussed in or implied by the forward-looking statements
contained herein.

                                DSET CORPORATION

         We develop and market highly scalable service-provisioning and
electronic-bonding solutions for use by telecommunications providers around the
world. Our Universal Provisioning eXchange (UPX) software platform enables any
service provider to provision, activate, and manage services such as Internet
Protocol (IP) based virtual private networks (VPNs) in complex multi-vendor
network environments. We also offer a family of software solutions for
competitive service providers that enable them to exchange information with
other telecommunications service providers to reduce the time necessary to
provision new voice and data services for their customers.

         Our success will depend on continued growth in the market for advanced
telecommunications products and services, such as highly scalable
service-provisioning and electronic-bonding solutions.

                                      -4-

<PAGE>

         We are a New Jersey corporation. Our principal executive offices are
located at 1160 US Highway 22 East, Bridgewater, New Jersey 08807, and our
telephone number is (908) 526-7500. In this Prospectus, the terms "DSET," "the
Company," "we," "us" and "our" includes DSET Corporation and its subsidiaries.


                                      -5-
<PAGE>


                                  RISK FACTORS

         In addition to the other information in this Prospectus, you should
carefully consider the following factors in evaluating whether to invest in the
Shares. The risks and uncertainties described below are not the only ones we
face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations and financial
results.

         If any of the following risks or other uncertainties actually occur,
our business, financial condition or results of operations could be materially
adversely affected, and may affect our ability to continue as a going concern.
In such case, the trading price of our Common Stock could decline and you may
lose all or part of your investment.

         This Prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this Prospectus.

WE HAVE INCURRED SUBSTANTIAL LOSSES IN 2001, EXPECT TO CONTINUE TO INCUR
ADDITIONAL LOSSES IN THE FUTURE AND WILL NOT BE SUCCESSFUL UNTIL WE REVERSE THIS
TREND

       DSET recently, and ISPsoft since inception, have incurred substantial
losses. We expect to incur operating losses for the foreseeable future.

       Changes in the telecommunications industry have resulted in significant
decreases in our revenue. For the year ended December 31, 2001, we incurred net
losses of approximately $33.3 million.

       If sufficient funds are available, we expect to increase our spending as
we continue to expand our product offerings and commercialization activities. We
will be dependent, in part, on the return of the market for OSS interconnection
products and services, as well as acceptance of the IP provisioning products and
services. As a result, we will need to generate significant revenues before we
will be able to return to profitability.

       Our IP provisioning products and services have only recently been
commercially available and have only seen limited opportunities to test them in
the marketplace. As a result, we have no basis on which to evaluate whether the
market will embrace these products, nor do we have any basis to evaluate whether
we will be able to effectively develop, market and sell additional products and
services. A lack of customer acceptance of these and any future products would
substantially harm our business.

WE MAY REQUIRE SUBSTANTIAL FINANCING TO CONTINUE OPERATIONS WHICH MAY BE
DIFFICULT TO OBTAIN AND MAY DILUTE OUR EXISTING OWNERS' INTERESTS

       We will need significant financing to grow our business. Historically, we
have operated with cash from our initial public offering and cash flow from
operations. Our cash balance has decreased substantially to approximately $13.0
million as of December 31, 2001 from approximately $35.1 million as of December
31, 2000. Subsequently and in connection with our merger with ISPsoft, we
incurred or expect to incur additional cash expenditures of

                                      -6-
<PAGE>

approximately $3.7 million through the end of the first quarter of 2002 for
acquisition, legal, accounting and financial advisory fees and other integration
costs. In addition, we may incur other additional unanticipated merger costs
that may require further cash outlays. Some of these nonrecurring costs will
increase cash expenditures and may impact our ability to continue to fund our
operations. The ability of the newly acquired IP provisioning products and
services to contribute to operating revenues is uncertain since there have been
no significant revenues from this product line to date. Based on our plan, we
believe that our existing available cash and cash equivalents may not be
adequate to satisfy current and planned operations for the next 12 months.
Additionally, we expect that we may require additional financing prior to our
return to profitability.

       If we cannot raise more funds, we could be required to reduce our capital
expenditures, scale back our research and product development plans, reduce our
workforce, license to others products or technologies we would otherwise seek to
commercialize ourselves, sell certain assets, and seek bankruptcy protection.

       We may seek additional funding through collaborative arrangements,
borrowing money and by the sale of additional equity securities. Any sales of
additional equity securities are likely to result in further dilution to our
existing shareholders. Further, if we issue additional equity securities, the
new equity securities may have rights, preferences or privileges senior to those
of existing holders of our Common Stock. Alternatively, we may borrow money from
conventional lenders, possibly at high interest rates, which may affect the
value of your holdings. Despite our efforts, funding may not be available to us
at all or only on terms that are unacceptable to us. We also could be required
to seek funds through arrangements with collaborative partners or others that
may require us to relinquish rights to certain of our technologies, product
candidates or products which we would otherwise pursue on our own.

THERE IS A SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN

         Beginning in the fourth quarter of 2000 and continuing through the
fourth quarter of 2001, we experienced negative cash flows from operations and
substantial declines in our revenues. For the year ended December 31, 2001,
revenue was $9.9 million compared to $47.0 million for the year ended December
31, 2000. Additionally, we recognized $15.7 million in restructuring and
impairment charges during 2001 related to certain asset impairments and
severance payments to reduce headcount. As a result of these events, we have
expended $22.1 million of cash and cash equivalents during 2001 to fund our
operations. Our ability to return to profitability and ability to generate
positive cash flows from operations will have a significant impact on the period
through which our existing cash will be sufficient to fund operations. Based on
our plan, which included the merger with ISPsoft and the resulting cash
requirements for operations, we believe that our existing available cash and
cash equivalents may not be adequate to satisfy current and planned operations
for the next 12 months. Additionally, we expect that we may require additional
financing prior to our return to profitability. All of these factors raise a
substantial doubt as to our ability to continue as a going concern. If we cannot
sufficiently improve our profitability or raise more funds on acceptable terms,
we could be required to further reduce our capital expenditures, reduce our
workforce and possibly explore additional alternatives including seeking
bankruptcy protection.

                                      -7-

<PAGE>

THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED IF WE ARE DELISTED
FROM THE NASDAQ NATIONAL MARKET

       On February 14, 2002, we received notification from the Nasdaq Stock
Market, Inc. ("Nasdaq") that our Common Stock had not maintained the minimum
market value of publicly held shares for the 30 days prior to the date of
notification and we would have ninety (90) days (until May 15, 2002) to regain
compliance. Additionally, on March 5, 2002 Nasdaq notified us that our Common
Stock had failed to maintain a minimum bid price of $1.00 per share for the 30
days prior to the date of notification and we would have ninety (90) days (until
June 3, 2002) to regain compliance. We cannot guarantee that we will regain and
then, maintain compliance with the Nasdaq regulations or that our Common Stock
will not be delisted from the Nasdaq National Market. In the event that we are
delisted from the Nasdaq National Market, we would attempt to trade on either
the Nasdaq SmallCap Market or the OTC Bulletin Board. A delisting from the
Nasdaq National Market may have a material adverse effect on our stock price and
our ability to raise capital through the issuance of additional equity. If our
Common Stock trades on the OTC Bulletin Board, we will be ineligible to use Form
S-3 to register shares of our Common Stock with the Securities and Exchange
Commission, therefore, making it more expensive to register shares of our Common
Stock. In the event our Common Stock is traded on the OTC Bulletin Board, it
would become subject to certain securities law restrictions requiring
broker/dealers who recommend low-priced securities to persons (with certain
exceptions) to satisfy special sales practice requirements, including making an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction. The securities laws
also require additional disclosure in connection with any trades involving
low-priced stocks (subject to certain exceptions), including the delivery, prior
to any transaction, of a disclosure schedule explaining the market for such
stocks and the associated risks. These requirements could severely limit the
market liquidity of our Common Stock and your ability to sell the Common Stock
in the secondary market.

IF OUR COMMON STOCK IS DELISTED FROM THE NASDAQ NATIONAL MARKET, IT MAY BE
SUBJECT TO THE "PENNY STOCK" REGULATIONS WHICH MAY AFFECT THE ABILITY OF OUR
SHAREHOLDERS TO SELL THEIR SHARES

       If Nasdaq delists our Common Stock from the National Market System, it
could become subject to Rule 15g-9 under the Exchange Act, which imposes
additional sales practice requirements on broker/dealers that sell such
securities to persons other than established customers and "accredited
investors" (generally, an individual with a net worth in excess of $1,000,000 or
an annual income exceeding $200,000, or $300,000 together with his or her
spouse's income). For transactions covered by this rule, a broker/dealer must
make a special suitability determination for the purchaser and receive the
purchaser's written consent to the transaction prior to the sale. Consequently,
the rule may adversely affect the ability of the holders of our Common Stock to
sell their shares in the secondary market.

       Regulations of the Securities and Exchange Commission define "penny
stock" to be any non-Nasdaq equity security that has a market price (as therein
defined) of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require delivery, prior to any transaction
of penny stock, of a disclosure schedule prepared by the Securities and Exchange
Commission relating to the penny stock market. The Securities and Exchange
Commission also requires disclosure about commissions payable to both the
broker/dealer and its registered

                                      -8-

<PAGE>

representative and information regarding current quotations of the securities.
Finally, the Securities and Exchange Commission requires that monthly statements
be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.

       If our Common Stock were subject to the rules on penny stocks, the market
liquidity for our Common Stock could be severely and adversely affected.

OUR STOCK PRICE HAS BEEN VOLATILE

       We completed our initial public offering in March 1998. Since then, the
market price of our Common Stock has been highly volatile and is subject to wide
fluctuations. We expect our stock price to continue to fluctuate:

     o    in response to quarterly fluctuations in our operating results;

     o    because of market conditions in our industry;

     o    in  reaction  to  announcements  of  technological  innovations,   new
          products, or significant agreements by us or our competitors;

     o    in  reaction to changes in prices of our  products or the  products of
          our competitors; and

     o    in reaction to changes in trading activity and volume.

OUR LACK OF OPERATING HISTORY IN PROVIDING IP PROVISIONING AND MANAGEMENT
APPLICATIONS AND SERVICES MAKES EVALUATING OUR FUTURE PERFORMANCE DIFFICULT

       Historically, we developed and sold software tools, applications,
electronic-bonding gateways and services to telecommunications equipment
suppliers and competitive telecommunications service providers. The IP
provisioning products and services, although software applications, perform
different functions than our historic products, which have been targeted at
large incumbent communications providers and network providers, and, in part, at
our traditional customer base. In addition, the IP provisioning products have no
history of being sold to our historical customer base. Because we have not
previously operated as a provider of IP provisioning and management
applications, we have no basis to evaluate our ability to develop, market and
sell such products. Our ability to commercialize these products and services and
generate operating profits and positive operating cash flow will depend
principally upon our ability to:

     o    attract and retain an adequate number of customers;

     o    enter new markets and compete successfully in them;

     o    manage operating expenses;

     o    raise additional capital to fund our capital expenditure plans; and

     o    attract and retain qualified personnel.

INTEGRATING ISPSOFT'S CORPORATE STRUCTURE AND OPERATIONS WITH DSET'S WILL BE
CHALLENGING AND THE COMBINED COMPANY MAY NOT REALIZE THE EXPECTED BENEFITS OF
THE MERGER

       The merger of ISPsoft and DSET in January 2002 involves the integration
of two different companies that have previously operated independently.
Integrating DSET's operations,


                                      -9-
<PAGE>

technologies and personnel with those of ISPsoft will be a complex process,
and it is uncertain whether the integration will be completed rapidly or that
after the integration the combined company will achieve the expected benefits
of the merger. Importantly, ISPsoft personnel have never operated as a publicly
held company, and will now be subject to rigorous disclosure and reporting
obligations. The diversion of the attention of management and any difficulties
encountered in the process of combining our companies could lead to possible
unanticipated liabilities and costs and cause the disruption of, or a loss of
momentum in, the business activities of the combined company. We will be forced
to operate in multiple locations in various states. Further, the process of
combining our companies could create uncertainty among employees about their
future roles with us, thereby negatively affecting employee morale. This
uncertainty may adversely affect the ability of us to retain some of our key
employees after the merger. Furthermore, the management of the combined company
will have to establish a new organizational structure that is cost-efficient
and productive. As a consequence, we cannot assure you that we will successfully
integrate ISPsoft or profitably manage the combined company. In addition, we
cannot be certain that, following the transaction, we will achieve revenues, net
income, efficiencies or synergies that justify the merger or that the merger
will result in increased earnings for us in any future period.

IN OUR COMPETITIVE MARKETS, POTENTIAL CUSTOMERS MAY CHOOSE COMPETITORS BECAUSE
WE ARE SELLING A NEW PRODUCT IN A NEW LINE OF BUSINESS, WHICH WOULD REDUCE OUR
ABILITY TO INCREASE OUR REVENUES

       Our success will depend upon the willingness of IP service providers to
accept us as a new provider of IP provisioning and management applications.
While we believe that our customer marketing efforts, including targeted
customer trials of our products and services, will help us to develop products
and services that are attractive to potential customers, we cannot be assured
that we will be successful in overcoming any such resistance nor can we be
assured that customers will buy our products and services. A lack of customer
acceptance would reduce our ability to increase our revenues and would adversely
affect our business. Potential competition to our business will come from four
categories of industry segments. The first class of competitors is the equipment
vendors, such as Cisco, Nortel and Lucent. These vendors typically provide some
management tools with their equipment that would compete with our multi-vendor
products. The second group of competitors is the third-party established
operations support systems vendors such as Eftia, Vitria and Telcordia
Technologies, each of whom could leverage their existing markets to move into
those markets targeted by us. Additional entrants to the marketplace that we
will target include Orchestream, Dorado, Syndesis and CPlane. Competition will
also come from in-house systems that various large service providers such as MCI
Worldcom and AT&T have built for their internal use.

CUSTOMERS WHO ARE CONCERNED ABOUT OUR VIABILITY OR INTEGRATION MAY DELAY OR
CANCEL ORDERS

       Our customers and potential customers may delay or cancel orders for
products and/or services as a result of their concerns and uncertainty over the
evolution, integration and support of our electronic-bonding gateways and IP
provisioning products and services. A delay or cancellation of orders could have
a material adverse effect on our business.

                                      -10-
<PAGE>


WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER INTELLECTUAL
PROPERTY PROCEEDINGS, WHICH COULD RESULT IN LIABILITY FOR DAMAGES OR STOP OUR
DEVELOPMENT AND COMMERCIALIZATION EFFORTS

       We may become a party to patent litigation or other proceedings regarding
intellectual property rights.

       Other types of situations in which we may become involved in patent
litigation or other intellectual property proceedings include:

     o    we may initiate  litigation or other proceedings against third parties
          to enforce our patent rights;

     o    we may initiate  litigation or other proceedings against third parties
          to seek to  invalidate  the patents held by these third  parties or to
          obtain a judgment  that our  products or services do not  infringe the
          patents of these third parties;

     o    if our competitors file patent applications that claim technology also
          claimed  by us,  we may  participate  in  interference  or  opposition
          proceedings to determine the priority of invention; and

     o    if third parties  initiate  litigation  claiming that our processes or
          products infringe their patents or other intellectual property rights,
          we will need to defend against these claims.

       The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. We maintain insurance coverage to
assist in defraying the costs and potential losses associated with defending
actions for intellectual property claims. We do not maintain insurance coverage
for actions commenced by us. Some of our competitors may be able to sustain the
cost of litigation or proceedings more effectively than we can because of their
substantially greater financial resources. If a patent litigation or other
intellectual property proceeding is resolved unfavorably to us, we may be
enjoined from selling our products and services without a license from the other
party and be held liable for significant damages. We may not be able to obtain
any required license on commercially acceptable terms or at all.

       Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace and, therefore, to become profitable.
Patent litigation and other proceedings may also divert significant management
time away from growing our business.

THERE ARE A NUMBER OF FACTORS WHICH MAY CAUSE SUBSTANTIAL VARIABILITY IN OUR
QUARTERLY OPERATING RESULTS

       Our revenue, gross profit, operating income and net income may vary
substantially from quarter to quarter due to a number of factors. Many factors,
some of which are not within our control, may contribute to fluctuations in
operating results. These factors include the following:

     o    market acceptance of our new products;

     o    market  acceptance of the "Pay As You Grow" and Gateway Rental Program
          plans;

     o    timing and levels of hardware and software purchases by customers;

     o    budgetary constraints of our customers;

                                      -11-
<PAGE>


     o    consolidation  within  our target  markets,  such as with  CLECs,  via
          merger, acquisition or cessation of business;

     o    timing, size and stage of application development projects;

     o    new product and service introductions by our competitors or us;

     o    seasonal impact on projects for customers;

     o    our employment patterns;

     o    costs associated with fixed-price contracts;

     o    market  factors  affecting  the  availability  or costs  of  qualified
          technical personnel;

     o    timing  and  customer  acceptance  of  our  new  product  and  service
          offerings;

     o    length of sales cycle;

     o    variations in revenues from our distributors and partners;

     o    costs related to acquisitions of technology or businesses; and

     o    industry and general economic conditions.

       Historically, our revenue has been higher in the fourth quarter due to
capital budgeting and spending patterns by customers. As with the fourth quarter
of 2000, the fourth quarter of 2001 was again the lowest revenue quarter for the
year at approximately $1.9 million. We anticipate that the business will
continue to be subject to seasonal variations. In addition, depending on the
sales program by which the customer acquires our products and services, a
significant portion of quarterly revenue may be recognized in the last few weeks
of the last month of each quarter. As a result, we may not recognize any
negative fluctuations in revenue until the end of a particular quarter.

