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                                 SECURITIES AND EXCHANGE COMMISSION
                                       WASHINGTON, D.C. 20549
                                             FORM 10-K/A

                                           AMENDMENT NO. 2
                                                 TO
                                            ANNUAL REPORT
          FILED PURSUANT TO SECTION 12, 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

             For the Fiscal Year Ended December 31, 2000 Commission File Number 0-21041

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


         Delaware                                                                    02-0424252
         --------                                                                    ----------
(State or other jurisdiction of                                                   (I.R.S. Employer
incorporation or organization)                                                   Identification No.)


25 Mall Road, Burlington, MA                                                              01803
----------------------------                                                              -----
(Address of principal executive offices)                                               (Zip Code)


                 Registrant's telephone number, including area code: (781) 674-5000

      Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $.001

                  Securities registered pursuant to Section 12(g) of the Act: None

    Indicate by check mark whether the Registrant (1) has filed all reports required to be filed
       by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
   months (or for such shorter period that the Registrant was required to file such reports), and
         (2) has been subject to such filing requirements for the past 90 days. Yes X   No
                                                                                   ---    ---

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-K is
not contained  herein,  and will not be contained,  to the best of the  Registrant's  knowledge,  in
definitive proxy or information  statements  incorporated by reference in Part III of this Form 10-K
or any amendment to the Form 10-K.  X
                                   ---

The aggregate market value of voting stock held by  non-affiliates  of the Registrant,  based on the
closing  price of the Common Stock on February 28, 2001 as reported by the NASDAQ  National  Market,
was approximately  $88,741,640.  For purposes of the foregoing calculation,  the Company has assumed
that  each  director,  executive  officer  and  holder  of 10% or more of the  voting  stock  of the
Registrant is an affiliate.  This  determination of affiliate status is not necessarily a conclusive
determination for other purposes.

      The Registrant had 29,575,376 shares of Common Stock outstanding as of February 28, 2001.

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ITEM 7 OF PART II AND ITEMS 11 AND 12 OF PART III OF THE REGISTRANT'S ANNUAL REPORT ON FORM 10-K, AS
PREVIOUSLY  AMENDED BY THE  REGISTRANT,  ARE  HEREBY  AMENDED BY  DELETING  THE TEXT  THEREOF IN ITS
ENTIRETY AND SUBSTITUTING THEREFOR THE FOLLOWING:

PART II

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW
We  develop,  sell and support  two major  product  lines:  our  business to business  (B2B) line of
eXtensible  Markup  Language   ("XML")-based  software  products  and  our  Object  Design  line  of
object-oriented database management software products. Using our B2B products, companies are able to
create  self-service  applications  running on the Internet or an intranet,  that can be targeted to
customers, suppliers, channel partners and employees, and that enable companies to transact business
more efficiently and effectively,  improve customer service and responsiveness and lower transaction
costs.  Our Object Design products have been used  extensively for over 12 years by companies in the
telecommunications and finance industries, and by independent software vendors, and for over 5 years
in electronic business ("e-business")  applications with demanding requirements for high-performance
and scalable data management  solutions.  Until 1999, we derived 100% of our revenue from our Object
Design line of database  management  software products.  However,  during the past two years our B2B
software products line has grown rapidly.  During 2000, sales of B2B products and services accounted
for over $20 million, or approximately 28%, of our total revenues, up from less than 5% in 1999.

Our B2B  product  line was  introduced  in 1999.  Despite a  significant  investment  in and a rapid
expansion of our B2B line of software  products over the past two years,  the Object Design  product
line continues to contribute the majority of our revenues.  Our Object Design product line generated
more than 70% of our revenues in 2000 and more than 90% of our revenues in 1999.

Our  revenues  are derived from sales of licenses of our B2B and Object  Design  software  products,
professional  services and maintenance.  We generally  license our software  products on a perpetual
basis.  Maintenance is generally billed annually in advance. We offer our eXcelon eSolutions and our
implementation  and other  professional  services  primarily on a time and materials basis. We offer
training on a fixed fee basis.

We recognize revenue in accordance with the provisions of AICPA Statement of Position 97-2 "Software
Revenue  Recognition." Revenue from software license fees is recognized when there is evidence of an
arrangement,  the product has been delivered, fees are fixed or determinable,  and collection of the
related  receivable is deemed  probable by management.  Revenue from sales through  distributors  is
recorded net of  distributor  commissions.  Maintenance  revenue,  including  those bundled with the
initial  license  fee,  are  deferred and  recognized  ratably  over the service  period,  generally
one-year. Consulting and training service revenue is recognized as the services are performed.

Our cost of software revenues includes primarily royalties to third parties for software used in our
software.  Our cost of services  revenues  primarily  includes  salaries and related expenses of our
consulting and technical support personnel, and an allocation of overhead and recruitment costs.

                                                 1





The following  table sets forth certain  revenue and cost data as a percentage of our total revenues
for each of the three years ended December 31, 2000.

                                                         2000           1999         1998
                                                       --------      --------      --------
Revenues:
  Software                                                61.3%         60.2%         70.6%
  Services                                                38.7          39.8          28.9
  Related party software and services                        -             -           0.5
                                                       --------      --------      --------
    Total revenues                                       100.0%        100.0%        100.0%
                                                       --------      --------      --------

Cost of revenues:
  Cost of software                                         4.2           3.9           2.6
  Cost of services                                        25.6          21.3          16.5
  Cost of related party software and services                -             -           0.3
                                                       --------      --------      --------
    Total cost of services                                29.8          25.2          19.4
                                                       --------      --------      --------
Gross profit                                              70.2          74.8          80.6
Operating expenses:
  Selling and marketing                                   59.3          59.9          50.7
  Research and development                                18.3          16.9          13.8
  General and administrative                              10.2          10.0           9.0
  Restructuring                                              -           1.5             -
                                                       --------      --------      --------
    Total operating expenses                              87.8          88.3          73.5
                                                       --------      --------      --------
Operating income (loss)                                  (17.6)        (13.5)          7.1
Other income, net                                          1.9           1.8           1.6
                                                       --------      --------      --------
Income (loss) before income taxes                        (15.7)        (11.7)          8.7
Provision for income taxes                                   -             -           1.0
                                                       --------      --------      --------
Net income (loss)                                        (15.7)        (11.7)          7.7
                                                       --------      --------      --------



2000 COMPARED TO 1999

SOFTWARE REVENUES. Software revenues increased 17.7%, to $43.1 million in 2000 from $36.6 million in
1999.  The  increase was  primarily  due to increased  volume of B2B software  license  sales offset
partially by a decrease in sales of our Object  Design  product  line.  We expect  software  license
revenues  from our B2B products to continue to increase in future  periods,  while our Object Design
product line may stabilize or decline in the coming year. The timing of closing large-sized software
deals could result in fluctuations of future software license revenues in any quarter.  B2B software
revenues  were $12.9 and $2.1  million  while  ObjectStore  software  revenues  were $30.2 and $34.5
million for the years 2000 and 1999, respectively.

