UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549



                                    FORM 10-Q

             [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended October 31, 2001

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934


                        For the transition period From To

                         Commission file number 1-111898


                               ACCELIO CORPORATION
             (Exact name of registrant as specified in its charter)


         CANADA                                                 N/A
---------------------------                          --------------------------
(state or other jurisdiction of                             (IRS Employer
incorporation or organization)                             Identification No.)


                              560 Rochester Street
                         Ottawa, Ontario K1S 5K2, Canada
                   -----------------------------------------
                    (Address of principal executive offices)

                                 (613) 233-2256
                            ------------------------
               Registrant's telephone number (including area code)


     Indicate by check mark whether the registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Exchange Act during the
  preceding 12 months (or for such shorter period that the issuer was required
         to file such reports), and (2) has been subject to such filing
                       requirements for the past 90 days.

                                    Yes X  No __



                      APPLICABLE ONLY TO CORPORATE ISSUERS
              The number of the issuer's Common Shares outstanding
                        on November 20, 2001: 24,915,913


                                       1
<PAGE>


                               ACCELIO CORPORATION
                                TABLE OF CONTENTS



PART I   FINANCIAL INFORMATION                                         Page No.

Item 1.  Financial Statements

         Consolidated Balance Sheets as at October 31, 2001, and          3
           April  30, 2001

         Consolidated Statements of Operations for the three and six      4
           month periods ended October 31, 2001 and October 31, 2000

         Consolidated Statements of Comprehensive Income for the three    5
           and six months periods ended October 31, 2001 and October
           31, 2000

         Consolidated Statements of Cash Flows for the three month and    6
           six month periods ended October 31, 2001 and October 31,
           2000

         Notes to Consolidated Financial Statements                       7

Item 2.  Management's Discussion and Analysis of Financial               19
          Condition and Results of Operations


PART II  OTHER INFORMATION

Item 1.  Legal Proceedings                                               29

Item 6.  Exhibits and Reports on Form 8-K                                29

SIGNATURES                                                               30







This  Quarterly  Report  on  Form  10-Q  ("Report"),   contains  forward-looking
statements  within the  meaning of Section  27A of the  Securities  Act of 1933.
Discussions  containing such forward-looking  statements may be found in Items 2
of Part I and Item 1 of Part II herof, as well as within this Report  generally.
In  addition,  when  used in  this  Report,  the  words  "believes",  "intends",
"anticipates",  "expects",  and  similar  expressions  are  intended to identify
forward-looking statements. Such statements are subject to a number of risks and
uncertainties.  Actual results in the future could differ  materially from those
described  in  the  forward-looking   statements  as  a  result  of  changes  in
technology,   changes  in  industry  standards,   new  product  introduction  by
competitors,  increased participation in the enterprise software market by major
corporations  and other  matters set forth in this Report.  The Company does not
undertake  any  obligation  to publicly  release the results of any revisions to
these  forward-looking  statements that may be made to reflect any future events
or circumstances.

                                       2
<PAGE>
<TABLE>
<CAPTION>
                                              ACCELIO CORPORATION
                                         CONSOLIDATED BALANCE SHEETS
                           (in thousands of Canadian dollars, except share amounts)
 <S>                                                            <C>                  <C>
                                                                October 31,          April 30,
                                                                   2001                2001
                                                              ----------------      ------------
                                             ASSETS
 Current assets
   Cash and cash equivalents..............................           $ 29,579         $  41,426
   Accounts receivable (Note 2)...........................             23,847            28,488
   Term accounts receivable (Note 2)......................              2,118             3,962
   Unbilled receivables...................................              2,310             2,399
   Inventory..............................................                801               869
   Prepaid expenses ......................................              3,641             3,684
                                                               ---------------      ------------
                                                                       62,296            80,828
   Fixed assets (Note 3)..................................             12,961            12,722
   Other assets (Note 4)..................................             20,171            21,126
                                                               ---------------      ------------
                                                                     $ 95,428         $ 114,676
                                                               ===============      ============

                              LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities
   Accounts payable.......................................            $ 4,934            $4,039
   Accrued liabilities ...................................              9,551            11,911
   Unearned revenue.......................................             14,887            15,788
   Term loan (Note 5).....................................             10,000                --
   Obligations under capital lease (Note 10)..............                947               919
                                                              ----------------      ------------
                                                                       40,319            32,657
 Accrued liabilities (Note 8).............................                298               446
 Term loan (Note 5).......................................                 --            10,000
 Obligations under capital lease (Note 10)................              1,168             1,011
                                                              ----------------      ------------
                                                                       41,785            44,114
                                                              ----------------      ------------


 Shareholders' equity
   Capital stock (Issued and outstanding--24,915,913
   Common Shares at October 31, 2001; 24,831,527
   Common  Shares at April  30, 2001) ....................           272,989           272,587
   Cumulative translation adjustment......................              (897)           (4,206)
   Deficit................................................          (218,449)         (197,819)
                                                              ----------------      ------------
                                                                      53,643            70,562
                                                              ----------------      ------------
                                                                    $ 95,428          $114,676
                                                              ================      ============

      (the accompanying notes are an integral part of these consolidated financial statements)

</TABLE>
                                       3
<PAGE>
<TABLE>
<CAPTION>


                                                          ACCELIO CORPORATION
                                             CONSOLIDATED STATEMENTS OF OPERATIONS
                                     (in thousands of Canadian dollars except share and per share amounts)


                                                   Three Months ended                  Six Months ended
                                                       October 31,                        October 31,
                                             ------------------------------    -------------------------------
                                                  2001            2000              2001             2000
                                             -------------   --------------    --------------   --------------

<S>                                          <C>              <C>               <C>              <C>
Revenues
  Product................................         $ 8,945         $ 17,259          $ 19,143         $ 29,913
  Service................................          11,921            9,427            24,724           18,828
                                             -------------   --------------    --------------   --------------
                                                   20,866           26,686            43,867           48,741
                                             -------------   --------------    --------------   --------------

Costs and expenses
  Cost of product........................           2,042            2,118             3,453            4,132
  Cost of service........................           5,032            2,599             9,596            5,286
  Sales and marketing....................          16,419           12,714            30,136           25,402
  General and administrative.............           3,675            2,258             6,047            4,732
  Research and development (Note 6)......           4,842            4,059            10,036            8,006
  Depreciation and amortization..........           2,876            2,474             5,525            5,061
  Gain on sale of assets.................           (200)               --             (200)               --
                                             -------------   --------------    --------------   --------------
                                                   34,686           26,222            64,593           52,619
                                             -------------   --------------    --------------   --------------

Operating income (loss)                          (13,820)              464           (20,726)          (3,878)
  Net investment income .................             (8)              312                58              427
  Other income (expense).................             287              106               300               25
                                             -------------   --------------    --------------   --------------
Income (loss) before taxes                       (13,541)              882           (20,368)          (3,426)

Income tax
  Current  (Note 7)......................           (131)             (501)             (262)            (659)
                                             -------------   --------------    --------------   --------------
Net income (loss)                              $ (13,672)            $ 381         $ (20,630)        $ (4,085)
                                             =============   ==============    ==============   ==============
Basic income (loss) per share
  Net loss per share.....................         $(0.55)           $ 0.02          $ (0.83)         $ (0.20)
  Weighted average number of shares......      24,908,568       20,952,065        24,879,676       20,507,927
Fully diluted income (loss) per share
Net loss per share.......................         $(0.55)           $ 0.02          $ (0.83)         $ (0.20)
Weighted average number of shares........      24,908,568       21,045,122        24,879,676       20,507,927


                (the accompanying notes are an integral part of these consolidated financial statements)

</TABLE>






                                       4
<PAGE>
<TABLE>
<CAPTION>

                                                ACCELIO CORPORATION
                                   CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                                          (in thousands of Canadian dollars)


                                                   Three Months ended                 Six Months ended
                                                      October 31,                        October 31,
                                              -----------------------------    ------------------------------

                                                 2001            2000              2001            2000
                                              ------------   --------------    -------------   --------------
<S>                                            <C>                <C>            <C>               <C>
Net income (loss)............................  $ (13,672)            $ 381       $ (20,630)         $(4,085)
Other comprehensive income (loss):...........
Cumulative translation adjustment (net of
tax of nil):.................................      3,657            (1,411)          3,309             (887)
                                              ------------   --------------    -------------   --------------
Comprehensive loss...........................  $ (10,015)         $ (1,030)      $ (17,321)         $(4,972)
                                              ============   ==============    =============   ==============


                (the accompanying notes are an integral part of these consolidated financial statements)


</TABLE>

                                       5
<PAGE>

<TABLE>
<CAPTION>

                                            ACCELIO CORPORATION
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (in thousands of Canadian dollars)


                                                       Three Months ended               Six Months ended
                                                          October 31,                      October 31,
                                                 ----------------------------     -----------------------------

                                                        2001            2000          2001              2000
                                                 --------------    -----------    ------------     ------------

    <S>                                               <C>               <C>         <C>               <C>
    Cash provided from (used in):
    Operating activities
    Net income (loss).......................          $  (13,672)           $381      $ (20,630)        $(4,085)
    Items not involving cash:
      Depreciation and amortization.........               3,037           3,380          5,846           6,867
      Deferred income taxes.................                  --              58             --              --
      Other non-cash items..................               2,466            (884)         3,419            (139)
    Net change in operating components
      of working capital (Note 11)..........               1,777             631          4,417          (9,632)
                                                     ------------    -----------   -------------   -------------
                                                          (6,392)          3,566         (6,948)         (6,989)
                                                     ------------    -----------   -------------   -------------
    Investing activities
    Purchase of fixed assets................              (1,809)         (2,360)        (2,534)         (4,614)
    Purchase of other assets................                (829)         (1,147)        (2,144)         (1,695)
                                                     ------------    -----------   -------------   -------------
                                                          (2,638)         (3,507)        (4,678)         (6,309)
                                                     ------------    -----------   -------------   -------------
    Financing activities
    Proceeds from issuance of shares........                  38          20,915            236          21,111
    Capital lease repayments................                (191)             --           (930)             --
                                                     ------------    -----------   -------------   -------------
                                                            (153)         20,915           (694)         21,111
                                                     ------------    -----------   -------------   -------------

