<PAGE>


                                   FORM 10-QSB

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)

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

               For the quarterly period ended: September 30, 2001

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

               For the transition period from ________ to ________

                         Commission File Number 0-13022

                                INTELLICORP, INC.
        (Exact name of small business issuer as specified in its charter)

DELAWARE                                            94-2756073
(State or other jurisdiction of                     (I.R.S. Employer
incorporation or organization)                      Identification No.)

                      1975 EL CAMINO REAL WEST, SUITE #201
                      MOUNTAIN VIEW, CALIFORNIA 94040-2216
               (Address of principal executive offices)
                                   (Zip Code)

                                 (650) 965-5500
                (Issuer's telephone number, including area code)


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

                                YES [X]   NO [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

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


<TABLE>
<CAPTION>
                                            Outstanding as of
               Class                        October 31, 2001
               ---------------------        ----------------
               <S>                          <C>
               Common stock,
               $.001 par value              21,765,007 shares
</TABLE>


                     This document is comprised of 16 pages.


<PAGE>

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----
<S>                                                                          <C>
PART I.  FINANCIAL INFORMATION

    Item 1.    Financial Statements (unaudited)
               Condensed Consolidated Balance Sheets............................3
               Condensed Consolidated Statements of Operations..................4
               Condensed Consolidated Statements of Cash Flows..................5
               Notes to Condensed Consolidated Financial Statements...........6-8

    Item 2.    Management's Discussion and Analysis of

               Financial Condition and Results of Operations.................9-14

PART II.  OTHER INFORMATION

    Item 2.    Changes in Securities and Use of Proceeds.......................15

    Item 6.    Exhibits and Reports on Form 8-K................................15

SIGNATURE......................................................................16
</TABLE>



                                       2
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INTELLICORP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                  September 30,        June 30,
(In thousands)                                        2001              2001(1)
                                                  -------------        --------
                                                  (unaudited)
<S>                                               <C>                  <C>
Assets
Current assets:
Cash and cash equivalents                           $    968           $  2,639
Accounts receivable, net                               3,651              5,966
Other current assets                                     782                671
                                                    --------           --------
    Total current assets                               5,401              9,276

Property and equipment, net                              528                603
Purchased intangibles, net                             1,344              1,472
Other assets                                             150                143
                                                    --------           --------
                                                    $  7,423           $ 11,494
                                                    ========           ========

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable                                    $  2,213           $  2,381
Accrued compensation                                   1,601              1,639
Accrued royalties                                        136                284
Other current liabilities                              1,528              1,702
Bank loan                                              1,152              1,640
Short term notes payable                               1,100                 --
Deferred revenues                                        690              1,081
                                                    --------           --------
    Total current liabilities                          8,420              8,727

Stockholders' equity:
Preferred stock                                            1                  1
Common stock                                              22                 22
Additional paid-in capital                            73,326             73,369
Accumulated deficit                                  (74,346)           (70,625)
                                                    --------           --------
    Total stockholders' equity                          (997)             2,767
                                                    --------           --------
                                                    $  7,423           $ 11,494
                                                    ========           ========
</TABLE>


(1)   The consolidated balance sheet at June 30, 2001, has been derived from the
      audited consolidated financial statements at that date but does not
      include all of the information and footnotes required by accounting
      principles generally accepted United States for complete financial
      statements.

                             See accompanying notes.



                                       3
<PAGE>

INTELLICORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                       Three months ended
                                                          September 30,
                                                   ---------------------------
(In thousands, except per share amounts)               2001              2000
                                                   ----------          -------
                                                            (unaudited)
<S>                                                   <C>               <C>
Revenues:
    Consulting services                               $ 2,814           $ 3,713
    Software license                                      407             1,590
    License support                                       506               730
                                                      -------           -------
    Total revenues                                      3,727             6,033
                                                      -------           -------

Costs and expenses:
    Cost of revenues:
       Consulting services                              2,978             2,817
       Software license                                   137               192
       License support                                     97                99
    Research and development                              771               639
    Marketing, general, and administrative              3,263             3,590
                                                      -------           -------
    Total costs and expenses                            7,246             7,337
                                                      -------           -------

