<PAGE>

                                   FORM 10-Q

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


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

For the quarterly period ended:   June 30, 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  0-26540
                        -------

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

       DELAWARE                             04-3016142
     (State or other jurisdiction of        (I.R.S. Employer
     incorporation or organization)         Identification Number)

                               80 Blanchard Road
                        Burlington, Massachusetts 01803
                    (Address of principal executive offices)

                                 (781) 229-3000
              (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 Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 60 days.  Yes   X  .  No ___.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Title of each class                     Outstanding at July 31, 2001
-------------------                     ----------------------------

Common Stock, par value $.01            18,621,403
<PAGE>

                     NEWSEDGE CORPORATION AND SUBSIDIARIES

                               TABLE OF CONTENTS




PART I - FINANCIAL INFORMATION                                   PAGE NUMBER

Item 1 - Financial Statements

     Condensed Consolidated Balance Sheets as of
          June 30, 2001 and December 31, 2000                           3

     Condensed Consolidated Statements of Operations
          for the three and six months ended June 30, 2001 and 2000     4

     Condensed Consolidated Statements of Cash Flows
          for the three and six months ended June 30, 2001 and 2000     5

     Notes to the Condensed Consolidated Financial Statements           6

Item 2 - Management's Discussion and Analysis of
     Financial Condition and Results of Operations                     10

Item 3 - Quantitative and Qualitative Disclosures About Market Risk    23


PART II - OTHER INFORMATION

Item 4.      Submission of Matter to a Vote of Security Holders        24

Item 6(a)    Exhibits                                                  24

Item 6(b)    Reports on Form 8-K                                       24

Signature                                                              25

                                       2
<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1
                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                       (in thousands, except share data)

<TABLE>
<CAPTION>

                                                          JUNE 30,            DECEMBER 31,
                                                           2001                  2000
                                                      ----------------     --------------
<S>                                                 <C>                     <C>
ASSETS

Current assets:
 Cash and cash equivalents                                $  16,399             $  18,320
 Restricted cash (Note 2)                                       375                   404
 Accounts receivable                                         11,237                16,645
 Due from Office.com (Note 3)                                     -                 1,000
 Prepaid expenses and deposits                                3,819                 3,748
                                                   ----------------        --------------
       Total current assets                                  31,830                40,117
                                                   ----------------        --------------

Property and equipment, net                                   9,114                 8,782
                                                   ----------------        --------------

Other assets                                                    346                   345
                                                   ----------------        --------------

       Total assets                                       $  41,290             $  49,244
                                                   ================        ==============


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                         $   6,907             $   5,761
 Accrued expenses                                             9,462                12,900
 Deferred revenue, current                                   21,164                25,837
                                                   ----------------        --------------
       Total current liabilities                             37,533                44,498
                                                   ----------------        --------------

Deferred revenue, noncurrent                                     29                    35
                                                   ----------------        --------------

Stockholders' equity:
 Common stock                                                   191                   190
 Additional paid-in capital                                 131,716               131,682
 Cumulative translation adjustment                              (56)                 (104)
 Accumulated deficit                                       (125,397)             (124,331)
       Treasury stock, at cost; 432,000 shares               (2,726)               (2,726)
                                                   ----------------        --------------
       Total stockholders' equity                             3,728                 4,711
                                                   ----------------        --------------

       Total liabilities & stockholders' equity           $  41,290             $  49,244
                                                   ================        ==============
</TABLE>


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.

                                       3
<PAGE>

                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                             Three Months Ended                 Six Months Ended
                                                                  June 30,                          June 30,
                                                         ----------------------------      ----------------------------
                                                            2001            2000              2001            2000
                                                         ------------    ------------      ------------    ------------
<S>                                                      <C>            <C>               <C>            <C>
Total revenues                                              $ 16,422        $ 17,672          $ 33,525        $ 35,001

Costs and expenses:
       Cost of revenues                                        6,704           7,605            13,086          15,171

       Customer support expenses                               1,126           1,345             2,328           2,843

       Development expenses                                    2,333           2,384             4,645           5,627

       Sales and marketing expenses                            5,893           7,685            12,662          17,451

       General and administrative expenses                     1,132           1,420             2,028           4,013

       Merger, disposition and other charges                       -            (453)                -            (453)
                                                         -----------     -----------       -----------     -----------
           Total costs and expenses                           17,188          19,986            34,749          44,652
                                                         -----------     -----------       -----------     -----------

Loss from operations                                            (766)         (2,314)           (1,224)         (9,651)

       Gain on sale of NewsWatch, KK                             774               -               774               -

       Interest income and other, net                            139             275               372             504
                                                         -----------     -----------       -----------     -----------
Income (loss) from continuing operations before
  provision for income taxes                                     147          (2,039)              (78)         (9,147)
       Provision for income taxes                                  9              15                18              39
                                                         -----------     -----------       -----------     -----------

       Net income (loss) from continuing operations              138          (2,054)              (96)         (9,186)

       Loss from discontinued operations, net                      -               -                 -          (1,859)
       Net gain on disposal of Individual.com, Inc.                -             773              (970)          6,267
                                                         -----------     -----------       -----------     -----------
       Income (loss) from discontinued operations                  -             773              (970)          4,408
                                                         -----------     -----------       -----------     -----------

Net income (loss)                                        $       138       $  (1,281)         $ (1,066)       $ (4,778)
                                                         ===========     ===========       ===========     ===========

Basic and diluted net income (loss) per share
       Continuing operations                             $      0.01       $   (0.12)         $  (0.01)       $  (0.52)
       Discontinued operations                                     -            0.04             (0.05)           0.24
                                                         -----------     -----------       -----------     -----------
          Total                                          $      0.01       $   (0.08)         $  (0.06)       $  (0.28)
                                                         ===========     ===========       ===========     ===========

Weighted average common shares outstanding -basic             18,620          17,696            18,614          17,690
                                                         ===========     ===========       ===========     ===========
Weighted average common shares outstanding - diluted          18,627          17,696            18,614          17,690
                                                         ===========     ===========       ===========     ===========

</TABLE>

                                       4
<PAGE>

                     NEWSEDGE CORPORATION AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                (in thousands)
<TABLE>
<CAPTION>
                                                                                Six Months Ended
                                                                                    June 30,
                                                                     ----------------------------------------
                                                                           2001                   2000
                                                                     -----------------      -----------------
<S>                                                                   <C>                   <C>
Cash flows from operating activities:
     Net loss                                                           $     (1,066)          $     (4,778)
     Adjustments to reconcile net loss to net cash
     used in operating activities:
         Depreciation and amortization                                         1,962                  2,435
         Loss (gain) on disposal of Individual.com, Inc.                         970                 (5,494)

         Changes in assets and liabilities:
             Accounts receivable                                               5,408                 (2,217)

             Prepaid expenses and deposits                                       (71)                (1,301)
             Accounts payable and accrued expenses                            (2,292)                 2,926

             Deferred revenue                                                 (4,673)                 4,319

                                                                     ---------------        ---------------
         Net cash provided by (used in) operating activities                     238                 (4,110)
                                                                     ---------------        ---------------

Cash flows from investing activities:
     Net proceeds from disposal of Individual.com, Inc.                            -                  4,368
     Unrecognized portion of deferred gain from disposal of
     Ind.com, Inc.                                                                30                      -
     Purchases of property and equipment                                      (2,294)                (1,023)
     Restricted cash                                                              29                      -
     (Increase) decrease in other assets                                          (1)                     3
                                                                     ---------------        ---------------
         Net cash (used in) provided by investing activities                  (2,236)                 3,348
                                                                     ---------------        ---------------

Cash flows from financing activities:
     Proceeds from issuances related to stock plans, including tax
     benefits                                                                     35                    648
     Principal payments under capital leases                                       -                   (229)

     (Increase) decrease in long-term obligations                                 (6)                    98

                                                                     ---------------        ---------------
         Net cash provided by financing activities                                29                    517
                                                                     ---------------        ---------------

Effect of exchange rate on cash and cash equivalents                              48                    (29)
                                                                     ---------------        ---------------

Decrease in cash and cash equivalents                                         (1,921)                  (274)
Cash and cash equivalents, beginning of period                                18,320                 20,278
                                                                     ---------------        ---------------

Cash and cash equivalents, end of period                             $        16,399         $       20,004
                                                                     ===============        ===============

Supplemental disclosure of cash flow information:
     Cash paid for income taxes                                      $            23         $           31

                                                                     ===============        ===============
     Cash paid for interest                                          $             -         $           16
                                                                     ===============        ===============

</TABLE>

                                       5
<PAGE>

                     NEWSEDGE CORPORATION AND SUBSIDIARIES
            NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.  NATURE OF THE BUSINESS

  NewsEdge Corporation (the "Company" or "NewsEdge") is a leading provider of
content solutions and electronic publishing technologies for business Web sites
and enterprise Intranets. The Company's mission is to make news and information
valuable for business. NewsEdge services provide access to value- added news
over the Internet or customer intranets. The Company aggregates and adds value
to news and information from over 2,000 sources published by over one hundred
global content providers. This information is customized and filtered so that
users can readily find the most important, relevant stories from the
overwhelming volume of daily news that is available.

