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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the quarterly period ended on March 31, 2004



OR



| ̈ | TRANSITION QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------------------



For the transition period from
             to



Commission file number: 0-27544



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OPEN TEXT CORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|ONTARIO                                                        |  | 98-0154400                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



185 Columbia Street
West, Waterloo, Ontario, Canada N2L 5Z5

(Address of principal executive offices)



Registrants telephone number, including area code: (519) 888-7111



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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.    Yesx    No ̈



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act).    Yes  x    No ̈



At April 30, 2004 there were 50,725,475 outstanding Common
Shares of the registrant.



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##### Table of Contents

OPEN TEXT CORPORATION



TABLE OF CONTENTS



|                              |  |                                                                                                                     |  |         
|----------------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                                                     |  | Page No.
|PART I Financial Information: |  |                                                                                                                    
|                              |  |                                                                                                                    
|Item 1.                       |  | Financial Statements                                                                                                |  |         
|                              |  |                                                                                                                    
|                              |  | Condensed Consolidated Balance Sheets (Unaudited) as ofMarch 31, 2004 and June 30, 2003                             |  | 3       
|                              |  |                                                                                                                    
|                              |  | Condensed Consolidated Income Statements (Unaudited) -Three and Nine Months Ended on March 31, 2004 and 2003        |  | 4       
|                              |  |                                                                                                                    
|                              |  | Condensed Consolidated Statements of Cash Flows (Unaudited) -Three and Nine Months Ended on March 31, 2004 and 2003 |  | 5       
|                              |  |                                                                                                                    
|                              |  | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                    |  | 6       
|                              |  |                                                                                                                    
|Item 2.                       |  | Managements Discussion and Analysis of FinancialCondition and Results of Operations                                |  | 24      
|                              |  |                                                                                                                    
|Item 3.                       |  | Quantitative and Qualitative Disclosures about Market Risk                                                          |  | 41      
|                              |  |                                                                                                                    
|Item 4.                       |  | Controls and Procedures                                                                                             |  | 42      
|                              | 
|PART II Other Information:    |  |                                                                                                                    
|                              |  |                                                                                                                    
|Item 2.                       |  | Changes in Securities, and Use of proceeds and Issuer Purchases of Equity Securities                                |  | 43      
|                              |  |                                                                                                                    
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                                                    |  | 44      
|                              | 
|Signatures                    |  | 45                                                                                                                 



2



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##### Table of Contents

Part I: Financial Information



Item 1. Condensed Consolidated Financial Statements



OPEN TEXT CORPORATION



CONDENSED
CONSOLIDATED BALANCE SHEETS

(In thousands of US Dollars, except per share data)

(Unaudited)



|                                                                                                                           |  |               |         |   |              |   |         |  
|-------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------- | - | ------------ | - | ------- | -
|                                                                                                                           |  | March 31,2004 |         |   | June 30,2003 |  
|ASSETS                                                                                                                     |  |               |         |   |              |   |         |  
|Current assets:                                                                                                            |  |               |         |   |              |   |         |  
|Cash and cash equivalents                                                                                                  |  | $             | 153,344 |   |              | $ | 116,554 |  
|Accounts receivable - net of allowance for doubtful accounts of $3,931 as of March 31, 2004 and $1,933 as of June 30, 2003 |  |               | 88,434  |   |              |   | 35,855  |  
|Income taxes recoverable (note 4)                                                                                          |  |               | 8,041   |   |              |   | 484     |  
|Prepaid expenses and other assets                                                                                          |  |               | 9,488   |   |              |   | 3,541   |  
|Deferred tax asset (note 4)                                                                                                |  |               | 10,125  |   |              |   | 7,688   |  
|                                                                                                                           |  |               |         |   |              |   |         |  
|Total current assets                                                                                                       |  |               | 269,432 |   |              |   | 164,122 |  
|Capital assets                                                                                                             |  |               | 23,939  |   |              |   | 10,011  |  
|Goodwill, net of accumulated amortization of $12,807 at March 31, 2004 and June 30, 2003 (note 9)                          |  |               | 211,030 |   |              |   | 32,301  |  
|Deferred tax asset (note 4)                                                                                                |  |               | 13,794  |   |              |   | 8,674   |  
|Acquired intangibles (note 10)                                                                                             |  |               | 120,665 |   |              |   | 20,517  |  
|Other assets                                                                                                               |  |               | 7,786   |   |              |   | 3,062   |  
|                                                                                                                           |  |               |         |   |              |   |         |  
|                                                                                                                           |  | $             | 646,646 |   |              | $ | 238,687 |  
|                                                                                                                           |  |               |         |   |              |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                       |  |               |         |   |              |   |         |  
|Current liabilities:                                                                                                       |  |               |         |   |              |   |         |  
|Accounts payable and accrued liabilities (note 3)                                                                          |  | $             | 95,376  |   |              | $ | 31,596  |  
|Deferred revenues                                                                                                          |  |               | 66,891  |   |              |   | 38,086  |  
|Deferred tax liability (note 4)                                                                                            |  |               | 9,090   |   |              |   |        |  
|                                                                                                                           |  |               |         |   |              |   |         |  
|Total current liabilities                                                                                                  |  |               | 171,357 |   |              |   | 69,682  |  
|                                                                                                                           |  |              
|Long term liabilities:                                                                                                     |  |               |         |   |              |   |         |  
|Deferred revenues                                                                                                          |  |               | 1,135   |   |              |   | 1,696   |  
|Deferred tax liability (note 4)                                                                                            |  |               | 30,375  |   |              |   |        |  
|Accrued liabilities                                                                                                        |  |               | 18,629  |   |              |   | 4,912   |  
|                                                                                                                           |  |               |         |   |              |   |         |  
|                                                                                                                           |  |               | 50,139  |   |              |   | 6,608   |  
|Minority interest (note 13)                                                                                                |  |               | 9,913   |   |              |   |        |  
|Shareholders equity:                                                                                                      |  |               |         |   |              |   |         |  
|Share capital                                                                                                              |  |               |         |   |              |   |         |  
|50,629,212 and 39,136,518 Common Shares issued and outstanding at March 31, 2004 and June 30, 2003 respectively            |  |               | 417,215 |   |              |   | 204,343 |  
|Warrants                                                                                                                   |  |               | 24,313  |   |              |   |        |  
|Accumulated other comprehensive income:                                                                                    |  |               |         |   |              |   |         |  
|Cumulative translation adjustment                                                                                          |  |               | 1,210   |   |              |   | (119    | )
|Accumulated deficit (note 6)                                                                                               |  |               | (27,501 | ) |              |   | (41,827 | )
|                                                                                                                           |  |               |         |   |              |   |         |  
|Total shareholders equity                                                                                                 |  |               | 415,237 |   |              |   | 162,397 |  
|                                                                                                                           |  |               |         |   |              |   |         |  
|                                                                                                                           |  | $             | 646,646 |   |              | $ | 238,687 |  
|                                                                                                                           |  |               |         |   |              |   |         |  



See accompanying notes
to condensed consolidated financial statements



3



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##### Table of Contents

OPEN TEXT CORPORATION



CONDENSED
CONSOLIDATED INCOME STATEMENTS

(in thousands of US Dollars, except per share data)

(Unaudited)



|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ---------------------------- | ------- | - | --------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                               |  | Three months ended March 31, |         |   | Nine months ended March 31, |  
|                                                               |  | 2004                         |         |   | 2003                        |   |         | 2004 |  |   | 2003    |  
|Revenues:                                                      |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|License                                                        |  | $                            | 34,534  |   |                             | $ | 19,025  |      |  | $ | 79,294  |   |  | $ | 51,869  |  
|Customer support                                               |  |                              | 28,578  |   |                             |   | 16,190  |      |  |   | 69,926  |   |  |   | 44,735  |  
|Service                                                        |  |                              | 17,103  |   |                             |   | 8,744   |      |  |   | 36,854  |   |  |   | 28,024  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Total revenues                                                 |  |                              | 80,215  |   |                             |   | 43,959  |      |  |   | 186,074 |   |  |   | 124,628 |  
|Cost of revenues:                                              |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|License                                                        |  |                              | 2,610   |   |                             |   | 1,601   |      |  |   | 6,451   |   |  |   | 4,868   |  
|Customer support                                               |  |                              | 5,608   |   |                             |   | 2,734   |      |  |   | 12,843  |   |  |   | 7,452   |  
|Service                                                        |  |                              | 11,992  |   |                             |   | 6,606   |      |  |   | 28,321  |   |  |   | 20,288  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Total cost of revenues                                         |  |                              | 20,210  |   |                             |   | 10,941  |      |  |   | 47,615  |   |  |   | 32,608  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Gross profit                                                   |  |                              | 60,005  |   |                             |   | 33,018  |      |  |   | 138,459 |   |  |   | 92,020  |  
|Operating expenses:                                            |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Research and development                                       |  |                              | 10,529  |   |                             |   | 7,611   |      |  |   | 28,484  |   |  |   | 20,624  |  
|Sales and marketing                                            |  |                              | 23,234  |   |                             |   | 13,190  |      |  |   | 55,541  |   |  |   | 38,991  |  
|General and administrative                                     |  |                              | 6,841   |   |                             |   | 3,592   |      |  |   | 15,082  |   |  |   | 10,378  |  
|Depreciation                                                   |  |                              | 1,808   |   |                             |   | 1,297   |      |  |   | 4,474   |   |  |   | 3,741   |  
|Amortization of acquired intangible assets                     |  |                              | 3,062   |   |                             |   | 822     |      |  |   | 5,884   |   |  |   | 2,047   |  
|Restructuring                                                  |  |                              | 10,005  |   |                             |   |        |      |  |   | 10,005  |   |  |   |        |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Total operating expenses                                       |  |                              | 55,479  |   |                             |   | 26,512  |      |  |   | 119,470 |   |  |   | 75,781  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Income from operations                                         |  |                              | 4,526   |   |                             |   | 6,506   |      |  |   | 18,989  |   |  |   | 16,239  |  
|Other income                                                   |  |                              | 817     |   |                             |   | 876     |      |  |   | 1,305   |   |  |   | 1,991   |  
|Interest income                                                |  |                              | 517     |   |                             |   | 239     |      |  |   | 954     |   |  |   | 971     |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Income before income taxes                                     |  |                              | 5,860   |   |                             |   | 7,621   |      |  |   | 21,248  |   |  |   | 19,201  |  
|Provision for income taxes                                     |  |                              | 1,556   |   |                             |   | 829     |      |  |   | 5,897   |   |  |   | 829     |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Income from continuing operations before minority interest     |  |                              | 4,304   |   |                             |   | 6,792   |      |  |   | 15,351  |   |  |   | 18,372  |  
|Minority interest                                              |  |                              | 1,025   |   |                             |   |        |      |  |   | 1,025   |   |  |   |        |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Net income for the period                                      |  | $                            | 3,279   |   |                             | $ | 6,792   |      |  | $ | 14,326  |   |  | $ | 18,372  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Deficit, beginning of the period                               |  | $                            | (30,780 | ) |                             | $ | (57,937 | )    |  | $ | (41,827 | ) |  | $ | (60,004 | )
|Repurchase of Common Shares                                    |  |                              |        |   |                             |   |        |      |  |   |        |   |  | $ | (9,513  | )
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Deficit, end of the period                                     |  | $                            | (27,501 | ) |                             | $ | (51,145 | )    |  | $ | (27,501 | ) |  | $ | (51,145 | )
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Basic earnings per share                                       |  | $                            | 0.07    |   |                             | $ | 0.17    |      |  | $ | 0.35    |   |  | $ | 0.47    |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Diluted earnings per share                                     |  | $                            | 0.07    |   |                             | $ | 0.16    |      |  | $ | 0.32    |   |  | $ | 0.45    |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Weighted average number of Common Shares outstanding - basic   |  |                              | 43,988  |   |                             |   | 38,816  |      |  |   | 41,385  |   |  |   | 38,984  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Weighted average number of Common Shares outstanding - diluted |  |                              | 47,777  |   |                             |   | 41,334  |      |  |   | 44,649  |   |  |   | 41,136  |  
|                                                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes
to condensed consolidated financial statements



4



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##### Table of Contents

OPEN TEXT CORPORATION



CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of US Dollars)

(Unaudited)



|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------- |  | ---------------------------- | ------- | - | --------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                    |  | Three months ended March 31, |         |   | Nine months ended March 31, |  
|                                                                    |  | 2004                         |         |   | 2003                        |   |         | 2004 |  |   | 2003    |  
|Cash flows from operating activities:                               |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Net income for the period                                           |  | $                            | 3,279   |   |                             | $ | 6,792   |      |  | $ | 14,326  |   |  | $ | 18,372  |  
|Non-cash items:                                                     |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Depreciation and amortization of acquired intangible assets         |  |                              | 4,851   |   |                             |   | 2,119   |      |  |   | 10,339  |   |  |   | 5,788   |  
|Gain on sale of investments                                         |  |                              |        |   |                             |   | (77     | )    |  |   |        |   |  |   | (77     | )
|Undistributed earnings related to minority interest                 |  |                              | 1,025   |   |                             |   |        |      |  |   | 1,025   |   |  |   |        |  
|Restructuring                                                       |  |                              | 10,005  |   |                             |   |        |      |  |   | 10,005  |   |  |   |        |  
|Other                                                               |  |                              | (29     | ) |                             |   |        |      |  |   | (20     | ) |  |   |        |  
|Changes in operating assets and liabilities net of assets acquired: |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Accounts receivable                                                 |  |                              | (3,799  | ) |                             |   | 1,167   |      |  |   | (3,828  | ) |  |   | 7,291   |  
|Prepaid and other assets                                            |  |                              | (559    | ) |                             |   | 238     |      |  |   | (328    | ) |  |   | 1,574   |  
|Deferred tax asset                                                  |  |                              | (2,494  | ) |                             |   |        |      |  |   | (2,394  | ) |  |   |        |  
|Accounts payable and accrued liabilities                            |  |                              | (1,889  | ) |                             |   | (2,191  | )    |  |   | (5,946  | ) |  |   | (3,444  | )
|Income taxes recoverable                                            |  |                              | (1,249  | ) |                             |   | (569    | )    |  |   | (1,249  | ) |  |   | (569    | )
|Deferred revenue                                                    |  |                              | 7,176   |   |                             |   | 4,195   |      |  |   | 1,136   |   |  |   | 4,591   |  
|Unrealized foreign exchange loss                                    |  |                              | (922    | ) |                             |   | (1,020  | )    |  |   | (2,431  | ) |  |   | (1,601  | )
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Net cash provided by operating activities                           |  |                              | 15,395  |   |                             |   | 10,654  |      |  |   | 20,635  |   |  |   | 31,925  |  
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Cash flows used in investing activities:                            |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Acquisitions of capital assets                                      |  |                              | (1,530  | ) |                             |   | (1,223  | )    |  |   | (3,472  | ) |  |   | (2,671  | )
|Purchase of Centrinity Inc., net of cash acquired                   |  |                              |        |   |                             |   |        |      |  |   |        |   |  |   | (11,369 | )
|Purchase of Corechange Inc., net of cash acquired                   |  |                              |        |   |                             |   | (2,695  | )    |  |   |        |   |  |   | (2,695  | )
|Purchase of Eloquent, net of cash acquired                          |  |                              |        |   |                             |   | (2,674  | )    |  |   |        |   |  |   | (2,674  | )
|Purchase of Gauss, net of cash acquired                             |  |                              |        |   |                             |   |        |      |  |   | (9,764  | ) |  |   |        |  
|Purchase of SER, net of cash acquired                               |  |                              |        |   |                             |   |        |      |  |   | (3,403  | ) |  |   |        |  
|Purchase of IXOS, net of cash acquired                              |  |                              | 24,637  |   |                             |   |        |      |  |   | 24,637  |   |  |   |        |  
|Cash restricted for acquisitions                                    |  |                              | 46,837  |   |                             |   |        |      |  |   |        |   |  |   |        |  
|Business acquisition costs                                          |  |                              | (4,841  | ) |                             |   |        |      |  |   | (6,642  | ) |  |   |        |  
|Purchase of patent                                                  |  |                              |        |   |                             |   |        |      |  |   |        |   |  |   | (1,246  | )
|Proceeds on sale of investment                                      |  |                              |        |   |                             |   | 149     |      |  |   |        |   |  |   | 149     |  
|Other acquisitions                                                  |  |                              | (38     | ) |                             |   |        |      |  |   | (1,987  | ) |  |   |        |  
|Other                                                               |  |                              | (281    | ) |                             |   | (782    | )    |  |   | (281    | ) |  |   | (914    | )
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Net cash provided by (used in) investing activities                 |  |                              | 64,784  |   |                             |   | (7,225  | )    |  |   | (912    | ) |  |   | (21,420 | )
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Cash flow from financing activities:                                |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Payments of obligations under capital leases                        |  |                              | (74     | ) |                             |   |        |      |  |   | (224    | ) |  |   |        |  
|Deferred costs                                                      |  |                              |        |   |                             |   |        |      |  |   | (668    | ) |  |   |        |  
|Other                                                               |  |                              | (56     | ) |                             |   |        |      |  |   | (56     | ) |  |   |        |  
|Proceeds from issuance of Common Shares                             |  |                              | 6,938   |   |                             |   | 2,361   |      |  |   | 16,325  |   |  |   | 4,847   |  
|Proceeds from exercised warrants                                    |  |                              | 1,120   |   |                             |   |        |      |  |   | 1,120   |   |  |   |        |  
|Repurchase of Common Shares                                         |  |                              |        |   |                             |   |        |      |  |   |        |   |  |   | (17,302 | )
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Net cash provided by (used in) financing activities                 |  |                              | 7,928   |   |                             |   | 2,361   |      |  |   | 16,497  |   |  |   | (12,455 | )
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Foreign exchange gain (loss) on cash held in foreign currency       |  |                              | (184    | ) |                             |   | (33     | )    |  |   | 570     |   |  |   | 153     |  
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Increase (decrease) in cash and cash equivalents during the period  |  |                              | 87,923  |   |                             |   | 5,757   |      |  |   | 36,790  |   |  |   | (1,797  | )
|Cash and cash equivalents at beginning of period                    |  |                              | 65,421  |   |                             |   | 102,341 |      |  |   | 116,554 |   |  |   | 109,895 |  
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  
|Cash and cash equivalents at end of period                          |  | $                            | 153,344 |   |                             | $ | 108,098 |      |  | $ | 153,344 |   |  | $ | 108,098 |  
|                                                                    |  |                              |         |   |                             |   |         |      |  |   |         |   |  |   |         |  



See accompanying notes
to condensed consolidated financial statements



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OPEN TEXT CORPORATION



NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For the Three and Nine Months ended on March 31, 2004

(Tabular dollar amounts in thousands of US Dollars, except per share data)

(unaudited)



1.
BASIS OF PRESENTATION



The accompanying unaudited
condensed consolidated financial statements as of and for the three and nine month periods ended on March 31, 2004 (Interim Financial Statements) include the accounts of Open Text Corporation and its wholly and majority-owned
subsidiaries, collectively referred to as Open Text or the Company. As discussed in Note 13, the accounts of IXOS Software AG (IXOS), are included beginning March 1, 2004. All inter-company balances and
transactions have been eliminated.