SERVICES REVENUES. Services revenues increased 12.6%, to $27.2 million in 2000 from $24.2 million in
1999.  The increase is due to higher demand for our  consulting  services  attributable  to customer
deployments of applications built using our software,  and higher maintenance  revenues,  reflecting
continued  growth in our  installed  base of customers.  We are not expecting  increases in services
revenues for 2001.  B2B services  revenues  were $7.1 and $0.8 million  while  ObjectStore  services
revenues were $20.1 and $23.4 million for the years 2000 and 1999, respectively.

REVENUES  FROM  INTERNATIONAL  OPERATIONS.   Revenues  from  the  operations  of  our  international
subsidiaries  increased  $9.9  million in 2000 as  compared  to 1999.  International  revenues  as a
percentage of total  revenues were 47.4% in 2000 compared with 38.5% in 1999. The increase in dollar
amount and percentage  contribution of our international  revenues is primarily the result of strong
B2B license revenues in Japan and the UK. While we expect that international  revenues will continue
to be a large part of our revenues in 2001, it is difficult to predict the percentage that they will
represent.

COST OF SOFTWARE  REVENUES.  Cost of software revenues increased 22.7%, to $2.9 million in 2000 from
$2.4 million in 1999, and increased as a percentage of software  revenues to 6.8% from 6.5% for such
years,  respectively.  The increase in absolute dollars and as a percentage of software  revenues is
due to  additional  purchases  of  technology  in the  amount of $0.3  million  and an  increase  in
write-offs of old technology from $0.5 million in 1999 to $0.7 million in 2000.

COST OF SERVICES REVENUES.  Cost of services revenues increased 39.7%, to $18.1 million in 2000 from
$12.9  million in 1999 and  increased as a percentage  of services  revenues to 66.3% from 53.5% for
such years, respectively. The increase in dollar amount reflects the growth in staffing necessary to
generate  and support  increased  worldwide  service  revenues and provide  customer  support to our
growing  installed  base.  The increase in cost of services as a percentage  of service  revenues is
primarily due to lower  utilization of consulting  personnel in 2000 as compared to 1999 as a result
of expanding staff in the B2B division in anticipation of revenue growth in B2B products, as well as
a direct write-off of purchased  technology no longer being utilized by our services  organizations.
By hiring staff ahead of demand we caused our average  utilization  to decline.  In 2001,  we expect
cost of services revenues to remain flat in absolute dollars, and it may decrease as a percentage of
services  revenues as we strive to increase the  utilization  of our services  organizations  as new
e-business customers are added.


                                                 2


SELLING AND MARKETING  EXPENSE.  Selling and marketing  expense increased 14.6%, to $41.7 million in
2000 from $36.4 million in 1999, and decreased as a percentage of total revenues to 59.3% from 59.9%
for such years,  respectively.  The increase in dollar amount resulted  primarily from the hiring of
additional  marketing and sales personnel and increased  spending on marketing programs primarily to
launch our B2B  product  line.  We do not expect  future  sales and  marketing  expenses to increase
significantly in 2001.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense increased 24.9%, to $12.9 million
in 2000 from $10.3 million in 1999, and increased as a percentage of total revenues to 18.3% in 2000
from 16.9% for 1999. The increase was due principally to the addition of personnel,  depreciation of
capital  equipment and related  overhead for the  development of new B2B products and enhancement to
existing  Object Design  products.  We do not expect  future  research and  development  expenses to
increase significantly in 2001.

GENERAL AND  ADMINISTRATIVE  EXPENSE.  General and  administrative  expense increased 18.2%, to $7.2
million in 2000 from $6.1 million in 1999,  and increased as a percentage of total revenues to 10.2%
in 2000  compared to 10.0% in 1999.  The increase in dollar  amount is  reflective  of the increased
staffing,  investments in information  technology,  professional expenses and other costs associated
with our expanding operations.  We expect general and administrative expense to increase slightly or
remain flat in 2001.

RESTRUCTURING.  In 1999, we recorded a restructuring charge in the amount of $945,000, in connection
with  repositioning  the company for future growth.  The charge was composed of severance  costs for
eleven  employees,  closure costs of some office space, and cancellation  costs of certain marketing
initiatives. All of the restructuring charges were paid in 2000.

OTHER INCOME (net). Other income (net) increased 22.5%, to $1.4 million in 2000 from $1.1 million in
1999. The increase was largely the result of some movement to longer-term  investments  that yield a
higher rate of return as well as gains from transactions with our foreign subsidiaries.

PROVISION FOR INCOME TAXES.  In 2000 and 1999, we paid only certain  foreign income taxes due to our
overall net loss.


1999 COMPARED TO 1998

SOFTWARE REVENUES. Software revenues decreased 16.8%, to $36.6 million in 1999 from $44.0 million in
1998. The decrease was primarily due to decreased  volume of Object Design software  licenses offset
partially by an increase in sales of our B2B product line. We expect software  license revenues from
our B2B products to increase in future periods.

SERVICES REVENUES. Services revenues increased 34.3%, to $24.2 million in 1999 from $18.0 million in
1998.  The  increase  is due to higher  demand  for our  consulting  services  related  to  customer
deployments of our software and higher  maintenance  revenues,  reflecting  continued  growth in our
installed base of Object Design products.

RELATED PARTY  REVENUES AND COST OF RELATED PARTY  REVENUES.  Related party  revenues and associated
cost of related  party  revenues  were not material in 1999.  In 1998,  related  party  revenues and
associated  cost of revenues were derived from services  provided to IBM. IBM ceased to be a related
party in 1999.

REVENUES  FROM  INTERNATIONAL  OPERATIONS.   Revenues  from  the  operations  of  our  international
subsidiaries  decreased  $1.0  million in 1999 as  compared  to 1998.  International  revenues  as a
percentage of total  revenues were 38.5% in 1999 compared with 39.2% in 1998. The decrease in dollar
amount of our international revenues is approximately  commensurate with the year-over-year decrease
in our total revenues.

COST OF SOFTWARE  REVENUES.  Cost of software revenues increased 48.3%, to $2.4 million in 1999 from
$1.6 million in 1998, and increased as a percentage of software  revenues to 6.5% from 3.6% for such
years,  respectively.  The increase in absolute dollars and as a percentage of software  revenues is
due to additional  purchases of  technology  from third parties in 1999 for inclusion in our new B2B
Solutions  product  line,  as  well  as the  write-off  in  1999  of  certain  previously  purchased
technologies.