    Effect of exchange rate changes on cash                  741            (358)           473            (218)
                                                     ------------    -----------   -------------   -------------

    Increase (decrease) in cash and cash
      equivalents...........................              (8,442)         20,616        (11,847)          7,595
    Cash and cash equivalents, beginning
      of period.............................              38,021          29,071         41,426          42,092
                                                     ------------    -----------   -------------   -------------
    Cash and cash equivalents, end of
      period................................            $ 29,579         $49,687      $  29,579         $49,687
                                                     ============    ===========   =============   =============



                    (the accompanying notes are an integral part of these consolidated financial statements)

</TABLE>


                                       6
<PAGE>


                               ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

1.   SIGNIFICANT ACCOUNTING POLICIES

(a)  Basis of presentation

     These consolidated financial statements have been prepared by management in
accordance with accounting  principles  generally  accepted in the United States
("U.S.  GAAP"),  and include all assets,  liabilities,  revenues and expenses of
Accelio  Corporation  ("Accelio")  and its  wholly-owned  subsidiaries:  Accelio
Corporation  (a  Delaware   corporation),   JF  A'Asia  Pty.  Limited  ("Accelio
Pacific"),  Accelio Aktiebolag  ("Accelio Nordic"),  Accelio France SA ("Accelio
France"),  Accelio UK Limited ("Accelio UK"), Accelio Deutschland GmbH ("Accelio
Germany"),  Accelio Technologies Limited ("Accelio Ireland"), Accelio Japan K.K.
("Accelio Japan"), Accelio Netherlands BV ("Accelio Netherlands"), Accelio Norge
AS ("Accelio Norway") and Accelio PTE Ltd ("Accelio Singapore"). Accelio and its
wholly-owned  subsidiaries are collectively referred to herein as the "Company".
Investments in businesses  that the Company does not control,  but over which it
can exert significant influence, are accounted for using the equity method. Such
investments   are   periodically   evaluated  for  impairment  and   appropriate
adjustments  are recorded,  if necessary.  The  unaudited  interim  consolidated
financial  statements  reflect all adjustments  which are, in the opinion of the
Company's  management,  necessary  for a fair  statement  of  results  for these
interim periods.

     The unaudited  interim  financial  statements should be read in conjunction
with and follow the same  accounting  policies and methods of application as the
most recent annual financial statements of April 30, 2001.

(b)  Revenue recognition

     The Company  recognizes  revenue in accordance  with  Statement of Position
("SOP") 97-2,  "Software Revenue  Recognition," issued by the American Institute
of Certified  Public  Accountants  ("AICPA"),  SOP 98-9,  "Modification of 97-2,
Software Recognition with Respect to Certain  Transactions" and Staff Accounting
Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements",  issued by
the Securities and Exchange Commission (SEC).

     The Company records product revenue from packaged  software and irrevocable
commitments  to purchase  products when  persuasive  evidence of an  arrangement
exists,  the  software  product  has  been  shipped,  there  are no  significant
uncertainties   surrounding   product   acceptance,   the  fees  are  fixed  and
determinable and collection is considered  probable.  The Company's  Irrevocable
Commitment  Licenses  ("ICLs")  are  arrangements  to use  multiple  copies of a
software  product under site licenses with users and to market  multiples copies
of a software under similar  arrangements  with  resellers.  These  arrangements
always include  post-contract  customer  support  ("PCS") and are typically less
than a year in duration  with a significant  portion of the product  license fee
payable  within the  Company's  normal trade terms.  Revenues  from  irrevocable
commitments  to purchase  products  with payment  terms  exceeding the Company's
customary  trade  terms  are  recorded  at the  amount  receivable  less  deemed
interest.  The Company  amortizes the  difference  between the face value of the
receivable and the discounted amount over the term of the receivable and records
the discount as interest income.

     Revenue  from  software   product   licenses   which  include   significant
customization  and revenue from  services  are  recognized  on a  percentage  of
completion  basis,  whereby revenue is recorded,  based on labor input hours, at
the estimated  realizable  value of work completed to date.  Estimated losses on
contracts  are  recognized  when  they  become  probable.  Unbilled  receivables
represent  consulting work performed under contract and not yet billed.

     Revenue from maintenance  agreements ("PCS") is recognized ratably over the
term of the  agreement.  Unearned  revenue  represents  payments  received  from
customers for services not yet performed.


2.   ACCOUNTS RECEIVABLE

     Accounts  receivable  and term accounts  receivable are net of an allowance
for doubtful  accounts of $3.2 million at October 31, 2001,  and $2.9 million at
April 30, 2001.

     The Company  records  revenues  from  irrevocable  commitments  to purchase
products  which do not  conform to the

                                       7

<PAGE>

                               ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

Company's  customary  trade terms at the minimum amount  receivable  less deemed
interest  ("Term Accounts  Receivable").  The Company's  Irrevocable  Commitment
Licenses  ("ICLs") are arrangements to use multiple copies of a software product
under  site  licenses  with users and to market  multiples  copies of a software
under similar  arrangements with resellers.  These  arrangements  always include
post-contract  customer  support  ("PCS") and are typically  less than a year in
duration with a significant  portion of the product  license fee payable  within
the  Company's  normal trade terms.  License  revenue from  arrangements  having
extended  payment  terms were  $287,000 for the three  months ended  October 31,
2001, and $660,000 in the six months ended October 31, 2001 compared to $274,000
and  $2.4  million  for  the  three  and  six  months  ended  October  31,  2000
respectively.  For the three months ended  October 31, 2001,  the discount  rate
used was 6.5%.

     The Company  records Term Accounts  Receivable as non-current to the extent
that  payment will be received  more than one year from the balance  sheet date.
Payment  of Term  Accounts  Receivable  is  generally  due the  earlier  of: (i)
delivery of the  Company's  products by the  customer  to its  customers  or end
users;  and (ii)  specific  dates in the  license  agreement  ("Minimum  Payment
Dates").  The net amount of these receivables at October 31, 2001, and April 30,
2001  was  $2.1  million  and  $4.0  million,  respectively.  Net  additions  to
non-current Term Accounts Receivable were nil for the three and six months ended
October 31, 2001 and 2000.

     The Company's  customer base consists of large numbers of diverse customers
dispersed across many industries and geographies. As a result,  concentration of
credit risk with respect to accounts  receivable and term accounts receivable is
not significant.

3.  FIXED ASSETS

                                        October 31, 2001
                          ---------------------------------------------

                                          Accumulated       Net book
                             Cost         depreciation        value
                          ------------  ----------------  -------------
                               (in thousands of Canadian dollars)

   Computer equipment        $ 21,822          $ 15,804         $ 6,018
   Furniture and
   fixtures..........           9,446             6,067           3,379
   Leasehold
   improvements......           5,913             2,349           3,564
                          ------------  ----------------  -------------
                             $ 37,181          $ 24,220        $ 12,961
                          ============  ================  =============



                                        April 30, 2001
                          ---------------------------------------------

                                           Accumulated       Net book
                             Cost          depreciation        value
                          ------------   ----------------  -------------
                               (in thousands of Canadian dollars)

   Computer equipment         $20,013           $13,999          $6,014
   Furniture and
   fixtures..........           9,152             5,424           3,728
   Leasehold
   improvements......           4,974             1,994           2,980
                          ------------   ----------------  -------------
                              $34,139           $21,417         $12,722
                          ============   ================  =============


                                       8
<PAGE>

                               ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)


4.  OTHER ASSETS

                                               October 31, 2001
                                  -------------------------------------------

                                                   Accumulated      Net book
                                      Cost         amortization      value
                                  ------------   ---------------- -----------
                                      (in thousands of Canadian dollars)
  Delrina technology,
   trademarks, tradenames
   and workforce..................  $ 16,081        $ 11,679         $ 4,402
  Software........................    17,715           8,464           9,251
  Goodwill........................     2,235           1,480             755
  Licenses, marketing and
  distribution rights.............     6,895           3,870           3,025
  Capitalized software costs......    17,294          16,767             527
  Other assets....................     6,448           4,237           2,211
                                  ------------   -------------   ------------
                                    $ 66,668        $ 46,497        $ 20,171
                                  ============   =============   ============


                                                April 30, 2001
                                  --------------------------------------------

                                                   Accumulated       Net book
                                      Cost         amortization       value
                                  ------------   ---------------- ------------
                                      (in thousands of Canadian dollars)
  Delrina technology,
   trademarks, tradenames
   and workforce..................    $16,081         $11,146          $4,935
  Software........................     16,955           8,105           8,850
  Goodwill........................      2,203           1,319             884
  Licenses, marketing and
  distribution rights.............      6,792           3,375           3,417
  Capitalized software costs......     17,294          16,331             963
  Other assets....................      6,234           4,157           2,077
                                  ------------   -------------   -------------
                                      $65,559         $44,433         $21,126
                                  ============   =============   =============


5.   FINANCIAL INSTRUMENTS AND CREDIT FACILITY

     The Company has entered into  receivable  purchase  agreements with certain
third party purchasers. Under the agreements, the Company has the option to sell
certain accounts receivable on a recourse basis. The purchasers have recourse in
the event of a trade dispute as defined in the receivables  purchase agreements.
As at October 31, 2001 and April 30, 2001, the  outstanding  balance of accounts
receivable  sold under these  agreements  was  approximately  US$3.1 million and
US$3.6 million,  respectively. The recourse obligation is estimated to be nil as
the Company believes that none of the receivables sold are at risk of recourse.

     The Company has a committed $10 million credit facility with the Royal Bank
of Canada  ("RBC").  This credit  facility is made up of a $10 million term loan
facility which bears interest at a rate of 1.5% over the Bankers Acceptance rate
of RBC from time to time and is  payable on August 1,  2002.  As at October  31,
2001,  the Company had drawn all of the $10 million term loan facility and fixed
the interest rate until January 17, 2002, at 3.02%. The Company has granted,  as
collateral for the $10 million credit  facility,  a general  security  agreement
over Accelio's assets, including a pledge of the shares of certain subsidiaries.