       Many of our costs, such as personnel and facilities costs, are relatively
fixed in nature. Expense levels are based in part on expectations of future
revenue. As a result, operating results have been and in the future will
continue to be impacted by changes in technical personnel cost and utilization
rates. Technical personnel utilization rates have been and are expected to
continue to be adversely affected during periods of rapid and concentrated
hiring. In addition, during such periods, we are likely to incur greater
technical training costs. Due to these and other factors, if we are successful
in expanding our service offerings and revenue, periods of variability in
utilization are likely to occur. In addition, revenues in any given period are
likely to come from a limited number of customer contracts. Any delay in the
closing of, or the loss of any number of, such contracts would adversely affect
results of operations. Therefore, past operating results and period-to-period
comparisons should not be relied upon as an indication of future operating
performance.

OUR SUCCESS DEPENDS ON THE SUCCESS AND SUSTAINABILITY OF THE MARKET FOR
ADVANCED TELECOMMUNICATIONS PRODUCTS AND SERVICES

       The global telecommunications market is evolving rapidly and it is
difficult to predict its potential size or future growth rate. We cannot assure
investors that the global deregulation and privatization of the worldwide
telecommunication market that has resulted in increased

                                      -12-
<PAGE>

competition and escalating demand for new technologies and services will
continue in a manner favorable to us or our business strategies.

       Since our customers are concentrated in the competitive
telecommunications industry in the United States, our future success is
dependent upon increased utilization of OSS interconnection and related
applications by telecommunications providers, the financial health and buying
patterns of CLECs, which in late 2000 was significantly impaired, and the
continued demand for integration, support and maintenance services. We cannot
guarantee that current or future products or services will achieve acceptance
among telecommunications carriers, network equipment vendors and other potential
customers or that these customers will not adopt alternative architectures or
technologies that are incompatible with our technologies.

       In addition, it is predicted that the telecommunications industry may
experience significant consolidation in the near future. This may result in
fewer potential customers for our products and services, increasing the level of
competition in the industry. Also, due to the predicted continued cash shortage
for the small to medium telecommunications providers, larger or consolidated
telecommunications providers may have stronger purchasing power, which could put
pressure on prices and result in lower operating margins.

OUR INABILITY TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE COULD LEAD TO
DECLINES IN SALES AND OPERATING MARGINS

       Over the last decade, and especially in the last year, the market for
telecommunications products and related services has been characterized by rapid
technological developments, evolving industry standards, changes in end-user
requirements and frequent new product and service introductions. Continued
changes such as these may render our existing product and service offerings
obsolete. As a result, our position in this market could be negatively impacted
due to unforeseen changes in product features and functions of competing
products. Our future results of operations will depend in part on our ability to
respond to these changes by enhancing existing products and services and by
developing and introducing, on a timely and cost-effective basis, new products,
features and related services to meet or exceed technological advances
introduced by competitors. However, we cannot guarantee success in identifying,
developing and marketing new products, product enhancements and related services
necessary to keep pace with technological change, which could lead to declines
in sales and operating margins.

IF WE DO NOT MANAGE OUR CORPORATE CONSOLIDATION AND POTENTIAL GROWTH ON A
COST-EFFECTIVE AND TIMELY BASIS, OUR BUSINESS COULD SUFFER

       Our downsizing throughout 2001 has placed, and is expected to continue to
place, a significant strain on our managerial, operational and technical
resources. Our ability to manage this consolidation or, when able, to grow
effectively, will require continued improvement of operational, financial and
other internal systems, as well as business development and strategic alliance
capabilities. Additionally, we must continue to attract, hire, train, retain,
motivate and manage our employees. We must allocate sufficient engineering
resources to improve the quality and depth of our current offerings and develop
new products. The failure to manage the reduced employee base, improve operating
systems or integrate resources when needed on a cost-effective and timely basis
could have a material adverse effect on our business.

                                      -13-
<PAGE>


INTENSE COMPETITION IN OUR TARGET MARKET COULD DECREASE OUR PROFITABILITY

       We compete in rapidly changing markets that are intensely competitive and
involve changing technologies, evolving industry standards, frequent new product
introductions, regulatory issues and rapid changes in customer requirements. We
compete with other interconnection software providers, order management system
providers, system integrators, IP provisioning providers and in-house
development staffs of telecommunications providers and network equipment vendors
via partnerships with our direct product competitors or through development by
them of competing products. Many of our current and potential competitors have
longer operating histories, greater name recognition, larger or captive customer
bases and significantly greater financial, technical, sales, customer support,
marketing and other resources.

       We believe the principal competitive factors affecting the market for our
products are:

     o    pricing of our products and services;

     o    breadth and depth of solutions offered;

     o    product quality and performance;

     o    strength of core technology and product features such as adaptability,
          scalability,  ability to integrate with other products,  functionality
          and ease of use;

     o    ability to install and implement solutions;

     o    customer support and service;

     o    relationships with business partners and alliances; and

     o    continued building of a base of satisfied and referable customers.

BECAUSE WE RELY HEAVILY ON SALES TO A LIMITED NUMBER OF CUSTOMERS FOR A
SIGNIFICANT PORTION OF REVENUE, THE LOSS OF ANY ONE SUCH CUSTOMER COULD CAUSE
OUR REVENUES TO DECLINE

       We currently derive, and expect to continue to derive, a significant
portion of our revenues from a limited number of customers including competitive
service providers, or CSPs. For the year ended December 31, 2001, we had one
customer who accounted for approximately 19% of total revenues. For the quarter
ended March 31, 2001, we had one customer, which accounted for 37% of revenues
for such quarter. For the quarter ended June 30, 2001, we had two customers,
which accounted for 14% and 10% of revenues, respectively, for such quarter. For
the quarter ended September 30, 2001, we had three customers, which accounted
for 12%, 11%, and 10% of revenues, respectively, for such quarter. For the
quarter ended December 31, 2001, we had one customer, which accounted for 15% of
revenues for such quarter. The amount of revenue derived from a specific
customer for any one product varies from period to period, and a major customer
in one period may not produce significant additional revenue in a subsequent
period. Other than certain agreements that provide for on-going maintenance
revenues or minimum royalties for run-time licenses, none of our customers have
entered into agreements requiring on-going minimum purchases. Due to a continued
decrease in the number of existing and prospective CSPs as a result of continued
economic uncertainties, to the extent that we are not able to capture new major
customers or to maintain relations with existing major customers, our revenues
may be subject to further substantial period-to-period fluctuations and could
decline significantly.

                                      -14-
<PAGE>


A FAILURE TO PROTECT OUR PROPRIETARY RIGHTS OR TO ENFORCE OUR LICENSING RIGHTS
MAY ADVERSELY AFFECT OUR BUSINESS

       Our success and ability to compete effectively is dependent, in part,
upon our proprietary rights. We rely primarily on a combination of copyright,
trademark, patent and trade secret laws, as well as confidentiality procedures
and contractual restrictions, to establish and protect these proprietary rights.
Our practice is to enter into non-competition, non-disclosure and invention
assignment agreements with our employees and consultants, and into
non-disclosure agreements with customers, partners and distributors. We cannot
assure investors that these measures will be adequate to protect our proprietary
rights.

       We may also be subject to further risks as we enter into transactions in
countries where intellectual property laws are not well developed or are
difficult to enforce. Legal protections of proprietary rights may be ineffective
in other countries. Litigation may be necessary to defend and enforce those
proprietary rights, which could result in substantial costs and diversion of
management resources and could have a material adverse effect on our business,
financial condition and results of operations, regardless of the final outcome
of such litigation. Despite efforts to safeguard and maintain proprietary rights
both in the United States and abroad, there is no guarantee that we will be
successful in doing so. Furthermore, we cannot assure investors that the steps
taken by us will be adequate to deter misappropriation or independent
third-party development of our technology or to prevent an unauthorized third
party from copying or otherwise obtaining and using our products or technology.
Any of these events could have a material adverse effect on our business,
financial condition and results of operations.

       DSET, or our employees, may become subject to claims of infringement or
misappropriation of the intellectual property rights of others. In addition, in
our licenses and software development and distribution agreements, we agree to
indemnify customers and distributors for any expenses and liabilities resulting
from claimed infringements of patents, trademarks, copyrights or other
proprietary rights of third parties. The amount of indemnity obligations may be
greater than the revenue that may have been received under these agreements. We
cannot assure investors that third parties will not assert infringement or
misappropriation claims against us, our customers, partners or distributors in
the future with respect to our employees or current or future products or
services. Any claims or litigation, with or without merit, could be
time-consuming, result in costly litigation, cause product shipment delays or
require us to enter into royalty or licensing arrangements. Royalty or licensing
arrangements, if necessary, may not be available on terms acceptable to us, if
at all, which could have a material adverse effect on our business, financial
condition and results of operations.

IF OUR PRODUCTS CONTAIN DEFECTS, WE COULD EXPERIENCE A DECLINE IN REVENUES
AND DAMAGES

       Applications developed, licensed and sold by us may contain errors or
failures. We cannot guarantee that errors or failures will not be found in our
products or applications or, if discovered, that we will be able to successfully
correct any errors or failures in a timely manner or at all. The occurrence of
errors or failures in our products and applications could result in loss of or
delay in market acceptance, increased service and warranty costs or payment of
compensatory or other damages. In addition, errors or failures may result in
delays in recognition of revenue and diversion of engineering resources during
the period in which we are required to correct any defects. In 2000 and 2001, we
obtained errors and omissions insurance to cover

                                      -16-
<PAGE>


liability associated with our software development and license agreements.
There is no assurance that we will be able to maintain this coverage in the
future. Although agreements with customers typically contain provisions intended
to limit exposure to potential claims as well as any liabilities arising from
such claims, our contracts with customers may not effectively protect us against
the liabilities and expenses associated with software errors or failures.
Accordingly, errors or failures in our products, solutions or applications could
have a material adverse effect upon our business, financial condition and
results of operations.

WE RELY ON THIRD-PARTY SOFTWARE THAT MAY BE DIFFICULT TO REPLACE

       Some of the software we license from third parties and utilize in
conjunction with our products may be difficult to replace. This software may not
continue to be available on commercially reasonable terms, if at all. In many
cases we have identified potential replacements or may have procured source code
rights for certain third-party software. However, replacement software may not
have the same functionality or integration within our products. Additionally, of
the third-party software that is not at least in some form immediately
replaceable, we would need to internally develop alternatives or increased
functionality, which could take substantial time and resources. The loss or
inability to maintain any of these technology licenses could result in delays in
the sale of our products and services until equivalent technology, if available,
is identified, licensed, and integrated, which could harm our business.

THE REVENUE FROM LICENSING AND MAINTENANCE OF OUR TOOLS PRODUCTS MAY DECLINE

       In 2001, we transitioned primary responsibility for licensing, support
and development services of our application development toolkits and certain of
our gateway products to a distributor for which we receive a percentage of their
revenue. We cannot guarantee any revenue from this arrangement and historical
projections may be inaccurate in producing forecasts for these products.

       Portions of the revenue from this arrangement are generated from direct
licensing, royalties for run-time licenses, maintenance and additional fees
relative to development projects. Run-time royalties generally become due upon
the deployment by equipment vendors to telecommunications carriers of network
devices, which have embedded applications built with our software. Many
customers are contractually required to periodically report the sales of these
network devices to our distributor or us. Although we both generally have the
right to periodic audits in these contracts which provide for run-time
royalties, we cannot assure investors that customers will accurately report
their sales or that we will be able to effectively monitor and enforce our
contractual rights with respect to run-time royalty fees.

THE COMPETITIVE MARKET FOR TECHNICAL PERSONNEL MAY MAKE IT DIFFICULT FOR US TO
MEET OUR CURRENT AND FUTURE DEMANDS

       Our future success depends to a significant extent on our ability to
attract, hire, train, retain and motivate qualified technical and sales
personnel, with appropriate levels of managerial and technical capabilities. Our
complex technology generally requires a significant level of expertise to
effectively develop and market our products and services and to perform custom
application development and installation services. We believe that there remains
significant competition for professionals with the advanced skills required. We
have at times experienced, and continue to experience, difficulty in recruiting
and at times retaining, qualified personnel. We compete for

                                      -16-
<PAGE>

personnel with software companies, system integrators and telecommunications
companies, many of which have greater resources. Market conditions also may
affect our ability to attract and retain qualified personnel. This makes it
difficult for us to hire the quality and number of highly skilled technical
and sales personnel required to meet current and expected future demand. In
addition, it may make it more expensive to hire those personnel in general. Due
to this competition, and market conditions we have experienced, and expect to
continue to experience, turnover in technical and sales personnel is high. There
is no guarantee that we will be successful in attracting and retaining the
technical or sales personnel required to conduct and successfully expand
operations. Our business, financial condition and results of operations could
be materially adversely affected if we are unable to attract, hire, train,
retain and motivate qualified technical and sales personnel.

IF OUR DIRECT SALES PROCESS IS INEFFECTIVE, OUR REVENUES WILL DECLINE

       Although we are aggressively striving to enhance and expand our strategic
alliances programs, we continue to sell our products primarily through our
direct sales force. We believe that there is significant competition for sales
personnel with the advanced skills and technical knowledge we desire. Our
inability to hire and train competent sales and sales support personnel, or our
failure to retain them, would harm our business. Additionally, by relying
primarily on a direct sales model, we may miss opportunities available through
other channels. We plan to expand our sales efforts to include additional
resellers and partners and the failure to expand indirect channels may place us
at a competitive disadvantage.

       Our entire sales and marketing strategy involves substantial risk. There
can be no assurance that we will be successful in implementing our strategy,
that it will lead to achievement of our objectives, or that some resellers or
partners will not attempt to partner with our competitors, or develop or acquire
products, or services that compete with our products or services. Any inability
to maintain our strategic relationships or to enter into any additional
strategic relationships may have a material adverse affect on our business. If
we are unable to implement our strategy effectively, our business will be
materially adversely affected.

THE UNCERTAIN LENGTH AND VARIABILITY OF OUR PRODUCT SALES CYCLE MAKES OUR
REVENUE STREAM LESS PREDICTABLE

       Our products are often used by our customers to deploy mission-critical
solutions for their businesses. Additionally, the cost of our products and
suites of products can be significant to a customer's overall financial
position. As such, customers generally consider a wide range of issues before
committing to purchase products, including product benefits, ability to operate
with existing or planned computer systems, scalability, reliability and
competitive price. Many customers are still in the early stages of developing
their businesses and need to be educated about the use and benefits of our
products and services. Additionally, the purchase of our products generally
involves a significant commitment of capital and other resources by the
customer. This can mean additional technical reviews, assessment of competitive
products and approval at several levels within the customer's management and
executive structure.

       The period of time between initial customer contact and execution of a
license agreement or contract for services with telecommunications service
providers typically ranges from three to nine months. The variability of these
sales cycles could have a material adverse effect on our business, financial
condition and results of operations.

                                      -17-
<PAGE>

DEPENDENCE ON SOFTWARE LICENSE REVENUES MAKES OUR OPERATING RESULTS DIFFICULT
TO PREDICT

       License revenues in any quarter are difficult to forecast because they
depend on relatively few orders booked and shipped in that quarter. Moreover, we
have historically recognized a substantial percentage of revenues in the last
month of the quarter, frequently in the last week or even the last days of the
quarter, and we expect this trend to continue for as long as our licensed
software products represent a substantial part of our overall business. Since
our expenses are relatively fixed in the near term, any shortfall from
anticipated revenues or any delay in the recognition of revenues could result in
significant variations in operating results from quarter to quarter. We find it
difficult to forecast quarterly license revenues because our sales cycles, from
initial evaluation to delivery of software, is lengthy and varies substantially
from customer to customer. If revenues fall below our expectations in a
particular quarter, our business could be harmed. In the first quarters of
fiscal 2001, our revenues did, in fact, fall below our own and consensus
securities analysts' estimates for those quarters and, as a result, the price of
our stock declined significantly during those periods. Specifically, license
revenues decreased by 92% to $2.6 million for the year ended December 31, 2001
from $32.9 million for the year ended December 31, 2000. Although we have
introduced both "Pay As You Grow" and Gateway Rental Program pricing models
providing pricing alternatives to CSPs, if our revenues fall below our own
estimates or below the consensus securities analysts' estimate in an upcoming
quarter, our stock price could decline further, harming our business
significantly in terms of, among other things, diminished employee morale and
public image.

WE DEPEND ON SERVICE REVENUES TO INCREASE OUR OVERALL REVENUES; SERVICES MAY
NOT ACHIEVE PROFITABILITY

       Since the introduction of our interconnection gateway products in 1998,
most of our customers have installed and are operating our products. Many of
these have entered into service agreements, which make up a portion of our
revenue. Service revenues represented 73.5%, 30.2% and 46.0% of total revenues
for fiscal 2001, 2000 and 1999, respectively. The level of service revenues
depends largely upon our implementation services and ongoing renewals of
customer support contracts by our installed customer base. Our implementation
revenues could decline if third-party organizations such as systems integrators
compete for the installation or servicing of our products. In addition, our
customer support contracts might not be renewed in the future. Due to the
increasing costs of operating a professional services organization, we may not
be able to sustain profitability in this part of our business in the near
future, or ever.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR STOCK PRICE
VOLATILITY

       In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation, either due
to stock price declines associated with our failure to meet consensus securities
analysts' estimates for revenues or earnings for prior fiscal periods or due to
future volatility in our stock price. This litigation could result in
substantial costs and divert management's attention and resources. We are not
aware of any litigation due to stock price volatility at this time.

