<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 October 31, 2001.

    [ ]   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)

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

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:

================================================================================
               CLASS                            OUTSTANDING AT NOVEMBER 20, 2001
--------------------------------------------------------------------------------
Class A Common Stock, par value $.001                        4,693,826
Class B Common Stock, par value $.001                            1,000
================================================================================



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


<PAGE>

                      MOMENTUM BUSINESS APPLICATIONS, INC.

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                             PAGE NO.
                                                                                                             --------
<S>         <C>                                                                                              <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       9
            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                                                                                                      16
</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>
                                                                 OCTOBER 31,     APRIL 30,
                                                                    2001            2001
                                                                 ---------       ---------
                                          ASSETS
<S>                                                              <C>             <C>
Current assets:
  Cash and cash equivalents ...............................      $  25,899       $  63,283
  Short term investments ..................................         10,340          13,768
  Accounts receivable from PeopleSoft .....................             --           1,973
                                                                 ---------       ---------
          Total current assets ............................         36,239          79,024
Long term investments .....................................             --          10,313
Capitalized software, net .................................         10,676          12,478
                                                                 ---------       ---------
                                                                 $  46,915       $ 101,815
                                                                 =========       =========

                            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Payable to PeopleSoft ...................................      $   7,352       $   8,946
  Accounts payable ........................................            131             283
  Accrued liabilities .....................................            103             333
  Accrued compensation and related expenses ...............              2               8
                                                                 ---------       ---------
          Total current liabilities .......................          7,588           9,570
Stockholders' equity:
  Class A Common stock, $0.001 par value, 10,000,000
     shares authorized, 4,693,826 issued and outstanding ..              5               5
  Class B Common stock, $0.001 par value, 1,000 shares
     authorized, issued and outstanding ...................             --              --
  Additional paid-in capital ..............................        251,243         249,996
  Accumulated other comprehensive income ..................             28             156
  Accumulated deficit .....................................       (211,949)       (157,912)
                                                                 ---------       ---------
                                                                    39,327          92,245
                                                                 ---------       ---------
                                                                 $  46,915       $ 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            SIX MONTHS ENDED
                                                              OCTOBER 31,                  OCTOBER 31,
                                                        -----------------------       -----------------------
                                                          2001           2000           2001           2000
                                                        --------       --------       --------       --------
<S>                                                     <C>            <C>            <C>            <C>
Revenues from PeopleSoft .........................      $    508       $  1,442       $    957       $  1,728
Costs and expenses primarily from PeopleSoft:
  Cost of revenues ...............................         1,243            161          2,417            223
  Product development ............................        24,047         36,632         52,008         67,141
  General and administrative .....................           738            320          1,966            556
                                                        --------       --------       --------       --------
          Total costs and expenses ...............        26,028         37,113         56,391         67,920
                                                        --------       --------       --------       --------
Operating loss ...................................       (25,520)       (35,671)       (55,434)       (66,192)
Interest income ..................................           475          2,828          1,398          6,197
                                                        --------       --------       --------       --------
Net loss before income taxes .....................       (25,045)       (32,843)       (54,036)       (59,995)
Provision for (benefit from) income taxes ........            --              1              1              1
                                                        --------       --------       --------       --------

Net loss .........................................      $(25,045)      $(32,844)      $(54,037)      $(59,996)
                                                        ========       ========       ========       ========
Basic and diluted loss per share .................      $  (5.33)      $  (7.00)      $ (11.51)      $ (12.78)
                                                        ========       ========       ========       ========
Shares used in basic and diluted
  loss per share computation .....................         4,695          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>
                                                                 SIX MONTHS ENDED
                                                                    OCTOBER 31,
                                                            -------------------------
                                                               2001           2000
                                                            ---------       ---------
<S>                                                         <C>             <C>
OPERATING ACTIVITIES
Net loss .............................................      $ (54,037)      $ (59,996)
Amortization of capitalized software .................          2,417             223
Non-cash stock compensation ..........................          1,247              --
Adjustments to reconcile net loss to net cash
used by operating activities:
  Changes in operating assets and liabilities:
     Accounts receivable from PeopleSoft .............          1,973            (879)
     Short term investments ..........................          3,298              --
     Payable to PeopleSoft ...........................         (1,593)        (12,345)
     Accounts payable ................................           (152)             (6)
     Accrued liabilities .............................           (230)           (106)
     Accrued compensation and related expenses .......             (6)              3
     Income taxes payable ............................             --              --
                                                            ---------       ---------
Net cash used by operating activities ................        (47,083)        (73,106)
INVESTING ACTIVITIES
Net maturities of available-for-sale investments .....         10,313              --
Capitalized software development costs ...............           (614)         (2,286)
Purchase of developed technology .....................             --          (8,878)
                                                            ---------       ---------
Net cash provided (used) by investing activities .....          9,699         (11,164)
                                                            ---------       ---------
Net decrease in cash and cash equivalents ............        (37,384)        (84,270)
Cash and cash equivalents at beginning of period .....         63,283         228,218
                                                            ---------       ---------
Cash and cash equivalents at end of period ...........      $  25,899       $ 143,948
                                                            =========       =========
</TABLE>

             See notes to condensed unaudited financial statements.