     When the Company  deems  appropriate,  Accelio uses forward  contracts  and
purchased  options  to manage  exposures  to  foreign  exchange.  The  Company's
objective is to minimize risk using the most  effective  methods to eliminate or
reduce  the  impacts of this  exposure.  Accelio  does not enter into  financial
instruments  for  speculative or trading  purposes.  As at October 31, 2001, the
Company had no outstanding foreign exchange financial instruments.

                                       9

<PAGE>

                               ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                   (Unaudited)

6.  RESEARCH AND DEVELOPMENT EXPENSE

   The following table provides a summary of capitalized software costs and the
related amortization and write down charged to cost of product in the three and
six months ended October 31, 2001 and October 31, 2000.

<TABLE>
<CAPTION>
                                             Three Months ended         Six Months ended
                                                October 31,                October 31,
                                          -------------------------  ------------------------
                                             2001         2000          2001         2000
                                          -----------  ------------  ------------  ----------
                                              (in thousands of          (in thousands of
                                             Canadian dollars)          Canadian dollars)

  <S>                                        <C>           <C>          <C>          <C>
  Research and development costs...            4,842         4,856       10,036        9,703
  Capitalized software costs.......               --          (797)           --      (1,697)
                                          -----------  ------------  -----------  -----------
  Net research and development expense       $ 4,842       $ 4,059     $ 10,036      $ 8,006
                                          ===========  ============  ===========  ===========
  Amortization of development costs
  charged to cost of product.......            $ 161          $819        $ 321       $1,619
                                          ===========  ============  ===========  ===========
  Write-down of development costs
  charged to cost of product.......            $ 115           $--        $ 115          $--
                                          ===========  ============  ===========  ===========
</TABLE>

7.  INCOME TAXES

     As at October 31,  2001,  the Company had net  deferred tax assets of $76.8
million  (October 31, 2000,  $58.9 million),  the principal  components of which
were  temporary  differences  associated  with  the  acquisition  of in  process
research and development and operating loss carry forwards. The Company believes
sufficient  uncertainty exists regarding the realizability of these net deferred
tax assets such that a valuation  allowance of $76.8 million  (October 31, 2000,
$53.2 million) has been applied.  During the quarter ended October 31, 2001, the
Company recorded a provision for domestic capital taxes and foreign jurisdiction
income tax of $131,000 (October 31, 2000, $501,000).

                                       10

<PAGE>
                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


8.   PROVISION FOR RESTRUCTURING COSTS

     On March 17,  1999,  the  Corporation  announced a  restructuring  plan and
recorded a  provision  for  restructuring  costs of $30.5  million  directed  at
reducing costs. The key restructuring actions included:

o    consolidation of management responsibilities and reduction in headcount;
o    closure of redundant facilities;
o    reduction in the carrying value of certain capital assets primarily related
     to past acquisitions; and
o    cancellation of certain commitments and other costs.

     The following  table  summarizes  the activity in the  restructuring  costs
during the three months ended October 31, 2001:

<TABLE>

<CAPTION>


                                           Employee                           Total       Non Cash       Total
                                          Termination  Facilities  Other      Costs        Costs       Provision
                                          -------------------------------------------------------------------------

<S>                                       <C>          <C>         <C>       <C>         <C>          <C>

Restructuring provision........           $ 5,252      $2,914      $ 726     $ 8,892     $ 21,611     $ 30,503
Cash payments..................            (1,175)        (36)      (207)     (1,418)          --       (1,418)
Non-cash items.................                --          --         --          --      (21,611)     (21,611)
                                          -------------------------------------------------------------------------
Balance, April 30, 1999........           $ 4,077      $2,878      $ 519     $ 7,474     $     --     $  7,474
Cash payments..................            (2,921)     (1,092)      (124)     (4,137)          --       (4,137)
Reductions.....................              (566)       (540)        --      (1,106)          --       (1,106)
                                          -------------------------------------------------------------------------
Balance, April 30, 2000........           $   590      $1,246      $ 395     $ 2,231     $     --     $  2,231
Cash payments..................              (468)       (236)      (121)       (825)          --         (825)
Reductions.....................              (122)       (567)        --        (689)          --         (689)
                                          -------------------------------------------------------------------------
Balance, April 30, 2001........           $    --      $  443      $ 274     $   717     $     --     $    717
Cash payments..................                --         (88)       (40)       (128)          --         (128)
Reductions.....................                --          --         --          --           --           --
                                          -------------------------------------------------------------------------
Balance, July 31, 2001.........           $    --      $  355      $ 234     $   589     $     --     $    589
Cash payments..................                --          (8)       (41)        (49)          --          (49)
Reductions.....................                --          --         --          --           --           --
                                          -------------------------------------------------------------------------
Balance, October 31, 2001......           $    --      $  347      $ 193     $   540     $     --     $    540
                                          -------------------------------------------------------------------------
Long-term balance..............           $    --      $  298      $  --     $   298     $     --     $    298
                                          =========================================================================
</TABLE>


     Employee  terminations  totaled 105 and included 46 in sales and marketing,
40 in  research in  development,  12 in internal  corporate  services,  and 7 in
systems  and  consulting  services.   Employee   terminations   included  salary
continuance  for which the  Company  was  contractually  obligated  to pay.  All
employees were terminated on or before April 30, 1999.

     Facilities  costs consisted  primarily of $2.1 million and $780,000 related
to  the  closure  of  the  Company's  United  Kingdom  and  Toronto  facilities,
respectively.  The provision for redundant facilities included management's best
estimates of the total future operating costs of these vacant facilities for the
remainder of their respective lease terms.  Actual costs could differ from these
estimates. During the six months ended October 31, 2001, the Company's liability
for vacant  facilities was reduced by $96,000.  The Company's  long-term balance
relates to a lease in the United Kingdom which expires April 30, 2010.

     Other cash costs related  primarily to the  cancellation of trade shows and
other commitments.  The remaining obligation relates to a service contract which
expires  August 31,  2002.  During the six months ended  October 31,  2001,  the
Company's liability related to this commitment was reduced by $81,000.

     Non-cash  costs  included  impairment  losses of $21.6  million  related to
assets  held for use.  The losses were  comprised  of $16.6  million  related to
marketing and  distribution  rights,  $3.1 million  related to goodwill and $1.9
million related to other capital assets.


                                       11


<PAGE>

                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


9.  SEGMENTED INFORMATION

     Operating  segments are defined as components of an enterprise  about which
separate financial  information is available that is evaluated  regularly by the
Company's  chief  decision  maker in  deciding  how to  allocate  resources  and
assessing performance. The Company's chief decision maker is the Chief Executive
Officer.

     The Company's Chief Executive Officer primarily  evaluates the Company on a
geographic  basis. The geographic  evaluation is further segmented into Product,
Consulting,  and Customer  Support  components.  The Product  segment engages in
business  activities  from which it earns  license  revenues  from the Company's
software  products.   The  Consulting  segment  earns  revenues  from  assisting
customers in configuring,  implementing  and integrating the Company's  products
and, when required,  customizing  products and designing  automated processes to
meet the customers  specific  business  needs as well as providing all necessary
training. The Customer Support segment earns revenues through after sale support
for software products as well as providing software upgrades under the Company's
maintenance and support programs.

     The  Company  evaluates  performance  based  on the  contribution  of  each
segment.  The Product  segment costs include all costs  associated  with selling
product  licenses.  The costs of the  Consulting and Customer  Support  segments
include all costs  associated  with the delivery of the service to the customer.
Inter-segment revenues as well as charges such as depreciation and amortization,
interest expense and overhead  allocation are not included in the calculation of
segment  profit.  The Company does not use a measure of segment assets to assess
performance or allocate resources. As a result, segment asset information is not
presented.


                                       12


<PAGE>


                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


     The following  tables sets forth,  on a  comparative  basis for the periods
indicated, the Company's segmented information:

<TABLE>

<CAPTION>
                                                         Three months ended October 31, 2001
                                                          (in thousands of Canadian dollars)
                                                 ------------------------------------------------
                                                                             Customer
                                                  Product       Consulting   Support       Total
                                                 -------------------------------------------------
         <S>                                     <C>            <C>          <C>         <C>

          North America
          Revenue.......................         $  4,859       $ 2,628      $ 4,829     $ 12,316
          Costs.........................            7,642           963        2,255       10,860
                                                 -------------------------------------------------
          Contribution..................         $ (2,783)      $ 1,665      $ 2,574     $  1,456
                                                 -------------------------------------------------

          Europe
          Revenue.......................         $  3,683       $ 1,960      $ 2,131     $  7,774
          Costs.........................            4,325         1,299          515        6,139
                                                 -------------------------------------------------
          Contribution..................         $   (642)      $   661      $ 1,616     $  1,635
                                                 -------------------------------------------------

          Asia Pacific
          Revenue.......................         $    403         $  88        $ 285     $    776
          Costs.........................            1,790             -            -        1,790
                                                 -------------------------------------------------
          Contribution..................         $ (1,387)         $ 88       $  285     $ (1,014)
                                                 -------------------------------------------------

          Total
          Revenue.......................         $  8,945       $ 4,676      $ 7,245     $ 20,866
          Costs.........................           13,757         2,262        2,770       18,789
                                                 -------------------------------------------------
          Contribution..................         $ (4,812)      $ 2,414      $ 4,475     $  2,077
                                                 -------------------------------------------------

          Cost of product...............                                                    2,042
          Corporate marketing...........                                                    2,662
          Research and development......                                                    4,842
          General and administration....                                                    3,675
          Depreciation and amortization                                                     2,876
          Gain on sale of asset.........                                                     (200)
                                                                                          --------
                                                                                         $ 15,897
                                                                                          --------
          Operating loss ...............                                                  (13,820)
          Net investment income.........                                                      279
                                                                                          --------
          Loss before taxes.............                                                 $(13,541)
          Provision for income taxes....                                                     (131)
                                                                                         ---------
          Net loss......................                                                 $(13,672)
                                                                                         =========
</TABLE>