  NewsEdge is headquartered in Burlington, Massachusetts, with sales offices and
distributors throughout North America, South America, Europe, Asia and the
Middle East.

2.  SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

  The condensed consolidated financial statements of the Company presented
herein have been prepared pursuant to the rules of the Securities and Exchange
Commission for quarterly reports on Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles.  These financial statements should be read in conjunction with the
Company's consolidated financial statements and notes thereto for the year ended
December 31, 2000 included in the Company's Form 10-K.  In the opinion of
management, the accompanying unaudited condensed consolidated financial
statements include all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the consolidated financial position,
results of operations and cash flows of the Company and its subsidiaries.
Quarterly operating results are not necessarily indicative of the results that
would be expected for the full year.

Principles of Consolidation

  The accompanying condensed consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries.  All material
intercompany accounts and transactions have been eliminated in consolidation.

Cash Equivalents and Investments

  Cash equivalents consist of highly-liquid investments purchased with an
original maturity of three months or less.  At June 30, 2001, the Company had
restricted cash of $375,000, which was required under the Company's letter of
credit agreement.

Management Estimates

  The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

                                       6
<PAGE>

Recent Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS,
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in other contracts, and
for hedging activities. SFAS No. 133, as amended by SFAS No. 137 and 138, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The adoption of SFAS No. 133 did not have a material impact on the Company's
consolidated financial statements.

  The Securities and Exchange Commission released Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in Financial Statements, on December 3, 1999.
This SAB provides additional guidance on the accounting for revenue recognition,
including both broad conceptual discussions as well as certain industry-specific
guidance. The guidance is effective in the fourth quarter 2000. The adoption of
SAB 101 did not have a material impact on the Company's results of operations.

  In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation, an Interpretation of Accounting
Principles Board ("APB") Opinion No. 25. The interpretation clarifies the
application of APB Opinion No. 25 in certain situations, as defined. The
interpretation is effective July 1, 2000, but covers certain events occurring
during the period after December 15, 1998, but before the effective date. The
adoption of this interpretation did not have any effect on the accompanying
financial statements.

  In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations".  SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase method.
This statement is effective for all business combinations initiated after June
30, 2001.

  In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets".  This statement applies to goodwill and intangible assets acquired
after June 30, 2001, as well as goodwill and intangible assets previously
acquired.  Under this statement goodwill as well as certain other intangible
assets, determined to have an infinite life, will no longer be amortized,
instead these assets will be reviewed for impairment on a periodic basis. This
statement is effective for the Company for the first quarter in the fiscal year
ended December 2002. Management is currently evaluating the impact that this
statement will have on the Company's financial statements.


3.  DISCONTINUED OPERATIONS

  On February 18, 2000, the Company entered into a purchase and sale agreement
with Office.com, Inc. to sell its ownership interest in its wholly owned
subsidiary, Individual.com, Inc. Upon the initial closing, the Company sold 80%
of its ownership interest in Individual.com, Inc. for a purchase price of $8.0
million payable in installments receivable through December 2000, of which the
Company received $2.5 million in February 2000 and $2.5 million in May 2000. The
purchase and sale of the remaining 20% of Individual.com, Inc., was completed on
August 1, 2000, under the terms of an amended agreement, pursuant to which the
Company received payments of $3.0 million in September 2000 and $1.0 million on
December 26, 2000 and was due to receive a final payment of $1.0 million on
February 28, 2001.

  During 2000, the Company recorded a net gain on the sale of Individual.com,
Inc. totaling approximately $8,314,000.  The Company also made payments to
retain the Individual.com workforce, which have been included as a reduction in
the gain on the sale.  Office.com, its parent WinStar New Media Company, Inc.
and its parent WinStar Communications, Inc. each made voluntary filings under
Chapter 11 of the U.S. Bankruptcy Code on April 18, 2001.  As a result, in the
first quarter of 2001, the Company reversed $970,000 of the previously
recognized gain on the sale transaction related to the final $1 million due from
Office.com as of February 28, 2001.

  The Company has presented the operating results of Individual.com, Inc. as
discontinued operations for all periods presented.  Included in these results
are revenues from the Individual.com business for the six-month period ending
June 30, 2001 of $0 as compared to $297,000 for the same period in 2000.

                                       7
<PAGE>

4. SEGMENT REPORTING

  On December 31, 1998, NewsEdge adopted SFAS No. 131, Disclosures About
Segments of an Enterprise and Related Information.  This pronouncement
established standards for public companies relating to the reporting of
financial and descriptive information about their operating segments in
financial statements.  Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly by management in deciding how to allocate resources and in
assessing performance of the business.

  The Company evaluates its continuing operations in one product segment:
Enterprise.

  The Company pursues the market for content solutions and electronic publishing
technologies through one primary line of business: the Enterprise business. The
Enterprise business uses direct selling and telesales efforts and targets large
organizations, publisher and individual websites. The Enterprise content
solutions deliver news and information to large numbers of users within
organizations through their corporate intranet or local area networks and to
destination websites as a content service for visitors of those sites.

  Segment data excludes information pertaining to the discontinued operations of
Individual.com, Inc. (see Note 3).


5.     COMPREHENSIVE INCOME

  SFAS No. 130, Reporting Comprehensive Income, requires that items defined as
other comprehensive income, such as foreign currency translation adjustments, be
separately classified in the financial statements and that the accumulated
balance of other comprehensive income be reported separately from retained
earnings and additional paid-in capital in the equity section of the balance
sheet. The components of comprehensive income for the three and six months ended
June 30, 2001 and 2000 are as follows:

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                        SIX MONTHS ENDED
                                                         JUNE 30,                                 JUNE 30,
(in thousands)

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


<S>                                      <C>                   <C>                 <C>                 <C>
Comprehensive income (loss):
 Net income (loss)                                      $ 138            $(1,281)            $(1,066)            $(4,778)
 Other comprehensive income (loss):
  Foreign currency adjustment                              93               (106)                 48                 (29)
                                       ---------------------------------------------------------------------------------


     Comprehensive loss                                 $ 231            $(1,387)            $(1,018)            $(4,807)
                                       =================================================================================
</TABLE>


6.     EARNINGS PER SHARE

  In accordance with SFAS No. 128, Earnings per Share, basic and diluted
earnings per share were computed by dividing net loss by the weighted average
number of common shares outstanding during the first six months of 2001 and
2000.  Diluted earnings per share excludes shares issuable from the assumed
exercise of 4,750,168 and 5,022,886 shares of stock options and warrants as of
June 30, 2001 and 2000, respectively, as their effect would be antidilutive.
For the three-month period ended June 30,2001, diluted earnings per share
assumes the exercise of stock options and warrants of approximately 7,000
shares.

                                       8
<PAGE>

7.     NEWSWATCH, KK

During June 2001 we sold the majority of our equity investment in NewsWatch, KK,
a Japanese corporation of which we had owned 23.4% and which carried a zero
balance in our consolidated assets, for $773,930.