COST OF SERVICES REVENUES.  Cost of services revenues increased 25.4%, to $12.9 million in 1999 from
$10.3  million in 1998 and  decreased as a percentage  of services  revenues to 53.5% from 57.3% for
such years, respectively. The increase in dollar amount reflects the growth in staffing necessary to
generate  and support  increased  worldwide  service  revenues and provide  customer  support to our
growing  installed  base.  The decrease in cost of services as a percentage  of service  revenues is
primarily due to higher average utilization of consulting personnel in 1999.

                                                 3


SELLING AND MARKETING  EXPENSE.  Selling and marketing  expense increased 15.3%, to $36.4 million in
1999 from $31.6 million in 1998, and increased as a percentage of total revenues to 59.9% from 50.7%
for such years,  respectively.  The increase in dollar amount and as a percentage of total  revenues
resulted  primarily  from the hiring of additional  marketing  personnel  and increased  spending on
marketing programs to launch our new B2B product line.

RESEARCH AND DEVELOPMENT EXPENSE. Research and development expense increased 19.1%, to $10.3 million
in 1999 from $8.6 million in 1998,  and increased as a percentage of total revenues to 16.9% in 1999
from 13.9% for 1998. The increase was due principally to the addition of personnel,  depreciation of
capital  equipment and related  overhead for the  development of new B2B products and enhancement to
existing Object Design products.

GENERAL AND  ADMINISTRATIVE  EXPENSE.  General and  administrative  expense  increased 7.7%, to $6.1
million in 1999 from $5.6 million in 1998,  and increased as a percentage of total revenues to 10.0%
in 1999 compared to 9.0% in 1998. The increase is reflective of the increased staffing,  investments
in  information  technology,  professional  expenses and other costs  associated  with our expanding
operations.

RESTRUCTURING.  In 1999, we recorded a restructuring charge in the amount of $945,000, in connection
with  repositioning  the company for future  growth.  The charge is composed of severance  costs for
eleven  employees,  closure costs of some office space, and cancellation  costs of certain marketing
initiatives.

OTHER INCOME (net). Other income (net) increased 14.2%, to $1.1 million in 1999 from $1.0 million in
1998.  The increase was largely the result of overall  higher cash balances as well as some movement
to longer-term investments that yield a higher rate of return.

PROVISION FOR INCOME TAXES.  In 1999, we paid only certain  foreign  income taxes due to our overall
net loss.  Our  effective  tax rate for 1998 was 10%.  The  effective  tax rate in 1998  reflects an
alternative  minimum tax  provision  for  federal  taxes and certain  state and foreign  taxes.  The
effective  tax rate is lower than the  statutory  rate  principally  due to the  utilization  of net
operating loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2000,  our  principal  sources of liquidity  included  $16.0  million of cash,  cash
equivalents and short-term  marketable  securities and $600,000 of long-term marketable  securities.
$175,000 of cash and cash  equivalents  is restricted  and is being held in a certificate of deposit
with  Silicon  Valley  Bank as  collateral  for a  security  deposit on leased  office  space in our
Burlington, MA location. While we believe that our cash and securities balances at December 31, 2000
are sufficient to meet our needs, we are presently negotiating with Silicon Valley Bank regarding an
additional financing package of approximately $4.8 million.

We had an accumulated  deficit of $46.1 million at December 31, 2000 and a net loss of $11.0 million
for the year then ended.  Management  believes  that cash flows from  operations  and existing  cash
balances will be sufficient to fund the Company's  cash  requirements  for the  foreseeable  future.
Failure to generate sufficient  revenues,  raise additional capital or reduce certain  discretionary
spending  could have a material  adverse  effect on the  Company's  ability to  continue  as a going
concern and achieve its business objectives.

Our operating activities used net cash of $5.6 million and provided net cash of $1.6 million in 2000
and 1999, respectively. The decrease was primarily the result of a net loss of $11.0 million in 2000
compared to a net loss of $7.1 million in 1999, plus increased cash used for working capital.

Our  investing  activities  used  net  cash of $3.5  million  and $4.3  million  in 2000  and  1999,
respectively. The decrease in uses of cash was attributable primarily to the net sale of $598,000 of
marketable  securities in 2000, compared to the net purchase of $150,000 of marketable securities in
1999, and a decrease in purchased technology to $370,000 in 2000 from $1.2 million in 1999.

Our  financing  activities  provided  net cash of $2.2  million and $1.8 million for the years ended
December 31, 2000 and 1999, respectively. The increase was due to an increase in proceeds from stock
option exercises to $2.2 million in 2000 from $2.0 million in 1999 and the absence of treasury stock
purchases in 2000.

We believe that our current cash, cash equivalents,  and marketable securities,  and funds generated
from  operations,  if any,  will  provide  adequate  liquidity  to meet our  capital  and  operating
requirements for the next twelve months.

                                                  4


NEW ACCOUNTING STANDARDS

In June 1998, the Financial  Accounting  Standards  Board issued  Statement of Financial  Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (SFAS No. 133). This
accounting standard, which is effective for all fiscal quarters of fiscal years beginning after June
15, 2000,  requires that all  derivatives be recognized as either assets or liabilities at estimated
fair value. In June 2000, the Financial  Accounting  Standards  Board issued  statement of Financial
Accounting  Standards No. 138,  Accounting for Certain  Derivative  Instruments  and Certain Hedging
Activities,  an amendment of SFAS No. 133.  This  accounting  standard  amended the  accounting  and
reporting standards of SFAS No. 133 for certain derivative  instruments and hedging activities.  The
January 1, 2001 adoption of SFAS No. 133, as amended,  is not expected to have a material  effect on
the Company's financial position or results of operation.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

From time to time,  information  provided by us,  statements  made by our  employees or  information
included in our filings with the Securities and Exchange Commission may contain statements which are
not  historical  facts  but  which  are   "forward-looking   statements"  which  involve  risks  and
uncertainties. The words "expect", "anticipate", "intend", "plan", "believe," "seek", "estimate" and
similar  statements  are  intended to  identify  such  forward-looking  statements.  In  particular,
statements  in  "Management's  Discussion  and  Analysis  of  Financial  Condition  and  Results  of
Operations" relating to our products,  competition,  future development,  revenue and expense levels
and  profitability,  as well as the  sufficiency  of capital to meet  working  capital  and  capital
expenditure  requirements,   may  be  forward-looking  statements.  Our  disclosures  in   Item  7A,
"Quantitative and  Qualitative  Disclosures  About  Market  Risk," also  constitute  forward-looking
statements. This Report also contains other forward-looking statements, including without limitation
statements regarding:  the market opportunity for our products, our competitors,  the development of
our products, the capabilities of our product lines,  anticipated increases in revenues from our B2B
products, the percentage of revenues from our international operations, outlook with regard to costs
and expenses,  the adequacy of our existing facilities to meet our requirements over the next twelve
months,  and adequate  liquidity to meet our capital and operating  requirements for the next twelve
months. Such statements are not guarantees of future  performance,  but are based on assumptions and
expectations  of our management at the time such  statements  are made,  and involve  certain risks,
uncertainties  and assumptions  that could cause our future results to differ  materially from those
expressed in any forward-looking  statements.  Important factors that could cause our actual results
to differ from those  forward-looking  statements  include  those set forth  below.  We disclaim any
intent or obligation to update publicly any  forward-looking  statements  whether in response to new
information, future events or otherwise.

