<PAGE>

================================================================================


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


                                    FORM 10-Q


   [X]    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934 for the quarterly period ended January 31, 2002.


   [ ]    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: 0-25185


                      MOMENTUM BUSINESS APPLICATIONS, INC.
             (Exact name of registrant as specified in its charter)


                   DELAWARE                                      94-3313175
        (State or other jurisdiction of                       (I.R.S. Employer
        Incorporation or organization)                       Identification No.)

4301 Hacienda Drive, Suite 410, Pleasanton, CA                      94588
   (Address of principal executive officers)                      (Zip Code)


                    Registrant's telephone number, including area code:
                                 (925) 469-6621


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                Yes [X]   No [ ]

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


<TABLE>
<CAPTION>
================================================================================
                  CLASS                             OUTSTANDING AT MARCH 1, 2002
--------------------------------------------------------------------------------
<S>                                                           <C>
  Class A Common Stock, par value $.001                       4,779,310
  Class B Common Stock, par value $.001                           1,000
================================================================================
</TABLE>


================================================================================




<PAGE>


                      MOMENTUM BUSINESS APPLICATIONS, INC.

                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                           PAGE NO.
                                                                                           --------
<S>                                                                                        <C>
PART I         FINANCIAL INFORMATION

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

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

               ITEM 3 -- Quantitative and Qualitative Disclosure about Market Risk            13

PART II        OTHER INFORMATION

               ITEM 1 --  Legal Proceedings                                                   14

               ITEM 2 --  Changes in Securities and Use of Proceeds                           14

               ITEM 3 --  Defaults upon Senior Securities                                     14

               ITEM 4 --  Submission of Matters to a Vote of Security Holders                 14

               ITEM 5 --  Other Information                                                   14

               ITEM 6 --  Exhibits and Reports on Form 8-K                                    14

SIGNATURES                                                                                    15
</TABLE>




                                       2
<PAGE>

                         PART 1 -- FINANCIAL INFORMATION

                         ITEM 1 -- FINANCIAL STATEMENTS

                      MOMENTUM BUSINESS APPLICATIONS, INC.

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

                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)
               (IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                             JANUARY 31,      APRIL 30,
                                                                                2002            2001
                                                                             -----------      ---------
<S>                                                                           <C>             <C>

                                     ASSETS

 Current assets:
   Cash and cash equivalents ..............................................   $   7,767       $  63,283
   Short term investments .................................................       9,227          13,768
   Accounts receivable from PeopleSoft ....................................          --           1,973
                                                                              ---------       ---------
           Total current assets ...........................................      16,994          79,024
 Long term investments ....................................................        --            10,313
 Capitalized software and purchased technology, net .......................       9,433          12,478
                                                                              ---------       ---------
                                                                              $  26,427       $ 101,815
                                                                              =========       =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities:
   Payable to PeopleSoft ..................................................   $   5,275       $   8,946
   Accounts payable .......................................................          15             283
   Dividend payable .......................................................       8,844              --
   Accrued liabilities ....................................................         147             333
   Accrued compensation and related expenses ..............................         257               8
                                                                              ---------       ---------
           Total current liabilities ......................................      14,538           9,570
 Stockholders' equity:
   Class A Common stock, $0.001 par value, 10,000,000 shares authorized,
      4,779,310 issued and outstanding ....................................           5               5
   Class B Common stock, $0.001 par value, 1,000 shares authorized,
      issued and outstanding ..............................................          --              --
   Additional paid-in capital .............................................     242,891         249,996
   Accumulated other comprehensive income .................................          19             156
   Accumulated deficit ....................................................    (231,026)       (157,912)
                                                                              ---------       ---------
                                                                                 11,889          92,245
                                                                              ---------       ---------
                                                                              $  26,427       $ 101,815
                                                                              =========       =========

</TABLE>


             See notes to condensed unaudited financial statements.




                                       3
<PAGE>

                      MOMENTUM BUSINESS APPLICATIONS, INC.

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

                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                        JANUARY 31,                JANUARY 31,
                                                                  ----------------------      ----------------------
                                                                    2002          2001          2002          2001
                                                                  --------      --------      --------      --------
<S>                                                               <C>           <C>           <C>           <C>
Revenues from PeopleSoft .......................................  $    756      $  2,611      $  1,713      $  4,339
Costs and expenses primarily from PeopleSoft:
  Cost of revenues .............................................     1,243           307         3,660           531
  Product development ..........................................    17,685        31,388        69,693        98,529
  General and administrative ...................................     1,070           339         3,035           894
                                                                  --------      --------      --------      --------
          Total costs and expenses .............................    19,998        32,034        76,388        99,954
                                                                  --------      --------      --------      --------
Operating loss .................................................   (19,242)      (29,423)      (74,675)      (95,615)
Interest income ................................................       165         2,386         1,562         8,582
                                                                  --------      --------      --------      --------
Net loss before income taxes ...................................   (19,077)      (27,037)      (73,113)      (87,033)
Provision for income taxes .....................................        --            --             1             1
                                                                  --------      --------      --------      --------
Net loss .......................................................  $(19,077)     $(27,037)     $(73,114)     $(87,034)
                                                                  ========      ========      ========      ========
Basic and diluted loss per share ...............................  $  (4.06)     $  (5.76)     $ (15.57)     $ (18.54)
                                                                  ========      ========      ========      ========
Shares used in basic and diluted loss per share computation ....     4,697         4,695         4,695         4,695
                                                                  ========      ========      ========      ========
</TABLE>


             See notes to condensed unaudited financial statements.




