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

---

**FORM 10-K**

---

(MARK ONE)

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

**For the fiscal year ended November 30, 2001**

**OR**

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

**FOR THE TRANSITION PERIOD FROM ___________ TO  _____________**

**Commission file number 0-20562**

**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 15, 2002, the aggregate market value of Common Shares held by
non-affiliates of the registrant, based on the closing sales price of $1.56 of the Registrant's Common Shares
as reported on the NASDAQ National Market,
was $125,928,529. As of that date 80,723,416 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.        |                                                                                       | 
|-------------- | ------------------------------------------------------------------------------------- | 
|Item 1.        | Business                                                                              | 
|Item 2.        | Properties                                                                            | 
|Item 3.        | Legal Proceedings and Government Proceedings                                          | 
|Item 4.        | Submission of Matters to a Vote of Security Holders                                   | 
|Part II.       |                                                                                       | 
|Item 5.        | Market for the Registrant's Common Equity and Related Stockholder Matters             | 
|Item 6.        | Selected Financial Data                                                               | 
|Item 7.        | Management's Discussion and Analysis of Financial Condition and Results of Operations | 
|Item 7a.       | Quantitative and Qualitative Disclosures About Market Risk                            | 
|Item 8.        | Financial Statements and Supplementary Data                                           | 
|Item 9.        | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure  | 
|Part III.      |                                                                                       | 
|Item 10.       | Directors and Executive Officers of the Registrant                                    | 
|Item 11.       | Executive Compensation                                                                | 
|Item 12.       | Security Ownership of Certain Beneficial Owners and Management                        | 
|Item 13.       | Certain Relationships and Related Transactions                                        | 
|Part IV.       |                                                                                       | 
|Item 14.       | Exhibits, Consolidated Financial Statement Schedules and Reports on Form 8-K          | 
|Signatures     |                                                                                       | 
|Exhibits Index |                                                                                       | 

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

---

**PART I**

PART I

**Item 1.  Business**

GENERAL



Corel develops, manufactures, licenses, sells and supports a wide range of software
solutions for home and
small business users, creative professionals and enterprise customers. Corel's software is available for use on
most industry computers, including those produced by International Business Machines ("IBM") Corporation,
Apple Computer, Inc., and Linux systems. The Company plans to leverage its technology assets and experience
to enhance its relationships with existing customers, as well as target new customers in emerging markets
created by the expansion of the Web and the increasing demand for graphics-rich visual communication. Corel
also plans to develop applications for Microsoft Corporation's ("Microsoft") .NET platform as part of its
commitment to offer customers flexible services and solutions.

Corel's business strategy emphasizes the development of a broad line of software
solutions for business,
academic and personal use, marketed through multiple channels of distribution. These software solutions are
designed to provide customers with tools to create, publish and deploy content. The Company also plans to
leverage and extend its technology base using partnerships and acquisitions to develop and market solutions
that maximize customers' ability to exchange information.

Historically, the Company has been a developer and marketer of products for users
seeking content creation
software in either the Creative Products or Business Applications markets. The Creative Products group
included graphics applications designed for business, academic and home markets. The Business Applications
Products group created business productivity applications designed for those same markets. In January 2001,
the Company's new management team announced a detailed strategy designed to capitalize on its current
technology assets while laying the foundation for long-term revenue growth. Organized around three phases,
the Company's first phase was centered on capitalizing on immediate opportunities, which include current
rebranding efforts and releasing upgrades to existing products. Subsequent phases of the strategy are focused
on making strategic investments to capture new opportunities in the enterprise market - opportunities driven
by the proliferation of content and the need to more effectively create, manage and share that content within
complex business environments. While addressing immediate opportunities and investing to capture new
markets, the Company also consistently tracks trends in order to effectively address customer needs as they
evolve with the expansion of wireless technology and Web-based services.

In line with the first two phases of the January 23, 2001 strategy, on October 29, 2001,
Corel acquired
Micrografx, Inc. Micrografx developed enterprise process and graphics software, solutions and services. The
technology acquired will aid in the development of new products that enable customers to create graphics-rich
content that can be output easily and simultaneously to multiple channels, including the Web. This acquisition
also gave Corel access to a new market, Enterprise Process Management ("EPM").

On August 7, 2001, Corel and SoftQuad Software, Ltd. ("SoftQuad") announced a definitive
agreement
whereby Corel will acquire SoftQuad in a stock-for-stock transaction. SoftQuad is a developer of eXtensible
Markup Language ("XML")-enabling technologies and commerce solutions for e-Business. Technologies
acquired from this acquisition will provide the necessary technologies to develop cross-media publishing
solutions. The transaction is subject to approval of SoftQuad's shareholders at a meeting to be held March 14,
2002.

The Company continues to develop and market primarily content creation software. Over
the medium to long
term, the Company plans to leverage and extend its stable of technologies in order to deliver customized
solutions for the enterprise customer. The Company's Sales and Marketing groups have been reorganized to
more effectively address three customer profiles: home and small business, creative professionals and
enterprises. Today, the majority of the Company's revenues are generated through sales to home and small
business customers. Acquisitions are expected to play an important role in supplementing the Company's
current technology base. For example, the acquisition of Micrografx is expected to assist the Company with
its plans to grow revenues with its EPM and technical graphics solutions. The Company believes that the rapid
change in technology related to personal computers, and peripheral devices such as cell phones and portable
digital assistants, has created an opportunity for the Company. Customers are seeking solutions that will enable
them to create content and deliver it across multiple communication devices while maintaining the integrity
of the content. The Company believes that this cross-media publishing space represents the greatest potential
as the underlying technologies provide the opportunity to develop content solutions for enterprises.

The Sales group 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 ("OEM") and
enterprises. The department also focuses directly on large organizations, offering tailored licence 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.

During fiscal 2001, the Company established a new division, Strategic Relations, to
foster key relationships
with existing and potential high profile industry partners. As the Company advances its strategy to provide
enterprise content solutions, it will become increasingly important to strengthen its partnerships with content
management solution providers.

Other supporting departments are responsible for managing business operations and
overall business planning.
This includes the process of manufacturing and delivering finished goods and licences, 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
four geographic
regions. Note 14 to the Consolidated Financial Statements (see Item 8) sets forth financial information by
product group, sales channel and geographic region and is incorporated herein by reference.

|**PRODUCTS** | **Home and Small Business Applications**
|------------ | ----------------------------------------

The Company develops and markets graphics and business applications. Primary examples of
graphics
applications include illustration, photo-editing, painting, 3D rendering, and animation programs. Corel's
graphics applications are developed principally for Microsoft Windows ("Windows") and Macintosh operating
systems, and are available in English and French as well as selected other languages. All of the following
products have been developed and are available in market.

CorelDRAW Graphics Suite.CorelDRAW 10
Graphics Suite provides home and small business users with
a set of integrated graphics applications. The suite's modules features common commands, and extensive use
of object linking and embedding ("OLE") cross-application capabilities. CorelDRAW 10 Graphics Suite is
available in several versions with certain combinations of modules, supporting utilities, clipart images, fonts
and photos available for the various operating system platforms.

CorelDRAW 10 is an illustration program that allows users to produce color illustrations
incorporating both
text and objects. CorelPHOTO-PAINT 10 is a photo-editing and painting application that enables users to
apply global photo-retouching and pixel-by-pixel editing to scanned or photographic images. Corel R.A.V.E.
gives users the ability to create effects that take place over a period of time, resulting in an animation.Supporting utilities include: Microsoft Visual Basic for Applications 6.2, an
application that 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 images, stock photos and
QuickTime movies quickly and easily; Bitstream Font Navigator 4.0, which gives users a fast and easy way
to find, install and organize fonts into manageable groups, and view and print font samples; Corel TEXTURE
10, a tool for creating realistic
natural textures; CorelTRACE 10, a bitmap-to-vector conversion utility for
images and text; Corel CAPTURE 10, a tool for capturing portions of, or the entire, application window.
CorelDRAW 10 Graphics Suite also includes Adobe Acrobat Reader 4.0 and Adobe Photoshop compatible
plug-in filters, including Digimarc Digital Watermarking and Human Software Squizz!.

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



****************CorelDRAW ESSENTIALS. Like CorelDRAW Graphics Suite, CorelDRAW ESSENTIALS is a suite
that
features graphics, page layout, photo-editing and painting tools to help users create graphics projects for print
and the Web. CorelDRAW ESSENTIALS is designed for users who have moved beyond entry-level graphics
products. It is a more sophisticated solution that provides more power and creative control but is easier to learn
to use than a professional tool. It includes modified versions of CorelDRAW 9 andCorelPHOTO-PAINT 9,
as well asCanto Cumulus Desktop LE
5.0, media asset management,Corel
CAPTURE 9, a screen capture
utility,Adobe Acrobat Reader 5,QuickTime 5, Digimarc Digital Watermarking,Human Software Squizz!, and
clipart images, symbols, photos and fonts.



**WordPerfect****Family Pack**. WordPerfect Family Pack 3 is a collection of
software applications designed to
meet the home computing needs of all the members of a household. Applications in WordPerfect Family Pack
3 include Task Manager, WordPerfect 9, Quattro Pro 9, Corel Print House 5, Corel Photo House 5, Compton's
Interactive World Atlas, Mavis Beacon Teaches Typing 11, McAfee VirusScan, and Internet content filter
CYBERsitter 2000.

******Corel
VENTURA.** 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 documents to HTML, portable electronic formats, such as Envoy and Adobe Acrobat, a CD-ROM,
over an internal network or on the Internet.

**Bryce**. Bryce offers an easy way to create, explore and animate 3D
imagery for multimedia, video and the Web.

| | **Creative Professional**
| | -------------------------

The Company develops software for creative professionals who are looking for innovative,
powerful
enhancement tools that easily integrate into their professional workflow. In July 2001, the Company launched
procreate, a collection of enhancement toolsdesigned specifically to address the preferences of this target
customer. Available for both Macintosh and Windows, procreate products are optimized for Mac OS X,
leveraging the strengths of Apple's next-generation operating system.All of the
following products have been
developed and are available in market.

**KPT effects.** KPT effects,
a member of the procreate line of products, is a collection of image filters that
produce effects for print and the Web. KPT effects includes plug-in filters that extend and enhance the creative
possibilities of Adobe Photoshop and other compatible products.

**Painter 7.**Also part of the procreate line of products, Painter 7
captures the subtleties of an artist's style with
true-to-life natural-mediatools, including Watercolor, Liquid Ink, Color Reduction,
oil paints, pens and pastels,
enabling horizons ofhigh-quality output for print and the Web.

**KnockOut**. The third product offered under the procreate line, KnockOut
2 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.



| | **Enterprise**
| | --------------

****The Internet has created
new opportunities for businesses to enhance service and deliver information to
partners and customers electronically. Today, Web sites are an important source of product and service
information across many industries, and businesses rely on them to improve customer service and enhance
market reach. This change, however, has brought with it new demands: whereas at one time corporations
published predominantly in printed form only and updated publications in manageable cycles, today businesses
are expected to deliver up-to-date information almost continuously, through Web sites, through wireless
devices and in a variety of formats, as well as in printed form. This has taxed the existing print publishing
processes. In this new environment, for example, information is often re-used from one publication media to
another and across many documents. Changing it may imply revising hundreds of individual documents at
once. Tracking and executing these revisions continuously to ensure accurate information delivery on multiple
media, 24 hours a day, seven days as week, often requires new systems and processes. XML-based content
creation provides the opportunity to effectively address the demands created by the need to continuously
exchange information of varying formats across different devices. XML is a language that allows for the
exchange of data on the World Wide Web that is an emerging standard for business-to-business ("B2B") e-commerce. Content
management systems support the publishing process from authored document to final
output, controlling and tracking the flow of work and managing revisions. XML, on the other hand, facilitates
the re-use of information across documents and delivery media. XML and other open standard technologies
enable organizations to streamline, automate and manage information flow from potentially many thousands
of authors, and to manage and control the delivery of this information to many Web sites and printed
documents. Today, traditional word processors and desktop publishing tools do not produce XML content that
is suitable for cross-media publishing applications. The Company's vision is to offer solutions that not only
enable non-technical authors within enterprises to createvarious types of content,
but also to interact with and
share XML content more easily, thereby allowing enterprises to deploy XML content management solutions
more broadly within their organizations and across many delivery media.

Although the Company currently offers products for the enterprise market, its products
and infrastructure
require augmentation to address this market effectively. Targeted customers include small and medium
enterprises and large organizations that produce or edit substantial documents, with power and control as their
key requirements. Business applications are designed for use by a broad class of end users, regardless of
business, industry or market segment. Primary examples of productivity applications are word processing,
spreadsheet and presentation graphics programs. Corel's productivity software applications are currently
available on the Windows operating system, and are available in English and French. Future versions of these
offerings will be enhanced by implementing proprietary technology and technologies through acquisition,
resulting in solutions that better meet the needs of enterprise customers.