8.     SUBSEQUENT EVENT

On August 6, 2001, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with Thomson Corporation, a corporation incorporated under
the laws of the province of Ontario ("Thomson") and InfoBlade Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of Thomson
("Merger Sub"), whereby Merger Sub will commence a tender offer to purchase all
of the outstanding shares of common stock of the Company at a price per share of
$2.30, net to the seller in cash without interest.  Following consummation of
the tender offer and subject to the satisfaction or waiver of certain conditions
contained in the Merger Agreement, Merger Sub will be merged with and into the
Company and the Company will become a wholly owned indirect subsidiary of
Thomson (such tender offer and merger being referred to in this Form 10-Q as the
"Merger"). This transaction has been approved by the board of directors of the
Company and Merger Sub and is subject to customary closing conditions, including
that at least a majority of the outstanding shares of the Company (on a fully
diluted basis (as defined in the Merger Agreement)) are validly tendered and not
withdrawn. If less than 90% of the outstanding shares of the Company are
tendered, the transaction will be further subject to the approval of at least a
majority of the Company's shareholders.

                                       9
<PAGE>

ITEM 2
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      Condition and Results of Operations

Except for the historical information contained herein, this Report contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including
statements regarding, among other items, (i) NewsEdge's growth strategies; (ii)
anticipated trends in our business; (iii) our ability to expand our service
offerings; and (iv) our ability to satisfy working capital requirements.
NewsEdge makes these forward-looking statements under the provision of the "Safe
Harbor" section of the Private Securities Litigation Reform Act of 1995.  These
forward-looking statements are based largely on our expectations and are subject
to a number of risks and uncertainties, certain of which are beyond our control.
Actual results could differ materially from these forward-looking statements as
a result of a number of factors including, but not limited to, those factors
described in "Certain Factors Affecting Future Operating Results" contained
herein.

Introduction and Overview

  NewsEdge Corporation (Nasdaq: NEWZ) is a global provider of syndicated content
services and electronic publishing technologies for business.  Our customers
include both content creators, such as information publishers, and the operators
of the world's most active Web sites.  We offer technology and services for
customers to create, manage and deploy content for millions of end-users through
Intranets, Web sites, portals, Extranets and distribution channels.

  The market for content solutions and electronic publishing technologies is
pursued by us through the sale of our Information Products and Content Solutions
service offerings via our Enterprise business, which uses both a direct and
telesales selling effort. Our Enterprise revenues consist primarily of
subscription fees related to the Enterprise service offerings. Additionally,
Enterprise revenues include royalty revenues generated from content sales billed
directly by third party information providers to customers, revenue generated
from professional consulting services and revenue generated from installations
and related computer hardware sales.

  Subscription agreements across all product segments are generally for an
initial term of twelve months, payable in advance, and are automatically
renewable for successive one-year periods unless the customer delivers notice of
termination prior to the expiration date of the then current agreement.
Subscription revenues associated with these agreements are recognized ratably
over the subscription term, beginning upon installation of the service.
Accordingly, a substantial portion of our revenue is recorded as deferred
revenue.

  Certain newswires offered by us for use within our services are purchased by
the customer directly from the news provider and payments are made directly from
our customer to the provider. For some of these newswires, we receive royalty
revenue based on payments made by the customer to the news provider. We
recognize the royalty revenue when we receive payment from the news provider.
For the remaining newswires that are resold by us to our customers, we bill the
customer for the newswire directly and then pay a royalty to the news provider.
Such royalty expenses are included in our cost of revenues.

  Individual.com, Inc. operated our single-worker news service business unit,
which derived its revenues from targeted advertising and electronic commerce. On
February 18, 2000, we entered into a purchase and sale agreement with
Office.com, Inc., an indirect subsidiary of WinStar Communications, Inc., which
provided for the sale of all the issued and outstanding capital stock of
Individual.com to Office.com. An initial purchase and sale of 4.0 million of the
shares occurred on February 18, 2000. The purchase and sale of the remaining 1.0
million shares, or 20% of Individual.com, occurred on August 1, 2000. Under the
terms of the amended stock purchase agreement, we received installment payments
of $2.5 million in February 2000, $2.5 million in May 2000, $3.0 million in
September 2000 and $1.0 million in December 2000, and were due to receive a
final payment of $1.0 million on February 28, 2001 which has not yet been made.
In the third quarter of 2000, we recorded the remaining $2.0 million gain on the
sale transaction based on the sale of the remaining 20% of Individual.com, Inc.

                                       10
<PAGE>

  For the twelve months ended December 31, 2000 we recorded a net gain on the
sale of Individual.com totaling $8.3 million. Concurrently with the execution of
the purchase and sale agreement, we also entered into a facilities services
agreement and a license agreement with Office.com. We also made payments to
retain the Individual.com workforce, which along with other transaction fees,
have been included as a reduction in the gain on the sale. Office.com, its
parent WinStar New Media Company, Inc. and its parent WinStar Communications,
Inc. each made voluntary filings under Chapter 11 of the U.S. Bankruptcy Code on
April 18, 2001. As a result, in the first quarter of 2001, we reversed $970,000
of the previously recognized gain on the sale transaction related to the final
$1 million due us from Office.com as of February 28, 2001.

  On December 7, 1999, we entered into a purchase and sale agreement with
RoweCom, Inc., whereby RoweCom would purchase all of our outstanding shares of
common stock for approximately $227 million. The acquisition was subject to the
approval of the stockholders of both companies. On March 6, 2000, the agreement
was mutually terminated by both parties. For the three months ended March 31,
2000 we incurred costs of $1.4 million comprised of legal, retention and
acquisition related expenses charged to operations.  For the three months ended
June 30, 2000 we incurred additional costs of $668,000 related to remaining
employee retention expenses.  No costs were incurred for the six months ended
June 30, 2001.

  In March 2000, the Board of Directors approved, and in early May 2000, we
announced a strategic expansion of our traditional business focus. In order to
capitalize on our media sources, personalization strategy, and international
sales and support infrastructure, we have moved into the content solutions
business marketplace by offering Content Solutions, our competitive content
solution applications for business Web sites and enterprise intranets.  We
believe that syndicated content offerings, in addition to providing
infrastructure and solution applications to our clients, will allow us to drive
traffic and commerce on our client's Web sites.  For the six months ended June
30, 2000 we incurred costs of $2.1 million of non-recurring expenses charged to
operations, which relate to our transition to the new strategic direction.
These costs comprise primarily asset write-offs and reserves.  No costs were
incurred for the six months ended June 30, 2001.

  On August 6, 2001, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Thomson Corporation, a corporation incorporated
under the laws of the province of Ontario ("Thomson") and InfoBlade Acquisition
Corporation, a Delaware corporation and wholly owned subsidiary of Thomson
("Merger Sub"), whereby Merger Sub will commence a tender offer to purchase all
of the outstanding shares of common stock of the Company at a price per share of
$2.30, net to the seller in cash without interest. Following consummation of the
tender offer and subject to the satisfaction or waiver of certain conditions
contained in the Merger Agreement, Merger Sub will be merged with and into the
Company and the Company will become a wholly owned indirect subsidiary of
Thomson. This transaction has been approved by the board of directors of the
Company and Merger Sub and is subject to customary closing conditions, including
that at least a majority of the outstanding shares of the Company (on a fully
diluted basis (as defined in the Merger Agreement)) are validly tendered and not
withdrawn. If less than 90% of the outstanding shares of the Company are
tendered, the transaction will be further subject to the approval of at least a
majority of the Company's shareholders.


RESULTS OF OPERATIONS FOR THE THREE- AND SIX-MONTH PERIODS ENDED JUNE 30, 2001
AS COMPARED TO THE THREE-AND SIX-MONTH PERIODS ENDED JUNE 30, 2000

REVENUES

  Total revenues for the three-month period ended June 30, 2001 decreased 7.1%
to $16.4 million compared to $17.7 million for the same period in 2000.    Total
revenues for the six-month period ended June 30, 2001 decreased 4.2% to $33.5
million compared to $35.0 million for the same period in 2000.  The decreases
reflect the highly competitive environment that has been affecting our
Information Products and Content Solutions businesses generally, including lower
renewal rates and fewer new sales orders.