                                       4
<PAGE>

                      MOMENTUM BUSINESS APPLICATIONS, INC.

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

                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                          NINE MONTHS ENDED
                                                              JANUARY 31,
                                                      -------------------------
                                                         2002            2001
                                                      ---------       ---------
<S>                                                   <C>             <C>
OPERATING ACTIVITIES
Net loss ..........................................   $ (73,114)      $ (87,034)
Amortization of capitalized software ..............       3,660             531
Non-cash stock compensation .......................       1,739              --
Adjustments to reconcile net loss to net cash
  provided (used) by operating activities:
  Changes in operating assets and liabilities:
     Accounts receivable from PeopleSoft ..........       1,973          (2,048)
     Short term investments .......................       4,404              --
     Payable to PeopleSoft ........................      (3,671)        (12,531)
     Accounts payable .............................        (268)            (33)
     Accrued liabilities ..........................        (186)            (31)
     Accrued compensation and related expenses ....         249              (3)
                                                      ---------       ---------
Net cash used by operating activities .............     (65,214)       (101,149)
INVESTING ACTIVITIES
Net maturities of available-for-sale investments ..      10,313              --
Capitalized software development costs ............        (615)         (3,834)
Purchase of developed technology ..................          --          (9,164)
                                                      ---------       ---------
Net cash provided (used) by investing activities ..       9,698         (12,998)
                                                      ---------       ---------
Net decrease in cash and cash equivalents .........     (55,516)       (114,147)
Cash and cash equivalents at beginning of period ..      63,283         228,218
                                                      ---------       ---------
Cash and cash equivalents at end of period ........   $   7,767       $ 114,071
                                                      =========       =========

SUPPLEMENTAL DISCLOSURE
Cash dividend payable on common stock .............   $   8,844       $      --
                                                      =========       =========
</TABLE>


             See notes to condensed unaudited financial statements.




                                       5
<PAGE>

                      MOMENTUM BUSINESS APPLICATIONS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                JANUARY 31, 2002
                                   (UNAUDITED)


1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

   Momentum Business Applications, Inc., (the "Company" or "Momentum") was
incorporated in Delaware on November 9, 1998 and commenced operations on January
4, 1999. Momentum was formed and has organized its business in one operating
segment for the purpose of selecting and developing software application
products and commercializing such products (the "Momentum Products"),
historically and most likely in the future, through licensing to PeopleSoft,
Inc., ("PeopleSoft"). Since its formation, Momentum's principal activity has
been conducting product development under its agreements with PeopleSoft.

   The information at January 31, 2002 and for the three and nine months ended
January 31, 2002 and 2001, is unaudited, and includes all adjustments
(consisting only of normal recurring adjustments) that the management of
Momentum believes necessary for fair presentation of the results for the periods
presented. Interim results are not necessarily indicative of results to be
expected for the full year. The balance sheet for April 30, 2001 was derived
from the audited balance sheet. The condensed financial statements should be
read in conjunction with the audited financial statements and accompanying notes
for the fiscal year ended April 30, 2001 included in Momentum's 2001 Annual
Report on Form 10-K.

Accounting for Revenues and Expenses

   Through January 31, 2002, Momentum's revenue consisted entirely of royalty
revenue derived from PeopleSoft's sales and licensing of certain software
products developed under the Development and License Agreement (the "Development
Agreement") between Momentum and PeopleSoft. Royalty and other product revenue
are recorded as earned and reported by PeopleSoft to Momentum on a calendar
quarterly basis. Development costs paid to PeopleSoft under a software
development agreement are recorded as research and development expenses when
incurred except for amounts capitalized pursuant to SFAS 86. Amounts paid to
PeopleSoft under a services agreement are recorded as administrative expenses
when incurred. (See Note 3 for a description of the agreements between Momentum
and PeopleSoft).

Investment Risk

   Momentum invests excess cash in money market funds and financial instruments
with financial institutions with strong credit ratings. These funds and
investments typically bear minimal risk. The Company has not experienced any
losses on its investments due to institutional failure or bankruptcy.

Use of estimates

   The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

Cash equivalents

   Momentum considers all highly liquid investments with original maturities of
three months or less to be cash equivalents. At January 31, 2002, cash and cash
equivalents (approximately $7.8 million) consisted primarily of taxable
investments in money market funds at two financial institutions. The Company's
aggregate cash, cash equivalents and investments balance as of January 31, 2002
was approximately $17.0 million of which $7.9 million is required to be used
under the Development Agreement (see Note 3).