The Company intends to expand its presence in the enterprise space by also offering
future releases of technical
graphics software. With the acquisition of Micrografx, the Company can expand on its ability to offer
standards-based products and services that enable companies to leverage their valuable investments in
engineering drawings, technical illustrations, schematics and diagrams, and to optimize them for use in
innovative Web-based applications such as parts catalogues, technical documentation, shop-floor viewing, and
real-time monitoring and control systems.

Also through the acquisition of Micrografx, the Company is able to offer enterprise
customers  Enterprise
Process Management (EPM) solutions. These solutions are targeted at organizations implementing a strategy
for business process improvement, requiring tools and services to model and simulate their business processes.
These tools exist to help management supervise this key sequence of events and to assist the organization to
perform at optimal levels. All of the following products have been developed and are available in market.

Upon the completion of the acquisition of SoftQuad, the Company will become a leading
provider of solutions
software products for the creation and management of XML-based content. SoftQuad's technology forms an
integral piece of the Company's strategy to develop and market content solutions to existing and prospective
enterprise customers.

**WordPerfect Office.** WordPerfect Office 2002 is a suite of software
programs featuring seamless integration
of the most commonly used desktop applications. It combines document creation with graphics and Internet
capabilities. There are several versions of WordPerfect Office available. WordPerfect Office 2002 - Standard
Edition contains the following applications: WordPerfect 10, 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 10, an
integrated spreadsheet program with database, business graphics and Internet capabilities; Corel Presentations
10, a presentation graphics program for producing slide shows, overheads, transparencies and prints; and
CorelCENTRAL 10, Corel's personal information manager and calendar application. In addition to the
applications offered in the standard version, WordPerfect Office 2002 - Professional Edition includes Paradox
10, a powerful data management tool that delivers advanced features such as the ability to publish a database
to the Web, and the speech-recognition technology of Dragon NaturallySpeaking.

**iGrafx FlowCharter.** iGrafx FlowCharter creates powerful, interactive
diagrams of business processes,
workflow, computer networks, Web sites, and databases, among others.

**iGrafx Process Central.** iGrafx Process Central is a central repository
that integrates with iGrafx FlowCharter
to give stakeholders real-time access to all enterprise process data, and save users time developing enterprise
models by linking and re-using models whenever possible. It also provides comprehensive repository
capabilities, such as access and security control, concurrency control, versioning and configuration
management.

**Corel DESIGNER.** Corel DESIGNER is the technical graphics solution that
bridges the gap between
AutoCAD and camera-ready images, providing a graphical tool set that supports a range of file types.
Engineering departments and technical publishers can take advantage of it to create presentation-quality
graphics that can be easily utilized in office software documents, presentations, Web and Intranet pages, and
much more. With tools for image editing and 3D creation, Corel DESIGNER is a complete graphics solution
for technical illustration.

**XMetal.**Released in May 1999 by SoftQuad, XMetaL is SoftQuad's flagship
product, and is expected to
become a member of the Company's product line upon completion of the acquisition of SoftQuad in the first
half of fiscal 2002. XMetaL is a software program that enables organizations to create XML content easily and
avoid the complexities of formatting languages. As organizations continue to adopt XML, they will need to
create valid XML documents that conform precisely to the rules of a specific application. For example, product
descriptions for product catalogues, user guides for consumer products, articles, newsletters, purchase orders,
bills of material and part specifications all have particular XML rules as to their structure and syntax. XMetaL
enables non-technical individuals to create valid XML documents without having to remember and correctly
apply all these rules. XMetaL reduces training costs and enables businesses to deploy XML applications
broadly, both internally and to business partners.

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

The 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 and
new programming languages and platforms, such as XML 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 $25.3 million, $43.9 million and $40.0
million in fiscal 2001,
2000 and 1999, respectively.

|**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 toward 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: Canada, United States of America, Europe-Middle East-Africa (EMEA) and other.****

End user marketing activities cover all of Corel's products and target end users who
make individual buying
decisions for the computers they use at work or at home. These activities 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 (VARs) 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, and supporting and providing seminars, events and
sales training for channel partners. The unit also has responsibility for administering the Corel Licence
Programs (CLP) worldwide. Key products for the corporate licensing unit are graphics and productivity
software applications.

The OEM customer unit works with OEMs that pre-install or bundle Corel software on their
computers 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. 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 co-ordinated 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 co-ordinated 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 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, 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.

**Online Distribution.**Corel offers its products online through
third-party Web sites, including buy.com and
egghead.com, as well as through its own sites, which include Corel Store and ClipartCity.com. ****

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

Corel markets certain productivity, graphics and consumer software under licence
agreements with OEMs that
grant the OEMs the right to distribute copies of Corel's products with their OEM 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 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 user group participation; and (iv) direct corporate marketing
efforts. The Company has an in-house tactical and strategic marketing department which, in conjunction with
third-party agencies, is responsible for conceptualizing, producing, placing and monitoring the effectiveness
of Corel's global ad copy, packaging and promotional material. 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
14 to the Consolidated Financial Statements (see Item 8) identifies, as required, customers that represent more
than 10% of Corel's revenues.

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

Corel provides product support 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 consistency 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 a day, seven days a 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 the Knowledge Base, technical
support information and frequently asked questions and answers via its Web site (*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, 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 OEMs. In order to compete for
distribution channel space, the Company must offer compelling reasons to distribute its products at a
reasonable price and offer compatibility with competitive products. The Company must also use innovative
marketing ideas in order to compel the distributor to carry its products.

Inability to maintain distribution channel space could have a material adverse affect on
the Company's
business, results of operations and financial condition.

The marketplace is intensely competitive and rapidly changing, and the Company may not
be able to compete
successfully in the future. The software industry is highly competitive and subject to rapid technology change.
Many of the Company's 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 the Company's 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 the Company's 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.

The Company's software products targeted at the home and small business user face
substantial competition
from a wide variety of companies, including Adobe Systems Incorporated, JASC Software, Inc., Macromedia
Inc., and Microsoft. The Company's competitors in the creative professional marketplace include Adobe,
Macromedia and Apple Computer, Inc. Enterprise solutions competitors (currently primarily in the productivity
or office suite marketplace) include Microsoft, IBM (Lotus Development Corporation) and Sun Microsystems,
Inc. As the Company makes advancements into the enterprise solutions market with content creation solutions,
potential competitors include Adobe and Microsoft.

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

Corel regards certain features of its internal operations, software and
documentation as proprietary, and relies
on contract, patent, copyright, trademark, 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 licences, 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 its 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" licences 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 licences 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 15, 2002, Corel employed approximately****889****people on a full-time basis. Corel's success
depends to a significant extent upon the performance of its 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**

|                    |                          | **********Area**     | **Expiration**
|------------------- | ------------------------ | -------------------- | --------------
|**Location**        | **Purpose**              | **(in square feet)** | **year**      
|Ottawa, Canada      | Corporate head office    | 177,000              | 2015          
|Ottawa, Canada      | Training                 | 13,025               | 2002          
|Dublin, Ireland     | Administration           | 7,292                | 2025          
|Dallas, Texas       | Sales and marketing      | 13,904               | 2005          
|Portland, Oregon    | Sales and development    | 10,908               | 2006          
|Annapolis, Maryland | Sales and development    | 10,588               | 2005          
|Maidenhead, U.K.    | Sales and administration | 10,500               | 2015          
|Munich, Germany     | Sales and administration | 7,261                | 2005          

**Item 3.  Legal and Government Proceedings**

On December 15, 1999, the Company 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 conducting 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 licensed for a majority of the Department's
20,000 work stations. As a remedy, the Company sought an immediate injunction against the further
implementation of the "sole source" contract and to have it declared void. The Company also sought 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 filed a motion to have the Company's action dismissed
for lack of jurisdiction and, in the alternative, for summary judgement. The Company filed its motion for
preliminary injunction. All motions were argued on August 11, 2000, in conjunction with arguments on the
merits of the case. In the final adjudication of this case on September 17, 2001, the Court dismissed the
Company's action, stating that the Court lacked subject-matter jurisdiction over the Company's claims. The
Company does not intend to appeal this judgement.



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 U.S. 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 the Company's financial condition. The Complaint seeks an
unspecified amount of money damages. Numerous other complaints were filed thereafter, each making similar
allegations and referencing the same Class Period as the initial claims. 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, which expanded the Class Period, from December 7, 1999 to March 20, 2000
(inclusive), and contains several new allegations. The Company filed a Motion to Dismiss the Consolidated
Class Action Complaint on the grounds of Forum Non Conveniens and Failure to State a Claim, which was
dismissed by the Court on May 31, 2001. On or about July 6, 2001, the Company and co-defendant Cowpland
filed their answers to the amended Complaint, denying all liability to Plaintiffs and asserting various
affirmative defenses. The Company has deposed four lead plaintiffs.Discovery requests have
been served by
both sides. By order dated February 1, 2002, the Court granted Plaintiffs' motion for class certification, but
withheld judgement until a later date as to whether the Class Period could be expanded to March 20, 2000,
from the initial Class Period claimed. A non-binding mediation is scheduled for March 7, 2002.



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 (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 2001**    | **** | **FISCAL 2000**
|------------------------------ |  | ------------------ | ---- | ---------------
|                               |  | **High**           |      | **Low**        
|**The Toronto Stock Exchange** |  | (Canadian dollars)
|First Quarter                  |  | $     5.90         |      | $     2.32     
|Second Quarter                 |  | 4.02               |      | 3.07           
|Third Quarter                  |  | 5.98               |      | 3.50           
|Fourth Quarter                 |  | 5.01               |      | 3.00           
|**NASDAQ National Market**     |  | (US dollars)      
|First Quarter                  |  | $     3.88         |      | $     1.38     
|Second Quarter                 |  | 2.65               |      | 2.00           
|Third Quarter                  |  | 3.83               |      | 2.33           
|Fourth Quarter                 |  | 3.20               |      | 1.87           

As of February 15, 2002, there were 1,403 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 determined 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 Company 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, 2001, 2000
and 1999, and the balance sheet data as at November 30, 2001 and 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 as at November 30, 1999, 1998
and 1997 are derived from audited financial statements of Corel not included in this report. The Statement
of Operations data set forth below with respect to the fiscal years ended November 30, 1998 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**           
|---------------------------------------- | -------------------------------------
|                                         | **2001**                             
|                                         | (in thousands, except per share
data)
|**Canadian GAAP**                        |                                      
|                                         |                                      
|Revenue                                  | $134,320                             
|                                         |                                      
|Income (loss) from continuing operations | (7,324)                              
|                                         |                                      
|Income (loss) from continuing            |                                      
|operations per share (fully diluted)     | (0.10)                               
|                                         |                                      
|Cash and short-term investments          | 103,000                              
|                                         |                                      
|Working capital                          | 85,797                               
|                                         |                                      
|Total assets                             | 235,699                              
|                                         |                                      
|Novell obligations                       |                                      
|                                         |                                      
|Shareholders' equity                     | 171,623                              
|                                         |                                      

|                                         |                                       |      | Year ended November 30
|---------------------------------------- | ------------------------------------- | ---- | ----------------------
|                                         | **2001**                              | **** | **2000**              
|                                         | (in thousands, except per share
data)
|**US GAAP**                              |                                       |      |                       
|                                         |                                       |      |                       
|Revenue                                  | $134,320                              |      | $157,487              
|                                         |                                       |      |                       
|Income (loss) from continuing operations | (11,635)                              |      | (55,348)              
|                                         |                                       |      |                       
|Comprehensive income                     | (12,398)                              |      | (56,318)              
|                                         |                                       |      |                       
|Income (loss) from continuing            |                                       |      |                       
|operations per share (diluted)           | (0.16)                                |      | (0.80)                
|                                         |                                       |      |                       
|Cash and short-term investments          | 103,000                               |      | 127,430               
|                                         |                                       |      |                       
|Working capital                          | 85,704                                |      | 106,353               
|                                         |                                       |      |                       
|Total assets                             | 230,174                               |      | 219,990               
|                                         |                                       |      |                       
|Novell obligations                       |                                       |      | 10,000                
|                                         |                                       |      |                       
|Shareholders' equity                     | 167,643                               |      | 163,738               
|                                         |                                       |      |                       

See Item 8 - Financial Statements and Supplementary Data, and the Notes to the Company's Consolidated
Financial Statements, Note 15 - Significant Differences Between Canadian and United States GAAP for an
explanation of differences.