                                       13

<PAGE>



                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


<TABLE>

<CAPTION>
                                                         Three months ended October 31, 2001
                                                          (in thousands of Canadian dollars)
                                                 --------------------------------------------------
                                                                                 Customer
                                                    Product       Consulting     Support     Total
                                                 --------------------------------------------------
         <S>                                     <C>               <C>          <C>        <C>

          North America
          Revenue.......................              $ 9,432       $ 1,433      $ 4,812    $ 15,677
          Costs.........................                5,500           859          961       7,320
                                                 ----------------------------------------------------
          Contribution..................              $ 3,932         $ 574       $3,851     $ 8,357
                                                 ----------------------------------------------------

          Europe
          Revenue.......................              $ 4,570       $ 1,252      $ 1,706     $ 7,528
          Costs.........................                3,096           420          359       3,875
                                                 ----------------------------------------------------
          Contribution..................              $ 1,474         $ 832      $ 1,347     $ 3,653
                                                 ----------------------------------------------------

          Asia Pacific
          Revenue.......................              $ 3,257          $ 79        $ 145     $ 3,481
          Costs.........................                1,399             -            -       1,399
                                                 ----------------------------------------------------
          Contribution..................              $ 1,858          $ 79        $ 145     $ 2,082
                                                 ----------------------------------------------------

          Total
          Revenue.......................             $ 17,259       $ 2,764      $ 6,663    $ 26,686
          Costs.........................                9,995         1,279        1,320      12,594
                                                 ----------------------------------------------------
          Contribution..................              $ 7,264       $ 1,485      $ 5,343    $ 14,092
                                                 ----------------------------------------------------

          Cost of product...............                                                       2,118
          Corporate marketing...........                                                       2,719
          Research and development......                                                       4,059
          General and administration....                                                       2,258
          Depreciation and amortization                                                        2,474
                                                                                          -----------
                                                                                            $ 13,628
                                                                                          -----------
          Operating income .............                                                         464
          Net investment income.........                                                         418
                                                                                          -----------
          Income before taxes...........                                                       $ 882
          Provision for income taxes....                                                        (501)
                                                                                          -----------
          Net income....................                                                       $ 381
                                                                                          ===========
</TABLE>


                                       14


<PAGE>


                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


<TABLE>

<CAPTION>
                                                         Six months ended October 31, 2001
                                                          (in thousands of Canadian dollars)
                                                 ------------------------------------------------
                                                                                Customer
                                                    Product       Consulting    Support       Total
                                                 ---------------------------------------------------
         <S>                                     <C>               <C>          <C>          <C>

          North America
          Revenue.......................            $   9,833       $ 5,880     $  9,946     $ 25,659
          Costs.........................               14,118         2,850        3,277       20,245
                                                 ----------------------------------------------------
          Contribution..................            $ (4,285)       $ 3,030     $  6,669     $  5,414
                                                 ----------------------------------------------------

          Europe
          Revenue.......................            $   7,516       $ 3,610     $  4,399     $ 15,525
          Costs.........................                8,208         2,411        1,058       11,677
                                                 ----------------------------------------------------
          Contribution..................            $   (692)       $ 1,199     $  3,341     $  3,848
                                                 ----------------------------------------------------

          Asia Pacific
          Revenue.......................            $   1,794       $   250     $    639     $  2,683
          Costs.........................                3,402             -            -        3,402
                                                 ----------------------------------------------------
          Contribution..................            $  (1,608)      $   250     $    639     $   (719)
                                                 ----------------------------------------------------

          Total
          Revenue.......................            $  19,143       $ 9,740     $ 14,984     $ 43,867
          Costs.........................               25,728         5,261        4,335       35,324
                                                 ----------------------------------------------------
          Contribution..................            $  (6,585)      $ 4,479     $ 10,649     $  8,543
                                                 ----------------------------------------------------

          Cost of product...............                                                        3,453
          Corporate marketing...........                                                        4,408
          Research and development......                                                       10,036
          General and administration....                                                        6,047
          Depreciation and amortization                                                         5,525
          Gain on sale of asset.........                                                         (200)
                                                                                          ------------
                                                                                             $ 29,269
                                                                                          ------------
          Operating loss ...............                                                      (20,726)
          Net investment income.........                                                          358
                                                                                          ------------
          Loss before taxes.............                                                    $ (20,368)
          Provision for income taxes....                                                         (262)
                                                                                          ------------
          Net loss......................                                                   $  (20,630)
                                                                                          ============
</TABLE>


                                       15


<PAGE>


                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


<TABLE>

<CAPTION>
                                                         Six months ended October 31, 2001
                                                          (in thousands of Canadian dollars)
                                                 ------------------------------------------------
                                                                                Customer
                                                    Product       Consulting    Support       Total
                                                 ---------------------------------------------------
         <S>                                     <C>               <C>          <C>          <C>

          North America
          Revenue.......................             $ 15,640       $ 2,776      $ 9,474    $ 27,890
          Costs.........................               11,848         1,389        2,069      15,306
                                                 ----------------------------------------------------
          Contribution..................             $  3,792       $ 1,387      $ 7,405    $ 12,584
                                                 ----------------------------------------------------

          Europe
          Revenue.......................             $  9,378       $ 2,558      $ 3,463    $ 15,399
          Costs.........................                6,024           985          843       7,852
                                                 ----------------------------------------------------
          Contribution..................             $  3,354       $ 1,573      $ 2,620    $  7,547
                                                 ----------------------------------------------------

          Asia Pacific
          Revenue.......................             $  4,895       $   275      $   282    $  5,452
          Costs.........................                2,446             -            -       2,446
                                                 ----------------------------------------------------
          Contribution..................             $  2,449       $   275      $   282    $  3,006
                                                 ----------------------------------------------------

          Total
          Revenue.......................             $ 29,913       $ 5,609      $13,219    $ 48,741
          Costs.........................               20,318         2,374        2,912      25,604
                                                 ----------------------------------------------------
          Contribution..................             $  9,595       $ 3,235      $10,307    $ 23,137
                                                 ----------------------------------------------------

          Cost of product...............                                                       4,132
          Corporate marketing...........                                                       5,084
          Research and development......                                                       8,006
          General and administration....                                                       4,732
          Depreciation and amortization                                                        5,061
                                                                                          -----------
                                                                                            $ 27,015
                                                                                          -----------
          Operating loss................                                                      (3,878)
          Net investment income.........                                                         452
                                                                                          -----------
          Loss before taxes.............                                                   $  (3,426)
          Provision for income taxes....                                                        (659)
                                                                                          -----------
          Net loss......................                                                   $  (4,085)
                                                                                          ===========


                                       16

</TABLE>
<PAGE>


                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


10.  CAPITAL LEASE OBLIGATION

     The Company  leases  certain  computer  hardware and software under capital
lease agreements.  The capital leases have been recorded as fixed assets,  other
assets, and capital lease obligations in the accompanying  financial statements.
Depreciation  related to the  capital  leases is included  in  depreciation  and
amortization expense for the three and six months ended October 31, 2001.


     The total future minimum lease payments under capital leases at October 31,
2001 are as follows:


                                                                    in thousands
                                                                    of Canadian
    Years ending April 30,                                            dollars
    ----------------------                                        --------------
        2002.................................................            $ 546
        2003.................................................            1,042
        2004.................................................              685
        2005.................................................               42
                                                                  ------------
        Total minimum lease payment..........................            2,315
        Less amounts representing interest...................             (200)
                                                                  =============

        Present value of net minimum lease payments..........          $ 2,115

        Less current portion.................................             (947)
                                                                   ------------

        Long term portion....................................          $ 1,168
                                                                   ============


11.  NET CHANGE IN OPERATING COMPONENTS OF WORKING CAPITAL

     The net change in operating components of working capital is comprised of:

<TABLE>
<CAPTION>

                                              Three Months ended                 Six Months ended
                                                  October 31,                      October 31,
                                          ---------------------------    -------------------------------
                                             2001            2000             2001             2000
                                          ------------   ------------    -------------    --------------
                                               (in thousands of                  (in thousands of
                                               Canadian dollars)                Canadian dollars)

<S>                                           <C>            <C>              <C>               <C>
  Decrease (increase) in:
  Accounts receivable and term
    accounts receivable............       $     1,350    $      (670)          $ 7,444     $     (5,346)
  Unbilled receivables.............                42            618               206              787
  Inventory........................               (47)             1              (132)              43
  Prepaid expenses.................                94            314                90               72

  Increase (decrease) in:
  Accounts payable.................             1,522            443               839           (3,236)
  Accrued liabilities..............                (6)           183            (2,682)            (716)
  Unearned revenue.................            (1,178)          (258)           (1,348)          (1,236)
                                          ------------   ------------     -------------    -------------
                                          $     1,777    $       631          $  4,417      $    (9,632)
                                          ============   ============     =============    =============
</TABLE>

                                       17


<PAGE>

                              ACCELIO CORPORATION
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
                                  (Unaudited)


12.  RECENT ACCOUNTING PRONOUNCEMENTS

     On October 3, 2001 the Financial  Accounting  Standards Board (FASB) issued
Statement  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets,  that replaces FASB Statement No. 121,  Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of and APB Opinion
No. 30, Reporting Results of  Operations-Reporting  the Effects of Disposal of a
Segment of a Business,  for the disposal of segments of business.  Statement 144
requires  that those  long-lived  assets be  measured  at the lower of  carrying
amount  or fair  value  less  cost  to  sell,  whether  reported  in  continuing
operations or in discontinued  operations.  Therefore,  discontinued  operations
will no longer be  measured  at net  realizable  value or  include  amounts  for
operating losses that have not yet occurred. The provisions of Statement 144 are
effective  for  financial  statements  issued or fiscal  years  beginning  after
December  15,  2001  and,  generally,  are  to be  applied  prospectively.  This
pronouncement  will be effective for the Company's  fiscal year beginning May 1,
2002.  Management  believes  the  adoption  of SFAS  No.  144  will  not  have a
significant  impact  on  the  Company's   financial   condition  or  results  of
operations.

