<PAGE>
 
================================================================================
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-K

             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1998

                        Commission File Number 0-20562

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

                     CANADA                            NOT APPLICABLE
          (State or other jurisdiction of             (I.R.S. Employer
          incorporation or organization)             Identification No.)


    1600 CARLING AVENUE, OTTAWA, ONTARIO, CANADA            K1Z 8R7
      (Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code:  (613) 728-8200

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

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

                  COMMON SHARES WITHOUT NOMINAL OR PAR VALUE
                               (Title of Class)

   Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No_____

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

   The aggregate market value of Common Shares held by non-affiliates of the
registrant, based on the last reported sales price of the Common Shares as
reported on the NASDAQ National Market on February 24, 1999 was $218,140,133. As
of that date 51,327,090 Common Shares were issued and outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the 1998 Annual Report to Shareholders are incorporated by
reference into Parts II and IV.

================================================================================
<PAGE>
 
                               COREL CORPORATION

                                   FORM 10-K

                  FOR THE FISCAL YEAR ENDED NOVEMBER 30, 1998

                                     INDEX

<TABLE>
<S>                                                                                                            <C>      
PART I                                                                                                                 
                                                                                                                       
Item 1.      Business.....................................................................................      3      
                                                                                                                       
Item 2.      Properties...................................................................................     10      
                                                                                                                       
Item 3.      Legal and Government Proceedings.............................................................     10      
                                                                                                                       
Item 4.      Submission of Matters to a Vote of Security Holders..........................................     12      
                                                                                                                       
PART II                                                                                                                
                                                                                                                       
Item 5.      Market for the Registrant's Common Equity and Related Stockholder Matters....................     13      
                                                                                                                       
Item 6.      Selected Financial Data......................................................................     14      
                                                                                                                       
Item 7.      Management's Discussion and Analysis of Financial Condition and Results of Operations........     15      
                                                                                                                       
Item 8.      Financial Statements and Supplementary Data..................................................     15      
                                                                                                                       
Item 9.      Changes in and Disagreements with Accountants on Accounting and Financial Disclosures........     15      
                                                                                                                       
PART III                                                                                                               
                                                                                                                       
Item 10.     Directors and Executive Officers of the Registrant...........................................     16      
                                                                                                                       
Item 11.     Executive Compensation.......................................................................     19      
                                                                                                                       
Item 12.     Security Ownership of Certain Beneficial Owners and Management...............................     23      
                                                                                                                       
Item 13.     Certain Relationships and Related Transactions...............................................     23      
                                                                                                                       
PART IV                                                                                                                
                                                                                                                       
Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K.............................     24      
                                                                                                                       
Signatures   .............................................................................................     25       
</TABLE>

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

                                       2
<PAGE>

 
                                    PART I
ITEM 1.  BUSINESS

GENERAL
--------------------------------------------------------------------------------

The Company was incorporated as Corel Systems Corporation under the Canada
Business Corporations Act by Articles of Incorporation dated May 29, 1985. The
name of the Company was changed to Corel Corporation in May 1992.  For the
purposes of this report, except in the consolidated financial statements, unless
the context otherwise requires, "Corel" and "the Company" refer to the
consolidated operations of Corel Corporation and its wholly owned subsidiaries,
Corel Corporation Limited, Corel Computer Corp., Corel International
Corporation, Corel Inc. and Corel Corporation (U.S.A.), while "the Company"
refers to the parent, Corel Corporation.

Corel develops, manufactures, licenses, sells and supports a wide range of
software products including graphics, business productivity, consumer and video
applications as well as network computers.  Corel products are available for
users of most PCs, including International Business Machines Corporation
("IBM(R)") and IBM-compatible PCs, Apple Computer Inc.'s ("Apple")
Macintosh(R) ("Mac"), UNIX-based and Linux-based systems.

Corel's business strategy emphasizes the development of a broad line of PC
software application products for business and personal use, marketed through
multiple channels of distribution. Corel is divided into three broad areas: the
Software Development Group; the Sales and Customer Support Group; and the
Operations and Administration Group.

The Software Development Group consists of four divisions, each responsible for
a particular area of software development. The Graphics Applications Division
develops graphics software applications and products designed for the business,
academic and home markets. The Productivity Applications Division creates
business productivity applications and products designed for the business,
academic and home markets. The Consumer Products Software Division develops
various software applications for retail users.  The Video and Network Computer
Division develops video communications software and Linux-based network
computing solutions.