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

******Overview**

Corel develops, manufactures, licenses, sells and supports software that creates
content. It has traditionally
differentiated its products into two main types of product lines: Creative Products and Business Applications.
As these technologies evolve and the market demands change, Corel is refocusing its business to products
that create content across multiple delivery channels.

On January 23, 2001, Corel announced a
three-phase corporate strategy designed to reposition the Company
for long-term growth and profitability. The first phase focused on fiscal discipline, maintenance of current
business application's customers and growth of Creative Products lines. Fiscal 2001 proved this phase had
been successfully implemented as evidenced by the significant cost reductions. The second phase of this
strategy will focus on growth in current markets through strategic investments. The final phase will focus on
long-term growth by generating new revenue in new market segments through acquisition or internal research
and development.

In line with the first two phases of the
January 23, 2001, strategy on October 29, 2001, Corel acquired
Micrografx, Inc. (Micrografx). Micrografx developed enterprise process and graphics software, solutions and
services. The technology acquired will aid in the development of new products that enable customers to create
graphic-rich content that can be output easily and simultaneously to multiple channels, including the Web.Upon close, approximately 6.9 million common shares were issued to former Micrografx
shareholders for
a value of $16.0 million representing approximately 50% of the total consideration. The remaining
consideration was in the form of 16,038,875 participation rights, which will convert one year after closing
into $1.02 USD per participation right in cash or Corel common shares, contingent upon Corel's share price
at that time. This acquisition also gives Corel access to a new market, Enterprise Process Management (EPM).

On July 17, 2001, Corel announced the
release of the procreateproduct line,
a new line of software developed
for creative professionals--a key customer group identified in phase one of the corporate strategy.

On August 7, 2001, Corel and SoftQuad Software, Ltd. (SoftQuad) announced a definitive
agreement
whereby Corel will acquire SoftQuad in a stock-for-stock transaction. SoftQuad is a developer of
XML-enabling technologies and commerce solutions for e-Business. Technologies acquired from this
acquisition will assist in developing cross-media publishing solutions. The transaction is subject to approval
of SoftQuad's shareholders at a meeting to be held on March 14, 2002.

Management is now focused on a three-point
initiative: identifying key customer profiles, continuing to make
strategic investments to capture new markets, and developing solutions for emerging markets in order to
address the evolving needs of the Company's global customer base.

**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**

**Fiscal 2001 compared to fiscal
2000**

**Revenue**

Management believes the 14.7% decrease in revenue to $134.3 million in fiscal 2001 is
partially a result of
focusing on profitability instead of revenue. As part of the corporate strategy, there has been a move away
from the retail market and an emphasis on corporate sales. Certain non-profitable product lines were dropped
during the year. WordPerfect was not localized in as many languages as it had been in the past. This resulted
in a reduction in expenses which improved profitability while reducing revenue. 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 product's life cycle and/or the amount of inventory in the distribution
channel.

Revenue growth from new products resulting from merging technologies of the Company with
recently
acquired technology is not expected before the fourth quarter of fiscal 2002.

**Revenue by product groups**

Revenue of Creative Products remained relatively constant, showing a 2.6% decline from
fiscal 2000. During
the year, a number of new Creative Products were released: CorelDRAW ESSENTIALS, a software package
for graphics users combining the functionality of CorelDRAW 9 and Corel PHOTO-PAINT 9, Corel
GRAPHICS SUITE 10, a creative tool for the Mac environment, and the entire procreate line of products.
These releases helped maintain revenue in a competitive market during an economic downturn. New products
resulting from merging technologies of the Company with recently acquired technology are expected to result
in increased revenues by the fourth quarter of 2002.

Business applications revenue declined 25.7% as a result of a change in focus for
business applications.
WordPerfect Office 2002 was released  in the second quarter of 2001 and was not localized into as many
languages as was done historically. This resulted in decreased revenues in many foreign jurisdictions. A
decision to not reduce prices and a focus on profitable products resulted in a decline in revenues. However,
expenses declined in greater proportion than the decline in revenues. The global economic downturn
experienced in 2001 also negatively affected business application revenues.

Other product lines revenue declined 34.1% as Corel Linux OS was exclusively licensed
for distribution to
a third party in August 2001, resulting in obsolescence of the product line. Growth of other product revenue
is expected in fiscal 2002 as Corel develops the newly acquired Enterprise Process Management product line.

****Revenue by sales
channels**

Retail product revenue was down 2.8% from fiscal 2001 as a result of the general
downturn in the economy.
As Corel refocuses its direction and moves more to direct corporate sales, revenues from the retail channel
are expected to decline as a percentage of overall revenues.

OEM revenue declined 34.9% from 2000 levels as a result of the change in Corel's focus
and the general
economic downturn. As Corel's product mix changes, product offerings for OEM become limited. OEM
offers high volume, low cost products, a market Corel is moving away from with WordPerfect Office 2002
not being offered as an OEM product. With the downturn in the economy, OEM partners have looked to ways
of cutting costs of products, resulting in a decrease in demand for products by OEMs.

Corporate licence revenue was down 24.7% as a result of corporations increasing the
length of their upgrade
cycles and thereby not upgrading their licences to the current version of WordPerfect. Also, increased
competition in the legal and government market negatively affected corporate licensing sales.

As a result of Corel's growth strategy focusing on corporate customers, Corel expects to
increase the number
of direct sales made to corporate customers in fiscal 2002. New product lines will not be as heavily reliant
on the retail channel as previous product lines. Consequently, Corel's channel mix is expected to shift from
retail to corporate/direct sales in the coming year.

**Revenue by region**

The regional revenue mix did not change significantly in fiscal 2001 from fiscal 2000.
North American
revenue declined in proportion to the general decline in revenue as a result of the general decline in the
economic environment.

Europe, Middle East and Africa (EMEA) revenue was down 16.8% as a result of Corel not
localizing as many
of its products as it had in the past. Revenue in EMEA is expected to increase in fiscal 2002 as a result of a
significant increase in Corel's operating infrastructure in EMEA.



Revenue in the rest of the world was down 18.6% due primarily to Corel changing its
product strategies and
not offering WordPerfect Office 2002 to the OEM market. This decline also resulted from not localizing
WordPerfect Office 2002 into as many languages as was done historically.

******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 have 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.

Gross profit as a percentage of revenue increased 10.6% as a result of improved
inventory management and
purchasing techniques. These process changes, such as building to requirements instead of building to sales
forecast, resulted in fewer charges to cost of sales for obsolete products. The improved cost of sales can also
be attributed to a significant reduction in the amount of inventory on hand as well as in the distribution
channel.



With continued inventory management and the new corporate strategy, gross profit as a
percentage of revenue
is expected to improve slightly in fiscal 2002.

**Advertising expenses**

Advertising expenses, which include all marketing, advertising and trade show expenses,
decreased by 33.6%
as a result of the cost reduction plan implemented in fiscal 2000. During fiscal 2001, Corel used a more
focused marketing strategy, resulting in advertising dollars being spent in areas that would provide the best
benefit for the cost. Corel also reduced the number of trade shows it attended which further reduced
advertising expenses.

As Corel rebrands itself and its products, advertising expenses are expected to increase
significantly in fiscal
2002.

**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 declined $23.8 million (27.8%) as a result of the cost-cutting plan implemented in
the first half of fiscal 2000. This decrease was partly offset by increases of approximately $4.0 million in
consulting fees that resulted from development of the corporate strategy. Additional non-recurring charges
of approximately $1.5 million that occurred from the restructuring of the Company further offset the reduction
in selling, general and administration expenses.

**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.

Research and development expenses declined $18.6 million (42.4%) as a result of the
cost-cutting plan
implemented in the first half of fiscal 2000. One of the major cost-cutting measures that resulted was that
WordPerfect Office 2002 was not localized into as many languages as were earlier versions.

**Depreciation and amortization expenses**

Depreciation and amortization decreased $1.8 million (24.2%) as a result of the
cost-cutting plan implemented
in the first half of fiscal 2000. There was a decrease in capital asset additions of $11.7 million, excluding the
acquisition of Micrografx capital assets.

**Interest revenue/expense**

Interest revenue consisted primarily of interest earned from the investing of the
Company's funds (cash and
cash equivalents, restricted cash and short-term investments) resulting from Microsoft's investment in the
Company in October 2000. Interest expense in fiscal 2000 related to Novell obligations for the acquisition
of the WordPerfect technology from Novell, Inc. The obligation was repaid during fiscal 2001.

**Income taxes**

Corel operates in a number of different countries and consequently, its tax rates are
affected by the
profitability of its operations in those countries. In fiscal 2001, Corel recorded a tax expense of $4.0 million
on a pretax loss of $2.8 million. The tax expense primarily related to withholding tax on income from foreign
jurisdictions and income tax from prior year reassessments.

******Fiscal 2000
compared to fiscal 1999**

**Revenue**

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 and CorelDRAW, 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 product's life cycle and/or the amount of inventory in the distribution channel.

**Revenue by product groups**

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. Creative products revenues were 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 Corel GRAPHICS SUITE 10 for
Macintosh. Included in creative products revenues for fiscal 1999 is $24.0 million of revenue relating to
consumer applications products. 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.

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. **

**Revenue by sales channels**

Corel distributes its products primarily through distributors (as retail packaged
products), OEM licences and
corporate licences.

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 was primarily due to 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 cycles.

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.

Corporate licences declined 21% from $75.9 million in fiscal 1999 to $59.8 million in
fiscal 2000. This
decrease was primarily due to not having released new versions of WordPerfect during the year.

**Revenue by region**

Sales in North America declined 38% from $155.8 million in fiscal 1999 to $96.5 million
in fiscal 2000. This
was primarily due to products reaching the end of their life cycles and the aforementioned change in
distributors' buying patterns. A general decline in the retail market in North America also contributed to
slower sales.

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.

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 US 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 have 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 cycles or as decisions are made to no longer
actively market products,
inventory then held (consisting of finished goods and raw materials associated with those products) may be
in excess of estimated future sales of 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 such
inventory was obsolete and consequently 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.

**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.

**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.

**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 increased by $3.8 million (10%)
to $43.9 million
from $40.0 million primarily as a result of the cost reduction plan implemented in June 2000. Netted against
gross research and development expenses were $0.5 million and $8.9 million of Canadian investment tax
credits in fiscal 2000 and fiscal 1999, respectively. Fiscal 1999 includes investment tax credits of $8.9 million
related to the 1997 through 1999 taxation years that were recognized for accounting purposes as a result of
an audit by the Canada Customs and Revenue Agency being completed during the year.

**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 a result of significant
purchases of computer equipment made in the fourth quarter of fiscal 1999 having a full year of amortization.

**Interest expense**

In fiscal 2000, interest on investments was offset against a $3.0 million accrual for
interest charges relating
to proposed reassessments of prior year tax returns and interest expense on Novell obligations for the
acquisition of the WordPerfect technology from Novell, Inc. resulting in net interest expense of $1.3 million
compared to a $0.2 million expense in fiscal 1999.

**Income taxes**

Corel operates in a number of different countries and its tax rates are affected by the
profitability of its
business in those countries. In fiscal 2000, Corel recorded a tax expense of $4.7 million on a pretax loss of
$47.8, primarily due to foreign tax rate differences associated with Corel's international operations and non-recognition of
losses. In fiscal 1999, Corel booked a tax recovery of $3.9 million on pretax income of $13.2
million, primarily as a result of recognizing the benefit of previously unbooked losses carried forward.

**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 hiring, 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 $40.0 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 payments,
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, 2001, Corel's principal sources of liquidity included cash and cash
equivalents, and
short-term investments of $103.0 million ($127.4 million in 2000), and trade accounts receivable of $18.7
million ($28.6 million in 2000). Included in cash, cash equivalents, and short-term investments as of
November 30, 2001 and November 30, 2000, were corporate debt amounts of $15.0 million and $110.0
million, respectively. At November 30, 2001, $19.4  million of cash was restricted in use as it was held as
security against certain corporate financial obligations, including $16.3 million held in trust as a requirement
of the participation rights issued in the acquisition of Micrografx.

Cash provided by operations was $15.1 million for fiscal 2001 compared to cash used in
operations of $30.0
million for fiscal 2000. The increase of $45.1 million was primarily due to the Company's significant expense
reductions in fiscal 2001, which reduced the loss for the year from $55.3 million in 2000 to $7.3 million  in
2001.

Trade accounts receivable, net of provisions, decreased from the November 30, 2000
balance of $28.6 million
to $18.7 million. The reduction was partly a result of the decrease in sales volume from 2000 to 2001. The
balance of the reduction resulted from improved collection of receivables.