                                      -18-
<PAGE>


GOVERNMENT REGULATION AND RELATED LITIGATION MAY ADVERSELY AFFECT OUR CUSTOMERS
AND US

       While our operations are not directly regulated, existing and potential
customers are subject to a variety of United States and foreign governmental
regulations. These regulations and future changes to them may negatively impact
the telecommunications industry, limit the number of potential customers for our
products and services or otherwise have a material adverse effect on our
business, financial condition and results of operations. Recently enacted
legislation, including the Telecommunications Act of 1996, deregulating the
telecommunications industry has caused and may continue to cause changes in the
telecommunications industry, including the entrance of new competitors and
possible industry consolidation. These events could reduce our potential
customer base, increase pricing pressures, decrease demand for our products,
increase the cost of doing business or otherwise have a material adverse effect
on our business, financial condition and results of operations. Currently the
Federal Communications Commission and state authorities are implementing the
provisions of the Telecommunications Act of 1996 and several of the decisions by
the Federal Communications Commission and state authorities are being challenged
in court. In addition, Congress is exploring potential additional changes. We
cannot predict the extent to which such legislation and related litigation will
affect our current and potential customers or ultimately affect our business,
results of operations and financial condition.

POTENTIAL ACQUISITIONS OF OR BY US COULD BE COSTLY OR UNSUCCESSFUL

       As part of our strategy, we intend to continue to pursue acquisitions of
businesses or technologies to broaden our product and service offerings, add
technical or sales personnel, increase our presence in existing markets, expand
into new geographic markets, establish strategic relationships and obtain
desirable customer relationships. If we buy another company or selected assets
or technologies, we could have difficulty assimilating acquired personnel,
operations, customers or vendors. In addition, one or more of such personnel,
customers or vendors may decide not to work for or continue to do business with
us. These difficulties could disrupt our ongoing business, distract management
and employees and increase expenses. Although we conduct due diligence reviews
with respect to all acquisition candidates, all material liabilities or risks
related to potential acquisitions may not be successfully identified.
Furthermore, we may have to incur debt or issue equity securities to pay for any
future acquisitions, the issuance of which could be dilutive to existing
shareholders. In addition, certain of our key personnel have executed change of
control agreements detailing circumstances governing their removal and severance
rights in any acquisition or change in our management structure.

ANTI-TAKEOVER PROVISIONS OF SHAREHOLDER RIGHTS PLAN, CHARTER, BY-LAWS AND
CERTAIN PROVISIONS UNDER NEW JERSEY LAW COULD REDUCE OUR STOCK PRICE

       On July 20, 2001, our board of directors adopted a shareholder rights
plan. Under the rights plan, each of our shareholders of record on July 31, 2001
received a distribution of one right for each share of our Common Stock.
Initially, the rights are represented by our Common Stock certificates, are not
traded separately from our Common Stock, and are not exercisable. The rights
become exercisable only if a person acquires, or announces a tender offer, that
would result in ownership of 15% or more of our Common Stock, at which time each
right would enable the holder to buy one one-thousandth of a share of our Series
A preferred stock at an

                                      -19-
<PAGE>

exercise price of $20, subject to adjustment. The actual number of shares
acquirable by the holder equals $20 divided by one-half of the then current
market price of our Common Stock. Additionally, the rights plan provides that
in the event of a subsequent merger or other acquisition of us, the holders
of rights will be entitled to buy shares of common stock of the acquiring
entity at one-half of the market price of the acquiring company's shares.

       In addition, anti-takeover provisions of New Jersey law, our Certificate
of Incorporation and By-Laws could make it more difficult for a third party to
acquire control of us, even if such change would be beneficial to our
shareholders. Our Certificate of Incorporation provides that the board of
directors may issue preferred stock with superior rights and preferences without
common shareholder approval.

         Each of these anti-takeover measures could have the effect of delaying,
deterring or preventing a change in control. This could be harmful to
shareholders because it could prevent them from realizing a premium for their
stock.

                                      -20-
<PAGE>


                                 USE OF PROCEEDS

         DSET will not receive any proceeds from the sale of the Shares covered
by this Prospectus. While DSET will receive sums upon any exercise of options by
the Selling Shareholders, DSET currently has no plans for their application,
other than for general corporate purposes. DSET cannot assure that any of such
options will be exercised.

                            THE SELLING SHAREHOLDERS

         The individuals listed below (the "Selling Shareholders") have or will
acquire the Shares being registered pursuant to the exercise of options
previously granted to them or assumed by DSET or through the 2001 Employee Stock
Purchase Plan. The Shares may not be sold or otherwise transferred by the
Selling Shareholders unless and until the applicable options are exercised in
accordance with their terms.

         The following table sets forth: (i) the name of each Selling
Shareholder; (ii) his or her position(s), office or other material relationship
with DSET and its predecessors or affiliates, over the last three years; (iii)
the number of shares of Common Stock owned (or subject to options) by each
Selling Shareholder as of the date of this Prospectus and prior to this
offering; (iv) the number of shares of Common Stock which may be offered and are
being registered for the account of each Selling Shareholder by this Prospectus
(some of which have been or may be acquired by the Selling Shareholders pursuant
to the exercise of options subject to the appropriate vesting of such options);
and (v) the amount of Common Stock to be owned by each such Selling Shareholder
if such Selling Shareholder were to sell all of their shares of Common Stock
covered by this Prospectus.

         DSET cannot assure that any of the Selling Shareholders will offer for
sale or sell any or all of the Shares offered by them pursuant to this
Prospectus.


                                      -21-
<PAGE>


<TABLE>
<CAPTION>
                                                                                                                         NUMBER
                                                                     NUMBER OF                                           SHARES/
                                                                       SHARES/                                        PERCENTAGE OF
                                                                    PERCENTAGE OF                                        COMMON
                                                                    COMMON STOCK                                       STOCK OWNED
                                                                      PRIOR TO                     NUMBER OF            AFTER THE
                                                                   OFFERING (BOTH                  SHARES OF            OFFERING
                                                                    HELD DIRECTLY                   COMMON             (BOTH HELD
                                    POSITION WITH                        OR                       STOCK TO BE          DIRECTLY OR
       NAME                             DSET                        INDIRECTLY)(1)                  OFFERED           INDIRECTLY(2)
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>                             <C>                            <C>                 <C>
William P. McHale, Jr.........      CEO, Chairman of the            376,226/6.9%(3)                306,138             70,088/1.4%
                                      Board and Director
Binay Sugla...................      President and Director          247,133/4.7%(4)                131,629             115,504/2.3%
Jacob J. Goldberg.............      Director                          26,875/*(5)                   20,625               6,250/*
Arun Inam.....................      Director                          12,500/*(6)                   12,500                 0/*
Andrew C. Lipman..............      Director                          26,875/*(7)                   20,625               6,250/*
Carl Pavarini.................      Director                          12,500/*(8)                   12,500                 0/*
C. Daniel Yost................      Director                          26,875/*(9)                   20,625               6,250/*
Bruce M. Crowell..............      Vice President, Chief          111,819/2.2%(10)                 75,819               36,000/*
                                      Financial Officer and
                                      Secretary
Jeffery S. Gill...............      Vice President,                 64,825/1.3%(11)                 64,000                825/*
                                      Professional Services
Louis P. Davidov..............      TPI Specialist                    2,611/*(12)                      485               2,126/*
Proneel Guptan................      Senior Research Engineer          4,253/*(13)                      915               3,338/*
Jeffrey N. Klouda.............      Director, Customer               14,846/*(14)                    6,437               8,409/*
                                      Engineering Services
Vincent D. Leone..............      Vice President, US Sales         11,586/*(15)                    3,836               7,750/*
George P. Lerma...............      Field Engineer                    3,152/*(16)                    1,389               1,763/*
Thomas J. Llewelyn............      Senior Accountant                 6,697/*(17)                    3,959               2,738/*
Fan Maurice Lok...............      Senior Research Engineer          5,765/*(18)                    2,419               3,346/*
Lewis A. Paskin...............      Director, TPI                    13,523/*(19)                    5,073               8,450/*
Judy A. Sarasua...............      National Sales Manager,           8,791/*(20)                    1,562               7,229/*
                                      Gateways
Stephen Van Houten............      Director of Human                20,484/*(21)                    6,471               13,950/*
                                      Resources
James Michael Vogel...........      Senior Architect                 19,192/*(22)                      892               18,300/*
Michael A. Walch..............      Director of Accounting           15,378/*(23)                    5,177               10,201/*
</TABLE>
---------------
* Less than one percent.

(1)  Applicable  percentage of ownership is based on 5,082,402  shares of Common
     Stock  outstanding as of March 31, 2002, plus any Common Stock  equivalents
     held by such holder.

                                      -22-
<PAGE>

(2)  Assumes  that all  Shares  to be  offered,  as set  forth  above,  are sold
     pursuant  to this  offering  and that no other  shares of Common  Stock are
     acquired  or  disposed  of  by  the  Selling   Shareholders  prior  to  the
     termination of this  offering.  Because the Selling  Shareholders  may sell
     all, some or none of their Shares or may acquire or dispose of other shares
     of Common Stock, no reliable  estimate can be made of the aggregate  number
     of Shares  that will be sold  pursuant  to this  offering  or the number or
     percentage of shares of Common Stock that each Selling Shareholder will own
     upon completion of this offering.

(3)  Includes  353,656 vested and unvested  options to purchase shares of Common
     Stock prior to this  offering.  Also includes  4,002 shares of Common Stock
     held by Mr.  McHale's  wife and 639  shares  of  Common  Stock  held by Mr.
     McHale's minor child.

(4)  Includes  131,629 vested and unvested  options to purchase shares of Common
     Stock prior to this offering.

(5)  Includes  26,875 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(6)  Includes  12,500 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(7)  Includes  26,875 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(8)  Includes  12,500 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(9)  Includes  26,875 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(10)  Includes 89,875 vested and unvested options to purchase shares of Common
      Stock prior to this offering and 5,444 shares issued pursuant to the 2001
      Employee Stock Purchase Plan.

(11) Includes  64,000 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(12) Includes  2,101  vested and unvested  options to purchase  shares of Common
     Stock prior to this  offering  and 485 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(13) Includes  3,338  vested and unvested  options to purchase  shares of Common
     Stock prior to this  offering  and 915 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(14) Includes  8,051  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 6,437 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(15) Includes  7,750  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 3,836 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(16) Includes  1,763  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 1,389 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(17) Includes  2,738  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 3,959 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(18) Includes  3,346  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 2,419 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

                                      -23-
<PAGE>

(19) Includes  8,175  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 5,073 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(20) Includes  7,229  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 1,562 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(21) Includes  12,156 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 6,471 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(22) Includes  18,300 vested and unvested  options to purchase  shares of Common
     Stock prior to this  offering  and 892 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(23) Includes  8,738  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 5,177 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.


                                      -24-
<PAGE>


                              PLAN OF DISTRIBUTION

         The Selling Shareholders have not advised DSET of any specific plan for
distribution of the Shares. If and when they occur, such sales may be made in
any of the following manners:

     o    On the  Nasdaq  National  Market (or  through  the  facilities  of any
          national securities exchange or U.S. inter-dealer  quotation system of
          a registered national securities association,  on which the Shares are
          then listed,  admitted to unlisted trading  privileges or included for
          quotation);

     o    In public or privately negotiated transactions;

     o    In transactions involving principals or brokers;

     o    In a combination of such methods of sale; or

     o    Any other lawful methods.

         Although sales of the Shares are, in general, expected to be made at
market prices prevailing at the time of sale, the Shares may also be sold at
prices related to such prevailing market prices or at negotiated prices, which
may differ considerably.

         In offering the Shares covered by this Prospectus, each of the Selling
Shareholders and any broker-dealers who sell the Shares for the Selling
Shareholders may be "underwriters" within the meaning of the Securities Act of
1933, and any profits realized by such Selling Shareholders and the compensation
of such broker-dealers may be underwriting discounts and commissions.

         Sales through brokers may be made by any method of trading authorized
by any stock exchange or market on which the Shares may be listed, including
block trading in negotiated transactions. Without limiting the foregoing, such
brokers may act as dealers by purchasing any or all of the Shares covered by
this Prospectus, either as agents for others or as principals for their own
accounts, and reselling such Shares pursuant to this Prospectus. The Selling
Shareholders may effect such transactions directly, or indirectly through
underwriters, broker-dealers or agents acting on their behalf. In connection
with such sales, such broker-dealers or agents may receive compensation in the
form of commissions, concessions, allowances or discounts, any or all of which
might be in excess of customary amounts.

         Each of the Selling Shareholders is acting independently of DSET in
making decisions with respect to the timing, manner and size of each sale of
Shares. DSET has not been advised of any definitive selling arrangement at the
date of this Prospectus between any Selling Shareholder and any broker-dealer or
agent.

         To the extent required, the names of any agents, broker-dealers or
underwriters and applicable commissions, concessions, allowances or discounts,
and any other required information with respect to any particular offer of the
Shares by the Selling Shareholders, will be set forth in a Prospectus
Supplement.

         The expenses of preparing and filing this Prospectus and the related
Registration Statement with the Securities and Exchange Commission will be paid
entirely by DSET. Shares of Common Stock covered by this Prospectus also may
qualify to be sold pursuant to Rule 144

                                      -25-
<PAGE>

under the Securities Act of 1933, rather than pursuant to this Prospectus. The
Selling Shareholders have been advised that they are subject to the applicable
provisions of the Securities Exchange Act of 1934, as amended, including without
limitation, Rule 10b-5 thereunder.

         Neither DSET nor the Selling Shareholders can estimate at the present
time the amount of commissions or discounts, if any, that will be paid by the
Selling Shareholders on account of their sales of the Shares from time to time.

                                  LEGAL MATTERS

         The validity of the shares of Common Stock offered hereby will be
passed upon for DSET by Hale and Dorr LLP, 650 College Road East, Princeton, New
Jersey 08540.

                                     EXPERTS

       The consolidated financial statements of DSET Corporation as of December
31, 2001 and 2000 and for each of the three years in the period ended December
31, 2001 incorporated by reference herein in this Form S-8 have been so included
in reliance on the report (which contains an explanatory paragraph relating to
DSET Corporation's ability to continue as a going concern as described in Note 2
to the financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

       The financial statements of ISPsoft (a Development Stage Company) as of
December 31, 1999 and 2000 and for the period March 30, 1999 (date of inception)
to December 31, 1999 and for the year ended December 31, 2000 incorporated by
reference in this Registration Statement have been so included in reliance on
the report of Amper, Politziner & Mattia, P.A. independent auditors, given on
the authority of said firm as experts in auditing and accounting.

                      INFORMATION INCORPORATED BY REFERENCE

         The Securities and Exchange Commission allows DSET to "incorporate by
reference" the information DSET files with the Securities and Exchange
Commission, which means that DSET can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Prospectus, and information that DSET files later with
the Securities and Exchange Commission will automatically update and supersede
this information. DSET incorporates by reference the documents listed below and
any future filings made by DSET with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934 until the
filing of a post-effective amendment to this Prospectus which indicates that all
securities registered have been sold or which deregisters all securities then
remaining unsold:

     o    The annual report on Form 10-K for the fiscal year ended  December 31,
          2001  of DSET  Corporation,  filed  on  April  1,  2002,  to  disclose
          information  regarding the financial  position,  results of operations
          and cash flows of DSET Corporation and its subsidiaries;

     o    The current report on Form 8-K filed on February 7, 2002; and

                                      -26-
<PAGE>


     o    The  description  of  DSET's  Common  Stock,  no par  value,  which is
          contained in DSET's Registration  Statement on Form 8-A filed pursuant
          to  Section  12(g) of the  Exchange  Act of 1934 in the form  declared
          effective by the Securities and Exchange Commission on March 12, 1998,
          and any  subsequent  amendments  or reports  filed for the  purpose of
          updating such description.

         DSET will provide to any person, including any beneficial owner of its
securities, to whom this Prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in this Prospectus but not
delivered with this Prospectus. You may make such requests at no cost to you by
writing or telephoning DSET at the following address or number:

                  DSET Corporation
                  1160 US Highway 22 East
                  Bridgewater, New Jersey 08807
                  Attention:  Manager, Legal Affairs
                  Telephone:  (908) 526-7500

         You should rely only on the information incorporated by reference or
provided in this Prospectus or any Prospectus Supplement. DSET has not
authorized anyone else to provide you with different information. DSET is not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus or any
Prospectus Supplement is accurate as of any date other than the date on the
front of those documents.

                       WHERE YOU CAN FIND MORE INFORMATION

         DSET files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. DSET's Securities
and Exchange Commission filings are available to the public over the Internet at
the Securities and Exchange Commission's website at http://www.sec.gov. You may
also read and copy, at prescribed rates, any document DSET files with the
Securities and Exchange Commission at the Securities and Exchange Commission's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the Securities and Exchange Commission's Public Reference Room.

         DSET has filed with the Securities and Exchange Commission a
Registration Statement on Form S-8 under the Securities Act of 1933 with respect
to the Shares offered hereby. This Prospectus, which constitutes a part of that
registration statement, does not contain all the information contained in the
registration statement and its exhibits. For further information with respect to
DSET and the Shares, you should consult the registration statement and its
exhibits. Statements contained in this Prospectus concerning the provisions of
any documents are necessarily summaries of those documents, and each statement
is qualified in its entirety by reference to the copy of the document filed with
the Securities and Exchange Commission. The registration statement and any of
its amendments, including exhibits filed as a part of the registration statement
or an amendment to the registration statement, are available for inspection and
copying as described above.

                                      -27-
<PAGE>

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 14A:3-5 of the New Jersey Business Corporation Act permits each
New Jersey business corporation to indemnify its directors, officers, employees
and agents against expenses and liabilities in connection with any proceeding
involving such persons by reason of his serving or having served in such
capacities or for each such person's acts taken in his or her capacity as a
director, officer, employee or agent of the corporation if such actions were
taken in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and with respect to any
criminal proceeding, if he or she had no reasonable cause to believe his or her
conduct was unlawful, provided that any such proceeding is not by or in the
right of the corporation.