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

The Operations and Administration Group is responsible for managing business
operations and overall business planning.  This includes the process of
manufacturing and delivering finished goods and licenses, as well as corporate
functions such as finance, administration, human resources, legal, business
development and information technology.


PRODUCTS                                                   GRAPHICS APPLICATIONS
--------------------------------------------------------------------------------

The Graphics Division develops graphics applications software, which provides
the PC with instructions for creating and manipulating graphics, text, or
numbers. Corel's graphics applications are designed to meet the needs of general
business users and graphics professionals. Primary examples of graphics
applications include illustration, photo editing and painting, 3D rendering, and
animation programs. Corel's graphics applications programs are developed
principally for the Microsoft Corporation ("Microsoft(R)") Windows(TM)
("Windows"), Macintosh and UNIX operating systems.

CORELDRAW(R).  CorelDRAW is a suite of software programs featuring integration
of all of the major graphics functions that share a common "look and feel".
CorelDRAW modules feature common commands and extensive use of object linking
and embedding ("OLE") cross-application capabilities. CorelDRAW is available in
several versions, with certain combinations of modules, supporting utilities,
clipart images, fonts, photos and 3D models available for the various operating
system platforms. Versions of CorelDRAW include: CorelDRAW 8, a 32-bit suite
designed to run under Windows 95, Windows NT and Alpha, CorelDRAW 8 for the
Power Macintosh, 

                                       3
<PAGE>
 
CorelDRAW 5 for Windows 3.x and CorelDRAW 3.5 for UNIX.

The CorelDRAW module is an illustration program allowing users to produce color
illustrations incorporating both text and objects. The Corel PHOTO-PAINT(R)
module is a photo-editing and painting module that enables users to apply global
photo-retouching and pixel by pixel editing to scanned or photographic images.
The Corel DREAM 3D module is a spline-based 3D modeling and rendering
application that allows users to create 3D illustrations with predefined models
and surface textures, lighting controls and high resolution rendering.
Supporting utilities include Corel TEXTURE(TM), a tool for creating realistic
natural textures, Corel OCR-TRACE(TM), a bitmap-to-vector conversion utility for
images and text, Corel SCAN(TM), a wizard-based scanning utility with preset
processing options, and Corel CAPTURE(TM), a tool for capturing portions of the,
or the entire, application window, Corel SCRIPT Editor(TM), an OLE 2-enabled
scripting application ideal for creating add-on utilities for CorelDRAW 8 or
Corel PHOTO-PAINT 8, Corel(R) Versions(R), a tool that provides an overview of
all archived files in a history list and allows you to retrieve any archived
file when a previous version is required and Kodak Digital Science(TM) Color
Management System, a tool that ensures accurate color representation during
scanning, display and printing using ColorSync(R) 2.0-compatible device
profiles.

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

CORELDRAW(TM) 7 SELECT EDITION. This is a scaled down version of CorelDRAW. It
includes the CorelDRAW 7 and Corel PHOTO-PAINT 7 modules along with the
following utilities: Kodak Digital Science(TM) Color Management System, Corel
OCR-TRACE, Corel SCAN and Corel MULTIMEDIA MANAGER; a utility that allows the
user to organize and manage graphics files easily and browse the extensive
clipart and photo libraries included in CorelDRAW 7. This version of CorelDRAW
is designed to run under Windows 95 or Windows NT.
 
COREL PHOTO-PAINT(R).  Corel PHOTO-PAINT is a photo-editing and painting program
that enables users to apply global photo-retouching and pixel by pixel editing
to scanned or photographic images. Corel PHOTO-PAINT is available in various
versions including Corel PHOTO-PAINT 8 for Windows 95 and Windows NT and Corel
PHOTO-PAINT 8 for Power MacIntosh.
 
COREL VENTURA(R). 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, Corel VENTURA 8, allows users to publish
Corel VENTURA 8 documents to HTML, portable electronic formats, such as Corel
Envoy(TM) and Adobe Acrobat(R), a CD-ROM, over an internal network, or on the
Internet. Corel VENTURA is available in two versions: Corel VENTURA 8 for
Windows 95 and Windows NT, and Corel VENTURA 5 for Windows 3.x.

CORELXARA(TM). CorelXARA, designed for Windows 95 and Windows NT, is an
outstanding Web graphics design tool that delivers exceptional animation
capabilities and advanced color-handling tools for polished and professional Web
graphic design.