Loss from operations                                   (3,519)           (1,304)

Other income (expense), net                                38               (35)
                                                      -------           -------
Loss before provision for income taxes                 (3,481)           (1,339)

Provision for income taxes                                  8                --
                                                      -------           -------
Net loss                                              $(3,489)          $(1,339)
                                                      =======           =======
Series A, Series B and Series C
    Preferred stock dividends                            (232)             (133)
                                                      -------           -------
Net loss applicable to common shareholders            $(3,721)          $(1,472)
                                                      =======           =======

Basic and diluted net loss per common share           $ (0.17)          $ (0.07)
                                                      =======           =======
Shares used in computing basic and
    diluted net loss per common share                  21,763            20,043
                                                      =======           =======
</TABLE>



                             See accompanying notes.



                                       4
<PAGE>

INTELLICORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
Increase (decrease) in cash and cash equivalents
(in thousands)                                              Three months ended
                                                               September 30,
                                                          ---------------------
                                                             2001         2000
                                                           -------      -------
                                                                (unaudited)
<S>                                                        <C>          <C>
Cash flows from operating activities:
    Net loss                                               $(3,489)     $(1,339)
    Adjustments to reconcile net loss to net
        cash used in operating activities:
    Depreciation and amortization                              231          252
    Abandoned software written-off                              --          249
    Changes in assets and liabilities:
        Accounts receivable                                  2,315         (979)
        Other current assets                                  (111)         768
        Other assets                                            (7)         (31)
        Accounts payable                                      (168)        (351)
        Accrued compensation                                   (38)           9
        Other current liabilities                             (322)        (400)
        Deferred revenues                                     (391)        (114)
                                                           -------      -------
    Net cash used in operating activities                   (1,980)      (1,936)
                                                           -------      -------

Cash flows from investing activities:
    Expenditures for property and equipment                    (28)         (13)
                                                           -------      -------
Net cash used in investing activities                          (28)         (13)
                                                           -------      -------

Cash flows from financing activities:
    Net borrowings (repayments) under bank credit line        (488)       1,154
    Short term notes payable                                 1,100           --
    Payment of dividends                                      (232)        (133)
    Cash paid for issuance costs related to sales of
      preferred stock                                          (61)          --
    Cash received from sale of common stock                     18          801
                                                           -------      -------
Net cash provided by financing activities                      337        1,822
                                                           -------      -------

Decrease in cash and cash equivalents                       (1,671)        (127)
Cash and cash equivalents, beginning of period               2,639        2,240
                                                           -------      -------
Cash and cash equivalents, end of period                   $   968      $ 2,113
                                                           =======      =======
</TABLE>



                             See accompanying notes.



                                       5
<PAGE>

                                INTELLICORP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                      THREE MONTHS ENDED SEPTEMBER 30, 2001
                                   (UNAUDITED)

1. BASIS OF PRESENTATION. The accompanying condensed consolidated financial
statements should be read in conjunction with the Company's consolidated
financial statements for the fiscal year ended June 30, 2001, included in the
Company's Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission. In the opinion of management, the interim statements reflect all
adjustments (consisting of normal recurring entries), which are necessary for a
fair presentation of the results of the interim periods presented. The interim
results are not necessarily indicative of the results that may be expected for
the full fiscal year ending June 30, 2002 or for any future periods.

2. SIGNIFICANT CUSTOMERS. A related party accounted for 8% ($282,000) and 18%
($1,107,000) of the total revenues for the three months ended September 30, 2001
and 2000, respectively. Three customers accounted for 17% ($618,000), 15%
($548,000) and 14% ($510,000) of total revenues for the three months ended
September 30, 2001 and one customer accounted for 20% ($1,189,000) of the total
revenues for the three months ended September 30, 2000.

3. INCOME TAXES. The provision for income taxes of $8,000 for the three months
ended September 2001 is attributable to local taxes.

4. COMPREHENSIVE LOSS. For the three months ended September 30, 2001 and 2000,
respectively, comprehensive loss equaled net loss.