Accounts Receivable

   Accounts receivable are comprised of billed receivables arising from
recognized royalty revenue, entirely from PeopleSoft. The Company does not
maintain an allowance for uncollectible accounts receivable since it does not
expect to experience losses that could have a material impact on the Company's
future results of operations. Upon collection of the receivables, these funds
will not be restricted.




                                       6
<PAGE>

Capitalized Software

   Momentum accounts for its purchases of software from third parties and
internal software development costs of computer software to be sold, leased or
otherwise marketed under Statement of Financial Accounting Standard No. 86
("SFAS 86"). SFAS 86, "Accounting for Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed" establishes standards of financial accounting and
reporting for the costs of computer software to be sold, leased, or otherwise
marketed as a separate product or as part of a product or process, whether
internally developed and produced or purchased. It identifies the costs incurred
in the process of creating a software product that are research and development
costs and those that are production costs to be capitalized, and it specifies
amortization, disclosure, and other requirements. The Company capitalizes
software costs if the related software product under development has reached
technological feasibility or if there are alternative future uses for the
software product provided that capitalized amounts will be realized over a
period not exceeding five years. Technological feasibility is attained when
software products reach Beta release. Costs incurred prior to the establishment
of technological feasibility are charged to product development expense. The
establishment of technological feasibility and the ongoing assessment of
recoverability of capitalized software development costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, anticipated future revenues, estimated economic life and changes
in software and hardware technologies. Upon the general release of the software
product to customers, capitalization ceases and such costs are amortized (using
the straight-line method) on a product-by-product basis over the estimated life,
which is generally three years. All product development expenditures are charged
to product development expense in the period incurred.

   In June 2000, Momentum purchased developed technology (the "Assets") from
PeopleSoft. The purchased Assets are being utilized by the Company in advancing
the development of certain Momentum Products including the Analytic Applications
Suite and Budgets for Education and Government. The total purchase price is
comprised of an initial payment of approximately $8.6 million plus earn-out
payments of approximately $1.1 million. The cost of this purchased technology is
being amortized to cost of revenue over its estimated useful life of three
years.

Income Taxes

   Momentum accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". This
statement provides for a liability approach under which deferred income taxes
are provided based upon enacted tax laws and rates applicable to the periods in
which the taxes become payable. The Company expects to have a net loss for
fiscal year 2002, and thus no taxes, other than the California minimum tax, were
provided for in the nine month period ended January 31, 2002.

Common Stock

   Momentum's Articles of Incorporation provide for two classes of common stock,
Class A Common Stock and Class B Common Stock. In December 1998, PeopleSoft
declared a stock dividend of one share of Momentum's Class A Common Stock for
every fifty shares of PeopleSoft stock held as of December 31, 1998, resulting
in the distribution of approximately 4.7 million shares. The shares of Momentum
Common Stock held by PeopleSoft on the record date were converted into 1,000
shares of Momentum Class B Common Stock. The holder or holders of the Momentum
Class B Common Stock are entitled to vote separately as a class with respect to
any merger or liquidation of Momentum, the sale, lease, exchange, transfer or
other disposition of any substantial asset of Momentum, and any amendments to
the Certificate of Incorporation of Momentum that would alter the Purchase
Option, Momentum's authorized capitalization, or the provisions of the
Certificate of Incorporation governing Momentum's Board of Directors.
Accordingly, PeopleSoft could preclude the holders of the Momentum Class A
Common Stock from taking any of the foregoing actions at any time prior to the
expiration of the Purchase Option. Prior to the exercise of the Purchase Option,
the holders of the Momentum Common B Stock, voting as a separate class, are
entitled to elect one director, and the holder or holders of the Momentum Class
A Common Stock are entitled to elect up to four directors. Upon exercise of the
Purchase Option, PeopleSoft, as the sole holder of the Momentum Class B Common
Stock, has the right to elect all of the Momentum directors and to remove
incumbent directors with or without cause. (See Note 3 -- "Purchase Option"). On
all other matters, holders of the Momentum Class A Common Stock and Momentum
Class B Common Stock are entitled to vote together as a single class. Holders of
Momentum Common Stock are allowed one vote for each share of Momentum Common
Stock held by them. Subject to compliance with securities laws, the Momentum
Class B Common Stock is freely transferable.




                                       7
<PAGE>

2. LOSS PER SHARE DATA

   The Company's loss per share amounts are calculated in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). SFAS 128 requires calculation of both a basic loss per share and a
diluted loss per share. The basic loss per share excludes the dilutive effect of
common stock equivalents such as stock options and warrants, while the diluted
loss per share includes such dilutive effects. On January 31, 2002, the
Directors and Officer of Momentum, holding options on 208,333 shares of Class A
common stock, exercised 100% of their outstanding stock options under a net
exercise provision, resulting in the issuance of 85,484 shares. Since these
shares were outstanding only one day during the quarter, they did not factor
materially into the basic loss per share calculation.