                                       11
<PAGE>

COST OF REVENUES

  Cost of revenues consists primarily of royalties paid to information
providers, payroll and related expense for the editorial and news operations
staff, as well as data transmission and computer-related costs for the support
and delivery of our services.  Cost of revenues for the three-month period ended
June 30, 2001 decreased 11.8% to $6.7 million from $7.6 million for the same
period in 2000.  As a percentage of total revenues, cost of revenues for the
three-month period ended June 30, 2001 decreased to 40.8% from 43.0% during the
same period in 2000.  The decreases were resulted from the higher margin Content
Solutions business.  Cost of revenues for the six-month period ended June 30,
2001 decreased 13.7% to $13.1 million from $15.2 million for the same period in
2000.  As a percentage of total revenues, cost of revenues for the six-month
period ended June 30, 2001 decreased to 39.0% from 43.3% during the same period
in 2000.  The decreases were primarily a result of the higher margin Content
Solutions business, fixed-price contracts with information providers, a new
fixed price contract with a major transmission provider, and a first quarter of
2001 reversal of $456,000 of accrued royalties which management deemed no longer
necessary.

CUSTOMER SUPPORT EXPENSES

  Customer support expenses consist primarily of costs associated with technical
support of our installed base of customers.  Customer support expenses for the
three-month period ended June 30, 2001 decreased 16.3% to $1.1 million as
compared to $1.3 million for the same period in 2000.  As a percentage of total
revenues, customer support expenses for the three-month period ended June 30,
2001 decreased to 6.9% from 7.6% in the same period in 2000.  Customer support
expenses for the six-month period ended June 30, 2001 decreased 18.1% to $2.3
million as compared to $2.8 million for the same period in 2000.  As a
percentage of total revenues, customer support expenses for the six-month period
ended June 30, 2001 decreased to 6.9% from 8.1% in the same period in 2000.  The
decreases in customer support expenses resulted primarily from lower headcount
and related expenses.

DEVELOPMENT EXPENSES

  Development expenses consist primarily of costs associated with the design,
programming, and testing of our software and services.  Development expenses for
the three-month period ended June 30, 2001 slightly decreased 2.1% to $2.3
million as compared to $2.4 million for the same period in 2000.  As a
percentage of total revenues, development expenses for the three-month period
ended June 30, 2001 increased to 14.2% from 13.5% in the same period in 2000.
Development expenses for the six-month period ended June 30, 2001 decreased
17.5% to $4.6 million as compared to $5.6 million for the same period in 2000.
As a percentage of total revenues, development expenses for the six-month period
ended June 30, 2001 decreased to 13.9% from 16.1% in the same period in 2000.

The six-month year-over-year decrease was primarily due to the absence this year
of $600,000 of expenses, which represented a write-off of a software asset in
the first quarter of 2000, related to our new strategic direction during 2000,
and the remaining $400,000 was due to lower headcount and related expenses in
2001.

Sales and marketing expenses

  Sales and marketing expenses consist primarily of compensation costs
(including sales commissions and bonuses), travel expenses, trade shows and
other marketing programs.  Sales and marketing expenses for the three-month
period ended June 30, 2001 decreased 23.3% to $5.9 million as compared to $7.7
million for the same period in 2000.  As a percentage of total revenues, sales
and marketing expenses for the three-month period ended June 30, 2001 decreased
to 35.9% from 43.5% in the same period in 2000.  Sales and marketing expenses
for the six-month period ended June 30, 2001 decreased 27.4% to $12.7 million as
compared to $17.5 million for the same period in 2000.  As a percentage of total
revenues, sales and marketing expenses for the six-month period ended June 30,
2001 decreased to 37.8% from 49.9% in the same period in 2000.  The year-over-
year decreases were comprised of $1.0 million of expenses in 2000 related to the
non-recurring charges for transitioning us to our new strategic direction, which
included $400,000 for a reserve for bad debts.  The remaining $3.8 million of
the decrease in sales and marketing expenses was primarily due to lower
investments and spending in domestic and international sales force and sales
management, lower headcount and related payroll expenses, and fewer events and
direct mail campaign costs in 2001.  These expense reductions were part of a
concerted and ongoing effort to reduce our operating expenses in line with new
business levels and to achieve our goal of profitability.  The decreases for the
three months ended June 30, 2001 compared to the same period in 2000 resulted
from similar cost reductions noted above.

                                       12
<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES

  General and administrative expenses consist primarily of expenses for finance,
office operations, administration and general management activities, including
legal, accounting and other professional fees.  General and administrative
expenses for the three-month period ended June 30, 2001 decreased 20.3% to $1.1
million as compared to $1.4 million for the same period in 2000.  The decrease
was primarily a result of costs related to the terminated merger agreement with
RoweCom amounting to $668,000 of expenses related to remaining employee
retention expenses.  Excluding this nonrecurring charge, general and
administrative expenses for the second quarter of 2001 were $380,000 higher than
the second quarter of 2000 due to higher legal and investor relations costs as
well as the lack of comparable expense credits, which the Company earned from
our Individual.com facilities service agreement in 2000.  As a percentage of
total revenues, general and administrative expenses for the six-month period
ended June 30, 2001 decreased to 6.9% from 8.0% (and increased from the 4.3%
excluding nonrecurring charges associated with RoweCom) in the same period in
2000.

  General and administrative expenses for the six-month period ended June 30,
2001 decreased 49.5% to $2.0 million as compared to $4.0 million for the same
period in 2000.  The decrease was primarily a result of costs related to the
terminated merger agreement with RoweCom amounting to $2.0 million and
approximately $0.5 million of expenses related to the nonrecurring charge for
transitioning us to our new strategic direction in 2000.  Excluding these
nonrecurring charges, general and administrative expenses for the first six
months of 2001 were approximately $0.5 million higher than the first six months
of 2000 due to higher legal and investor relations costs as well as the lack of
comparable expense credits, which the Company earned from our Individual.com
facilities service agreement in 2000.  As a percentage of total revenues,
general and administrative expenses for the six-month period ended June 30, 2001
decreased to 6.0% from 11.5% (and increased from 4.3% excluding nonrecurring
charges associated with RoweCom and the change in strategic direction) in the
same period in 2000.

MERGER, DISPOSITION AND OTHER EXPENSES

  Merger, disposition and other related expenses for the three- and six-month
period ended June 30, 2000 consisted of the $453,000 reversal of acquisition-
related reserves no longer deemed necessary by the Company.  There were no
merger, disposition and other related expenses during the three- and six-month
periods ended June 30, 2001.

LOSS FROM OPERATIONS

  Operating loss for the quarter ended June 30, 2001 was $766,000 compared to a
loss of $2.3 million for the same period in 2000.  Included in the loss from
operations during the second quarter of 2001 was $307,000 of severance related
costs related to a downsizing begun in April and completed by June, partially
offset by a favorable $239,000 reduction in salary expense due to implementing a
new vacation carryover policy.  Included in the loss from operations during the
second quarter of 2000 were $668,000 of expenses related to remaining employee
retention expenses under the terminated merger agreement with RoweCom as well as
a $453,000 reversal of merger acquisition-related expenses no longer deemed
necessary.   Excluding all nonrecurring items in the second quarter of 2001, the
loss from operations would have been $698,000.  This compares to a $2.1 million
loss in the second quarter of 2000 excluding all nonrecurring charges.   The
$1.4 million decrease in operating loss for the second quarter of 2001 compared
to the second quarter of 2000 (excluding nonrecurring items in both periods) is
due to our continued cost reduction efforts that began as part of our transition
to the Content Solutions strategy as well as the improved gross margin from our
Content Solutions business.

  Operating loss for the six months ended June 30, 2001 was $1.2 million
compared to a loss of $9.7 million for the same period in 2000.  Included in the
loss from operations during the first six months of 2001 were the reversals of
$456,000 and $63,000 in accrued royalty expenses and accrued strategy change
expenses, respectively, no longer needed, $307,000 of severance related costs
related to a downsizing begun in April and completed by June, and a favorable
$239,000 reduction in salary expense due to implementing a new vacation
carryover policy.  Excluding all nonrecurring items in the first six months of
2001, the loss from operations would have been $1.7 million.  This compares to a
$6.0 million loss in the first six months of 2000 excluding all nonrecurring
charges.  The $4.3 million decrease in operating loss for the first six months
of 2001 compared to the first six months of 2000 (excluding nonrecurring items
in both periods) is due to our continued cost reduction efforts that began as
part of our transition to the Content Solutions strategy as well as the improved
gross margin from our Content Solutions business.