5. BANK LOAN. In March 1999, the Company secured a credit facility from a bank,
bearing an annual interest at the bank's prime rate plus 2% (8.0% and 11.5% as
of September 30, 2001 and 2000, respectively). The credit line is an asset-based
facility, and as of September 30, 2001 the amount that can be borrowed under the
loan is the lesser of $2.0 million or 75% of the eligible accounts receivable
balances at any point in time. At September 30, 2001, $115,000 was available
under the bank credit facility, and the Company owed $1.2 million on this credit
facility. The amounts collected from outstanding, eligible accounts receivable
balances are remitted to the bank as loan payments when such amounts are
received. The initial term of this facility was two years, and it was renewed on
July 31, 2001 for one additional year. The credit facility is secured by
essentially all of the assets of the Company.

6. PROMISSORY NOTES. In August and September 2001, the Company entered into
promissory notes with two related parties to provide an aggregate of $1.9
million, of which $1.1 million has been borrowed through September 30, 2001. The
notes bear interest at a rate equal to the interest rate on the Company's bank
loan, which bears annual interest at the bank's prime rate plus 2%. The notes
and accrued interest are due on August 31, 2002. Prepayment of principal,
together with accrued interest, may be made at any time without penalty. The
notes are secured by the Company's accounts receivable, however such notes are
subordinate to that amount owed under the Company's credit facility. The notes
may be converted to equity by mutual agreement of the parties.

7. EQUITY. The Company is required to adjust the conversion price of the Series
C convertible preferred stock and issue additional warrants as a result of a
reset provision in the Series C preferred stock purchase agreement. The reset
provision specifies that if the original conversion price ($1.125) is higher
than the average closing bid price per share of the Company's common stock for
the five trading days immediately preceding the six-month anniversary of the
sale of the first share of Series C convertible preferred stock (the "average
closing bid price"), the original conversion price is reset. The reset price is
designated as the higher of $0.84 or the average closing bid price per share of
the Company's common stock for the five trading days immediately preceding the
six-month anniversary of the sale of the first share of Series C convertible
preferred stock, not to exceed $1.125. The six-month anniversary date was
September 5, 2001 and the five trading days preceding the anniversary were
August 28, 2001 thru August 31, 2001 and September 4, 2001. The average closing
bid price for the aforementioned period was $0.71. Therefore, the conversion
price will be reset to $0.84 and would result in the issuance of an additional
1,471,747 shares of common stock if fully converted. In


                                       6
<PAGE>

                                INTELLICORP, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      THREE MONTHS ENDED SEPTEMBER 30, 2001
                                   (UNAUDITED)

addition, Series C convertible preferred stockholders shall receive warrants to
purchase an additional 367,937 shares of common stock at $2.00 per share. In
accordance with NASD Rule 4350(i)(1)(D), since the Series C Preferred were
issued in a private financing with a conversion price which was below the market
price of the Common Stock at the time, approval of the Company's Stockholders is
required in order to permit the Additional Issuance (and any additional
securities that may become issuable pursuant to the respective rights,
preferences and privileges of the Series C Preferred and Warrants) to constitute
more than twenty percent of the shares outstanding immediately prior to the
Financing in order to comply with NASD corporate governance requirements. The
Conversion Shares underlying the Issued Series C and the Issued Warrants
constituted less than twenty percent of the shares outstanding immediately prior
to the Financing and, therefore, no stockholder vote was required. However, due
to the reset, the total number of shares underlying Series C Preferred and
warrants would constitute more than twenty percent of the shares outstanding
prior to the Financing. Thus, the Company is seeking stockholder approval of the
Financing prior and as a condition to its implementation of the reset provision
at the next annual meeting of Stockholders to be held on December 4, 2001.

8. NET LOSS PER COMMON SHARE. Net loss per common share is computed using the
weighted-average number of shares of common stock outstanding. Common stock
equivalent shares from outstanding stock options and warrants are not included
as their effect is antidilutive.

9. REDUCTION-IN-FORCE. During the three months ended September 2001, the Company
reduced its work force by 26% in order to align cash resources with projected
expenses for fiscal year 2002. Estimated revenues were impacted by a downturn in
the economy during fiscal 2001. A total of 32 employees were affected by the
reduction in force, which consisted of 22 technical professionals and 10
employees in marketing, general and administration. The cost of the
reduction-in-force was approximately $268,000 for severance pay. Of the
$268,000, $183,000 was charged to cost of revenues, $23,000 was charged to
research and development expenses and $62,000 was charged to marketing, general
and administrative expenses.