3. ARRANGEMENTS WITH PEOPLESOFT

In late December 1998, PeopleSoft contributed $250 million in cash to Momentum.
On December 31, 1998, PeopleSoft transferred 4,693,826 shares, representing all
of the outstanding shares, of Momentum Class A Common Stock (the "Momentum
Shares"), to a custodian who distributed the shares to the holders of PeopleSoft
common stock in mid January 1999 (the "Distribution"). Momentum Shares are
traded on the Nasdaq National Market under the symbol "MMTM". PeopleSoft
continues to hold all 1,000 shares of the Momentum Class B Common Stock. In
connection with PeopleSoft's contribution to Momentum and the distribution of
Momentum Shares, Momentum and PeopleSoft entered into a number of agreements,
including a Development Agreement, Marketing and Distribution Agreement and a
Services Agreement. On July 23, 2001, Momentum and PeopleSoft entered into the
Business Agreement Amendment, which amended the terms of the Development
Agreement and the Marketing Agreement, and changed certain provisions of
Momentum's Restated Certificate of Incorporation. The primary purpose of the
Business Agreement Amendment was to restructure the royalty payments PeopleSoft
must make to Momentum to license Momentum Products, and to amend the Purchase
Option. The agreements, as amended, are discussed below.

   Momentum and PeopleSoft are parties to a Development Agreement pursuant to
which PeopleSoft conducts product development and related activities on behalf
of Momentum under work plans and cost estimates that have been proposed by
PeopleSoft and approved by Momentum. Momentum is required to utilize the cash
initially contributed to Momentum by PeopleSoft plus interest earned thereon,
less administrative expenses and reserves of up to $2 million (the "Available
Funds") to conduct activities under the Development Agreement. The products to
be developed under the Development Agreement include electronic business
applications ("e-commerce"), analytic applications, and industry specific
applications. PeopleSoft has granted to Momentum a perpetual, worldwide,
non-exclusive license to use certain of PeopleSoft's proprietary technology
solely for internal use in conjunction with the Development Agreement. During
the development period (the "Pre-Release Term), PeopleSoft has an exclusive
right to market, distribute and license pre-release versions of Momentum
products. In September 2001, PeopleSoft and Momentum executed an agreement which
clarified the parties' respective rights and obligations related to product
development projects that may still be in process at such time when Momentum has
exhausted its Available Funds. Under this clarification, Momentum will have a
regular intellectual property interest in, and receive the full contractual
product payment rate, for any products created out of Momentum projects that it
is unable to complete due to lack of Available Funds. PeopleSoft does not
however, have any legal obligation to complete any projects in process that
cannot be completed by Momentum due to a lack of Available Funds.

   Under the terms of the Marketing and Distribution Agreement entered into by
Momentum and PeopleSoft, Momentum has granted PeopleSoft an option to acquire a
license to each product developed under the Development Agreement. The license
option for any such Momentum product is exercisable on a world-wide, exclusive
basis at any time from the date Momentum agrees to develop the product until the
earlier of a) thirty days after the product becomes Generally Available (as
defined in the agreements); or b) the expiration of the purchase option. The
license option will expire, to the extent not previously exercised, 30 days
after the expiration of PeopleSoft's option to purchase all of the outstanding
Momentum Shares as described below. If and to the extent the license option is
exercised as to any Momentum product, PeopleSoft will acquire a perpetual,
exclusive license (with the right to sublicense) to develop, make, have made and
use the licensed product, and to sell and have sold the licensed product. Upon
exercising the license option, PeopleSoft will assume responsibility for all
ongoing development and sustaining engineering expenses for the related product.
Under the License Agreement for each licensed product, PeopleSoft will make
payments to Momentum with respect to the licensed product based on the quarterly
net sales of the licensed product achieved by PeopleSoft and its sublicensees,
distributors and marketing partners. The royalty rate for pre-release products
is a flat one percent of net license fees. As of January 31, 2001, PeopleSoft
had exercised its license option on six products. For these six Momentum
products, the product payment rate was determined using a formula which takes
the sum of one percent plus an additional 0.1 percent for each full $1 million
of development costs of the licensed product that have been paid by Momentum, up
to a maximum 6 percent royalty. For all other Momentum products, the product
payment rate will be a flat 10% on net license fees and any related maintenance
fees beginning on the earlier to occur of i) July 1, 2002 or ii) on the 60th day
after Momentum provides PeopleSoft with a statement that, as of the end of any
calendar




                                       8
<PAGE>

month, there are less than $2.5 million of Available Funds remaining. PeopleSoft
has the right to buyout Momentum's right to receive payments for individual
licensed products in accordance with a formula set forth in the Marketing and
Distribution Agreement. Such right is generally available on the first
anniversary following the commencement of product payments on each licensed
product.

