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

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**FORM 10-K/A**

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**[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended November 30, 2000**

**Commission file number 0-20562**

**COREL CORPORATION**
(Exact name of Registrant as Specified in its Charter)



|**Canada**                                                     | **Not Applicable**                     
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**1600 Carling AvenueOttawa, Ontario, Canada     KIZ 8R7**(Address of Principal Executive Offices including Zip Code)

**(613) 728-8200**(Registrant's Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(g) of the Act:

**Title of Each Class**

**Common shares, no par value**

**Common share purchase rights**

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 (Section 229.4054 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

As of February 21, 2001, the aggregate market value of Common Shares held by
non-affiliates of the registrant, based on the closing sales price of $2.19 of the Registrant's Common Shares
as reported on the NASDAQ National Market,
was $161,112,814. As of that date 73,651,572 Common Shares were issued and
outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None







**COREL CORPORATION
                                             FORM 10-K
                       For The Fiscal Year Ended November 30, 2000
                                             Index**



|Part I.    |                                                                                       | Page
|---------- | ------------------------------------------------------------------------------------- | ----
|Item 1.    | Business                                                                              | 3   
|Item 2.    | Properties                                                                            | 9   
|Item 3.    | Legal Proceedings and Government Proceedings                                          | 9   
|Item 4.    | Submission of Matters to a Vote of Security Holders                                   | 10  
|Part II.   |                                                                                       |     
|Item 5.    | Market for the Registrant's Common Equity and Related Stockholder Matters             | 10  
|Item 6.    | Selected Financial Data                                                               | 11  
|Item 7.    | Management's Discussion and Analysis of Financial Condition and Results of Operations | 12  
|Item 7a.   | Quantitative and Qualitative Disclosures About Market Risks                           | 12  
|Item 8.    | Consolidated Financial Statements and Supplementary Data                              | 12  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures | 12  
|Part III.  |                                                                                       |     
|Item 10.   | Directors and Executive Officers of the Registrant                                    | 12  
|Item 11.   | Executive Compensation                                                                | 14  
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management                        | 17  
|Item 13.   | Certain Relationships and Related Transactions                                        | 17  
|Part IV.   |                                                                                       |     
|Item 14.   | Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K          | 17  
|Signatures |                                                                                       | 19  

All financial information contained in this report is expressed in United States dollars,
unless otherwise stated.

---

**PART I**

**Item 1.  Business**

******GENERAL**



Corel develops, manufactures, licenses, sells and supports a wide range of software
products including
graphics, business productivity and consumer.  Corel products are available for users of most PCs,
including International Business Machines ("IBM") Corporation and IBM-compatible PCs, Apple
Computer Inc.'s  Macintosh® ("Mac") and Linux-based systems. In 2001, the Company plans continue to
expand its support of the Web, delivering the Internet's versatility to customers through web-based
applications, content and services. Corel also plans to develop applications for Microsoft Corporation's
("Microsoft") .NET platform as part of services to be available on multiple platforms.

On October 2, 2000, Corel announced a strategic alliance with Microsoft.  The Company
issued
24,000,000 Series A, participating convertible, non-voting, non-redeemable preferred shares to Microsoft
for total gross proceeds of $135.0 million ($5.625 per share).  Each preferred share is convertible into one
common share but not in the hands of Microsoft or its affiliates. As part of the share purchase agreement
the Company is obligated to file, with the United States Securities and Exchange Commission ("SEC") a
resale registration statement for 24,000,000 common shares underlying these preferred shares. Under the
terms of a technology and services agreement the companies will work together to support the
development, testing and marketing of new products related to the .NET platform and, upon request from
Microsoft at any time prior to October 2, 2003, Corel is obligated to provide 30 full time equivalents (20
developers and 10 testers) for a 12 month period to port the .NET platform from the Windows platform to
the Linux platform.  The Company has deducted from equity $3.0 million of the total money received from
Microsoft for this future possible obligation.

Corel's business strategy emphasizes the development of a broad line of software
application products for
business, academic and personal use, marketed through multiple channels of distribution. Corel is divided
into two main product groups: Creative Products and Business Applications Products and various
supporting departments.

The Creative Products group develops graphics software applications designed for
business, academic and
home markets.

The Business Applications Products group creates business productivity applications
designed for the
business, academic and home markets.

The Sales department is responsible for building long-term business relationships with
customers. This
department is organized to serve three main customer types: end-users, original equipment manufacturers
("OEMs") and enterprises. The department also focuses directly on large organizations, offering tailored
license programs and organization-wide support. The department manages the channels that serve
customers by working with distributors, resellers and OEMs. The Customer Service and Technical Support
departments support Corel's products with technical support and customer service for end-users and
organizations.

Other supporting departments are responsible for managing business operations and
overall business
planning. This includes the process of manufacturing and delivering finished goods and licenses, as well as
corporate  functions such as finance, administration, human resources, legal, business development and
information technology.

The Company has only one global operating segment and sells its products worldwide from
three
geographic regions. Note 15 to the Consolidated Financial Statements (see Item 8) is incorporated herein
by reference.

PRODUCTS

CREATIVE PRODUCTS

The Creative Products group develops graphics applications software, which provides
instructions for
creating and manipulating graphics, text, or numbers. Corel's graphics applications are designed to meet
the needs of general business users and graphics professionals. Primary examples of graphics applications
include illustration, photo editing and painting, 3D rendering, and animation programs. Corel's graphics
applications programs are developed principally for Microsoft® Windows® ("Windows"), Macintosh and
Linux operating systems and are available in English and French.

**CorelDRAW®.**CorelDRAW is asuite of
software programs featuring integrationof all of the major
graphics functions that share a common "look and feel".  CorelDRAW modules feature common
commands and extensive use of object linking and embedding ("OLE") cross-application capabilities.
CorelDRAW is available in several versions, with certain combinations of modules, supporting utilities,
clipart images, fonts and photos available for the various operating system platforms.

The CorelDRAW module is an illustration program allowing users to produce color
illustrations
incorporating both text and objects. The Corel PHOTO-PAINT® module is a photo-editing and painting
module that enables users to apply global photo-retouching and pixel by pixel editing to scanned or
photographic images.  Supporting utilities include: Microsoft® Visual Basic® for Applications 6.2, a
supporting application which allows developers to build custom business solutions by automating and
integrating off-the-shelf software applications to meet specific customer needs;Canto® Cumulus®
Desktop LE 5.0, a tool that organizes media and graphics files into a catalog which can be indexed so that
users can find images,designs,
clipart, stock photosand
QuickTime® movies quickly and easily;Bitstream® Font NavigatorTM 4.0, a tool that allows users a quick and easy way to find, install and
organize fonts into manageable groups and view and print font samples; Corel TEXTURETM, a tool for
creating realistic natural textures; CorelTRACE TM, a bitmap-to-vector conversion utility for images and
text; Corel CAPTURETM, a tool for capturing portions of the, or the entire, application window; Corel
R.A.V.E.TM, is a new product that gives users the ability to create effects that take place over a period of
time, resulting in an animation. CorelDRAW also includes Adobe® Acrobat® Reader and Adobe®
Photoshop® compatible plugin filters, including Digimarc® Digital Watermarking and Human Software
Squizz!TM.

CorelDRAW has a leading market share
in the illustration segment of the Windows graphics software
market with an installed base of over 12.4 million units worldwide.



**Corel PHOTO-PAINT®.**Corel
PHOTO-PAINT is a comprehensive photo-editing, image composition
and painting application. Corel PHOTO-PAINT 10 features a variety of image-enhancing filters to improve
the quality of scanned images and special effects filters that dramatically alter the appearance of images,
such as the new Red Eye Removal and Smart Blur filters.Corel PHOTO-PAINT is available in various
versions for various operating systems.



******Corel
VENTURA** **TM****.**Corel VENTURA is a suite of high-end desktop publishing software programs for
publishing documents of any size, length or complexity. The latest version of Corel VENTURA allows
users to publish Corel VENTURA documents to HTML, portable electronic formats, such as EnvoyTM and
Adobe Acrobat, a CD-ROM, over an internal network, or on the Internet.

**KPT®********.**KPT is a collection of image filters that produce
spectacular effects for print and the Web. KPT
includes  plug-ins that extend and enhance the creative possibilities of Adobe Photoshop and compatible
products.

**Bryce®**. Bryce is an
easy way to create, explore and animate extraordinary imagery for multimedia, video
and the Web.

**Corel® Painter** **TM.**Corel Painter, the ultimate
Natural-Media® painting tool, delivers hundreds of
brushes and creative materials, opening new horizons in high-quality output for print and the Web.

**Corel® KnockOut.** Corel KnockOut is a masking tool that can perform
complex masking functions, while
preserving fine image details, such as blurred or  out of focus edges, hair, smoke and shadows.

**BUSINESS APPLICATIONS**

Corel's Business Applications products are designed for use by a broad class of
end-users, regardless of
business, industry, or market segment. Primary examples of productivity software applications are word
processing, spreadsheet, and presentation graphics programs. Corel's productivity software applications are
developed for the Windows, Macintosh, DOS and Linux operating systems and are available in English
and French.

**Corel® WordPerfect® Suite.**  Corel WordPerfect suite is a suite
of software programs featuring seamless
integration of the most commonly used desktop applications. Corel WordPerfect suite combines document
creation with graphics and Internet capabilities. There are several versions of Corel WordPerfect suite
available.

WordPerfect Office 2000 contains WordPerfect, Quattro Pro , Corel Presentations and
Trellix2 desktop
web publishing.  Corel also offers a version of Corel WordPerfect suite for legal professionals,
WordPerfect® Law Office 2000 - Legal Edition. WordPerfect Law Office 2000 - Legal Edition offers all
the features found in the WordPerfect Office 2000 along with industry-specific applications and resources.
WordPerfect Office 2000 Voice-Powered Edition includes all of the above features in addition to the
speech recognition technology of Dragon NaturallySpeakingTM.

**Corel**®**WordPerfect**®**Suite
Professional.**  Corel WordPerfect Suite Professional is a suite of software
programs that includes enhanced Internet connectivity, graphics and database features. WordPerfect Office
2000  Professional includes WordPerfect, Quattro Pro, Corel Presentations, Paradox® 9,
CorelCENTRALTM 9 and Trellix® 2, a tool which simplifies the process of creating and managing a Web
site.

**WordPerfect®.** WordPerfect is Corel's principal word processing
program, providing all the features that
users of word processing products expect plus the ability to handle graphics, tables, spreadsheet data,
charts, and images imported from other software programs.

**Quattro® Pro.** Quattro Pro is an integrated spreadsheet with
database, business graphics and Internet
capabilities.

**Paradox®.**  Paradox, a powerful data management tool, delivers
advanced features such as the ability to
publish a database to the Web.

**Corel**®**PresentationsTM.**  Corel Presentations is a
presentation graphics program for producing slides,
overheads, transparencies and prints.

**LINUX OPERATING SYSTEM**



Corel® LINUX® OS is built specifically for the desktop and is offered in two
versions: Corel LINUX -
Standard Edition and Corel LINUX - Deluxe Edition. Based on the Debian version of Linux, this system
delivers an easy-to-use, four-step graphical installer that automatically detects most PCI hardware. Features
include a KDE-based, drag-and-drop desktop environment and a browser-style file manager.



|**RESEARCH AND DEVELOPMENT** | 
|---------------------------- | 

The PC software industry is characterized by frequent changes in technology and
user preferences, which
require constant attention to software technology trends, shifting consumer demand and rapid product
innovation. The pace of change has recently increased due to the burgeoning interest in the Internet,
networking in general, emerging interest in Linux as an operating system and new programming languages
and platforms such as Java and Microsoft's .NET platform.

Accordingly, Corel must be able to provide new software products and modify and enhance
existing
products on a timely and continuing basis to be competitive. Corel employs a strategy of internally
developing software, contracting for the development of certain products by third parties; and acquiring or
licensing technology that will, in most cases, be enhanced by Corel. Corel believes that its ability to
maintain technological competitiveness will depend in large part upon its ability to successfully enhance its
existing products, develop new products on a timely basis and acquire or license complementary
technologies and products in a timely manner. The Company strives to become as informed as possible at
an early stage about changing usage patterns and hardware advances that may affect software design.

Corel's research and development expenses were $71.9 million,  $40.0 million and $43.9
million in fiscal
1998,  1999 and 2000, respectively. Those amounts represented approximately 29%, 16% and 28%
respectively, of sales in each of those years. Software acquired or licensed for incorporation into Corel's
product line totaled $4.7 million in fiscal 1998, $15.4 million in fiscal 1999 and $13.5 million in fiscal
2000. Corel intends to continue significant expenditures for research and development activities.

|**MANUFACTURING** | 
|----------------- | 

The principal materials and components used in Corel's products include computer
media (diskettes, CD-ROMs or tapes) and documentation. Corel is often able to acquire component parts and materials on a
volume discount basis.

Corel contracts all of its manufacturing activity to third parties. Manufacturing
involves the duplication of
computer media and user manuals, assembly of components, spot testing of the product and final
packaging, all in accordance with Corel's specifications. Corel believes there is an adequate supply of and
source for the raw materials used in its products, and that multiple sources are available for media
duplication, manual printing and final packaging. Corel's products are generally shipped as orders are
received and accordingly, Corel has historically operated with little backlog.

|**MARKETING, SALES AND DISTRIBUTION** | 
|------------------------------------- | 

Corel's marketing and sales efforts are directed towards several customer types
including end-users,
corporate accounts, and OEMs. Corel's marketing and sales staff seek to build long-term relationships with
customers and end-users of Corel products. In addition to the OEM channel, Corel has four major
geographic sales and marketing areas: North America, Latin America, Europe and Asia-Pacific.****

End-user marketing activities cover all of Corel's products and target end-users who
make individual
buying decisions for the PCs they use at work or at home. Marketing activities aimed at end-users include
developing and administering reseller relationships, channel marketing and promotions, end-user marketing
programs and seminars, events and product training for resellers.

The corporate licensing unit has responsibility for sales and marketing activities that
target groups of users
in all organizations and enterprises. The unit works directly with these organizations and enterprises, as
well as with channel partners such as distributors, value-added resellers and large account resellers, to
provide complete desktop productivity solutions to this customer segment. The unit's sales and marketing
activities include providing technical training to channel resellers, supporting and providing seminars,
events, and sales training for channel partners. The unit also has responsibility for administering the Corel
License Programs worldwide. Key products for the corporate licensing unit are graphics and productivity
software applications.

The OEM customer unit works with original equipment manufacturers that pre-install or
bundle Corel
software on their PCs or peripheral hardware.

|**Finished Goods Channels** | 
|--------------------------- | 

**Distributors and Resellers.**  Corel sells its products worldwide
to over 160 distributors for resale through
software resellers. Distributors include Ingram Micro, Merisel, Tech Data, and Navarre. Resellers include
ASAP Software and Software House International. Within the United States and Canada, Corel has sales
representatives and support personnel who solicit orders from distributors and resellers and provide
product training and sales support. In other countries, Corel's marketing personnel provide product training
and sales support.

**Licensing.**  Corel has a program designed to make it easier for large or
small organizations to acquire and
maintain Corel products. The Corel License Program ("CLP") consists of three separate programs. CLP
Universal offers flexible software acquisition, licensing and maintenance options specially designed to
meet the needs of large multinational organizations. Targeted audiences include technology specialists and
influential end-users in large enterprises. Marketing efforts and fulfillment are generally coordinated
through Corel's network of large account resellers.  CLP Choice offers flexible software acquisition and
licensing options specially designed to meet the needs of small and medium sized organizations. Marketing
efforts and fulfillment are generally coordinated through Corel's network of distributors and resellers.
CLP Freedom is designed to make it easy and affordable for organizations to standardize on a single
software solution.  This package allows organizations to license Corel's business or graphics software
products for a one- or a two-year term.  The minimum licensing commitment to qualify is only 100
employees or workstations within an entire organization or a defined portion of an organization.

**Solution Partners.**  Corel's Solution Partners program is a support
relationship with independent
developers and consultants that provide products, solutions or services around Corel products.  The
program supports independent software vendors, consultants, value-added resellers ("VARs"), system
integrators, custom application developers, and solution developers; as well as technical support and
training organizations. Under this business partnership strategy, the Company provides sales and product
information, development services, access to beta software, discounts on Corel products and dedicated
developer technical support.

**Approved Service Bureaus.**  The Corel Approved Service Bureau Program
("CASB") supports
organizations that output and render files created with Corel's graphics software applications such as
CorelDRAW and Corel VENTURA. Under CASB, the Company provides members with product
information, free priority technical support and referral services through Corel's bulletin board service and
Customer Service and Technical Support networks.

**Direct Marketing.**  Corel promotes some of its products through direct
marketing techniques directed
toward existing and potential users of Corel's products. Fulfillment of product to the end-user is either by
direct shipment or through resellers.