         Section 14A:2-7(3) of the New Jersey Business Corporation Act enables a
corporation in its certificate of incorporation to limit the liability of
directors and officers of the corporation to the corporation or its
shareholders. Specifically, the certificate of incorporation may provide that
directors and officers of the corporation will not be personally liable for
money damages for breach of a duty as a director or an officer, except for
liability: (i) for any breach of the director's or officer's duty of loyalty to
the corporation or its shareholders; (ii) for acts or omissions not in good
faith or which involve a knowing violation of law; (iii) as to directors only,
under Section 14A:6-12(1) of the New Jersey Business Corporation Act, which
relates to unlawful declarations of dividends or other distributions of assets
to shareholders or the unlawful purchase of shares of the corporation; or (iv)
for any transaction from which the director or officer derived an improper
personal benefit.

         DSET's Amended and Restated Certificate of Incorporation limits the
liability of its directors and officers as authorized by Section 14A:2-7(3).

         Article XI of DSET's Amended and Restated By-laws specifies that DSET
shall indemnify its directors, officers, employees and agents to the extent such
parties are a party to any action because he was a director, officer, employee
or agent of DSET. This provision of the By-laws is deemed to be a contract
between DSET and each director and officer who serves in such capacity at any
time while such provision and the relevant provisions of the New Jersey Business
Corporation Act are in effect, and any repeal or modification thereof shall not
offset any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts. The
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of capital stock of DSET is required to adopt, amend or
repeal such provisions of the By-laws.

         DSET has executed indemnification agreements with each of its officers
and directors pursuant to which DSET has agreed to indemnify such parties to the
full extent permitted by law, subject to certain exceptions, if such party
becomes subject to an action because such party is a director, officer,
employee, agent or fiduciary of DSET.

         DSET has also obtained liability insurance for the benefit of its
directors and officers which will provide coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of DSET due to any breach of duty, neglect, error,
misstatement, misleading statement, omission or act done by such directors and
officers, except as prohibited by law.

                                      -28-
<PAGE>


         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling DSET
pursuant to the foregoing provisions, DSET has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.


                                      -29-
<PAGE>

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

         The Securities and Exchange Commission allows DSET to "incorporate by
reference" the information DSET files with the Securities and Exchange
Commission, which means that DSET can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this registration statement, and information that DSET
files later with the Securities and Exchange Commission will automatically
update and supersede this information. DSET incorporates by reference the
documents listed below and any future filings made by DSET with the Securities
and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act of 1934 until the filing of a post-effective amendment to this registration
statement which indicates that all securities registered have been sold or which
deregisters all securities then remaining unsold:

     o    The annual report on Form 10-K for the fiscal year ended  December 31,
          2001  of DSET  Corporation,  filed  on  April  1,  2002,  to  disclose
          information  regarding the financial  position,  results of operations
          and cash flows of DSET Corporation and its subsidiaries;

     o    The current report on Form 8-K filed on February 7, 2002; and

     o    The  description  of  DSET's  Common  Stock,  no par  value,  which is
          contained in DSET's Registration  Statement on Form 8-A filed pursuant
          to  Section  12(g) of the  Exchange  Act of 1934 in the form  declared
          effective by the Securities and Exchange Commission on March 12, 1998,
          and any  subsequent  amendments  or reports  filed for the  purpose of
          updating such description.

Item 4. Description of Securities.

         Not applicable.

Item 5. Interests of Named Experts and Counsel.

         Hale and Dorr LLP has opined as to the  legality  of the  securities
being offered by this registration statement.

Item 6. Indemnification of Directors and Officers.

         Section 14A:3-5 of the New Jersey Business Corporation Act permits each
New Jersey business corporation to indemnify its directors, officers, employees
and agents against expenses and liabilities in connection with any proceeding
involving such persons by reason of his serving or having served in such
capacities or for each such person's acts taken in his or her capacity as a
director, officer, employee or agent of the corporation if such actions were
taken in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests

                                      II-1
<PAGE>

of the corporation, and with respect to any criminal proceeding, if he or
she had no reasonable cause to believe his or her conduct was unlawful,
provided that any such proceeding is not by or in the right of the corporation.

         Section 14A:2-7(3) of the New Jersey Business Corporation Act enables a
corporation in its certificate of incorporation to limit the liability of
directors and officers of the corporation to the corporation or its
shareholders. Specifically, the certificate of incorporation may provide that
directors and officers of the corporation will not be personally liable for
money damages for breach of a duty as a director or an officer, except for
liability: (i) for any breach of the director's or officer's duty of loyalty to
the corporation or its shareholders; (ii) for acts or omissions not in good
faith or which involve a knowing violation of law; (iii) as to directors only,
under Section 14A:6-12(1) of the New Jersey Business Corporation Act, which
relates to unlawful declarations of dividends or other distributions of assets
to shareholders or the unlawful purchase of shares of the corporation; or (iv)
for any transaction from which the director or officer derived an improper
personal benefit.

         DSET's Amended and Restated Certificate of Incorporation limits the
liability of its directors and officers as authorized by Section 14A:2-7(3).

         Article XI of DSET's Amended and Restated By-laws specifies that DSET
shall indemnify its directors, officers, employees and agents to the extent such
parties are a party to any action because he was a director, officer, employee
or agent of DSET. This provision of the By-laws is deemed to be a contract
between DSET and each director and officer who serves in such capacity at any
time while such provision and the relevant provisions of the New Jersey Business
Corporation Act are in effect, and any repeal or modification thereof shall not
offset any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts. The
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of capital stock of DSET is required to adopt, amend or
repeal such provisions of the By-laws.

         DSET has executed indemnification agreements with each of its officers
and directors pursuant to which DSET has agreed to indemnify such parties to the
full extent permitted by law, subject to certain exceptions, if such party
becomes subject to an action because such party is a director, officer,
employee, agent or fiduciary of DSET.

         DSET has also obtained liability insurance for the benefit of its
directors and officers which will provide coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of DSET due to any breach of duty, neglect, error,
misstatement, misleading statement, omission or act done by such directors and
officers, except as prohibited by law.

Item 7. Exemption from Registration Claimed.

         The issuance of the Shares being offered by the Form S-3 Reoffer
Prospectus were or will be deemed exempt from registration under the Securities
Act of 1933 in reliance upon either

                                      II-2
<PAGE>

Section 4(2) of the Securities Act of 1933 as transactions not involving any
public offering or Rule 701 under the Securities Act of 1933 as transactions
made pursuant to a written compensatory plan or pursuant to a written contract
relating to compensation.


Item 8. Exhibits.

Exhibit Number     Description
--------------     -------------------------------------------------------------

   4.1             ISPsoft's 2000 Stock Plan.
   4.2             DSET Corporation 2001 Employee Stock Purchase Plan.
   4.2             DSET Corporation 1998 Stock Plan, as amended.
   5.1             Opinion of Hale and Dorr LLP.
  23.1             Consent of PricewaterhouseCoopers LLP.
  23.2             Consent of Amper, Politziner & Mattia P.A.
  23.3             Consent of Hale and Dorr LLP (contained in the opinion filed
                   as Exhibit 5.1).
  24               Power of Attorney (contained on the signature page of this
                   Registration Statement).

Item 9. Undertakings.

     a.   DSET hereby undertakes:

          (1) To file,  during  any  period  in which  offers or sales are being
     made, a post-effective amendment to this registration statement:

          (i)  To include any  prospectus  required  by Section  10(a)(3) of the
               Securities Act of 1933;

          (ii) To reflect in the  prospectus  any facts or events  arising after
               the effective  date of this  registration  statement (or the most
               recent post-effective  amendment thereof) which,  individually or
               in  the  aggregate,   represent  a  fundamental   change  in  the
               information set forth in the registration statement; and

          (iii)To include any material  information  with respect to the plan of
               distribution  not  previously   disclosed  in  this  registration
               statement  or any  material  change to such  information  in this
               registration statement;

                                      II-3
<PAGE>


               provided,  however,  that paragraphs  (a)(1)(i) and (a)(1)(ii) do
               not  apply  if  the  information  required  to be  included  in a
               post-effective  amendment  by those  paragraphs  is  contained in
               periodic  reports filed with or furnished to the  Securities  and
               Exchange  Commission  by DSET  pursuant  to Section 13 or Section
               15(d)  of the  Exchange  Act of 1934  that  are  incorporated  by
               reference in this registration statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
     Securities Act of 1933, each such post-effective  amendment shall be deemed
     to be a new  registration  statement  relating  to the  securities  offered
     therein,  and the offering of such  securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any  of  the  securities  being  registered  which  remain  unsold  at  the
     termination of the offering.

     b. The  undersigned  Registrant  hereby  undertakes  that,  for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable,  each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that
is incorporated by reference in this  Registration  Statement shall be deemed to
be a new registration  statement relating to the securities offered therein, and
the offering of such  securities  at that time shall be deemed to be the initial
bona fide offering thereof.

     c. Insofar as indemnification  for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities  Act of 1933 and is,  therefore,  unenforceable.  In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the  Registrant  of  expenses  incurred  or  paid  by  a  director,  officer  or
controlling  person of the Registrant in the  successful  defense of any action,
suit or proceeding) is asserted by such director,  officer or controlling person
in connection with the securities being registered,  the Registrant will, unless
in the  opinion  of its  counsel  the matter  has been  settled  by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities  Act of 1933 and will be governed by the final  adjudication  of such
issue.

                                      II-4

<PAGE>





                                   SIGNATURES


         Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Bridgewater, State of New Jersey, on this 23rd
day of April, 2002.

                          DSET CORPORATION



                          By:/s/   William P. McHale, Jr.
                             ----------------------------------------------
                             William P. McHale, Jr.
                             Chief Executive Officer




<PAGE>


                                POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints William P. McHale, Jr., his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

        Signature                       Title                        Date
--------------------------    --------------------------------  --------------


/s/ William P. McHale, Jr.    Chairman of the Board, Chief
--------------------------    Executive Officer and Director     April 23, 2002
William P. McHale, Jr.        (Principal Executive Officer)

                              Vice President, Chief Financial
/s/ Bruce M. Crowell          Officer and Secretary              April 23, 2002
--------------------------    (Principal Financial and
Bruce M. Crowell               Accounting Officer)


/s/ Binay Sugla               President and Director             April 23, 2002
--------------------------
Binay Sugla


/s/ Jacob J. Goldberg         Director                           April 23, 2002
--------------------------
Jacob J. Goldberg


/s/ Arun Inam                 Director                           April 23, 2002
--------------------------
Arun Inam


/s/ Andrew D. Lipman          Director                           April 23, 2002
--------------------------
Andrew D. Lipman


/s/ Carl Pavarini             Director                           April 23, 2002
--------------------------
Carl Pavarini


/s/ C. Daniel Yost            Director                           April 23, 2002
--------------------------
C. Daniel Yost


<PAGE>

                                  EXHIBIT INDEX


Exhibit Number               Description
--------------   ---------------------------------------------------------
    4.1          ISPsoft's 2000 Stock Plan.
    4.2          DSET Corporation 2001 Employee Stock Purchase Plan.
    4.3          DSET Corporation 1998 Stock Plan, as amended.
    5.1          Opinion of Hale and Dorr LLP.
   23.1          Consent of PricewaterhouseCoopers LLP.
   23.2          Consent of Amper, Politziner & Mattia P.A.
   23.3          Consent of Hale and Dorr LLP (contained in the opinion filed as
                 Exhibit 5.1).
   24            Power of Attorney (contained on the signature page of this
                 Registration Statement).
[{"type": "S-8", "sequence": "1", "filename": "regstmt_form-s8.txt", "description": "REGISTRATION STATEMENT ON FORM S-8", "secsgml_size_bytes": 114887}]
{"company-data": {"conformed-name": "DSET CORP", "cik": "0001052196", "assigned-sic": "7371", "irs-number": "223000022", "state-of-incorporation": "NJ", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-86782", "film-number": "02618615"}, "business-address": {"street1": "1011 US HIGHWAY 22", "city": "BRIDGEWATER", "state": "NJ", "zip": "08807", "phone": "9085267500"}, "mail-address": {"street1": "1011 US HIGHWAY 22", "city": "BRIDGEWATER", "state": "NJ", "zip": "08807"}}
As filed with the Securities and Exchange
                          Commission on April 23, 2002

                                                 Registration No. 333-
--------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                                  -------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                                DSET CORPORATION
--------------------------------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

                                1160 US Highway 22 East
       New Jersey           Bridgewater, New Jersey 08807        22-3000022
--------------------------- ------------------------------- --------------------
(State or Other Jurisdiction    (Address of Principal         (I.R.S. Employer
   of Incorporation or             Executive Offices)        Identification No.)
      Organization)                    (Zip Code)

               ISPsoft 2000 Stock Plan (assumed January 31, 2002)
               DSET Corporation 2001 Employee Stock Purchase Plan
                  DSET Corporation 1998 Stock Plan, as amended
--------------------------------------------------------------------------------
                           (Full Title of the Plans)

                             William P. McHale, Jr.
                             Chief Executive Officer
                                DSET Corporation
                            1160 U.S. Highway 22 East
                          Bridgewater, New Jersey 08807
--------------------------------------------------------------------------------
                            (Name and Address of Agent
                                   for Service)

                                 (908) 526-7500
--------------------------------------------------------------------------------
                     (Telephone Number, Including Area Code,
                              of Agent for Service)

                                    Copy To:

                            Richard Mattessich, Esq.
                              Tod K. Reichert, Esq.
                                Hale and Dorr LLP
                              650 College Road East
                               Princeton, NJ 08540
                                 (609) 750-7600
CALCULATION OF REGISTRATION FEE

======================================================================================================================
                                                                Proposed             Proposed
                                              Amount            Maximum               Maximum             Amount of
           Title of Securities           to be Registered    Offering Price          Aggregate          Registration
            to be Registered                    (1)            Per Share           Offering Price           Fee
-----------------------------------------------------------------------------------------------------------------------
Common Stock, no par value
    per share:
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to prior option grants
    under the ISPsoft 2000
    Stock Plan....................             241,483          $1.97(2)         $  475,721.51(2)        $  113.70
-----------------------------------------------------------------------------------------------------------------------
  Shares issued pursuant
    to the 2001 Employee Stock
    Purchase Plan.................              44,059         $0.9775(3)        $   43,067.67(3)        $   10.30
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to the 2001 Employee
    Stock Purchase Plan...........             205,941          $0.45(4)         $   92,673.45(4)        $   22.15
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to prior option grants
    under the 1998 Stock Plan.....             771,987          $9.657(5)        $7,455,078.46(5)        $1,095.82(6)
-----------------------------------------------------------------------------------------------------------------------
  Shares to be issued pursuant
    to future option grants
    under the 1998 Stock Plan.....             200,214          $0.45(4)         $   90,096.30(4)        $   21.54
-----------------------------------------------------------------------------------------------------------------------
  Total:                                     1,463,684                           $8,156,637.39           $1,263.51
=======================================================================================================================
(1)  For the sole purpose of  calculating  the  registration  fee, the number of
     shares  under  this  Registration  Statement  has been  divided  among five
     subtotals.

(2)  Pursuant to Rule 457(h),  these prices are calculated based on the weighted
     average  exercise price of $1.97 per share covering  241,483 shares subject
     to stock options granted under the ISPsoft 2000 Stock Plan.

(3)  Pursuant to Rule 457(h),  these prices are calculated based on the purchase
     price of $0.9775 per share covering 44,059 shares  purchased under the 2001
     Employee Stock Purchase Plan.

(4)  Pursuant to Rule 457(h) and 457(c),  these prices are estimated  solely for
     the  purpose of  calculating  the  registration  fee and are based upon the
     average of the bid and asked  prices of DSET's  Common  Stock on the Nasdaq
     National Market on April 19, 2002.

                                      -ii-
(5)  Pursuant to Rule 457(h),  these prices are calculated based on the weighted
     average  exercise price of $9.657 per share covering 771,987 shares subject
     to stock options granted under the 1998 Stock Plan.

(6)  The Registrant previously paid the registration fee with respect to 297,201
     of such shares in connection with the filing of its Registration  Statement
     on Form S-8 (File No. 333-92311) on December 8, 1999.

         Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
Registration Statement also covers an indeterminate number of shares as may be
issued as a result of the anti-dilution provisions of the ISPsoft 2000 Stock
Plan (assumed January 31, 2002), the DSET 2001 Employee Stock Purchase Plan and
the DSET 1998 Stock Plan, as amended.

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

                                     -iii-
EXPLANATORY NOTE

     This Registration Statement contains two parts:

     The first part contains a Reoffer Prospectus (the "Prospectus") prepared in
accordance with the  requirements  of Part I of Form S-3. The Prospectus  covers
reoffers  and  resales  of shares of common  stock,  no par value  (the  "Common
Stock"),  of DSET Corporation  ("DSET") by: (i) certain  affiliates of DSET with
respect to options  granted and shares issued prior to the date hereof  pursuant
to ISPsoft's  2000 Stock Plan,  DSET's 2001  Employee  Stock  Purchase  Plan and
DSET's  1998  Stock  Plan,  as amended  (collectively,  the  "Plans");  (ii) all
non-affiliates  who hold less than 1,000 shares pursuant to option exercises and
shares issued under the Plans prior to the date hereof;  and (iii) certain other
non-affiliates listed on the Selling Shareholder table herein.

     The  second  part  contains   "Information  Required  in  the  Registration
Statement"  pursuant to Part II of Form S-8 with respect to option exercises and
share purchases by  non-affiliates  pursuant to the Plans subsequent to the date
hereof.

                                      -iv-
PROSPECTUS

                   S-3 Reoffer Prospectus dated April 23, 2002

                                DSET CORPORATION

                          56,629 Shares of Common Stock
                   Issuable under the ISPsoft 2000 Stock Plan

                          44,059 Shares of Common Stock
               Issued under the 2001 Employee Stock Purchase Plan

                         602,388 Shares of Common Stock
                 Issuable under the 1998 Stock Plan, as amended

         This Prospectus relates to the public resale, from time to time, of
703,076 shares of our Common Stock (the "Shares") by certain shareholders
identified below in the section entitled "The Selling Shareholders." These
Shares have been or may be acquired: (i) upon the exercise of stock options
granted pursuant to the ISPsoft 2000 Stock Plan and our 1998 Stock Plan; or (ii)
pursuant to our 2001 Employee Stock Purchase Plan (collectively, the ISPsoft
2000 Stock Plan, the 1998 Stock Plan and the 2001 Employee Stock Purchase Plan
referred to herein as the "Plans"). Options may be granted or shares of our
Common Stock may be issued pursuant to the 1998 Stock Plan or the 2001 Employee
Stock Purchase Plan in amounts and to persons not presently known by us. Such
information, when known, may be included in an amendment to this Prospectus.