   Under the terms of the Services Agreement, PeopleSoft provides office
facilities for and performs accounting, finance, human resources, information
systems and legal services on behalf of, Momentum. PeopleSoft receives $100,000
per quarter as compensation for the provision of these services.

   Pursuant to Momentum's Restated Certificate of Incorporation, PeopleSoft has
the right to purchase all (but not less than all) of the Momentum Shares (the
"Purchase Option"). On January 29, 2002, PeopleSoft exercised its option to
purchase one hundred percent of the outstanding Class A Common Stock of
Momentum. Momentum has provided to PeopleSoft the requisite Status Statement,
and PeopleSoft has confirmed that the Final Purchase Option Exercise Price is
$90.0 million in cash. PeopleSoft will conduct the redemption of the Momentum
shares, and distribute the purchase price to shareholders via Equiserve, the
Company's transfer agent. The closing of the transaction is expected to take
place on or before March 31, 2002 subject to the receipt of regulatory approval.

   The Purchase Option was exercisable by written notice to Momentum at any time
until December 31, 2002, provided that such date was extended for successive six
month periods if, as of any June 30 or December 31 beginning with June 30, 2002,
Momentum has not paid (or accrued expenses) for all but $15 million of Available
Funds as of such date. In any event, the Purchase Option would be terminated on
the 60th day after Momentum provided PeopleSoft with a statement that, as of the
end of any calendar month, there were less than $2.5 million of Available Funds
remaining. The Business Agreement Amendment modified the provisions of the first
and fourth formulas of the purchase option.

   Except in instances in which Momentum's liabilities exceeded its assets, the
purchase option exercise price available to PeopleSoft was the greatest of:

(1) 15 times the sum of (i) the actual worldwide payments made by or due from
    PeopleSoft to Momentum with respect to all Momentum Products and Developed
    Technology for the four calendar quarters immediately preceding the quarter
    in which the Purchase Option is exercised (the "Base Period"); plus (ii)
    such payments as would have been made during the Base Period by, or due
    from, PeopleSoft to Momentum if PeopleSoft had not previously exercised its
    Product Payment Buy-Out Option with respect to any Momentum Product;

    minus any amounts previously paid to exercise any Product Payment Buy-Out
    Option for such Momentum Product;

(2) the fair market value of six hundred thousand (600,000) shares of PeopleSoft
    Common Stock, adjusted in the event of a stock split or dividend, as of the
    date PeopleSoft exercises its Purchase Option;

(3) three hundred million dollars ($300,000,000) plus any additional funds
    contributed to Momentum by PeopleSoft, less the aggregate of all amounts
    paid or incurred to develop the Momentum Products or pursuant to the
    Services Agreement as of the date the Purchase Option is exercised; or

(4) a flat amount of either i) $90 million provided the option is exercised no
    later than February 15, 2002, ii) $92.5 million if exercised on or between
    February 16, 2002 and May 15, 2002, or iii) $95 million if exercised on or
    after May 16, 2002.

   In the event Momentum's liabilities (other than liabilities under the
Development Agreement, the Marketing Agreement and the Services Agreement)
exceeded Momentum's assets, the Purchase Option Exercise Price described above
would be reduced by the amount such liabilities at the time of exercise were in
excess of Momentum's cash and cash equivalents, and short term and long term
investments. As of the time of exercise, Momentum's liabilities did not exceed
its assets. The Purchase Option exercise price is payable in cash.




                                       9
<PAGE>

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

   The Discussion and Analysis of Financial Condition and Results of Operations
contains descriptions of the Company's expectations regarding future trends
affecting its business. These forward-looking statements and other
forward-looking statements made elsewhere in this document are made in reliance
upon safe harbor provisions of the Private Securities Litigation Reform Act of
1995. The following discussion sets forth certain factors the Company believes
could cause actual results to differ materially from those contemplated by the
forward-looking statements. Forward-looking statements include, but are not
limited to, those items identified with a footnote (1) symbol. The Company
undertakes no obligation to update the information contained herein.






                                       10
<PAGE>

Results of Operations

   Revenues, consisting entirely of royalty revenue from PeopleSoft, was
approximately $0.8 million and $1.7 million respectively for the three and nine
month periods ended January 31, 2002 compared with approximately $2.6 million
and $4.3 million respectively for the three and nine month periods ended January
31, 2001. Royalty revenue is derived from PeopleSoft's end user licensing and
shipment of certain software products developed under the Development Agreement
and Marketing Agreement. Momentum initially realized royalty revenue in the
third fiscal quarter of 2000. Upon the release of PeopleSoft 8 in the second
fiscal quarter of 2001, the volume of shipments by PeopleSoft of Momentum
products increased significantly. Royalties for the third fiscal quarter of 2002
were earned on over 50 products. However, the royalties for the current quarter
were computed based on the recently executed Business Agreement Amendment
between Momentum and PeopleSoft which decreased the Pre-Release Royalty for all
Momentum Products to one percent (1%) of Net License Fees from six percent (6%)
of Net Revenues. Accordingly, the royalties for the fiscal 2002 period reflect
the lower pre-release royalty rate of 1% on Momentum Products. Had the royalties
been computed under the original agreements and the previously established
pre-release royalty rate of 6%, total revenues from royalties for the quarter
ended January 31, 2002 would have been approximately $4.0 million. Partially
offsetting this rate decrease was a 52% increase in Net License Fees related to
Momentum Products for Momentum's third fiscal quarter of 2002 compared to the
same quarter of the prior fiscal year. There can be no assurance that Momentum
will continue to realize significant royalty revenues from its development
efforts(1).