10. RECENT PRONOUNCEMENTS. In July 2001, the Financial Accounting Standards
Board issued SFAS 141, "Business Combinations", and SFAS 142, "Goodwill and
Other Intangible Assets".

SFAS 141 supercedes Accounting Principles Board Opinion No. 16, (Business
Combinations "APB 16"). The most significant changes made by SFAS 141 are: (1)
requiring that the purchase method of accounting be used for all business
combinations initiated after June 30, 2001, (2) establishing specific criteria
for the recognition of intangible assets separately from goodwill, and (3)
requiring unallocated negative goodwill to be written off immediately as an
extraordinary gain (instead of being deferred and amortized).

SFAS 142 supercedes APB 17, Intangible Assets. SFAS 142 primarily addresses the
accounting for goodwill and intangible assets subsequent to business
combinations (i.e., the post-acquisition accounting). The provisions of SFAS 142
will be effective for fiscal years beginning after December 15, 2001, however,
certain provisions of this new standard may also apply to any acquisitions
concluded subsequent to June 30, 2001. The most significant changes made by SFAS
142 are: (1) goodwill and indefinite lived intangible assets will no longer be
amortized, (2) goodwill will be tested for impairment at least annually at the
reporting unit level, and (3) intangible assets deemed to have an indefinite
life will be tested for impairment at least annually.

The Company is required to adopt SFAS 141 and SFAS 142 on a prospective basis as
of July 1, 2002, however, certain provisions of these new standards may also
apply to any acquisitions concluded subsequent to June 30, 2001. As a result of
implementing these new standards, amortization of existing goodwill will cease
as of July 1, 2002 and during fiscal 2003, the Company will perform the first of
the required impairment tests of goodwill as of July 1, 2002. The Company is
currently reviewing the impact that the adoption of these standards will have on
its financial position and results of operations.


                                       7
<PAGE>

                                INTELLICORP, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                      THREE MONTHS ENDED SEPTEMBER 30, 2001
                                   (UNAUDITED)

11. SUBSEQUENT EVENTS. From October 1, 2001 through November 5, 2001, the
Company reduced its work force by 9% in order to align cash resources with
projected expenses for fiscal year 2002. Estimated revenues were impacted by the
economic downturn in the quarter and the events of September 11, 2001. A total
of 11 employees were affected by the reduction in force, which consisted of 10
technical and one in marketing, general and administration. The cost of the
reduction-in-force was approximately $29,000 for severance pay. Of the $29,000,
$6,000 was charged to cost of revenues, $22,000 was charged to research and
development expenses and $1,000 was charged to marketing, general and
administrative expenses.



                                       8
<PAGE>

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

OVERVIEW

We are an international technology services and solutions firm that provides
Global 2000 companies the business solutions required to fully leverage their
investments in information systems and business processes. We offer services and
solutions for evaluating and developing business strategy, refining, designing
and implementing business software architecture, and implementing and
integrating Customer Relationship Management (CRM) software.

We offer a combination of customized consulting services and solutions to help
our customers align disparate customer channels, including the Internet,
wireless, contact centers, and field sales with "back-office" processes such as
manufacturing, order fulfillment, order management, logistics, human resources,
distribution, and accounting.

The solutions that we design and implement enable our customers to increase
efficiency, accelerate business growth, and increase customer retention by
applying an end-to-end methodology to the customer relationship process. By
focusing primarily on the configuration of complex products and the
personalization of the customer experience, we help our customers conquer the
most difficult and complex aspects of the CRM process.