         We will not receive any of the proceeds from the sale by the Selling
Shareholders of the Shares covered by this Prospectus.

         We have not entered into any underwriting arrangements in connection
with the sale of Shares. The Shares may be sold from time to time by the Selling
Shareholders or by permitted pledgees, donees, transferees or other permitted
successors in interest and may be made on the Nasdaq National Market at prices
and at terms then prevailing or at prices related to the then current market
price, or in negotiated transactions.

         Our Common Stock is traded on the Nasdaq National Market under the
symbol "DSET." On April 19, 2002, the closing sale price of our Common Stock on
the Nasdaq National Market was $0.45 per share.

         All per share amounts set forth in this Prospectus reflect the
one-for-four reverse stock split capitalization effected by us as of the close
of business on August 21, 2001.

          INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 6.

         Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

                 The date of this Prospectus is April 23, 2002.
PROSPECTUS TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
Special Note Regarding Forward-Looking Information.....................................................          4
DSET Corporation.......................................................................................          4
Risk Factors...........................................................................................          6
       We have incurred substantial losses in 2001, expect to continue to incur
         additional losses in the future and will not be successful until we reverse this
         trend.........................................................................................          6
       We may require substantial financing to continue operations which may be
         difficult to obtain and may dilute our existing owners' interests.............................          6
       There is a substantial doubt about our ability to continue as a going concern...................          7
       The liquidity of our Common Stock could be adversely affected if we are delisted
         from the Nasdaq National Market...............................................................          8
       If our Common Stock is delisted from the Nasdaq National Market, it may be
         subject to the "penny stock" regulations which may affect the ability of our
         shareholders to sell their shares.............................................................          8
       Our stock price has been volatile...............................................................          9
       Our lack of operating history in providing IP provisioning and management
         applications and services makes evaluating our future performance difficult...................          9
       Integrating ISPsoft's corporate structure and operations with DSET's will be
         challenging and the combined company may not realize the expected benefits
         of the merger.................................................................................          9
       In our competitive markets, potential customers may choose competitors because
         we are selling a new product in a new line of business, which would reduce our
         ability to increase our revenues..............................................................         10
       Customers who are concerned about our viability or integration may delay
         or cancel orders..............................................................................         10
       We may become involved in expensive patent litigation or other intellectual
         property proceedings, which could result in liability for damages or stop our
         development and commercialization efforts.....................................................         11
       There are a number of factors, which may cause substantial variability in our
         quarterly operating results...................................................................         11
       Our success depends on the success and sustainability of the market for advanced
          telecommunications products and services.....................................................         12
       Our inability to keep pace with rapid technological change could lead to declines
          in sales and operating margins...............................................................         13
       If we do not manage our corporate consolidation and potential growth on a cost-
          effective and timely basis, our business could suffer........................................         13
       Intense competition in our target market could decrease our profitability.......................         14
       Because we rely heavily on sales to a limited number of customers for a
          significant portion of revenue, the loss of any one such customer could cause
          our revenues to decline......................................................................         14
       A failure to protect our proprietary rights or to enforce our licensing rights may
          adversely affect our business................................................................         15
-2-
If our products contain defects, we could experience a decline in revenues and
          damages......................................................................................         15
       We rely on third-party software that may be difficult to replace................................         16
       The revenue from licensing and maintenance of our tools products may decline....................         16
       The competitive market for technical personnel may make it difficult for us to
          meet our current and future demands..........................................................         16
       If our direct sales process is ineffective, our revenues will decline...........................         17
       The uncertain length and variability of our product sales cycle makes our revenue
          stream less predictable......................................................................         17
       Dependence on software license revenues makes our operating results difficult to
          predict......................................................................................         18
       We depend on service revenues to increase our overall revenues; services may not
          achieve profitability........................................................................         18
       We are at risk of securities class action litigation due to our stock price volatility..........         18
       Government regulation and related litigation may adversely affect our customers
          and us.......................................................................................         19
       Potential acquisitions of or by us could be costly or unsuccessful..............................         19
       Anti-takeover provisions of shareholder rights plan, charter, by-laws and certain
          provisions under New Jersey law could reduce our stock price.................................         19
Use of Proceeds........................................................................................         21
The Selling Shareholders...............................................................................         21
Plan of Distribution...................................................................................         25
Legal Matters..........................................................................................         26
Experts................................................................................................         26
Information Incorporated by Reference..................................................................         26
Where You Can Find More Information....................................................................         27
Indemnification of Directors and Officers..............................................................         28
-3-
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION

         This Prospectus and the documents incorporated herein contain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. For this purpose, any statements contained herein or
incorporated herein that are not statements of historical fact may be
forward-looking statements. For example, the words "may," "will," "continue,"
"believes," "expects," "anticipates," "intends," "estimates," "should" and
similar expressions are intended to identify forward-looking statements. There
are a number of important factors that could cause DSET's results to differ
materially from those indicated by such forward-looking statements. These
factors include those set forth below in the section entitled "Risk Factors." In
particular, the development and marketing of software solutions and related
services to telecommunications services providers by DSET is subject to a number
of significant risks and uncertainties, including, but not limited to: (i) our
ability to continue as a going concern; (ii) risks associated with the
integration of ISPsoft with us following our recent acquisition of ISPsoft and
the potential acquisition of other businesses by us, including risks relating to
unanticipated liabilities or expenses, lower than expected revenues and the
commercialization of acquired technology or products; (iii) the need for
substantial financing to continue operations; (iv) the risk that our Common
Stock may be delisted from the Nasdaq National Market; (v) our dependence on the
market for advanced telecommunications products and services; (vi) rapid
technological change in our industry; (vii) our lack of an operating history in
providing Internet Protocol (IP)-based provisioning and management applications
and services; (viii) the failure to protect proprietary rights or enforce
licensing rights; and (ix) the loss of third-party software we utilize in our
products. The success of DSET depends to a large degree on continued growth in
the market for advanced telecommunications products and services, such as highly
scalable provisioning and electronic-bonding solutions. As a result of such
risks and others expressed from time to time in DSET's filings with the
Securities and Exchange Commission, DSET's actual results may differ materially
from the results discussed in or implied by the forward-looking statements
contained herein.

                                DSET CORPORATION

         We develop and market highly scalable service-provisioning and
electronic-bonding solutions for use by telecommunications providers around the
world. Our Universal Provisioning eXchange (UPX) software platform enables any
service provider to provision, activate, and manage services such as Internet
Protocol (IP) based virtual private networks (VPNs) in complex multi-vendor
network environments. We also offer a family of software solutions for
competitive service providers that enable them to exchange information with
other telecommunications service providers to reduce the time necessary to
provision new voice and data services for their customers.

         Our success will depend on continued growth in the market for advanced
telecommunications products and services, such as highly scalable
service-provisioning and electronic-bonding solutions.

                                      -4-
We are a New Jersey corporation. Our principal executive offices are
located at 1160 US Highway 22 East, Bridgewater, New Jersey 08807, and our
telephone number is (908) 526-7500. In this Prospectus, the terms "DSET," "the
Company," "we," "us" and "our" includes DSET Corporation and its subsidiaries.

                                      -5-
RISK FACTORS

         In addition to the other information in this Prospectus, you should
carefully consider the following factors in evaluating whether to invest in the
Shares. The risks and uncertainties described below are not the only ones we
face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations and financial
results.

         If any of the following risks or other uncertainties actually occur,
our business, financial condition or results of operations could be materially
adversely affected, and may affect our ability to continue as a going concern.
In such case, the trading price of our Common Stock could decline and you may
lose all or part of your investment.

         This Prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in the forward-looking statements as a result of certain factors,
including the risks described below and elsewhere in this Prospectus.

WE HAVE INCURRED SUBSTANTIAL LOSSES IN 2001, EXPECT TO CONTINUE TO INCUR
ADDITIONAL LOSSES IN THE FUTURE AND WILL NOT BE SUCCESSFUL UNTIL WE REVERSE THIS
TREND

       DSET recently, and ISPsoft since inception, have incurred substantial
losses. We expect to incur operating losses for the foreseeable future.

       Changes in the telecommunications industry have resulted in significant
decreases in our revenue. For the year ended December 31, 2001, we incurred net
losses of approximately $33.3 million.

       If sufficient funds are available, we expect to increase our spending as
we continue to expand our product offerings and commercialization activities. We
will be dependent, in part, on the return of the market for OSS interconnection
products and services, as well as acceptance of the IP provisioning products and
services. As a result, we will need to generate significant revenues before we
will be able to return to profitability.

       Our IP provisioning products and services have only recently been
commercially available and have only seen limited opportunities to test them in
the marketplace. As a result, we have no basis on which to evaluate whether the
market will embrace these products, nor do we have any basis to evaluate whether
we will be able to effectively develop, market and sell additional products and
services. A lack of customer acceptance of these and any future products would
substantially harm our business.

WE MAY REQUIRE SUBSTANTIAL FINANCING TO CONTINUE OPERATIONS WHICH MAY BE
DIFFICULT TO OBTAIN AND MAY DILUTE OUR EXISTING OWNERS' INTERESTS

       We will need significant financing to grow our business. Historically, we
have operated with cash from our initial public offering and cash flow from
operations. Our cash balance has decreased substantially to approximately $13.0
million as of December 31, 2001 from approximately $35.1 million as of December
31, 2000. Subsequently and in connection with our merger with ISPsoft, we
incurred or expect to incur additional cash expenditures of

                                      -6-
approximately $3.7 million through the end of the first quarter of 2002 for
acquisition, legal, accounting and financial advisory fees and other integration
costs. In addition, we may incur other additional unanticipated merger costs
that may require further cash outlays. Some of these nonrecurring costs will
increase cash expenditures and may impact our ability to continue to fund our
operations. The ability of the newly acquired IP provisioning products and
services to contribute to operating revenues is uncertain since there have been
no significant revenues from this product line to date. Based on our plan, we
believe that our existing available cash and cash equivalents may not be
adequate to satisfy current and planned operations for the next 12 months.
Additionally, we expect that we may require additional financing prior to our
return to profitability.

       If we cannot raise more funds, we could be required to reduce our capital
expenditures, scale back our research and product development plans, reduce our
workforce, license to others products or technologies we would otherwise seek to
commercialize ourselves, sell certain assets, and seek bankruptcy protection.

       We may seek additional funding through collaborative arrangements,
borrowing money and by the sale of additional equity securities. Any sales of
additional equity securities are likely to result in further dilution to our
existing shareholders. Further, if we issue additional equity securities, the
new equity securities may have rights, preferences or privileges senior to those
of existing holders of our Common Stock. Alternatively, we may borrow money from
conventional lenders, possibly at high interest rates, which may affect the
value of your holdings. Despite our efforts, funding may not be available to us
at all or only on terms that are unacceptable to us. We also could be required
to seek funds through arrangements with collaborative partners or others that
may require us to relinquish rights to certain of our technologies, product
candidates or products which we would otherwise pursue on our own.

THERE IS A SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN

         Beginning in the fourth quarter of 2000 and continuing through the
fourth quarter of 2001, we experienced negative cash flows from operations and
substantial declines in our revenues. For the year ended December 31, 2001,
revenue was $9.9 million compared to $47.0 million for the year ended December
31, 2000. Additionally, we recognized $15.7 million in restructuring and
impairment charges during 2001 related to certain asset impairments and
severance payments to reduce headcount. As a result of these events, we have
expended $22.1 million of cash and cash equivalents during 2001 to fund our
operations. Our ability to return to profitability and ability to generate
positive cash flows from operations will have a significant impact on the period
through which our existing cash will be sufficient to fund operations. Based on
our plan, which included the merger with ISPsoft and the resulting cash
requirements for operations, we believe that our existing available cash and
cash equivalents may not be adequate to satisfy current and planned operations
for the next 12 months. Additionally, we expect that we may require additional
financing prior to our return to profitability. All of these factors raise a
substantial doubt as to our ability to continue as a going concern. If we cannot
sufficiently improve our profitability or raise more funds on acceptable terms,
we could be required to further reduce our capital expenditures, reduce our
workforce and possibly explore additional alternatives including seeking
bankruptcy protection.

                                      -7-
THE LIQUIDITY OF OUR COMMON STOCK COULD BE ADVERSELY AFFECTED IF WE ARE DELISTED
FROM THE NASDAQ NATIONAL MARKET

       On February 14, 2002, we received notification from the Nasdaq Stock
Market, Inc. ("Nasdaq") that our Common Stock had not maintained the minimum
market value of publicly held shares for the 30 days prior to the date of
notification and we would have ninety (90) days (until May 15, 2002) to regain
compliance. Additionally, on March 5, 2002 Nasdaq notified us that our Common
Stock had failed to maintain a minimum bid price of $1.00 per share for the 30
days prior to the date of notification and we would have ninety (90) days (until
June 3, 2002) to regain compliance. We cannot guarantee that we will regain and
then, maintain compliance with the Nasdaq regulations or that our Common Stock
will not be delisted from the Nasdaq National Market. In the event that we are
delisted from the Nasdaq National Market, we would attempt to trade on either
the Nasdaq SmallCap Market or the OTC Bulletin Board. A delisting from the
Nasdaq National Market may have a material adverse effect on our stock price and
our ability to raise capital through the issuance of additional equity. If our
Common Stock trades on the OTC Bulletin Board, we will be ineligible to use Form
S-3 to register shares of our Common Stock with the Securities and Exchange
Commission, therefore, making it more expensive to register shares of our Common
Stock. In the event our Common Stock is traded on the OTC Bulletin Board, it
would become subject to certain securities law restrictions requiring
broker/dealers who recommend low-priced securities to persons (with certain
exceptions) to satisfy special sales practice requirements, including making an
individualized written suitability determination for the purchaser and receive
the purchaser's written consent prior to the transaction. The securities laws
also require additional disclosure in connection with any trades involving
low-priced stocks (subject to certain exceptions), including the delivery, prior
to any transaction, of a disclosure schedule explaining the market for such
stocks and the associated risks. These requirements could severely limit the
market liquidity of our Common Stock and your ability to sell the Common Stock
in the secondary market.

IF OUR COMMON STOCK IS DELISTED FROM THE NASDAQ NATIONAL MARKET, IT MAY BE
SUBJECT TO THE "PENNY STOCK" REGULATIONS WHICH MAY AFFECT THE ABILITY OF OUR
SHAREHOLDERS TO SELL THEIR SHARES

       If Nasdaq delists our Common Stock from the National Market System, it
could become subject to Rule 15g-9 under the Exchange Act, which imposes
additional sales practice requirements on broker/dealers that sell such
securities to persons other than established customers and "accredited
investors" (generally, an individual with a net worth in excess of $1,000,000 or
an annual income exceeding $200,000, or $300,000 together with his or her
spouse's income). For transactions covered by this rule, a broker/dealer must
make a special suitability determination for the purchaser and receive the
purchaser's written consent to the transaction prior to the sale. Consequently,
the rule may adversely affect the ability of the holders of our Common Stock to
sell their shares in the secondary market.

       Regulations of the Securities and Exchange Commission define "penny
stock" to be any non-Nasdaq equity security that has a market price (as therein
defined) of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require delivery, prior to any transaction
of penny stock, of a disclosure schedule prepared by the Securities and Exchange
Commission relating to the penny stock market. The Securities and Exchange
Commission also requires disclosure about commissions payable to both the
broker/dealer and its registered

                                      -8-
representative and information regarding current quotations of the securities.
Finally, the Securities and Exchange Commission requires that monthly statements
be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.

       If our Common Stock were subject to the rules on penny stocks, the market
liquidity for our Common Stock could be severely and adversely affected.

OUR STOCK PRICE HAS BEEN VOLATILE

       We completed our initial public offering in March 1998. Since then, the
market price of our Common Stock has been highly volatile and is subject to wide
fluctuations. We expect our stock price to continue to fluctuate:

     o    in response to quarterly fluctuations in our operating results;

     o    because of market conditions in our industry;

     o    in  reaction  to  announcements  of  technological  innovations,   new
          products, or significant agreements by us or our competitors;

     o    in  reaction to changes in prices of our  products or the  products of
          our competitors; and

     o    in reaction to changes in trading activity and volume.

OUR LACK OF OPERATING HISTORY IN PROVIDING IP PROVISIONING AND MANAGEMENT
APPLICATIONS AND SERVICES MAKES EVALUATING OUR FUTURE PERFORMANCE DIFFICULT

       Historically, we developed and sold software tools, applications,
electronic-bonding gateways and services to telecommunications equipment
suppliers and competitive telecommunications service providers. The IP
provisioning products and services, although software applications, perform
different functions than our historic products, which have been targeted at
large incumbent communications providers and network providers, and, in part, at
our traditional customer base. In addition, the IP provisioning products have no
history of being sold to our historical customer base. Because we have not
previously operated as a provider of IP provisioning and management
applications, we have no basis to evaluate our ability to develop, market and
sell such products. Our ability to commercialize these products and services and
generate operating profits and positive operating cash flow will depend
principally upon our ability to:

     o    attract and retain an adequate number of customers;

     o    enter new markets and compete successfully in them;

     o    manage operating expenses;

     o    raise additional capital to fund our capital expenditure plans; and

     o    attract and retain qualified personnel.