   Cost of revenues consists entirely of amortization of capitalized development
costs of software developed for sale under SFAS 86 and purchased developed
technology. (See Note 1 --"Capitalized Software"). Cost of revenues was
approximately $1.2 million and $3.7 million for the three and nine month periods
ended January 31, 2002, respectively, compared to approximately $0.3 million and
$0.5 million for the same respective periods ended January 31, 2001.

   The Company incurred development expenses of approximately $17.7 million and
$69.7 million respectively for the three and nine month periods ended January
31, 2002 compared with approximately $31.4 million and $98.5 million
respectively for the three and nine month periods ended January 31, 2001. These
expenses were incurred pursuant to the Development Agreement. Under this
agreement, Momentum can engage PeopleSoft to perform research and development
work, and PeopleSoft will charge Momentum 110% of its fully burdened cost of
performing such activities. Fully burdened costs include salary, benefits and
overhead allocations, but do not include certain other costs, such as the human
resources costs associated with recruiting development personnel and other
indirect costs and expenses of establishing and maintaining a development
environment. Momentum also incurs certain direct costs associated with
developing its products that may include payments to other third parties for
development, royalties, or costs associated with acquiring or investing in
complementary companies, products or technology. The decrease in development
expenditures in the current fiscal year was driven by three factors, including
i) the absence in fiscal 2002 of certain expenses associated with product
translation and non-recurring release management and testing activities which
were incurred in advance of PeopleSoft 8 initial shipments of Momentum Products
during third calendar quarter of 2000, ii) the completion of certain projects in
the fourth calendar quarter of 2000, and iii) the reduction of staffing and the
associated expense run rates on several previously committed projects that are
at or nearing completion. Although the quarterly rate of development
expenditures is expected to continue to decline, for the foreseeable future,
Momentum expects that its development expenditures will continue to
significantly exceed interest and royalty income, resulting in ongoing net
operating losses(1).

   General and administrative expenses were approximately $1.1 million and $3.0
million for the three and nine month periods ended January 31, 2002,
respectively, compared to approximately $0.3 million and $0.9 million for the
same respective periods ended January 31, 2001. The expenses for the three and
nine month periods ended January 31, 2002 include non-cash charges of
approximately $0.5 million and $1.7 million respectively, related to variable
plan accounting for all of the outstanding stock options as a result of a recent
change made to the 1999 Incentive Stock Plan to incorporate a net exercise
feature. Under the Services Agreement, PeopleSoft provides Momentum certain
administrative services including accounting, finance, human resources and legal
services, and maintains office facilities for Momentum. Momentum pays PeopleSoft
a fee of $100,000 per quarter for such services. The amount of this fee was
determined using PeopleSoft's internal projections of the incremental costs that
it would incur to provide these services to Momentum. Momentum is required to
separately pay for direct costs such as professional services, insurance, taxes,
director and officer compensation, listing fees and regulatory fees. It is
anticipated that general and administrative expenses, exclusive of non-cash
compensation charges, if any, will remain at approximately current levels during
the remainder of Fiscal 2002(1).

   Interest income earned on invested funds was approximately $0.2 million and
$1.6 million respectively for the three and nine month periods ended January 31,
2002 compared with approximately $2.4 million and $8.6 million respectively for
the three and nine month periods ended January 31, 2001. The decline in interest
and investment income was primarily due to the significant reduction in the cash
balances of Momentum over the past year, a direct consequence of the aggressive
product development spending over the same period. As Momentum's Available Funds
are used under the Development Agreement and the Services Agreement, lower cash

----------
(1) Forward-Looking Statement.


                                       11
<PAGE>


balances will be available for investment. Furthermore, due to the relatively
short maturities of Momentum's cash investments and the declining interest rate
environment, the rate of interest earnings on cash investments will continue to
decline in the near term. As a consequence of these two factors, interest income
is expected to continue to decrease(1).

   The results of operations of Momentum currently reflect primarily development
expenses related to development of Momentum products and interest and investment
income earned on the funds contributed by PeopleSoft. Momentum's net loss was
approximately ($19.1) million or ($4.06) per share for the quarter ended January
31, 2002 as compared with a net loss of approximately ($27.0) million or ($5.76)
per share for the quarter ended January 31, 2001. The Company is expected to
record additional net losses in the fourth quarter of fiscal 2002, as product
development expenses under its agreements with PeopleSoft and amortization of
capitalized software are expected to continue to exceed income from royalties
and investments(1).