                                       5
<PAGE>

                      MOMENTUM BUSINESS APPLICATIONS, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                OCTOBER 31, 2001
                                   (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 October 31, 2001 and for the three and six months ended
October 31, 2001 and 2000, 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 October 31, 2001, 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
is 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 October 31, 2001, cash and cash
equivalents (approximately $25.9 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 October 31, 2001
was approximately $36.2 million of which $28.0 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 six month period ended October 31, 2001.

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. Although Momentum has 208,333
outstanding stock options with an exercise price of $12 per share, they are not
currently considered dilutive common stock equivalents and thus diluted loss per
share equals basic loss per share. Importantly, such stock options, if
exercised, would most likely reduce the per share proceeds available to holders
of the Momentum Class A Common Stock if the Purchase Option were to be exercised
by PeopleSoft. (See Note 3 -- "Purchase Option").

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 March 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"). The Purchase Option will be exercisable by written notice to
Momentum at any time until December 31, 2002, provided that such date will be
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 will terminate on the 60th day after Momentum provides
PeopleSoft with a statement that, as of the end of any calendar month, there are
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 exceed its assets, if
the purchase option is exercised, the exercise price will be 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)
exceed Momentum's assets, the Purchase Option Exercise Price described above
will be reduced by the amount such liabilities at the time of exercise are in
excess of Momentum's cash and cash equivalents, and short term and long term
investments. The Purchase Option exercise price is payable in cash.


                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.



                                       9
<PAGE>

Results of Operations

    Revenues, consisting entirely of royalty revenue from PeopleSoft, was
approximately $0.5 million and $1.0 million respectively for the three and six
month periods ended October 31, 2001 compared with approximately $1.4 million
and $1.7 million respectively for the three and six month periods ended October
31, 2000. 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 first fiscal quarter of 2002
were earned on over 45 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 October 31, 2001 would have been approximately $2.5 million. Partially
offsetting this rate decrease was a 90% increase in Net License Fees related to
Momentum Products for Momentum's second 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 $2.4 million for the three and six month
periods ended October 31, 2001, respectively, compared to approximately
$0.2 million for each of the same respective periods ended October 31, 2000.

    The Company incurred development expenses of approximately $24.0 million and
$52.0 million respectively for the three and six month periods ended October 31,
2001 compared with approximately $36.6 million and $67.1 million respectively
for the three and six month periods ended October 31, 2000. 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 2001 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 the fiscal 2000 periods, 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 $0.7 million and $2.0
million for the three and six month periods ended October 31, 2001,
respectively, compared to approximately $0.3 million and $0.6 million for the
same respective periods ended October 31, 2000. The expenses for the three and
six month periods ended October 31, 2001 include non-cash charges of
approximately $0.3 million and $1.2 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)


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



                                       10
<PAGE>

    Because of the restrictions on the use of Available Funds under the
Development Agreement, Momentum is not expected, for the indefinite future, to
spend any funds on sales, marketing, or distribution activities. As such, it
will not be able to effectively establish a brand, corporate image or identity
in the overall marketplace. Such anonymity may make it more difficult for
Momentum to pursue alternate exit strategies, should PeopleSoft not exercise its
purchase option in the future.

    Interest income earned on invested funds was approximately $0.5 million and
$1.4 million respectively for the three and six month periods ended October 31,
2001 compared with approximately $2.8 million and $6.2 million respectively for
the three and six month periods ended October 31, 2000. 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
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 ($25.0) million or ($5.33) per share for the quarter
ended October 31, 2001 as compared with a net loss of approximately ($32.8)
million or ($7.00) per share for the quarter ended October 31, 2000. The Company
is expected to record significant net losses in future periods, 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
to four years from Momentum's inception.(1) Including such interest income
earned from inception through October 31, 2001, Momentum's gross Available Funds
(before deducting development and administrative expenses incurred from
inception to the same date) totaled $278.1 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 October 31, 2001, cash, cash
equivalents and investments were approximately $36.2 million of which $28.0
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
October 31, 2001, the Company earned approximately $0.5 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 most likely
reduce the per share proceeds available to holders of the Momentum Class A
Common Stock if the Purchase Option were to be exercised by PeopleSoft. (See
Note 3 -- "Purchase Option").