These Interim Financial
Statements are expressed in US dollars and are based upon accounting policies and methods of their application consistent with those used and described in the Companys annual consolidated financial statements. The Interim Financial Statements
do not include all of the financial statement disclosures included in the annual financial statements prepared in accordance with United States generally accepted accounting principles (US GAAP) and therefore should be read in
conjunction with the consolidated financial statements and notes included in the Companys Annual Report on Form 10-K for the fiscal year ended on June 30, 2003. Certain prior year amounts have been reclassified to conform to current year
presentation.



The information furnished reflects all
adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods presented. The operating results for both the three months and nine months ended on March 31, 2004 are not
necessarily indicative of the results expected for any succeeding quarter or the entire fiscal year ending on June 30, 2004.



Stock Dividend



On October 8, 2003, the Company declared a two-for-one split of the Companys Common Shares effected by means of a dividend. The stock split doubled
the number of the Companys outstanding Common Shares. Share certificates representing the stock dividend were mailed on or after October 28, 2003 to shareholders of record as of the close of business on October 22, 2003. All of the share and
per share information presented in these Interim Financial Statements has been retroactively restated to reflect the stock dividend.



Use of Estimates



The preparation of financial statements in conformity with US GAAP requires management to make estimates, judgments and assumptions, which are evaluated
on an ongoing basis, that affect the amounts reported in the financial statements. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable at that time under the circumstances, the
results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates. In particular, significant estimates, judgments
and assumptions include those related to revenue recognition, allowance for doubtful accounts, investments, goodwill and other intangible assets, long-lived assets, contingencies, income taxes, realization of investment tax credits, and the
valuation allowance relating to the Companys deferred tax assets.



Comprehensive net income



Comprehensive net
income is comprised of net income and other comprehensive income (loss), including the effect of foreign currency translation resulting from the consolidation of subsidiaries where the functional



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



currency is a foreign currency, and the inclusion of unrealized capital gains and losses on available for sale marketable securities. The Companys
total comprehensive net income was as follows:



|                                                 |  |                              |       |   |                             |   |        |      |  |      |        |  |   |        |  
|------------------------------------------------ |  | ---------------------------- | ----- | - | --------------------------- | - | ------ | ---- |  | ---- | ------ |  | - | ------ | -
|                                                 |  | Three months ended March 31, |       |   | Nine months ended March 31, |  
|                                                 |  | 2004                         |       |   | 2003                        |   |        | 2004 |  | 2003 |       
|Other comprehensive income (loss):               |  |                              |       |   |                             |   |        |      |  |      |        |  |   |        |  
|                                                 |  |                              |       |  
|Foreign currency translation adjustment          |  |                              | (922  | ) |                             | $ | (1,232 | )    |  | $    | 1,329  |  | $ | (2,016 | )
|Unrealized gain on available for sale securities |  |                              |      |   |                             |   | 65     |      |  |      |       |  |   | 65     |  
|                                                 |  |                              |       |   |                             |   |        |      |  |      |        |  |   |        |  
|Other comprehensive income (loss):               |  |                              | (922  | ) |                             |   | (1,167 | )    |  |      | 1,329  |  |   | (1,951 | )
|Net income for the period                        |  |                              | 3,279 |   |                             |   | 6,792  |      |  |      | 14,326 |  |   | 18,372 |  
|                                                 |  |                              |       |   |                             |   |        |      |  |      |        |  |   |        |  
|Comprehensive net income for the period          |  | $                            | 2,357 |   |                             | $ | 5,625  |      |  | $    | 15,655 |  | $ | 16,421 |  
|                                                 |  |                              |       |   |                             |   |        |      |  |      |        |  |   |        |  



2. ACCOUNTING POLICIES



The following is a summary of recently adopted Accounting
Standards:



Consolidation of Variable Interest Entities



In January 2003, the Financial Accounting Standards Board (FASB)
issued Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). FIN 46 requires all companies with variable interests in entities created after January 31, 2003 to apply its provisions to those entities
immediately. In December 2003 the FASB issued a revised Interpretation FIN 46R. Under the revised Interpretation, an entity deemed to be a business, based on certain specified criteria, need not be evaluated to determine if it is a
Variable Interest Entity. The Company must apply the provisions to variable interests held in all variable interest entities during the quarter ended on March 31, 2004. Adoption of FIN 46 and FIN 46R during the third quarter of fiscal 2004 did not
have an impact on the Companys financial condition or results of operations.



Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity



In May 2003, the FASB issued Statement of Financial Accounting Standards 150 (SFAS 150) Accounting for Certain Financial Instruments
with Characteristics of Both Liabilities and Equity. SFAS 150 established standards for classifying and measuring as liabilities certain financial instruments that have characteristics of liabilities and equity. Adoption of SFAS 150 did not
have an impact on the Companys financial condition or results of operations.



Accounting for Revenue Arrangements and Multiple Deliverables



The Emerging Issues Task Force released Issue No. 00-21 Accounting for Revenue Arrangements and Multiple Deliverables in May 2003. Issue No. 00-21 addresses how to account for arrangements that may involve
delivery or performance of multiple products, services and or rights to use assets. Issue No. 00-21 is effective for Open Text for its fiscal year beginning July 1, 2003. Adoption of Issue No. 00-21 did not have a material impact on the
Companys financial condition or results of operations.



Restructuring
Liabilities



The Company follows the guidance of SFAS No.
146, Accounting for Costs Associated with Exit or Disposal Activities, which addresses accounting for restructuring and similar costs. SFAS No. 146 requires that



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



the liability for costs associated with an exit or disposal activity be recognized when the liability is incurred. In addition, under SFAS No. 146 the
restructuring liability is measured and recorded at fair value.



Employee
stock option plans



The Company has elected to follow
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and to present the pro forma information that is required by SFAS No. 123Accounting for Stock-Based Compensation
(SFAS 123). APB 25 requires compensation cost for stock-based employee compensation plans to be recognized over the vesting period of the options based on the difference, if any, on the grant date between the quoted market price of the
Companys stock and the option exercise price. No compensation cost was included in net income as reported for the three and nine-month periods ended on March 31, 2004 and 2003.



Had compensation cost for the Companys stock-based compensation plans and the employee stock purchase plan been
determined using the fair value approach set forth in SFAS 123, the Companys net income and net income per share for the three and nine month periods would have been in accordance with the pro forma amounts indicated below:



|                               |  |                             |       |   |      |   |        |  
|------------------------------ |  | --------------------------- | ----- | - | ---- | - | ------ | -
|                               |  | Three Months EndedMarch 31, |      
|                               |  | 2004                        |       |   | 2003 |  
|Net income                     |  |                             |       |   |      |   |        |  
|As reported                    |  | $                           | 3,279 |   |      | $ | 6,792  |  
|Fair value compensation cost*  |  | $                           | (180  | ) |      | $ | (1,754 | )
|                               |  |                             |       |   |      |   |        |  
|Pro forma                      |  | $                           | 3,099 |   |      | $ | 5,038  |  
|Net income per share - basic   |  |                             |       |   |      |   |        |  
|As reported                    |  | $                           | 0.07  |   |      | $ | 0.17   |  
|Pro forma                      |  | $                           | 0.07  |   |      | $ | 0.13   |  
|Net income per share - diluted |  |                             |       |   |      |   |        |  
|As reported                    |  | $                           | 0.07  |   |      | $ | 0.16   |  
|Pro forma                      |  | $                           | 0.06  |   |      | $ | 0.12   |  



|                               |  |                            |        |   |      |   |        |  
|------------------------------ |  | -------------------------- | ------ | - | ---- | - | ------ | -
|                               |  | Nine Months EndedMarch 31, |       
|                               |  | 2004                       |        |   | 2003 |  
|Net income                     |  |                            |        |   |      |   |        |  
|As reported                    |  | $                          | 14,326 |   |      | $ | 18,372 |  
|Fair value compensation cost*  |  | $                          | (2,441 | ) |      | $ | (5,640 | )
|                               |  |                            |        |   |      |   |        |  
|Pro forma                      |  | $                          | 11,885 |   |      | $ | 12,732 |  
|Net income per share - basic   |  |                            |        |   |      |   |        |  
|As reported                    |  | $                          | 0.35   |   |      | $ | 0.47   |  
|Pro forma                      |  | $                          | 0.29   |   |      | $ | 0.33   |  
|Net income per share - diluted |  |                            |        |   |      |   |        |  
|As reported                    |  | $                          | 0.32   |   |      | $ | 0.45   |  
|Pro forma                      |  | $                          | 0.27   |   |      | $ | 0.31   |  

---

|* | The fair value compensation cost is net of the tax benefit provided on the exercise of stock options by employees in the United States.
|- | ---------------------------------------------------------------------------------------------------------------------------------------



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES



Current



Accounts payable and accrued liabilities are as follows:



|                                 |  |                     |        |                   |   |       
|-------------------------------- |  | ------------------- | ------ | ----------------- | - | ------
|                                 |  | As of March 31,2004 |        | As ofJune 30,2003
|                                 |  | (unaudited)         |        |                  
|Accounts payable                 |  | $                   | 8,929  |                   | $ | 4,035 
|Short term bank loan             |  |                     | 2,266  |                   |   |      
|Accrued liabilities              |  |                     | 29,871 |                   |   | 12,693
|Amounts payable for acquisitions |  |                     | 24,143 |                   |   | 3,443 
|Accrued salaries and commissions |  |                     | 28,822 |                   |   | 10,403
|Other liabilities                |  |                     | 1,345  |                   |   | 1,022 
|                                 |  |                     |        |                   |   |       
|                                 |  | $                   | 95,376 |                   | $ | 31,596
|                                 |  |                     |        |                   |   |       



Short term loan



IXOS subsidiary in Japan had a short term bank loan totalling
approximately $2.3 million as of March 31, 2004. The weighted average interest rate on these short term borrowings was 1.1% as of March 31, 2004. The loan is renewed monthly. There are no significant bank covenants associated with these borrowings.



Long term



|                                 |  |                     |        |                   |   |      
|-------------------------------- |  | ------------------- | ------ | ----------------- | - | -----
|                                 |  | As of March 31,2004 |        | As ofJune 30,2003
|                                 |  | (unaudited)         |        |                  
|Pension liability                |  |                     | 1,349  |                   |   |     
|Amounts payable for acquisitions |  |                     | 8,919  |                   |   |     
|Lease obligations                |  |                     | 4,518  |                   |   | 4,912
|Asset retirement obligation      |  |                     | 3,843  |                   |   |     
|                                 |  |                     |        |                   |   |      
|                                 |  | $                   | 18,629 |                   | $ | 4,912
|                                 |  |                     |        |                   |   |      



Pension obligations



IXOS has pension commitments to employees as well as to current and
previous members of the Executive Board. The actuarial cost method used in determining the net periodic pension cost is the projected unit credit method. The liabilities and annual income or expense of the Companys pension plan are determined
using methodologies that involve various actuarial assumptions, the most significant of which are the discount rate and the long-term rate of return on assets. The Companys policy is to deposit amounts with an insurance company to cover the
actuarial present value of the expected retirement benefits. The total held in short-term investments at March 31, 2004 was $1.5 million. These amounts are included in other assets. The amounts are independent of the defined benefit plan
and do not constitute assets of the plan. The fair value of the pension obligation at March 31, 2004 was $1.3 million.



Asset retirement obligations



The Company is required to return certain of its leased facilities to their original state at the conclusion of the lease. At March 31, 2004, the present
value of this obligation was $3.8 million.



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



4. INCOME TAXES



The Company operates in various tax jurisdictions, and accordingly, the Companys income is subject to varying rates of tax. Losses incurred in one
jurisdiction cannot be used to offset income taxes payable in another. The Companys ability to use these income tax losses and future income tax deductions is dependent upon the operations of the Company in the tax jurisdictions in which such
losses or deductions arise. As of March 31, 2004 and June 30, 2003, the Company had total net deferred tax assets of $23.9 million and $16.4 million and total net deferred tax liabilities of $39.5 million and nil, respectively.



The principal component of the total net deferred tax assets is temporary
differences associated with net operating loss carry forwards. The net deferred tax asset as of March 31, 2004 arises primarily from available income tax losses and future income tax deductions. The Company provides a valuation allowance if
sufficient uncertainty exists regarding the realization of certain deferred tax assets. Based on the reversal of deferred income tax liabilities, projected future taxable income, the character of the income tax assets and tax planning strategies, a
valuation allowance (excluding the allowance required for Gauss and IXOS deferred taxes) of $6.0 million and $5.7 million, respectively, was required as of March 31, 2004 and June 30, 2003. The Company continues to evaluate its taxable
position quarterly and considers factors by taxing jurisdiction such as estimated taxable income, the history of losses for tax purposes and the growth of the Company, among others. The principal component of the total net deferred tax liabilities
arises from purchased intangible assets acquired on the Gauss and IXOS transactions.



Gauss Interprise AG, in which the Company acquired a controlling interest in October 2003, had approximately $218.0 million of net operating loss carry forwards at March 31, 2004. Currently, no net deferred tax assets
have been recorded in the preliminary purchase price allocation related to these operating loss carry forwards since it is currently considered to be unlikely that the Company will be able to utilize any of the these net operating loss carry
forwards. The gross deferred tax asset related to these loss carry forwards is approximately $91.0 million and is fully offset by a valuation allowance. The Company will continue to review and evaluate these net operating loss carryforwards. If the
Company determines that it will realize the tax attributes related to Gauss in the future, the related decrease in the valuation allowance will reduce goodwill instead of the provision for taxes.



IXOS SOFTWARE AG, in which the Company acquired a controlling interest in
March 2004 (see note 13), had approximately $132 million of net operating loss carry forwards and other future deductions at March 31, 2004. Currently, no net deferred tax assets have been recorded in the preliminary purchase price allocation
related to these operating loss carry forwards and other future deductions, since it is currently considered to be unlikely that the Company will be able to utilize any of these net operating loss carryforwards. The gross deferred tax asset related
to these loss carry forwards is approximately $36.0 million and is offset by a valuation allowance and deferred tax liabilities. The Company will continue to review and evaluate these net operating loss carryforwards. If the Company determines that
it will realize the tax attributes related to IXOS in the future, the related decrease in the valuation allowance will reduce goodwill instead of the provision for taxes.



5. SEGMENT INFORMATION



The Company has two reportable segments: North America and Europe. The Company evaluates operating segment performance based on revenues and direct
operating expenses of the segment, based on the location of the respective customers. The accounting policies of the operating segments are the same as those set forth in the Companys Annual Report on Form 10-K for the year ended on June 30,
2003.



Included in the following operating results are
allocations of certain operating costs that are incurred in one reporting segment but which relate to all reporting segments. The allocations of these common operating costs



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



are consistent with the manner in which the chief operating decision maker of the Company allocates them for analysis. The Other category
consists of geographic regions other than North America and Europe.



Contribution margin from operating segments does not include amortization of intangible assets, and restructuring costs. Goodwill and other intangible assets have been included in segment assets.