INTEGRATING ISPSOFT'S CORPORATE STRUCTURE AND OPERATIONS WITH DSET'S WILL BE
CHALLENGING AND THE COMBINED COMPANY MAY NOT REALIZE THE EXPECTED BENEFITS OF
THE MERGER

       The merger of ISPsoft and DSET in January 2002 involves the integration
of two different companies that have previously operated independently.
Integrating DSET's operations,

                                      -9-
technologies and personnel with those of ISPsoft will be a complex process,
and it is uncertain whether the integration will be completed rapidly or that
after the integration the combined company will achieve the expected benefits
of the merger. Importantly, ISPsoft personnel have never operated as a publicly
held company, and will now be subject to rigorous disclosure and reporting
obligations. The diversion of the attention of management and any difficulties
encountered in the process of combining our companies could lead to possible
unanticipated liabilities and costs and cause the disruption of, or a loss of
momentum in, the business activities of the combined company. We will be forced
to operate in multiple locations in various states. Further, the process of
combining our companies could create uncertainty among employees about their
future roles with us, thereby negatively affecting employee morale. This
uncertainty may adversely affect the ability of us to retain some of our key
employees after the merger. Furthermore, the management of the combined company
will have to establish a new organizational structure that is cost-efficient
and productive. As a consequence, we cannot assure you that we will successfully
integrate ISPsoft or profitably manage the combined company. In addition, we
cannot be certain that, following the transaction, we will achieve revenues, net
income, efficiencies or synergies that justify the merger or that the merger
will result in increased earnings for us in any future period.

IN OUR COMPETITIVE MARKETS, POTENTIAL CUSTOMERS MAY CHOOSE COMPETITORS BECAUSE
WE ARE SELLING A NEW PRODUCT IN A NEW LINE OF BUSINESS, WHICH WOULD REDUCE OUR
ABILITY TO INCREASE OUR REVENUES

       Our success will depend upon the willingness of IP service providers to
accept us as a new provider of IP provisioning and management applications.
While we believe that our customer marketing efforts, including targeted
customer trials of our products and services, will help us to develop products
and services that are attractive to potential customers, we cannot be assured
that we will be successful in overcoming any such resistance nor can we be
assured that customers will buy our products and services. A lack of customer
acceptance would reduce our ability to increase our revenues and would adversely
affect our business. Potential competition to our business will come from four
categories of industry segments. The first class of competitors is the equipment
vendors, such as Cisco, Nortel and Lucent. These vendors typically provide some
management tools with their equipment that would compete with our multi-vendor
products. The second group of competitors is the third-party established
operations support systems vendors such as Eftia, Vitria and Telcordia
Technologies, each of whom could leverage their existing markets to move into
those markets targeted by us. Additional entrants to the marketplace that we
will target include Orchestream, Dorado, Syndesis and CPlane. Competition will
also come from in-house systems that various large service providers such as MCI
Worldcom and AT&T have built for their internal use.

CUSTOMERS WHO ARE CONCERNED ABOUT OUR VIABILITY OR INTEGRATION MAY DELAY OR
CANCEL ORDERS

       Our customers and potential customers may delay or cancel orders for
products and/or services as a result of their concerns and uncertainty over the
evolution, integration and support of our electronic-bonding gateways and IP
provisioning products and services. A delay or cancellation of orders could have
a material adverse effect on our business.

                                      -10-
WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER INTELLECTUAL
PROPERTY PROCEEDINGS, WHICH COULD RESULT IN LIABILITY FOR DAMAGES OR STOP OUR
DEVELOPMENT AND COMMERCIALIZATION EFFORTS

       We may become a party to patent litigation or other proceedings regarding
intellectual property rights.

       Other types of situations in which we may become involved in patent
litigation or other intellectual property proceedings include:

     o    we may initiate  litigation or other proceedings against third parties
          to enforce our patent rights;

     o    we may initiate  litigation or other proceedings against third parties
          to seek to  invalidate  the patents held by these third  parties or to
          obtain a judgment  that our  products or services do not  infringe the
          patents of these third parties;

     o    if our competitors file patent applications that claim technology also
          claimed  by us,  we may  participate  in  interference  or  opposition
          proceedings to determine the priority of invention; and

     o    if third parties  initiate  litigation  claiming that our processes or
          products infringe their patents or other intellectual property rights,
          we will need to defend against these claims.

       The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. We maintain insurance coverage to
assist in defraying the costs and potential losses associated with defending
actions for intellectual property claims. We do not maintain insurance coverage
for actions commenced by us. Some of our competitors may be able to sustain the
cost of litigation or proceedings more effectively than we can because of their
substantially greater financial resources. If a patent litigation or other
intellectual property proceeding is resolved unfavorably to us, we may be
enjoined from selling our products and services without a license from the other
party and be held liable for significant damages. We may not be able to obtain
any required license on commercially acceptable terms or at all.

       Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace and, therefore, to become profitable.
Patent litigation and other proceedings may also divert significant management
time away from growing our business.

THERE ARE A NUMBER OF FACTORS WHICH MAY CAUSE SUBSTANTIAL VARIABILITY IN OUR
QUARTERLY OPERATING RESULTS

       Our revenue, gross profit, operating income and net income may vary
substantially from quarter to quarter due to a number of factors. Many factors,
some of which are not within our control, may contribute to fluctuations in
operating results. These factors include the following:

     o    market acceptance of our new products;

     o    market  acceptance of the "Pay As You Grow" and Gateway Rental Program
          plans;

     o    timing and levels of hardware and software purchases by customers;

     o    budgetary constraints of our customers;

                                      -11-
o    consolidation  within  our target  markets,  such as with  CLECs,  via
          merger, acquisition or cessation of business;

     o    timing, size and stage of application development projects;

     o    new product and service introductions by our competitors or us;

     o    seasonal impact on projects for customers;

     o    our employment patterns;

     o    costs associated with fixed-price contracts;

     o    market  factors  affecting  the  availability  or costs  of  qualified
          technical personnel;

     o    timing  and  customer  acceptance  of  our  new  product  and  service
          offerings;

     o    length of sales cycle;

     o    variations in revenues from our distributors and partners;

     o    costs related to acquisitions of technology or businesses; and

     o    industry and general economic conditions.

       Historically, our revenue has been higher in the fourth quarter due to
capital budgeting and spending patterns by customers. As with the fourth quarter
of 2000, the fourth quarter of 2001 was again the lowest revenue quarter for the
year at approximately $1.9 million. We anticipate that the business will
continue to be subject to seasonal variations. In addition, depending on the
sales program by which the customer acquires our products and services, a
significant portion of quarterly revenue may be recognized in the last few weeks
of the last month of each quarter. As a result, we may not recognize any
negative fluctuations in revenue until the end of a particular quarter.

       Many of our costs, such as personnel and facilities costs, are relatively
fixed in nature. Expense levels are based in part on expectations of future
revenue. As a result, operating results have been and in the future will
continue to be impacted by changes in technical personnel cost and utilization
rates. Technical personnel utilization rates have been and are expected to
continue to be adversely affected during periods of rapid and concentrated
hiring. In addition, during such periods, we are likely to incur greater
technical training costs. Due to these and other factors, if we are successful
in expanding our service offerings and revenue, periods of variability in
utilization are likely to occur. In addition, revenues in any given period are
likely to come from a limited number of customer contracts. Any delay in the
closing of, or the loss of any number of, such contracts would adversely affect
results of operations. Therefore, past operating results and period-to-period
comparisons should not be relied upon as an indication of future operating
performance.

OUR SUCCESS DEPENDS ON THE SUCCESS AND SUSTAINABILITY OF THE MARKET FOR
ADVANCED TELECOMMUNICATIONS PRODUCTS AND SERVICES

       The global telecommunications market is evolving rapidly and it is
difficult to predict its potential size or future growth rate. We cannot assure
investors that the global deregulation and privatization of the worldwide
telecommunication market that has resulted in increased

                                      -12-
competition and escalating demand for new technologies and services will
continue in a manner favorable to us or our business strategies.

       Since our customers are concentrated in the competitive
telecommunications industry in the United States, our future success is
dependent upon increased utilization of OSS interconnection and related
applications by telecommunications providers, the financial health and buying
patterns of CLECs, which in late 2000 was significantly impaired, and the
continued demand for integration, support and maintenance services. We cannot
guarantee that current or future products or services will achieve acceptance
among telecommunications carriers, network equipment vendors and other potential
customers or that these customers will not adopt alternative architectures or
technologies that are incompatible with our technologies.

       In addition, it is predicted that the telecommunications industry may
experience significant consolidation in the near future. This may result in
fewer potential customers for our products and services, increasing the level of
competition in the industry. Also, due to the predicted continued cash shortage
for the small to medium telecommunications providers, larger or consolidated
telecommunications providers may have stronger purchasing power, which could put
pressure on prices and result in lower operating margins.

OUR INABILITY TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGE COULD LEAD TO
DECLINES IN SALES AND OPERATING MARGINS

       Over the last decade, and especially in the last year, the market for
telecommunications products and related services has been characterized by rapid
technological developments, evolving industry standards, changes in end-user
requirements and frequent new product and service introductions. Continued
changes such as these may render our existing product and service offerings
obsolete. As a result, our position in this market could be negatively impacted
due to unforeseen changes in product features and functions of competing
products. Our future results of operations will depend in part on our ability to
respond to these changes by enhancing existing products and services and by
developing and introducing, on a timely and cost-effective basis, new products,
features and related services to meet or exceed technological advances
introduced by competitors. However, we cannot guarantee success in identifying,
developing and marketing new products, product enhancements and related services
necessary to keep pace with technological change, which could lead to declines
in sales and operating margins.

IF WE DO NOT MANAGE OUR CORPORATE CONSOLIDATION AND POTENTIAL GROWTH ON A
COST-EFFECTIVE AND TIMELY BASIS, OUR BUSINESS COULD SUFFER

       Our downsizing throughout 2001 has placed, and is expected to continue to
place, a significant strain on our managerial, operational and technical
resources. Our ability to manage this consolidation or, when able, to grow
effectively, will require continued improvement of operational, financial and
other internal systems, as well as business development and strategic alliance
capabilities. Additionally, we must continue to attract, hire, train, retain,
motivate and manage our employees. We must allocate sufficient engineering
resources to improve the quality and depth of our current offerings and develop
new products. The failure to manage the reduced employee base, improve operating
systems or integrate resources when needed on a cost-effective and timely basis
could have a material adverse effect on our business.

                                      -13-
INTENSE COMPETITION IN OUR TARGET MARKET COULD DECREASE OUR PROFITABILITY

       We compete in rapidly changing markets that are intensely competitive and
involve changing technologies, evolving industry standards, frequent new product
introductions, regulatory issues and rapid changes in customer requirements. We
compete with other interconnection software providers, order management system
providers, system integrators, IP provisioning providers and in-house
development staffs of telecommunications providers and network equipment vendors
via partnerships with our direct product competitors or through development by
them of competing products. Many of our current and potential competitors have
longer operating histories, greater name recognition, larger or captive customer
bases and significantly greater financial, technical, sales, customer support,
marketing and other resources.

       We believe the principal competitive factors affecting the market for our
products are:

     o    pricing of our products and services;

     o    breadth and depth of solutions offered;

     o    product quality and performance;

     o    strength of core technology and product features such as adaptability,
          scalability,  ability to integrate with other products,  functionality
          and ease of use;

     o    ability to install and implement solutions;

     o    customer support and service;

     o    relationships with business partners and alliances; and

     o    continued building of a base of satisfied and referable customers.

BECAUSE WE RELY HEAVILY ON SALES TO A LIMITED NUMBER OF CUSTOMERS FOR A
SIGNIFICANT PORTION OF REVENUE, THE LOSS OF ANY ONE SUCH CUSTOMER COULD CAUSE
OUR REVENUES TO DECLINE

       We currently derive, and expect to continue to derive, a significant
portion of our revenues from a limited number of customers including competitive
service providers, or CSPs. For the year ended December 31, 2001, we had one
customer who accounted for approximately 19% of total revenues. For the quarter
ended March 31, 2001, we had one customer, which accounted for 37% of revenues
for such quarter. For the quarter ended June 30, 2001, we had two customers,
which accounted for 14% and 10% of revenues, respectively, for such quarter. For
the quarter ended September 30, 2001, we had three customers, which accounted
for 12%, 11%, and 10% of revenues, respectively, for such quarter. For the
quarter ended December 31, 2001, we had one customer, which accounted for 15% of
revenues for such quarter. The amount of revenue derived from a specific
customer for any one product varies from period to period, and a major customer
in one period may not produce significant additional revenue in a subsequent
period. Other than certain agreements that provide for on-going maintenance
revenues or minimum royalties for run-time licenses, none of our customers have
entered into agreements requiring on-going minimum purchases. Due to a continued
decrease in the number of existing and prospective CSPs as a result of continued
economic uncertainties, to the extent that we are not able to capture new major
customers or to maintain relations with existing major customers, our revenues
may be subject to further substantial period-to-period fluctuations and could
decline significantly.

                                      -14-
A FAILURE TO PROTECT OUR PROPRIETARY RIGHTS OR TO ENFORCE OUR LICENSING RIGHTS
MAY ADVERSELY AFFECT OUR BUSINESS

       Our success and ability to compete effectively is dependent, in part,
upon our proprietary rights. We rely primarily on a combination of copyright,
trademark, patent and trade secret laws, as well as confidentiality procedures
and contractual restrictions, to establish and protect these proprietary rights.
Our practice is to enter into non-competition, non-disclosure and invention
assignment agreements with our employees and consultants, and into
non-disclosure agreements with customers, partners and distributors. We cannot
assure investors that these measures will be adequate to protect our proprietary
rights.

       We may also be subject to further risks as we enter into transactions in
countries where intellectual property laws are not well developed or are
difficult to enforce. Legal protections of proprietary rights may be ineffective
in other countries. Litigation may be necessary to defend and enforce those
proprietary rights, which could result in substantial costs and diversion of
management resources and could have a material adverse effect on our business,
financial condition and results of operations, regardless of the final outcome
of such litigation. Despite efforts to safeguard and maintain proprietary rights
both in the United States and abroad, there is no guarantee that we will be
successful in doing so. Furthermore, we cannot assure investors that the steps
taken by us will be adequate to deter misappropriation or independent
third-party development of our technology or to prevent an unauthorized third
party from copying or otherwise obtaining and using our products or technology.
Any of these events could have a material adverse effect on our business,
financial condition and results of operations.

       DSET, or our employees, may become subject to claims of infringement or
misappropriation of the intellectual property rights of others. In addition, in
our licenses and software development and distribution agreements, we agree to
indemnify customers and distributors for any expenses and liabilities resulting
from claimed infringements of patents, trademarks, copyrights or other
proprietary rights of third parties. The amount of indemnity obligations may be
greater than the revenue that may have been received under these agreements. We
cannot assure investors that third parties will not assert infringement or
misappropriation claims against us, our customers, partners or distributors in
the future with respect to our employees or current or future products or
services. Any claims or litigation, with or without merit, could be
time-consuming, result in costly litigation, cause product shipment delays or
require us to enter into royalty or licensing arrangements. Royalty or licensing
arrangements, if necessary, may not be available on terms acceptable to us, if
at all, which could have a material adverse effect on our business, financial
condition and results of operations.

IF OUR PRODUCTS CONTAIN DEFECTS, WE COULD EXPERIENCE A DECLINE IN REVENUES
AND DAMAGES

       Applications developed, licensed and sold by us may contain errors or
failures. We cannot guarantee that errors or failures will not be found in our
products or applications or, if discovered, that we will be able to successfully
correct any errors or failures in a timely manner or at all. The occurrence of
errors or failures in our products and applications could result in loss of or
delay in market acceptance, increased service and warranty costs or payment of
compensatory or other damages. In addition, errors or failures may result in
delays in recognition of revenue and diversion of engineering resources during
the period in which we are required to correct any defects. In 2000 and 2001, we
obtained errors and omissions insurance to cover

                                      -16-
liability associated with our software development and license agreements.
There is no assurance that we will be able to maintain this coverage in the
future. Although agreements with customers typically contain provisions intended
to limit exposure to potential claims as well as any liabilities arising from
such claims, our contracts with customers may not effectively protect us against
the liabilities and expenses associated with software errors or failures.
Accordingly, errors or failures in our products, solutions or applications could
have a material adverse effect upon our business, financial condition and
results of operations.

WE RELY ON THIRD-PARTY SOFTWARE THAT MAY BE DIFFICULT TO REPLACE

       Some of the software we license from third parties and utilize in
conjunction with our products may be difficult to replace. This software may not
continue to be available on commercially reasonable terms, if at all. In many
cases we have identified potential replacements or may have procured source code
rights for certain third-party software. However, replacement software may not
have the same functionality or integration within our products. Additionally, of
the third-party software that is not at least in some form immediately
replaceable, we would need to internally develop alternatives or increased
functionality, which could take substantial time and resources. The loss or
inability to maintain any of these technology licenses could result in delays in
the sale of our products and services until equivalent technology, if available,
is identified, licensed, and integrated, which could harm our business.

THE REVENUE FROM LICENSING AND MAINTENANCE OF OUR TOOLS PRODUCTS MAY DECLINE

       In 2001, we transitioned primary responsibility for licensing, support
and development services of our application development toolkits and certain of
our gateway products to a distributor for which we receive a percentage of their
revenue. We cannot guarantee any revenue from this arrangement and historical
projections may be inaccurate in producing forecasts for these products.

       Portions of the revenue from this arrangement are generated from direct
licensing, royalties for run-time licenses, maintenance and additional fees
relative to development projects. Run-time royalties generally become due upon
the deployment by equipment vendors to telecommunications carriers of network
devices, which have embedded applications built with our software. Many
customers are contractually required to periodically report the sales of these
network devices to our distributor or us. Although we both generally have the
right to periodic audits in these contracts which provide for run-time
royalties, we cannot assure investors that customers will accurately report
their sales or that we will be able to effectively monitor and enforce our
contractual rights with respect to run-time royalty fees.