In January  2001, we  restructured  our business  operations.  As a result of the  restructuring  we
reduced our workforce by approximately  11% and split our business  operations into three divisions:
our B2B product line  division,  our Object Design  product line division and a third  division that
provides finance and administrative functions for the other two divisions. The restructuring may not
produce the improvement in sales and marketing focus, growth in business or revenues, improvement in
our results of operations or other benefits that we anticipate  and could,  by duplication of senior
management and other  personnel,  increase our operating  expenses without  realizing  corresponding
increases in revenue. In addition, if we are unable to successfully manage the transition to our new
organizational  structure,  we could  experience  disruption of our business  operations  that could
materially  adversely affect our financial  results.  Disruptions or operational  difficulties could
result in delays in  product  development  cycles and sales of our  products.  We may not be able to
retain  our key  personnel  following  the  restructuring  or attract  and retain the new  personnel
necessary  to grow our B2B  product  line and Object  Design  product  line  divisions,  which could
materially  adversely  affect our ability to develop  and sell our  products,  support our  business
operations  and grow our  businesses.  The occurrence of one or more of these factors could distract
our management team and materially adversely affect our business,  financial condition and operating
results.

The majority of our revenues to date has been derived from our Object Design line of object-oriented
database management products and related services. We expect the market for object-oriented database
management  products in general to remain stable or decrease in the future. Our future revenues from
our Object Design  product line will depend to a substantial  degree on our ability both to maintain
our existing  customers and to attract and maintain new customers for these products.  A significant
portion of our  revenues  is derived  from sales of our Object  Design  products to  customers  in a
limited  number of  industries,  such as the  telecommunications  industry,  some of which have been
decreasing  their rate of capital  expenditures,  including  expenditures for products such as ours.
There can be no assurance that we will be able to maintain  demand for our Object Design products in
the  telecommunications  industry or other vertical markets in which our Object Design products have
been widely  implemented.  If our revenues in our  traditional  markets decline and we are unable to
create demand for our Object Design  products in new vertical  markets,  our revenues could decline,
our ability to support the levels of  expenditure  we believe are necessary to support the growth of
our B2B business could be impaired, and our business and prospects could be significantly harmed. As
a result of the foregoing and other  factors,  we may  experience  material  fluctuations  in future
operating  results on a  quarterly  or annual  basis  which could  materially  adversely  affect our
business, financial condition and operating results.

                                                  5



We  expect  to  increase  our  sales  and  marketing,  research  and  development  and  general  and
administrative expenses as we develop and expand our B2B line of products and services.  Because our
B2B products and services are in the early phase of market acceptance,  we do not expect to generate
sufficient  B2B  revenues in 2001 to cover all of the related  expenses.  Accordingly,  we expect to
incur a loss in 2001.  Our failure to generate  sufficient  revenues,  raise  additional  capital or
reduce  certain  discretionary  spending  could have a  material  adverse  effect on our  ability to
continue as a going concern and achieve our business  objectives.  We believe that our current cash,
cash equivalents and marketable  securities will provide adequate  liquidity to meet our capital and
operating  requirements  for the next  twelve  months.  The time for which we believe our capital is
sufficient is an estimate.  The actual time period may differ  materially as a result of a number of
factors, risks and uncertainties. We may need to raise additional funds in the future through public
or  private  debt or  equity  financing  in order to  develop  new  products  or  services,  acquire
complementary  businesses or technologies or respond to competitive pressures.  Additional financing
we may need in the future may not be  available  on terms  favorable  to us, if at all.  If adequate
funds  are  not  available  or are  not  available  on  acceptable  terms,  or if we  experience  an
unanticipated  revenue  shortfall that requires us to implement  personnel  reductions or other cost
reduction measures,  we may not be able to take advantage of opportunities,  develop new products or
services or otherwise respond to unanticipated  competitive  pressures.  In such case, our business,
operating results and financial condition could be harmed.

Our B2B product line is currently based in large part upon XML, or eXtensible  Markup  Language,  an
emerging  standard for sharing data over the  Internet.  While we  anticipate  that XML will achieve
broad market  acceptance in the near future,  the acceptance of XML within the B2B industry has been
slower than expected.  It is also possible that a competing  standard perceived to be superior could
replace XML, in which case the market may not accept an XML-based  product.  If a new standard  were
perceived to be superior, our software might not be compatible with the new standard or we might not
be able to develop a product  using this  standard in a timely  manner.  Consequently,  a failure of
XML-based products to achieve broad market acceptance,  delay in such acceptance or the introduction
of a competing standard perceived to be superior in the market could harm our business.

In  order  to  achieve  broad  market  acceptance  of our B2B  product  line,  we must  improve  the
effectiveness  of our sales and marketing  efforts,  including by increasing  the  visibility of our
company and brand recognition of our B2B products,  by increasing the market reach and effectiveness
of our channel  partners,  and by increasing the  productivity  of our sales force.  There can be no
assurance  that  we  will  be  successful  in  these  efforts.  If we are  unable  to  increase  the
effectiveness  of our sales and marketing  programs,  we may not be able to attain planned levels of
revenue growth or compete effectively, and our business could be significantly harmed.

The market for B2B e-commerce solutions is rapidly changing and intensely competitive. We expect the
market for B2B  e-commerce  solutions  to  continue  to evolve at a rapid  pace.  For  example,  the
difficulties  experienced  in recent months by many online  retailers and other  web-based  consumer
businesses has resulted in reduced demand for our B2B products from such businesses. As a result, we
have been required to re-orient  our B2B sales force and  marketing  efforts in response to focus on
enterprise customers rather than web-based consumer  businesses.  We may not be able to successfully
develop and target our B2B products and sales and marketing efforts to such changing market demands.
We also expect competition to intensify as the number of entrants and new technologies increases. We
may not be able to compete  successfully  against  current or future  competitors.  The  competitive
pressures facing us, as well as our potential  inability to successfully  develop and target our B2B
products to the changing  market for B2B  e-commerce  solutions,  may harm our  business,  operating
results and financial condition.