    During the quarter ending October 31, 2001, Momentum and PeopleSoft agreed
to collaborate on three new e-Business application development projects
including two centered around the creation of products that will complement
PeopleSoft's eStore and eProcurement initiatives, and one that will enhance the
Compensation Management capabilities of PeopleSoft's overall Enterprise
Solutions. As of October 31, 2001, Momentum had committed over $270 million of
the Available Funds to various development

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



                                       11
<PAGE>

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 $253.0 million of development expenditures
(including purchased technology) on the above referenced projects, and has
incurred approximately $3.8 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 an estimated third fiscal quarter development expenditure
run rate of approximately $20 million. However, such run rate is subject to
rapid change due to a variety of factors including changes in project stages,
the completion or termination of one or more existing projects, and increases or
decreases in the level of resources assigned to each respective project. Based
on current spending projections and presently committed projects, the Available
Funds are expected to be substantially exhausted by February 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.


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:

-   Momentum may not successfully select or develop a sufficient number of
    products to economically justify the aggregate purchase price implied by
    some or all of the exercise price formulas. The development projects
    referenced herein are characterized by many inherent risks, including but
    not limited to: 1) existing PeopleSoft technology may not be suitable as a
    foundation for the application software functionality, and 2) constantly
    changing and evolving customer demands for products, product functionality,
    and the underlying technology may cause products to meet with limited market
    acceptance. Consequently, such development efforts may not result in a
    product that is embraced by the market.

-   Demand for Momentum's products may be highly sensitive to time to market
    and/or first mover advantages. Any material delays in the development
    project schedule may adversely affect demand for the product, even if the
    development project is otherwise successfully completed. Furthermore,
    competitors of PeopleSoft, and even PeopleSoft, may offer products that
    compete directly with Momentum's products. Weakness in demand for a product
    will translate into limited royalty income to Momentum, associated limited
    product payment buy out proceeds, if any, and may ultimately reduce
    PeopleSoft's interest in exercising its purchase option.

-   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 should PeopleSoft elect not
    to utilize some or all of the developed products. As of October 31, 2001,
    Momentum had approximately $8.2 million of unrestricted funds.

-   Momentum or PeopleSoft may cancel a development project at anytime and for
    any reason or no reason at all. Accordingly, it is possible that Momentum
    could incur significant expenditures toward the development of a particular
    product, only to have the project cancelled in the later stages of the
    schedule. There is no recourse to PeopleSoft in the event of this
    occurrence. Since inception, a total of four projects have been cancelled
    after Momentum had incurred material expenditures associated with such
    projects.

-   Momentum common shares are subject to an all or nothing call option held by
    PeopleSoft. The call option has a formula based exercise price that could
    effectively cap the value of Momentum common shares. As of October 31, 2001,
    the formula produced an aggregate exercise price of $90 million. After
    taking into effect potential dilution from common stock options outstanding,
    this aggregate price translates into a per share exercise price of
    approximately $18.75.


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



                                       12
<PAGE>

-   If Momentum were not successful with a number of development projects,
    PeopleSoft would be unlikely to exercise its option to purchase the stock of
    Momentum. Even if Momentum is successful in developing certain products,
    PeopleSoft may not exercise its option to purchase the Common Stock of
    Momentum. For example, PeopleSoft has the right to buy out the ownership of
    selected products under its product payment buy out option. Consequently, it
    could purchase the rights to certain products, thereby obviating any need to
    exercise the purchase option on the Company's Common Stock. Alternatively,
    PeopleSoft could elect to continue to pay royalties for the term of their
    license (generally ten years) after which time they would have a paid up
    license for the products. It is not clear whether a royalty-based annuity
    would provide a reasonable return to Momentum shareholders.

-   Royalty results for the second quarter are not necessarily indicative of
    results to be expected going forward. The recent approval by the
    shareholders 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 second 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.