     In July 2001, the Financial  Accounting Standards Board ("FASB") has issued
the Statement of Financial  Standards  ("SFAS") No.141,  Business  Combinations,
that will  require  all  business  combinations  to use the  purchase  method of
accounting.  This  pronouncement  is  effective  for all  business  combinations
initiated  after June 30, 2001. The FASB has also issued SFAS No. 142,  Goodwill
and Other  Intangible  Assets,  which will  require  intangible  assets  with an
indefinite  life and goodwill to be tested for  impairment  on an annual  basis.
Goodwill and indefinite life intangibles will no longer be amortized. Intangible
assets with a definite  life will  continue to be  amortized  over their  useful
life.  This  pronouncement  will be  effective  for the  Company's  fiscal  year
beginning May 1, 2002. Management believes the adoption of SFAS No. 141 and SFAS
No. 142 will not have a significant impact on the Company's  financial condition
or results of operations.

     In June  1998,  the FASB  issued  the  Statement  of  Financial  Accounting
Standard  ("SFAS") No. 133,  "Accounting for Derivative  Instruments and Hedging
Activities"  ("SFAS 133"). This statement  establishes  accounting and reporting
standards for derivative instruments and hedging activities and is effective for
all fiscal  quarters of fiscal years  beginning  after June 15,  1999.  In June,
1999,  the FASB issued SFAS No.137,  which delays the effective date of SFAS 133
until fiscal years beginning after June 15, 2000. Currently,  as the Company has
no derivative instruments, the adoption of SFAS No. 133 has had no impact on the
Company's financial condition or results of operations.


13.  COMPARATIVE RESULTS

     Certain of the prior  years'  figures  have been  reclassified  in order to
conform to the presentation adopted in the current year.


14.  SUBSEQUENT EVENTS

     In a move to reduce its cost base while also  preserving  the  intellectual
talent of the Company, Accelio has implemented a Global salary reduction program
of 10% for all employees earning $60,000 or higher.  Employees earning less than
$60,000 will receive a 5% reduction. This initiative is currently for six months
but may be extended to twelve months and will commence  during the quarter ended
January 31, 2002. The reduction will apply to every employee,  where  applicable
geographically, including the Board of Directors, the executive officers and the
Chief Executive Officer. The Company has cancelled all executive bonus plans for
the third and  fourth  quarters,  unless it meets  its  profit  target, and also
eliminated a total of 50 positions.  All employees will receive statutory notice
of this change in salary in accordance with  employment  law.  Employees will be
granted stock options on a prorated basis with the salary reduction. The Company
expects to grant 500,000 options to employees pursuant to this arrangement.


                                       18

<PAGE>


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


Introduction

     The following  discussion of the Company's results of operations and of its
liquidity  and  capital  resources  should  be  read  in  conjunction  with  the
information contained in the Consolidated Financial Statements and related Notes
thereto.  The following  discussion provides a comparative  analysis of material
changes for the quarters  ended  October 31, 2001,  and 2000,  in the  financial
condition and results of operations of the parent  company  ("Accelio")  and its
wholly-owned  subsidiaries:  Accelio  Corporation (a Delaware  corporation),  JF
A'Asia Pty.  Limited  ("Accelio  Pacific"),  Accelio  Scandinavia  AB  ("Accelio
Nordic"),  Accelio France SA ("Accelio  France"),  Accelio UK Limited  ("Accelio
UK"), Accelio Deutschland GmbH ("Accelio Germany"), Accelio Technologies Limited
("Accelio Ireland"),  Accelio Japan K.K. ("Accelio Japan"),  Accelio Netherlands
BV ("Accelio  Netherlands") and Accelio PTE Ltd ("Accelio  Singapore").  Accelio
and its wholly-owned  subsidiaries  are  collectively  referred to herein as the
"Company".


Results of Operations

     The Company's revenues and operating results have varied substantially from
quarter to quarter. With the exception of its consulting services operation, the
Company has  historically  operated  with little  backlog of orders  because its
software  products are  generally  shipped as orders are  received.  The Company
records  product revenue from packaged  software and irrevocable  commitments to
purchase  products  when  persuasive  evidence  of an  arrangement  exists,  the
software  product  has been  shipped,  there  are no  significant  uncertainties
surrounding  product  acceptance,  the  fees  are  fixed  and  determinable  and
collection is considered probable. As a result, product revenue in any period is
substantially  dependent on orders  booked and shipped in that  period.  Product
revenue is difficult to forecast due to the fact that the Company's sales cycle,
from initial trial to multiple copy licenses, varies substantially from customer
to customer.  As a result,  variations  in the timing of product sales can cause
significant  variations  in  operating  results  from period to period.  Product
revenue represented 43% of total revenue for the quarter ended October 31, 2001.

     Service revenue  primarily  consists of consulting  services,  training and
technical support. Consulting services include assisting customers to configure,
implement and integrate the  Company's  products and, when  required,  customize
products and design  automated  processes to meet customers'  specific  business
needs.  Service  revenue  represented 57% of total revenue for the quarter ended
October 31, 2001.

     Costs and expenses are comprised of cost of product, cost of service, sales
and   marketing,   general  and   administrative,   research  and   development,
depreciation and  amortization  and other expenses.  Cost of product consists of
the cost of disks,  manuals,  packaging,  freight,  royalty  payments to vendors
whose  software  is bundled  with  certain  products,  amortization  of deferred
product  development costs and provision for bad debts. Cost of service includes
all costs of providing  technical support,  training,  consulting,  custom forms
development  application development services and provision for bad debts. Sales
and marketing expenses are principally  related to salaries and commissions paid
to sales and marketing  personnel and the cost of marketing  programs.  Research
and development  expenses  include  personnel and occupancy costs as well as the
costs of software development,  testing,  product management,  quality assurance
and  documentation.  General and  administrative  expenses include personnel and
occupancy  costs  related  to   administrative   personnel.   Depreciation   and
amortization  includes  depreciation  of fixed assets and  amortization of other
assets,  goodwill and distribution rights relating to various acquisitions.  The
Company  amortizes  goodwill and distribution  rights over their expected useful
lives. The Company  periodically  reviews the carrying value of its fixed assets
and other assets.  Any  impairment  in the carrying  value is recognized at that
time.


                                       19


<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


     The  following  table sets forth,  on a  comparative  basis for the periods
indicated,  the components of the Company's  product margin,  service margin and
product and service margin:

<TABLE>
<CAPTION>

                               Three months ended October 31,                    Six months ended October 31,
                       -----------------------------------------------    -------------------------------------------
                               2001                     2000                     2001                   2000
                       ---------------------   -----------------------    -------------------    --------------------
                             (in thousands of Canadian dollars)               (in thousands of Canadian dollars)
<S>                       <C>          <C>         <C>           <C>      <C>           <C>       <C>           <C>
Product revenue....       $ 8,945      100%        $17,259       100%     $ 19,143      100%      $29,913       100%
Cost of product....         2,042       23%          2,118        12%        3,453       18%        4,132        14%
                       -----------   -------   ------------    -------    ---------    ------    ---------    -------
Product margin.....         6,903       77%         15,141        88%       15,690       82%       25,781        86%
                       ===========   =======   ============    =======    =========    ======    =========    =======


Service revenue....        11,921      100%          9,427       100%       24,724      100%       18,828       100%
Cost of service....         5,032       42%          2,599        28%        9,596       39%        5,286        28%
                       -----------   -------   ------------    -------    ---------    ------    ---------    -------
Service margin.....         6,889       58%          6,828        72%       15,128       61%       13,542        72%
                       ===========   =======   ============    =======    =========    ======    =========    =======

Total revenue......        20,866      100%         26,686       100%       43,867      100%       48,741       100%
Costs of product and
service                     7,074       34%          4,717        18%       13,049       30%        9,418        19%
                       -----------   -------   ------------    -------    ---------    ------    ---------    -------
Product and service
margin                   $ 13,792       66%        $21,969        82%     $ 30,818       70%      $39,323        81%
                       ===========   =======   ============    =======    =========    ======    =========    =======

</TABLE>

     The  following  table  presents,  for the periods  indicated,  consolidated
statement of operations data expressed as a percentage of total revenues:

<TABLE>
<CAPTION>

                                            Three Months ended            Six months ended
                                               October 31,                  October 31,
                                         -------------------------    -------------------------
                                            2001          2000           2001          2000
                                         -----------   -----------    ------------  -----------
<S>                                           <C>           <C>             <C>          <C>
REVENUES
  Product............................          43%           65%             44%          61%
  Service............................          57%           35%             56%          39%
                                        -----------   -----------    ------------   ----------
                                              100%          100%            100%         100%
                                        -----------   -----------    ------------   ----------
COSTS AND EXPENSES
  Cost of product....................          10%            8%              8%           8%
  Cost of service....................          24%           10%             22%          11%
  Sales and marketing................          79%           48%             69%          52%
  General and administrative.........          18%            8%             14%          10%
  Research and development...........          23%           15%             23%          16%
  Depreciation and amortization......          14%            9%             13%          10%
 Gain on sale of asset                         -1%             -             -1%            -
                                        -----------   -----------    ------------   ----------
                                              166%           98%            147%         108%
                                        -----------   -----------    ------------   ----------
OPERATING INCOME (LOSS)..............         -66%            2%            -47%          -8%
Interest and other income (expense)..           1%            1%              1%           1%
                                        -----------   -----------    ------------   ----------
INCOME (LOSS) BEFORE TAXES...........         -65%            3%            -46%          -7%
Provision for income taxes...........          -1%           -2%             -1%          -1%
                                        -----------   -----------    ------------   ----------
NET INCOME (LOSS)....................         -66%            1%            -47%          -8%
                                        ===========   ===========    ============   ==========

</TABLE>


                                       20


<PAGE>

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


     The  following  table  provides  details of product  revenue by  geographic
segment and,  within  Canada and the United States of America,  by  distribution
channel:

<TABLE>
<CAPTION>

                                  Three months ended October 31,                 Six months ended October 31,
                             -----------------------------------------    --------------------------------------------
                               2001          2000          Decrease          2001             2000         Decrease
                             ----------    ----------     ------------    ------------     -----------    ------------
<S>                            <C>           <C>             <C>              <C>            <C>             <C>
Product revenue by region
United States and Canada....   $ 4,859       $ 9,432         -48%             $ 9,833        $ 15,640        -37%
Europe......................     3,683         4,570         -19%               7,516           9,378        -20%
Rest of World...............       403         3,257         -88%               1,794           4,895        -63%
                             ----------    ----------     ------------    ------------     -----------    ------------
                               $ 8,945      $ 17,259         -48%            $ 19,143        $ 29,913        -36%
                             ==========    ==========     ============    ============     ===========    ============


Product revenue by channel in North America
End Users...................   $ 3,302       $ 3.564          -7%             $ 5,909         $ 8,553        -31%
Reseller and OEM............     1,557         5,868         -73%               3,924           7,087        -45%
                             ----------    ----------     ------------    ------------     -----------    ------------
                               $ 4,859       $ 9,432         -48%             $ 9,833        $ 15,640        -37%
                             ==========    ==========     ============    ============     ===========    ============

</TABLE>

Three Months Ended October 31, 2001,  Compared to Three Months Ended October 31,
2000

Revenues

     Total Revenues: Total revenues decreased 22% to $20.9 million for the three
months  ended  October 31, 2001,  from $26.7  million for the three months ended
October 31,  2000.  Total  revenues  consisted  of 43%  product  revenue and 57%
service revenue for the three months ended October 31, 2001.

     Product  Revenue:  Product  revenue  decreased  48% to $8.9 million for the
three months ended  October 31,  2001,  from $17.3  million for the three months
ended October 31, 2000.  Product revenue derived from North America,  Europe and
Rest of World represented 54%, 41% and 5%, respectively,  of product revenue for
the three  months  ended  October 31,  2001,  as  compared to 55%,  26% and 19%,
respectively, of product revenue for the three months ended October 31, 2000.

     Product  revenue  derived from North America  decreased 48% to $4.9 million
for the three  months ended  October 31,  2001,  from $9.4 million for the three
months ended October 31, 2000.  Reseller and OEM sales, which represented 32% of
North  American  product  revenue,  decreased  73% to $1.6 million for the three
months  ended  October 31,  2001,  from $5.9  million for the three months ended
October 31, 2000 due primarily to lower than  expected  revenues from the United
States  Government.  Product revenue from direct sales, which represented 68% of
North  American  product  revenue,  decreased  7% to $3.3  million for the three
months  ended  October 31,  2001,  from $3.6  million for the three months ended
October 31, 2000.

     Product revenue  derived from Europe  decreased 19% to $3.7 million for the
three  months  ended  October 31,  2001,  from $4.6 million for the three months
ended October 31, 2000, due to decreased license revenue from the United Kingdom
and Sweden.

     Product  revenue  derived from Rest of World  decreased 88% to $0.4 million
for the three  months ended  October 31,  2001,  from $3.3 million for the three
months ended October 31, 2000,  primarily due to decreased reseller revenue from
Japan and Australia.

     Service  Revenue:  Service  revenue  increased 26% to $11.9 million for the
three  months  ended  October 31,  2001,  from $9.4 million for the three months
ended October 31, 2000. For the three months ended October 31, 2001, maintenance
and support revenue increased 9% to $7.2 million from $6.7 million for the three
months ended October 31, 2000. The Company's consulting revenue increased 69% to
$4.7 million for the three months ended October 31, 2001,  from $2.8 million for
the three months ended October 31, 2000. The increase in consulting  revenue was
a direct  result of sales  efforts  to  increase  the amount and size of ongoing
professional service projects over the past year.


                                       21


<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


Costs and Expenses

     Total Costs and  Expenses:  Total costs and expenses were $34.7 million for
the three months ended  October 31, 2001,  an increase of 33% from $26.2 million
for the three months ended October 31, 2000.

     In a move to reduce its cost base while also  preserving  the  intellectual
talent of the Company, Accelio has implemented a global salary reduction program
of 10% for all employees earning $60,000 or higher.  Employees earning less than
$60,000 will receive a 5% reduction. This initiative is currently for six months
but may be extended to twelve months and will commence  during the quarter ended
January 31, 2002. The reduction will apply to every employee,  where  applicable
geographically, including the Board of Directors, the executive officers and the
Chief Executive Officer. The Company has cancelled all executive bonus plans for
the third and  fourth  quarters,  unless it meets  its  profit  target  and also
eliminated a total of 50 positions.  All employees will receive statutory notice
of this change in salary in accordance with  employment  law.  Employees will be
granted stock options on a prorated basis with the salary  reduction.  The grant
is based on the amount of the salary  reduction  divided by 4. For  example,  an
employee with a salary of $60,000  would  multiply the salary times 10% ($6,000)
divided by two ($3,000)  divided by 4 equals  number of options  granted of 750.
The vesting  period for these  options is 2/3 of one year from the date of grant
and the remaining 1/3 after eighteen  months of grant date. The Company  expects
to grant 500,000 options to employees pursuant to this arrangement.

     Cost of Product: Cost of product decreased 4% to $2.0 million for the three
months  ended  October 31,  2001,  from $2.1  million for the three months ended
October 31, 2000.  These costs  represent 23% and 12% of product revenue for the
three months  ended  October 31, 2001 and October 31,  2000,  respectively.  The
decrease is related to a decrease in amortization of capitalized software costs.
During fiscal year 2001, the company wrote down the value of certain capitalized
software costs.  The write-down was  attributable to management's  analysis that
the life cycles of some of its  products had come to an end.  Total  capitalized
software costs charged to cost of product revenue  decreased 66% to $276,000 for
the three months  ended  October 31,  2001,  from  $819,000 for the three months
ended October 31, 2000. Total bad debt expense decreased 36% to $574,000 for the
three months ended  October 31, 2001,  from  $891,000 for the three months ended
October 31, 2000.

     Cost of  Service:  Cost of service  increased  94% to $5.0  million for the
three  months  ended  October 31,  2001,  from $2.6 million for the three months
ended October 31, 2000 due to the  company's  increasing  consulting  revenue in
addition to the number of resources dedicated to consulting and customer support
activities.  The service  margin  decreased  to 61% for the three  months  ended
October 31, 2001, from 72% for the three months ended October 31, 2000.

     Sales and Marketing:  Sales and marketing  expenses  increased 29% to $16.4
million for the three months ended  October 31, 2001 from $12.7  million for the
three months ended October 31, 2000,  as a result of the Company's  expansion of
its  worldwide  sales  force.  As a  percentage  of total  revenues,  sales  and
marketing increased to 79% for the three months ended October 31, 2001, from 48%
for the three months ended October 31, 2000.

     General and Administrative:  General and administrative  expenses increased
63% to $3.7  million for the three  months  ended  October 31,  2001,  from $2.3
million for the three months ended October 31, 2000. This increase was primarily
due to an  increase  in  employee  expenses  related  to  additional  headcount,
increased  communication  charges and severance charges incurred in the quarter.
As a percentage of total revenues, general and administrative expenses increased
to 18% for the three months ended October 31, 2001, from 8% for the three months
ended October 31, 2000.

     Research and Development:  Research and development  expenses increased 19%
to $4.8 million for the three months ended  October 31, 2001,  from $4.1 million
for the three months ended October 31, 2000, primarily due to a reduction in the
amount of capitalized  software costs. During the three months ended October 31,
2001, the Company did not  capitalize any costs related to software  development
as compared to $797,000 for the three months  ended  October 31, 2000.  Software

                                       22

<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


development  costs are expensed as incurred unless they meet generally  accepted
accounting  criteria for deferral and  amortization.  Costs were not deferred in
the quarter ended October 31, 2001 to the extent they were for the quarter ended
October 31, 2000 because fewer  projects met the criteria for deferral and where
projects  did meet the  criteria  the  period  between  achieving  technological
feasibility  and the  general  availability  of the  product  was  short and the
associated costs were minimal.  Research and development expense as a percentage
of product revenue increased to 54% for the three months ended October 31, 2001,
from 24% for the three months ended October 31, 2000.

     Depreciation and Amortization:  Depreciation and amortization  increased to
$2.9  million for the three  months  ended  October 31,  2001,  compared to $2.5
million for the three months ended October 31, 2000.

     Operating Loss: Operating loss was $13.8 million for the three months ended
October 31, 2001,  compared to an operating income of $0.5 million for the three
months  ended  October 31, 2000.  The  increase in operating  loss is due to the
factors discussed above.

     Net Investment and Other Income (Expense):  Net investment and other income
was approximately $279,000 for the three months ended October 31, 2001, compared
to $418,000 for the three months ended October 31, 2000.  The decrease is due to
the  decrease  in cash and cash  equivalents  and the lower  interest  return on
investments.

     Provision for Income Taxes:  During the quarter ended October 31, 2001, the
Company recorded a provision for domestic capital taxes and foreign jurisdiction
income tax of $131,000,  compared to $501,000 for the three months ended October
31, 2000.

Six Months Ended October 31, 2001, Compared to Six Months Ended October 31, 2000

Revenues

     Total Revenues:  Total revenues  decreased 10% to $44.0 million for the six
months  ended  October 31,  2001,  from $48.7  million for the six months  ended
October 31,  2000.  Total  revenues  consisted  of 44%  product  revenue and 56%
service revenue for the six months ended October 31, 2001.

     Product Revenue: Product revenue decreased 36% to $19.1 million for the six
months  ended  October 31,  2001,  from $29.9  million for the six months  ended
October 31, 2000. Product revenue derived from North America, Europe and Rest of
World represented 51%, 39% and 10%, respectively, of product revenue for the six
months ended October 31, 2001, as compared to 52%, 32% and 16%, respectively, of
product revenue for the six months ended October 31, 2000.