Information about reported segments is as follows:



|                                    |  |              |         |        |   |         |  |       |        |  |   |        
|----------------------------------- |  | ------------ | ------- | ------ | - | ------- |  | ----- | ------ |  | - | -------
|                                    |  | NorthAmerica |         | Europe |   | Other   |  | Total
|Three months ended March 31, 2004   |  |              |         |        |   |         |  |       |        |  |   |        
|                                    |  |              |         |       
|Revenue from external customers     |  | $            | 35,846  |        | $ | 37,681  |  | $     | 6,688  |  | $ | 80,215 
|Operating costs                     |  |              | 26,912  |        |   | 29,264  |  |       | 4,638  |  |   | 60,814 
|                                    |  |              |         |        |   |         |  |       |        |  |   |        
|Contribution margin                 |  | $            | 8,934   |        | $ | 8,417   |  | $     | 2,050  |  | $ | 19,401 
|                                    |  |              |         |        |   |         |  |       |        |  |   |        
|Segment assets as of March 31, 2004 |  | $            | 228,465 |        | $ | 268,948 |  | $     | 54,795 |  | $ | 552,208
|                                    |  |              |         |        |   |         |  |       |        |  |   |        
|Three months ended March 31, 2003   |  |              |         |        |   |         |  |       |        |  |   |        
|                                    |  |              |         |       
|Revenue from external customers     |  | $            | 23,391  |        | $ | 19,602  |  | $     | 966    |  | $ | 43,959 
|Operating costs                     |  |              | 17,324  |        |   | 17,340  |  |       | 670    |  |   | 35,334 
|                                    |  |              |         |        |   |         |  |       |        |  |   |        
|Contribution margin                 |  | $            | 6,067   |        | $ | 2,262   |  | $     | 296    |  | $ | 8,625  
|                                    |  |              |         |        |   |         |  |       |        |  |   |        
|Segment assets as of June 30, 2003  |  | $            | 98,769  |        | $ | 38,618  |  | $     | 2,106  |  | $ | 139,493
|                                    |  |              |         |        |   |         |  |       |        |  |   |        



|                                 |  |              |        |        |   |        |  |       |        |  |   |        
|-------------------------------- |  | ------------ | ------ | ------ | - | ------ |  | ----- | ------ |  | - | -------
|                                 |  | NorthAmerica |        | Europe |   | Other  |  | Total
|Nine months ended March 31, 2004 |  |              |        |        |   |        |  |       |        |  |   |        
|                                 |  |              |        |       
|Revenue from external customers  |  | $            | 96,901 |        | $ | 78,559 |  | $     | 10,614 |  | $ | 186,074
|Operating costs                  |  |              | 69,082 |        |   | 69,100 |  |       | 8,540  |  |   | 146,722
|                                 |  |              |        |        |   |        |  |       |        |  |   |        
|Contribution margin              |  | $            | 27,819 |        | $ | 9,459  |  | $     | 2,074  |  | $ | 39,352 
|                                 |  |              |        |        |   |        |  |       |        |  |   |        
|Nine months ended March 31, 2003 |  |              |        |        |   |        |  |       |        |  |   |        
|                                 |  |              |        |       
|Revenue from external customers  |  | $            | 71,627 |        | $ | 49,645 |  | $     | 3,356  |  | $ | 124,628
|Operating costs                  |  |              | 59,749 |        |   | 39,876 |  |       | 2,976  |  |   | 102,601
|                                 |  |              |        |        |   |        |  |       |        |  |   |        
|Contribution margin              |  | $            | 11,878 |        | $ | 9,769  |  | $     | 380    |  | $ | 22,027 
|                                 |  |              |        |        |   |        |  |       |        |  |   |        



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



A reconciliation of the totals reported for the operating segments to the applicable line items in
the condensed consolidated financial statements for the three months and nine months ending March 31, 2004 and 2003 is as follows:



|                                                        |  |                             |         |   |      |   |      
|------------------------------------------------------- |  | --------------------------- | ------- | - | ---- | - | -----
|                                                        |  | Three months endedMarch 31,
|                                                        |  | 2004                        |         |   | 2003
|Total contribution margin from operating segments above |  | $                           | 19,401  |   |      | $ | 8,625
|Amortization and depreciation                           |  |                             | 4,870   |   |      |   | 2,119
|                                                        |  |                             |         |   |      |   |      
|Total operating income excluding restructuring          |  |                             | 14,531  |   |      |   | 6,506
|Restructuring                                           |  |                             | (10,005 | ) |      |   |     
|                                                        |  |                             |         |   |      |   |      
|Total operating income                                  |  |                             | 4,526   |   |      |   | 6,506
|Interest, other income, minority interest and taxes     |  |                             | (1,247  | ) |      |   | 286  
|                                                        |  |                             |         |   |      |   |      
|Net income                                              |  | $                           | 3,279   |   |      | $ | 6,792
|                                                        |  |                             |         |   |      |   |      



|                                                        |  |                            |         |   |      |   |       
|------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ------
|                                                        |  | Nine months endedMarch 31,
|                                                        |  | 2004                       |         |   | 2003
|Total contribution margin from operating segments above |  | $                          | 39,352  |   |      | $ | 22,027
|Amortization and depreciation                           |  |                            | 10,358  |   |      |   | 5,788 
|                                                        |  |                            |         |   |      |   |       
|Total operating income excluding restructuring          |  |                            | 28,994  |   |      |   | 16,239
|Restructuring                                           |  |                            | (10,005 | ) |      |   |      
|                                                        |  |                            |         |   |      |   |       
|Total operating income                                  |  |                            | 18,989  |   |      |   | 16,239
|Interest, other income, minority interest and taxes     |  |                            | (4,663  | ) |      |   | 2,133 
|                                                        |  |                            |         |   |      |   |       
|Net income                                              |  | $                          | 14,326  |   |      | $ | 18,372
|                                                        |  |                            |         |   |      |   |       



|                                            |  |                     |         |                    |   |        
|------------------------------------------- |  | ------------------- | ------- | ------------------ | - | -------
|                                            |  | As of March31, 2004 |         | As of June 30,2003
|Segment assets                              |  | $                   | 552,208 |                    | $ | 139,493
|Investments                                 |  |                     |        |                    |   |       
|Cash, including restricted cash (corporate) |  |                     | 94,438  |                    |   | 99,194 
|                                            |  |                     |         |                    |   |        
|Total corporate assets                      |  | $                   | 646,646 |                    | $ | 238,687
|                                            |  |                     |         |                    |   |        



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



The following table sets forth the distribution of net revenues determined by location of customer
and identifiable assets, by geographic area where the net revenue for such location is greater than 10% of total revenue, for the three and nine months ended on March 31, 2004 and 2003:



|               |  |                             |        |      |   |       
|-------------- |  | --------------------------- | ------ | ---- | - | ------
|               |  | Three months endedMarch 31,
|               |  | 2004                        |        | 2003
|Net revenues:  |  |                             |        |      |   |       
|Canada         |  | $                           | 5,141  |      | $ | 3,810 
|United States  |  |                             | 30,705 |      |   | 19,581
|United Kingdom |  |                             | 9,973  |      |   | 5,677 
|Germany        |  |                             | 12,001 |      |   | 2,778 
|Rest of Europe |  |                             | 15,707 |      |   | 11,147
|Other          |  |                             | 6,688  |      |   | 966   
|               |  |                             |        |      |   |       
|Total revenues |  | $                           | 80,215 |      | $ | 43,959
|               |  |                             |        |      |   |       



|               |  |                            |         |      |   |        
|-------------- |  | -------------------------- | ------- | ---- | - | -------
|               |  | Nine months endedMarch 31,
|               |  | 2004                       |         | 2003
|Net revenues:  |  |                            |         |      |   |        
|Canada         |  | $                          | 13,680  |      | $ | 9,900  
|United States  |  |                            | 83,221  |      |   | 61,727 
|United Kingdom |  |                            | 22,315  |      |   | 15,096 
|Germany        |  |                            | 21,473  |      |   | 9,223  
|Rest of Europe |  |                            | 34,771  |      |   | 25,326 
|Other          |  |                            | 10,614  |      |   | 3,356  
|               |  |                            |         |      |   |        
|Total revenues |  | $                          | 186,074 |      | $ | 124,628
|               |  |                            |         |      |   |        



|                     |  |                 |         |                |   |        
|-------------------- |  | --------------- | ------- | -------------- | - | -------
|                     |  | As of March 31, |         | As of June 30,
|                     |  | 2004            |         | 2003          
|Segment assets:      |  |                 |         |                |   |        
|Canada               |  | $               | 164,180 |                | $ | 43,725 
|United States        |  |                 | 64,285  |                |   | 55,044 
|United Kingdom       |  |                 | 23,303  |                |   | 13,733 
|Germany              |  |                 | 195,405 |                |   | 4,832  
|Rest of Europe       |  |                 | 50,240  |                |   | 20,053 
|Other                |  |                 | 54,795  |                |   | 2,106  
|                     |  |                 |         |                |   |        
|Total segment assets |  | $               | 552,208 |                | $ | 139,493
|                     |  |                 |         |                |   |        



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



6. ACCUMULATED DEFICIT



During the three and nine month periods ending March 31, 2004, the Company did not repurchase any of its Common Shares
pursuant to its stock repurchase program.



During the three
month period ending March 31, 2003, the Company did not repurchase any of its Common Shares pursuant to its stock repurchase program. During the nine months ended on March 31, 2003, the Company, pursuant to its stock repurchase program, purchased
755,700 of its Common Shares on The Toronto Stock Exchange and the NASDAQ National Market at an aggregate cost of $17.3 million. $7.8 million of the repurchase was charged to common share capital based on the average carrying value of the Common
Shares, with the remaining $9.5 million charged to accumulated deficit.



7.
NET INCOME PER SHARE



|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|------------------------------------------------------ |  | --------------------------- | ------ | -------------------------- | - | ------ |  | ---- | ------ |  | - | ------
|                                                       |  | Three Months EndedMarch 31, |        | Nine Months EndedMarch 31,
|                                                       |  | 2004                        |        | 2003                       |   | 2004   |  | 2003
|Basic net income per share                             |  |                             |        |                            |   |        |  |      |        |  |   |       
|Net income                                             |  | $                           | 3,279  |                            | $ | 6,792  |  | $    | 14,326 |  | $ | 18,372
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|Weighted average number of shares outstanding          |  |                             | 43,988 |                            |   | 38,816 |  |      | 41,385 |  |   | 38,984
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|Basic income per share                                 |  | $                           | 0.07   |                            | $ | 0.17   |  | $    | 0.35   |  | $ | 0.47  
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|Diluted net income per share                           |  |                             |        |                            |   |        |  |      |        |  |   |       
|                                                       |  |                             |        |                           
|Net income                                             |  | $                           | 3,279  |                            | $ | 6,792  |  | $    | 14,326 |  | $ | 18,372
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|Weighted average number of shares outstanding          |  |                             | 43,988 |                            |   | 38,816 |  |      | 41,385 |  |   | 38,984
|Dilutive effect of stock options and warrants          |  |                             | 3,789  |                            |   | 2,518  |  |      | 3,264  |  |   | 2,152 
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|Adjusted weighted average number of shares outstanding |  |                             | 47,777 |                            |   | 41,334 |  |      | 44,649 |  |   | 41,136
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       
|Diluted income per share                               |  | $                           | 0.07   |                            | $ | 0.16   |  | $    | 0.32   |  | $ | 0.45  
|                                                       |  |                             |        |                            |   |        |  |      |        |  |   |       



8. OPTION PLANS



Summary of Outstanding Stock Options



As of March 31, 2004, options to purchase an aggregate of 5,181,464 Common
Shares were outstanding under all of the Companys stock option plans. As of March 31, 2004, there were exercisable options outstanding to purchase 3,547,488 shares at an average price of $7.97. At March 31, 2003, there were exercisable options
outstanding to purchase 4,619,351 shares at an average price of $7.12 on an adjusted split basis. As a result of the stock split declared on October 8, 2003 the number of stock options doubled and accordingly the exercise price was halved.



14



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



The following table summarizes information regarding stock options outstanding at March 31, 2004
adjusted for the stock dividend declared on October 8, 2003:



|                        |  |                                   |  |                                                 |  |                              |       |                                   |           |                              |   |      
|----------------------- |  | --------------------------------- |  | ----------------------------------------------- |  | ---------------------------- | ----- | --------------------------------- | --------- | ---------------------------- | - | -----
|                        |  | Options Outstanding               |  | Options Exercisable                            
|Range ofExercise Prices |  | NumberOutstandingat March31, 2004 |  | WeightedAverageRemainingContractualLife (years) |  | WeightedAverageExercisePrice |       | NumberOutstandingat March31, 2004 |           | WeightedAverageExercisePrice
|$  0.08 -$  3.31        |  | 553,640                           |  | 2.43                                            |  | $                            | 2.53  |                                   | 553,640   |                              | $ | 2.53 
|$  4.00 -$  6.72        |  | 746,320                           |  | 3.80                                            |  |                              | 5.51  |                                   | 746,320   |                              |   | 5.51 
|$  6.88 -$  9.25        |  | 1,050,112                         |  | 4.75                                            |  |                              | 7.33  |                                   | 1,008,612 |                              |   | 7.28 
|$  9.28 -$11.09         |  | 1,071,450                         |  | 6.82                                            |  |                              | 10.60 |                                   | 600,200   |                              |   | 10.61
|$11.31 -$14.10          |  | 944,302                           |  | 8.07                                            |  |                              | 12.93 |                                   | 365,076   |                              |   | 13.12
|$14.56 -$26.24          |  | 815,640                           |  | 8.19                                            |  |                              | 17.24 |                                   | 273,640   |                              |   | 15.54
|                        |  |                                   |  |                                                 |  |                              |       |                                   |           |                              |   |      
|$ 0.08 -   26.24        |  | 5,181,464                         |  | 5.94                                            |  | $                            | 9.81  |                                   | 3,547,488 |                              | $ | 7.97 
|                        |  |                                   |  |                                                 |  |                              |       |                                   |           |                              |   |      



During the three and
nine month periods ended on March 31, 2004, 32,000 and 530,000 stock options were granted, respectively. During the three and nine month periods ended on March 31, 2003 94,968 and 834,968 stock options were granted, respectively. The fair value of
each stock option grant on the date of grant was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions for the stock-based compensation plans:



|                                         |  |                             |       |   |      |   |      |  
|---------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ---- | -
|                                         |  | Three monthsended March 31, |      
|                                         |  | 2004                        |       |   | 2003 |  
|Volatility                               |  |                             | 60    | % |      |   | 60   | %
|Risk-free interest rate                  |  |                             | 3.5   | % |      |   | 6    | %
|Dividend yield                           |  |                             |      |   |      |   |     |  
|Expected lives (in years)                |  |                             | 3.5   |   |      |   | 5.5  |  
|Weighted average fair value (in dollars) |  | $                           | 12.81 |   |      | $ | 5.48 |  



|                                         |  |                            |      |   |      |   |      |  
|---------------------------------------- |  | -------------------------- | ---- | - | ---- | - | ---- | -
|                                         |  | Nine monthsended March 31, |     
|                                         |  | 2004                       |      |   | 2003 |  
|Volatility                               |  |                            | 60   | % |      |   | 60   | %
|Risk-free interest rate                  |  |                            | 3.5  | % |      |   | 6    | %
|Dividend yield                           |  |                            |     |   |      |   |     |  
|Expected lives (in years)                |  |                            | 3.5  |   |      |   | 5.5  |  
|Weighted average fair value (in dollars) |  | $                          | 8.77 |   |      | $ | 6.31 |  



15



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



9. GOODWILL



Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of identifiable net tangible and intangible assets. The
following table summarizes the change in goodwill:



|                                          |  |                                 |  |                               
|----------------------------------------- |  | ------------------------------- |  | ------------------------------
|                                          |  | Three monthsended March 31,2004 |  | Nine monthsended March 31,2004
|Balance as of the beginning of the period |  | 50,262                          |  | 32,301                        
|Goodwill acquired during the period       |  | 158,598                         |  | 175,791                       
|Other                                     |  | 2,170                           |  | 2,938                         
|                                          |  |                                 |  |                               
|Balance as of March 31, 2004              |  | 211,030                         |  | 211,030                       
|                                          |  |                                 |  |                               



10. ACQUIRED INTANGIBLE ASSETS



|                                             |  |                                 |   |  |                                |  
|-------------------------------------------- |  | ------------------------------- | - |  | ------------------------------ | -
|                                             |  | Three monthsended March 31,2004 |   |  | Nine monthsended March 31,2004 |  
|Balance as of the beginning of the period    |  | 31,826                          |   |  | 20,517                         |  
|Intangible assets acquired during the period |  | 93,671                          |   |  | 106,671                        |  
|Less: Amortization                           |  | (3,062                          | ) |  | (5,884                         | )
|Other                                        |  | (1,770                          | ) |  | (639                           | )
|                                             |  |                                 |   |  |                                |  
|Balance as of March 31, 2004                 |  | 120,665                         |   |  | 120,665                        |  
|                                             |  |                                 |   |  |                                |  



11. SUPPLEMENTAL CASH FLOW
DISCLOSURE



|                                                  |  |           |       |           |   |      |  |      |       |  |   |   
|------------------------------------------------- |  | --------- | ----- | --------- | - | ---- |  | ---- | ----- |  | - | --
|                                                  |  | March 31, |       | March 31,
|                                                  |  | 2004      |       | 2003      |   | 2004 |  | 2003
|Supplemental disclosure of cash flow information: |  |           |       |           |   |      |  |      |       |  |   |   
|Cash paid during the period for interest          |  | $         | 5     |           | $ | 10   |  | $    | 22    |  | $ | 20
|Cash paid during the period for taxes             |  | $         | 1,166 |           |   |     |  | $    | 5,768 |  |   |  



12. COMMITMENTS AND CONTINGENCIES



As of March 31, 2004, the Company had future commitments
and contractual obligations as summarized in the following table. These commitments are principally comprised of operating leases for the Companys leased premises.



|            |  |        |         |                 |   |        |  |   |       
|----------- |  | ------ | ------- | --------------- | - | ------ |  | - | ------
|Fiscal Year |  | Leases |         | SubLeaseRentals |   | Net   
|2004        |  | $      | 6,395   |                 | $ | 1,949  |  | $ | 4,446 
|2005        |  |        | 23,026  |                 |   | 6,797  |  |   | 16,229
|2006        |  |        | 19,592  |                 |   | 6,260  |  |   | 13,332
|2007        |  |        | 18,516  |                 |   | 6,043  |  |   | 12,473
|Thereafter  |  |        | 74,823  |                 |   | 24,213 |  |   | 50,610
|            |  |        |         |                 |   |        |  |   |       
|            |  | $      | 142,352 |                 | $ | 45,262 |  | $ | 97,090
|            |  |        |         |                 |   |        |  |   |       



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



The Company also has a long-term network services contract for telecommunication. The contractual
obligations under this contract totals approximately $1.6 million through September 2006.