Accounts payable and accrued liabilities were $27.9 million at November 30, 2001
compared to $28.4 million
at November 30, 2000. Ongoing reductions in accounts payable and accrued liabilities from Corel's cost
reduction initiatives throughout fiscal 2001 were offset at the end of the year by Corel's assumption of
liabilities in the acquisition of Micrografx, Inc.

Financing activities used $9.7 million in 2001 compared to providing $146.4 million in
fiscal 2000. The main
reason for the difference between 2001 and 2000 was the proceeds from various share and warrant issuances
in fiscal 2000. During 2000, the issuance of common shares and common share purchase warrants resulted
in net proceeds of $22.3 million, compared to $0.3 million in fiscal 2001. In addition, in fiscal 2000, the
issuance of preferred shares to Microsoft Corporation provided $130.7 million to the Company. The
significant use of cash in 2001 was $10.0 million, used to repay the Novell debt ($6.6 million in 2000).
Repayment of Novell obligations was based on an agreement reached by Corel with Novell in fiscal 2000
whereby the balance due was fixed and was repaid in three equal payments of $5.0 million.

****Investing activities used $107.9 million in
fiscal 2001 compared to $7.0 million in fiscal 2000. In
fiscal 2000, the primary source of cash from investing activities was proceeds from sales of shares
of GraphOn Corporation ("GraphOn") of  $14.6 million. The most significant uses of cash in fiscal
2001 was Corel's investment of $78.1 million in short-term investments and$16.3 million of
funds
placed in trust to satisfy the requirements of the participation rights issued as part of the acquisition
of Micrografx. Corel's investment in capital assets decreased from
$19.5 million in fiscal 2000 to
$7.8 million in fiscal 2001 reflecting Corel's cost reduction initiatives. ****

****

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. The Company had not issued any shares under this agreement as of November 30,
2001.

At November 30, 2001, Corel's capital resource commitments consisted primarily of lease
arrangements for
office space. As part of the terms of the Micrografx acquisition, $16.3 million has been escrowed until
October 2002 to meet potential obligations associated with the participation rights. No significant
commitments exist for future capital expenditures. Corel believes available balances of cash and cash
equivalents and short-term investments are sufficient to meet its working capital requirements for the
foreseeable future.

******New accounting
pronouncements**

In fiscal 1998, the FASB issued SFAS No.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 was the fiscal year beginning December 1, 2000 for the Company. The adoption of this
pronouncement has not had an impact on its results of operations or financial position.

During the year, the Canadian Institute of Chartered Accountants ("CICA") issued CICA
1581- "Business
Combinations" ("CICA 1581") and FASB issued SFAS No. 141, "Business Combinations" ("SFAS 141").
These standards are effective for all business combinations initiated after June 30, 2001, and require that the
purchase method of accounting be used for all business combinations initiated after that date. Corel applied
CICA 1581 and SFAS 141 to the Micrografx acquisition and will apply these pronouncements to future
acquisitions.

During the year, the CICA issued CICA 3062 - "Goodwill and Other Intangible Assets"
("CICA 3062") and
FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). These standards are
effective for fiscal years beginning after December 15, 2001, which is the fiscal year beginning December 1,
2002 for the Company, but applied immediately to any business combinations consummated after June 30, 2001.
CICA 3062 and SFAS 142 require that goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized, including goodwill recorded in past business combinations, but will be subject to annual
impairment tests in accordance with the new guidelines. Other tangible assets will continue to be amortized over
their useful lives. The Company believes that the adoption of these pronouncements will have a material effect
on its results of operations and financial position.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived
Assets" ("SFAS 144"). This Statement addresses financial accounting and reporting for the
impairment or
disposal of long-lived assets. The provisions of this Statement are effective for financial statements issued for
fiscal years beginning after December 15, 2001, which is the fiscal year beginning December 1, 2002 for the
Company. The Company has not assessed the impact that the adoption of this standard will have on its results
of operations or financial position.

In December 2001, the CICA issued AcG 13 - "Hedging Relationships" ("AcG 13"). The guideline
presents the
views of the Canadian Accounting Standards Board on the identification, designation, documentation and
effectiveness of hedging relationships, for the purpose of applying hedge accounting.  The guideline is effective
for all fiscal years beginning on or after January 1, 2002, which is the fiscal year beginning December 1, 2002 for
the Company. The Company does not believe that the adoption of this guideline will have a material impact on
its results of operations or financial position, as it does not apply hedge accounting.

In January 2002, the CICA amended CICA 1650 - "Foreign Currency Translation" ("CICA 1650"). The
amended
standard eliminates the requirement to defer and amortize exchange gains and losses related to a foreign currency
denominated monetary items with a fixed or ascertainable life extending beyond the end of the following fiscal
year and require new disclosure surrounding foreign exchange gains and losses. The standard is effective for all
fiscal years beginning on or after January 1, 2002, which is the fiscal year beginning December 1, 2002 for the
Company. The Company has not assessed the impact that the adoption of this standard will have on its results of
operations or financial position.

In January 2002, the CICA issued CICA 3870 - "Stock-Based Compensation and Other Stock-Based
Payments"
("CICA 3870"). This section establishes standards for the recognition, measurement and disclosure of stock-based
compensation and other stock-based payments made in exchange for goods and services.  This section sets out
a fair value based method of accounting and is required for certain, but not all, stock-based transactions.  The
recommendations of this section should be adopted for fiscal years beginning on or after January 1, 2002, which
is the fiscal year beginning December 1, 2002 for the Company, and applied to awards granted on or after the date
of adoption. The Company has not assessed the impact that the adoption of this standard will have on its results
of operations or financial position.

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

**Interest rate risk**

Corel's exposure to market risk for changes in interest rates relates primarily to its investment
portfolio of cash
equivalents and short-term investments. The primary objective of the Company with respect to investments is
security of principal. Investment criteria include selecting securities having an acceptable credit rating and
diversifying both issuers and terms to maturity, which in no case exceed one year. Short-term investments include
only those securities with active secondary or resale markets to ensure portfolio liquidity. Sustained low general
interest rates, particularly in the United States, could significantly reduce Corel's interest income. Corel does not
use derivative financial instruments in its investment portfolio.



At November 30, 2001, interest rates on the Company's investments ranged from 1.98% to 3.97% per
annum
(average rate approximately 3.4% per annum) with all investments maturing by the end of June 2002. The
Company's cash, cash equivalents and short-term investments are denominated predominately in US dollars.



**Foreign currency risk**

Corel conducts business worldwide. Revenues and expenses are generated primarily in US dollars,
but the
Company does operate in foreign currencies, primarily in Canada and Europe and, to a lesser extent, in Australia,
Latin America, Japan and other Asian countries. As the Company's business expands, its exposure to foreign
currency risk will increase. Corel continues to monitor its foreign currency exposure to minimize the impact on
its business operations. Corel has mitigated, and expects to continue to mitigate, a portion of its currency exposure
through decentralized sales, marketing and support operations in which most costs are local currency based. As
of November 30, 2001, Corel had no foreign currency hedges outstanding.

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

**Corel Corporation**

**Index to Consolidated Financial Statements**

1: Management's Report

2: Auditors' Report

Consolidated Financial Statements:

3: Consolidated Balance Sheets at November 30, 2001 and 2000

4: Consolidated Statements of Operations for the years ended

November 30, 2001, 2000 and 1999

5: Consolidated Statements of Shareholders' Equity for the years ended

November 30, 2001, 2000 and 1999

6: Consolidated Statements of Cash Flows for the years ended

November 30, 2001, 2000 and 1999

7: Notes 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 15. 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**Chief Financial Officer and Treasurer*
Auditors' Report to the Shareholders

**We have audited
the consolidated balance sheets of Corel Corporation as at November 30, 2001 and November
30, 2000 and the related consolidated statements of operations, shareholders' equity
and cash flows for the years
ended November 30, 2001, 2000 and 1999. 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, 2001 and November 30, 2000, and the
results of its operations
and its cash flows for the years ended November 30, 2001, 2000 and 1999 in accordance with generally
accepted accounting principles in Canada.






PricewaterhouseCoopers LLP
Ottawa, Canada*Chartered Accountants*
January 25, 2002,except for Note 13.B dated as ofFebruary 6, 2002




Consolidated Balance Sheets

(in thousands of US$)

As at November 302001
2000**Assets**Current
assets:Cash and Cash
equivalents
$  24,924
$  127,430Restricted cash
19,367
1,136Short-term investments
78,076Accounts receivableTrade
18,689
28,620Other
1,272
773Inventory
799
3,117Future tax asset

479Prepaid expenses
1,779
1,050Total current assets
144,906
162,605Investments
9,886
11,996Future tax asset

965Deferred financing charges
250
550Capital assets
43,123
42,471Goodwill
37,534Total assets
$  235,699
$  218,587**Liabilities and shareholders' equity**Current
liabilities:Accounts payable
and accrued liabilities
$  27,862
$  28,441Participation rights obligation
16,338Current portion of Novell obligations

10,000Income taxes payable
4,749
6,595Deferred revenue
10,160
10,907Total current liabilities
59,109
55,943Future income tax liabilities
4,967Total Liabilities
$  64,076
$  55,943**Commitments and contingencies****Shareholders' equity**Share capitalPreferred shares:
Series A (2001 - 24,000; 2000 - 24,000)Common shares
(2001 - 80709; 2000 - 73,641)
$  388,193
$  371,890Contributed surplus
4,990
4,990Deficit
(221,560)
(214,236)Total shareholders' equity
171,623
162,644Total liabilities and shareholders' equity
$  235,699
$  218,587(See accompanying Notes to Consolidated Financial
Statements.)

On behalf of the Board

James Baillie
Jean-Louis Malouin*Director*
*Director***
Consolidated Statements of Operations

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

For the year
ended November 30,2001
2000
1999Revenue
134,320
157,487
243,051Cost of sales
25,927
47,025
59,516Gross Profit
108,393
110,462
183,535Expenses:Advertising
22,091
33,258
47,964Selling, general and administrative
61,828
85,662
82,229Research and development
25,251
43,867
40,049Depreciation and amortization
5,577
7,354
6,443Settlement proceeds
(409)

(6,342)Loss (gain) on foreign exchange
(71)
1,371
(246)114,267
171,512
170,097Income (loss) from operations
(5,874)
(61,050)
13,438Gain (loss) on investments
(2,359)
14,585Interest revenue (expense)
5,420
(1,305)
(190)Income (loss) before the undernoted
(2,813)
(47,770)
13,248Less:Income tax expense (recovery)
4,039
4,705
(3,946)Share of loss of equity investments
472
2,873
478Net Income (loss)
(7,324)
(55,348)
16,716**Income (loss) per
share**Basic
$  (0.10)
$  (0.80)
$  0.27Diluted
$  (0.10)
$  (0.80)
$  0.27Weighted average number of common shares
outstanding
(000's)Basic
74,325
69,498
62,194Diluted
74,325
69,498
63,042(See accompanying Notes to Consolidated Financial
Statements.)

**Consolidated Statements of Shareholders'****Equity******

(in thousands of US$ except share data)

******Number of shares
(000s)******
******Share
capital**
******Contributed**

**surplus**
******Deficit**
**Total**

**shareholders'**

**equity******
**Common**
**Preferred**Balance at November 30, 1998
59,478

$203,088
$1,099
$(175,604)
$28,583Issuance of common shares
  pursuant to stock options
5,054

12,767


12,767Issuance of common shares

for acquisitions
1,000

6,300


6,300Net income




16,716
16,716Balance at November 30, 1999
65,532

222,155
1,099
(158,888)
64,366Issuance of common shares
   pursuant to stock options
798

3,390


3,390Issuance of common shares and
   warrants for cash
7,299

15,630
3,291

18,921Issuance of common shares
  pursuant to warrants
12

36


36Issuance of preferred shares for
   cash

24,000
130,679


130,679Issuance of warrants for services



600

600Net loss




(55,348)
(55,348)Balance at November 30, 2000
73,641
24,000
371,890
4,990
(214,236)
162,644Issuance of common shares
   pursuant to stock options
174

265


265Issuance of common shares for
    acquisition
6,894

16,038


16,038Net loss




(7,324)
(7,324)Balance at November 30, 2001
80,709
24,000
$388,193
$4,990
$(221,560)
$171,623

(See accompanying Notes to Consolidated Financial
Statements.)