**On-line Distribution.**Corel offers its products on-line through third
party web sites including
beyond.com,  buy.com and egghead.com as well as through their own sites which include Corel® Store and
ClipartCity.com. ****

|**OEM Channel** | 
|--------------- | 

Corel markets certain productivity, graphics, and consumer software applications
under license agreements
with OEMs that grant the OEMs the right to distribute copies of Corel's products with their hardware
products. Corel has OEM agreements covering one or more of its products with most of the major PC and
peripheral hardware vendors, including Agfa, Canon, Compaq, Cybermax, Dell, Epson, Gateway 2000,
Hewlett-Packard, Packard Bell, PCChips, Quantex and Vobis.

|**Advertising and Promotion** | 
|----------------------------- | 

Advertising, direct marketing, and marketing materials are targeted to various
end-user groups through a variety
of programs: (i) extensive worldwide advertising in broad consumer media and trade publications; (ii) joint
promotions with computer retailers under which qualifying resellers and OEMs are reimbursed for certain
advertising expenditures; (iii) trade show and PC user group participation; and (iv) direct corporate marketing
efforts. The Company has an in-house creative design group responsible for conceptualizing and producing
all of Corel's ad copy, box covers, and promotional material. The Company has an in-house ad agency which
places and monitors the effectiveness of Corel's worldwide advertising. The Company maintains a broad
advertising campaign emphasizing the Corel brand identity.

|**CUSTOMERS** | 
|------------- | 

As described above, Corel has three main customer types: end-users, organizations
or enterprises, and OEMs.
Most end-users of Corel products are individuals in business, government agencies, educational institutions
and at home. These end-users obtain Corel products primarily through distributors, resellers, and OEMs. Note
15 to the Consolidated Financial Statements (see Item 8) identifies, by name as required, customers that
represent more than 10% of Corel's revenues.

|**PRODUCT SUPPORT** | 
|------------------- | 

Corel provides product support coverage options to meet the needs of users of
Corel products. Support
personnel are located in Ottawa, Ontario. Certain support is also provided by qualified third-party support
organizations in accordance with Corel's specifications for quality and timeliness of the support response.
Corel generally hires individuals with product expertise and provides them with the productivity tools,
continuous product education, training and consistent processes to deliver quality support for Corel products.
Coverage options currently range from standard no-charge toll telephone support to fee-based offerings
providing unlimited toll-free telephone and technical support for all Corel products 24 hours per day, 7 days
per week.

Users have access to Corel's Knowledge Base, a database of technical support articles
that is updated regularly
with useful information regarding Corel products. Corel provides access to Knowledge Base, technical support
information and frequently asked question and answers via Corel's worldwide web site on the Internet
(*http://www.corel.com*). Corel maintains a bulletin board service for European customers and a forum on
CompuServe to provide users with a mechanism to provide feedback as well as receive technical updates and
notes. Additionally, users can access Corel's automated "Fax on Demand" system where up-to-date
information about common issues and tips and tricks is stored in numbered documents.

Corel's Customer Service representatives, including a number of third-party
organizations, answer questions
about product specifications and pricing, sell Corel products, and issue replacement media and documents.

|**COMPETITION** | 
|--------------- | 

Competition within distribution channels may adversely affect the Company's
business. Corel competes with
other software vendors for access to distribution channels, retail shelf space and the attention of customers at
the retail level  and in corporate accounts. Other competitors with greater market share and significantly greater
financial resources may command the attention of the retail accounts, the corporate market and original
equipment manufacturers. In order to compete for distribution channel space we must offer compelling reasons
to distribute our product at a reasonable price that offers compatibility with competitive products. we must also
use innovative marketing ideas in order to compel the distributor to carry our products. Inability to maintain
distribution channel space could have a material adverse affect on our business, results of operations and
financial condition.

The marketplace is intensely competitive and rapidly changing and we may not be able to
compete successfully
in the future. The software industry is highly competitive and subject to rapid technology change. Many of our
current and potential competitors have larger technical staffs, more established and larger marketing and sales
organizations and significantly greater financial resources. The rapid pace of technological change constantly
creates new opportunities for existing and new competitors and can quickly render existing technologies less
valuable. As the market for our products continues to develop, additional competitors may enter the market and
competition may intensify. Inability to compete in the following factors could have a material adverse affect
on our business, product performance, product features, ease of use, reliability, hardware and competitor
compatibility, brand name recognition, product reputation, pricing levels of advertising, availability and quality
of customer support, and timeliness of product upgrades. We compete in the following areas with a variety of
companies, including:

Graphics

The Company's graphics software products face substantial competition from a wide
variety of companies.
In the illustration graphics segment, our competitors include Adobe Systems Incorporated, JASC Software,
Inc., Macromedia Inc., Micrografx, Inc. and Microsoft. In the desktop publishing segment, our competitors
include Adobe Systems, Inc. Our competitors also include many independent software vendors, such as
Autodesk, Inc., and Apple Computer Inc.

Business Productivity

The Company's competitors in the productivity software (primarily office suites)
marketplace include
Microsoft, IBM (Lotus Development Corporation), Sun Microsystems, Inc., Red Hat, Inc., and Applix Inc.
According to industry sources, Microsoft currently has the largest overall market share for office suites. IBM
has a large installed base with its spreadsheet program. Also, IBM preinstalls some of its software products
on various models of its PCs, competing directly with the Company's productivity software.

|**PROPRIETARY RIGHTS** | 
|---------------------- | 

Corel regards certain features of its internal operations, software and
documentation as proprietary and relies
on contract, patent, copyright, trademark, and trade secret laws and other measures to protect its proprietary
information. The Company believes, however, that due to the rapid pace of innovation within its industry,
factors such as the technological expertise and creative skills of its personnel are more important to establishing
and maintaining technological leadership than are the various legal protections of its technology.

Corel provides its products to end users under non-exclusive licenses, which generally
have a perpetual term,
with the exception of academic licences, and are transferable provided the transferor erases or destroys its copy
of the product.  In special circumstances, Corel makes source code available for certain of Corel's products.
The provision of source code may increase the likelihood of misappropriation or other misuse of Corel's
intellectual property. Corel licenses its products pursuant to "shrink wrap" and/or "click wrap" licenses that
are not signed by licensees and therefore may be unenforceable under the laws of certain jurisdictions. In
addition, the laws of some foreign countries do not protect Corel's proprietary rights to the same extent as do
the laws of Canada and the United States.

From time to time Corel receives notices from third parties asserting that Corel has
infringed their patents or
other intellectual property rights. Corel may find it necessary or desirable in the future to obtain licenses from
third parties relating to one or more of its products or relating to current or future technologies. There can be
no assurance that third parties will not assert infringement claims against Corel in the future with respect to
current or future products or that any such assertion will not require Corel to enter into royalty arrangements
or result in costly litigation. As the number of software products in the industry increases and the functionality
of these products further overlap, Corel believes that software developers may become increasingly subject
to infringement claims. Any such claims, with or without merit, can be time consuming and expensive to
defend.

|**EMPLOYEES** | 
|------------- | 

As of February 21, 2001, Corel employed approximately 800 people on a full-time
basis. Corel's success
depends to a significant extent upon the performance of Corel's executive officers and key technical, sales and
marketing personnel. Corel believes that its future success will also depend in large part on its ability to attract
and retain highly skilled technical, managerial and sales and marketing personnel. Competition for employees
is intense in the software industry. To date, Corel believes it has been successful in its efforts to recruit
qualified employees, but there can be no assurance that Corel will continue to be as successful in the future.
None of Corel's employees are subject to collective bargaining agreements. Corel believes relations with its
employees are favourable.



**Item 2.  Properties**

Corel leases 177,000 square feet of office
space in a facility located in Ottawa, Ontario under leases that expire
in 2015; 13,025 square feet of office space under a lease that expires in 2002 in another facility in Ottawa,
Ontario; 7,292 square feet of office space in a facility located in Dublin, Ireland under leases that expire in
2025 and smaller office spaces in various countries around the world. The Company believes that its facilities
will be adequate for its immediate needs and that additional or substitute space is available if needed to
accommodate expansion.

**Item 3.  Legal and Government Proceedings**

On December 15, 1999, Corel filed suit
against the United States of America in the U.S. District Court for the
District of Columbia, in Washington, D.C., for the actions of its agency, the Department of Labor in
conducting an unlawful procurement. The Complaint claims that, in its goal to standardize its office automation
suite, the Department of Labor violated various statutes, regulations and treaties by "sole-sourcing" its contract
to a competing vendor rather than conduct an open and fair procurement in accordance with U.S. law. In
dispute is the decision by the Department of Labor to standardize on a competing product despite the fact that,
at the time of the award, the WordPerfect family of products was licenced for a majority of the Department's
20,000 work stations. It is believed that the three-year standardization deal with the competing vendor could
be valued as high as US $8 million. As a remedy, Corel is seeking an immediate injunction against the further
implementation of the "sole source" contract and to have it declared void. Corel is also seeking to have the
standardization process and related procurement activities tendered in a fair and open competition in
accordance with the applicable statutes, regulations and treaties. The Answer to the Complaint was filed by
the Government on March 21, 2000. The Government has filed a motion to have Corel's action dismissed for
lack of jurisdiction and, in the alternative, for summary judgment. Corel filed its motion for preliminary
injunction. All motions were argued on August 11, 2000 in conjunction with arguments on the merits of the
case. The decision of the court is pending.

On October 14, 1999, the Ontario Securities Commission filed charges
against Dr. Michael C.J. Cowpland,
the Company's former Chairman, President and Chief Executive Officer and his holding company, M.C.J.C.
Holdings Inc., in the Ontario Court of Justice. The charges include four counts of violating provisions of the
Ontario Securities Act related to insider trading. The trial of these issues is a private matter between the
Ontario Securities Commission and Dr. Cowpland as an individual. As such, it is not expected to affect the
Company's day-to-day activities.  Dr. Cowpland  has denied all allegations by the Ontario Securities
Commission.

On March 13, 2000, the Company was served with a complaint filed against it and Dr.
Michael C.J. Cowpland
by plaintiffs Anthony Basilio and Fred Spagnola in the United States District Court for the Eastern District of
Pennsylvania.  The complaint was filed on behalf of all persons who purchased or otherwise acquired Corel
common shares between December 7, 1999 and December 21, 1999 (the "Class Period"). The complaint
alleges that the defendants violated various provisions of the federal securities laws, including Section 10(b),
Section 20(a) and Rule 10b-5 of the Securities Exchange Act of 1934, as amended, by misrepresenting or
failing to disclose material information about Corel's financial condition.  The complaint seeks an unspecified
amount of money damages. On March 29, 2000, the Company was served with a second complaint filed against
the same named defendants by plaintiff Alan Treski in the United States District Court for the Eastern District
of Pennsylvania.  This second complaint references an identical Class Period as the Basilio complaint
referenced above and contains similar allegations.  Since service of the Basilio and Treski complaints, the
Company became aware of four additional complaints filed in the same jurisdiction and one complaint filed
in the District of Massachusetts that reference an identical Class Period and contain similar allegations. At the
scheduling conference on June 14, 2000, the court appointed Fred Spagnola, Michael Perron and David
Chavez as Lead Plaintiffs, and the law firms of Weinstein, Kitchenoff Scarlato & Goldman Ltd. and Savett
Frutkin Podell & Ryan, P.C. as Co-Lead Counsel. The Court has consolidated all pending cases in the Eastern
District of Pennsylvania. An Amended Consolidated Complaint was served on or about August 14, 2000. The
Amended Consolidated Complaint references an expanded class period, from December 7, 1999 toMarch 20,
2000 (inclusive). The Companyfiled a
Motion to Dismiss the Consolidated Class Action Complaint on the
grounds of forum non conveniens and Pursuant to Rules 9(b) and 12(b)(6).  FED.R.CIV.P on October 16,
2000. On December 4, 2000 the plaintiffs filed their answer to Corel's Motion to Dismiss. Corel subsequently
filed its Reply on January 16, 2001. The motion has yet to be heard by the court. The Company intends to
aggressively defend this matter.

In January, 2001, the Company was served by the U.S. Department of Justice with a Civil Investigative
Demand ("CID"), pursuant to the Antitrust Civil Process Act, inquiring into the conduct and activities
surrounding the Microsoft purchase of Corel shares  by its October 2, 2000 agreement and ancillary
agreements. The Company is currently gathering and providing documentation in response to the demand.

On January 5, 2001, in its review of  the trading of Corel Corporation stock prior to
the announcement on
October 2, 2000 of the purchase by Microsoft of Corel shares, the Ontario Securities Commission requested
that Corel  provide a written chronology of events resulting in the announcement. The Company is also
gathering and providing information to the OSC in response to this request.



The Company is a party to a number of additional claims arising in the ordinary course
of business relating
to employment, intellectual property and other matters.  Based on its review of the individual matters, the
Company believes that such claims, individually, will not have a material adverse effect on its business,
financial position or results of operations but, in the aggregate, may have a material adverse effect on its
business, financial position or results of operations. Such possible effect cannot be reasonably estimated at this
time.

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

****None.

******PART
II**

******Item 5.
Market for the Registrant's Common Equity and Related Stockholder Matters**

**Price Range of Common
Shares**

The Company's Common Shares are traded on The Toronto Stock Exchange (the"TSE") under
the symbol
"COR" and in the over-the-counter market on the NASDAQ National Market under the symbol "CORL". The
following table sets forth the range of quarterly high and low closing sale prices of the Common Shares in
CDN$ on the TSE and in US$ on the NASDAQ National Market within the two most recent fiscal years.

|                               |  | **FISCAL 2000**    |  | **FISCAL 1999**
|------------------------------ |  | ------------------ |  | ---------------
|                               |  | **High**           |  | **Low**        
|**The Toronto Stock Exchange** |  | (Canadian dollars)
|First Quarter                  |  | $57.95             |  | $19.70         
|Second Quarter                 |  | 21.60              |  | 3.00           
|Third Quarter                  |  | 7.70               |  | 4.30           
|Fourth Quarter                 |  | 9.05               |  | 4.01           
|**NASDAQ National Market**     |  | (US dollars)      
|First Quarter                  |  | $39.25             |  | 13.19          
|Second Quarter                 |  | 15.88              |  | 3.03           
|Third Quarter                  |  | 5.25               |  | 2.91           
|Fourth Quarter                 |  | 6.06               |  | 2.59           

As of February 21, 2001, there were 1,118 holders of record of Common Shares. A
substantial number of
Common Shares of the Company are held by depositories, brokerage firms and financial institutions in "street
name." Based upon the number of annual reports and proxy statements requested by such nominees, the
management of the Company estimates that the****number of beneficial holders of Common Shares approximates
105,000 holders**.**

**Limitations Affecting Security
Holders**

There is no law or government decree or regulation in Canada that restricts the export
or import of capital, or
affects the remittances of dividends, insurance or other payments to a non-resident holder of Common Shares.

**Dividend Policy**

The Company has neither declared nor paid cash dividends on its Common Shares since its
inception and does
not anticipate paying any dividends in the foreseeable future, but intends to retain future earnings for
reinvestment to finance the growth of its business.  Any future determination to pay dividends will be at the
discretion of the Board of Directors.  From time to time, the Company repurchases common shares for
cancellation.  There is no policy with regards to the timing or amount of common share repurchases and
cancellation.  There are no plans to repurchase and cancel common shares at this time.

**Item 6.  Selected Financial Data**

The statement of operations data set forth
below with respect to the years ended November 30, 1998, 1999 and
2000 and the balance sheet data at November 30, 2000 are derived from the audited financial statements of
Corel incorporated by reference in Item 8 hereof and should be read in conjunction with those financial
statements and the notes thereto. The balance sheet data at November 30, 1996, 1997, 1998, and 1999 are
derived from Note 17 to the audited financial statements of Corel incorporated by reference in item 8 hereof
and should be read in conjunction with these financial statements and notes thereto.  As discussed in Note 17
to the audited financial statements, the balance sheets for 1996 through 1999 have been restated, but this
restatement had no impact on previously reported results of operations or overall cash flows. The statement
of operations data set forth below with respect to the fiscal years ended November 30, 1996 and 1997 are
derived from audited financial statements not included in this Annual Report on Form 10-K.   All amounts are
in United States dollars.

|                                         | **Year
ended November 30**           
|---------------------------------------- | -------------------------------------
|                                         | **2000**                             
|                                         | (in thousands, except per share
data)
|**Canadian GAAP**                        |                                      
|                                         |                                      
|Sales                                    | $157,487                             
|                                         |                                      
|Income (loss) from continuing operations | (55,348)                             
|                                         |                                      
|Income (loss) from continuing            |                                      
|operations per share (fully diluted)     | (0.80)                               
|                                         |                                      
|Cash and short-term investments          | 127,430                              
|                                         |                                      
|Working capital                          | 106,662                              
|                                         |                                      
|Total assets                             | 218,587                              
|                                         |                                      
|Novell obligations                       | 10,000                               
|                                         |                                      
|Shareholders' equity                     | 162,644                              
|                                         |                                      

Note:   The selected financial data included herein is derived from the Company's financial statements which
are prepared on the basis of Canadian GAAP, which differs in some respects from US GAAP. For
the periods presented, differences between Canadian GAAP and US GAAP do not result in any
material differences in the selected financial data presented herein. Please see Item 8 - Financial
Statements and Supplementary Data, and the Notes to the Company's Consolidated Financial
Statements, Note 16 - Significant Differences Between Canadian and United States GAAP.