In the past year we changed our focus to solutions, which combine a mix of
software products and consulting services that help Fortune 2000 companies
rapidly enter the world of conducting electronic business (eBusiness) on the
Internet. These consulting solutions provide SAP, AG customers with an eBusiness
strategy that maximizes their enterprise resource planning (ERP) investment and
minimizes integration and data management issues associated with implementing
software packages that combine the best applications from many different vendors
to create the best product of its type (best-of-breed software). We began to
explore other strategic business opportunities, including entering into an
agreement with SAP, AG to assist them with the development of SAP's Internet
Pricing and Configurator (IPC) program. We also were selected to implement this
program for three of SAP AG's major customers due to our extensive knowledge of
a variety of SAP AG's software applications. From this experience, and from
analysis of the growing market for consulting services attuned to the
relationships of business with our customers, we believed that the revenue
stream in the implementation services area would be more predictable in the near
term than in the software license products area. In addition, we determined that
our unique understanding of SAP's business planning system allowed us to expand
beyond providing implementation services for SAP AG's customer management
applications to providing those services to other vendors of software such as
Siebel and Cybrant directed at the business-customer relationship. As part of
this strategy, we found new opportunities to sell our business management tools
and applications to enable our business customers to consolidate and/or align
our business management systems with the newer customer management applications.

Based on our recent change to a combination of software license products,
consulting and combined solutions, our revenue mix in any short span of time may
prove volatile as we accommodate our customer's specific and immediate needs.
The dynamic nature of the market, especially as ERP upgrades become available
and potential customers continue to delay the purchase and/or implementation of
CRM applications, may result in a dynamic situation whereby the mix to services
and products could vary significantly quarter-to-quarter. The operating margins
for software license products are substantially higher than the operating
margins for our consulting services. This disparity is principally due to the
low cost of materials, royalties, and other costs associated with our software
license products, as compared to the relatively high personnel costs (including
the higher cost of using outside consultants) incurred in providing consulting
services. Our operating margins have in the past and may, in the future, vary
significantly as a result of changes in the proportion of revenues attributable
to software license products and consulting services. Should the proportion of
licensing revenues increase relative to our consulting services; our overall
margins will increase accordingly. Our overall operating margins may thus be
higher than those for consulting services companies that do not derive such a
percentage of revenues from license product sales.


                                       9
<PAGE>

Other than statements of historical fact, the statements made in this quarterly
report are hereby identified as forward-looking statements that involve risks
and uncertainties. The Company's actual results may differ materially from the
results discussed in the forward-looking statements. Factors that might cause
such a difference include, but are not limited to, those discussed in "Statement
of Operations Data" and "Liquidity and Capital Resources" below and in "Risk
Factors" in the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2001.

In particular, it is important to note that achievement of revenue goals is
affected by numerous factors beyond the Company's control, including
competitors' product introductions, market price competition and market
acceptance of the Company's consulting and software license products. Historical
results of the Company may not be indicative of future operating results.



                                       10
<PAGE>

RESULTS OF OPERATIONS

QUARTERLY RESULTS

The following table presents the Company's condensed consolidated financial
results by quarter for the four quarters of fiscal 2001 and the first quarter of
fiscal 2002. These quarterly financial results are unaudited. In the opinion of
management, however, they have been prepared on the same basis as the audited
financial information and include all adjustments necessary for a fair
presentation of the information set forth therein. The operating results for any
quarter are not necessarily indicative of the results that may be expected for
any future period.

               CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA
               (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                            QUARTER ENDED
                                                                                            Fiscal
                                                       Fiscal 2001                           2002
                                   -------------------------------------------------       --------
                                   Sept. 30      Dec. 31       Mar. 31        Jun 30       Sept. 30
                                   --------      --------      --------      --------      --------
<S>                                <C>           <C>           <C>           <C>           <C>
Revenues:
Consulting services                $  3,713      $  4,354      $  5,784      $  4,404      $  2,814
Software license                      1,590         1,375           732         1,063           407
License support                         730           706           568           594           506
                                   --------      --------      --------      --------      --------
      Total Revenues                  6,033         6,435         7,084         6,061         3,727

Cost and Expenses:
  Cost of revenues:
Consulting services                   2,817         2,848         3,770         4,683         2,978
Software license                        192           297           149           288           137
License support                          99            86            92            95            97
  Research and development              639           621           850           787           771
  Marketing, general, and
    Administrative                    3,590         3,173         3,612         3,921         3,263
                                   --------      --------      --------      --------      --------
      Total costs and expenses        7,337         7,025         8,473         9,774         7,246