Recent negative trends in the securities markets and in general domestic and international  economic
and market conditions have adversely  affected,  among other enterprises,  many companies engaged in
Internet-related  businesses.  As a result,  our revenues from sales of our products and services to
customers  engaged in  Internet-related  businesses have declined and may continue to decline in the
future.  There can be no  assurance  that such  negative  trends and  decline in  revenues  will not
continue  or  worsen  or that we will be able to  replace  the  revenue  that we have lost from such
customers.  These factors could materially  adversely affect our business,  financial  condition and
operating results.

We  typically  receive  the  majority  of our  revenue  in the  last  month of each  quarter  with a
concentration  of revenue in the latter half of such month.  This  pattern,  common to many software
companies,  makes it difficult  to forecast  accurately,  increasing  the  possibility  of missing a
quarterly  revenue or profit  target.  Any  inability  to obtain  orders in large  volume or to make
shipments  in the period  immediately  preceding  the end of any  particular  quarter  may cause the
results for that  quarter to fall short of our revenue  targets.  Any failure to meet our  quarterly
revenue or earnings targets could adversely impact the market price of our stock. As a result of the
foregoing and other factors, we may experience material  fluctuations in future operating results on
a  quarterly  or annual  basis which  could  materially  adversely  affect our  business,  financial
condition and operating results.

A key element of our strategy is to expand our operations in international  markets.  We derive, and
expect to  continue  to derive,  a  significant  portion of our  revenues  from sales by our foreign
subsidiaries  and to distributors  outside the United States.  We may have  difficulty  managing our
international  operations  because of distance,  as well as language and  cultural  differences.  We
cannot assure you that we will be able to successfully  market and deliver,  or maintain or increase
demand for, our products and services in foreign markets.  Other risks related to our  international
operations  include  fluctuations  in  currency  exchange  rates and the  conversion  to the euro by
applicable  members of the European Union by year-end 2001;  difficulties  arising from staffing and
managing foreign operations;  longer payment cycles and problems in collecting accounts  receivable;
reduced protection for intellectual property rights in certain countries; restrictions on the import
and export of sensitive U.S. technologies, such as data security and encryption technologies that we
may wish to use in solutions we develop for foreign customers;  legal and regulatory requirements of
different  countries,  such as differing  tax or labor laws;  and  potential  political and economic
instability.

Market prices and trading volumes for securities of software companies have generally been volatile.
In  particular,  our common stock has been and may continue to be subject to  significant  price and
volume  fluctuations  and may also be affected by broader  market trends  unrelated to our operating
performance.  Such  price and  volume  volatility,  as well as  general  domestic  or  international
economic,  market and political  conditions,  could adversely affect the market price for our common
stock and may prevent  stockholders  from reselling their shares at or above the price at which they
purchased their shares.

                                                  6



Our current and potential competitors include,  among others, large software vendors,  companies and
trading networks that develop their own B2B integration  e-commerce solutions,  vendors,  vendors of
proprietary enterprise application integration, or EAI, solutions and application server vendors who
have added XML capabilities to their products. In addition, our customers and companies with whom we
currently have strategic relationships may become competitors in the future. Many of our competitors
and potential competitors have more experience developing  Internet-based software, larger technical
staffs, larger customer bases, more established distribution channels, greater brand recognition and
greater financial,  marketing and other resources than we do. Our competitors may be able to develop
products and services that are superior to our software and services,  that achieve greater customer
acceptance or that have  significantly  improved  functionality as compared to our existing software
and future products and services.  In addition,  negotiating and maintaining  favorable customer and
strategic  relationships  is critical to our  business.  Our  competitors  may be able to  negotiate
strategic  relationships  on more  favorable  terms  than  we are  able  to  negotiate.  Many of our
competitors  may  also  have  well-established  relationships  with  our  existing  and  prospective
customers.  Increased  competition may result in reduced margins,  loss of sales or decreased market
share, which in turn could harm our business, operating results and financial condition.

We depend on product  innovation and new product  releases to remain  competitive.  Any delay in the
release of products or failure of released products to meet the market  expectation of functionality
and features could undermine our competitive position.  Furthermore,  certain of our competitors are
significantly  larger and are expending  greater  amounts on research and  development and sales and
marketing than we are. The result could be new competitive  product  introductions  that could limit
the salability of our products or put pressure on sales prices.

Our future  success  depends  upon our  ability to attract  and  retain  highly  skilled  technical,
managerial, sales and marketing personnel. We assume that we will continue to be able to attract and
retain such personnel.  While we have not experienced any significant difficulty in hiring qualified
personnel to date,  competition  for such personnel in the high technology  industry is intense.  We
experience  attrition,  and this cannot be  predicted.  The failure to recruit and retain  qualified
personnel, however, could have a material adverse effect on our future operating results.

Our software is complex and may contain known and undetected  errors or performance  problems.  Many
serious defects are frequently  found during the period  immediately  following  introduction of new
software or  enhancements  to existing  software.  Although we attempt to resolve all errors that we
believe would be considered  serious by our customers,  our software is not  error-free.  Undetected
errors or  performance  problems may be  discovered  in the future.  Our customers may perceive such
errors to be serious.  This could result in lost revenue or delays in customer  acceptance and would
be detrimental to our  reputation,  which could harm our business,  operating  results and financial
condition.

Because of the complexity of our software,  internal quality  assurance testing and customer testing
may reveal  product  performance  issues or  desirable  feature  enhancements  that could lead us to
postpone the release of new versions of our software.  In addition,  the  reallocation  of resources
associated  with any  postponement  could  cause  delays in the  development  and  release of future
enhancements to our currently  available software.  We may not be able to successfully  complete the
development of future enhancements in a timely and efficient manner. Any such failure or delay could
harm our operating results.