**Item 7.  Management's Discussion and Analysis of Financial Condition and
Results          of Operations**

**Overview**

For the purposes of this discussion, unless the context otherwise requires, "Corel"
refers to the consolidated
operations of Corel Corporation and its wholly owned subsidiaries, Corel Corporation Limited, Corel
International Corporation, Corel, Inc., and Corel Corporation (U.S.A.), while "the Company" refers to the
parent, Corel Corporation.  All dollar amounts included herein are expressed in thousands of US$ unless
otherwise noted.

Corel develops, manufactures, licenses, sells and supports two main types of software
products, creative
products and business applications.  These products are available on the Windows, MacIntosh and Linux
environments.

On March 24, 2000, Corel entered into an agreement to purchase all of the assets
relating to the Painter, Bryce
and KPT family of graphic software products fromMetaCreations Corporation of Santa Barbara California.
The cash purchase price for the assets was $10.0 million of which $2.0 million was paid on each of March 24,
June 30 and September 30, 2000, with the balance being payable in two further instalments of $2.0 million
each on December 31, 2000 and January 31, 2001.

On June 28, 2000, the Company issued
7,299,270 common shares and 3,649,635 common share purchase
warrants at CDN $4.11 per unit for total gross proceeds of CDN $30.0 million.The values assigned to each of
the components of the unit were based on their relative fair values at the date of the transaction.  The warrants
are exercisable until June 27, 2001 at a price of CDN $4.56 per common share.  In the event that all of the
warrants are exercised, the Company will issue an additional 3,649,635 common shares resulting in gross
proceeds of CDN $16.6 million. As at November 30, 2000, 11,659 warrants have been exercised for gross
proceeds of CDN $53,165.

On July 17, 2000, Corel purchased, and currently maintains a 23% interest in Hemera
Technologies, Inc., a
privately held company.  As consideration for these shares, Corel transferred its GraphicCorp division and
related assets to Hemera Technologies, Inc.  As of the effective date of the transaction, the fair value of the
GraphicCorp division and its related assets was estimated at $9.7 million and the shares were valued at this
amount. No gain or loss was recognized on the transfer.  In fiscal 2000, Corel's share of Hemera Technologies,
Inc.'s operating results was nominal.

On August 15, 2000, Mr. James Baillie, counsel to the law firm of Torys, and Mr. Larry
O'Brien, Chair of
Calian Technology Ltd., were appointed to the Board of Directors following the Board of Directors'
acceptance of the resignation of Mr. William G. Davis for personal reasons.  Michael Cowpland resigned as
President, Chief Executive Officer and Chair of the Board of Directors of the Company. He continued to serve
as a director and as a technology advisor until his resignation as a director on January 25, 2001.  Also on
August 15, 2000, Derek J. Burney, formerly executive vice-president, engineering and chief technology officer
of the Company was appointed interim President and CEO and Mr. Baillie has been appointed as Chair of the
Board of Directors. On October 2, 2000, Mr. Burney was appointed President and CEO and appointed to the
Board of Directors.

On October 2, 2000, Corel announced a strategic alliance with Microsoft Corporation
("Microsoft").  The
Company issued 24,000,000 Series A, participating convertible, non-voting, non-redeemable preferred shares
to Microsoft for total gross proceeds of $135.0 million ($5.625 per share).  Each preferred share is convertible
into one common share but not in the hands of Microsoft or its affiliates. As part of the share purchase
agreement the Company is obligated to file, with the United States Securities and Exchange Commission
("SEC") a resale registration statement for 24,000,000 common shares underlying these preferred shares.
Under the terms of a technology support and settlement agreement the companies will work together to support
the development, testing and marketing of new products related to the .NET platform and, upon request from
Microsoft at any time prior to October 2, 2003, Corel is obligated to provide 30 full time equivalents (20
developers and 10 testers) for a 12-month period to port the .NET platform from the Windows platform to the
Linux platform.  The Company estimated the costs to perform the services described as being $3.0 million
based on the estimated average cost per developer and tester required to perform the services when required.
If the actual cost to perform the required services is less than the $3.0 million deducted from equity, the
remainder will be recorded as an increase to contributed surplus.

**Forward Looking Statements**

The following information contains forward-looking statements, as defined by the United
States Private
Securities Litigation Reform Act of 1995, involving Corel's expectations about future financial results and
other matters.  These statements reflect management's current forecast of certain aspects of Corel's future
business.  These forward-looking statements are subject to certain risks and uncertainties that could cause
actual results of operations to differ materially from historical results or current expectations.  The words
"plan", "expect", "believe", "intend", "anticipate", "forecast", "target", "estimate" and similar expressions
identify forward-looking statements.  Risk factors include shifts in customer demand, product shipment
schedules, product mix, competitive products and pricing, technological shifts and other variables. Readers are
referred to Corel's most recent reports filed with the Securities and Exchange Commission for a more complete
discussion of the other risks and uncertainties. The factors underlying forecasts are dynamic and subject to
change.  As a result, forecasts speak only as of the date they are given and do not necessarily reflect Corel's
outlook at any other point in time. Corel does not undertake to update or review these forward-looking
statements.

**RESULTS OF OPERATIONS**

**Sales** ****

Sales decreased 35% to $157.5 million in fiscal 2000 from $243.1 million in fiscal 1999.
This decrease was
due primarily to new versions of Corel's flagship products ,WordPerfect Office 2000 and CorelDRAW 9
Graphics Suite, nearing the end of their life cycles in fiscal 2000. Sales were also negatively impacted in fiscal
2000 by lower product prices, which were implemented in an attempt to gain market share.  Corel provides for
estimated future returns, exchanges and price protection.  The timing of establishment of the provision and
actual usage may vary according to the respective products' life cycle and/or the amount of inventory in the
distribution channel.

Financial performance in fiscal 2000 as compared to the prior year was negatively
impacted primarily by the
decline in revenues. Corel has been impacted, as has the entire industry in Corel's belief, by the reduction in
the amount of product inventory traditionally held within the retail distribution channel. Corel released
CorelDRAW 10 Graphics Suite in early November 2000. Corel generally experiences an increase in revenues
upon release of a major upgrade of its flagship products. Corel also believes its results in fiscal 2000 were
negatively impacted by concerns as to its viability due to potential cash shortfalls during much of fiscal 2000.
There was no significant change in overall revenues from fiscal 1998 to fiscal 1999.

******Sales by product
groups**

The table below shows sales consisting of
creative products, business application products and other revenues
consisting primarily of Linux operating system products.  The comparative numbers have been reclassified to
conform with current presentation.****

****



|                               |  | ****Year ended November 30
|------------------------------ |  | --------------------------
|                               |  | ****2000                  
|                               |  |                           
|Creative products              |  | $     75,919              
|Business applications products |  | 78,917                    
|Other                          |  | 2,651                     
|Total sales                    |  | $157,487                  

Creative products revenues decreased 29% from $106.6 million in fiscal 1999 to $75.9
million in fiscal 2000.
This decrease is primarily due to the release of CorelDRAW 10 Graphics Suite in the final month of the fiscal
year.  CorelDRAW 9 Graphics Suite was released in May 1999, resulting in the inclusion of approximately
eight months of revenue in fiscal 1999 as opposed to one month of revenues of CorelDraw 10 Graphics Suite
in fiscal 2000.  In fiscal 1999, creative products revenues declined 20% from $133.8 million to $106.6 million
due to CorelDRAW 8 being available for sale for the entire year in fiscal 1998. Creative products revenues are
expected to increase approximately 20% in fiscal 2001 due primarily to increased demand for CorelDRAW
10 Graphics Suite, planned releases of updates to the products acquired from Metacreations Corporation and
the release of CorelDraw 10 Graphics Suite for the MacIntosh operating system.  Included in creative products
revenues are consumer applications products which were relatively consistent from fiscal 1998 ($27.6 million)
to fiscal 1999 ($24.0 million).  In fiscal 2000, as Corel realigned itself and moved away from promoting these
products, these revenues declined significantly and are no longer managed or accounted for as a separate
segment.

Business application products revenues declined 41% from $132.9 million in fiscal 1999
to $78.9 million in
fiscal 2000.  This is due primarily to the lack of any major product launches in fiscal 2000.  Sales for business
applications products increased from $112.0 million in fiscal 1998 to $132.9 million in fiscal 1999 due to the
release of the then latest version of the WordPerfect suite in May 1999.  The prior version, Corel WordPerfect
Suite 8, was released in fiscal 1997,  therefore a 24 month period existed between releases resulting in a full
year of revenue in 1998.  With the planned release of  WordPerfect Office 2002 in early spring 2001,  localized
only in International English and Canadian  French, revenues for business applications products in fiscal 2001
are expected to remain at their fiscal 2000 levels.

Other revenues, related primarily to Corel
LINUX OS, decreased 24% to $2.7 million in fiscal 2000 from $3.5
million in fiscal 1999 due to the Company's focus on its core products.  Other revenues are expected to
increase marginally in the future with the introduction of professional services and other revenue sources.

****Sales by sales
channels**

Corel distributes its products primarily through distributors (as retail packaged
products), OEM licences and
corporate licences. The table below shows sales by sales channels:

|                         |  | ****Year ended November 30
|------------------------ |  | --------------------------
|                         |  | ****2000                  
|                         |  | (in
thousands)            
|Retail packaged products |  | $80,069                   
|OEM licenses             |  | 17,640                    
|Corporate licenses       |  | 59,778                    
|Total sales              |  | $157,487                  



Retail packaged products and corporate licences are sold primarily through distributors.
Sales from retail
packaged products declined 43% from $140.2 million in fiscal 1999 to $80.1 million in fiscal 2000.  The
decline in retail packaged product sales is primarily due the decline in PC sales and the aforementioned change
in the buying practices of retail distributors.  In addition, for much of fiscal 2000, the core products were
available only in releases nearing the end of their life cycle.   Packaged product revenues decreased from
$153.6 million in fiscal 1998 to $140.2 million in fiscal 1999 due to a shift in focus from retail packaged
products to corporate licenses and Year 2000 pressure.

OEM channel sales are licence fees from original equipment manufacturers.  These sales
decreased 35% from
$27.0 million in fiscal 1999 to $17.6 million in fiscal 2000.  The decrease was due primarily to declining PC
sales and products reaching the end of their life cycles.  The increase to $27.0 million in fiscal 1999 from $23.3
million in fiscal 1998 was due primarily to increased OEM agreements for business applications products.

Corporate licenses declined 21% from $75.9 million in fiscal 1999 to $59.8 million in
fiscal 2000.  This
decrease is  primarily due to not having released new versions of WordPerfect during the year.  The 9%
increase from $69.9 million in 1998 to $75.9 million in fiscal 1999 was due to Corel's enhanced focus on
corporate customers.

The channel mix is not expected to materially change in the coming year.



**Sales by region**

The table below shows sales by region:

|            |  | ****Year ended November 30
|----------- |  | --------------------------
|            |  | ****2000                  
|            |  | (in
thousands)            
|Canada      |  | $13,181                   
|U.S.A.      |  | 83,355                    
|Europe      |  | 42,453                    
|Other       |  | 18,498                    
|Total sales |  | $157,487                  

Sales in North America declined 38% from $155.8 million in fiscal 1999 to $96.5 million
in fiscal 2000.  This
is primarily due to products reaching the end of their life cycle and the aforementioned change in distributors'
buying patterns.  A general decline in the retail market in North America also contributed to slower sales.
Revenues in North America are expected to increase marginally in 2001 as Corel increases its focus on the
North American market.

Declining sales in Germany, the Netherlands and the United Kingdom resulted in European
revenues declining
34% from $64.1 million in fiscal 1999 to $42.5 million in fiscal 2000.  The decrease in sales in Europe from
$73.1 million in fiscal 1998 to $64.1 million in fiscal 1999 reflects large declines in revenues from Germany
and France.   Revenues in Europe are expected to decline modestly  in the coming year since WordPerfect
Office 2002 will not be localized in many local languages as was done historically.

Corel's products are sold primarily in US dollars in all regions other than  Europe. In
fiscal 2000, Corel began
selling in Euros for many of its European customers.  The relative weakness of the Euro to the U.S. dollar in
fiscal 2000 impacted sales slightly.

**Cost of sales and gross profit**

In cost of sales, Corel includes all costs associated with the acquisition of
components, the assembly of
finished products, product royalties, the amortization of software acquisition costs and shipping. Costs
associated with warehousing are included in selling, general and administrative expenses.  Deferred royalties
and software acquired for integration and sale with Corel products that has been capitalized are currently being
amortized over the greater of : a) the ratio that current gross revenues bear to the total of current and anticipated
future gross revenues or, b) the straight line method over the remaining economic life generally estimated to
be three to five years.

As products reach the end of their life cycle or as decisions are made to no longer
actively market products,
inventory then held may be in excess of estimated future sales of those products, consisting of finished goods
and raw materials associated with those products.  Such excess inventories would then be considered obsolete
and would be written off.  In fiscal 2000, the Company determined that $14.2 million of inventory was obsolete
and written off.  In addition, in the fourth quarter of 2000, the Company determined that $1.6 million of
prepaid royalties had no future value as the associated products were no longer actively marketed, and as such
the prepaid royalties were written off.  This, combined with decreases in product prices, resulted in a decrease
in gross margin from 76% in fiscal 1999 to 70% in fiscal 2000.  The decrease in gross margin from 79% in
fiscal 1998 to 76% in fiscal 1999 is attributable to lower sales, increased inventory obsolescence and valuation
adjustments.  On a go-forward basis, Corel anticipates gross margin in the high 70 to low 80 percent range.



**Advertising Expenses**

Advertising expenses include all marketing, advertising and trade show expenses. In
fiscal 2000, advertising
expenses decreased 31% from $48.0 million in fiscal 1999 to $33.3 million in fiscal 2000.  This was due
primarily to Corel's cost reduction plan that was implemented in May 2000.  In fiscal 1999, these expenses
increased 15% from $41.8 million in 1998 primarily as a result of print advertising and trade shows to promote
the latest versions of Corel's products over the fourth fiscal quarter of that year.  In fiscal 2001, Corel plans
to release several new products, including WordPerfect Office 2002 and CorelDRAW 10 Graphics Suite for
Macintosh. However, advertising expenditures are expected to remain consistent with the cost reduction plan,
allowing for a better focus of the monies spent.

**Selling, general and administrative expenses**

All selling expenses (except for advertising expenses) are included in this category
along with general and
administrative expenses, including expenses associated with warehousing inventory.  Selling, general and
administrative expenses increased 4% from $82.2 million  in fiscal 1999 to $85.7 million in fiscal 2000.  While
a cost reduction plan was implemented during the year, the benefits were not realized until the fourth quarter.
There were a number of non-recurring charges such as severance, consulting fees and asset write-downs that
resulted from the cost reduction plan implemented during the year.

The increase in selling, general and administration expenses to $82.2 million in fiscal
1999 from $77.7 million
in fiscal 1998 resulted from new releases of Corel's two flagship products - CorelDRAW  9 Graphics Suite
and WordPerfect Office 2000.  Further expenses were incurred relating to Corel LINUX OS, which was also
released during the year. ****

Selling, general and administrative expenses are expected to be reduced significantly in
the future due to
Corel's cost restructuring plan.****

**Research and development expenses**

Research costs are expensed as incurred.  Development costs related to software products
developed for sale
are expensed as incurred unless they meet the criteria for deferral under generally accepted accounting
principles.

Research and development expenses are reported net of Canadian investment tax
credits

In fiscal 2000, gross research and development expenses were reduced by $4.5 million
(9%) to  $44.4 million
from $48.9 million primarily as a result of the cost reduction plan implemented in June 2000.  Netted against
gross research and development expenses is $0.5 million and $8.9 million of Canadian investment tax credits
in fiscal 2000 and fiscal 1999 respectively.

In fiscal 1999, investment tax credits of $8.9 million related to the 1997 through 1999
taxation years were
recognized for accounting purposes as a result of an audit by the Canada Customs and Revenue Agency being
completed during the year.  Gross research and development expenses decreased over 1998 levels primarily
due to employees that were terminated as part of the restructuring in 1998 not being replaced.

Research and development expenses are expected to decline significantly in the future.
This is due primarily
to the cost reduction plan that resulted in the consolidation of the Irish localization facilities. Corel will not be
localizing as many products on a go forward basis. Also, with Corel shifting its focus to two main business
lines, fewer resources will be used to develop Corel LINUX OS.

**Depreciation and amortization expenses**

Depreciation and amortization expenses, which do not include the amortization of
purchased software,
increased $1.0 million in fiscal 2000 to $7.4 million from $6.4 million in fiscal 1999 as result of significant
purchases of computer equipment made in the fourth quarter of fiscal 1999 having a full year of amortization.
The decrease to $6.4 million in fiscal 1999 from $12.4 million in fiscal 1998 is a result of an aging asset base.
In fiscal 1998, a number of assets were written off as a result of the restructuring that took place.