                                       13
<PAGE>

INTEREST INCOME AND OTHER, NET

  Interest income and other, net for the three-month period ended June 30, 2001
decreased to $139,000 from $275,000 for the same period in 2000.  Interest
income and other, net for the six-month period ended June 30, 2001 decreased to
$372,000 from $504,000 for the same period in 2000.  The decreases are due to a
reduction in interest income associated with lower cash, investment balances and
interest rates.

GAIN ON SALE OF NEWSWATCH, KK

  During June 2001 we sold the majority of our equity investment in NewsWatch,
KK, a Japanese corporation of which we had owned 23.4% and which carried a zero
balance in our consolidated assets, for $773,930.

Provision for income taxes

  The provision for income taxes for the three-month period ended June 30, 2001
decreased to $9,000 from $15,000 for the same period in 2000.  The provision for
income taxes for the six-month period ended June 30, 2001 decreased to $18,000
from $39,000 for the same period in 2000.  Components of the provisions include
state taxes due in states that do not have net operating loss carry-forwards
available, foreign tax liabilities and the alternative minimum tax due under the
Internal Revenue Code of 1986, as amended.  We have not recorded a deferred tax
benefit in the periods presented for the potential future benefit of our tax
loss carry-forwards as we have concluded that it is not likely such deferred tax
asset would be realized.

DISCONTINUED OPERATIONS

  In February 2000, our Board of Directors decided to sell its ownership
interest in Individual.com, Inc., due to the lack of growth in revenue, increase
in expenses and ongoing funding.  We have reported the historical operating
results of our Individual.com business segment as discontinued operations.
Revenues from the discontinued operations for the three-month period ending
March 31, 2001 were $0 as compared to $297,000  (for January 1, 2000 to the
February 18, 2000 disposal date) for the same period in 2000.  Revenues from the
discontinued operations for the six-month period ending June 30, 2001 were $0 as
compared to $297,000  (for January 1, 2000 to the February 18, 2000 disposal
date) for the same period in 2000. Expenses from discontinued operations for the
three-month period ended March 31, 2001, were $0 and $2.2 million (for January
1, 2000 to the February 18, 2000 sale date to Office.com) for the same period in
2000.  Expenses from discontinued operations for the six-month period ended June
30, 2001, were $0 and $2.2 million (for January 1, 2000 to the February 18, 2000
sale date to Office.com) for the same period in 2000.  Office.com, its parent
WinStar New Media Company, Inc. and its parent WinStar Communications, Inc. each
made voluntary filings under Chapter 11 of the U.S. Bankruptcy Code on April 18,
2001.  As a result, in the first quarter of 2001, we reversed $970,000 of the
previously recognized gain on the sale transaction related to the final $1
million due us from Office.com as of February 28, 2001.  See Note 3 in the
accompanying Notes to Condensed Consolidated Financial Statements.

NET GAIN (LOSS) FROM CONTINUING OPERATIONS

  The net gain for the three-month period ended June 30, 2001 was $138,000, or
$0.01 per share, which compares favorably to a net loss of $2.1 million, or
$0.12 per share during the same period in 2000.  Excluding all nonrecurring
items, which include a $774,000 gain on the sale of our investment in NewsWatch,
KK, $307,000 of severance related costs related to a downsizing begun in April
and completed by June, and a favorable $239,000 reduction in salary expense due
to implementing a new vacation carryover policy, the loss from continuing
operations during the second quarter of 2001 was $568,000, or $0.03 per share.
The second quarter of 2000 included two nonrecurring charges: $668,000 relating
to remaining employee retention expenses under the terminated merger agreement
with RoweCom and a $453,000 reversal of merger acquisition-related expenses no
longer deemed necessary.  Excluding these items, the second quarter of 2000
would have resulted in a loss from continuing operations of $1.8 million, or
$0.10 per share.  The decrease in net loss was due to lower expenses primarily
within sales and marketing and cost of revenues.

                                       14
<PAGE>

  The net loss for the six-month period ended June 30, 2001 was $96,000, or
$0.01 per share, which compares favorably to a net loss of $9.2 million, or
$0.52 per share during the same period in 2000.  Excluding all nonrecurring
items, which include the reversals of $456,000 and $63,000 of accrued royalty
reserves and strategy change reserves, respectively, no longer needed, a
$774,000 gain on the sale of our investment in NewsWatch, KK, $307,000 of
severance related costs related to a downsizing begun in April and completed by
June, and a favorable $239,000 reduction in salary expense due to implementing a
new vacation carryover policy, the loss from continuing operations was $1.3
million, or $0.07 per share.  The first six months of 2000 also included
nonrecurring charges:  $2.0 million relating to retention payments, transaction
costs, and expenses incurred as part of the termination of the RoweCom, Inc.
acquisition, $2.1 million relating to asset write-offs and reserves associated
with costs incurred in transitioning to the new strategy, and a $453,000
reversal of merger acquisition-related expenses no longer deemed necessary.
Excluding these items, the first six months of 2000 would have resulted in a
loss from continuing operations of $5.5 million, or $0.31 per share.  The
decrease in net loss was due to lower expenses primarily within sales and
marketing and cost of revenues.

NET GAIN (LOSS)

  The net gain for the three months ended June 30, 2001 was $138,000, or $0.01
per share, which compares favorably to a net loss of $1.3 million or $0.08 per
share during the same period in 2000.  The net gain for the second quarter of
2001 includes a $774,000 gain on the sale of our investment in NewsWatch, KK,
$307,000 of severance related costs related to a downsizing begun in April and
completed by June and a favorable $239,000 reduction in salary expense due to
implementing a new vacation carryover policy.  The net loss for the second
quarter of 2000 includes nonrecurring items of $668,000 of expenses related to
remaining employee retention expenses under the terminated merger agreement with
RoweCom, a $453,000 reversal of merger acquisition-related expenses no longer
deemed necessary, and $773,000 of net gain relating to an adjustment to the sale
transaction expenses from the sale of Individual.com.  Excluding all
nonrecurring items in both time periods, the net loss for the second quarter of
2001 was $568,000, or $0.03 per share compared to $1.8 million, or $0.10 per
share, in 2000.  The decrease in net loss was due to lower expenses primarily
within sales and marketing and cost of revenues.

  The net loss for the six months ended June 30, 2001 was $1.1 million, or $0.06
per share, which compares favorably to a net loss of $4.8 million or $0.28 per
share during the same period in 2000.  The net loss for the first six months of
2001 includes a $970,000 reversal of the previously recognized net gain relating
to the sale of the remaining 20% of Individual.com, a $774,000 gain on the sale
of our investment in NewsWatch, KK, $307,000 of severance related costs related
to a downsizing begun in April and completed by June, a favorable $239,000
reduction in salary expense due to implementing a new vacation carryover policy
and the reversals of $456,000 and $63,000 of accrued royalty reserves and
strategy change reserves, respectively, no longer needed.  Excluding these
items, the net loss for the first six months of 2001 was $547,000, or $0.03 per
share compared to $5.5 million, or $0.31 per share, in 2000 which excludes total
nonrecurring items of $3.6 million as well as $4.4 million of net gain from
discontinued operations.  The decrease in net loss was due to lower expenses
primarily within sales and marketing and cost of revenues.


LIQUIDITY AND CAPITAL RESOURCES

  Our cash and cash equivalents totaled $16.8 million at June 30, 2001, as
compared to $18.7 million at December 31, 2000, a decrease of $1.9 million.

  Our operations provided $238,000 of cash in the six months ended June 30,
2001.  Cash from operations primarily reflects the $96,000 loss from continuing
operations and the $970,000 write-off related to the final payment due from the
previously recognized gain on the sale of Individual.com to Office.com.  In
addition, non-cash depreciation and amortization together with strong receivable
collections offset decreases in accounts payable, accrued expenses and deferred
revenue.  Our investing activities used $2.2 million of cash primarily due to
capital expenditures.  Our financing activities provided $29,000 primarily from
purchases of stock under our employee stock purchase plan.

  We believe that our current cash and cash equivalents and the continued impact
of expense reduction programs will be sufficient to satisfy working capital and
capital expenditure requirements for at least the next twelve months.