Our market is characterized by rapidly changing technology, evolving industry standards and frequent
new  product  announcements.  To be  successful,  we must adapt to our  rapidly  changing  market by
continually  improving the  performance,  features and reliability of our software and services.  We
could incur substantial  costs to modify our software,  services or infrastructure in order to adapt
to these  changes.  Our business  could be harmed if we incur  significant  costs  without  adequate
results, or if we are unable to adapt rapidly to these changes.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We face exposure to certain market risks,  primarily  adverse movements in foreign currency exchange
rates and changes in interest  rates.  We have not invested in derivative  instruments or derivative
commodity  instruments.  We believe that the fair value of other financial  instruments reflected in
our  consolidated  balance sheets does not represent a significant  market risk due to the nature of
these instruments and their short-term maturities.  We also do not believe that our future earnings,
fair  values  and/or  cash flows are  subject to risk of  material  near term loss due to changes in
market rates or prices that we consider to be  reasonably  possible in the near term.  However,  our
exposure to market  risk may change over time as our  business  practices  evolve,  and could in the
future materially  adversely effect our financial  condition and results of operations.  Our primary
exposure  has been  related to local  currency  revenue  and  operating  expenses  in Europe and the
Asia/Pacific region.

FINANCIAL RISK MANAGEMENT

The carrying  amounts  reflected in the consolidated  balance sheets for cash and cash  equivalents,
accounts  receivable,  and accounts payable  approximate fair value at the balance sheet date due to
the short maturities of these instruments.

                                                  7


Our exposure to market rate risk for changes in interest  rates relates  primarily to our investment
portfolio.  We  have  not  used  derivative  financial  instruments  in  our  investment  portfolio.
Information  about our  investment  portfolio  is set  forth in Note C of Notes to the  Consolidated
Financial  Statements  included  in Item 8 of this  Annual  Report on form 10-K and is  incorporated
herein by reference.

We  maintain  investment  portfolio  holdings  of various  issuers,  types,  and  maturities.  These
securities are classified as available for sale, and consequently, are recorded on the balance sheet
at fair value with unrealized gains or losses included in stockholders' equity. To date, we have not
experienced  material losses on our investments.  We place our investments with high quality issuers
and, by policy,  limit the amount of credit exposure to any one issuer.  Given the short  maturities
and  investment  grade  quality of the  portfolio  holdings at December  31,  2000,  a sharp rise in
interest  rates  should  not have a  material  adverse  impact on the fair  value of our  investment
portfolio.

FOREIGN CURRENCY RISK

Fluctuations  in  exchange  rates can  adversely  effect our  results of  operations  and  financial
position.  The  financial  statements of our  international  subsidiaries,  all of whose  functional
currencies are the local currency,  are translated  using exchange rates in effect at the end of the
period for assets and  liabilities  and  average  exchange  rates  during the period for  results of
operations.  Foreign  currency  translation  adjustments  are  recorded as a separate  component  of
stockholders'  equity,  and also are included in reporting  comprehensive  income. We also engage in
transactions denominated in foreign currencies.  Gains and losses from these transactions,  which to
date have been immaterial, are reflected in the results of operations. The impact of future exchange
rate  fluctuations  on our results of  operations  and  financial  condition  cannot  accurately  be
predicted. We do not currently engage in foreign currency hedging activities.

FINANCIAL INFORMATION BY GEOGRAPHIC AREAS

eXcelon does not generally track its revenues according to the geographic  location of its customer.
Instead,  eXcelon  tracks its  revenues  according  to the  geographic  location  of the office that
generates  such  revenues.  Based  on  the  foregoing  allocation,   the  following  table  provides
information,  summarized by geographic area, regarding our revenues and long-lived assets (excluding
financial instruments and deferred tax assets) for 2000, 1999 and 1998, in thousands:


                                                 YEAR ENDED DECEMBER 31,

REVENUES:                                        2000       1999       1998
--------------------------------------------------------------------------------
   United States                               $ 36,991   $ 37,399   $ 37,939

   United Kingdom                                13,842     10,761     10,448
   Germany                                        3,071      2,810      4,404
   France                                         2,018      1,118      1,950
   Rest of Europe                                 2,200        428      1,041
--------------------------------------------------------------------------------
     Total Europe                                21,131   $ 15,117   $ 17,843
--------------------------------------------------------------------------------

   Japan                                         11,354      7,246      5,452
   Australia                                        871      1,048      1,124
--------------------------------------------------------------------------------
     Total Asia/Pacific                        $ 12,225    $ 8,294    $ 6,576
--------------------------------------------------------------------------------


   Total all foreign countries                 $ 33,356   $ 23,411   $ 24,419
--------------------------------------------------------------------------------

   Total revenues                              $ 70,347   $ 60,810   $ 62,358
--------------------------------------------------------------------------------




                                                 8


                                                 YEAR ENDED DECEMBER 31,
LONG-LIVED ASSETS:                               2000       1999       1998
--------------------------------------------------------------------------------
   United States                                $ 6,934    $ 7,194   $ 6,495

   United Kingdom                                   566        659       726
   Germany                                          120        126       156
   France                                             3          3        92
   Rest of Europe                                    71         34        33
--------------------------------------------------------------------------------
     Total Europe                               $   760      $ 822   $ 1,007
--------------------------------------------------------------------------------

   Japan                                          $ 747      $ 734       312
   Australia                                         43         45        39
--------------------------------------------------------------------------------
     Total Asia/Pacific                           $ 790      $ 779     $ 351
--------------------------------------------------------------------------------


  Total all foreign countries                   $ 1,550    $ 1,601   $ 1,358
--------------------------------------------------------------------------------

  Total long-lived assets                       $ 8,484     $8,795   $ 7,853
--------------------------------------------------------------------------------






                                                  9


PART III

ITEM 11.  EXECUTIVE COMPENSATION

DIRECTOR COMPENSATION

    Each non-employee Director of the Company (an "Outside Director") receives $2,500 for each Board
of Directors meeting attended and $500 for each Committee  meeting attended and is reimbursed,  upon
request,  for expenses  incurred in attending  such  meetings.  Directors  who are  employees of the
Company are not paid any separate fees for serving as Directors.

    Under the  provisions of the Company's 1996  Incentive and  Nonqualified  Stock Option Plan (the
"1996 Plan"), each new Outside Director elected to the Board will be automatically granted, upon his
or her initial  election,  a fully-vested  nonqualified  option to purchase  15,000 shares of Common
Stock of the Company. In addition,  immediately following each annual meeting of stockholders of the
Company or special meeting in lieu thereof,  there is automatically granted to each Outside Director
re-elected  at or  remaining  in office after such  meeting a  fully-vested  nonqualified  option to
purchase 5,000 shares of Common Stock.  Each  additional  nonqualified  option granted to an Outside
Director  pursuant to this  provision of the 1996 Plan will expire on the tenth  anniversary  of the
date of grant. The exercise price of each such nonqualified  option will be equal to the fair market
value of the Common Stock on the date the nonqualified option is granted.