******Consolidated Statements of Cash Flows**************

(in thousands of US$)

|                                                     | Year Ended November 30
|---------------------------------------------------- | ----------------------
|                                                     | 2001                  
|Operating activities:                                |                       
|Net income (loss)                                    | $     (7,324)         
|Items which do not involve cash or cash equivalents: |                       
|Depreciation and
amortization                        | 16,347                
|Bad Debt expense                                     | 3,197                 
|Write down of assets                                 |                       
|Future income taxes                                  | 1,444                 
|Loss (gain) on investments                           | 2,359                 
|Gain on disposal of assets                           | (306)                 
|Share of loss of equity investments                  | 472                   
|Changes in operating assets and liabilities:         |                       
|Restricted cash                                      | (1,893)               
|Accounts receivable                                  | 10,277                
|Inventory                                            | 2,836                 
|Income taxes recoverable                             |                       
|Prepaid expenses                                     | 430                   
|Accounts payable and accrued liabilities             | (9,897)               
|Income taxes payable                                 | (2,051)               
|Deferred revenue                                     | (747)                 
|Net cash provided by (used in) operating activities  | 15,144                
|                                                     |                       
|Financing
activities:                                |                       
|Issuance of common shares                            | 265                   
|Issuance of preferred shares                         |                       
|Issuance of warrants                                 |                       
|Reduction of Novell obligations                      | (10,000)              
|Net cash provided by (used in) financing activities  | (9,735)               
|                                                     |                       
|Investing
activities:                                |                       
|Proceeds on sale of
investments                      |                       
|Purchase of investments                              | (909)                 
|Purchase of short-term investments                   | (78,076)              
|Purchase of capital assets                           | (7,817)               
|Cash restricted for participation rights obligation  | (16,338)              
|Proceeds on disposal of assets                       | 818                   
|Acquisition of Micrografx, Inc.                      | (5,593)               
|Net cash used in investing activities                | (107,915)             
|                                                     |                       
|Increase
(decrease) in cash and cash equivalents     | (102,506)             
|Cash and cash equivalents at beginning of year       | 127,430               
|Cash and cash equivalents at end of year             | $     24,924          
|                                                     |                       
|**Supplemental non-cash information:**               |                       
|Purchase of Micrografx, Inc.                         | $     32,376          
|Investment in Hemera Technologies, Inc.              |                       
|Purchase of MetaCreations assets                     |                       
|Purchase of Rebel.com                                |                       

(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 15.

**Nature of operations**

Corel develops, manufactures, licenses, sells and supports a wide range of software
solutions for home and small business users,
creative professionals and enterprise customers. 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
systems.

******Basis of
consolidation**

The consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries.****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 November
30, 2000 and prior 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 sales returns and bad debts, the length of product cycles and related capital asset lives. Actual results may
differ from these estimates.

**Software revenue recognition**

The Company recognizes revenue from packaged software and licence 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 establishes provisions 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 licence fee, the entire licence 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 licence agreement since the Company does not have vendor specific
objective evidence of fair market value of this PCS. Revenue from professional services and other services are recognized as
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. ****

****

Cash equivalents typically consist of commercial paper, term deposits and banker's
acceptances issued by major North American
banks, and corporate debt. Cash and cash equivalents are carried at cost, which approximates their fair value.

**Short-term investments**

Short-term investments are investments that are generally held to maturity and have
terms greater than three months at the time
of acquisition. Short-term investments typically consist of commercial paper, Government of Canada Treasury Bills, and
banker's acceptances. Short-term investments are carried at cost plus accrued interest, which approximates their fair
value.

**Restricted cash**

The Company maintains restricted cash in investments with major financial institutions
as security against certain corporate
financial obligations.****

**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 | 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.

**Goodwill**

Goodwill represents the excess of the purchase price of acquired companies over the
estimated fair value of the tangible and
intangible net assets acquired. Goodwill is not amortized. The Company evaluates the expected future net cash flows of the
acquired businesses periodically, and adjusts goodwill for any impairment.

**Income taxes**

The Company accounts for income taxes under the asset and liability method. 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. Monetary assets and liabilities denominated in foreign currencies, other than the functional currency, are
remeasured at the closing period-end rates of exchange. The gains or losses resulting from the remeasurement of these
amounts have been reflected in earnings in the respective periods. Non-monetary items and any related amortization of such
items are measured 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 rates prevailing during the respective periods.

**Investment tax credits**

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

******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. Inventory**



|                   | **As at November 30**
|------------------ | ---------------------
|                   | **2001**             
|                   |                      
|Product components | $  359.00            
|Finished Goods     | 440.00               
|                   | $     799.00         

******3.
Investments**

|                                                            |                                      |       | **As at November 30**
|----------------------------------------------------------- | ------------------------------------ | ----- | ---------------------
|                                                            |                                      |       | **2001**             
|Equity investments                                          |                                      |       |                      
|                                                            | Hemera Technologies,
Inc.            |       |                      
|                                                            | LinuxForce, Inc.                     |       |                      
|                                                            | Rebel.com, Inc.                      |       |                      
|                                                            | Alchemy Software Development Limited |       |                      
|                                                            |                                      |       |                      
|                                                            |                                      |       |                      
|Investments recorded at cost, including GraphOn
Corporation | 388                                  | 2,026
|                                                            |                                      |       |                      

******Hemera Technologies, Inc.**

On July 17, 2000, the Company purchased a 23% interest in Hemera
Technologies, Inc. ("Hemera"), a privately held
company. As consideration for these shares, the Company transferred its GraphicCorp division and related assets to
Hemera. 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. During
fiscal 2001, Hemera received additional financing which resulted in the Company's interest in Hemera being diluted to
21%. The Company's share of Hemera's operating results was nominal in fiscal 2001 and 2000.****

**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. The
Company's share of LinuxForce, Inc.'s operating results was nominal in fiscal 2000 and 2001.****

**Rebel.com, Inc.**

In fiscal 2000, the Company's share of Rebel.com, Inc.'s net loss was $1.2
million, which was deducted from the carrying
value of the investment, which reduced the investment in Rebel.com, Inc. to nil. Due to the magnitude of the losses, the
remaining goodwill on the investment was written down to nil in fiscal 2000. On July 12, 2001, KPMG Inc. was named
court-appointed receiver and manager of Rebel.com, Inc. and was subsequently appointed as trustee in bankruptcy of
Rebel.com, Inc. on November 5, 2001. The receiver is liquidating the assets of Rebel.com, Inc. The Company does not
expect to receive any amount from the liquidation.

******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 Corel 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. The Company's share of Alchemy Software Development Limited's operating results was nominal in fiscal
2001 and 2000.

******Investments recorded at cost**

On December 31, 1998, the Company sold its jBridge technology to GraphOn
Corporation (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, 2001, had a market value of $0.68 per
share for an aggregate fair value of $0.8 million. The Company has accounted for the cost of this investment under the first-in,
first-out method.

Other investments recorded at lesser of cost or net realizable value,
totaled nil and $1.6 million at November 30, 2001 and
2000, respectively. During 2001, the Company acquired additional cost investments. The total write-down to net realizable
value during 2001 resulted in a $2.4 million charge to income.

****

**4.   Capital Assets**

****

|                                                 | **November 30, 2001** | **November 30, 2000**       
|------------------------------------------------ | --------------------- | ----------------------------
|                                                 | **Cost**              | **Accumulated
Amortization**
|Furniture and equipment                          | $  13,267             | $  10,431                   
|Computer equipment                               | 86,275                | 78,830                      
|Research and development equipment               | 12,389                | 10,523                      
|Leasehold improvements                           | 2,888                 | 2,608                       
|Licenses, purchased software, deferred
royalties | 54,815                | 24,119                      
|                                                 | 169,634               | $  126,511                  
|Less: Accumulated amortization                   | 126,511               |                             
|Net book value                                   | $  43,123             |                             

**5.       Accounts Payable and Accrued Liabilities**

|                       | As at November 30
|---------------------- | -----------------
|                       | 2001             
|Trade accounts payable | $  18,416        
|Accrued payroll        | 4,900            
|Accrued liabilities    | 2,543            
|MetaCreations payable  |                  
|Microsoft accrual      | 2,003            
|                       | $     27,862     
|                       |                  
|                       |                  

**Microsoft accrual**

On October 2, 2000, concurrent with the issuance of Series A preferred
shares, the Company entered into a technology
support and settlement agreement with Microsoft Corporation ("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. On May 17, 2001, the Company
received written notice from Microsoft of its exercise of the option. 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 $3.0 million, the
remainder of the liability will be recorded as an increase in contributed surplus. As of November 30, 2001, the Company
had applied approximately $1.0 million in costs against this obligation.

**6.     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 in three equal payments of $5.0 million made on October 31, 2000,
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 three years, being the estimated remaining useful life of the underlying products, or at 2% of net revenues,
whichever is greater.

******7.
 Commitments****and Contingencies**

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 $5,313, $7,654 and
$7,169 during the years ended November 30, 2001, 2000 and 1999, respectively. At November 30, 2001, the minimum
commitments under long-term agreements, are as follows:

|2002                | $  4,898    
|------------------- | ------------
|2003                | 4,235       
|2004                | 4,220       
|2005                | 4,042       
|2006                | 3,499       
|2007 and thereafter | 38,530      
|                    | $     59,424

****

The Company is 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.

**8.    Financial Instruments**

**Concentration of credit risk**

The primary objective of the Company with respect to short-term
investments is security of principal. The Company
manages its investment credit risk through a combination of the (i) selection of securities with an acceptable credit
rating; (ii) selection of term to maturity, which in no event exceeds one year in length; and (iii) diversification of debt
issuers.

Included in cash, cash equivalents and short-term investments as of
November 30, 2001 and November 30, 2000 were
corporate debt amounts of $15.0 million and $110.0 million, respectively. These amounts were repaid, in full, at maturity
in January 2002 and December 2001, respectively. All of the Company's short-term investments as at November 30,
2001 had maturity dates of less than two months from year end.  The Company's cash, cash equivalents and short-term
investments are denominated predominantly in US dollars.

Included in the restricted cash balance as at November 30, 2001 is $16.3
million invested with a major US financial
institution. This investment relates to the participation rights obligation arising from the acquisition of Micrografx, Inc.
(see Note 13).

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 $13.0 million (67.8%) and $10.4 million (36.5%) of accounts receivable at
November 30, 2001 and November 30, 2000, respectively.

**Fair value of financial instruments**

The carrying amounts for cash and cash equivalents, restricted cash,
short-term investments, accounts receivable,
accounts payable, accrued liabilities and the participation rights obligation approximate fair value due to the short
maturity of these instruments, unless otherwise noted.

******9.  Share Capital**

**Common shares**

There are an unlimited number of common shares authorized. 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 were exercisable until June 27, 2001 at a price of CDN $4.56.  During fiscal 2000,
11,659 warrants were exercised for gross proceeds of CDN$53,165. The remaining warrants expired June 27, 2001.



On October 30, 2001, the Company completed the acquisition of Micrografx,
Inc. ("Micrografx"). The aggregate
purchase price paid was approximately $33.8 million consisting of 6,894,250 common shares valued at $16.0 million
and participation rights valued at $16.3 million (see Note 13).

**Series A preferred
shares**

There are an unlimited number of Series A preferred shares authorized. 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). Series A preferred shares are convertible into one common share but not
in the hands of Microsoft or its affiliates. As part of the share purchase agreement on October 2, 2001, the Company
filed 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 the $5.625 per
share purchase price plus all accrued and
unpaid dividends, and the amount per share that could be distributed to common shareholders, assuming the conversion
of the preferred shares, shall be distributed to the holders of the preferred shares. If such payment is made, Series A
preferred shareholders will have no further claim on assets.

**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, 2001, 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. As at November 30,
2001, 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, 2001, there were approximately 13.9 million and 7.0 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 1999, 2000 and 2001 is as follows:



| | ******Number of shares
(000s)** | **Price per share
(CDN$)**
| | ------------------------------- | --------------------------
| | **Range**                       | **Weighted
average**      

|                                 |         |                    |      
|-------------------------------- | ------- | ------------------ | -----
|Outstanding at
November 30, 1998 | 8,281   | $2.10   - $22.38   | $8.65
|Granted                          | 3,022   | 3.37    -   11.70  | 3.41 
|Exercised                        | (5,054) | 2.10    -   13.50  | 4.03 
|Forfeited                        | (1,883) | 2.10    -   13.50  | 7.06 
|Expired                          | (1,313) | 2.10    -   22.38  | 10.25
|Outstanding at November 30, 1999 | 3,053   | 2.10    -   13.50  | 5.03 
|Granted                          | 3,869   | 5.35    -   29.90  | 14.49
|Exercised                        | (798)   | 2.06   -   13.50   | 4.08 
|Forfeited                        | (1,115) | 2.10    -   15.25  | 14.44
|Expired                          | (591)   | 7.70    -   13.50  | 7.88 
|Outstanding at November 30, 2000 | 4,418   | 3.00    -   29.90  | 10.65
|Granted                          | 2,840   | 3.30    -     4.80 | 4.22 
|Exercised                        | (174)   | 3.00    -     4.80 | 3.26 
|Forfeited                        | (2,198) | 3.00   -   29.90   | 7.81 
|Expired                          | (364)   | 4.00   -     7.70  | 7.58 
|Outstanding at November 30, 2001 | 4,522   | $3.00   - $15.25   | $4.97

For various price ranges (in
CDN$), weighted average characteristics of outstanding stock options at November 30,
2001 were as follows:

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

**(years)**
|$ 3.00-$
5.00                    | 2,894             | 3.4                            
|5.01-8.00                        | 1,228             | 2.3                            
|8.01-
15.25                      | 400               | 2.8                            
|Outstanding at November 30, 2001 | 4,522             | 3.06                           



The outstanding options expire between April 15, 2002 and November 7,
2005.