Liquidity and Capital Resources

   Momentum was formed on November 9, 1998. PeopleSoft contributed a total of
$250 million in cash to Momentum in late December 1998 prior to the
Distribution. PeopleSoft's contribution (together with interest earned thereon)
is expected to fund research and development activities for approximately three
years from Momentum's inception(1). Including such interest income earned from
inception through January 31, 2002, Momentum's gross Available Funds (before
deducting development and administrative expenses incurred from inception to the
same date) totaled $278.2 million. Momentum's funds have been, and are expected
to be used in the future, primarily to fund activities conducted under the
Development Agreement with PeopleSoft. Momentum has previously, and expects to
continue to engage PeopleSoft or other third parties to perform the development
activities on Momentum's behalf. Momentum is not expected to require significant
facilities or capital equipment of its own during the term of the Development
Agreement. At January 31, 2002, cash, cash equivalents and investments were
approximately $17.0 million of which $7.9 million are restricted for use under
the Development Agreement and consist primarily of investments in money market
funds with maturities of three months or less (See Note 3 -- "Development
Agreement").

   In addition to the Available Funds, Momentum generates additional funds
through successfully licensing its products to PeopleSoft or other parties.
Momentum also has the option to obtain additional financing through either debt
or equity financing, as long as the terms of such financings do not alter
PeopleSoft's rights as a Class B Common Stock holder. Funds raised through
licensing of products or financings are not considered Available Funds and thus
their use by Momentum is not restricted by PeopleSoft. During the quarter ended
January 31, 2002, the Company earned approximately $0.8 million in royalties
from the licensing of products developed under the Development Agreement.

   Since the spin-out of Momentum, it has not attempted to raise any additional
capital. Furthermore, there can be no assurances, particularly given the
existence of the Development Agreement, the Marketing Agreement and PeopleSoft's
Purchase Option, that Momentum would be able to raise any additional capital if
it were deemed desirable. Such additional capital, if raised, would have reduced
the per share proceeds available to holders of the Momentum Class A Common Stock
once PeopleSoft exercised the Purchase Option. (See Note 3 -- "Purchase
Option"). On January 29, 2002, PeopleSoft exercised its option to purchase one
hundred percent of the outstanding Class A Common Stock of Momentum for $90.0
million in cash. The transaction is expected to be completed no later than March
31, 2002(1).

   During the quarter ending January 31, 2002, Momentum declared a one-time
special cash dividend of $1.85 per share on its Class A and Class B Common
Stock. Shareholders of record at the close of business on February 12, 2002 were
paid this dividend on February 22, 2002. The funds used for the dividend
distribution have been accumulated by way of royalty payments from PeopleSoft
and interest earned thereon and include the $8.2 million of unrestricted funds
reported as of October 31, 2001 as well as royalties of approximately $0.8
million that were recently received by Momentum for the third fiscal quarter.
This dividend has substantially exhausted Momentum's balance of Unrestricted
Funds as of the distribution date. Furthermore, under the Restated Certificate
of Incorporation, any future accumulation of Unrestricted Funds would accrue to
PeopleSoft under the terms of the Exercise of the Purchase Option.

   As of January 31, 2002, Momentum had committed over $270 million of the
Available Funds to various development projects as follows: i) approximately $56
million for the development of a suite of Analytic Applications and workbenches
(EPM products), ii) approximately $124 million for new eBusiness applications,
iii) approximately $72 million for new industry specific applications, and iv)
approximately $16 million for two technology development and acquisition
projects. From inception to date, Momentum has incurred approximately $271.0
million of development expenditures (including purchased technology and
capitalized software) on the above referenced projects, and has incurred
approximately $4.3 million on general and administrative expenses (excluding the
non-cash stock compensation charges discussed above). Based on the projects
committed to date and their associated current staffing levels, Momentum
presently has estimated development expenditure run rate of approximately $7.0
million from the beginning of its fourth fiscal quarter through the closing date
of the purchase transaction which is expected to be no later than March 31,
2002(1). Based on current spending projections and presently committed
projects, the Available Funds are expected to be fully exhausted by March
2002(1). Upon exhausting the Available Funds, Momentum is under no obligation,
contractual or otherwise, to continue to provide funding for any remaining
active development projects. It is presently the intention of Momentum to cease
funding any and all development projects upon exhausting its Available Funds.

----------
(1) Forward-looking Statement.




                                       12
<PAGE>


Risks and Uncertainties

   Momentum's actual results could differ materially from those anticipated in
these forward-looking statements due to certain factors. Such risks and
uncertainties include, but are not limited to the following:

   -  The closing of the purchase option exercise is conditioned upon the
      receipt of the required regulatory approvals. Failure to obtain all the
      necessary government approvals, including those required under the
      Hart-Scott-Rodino Act, could delay or even prevent the closing of this
      transaction.