Loss from operations                 (1,304)         (590)       (1,389)       (3,713)       (3,519)
Other Income (expense), net             (35)         (127)            8           (99)           38
                                   --------      --------      --------      --------      --------
Loss before provision
  for income taxes                   (1,339)         (717)       (1,381)       (3,812)       (3,481)
Provision for income taxes               --            --             6            (9)            8
                                   --------      --------      --------      --------      --------
Net loss                           $ (1,339)     $   (717)     $ (1,387)     $ (3,803)     $ (3,489)
                                   ========      ========      ========      ========      ========

Series A, Series B and Series C
  Preferred stock dividends            (133)         (134)         (129)         (253)         (232)
                                   --------      --------      --------      --------      --------

Beneficial Conversion Dividend
  Series C Preferred stock               --            --        (1,703)           --            --
                                   --------      --------      --------      --------      --------
Net loss available to
  common shareholders              $ (1,472)     $   (851)     $ (3,219)     $ (4,056)     $ (3,721)
                                   ========      ========      ========      ========      ========

Basic and diluted net loss
  per common share                 $  (0.07)     $  (0.04)     $  (0.15)     $  (0.19)     $  (0.17)
                                   ========      ========      ========      ========      ========

Shares used in computing basic
  and diluted net loss per
  common share                       20,043        21,101        21,704        21,731        21,763
                                   ========      ========      ========      ========      ========
</TABLE>



                                       11
<PAGE>

The geographic breakdown of revenue is as follows:

<TABLE>
<CAPTION>
                                    Three months ended
(In thousands)                          September 30,
                                   ---------------------               %
                                    2001            2000            Change
                                   ------          ------           ------
<S>                                <C>             <C>              <C>
North America                      $2,933          $4,210             (30)%
United Kingdom                        405           1,098             (63)%
Germany                               227             218               4%
France                                146             410             (64)%
Pacific Rim/Latin America              16              97             (84)%
                                   ------          ------             ---
    Total revenue                  $3,727          $6,033             (38)%
</TABLE>

The geographic revenue as a percentage of revenue is as follows:

<TABLE>
<CAPTION>
                                   Three months ended
                                      September 30,
                                   ------------------
                                   2001         2000
                                   ----         ----
<S>                                <C>          <C>
North America                       79%          70%
United Kingdom                      11%          18%
Germany                              6%           4%
France                               4%           7%
Pacific Rim/Latin America            0%           1%
                                   ---          ---
    Total revenue                  100%         100%
</TABLE>


Revenues: The Company's total revenue is derived from three sources all related
to providing a suite of consulting services and software license products to the
SAP community: consulting services, software license products, and software
license product support. Total revenues were $3,727,000 and $6,033,000, for the
three months ended September 30, 2001 and 2000, respectively. This represents a
38% decrease for the period ended September 30, 2001 compared to the same prior
year period due to decreases in all three revenue sources.

Consulting services revenues, which also includes software license product
training revenues, were $2,814,000 and $3,713,000 for the three-month periods
ended September 30, 2001 and 2000, respectively. The 24% decrease compared to
the same period in the prior year is primarily due to a decrease in existing
customer demand for CRM consulting services resulting from customers' decisions
to delay major capital expenditures for such services.

Software license product revenues were $407,000 and $1,590,000 for the three
month periods ended September 30, 2001 and 2000, respectively. The 74% decrease
in software license product revenues compared to the same period in the prior
year is primarily attributable to a reduction in product demand due to economic
uncertainties compounded by the events of September 11, 2001, in the United
States.

Software license product support revenues were $506,000 and $730,000 for the
three-month periods ended September 30, 2001 and 2000, respectively, which is a
decrease of 31% compared to the same period in the prior year. The decrease is
primarily due to lower than expected software license product support renewals
related to LiveInterface and LiveModel software license products and lower
overall software license product sales in the quarter ended September 30, 2001.