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 remained vested, one third vested 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), required shareholder approval, which was obtained. Non-employee directors'
options were excluded from the repricings. At November 30, 2001, 1,544,500 options had been tendered for repricing to
CDN $5.70 while 186,000 options had been tendered for repricing to US $3.63. The market price of the underlying
common shares at November 30, 2001 was CDN $3.95 and US $2.52, respectively.

**10.    Earnings Per Share**

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 2001 and in 2000, 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.   Cost of Sales**

|                     | **Year ended November 30**
|-------------------- | --------------------------
|                     | **2001**                  
|Cost of goods sold   | $  10,935                 
|License amortization | 11,014                    
|Royalties            | 3,978                     
|                     | $     25,927              

**12.   Income Taxes**



Income tax expense (recovery) consists of the following:



|                              | **Year ended November 30**
|----------------------------- | --------------------------
|                              | **2001******              
|Current:                      |                           
|Canadian                      | $1,296                    
|Foreign                       | 1,275                     
|                              |                           
|                              | 2,571                     
|Future:                       |                           
|Canadian                      | 965                       
|Foreign                       | 503                       
|                              | 1,468                     
|Income tax expense (recovery) | $4,039                    
|                              |                           



The reported income tax provision differs from the amount computed by
applying the Canadian statutory rate to income
before taxes for the following reasons:

|                                                                           | **Year ended November 30******
|-------------------------------------------------------------------------- | ------------------------------
|                                                                           | **2001**                      
|                                                                           |                               
|                                                                           |                               
|Income (loss) before income taxes and share of loss of equity
investments: |                               
|Canadian                                                                   | $(4,417)                      
|Foreign                                                                    | 1,604                         
|                                                                           | (2,813)                       
|                                                                           |                               
|Expected statutory rate                                                    | 42.0%                         
|Expected tax expense (recovery)                                            | $(1,181)                      
|Foreign tax rate differences                                               | 479                           
|Change in valuation allowance                                              | 2,053                         
|Non-deductible expenses and non-taxable income                             |                               
|Reassessment of prior years

Withholding tax on foreign income             | 998

1,149                    
|Other                                                                      | 541                           
|Reported income tax expense (recovery)                                     | $4,039                        
|                                                                           |                               

The
tax effects of significant temporary differences which gave rise to future taxes at November 30, 2001 and 2000 are:



|                                   | **Year ended November 30**********
|---------------------------------- | ----------------------------------
|                                   | **2001**                          
|Assets                             |                                   
|Reserves and allowances            | $2,328                            
|Book and tax differences on assets | 10,033                            
|Net operating loss carryforwards   | 23,324                            
|Other                              | 725                               
|                                   | 36,410                            
|Less: valuation allowance          | (36,410)                          
|Future income tax
asset            |                                   
|Current                            |                                   
|Long term                          |                                   
|Future income tax asset            |                                   
|Liabilities                        |                                   
|Book and tax
differences on assets | $4,967                            
|Future income tax liability        | $4,967                            



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. Changes in the valuation allowance include losses
acquired from the purchase of Micrografx and changes in the revaluation of losses in various jurisdictions. 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.

As at November 30, 2001, the Company has tax loss carryforwards of
approximately $139.0 million which expire during
the years 2007 to 2020. Approximately $28.0 million of these losses acquired with the purchase of Micrografx are
restricted in the amount of the loss, which may be claimed each year based on U.S. tax loss limitations. A valuation
allowance of approximately $8.5 million has been taken against the Micrografx losses. The benefit resulting from any
subsequent realization of those losses would be allocated to reduce goodwill from the acquisition of Micrografx.

******13.    Business Acquisitions**

**A.  Micrografx, Inc. ("Micrografx")**

On October 30, 2001, the Company completed the acquisition of all of the
issued and outstanding stock of Micrografx, a
Dallas, Texas-based provider of enterprise process management and graphics software, solutions and services. The
Company's consolidated statements of operations reflect the results of operations of Micrografx from the date of the
acquisition.

The aggregate purchase price paid was approximately $33.8 million,
consisting of 6,894,250 shares of newly issued
common shares of Corel at a value of $16.0 million and 16,038,875 participation rights that were valued at $16.3 million
(see Note 9). The value of the participation rights is to be paid in cash or common shares of Corel on October 30, 2002.
In the event Corel's common share price at that time is equal to or less than $2.29, Corel will pay the remaining
transaction value in cash. If Corel's common share price on October 30, 2002 is
higher than $2.29, Corel will issue
common shares with a then-current value equivalent to the remaining one-half of the transaction value plus, on a per share
basis, 18 % of any increase in the value of Corel common shares in the 12 month period following the close.

The components of the aggregate purchase price were as follows (in
thousands):

|Common shares              | $ 16,038
|-------------------------- | --------
|Participation rights       | 16,338  
|Other costs of acquisition | 1,457   
|Total purchase price       | $ 33,833



Other costs of acquisition include professional fees and other costs
directly related to the acquisition.

The Micrografx acquisition has been accounted for in accordance with the
purchase method of accounting. The purchase
price has been allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values as follows:



|Cash                                | $ 4,164 
|----------------------------------- | --------
|Other current assets                | 5,531   
|Developed software                  | 8,760   
|In-process research and development | 4,311   
|Property and equipment              | 323     
|Future tax liabilities              | (4,967) 
|Bridge loan                         | (8,300) 
|Other liabilities                   | (13,523)
|Net liabilities acquired            | (3,701) 
|Total purchase price                | 33,833  
|Goodwill                            | $ 37,534

The estimates of fair value
were determined by the Company's management based on information furnished by the
management of Micrografx and an independent valuation of developed software and in-process research and development
products.

Goodwill will be re-evaluated on an annual basis for impairment. All
losses due to impairment will be recorded against
income in the year impairment is determined. Factors that contributed to goodwill include synergies to be achieved by
combining Micrografx technologies with the Company's technologies, access to certain distribution channels and
customer lists as well as additional workforce skill sets.

To determine the fair market value of the developed software and
in-process research and development, the Company
considered the three traditional approaches of value: the cost approach, the market approach and the income approach.

The Company relied primarily on the income approach, under which fair
market value is a function of the future revenues
expected to be generated by an asset, net of all allocable expenses. The income approach focuses on the income-producing
capability of the developed software, core technology, and purchased research and development projects, and
best represents the present value of the future economic benefits expected to be derived. In determining the amount of the
purchase price to allocate to in-process research and development, factors such as stage of completion and technological
uncertainties were considered by the Company and its independent appraiser in determining the present value of the
future benefits to be received. If these projects are not successfully developed, the Company may not realize the value
assigned to the in-process research and development.

**B.  SoftQuad Software, Ltd. ("SoftQuad")**

On August 7, 2001, Corel and SoftQuad announced that they had signed a
definitive agreement whereby Corel will
acquire SoftQuad  in a stock-for-stock transaction. SoftQuad is a developer of XML-enabling technologies and commerce
solutions for e-Business. The transaction is subject to approval by SoftQuad's shareholders. Each common share, or
equivalent, of SoftQuad will be exchanged for .4152 of a Corel common share on closing, being the ratio of $1.50 to
$3.6129, assuming Corel's common share price at closing is between $2.71 per share and $4.52 per share. For prices
outside this range, Corel would issue more shares at a lower price and fewer shares at a higher price. The maximum
number of shares Corel could issue is approximately 11.6 million.

Subsequent to November 30, 2001, Corel will be providing a bridge loan of
$2.0 million to SoftQuad to be used for
operating activities. On February 6, 2002 the SEC declared the registration statement effective. SoftQuad shareholders
are scheduled to vote on the acquisition on March 14, 2002.

******14.
 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
|------------------------------ | ----------------------
|                               | 2001                  
|By product group               |                       
|Creative products              | $  73,949             
|Business applications products | 58,624                
|Other                          | 1,747                 
|                               | $     134,320         
|                               |                       
|By sales channel               |                       
|Retail packaged products       | $  77,838             
|OEM licenses                   | 11,475                
|Corporate licenses             | 45,007                
|                               | $     134,320         
|                               |                       
|By region                      |                       
|Canada                         | $  7,666              
|U.S.A.                         | 76,287                
|Europe, Middle East and Africa | 35,313                
|Other                          | 15,054                
|                               | $     134,320         
|                               |                       
|By major customer              |                       
|Ingram Micro, Inc.             | $  39,241             
|All others                     | 95,079                
|                               | $     134,320         

**15.    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. There were no differences in reported cash flows for the periods presented. Significant differences between Canadian
GAAP and US GAAP are reflected in the balance sheets and Statements of Operations set forth below:********

|**Balance Sheet**                          | **** |               | ******As at November 30**
|------------------------------------------ | ---- | ------------- | -------------------------
|                                           |      | ******Notes** | **2001**                 
|**Assets**                                 | **** |               |                          
|************Current assets                 |      |               | $144,906                 
|Investments                                |      | (B)           | 10,310                   
|Other non-current assets                   |      |               | 250                      
|Capital assets                             |      | (A)           | 38,812                   
|Goodwill                                   |      | (A)           | 35,896                   
|Total assets                               |      |               | $230,174                 
|                                           |      |               |                          
|**Liabilities**                            |      |               |                          
|Current liabilities                        |      |               | $54,360                  
|Income taxes payable                       |      | (B)           | 4,842                    
|Future income tax liabilities              |      | (A)           | 3,329                    
|Total liabilities                          |      |               | 62,531                   
|Shareholders' equity                       |      | (A)           | 167,312                  
|Cumulative comprehensive income            |      | (B)           | 331                      
|Total liabilities and shareholders' equity |      |               | $230,174                 
|                                           |      |               |                          

|****Statement of Operations information**                           | ****          | **Year ended November 30**
|------------------------------------------------------------------- | ------------- | --------------------------
|                                                                    | **Notes**     | **2001**                  
|**Net income (loss) in accordance with Canadian
GAAP**              | $(7,324)      | $(55,348)                 
|Adjustments to reconcile to US GAAP:                                |               |                           
|Write-off of purchased in-process research

    and development     |               | (4,311)                   
|**Net income (loss) in accordance with US GAAP**                    | **$(11,635)** | **$(55,348)**             
|                                                                    |               |                           
|**Comprehensive income**                                            | (C)           |                           
|Net income (loss) in accordance with US GAAP                        |               | $(11,635)                 
|Unrealized holding gains (losses) on available

for sale securities | (B)           | (979)                     
|Related income tax                                                  | (B)           | 216                       
|Comprehensive income (loss)                                         |               | $(12,398)                 
|                                                                    |               |                           
|**Income (loss) per share**                                         |               |                           
|Basic                                                               |               | $(0.16)                   
|Diluted                                                             |               | $(0.16)                   

****

**A.  In-process research and development**

Associated with the allocation of the purchase price of the acquisition of Micrografx is
$4.3 million for in-process research
and development which, for US GAAP purposes, is to be expensed in the year of acquisition if the related technology has
not reached technological feasibility and does not have an alternative future use (see Note 13). This adjustment results in a
$4.3 million reduction of capital assets and increase in the reported net loss. This adjustment reduces the book value of the
assets acquired and, in turn, the related tax difference on those assets resulting in a reduction of $1.6 million to the future
tax
liability and goodwill.

**B. 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 decreased by $0.4 million at November 30,
2001 and increased by $1.4 million at November 30, 2000. In addition, income taxes payable would be decreased by $0.1
million at November 30, 2001 and increased by $0.3 million at November 30, 2000.