     Product  revenue  derived from North America  decreased 37% to $9.8 million
for the six months ended October 31, 2001, from $15.6 million for the six months
ended October 31, 2000.  Reseller and OEM sales,  which represented 40% of North
American product revenue, decreased 45% to $3.9 million for the six months ended
October 31, 2001,  from $7.1  million for the six months ended  October 31, 2000
due primarily to the economic  slowdown in North America and lower than expected
revenues from the United States  government.  Product revenue from direct sales,
which  represented 60% of North American product revenue,  decreased 31% to $5.9
million for the six months ended October 31, 2001, from $8.6 million for the six
months ended October 31, 2000.

     Product revenue  derived from Europe  decreased 20% to $7.5 million for the
six months ended  October 31,  2001,  from $9.4 million for the six months ended
October 31, 2000,  due to  decreased  license  revenue from the United  Kingdom,
where a  significant  sale had taken  place in the  prior  fiscal  year's  first
quarter.

     Product  revenue  derived  from  the Rest of  World  decreased  63% to $1.8
million for the six months ended October 31, 2001, from $4.9 million for the six
months ended October 31, 2000,  primarily due to decreased reseller revenue from
Japan and Australia.

    Service Revenue: Service revenue increased 31% to $24.7 million for the six
months ended October 31, 2001, from $18.8 million for the six months ended
October 31, 2000. For the six months ended October 31, 2001, maintenance and

                                       23

<PAGE>

MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


support revenue increased 13% to $15.0 million from $13.2 million for the six
months ended October 31, 2000. The Company's consulting revenue increased 74% to
$9.7 million for the six months ended October 31, 2001, from $5.6 million for
the six months ended October 31, 2000. The increase in consulting revenue was a
direct result of sales efforts to increase the amount and size of ongoing
professional service projects over the past year.

Costs and Expenses

     Total Costs and  Expenses:  Total costs and expenses were $64.6 million for
the six months ended October 31, 2001, an increase of 23% from $52.6 million for
the six months ended October 31, 2000.

     Cost of Product:  Cost of product decreased 16% to $3.5 million for the six
months  ended  October 31,  2001,  from $4.1  million  for the six months  ended
October 31, 2000.  These costs  represent 18% and 14% of product revenue for the
six months  ended  October  31, 2001 and October  31,  2000,  respectively.  The
decrease is related to a decrease in amortization of capitalized software costs.
During fiscal year 2001, the company wrote down the value of certain capitalized
software costs.  The write-down was  attributable to management's  analysis that
the life cycles of some of its  products had come to an end.  Total  capitalized
software costs charged to cost of product revenue  decreased 73% to $436,000 for
the six months  ended  October 31,  2001,  from $1.6  million for the six months
ended October 31, 2000. Total bad debt expense decreased 36% to $891,000 for the
six months ended  October 31,  2001,  from $1.4 million for the six months ended
October 31, 2000.

     Cost of Service:  Cost of service increased 82% to $9.6 million for the six
months  ended  October 31,  2001,  from $5.3  million  for the six months  ended
October 31, 2000 due to the Company's increasing  consulting revenue in addition
to the  number  of  resources  dedicated  to  consulting  and  customer  support
activities. The service margin decreased to 61% for the six months ended October
31, 2001, from 72% for the six months ended October 31, 2000.

     Sales and Marketing:  Sales and marketing  expenses  increased 19% to $30.1
million for the six months ended October 31, 2001 from $25.4 million for the six
months ended  October 31, 2000,  as a result of the  Company's  expansion of its
worldwide sales force.  As a percentage of total  revenues,  sales and marketing
increased to 69% for the six months ended October 31, 2001, from 52% for the six
months ended October 31, 2000.

     General and Administrative:  General and administrative  expenses increased
28% to $6.0 million for the six months ended October 31, 2001, from $4.7 million
for the six months ended October 31, 2000. This increase was primarily due to an
increase  in  employee  expenses  related  to  additional  headcount,  increased
communication  charges and severance charges incurred during the second quarter.
As a percentage of total revenues, general and administrative expenses increased
to 14% for the six months ended  October 31,  2001,  from 10% for the six months
ended October 31, 2000.

     Research and Development:  Research and development  expenses increased 25%
to $10.0  million for the six months ended  October 31, 2001,  from $8.0 million
for the six months ended  October 31, 2000,  primarily due to a reduction in the
amount of capitalized  software  costs.  During the six months ended October 31,
2001, the Company did not  capitalize any costs related to software  development
as compared to $1.7 million for the six months ended October 31, 2000.  Software
development  costs are expensed as incurred unless they meet generally  accepted
accounting  criteria for deferral and  amortization.  Costs were not deferred in
the six months ended October 31, 2001 to the extent they were for the six months
ended October 31, 2000 because fewer  projects met the criteria for deferral and
where projects did meet the criteria the period between achieving  technological
feasibility  and the  general  availability  of the  product  was  short and the
associated costs were minimal.  Research and development expense as a percentage
of product  revenue  decreased to 53% for the six months ended October 31, 2001,
from 27% for the six months ended October 31, 2000.

     Depreciation and Amortization:  Depreciation and amortization  increased 9%
to $5.5  million for the six months  ended  October  31,  2001  compared to $5.0
million for the six months ended October 31, 2000.

    Operating Loss: Operating loss was $20.7 million for the six months ended
October 31, 2001, compared to an operating loss of $3.9 million for the six
months ended October 31, 2000. The increase in operating loss is due to the
factors discussed above.

                                       24

<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


     Net Investment and Other Income (Expense):  Net investment and other income
was approximately  $358,000 for the six months ended October 31, 2001,  compared
to $452,000  for the six months ended  October 31, 2000.  The decrease is due to
the  decrease  in cash and cash  equivalents  and the lower  interest  return on
investments.

     Provision for Income Taxes:  The Company  recorded a provision for domestic
capital  taxes and foreign  jurisdiction  income tax of $262,000  during the six
months  ended  October 31,  2001,  compared to $659,000 for the six months ended
October 31, 2000.

Liquidity and Capital Resources

     As at October 31, 2001,  and April 30, 2001,  the Company had $29.6 million
and $41.4  million  of cash and cash  equivalents  respectively.  During the six
months ended October 31, 2001, the Company's cash and cash equivalents decreased
by approximately  $11.8 million.  The decrease is primarily due to the Company's
use of cash to fund current operations,  the purchase of fixed and other assets,
the  repayment  of certain  capital  lease  obligations,  a decrease in accounts
receivable and an increase in accounts payable.

     The Company  believes  that its  existing  cash and cash  equivalents  will
provide sufficient liquidity to meet the Company's business  requirements in the
near term.  However,  should the Company continue to incur operating losses, its
ability  to meet its  liquidity  requirements  and to raise  additional  capital
through debt or equity financing may be compromised.

Operations

     The Company decreased its investment in the non-cash  operating  components
of working  capital  decreased  during the six months ended October 31, 2001, by
approximately  $8.6 million  primarily due to a decrease in accounts  receivable
and accrued  liabilities  and an increase in accounts  payable.  The decrease in
account receivable is related to the decline in the Company's revenue.

     The Company purchased approximately $2.5 million of fixed assets in the six
months ended October 31, 2001 including  computer  hardware,  office  equipment,
furniture,  and leasehold improvements.  During the six months ended October 31,
2001, the Company invested $2.1 million in other assets related primarily to the
purchase of software.

     During the six months ended October 31, 2001, the Company generated cash of
approximately $236,000 relating to the Company's stock purchase plan.


Accounts Receivable and Term Accounts Receivable

     Total  accounts  receivable  and term accounts  receivable  decreased  $6.5
million to $26.0  million at October  31,  2001 from $32.5  million at April 30,
2001,  primarily due to the decrease in the current quarter's revenue,  combined
with the Company's continued focus on collections. Accounts receivable excluding
term accounts  receivable  decreased to $23.8 million at October 31, 2001,  from
$28.5 million at April 30, 2001.  Term accounts  receivable,  which are accounts
receivable with contracted payment dates exceeding the Company's customary trade
terms,  decreased  by $1.8  million to $2.1  million  for the six  months  ended
October 31, 2001,  from $4.0 million on April 30, 2001 due to a reduction in the
Company's  practice of granting  extended payment terms.

     The Company  records  revenues  from  irrevocable  commitments  to purchase
products  which do not  conform to the  Company's  customary  trade terms at the
minimum amount receivable less deemed interest ("Term Accounts Receivable"). The
Company's  Irrevocable  Commitment  Licenses  ("ICLs") are  arrangements  to use
multiple  copies of a software  product  under site  licenses  with users and to
market multiples copies of a software under similar arrangements with resellers.
These arrangements always include post-contract customer support ("PCS") and are
typically less than a year in duration with a significant portion of the product
license fee payable  within the Company's  normal trade terms.  License  revenue
from  arrangements  having  extended  payment  term were  $287,000 for the three
months ended October 31, 2001,  and $660,000 in the six months ended October 31,

                                       25


<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


2001  compared to $274,000  and $2.4  million for the three and six months ended
October 31, 2000 respectively.  For the three months ended October 31, 2001, the
discount rate used was 6.5%.

     The Company  records Term Accounts  Receivable as non-current to the extent
that management  estimates  payment will be received more than one year from the
balance  sheet date.  Payment of Term  Accounts  Receivable is generally due the
earlier  of: (i)  delivery  of the  Company's  products  by the  customer to its
customers  or end  users;  and  (ii)  specific  dates in the  license  agreement
("Minimum Payment Dates"). Net additions to non-current Term Accounts Receivable
were nil for the three and six months ended October 31, 2001 and 2000.

Restructuring

     On March 17,  1999,  the  Corporation  announced a  restructuring  plan and
recorded a  provision  for  restructuring  costs of $30.5  million  directed  at
reducing costs. The key restructuring actions included:

o    Consolidation of management responsibilities and reduction in headcount;
o    Closure of redundant facilities;
o    Reduction in the carrying value of certain capital assets primarily related
     to past acquisitions;  and
o    Cancellation of certain commitments and other costs.