-   Terrorist attacks in New York and Washington, D.C. on September 11, 2001
    have disrupted commerce throughout the United States and Europe. The
    continued threat of terrorism within the United States and Europe and the
    ongoing military action and heightened security measures in response to such
    threat may cause significant disruption to commerce throughout the world. To
    the extent that such disruptions result in delays or cancellations of
    customer orders, a general decrease in corporate spending on information
    technology, or PeopleSoft's inability to effectively market, manufacture or
    ship our products, our business and results of operations could be
    materially and adversely affected. Any such effects on PeopleSoft may also
    cause PeopleSoft to cancel development projects or have a negative impact on
    its deliberation on whether to exercise its option to purchase the stock of
    Momentum. We are unable to predict whether the threat of terrorism or the
    responses thereto will result in any long-term commercial disruptions or if
    such activities or responses will have any long-term material adverse effect
    on our business, results of operations or financial condition.

-   Business conditions in the United States and other major IT markets around
    the world have deteriorated significantly during the past few quarters. If
    this trend continues, it could result in lower future Momentum product sales
    volumes, lower associated royalty income to Momentum, and might ultimately
    reduce PeopleSoft's motivation to exercise its option to purchase Momentum.



                     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 October 31, 2001, we had cash, cash equivalents and investments of
approximately $36.2 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

        (a) The Company held its annual meeting of stockholders on September 19,
            2001.

        (b) Pursuant to the election of the director listed under Item 4(c)(i),
            Mr. Ronald E.F. Codd was elected as a Class A Common Class III
            director for a term of three years.

        (c) The Company's stockholders voted the following matters:

            (i) Election of one Class A Common Class III director. The director
                proposed by the Board of Directors was elected.

<TABLE>
<CAPTION>
                ----------------------  ----------------------------------------
                                                     Number of Votes
                ----------------------  ----------------------------------------
                Nominee:                        For           Authority Withheld
                ----------------------  -------------------- -------------------
                <S>                     <C>                  <C>
                Ronald E.F. Codd             4,527,835              3,485
                ----------------------  -------------------- -------------------
</TABLE>

           (ii) Approval of the amendment to the Company's Restated Certificate
                of Incorporation as described in the proxy statement.

<TABLE>
                <S>                          <C>
                ---------------------------  --------------------
                For                              3,060,214
                ---------------------------  --------------------
                Against                              2,168
                ---------------------------  --------------------
                Abstain                              1,293
                ---------------------------  --------------------
                No Vote                          1,467,645
                ---------------------------  --------------------
</TABLE>


          (iii) Ratification of the appointment of Ernst & Young LLP as
                independent auditors of the Company for the fiscal year ending
                April 30, 2002.

<TABLE>
                <S>                          <C>
                ---------------------------  --------------------
                For                              4,528,625
                ---------------------------  --------------------
                Against                              2,039
                ---------------------------  --------------------
                Abstain                                656
                ---------------------------  --------------------
</TABLE>


    Item 5. Other Information

    None

    Item 6. Exhibits and Reports on Form 8-K

    (a) Exhibits

        3.3+  Restated Certificate of Incorporation of Momentum Business
              Applications, Inc.

        3.4++ Certificate of Amendment of the Restated Certificate of
              Incorporation of Momentum Business Applications, Inc.



                                       14
<PAGE>

        10.6++ Amendment to the Development and Marketing Agreements between
               Momentum and PeopleSoft, dated as of July 23, 2001, made by and
               between Momentum Business Applications, Inc. and PeopleSoft, Inc.

---------------
 + Incorporated by reference to Amendment No. 2 to the Registration Statement
   on Form 10 (Reg. No. 000-25185) filed December 31, 1998.

++ Incorporated by reference to the Current Report on Form 8-K dated September
   20, 2001.

    (b) Reports on Form 8-K

        The Company filed a Current Report on Form 8-K dated September 20, 2001
        to report under Item 5 thereof, that the Company received confirmation
        of the filing of the Certificate of Amendment of the Restated
        Certificate of Incorporation changing the formula for determining the
        exercise price that PeopleSoft must pay to exercise the Purchase Option
        and that Amendment to the Development and Marketing Agreements became
        effective.










                                       15
<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: November 30, 2001

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)






                                       16
<PAGE>
                                 Exhibit Index


       Exhibit
         No.                                Description
      ---------                           --------------
        3.3+   Restated Certificate of Incorporation of Momentum Business
               Applications, Inc.

        3.4++  Certificate of Amendment of the Restated Certificate of
               Incorporation of Momentum Business Applications, Inc.

       10.6++  Amendment to the Development and Marketing Agreements between
               Momentum and PeopleSoft, dated as of July 23, 2001, made by and
               between Momentum Business Applications, Inc. and PeopleSoft, Inc.

---------------
 + Incorporated by reference to Amendment No. 2 to the Registration Statement
   on Form 10 (Reg. No. 000-25185) filed December 31, 1998.

++ Incorporated by reference to the Current Report on Form 8-K dated September
   20, 2001.