Gross Margins: Gross margin, as a percentage of total revenues for the three
months ended September 30, 2001 was 14% compared to 48% in the same period in
the prior year. Consulting services margin was (6)% for the three months ended
September 30, 2001, compared to 24% in the same period in the prior year. The
decrease in consulting services margins compared to the prior year period is
primarily due the decrease in consulting revenue. The software license product
gross margin was 66% for the three months ended September 30, 2001, compared to
88% for the same prior year period. The net decrease in software license product
margins is due to the decrease in software license revenue and relatively higher
costs of license. The higher costs of license relate to fixed intangible
amortization costs and a decrease in license sales without royalty costs
compared to license sales with royalty costs. Software license product support
margin was 81% for the three months ended September 30, 2001 compared to 86% for



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the same prior year period. The decrease in the current quarter over the prior
year quarter is primarily due to decreased product support revenue.

Research and Development (R&D): R&D expenses increased $132,000 during the three
months ended September 30, 2001 from the same prior year period. The increase is
primarily due to the increased costs associated with the rollout of new software
products in this first quarter. R&D expenses, as a percentage of total revenues
for the three months ended September 30, 2001 were 21% compared to 11% in the
same prior year period. This increase as a percentage of revenues is primarily
the result of the decrease in revenues for the three month period ended
September 30, 2001 compared to the same period of the prior year.

Marketing, General and Administrative: Marketing, general and administrative
expenses decreased $327,000 during the three months ended September 30, 2001
compared to the same prior year period. The decrease is primarily due to
decreased recruiting and bonus expenses in the sales and administrative
departments.

Other Income and Expense: Other income and expense, net, which includes interest
income and expense, increased $73,000 for the three months ended September 30,
2001 compared with the same period in the prior year. The net increase is
primarily due to the net of forgiveness of accrued third party royalties,
decreased interest expense from bank borrowings and losses related to foreign
currency exchange.

Provision for Income Taxes: The provision for income taxes increased $8,000 for
the three months ended September 30, 2001 compared with the same period in the
prior year. The taxes are primarily related to state income taxes.

Net Loss Per Common Share. Basic and diluted net loss per common share for the
quarter ended September 30, 2001 was $(0.17), compared with $(0.07) for the same
period in 2000. The increased net loss was primarily the result of decreased
revenues.

BOOKINGS AND BACKLOG

CRM bookings were $1.4 million and $2.1 million for the three months ended
September 30, 2001 and 2000, respectively, Bookings were derived primarily from
CRM consulting services to large commercial companies. At the end of the first
quarter of fiscal 2001 and 2000, backlog stood at $1.7 million and $4.2 million,
respectively. The Company's bookings and backlog are largely dependent upon
continued business related to CRM consulting solutions.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001, cash, cash equivalents and short-term investments were
$968,000 compared to $2,113,000 at June 30, 2000.

Cash used in operations was $1,980,000 during the three months ended September
30, 200, compared to $1,936,000 in the same period of the prior year. The
increase in cash used in operations is primarily due to the net of a $2.1
million increase in net loss and a decrease in deferred revenue of $391,000,
offset by a decrease of $2.3 million of accounts receivable during the period.

Cash used by investing activities was $28,000 in the three months ended
September 30, 2001 compared to $13,000 in the same period the prior year. The
increase in cash used in investing activities is primarily due to the purchase
of computer software.

Cash provided by financing activities was $337,000 for the three months ended
September 30, 2001 compared to $1,822,000 in the same period in the prior year.
The decrease in cash provided by financing activities was primarily due to
repayments under the bank credit line and a decrease in proceeds from the sale
of common stock, which was offset by increased cash provided by short-term notes
payable.

In September 2000, the Company issued 1.0 million shares of common stock at
$1.00 per share in a private placement. The investors received warrants to
purchase common stock equal to 25% of the number of common shares purchased.
Warrants were issued to purchase 250,000 shares



                                       13
<PAGE>

of common stock at $2.00 per share, and the warrants expire in 2005. These
warrants remain outstanding at September 30, 2001.