                                       15
<PAGE>

CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS

  An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below before deciding to invest in shares
of our common stock. The trading price of our common stock could decline due to
any of these risks, in which case you could lose all or part of your investment.
In assessing these risks, you should also refer to the other information in this
and our other public filings, including our financial statements and the related
notes.

     We may not be able to manage our growth or hire and retain additional
     personnel, which could affect our operating results.

       We have experienced growth in our content solutions and electronic
     publishing technology revenues and expansion of our operations, which have
     placed significant demands on our management, development, sales and
     customer support staff. Continued growth will require us to hire and retain
     more development, selling and customer support personnel. We have at times
     experienced difficulty in recruiting and retaining qualified personnel.
     Recruiting and retaining qualified personnel is an intensely competitive
     and time-consuming process. We may not be able to attract and retain the
     necessary personnel to accomplish our growth strategies. Continued
     difficulties with the recruiting and retention of personnel could adversely
     affect our ability to satisfy customer demand in a timely fashion or to
     satisfactorily support our customers and operations, which could in turn,
     materially adversely affect our business, operating results and financial
     condition.

     If the Merger with the Thomson Corporation is not completed our future
     business and operations could be harmed.

       If the Merger is not completed, we may be subject to the following
     material risks:

       .  we may be required to pay The Thomson Corporation a termination fee;

       .  the price of our common stock may decline to the extent that the
          current market price of our common stock reflects a market assumption
          that the Merger will be completed; and we will incur significant costs
          related to the Merger, such as legal, accounting and some of the fees
          and expenses of our financial advisors, which costs must be paid even
          if the merger is not completed;

       .  further if the Merger is terminated and NewsEdge's board of directors
          determines to pursue another merger or business combination, it is not
          certain that we will be able to find a partner willing to pay an
          equivalent or more attractive price than that which would be paid in
          the merger; and

       .  in addition, while the Merger Agreement is in effect and subject to
          limited exceptions required by fiduciary obligations, the Company,
          through its officers, board of directors and advisors is generally
          prohibited from soliciting, initiating or knowingly encouraging or
          entering into extraordinary transactions, such as merger, sale of
          assets or other business combination with any other party other than
          The Thomson Corporation.

                                       16
<PAGE>

     Our quarterly financial results may be volatile and could cause our stock
     price to fluctuate.

       Our quarterly operating results may fluctuate significantly in the future
     depending on factors such as:

       .  demand for our services;
       .  changes in service mix;
       .  the size, timing and renewal of contracts with corporate customers,
          value added resellers, and channel partners and content providers;
       .  the effects of new service announcements by us or our competitors;
       .  the performance of our technology;
       .  our ability to develop, market and introduce new and enhanced versions
          of our services on a timely basis; and
       .  the level of product and price competition.

       A substantial portion of our costs of revenue, consisting principally of
     fees payable to information providers, communications costs and personnel
     expenses, is relatively fixed in nature. Our operating expense levels are
     based, in significant part, on their expectations of future revenue. If
     quarterly revenues are below management's expectations, results of
     operations would be adversely affected because a relatively small amount of
     our costs and expenses will vary with our revenues.

     If we are unable to continue to expand our sales and marketing efforts the
     expansion of our business will be impeded.

       Our ability to increase revenues will depend upon our ability to expand
     our sales force, increase sales to new customers, penetrate into our
     existing customer base, and successfully continue to implement our plans to
     provide digital content solutions to business web-sites and electronic
     publishing technology to publishers. In addition, as of June 30, 2001, we
     had an accumulated deficit of approximately $125 million. The time required
     for us to reach profitability is highly uncertain and we may not be able to
     achieve profitability on a sustained basis, if at all. As a result, it is
     possible that in some future quarter our operating results will be below
     the expectations of public market analysts and investors. In such event,
     the price of our common stock would likely be materially adversely
     affected. Although we experienced growth in revenues in recent years within
     our Content Solutions business, we may not sustain revenue growth in the
     future or be profitable on a quarterly or annual basis.

     Our Content Solutions operating history is limited and may not meet
expectations.

       Because we commenced our strategic expansion into our Content Solutions
     line of business in May 2000, we have limited financial and operating data
     and a limited operating history relevant to this business. Accordingly, it
     is difficult to evaluate the prospects of these businesses. Our business
     models are unproven, which creates a risk that their performance will not
     meet the expectations of investors and that the value of our common stock
     will decline.

     Our strategy is dependent on continued growth in use of the Internet for
     the delivery of information and if Internet growth does not continue, our
     business will suffer.

       We distribute certain services across multiple delivery platforms,
     including the Internet, private networks based on Lotus Notes and other
     groupware products and electronic mail. Because we recently expanded our
     strategic focus to target operators of commercial Web sites and publishers,
     demand for our services will depend in large part on continued growth in
     the use of the Internet and the success of the commercial Web site and
     publishers we target. There are critical issues concerning the commercial
     use of the Internet that remain unresolved. As a result, communication or
     commerce over the Internet may not continue to develop at historical rates
     and extensive content may not continue to be provided over the

                                       17
<PAGE>

     Internet. The Internet may not prove to be a viable commercial marketplace
     for a number of reasons, including:

       .  potentially inadequate development of the necessary infrastructure;
       .  timely development and commercialization of performance improvements;
          and
       .  delays in the development or adoption of new standards and protocols
          required to handle increased levels of Internet activity.

       If the necessary infrastructure or complementary services necessary to
     make the Internet a viable commercial marketplace are not developed, or if
     the Internet does not become a viable commercial marketplace, our business,
     results of operations, and financial condition could be materially
     adversely affected.

     Legal uncertainties and governmental regulation of the Internet could
     inhibit growth of the Internet and E-Commerce and adversely affect our
     business.

       Many legal questions relating to the Internet remain unsettled and these
     areas of uncertainty may be resolved in ways that damage our business. It
     may take years to determine whether and how existing laws governing matters
     such as intellectual property, privacy, libel and taxation apply to the
     Internet. In addition, new laws and regulations that address issues such as
     user privacy, commerce, advertising and the characteristics of and quality
     of products or services are becoming more prevalent. As use of the Internet
     and the prevalence of e-Commerce grow, there may be calls for further
     regulation such as more stringent consumer protection laws. Regulators also
     continue to evaluate the best telecommunications policy regarding the
     transmission of Internet traffic. In addition, our distribution
     arrangements and customer contracts could subject us to the laws of foreign
     jurisdictions, which may have unpredictable adverse affects on our
     business. These possibilities could affect us adversely in a number of
     ways:

       .  new regulation could make the Internet less attractive to users,
          resulting in slower growth in its use and acceptance than we expect;

       .  complying with new regulations could result in additional costs, which
          could reduce our margins, or could leave us at risk of potentially
          costly legal action; and

       .  we may be affected indirectly by legislation that fundamentally alters
          the practicality or cost-effectiveness of utilizing the Internet,
          including the cost of transmitting over various forms of network
          architecture, such as telephone networks or cable systems, or the
          imposition of various forms of taxation on Internet-related
          activities.

     We face intense competition that could impede our ability to grow and
     achieve profitability.

       The business information services industry is intensely competitive and
     is characterized by rapid technological change and entry into the field by
     extremely large and well-capitalized companies.

     We compete or may compete directly or indirectly with the following
     categories of companies:

       .  large, well-established news and information providers such as Dow
          Jones, Lexis/Nexis, Pearson, and Thomson;
       .  Content providers such as Screaming-Media.com, Inc., Yellowbrix and
          WAVO;
       .  market data services companies such as ADP, Bloomberg and Bridge;
       .  traditional print media companies that are increasingly searching for
          opportunities for on-line provision of news, including through the
          establishment of web sites on the Internet;

                                       18
<PAGE>

          large providers of LAN-based software systems such as Lotus/IBM and
          Microsoft, which could, in the future, ally with competing news and
          information providers;
       .  companies that create and sell software that enables their customers
          to aggregate and distribute digital content and/or to integrate
          digital content from external sources into their web platforms; and
       .  to a lesser degree, consumer-oriented, advertising-subsidized Web-
          based services and Internet access providers.

       Many of the market participants named above have substantially greater
     financial, technical and marketing resources than we do.

       Increased competition, on the basis of price, delivery systems or
     otherwise, may require us to implement price reductions or increase our
     spending on marketing or software development, which could have a material
     adverse effect on our business and results of operations.