     The following  table  summarizes  the activity in the  restructuring  costs
during the three months ended October 31, 2001:

<TABLE>
<CAPTION>
                                       Employee                             Total       Non Cash      Total
                                      Termination   Facilities    Other     Costs        Costs      Provision
                                     -------------- ----------- ---------- ----------- ------------ ------------
<S>                                    <C>          <C>          <C>       <C>         <C>         <C>
Restructuring provision...........     $ 5,252      $2,914       $726      $8,892      $21,611     $ 30,503
Cash payments.....................      (1,175)        (36)      (207)     (1,418)          --       (1,418)
Non-cash items....................          --          --         --          --      (21,611)     (21,611)
                                     -------------- ----------- ---------- ----------- ------------ ------------

Balance, April 30, 1999...........     $ 4,077      $2,878       $519      $7,474         $ --      $ 7,474
Cash payments.....................      (2,921)     (1,092)      (124)     (4,137)          --       (4,137)
Reductions........................        (566)       (540)        --      (1,106)          --       (1,106)
                                     -------------- ----------- ---------- ----------- ------------ ------------
Balance, April 30, 2000...........     $   590      $1,246       $395      $2,231         $ --      $ 2,231
Cash payments.....................        (468)       (236)      (121)       (825)          --         (825)
Reductions........................        (122)       (567)        --        (689)          --         (689)
                                     -------------- ----------- ---------- ----------- ------------ ------------
Balance, April 30, 2001...........        $ --       $ 443       $274       $ 717         $ --       $  717
Cash payments.....................          --         (88)       (40)       (128)          --         (128)
Reductions........................          --          --         --          --           --           --
                                     -------------- ----------- ---------- ----------- ------------ ------------
Balance, July 31, 2001...........         $ --       $ 355       $234       $ 589         $ --       $  589
Cash payments.....................          --          (8)       (41)        (49)          --          (49)
Reductions........................          --          --         --          --           --           --
                                     -------------- ----------- ---------- ----------- ------------ ------------
Balance, October 31, 2001.........        $ --       $ 347       $193       $ 540         $ --       $  540
                                     -------------- ----------- ---------- ----------- ------------ ------------

Long-term balance.................        $ --       $ 298        $--       $ 298         $ --       $  298
                                     ============== =========== ========== =========== ============ ============

</TABLE>
     Employee  terminations  totaled 105 and included 46 in sales and marketing,
40 in  research in  development,  12 in internal  corporate  services,  and 7 in
systems  and  consulting  services.   Employee   terminations   included  salary
continuance  for which the  Company  was  contractually  obligated  to pay.  All
employees were terminated on or before April 30, 1999.

     Facilities  costs consisted  primarily of $2.1 million and $780,000 related
to  the  closure  of  the  Company's  United  Kingdom  and  Toronto  facilities,
respectively.  The provision for redundant facilities included management's best
estimates of the total future operating costs of these vacant facilities for the
remainder of their respective lease terms.  Actual costs could differ from these
estimates. During the six months ended October 31, 2001, the Company's liability
for vacant  facilities was reduced by $96,000.  The Company's  long-term balance
relates to a lease in the United Kingdom which expires April 30, 2010.


                                       26

<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


     Other cash costs related  primarily to the  cancellation of trade shows and
other commitments.  The remaining obligation relates to a service contract which
expires  August 31,  2002.  During the six months ended  October 31,  2001,  the
Company's liability related to this commitment was reduced by $81,000.

     Non-cash  costs  included  impairment  losses of $21.6  million  related to
assets  held for use.  The losses were  comprised  of $16.6  million  related to
marketing and  distribution  rights,  $3.1 million  related to goodwill and $1.9
million related to other capital assets.


Financial Instruments and Credit Facility

     The Company has entered into  receivable  purchase  agreements with certain
third party purchasers. Under the agreements, the Company has the option to sell
certain accounts receivable on a recourse basis. The purchasers have recourse in
the event of a trade dispute as defined in the receivables  purchase agreements.
As at October 31, 2001 and April 30, 2001, the  outstanding  balance of accounts
receivable  sold under these  agreements  was  approximately  US$3.1 million and
US$3.6 million,  respectively. The recourse obligation is estimated to be nil as
the Company believes that none of the receivables sold are at risk of recourse.

     The Company has a committed $10 million credit facility with the Royal Bank
of Canada  ("RBC").  This credit  facility is made up of a $10 million term loan
facility which bears interest at a rate of 1.5% over the Bankers Acceptance rate
of RBC from time to time and is  payable on August 1,  2002.  As at October  31,
2001,  the Company had drawn all of the $10 million term loan facility and fixed
the interest rate until January 17, 2002, at 3.02%. The Company has granted,  as
collateral for the $10 million credit  facility,  a general  security  agreement
over Accelio's assets, including a pledge of the shares of certain subsidiaries.

     When the Company  deems  appropriate,  Accelio uses forward  contracts  and
purchased  options  to manage  exposures  to  foreign  exchange.  The  Company's
objective is to minimize risk using the most  effective  methods to eliminate or
reduce  the  impacts of this  exposure.  Accelio  does not enter into  financial
instruments  for  speculative or trading  purposes.  As at October 31, 2001, the
Company had no outstanding foreign exchange financial instruments.

Recent Accounting Pronouncements

     On October 3, 2001 the Financial  Accounting  Standards Board (FASB) issued
Statement  No. 144,  Accounting  for the  Impairment  or Disposal of  Long-Lived
Assets,  that replaces FASB Statement No. 121,  Accounting for the Impairment of
Long-Lived  Assets and for  Long-Lived  Assets to Be Disposed Of and APB Opinion
No. 30, Reporting Results of  Operations-Reporting  the Effects of Disposal of a
Segment of a Business,  for the disposal of segments of business.  Statement 144
requires  that those  long-lived  assets be  measured  at the lower of  carrying
amount  or fair  value  less  cost  to  sell,  whether  reported  in  continuing
operations or in discontinued  operations.  Therefore,  discontinued  operations
will no longer be  measured  at net  realizable  value or  include  amounts  for
operating losses that have not yet occurred. The provisions of Statement 144 are
effective  for  financial  statements  issued or fiscal  years  beginning  after
December  15,  2001  and,  generally,  are  to be  applied  prospectively.  This
pronouncement  will be effective for the Company's  fiscal year beginning May 1,
2002.  Management  believes  the  adoption  of SFAS  No.  144  will  not  have a
significant  impact  on  the  Company's   financial   condition  or  results  of
operations.

     In July 2001, the Financial  Accounting Standards Board ("FASB") has issued
the Statement of Financial  Standards  ("SFAS") No.141,  Business  Combinations,
that will  require  all  business  combinations  to use the  purchase  method of
accounting.  This  pronouncement  is  effective  for all  business  combinations
initiated  after June 30, 2001. The FASB has also issued SFAS No. 142,  Goodwill
and Other  Intangible  Assets,  which will  require  intangible  assets  with an
indefinite  life and goodwill to be tested for  impairment  on an annual  basis.
Goodwill and indefinite life intangibles will no longer be amortized. Intangible
assets with a definite  life will  continue to be  amortized  over their  useful
life.  This  pronouncement  will be  effective  for the  Company's  fiscal  year


                                       27

<PAGE>


MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS (Con't)


beginning May 1, 2002. Management believes the adoption of SFAS No. 141 and SFAS
No. 142 will not have a significant impact on the Company's  financial condition
or results of operations.

     In June  1998,  the FASB  issued  the  Statement  of  Financial  Accounting
Standard  ("SFAS") No. 133,  "Accounting for Derivative  Instruments and Hedging
Activities"  ("SFAS 133"). This statement  establishes  accounting and reporting
standards for derivative instruments and hedging activities and is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. In June 1999,
the FASB issued SFAS No.137,  which delays the effective  date of SFAS 133 until
fiscal years  beginning  after June 15, 2000.  Currently,  as the Company has no
derivative  instruments,  the  adoption of SFAS No. 133 has had no impact on the
Company's financial condition or results of operations.


                                       28

<PAGE>


PART II -- OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

     The Company is not a party to any material legal proceeding.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Each year,  the Company's  shareholders  elect the directors of the Company
for the ensuing year. At the Company's  annual meeting of  shareholders  held on
September  12, 2001 (the  "Annual  Meeting"),  the  following  individuals  were
elected to the board of directors:

John Gleed, Abraham E. Ostrovsky, Stephen A. Holinski, Paul K. Bates, Patrick J.
Martin, A. Kevin Francis and Deborah L. Weinstein.

     The  following  proposals,  as more  particular  described in the Company's
Management  Proxy  Circular  dated July 21, 2001 were  approved at the Company's
Annual Meeting

<TABLE>

<CAPTION>

                                                                              Votes Against or
                                                          Votes For               Withheld
                                                          ---------           ----------------

<S>    <C>                                                <C>                 <C>

1.     Election of directors......................        10,541,360              99,816

2.     Appointment of PricewaterhouseCoopers LLP as
       independent auditors for the fiscal year
       ending April 30, 2002......................       10,615,142              53,956

3.     Name change from JetForm Corporation to
       Accelio Corporation........................        10,141,071             529,986

4.     Amendment to the Corporation's Shareholder
       Rights Plan................................         6,693,509           1,959,915


</TABLE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     During the three  months  ended  October 31,  2001,  the Company  filed the
following reports on Form 8-K:

o    Report on Form 8K dated  September  20, 2001,  pursuant to name change from
     JetForm Corporation to Accelio Corporation.

o    Report on Form 8K dated October 26, 2001,  regarding the restatement of the
     Company's results for the quarter ended July 31, 2001.


                                       29


<PAGE>


                                   SIGNATURES


     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

<TABLE>

<CAPTION>
                               Accelio Corporation

<S>                                            <C>


           December 10, 2001                   /s/  A. Kevin Francis
-----------------------------------------      ----------------------------------------------------
                 Date                          A. Kevin Francis
                                               President and Chief Executive Officer and Director
                                               (Principal Executive Officer)


           December 10, 2001                   /s/  Leonard Graham III
-----------------------------------------      ----------------------------------------------------
                 Date                          Leonard Graham III
                                               Senior Vice President, Finance and Chief Financial
                                               Officer (Principal Financial and Accounting Officer)


</TABLE>


                                       30