The Company does not enter into off-balance sheet financing as a matter of practice except for the use of operating leases for office space, computer equipment, and vehicles. In accordance with GAAP, neither the lease
liability nor the underlying asset is carried on the balance sheet, as the terms of the leases do not meet the criteria for capitalization.



The Company typically agrees in its sales contracts to indemnify its customers for any expenses or liability resulting from claimed infringements of
patents, trademarks or copyrights of third parties. The terms of these indemnification agreements are generally perpetual after execution of the agreement. Typically, the maximum amount of potential future indemnification liability with respect to
individual customers is limited to an amount equal to the license fees paid by the customer. In limited circumstances, the Company has agreed to extend this liability. To date, the Company has not paid any amounts to settle claims, defend lawsuits
or otherwise under these indemnification agreements.



13. ACQUISITIONS



IXOS



On October 21, 2003, Open Text announced that it had entered into a business
combination agreement with IXOS Software AG (IXOS). The transaction was consummated via a tender offer to purchase all of the issued and outstanding shares of common stock of IXOS for either cash or a combination of Common Shares and
Common Share purchase warrants (the Alternative Consideration) of Open Text. The tender offer for all shares of IXOS by Open Text began on December 2, 2003, through its wholly owned subsidiary, 2016091 Ontario Inc.



On February 19, 2004, Open Text Corporation closed the tender offer, pursuant
to which 2016091 Ontario acquired a total of 19,157,428 IXOS shares or approximately 88% of the ordinary share capital and voting rights of IXOS, including shares acquired in the open market. Of these IXOS shares, 17,792,529 shares (approximately
93% of the tendered shares) were tendered for the Alternative Consideration, with the balance, including shares purchased on the open market, acquired for approximately $15.3 million in cash. The Alternative Consideration for each IXOS share
consisted of 0.5220 of an Open Text Common Share and 0.1484 of a warrant. Each whole warrant is exercisable to purchase one Open Text Common Share for up to one year after the closing date of the Tender Offer, on February 19, 2004, at a strike price
of $20.75 per share.



Approximately 9.3 million Open Text
shares were issued in conjunction with the tender offer for IXOS. These shares were valued using the average share price two days before and two days after the acquisition was agreed to and announced. Accordingly, the fair value of these shares was
approximately $191 million.



Approximately 2.6 million warrants
were issued in conjunction with the Alternate Consideration. The fair value of each warrant was estimated using the Black-Scholes option-pricing model with the following weighted average assumptions:



|                        |  |        |  
|----------------------- |  | ------ | -
|Volatility              |  | 60     | %
|Risk-free interest rate |  | 3.5    | %
|Dividend yield          |  |       |  
|Expected life           |  | 1 year |  



Based on this
methodology, the warrants were valued at $9.40 each, resulting in a total value of approximately $25 million.



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



The results of operations of IXOS have been included in Open Texts consolidated results from
March 1, 2004.



IXOS is a leading vendor of solutions for
Enterprise Content Management (ECM). IXOS enterprise solutions help businesses achieve efficient management and display of web information, optimization of business processes, and secure, long-term archiving of all business documents in
a highly-scaleable document repository.



The Company has
retained the services of an independent valuator to assist in the purchase price allocation. The work of the independent valuator is not yet finalized. The allocation presented in the preliminary purchase price allocation represents
managements best estimate of the allocation of the purchase price at the current time. These items may differ from the final purchase price allocation and these differences may be material.



As part of the purchase price allocation, the Company performed an in depth
review to determine if there was in process research and development. It determined that there was no in process research and development, primarily as a result of the release, shortly before the acquisition, of a new version of IXOS software
solution.



The following table summarizes the estimated fair
values of the assets acquired and liabilities assumed as of the date of the IXOS acquisition:



|                                                                   |  |   |          |  
|------------------------------------------------------------------ |  | - | -------- | -
|Current assets                                                     |  | $ | 88,474   |  
|Long-term assets                                                   |  |   | 19,864   |  
|Customer assets                                                    |  |   | 32,913   |  
|Technology                                                         |  |   | 60,758   |  
|Goodwill                                                           |  |   | 158,598  |  
|                                                                   |  |   |          |  
|Total assets acquired                                              |  |   | 360,607  |  
|                                                                   | 
|Current liabilities                                                |  |   | (49,177  | )
|Long-term liabilities                                              |  |   | (34,065  | )
|Liabilities recognized in connection with the business combination |  |   | (36,988  | )
|                                                                   |  |   |          |  
|Total liabilities assumed                                          |  |   | (120,230 | )
|Minority Interest                                                  |  |   | (8,888   | )
|                                                                   |  |   |          |  
|Net assets acquired                                                |  |   | 231,489  |  
|                                                                   |  |   |          |  



The portion of the
purchase price allocated to goodwill of $159 million was assigned to the Companys reportable geographic segments as follows:



|              |  |   |        
|------------- |  | - | -------
|North America |  | $ | 30,134 
|Europe        |  |   | 98,330 
|Other         |  |   | 30,134 
|              |  |   |        
|              |  | $ | 158,598
|              |  |   |        



The customer assets of
$32.9 million were assigned a useful life of 10 years. The technology assets of $60.8 million were assigned a useful life of between 5 years and 7 years.



As part of the purchase price allocation, the Company recognized liabilities in connection with the acquisition of IXOS totalling approximately $37.0
million. The liabilities recognized include severance and



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



related charges in connection with a worldwide reduction in the IXOS workforce, in addition to transaction costs and costs relating to provisioning for
excessive facilities. Of the approximately $37.0 million in total liabilities recognized in connection with the acquisition, approximately $33.0 million remains accrued at March 31, 2004.



IXOS had approximately $132 million of net operating loss carry forwards and other future deductions at March 31, 2004.
Currently, no net deferred tax assets have been recorded in the preliminary purchase price allocation related to these operating loss carry forwards and other future deductions since it is currently considered unlikely that the Company will be able
to utilize any of the loss carryforwards. The gross deferred tax asset related to these loss carry forwards is approximately $36 million and is offset by a valuation allowance and deferred tax liabilities. The Company will continue to review and
evaluate these net operating loss carryforwards. If the Company determines that it will realize the tax attributes related to IXOS in the future, the related decrease in the valuation allowance will reduce goodwill instead of the provision for
taxes.



Open Text intends to acquire 100% of the shares of
IXOS. The total cash consideration to acquire the remaining outstanding shares of IXOS is estimated to be approximately $30 million (based on 9 Euro per share).



A Director of the Company received $235,000 in consulting fees for assistance with the acquisition of IXOS. These fees are included in the acquisition
cost.



IXOS Restructuring



On March 16, 2004, IXOS, which is approximately 88% owned by Open Text,
announced plans to improve profitability and position the company for future growth. IXOS recorded a charge of approximately $13 million (10.5 million Euro) in the third quarter of fiscal 2004 relating to this restructuring activity, which includes
a reduction of IXOS workforce by 14 percent, or approximately 130 people. The restructuring charge taken by IXOS does not impact the operating results of Open Text as the restructuring charge was recorded as part of the liabilities assumed as
of the date IXOS was acquired.



Gauss



On October 16, 2003, 2016090 Ontario Inc. (Ontario), a wholly
owned subsidiary of Open Text, acquired approximately 75% of the shares of Gauss Interprise AG (Gauss) pursuant to several sale and purchase agreements with major shareholders. The results of Gauss operations have been included in
the consolidated financial statements of Open Text since that date. As of December 31, 2003, Open Text had acquired approximately 87% of the common shares of Gauss as a result of these agreements, as well as through the purchase of common shares on
the open market and through a public tender offer.



On December
23, 2003, at an Extraordinary Shareholder Meeting of Gauss, the Gauss shareholders voted to approve an Agreement of Control between Ontario and Gauss. The Agreement of Control is not effective until it is registered with the German Courts. Under
German law registration occurs on the earlier of a) 30 days following shareholder approval or b) if any actions contesting the registration are filed, when such actions have been resolved. Pursuant to the German Stock Corporation Act, the Agreement
entitles Ontario, as the majority shareholder of Gauss, to issue instructions to the management board of Gauss.



In May 2004 Gauss announced that the Agreement of Control between the majority shareholder 2016090 Ontario Inc., a wholly owned subsidiary of Open Text
Corporation, and Gauss was registered in the commercial register at the lower court of Hamburg on and became effective on May 6, 2004. The announcement in the German Federal Gazette is expected to follow shortly. On the day after the announcement in
the Federal Gazette, the purchase offer of the major shareholder, 2016090 Ontario Inc., to the minority shareholders of Gauss will



19



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



commence. Under the purchase offer 2016090 Ontario Inc. will offer to purchase the remaining outstanding shares of Gauss at a price of EURO 1.06 per
Gauss-Share. The acceptance period will be for two months.



In
addition, in April 2004 Gauss announced that effective July 1, 2004 the shares of Gauss will cease to be listed on a stock exchange. In connection with this delisting on July 2, 2004, a second offer will commence by 2016090 Ontario Inc. to purchase
the remaining outstanding shares of Gauss at a price of EURO 1.06 per Gauss share. The acceptance period will be for two months.



Gauss is a developer of Web content management software. It also provides Integrated Document and Output Management (IDOM) software for ERP systems. These
products automate processes such as invoicing, ordering and insurance claims, allowing customers to convert large volumes of paper into electronic documents via imaging technology and processing them through highly structured workflows.



The Company has retained the services of an independent valuator to assist
in the purchase price allocation. The work of the independent valuator is not yet finalized. The allocation presented in the preliminary purchase price allocation represents managements best estimate of the allocation of the purchase price at
the current time. These items may differ from the final purchase price allocation and these differences may be material.



The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the Gauss acquisition.



|                                                                   |  |   |         |  
|------------------------------------------------------------------ |  | - | ------- | -
|Current assets                                                     |  | $ | 3,712   |  
|Long-term assets                                                   |  |   | 1,737   |  
|Customer assets                                                    |  |   | 4,200   |  
|Purchased technology                                               |  |   | 5,500   |  
|Goodwill                                                           |  |   | 12,215  |  
|                                                                   |  |   |         |  
|Total assets acquired                                              |  |   | 27,364  |  
|                                                                   | 
|Current liabilities                                                |  |   | (12,400 | )
|Liabilities recognized in connection with the business combination |  |   | (5,200  | )
|                                                                   |  |   |         |  
|Total liabilities assumed                                          |  |   | (17,600 | )
|                                                                   |  |   |         |  
|Net assets acquired                                                |  |   | 9,764   |  
|                                                                   |  |   |         |  



The portion of the
purchase price allocated to goodwill of $12.2 million was assigned to the Companys reportable geographic segments as follows:



|              |  |   |       
|------------- |  | - | ------
|North America |  | $ | 8,306 
|Europe        |  |   | 3,909 
|              |  |   |       
|              |  | $ | 12,215
|              |  |   |       



No minority interest
was recorded as part of the purchase price as the net book value of Gauss assets and liabilities was in a negative position.



The customer assets of $4.2 million and the purchased technology of $5.5 million were assigned a useful life of 5 years.



As part of the purchase price allocation, the Company recognized liabilities
in connection with the acquisition of Gauss totaling $5.2 million. The liabilities recognized include severance and related charges in connection with a worldwide reduction in the Gauss workforce, in addition to transaction costs and costs relating



20



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##### Table of Contents

OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



to provisioning for excessive facilities. Of the total liabilities recognized in connection with the acquisition totaling $5.2 million, $2.6 million remains
accrued at March 31, 2004.



Gauss had approximately $218
million of net operating loss carry forwards at December 31, 2003. Currently, no net deferred tax assets have been recorded in the preliminary purchase price allocation related to these operating loss carry forwards since at the current time it is
unlikely that the company will be able to utilize any of these net operating loss carry forwards. The gross deferred tax asset related to these loss carry forwards is approximately $91 million and is fully offset by a valuation allowance.



Open Text intends to acquire 100% of the shares of Gauss. The
total cash consideration for 100% of Gauss is estimated to be approximately $11.0 million.



A Director of the Company received $170,000 in consulting fees for assistance with the acquisition of Gauss. These fees are included in the acquisition cost.



SER



On October 23, 2003, Open Text acquired all the common shares of SER Solutions Software GmbH and SER eGovernment Deutschland
GmbH (together SER) for total consideration of up to $11.4 million, subject to meeting certain revenue performance and certain adjustments based on the Companys assets and liabilities. The results of SERs operations have been
included in the consolidated financial statements of Open Text since that date. SER develops and markets the DOMEA® software solution. The purchase price includes contingent consideration of $3.8 million that may be earned by the former shareholders of SER based on
the achievement of certain revenue targets through December 31, 2004. Amounts earned under this arrangement will be paid in the form of 50% cash and 50% in Open Text Common Shares. In addition, approximately $2.0 million of the purchase price is
being held to secure certain warranties, representations and covenants in the acquisition agreement. The Company expects this amount to be paid within approximately one year of closing. When paid these amounts will be recorded as additional
goodwill.



The Company has retained the services of an
independent valuator to assist in the purchase price allocation. The work of the independent valuator is not yet finalized. The allocation presented in the preliminary purchase price allocation represents managements best estimate of the
allocation of the purchase price at the current time. These items may differ from the final purchase price allocation and these differences may be material.



The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of the SER acquisition.



|                                                                   |  |   |        |  
|------------------------------------------------------------------ |  | - | ------ | -
|Current assets                                                     |  | $ | 2,537  |  
|Long-term assets                                                   |  |   | 249    |  
|Customer assets                                                    |  |   | 1,800  |  
|Purchased technology                                               |  |   | 1,300  |  
|Trademark                                                          |  |   | 400    |  
|Goodwill                                                           |  |   | 3,722  |  
|                                                                   |  |   |        |  
|Total assets acquired                                              |  |   | 10,008 |  
|                                                                   | 
|Current liabilities                                                |  |   | (2,080 | )
|Liabilities recognized in connection with the business combination |  |   | (350   | )
|                                                                   |  |   |        |  
|Total liabilities assumed                                          |  |   | (2,430 | )
|                                                                   |  |   |        |  
|Net assets acquired                                                |  |   | 7,578  |  
|                                                                   |  |   |        |  



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



The portion of the purchase price allocated to goodwill of $3.7 million was assigned entirely to the
Companys European operating segment.



In accordance with
SFAS 142, the goodwill will not be amortized but will be reviewed for impairment on an annual basis.



Customer assets of $1.8 million and purchased technology of $1.3 million were assigned a useful life of 5 years.



As part of the purchase price allocation, the Company recognized liabilities
in connection with the acquisition of SER totaling $0.4 million. The liabilities recognized relate to transaction costs related to this acquisition. Of the total liabilities recognized in connection with the acquisition totaling $0.4 million, nil
remains accrued at March 31, 2004.



A Director of the Company
received $90,000 in consulting fees for assistance with the acquisition of SER. These fees are included in the acquisition cost.



Pro forma results



The following pro forma results of operations reflect the combined results of Open Text, Gauss Interprise AG (acquired on October 16, 2003), SER Solutions
Software GmbH and SER eGovernment Deutschland GmbH (acquired on October 23, 2003) and IXOS SOFTWARE AG, for the three and nine-month periods ending March 31, 2004 and 2003 as if the business combinations occurred at the beginning of Open Texts
fiscal year. The information used for this pro forma disclosure was obtained from unaudited reports filed with the Ontario Securities Commission and the Deutsche Borse for the quarterly and annual (as applicable) periods ended June 30, 2003,
September 30, 2003 and December 31, 2003 and from internal financial reports prepared by Gauss for the period from October 1, 2003 to October 15, 2003, from the internal financial reports prepared by SER for the periods ended September 30, 2002,
December 31, 2002, September 30, 2003 and for the period from October 1, 2003 to October 22, 2003 and from the unaudited financial statements filed with the Deutsche Borse for the periods ended March 31, 2003 and December 31, 2003 and from the
internal reports prepared by IXOS for the period from January 1, 2004 to February 29, 2004.



|                                     |  |                             |        |   |                            |   |        |      |  |   |         |   |  |   |         |  
|------------------------------------ |  | --------------------------- | ------ | - | -------------------------- | - | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                     |  | Three months ended March 31 |        |   | Nine months ended March 31 |  
|                                     |  | 2004                        |        |   | 2003                       |   |        | 2004 |  |   | 2003    |  
|Revenue                              |  | $                           | 96,574 |   |                            | $ | 85,552 |      |  | $ | 290,616 |   |  | $ | 241,008 |  
|Net Income (loss)                    |  | $                           | (7,644 | ) |                            | $ | (2,844 | )    |  | $ | (7,616  | ) |  | $ | (2,451  | )
|Basic EPS                            |  | $                           | (0.15  | ) |                            | $ | (0.06  | )    |  | $ | (0.15   | ) |  | $ | (0.05   | )
|Shares used in Basic EPS Calculation |  |                             | 50,213 |   |                            |   | 48,218 |      |  |   | 49,774  |   |  |   | 48,386  |  



The pro forma results
are not necessarily indicative of what would have occurred if the acquisitions had actually been completed as of the assumed dates and for the periods presented. The pro forma results represent Open Texts preliminary assessment of the
intangible assets and are subject to change and, therefore, the final values may differ substantially from these amounts. The actual results for the quarter ended March 31, 2004 include the results for IXOS for the month of March 2004. These results
are significantly different from the historical results for IXOS included in the pro forma due to significant restructuring actions taken by IXOS in February and March of 2004 to improve its results and bring them in line with Open Texts
operating model going forward.