The Company's available cash resources at September 30, 2001 include $968,000 in
cash and cash equivalents, $0.1 million available under its bank credit facility
and $0.8 million available under its $1.9 million promissory notes. The bank
credit facility consists of the lesser of $2.0 million or 75% of eligible
accounts receivable balances at any point in time. At September 30, 2001, the
Company owed $1.2 million on the bank credit facility and had an additional $0.1
million that could have been borrowed. The initial term of this facility was two
years, and it was renewed on July 31, 2001 for one additional year. The credit
facility is secured by essentially all of the assets of the Company. Management
believes that cash on hand together with cash generated from operations and
available funds under the promissory notes and potential equity funding, will be
sufficient to fund the Company's cash requirements through at least June 30,
2002. However, if anticipated revenues and continued cost containment measures
for fiscal 2002 do not meet management's expectations, and additional financing
described above the amounts secured are not available, management has the
ability and intent to further reduce certain planned expenditures and continue
to curtail operations significantly.

PURCHASED INTANGIBLE ASSETS

On January 23, 1998, the Company purchased the rights to the Universal Portable
Interface ("UPI") technology. This technology consisted of the intellectual and
proprietary property comprised of UPI and included all related copyrights,
processes, designs, formulas, inventions, trade secrets, know-how, technology,
methodologies, principles of operations flow charts, schematics, codes and
databases.

At the time of acquisition, revenues for developed and core technology were
estimated for the remainder of fiscal 1998 through fiscal 2004. As of the end of
the first quarter of fiscal 2002, the Company believes that total revenues over
the life of the product will not differ to such an extent as to require a
devaluation of the current carrying value of the intangible assets. It should be
noted that while revenues allocated to the developed and in-process technologies
are expected to individually phase down over time (consistent with normal
software product life cycles), the composite revenue attributed to all
applications integration products and technologies (including future follow-on
technologies) is planned to continue growing in the foreseeable future.



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<PAGE>

PART II.       OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS:

The Company is required to adjust the conversion price of the Series C
convertible preferred stock and issue additional warrants as a result of a reset
provision in the Series C preferred stock purchase agreement. The reset
provision specifies that if the original conversion price ($1.125) is higher
than the average closing bid price per share of the Company's common stock for
the five trading days immediately preceding the six-month anniversary of the
sale of the first share of Series C convertible preferred stock (the "average
closing bid price"), the original conversion price is reset. The reset price is
designated as the higher of $0.84 or the average closing bid price per share of
the Company's common stock for the five trading days immediately preceding the
six-month anniversary of the sale of the first share of Series C convertible
preferred stock, not to exceed $1.125. The six-month anniversary date was
September 5, 2001 and the five trading days preceding the anniversary were
August 28, 2001 thru August 31, 2001 and September 4, 2001. The average closing
bid price for the aforementioned period was $0.71. Therefore, the conversion
price will be reset to $0.84 and would result in the issuance of an additional
1,471,747 shares of common stock if fully converted. In addition, Series C
convertible preferred stockholders shall receive warrants to purchase an
additional 367,937 shares of common stock at $2.00 per share. In accordance with
NASD Rule 4350(i)(1)(D), since the Series C Preferred were issued in a private
financing with a conversion price which was below the market price of the Common
Stock at the time, approval of the Company's Stockholders is required in order
to permit the Additional Issuance (and any additional securities that may become
issuable pursuant to the respective rights, preferences and privileges of the
Series C Preferred and Warrants) to constitute more than twenty percent of the
shares outstanding immediately prior to the Financing in order to comply with
NASD corporate governance requirements. The Conversion Shares underlying the
Issued Series C and the Issued Warrants constituted less than twenty percent of
the shares outstanding immediately prior to the Financing and, therefore, no
stockholder vote was required. However, due to the reset, the total number of
shares underlying Series C preferred and warrants would constitute more than
twenty percent of the shares outstanding prior to the Financing. Thus, the
Company is seeking stockholder approval of the Financing prior and as a
condition to its implementation of the reset provision at the next annual
meeting of Stockholders to be held on December 4, 2001.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a)   Reports on Form 8-K

        No reports have been filed for the quarter ended September 30, 2001.



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                                    SIGNATURE

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

                                    INTELLICORP, INC.


                                    /s/ Jerome F. Klajbor
                                    ----------------------
                                    Jerome F. Klajbor
                                    Chief Financial Officer

Date: November 14, 2001



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