   -  Momentum and PeopleSoft are parties to various agreements which limit
      Momentum's ability to take certain actions, establish alternate channels
      of distribution for its products, market its products to or through
      certain competitors of PeopleSoft, or use Available Funds for other than
      designated product development and administrative activities.
      Consequently, Momentum has few degrees of freedom with which to generate
      revenues or otherwise commercialize developed technology or products if
      the closing of the exercise of the Purchase Option is prevented by
      governmental or other third party action. The payment of the one-time
      special cash dividend on February 22, 2002 has substantially exhausted the
      balance of Momentum's Unrestricted Funds.

   -  Royalty results for the third quarter are not necessarily indicative of
      results to be expected going forward. The Business Agreement Amendment,
      including the approval by the shareholders in September, 2001 of the
      amendment to Momentum's Restated Certificate of Incorporation, will
      increase the royalty rate to 10% on both license fees and maintenance fees
      at the conclusion of the pre-release term (which by agreement will occur
      on the earlier of July 1, 2002 or the exhaustion of Momentum's Available
      Funds). Until such time, royalties during the interim pre-release periods
      will fluctuate primarily in relationship to PeopleSoft's net license fees
      earned on Momentum Products. The royalty rate applied to the majority of
      the licensing activity during the third fiscal quarter was one percent,
      which is the revised contractual rate for products licensed to customers
      prior to PeopleSoft's exercise of its license option on a product.


                     ITEM 3 -- QUANTITATIVE AND QUALITATIVE
                          DISCLOSURE ABOUT MARKET RISK

   In the normal course of business, our financial position is routinely subject
to a variety of risks, including market risk associated with interest rate
movement. We regularly assess these risks and have established policies and
business practices to protect against these and other exposures. As a result, we
do not anticipate material potential losses in these areas.

   As of January 31, 2002, we had cash, cash equivalents and investments of
approximately $17.0 million consisting of cash and highly liquid investments.
Our investments will decline by an immaterial amount if market interest rates
increase, and therefore, our exposure to interest rate changes has been
immaterial. Declines of interest rates over time will, however, reduce our
interest income from our investments.

   Other risks which are detailed in the Company's filings with the Securities
and Exchange Commission, including, but not limited to, the December 31, 1998
Second Amendment to the Information Statement (Form 10) and the 2001 Annual
Report to Shareholders (Form 10-K) filed July 30, 2001.




                                       13
<PAGE>

                          PART II -- OTHER INFORMATION


   Item 1. Legal Proceedings

   None

   Item 2. Changes in Securities and Use of Proceeds

   None

   Item 3. Defaults Upon Senior Securities

   None

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

   None

   Item 5. Other Information

   None

   Item 6. Exhibits and Reports on Form 8-K

   (a) Exhibits

       99.1+  Press release of the Company, dated January 29, 2002.

       99.2+  Notice of Election to Exercise Purchase Option, dated January 29,
              2002, delivered by PeopleSoft to the Company.

------------
+ Incorporated by reference to the Current Report on Form 8-K dated January 30,
2002.

   (b) Reports on Form 8-K

       The Company filed a Current Report on Form 8-K dated January 30, 2002 to
report under Item 1 thereof, that the Company received on January 29, 2002
PeopleSoft's Notice of Exercise of its option pursuant to the Company's Restated
Certificate of Incorporation (the "Restated Certificate") to purchase all of the
issued and outstanding shares of the Class A Common Stock of the Company (the
"Purchase Option"). PeopleSoft further notified the Company that, as determined
in accordance with the Restated Certificate, the aggregate purchase price (the
"Purchase Price") for such shares of the Company's Class A Common Stock is
expected to be $90,000,000. The closing of the purchase of all Class A Common
Stock is scheduled to occur on a date no earlier than the thirtieth (30th) day
and no later than the sixtieth (60th) day following the Notice Date (the
"Closing Date"). Under Item 5 of the same report, the Company reported that
effective January 29, 2002, the Board of Directors of the Company has declared a
one-time special cash dividend of $1.85 per share on the Class A Common Stock
and Class B Common Stock. Stockholders of record at the close of business on
February 12, 2002 will be paid this dividend on February 22, 2002.




                                       14
<PAGE>

                                   SIGNATURES


   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.

Dated: March 13, 2002


                                     MOMENTUM BUSINESS APPLICATIONS, INC.



                                     By: /s/  Ronald E. F. Codd
                                         ---------------------------------------
                                         Ronald E. F. Codd
                                         President and Chief Executive Officer
                                         (Principal Executive, Financial and
                                         Accounting Officer)




                                       15
<PAGE>

                                  Exhibit Index



<TABLE>
<CAPTION>
     EXHIBIT
       NO.                               DESCRIPTION
     -------                             -----------
     <S>          <C>
     99.1+        Press release of the Company, dated January 29, 2002.

     99.2+        Notice of Election to Exercise Purchase Option, dated January
                  29, 2002, delivered by PeopleSoft to the Company.
</TABLE>

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

+ Incorporated by reference to the Current Report on Form 8-K dated January 30,
2002.





                                       16