**Restructuring charge**

Corel incurred a restructuring charge of $15.9 million in the third quarter of fiscal
1998.  The charge relates
to the costs associated with moving the research and development activity in Orem, Utah to the Ottawa, Ontario
location.  Further discussion of the charge and its components may be found in Note 14 of the 2000
Consolidated Financial Statements.

**Interest
expenses**

Interest expenses relates to Novell obligations for the acquisition of the WordPerfect
technology from Novell,
Inc. and is netted with interest income from term deposits.  In fiscal 2000, $3.0 million was accrued for interest
charges relating to proposed reassessments of prior year Canadian tax returns.  The decrease from $1.1 million
in fiscal 1998 to $0.2 million in fiscal 1999 is a result of the decrease in the outstanding Novell obligation.

**Income taxes**

Corel's effective tax rates for fiscal 2000, 1999 and 1998 were 9.8%, 29.8% and 14.9%;
respectively. These
effective tax rates vary from Corel's statutory tax rate of 44.3% primarily due to foreign tax rate differences
associated with Corel's international operations.  In fiscal 1999, Corel recorded a tax benefit of accounting
losses in the 1996 and 1997 taxation years.

**Cost reduction plan****

Cost reduction actions commenced in late April 2000 when Corel began to curtail
discretionary spending,
particularly in the area of direct marketing and travel.  In early May 2000, Corel proceeded to identify broader
areas of spending cuts, namely in the areas of future hirings, capital purchases and other discretionary
purchases.  In mid-May 2000, Corel began to consider employee terminations and commenced a formal process
of planning for spending cuts that would reduce its quarterly expenses to a level commensurate with expected
achievable revenues. Consideration was also given to the amount of spending that had occurred in the first
quarter and spending estimates for the second quarter, with a normalization factor for what was considered
non-recurring.  In summary, this called for a quarterly cost structure of $45.0 million or a $10.0 million
quarterly reduction from normalized spending rates.



On May 16, 2000, Corel announced that it had undertaken a cost reduction plan with the
intention of
eliminating $40 million in costs on an annualized basis. The cost reduction plan has been implemented in a
series of steps.

On June 8, 2000, Corel announced a reduction in its workforce of approximately 320
positions from  a
combination of employee terminations, termination of contract positions, elimination of vacant positions,
attrition and termination of the services of independent contractors.  The costs of severance and other
termination payments, estimated at $1.6 million, were recorded in Corel's third fiscal quarter ended August
31, 2000. The estimated annualized cost saving from the workforce reduction, without taking into account one
time implementation charges, is expected to be approximately $11.0 million.

On September 6, 2000, Corel announced that it had identified the remaining components of
the previously
targeted $40.0 million in expenditure cuts, designed to realign its costs with its expected achievable revenues.
As part of this plan, Corel announced the proposed consolidation of its engineering operations based in Dublin,
Ireland, to its corporate headquarters in Ottawa, Canada. A total of 139 positions at the Dublin facility were
eliminated as a result of the move with the estimated costs of severance and other termination payment, being
approximately $0.85 million recorded in the third quarter of fiscal 2000 and approximately $1.4 million in
additional costs recorded in the fourth quarter of fiscal 2000.

**Liquidity and capital resources**

As of November 30, 2000, Corel's principal sources of liquidity included cash and cash
equivalents of
approximately $127.4 million, and trade accounts receivable of $28.6 million. Cash equivalents consist of
overnight call loans to a major Canadian bank totalling $14.0 million and a loan of $110.0 million to a major
Canadian corporation,  guaranteed by a major Canadian bank.  At November 30, 2000, $1.1 million of cash
was restricted for corporate credit cards and severance payments related to the closing of the Irish localization
facilities.



Cash used in operations was $30.0 million for fiscal 2000 compared to cash provided by
operations of $6.3
million for fiscal 1999. The decrease of $36.3 million was primarily due to the net loss of $55.3 million in
fiscal 2000 as compared to the net income of $16.7 million in fiscal 1999.

Trade accounts receivable, net of provisions, decreased from the November 30,1999
balance of $54.8 million
to $28.6 million as a result of a decrease in gross accounts receivable.  This was a  result of lower sales volume
that was achieved during the year.  This reduction in gross accounts receivable was off-set by a reduction in
the provision for sales returns to reflect the reduced level of products in the distribution channel.

Accounts payable and accrued liabilities decreased from $50.3 million on November 30,
1999 to $28.4 million
at November 30, 2000 mainly due to decreases in volume related to the cost reduction plan as well as payment
of many of the previously accrued liabilities.

Financing activities provided $146.4 million in fiscal 2000 compared to $7.0 million in
fiscal 1999.  The source
of cash in fiscal 2000 through financing activities was the issuance of common and preferred shares.  During
the year, the issuance of common shares through employee stock options and a public offering of common
shares and common share purchase warrants resulted in net proceeds of $22.3 million.  In fiscal 1999, $12.8
million of common shares were issued to employees.  In fiscal 2000, the issuance of preferred shares to
Microsoft Corporation provided $130.7 million. The use of cash in fiscal 2000 and fiscal 1999 was the
repayment of the Novell obligations.  Repayment of Novell obligations decreased in fiscal 2000 as a result of
Corel reaching an agreement with Novell whereby the balance due was fixed and will be repaid in three equal
payments of $5.0 million.  One of these payments was made prior to November 30, 2000.

Investing activities used $7.0 million in fiscal
2000 compared to $17.7 million in fiscal 1999.  The source of
cash from investing activities was primarily proceeds from sales of shares of GraphOn Corporation
("GraphOn") of  $14.6 million.  Uses of cash for investing activities includes expenditures for capital assets
of $19.5 million in the fiscal 2000 compared to $19.2 million in fiscal 1999.

On September 19, 2000, the Company announced it had entered into a share purchase
agreement with an
institutional investor. Subject to the terms and conditions of this agreement, the Company may issue and sell
to the investor up to 14,690,000 shares in periodic draw down periods over 24 months, if all associated
warrants are exercised.  Corel has not issued any shares related to this agreement as of November 30, 2000.

At November 30, 2000, Corel's capital resource commitments consisted primarily of lease
arrangements for
office space. No significant commitments exist for future capital expenditures. Corel believes available
balances of cash and cash equivalents combined with the proceeds of the shares issued and issuable as
described above are sufficient to meet its working capital requirements for the foreseeable future.

**Other Matters**

**New accounting pronouncements**

In fiscal 1998, the Financial Accounting Standards Board ("FASB") issued SFAS 133,
"Accounting for
Derivative Instruments and Hedging Activities", ("SFAS 133") which establishes standards for derivative
instruments and hedging activities.  It requires that all derivatives be recognized as either assets or liabilities
on the Balance Sheet and be measured at fair value.  SFAS 133 is effective for fiscal years beginning after June
15, 1999, which is the fiscal year beginning December 1, 1999 for the Company.  Prior periods should not be
restated.  In June 1999, the FASB issued SFAS No. 137, which delays the effective date of SFAS 133 until
fiscal years beginning after June 15, 2000, which is the fiscal year beginning December 1, 2000 for the
Company. The Company believes the adoption of this pronouncement will not have a material impact on its
results from operations or financial position.

In fiscal 2000, the United States Securities and Exchange Commission ("SEC") issued
Staff Accounting
Bulletin ("SAB") No. 101, Revenue Recognition in Financial Statements and its related interpretations. The
SAB summarizes certain of the SEC staff views in applying generally accepted accounting principles to
revenue recognition in financial statements. This SAB is effective beginning the Company's first quarter of
fiscal 2001.The Company does not expect the adoption of this SAB to have a material impact on its results of
operations or financial position.

******Year
2000**

The Year 2000 issue arises because many computerized systems use two digits rather than
four to identify a
year.  Date-sensitive systems may recognize the year 2000 as 1900 or some other date, resulting in errors when
information using Year 2000 dates are processed.  In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a date.  Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year 2000 issue that may affect the entity,
including those related to customers, suppliers or other third parties, have been fully resolved.

**Item 7A. Financial Instruments - Quantitative And Qualitative Disclosures About
Market Risk**

**Financial Instruments**

**Interest rate risk**

****

Corel's exposure to market risk for changes in interest rates relates primarily to its
investment portfolio of cash
equivalents and marketable securities.  Corel does not use derivative financial instruments in its investment
portfolio.  The stated objectives of Corel's investment guidelines are safety of principal, liquidity,
maximization of yield, and diversification of risk.  The Company places its investments with high credit quality
issuers, principally term deposits with a major Canadian financial institution.  The marketable securities
portfolio includes only those securities with active secondary or resale markets to ensure portfolio liquidity.
A substantial reduction in overall interest rates could significantly reduce Corel's interest income.

The table below presents principal amounts and related weighted average interest related
by date of maturity
for Corel's interest bearing investment portfolio.  Weighted average interest rates include the after-tax yield
on a debt security of a major Canadian corporation.   At November 30, 2000, the total investment portfolio had
maturity dates prior to December 31, 2000.

Weighted
average
Fair value atMaturity balance
after-tax yield
November 30, 2000Cash equivalents
$14,002
4.16%
$14,002Debt securities
110,596
4.29%
110,040Total investment portfolio
$124,598
4.28%
$124,042

**Foreign currency risk**

Corel conducts business in various foreign currencies, primarily in Canada and Europe
and to a lesser extent
Australia, Latin America, Japan and other Asian countries.  Corel monitors its foreign currency exposure.  As
of November 30, 2000, Corel had no foreign currency hedges outstanding.  Corel has mitigated, and expects
to continue to mitigate, a portion of its currency exposure through decentralized sales, marketing and support
operations in which all costs are local currency based.

**Item 8.  Financial Statements and Supplementary Data**

**Corel
Corporation**

**Index to Consolidated Financial Statements******Management's ReportAuditors' ReportConsolidated Financial Statements:Consolidated Balance Sheets at November 30, 2000 and
1999Consolidated Statements of Operations for the years ended November 30,
2000, 1999 and
1998Consolidated Statements of Shareholders' Equity for the years ended
November 30, 2000,

1999 and 1998Consolidated Statements of Cash Flows for the years ended November 30,
2000, 1999 and
1998Notes to Consolidated Financial Statements

Management's Report

Management is responsible for the
preparation of the Company's consolidated financial statements.
Management believes that the consolidated financial statements fairly reflect the form and substance of
transactions and that the consolidated financial statements reasonably present the Company's financial condition
and results of operations. The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in Canada ("Canadian GAAP").  These principles are also generally
accepted in the United States ("US GAAP") in all material respects except as disclosed in Note 16. Management
has included in the Company's consolidated financial statements amounts based on estimates and judgements
that it believes are reasonable under the circumstances.

PricewaterhouseCoopers LLP, the independent auditors of the Company, have
audited the Company's
consolidated financial statements in accordance with generally accepted auditing standards, and they provide
an objective, independent review of the fairness of reported operating results and financial position.



The
Board of Directors of the Company has an Audit Committee which meets with financial management and
the independent auditors to review accounting, auditing, internal accounting controls, and financial reporting
matters.

*Derek J. Burney*                                  *John
Blaine*

President and CEO                            Executive Vice-President Finance,

CFO and
Treasurer



Auditors' Report to the Shareholders

**We have audited the consolidated balance sheets of Corel Corporation as at November 30, 2000 and November
30, 1999 and the related consolidated statements of operations, shareholders' equity
and cash flows for each
of the three years ended November 30, 2000, 1999 and 1998. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on these financial statements based
on our audits.

We
conducted our audits in accordance with generally accepted auditing standards in both Canada and the
United States. Those standards require that we plan and perform an audit to obtain reasonable assurance
whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.



In our opinion, these consolidated financial
statements present fairly, in all material respects, the financial
position of the Company as at November 30, 2000 and November 30, 1999, and the
results of its operations
and its cash flows for the years ended November 30, 2000, 1999 and 1998 in accordance with generally
accepted accounting principles in Canada.



As
discussed in Note 17 to these consolidated financial statements, the Company has restated these
consolidated financial statements as they relate to the Novell royalty obligation. Accordingly, our previous
report dated January 26, 2001 has been withdrawn and replaced herein. However, our report does not extend
to any information related to those years prior to the year ended November 30, 1998, which were reported
on by the previous auditor.

***PricewaterhouseCoopers* LLP

Chartered Accountants

Ottawa, Canada

January 26, 2001, except for Note 17 which is as of September 5, 2001


As at November 302000
1999

(as restated)**Assets**Current assets:Cash and cash equivalents
$     127,430
$     18,021Restricted cash
1,136Accounts receivableTrade
28,620
54,770Other
773
3,954Inventory
3,117
13,567Income taxes recoverable

5,135Future tax asset
479
1,642Prepaid expenses
1,050
2,042Total current assets
162,605
99,131Investments
11,996
2,873Future tax asset
965Deferred financing charges
550Capital assets
42,471
37,712Total assets
$     218,587
$     139,716**Liabilities and shareholders'
equity**Current liabilities:Accounts payable and accrued liabilities
$     28,441
$     50,284Current portion of Novell obligations
10,000
6,594Income taxes payable
6,595Deferred revenue
10,907
18,472Total current liabilities
55,943
75,350**Commitments and contingencies****Shareholders' equity**Share CapitalPreferred shares (000's), no par value, unlimited authorized;
24,000 and nilSeries A issued and outstanding at November 30, 2000 and 1999,
respectivelyCommon shares (000's), no par value, unlimited authorized;
73,641 and65,532 issued and outstanding at November 30, 2000 and 1999,
respectively
371,890
222,155Contributed surplus
4,990
1,099Deficit
(214,236)
(158,888)Total shareholders' equity
162,644
64,366Total liabilities and shareholders' equity
$     218,587
$     139,716

On behalf of the Board****

****

|James Baillie | Jean-Louis Malouin
|------------- | ------------------
|Director      | Director          

(See accompanying Notes to Consolidated Financial Statements)

Consolidated Statements of Operations

(in thousands of US$, except share and per share data)

|                                         | Year ended November 30
|---------------------------------------- | ----------------------
|                                         | 2000                  
|Sales                                    | $  157,487            
|Cost of sales                            | 47,025                
|Gross profit                             | 110,462               
|Expenses:                                |                       
|Advertising                              | 33,258                
|Selling, general and administrative      | 85,662                
|Research and development                 | 43,867                
|Depreciation and amortization            | 7,354                 
|Restructuring charge                     |                       
|Settlement proceeds                      |                       
|Loss (gain) on foreign exchange          | 1,371                 
|                                         | 171,512               
|Income (loss) from operations            | (61,050)              
|Gain on sale of investment               | 14,585                
|Interest
expense                         | (1,305)               
|Income (loss) before the undernoted      | (47,770)              
|Income taxes (expense) recovery:         |                       
|Current                                  | (4,507)               
|Future                                   | (198)                 
|                                         | (4,705)               
|Share of loss of equity investments      | (2,873)               
|Net income (loss)                        | $  (55,348)           
|Income (loss) per share:                 |                       
|Basic                                    | $  (0.80)             
|Diluted                                  | $  (0.80)             
|                                         |                       
|Weighted average number of common
shares |                       
|outstanding (000's) :                    |                       
|Basic                                    | 69,498                
|Diluted                                  | 69,498                

****(See accompanying Notes to Consolidated Financial
Statements)



ConsolidatedStatements of
Shareholders'Equity

(in thousands of US$ except share data)

|                                      | Number of Shares

(000's) | Share

capital | Contributed

surplus | Deficit  | Total

shareholders'

equity
|------------------------------------- | ------------------------- | -------------- | -------------------- | -------- | ----------------------------
|                                      | Common                    | Preferred     
|Balance at November 30, 1997          | 59,740                    |                | $     204,235        | $  730   | $  (145,156)                
|Issuance of common shares             |                           |                |                      |          |                             
|pursuant to stock options             | 132                       |                | 209                  |          |                             
|Cancellation of common shares         | (394)                     |                | (987)                |          |                             
|Discount on shares repurchased        |                           |                | (369)                | 369      |                             
|Net
loss                              |                           |                |                      |          | (30,448)                    
|Balance at November 30, 1998          | 59,478                    |                | 203,088              | 1,099    | (175,604)                   
|Issuance of common shares             |                           |                |                      |          |                             
|pursuant to stock options             | 5,054                     |                | 12,767               |          |                             
|Issuance of common shares             |                           |                |                      |          |                             
|for acquisitions                      | 1,000                     |                | 6,300                |          |                             
|Net Income                            |                           |                |                      |          | 16,716                      
|Balance at November 30, 1999          | 65,532                    |                | 222,155              | 1,099    | (158,888)                   
|Issuance of common shares             |                           |                |                      |          |                             
|pursuant to stock options             | 798                       |                | 3,390                |          |                             
|Issuance of common shares and         |                           |                |                      |          |                             
|warrants for cash                     | 7,299                     |                | 15,630               | 3,291    |                             
|Issuance of common shares pursuant    |                           |                |                      |          |                             
|to warrants                           | 12                        |                | 36                   |          |                             
|Issuance of preferred shares for cash |                           | 24,000         | 130,679              |          |                             
|Issuance of warrants for services     |                           |                |                      | 600      |                             
|Net loss                              |                           |                |                      |          | (55,348)                    
|Balance at November 30, 2000          | 73,641                    | 24,000         | $  371,890           | $  4,990 | $  (214,236)                