     We are dependent on cooperative marketing arrangements with some of our
     competitors the loss of which could have a material adverse effect on our
     business.

       We have entered into certain cooperative marketing agreements and
     informal arrangements with software vendors, web site sponsors and
     operators of online services, including Microsoft, Netscape, Yahoo! and Dow
     Jones. These companies presently market services that compete directly with
     our services. If our relationships with these companies were terminated,
     curtailed, or otherwise modified, we may not be able to replicate these
     marketing activities alone or with others. If these companies were to
     develop and market their own business information services or those of our
     competitors, our business and results of operations and financial condition
     may be materially and adversely affected.

     Losing major news providers may leave us with insufficient breadth of
     content to retain and attract customers.

       A significant percentage of our customers subscribe to services provided
     by one or more of Press Association Inc., a subsidiary of The Associated
     Press, Dow Jones, The Financial Times and Thomson. Our agreements with news
     providers are generally for terms of one to three years, with automatic
     renewal unless notice of termination is provided before the end of the term
     by either party. These agreements may also be terminated by the provider if
     we fail to fulfill our obligations under the agreement. Many of these news
     and information providers compete with one another and, to some extent,
     with us. Termination of one or more significant news provider agreements
     would decrease the news and information which we can offer our customers
     and could have a material adverse effect on our business, results of
     operations and financial condition.   Additionally, our planned merger with
     The Thomson Corporation may lead one or more of our significant news
     providers to terminate their agreement with us based on competitive
     factors.  Also, an increase in the fees paid to our information providers
     would have an adverse effect on our gross margins and results of
     operations.

     We are dependent on certain news transmission sources and application
     service providers the loss of which could have a material adverse affect on
     our business.

       Our news and information for certain of the NewsEdge services is
     transmitted using one or more of four methods: leased telephone lines,
     satellites, FM radio transmission or the Internet. None of these methods of
     news and information transmission is within our control, and the loss or
     significant disruption of any of them could have a material adverse effect
     on our business. Many newswire providers have established their own
     broadcast communications networks using one or more of these four vehicles.
     In these cases, our role is to arrange communications between the news
     provider and the NewsEdge customer's server. For sources which do not have
     their own broadcast communications capability, news and information is
     delivered to our news consolidation facility, where it is reformatted for
     broadcast to NewsEdge servers and retransmitted to customers through one of
     three methods:

    .  utilizing our arrangement with Cidera, Inc., a common carrier
       communications vendor;

                                       19
<PAGE>

       .  utilizing our arrangement with eLogic Corporation, which develops and
          licenses certain software for our use and acts as an application
          service provider in connection with the delivery of our Content
          Solutions service; or
       .  utilizing our own NewsEdge Network, a proprietary entitlement and
          delivery system launched in the fall of 1998 that takes advantage of
          both leased line and Internet delivery.

       Our agreement with Cidera expires on December 31, 2002. This agreement
     can be terminated earlier in the event of a material breach by us of the
     agreement. Our arrangement with eLogic is set out in a binding term sheet,
     has an initial term that expires in January 2002 and is renewable by us for
     additional one year periods. If either of our agreements with Cidera or
     eLogic were terminated on short notice, or if Cidera or eLogic were to
     encounter technical or financial difficulties adversely affecting their
     ability to continue to perform under their agreements or otherwise, our
     business could be materially and adversely affected. We believe that if
     Cidera or eLogic were unable to fulfill their obligations, other sources of
     retransmission would be available to us including the NewsEdge Network,
     although the transition from Cidera or eLogic to those sources could result
     in delays or interruptions of service that could have a material adverse
     affect on our business, results of operations and financial condition.
     WAVO, our previous common carrier communications vendor which assigned its
     obligations to Cidera, did experience technical difficulties in May 1998
     due to the disablement of the PanAmSat Galaxy IV satellite. This
     disablement caused an interruption in the delivery of news services to
     between one-third and one-half of our customers. The interruption was
     resolved in approximately ten days and did not have a material impact on
     our financial results. If our computer or telecommunications systems fail
     or prove inadequate there could be a material adverse affect on our
     business.

       If our computer or telecommunications systems fail or prove inadequate
     there could be a material adverse affect on our business.

       Our operations are dependent on our ability to maintain our computer and
     telecommunications systems in effective working order. These systems and
     operations are vulnerable to damage or interruption from human error,
     natural disasters, telecommunications failures, break-ins, sabotage,
     computer viruses, intentional acts of vandalism and similar events.
     Although we have limited back-up capability, this measure does not
     eliminate the significant risk to our operations from a natural disaster or
     system failure at our principal site. In addition, any failure or delay in
     the timely transmission or receipt of news feeds and computer downloads
     from our information providers, due to system failure of the information
     providers, the public network or otherwise, could disrupt our operations.
     Our insurance policies may not adequately compensate us for any losses that
     we may incur because of any failures in our system or interruptions in
     delivery of content. Our business, results of operations and financial
     condition could be materially adversely affected by any event, damage or
     failure that interrupts or delays our operations.

     The termination of our relationship with eLogic Corporation could have a
     material adverse affect on our business.

       eLogic Corporation develops and licenses certain software, which enables
     us to deliver our Content Solutions to our customers. eLogic also acts as
     an application service provider in connection with the delivery of our
     Content Solutions service. Our arrangement with eLogic is set out in a
     binding term sheet, has an initial term that expires in January 2002 and is
     renewable by us for additional one year periods. Should eLogic terminate
     our license to its software or cease its role as an application service
     provider for our benefit, our business, results of operations and financial
     condition could be materially adversely affected.

     We must keep pace with rapid technological change or business will be
     adversely affected.

       We may be unable to develop our technology quickly enough to support
     demand or changes in technology.

                                       20
<PAGE>

       The business information services, software and communications industries
     are subject to rapid technological change, which may render existing
     services obsolete or require significant unanticipated investments in
     research and development. Our future success will depend, in part, upon our
     ability to enhance our service offerings and keep pace with technological
     developments. Our future success will depend on our ability to enhance
     existing services, to develop new services that address the needs of our
     customers and to respond to technological advances and emerging industry
     standards and practices, on a timely basis. Services as complex as those
     offered by us entail significant technical risks, often encounter
     development delays and may result in service failures when first introduced
     or as new versions are released. Any such delays in development or failures
     that occur after commercial introduction of new or enhanced services may
     result in loss of or delay in market acceptance, which could have a
     material adverse effect upon our business, results of operations and
     financial condition.

     Failure to protect our proprietary rights and intellectual property could
     dramatically affect our ability to operate.

       We are heavily dependent upon proprietary technology. In addition, we
     rely on a combination of trade secret, copyright, patent and trademark laws
     and non-disclosure agreements to protect our proprietary rights in our
     software and technology. These measures may not be adequate to protect our
     proprietary technology. In addition, our competitors may independently
     develop technologies that are substantially equivalent or superior to our
     technologies or services. We licensed proprietary filtering software, which
     is used as the filtering engine within our news Refinery, from each of
     Sovereign Hill Software, Inc. and Cornell Research Foundation, Inc. Under
     the terms of the license agreement with Sovereign Hill, we have a non-
     exclusive, worldwide license to use Sovereign Hill's InQuery retrieval
     system software until we terminate the license agreement. Sovereign Hill
     may also terminate the license agreement if we have materially breached the
     agreement and such breach remains uncured for 90 days after written notice.
     Under the terms of the license agreement with Cornell, we had exclusive
     worldwide rights until February 1999 to design, develop, market, and sell
     systems and services based on its SMART software for the retrieval and
     dissemination of data from recent and continually changing data sources.
     Provided that we do not default on the Cornell license agreement, we will
     retain a continuing worldwide, non- exclusive, perpetual royalty-free right
     to use the SMART software. We also own and will continue to own, all
     enhancements to the SMART software that we have developed. Cornell may,
     however, have licensed the SMART software to a third party, including one
     of our competitors or may do so in the future.

     Potential litigation of third party claims concerning the infringement of
     proprietary right could prove costly and time consuming.