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OPEN TEXT CORPORATION



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)

For the Three and Nine Months ended on March 31, 2004

(unaudited)



14. SUMMARY OF MATERIAL DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP) IN THE UNITED STATES AND CANADA



The consolidated financial statements of the Company have been prepared in accordance with US GAAP which conform in all material respects with Canadian GAAP except as set forth below.



Condensed Consolidated Income Statements



There were no material differences in the income statements between U.S. and
Canadian GAAP for the three and nine-month periods ended on March 31, 2004 and 2003.



Condensed Consolidated Balance Sheets



|                                                            |  |               |  |             
|----------------------------------------------------------- |  | ------------- |  | ------------
|                                                            |  | March 31,2004 |  | June 30,2003
|Total assets in accordance with US GAAP                     |  | 646,646       |  | 238,687     
|Goodwill (a)                                                |  | 9,092         |  | 9,092       
|                                                            |  |               |  |             
|Total assets in accordance with Canadian GAAP               |  | 655,738       |  | 247,779     
|                                                            |  |               |  |             
|Total shareholders equity in accordance with US GAAP       |  | 415,237       |  | 162,397     
|Goodwill (a)                                                |  | 9,092         |  | 9,092       
|                                                            |  |               |  |             
|Total shareholders equity in accordance with Canadian GAAP |  | 424,329       |  | 171,489     
|                                                            |  |               |  |             



(a) Goodwill



Under U.S. GAAP, any portion of the purchase price allocated to research and
development activities for which there is no alternative future use must be expensed on the acquisition date. Under Canadian GAAP Handbook Section 1581, such amounts were included in the amount recognized as goodwill as they did not meet the
criterion to be separately classified as intangible assets.



15.
RESTRUCTURING COSTS



During the third quarter of fiscal
2004, in connection with the integration of its recent acquisitions, the Company approved a plan to streamline its operations. The initiative totalled approximately $10.0 million and consists primarily of workforce reduction and excess facilities
associated with the integration. Charges for employee severance costs represent the reduction of Open Texts work force from our core businesses by approximately 140 people. The components of the restructuring charges are as follows:



|                   |  |                          |  |           |  |        |   |  |                      
|------------------ |  | ------------------------ |  | --------- |  | ------ | - |  | ---------------------
|                   |  | December 31,2003 Balance |  | Provision |  | Usage  |   |  | March 31,2004 Balance
|Employee Severance |  |                         |  | 5,657     |  | (186   | ) |  | 5,471                
|Facility Costs     |  |                         |  | 3,317     |  | (274   | ) |  | 3,043                
|Capital Assets     |  |                         |  | 684       |  | (684   | ) |  |                     
|Other              |  |                         |  | 347       |  | (174   | ) |  | 173                  
|                   |  |                          |  |           |  |        |   |  |                      
|                   |  |                         |  | 10,005    |  | (1,318 | ) |  | 8,687                
|                   |  |                          |  |           |  |        |   |  |                      



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



Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that express or involve discussions
with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance or the outcome of litigation (often, but not always, using words or phrases such as believes,
expects or does not expect, is expected, anticipates or does not anticipate or intends or stating that certain actions, events or results may, could,
would, might or will be taken or achieved) are not statements of historical fact and may be forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements of the Company, or developments in the Companys business or its industry, to differ materially from the anticipated results, performance, achievements or
developments expressed or implied by such forward-looking statements. Such risks and uncertainties include, the factors set forth in Cautionary Statements in this Quarterly Report on Form 10-Q. Readers should not place undue reliance on
any such forward-looking statements, which speak only as at the date they are made. Forward-looking statements are based on managements current plans, estimates, opinions and projections, and the Company assumes no obligation to update
forward-looking statements if assumptions regarding these plans, estimates, opinions or projections should change. This discussion should be read in conjunction with the condensed consolidated financial statements and related notes for the periods
specified. Further reference should be made to the Companys Annual Report on Form 10-K for the fiscal year ended on June 30, 2003.



Overview



Business



Open
Text is a leader in providing Enterprise Content
Management (ECM) solutions that bring together people, processes and information in global organizations. Throughout its history, Open Text has matched its tradition of innovation with a track record of financial strength and growth.
Today, the company supports approximately seventeen million seats across 13,000 deployments in 31 countries and 12 languages worldwide.



Open Texts flagship product, Livelink®, seamlessly combines collaboration with content management, helping organizations transform information into knowledge to provide the foundation for
innovation, compliance and accelerated growth.



Fully Web-based
with open architecture, Livelink provides rapid deployment, accelerated adoption, and low cost of ownership. Livelink Product Packages combine content lifecycle management, virtual team collaboration, online meetings, business process automation,
enterprise group scheduling and search services into scalable solutions that are easily customized and extended. Open Text provides integrated solutions that enable people to use information and technology more effectively at departmental levels and
across enterprises.



The Company offers its solutions both as
end-user stand-alone products and as fully integrated packages, which together provide a complete solution that is easily incorporated into existing enterprise business systems. Although most of the Companys technology is proprietary in
nature, the Company does include certain third party software in its products.



Future revenue is anticipated from a combination of organic growth and future potential acquisitions. The final stage of the IXOS tender offer was completed in February 2004, which creates a combined company poised to
become a leading presence in the ECM market. With Livelink, Open Texts strengths are clearly in the area of collaboration, and IXOS provides a comprehensive archiving capability. By managing substantially all types of business content, from
initial creation to final archive, the combined product offerings will create an end-to-end content management lifecycle management solution.



A broad and integrated Open Text and IXOS platform will provide:



| |  | Robust collaboration solutions
| | - | ------------------------------



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| |  | A broad and flexible Web Content Management portfolio
| | - | -----------------------------------------------------



| |  | Content archiving and e-mail management integration
| | - | ---------------------------------------------------



| |  | Document management and business process management technology for all customer environments
| | - | --------------------------------------------------------------------------------------------



| |  | A proven enterprise-strength infrastructure that allows organizations to manage huge volumes of records and documents
| | - | ---------------------------------------------------------------------------------------------------------------------



| |  | Outstanding compliance-ready solutions for emails and other records
| | - | -------------------------------------------------------------------



| |  | Leading capabilities in fully managing Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) document lifecycles.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



By delivering a one-stop solution for an
organizations evolving ECM requirements, the combined technologies will enable customers to lower overall cost of ownership and improve return on investment, without investing in the implementation of a number of different solutions from
different vendors.



Results of Operations



During the three months ending March 31, 2004, the Company recorded total
revenue of $80.2 million, of which license revenue was $34.5 million, and net income was $3.3 million. This compares with total revenue of $44.0 million recorded during the three months ended on March 31, 2003, of which license revenue was $19.0
million and net income was $6.8 million. Cash flow from operations for the three months ended on March 31, 2004 totaled $15.4 million as compared with $10.7 million for the three months ended on March 31, 2003.



During the nine months ended on March 31, 2004, the Company recorded total
revenue of $186.1 million, of which license revenue was $79.3 million, and net income was $14.3 million. This compares with total revenue of $124.6 million recorded during the nine months ended on March 31, 2003, of which license revenue was $51.9
million and net income was $18.4 million. Cash flow from operations for the nine months ended on March 31, 2004 totaled $20.6 million as compared with $31.9 million for the nine months ended on March 31, 2003.



The Companys cash and cash equivalents on March 31, 2004 was $153.3
million as compared with $116.6 million at June 30, 2003. Days sales outstanding (DSO) increased to 99 days at March 31, 2004, as compared with 62 days at March 31, 2003. Open Texts DSO excluding IXOS was 62 days at March 31,
2004. The increase primarily resulted from consolidating IXOS beginning March 1, 2004. While Open Text acquired all of IXOS outstanding receivables it only began consolidating IXOS revenues effective March 1, resulting in higher DSO. In
addition, historically, IXOS DSO was significantly higher than Open Texts historical DSO. Open Text is taking steps to attempt to improve IXOS DSO going forward.



The results of operations for the three and nine months ended March 31, 2004 and the financial condition on March 31, 2004
were favorably impacted by the acquisition of IXOS. The results of IXOS were consolidated with Open Text as of March 1, 2004. IXOS contributed $21.2 million of total revenue to Open Texts results for the three and nine-month periods ended
March 31, 2004 and $4.0 million to net income. IXOS contribution to license revenue was $11.1 million. However the results for the three and nine months ended March 31, 2004 are not necessarily indicative of future results, due to the
consolidation of IXOS in March and the higher weighting of revenue occurring towards the end of a quarter as compared with other expenditures which occur more evenly throughout the quarter.



Due to the increase in exchange rates in local currencies relative to the US
dollar, foreign exchange had an offsetting impact on both revenues and expenses for the three and nine months ended on March 31, 2004, as revenues were positively impacted by foreign exchange, and expenses were unfavorably impacted, resulting in an
immaterial impact on margin.



Acquisitions



During fiscal 2003, the Company acquired Centrinity Inc., Corechange Inc.,
and Eloquent, Inc. (collectively, the 2003 Acquisitions). To date in fiscal 2004 the Company has acquired IXOS SOFTWARE AG (IXOS),



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Gauss Interprise AG (Gauss), and SER Solutions Software GmbH and SER eGovernment Deutschland GmbH (together SER) (collectively, the
2004 Acquisitions).



On February 19, 2004, Open
Text Corporation closed the tender offer, pursuant to which, a wholly owned subsidiary of Open Text acquired a total of 19,157,428 IXOS shares or approximately 88% of the ordinary share capital and voting rights of IXOS, including shares acquired in
the open market. Of these IXOS shares, 17,792,529 shares (approximately 93% of the tendered shares) were tendered for Open Text shares and warrants, with the balance, including shares purchased on the open market, tendered for approximately $15.3
million in cash.



On October 16, 2003, Open Text acquired
approximately 75% of the shares of Gauss. As of December 31, 2003 Open Text had acquired approximately 87% of the outstanding shares of Gauss. Open Text intends to acquire 100% of the shares of Gauss.



On October 23, 2003, Open Text acquired all the common shares of SER.



Industry Developments



The recent acquisitions by Open Text are part of the overall consolidation
taking place in the Enterprise Content Management (ECM) industry. Vendors in the ECM sector are consolidating to broaden their product lines to take advantage of enterprise growth opportunities, strengthen and extend customer
relationships, and achieve increased efficiencies. The opportunities are enhanced by significant increases in content growth resulting from increases in e-mail traffic, greater usage of collaboration solutions, requirements for content to satisfy
regulatory compliance statutes, and the need to store and retrieve content faster and more effectively. Customers seek to have a complete suite of products integrated into a single product offering to properly manage their content. One-stop
shopping, ease of implementation, rapid deployment of solutions and financial stability of the vendor are critical. The Companys acquisition strategy reflects its focus on providing comprehensive ECM solutions to the market. The
acquisitions recently completed by the Company, extend its enterprise suite of offerings. Through internal development and its acquisition strategy, Open Text has created a broad product line to offer customers.



The Company continues to seek opportunities to acquire or invest in
businesses, products and technologies that expand, compliment or are otherwise related to the Companys current business or products. The Company also considers, from time to time, opportunities to engage in joint ventures or other business
collaborations with third parties to address particular market segments.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES



The Companys interim condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles
(US GAAP). These accounting principles were applied on a basis consistent with those of the consolidated financial statements contained in the Companys Annual Report on Form 10-K for the year ended on June 30, 2003 filed with the
Securities and Exchange Commission.



The preparation of
consolidated financial statements in accordance with US GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, the Company evaluates its estimates, including those related to revenues, bad debts, investments, intangible assets, income taxes, contingencies and litigation. The Company bases its estimates on historical
experience and on various other assumptions that are believed at the time to be reasonable under the circumstances.



The critical accounting policies affecting significant judgments and estimates used in the preparation of its condensed consolidated financial statements
have been applied as outlined in the Companys Annual Report on Form 10-K for the fiscal year ended on June 30, 2003, filed with the Securities and Exchange Commission. Under different assumptions or conditions, the actual results will differ,
potentially materially, from those previously estimated. Many of the conditions impacting these assumptions and estimates are outside of the Companys control.



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RESULTS OF OPERATIONS



Three Months Ended on March 31, 2004 compared with Three Months Ended on March 31,
20031



Revenues



The Companys total revenues increased 82% from $44.0 million in the three months ended on March 31, 2003 to $80.2 million for the three months ended
on March 31, 2004. The increase in revenues resulted primarily from the 2004 Acquisitions as well as significant organic growth.



License revenues increased 82% from $19.0 million in the three months ended on March 31, 2003 to $34.5 million in the three months ending March 31, 2004.
The increase in license revenue relates primarily to the 2004 acquisitions as well as organic growth. Also contributing to the Companys strong license revenue performance is the increase in large license transactions. During the quarter ended
on March 31, 2004 the Company completed five transactions that individually accounted for over $1 million in revenue each. This compares to one transaction exceeding $1.0 million in revenue completed during the quarter ended on March 31, 2003.



Customer support revenues increased 77% from $16.2 million in
the three months ended on March 31, 2003 to $28.6 million for the three months ended on March 31, 2004. The majority of the increase is attributable to the 2004 Acquisitions. The remaining increase in customer support revenues is directly
attributable to the increase in licenses granted in the prior year as well as strong renewal rates for maintenance contracts from existing customers.



Service revenues increased 96% from $8.7 million in the three months ended on March 31, 2003 to $17.1 million in the three months ended on March 31, 2004.
The increase is primarily attributable to the 2004 Acquisitions. Services revenues excluding acquisitions remained relatively constant representing the continuing competitive market for services engagements, especially in Europe. In addition, while
service revenue related to Livelink is growing, this is offset by decreases in services revenue related to certain legacy products. Utilization of services personnel in the quarter ended on March 31, 2004 and 2003 was 60% and 49%, respectively.



No single customer accounted for greater than 10% of the
Companys revenue during the three months ending March 31, 2003 or 2004. For the three months ended on March 31, 2004, 45% of total revenues were from customers located in North America, 47% of total revenues were from customers in Europe and
8% of total revenues were from customers in the Middle East and Asia (Other), compared with 53%, 45% and 2%, respectively, for North America, Europe and Other for the three months ended on March 31, 2003. The change in the mix of revenue
by geography resulted from the 2004 Acquisitions which increased the Companys global presence.



Cost of revenues



Cost
of license revenues increased 63% from $1.6 million in the three months ended on March 31, 2003 to $2.6 million in the three months ended on March 31, 2004. As a percentage of license revenues, cost of license revenues remained consistent at 8% for
the three months ended on March 31, 2003 and 2004. The increase in cost of license revenues is primarily a function of the increase in license revenues due to both organic growth and acquisitions completed during the period.



Cost of customer support revenues increased 105% from $2.7 million in the
three months ended on March 31, 2003 to $5.6 million in the three months ended on March 31, 2004. As a percentage of customer support



---

|1 | All percentage calculations are made using the amounts derived directly from the financial statements and not from rounded amounts referred to in the text of
managements discussion and analysis.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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revenues, cost of customer support revenues increased from 17% in the three months ended on March 31, 2003 to 20% during the three months ended on March 31,
2004. The increase in cost of customer support revenue is primarily associated with the increase in personnel-related expenses related to new employees from acquired companies, as well as the higher cost structure for customer support at these
acquired companies. The Company is taking measures to improve the cost structure of the acquired companies to reflect the lower cost of the Open Text structure going forward.



Cost of service revenues increased 82% from $6.6 million in the three months ended on March 31, 2003 to $12.0 million in the
three months ended on March 31, 2004. As a percentage of service revenues, cost of service revenues decreased from 76% in the three months ended on March 31, 2003 to 70% in the three months ended on March 31, 2004. The increase in cost of service
revenues resulted primarily from increases in the number of employees as a result of the Companys acquisitions compared to a year ago. The decrease in the cost of service revenue as a percentage of service revenue resulted primarily from the
consolidation of IXOS beginning March 1, 2004, as well as the associated improvements made in services margin as a result of the restructuring actions taken by IXOS during the third quarter ended on March 31, 2004. The improvement also resulted from
the increase in utilization, and improved cost structure in certain products. In addition, the Companys core European operations showed improved performance over the prior year.



Research and development



Research and development expenses increased 38% from $7.6 million in the three months ended on March 31, 2003 to $10.5 million in the three months ended
on March 31, 2004. Research and development expenses consist primarily of personnel expenses, and related facilities and equipment expenses, partially offset by the benefit of research and development tax credits and U.S. investment tax credits. As
a percentage of revenues, research and development expenses decreased from 17% to 13%. The increase in research and development expenses primarily resulted from an increase in personnel-related expenses associated with the new employees from the
2004 Acquisitions and the Companys continued commitment to developing new products and integrating acquired technologies. The number of employees in research and development has almost doubled from the same number a year ago, primarily as a
result of the addition of employees from acquired companies. The decrease in research and development expenses as a percentage of total revenue is primarily due to the consolidation of IXOS beginning March 1, 2004 and the associated higher weighting
of revenue occurring towards the end of the quarter as compared with the development expenditures which occur more evenly over the quarter.