THE COMPETITIVE MARKET FOR TECHNICAL PERSONNEL MAY MAKE IT DIFFICULT FOR US TO
MEET OUR CURRENT AND FUTURE DEMANDS

       Our future success depends to a significant extent on our ability to
attract, hire, train, retain and motivate qualified technical and sales
personnel, with appropriate levels of managerial and technical capabilities. Our
complex technology generally requires a significant level of expertise to
effectively develop and market our products and services and to perform custom
application development and installation services. We believe that there remains
significant competition for professionals with the advanced skills required. We
have at times experienced, and continue to experience, difficulty in recruiting
and at times retaining, qualified personnel. We compete for

                                      -16-
personnel with software companies, system integrators and telecommunications
companies, many of which have greater resources. Market conditions also may
affect our ability to attract and retain qualified personnel. This makes it
difficult for us to hire the quality and number of highly skilled technical
and sales personnel required to meet current and expected future demand. In
addition, it may make it more expensive to hire those personnel in general. Due
to this competition, and market conditions we have experienced, and expect to
continue to experience, turnover in technical and sales personnel is high. There
is no guarantee that we will be successful in attracting and retaining the
technical or sales personnel required to conduct and successfully expand
operations. Our business, financial condition and results of operations could
be materially adversely affected if we are unable to attract, hire, train,
retain and motivate qualified technical and sales personnel.

IF OUR DIRECT SALES PROCESS IS INEFFECTIVE, OUR REVENUES WILL DECLINE

       Although we are aggressively striving to enhance and expand our strategic
alliances programs, we continue to sell our products primarily through our
direct sales force. We believe that there is significant competition for sales
personnel with the advanced skills and technical knowledge we desire. Our
inability to hire and train competent sales and sales support personnel, or our
failure to retain them, would harm our business. Additionally, by relying
primarily on a direct sales model, we may miss opportunities available through
other channels. We plan to expand our sales efforts to include additional
resellers and partners and the failure to expand indirect channels may place us
at a competitive disadvantage.

       Our entire sales and marketing strategy involves substantial risk. There
can be no assurance that we will be successful in implementing our strategy,
that it will lead to achievement of our objectives, or that some resellers or
partners will not attempt to partner with our competitors, or develop or acquire
products, or services that compete with our products or services. Any inability
to maintain our strategic relationships or to enter into any additional
strategic relationships may have a material adverse affect on our business. If
we are unable to implement our strategy effectively, our business will be
materially adversely affected.

THE UNCERTAIN LENGTH AND VARIABILITY OF OUR PRODUCT SALES CYCLE MAKES OUR
REVENUE STREAM LESS PREDICTABLE

       Our products are often used by our customers to deploy mission-critical
solutions for their businesses. Additionally, the cost of our products and
suites of products can be significant to a customer's overall financial
position. As such, customers generally consider a wide range of issues before
committing to purchase products, including product benefits, ability to operate
with existing or planned computer systems, scalability, reliability and
competitive price. Many customers are still in the early stages of developing
their businesses and need to be educated about the use and benefits of our
products and services. Additionally, the purchase of our products generally
involves a significant commitment of capital and other resources by the
customer. This can mean additional technical reviews, assessment of competitive
products and approval at several levels within the customer's management and
executive structure.

       The period of time between initial customer contact and execution of a
license agreement or contract for services with telecommunications service
providers typically ranges from three to nine months. The variability of these
sales cycles could have a material adverse effect on our business, financial
condition and results of operations.

                                      -17-
DEPENDENCE ON SOFTWARE LICENSE REVENUES MAKES OUR OPERATING RESULTS DIFFICULT
TO PREDICT

       License revenues in any quarter are difficult to forecast because they
depend on relatively few orders booked and shipped in that quarter. Moreover, we
have historically recognized a substantial percentage of revenues in the last
month of the quarter, frequently in the last week or even the last days of the
quarter, and we expect this trend to continue for as long as our licensed
software products represent a substantial part of our overall business. Since
our expenses are relatively fixed in the near term, any shortfall from
anticipated revenues or any delay in the recognition of revenues could result in
significant variations in operating results from quarter to quarter. We find it
difficult to forecast quarterly license revenues because our sales cycles, from
initial evaluation to delivery of software, is lengthy and varies substantially
from customer to customer. If revenues fall below our expectations in a
particular quarter, our business could be harmed. In the first quarters of
fiscal 2001, our revenues did, in fact, fall below our own and consensus
securities analysts' estimates for those quarters and, as a result, the price of
our stock declined significantly during those periods. Specifically, license
revenues decreased by 92% to $2.6 million for the year ended December 31, 2001
from $32.9 million for the year ended December 31, 2000. Although we have
introduced both "Pay As You Grow" and Gateway Rental Program pricing models
providing pricing alternatives to CSPs, if our revenues fall below our own
estimates or below the consensus securities analysts' estimate in an upcoming
quarter, our stock price could decline further, harming our business
significantly in terms of, among other things, diminished employee morale and
public image.

WE DEPEND ON SERVICE REVENUES TO INCREASE OUR OVERALL REVENUES; SERVICES MAY
NOT ACHIEVE PROFITABILITY

       Since the introduction of our interconnection gateway products in 1998,
most of our customers have installed and are operating our products. Many of
these have entered into service agreements, which make up a portion of our
revenue. Service revenues represented 73.5%, 30.2% and 46.0% of total revenues
for fiscal 2001, 2000 and 1999, respectively. The level of service revenues
depends largely upon our implementation services and ongoing renewals of
customer support contracts by our installed customer base. Our implementation
revenues could decline if third-party organizations such as systems integrators
compete for the installation or servicing of our products. In addition, our
customer support contracts might not be renewed in the future. Due to the
increasing costs of operating a professional services organization, we may not
be able to sustain profitability in this part of our business in the near
future, or ever.

WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR STOCK PRICE
VOLATILITY

       In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation, either due
to stock price declines associated with our failure to meet consensus securities
analysts' estimates for revenues or earnings for prior fiscal periods or due to
future volatility in our stock price. This litigation could result in
substantial costs and divert management's attention and resources. We are not
aware of any litigation due to stock price volatility at this time.

                                      -18-
GOVERNMENT REGULATION AND RELATED LITIGATION MAY ADVERSELY AFFECT OUR CUSTOMERS
AND US

       While our operations are not directly regulated, existing and potential
customers are subject to a variety of United States and foreign governmental
regulations. These regulations and future changes to them may negatively impact
the telecommunications industry, limit the number of potential customers for our
products and services or otherwise have a material adverse effect on our
business, financial condition and results of operations. Recently enacted
legislation, including the Telecommunications Act of 1996, deregulating the
telecommunications industry has caused and may continue to cause changes in the
telecommunications industry, including the entrance of new competitors and
possible industry consolidation. These events could reduce our potential
customer base, increase pricing pressures, decrease demand for our products,
increase the cost of doing business or otherwise have a material adverse effect
on our business, financial condition and results of operations. Currently the
Federal Communications Commission and state authorities are implementing the
provisions of the Telecommunications Act of 1996 and several of the decisions by
the Federal Communications Commission and state authorities are being challenged
in court. In addition, Congress is exploring potential additional changes. We
cannot predict the extent to which such legislation and related litigation will
affect our current and potential customers or ultimately affect our business,
results of operations and financial condition.

POTENTIAL ACQUISITIONS OF OR BY US COULD BE COSTLY OR UNSUCCESSFUL

       As part of our strategy, we intend to continue to pursue acquisitions of
businesses or technologies to broaden our product and service offerings, add
technical or sales personnel, increase our presence in existing markets, expand
into new geographic markets, establish strategic relationships and obtain
desirable customer relationships. If we buy another company or selected assets
or technologies, we could have difficulty assimilating acquired personnel,
operations, customers or vendors. In addition, one or more of such personnel,
customers or vendors may decide not to work for or continue to do business with
us. These difficulties could disrupt our ongoing business, distract management
and employees and increase expenses. Although we conduct due diligence reviews
with respect to all acquisition candidates, all material liabilities or risks
related to potential acquisitions may not be successfully identified.
Furthermore, we may have to incur debt or issue equity securities to pay for any
future acquisitions, the issuance of which could be dilutive to existing
shareholders. In addition, certain of our key personnel have executed change of
control agreements detailing circumstances governing their removal and severance
rights in any acquisition or change in our management structure.

ANTI-TAKEOVER PROVISIONS OF SHAREHOLDER RIGHTS PLAN, CHARTER, BY-LAWS AND
CERTAIN PROVISIONS UNDER NEW JERSEY LAW COULD REDUCE OUR STOCK PRICE

       On July 20, 2001, our board of directors adopted a shareholder rights
plan. Under the rights plan, each of our shareholders of record on July 31, 2001
received a distribution of one right for each share of our Common Stock.
Initially, the rights are represented by our Common Stock certificates, are not
traded separately from our Common Stock, and are not exercisable. The rights
become exercisable only if a person acquires, or announces a tender offer, that
would result in ownership of 15% or more of our Common Stock, at which time each
right would enable the holder to buy one one-thousandth of a share of our Series
A preferred stock at an

                                      -19-
exercise price of $20, subject to adjustment. The actual number of shares
acquirable by the holder equals $20 divided by one-half of the then current
market price of our Common Stock. Additionally, the rights plan provides that
in the event of a subsequent merger or other acquisition of us, the holders
of rights will be entitled to buy shares of common stock of the acquiring
entity at one-half of the market price of the acquiring company's shares.

       In addition, anti-takeover provisions of New Jersey law, our Certificate
of Incorporation and By-Laws could make it more difficult for a third party to
acquire control of us, even if such change would be beneficial to our
shareholders. Our Certificate of Incorporation provides that the board of
directors may issue preferred stock with superior rights and preferences without
common shareholder approval.

         Each of these anti-takeover measures could have the effect of delaying,
deterring or preventing a change in control. This could be harmful to
shareholders because it could prevent them from realizing a premium for their
stock.

                                      -20-
USE OF PROCEEDS

         DSET will not receive any proceeds from the sale of the Shares covered
by this Prospectus. While DSET will receive sums upon any exercise of options by
the Selling Shareholders, DSET currently has no plans for their application,
other than for general corporate purposes. DSET cannot assure that any of such
options will be exercised.

                            THE SELLING SHAREHOLDERS

         The individuals listed below (the "Selling Shareholders") have or will
acquire the Shares being registered pursuant to the exercise of options
previously granted to them or assumed by DSET or through the 2001 Employee Stock
Purchase Plan. The Shares may not be sold or otherwise transferred by the
Selling Shareholders unless and until the applicable options are exercised in
accordance with their terms.

         The following table sets forth: (i) the name of each Selling
Shareholder; (ii) his or her position(s), office or other material relationship
with DSET and its predecessors or affiliates, over the last three years; (iii)
the number of shares of Common Stock owned (or subject to options) by each
Selling Shareholder as of the date of this Prospectus and prior to this
offering; (iv) the number of shares of Common Stock which may be offered and are
being registered for the account of each Selling Shareholder by this Prospectus
(some of which have been or may be acquired by the Selling Shareholders pursuant
to the exercise of options subject to the appropriate vesting of such options);
and (v) the amount of Common Stock to be owned by each such Selling Shareholder
if such Selling Shareholder were to sell all of their shares of Common Stock
covered by this Prospectus.

         DSET cannot assure that any of the Selling Shareholders will offer for
sale or sell any or all of the Shares offered by them pursuant to this
Prospectus.

                                      -21-
NUMBER
                                                                     NUMBER OF                                           SHARES/
                                                                       SHARES/                                        PERCENTAGE OF
                                                                    PERCENTAGE OF                                        COMMON
                                                                    COMMON STOCK                                       STOCK OWNED
                                                                      PRIOR TO                     NUMBER OF            AFTER THE
                                                                   OFFERING (BOTH                  SHARES OF            OFFERING
                                                                    HELD DIRECTLY                   COMMON             (BOTH HELD
                                    POSITION WITH                        OR                       STOCK TO BE          DIRECTLY OR
       NAME                             DSET                        INDIRECTLY)(1)                  OFFERED           INDIRECTLY(2)
-----------------------------------------------------------------------------------------------------------------------------------
William P. McHale, Jr.........      CEO, Chairman of the            376,226/6.9%(3)                306,138             70,088/1.4%
                                      Board and Director
Binay Sugla...................      President and Director          247,133/4.7%(4)                131,629             115,504/2.3%
Jacob J. Goldberg.............      Director                          26,875/*(5)                   20,625               6,250/*
Arun Inam.....................      Director                          12,500/*(6)                   12,500                 0/*
Andrew C. Lipman..............      Director                          26,875/*(7)                   20,625               6,250/*
Carl Pavarini.................      Director                          12,500/*(8)                   12,500                 0/*
C. Daniel Yost................      Director                          26,875/*(9)                   20,625               6,250/*
Bruce M. Crowell..............      Vice President, Chief          111,819/2.2%(10)                 75,819               36,000/*
                                      Financial Officer and
                                      Secretary
Jeffery S. Gill...............      Vice President,                 64,825/1.3%(11)                 64,000                825/*
                                      Professional Services
Louis P. Davidov..............      TPI Specialist                    2,611/*(12)                      485               2,126/*
Proneel Guptan................      Senior Research Engineer          4,253/*(13)                      915               3,338/*
Jeffrey N. Klouda.............      Director, Customer               14,846/*(14)                    6,437               8,409/*
                                      Engineering Services
Vincent D. Leone..............      Vice President, US Sales         11,586/*(15)                    3,836               7,750/*
George P. Lerma...............      Field Engineer                    3,152/*(16)                    1,389               1,763/*
Thomas J. Llewelyn............      Senior Accountant                 6,697/*(17)                    3,959               2,738/*
Fan Maurice Lok...............      Senior Research Engineer          5,765/*(18)                    2,419               3,346/*
Lewis A. Paskin...............      Director, TPI                    13,523/*(19)                    5,073               8,450/*
Judy A. Sarasua...............      National Sales Manager,           8,791/*(20)                    1,562               7,229/*
                                      Gateways
Stephen Van Houten............      Director of Human                20,484/*(21)                    6,471               13,950/*
                                      Resources
James Michael Vogel...........      Senior Architect                 19,192/*(22)                      892               18,300/*
Michael A. Walch..............      Director of Accounting           15,378/*(23)                    5,177               10,201/*
---------------
* Less than one percent.

(1)  Applicable  percentage of ownership is based on 5,082,402  shares of Common
     Stock  outstanding as of March 31, 2002, plus any Common Stock  equivalents
     held by such holder.

                                      -22-
(2)  Assumes  that all  Shares  to be  offered,  as set  forth  above,  are sold
     pursuant  to this  offering  and that no other  shares of Common  Stock are
     acquired  or  disposed  of  by  the  Selling   Shareholders  prior  to  the
     termination of this  offering.  Because the Selling  Shareholders  may sell
     all, some or none of their Shares or may acquire or dispose of other shares
     of Common Stock, no reliable  estimate can be made of the aggregate  number
     of Shares  that will be sold  pursuant  to this  offering  or the number or
     percentage of shares of Common Stock that each Selling Shareholder will own
     upon completion of this offering.

(3)  Includes  353,656 vested and unvested  options to purchase shares of Common
     Stock prior to this  offering.  Also includes  4,002 shares of Common Stock
     held by Mr.  McHale's  wife and 639  shares  of  Common  Stock  held by Mr.
     McHale's minor child.

(4)  Includes  131,629 vested and unvested  options to purchase shares of Common
     Stock prior to this offering.

(5)  Includes  26,875 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(6)  Includes  12,500 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(7)  Includes  26,875 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(8)  Includes  12,500 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(9)  Includes  26,875 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(10)  Includes 89,875 vested and unvested options to purchase shares of Common
      Stock prior to this offering and 5,444 shares issued pursuant to the 2001
      Employee Stock Purchase Plan.

(11) Includes  64,000 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering.

(12) Includes  2,101  vested and unvested  options to purchase  shares of Common
     Stock prior to this  offering  and 485 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(13) Includes  3,338  vested and unvested  options to purchase  shares of Common
     Stock prior to this  offering  and 915 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(14) Includes  8,051  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 6,437 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(15) Includes  7,750  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 3,836 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(16) Includes  1,763  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 1,389 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(17) Includes  2,738  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 3,959 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(18) Includes  3,346  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 2,419 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

                                      -23-
(19) Includes  8,175  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 5,073 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(20) Includes  7,229  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 1,562 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(21) Includes  12,156 vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 6,471 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(22) Includes  18,300 vested and unvested  options to purchase  shares of Common
     Stock prior to this  offering  and 892 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

(23) Includes  8,738  vested and unvested  options to purchase  shares of Common
     Stock prior to this offering and 5,177 shares  issued  pursuant to the 2001
     Employee Stock Purchase Plan.

                                      -24-
PLAN OF DISTRIBUTION

         The Selling Shareholders have not advised DSET of any specific plan for
distribution of the Shares. If and when they occur, such sales may be made in
any of the following manners:

     o    On the  Nasdaq  National  Market (or  through  the  facilities  of any
          national securities exchange or U.S. inter-dealer  quotation system of
          a registered national securities association,  on which the Shares are
          then listed,  admitted to unlisted trading  privileges or included for
          quotation);

     o    In public or privately negotiated transactions;

     o    In transactions involving principals or brokers;

     o    In a combination of such methods of sale; or

     o    Any other lawful methods.

         Although sales of the Shares are, in general, expected to be made at
market prices prevailing at the time of sale, the Shares may also be sold at
prices related to such prevailing market prices or at negotiated prices, which
may differ considerably.

         In offering the Shares covered by this Prospectus, each of the Selling
Shareholders and any broker-dealers who sell the Shares for the Selling
Shareholders may be "underwriters" within the meaning of the Securities Act of
1933, and any profits realized by such Selling Shareholders and the compensation
of such broker-dealers may be underwriting discounts and commissions.