**C. 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.

**Stock options
plans**

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 clarification of
the 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**
|-------------------------------------------- | --------------------------
|                                             | **2001**                  
|Net Income (loss) in accordance with US GAAP | $  (11,635)               
|Estimated stock-based compensation costs     | (2,101)                   
|Pro forma net income (loss)                  | $  (13,736)               
|Pro forma income (loss) per share            | $  (0.18)                 

The fair values of all options granted during 2001, 2000 and 1999 were estimated as of
the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:

|                             | **2001** | **2000** | **1999**
|---------------------------- | -------- | -------- | --------
|Expected option life (years) | 3        | 3.07     | 3.34    
|Volatility                   | 110      | 105      | 86      
|Risk free interest rate      | 4.53%    | 6.13%    | 4.78%   
|Dividend yield               | nil      | nil      | nil     



The fair values (in USD) at the date of grant for stock options granted during 2001,
2000 and 1999 were $1.85, $6.62 and
$1.35 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.

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 remained vested, one third vested 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, 2001, 1,544,500 options had been tendered for repricing to CDN $5.70 while
186,000 options had been tendered for repricing to US $3.63. The market price of the underlying common shares at
November 30, 2001 was CDN $3.95 and US $2.52, respectively.

In accordance with FIN 44, the option repricing, as described above, will result in
variable plan accounting for the re-priced options. Future periods may reflect compensation charges or credits depending on the
fair market price of the
underlying shares.

******New accounting
pronouncements**

In fiscal 1998, the FASB issued SFAS No.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 was the fiscal year beginning December 1, 2000 for the
Company. The adoption of this pronouncement has not had an impact on its results of operations or financial position.

During the year, the Canadian Institute of Chartered Accountants ("CICA") issued CICA
1581 - "Business
Combinations" ("CICA 1581") and FASB issued SFAS No. 141, "Business Combinations", ("SFAS 141"). These
standards are effective for all business combinations initiated after June 30, 2001, and require that the purchase method of
accounting be used for all business combinations initiated after that date. Corel applied CICA 1581 and SFAS 141 to the
Micrografx acquisition and will apply these pronouncements to future acquisitions.

During the year, the CICA issued CICA 3062 - "Goodwill and Other Intangible Assets"
("CICA 3062") and FASB
issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). These standards are effective for fiscal
years beginning after December 15, 2001, which is the fiscal year beginning December 1, 2002 for the Company, but
applied immediately to any business combinations consummated after June 30, 2001. CICA 3062 and SFAS 142 require
that goodwill and intangible assets deemed to have indefinite lives will no longer be amortized, including goodwill
recorded in past business combinations, but will be subject to annual impairment tests in accordance with the new
guidelines. Other tangible assets will continue to be amortized over their useful lives. The Company believes that the
adoption of these pronouncements will have a material effect on its results from operations and financial position.

In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets",
("SFAS 144"). This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived
assets. The provisions of this Statement are effective for financial statements issued for fiscal years beginning after
December 15, 2001, which is the fiscal year beginning December 1, 2002 for the Company. The Company has not
assessed the impact that the adoption of this standard will have on its results of operations or financial position.

In December 2001, the CICA issued AcG 13 - "Hedging Relationships" ("AcG 13"). The
guideline presents the views of
the Canadian Accounting Standards Board on the identification, designation, documentation and effectiveness of hedging
relationships, for the purpose of applying hedge accounting. The guideline is effective for all fiscal years beginning on or
after January 1, 2002, which is the fiscal year beginning December 1, 2002 for the Company. The Company does not
believe that the adoption of this guideline will have a material impact on its results of operations or financial position, as
it does not apply hedge accounting.

In January 2002, the CICA amended CICA 1650 - "Foreign Currency Translation" ("CICA
1650"). The amended
standard eliminates the requirement to defer and amortize exchange gains and losses related to a foreign currency
denominated monetary items with a fixed or ascertainable life extending beyond the end of the following fiscal year, and
require new disclosure surrounding foreign exchange gains and losses. The standard is effective for all fiscal years
beginning on or after January 1, 2002, which is the fiscal year beginning December 1, 2002 for the Company. The
Company has not assessed the impact that the adoption of this standard will have on its results of operations or financial
position.

In January 2002, the CICA issued CICA 3870 - "Stock-Based Compensation and Other
Stock-Based Payments" ("CICA
3870"). This section establishes standards for the recognition, measurement and disclosure of stock-based compensation
and other stock-based payments made in exchange for goods and services. This section sets out a fair value-based method
of accounting and is required for certain, but not all, stock-based transactions. The recommendations of this section
should be adopted for fiscal years beginning on or after January 1, 2002, which is the fiscal year beginning December 1,
2002 for the Company, and applied to awards granted on or after the date of adoption. The Company has not assessed the
impact that the adoption of this standard will have on its results of operations or financial position.

**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 15, 2002:

| | **Name**               |  | **Age** |  | **Position with the Company**                                           
| | ---------------------- |  | ------- |  | ------------------------------------------------------------------------
| |                        |  |         |  |                                                                         
| | Derek J. Burney        |  | 39      |  | President and Chief Executive Officer, Director                         
| | Amanda Bedborough      |  | 32      |  | Executive Vice President, EMEA Operations                               
| | John Blaine            |  | 39      |  | Executive Vice President, Finance, Chief Financial Officer and
Treasurer
| | Graham Brown           |  | 38      |  | Executive Vice President, Engineering                                   
| | Steven Houck           |  | 32      |  | Executive Vice President, Strategic Relations                           
| | Gary Klembara          |  | 50      |  | Executive Vice President, Sales                                         
| | Ian LeGrow             |  | 31      |  | Executive Vice President, Product Strategy                              
| | Annette McCleave       |  | 42      |  | Executive Vice President, Marketing                                     
| | Rene Schmidt           |  | 44      |  | Executive Vice President, Chief Technology Officer                      
| |                        |  |         |  |                                                                         
| | James C. Baillie       |  | 64      |  | Chair of the Board of Directors                                         
| | Lyle B. Blair          |  | 71      |  | Director                                                                
| | David A. Galloway      |  | 58      |  | Director                                                                
| | Hunter S. Grant        |  | 59      |  | Director                                                                
| | James L. Hopkins       |  | 55      |  | Director                                                                
| | Jean-Louis Malouin     |  | 58      |  | Director                                                                
| | Hon. Barbara McDougall |  | 64      |  | Director                                                                
| |                        |  |         |  |                                                                         
| |                        |  |         |  |                                                                         

Derek J. Burney joined the Company in April 1994 as the Project Leader for CorelFLOW. Mr. Burney was
appointed
Technology Manager in August 1995 and 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 appointed Executive Vice President, Engineering. Mr.
Burney held this position until August 2000, at which time he was appointed Interim President and CEO.  In October
2000, he was appointed President and Chief Executive Officer and appointed to the Board of Directors.

**Amanda Bedborough** joined the Company in October 2001 as Executive Vice
President, EMEA Operations, responsible
for leading Corel's operations in the Europe, Middle East and Africa region. Before joining Corel, Ms. Bedborough had
been Vice President, EMEA Operations for 3dfx Interactive since April 1999. Prior to holding that position, she was
employed for over five years with STB Systems, Inc., serving as the company's International Sales and Marketing
Director from November 1996.

**John Blaine**joined the Company in April 2000 as Executive Vice
President, Finance and Chief Financial Officer.  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**joined the Company in 1991. 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. Mr. Brown served as Vice President of Software Development, Business Applications from June
1998 to October 2000 when he was appointed Executive Vice President, Business Applications. In January 2002 Mr.
Brown was appointed Executive Vice President, Engineering**.**

**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 1999, he was appointed to Executive Vice President, Sales. Mr.
Houck held that position until October 2001 when he was named to his current position of Executive Vice President,
Strategic Relations.

**Gary Klembara** joined the
Company as Corel's Executive Vice President, Sales in October 2001. Mr. Klembara was
Executive Vice President, Sales for Micrografx, Inc., from July 2000 to October 2001. Prior to joining Micrografx, Mr.
Klembara was Executive Vice President, Worldwide Sales for Image2web, Inc., a Micrografx subsidiary. Prior to June
2000 he was National Director of Sales, Consultants and Systems Integrators Division of Compaq
Computer.****

**Ian LeGrow**joined the Company in 1994 and has held various positions in
product development. Mr. LeGrow was Vice
President of Software Development, CorelDRAW Graphics Suite from June 1998 to October 2000. In October 2000 he
was appointed Executive Vice President, Creative Products. In January 2002, he was appointed to his current position of
Executive Vice President, Product Strategy.



**Annette McCleave**joined the Company in 1990 as a member of the
technical marketing team and served as Product
Manager for CorelDRAW and Director of Product Management. From September 1999 to November 1999, she served as
Vice President of Product Management. In June 1998, she was appointed Vice President of the New Ventures Division.
She served as  Executive Vice President, Corporate Communications from October 2000 until February 2001. In
February 2001, she was appointed Executive Vice President, Marketing.

**Rene Schmidt**joined Corel in October 1995. 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. Prior to joining Corel Mr. Schmidt held several positions, including Chief Software Architect
and Software Development Manager, over an eleven year period with Instantel, Inc.

**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.

**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.



**David A. Galloway**joined the Board of Directors in October 2001.Mr. Galloway joined Torstar Corporation in 1981,
became CEO of Harlequin, a division of Torstar, in 1982, and was appointed to his current position of President and CEO
of Torstar in 1988.

**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.

**James L. Hopkins**joined the Board of Directors in October 2001,
concurrent with Corel'scompletion of its acquisition
of Micrografx, Inc.Prior to the acquisition, Mr.Hopkins served as Chairman and Chief Executive Officer of Micrografx
Inc., having been appointed to those positions in September 2000 and October 2000, respectively. Prior to that, Mr.
Hopkins was Managing Director of the Austin, Texas office of Hoak Breedlove Wesneski & Co., a technology
investment banking firm. From 1991 through May 1999, Mr. Hopkins held a variety of positions with STB Systems, Inc.,
leading to the position of Vice President of Strategic Marketing and Chief Financial Officer.Mr. Hopkins remains on the
Board of Directors for 3dfx Interactive in San Jose, CA as well as two early-stage, Texas-based, privately held software
companies.

**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.

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.

****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 Compensation Committee met three times in fiscal 2001 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, 2001, the Chief Executive Officer and the
other four most highly compensated executive officers of the Company (the "named executive officers").****

**Summary Compensation Table**

****



|                           |      |          |      |                                     |      |                  |      |                         |      | ****************Long-term | ****            
|-------------------------- | ---- | -------- | ---- | ----------------------------------- | ---- | ---------------- | ---- | ----------------------- | ---- | ------------------------- | ----------------
|                           |      |          |      | **************Annual compensation** | **** | **compensation** | ****
|                           |      |          |      |                                     |      |                  |      | **************Other**   | **** |                           |                 
|                           |      |          |      |                                     |      |                  |      | **************annual**  | **** | **Securities**            | **All**         
|**Name and principal**     | **** |          |      |                                     |      |                  |      | **************compen-** | **** | **under options**         | **other**       
|**Position**               | **** | **Year** | **** | **Salary**                          | **** | **Bonus**        | **** | **sation (1)**          | **** | **granted (#)**           | **compensation**
|**Derek J. Burney**        |      | 2001     |      | $303,461                            |      | $122,500         |      |                         |      | 187,500                   |                 
|President and              |      | 2000     |      | 293,077                             |      | 57,884           |      |                         |      | 225,000                   |                 
|Chief Executive Officer    |      | 1999     |      | 240,000                             |      | Nil              |      |                         |      | 81,000                    |                 
|                           |      |          |      |                                     |      |                  |      |                         |      |                           |                 
|Steven Houck               |      | 2001     |      | 200,753                             |      | 135,456          |      |                         |      | 19,000                    |                 
|Executive Vice President,  |      | 2000     |      | 211,299                             |      | 65,100           |      |                         |      | 63,600                    |                 
|Strategic Relations        |      | 1999     |      | 168,850                             |      | Nil              |      |                         |      | 4,200                     |                 
|                           |      |          |      |                                     |      |                  |      |                         |      |                           |                 
|John Blaine                |      | 2001     |      | 238,212                             |      | 48,000           |      |                         |      | 75,000                    |                 
|Executive Vice President,  |      | 2000     |      | 134,135                             |      | Nil              |      |                         |      | 100,000                   |                 
|Finance, CFO and Treasurer |      | 1999     |      | -                                   |      | -                |      |                         |      | -                         |                 
|                           |      |          |      |                                     |      |                  |      |                         |      |                           |                 
|Annette McCleave           |      | 2001     |      | 205,827                             |      | 45,150           |      |                         |      | 56,250                    |                 
|Executive Vice President,  |      | 2000     |      | 167,500                             |      | Nil              |      |                         |      | 54,700                    |                 
|Marketing                  |      | 1999     |      | 139,699                             |      | Nil              |      |                         |      | 13,000                    |                 
|                           |      |          |      |                                     |      |                  |      |                         |      |                           |                 
|Ian LeGrow                 |      | 2001     |      | 196,596                             |      | 40,000           |      |                         |      | 56,250                    |                 
|Executive Vice President,  |      | 2000     |      | 163,269                             |      | Nil              |      |                         |      | 54,700                    |                 
|Product Strategy           |      | 1999     |      | 130,828                             |      | Nil              |      |                         |      | 16,000                    |                 
|                           |      |          |      |                                     |      |                  |      |                         |      |                           |                 