During the quarter ended March 31, 2004 Open Text shipped Livelink Instant Messaging which integrates Presence and Instant Messaging technology into
Livelink, enhancing the real-time collaboration capabilities of Livelink. In addition, products that integrate technologies from recent acquisitions were released including Livelink Web Content Management Server, which includes technology from Gauss
and IXOS. This product significantly strengthens Livelinks ability to support Web Content Management applications. Also released this quarter is Coreport version 7.0 which is a big step forward in portal capabilities. Several products were
updated including Livelink Workflow, Explorer, Meeting Zone, LaunchForce and E-Sign.



Sales and marketing



Sales and marketing
expenses increased 76% from $13.2 million in the three months ended on March 31, 2003 to $23.2 million in the three months ended on March 31, 2004. Sales and marketing expenses include the costs associated with the Companys sales force
including compensation costs, travel, and training, as well as the costs of marketing programs and initiatives. As a percentage of revenues, sales and marketing expenses decreased from 30% in the three months ended on March 31, 2003 to 29% in the
three months ended on March 31, 2004. The increase in sales and marketing expenses is a result of increased spending related to the increase in revenues, due to employee incentive programs and commissions, as well as increased spending on marketing
new



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products acquired in recent acquisitions. The decrease in sales and marketing expenses as a percentage of total revenues for the three months ended on March
31, 2004 resulted primarily from a higher total revenue base.



General and
administrative



General and administrative expenses
increased 90% from $3.6 million in the three months ended on March 31, 2003 to $6.8 million in the three months ended on March 31, 2004. General and administrative expenses consist primarily of the salaries of administrative personnel and related
overhead and facilities expenses. As a percentage of total revenues, general and administrative expenses increased from 8% for the three months ended March 31, 2003 to 9% for the three months ended on March 31, 2004. The increase in general and
administrative expenses is directly related to growth in personnel through acquisitions and the associated increases of personnel to support these acquisitions, as well as an increase in certain consulting costs related to work performed by the
Company to comply with Section 404 of the Sarbanes-Oxley Act.



Depreciation



Depreciation expense increased 39% from $1.3 million in
the three months ended on March 31, 2003 to $1.8 million in the three months ended on March 31, 2004. As a percentage of revenues, depreciation expense decreased from 3% in the three months ended on March 31, 2003 to 2% in the three months ended on
March 31, 2004. The increase in depreciation expense is a result of additional capital assets acquired in recent acquisitions as well as additional capital expenditures in the Companys core operations. The decrease in depreciation expense as a
percentage of revenues resulted primarily from a higher revenue base.



Amortization of acquired intangible assets



Amortization of acquired intangible assets increased 273% from $822,000 in the three months ended on March 31, 2003 to $3.1 million in the three months ended on March 31, 2004. As a percentage of revenues, amortization of acquired
intangible assets increased from 2% in the three months ended on March 31, 2003 to 4% in the three months ended on March 31, 2004. Amortization of acquired intangible assets increased primarily because of additional amortization of core technology,
purchased software and customer relationships acquired pursuant to the 2004 Acquisitions.



Restructuring



During
the third quarter of fiscal 2004, in connection with the integration of its recent acquisitions, the Company approved a plan to streamline its operations. The initiative totaled approximately $10.0 million and consists primarily of a reduction in
Open Texts workforce and excess facilities associated with the integration.



Other income



Other income decreased from
$876,000 for the three months ended on March 31, 2003 to $817,000 for the three months ended on March 31, 2004. Other income consists primarily of foreign exchange gains or losses, which reflect relative movements in the various foreign currencies
in which the Company conducts business.



Interest income



Interest income increased from $239,000 for the three months ended on March
31, 2003 to $517,000 for the three months ended on March 31, 2004. The increase in interest income is a result of higher cash balances maintained during the period partially offset by lower interest rates realized during the three-month period ended
on March 31, 2004 compared to the three months ended on March 31, 2003.



Income taxes



The net deferred income tax
asset as at March 31, 2004 of $23.9 million arises from available income tax losses and future income tax deductions. The Companys ability to use these income tax losses and future income tax deductions is dependent upon the operations of the
Company in the tax jurisdictions in which such losses or deductions arose. The Company records a valuation allowance against deferred income tax assets when the company believes it is more likely than not that some portion or all of the deferred
income tax assets will not be



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realized. Based on the reversal of deferred income tax liabilities, projected future taxable income, the character of the income tax asset and tax planning
strategies, the Company has determined that a valuation allowance (excluding the valuation allowance required for Gauss and IXOS deferred taxes) of $6.0 million is required in respect of its net deferred income tax assets as at March 31,
2004. A valuation allowance of $5.7 million was required for the deferred income tax assets as at June 30, 2003. In order to fully utilize the net deferred income tax assets of $23.9 million, the Company will need to generate future taxable income
in applicable jurisdictions of approximately $65.7 million. Based on the Companys current projection of taxable income for the periods in which the deferred income tax assets are deductible, it is more likely than not that the Company will
realize the benefit of the net deferred income tax assets as at March 31, 2004. The net deferred tax liability as at March 31, 2004 of $39.5 million arises mainly from purchased intangible assets acquired in the Gauss and IXOS transactions.



Gauss had approximately $218 million of net operating loss
carry forwards at March 31, 2004. Currently, no net deferred tax assets have been recorded in the preliminary purchase price allocation related to these operating loss carry forwards since it is unlikely that the company will be able to utilize any
of these net operating loss carry forwards. However, the Company will continue to evaluate these net operating loss carryforwards. The gross deferred tax asset related to these loss carry forwards is $91 million and is fully offset by a valuation
allowance.



IXOS had approximately $132 million of net
operating loss carry forwards and other future deductions at March 31, 2004. Currently, no net deferred tax assets have been recorded in the preliminary purchase price allocation related to these operating loss carry forwards and other future
deductions since it is unlikely that the company will be able to utilize them. However the Company will continue to evaluate these net operating loss carryforwards. The gross deferred tax asset related to these loss carry forwards is $36 million and
is offset by a valuation allowance and deferred tax liabilities.



During the three months ended on March 31, 2004, the Company recorded a tax provision of $1.6 million compared to $829,000 recorded during the three months ended on March 31, 2003. The increase in the Companys tax provision resulted
from the Company becoming taxable in certain taxing jurisdictions where it was previously able to use loss carry forwards.



RESULTS OF OPERATIONS



Nine Months Ended on March 31, 2004 compared with the Nine Months Ended on March 31, 2003



Revenues



The Companys total revenues increased by 49% from $124.6 million for the nine months ended on March 31, 2003 to $186.1 million for the nine months
ended on March 31, 2004. License revenue increased by 53% from $51.9 million in the nine months ended on March 31, 2003 to $79.3 million in the nine months ended on March 31, 2004. The increase in license revenues resulted primarily from the 2004
Acquisitions as well as significant organic growth. During the nine months ended March 31, 2004 the Company closed nine transactions with greater than $1 million in revenue as compared with seven transactions during the same period last year.



Customer support revenues increased 56% from $44.7 million in
the nine months ended on March 31, 2003 to $69.9 million for the nine months ended on March 31, 2004. The increase in customer support revenues was directly attributable to the 2004 Acquisitions as well as the increase in licenses granted in the
prior year and strong renewal rates for maintenance contracts with existing customers.



Service revenues increased 32% from $28.0 million in the nine months ended on March 31, 2003 to $36.9 million in the nine months ended on March 31, 2004. The increase in service revenues relates primarily to growth
from the 2004 Acquisitions and was partially offset by decreases in core service revenues. The decrease in core service revenues is attributable to the competitive market for services engagements, especially in Europe.



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In the nine months ended on March 31, 2004 and 2003 no one customer accounted for greater than 10% of
revenues. For the nine months ended on March 31, 2004, 52% of total revenues were from customers located in North America, 42% of total revenues were from customers in Europe and 6% of total revenues were from customers in countries outside North
America and Europe (Other), compared with 57%, 40% and 3%, respectively, for North America, Europe and Other for the nine months ended on March 31, 2003.



Cost of revenues



Cost of license revenues increased 33% from $4.9 million in the nine months ended on March 31, 2003 to $6.5 million in the nine months ended on March 31,
2004. As a percentage of license revenues, cost of license revenues decreased from 9% in the nine months ended on March 31, 2003 to 8% in the nine months ended on March 31, 2004. The increase in cost of license revenues was largely related to the
costs from companies acquired during the period as well as the mix of the royalties for third party products embedded in our software and reseller fees. The decrease in the cost of license revenues as a percentage of license revenues resulted from
the substantial increase in base license revenues, without an offsetting increase in cost of license revenue.



Cost of customer support revenues increased 72% from $7.5 million in the nine months ended on March 31, 2003 to $12.8 million in the nine months ended on
March 31, 2004. As a percentage of customer support revenues, cost of customer support revenues increased from 17% in the nine months ended on March 31, 2003 to 18% in the nine months ended on March 31, 2004. The increase in cost of customer support
revenues is primarily due to an increase in personnel-related expenses associated with the new employees from acquisitions.



Cost of service revenues increased 40% from $20.3 million during the nine months ended on March 31, 2003 to $28.3 million in the nine months ended on
March 31, 2004. As a percentage of service revenues, the cost of service revenues increased from 72% in the nine months ended on March 31, 2003 to 77% in the nine months ended on March 31, 2004. The increase in cost of service revenues resulted
primarily from increases in the number of employees as a result of the Companys acquisitions.



Research and development



Research and development costs increased 38% from $20.6 million in the nine months ended on March 31, 2003 to $28.5 million in the nine months ended on March 31, 2004. As a percentage of revenues, research and development costs decreased
from 17% for the nine months ended on March 31, 2003 to 15% for the nine months ended on March 31, 2004. The increase in research and development expenses primarily resulted from an increase in personnel-related expenses associated with the new
employees from acquisitions and the Companys continued commitment to developing new products and integrating acquired technologies. The decrease in research and development as a percentage of total revenues is primarily a result of higher
revenue relative to same period in the prior year.



Development
efforts will continue to focus on enhancing our existing products while creating new offerings that result from the combination of technologies from the recently acquired companies. The strengths of the recently acquired companies in interfacing
with ERP and CRM systems and working with a number of storage management products will enable Open Text to offer the most comprehensive platform for Enterprise Content Management.



Sales and marketing



Sales and marketing expenses increased 42% from $39.0 million in the nine-month period ended on March 31, 2003 to $55.5 million in the nine-month period
ended on March 31, 2004. As a percentage of revenues, sales and marketing expenses decreased slightly from 31% for the nine months ended on March 31, 2003 to 30% during the nine months ended on March 31, 2004. The increase in sales and marketing
expenses is primarily due to increases in spending directly related to the increase in revenues due to employee incentive programs and



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commissions, as well as additional personnel from acquired companies. The decrease in sales and marketing expenses as a percentage of total revenues for the
nine months ended on March 31, 2004 resulted primarily from a higher total revenue base.



General and administrative



General and administrative expenses increased 45% from $10.4 million in the six months ended on March 31, 2003 to $15.1 million in the nine months ended on March 31, 2004. As a percentage of revenues, general and administrative expense
remained constant at 8% for the nine months ended on March 31, 2003 and 2004. The increase in general and administrative expense is a result of increases in personnel-related costs to support the Companys growth as well as additional personnel
acquired in acquisitions, and certain consulting costs.



Depreciation



Depreciation increased 20% from $3.7 million in the nine
months ended on March 31, 2003 to $4.5 million in the nine months ended on March 31, 2004. As a percentage of revenues, depreciation expense decreased from 3% in the nine months ended on March 31, 2003 to 2% in the nine months ended on March 31,
2004. This increase in depreciation resulted primarily from acquired capital assets related to the acquisitions. The decrease in depreciation as a percentage of revenues resulted from the higher revenue base.



Amortization of acquired intangible assets



Amortization of acquired intangible assets increased 187% from $2.0 million
in the nine months ended on March 31, 2003 to $5.9 million in the nine months ended on March 31, 2004. As a percentage of revenues, amortization of acquired intangible assets increased from 2% in the nine months ended on March 31, 2003 to 3% in the
nine months ended on March 31, 2004. Amortization of acquired intangible assets increased primarily due to amortization of core technology, purchased software and customer relationships acquired pursuant to recently completed acquisitions.



Other income



Other income decreased from $2.0 million in the nine months ended on March
31, 2003 to $1.3 million in the nine months ended on March 31, 2004. Other income consists primarily of foreign exchange gains or losses, which reflect relative movements in the various foreign currencies in which the Company conducts business.



Interest income



Interest income decreased from $971,000 in the nine months ended on March
31, 2003 to $954,000 in the nine months ended on March 31, 2004, primarily due to lower interest rates.



Income taxes



During
the nine months ended on March 31, 2004, the Company recorded a tax provision of $5.9 million compared to $829,000 recorded during the nine months ended on March 31, 2003. The increase in the Companys tax provision resulted from the Company
becoming taxable in certain taxing jurisdictions where it was previously able to use loss carry forwards. This was partially offset by the benefit of the increase in Ontario tax rates on the deferred tax assets.



LIQUIDITY AND CAPITAL
RESOURCES



Other than cash generated
through its operations, the Company has traditionally financed its cash needs primarily through the issuance of the Companys Common Shares and more recently on the exercise of stock options. At March 31, 2004, the Company had current assets of
$269.4 million, current liabilities of $171.4 million and working capital of $98.1 million. These amounts compare to current assets of $164.1 million, current liabilities of $69.7 million and working capital of $94.4 million at June 30, 2003. The
increase in current assets and liabilities primarily relates to the acquisition of IXOS. The results of IXOS have been consolidated effective March 1, 2004.



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Net cash provided by operating activities during the three months ended on March 31, 2004 was $15.4
million, compared to $10.7 million during the three months ended on March 31, 2003. The increase was primarily a result of the increase in net income prior to non cash charges during the third quarter, and the increase in deferred revenue, partially
offset by higher receivables balances due to the increase and timing of sales during the quarter as compared to the same quarter in the prior year, as well as other changes in working capital balances.



Net cash provided by operating activities during the nine months ending March
31, 2004 was $20.6 million, compared to $31.9 million during the nine months ending March 31, 2003 The decrease was primarily a result of higher receivable balances due to the increase and timing of sales during the period as compared to the same
period in the prior year, during which there was a significant decrease in receivables, a decrease in payables (excluding IXOS) as well as other changes in working capital balances. Days sales outstanding at March 31, 2004 was 99 days as compared to
62 days at March 31, 2003. Open Texts DSO excluding IXOS was 62 days at March 31, 2004. The increase primarily resulted from consolidating IXOS beginning March 1, 2004. IXOS DSO was significantly higher than Open Texts historical
DSO. Open Text is taking steps to improve the DSO on a go forward basis.



Net cash provided by investing activities was $64.8 million during the three months ended on March 31, 2004 compared to net cash used in investing activities of $7.2 million during the three months ended on March 31,
2003. During the three months ended on March 31, 2004, the Company spent approximately $15.3 million to purchase shares of IXOS, offset by approximately $39.9 million of cash acquired from IXOS, $1.5 million on the purchase of capital assets, and
$4.8 million relating to business acquisition costs related to the acquisition of IXOS and other costs of approximately $300,000. In addition, $46.9 million was provided by the cancellation of the agreement to maintain certain cash balances related
to the completion of the IXOS acquisition. During the prior quarter this amount was treated as restricted cash and classified as a long-term asset related to the IXOS transaction.



Net cash used in investing activities was $912,000 during the nine months ended on March 31, 2004 compared to $21.4 million
during the nine months ending March 31, 2003. During the nine month period ended on March 31, 2004, the Company acquired IXOS, Gauss and SER for $28.5 million of cash offset by approximately $39.9 million of cash acquired from IXOS. In addition, the
Company spent approximately $3.5 million on the purchase of capital assets, $6.6 million relating to business acquisition costs, and $2.3 million on other acquisitions.



Net cash provided by financing activities was $7.9 million in the three months ended on March 31, 2004 compared to $2.4
million in the three months ended March 31, 2003, which consisted primarily of $6.9 million of proceeds from the sale of Common Shares related to the exercise of Company stock options and the sale of Common Shares under the employee stock purchase
plan and $1.1 million from the exercise of warrants issued in connection with the IXOS acquisition.



Net cash provided by financing activities was $16.5 million in the nine months ended on March 31, 2004 compared to $12.5 million used in financing
activities in the nine months ended March 31, 2003, resulting primarily from proceeds of $16.3 million from the sale of Common Shares related to the exercise of Company stock options and the sale of Common Shares under the employee stock purchase
plan and $1.1 million from the exercise of warrants issued in connection with the IXOS acquisition. The proceeds were offset by $700,000 of deferred costs related to the IXOS acquisition and $300,000 of other payments.



The Company has a Cdn$10.0 million (USD$7.7 million) line of credit with a
Canadian Chartered bank, under which no borrowings were outstanding at March 31, 2004. The line of credit bears interest at the prime rate plus 0.5% and is secured by all of the Companys assets, including an assignment of accounts receivable.
In the future, the Company may issue Common Shares or debt financing to provide liquidity.



The Companys subsidiary in Japan has a short term bank loan totalling approximately $2.3 million at March 31, 2004. The loan is renewed monthly. There are no significant covenants associated with these
borrowings.