(See accompanying Notes to Consolidated
Financial Statements)

Consolidated Statements of Cash Flows

(in thousands of US$, as restated)

|                                                      | Year ended November 30
|----------------------------------------------------- | ----------------------
|                                                      | 2000                  
|Operating activities:                                 |                       
|Net Income (loss)                                     | $  (55,348)           
|Items which do not involve cash or cash equivalents:  |                       
|Depreciation and amortization                         | 17,904                
|Bad debt expense                                      | 2,357                 
|Write down of assets                                  | 984                   
|Future income
taxes                                   | 198                   
|Gain on sale of investment                            | (14,585)              
|Gain on disposal
of assets                            |                       
|Share of loss in equity investments                   | 2,873                 
|Write down of assets included in restructuring
charge |                       
|Write down of short-term investment                   |                       
|Changes in operating assets and liabilities:          |                       
|Restricted cash                                       | (1,136)               
|Accounts receivable                                   | 26,974                
|Inventory                                             | 10,450                
|Income taxes recoverable                              | 5,135                 
|Prepaid expenses                                      | 992                   
|Accounts payable and accrued liabilities              | (25,843)              
|Income taxes payable                                  | 6,595                 
|Deferred revenue                                      | (7,565)               
|Net cash provided by (used in) operating activities   | (30,015)              
|Financing activities:                                 |                       
|Issuance of common shares                             | 19,056                
|Issuance of preferred shares                          | 130,679               
|Issuance of
warrants                                  | 3,291                 
|Shares
repurchased for cancellation                   |                       
|Reduction of Novell obligations                       | (6,594)               
|Net cash provided by (used in) financing activities   | 146,432               
|Investing activities:                                 |                       
|Proceeds on sale of investments                       | 14,585                
|Purchase of investments                               | (2,356)               
|Purchase of capital assets                            | (19,511)              
|Proceeds on disposal of assets                        | 274                   
|Net cash used in investing activities                 | (7,008)               
|Increase (decrease) in
cash and cash equivalents      | 109,409               
|Cash and cash equivalents at beginning of year        | 18,021                
|Cash and cash equivalents at end of year              | $  127,430            
|                                                      |                       
|Supplemental non-cash information:                    |                       
|Non-monetary investment in Hemera Technologies Inc.   | $  9,727              

(See accompanying
Notes to Consolidated Financial Statements)

Notes to Consolidated
Financial Statements

****

1.
Summary of significant accounting policies

All dollar amounts included herein are expressed in thousands of US$ unless otherwise
noted. Certain per share
information is expressed in units of US$ unless otherwise noted.

The consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in
Canada ("Canadian GAAP").  These principles are also generally accepted in the United States ("US GAAP") in all
material respects except as disclosed in Note 16.

Basis of consolidation

The consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries, Corel
Corporation Limited, Corel International Corporation,  Corel Inc. and Corel Corporation (U.S.A.). All material
intercompany transactions and balances have been eliminated. The Company follows the equity method of accounting for
investments in other companies where it holds 20% or more of the outstanding voting shares and has the ability to exert
significant influence. Under the equity method the Company records its initial investment at cost and records its pro rata
share of earnings or losses of equity investments in its results of operations. Certain amounts for periods ended prior to
November 30, 2000 have been reclassified to conform to the current year presentation.

Estimates and assumptions**

Preparing financial statements requires management to make estimates and assumptions
that affect the reported amounts
of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities.  Examples include the
provisions for returns and bad debts, the length of product cycles and capital asset lives.  Actual results may differ from
these estimates.

Software revenue recognition

The Company recognizes revenue in accordance with Statement of Position 97-2, "Software
Revenue Recognition",  ("SOP
97-2")  issued by the American Institute of Certified Public Accountants in October 1997.  During the year ended November
30, 2000, the Company adopted the Statement of Position 98-9, "Modification of SOP 97-2, Software Revenue Recognition
with Respect to Certain Transactions" ("SOP 98-9") issued in December 1998.  The adoption of SOP 98-9 has not had a
material impact on the Company's financial results.

The Company recognizes revenue from packaged software and license fees when the software
is delivered, there is persuasive
evidence that an arrangement exists, the fee is fixed and determinable and collection is probable. Sales to distributors are
subject to agreements allowing various rights of return and price protection.  The Company provides for estimated future
returns, exchanges and price protection.  Where telephone support is included for a limited time (post contract support or
"PCS", generally for 90 days) together with the license fee, the entire license fee is recognized upon delivery of the product
and the insignificant costs to provide the support are accrued.  Where support is provided together with an annual licensing
fee, the entire fee is deferred and recognized ratably over the term of the license agreement since the Company does not have
vendor specific objective evidence of fair value of this PCS.  Revenue from professional services and other services are
recognized when the services are delivered.



Research and development costs

Research costs are expensed as incurred.  Development costs related to software products
developed for sale are
expensed as incurred unless they meet the criteria for deferral under generally accepted accounting principles.

Cash and cash equivalents

Cash includes cash equivalents, which are investments that are highly liquid and have
terms to maturity of three months
or less at the time of acquisition.



Restricted cash

The Company maintains restricted cash in term deposits with major financial institutions
as security for corporate credit cards

issued by such financial institutions.



Inventory

Inventory of product components is valued at the lower of average cost and replacement
cost, and finished goods are
valued at the lower of average cost and net realizable value.



Capital assets

Capital assets are recorded at cost. Amortization of licences commences with the market
release of each new software
product and version. Depreciation and amortization are calculated using the following rates and bases:



|Furniture and equipment                                                                    | 20 - 33.3% declining balance                                                                                                                                                                                                                              
|------------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Computer equipment                                                                         | 33.3% straight line                                                                                                                                                                                                                                       
|Research and development equipment                                                         | 20 - 50% declining balance                                                                                                                                                                                                                                
|Leasehold improvements                                                                     | Straight line over the term of the lease                                                                                                                                                                                                                  
|Licences, purchased software, deferred royalties,
clipart libraries and photo CD libraries | The greater of: a) the ratio that current gross
revenues bear to the total of current gross
revenues and anticipated future gross
revenues or, b) the straight line method over
the remaining economic life, generally
estimated to be three to five years



The Company regularly reviews the carrying value of its capital assets.  If the carrying
value of its capital assets exceeds
the amount recoverable, a write-down is charged to the consolidated statement of operations.

Income taxes

On December 1, 1999, the Company adopted the asset and liability method for determining
income taxes as prescribed
by the Canadian Institute of Chartered Accountants ("CICA") 3465 - "Income Taxes" ("CICA 3465").  Under this
method, future tax assets and liabilities are recognized for the estimated tax recoverable or payable which would arise if
assets were recovered and liabilities settled at the financial statement carrying amounts. Future tax assets and liabilities
are measured using substantially enacted tax rates expected to apply to taxable income in the years in which temporary
differences are expected to be recovered or settled. Changes to these balances are recognized in income in the period in
which they occur.

Foreign currency**

The functional currency of the Company and its subsidiaries, which are accounted for as
integrated foreign operations, is
the US dollar.  In accordance with the CICA 1650 - "Foreign Currency Translation", monetary assets and liabilities
denominated in foreign currencies, other than the functional currency, are remeasured at the closing period-end rates of
exchange.  Non-monetary items and any related amortization of such items are remeasured at the rates of exchange in
effect when the assets were acquired or obligations incurred.  All other income and expense items have been remeasured
at the average rated prevailing during the respective periods.  The gains or losses resulting from the remeasurement of
these amounts have been reflected in earnings in the respective periods.

Investment tax credits

Investments tax credits ("ITCs"), which are earned as a result of qualifying research
and development expenditures, are
recognized when the expenditures are made and their realization is reasonably assured, and are applied to reduce
research and development expense in the year.

Stock options

The Company has stock option plans as described in Note 9. No compensation expense is
recognized when shares or
stock options are issued to employees. Any consideration paid by employees on the exercise of stock options is credited
to share capital.



2.    Financial instruments

The carrying amounts for cash and cash equivalents, restricted cash, accounts
receivable, accounts payable, accrued
liabilities and Novell obligations approximate fair value due to the short maturity of these instruments unless otherwise
noted.

Cash equivalents include a $14.0 million term deposit issued by a major North American
bank and a loan of $110.0
million to a major Canadian corporation, which is guaranteed by a major North American bank, with maturity on
December 27, 2000. Subsequent to year end, the loan, including accrued interest, was repaid in full.



Concentration of credit risk, with respect to accounts receivable, is limited due to the
diversity of the Company's channel
arrangements.  The Company has credit evaluation, approval and monitoring processes intended to mitigate potential
credit risks.  Ingram Micro Inc. accounted for $10.4 million (36.5%) and $27.1 million (49.5%) of accounts receivable at
November 30, 2000 and November 30,1999, respectively.



3.   Inventory

|                   | As at November
30
|------------------ | -----------------
|                   | 2000             
|Product components | $  1,424         
|Finished goods     | 1,693            
|                   | $     3,117      

4.    Investments

|                                                            | As at November
30
|----------------------------------------------------------- | -----------------
|                                                            | 2000             
|Equity investments                                          |                  
|Hemera
Technologies Inc.                                    | $  9,727         
|LinuxForce, Inc.                                            | 243              
|Rebel.com Inc.                                              |                  
|Alchemy Software Development Limited                        |                  
|                                                            | 9,970            
|Investments recorded at cost, including GraphOn
Corporation | 2,026            
|                                                            | $
11,996         

Hemera Technologies Inc.

On July 17, 2000, the Company purchased and currently maintains a 23% interest in Hemera
Technologies Inc., a
privately held company.  As consideration for these shares, the Company transferred its GraphicCorp division and related
assets to Hemera Technologies Inc.  As of the effective date of the transaction, the fair value of the GraphicCorp division
and its related assets was estimated at $9.7 million and the shares were valued at this amount. No gain or loss was
recognized on the transfer. In fiscal 2000, the Company's share of Hemera Technologies Inc.'s operating results was
nominal.



LinuxForce, Inc.

In December 1999, the Company purchased and currently maintains, a 33% interest in
LinuxForce Inc., a privately held
company, for cash.  The Company also holds a three year option to purchase another 33% of LinuxForce, Inc.  In 2000,
the Company's share of LinuxForce, Inc.'s operating results was nominal.



Rebel.com Inc.

On February 17, 1999, the Company purchased and currently maintains, a 25% interest in
Rebel.com Inc., a privately
held company for $3.4 million.  The Company's share of the net book value of the underlying assets was $1.3 million.
The remaining balance of the purchase price of $2.1 million had been allocated to goodwill and was being amortized on a
straight-line basis over three years.  The fair value of the assets given up to purchase the Company's share of Rebel.com
Inc. was as follows:

|Cash                 | $  1,561
|-------------------- | --------
|Capital assets       | 1,341   
|Inventory            | 381     
|Accounts receivable  | 68      
|Total purchase price | $  3,351

In 2000, the Company's share of Rebel.com Inc.'s net loss was $1.2 million which has been
deducted from the carrying
value of the investment, reducing the investment in Rebel.com Inc. to nil.  Due to the magnitude of the losses, the
remaining goodwill on the investment has been written down to nil.

Alchemy Software Development Limited

On November 28, 2000, the Company purchased and currently maintains, a 25% interest in
Alchemy Software
Development Limited, a privately held company.  At the same time, the Company sold its CATALYST software and
related assets to Alchemy Software Development Limited. The transaction was accounted for as a non-monetary
transaction and the net book value of the assets sold was nil, resulting in the shares being fair valued at nil with no gain or
loss recognized. In 2000, the Company's share of Alchemy Software Development Limited's operating results was
nominal.

Investments recorded at cost, including GraphOn
Corporation ("GraphOn")

On December 31, 1998, the Company sold its jBridge technology to GraphOn.  In
consideration for the transfer of
technology, GraphOn issued to the Company 3,886,503 shares of common stock of GraphOn and a warrant to purchase
up to 388,650 shares of additional common stock. The assets transferred had a nominal value in the Company's financial
statements.



On July 12, 1999, GraphOn completed a merger with Unity First Acquisition Corp.
("Unity"), a publicly traded
acquisition corporation.  As part of the merger, Unity changed its name to GraphOn.  Under the terms of the merger
agreement, GraphOn shareholders received a fixed exchange ratio of 0.5576 share of Unity common stock for each share
of GraphOn common stock.  As result of the merger, the Company held 2,167,114 shares of common stock, representing
19.5% of the merged company and, during the year, exercised warrants to purchase 216,711 shares of common stock at
an exercise price of $1.79 per share.

During fiscal 2000, the Company sold a total of 1,190,001 shares of GraphOn for a
realized gain of approximately  $14.6
million.  The Company still owns 1,193,824 shares of common stock (including warrants exercised above), recorded at
$0.4 million representing  8.1 % of total shares outstanding which, as of November 30, 2000, had a market value of $1.50
per share for an aggregate fair value of $1.8 million. The Company has accounted for the cost of this investment under
the first-in, first-out method.

Other investments, at cost, totaled $1.6 million.



5.   Capital assets

|                                                         | November 30,
2000 |                           | November 30, 1999
|-------------------------------------------------------- | ----------------- | ------------------------- | -----------------
|                                                         | Cost              | Accumulated

amortization |                  
|Furniture and equipment                                  | $14,463           | $10,877                   |                  
|Computer equipment                                       | 74,462            | 65,866                    |                  
|Research and development equipment                       | 12,400            | 9,947                     |                  
|Leasehold improvements                                   | 3,707             | 3,426                     |                  
|Licenses, purchased software and deferred
     royalties | 94,926            | 67,371                    |                  
|Clipart libraries and photo CD libraries                 |                   |                           |                  
|                                                         | 199,958           | $ 157,487                 |                  
|Less: Accumulated amortization                           | 157,487           |                           |                  
|Net book value                                           | $42,471           |                           |                  

6.         Accounts payable and accrued liabilities

|                       | As at November
30
|---------------------- | -----------------
|                       | 2000             
|Trade accounts payable | $  11,518        
|Accrued payroll        | 4,005            
|Accrued liabilities    | 5,918            
|Metacreations payable  | 4,000            
|Microsoft accrual      | 3,000            
|                       | $
28,441         

The Metacreations payable relates to capital asset purchases during the year. The
Microsoft Corporation ("Microsoft")
accrual relates to obligations under the technology and services agreement as further discussed in Note 12.

7.   Income taxes

The Company operates in several tax jurisdictions.  Its income is subject to varying
rates of tax, and losses incurred in
one jurisdiction cannot be used to offset income taxes payable in another.

The income (loss) before income taxes consisted of the following:

|                                   | Year ended November 30
|---------------------------------- | ----------------------
|                                   | 2000                  
|****                               |                       
|************Domestic income (loss) | $     8,779           
|Foreign income (loss)              | (56,549)              
|                                   |                       
|Income (loss) before income taxes  | $  (47,770)           
|****                               |                       

************

The income taxes (expense) recovery consist of the following:

|                                                | Year ended
November 30
|----------------------------------------------- | ----------------------
|                                                | 2000                  
|                                                |                       
|****************Domestic:                       |                       
|Current income taxes                            | $     (3,913)         
|Future income taxes                             | 529                   
|                                                |                       
|                                                | (3,384)               
|                                                |                       
|Foreign:                                        |                       
|Current income taxes                            | (594)                 
|Future income taxes                             | (727)                 
|                                                |                       
|                                                | (1,321)               
|                                                |                       
|****************Income taxes (expense) recovery | $    (4,705)          
|                                                |                       

The Company has foreign non-capital loss carryforwards of $180 million, which begin to expire in 2003.

A reconciliation of the combined Canadian federal and provincial income tax rate with
the Company's effective income
tax rate is as follows:

|                                         | Year ended November 30,
|---------------------------------------- | -----------------------
|                                         | 2000                   
|                                         |                        
|Expected statutory rate                  | 44.04%                 
|Expected income taxes (expense) recovery | $  21,038              
|Effect of foreign tax rate differences   | (21,865)               
|Change in valuation allowance            | (6,470)                
|Permanent differences                    | 494                    
|Other                                    | 1,579                  
|Superallowance                           | 519                    
|                                         |                        
|Income taxes (expense) recovery          | $  (4,705)             
|                                         |                        

The primary temporary differences which gave rise to future taxes at November 30, 2000 and 1999 are:

|                                            | **********Year ended November 30,**
|------------------------------------------- | -----------------------------------
|****                                        | **2000**                           
|****                                        |                                    
|**********************Current**             |                                    
|Reserves                                    | $  2,807                           
|Accrued royalties                           | 1,000                              
|Investment tax
credits                      |                                    
|Share issue costs                           | 241                                
|                                            |                                    
|                                            | 4,048                              
|Less:  valuation allowance                  | (3,569)                            
|                                            |                                    
|Future tax asset                            | $    479                           
|                                            |                                    
|********Long-term                           |                                    
|********Net operating
loss carryforwards    | $ 19,304                           
|Depreciation                                | 3,344                              
|Share issue costs                           | 724                                
|Royalties not yet
deducted for tax purposes |                                    
|                                            |                                    
|                                            | 23,372                             
|Less:  valuation allowance                  | (22,407)                           
|                                            |                                    
|Future tax asset                            | $      965                         

The valuation allowance for future taxes is required
due to the Company's operating history and management's
assessment of various uncertainties related to their future realization.  Since the realization of future tax assets is
dependent upon generating sufficient taxable income in the tax jurisdictions which gave rise to the future tax asset, the
amount of the valuation allowance for future taxes may be reduced if it is demonstrated that positive taxable income in
the various tax jurisdictions is sustainable in the future.