         Sales through brokers may be made by any method of trading authorized
by any stock exchange or market on which the Shares may be listed, including
block trading in negotiated transactions. Without limiting the foregoing, such
brokers may act as dealers by purchasing any or all of the Shares covered by
this Prospectus, either as agents for others or as principals for their own
accounts, and reselling such Shares pursuant to this Prospectus. The Selling
Shareholders may effect such transactions directly, or indirectly through
underwriters, broker-dealers or agents acting on their behalf. In connection
with such sales, such broker-dealers or agents may receive compensation in the
form of commissions, concessions, allowances or discounts, any or all of which
might be in excess of customary amounts.

         Each of the Selling Shareholders is acting independently of DSET in
making decisions with respect to the timing, manner and size of each sale of
Shares. DSET has not been advised of any definitive selling arrangement at the
date of this Prospectus between any Selling Shareholder and any broker-dealer or
agent.

         To the extent required, the names of any agents, broker-dealers or
underwriters and applicable commissions, concessions, allowances or discounts,
and any other required information with respect to any particular offer of the
Shares by the Selling Shareholders, will be set forth in a Prospectus
Supplement.

         The expenses of preparing and filing this Prospectus and the related
Registration Statement with the Securities and Exchange Commission will be paid
entirely by DSET. Shares of Common Stock covered by this Prospectus also may
qualify to be sold pursuant to Rule 144

                                      -25-
under the Securities Act of 1933, rather than pursuant to this Prospectus. The
Selling Shareholders have been advised that they are subject to the applicable
provisions of the Securities Exchange Act of 1934, as amended, including without
limitation, Rule 10b-5 thereunder.

         Neither DSET nor the Selling Shareholders can estimate at the present
time the amount of commissions or discounts, if any, that will be paid by the
Selling Shareholders on account of their sales of the Shares from time to time.

                                  LEGAL MATTERS

         The validity of the shares of Common Stock offered hereby will be
passed upon for DSET by Hale and Dorr LLP, 650 College Road East, Princeton, New
Jersey 08540.

                                     EXPERTS

       The consolidated financial statements of DSET Corporation as of December
31, 2001 and 2000 and for each of the three years in the period ended December
31, 2001 incorporated by reference herein in this Form S-8 have been so included
in reliance on the report (which contains an explanatory paragraph relating to
DSET Corporation's ability to continue as a going concern as described in Note 2
to the financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

       The financial statements of ISPsoft (a Development Stage Company) as of
December 31, 1999 and 2000 and for the period March 30, 1999 (date of inception)
to December 31, 1999 and for the year ended December 31, 2000 incorporated by
reference in this Registration Statement have been so included in reliance on
the report of Amper, Politziner & Mattia, P.A. independent auditors, given on
the authority of said firm as experts in auditing and accounting.

                      INFORMATION INCORPORATED BY REFERENCE

         The Securities and Exchange Commission allows DSET to "incorporate by
reference" the information DSET files with the Securities and Exchange
Commission, which means that DSET can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this Prospectus, and information that DSET files later with
the Securities and Exchange Commission will automatically update and supersede
this information. DSET incorporates by reference the documents listed below and
any future filings made by DSET with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act of 1934 until the
filing of a post-effective amendment to this Prospectus which indicates that all
securities registered have been sold or which deregisters all securities then
remaining unsold:

     o    The annual report on Form 10-K for the fiscal year ended  December 31,
          2001  of DSET  Corporation,  filed  on  April  1,  2002,  to  disclose
          information  regarding the financial  position,  results of operations
          and cash flows of DSET Corporation and its subsidiaries;

     o    The current report on Form 8-K filed on February 7, 2002; and

                                      -26-
o    The  description  of  DSET's  Common  Stock,  no par  value,  which is
          contained in DSET's Registration  Statement on Form 8-A filed pursuant
          to  Section  12(g) of the  Exchange  Act of 1934 in the form  declared
          effective by the Securities and Exchange Commission on March 12, 1998,
          and any  subsequent  amendments  or reports  filed for the  purpose of
          updating such description.

         DSET will provide to any person, including any beneficial owner of its
securities, to whom this Prospectus is delivered, a copy of any or all of the
information that has been incorporated by reference in this Prospectus but not
delivered with this Prospectus. You may make such requests at no cost to you by
writing or telephoning DSET at the following address or number:

                  DSET Corporation
                  1160 US Highway 22 East
                  Bridgewater, New Jersey 08807
                  Attention:  Manager, Legal Affairs
                  Telephone:  (908) 526-7500

         You should rely only on the information incorporated by reference or
provided in this Prospectus or any Prospectus Supplement. DSET has not
authorized anyone else to provide you with different information. DSET is not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus or any
Prospectus Supplement is accurate as of any date other than the date on the
front of those documents.

                       WHERE YOU CAN FIND MORE INFORMATION

         DSET files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. DSET's Securities
and Exchange Commission filings are available to the public over the Internet at
the Securities and Exchange Commission's website at http://www.sec.gov. You may
also read and copy, at prescribed rates, any document DSET files with the
Securities and Exchange Commission at the Securities and Exchange Commission's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the Securities and Exchange Commission's Public Reference Room.

         DSET has filed with the Securities and Exchange Commission a
Registration Statement on Form S-8 under the Securities Act of 1933 with respect
to the Shares offered hereby. This Prospectus, which constitutes a part of that
registration statement, does not contain all the information contained in the
registration statement and its exhibits. For further information with respect to
DSET and the Shares, you should consult the registration statement and its
exhibits. Statements contained in this Prospectus concerning the provisions of
any documents are necessarily summaries of those documents, and each statement
is qualified in its entirety by reference to the copy of the document filed with
the Securities and Exchange Commission. The registration statement and any of
its amendments, including exhibits filed as a part of the registration statement
or an amendment to the registration statement, are available for inspection and
copying as described above.

                                      -27-
INDEMNIFICATION OF DIRECTORS AND OFFICERS

         Section 14A:3-5 of the New Jersey Business Corporation Act permits each
New Jersey business corporation to indemnify its directors, officers, employees
and agents against expenses and liabilities in connection with any proceeding
involving such persons by reason of his serving or having served in such
capacities or for each such person's acts taken in his or her capacity as a
director, officer, employee or agent of the corporation if such actions were
taken in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the corporation, and with respect to any
criminal proceeding, if he or she had no reasonable cause to believe his or her
conduct was unlawful, provided that any such proceeding is not by or in the
right of the corporation.

         Section 14A:2-7(3) of the New Jersey Business Corporation Act enables a
corporation in its certificate of incorporation to limit the liability of
directors and officers of the corporation to the corporation or its
shareholders. Specifically, the certificate of incorporation may provide that
directors and officers of the corporation will not be personally liable for
money damages for breach of a duty as a director or an officer, except for
liability: (i) for any breach of the director's or officer's duty of loyalty to
the corporation or its shareholders; (ii) for acts or omissions not in good
faith or which involve a knowing violation of law; (iii) as to directors only,
under Section 14A:6-12(1) of the New Jersey Business Corporation Act, which
relates to unlawful declarations of dividends or other distributions of assets
to shareholders or the unlawful purchase of shares of the corporation; or (iv)
for any transaction from which the director or officer derived an improper
personal benefit.

         DSET's Amended and Restated Certificate of Incorporation limits the
liability of its directors and officers as authorized by Section 14A:2-7(3).

         Article XI of DSET's Amended and Restated By-laws specifies that DSET
shall indemnify its directors, officers, employees and agents to the extent such
parties are a party to any action because he was a director, officer, employee
or agent of DSET. This provision of the By-laws is deemed to be a contract
between DSET and each director and officer who serves in such capacity at any
time while such provision and the relevant provisions of the New Jersey Business
Corporation Act are in effect, and any repeal or modification thereof shall not
offset any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts. The
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of capital stock of DSET is required to adopt, amend or
repeal such provisions of the By-laws.

         DSET has executed indemnification agreements with each of its officers
and directors pursuant to which DSET has agreed to indemnify such parties to the
full extent permitted by law, subject to certain exceptions, if such party
becomes subject to an action because such party is a director, officer,
employee, agent or fiduciary of DSET.

         DSET has also obtained liability insurance for the benefit of its
directors and officers which will provide coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of DSET due to any breach of duty, neglect, error,
misstatement, misleading statement, omission or act done by such directors and
officers, except as prohibited by law.

                                      -28-
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling DSET
pursuant to the foregoing provisions, DSET has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is therefore
unenforceable.

                                      -29-
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

         The Securities and Exchange Commission allows DSET to "incorporate by
reference" the information DSET files with the Securities and Exchange
Commission, which means that DSET can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this registration statement, and information that DSET
files later with the Securities and Exchange Commission will automatically
update and supersede this information. DSET incorporates by reference the
documents listed below and any future filings made by DSET with the Securities
and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act of 1934 until the filing of a post-effective amendment to this registration
statement which indicates that all securities registered have been sold or which
deregisters all securities then remaining unsold:

     o    The annual report on Form 10-K for the fiscal year ended  December 31,
          2001  of DSET  Corporation,  filed  on  April  1,  2002,  to  disclose
          information  regarding the financial  position,  results of operations
          and cash flows of DSET Corporation and its subsidiaries;

     o    The current report on Form 8-K filed on February 7, 2002; and

     o    The  description  of  DSET's  Common  Stock,  no par  value,  which is
          contained in DSET's Registration  Statement on Form 8-A filed pursuant
          to  Section  12(g) of the  Exchange  Act of 1934 in the form  declared
          effective by the Securities and Exchange Commission on March 12, 1998,
          and any  subsequent  amendments  or reports  filed for the  purpose of
          updating such description.

Item 4. Description of Securities.

         Not applicable.

Item 5. Interests of Named Experts and Counsel.

         Hale and Dorr LLP has opined as to the  legality  of the  securities
being offered by this registration statement.

Item 6. Indemnification of Directors and Officers.

         Section 14A:3-5 of the New Jersey Business Corporation Act permits each
New Jersey business corporation to indemnify its directors, officers, employees
and agents against expenses and liabilities in connection with any proceeding
involving such persons by reason of his serving or having served in such
capacities or for each such person's acts taken in his or her capacity as a
director, officer, employee or agent of the corporation if such actions were
taken in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests

                                      II-1
of the corporation, and with respect to any criminal proceeding, if he or
she had no reasonable cause to believe his or her conduct was unlawful,
provided that any such proceeding is not by or in the right of the corporation.

         Section 14A:2-7(3) of the New Jersey Business Corporation Act enables a
corporation in its certificate of incorporation to limit the liability of
directors and officers of the corporation to the corporation or its
shareholders. Specifically, the certificate of incorporation may provide that
directors and officers of the corporation will not be personally liable for
money damages for breach of a duty as a director or an officer, except for
liability: (i) for any breach of the director's or officer's duty of loyalty to
the corporation or its shareholders; (ii) for acts or omissions not in good
faith or which involve a knowing violation of law; (iii) as to directors only,
under Section 14A:6-12(1) of the New Jersey Business Corporation Act, which
relates to unlawful declarations of dividends or other distributions of assets
to shareholders or the unlawful purchase of shares of the corporation; or (iv)
for any transaction from which the director or officer derived an improper
personal benefit.

         DSET's Amended and Restated Certificate of Incorporation limits the
liability of its directors and officers as authorized by Section 14A:2-7(3).

         Article XI of DSET's Amended and Restated By-laws specifies that DSET
shall indemnify its directors, officers, employees and agents to the extent such
parties are a party to any action because he was a director, officer, employee
or agent of DSET. This provision of the By-laws is deemed to be a contract
between DSET and each director and officer who serves in such capacity at any
time while such provision and the relevant provisions of the New Jersey Business
Corporation Act are in effect, and any repeal or modification thereof shall not
offset any action, suit or proceeding theretofore or thereafter brought or
threatened based in whole or in part upon any such state of facts. The
affirmative vote of the holders of at least 80% of the voting power of all
outstanding shares of capital stock of DSET is required to adopt, amend or
repeal such provisions of the By-laws.

         DSET has executed indemnification agreements with each of its officers
and directors pursuant to which DSET has agreed to indemnify such parties to the
full extent permitted by law, subject to certain exceptions, if such party
becomes subject to an action because such party is a director, officer,
employee, agent or fiduciary of DSET.

         DSET has also obtained liability insurance for the benefit of its
directors and officers which will provide coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of DSET due to any breach of duty, neglect, error,
misstatement, misleading statement, omission or act done by such directors and
officers, except as prohibited by law.

Item 7. Exemption from Registration Claimed.

         The issuance of the Shares being offered by the Form S-3 Reoffer
Prospectus were or will be deemed exempt from registration under the Securities
Act of 1933 in reliance upon either

                                      II-2
Section 4(2) of the Securities Act of 1933 as transactions not involving any
public offering or Rule 701 under the Securities Act of 1933 as transactions
made pursuant to a written compensatory plan or pursuant to a written contract
relating to compensation.

Item 8. Exhibits.

Exhibit Number     Description
--------------     -------------------------------------------------------------

   4.1             ISPsoft's 2000 Stock Plan.
   4.2             DSET Corporation 2001 Employee Stock Purchase Plan.
   4.2             DSET Corporation 1998 Stock Plan, as amended.
   5.1             Opinion of Hale and Dorr LLP.
  23.1             Consent of PricewaterhouseCoopers LLP.
  23.2             Consent of Amper, Politziner & Mattia P.A.
  23.3             Consent of Hale and Dorr LLP (contained in the opinion filed
                   as Exhibit 5.1).
  24               Power of Attorney (contained on the signature page of this
                   Registration Statement).

Item 9. Undertakings.

     a.   DSET hereby undertakes:

          (1) To file,  during  any  period  in which  offers or sales are being
     made, a post-effective amendment to this registration statement:

          (i)  To include any  prospectus  required  by Section  10(a)(3) of the
               Securities Act of 1933;

          (ii) To reflect in the  prospectus  any facts or events  arising after
               the effective  date of this  registration  statement (or the most
               recent post-effective  amendment thereof) which,  individually or
               in  the  aggregate,   represent  a  fundamental   change  in  the
               information set forth in the registration statement; and

          (iii)To include any material  information  with respect to the plan of
               distribution  not  previously   disclosed  in  this  registration
               statement  or any  material  change to such  information  in this
               registration statement;

                                      II-3
provided,  however,  that paragraphs  (a)(1)(i) and (a)(1)(ii) do
               not  apply  if  the  information  required  to be  included  in a
               post-effective  amendment  by those  paragraphs  is  contained in
               periodic  reports filed with or furnished to the  Securities  and
               Exchange  Commission  by DSET  pursuant  to Section 13 or Section
               15(d)  of the  Exchange  Act of 1934  that  are  incorporated  by
               reference in this registration statement.

          (2) That,  for the  purpose of  determining  any  liability  under the
     Securities Act of 1933, each such post-effective  amendment shall be deemed
     to be a new  registration  statement  relating  to the  securities  offered
     therein,  and the offering of such  securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any  of  the  securities  being  registered  which  remain  unsold  at  the
     termination of the offering.

     b. The  undersigned  Registrant  hereby  undertakes  that,  for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable,  each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that
is incorporated by reference in this  Registration  Statement shall be deemed to
be a new registration  statement relating to the securities offered therein, and
the offering of such  securities  at that time shall be deemed to be the initial
bona fide offering thereof.

     c. Insofar as indemnification  for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission  such  indemnification  is against  public policy as expressed in the
Securities  Act of 1933 and is,  therefore,  unenforceable.  In the event that a
claim for  indemnification  against such liabilities  (other than the payment by
the  Registrant  of  expenses  incurred  or  paid  by  a  director,  officer  or
controlling  person of the Registrant in the  successful  defense of any action,
suit or proceeding) is asserted by such director,  officer or controlling person
in connection with the securities being registered,  the Registrant will, unless
in the  opinion  of its  counsel  the matter  has been  settled  by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities  Act of 1933 and will be governed by the final  adjudication  of such
issue.

                                      II-4
SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Bridgewater, State of New Jersey, on this 23rd
day of April, 2002.

                          DSET CORPORATION

                          By:/s/   William P. McHale, Jr.
                             ----------------------------------------------
                             William P. McHale, Jr.
                             Chief Executive Officer
POWER OF ATTORNEY

         KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints William P. McHale, Jr., his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same with all exhibits thereto,
and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

        Signature                       Title                        Date
--------------------------    --------------------------------  --------------

/s/ William P. McHale, Jr.    Chairman of the Board, Chief
--------------------------    Executive Officer and Director     April 23, 2002
William P. McHale, Jr.        (Principal Executive Officer)

                              Vice President, Chief Financial
/s/ Bruce M. Crowell          Officer and Secretary              April 23, 2002
--------------------------    (Principal Financial and
Bruce M. Crowell               Accounting Officer)

/s/ Binay Sugla               President and Director             April 23, 2002
--------------------------
Binay Sugla

/s/ Jacob J. Goldberg         Director                           April 23, 2002
--------------------------
Jacob J. Goldberg

/s/ Arun Inam                 Director                           April 23, 2002
--------------------------
Arun Inam

/s/ Andrew D. Lipman          Director                           April 23, 2002
--------------------------
Andrew D. Lipman

/s/ Carl Pavarini             Director                           April 23, 2002
--------------------------
Carl Pavarini

/s/ C. Daniel Yost            Director                           April 23, 2002
--------------------------
C. Daniel Yost
EXHIBIT INDEX

Exhibit Number               Description
--------------   ---------------------------------------------------------
    4.1          ISPsoft's 2000 Stock Plan.
    4.2          DSET Corporation 2001 Employee Stock Purchase Plan.
    4.3          DSET Corporation 1998 Stock Plan, as amended.
    5.1          Opinion of Hale and Dorr LLP.
   23.1          Consent of PricewaterhouseCoopers LLP.
   23.2          Consent of Amper, Politziner & Mattia P.A.
   23.3          Consent of Hale and Dorr LLP (contained in the opinion filed as
                 Exhibit 5.1).
   24            Power of Attorney (contained on the signature page of this
                 Registration Statement).