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Acquisition of IXOS



On October 21, 2003, Open Text announced that it had entered into a business combination agreement with IXOS. The transaction was consummated via a tender
offer to purchase all of the issued and outstanding shares of common stock of IXOS for either cash or Common Shares and Common Share purchase warrants of the Company (the Alternative Consideration). The tender offer for all shares of
IXOS by Open Text began on December 2, 2003. On February 19, 2004, Open Text Corporation closed the tender offer, pursuant to which, 2016091 Ontario, a wholly owned subsidiary of Open Text Corporation, acquired a total of 19,157,428 IXOS shares or
approximately 88% of the ordinary share capital and voting rights of IXOS, including shares acquired in the open market. Of these IXOS shares, 17,792,529 shares (approximately 93% of the tendered shares) were tendered for the Alternative
Consideration of Open Text Common Shares and warrants, with the balance, including shares purchased on the open market, tendered for approximately $15.3 million in cash. The Alternative Consideration for each IXOS share consists of 0.5220 of an Open
Text common share and 0.1484 of a warrant. Each whole warrant is exercisable to purchase one Open Text Common Share for up to one year after the closing date of the Tender Offer at a strike price of US$20.75 per share.



On November 11, 2003, the Company entered into a credit agreement with a
Canadian Chartered bank to provide credit facilities required to satisfy regulatory requirements in connection with the tender offer to acquire all of the shares of IXOS. In March 2004 the Company canceled these credit facilities as they were no
longer required for the acquisition of IXOS.



On a cumulative
basis, to date, license and service revenues have been insufficient to satisfy the Companys total cash requirements, particularly as the Company has sought to repurchase its Common Shares, acquire businesses and grow its infrastructure. The
Company will likely need to raise additional funds, in order to fund more rapid expansion of our business, develop new and enhance existing products and services, or acquire complementary products, businesses or technologies. If additional funds are
raised through the issuance of equity or convertible securities, the percentage ownership of the Companys stockholders may be reduced, the Companys stockholders may experience additional dilution, and such securities may have rights,
preferences, or privileges senior to those of the Companys stockholders. Additional financing may not be available on terms favorable to the Company, or at all. If adequate funds are not available or are not available on acceptable terms, the
Companys ability to fund its expansion, take advantage of acquisition opportunities or develop or enhance its services or products would be significantly limited.



CONTRACTUAL OBLIGATIONS



As of March 31, 2004, the Company had future commitments and contractual obligations as summarized in the following table.
These commitments are principally comprised of operating leases for the Companys leased premises.



|            |  |        |         |                   |   |        |  |   |       
|----------- |  | ------ | ------- | ----------------- | - | ------ |  | - | ------
|Fiscal Year |  | Leases |         | Sub Lease Rentals |   | net   
|2004        |  | $      | 6,395   |                   | $ | 1,949  |  | $ | 4,446 
|2005        |  |        | 23,026  |                   |   | 6,797  |  |   | 16,229
|2006        |  |        | 19,592  |                   |   | 6,260  |  |   | 13,332
|2007        |  |        | 18,516  |                   |   | 6,043  |  |   | 12,473
|Thereafter  |  |        | 74,823  |                   |   | 24,213 |  |   | 50,610
|            |  |        |         |                   |   |        |  |   |       
|            |  | $      | 142,352 |                   | $ | 45,262 |  | $ | 97,090
|            |  |        |         |                   |   |        |  |   |       



The Company also has a
long-term network services contract for telecommunication. The contractual obligations under this contract totals approximately $1.6 million through September 2006.



CAUTIONARY STATEMENTS



Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known



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and unknown risks, uncertainties and other factors, including those set forth in the following cautionary statements and elsewhere in this Quarterly
Report on Form 10-Q, that may cause the actual results, performance or achievements of the Company, or developments in the Companys industry, to differ materially from the anticipated results, performance, achievements or developments
expressed or implied by such forward-looking statements. The following factors, as well as all of the other information set forth herein, should be considered carefully in evaluating Open Text and its business. If any of the following risks were to
occur, the Companys business, financial condition and results of operations would likely suffer. In that event, it is likely there would be a material decline in the trading price of the Companys Common Shares.



If the Company does not continue to develop new technologically advanced products,
future revenues will be negatively affected



Open
Texts success will depend on its ability to design, develop, test, market, license and support new software products and enhancements of current products on a timely basis in response to both competitive products and evolving demands of the
marketplace. In addition, new software products and enhancements must remain compatible with standard platforms and file formats. Presently, Open Text is continuing to enhance the capability of its Livelink software to enable users to form
workgroups and collaborate on intranets and the Internet. The Company increasingly must integrate software licensed from third parties with its own software to create or improve intranet and Internet products. These products are key to the success
of the Companys strategy, and the Company may not be successful in developing and marketing these and other new software products and enhancements.



If the Company is unable to successfully integrate the technologies licensed from third parties, to develop new software products and enhancements to
existing products, or to complete products currently under development, or if such integrated or new products or enhancements do not achieve market acceptance, the Companys operating results will materially suffer. In addition, if new industry
standards emerge that the Company does not anticipate or adapt to, the Companys software products could be rendered obsolete and its business would be materially harmed.



Acquisitions, investments, joint ventures and other business initiatives may negatively affect the Companys operating results



Open Text acquired a number of companies in each of
fiscal 2003 and 2004 and continues to seek out opportunities to acquire or invest in businesses, products and technologies that expand, complement or are otherwise related to the Companys current business or products. The Company also
considers from time to time, opportunities to engage in joint ventures or other business collaborations with third parties to address particular market segments. These activities and acquisitions create risks including the need to integrate and
manage the businesses acquired with the business of the Company, additional demands on the Companys management, resources, systems, procedures and controls, disruption of the Companys ongoing business, and diversion of managements
attention from other business concerns. Moreover, these transactions could involve substantial investment of funds and/or technology transfers and the acquisition or disposition of product lines or businesses. Also, such activities could result in
one-time charges and expenses and have the potential to either dilute existing shareholders or result in the assumption of debt. Such acquisitions, investments, joint ventures or other business collaborations may involve significant commitments of
financial and other resources of the Company. Any such activity may not be successful in generating revenue, income or other returns to the Company, and the financial or other resources committed to such activities will not be available to the
Company for other purposes. The Companys inability to address these risks could negatively affect the Companys operating results.



The tender offer for all shares of IXOS by Open Text began on December 2, 2003. On February 19, 2004, Open Text Corporation closed the tender offer,
pursuant to which, 2016091 Ontario, a wholly owned subsidiary of Open Text Corporation, acquired a total of 19,157,428 IXOS shares or approximately 88% of the ordinary share capital and voting rights of IXOS, including shares acquired in the open
market. Of these IXOS shares,



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17,792,529 shares (approximately 93% of the tendered shares) have been tendered for the Open Text Common Shares and warrants, with the balance, including
shares purchased on the open market, tendered for approximately $15 million in cash. The issuance of Common Shares and Common Share purchase warrants by Open Text under the offer and the subsequent resale of these securities may result in a material
adverse affect on the market value of our Common Shares. After completion of the offer, Open Text must successfully integrate, among other things, certain product offerings, product development, sales and marketing, administrative and customer
service functions, and management information systems of the Company and IXOS. This integration may cause disruptions, including potential loss of customers, suppliers, and other business partners, in the business of Open Text or that of IXOS, which
could have material adverse effects on each companys or the combined companys business and operations. In addition, Open Text may not be able to retain the management and key employees of IXOS. It is possible that these integration
efforts will not be completed as efficiently as planned or will distract management from the operations of the combined company. Expected cost savings from the business combination may not be fully realized or realized within the Companys
expected time frames.



If the Companys products and services do not
gain market acceptance, the Company may not be able to increase its revenues



Open Text is continually working on the development of, and improvements to, new versions of Livelink and other products. In June 2003 the Company released Livelink LaunchForce, an application that offers closed-loop
distribution of critical information to a distributed field-sales organization. This product, based on rich-media technology acquired by Open Text from Eloquent, is designed to accelerate training time for sales forces and simultaneously helps large
sales organizations save money. In August 2003 the company released Livelink 9.2, which significantly advanced the ease of use of the system and added significant capabilities to support team collaboration. In addition the company continues to
improve Meeting Zone based on customer feedback. The primary market for Open Texts software and services is rapidly evolving. As is typical in the case of a rapidly evolving industry, demand for and market acceptance of products and services
that have been released recently or that are planned for future release are subject to a high level of uncertainty. If the markets for the Companys products and services fail to develop, develop more slowly than expected or become saturated
with competitors, the Companys business will suffer. The Company may be unable to successfully market its current products and services, develop new software products, services and enhancements to current products and services, complete
customer installations on a timely basis, or complete products and services currently under development. If the Companys products and services or enhancements do not achieve and sustain market acceptance, the Companys business and
operating results will be materially harmed.



Current and future
competitors could have a significant impact on the Companys ability to generate future revenue and profits



The markets for the Companys products are new, intensely competitive, subject to rapid technological change and are evolving rapidly. The Company
expects competition to increase and intensify in the future as the markets for the Companys products continue to develop and as additional companies enter each of its markets. Numerous releases of products that compete with those of the
Company can be expected in the near future. The Company may not be able to compete effectively with current and future competitors. If competitors were to engage in aggressive pricing policies with respect to competing products, or significant price
competition were to otherwise develop, the Company would likely be forced to lower its prices. This could result in lower revenues, reduced margins, loss of customers, or loss of market share for the Company.



A reduction in the number or sales efforts by distributors could materially impact the
Companys revenues



A material portion of the
Companys revenue is derived from the license of its products through third parties. The Companys success will depend, in part, upon its ability to maintain access to existing channels of distribution and to gain access to new channels if
and when they develop. The Company may not be able to retain a sufficient number of its existing or future distributors. Distributors may also give higher priority to the sale of other products (which could include products of competitors) or may
not devote sufficient resources to marketing



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the Companys products. The performance of third party distributors is largely outside the control of the Company and the Company is unable to predict
the extent to which these distributors will be successful in marketing and licensing the Companys products. A reduction in sales efforts, or a decline in the number of distributors, or the discontinuance of sales of the Companys products
by its distributors could lead to reduced revenue.



The Companys
international operations expose the Company to business risks that could cause the Companys operating results to suffer



Open Text intends to continue to make efforts to increase its international operations and anticipates that international sales will continue to account
for a significant portion of its revenue. Revenues derived outside of North America represented 48%, 42%, and 40% of total revenues for fiscal 2004 (year to date), 2003, and 2002, respectively. These international operations are subject to certain
risks and costs, including the difficulty and expense of administering business abroad, compliance with foreign laws, compliance with domestic and international import and export laws and regulations, costs related to localizing products for foreign
markets, and costs related to translating and distributing products in a timely manner. International operations also tend to expose the Company to a longer sales and collection cycle, as well as potential losses arising from currency fluctuations,
and limitations regarding the repatriation of earnings. Significant international sales may also expose the Company to greater risk from political and economic instability, unexpected changes in Canadian, US or other governmental policies concerning
import and export of goods and technology, and other regulatory requirements and tariffs and other trade barriers. In addition, international earnings may be subject to taxation by more than one jurisdiction, which could also materially adversely
affect the Companys results of operations. Moreover, international expansion may be more difficult, time consuming, and costly. As a result, if revenues from international operations do not offset the expenses of establishing and maintaining
foreign operations, the Companys operating results will suffer.



The Companys products may contain defects that could harm the Companys reputation, be costly to correct, delay revenues, and expose the Company to litigation



The Companys products are highly complex and sophisticated and, from
time to time, may contain design defects or software errors that are difficult to detect and correct. Errors may be found in new software products or improvements to existing products after commencement of commercial shipments, or, if discovered,
the Company may not be able to successfully correct such errors in a timely manner, or at all. In addition, despite tests carried out by the Company on all its products, the Company may not be able to fully simulate the environment in which its
products will operate and, as a result, the Company may be unable to adequately detect design defects or software errors inherent in its products and which only become apparent when the products are installed in an end-users network. The
occurrence of errors and failures in the Companys products could result in loss of, or delay in, market acceptance of the Companys products, and alleviating such errors and failures in the Companys products could require
significant expenditure of capital and other resources by the Company. The harm to the Companys reputation resulting from product errors and failures would be damaging to the Company. The Company regularly provides a warranty with its products
and the financial impact of these warranty obligations may be significant in the future. The Companys agreements with its strategic partners and end-users typically contain provisions designed to limit the Companys exposure to claims,
such as exclusions of all implied warranties and limitations on the availability of consequential or incidental damages. However, such provisions may not effectively protect the Company against claims and related liabilities and costs. Although the
Company maintains errors and omissions insurance coverage and comprehensive liability insurance coverage, such coverage may not be adequate and all claims may not be covered. Accordingly, any such claim could negatively affect the Companys
financial condition.



Other companies may claim that the Company
infringes their intellectual property, which could result in significant costs to defend and if the Company is not successful could have a significant impact on the Companys ability to generate future revenue and profits



Although the Company does not believe that its products infringe on the
rights of third parties, third parties may assert infringement claims against the Company in the future, and any such assertions may result in costly



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litigation or require the Company to obtain a license for the intellectual property rights of third parties, such licenses may not be available on reasonable
terms, or at all. In particular, as software patents become more prevalent, it is possible that certain parties will claim that the Companys products violate their patents. Such claims could be disruptive to the Companys ability to
generate revenue and may result in significantly increased costs as the Company attempts to license the patents or rework its products to ensure that they are not in violation of the claimants patents or dispute the claims. Any of the
foregoing could have a significant impact on the Companys ability to generate future revenue and profits.



The loss of license to use third party software or the lack of support or enhancement of such software could adversely affect the Companys business



The Company currently depends on certain third-party
software, the loss of which could result in increased costs of, or delays in, licenses of the Companys products. For a limited number of product modules, the Company relies on certain software that it licenses from third parties, including
software that is integrated with internally developed software and which is used in its products to perform key functions. These third-party software licenses may not continue to be available to the Company on commercially reasonable terms, and the
related software may not continue to be appropriately supported, maintained, or enhanced by the licensors. The loss of license to use, or the inability of licensors to support, maintain, and enhance any of such software, could result in increased
costs, delays, or reductions in product shipments until equivalent software is developed or licensed, if at all, and integrated, and could adversely affect the Companys business.



The Companys success depends and will depend on our relationships with strategic partners.



The Company relies on close cooperation with leading partners for product
development, optimization, and sales. If any of our partners should decide for any reason to terminate or scale back their cooperative efforts with the Company, our business, operating results, and financial condition may be adversely affected.



The length of the Companys sales cycle can fluctuate
significantly which could result in significant fluctuations in license revenue being recognized from quarter to quarter



Because the decision by a customer to purchase the Companys products often involves relatively large-scale implementation across the customers
network or networks, licenses of these products may entail a significant commitment of resources by prospective customers, accompanied by the attendant risks and delays frequently associated with significant expenditures and lengthy sales cycle and
implementation procedures. Given the significant investment and commitment of resources required by an organization in order to implement the Companys software, the Companys sales cycle tends to take considerable time to complete.
Particularly in the current economic environment of reduced information technology spending, it can take several months, or even quarters, for sales opportunities to translate into revenue. If installation of the Companys products in one or
more customers takes longer than originally anticipated, the date on which revenue from these licenses could be recognized would be delayed. Such delays could cause the Companys revenues to be lower than expected in a particular period.



The Company may not achieve its anticipated revenues if it does not
expand its product line



Substantially all of Open
Texts revenues are currently derived from its Livelink and related products and services offered by the Company in the Internet, intranet and extranet markets. Accordingly, the Companys future results of operations will depend, in part,
on expanding its product-line and related services. To achieve its revenue goals, the Company must also continue to enhance these products and services to meet the evolving needs of its customers. A reduction in demand or increase in competition in
the market for Internet or intranet applications, or a decline in licenses of Livelink and related services, would significantly harm the Companys business.



The Company must continue to manage its growth or its operating results could be adversely affected



Over the past several years, Open Text has experienced growth in revenues,
operating expenses, and product distribution channels. In addition, Open Texts markets have continued to evolve at a rapid pace. The total



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number of employees of the Company has grown to approximately 2,250 as of March 31, 2004, including contractors. The Company believes that continued growth
in the breadth of its product lines and services and in the number of personnel will be required in order to establish and maintain the Companys competitive position. Moreover, the Company has grown significantly through acquisitions in the
past and continues to review acquisition opportunities as a means of increasing the size and scope of its business. Open Texts growth, coupled with the rapid evolution of the Companys markets, has placed, and is likely to continue to
place, significant strains on its administrative and operational resources and increased demands on its internal systems, procedures and controls. The Companys administrative infrastructure, systems, procedures and controls may not adequately
support the Companys operations and the Companys management may not be able to achieve the rapid, effective execution of the product and business initiatives necessary to successfully penetrate the markets for the Companys products
and services and to successfully integrate any business acquisitions in the future. If the Company is unable to manage growth effectively, the Companys operating results will likely suffer.



The Companys products rely on the stability of various infrastructure software
that, if not stable, could negatively impact the effectiveness of the Companys products, resulting in harm to the reputation and business of the Company



Developments of internet and intranet applications by Open Text depends on the stability, functionality and scalability of
the infrastructure software of the underlying network, such as that of Sun, HP, Oracle, Microsoft and others. If weaknesses in such infrastructure software exist, the Company may not be able to correct or compensate for such weaknesses. If the
Company is unable to address weaknesses resulting from problems in the infrastructure software such that the Companys products do not meet customer needs or expectations, the Companys business and reputation may be significantly harmed.