**8.     Novell obligations**



The Novell obligations comprised royalty and product return obligations pursuant to the
March 1, 1996 acquisition of
the WordPerfect family of software programs and related technologies from Novell, Inc. ("Novell").



The Company was obligated at the date of acquisition, to pay royalties at a rate of 2%
of its net revenues to Novell to a
maximum of a then present value of $30.0 million imputing a 10% discount rate. The Company has recorded payments
on this obligation as royalty expense included in cost of sales.

On October 30, 2000, the Company agreed to pay Novell the total sum of $15.0 million
representing the present value of
the future royalty obligation referred to above. The first payment was made on October 31, 2000 with the remaining two
payments of $5.0 million each due January 24, 2001 and April 23, 2001.  This $15.0 million represents a prepayment of
otherwise future payable royalties and the Company has deferred this amount accordingly.  These deferred royalties are
being amortized to cost of sales over either 3 years, being the estimated remaining useful life of the underlying products,
or at 2% of net revenues, whichever is greater.



**9.  Share capital**

**Issuance of Series A preferred shares**

On October 2, 2000, the Company issued
24,000,000 Series A participating, convertible, non voting, non redeemable
preferred shares to Microsoft for total gross proceeds of $135.0 million ($5.625 per share).  Each preferred share is
convertible into one common share but not in the hands of Microsoft or its affiliates. As part of the share purchase
agreement the Company is obligated to file, with the United States Securities and Exchange Commission ("SEC"), a
resale registration statement for 24,000,000 common shares underlying these preferred shares.

The dividend rights are the same as for
common shares, other than dividends or other distributions to the extent payable
in the form of common shares.  Dividends on each full and each fractional Series A preferred share shall be cumulative.



In the event of liquidation of the Company, the greater of $5.625 per share purchase
price, and the aggregate amount that
could be distributed to common shareholders if these preferred shares did not exist, shall be distributed.  Both are
adjusted to include all accrued and unpaid dividends whether or not earned or declared.    If such payment is made,
Series A preferred shareholders will have no further claim on assets.

**Issuance of common shares**

On June 28, 2000, the Company issued 7,299,270
common shares and 3,649,635 common share purchase warrants at
CDN $4.11 per unit for total gross proceeds of CDN $30.0 million. The values assigned to each of the components of
the unit were based on their relative fair values at the date of the transaction. The warrants are exercisable until June 27,
2001 at a price of CDN $4.56 per common share. In the event that all of the warrants are exercised, the Company will
issue an additional 3,649,635 common shares, resulting in gross proceeds of CDN $16.6 million. As at November 30,
2000, 11,659 warrants have been exercised for gross proceeds of CDN $53,165.



**Equity line financing**

On October 3, 2000, the Company completed a
standby-financing share purchase agreement with an institutional
investor. Subject to the terms and conditions of this agreement, the Company may issue and sell to the investor up to
14,690,000 shares in periodic draw down periods over 24 months if all associated warrants are exercised. At November
30, 2000, the Company has not issued or sold any shares under this arrangement. However, pursuant to the terms of the
arrangement the Company has issued 169,500 warrants to the investor and 56,500 warrants to each of its advisors,
Whale Securities Co., L.P. and Richard Geyser. The warrants are exercisable at any time until October 3, 2003 at $3.91
per share for the investor and $4.28 per share by Whale Securities Co., L.P. and Richard Geyser. At November 30, 2000,
no warrants have been exercised.The Company has deferred $0.6
million in financing charges representing the fair
value of the warrants issued to secure this financing.  This commitment fee is being amortized over 24 months.

**Stock option plans**

The Company's stock option plans are administered by the Compensation Committee
which is a subcommittee of the
Board of Directors.  The Compensation Committee designates eligible participants to be included under the plans and
designates the number of options and share price of the options, subject to applicable securities laws and stock
exchange regulations.  At November 30, 2000, there were approximately 13.9 million and 4.0 million common shares
reserved for issuance under the Corel Corporation Stock Option Plan and the Corel Corporation Stock Option Plan
2000, respectively. Information with respect to stock option activity for 1998, 1999 and 2000 is as follows:



|                                 |                          | Price per share(CDN$)
|-------------------------------- | ------------------------ | ---------------------
|                                 | Number of shares (000's) | Range                
|Outstanding at November 30, 1997 | 6,158                    | $  4.00  -  $  22.38 
|Granted                          | 3,422                    | 2.10    -      4.10  
|Exercised                        | (132)                    | 3.00    -      3.00  
|Expired                          | (1,167)                  | 7.70    -    19.67   
|Outstanding at November 30, 1998 | 8,281                    | 2.10   -    22.38    
|Granted                          | 3,022                    | 3.37    -   11.70    
|Exercised                        | (5,054)                  | 2.10    -   13.50    
|Forfeited                        | (1,883)                  | 2.10    -   13.50    
|Expired                          | (1,313)                  | 2.10    -   22.38    
|Outstanding at November 30, 1999 | 3,053                    | 2.10    -   13.50    
|Granted                          | 3,869                    | 5.35    -   29.90    
|Exercised                        | (798)                    | 2.06   -   13.50     
|Forfeited                        | (1,115)                  | 2.10    -   15.25    
|Expired                          | (591)                    | 7.70    -   13.50    
|Outstanding at November 30, 2000 | 4,418                    | $   3.00   - $ 29.90 



For various price ranges (in CDN$), weighted average characteristics of outstanding
stock options at November 30,
2000 were as follows:

|                     |                | Outstanding options    
|-------------------- | -------------- | -----------------------
|Range of grant price | Shares (000's) | Remaining life

(years)
|$ 2.00  -    $ 5.00  | 1,187          | 1.7                    
|5.01  -        9.00  | 752            | 1.1                    
|9.01  -      29.90   | 2,478          | 2.6                    

The outstanding options expire between March 14, 2001 and November 16,
2004.

On November 16, 2000, the Board of Directors passed a resolution that allowed
certain employees holding options
granted in March 2000 at a price of CDN $15.25 (or the then US$ equivalent) and one senior officer with options at a
price of  $20.62 US to tender a maximum aggregate number of approximately 1.8 million options held by them for
repricing. The exercise price of the repriced options, namely CDN $5.70 (or the then US$ equivalent), was the closing
price of the Company's common shares on the Toronto Stock Exchange ("TSE") on November 15, 2000. The condition
of the repricing was to introduce a vesting schedule where one third of the options will remain vested, one third will vest
March 30, 2001 and the remaining options will vest on March 30, 2002. Repricing of any of these options held by
insiders, as defined by the Securities Act (Ontario), requires shareholder approval.  Non-employee directors' options
were excluded from the repricings. At November 30, 2000, no options had been tendered and the market price of the
underlying common shares was CDN $4.10.

**10.       Earnings  per share**

The Company adopted CICA 3500 "Earnings per Share" during the year ended
November 30, 2000 and has retro-actively restated earnings per share, where required, for all periods presented. The calculations
of the earnings per share
are based on the weighted daily average number of shares outstanding during the year.  The calculation of diluted
earnings per share assumes that all outstanding options and warrants have been exercised at the later of the beginning of
the fiscal period or the option issuance date.  As the impact of the exercise of these options and warrants is anti-dilutive
in 2000 and in 1998, outstanding options and warrants have been excluded from the calculation of diluted earnings per
share. See Note 9 for these other potentially dilutive instruments. In 1999, the dilutive effect of the weighted average
share calculation results from the potential exercise of employee stock options.



**11.    Commitments**



The Company rents office premises, sponsors various sporting events and venues,
and is obligated to pay minimum
product royalties under long-term agreements. Rent expense pursuant to lease obligations aggregated $7,654, $7,169 and
$7,155 during the years ended November 30, 2000, 1999 and 1998, respectively. At November 30, 2000, the minimum
commitments under long-term agreements, are as follows:

|2001                | $    3,626
|------------------- | ----------
|2002                | 3,670     
|2003                | 3,363     
|2004                | 3,392     
|2005                | 3,321     
|2006 and thereafter | 42,367    
|                    | $  59,739 

**12.
Contingencies**

On October 2, 2000, concurrent with the issuance of Series A preferred shares
(see Note 9), the Company entered into a
technology support and settlement agreement with Microsoft.  Together with the purchase of such Series A preferred
shares, Microsoft received the option to request the Company to perform certain product development work.  The
Company is obligated to provide at least 30 full time equivalents (20 developers and 10 testers) for a 12-month period to
Microsoft upon receipt of Microsoft's writtenintent to exercise the option.The option is exercisable for a period of
three years from the effective date.  The Company estimated the costs to perform the services described as being $3.0
million based on the estimated average cost per developer and tester required to perform the services when required.  If
the actual costs to perform the required services is less than the $3.0 million deducted from equity, the remainder of the
liability will be recorded as an increase in contributed surplus.



The Company is a party to a
number of claims arising in the ordinary course of business relating to employment,
intellectual property and other matters.  Based on its review of the individual matters the Company believes that such
claims, individually, will not have a material adverse effect on its business, financial position or results of operations
but, in the aggregate, may have a material adverse effect on its business, financial position or results of operations. Such
possible effect cannot be reasonably estimated at this time.



**13.    Cost of sales**



|                     | Year ended November 30
|-------------------- | ----------------------
|                     | 2000                  
|                     |                       
|Cost of
goods sold   | $    28,036           
|License amortization | 11,880                
|Royalties            | 7,109                 
|                     | $  47,025             

******14.  Restructuring charge**

On September 11, 1998, approximately 460 employees were terminated at the Orem, Utah facility. The balance of
the
workforce at that location remained with the Company until February 1, 1999 and assisted with the transfer of the
source code and technical services to the Ottawa facility.  As at November 30, 2000, the restructuring accrual included
in accounts payable and accrued liabilities is comprised  the following amounts:



|                                            | Asset

write-downs | Severance
costs | Facilities
closure costs | Total    | 
|------------------------------------------- | ------------------ | --------------- | ------------------------ | -------- | 
|Restructuring charge during the fiscal year | $ 3,086            | $ 10,104        | $ 2,690                  | $ 15,880 | 
|Payments                                    |                    | (6,395)         | (1,344)                  | (7,739)  | 
|Re-allocation                               |                    | (1,842)         | 1,842                    |          | 
|Non-cash asset
write-downs                  | (3,086)            |                 |                          | (3,086)  | 
|Restructuring accrual at November 30, 1998  |                    | 1,867           | 3,188                    | 5,055    | 
|Payments                                    |                    | (2,100)         | (1,705)                  | (3,805)  | 
|Re-allocation                               |                    | 233             | (233)                    |          | 
|Restructuring accrual at
November 30, 1999  |                    |                 | 1,250                    | 1,250    | 
|Payments                                    |                    |                 | (954)                    | (954)    | 
|Restructuring accrual at November 30, 2000  |                    |                 | $ 296                    | $ 296    | 

**15.
Segmented information**

The Company has only one global operating segment, as detailed in the
consolidated financial statements included
herein.

The Company sells its products worldwide from four geographic regions.  A
summary of sales by product group, sales
channel, region and  major customer from consolidated operations is as follows:

|                               | Year ended November 30
|------------------------------ | ----------------------
|                               | 2000                  
|By product group               |                       
|Creative products              | $    75,919           
|Business applications products | 78,917                
|Other                          | 2,651                 
|                               | $  157,487            
|By sales channel               |                       
|Retail packaged products       | $    80,069           
|OEM licenses                   | 17,640                
|Corporate licenses             | 59,778                
|                               | $  157,487            
|By region                      |                       
|Canada                         | $    13,181           
|U.S.A.                         | 83,355                
|Europe                         | 42,453                
|Other                          | 18,498                
|                               | $  157,487            
|By major customer              |                       
|Ingram Micro Inc.              | $    27,123           
|All others                     | 130,364               
|                               | $  157,487            

Included in creative products revenues are consumer applications products which were
relatively consistent from fiscal
1998 ($27.6 million) to fiscal 1999 ($24.0 million).  In fiscal 2000, as Corel realigned itself and moved away from
promoting these products, these revenues declined significantly and are no longer managed or accounted for as a
separate segment.



**16.   Significant differences between Canadian and United States
GAAP**

The Company's financial statements are prepared on the basis of Canadian GAAP,
which differs in some respects from US
GAAP.  For the periods ended November 30, 2000, 1999 and 1998 these differences do not result in any difference in the
reported income, loss or cash flows for those periods.  Significant effects of differences between Canadian GAAP and US
GAAP are set forth below:

**Accounting for
stock-based compensation

The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees"

("APB 25") and related interpretations in accounting for its employee stock
option plan. Accordingly, the Company also
applies United States Financial Accounting Standards Board ("FASB") Interpretation No. 44, "Accounting for Certain
Transactions involving Stock Compensation - an interpretation of APB No. 25" ("FIN 44"), providing new accounting rules
for stock-based compensation under APB 25. FIN 44 does not change FASB  Statement of Financial Accounting Standards
("SFAS") No. 123 "Accounting for Stock-Based Compensation" ("SFAS 123") and, as such, no compensation expense has
been recognized for its stock-based compensation plan. Had compensation cost for the Company's employee stock option
plan been determined based on the fair value at the grant date for awards under the plan, consistent with the methodology
prescribed under the SFAS 123, the Company's net income (loss) would have changed to the pro forma amounts indicated
as follows:

|                                         | Year ended November 30
|---------------------------------------- | ----------------------
|                                         | 2000                  
|                                         |                       
|Net income
(loss) as reported            | $    (55,348)         
|Estimated stock-based compensation costs | (32,761)              
|Pro forma net income (loss)              | $    (88,109)         
|Pro forma income (loss) per share        | $    (1.27)           

The fair values of all options granted during 2000, 1999 and 1998 were estimated
as of the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:



|                             | 2000  | 1999  | 1998 
|---------------------------- | ----- | ----- | -----
|                             |       |       |      
|Expected
option life (years) | 3.07  | 3.34  | 2.0  
|Volatility                   | 105   | 86    | 45   
|Risk free interest rate      | 6.13% | 4.78% | 4.33%
|Dividend yield               | nil   | nil   | nil  



The fair values, at the date of grant, for stock options granted during 2000,
1999 and 1998 were $9.02, $1.35 and $0.54 per
option, respectively.



The Black-Scholes model, used by the Company to calculate option values, as well
as other currently accepted option
valuation models were developed to estimate the fair value of freely tradeable, fully transferable options without vesting
restrictions, which significantly differ from the Company's stock option awards.  These models also require highly subjective
assumptions, including future stock price volatility and expected time until exercise, which greatly affect the calculated
values.  Accordingly, management believes that these models do not necessarily provide a reliable single measure of the fair
value of the Company's stock option awards.

In accordance with FIN 44, the option repricing, as described in Note 9, will
result in variable plan accounting for the re-priced options. At November 30, 2000, no options had been tendered and the market
price of the underlying common shares
was CDN. $4.10.  Future periods may reflect compensation charges or credits depending on the fair market price of the
underlying shares.

Available for sale securities

SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
("SFAS 115") requires available-for-sale securities to be marked to market with unrealized holding gains or losses being accounted
for in other comprehensive
income. Accordingly, the reported carrying value of investments would be increased by $1.4 million and $3.1 million at
November 30, 2000 and 1999, respectively. In addition, income taxes payable would be increased by $0.3 million at
November 30, 2000 and taxes recoverable would be decreased by $1.0 million at November 30, 1999.

Comprehensive income

The Company adopted SFAS No. 130, "Reporting Comprehensive Income" ("SFAS 130")
effective December 1, 1998.
SFAS 130 requires disclosure of comprehensive income, which includes reported net earnings adjusted for other
comprehensive income.  Other comprehensive income includes items that cause changes in shareholders' equity but are not
related to share capital or net earnings which, for the Company, comprises only unrealized holding gains on available for
sale securities.



|                                                                   | Year ended November 30
|------------------------------------------------------------------ | ----------------------
|                                                                   | 2000                  
|Net income (loss)                                                  | $    (55,348)         
|Other comprehensive income:                                        |                       
|Unrealized holding gains (losses) on available for sale
securities | (1,669)               
|Related income tax                                                 | 729                   
|Comprehensive income (loss)                                        | $    (56,318)         

New accounting pronouncements

In fiscal 1998, the FASB issued SFAS 133, "Accounting for Derivative Instruments
and Hedging Activities", ("SFAS 133")
which establishes standards for derivative instruments and hedging activities.  It requires that all derivatives be recognized
as either assets or liabilities on the Balance Sheet and be measured at fair value.  SFAS 133 is effective for fiscal years
beginning after June 15, 1999, which is the fiscal year beginning December 1, 1999 for the Company.  Prior periods should
not be restated.In June 1999, the FASB issued SFAS No. 137, which delays
the effective date of SFAS 133 until fiscal
years beginning after June 15, 2000, which is the fiscal year beginning December 1, 2000 for the Company.The Company
believes the adoption of this pronouncement will not have a material impact on its results of operations or financial
position.