       There has been substantial litigation in the information services
     industry involving intellectual property rights. Although we believe that
     we are not infringing the intellectual property rights of others, if such
     claims were asserted, they may have a material adverse effect on our
     business, results of operations, and financial condition. In addition,
     inasmuch as we license the informational content that is included in our
     services from third parties, our exposure to copyright infringement actions
     may increase because we must rely upon third parties for information as to
     the origin and ownership of our licensed content. Although we generally
     obtain representations as to the origins and ownership of our licensed
     informational content and generally obtain indemnification to cover any
     breach of any such representations, such representations may not be
     accurate and indemnification may not adequate compensation for any breach
     of such representations.  Additionally, a recent decision of the U.S.
     Supreme Court has raised uncertainty as to the ownership of certain
     copyrightable material produced by free-lance writers, which are frequently
     utilized by our information providers.  In the future, litigation may be
     necessary to enforce and protect our trade secrets, copyrights and other
     intellectual property rights. We may also be subject to litigation to
     defend against claimed infringement of the rights of others or to determine
     the scope and validity of the intellectual property rights of others. Any
     such litigation would be costly and divert management's attention, either
     of which would have a material adverse effect on our business, results of
     operations, and financial condition. Adverse determinations in such
     litigation could result in the loss of our proprietary rights, subject us
     to significant liabilities, require us to seek licenses from third parties,
     and prevent us from selling our services, any one of which could have a
     material adverse effect on our business, results of operations, and
     financial condition.

                                       21
<PAGE>

     If we distribute content to unauthorized recipients, we may have to pay
     damages to our content providers.

       We may be subject to claims for defamation, libel, copyright or trademark
     infringement or based on other theories relating to the information it
     publishes through its services. These types of claims have been brought,
     sometimes successfully, against online services as well as print
     publications in the past. Our insurance may not adequately protect it
     against these claims. In addition, NewsEdge's proprietary software
     technologies enable us to deliver content received from participating
     content providers only to customers who have been authorized to access that
     content. We might inadvertently distribute content to a customer who is not
     authorized to receive it, which could subject it to a claim for damages
     from the information provider or harm to its reputation in the market
     place.

     If we are unable to maintain our reputation and expand our name
     recognition, we may have difficulty attracting new business and retaining
     current customers and employees, and our business may suffer.

       We believe that establishing and maintaining a good reputation and name
     recognition are critical for attracting and retaining customers and
     employees. We also believe that the importance of reputation and name
     recognition is increasing and will continue to increase due to the growing
     number of providers of Internet services. If our reputation is damaged or
     if potential customers are not familiar with us, we may be unable to
     attract new, or retain existing, customers and employees. Promotion and
     enhancement of our name will depend largely on its success in continuing to
     provide effective services. If customers do not perceive our services to be
     effective or of high quality, our brand name and reputation will suffer.

RECENT ACCOUNTING PRONOUNCEMENTS

  In June 1998, the Financial Accounting Standards Board, ("FASB"), issued SFAS,
No. 133, Accounting for Derivative Instruments and Hedging Activities. This
statement establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in other contracts, and
for hedging activities. SFAS No. 133, as amended by SFAS No. 137 and 138, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
SFAS No. 133 did not  have a material impact on our consolidated financial
statements.

  The Securities and Exchange Commission released Staff Accounting Bulletin
(SAB) No. 101, Revenue Recognition in Financial Statements, on December 3, 1999.
This SAB provides additional guidance on the accounting for revenue recognition,
including both broad conceptual discussions as well as certain industry-specific
guidance. The guidance is effective in the fourth quarter 2000. The adoption of
SAB 101 did not have a material impact on the Company's results of operations.

  In March 2000, the FASB issued Interpretation No. 44, Accounting for Certain
Transactions Involving Stock Compensation, an Interpretation of Accounting
Principles Board ("APB") Opinion No. 25. The interpretation clarifies the
application of APB Opinion No. 25 in certain situations, as defined. The
interpretation is effective July 1, 2000, but covers certain events occurring
during the period after December 15, 1998, but before the effective date. The
adoption of this interpretation did not have any effect on the accompanying
financial statements.

  In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No.
141, "Business Combinations".  SFAS No. 141 requires all business combinations
initiated after June 30, 2001 to be accounted for using the purchase method.
This statement is effective for all business combinations initiated after June
30, 2001.

  In July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets".  This statement applies to goodwill and intangible assets acquired
after June 30, 2001, as well as goodwill and intangible assets previously
acquired.  Under this statement goodwill as well as certain other intangible
assets, determined to have an infinite life, will no longer be amortized,
instead these assets will be reviewed for impairment on a periodic basis. This
statement is effective for the Company for the first quarter in the fiscal year
ended December 2002. Management is currently evaluating the impact that this
statement will have on the Company's financial statements.

                                       22
<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  The following discussion about our market risk disclosures involves forward-
looking statements. Actual results could differ materially from those projected
in the forward-looking statements. We are exposed to market risk related to
changes in interest rates and foreign currency exchange rates. As of June 30,
2001, we did not use derivative financial instruments for speculative, hedging
or trading purposes.

Interest Rate Risk

  We maintain a short-term investment portfolio consisting of U.S. treasury
notes, U.S. Government agencies and corporate bonds. These held-to-maturity
securities are subject to interest rate risk and will fall in value if market
interest rates increase. We have the ability to hold our fixed income
investments until maturity, and therefore would not expect our operating results
or cash flows to be affected to any significant degree by the effect of a sudden
change in market interest rates on our securities portfolio.

Foreign Currency Exchange Risk

  As a global concern, we face exposure to adverse movements in foreign currency
exchange rates. These exposures may change over time as business practices
evolve and could have a material adverse impact on our financial results.
Historically, our primary exposures have been related to nondollar-denominated
operating expenses in Canada. The majority of our sales are denominated in U.S.
dollars. We have not determined what impact, if any, the introduction of the
Euro will have on our foreign exchange exposure. We are prepared to hedge
against fluctuations in the Euro if this exposure becomes material. As of June
30, 2001, the assets and liabilities related to nondollar-denominated currencies
was not material.

                                       23
<PAGE>

NEWSEDGE CORPORATION AND SUBSIDIARIES


PART II - OTHER INFORMATION


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

  The Annual Meeting of Stockholders was held on May 25, 2001.  Holders of an
aggregate of 18,621,403 shares at the close of business on April 17, 2001 were
entitled to vote at the meeting.  At such meeting, the Company's stockholders
voted as follows:


PROPOSAL I.  To re-elect Messrs. Clifford M. Pollan, Peter Woodward and Michael
E. Kolowich to the Board of Directors for a three-year term.

<TABLE>
<CAPTION>
                            Total Vote for    Total Vote Against      Abstentions from          Broker
      Director Name            Proposal           Proposal I             Proposal I            Non-votes
-----------------------------------------------------------------------------------------------------------
<S>                        <C>               <C>                   <C>                      <C>
Clifford M. Pollan               15,858,118                59,177            N/A                  N/A
Peter Woodward                   15,861,908                55,387            N/A                  N/A
Michael E. Kolowich              15,848,833                68,462            N/A                  N/A
</TABLE>

  Messrs., James D. Daniell and Basil P. Regan will continue to hold office
until the 2002 Annual Meeting of Stockholders or until their successors have
been duly elected or until their earlier resignation or removal.  Messrs., Rory
J. Cowan, William A. Devereaux and Murat H. Davidson will continue to hold
office until the 2003 Annual Meeting of Stockholders or until their successors
have been duly elected or until their earlier resignation or removal


PROPOSAL II.  To ratify the selection of the firm of Arthur Andersen LLP as
independent auditors for the fiscal year ending December 31, 2001.

<TABLE>
<CAPTION>
Total Vote for        Total Vote Against        Abstentions from       Broker Non-votes

----------------------------------------------------------------------------------------
<S>                 <C>                     <C>                        <C>
    15,893,084                      12,451                     11,760         N/A
</TABLE>

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

6(a)        Exhibits.

                 None


6(b)   REPORTS ON FORM 8-K

                 None

                                       24
<PAGE>

                     NEWSEDGE CORPORATION AND SUBSIDIARIES



SIGNATURE


  Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.


                                                 NEWSEDGE CORPORATION
                                                 (Registrant)



Date:  August 14, 2001                           /s/ Ronald Benanto
                                                 -----------------------
                                                 Ronald Benanto
                                                 Vice President -
                                                 Finance and CFO


                                       25