EXECUTIVE COMPENSATION

    Summary Compensation Table. The following table provides certain information for the years ended
December 31, 2000, 1999 and 1998 concerning  compensation paid to or accrued for the Company's Chief
Executive Officer, and the four other most highly compensated  executive officers who were in office
on December  31,  2000 and whose total  annual  salary and bonus for fiscal 2000  exceeded  $100,000
("named executive officers").

                                                      SUMMARY COMPENSATION TABLE

                                                                            Long-Term
                                          Annual Compensation (1)         Compensation
                                          -----------------------            Awards
                                                                          ------------
                                                                           Securities
                                                                           Underlying     All Other
 Name and Principal Position               Year    Salary($)   Bonus($)    Options(#)   Compensation($)
----------------------------               ----    ---------   --------   -----------   ---------------
Robert N. Goldman ......................   2000    $250,000    $175,000     600,000                --
    Chairman of the Board of Directors,    1999     210,000    $200,000     550,000                --
    and Chief  Executive Officer           1998     210,000          --     300,000                --

Satish Maripuri ........................   2000     263,454      14,000     500,000                --
    President and Chief Operating          1999     197,088      55,000     310,000                --
    Officer(2)                             1998          --          --          --                --

Brian W. Otis ..........................   2000     195,000      63,000          --                --
    Senior Vice President, Operations(3)   1999     171,200      40,385     400,000                --
                                           1998     174,004          --     120,000                --

Dan O'Connor............................   2000     180,000      56,000          --                --
    Senior  Vice President,                1999      97,404      47,500     280,000           $10,580
    Business Development (4)               1998          --          --          --                --

Ross A. Hinchcliffe ....................   2000     310,597       9,000          --                --
    Vice President, Worldwide Sales(5)     1999     279,382      20,544     450,000                --
                                           1998          --          --          --                --

                                                 10


(1) Other  annual  compensation  in the form of  perquisites  and other  personal  benefits has been
omitted because in each case the aggregate  amount of such  perquisites and other personal  benefits
was less than $50,000 and constituted less than 10% of the executive's annual salary and bonus.

(2) Mr.  Maripuri  was  elected as an  executive  officer  of the  Company in  September  1999.  Mr.
Maripuri's  salary  for 2000 and 1999  includes  $68,454  and  $48,755 of  sales-based  commissions,
respectively.

(3) Mr. Otis resigned as an executive  officer of the Company  effective  March 30, 2001.  Mr. Otis'
salary for 1998 includes sales-based commissions of $36,087.

(4) Mr. O'Connor  resigned as an executive  officer of the Company  effective  January 22, 2001. Mr.
O'Connor's salary for 1999 includes $10,417 of sales-based  commissions.  All other compensation for
1999 consisted of $10,580 of relocation reimbursements.

(5) Mr.  Hinchcliffe  resigned as an executive  officer of the Company effective April 17, 2001. Mr.
Hinchcliffe's  salary for 2000 and 1999 includes  $130,597 and $153,055 of sales-based  commissions,
respectively.


OPTION GRANTS IN LAST FISCAL YEAR.  The following  table sets forth for each of the named  executive
officers certain information concerning stock options granted by the Company during fiscal 2000.

                                        OPTION GRANTS IN LAST FISCAL YEAR

                                          Individual Grants
-------------------------------------------------------------------------------------------------------
                                                                                   Potential Realizable
                                      Percent of                                    Value at Assumed
                        Number of   Total Options                                    Annual Rate of
                        Securities    Granted to                                      Stock Price
                        Underlying    Employees    Exercise                           Appreciation
                         Options      In Fiscal     Price       Expiration           For Option Term (3)
          Name         Granted (#)     Year (1)   ($/sh) (2)       Date            5% ($)      10% ($)
          ----         ------------    --------   ----------       ----            ------      -------
Robert N. Goldman ....  300,000 (4)     6.84%       $ 13.13   January 10, 2010  $ 2,477,216  $ 6,277,752
                        300,000 (4)     6.84%          4.44   December 1, 2010      837,688    2,122,865
Satish Maripuri.......  500,000 (4)    11.41%          4.44   December 1, 2010    1,396,146    3,538,108
Ross A. Hinchcliffe...         --          --           --            --                --           --
Brian W. Otis.........         --          --           --            --                --           --
Dan O'Connor..........         --          --           --            --                --           --

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

(1) The Company granted to employees  options to purchase an aggregate of 4,383,050 shares of Common
Stock in fiscal 2000.

(2) All options were granted at fair market value as determined by the Compensation Committee on the
date of grant.

(3) The  dollar  amounts  under  these  columns  are the  result of  calculations  at the 5% and 10%
appreciation  rates  prescribed by the Securities and Exchange  Commission and,  therefore,  are not
intended to predict possible future appreciation, if any, in the price of the Common Stock. Any gain
to the  optionees  will result only from an increase in the price of the Common Stock after the date
of grant, which will benefit all stockholders proportionately.

(4) Represents shares of Common Stock issuable upon exercise of stock options granted under the 1996
Plan and the Company's 1997 Nonqualified Stock Option Plan. Such options vest as follows: 25% of the
total number of shares one year after their date of grant and an additional 6.25% at the end of each
three-month period thereafter until the options are fully vested.


                                                 11


    OPTION EXERCISES AND FISCAL YEAR-END VALUES. The following table sets forth certain  information
concerning stock options exercised during fiscal 2000 and stock options held as of December 31, 2000
by each of the named executive officers.

                           AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                                  AND FISCAL YEAR-END OPTION VALUES

                                                         Number of Securities          Value of Unexercised
                          Shares                       Underlying Unexercisable            In-the- Money
                         Acquired                            Options At                  Options At Fiscal
                            On           Value            Fiscal Year-End                 Year-End ($)(2)
             Name        Exercise(#)  Realized($)(1) Exercisable(#) Unexercisable(#) Exercisable($) Unexercisable($)
             ----        -----------  -------------- -------------- ---------------- -------------- ----------------
Robert N. Goldman ......      --            --       653,126         796,874              --                 --
Ross A. Hinchcliffe.....      --            --       446,875          53,125              --                 --
Satish Maripuri.........  25,600     $ 511,000       333,557         528,293              --                 --
Brian Otis..............      --            --       553,147         114,686        $ 32,633                 --
Dan O'Connor............  20,000       405,036       135,000         125,000              --                 --

(1) Value realized is based on the  difference  between the fair market value of the Common Stock on
the date of exercise of the applicable  option and the exercise  price of such option.  These values
may never be realized.  Actual  gains,  if any,  will depend on the value of the Common Stock on the
date of the sale of the shares.