In fiscal 2000, the SEC
issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements",
and its related interpretations. The SAB summarizes certain of the SEC staff views in applying generally accepted accounting
principles to revenue recognition in financial statements. This SAB is effective beginning the Company's first quarter of
fiscal 2001.The Company does not expect the adoption of this SAB to have a material impact on its results of operations
or financial position.

**17.  Restatement****of Novell royalty obligation**

The Company has restated its Consolidated Balance Sheets for the years ended
November 30, 1996 through November 30,
1999, as presented below, to remove the contingent liability related to the Novell royalty obligation, see Note 8, and the
corresponding acquired technology, see Note 5.  In addition, the Company has conformed its Consolidated Statements of
Cash Flows to reflect this restatement by reducing cash flows from operations and increasing cash flows from financing
activities by $2.0 million, $3.6 million and $3.6 million in 2000, 1999 and 1998 respectively. The Company concluded,
based on a review of its financial statements to be incorporated into a recently filed registration statement, that the accounting
treatment and disclosure previously adopted was not appropriate.  This restatement has no impact on the Company's
previously reported results of operations or overall cash flows. Summarized comparative balance sheets for the years affected
are presented below.  In addition, certain other notes to these consolidated financial statements have been modified for
clarification purposes only.

|As at November 30,                         
|-------------------------------------------
|                                           
|**Assets**                                 
|Current Assets                             
|Investments                                
|Future tax asset                           
|Capital Assets                             
|Total assets                               
|                                           
|**Liabilities and shareholder's equity**   
|Current liabilities                        
|Current portion of Novell
obligations      
|Other current liabilities                  
|Total current liabilities                  
|                                           
|Novell
obligations                         
|                                           
|**Shareholders' equity**                   
|Share capital                              
|Contributed surplus                        
|Retained earnings (deficit)                
|Total shareholders' equity                 
|Total liabilities and

shareholders' equity

**Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure**

None.

**PART III**

**Item 10.  Directors and Executive Officers of the
Registrant**

The following table sets forth certain
information with respect to the executive officers and directors of Corel as at
February 21, 2001:

| | **NAME**               |  | **Age** |  | **Position with the Company**                                           
| | ---------------------- |  | ------- |  | ------------------------------------------------------------------------
| |                        |  |         |  |                                                                         
| | Derek Burney           |  | 38      |  | President and Chief Executive Officer, Director                         
| | John Blaine            |  | 39      |  | Executive Vice President, Finance, Chief Financial Officer and
Treasurer
| | Graham Brown           |  | 37      |  | Executive Vice President, Business Applications                         
| | Steve Houck            |  | 31      |  | Executive Vice President, Sales                                         
| | Ian Legrow             |  | 30      |  | Executive Vice President, Creative Products                             
| | Annette McCleave       |  | 41      |  | Executive Vice President, Marketing                                     
| | Rene Schmidt           |  | 43      |  | Executive Vice President, Chief Technology Officer                      
| |                        |  |         |  |                                                                         
| | James Baillie          |  | 63      |  | Chairman of the Board                                                   
| | Lyle B. Blair (1)      |  | 70      |  | Director                                                                
| | Hunter S. Grant (1)    |  | 58      |  | Director                                                                
| | Jean-Louis Malouin     |  | 57      |  | Director                                                                
| | Hon. Barbara McDougall |  | 63      |  | Director                                                                
| | Lawrence O'Brien (1)   |  | 51      |  | Director                                                                

________

(1)   Member of the Audit Committee

**Derek Burney**joined the Company in April 1994 as the Project Leader for
CorelFLOW.  Mr. Burney was
promoted to Technology Manager in August 1995 and then Director of CAD 3D in February 1996.  He held this
position until October 1997 when he left the Company to work at IMSI (International Microcomputer Software
Inc.) in the product group that purchased CorelCAD, Corel Visual CADD, CorelFLOW, Corel Lumiere Suite,
Corel Click & Create and Corel Family Tree Suite from the Company.  Upon his return to the Company in May
1998, Mr. Burney served as Senior Vice President - Engineering until December 1998 at which time he was
promoted to Executive Vice President, Engineering. Mr. Burney held this position until October 2000 at which
time he was named President and Chief Executive Officer and appointed to the Board of Directors.

**John Blaine**joined the Company  in April of 2000 as Chief Financial
Officer and Executive Vice President,
Finance. Mr. Blaine is responsible for the Company's worldwide financial operations. Prior to joining the
Company Mr. Blaine served as Vice-President and Controller in the Dublin, Ohio corporate offices of Sterling
Commerce Inc., an electronic commerce software and services provider.



**Graham Brown**has been with the Company for nine years. He has served as
Developer and Project Lead for
CorelDRAW, Development Manager for Corel VENTURA Publisher and WordPerfect, and Director of Software
Development for WordPerfect Office. Prior to being named to his current position as Executive Vice President,
Business Applications in October of 2000, Mr. Brown served as Vice President of Software Development,
Business Applications from June 1998.

**Steven Houck**joined the Company in 1995 as a consultant for its
multimedia division. He then moved on to
become manager of the Company's OEM Accounts. In December of 1999 he moved into his current position as
Executive Vice President, Sales and is responsible for overseeing the worldwide sales operations for the
Company.

**Ian Legrow**joined the Company in 1994 and has held various positions in
product development. Prior to being
named to his current position of Executive Vice President, Creative Products in October of 2000, Mr. Legrow
served as Vice President of Software Development, CorelDraw Graphics Suite from June 1998.

**Annette McCleave**joined the Company in 1990 as a member of the technical
marketing team. She has served as
Product Manager for CorelDRAW during the release of versions 4 and 5 and went on to become Director, then
Vice-President, of Product Management. Prior to her appointment as Executive Vice-President, Marketing, in
February of 2001, Ms. McCleave served as Executive Vice President, Corporate Communications from October
2000 until February 2001 and prior to that she served as Vice-President of the New Ventures division from June
1998.

**Rene Schmidt**joined Corel in 1995 and brings over sixteen years of
software development experience to his
position, including several years with Instantel Inc. as Chief Software Architect and Software Development
Manager. Prior to his appointment as Executive Vice President, Linux Products, in October of 2000, Mr. Schmidt
led the scripting, common user interface and installation teams, and managed the Paradox, Quattro Pro, Corel
LINUX OS and Linux porting development teams. Mr. Schmidt was appointed Chief Technology Officer in
February, 2001.

**James C. Baillie**joined the Board of Directors as Chairman in August
2000. Mr Baillie is counsel to Torys,
Barristers and Solicitors, where he practices in the general area of business law with an emphasis on financial
institutions and securities law. Mr. Baillie was the Chair of the Ontario Securities Commission between 1978 and
1980 and was also the initial Chair of the federal government's Task Force on the Future of the Canadian
Financial Services Sector from December 1996 to July 1997. Currently Mr Baillie is the Chair of the Independent
Electricity Market Operator (Ontario) and is a director of Sun Life Financial Services of Canada Inc. and FPI.

**Lyle B. Blair**has been a Director since September 1989. Mr. Blair has
been Chairman of L.B. Blair Management
Ltd. since 1976. L.B. Blair Management Ltd. has owned and operated several companies including, from 1980 to
1992, Storwal International Inc., an office furniture manufacturer, and Thames Valley Beverages, the largest
independent Ontario Pepsi bottler, from 1976 to 1988. Prior to 1976, Mr. Blair held senior international positions
with Procter & Gamble Inc. and Pepsico Inc.

**Hunter S. Grant**has been a Director since September 1989. Mr. Grant was
the Co-Publisher, President and
General Manager of the Recorder and Times Limited, a newspaper publishing company, from July 1977 until July
1998.  He is currently the President of Kingmer Holding Ltd.

**Jean-Louis Malouin** became a Director in November 1997. Dr. Malouin is a
Professor in the Faculty of
Administration at the University of Ottawa where he served as Dean between 1992 and 2000.  From 1989 to 1992,
Dr. Malouin was the Dean of Administration at the University of Alberta and is a former dean at the Université
Laval.  He is an expert in  operations and production management, management information systems design and
research methodology.  He has served as a management consultant for numerous organizations and institutions
including the Canadian International Development Agency (CIDA), the Université du Québec and the Ottawa
Economic Development Corporation (OCEDCO).

**Hon. Barbara McDougall**became a Director in April 1998. Since February,
1999, Mrs. McDougall has been
President and Chief Executive Officer of the Canadian Institute of International Affairs. Prior to that appointment,
she was a private consultant on corporate governance and on international business. Mrs. McDougall was also
chairperson of the Board of Directors of AT&T Canada. Her current corporate directorships include the Bank of
Nova Scotia, Stelco Inc., and the Independent Order of Foresters. Prior to 1993, Mrs. McDougall was a Member
of Parliament and Cabinet Minister in the Canadian Federal Government.

**Lawrence O'Brien**became a director in August 2000. Mr. O'Brien founded
CALIAN Technology Ltd., a
consulting firm that sells information technology and professional services to industry and government worldwide,
in 1982. Mr. O'Brien retired as Chief Executive Officer of CALIAN Technology in May 2000 but remains the
Chairman of the Board.

Under the Canada Business Corporations Act, a majority of the Board of Directors and a
majority of Board
Committee members must be resident Canadians. All directors hold office until the next annual meeting of
shareholders and until their successors have been elected. The executive officers of the Company serve at the
discretion of the Board of Directors of the Company. There are no family relationships among any of the directors
and executive officers of the Company.

The Audit Committee reviews the internal accounting procedures of the Company, consults
with and reviews the
services provided by the Company's independent auditors and is responsible for corporate governance issues
relating to the Company.

The Compensation Committee has a mandate to: (a) monitor compliance with provincial legislation
applicable in
respect of employment practices of the Company, (b) determine the appropriate allocation of stock options to
eligible participants in the Corel Corporation Stock Option Plan, (c) determine Chief Executive Officer and senior
officer compensation, (d) monitor compliance with statutory requirements for employment matters including
remittances and legislation, and (e) review general policy matters relating to employment and wage equity,
compensation and benefits of employees of the Company generally. The Committee met eight times in fiscal 2000
and acted by way of resolution on other occasions.

The Company has a policy of compensation based on merit and performance and does not discriminate
or
distinguish with respect to persons performing similar functions. Compensation in the Company, as compared to
industry surveys, is consistent with industry standards at the level necessary to attract and retain qualified
personnel.

********

**Item************11.****Executive Compensation**

The following table, presented in CDN$, in accordance with the regulations of
the Securities Act (Ontario), sets forth all
compensation paid in respect of the individuals who were, at November 30, 2000, the Chief Executive Officer and the other
four most highly compensated executive officers of the Company and three former executive officers who were no longer
with the company at November 30, 2000 but otherwise would have been included in the most highly compensated executive
officers of the Company (the "named executive officers").

****

****

|                          |  |      |  |                     |  |              |  |            |  | Long-Term     |            
|------------------------- |  | ---- |  | ------------------- |  | ------------ |  | ---------- |  | ------------- | -----------
|                          |  |      |  | Annual Compensation |  | Compensation | 
|                          |  |      |  |                     |  |              |  | Other      |  |               | All        
|                          |  |      |  |                     |  |              |  | Annual     |  | Securities    | Other      
|Name and Principal        |  |      |  |                     |  |              |  | Compen-    |  | Under Options | Compen-    
|Position                  |  | Year |  | Salary              |  | Bonus        |  | sation (1) |  | Granted (#)   | sation     
|Derek J. Burney           |  | 2000 |  | $293,077            |  | Nil          |  | -          |  | 225,000       |            
|President, and            |  | 1999 |  | 240,000             |  | Nil          |  | -          |  | 81,000        |            
|Chief Executive Officer   |  | 1998 |  | 158,753             |  | $21,830      |  | -          |  | 95,800        |            
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Steven Houck              |  | 2000 |  | 275,399             |  | Nil          |  | -          |  | 63,600        | -          
|Executive Vice President, |  | 1999 |  | 168,850             |  | Nil          |  | -          |  | 4,200         | -          
|Sales                     |  | 1998 |  | 133,085             |  | Nil          |  | -          |  | 3,500         | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Annette McCleave          |  | 2000 |  | 167,500             |  | Nil          |  | -          |  | 54,700        | -          
|Executive Vice President, |  | 1999 |  | 139,699             |  |              |  | -          |  | 16,000        | -          
|Corporate Marketing       |  | 1998 |  | 118,216             |  |              |  | -          |  | 15,500        | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Ian Legrow                |  | 2000 |  | 163,269             |  | Nil          |  | -          |  | 54,700        | -          
|Executive Vice President, |  | 1999 |  | 154,346             |  |              |  | -          |  | 13,000        | -          
|Creative Products         |  | 1998 |  | 130,828             |  |              |  | -          |  | 9,600         | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Graham Brown              |  | 2000 |  | 163,269             |  | Nil          |  | -          |  | 54,700        | -          
|Executive Vice President, |  | 1999 |  | 155,471             |  |              |  | -          |  | 16,000        | -          
|Business Applications     |  | 1998 |  | 135,309             |  |              |  | -          |  | 15,500        | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Michael C.J. Cowpland(2)  |  | 2000 |  | 166,269             |  | Nil          |  | -          |  | 341,100       | -          
|former Chairman,          |  | 1999 |  | 297,000             |  | Nil          |  | -          |  | 299,800       | -          
|President, and Chief      |  | 1998 |  | 296,481             |  | Nil          |  | -          |  | 275,000       | -          
|Executive Officer         |  |      |  |                     |  |              |  |            |  |               | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Kerry D. Williams  (2)    |  | 2000 |  | 221,601             |  | Nil          |  | -          |  | 28,400        | 200,000 (3)
|former Executive Vice     |  | 1999 |  | 198,000             |  | Nil          |  | -          |  | 67,900        | -          
|President, Manufacturing  |  | 1998 |  | 197,654             |  | Nil          |  | -          |  | 31,200        | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            
|Carey Stanton   (2)       |  |      |  |                     |  |              |  |            |  |               |            
|former Executive          |  | 2000 |  | 186,692             |  | Nil          |  | -          |  | 80,000        | -          
|Vice President, Business  |  | 1999 |  | 198,000             |  | Nil          |  | -          |  | 67,900        | -          
|Development               |  | 1998 |  | 197,653             |  | Nil          |  | -          |  | 81,200        | -          
|                          |  |      |  |                     |  |              |  |            |  |               |            

Notes:

(1) Perquisites and other personal benefits do not exceed the
lesser of CDN$50,000 and 10% of the total of the annual
salary and bonus for any of the named executive officers.

(2) This additional disclosure includes individuals for whom
disclosure would have been provided as part of the four
most highly paid executive officers above but for the fact that the individuals were not serving as  executive officers
of the Company at the end of fiscal 2000.

(3) This represents amounts paid, payable or accrued to the
named executive officer pursuant to an arrangement in
connection with the termination of such executive officer's employment with the Company.



The following table sets
forth the stock options granted under the Corel Corporation Stock Option Plan 2000 during the fiscal
year ended November 30, 2000 to the named executive officers.