The Companys quarterly revenues and operating results are likely
to fluctuate which could materially impact the price of the Companys Common Shares



The Company has experienced, and is likely to continue to experience, significant fluctuations in quarterly revenues and operating results caused by many
factors, including changes in the demand for the Companys products, the introduction or enhancement of products by the Company and its competitors, market acceptance of enhancements or products, delays in the introduction of products or
enhancements by the Company or its competitors, customer order deferrals in anticipation of upgrades and new products, changes in the Companys pricing policies or those of its competitors, delays involved in installing products with customers,
the mix of distribution channels through which products are licensed, the mix of products and services sold, the timing of restructuring charges taken in connection with acquisitions completed by the Company, the mix of international and North
American revenues, foreign currency exchange rates and general economic conditions.



Like many other software companies, the Company has generally recognized a substantial portion of its revenues in the last weeks of each quarter. Accordingly, the cancellation or deferrals of even a small number of
licenses or delays in installations of the Companys products could have a material adverse effect on the Companys results of operations in any particular quarter. Because of the impact of the timing of product introductions and the rapid
evolution of the Companys business and the markets it serves, the Company cannot predict whether seasonal patterns experienced in the past will continue. For these reasons, no one should rely on period-to-period comparisons of the
Companys financial results to forecast future performance. It is likely that the Companys quarterly revenue and operating results will vary significantly in the future and if a shortfall in revenue occurs or if operating costs increase
significantly, the market price of our Common Shares could materially decline.



Failure to protect the Companys intellectual property could harm our ability to compete effectively



The Company is highly dependent on its ability to protect its proprietary technology. The Companys efforts to protect its intellectual property
rights may not be successful. The Company relies on a combination of copyright, trademark and trade secret laws, non-disclosure agreements and other contractual provisions to



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establish and maintain its proprietary rights. The Company has not sought patent protection for its products. While US and Canadian copyright laws,
international conventions and international treaties may provide meaningful protection against unauthorized duplication of software, the laws of some foreign jurisdictions may not protect proprietary rights to the same extent as the laws of Canada
or the United States. Software piracy has been, and can be expected to be, a persistent problem for the software industry. Enforcement of the Companys intellectual property rights may be difficult, particularly in some nations outside of the
United States and Canada in which the Company seeks to market its products. Despite the precautions taken by the Company, it may be possible for unauthorized third parties, including competitors, to copy certain portions of the Companys
products or to reverse engineer or obtain and use information that the Company regards as proprietary.



If the Company is not able to attract and retain top employees, the Companys ability to compete may be harmed



The Companys performance is substantially dependent on the performance of its executive officers and key employees.
The loss of the services of any of its executive officers or other key employees could significantly harm the Companys business. The Company does not maintain key person life insurance policies on any of its employees.



The Companys success is also highly dependent on its continuing
ability to identify, hire, train, retain and motivate highly qualified management, technical, sales and marketing personnel, including recently hired officers and other employees. Specifically, the recruitment of top research developers, along with
experienced salespeople, remains critical to the Companys success. Competition for such personnel is intense, and the Company may not be able to attract, integrate or retain highly qualified technical and managerial personnel in the future.



The volatility of the Companys stock price could lead to losses by
shareholders



The market price of the Common Shares
has been highly volatile and subject to wide fluctuations. Such fluctuations in market price may continue in response to quarterly variations in operating results, announcements of technological innovations or new products by the Company or its
competitors, changes in financial estimates by securities analysts or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity
securities of many technology companies and that often have been unrelated to the operating performance of such companies or have resulted from the failure of the operating results of such companies to meet market expectations in a particular
quarter. Broad market fluctuations or any failure of the Companys operating results in a particular quarter to meet market expectations may adversely affect the market price of the Common Shares, resulting in losses to shareholders. In the
past, following periods of volatility in the market price of a companys securities, securities class action litigation has often been instituted against such a company. Due to the volatility of our stock price, the Company could be the target
of securities litigation in the future. Such litigation could result in substantial costs and a diversion of managements attention and resources, which would have a material adverse effect on the Companys business and operating results.



The Companys performance will depend on initial and continued
market acceptance of our primary software products and services



The Companys revenues come from the licensing, servicing, and maintenance of our business document and content management software. Any reduction in demand for the Companys software, or lack of meaningful
growth in the market for this software, could have a material adverse effect on the Companys business, operating results, and financial condition. The development of our core market and applications in the areas of business software,
enterprise portals and web content management, email management and groupware, and customer relationship management (CRM) are particularly important to the Companys success.





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The unpredictability of our sales cycle may lead to fluctuations in operating results if our revenues are below
expectations



We generally ship
our software products shortly after receipt of an order and normally do not have a significant backlog of unfulfilled orders. Our software license revenues for any quarter are materially dependent on orders that are booked and shipped in that
quarter and cannot be predicted with any degree of certainty. In the past, we have experienced considerable fluctuations in quarterly results from operations and expect this to continue to occur in the future. Accordingly, shortfalls in revenues may
cause significant variations in operating results in any quarter. Factors that could cause these fluctuations include:



| |  | economic conditions, which may affect our customers and potential customers budgets for information technology expenditures;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| |  | the unpredictable timing of orders and the long sales cycles for our products (our sales cycle is typically between six and nine months);
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| |  | the timing and market acceptance of new product releases or product enhancements by either us or our competitors;
| | - | -----------------------------------------------------------------------------------------------------------------



| |  | the timing of product implementations, which are highly dependent on our customers resources and discretion;
| | - | -------------------------------------------------------------------------------------------------------------



| |  | any change in our pricing policy or the pricing policies of our competitors;
| | - | ----------------------------------------------------------------------------



| |  | any acquisitions consummated in a particular quarter; and
| | - | ---------------------------------------------------------



| |  | the time it takes newly hired sales and consulting personnel to become fully productive.
| | - | ----------------------------------------------------------------------------------------



Because of these factors, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful.



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Risk Management



Events may occur that may affect Open Texts ability to meet our strategic objectives. To manage these events, Open
Text has implemented an enterprise-wide risk management strategy designed to encompass events that potentially could damage the Companys financial strength, public image and the products and services the Company offers.



Oversight for risk management at Open Text is the responsibility of the Audit
Committee, which regularly monitors the Companys risk exposures and has approved certain guidelines for management. The senior management team, consisting of senior officers and executives of Open Text, are tasked to review and report on risk
items on a quarterly basis.



A risk management framework has
been implemented which sets out the key risks to Open Text and assesses whether they are internal or external, and whether they are within or outside the Companys control. As part of this framework, risks are reviewed on a regular basis
throughout the year and as new projects and business opportunities are considered, they are reviewed in connection with this process. A risk matrix has been established which identifies the risk, its estimated financial exposure, key controls
impacting the risks, and who has primary responsibility for the risk.



Interest rate risk



The Companys
exposure to interest rate fluctuations relates primarily to its investment portfolio, since the Company had no borrowings outstanding under its line of credit at March 31, 2004. The Company primarily



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invests its cash in short-term high-quality securities with reputable financial institutions. The primary objective of the Companys investment
activities is to preserve principal while at the same time maximizing the income the Company receives from its investments without significantly increasing risk. The Company does not use derivative financial instruments in its investment portfolio.
The interest income from the Companys investments is subject to interest rate fluctuations, which the Company believes would not have a material impact on the financial position of the Company.



All highly liquid investments with maturities of less than three months at
the date of purchase are considered to be cash equivalents. All investments with maturities of three months or greater are classified as available-for-sale and considered to be short-term investments. Some of the securities that the Company has
invested in may be subject to market risk. This means that a change in the prevailing interest rates may cause the principal amount of the investment to fluctuate. The impact on net interest income of a 100 basis point adverse change in interest
rates for the quarter ended on March 31, 2004 would have been an decrease of approximately $0.3 million.



Foreign currency risk



The Company has net monetary asset and liability balances in foreign currencies other than the US Dollar, including the Canadian Dollar (CDN), the Pound Sterling (GBP), the Swiss Franc (CHF), and the Euro
(EUR). The Companys cash and cash equivalents are primarily held in US Dollars. The Company does not currently use financial instruments to hedge its exposures in foreign currencies. The Company intends to assess the need to
utilize financial instruments to hedge currency exposures on an ongoing basis.



The following table provides a sensitivity analysis on the Companys exposure to changes in foreign exchange rates. For foreign currencies where the Company engages in material transactions, the following table
quantifies the impact that a 10% change against the U.S. dollar would have had on the Companys total revenues, operating expenses, and net income for the quarter ended on March 31, 2004. This analysis is presented in functional currency.
Functional currency represents the currency of measurement for each of an entitys domestic and foreign operations. The impact of changes in foreign exchange rates for those foreign currencies not presented in these tables is not material.



|                |  |                                                  |       |                   |   |        |            |  |   |      |  
|--------------- |  | ------------------------------------------------ | ----- | ----------------- | - | ------ | ---------- |  | - | ---- | -
|                |  | 10% Change in Functional Currency (in thousands) |      
|                |  | TotalRevenue                                     |       | OperatingExpenses |   |        | Net Income | 
|Canadian Dollar |  | $                                                | 537   |                   | $ | (634   | )          |  | $ | (97  | )
|Euro            |  |                                                  | 2,100 |                   |   | (2,902 | )          |  |   | (802 | )
|British Pound   |  |                                                  | 997   |                   |   | (863   | )          |  |   | 134  |  
|Swiss Franc     |  |                                                  | 447   |                   |   | (680   | )          |  |   | (233 | )



ITEM 4. CONTROLS AND PROCEDURES



As of March 31, 2004, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures pursuant to Rule 13-a15 (b) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that as of March 31, 2004, our disclosure controls and procedures are effective in ensuring that material information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange Commissions rules and forms, including ensuring that such material information is accumulated and communicated to our management, including our Chief Executive Officer
and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There were no changes in our internal control over financial reporting during the fiscal quarter ended on March 31, 2004 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II OTHER INFORMATION



ITEM 2. CHANGES IN SECURITIES, AND USE OF PROCEEDS AND ISSUER
PURCHASES OF EQUITY SECURITIES



(c)  Issuance of Unregistered Securities



On October 20, 2003, the Company and its wholly-owned subsidiary, 2016091 Ontario Inc., entered into a Business Combination Agreement (the BCA) with IXOS Software AG (IXOS) pursuant to which
Open Text agreed to undertake a tender offer to purchase all of the issued and outstanding shares of IXOS (IXOS Shares). On October 20, 2003, the Company entered into a support agreement with a significant group of shareholders of IXOS
holding approximately 26.7% of the IXOS Shares. Under the Offer, IXOS Shareholders were entitled to elect to receive either cash consideration or Common Shares and Common Share purchase warrants.



On February 19, 2004, Open Text Corporation closed the tender offer, pursuant
to which, 2016091 Ontario, a wholly owned subsidiary of Open Text Corporation, acquired a total of 19,157,428 IXOS shares or approximately 88% of the ordinary share capital and voting rights of IXOS, including shares acquired in the open market. Of
these IXOS shares, 17,792,529 shares (approximately 93% of the tendered shares) have been tendered for the Alternative Consideration of Open Text shares and warrants, with the balance, including shares purchased on the open market, tendered for
approximately $15.3 million in cash. The Alternative Consideration for each IXOS share consists of 0.5220 of an Open Text Common Share and 0.1484 of a warrant. Each whole warrant is exercisable to purchase one Open Text common share for up to one
year after the closing date of the Tender Offer at a strike price of US$20.75 per share. Under the Alternative Consideration approximately 9.3 million shares of Open Text were issued to shareholders of IXOS.



The Common Shares and Warrants were issued in reliance upon exemption from
the registration and certain tender offer provisions of the U.S. Securities Act of 1933, as amended (the Act), set forth in Rule 802 promulgated under the Act and Rule 14d-1(c) promulgated under the United States Securities Exchange Act
of 1934 (such Acts, and the rules promulgated thereunder, the US Securities Laws). The availability of the Exemptions is based on satisfaction of certain conditions including Open Texts reasonable determination that (i) IXOS is a
foreign private issuer as defined in the US Securities Laws, and (ii) US holders hold no more than 10% of the stocks of IXOS, as determined in accordance with the terms of the Exemptions as of the date which occurs 30 days before the
commencement of the Tender Offer.



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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



| | (a) | Exhibits
| | --- | --------



|           |  |                                                                                                                                                                                                              
|---------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No |  | Description                                                                                                                                                                                                  
|10.1       |  | English Summary of Lease Agreement dated April 25, 2001, between WBT Wohnungs- und Bautreuhand Verwaltungs- und Verwertungsgesellschaft mbH, Ms Anjuta Aigner-Dünnwald and IXOS Software
AG (filed herewith).
|           | 
|10.2       |  | English Summary of Lease Agreement dated April 12, 2000, between Technopark Grundstück GmbH & Co. KG, and IXOS Software AG (filed herewith).                                                                 
|           | 
|10.3       |  | English Summary of Sublease Agreement dated December 12, 2000, between IXOS Software AG, and Siemens Aktiengesellschaft (filed herewith).                                                                    
|           | 
|10.4       |  | English Summary of Lease Agreement dated December 8, 2000, between SPS Immobilien AG and Obtree Technologies Inc. (filed herewith).                                                                          
|           | 
|10.5       |  | Business Combination Agreement dated October 2003, between 2016091 Ontario Inc., Open Text Corporation and IXOS Software AG (filed herewith).                                                                
|           | 
|10.6       |  | Form of Indemnity Agreement entered into by Open Text Corporation and each of its Directors (filed herewith).                                                                                                
|           | 
|31.1       |  | Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                         
|           | 
|31.2       |  | Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                         
|           | 
|32.1       |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).                                                                 
|           | 
|32.2       |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).                                                                 



| | (b) | Reports on Form 8-K and 8-K/A
| | --- | -----------------------------



|                                   |  |                                                                                                                                                                                                                                                                                                                                                                                   
|---------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                   |  | Description                                                                                                                                                                                                                                                                                                                                                                       
|i) Press Release                   |  | On January 8, 2004, the Company filed a Report on Form 8-K, pursuant to Item 12 thereof, to furnish a press release announcing the Companys preliminary financial results for the second
fiscal quarter ended on December 31, 2003.                                                                                                                                              
|                                   | 
|ii) Press Release                  |  | On January 15, 2004 the Company filed a Report on Form 8-K, pursuant to Item 5 thereof, to file, a press release issued by the Company on January 13, 2004.                                                                                                                                                                                                                       
|                                   | 
|iii) Financial results             |  | On January 22, 2004, the Company filed a Report on Form 8-K, pursuant to Item 12 thereof, to furnish a press release announcing the Companys financial results for the second fiscal
quarter ended on December 31, 2003.                                                                                                                                                         
|                                   | 
|iv) Press Release                  |  | On February 6, 2004 the Company filed a Report on Form 8-K, pursuant to Item 9 thereof, to furnish, a press release issued by the Company on February 5, 2004.                                                                                                                                                                                                                    
|                                   | 
|v) Acquisition of IXOS SOFTWARE AG |  | On February 26, 2004, the Company filed a Report on form 8-K, pursuant to Items 2 and 7 thereof, announcing that on February 19, 2004, Open Text Corporation closed the tender offer, pursuant
to which, 2016091 Ontario Inc., a wholly owned subsidiary of Open Text Corporation, acquired approximately 88% of the ordinary share capital and voting rights of IXOS SOFTWARE AG.
|                                   | 
|vi) Press Release                  |  | On February 27, 2004 the Company filed a Report of Form 8-K, pursuant to Item 9 thereof, to furnish, a press release issued by the Company on February 24, 2004.                                                                                                                                                                                                                  



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SIGNATURES



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



|                   |  |     |  |                                                                                 
|------------------ |  | --- |  | --------------------------------------------------------------------------------
|                   |  |     |  | OPEN TEXT CORPORATION                                                           
|Date: May 17, 2004 |  |     |  |                                                                                 
|                   |  | By: |  | /s/    P. THOMAS
JENKINS                                                        
|                   |  |     |  | P. Thomas Jenkins Chief Executive Officer                                       
|                   |  |    
|                   |  |     |  | /s/    ALAN
HOVERD                                                              
|                   |  |     |  | Alan Hoverd Chief Financial Officer (Principal Financial and Accounting Officer)



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Index to Exhibits



|     |  |                                                                                                                                                                                                              
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.  |  | Description                                                                                                                                                                                                  
|10.1 |  | English Summary of Lease Agreement dated April 25, 2001, between WBT Wohnungs- und Bautreuhand Verwaltungs- und Verwertungsgesellschaft mbH, Ms Anjuta Aigner-Dünnwald and IXOS Software
AG (filed herewith).
|     | 
|10.2 |  | English Summary of Lease Agreement dated April 12, 2000, between Technopark Grundstück GmbH & Co. KG, and IXOS Software AG (filed herewith).                                                                 
|     | 
|10.3 |  | English Summary of Sublease Agreement dated December 12, 2000, between IXOS Software AG, and Siemens Aktiengesellschaft (filed herewith).                                                                    
|     | 
|10.4 |  | English Summary of Lease Agreement dated December 8, 2000, between SPS Immobilien AG and Obtree Technologies Inc. (filed herewith).                                                                          
|     | 
|10.5 |  | Business Combination Agreement dated October 2003, between 2016091 Ontario Inc., Open Text Corporation and IXOS Software AG (filed herewith).                                                                
|     | 
|10.6 |  | Form of Indemnity Agreement entered into by Open Text Corporation and each of its Directors (filed herewith).                                                                                                
|     | 
|31.1 |  | Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                         
|     | 
|31.2 |  | Certification Pursuant to Rule 13a-14(a) of the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).                                                         
|     | 
|32.1 |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).                                                                 
|     | 
|32.2 |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).                                                                 



46