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.****

The following table sets forth the stock options granted under the Corel Corporation
Stock Option Plan 2000 during the
fiscal year ended November 30, 2001 to the named executive officers.****

**Option Grants for the Year Ended November 30,
2001**

**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$)**    | **date**        | **5% ($)**                                                                                                                
|Derek J. Burney  | 125,000                   | 4.40%            | $  4.80       | August 10, 2005 | $   129,304                                                                                                               
|                 | 62,500                    | 2.20%            | $  3.30       | October 1, 2005 | 44,448                                                                                                                    
|Steven Houck     | 12,500                    | 0.44%            | $     3.12*   | August 10, 2005 | 8,405*                                                                                                                    
|                 | 6,500                     | 0.23%            | $     2.09*   | October 1, 2005 | 2,928*                                                                                                                    
|John Blaine      | 50,000                    | 1.76%            | $  4.80       | August 10, 2005 | 51,722                                                                                                                    
|                 | 25,000                    | 0.88%            | $  3.30       | October 1, 2005 | 17,779                                                                                                                    
|Annette McCleave | 37,500                    | 1.32%            | $  4.80       | August 10, 2005 | 38,791                                                                                                                    
|                 | 18,750                    | 0.66%            | $  3.30       | October 1, 2005 | 13,334                                                                                                                    
|Ian LeGrow       | 37,500                    | 1.32%            | $  4.80       | August 10, 2005 | 38,791                                                                                                                    
|                 | 18,750                    | 0.66%            | $  3.30       | October 1, 2005 | 13,334                                                                                                                    
|                 |                           |                  |               |                 |                                                                                                                           



(*) 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, 2001 by the named executive officers.

******Aggregated Option Exercises During the Fiscal Year Ended**

**November 30, 2001 and Fiscal Year-End Option
Values**



|                 |      |                     |      |              |      |                               |      | ****************Value of unexercised
|---------------- | ---- | ------------------- | ---- | ------------ | ---- | ----------------------------- | ---- | ------------------------------------
|****             |      |                     |      |              |      | **************Unexercised**   | **** | **in-the-money**                    
|****             |      | ******Securities**  | **** | **Aggregat** | **** | **options at**                | **** | **options at**                      
|****             |      | ******acquired**    | **** | **value**    | **** | **Nov. 30, 2001**             | **** | **Nov. 30, 2001**                   
|****             |      | ******on exercise** | **** | **realized** | **** | **Exercisable/Unexercisable** | **** | **Exercisable/Unexercisable**       
|**Name**         | **** | **(#)**             | **** | **(CDN$)**   | **** | **(#)**                       | **** | **(CDN$)**                          
|Derek Burney     |      |                     |      |              |      | 228,502 / 199,998             |      | $22,822 / $27,083                   
|Steven Houck     |      |                     |      |              |      | 48,735 / 33,865               |      | $932*/ $1,863*                      
|John Blaine      |      |                     |      |              |      | 118,335 / 56,665              |      | $5,417 / $10,833                    
|Annette McCleave |      |                     |      |              |      | 60,218 / 55,732               |      | $6,963 / $8,125                     
|Ian Legrow       |      |                     |      |              |      | 71,218 / 55,732               |      | $13,343 / $8,125                    



(*) in US$.

All options are exercisable as to one-third on each of the date of original grant and
the first and second anniversaries
thereof, except for options granted prior to October 2000, which are exercisable when granted (with the exception of
options granted during an employee's probationary period, usually six months in length).

**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 seven, 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 travelling
costs and other out-of-pocket expenses incurred in attending such meetings.

On August 15, 2000, a Deferred Share Units Plan ("DSP") for non-employee members of the
Board of Directors was
established by the Company. Under the DSP, 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 may
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, 2001 for duties
performed during that fiscal year was CDN $243,263. As of February 6, 2002, a total of 67,249 units have been credited
to directors.

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

The Corporation has entered into an employment agreement with Derek J. Burney dated as
of October 17, 2001. The
employment agreement sets forth the remuneration of Mr. Burney, including salary, bonus, vacation entitlement, car
allowance and ancillary perquisites. Mr. Burney receives an annual base salary of CDN $350,000. Mr. Burney may
terminate his employment with the Corporation at any time by giving 30 days notice of termination to the Corporation. If
the Corporation terminates Mr. Burney without cause or good reason (as defined within the employment agreement), the
Corporation will pay severance in the amount of 20 months' salary, which period increases by one month for every four
months of service by Mr. Burney, which period shall not exceed 24 months in total (the "severance period"). If Mr.
Burney is subsequently employed by another party for any portion of the severance period, the severance payment will be
reduced by 50% during the period in which Mr. Burney has obtained alternate employment. Mr. Burney is also entitled to
incentive payments earned during the severance period and accelerated vesting of any options that vest within the
severance period.

On a change of control (as defined within the employment agreement), if Mr. Burney is
terminated, he is entitled to an
amount equivalent to 24 months' salary along with the other benefits described above.

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

The following table sets forth, as of****February 15, 2002, 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.

|                                                            |  | ******Common shares
beneficially owned** | **** | **Exercisable**

**options** |  | ******Percentage
owned (1)**
|----------------------------------------------------------- |  | ---------------------------------------- | ---- | ---------------------------- |  | ----------------------------
|                                                            |  |                                          |      |                              |  |                             
|Derek J. Burney                                             |  | 25,000                                   |      | 282,668                      |  | *                           
|James C.
Baillie                                            |  | 50,000                                   |      | 8,335                        |  | *                           
|John Blaine                                                 |  |                                          |      | 126,668                      |  | *                           
|Lyle B.
Blair                                               |  |                                          |      | 28,334                       |  | *                           
|David A.
Galloway                                           |  |                                          |      | 1,667                        |  | *                           
|Hunter S.
Grant                                             |  | 5,000                                    |      | 28,334                       |  | *                           
|James
Hopkins                                               |  | 267,463                                  |      | 4,167                        |  | *                           
|Steven
Houck                                                |  | 5,000                                    |      | 60,585                       |  | *                           
|Ian LeGrow                                                  |  |                                          |      | 84,017                       |  | *                           
|Jean-Louis
Malouin                                          |  | 1,000                                    |      | 28,334                       |  | *                           
|Annette
McCleave                                            |  |                                          |      | 73,017                       |  | *                           
|Barbara
McDougall                                           |  |                                          |      | 33,334                       |  | *                           
|Directors and Executive
Officers as a
group (13 persons)(2) |  | 353,463                                  |      | 959,828                      |  | *                           

*     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 which the beneficial owner
indicated has a right to acquire
pursuant to options currently exercisable or exercisable within 60 days.

(2) 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**

None

**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 Statements Schedule**

The following financial statements 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, 2001, 2000
and
1999

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 |                                                                                                                                                                                               
| | ------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 Inc. Computer
Corp. (1)                                                                                               
| | 3.4     | Amendment to Articles of Incorporation. (6)                                                                                                                                                   
| | 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. (6)                                                                              
| | 10.4    | Registration Rights Agreement dated September 18, 2000 by and between the Company
and Albans Investments Limited. (6)                                                                         
| | 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. (6)                                       
| | 10.6    | Form of Share Purchase Warrant between the Company and each of Albans Investment
Limited, Whale Securities Co., L.P., and Richard Geyser. (6)                                                 
| | 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)                                                                             
| | 10.10   | Employment Agreement dated as of October 17, 2001 between the Company and Derek J.
Burney. (2)                                                                                                
| | 10.11   | Merger Agreement dated as of July 16, 2001 as amended and restated between the
Company, Calgary I Acquisition Corp. and Micrografx, Inc. (7)                                                  
| | 10.12   | Participation Rights Agreement dated as of October 30, 2001 between the Company and
The Bank of New York, as Trustee. (2)                                                                     
| | 10.13   | Merger Agreement dated as of August 7, 2001 as amended and restated between the
Company, Calgary II Acquisition Corp. and SoftQuad Software, Ltd. (8)                                         
| | 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, 2001, 2000 and 1999. (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

(6) Previously filed as an exhibit to the Annual report on Form 10-K dated February 21,
2001 and incorporated herein by reference

(7) Previously filed as an exhibit to the Current Report on Form 8-K dated July 16, 2001
and incorporated herein by reference

(8) Previously filed as Annex A to the Company's Registration Statement 333-69868 and
incorporated herein by reference

(b)  Reports on Form 8-K

During the three-month period ended November 30, 2001, the Company filed one Current Report on
Form 8-K, including information requested under Item 5 and Item 7 as follows:

On October 30, 2001, the Company reported the completion of the acquisition of Micrografx, Inc.

****(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 February 26, 2002.

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



KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Derek J. 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 February 26, 2002.



|Signature                |  | Title                                          
|------------------------ |  | -----------------------------------------------
|                         |  |                                                
|*/s/ James C. Baillie*   |  | Chair of the Board of Directors                
|James C. Baillie         |  |                                                
|                         |  |                                                
|***/s/ Derek J.
Burney*  |  | President and Chief Executive Officer, Director
|Derek J. Burney          |  |                                                
|                         |  |                                                
|*/s/ Lyle B.
Blair*      |  | Director                                       
|Lyle B. Blair            |  |                                                
|                         |  |                                                
|*/s/ David
Galloway*     |  | Director                                       
|David Galloway           |  |                                                
|                         |  |                                                
|*/s/ Hunter S.
Grant*    |  | Director                                       
|Hunter S. Grant          |  |                                                
|                         |  |                                                
|*/s/ James
Hopkins*      |  | Director                                       
|James Hopkins            |  |                                                
|                         |  |                                                
|*/s/ Jean-Louis
Malouin* |  | Director                                       
|Jean-Louis Malouin       |  |                                                
|                         |  |                                                
|*/s/ Barbara
McDougall*  |  | Director                                       
|Barbara McDougall        |  |                                                
|                         |  |                                                
|*/s/ John
Blaine*        |  | Chief Financial Officer,                       
|John Blaine              |  | Executive Vice President, Finance and Treasurer
|                         |  | (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. (6)                                                                                                                                                   
|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. (6)                                                                             
|10.4                        | Registration Rights Agreement dated September 18, 2000 by and between the
Company

and Albans Investments Limited. (6)                                                                        
|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. (6)                                       
|10.6                        | Form of Share Purchase Warrant between the Company and each of Albans Investment
Limited, Whale Securities Co., L.P., and Richard Geyser. (6)                                                 
|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)                                                                            
|10.10                       | Employment Agreement dated as of October 17, 2001 between the Company and Derek J.
Burney. (2)                                                                                                
|10.11                       | Merger Agreement dated as of July 16, 2001 as amended and restated between the Company,
Calgary I Acquisition Corp. and Micrografx, Inc. (7)                                                  
|10.12                       | Participation Rights Agreement dated as of October 30, 2001 between the Company and The
Bank of New York, as Trustee. (2)                                                                     
|10.13                       | Merger Agreement dated as of August 7, 2001 as amended and restated between the
Company, Calgary II Acquisition Corp. and SoftQuad Software, Ltd. (8)                                         
|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, 2001, 2000 and 1999. (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

(6) Previously filed as an exhibit to the Annual report on Form 10-K dated February 21,
2001 and incorporated herein by reference

(7) Previously filed as an exhibit to the Current Report on Form 8-K dated July 16, 2001
and incorporated herein by reference

(8) Previously filed as Annex A to the Company's Registration Statement 333-69868 and
incorporated herein by reference

© 2002 Corel Corporation. All rights reserved. Corel, CorelDRAW, Corel R.A.V.E.,
Real Animated Vector Effects,
Corel CAPTURE, CorelPHOTO-PAINT, CorelTRACE, Corel TEXTURE, Corel VENTURA, Corel DESIGNER,
Bryce, KPT, effects, Quattro, Painter 7, Paradox, CorelCENTRAL, Presentations, procreate, WordPerfect, iGrafx
and the procreate logo are trademarks or registered trademarks of Corel Corporation. Other product, font and
company names and logos may be trademarks or registered trademarks of their respective companies