(2) Value realized is based on the last sale price of the Common Stock ($1.50 per share) on December
31, 2000 as reported by the Nasdaq National Market, less the applicable option exercise price. These
values have not been and may never be realized. Actual gains, if any, on exercise will depend on the
value of the Common Stock on the date of the sale of the shares.

EMPLOYMENT AGREEMENTS

    In November 1995, the Company executed an employment agreement with Robert N. Goldman (the "1995
Employment  Agreement").  The Company agreed to employ Mr. Goldman as President and Chief  Executive
Officer of the Company,  at an annual  salary of at least  $190,000.  Under this  agreement,  if the
employment of Mr. Goldman was terminated by the Company for any reason other than just cause,  death
or permanent disability,  the agreement required the Company to continue to pay Mr. Goldman's salary
for a period of twelve months after such termination,  offset by any amounts received by Mr. Goldman
from subsequent employment during such period.

    In November 1998, the 1995 Employment Agreement for Mr. Goldman was amended.  The agreement,  as
amended,  provides  for his salary for  twelve  months and 100% of his target  bonus for the year in
which such  termination  occurs to be paid by the Company in the event of termination for any reason
other than "cause" as defined in the agreement.  In the event of a "change in control" as defined in
the agreement,  the Company will pay Mr. Goldman twenty-four months of salary and 100% of his target
bonus for the year in which  such  termination  occurs  multiplied  by two(2),  and any  outstanding
options held by Mr. Goldman will become fully vested.

    The Company also entered into agreements with Messrs.  O'Connor,  Otis, Hinchcliffe and Maripuri
which provided,  in the event of a change in control,  for payment of twelve months' salary and 100%
of target bonus for the year in which such termination  occurs,  and full vesting of any outstanding
options held by such individuals.

    In  connection  with  their  employment,   these  officers   executed  the  Company's   standard
Non-Competition,  Non-Disclosure and Developments Agreement (the "Non-Competition Agreement"). These
agreements contain covenants prohibiting the improper disclosure of confidential  information at any
time, as well as provisions assigning to the Company all inventions made or conceived by the officer
during his  employment  with the Company.  Each officer  agreed with the Company that,  with certain
exceptions,  until one year after the termination of his employment  with the Company,  he would not
participate in any capacity in any business activities  competitive with those of the Company.  Each
officer  further  agreed not to  participate  in any  capacity  in  soliciting  the  business of any
customers or the services of any employees of the Company during such one-year period.


                                                 12


    Mr. O'Connor resigned as Senior Vice President, Business Development and as an executive officer
of the Company  effective  January 22, 2001; Mr. Otis resigned as Senior Vice President,  Operations
and as an executive officer of the Company effective March 30, 2001; and Mr. Hinchcliffe resigned as
Vice President, Worldwide Sales and as an executive officer of the Company effective April 17, 2001.
Pursuant to  agreements  entered into in  connection  with their  respective  resignations  from the
Company,  Mr. O'Connor was provided with $115,269 of severance  compensation payable in installments
over a period of seven and one half  months;  Mr.  Otis was  provided  with  $236,250  of  severance
compensation ($90,000 paid on March 30, 2001 and $146,250 payable  in twenty-four equal installments
beginning April 1, 2001); and Mr.  Hinchcliffe was provided with $233,333 of severance  compensation
payable in installments over a period of twelve months.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    The Compensation Committee (the "Committee")  established by the Board of Directors is currently
composed of two non-employee  Directors;  Gerald B. Bay and Kevin J. Burns. No executive  officer of
the Company  served during 2000 on the Board of Directors or  compensation  committee of any entity,
one of whose executive  officers also served on the Board of Directors or Compensation  Committee of
the Company.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth certain  information with respect to the beneficial  ownership of
the Company's  Common Stock as of March 31, 2001 by (i) each person or group known to the Company to
be the beneficial  owner of more than five percent of the outstanding  Common Stock as of that date;
(ii) each of the Company's  Directors as of that date;  (iii) the named executive  officers and (iv)
all Directors and executive  officers of the Company as of that date as a group.  The information as
to each person has been furnished by such person.

                                                                    SHARES BENEFICIALLY OWNED (1)(2)
              NAME AND ADDRESS OF BENEFICIAL OWNER                     NUMBER            PERCENT
              -------------------------------------                    ------            -------
Robert N. Goldman                                                        1,903,126        6.3%
eXcelon Corporation
25 Mall Road
Burlington, MA 01803

Palo Alto Investors                                                      1,700,000        5.7%
470 University Ave
Palo Alto, CA  94301

Brian Otis(3)                                                              586,476        1.9%
Ross A. Hinchcliffe                                                        455,759        1.5%
Satish Maripuri                                                            346,100        1.2%
Gerald B. Bay                                                              262,727          *
Dan O'Connor(3)                                                            135,000          *
Kevin J. Burns                                                              34,333          *
Robert M. Agate                                                             17,933          *
All Directors and executive officers as a group(8 persons)(3)            3,316,383       10.5%
* Less than one percent.

(1) Except as otherwise  indicated,  the persons named in this table have sole voting and investment
power with respect to all shares of Common  Stock shown as  beneficially  owned by them,  subject to
community  property laws where applicable and subject to the information  contained in the footnotes
to this  table.  Amounts  shown  for each  stockholder  include  shares  subject  to  stock  options
exercisable within 60 days of the date of this table. Shares not outstanding but deemed beneficially
owned by virtue of the right of a person or group to  acquire  them  within 60 days are  treated  as
outstanding  only for  purposes of  determining  the number of and  percent  owned by such person or
group. As of March 31, 2001, the date of this table,  there were  29,575,376  shares of Common Stock
outstanding.

(2) The amounts listed include the following shares of Common Stock that may be acquired on or prior
to May 30, 2001 through the exercise of options:  Mr.  Goldman,  803,126  shares;  Mr.  Hinchcliffe,
454,375 shares;  Mr. Maripuri,  341,850 shares;  Mr. Otis,  583,771 shares;  Mr.  O'Connor,  135,000
shares;  Mr. Agate,  15,833 shares;  Mr. Burns,  34,333  shares;  Mr. Bay,  34,333  shares;  and all
Directors and executive officers as a group, 1,960,725 shares.

(3) Mr.  Otis's  shares and Mr.  O'Connor's  shares are excluded  from the number of shares shown as
owned by all directors and executive officers as a group due to the fact that Mr. Otis resigned from
the Company on March 30, 2001 and Mr. O'Connor resigned from the Company on January 22, 2001.

                                                 13


                                              SIGNATURE

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



                                                                EXCELON CORPORATION


Date:  August  15, 2001                                         /s/ Robert N. Goldman
                                                                ------------------------------------
                                                                Robert N. Goldman
                                                                Chairman and Chief Executive Officer







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