**OPTION GRANTS FOR THE YEAR ENDED NOVEMBER 30,
2000**

**AND POTENTIAL REALIZABLE VALUE OF EACH GRANT OF
OPTIONS**

|                      |             |              |            |                    | Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Option Term

(CDN$)
|--------------------- | ----------- | ------------ | ---------- | ------------------ | ------------------------------------------------------------------------------------------------------
|                      |             |              |            |                   
|                      | Number of   | % of total   | Exercise   |                   
|                      | Securities  | Options      | or base    |                   
|                      | underlying  | granted to   | Price      |                   
|                      | options     | employees in | ($/share)  | Expiration        
|Name                  | granted (#) | fiscal year  | (CDN$)     | Date               | 5% ($)                                                                                                
|Michael C.J. Cowpland | 341,100     | 8.82%        | $    15.25 | September 15, 2000 | $    121,015                                                                                          
|Derek Burney          | 100,000     | 2.58%        | $    15.25 | March 30, 2004     | 328,647                                                                                               
|                      | 125,000     | 3.23%        | $    8.20  | October 5, 2004    | 220,893                                                                                               
|Graham Brown          | 19,700      | 0.51%        | $    15.25 | March 30, 2004     | 64,743                                                                                                
|                      | 35,000      | 0.90%        | $    8.20  | October 5, 2004    | 61,850                                                                                                
|Steve Houck           | 10,000      | 0.26%        | $20.62*    | January 17, 2004   | 44,437*                                                                                               
|                      | 18,600      | 0.48%        | $10.56*    | March 30, 2004     | 42,328                                                                                                
|                      | 35,000      | 0.90%        | $5.53*     | October 5, 2004    | 41,711                                                                                                
|Ian Legrow            | 19,700      | 0.51%        | $    15.25 | March 30, 2004     | 64,743                                                                                                
|                      | 35,000      | 0.90%        | $    8.20  | October 5, 2004    | 61,850                                                                                                
|Annette McCleave      | 19,700      | 0.51%        | $    15.25 | March 30, 2004     | 64,743                                                                                                
|                      | 35,000      | 0.90%        | $    8.20  | October 5, 2004    | 61,850                                                                                                
|Rene Schmidt          | 19,700      | 0.51%        | $    15.25 | March 30, 2004     | 64,743                                                                                                
|                      | 35,000      | 0.90%        | $    8.20  | October 5, 2004    | 61,850                                                                                                
|Kerry D. Williams     | 28,400      | 0.73%        | $    15.25 | December 31, 2000  | 93,335                                                                                                
|Carey Stanton         | 80,000      | 2.07%        | $    15.25 | July 21, 2001      | 262,917                                                                                               
|                      |             |              |            |                    |                                                                                                       

(*) Steve Houck's options and related information are listed in US$.



The following table sets forth each exercise of stock options under the Corel
Corporation Stock Option Plan during the fiscal
year ended November 30, 2000 by the named executive officers.

**AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR
ENDED**

**NOVEMBER 30, 2000 AND FISCAL YEAR-END OPTION
VALUES**

|                      |  |             |  |                    |  |               |  | Value of     
|--------------------- |  | ----------- |  | ------------------ |  | ------------- |  | -------------
|                      |  |             |  |                    |  |               |  | Unexercised  
|                      |  | Securities  |  |                    |  | Unexercised   |  | in-the-Money 
|                      |  | Acquired    |  | Aggregate Value    |  | Options at    |  | Options at   
|                      |  | on
Exercise |  | Realized           |  | Nov. 30, 2000 |  | Nov. 30, 2000
|Name                  |  | (#)         |  | (CDN$)             |  | (#)           |  | (CDN$)       
|Derek Burney          |  | -           |  | $                - |  | 247,809       |  | $  11,680    
|Steven Houck          |  | -           |  | -                  |  | 63,600        |  | -            
|Annette McCleave      |  | 8,267       |  | 189,457            |  | 59,700        |  | 3,650        
|Ian Legrow            |  | 3,000       |  | 78,205             |  | 70,700        |  | 11,680       
|Graham Brown          |  | -           |  | -                  |  | 56,700        |  | 1,460        
|Michael C.J. Cowpland |  | -           |  | -                  |  | 917,023       |  | 521,354      
|Kerry D. Williams     |  | -           |  | -                  |  | -             |  | -            
|Carey Stanton         |  | 20,264      |  | 94,007             |  | 80,000        |  | -            

All options are exercisable when granted.  The only exceptions are options
granted during an employee's probationary period,
usually six months in length. Those options that were repriced,as described in Note 9 to the consolidated financial statements
(See Item*), and certain options recently granted which are exercisable as to one-third on each of the date of original grant
and the first and second anniversaries thereof.

**Compensation of Directors**

Directors who are salaried officers of the Company receive no compensation for
serving on the Board of Directors. The other
directors (the "independent directors"), of whom there are currently six, receive an annual retainer of CDN $16,000 (CDN
$25,000 for Board Chair) and a fee of CDN $1,000 (CDN $2,000 for Board and Committee Chairs and Board Vice-Chair) for
each Board of Directors and Committee meeting they attend, and are reimbursed for traveling costs and other out-of-pocket
expenses incurred in attending such meetings. During the transition phase of the Company from August 15 to December 6,
2000, each non-employee director was also entitled to receive an hourly rate of CDN $250 for each hour spent on the business
of the Company outside of regularly scheduled meetings.

On August 15, 2000, a Deferred Share Units Plan ("DSP") for non-employee members
of the Board od Directors was
established by the Company . Under the DS, each director may elect to be paid up to 100% of his or her compensation in
deferred share units ("DSUs"). A DSU is credited by means of a bookkeeping entry in the books of the Company to an
account in the name of the director and payable only at the end of his or her mandate on the Board of Directors, in cash or by
way of Common Shares equal in number to the DSUs credited to the director's account, based on the market value of the
Common Shares at that time. The number of DSUs credited to each director is determined on the basis of the portion elected
by each director of the amount payable to such director for the director's retainer and meeting fees for each financial quarter,
divided by the value of a DSU (which is equal to the closing price of the Common Shares on The Toronto Stock Exchange
("TSE") on the third trading day after the announcement of the results for such financial quarter). DSUs are credited with
dividend equivalents when dividends are paid on Common Shares and such dividend equivalents are converted into additional
DSUs. Additional compensation consisting of options for Common Shares mat be awarded to non-employee directors as the
Board of Directors deems appropriate.

The total compensation earned by non-employee directors in the financial year
ending November 30,2000 for duties
performed during that fiscal year was CDN $ 300,625. As of February 26, 2001, a total of 23,155 Units have been credited to
directors.



**Employment Contracts and Termination of Employment and Change-in-Control
Arrangements**

There are no clauses in the employment contracts for executives that are
materially different from those of other employees in
the Company.  Some of the items included in a standard employee contract are health benefits, fitness benefits and company
paid on-site parking; as well as non-competition and confidentiality clauses.

****

**Item 12.  Security Ownership of Certain Beneficial Owners and
Management**

The
following table sets forth, as ofFebruary 21, 2001, certain information with respect to the beneficial ownership of
Common Shares by (1) each person known by the Company to be a beneficial owner of more than 5% of its outstanding
Common Shares, (2) by each director and named executive officer and (3) by all directors and executive officers as a
group.

|****Name and Address of Beneficial Owner                    |  | **Common Shares
Beneficially
Owned** | **** | **Exercisable**

**Options**

**within 60 days** |  | ******Percentage
Owned (1)**
|----------------------------------------------------------- |  | ------------------------------------ | ---- | ------------------------------------------------ |  | ----------------------------
|                                                            |  |                                      |      |                                                  |  |                             
|Dr. Michael C.J. Cowpland(2)                                |  | 5,150,558                            |      | 1,646,176                                        |  | 9.2                         
|Lyle B. Blair                                               |  |                                      |      | 30,000                                           |  | *                           
|James C. Baillie                                            |  |                                      |      | 5,000                                            |  | *                           
|Hunter S. Grant                                             |  | 5,000                                |      | 37,852                                           |  | *                           
|Jean Louis Malouin                                          |  |                                      |      | 30,000                                           |  | *                           
|Barbara McDougall                                           |  |                                      |      | 30,000                                           |  | *                           
|Lawrence O'Brien                                            |  | 40,000                               |      | 5,000                                            |  | *                           
|John Blaine                                                 |  |                                      |      | 100,000                                          |  | *                           
|Derek Burney                                                |  |                                      |      | 247,809                                          |  | *                           
|Graham Brown                                                |  |                                      |      | 54,900                                           |  | *                           
|Steve Houck                                                 |  |                                      |      | 63,600                                           |  | *                           
|Ian Legrow                                                  |  |                                      |      | 75,888                                           |  | *                           
|Annette McCleave                                            |  |                                      |      | 62,985                                           |  | *                           
|Rene Schmidt                                                |  |                                      |      | 63,700                                           |  | *                           
|Directors and Executive Officers as a
group (13 persons)(3) |  | 5,196,458                            |      | 2,452,910                                        |  | 10.0                        

*     Indicates less than 1%

(1)       Percentage ownership is calculated using as a denominator the total
number of Common Share   outstanding plus the number of Common Shares to which the beneficial owner indicated has a right to
acquire
pursuant to options currently exercisable or exercisable within 60 days.

(2)  Dr. Michael C.J. Cowpland resigned as President, Chief Executive
Officer and Chairman of the Board of Directors
on August 15, 2000. Dr. Cowpland resigned from the Board of Directors on January 25, 2001.

(3)   The address for each
director and executive officer is Corel Corporation, 1600 Carling Avenue, Ottawa, Ontario,
Canada  K1Z 8R7.



Statements contained in the table as to securities beneficially owned by
directors, executive officers and beneficial owners of more
than 5% of the Company's outstanding Common Shares are, in each instance, based upon information obtained from such directors
and executive officers. Statements contained in the table as to securities beneficially owned by beneficial owners of holders of
5% or more of the Company's outstanding Common Shares are based on Schedules 13G or 13D filed by such persons with the
U.S. Securities and Exchange Commission.



**Item 13.  Certain
Relationships and Related Transactions**

Inapplicable pursuant to
Instruction 3 to Item 404 of Regulation S-K.

**PART IV**

**Item 14.  Exhibits,
Financial Statement Schedules, and Reports on Form 8-K**

****(a) The following documents are filed as a part of this Annual
Report on Form 10-K.



**1. Financial Statements**

**2. Financial Statement Schedule**

The following financial statement schedule and related auditors' report are
filed as part of this report herewith as Exhibits
99.1 and  99.2:

Schedule II     Valuation and Qualifying Accounts for the years ended
November 30, 2000, 1999 and 1998

All other schedules
for which provision is made in the applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

**3. Exhibits**

| | Exhibit

Number | Description                                                                                                                                                                                   
| | --------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 3.1             | Certificate and Articles of Incorporation (1)                                                                                                                                                 
| | 3.2             | By-law No. 6 (1)                                                                                                                                                                              
| | 3.3             | Certificate and Articles of Amalgamation of Corel Corporation and Corel
Computer Corp. (1)                                                                                                    
| | 3.4             | Amendment to Articles of Incorporation (2)                                                                                                                                                    
| | 4.1             | Specimen of Common Share Certificate (1)                                                                                                                                                      
| | 4.2             | Shareholder Rights Plan Agreement dated February 11, 1999, as amended and
restated as of
March 31, 1999, by and between the Company and Montreal Trust Company of Canada, as
rights agent. (3)
| | 10.1            | Corel Corporation Stock Option Plan, as amended (4)                                                                                                                                           
| | 10.2            | Corel Corporation Stock Option Plan 2000 (4)                                                                                                                                                  
| | 10.3            | Share Purchase Agreement dated September 18, 2000 by and between the Company
and
Albans Investments Limited (2)                                                                               
| | 10.4            | Registration Rights Agreement dated September 18, 2000 by and between the
Company and
Albans Investments Limited. (2)                                                                         
| | 10.5            | Escrow Agreement dated September 18, 2000 by and between the Company, Albans
Investments Limited and Epstein Becker & Green, P.C., as escrow agent. (2)                                       
| | 10.6            | Form of Share Purchase Warrant between the Company and each of Albans
Investment
Limited, Whale Securities Co., L.P., and Richard Geyser. (2)                                                 
| | 10.7            | Share Purchase Agreement dated October 2, 2000 by and between the Company and

Microsoft Corporation (5)                                                                                      
| | 10.8            | Registration Rights Agreement dated October 2, 2000 by and between the Company

and Microsoft Corporation (5)                                                                                 
| | 10.9            | Technology and Services Agreement dated October 2, 2000 by and between the
Company and
Microsoft Corporation (5)                                                                              
| | 21.1            | Subsidiaries of Registrant (2)                                                                                                                                                                
| | 23.1            | Consent of PricewaterhouseCoopers LLP Chartered Accountants
(2)                                                                                                                               
| | 99.1            | Financial Statement Schedule - Schedule II - Valuation and Qualifying Accounts
for

the years ended November 30, 2000, 1999 and 1998 (2)                                                      
| | 99.2            | Auditors' Report to the Board of Directors on Financial Statement Schedules
(2)                                                                                                               

(1) Previously filed as an exhibit to the Company's Registration Statement No.
33-50886 and incorporated herein by reference.

(2) Filed herewith

(3) Previously filed as an exhibit to the Company's Registration Statement No.
000-20562 and incorporated herein by reference

(4) Previously filed as an exhibit to the Company's Registration Statement No.
333-42790 and incorporated herein by reference

(5) Previously filed as an exhibit to the Current Report on Form 8-K dated
October 2, 2000 and incorporated herein by reference.

(b)  Reports on Form
8-K

During the three-month period ended November 30, 2000 the Company filed three
Current Reports on Form 8-K including
information requested under Item 5 and Item 7 as follows:



On September 12, 2000, the Company reported on the proposed consolidation of its
engineering operations, based in Dublin,
Ireland to its corporate headquarters in Ottawa, Canada.

On September 28, 2000, the Company reported that it had entered into a share
purchase agreement with an institutional
investor.

On October 11, 2000, the Company reported that it had entered into agreements
with Microsoft Corporation whereby
Microsoft Corporation would purchase 24 million non-voting, convertible Series A preferred shares.

****(c) Exhibits



The response to this portion of Item 14 is submitted as a separate section of
this report.

(d) Financial Statement Schedules

The response to this portion of Item 14 is submitted as a separate section of
this report.

****SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Ottawa,
Province of Ontario, Canada, on September 6, 2001.

| | COREL
CORPORATION
| | -----------------
| |                  
| | By               
| |                  
| |                  
| |                  



KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and
appoints Derek Burney and John Blaine, his or her Attorneys-in-fact, each with full power of substitution, for him or her
in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each said Attorney-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following
persons on behalf of the registrant in the capacities indicated on September 6, 2001.

|Signature              |  | Title                                          
|---------------------- |  | -----------------------------------------------
|                       |  |                                                
|*/s/ James Baillie*    |  | Chairman of the Board                          
|James Baillie          |  |                                                
|                       |  |                                                
|**/s/ Derek J. Burney  |  | President and Chief Executive Officer,
Director
|Derek J. Burney        |  |                                                
|                       |  |                                                
|/s/ Lyle B. Blair      |  | Director                                       
|Lyle B. Blair          |  |                                                
|                       |  |                                                
|/s/ Hunter S. Grant    |  | Director                                       
|Hunter S. Grant        |  |                                                
|                       |  |                                                
|/s/ Jean-Louis Malouin |  | Director                                       
|Jean-Louis Malouin     |  |                                                
|                       |  |                                                
|/s/ Barbara McDougall  |  | Director                                       
|Barbara McDougall      |  |                                                
|                       |  |                                                
|/s/ John Blaine        |  | Chief Financial Officer and                    
|John Blaine            |  | Executive Vice President, Finance              
|                       |  | (principal financial and accounting officer)   

****



******Schedule II - 1**

**Index to Exhibits**

|************Exhibit

Number | Description                                                                                                                                                                                   
|--------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3
 .1                       | Certificate and Articles of Incorporation (1)                                                                                                                                                 
|3.2                         | By-law No. 6 (1)                                                                                                                                                                              
|3.3                         | Certificate and Articles of Amalgamation of Corel Corporation and Corel Computer Corp.
(1)                                                                                                    
|3.4                         | Amendment to Articles of Incorporation (2)                                                                                                                                                    
|4.1                         | Specimen of Common Share Certificate (1)                                                                                                                                                      
|4.2                         | Shareholder Rights Plan Agreement dated February 11, 1999, as amended and restated as
of

March 31, 1999, by and between the Company and Montreal Trust Company of Canada,as
rights agent. (3)
|10.1                        | Corel Corporation Stock Option Plan, as amended (4)                                                                                                                                           
|10.2                        | Corel Corporation Stock Option Plan 2000 (4)                                                                                                                                                  
|10.3                        | Share Purchase Agreement dated September 18, 2000 by and between the Company
and

Albans Investments Limited (2)                                                                              
|10.4                        | Registration Rights Agreement dated September 18, 2000 by and between the
Company

and Albans Investments Limited. (2)                                                                        
|10.5                        | Escrow Agreement dated September 18, 2000 by and between the Company, Albans
Investments Limited and Epstein Becker & Green, P.C., as escrow agent. (2)                                       
|10.6                        | Form of Share Purchase Warrant between the Company and each of Albans Investment
Limited, Whale Securities Co., L.P., and Richard Geyser. (2)                                                 
|10.7                        | Share Purchase Agreement dated October 2, 2000 by and between the Company and

Microsoft Corporation (5)                                                                                      
|10.8                        | Registration Rights Agreement dated October 2, 2000 by and between the Company

and Microsoft Corporation (5)                                                                                 
|10.9                        | Technology and Services Agreement dated October 2, 2000 by and between the
Company

and Microsoft Corporation (5)                                                                             
|21.1                        | Subsidiaries of Registrant (2)                                                                                                                                                                
|23.1                        | Consent of PricewaterhouseCoopers LLP Chartered Accountants (2)                                                                                                                               
|99.1                        | Financial Statement Schedule - Schedule II - Valuation and Qualifying Accounts
for

the years ended November 30, 2000, 1999 and 1998 (2)                                                      
|99.2                        | Auditors' Report to the Board of Directors on Financial Statement Schedules
(2)