                                              PRODUCTIVITY SOFTWARE APPLICATIONS
--------------------------------------------------------------------------------

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

COREL(R) WORDPERFECT(R) SUITE.  Corel WordPerfect suite is a suite of software
programs featuring seamless integration of the most commonly used desktop
applications. Corel WordPerfect suite combines document creation with graphics
and Internet capabilities. There are several versions of Corel WordPerfect suite
available: Corel WordPerfect Suite for DOS; Corel WordPerfect Suite 7 for
Windows 3.x; and WordPerfect Suite 8 for Windows 95 and Windows NT.  In each of
the 16-bit versions, certain combinations of the following programs are
included: Corel WordPerfect; Corel(R) Quattro(R) Pro; and Corel(R)
Presentations(TM); along with 150 fonts, 10,000 clipart images and 200 photos.

Corel WordPerfect Suite 8 for Windows 95 and Windows NT contains 32-bit versions
of  Corel WordPerfect, 

                                       4
<PAGE>
 
Corel Quattro Pro and Corel Presentations. Corel also offers versions of Corel
WordPerfect suite for three key business sectors - legal, medical and
construction. Corel WordPerfect Suite Professional 8 - Medical Edition, Corel
WordPerfect Suites 7 and 8 - Construction Edition and Corel WordPerfect Suites 7
and 8 - Legal Edition offer all the features found in the Corel WordPerfect
Suites 7 and 8 along with industry-specific applications and resources. Corel
WordPerfect Suite 8 with Dragon NaturallySpeaking(TM) includes all of the above
features in addition to the speech recognition technology of Dragon
NaturallySpeaking(TM).

COREL WORDPERFECT SUITE PROFESSIONAL.  Corel WordPerfect Suite Professional is a
software program that includes enhanced Internet connectivity, graphics and
database features.  Corel WordPerfect Suite Professional is available in two
versions: Corel Office Professional for Windows 3.x and Corel WordPerfect Suite
8 Professional for Windows 95 and Windows NT.  Products offered in Corel Office
Professional for Windows 3.x include all of the components of Corel WordPerfect
Suite plus the Corel(R) Paradox(R) database management program.  Corel
WordPerfect Suite 8 Professional includes Corel Paradox 8, the Corel(R) Time
Line(R) project management software and Corel(R) WEB.SiteBuilder 8, a tool
which simplifies the process of creating and managing a Web site.

COREL(R) WORDPERFECT(R).  Corel WordPerfect is Corel's principal word processing
program, providing all the features that users of word processing products
expect plus the ability to handle graphics, tables, spreadsheet data, charts,
and images imported from other software programs. Corel WordPerfect is available
on a stand-alone basis for the Macintosh, DOS, UNIX and Linux operating systems,
while Windows versions are available only as components of Corel WordPerfect
Suite or Corel WordPerfect Suite Professional.

COREL(R) QUATTRO(R) PRO.  Corel Quattro Pro is an integrated spreadsheet with
database, business graphics and, in version 7, Internet capabilities. Corel
Quattro Pro is available in two versions: Corel Quattro Pro 6.0 for Windows 3.x
and Corel Quattro Pro 8 for Windows 95.

COREL(R) PARADOX(R).  Corel Paradox, a powerful data management tool, delivers
advanced features such as the ability to publish a database to the Web.  It is
offered in several configurations including a retail version and a Java runtime
version.

COREL(R) PRESENTATIONS(TM). Corel Presentations is a presentation graphics
program for producing slides, overheads, transparencies and prints. Corel
Presentations is available in two versions: Corel Presentations 3 for Windows
3.x and Corel Presentations 8 for Windows 95.


                                                  CONSUMER PRODUCTS APPLICATIONS
--------------------------------------------------------------------------------

The Consumer Products Division develops graphics applications for home PC users,
Photo CD titles for both the Internet and retail markets and peripheral
interface software for PCs.
 
COREL PRINT HOUSE(TM) MAGIC AND COREL PRINT HOUSE(TM) MAGIC DELUXE. Designed to
run under Windows 95 and Windows NT, Corel Print House Magic can be used to
create greeting cards, banners, invitations, business cards, signs, calendars,
menus, fax report covers, certificates and labels using Corel Print House(TM) 3.
It also includes Corel Photo House(TM) 2, a tool that adds photo-editing and
bitmap creation capabilities to enable users to scan in their own photographs,
touch them up or add special effects and an all-in-one Calendar, Address Book
and List Manager. In addition to these programs, Corel Print House Magic Deluxe
also features access to dozens of free electronic greeting cards; in addition to
those available from Corel(R) Greetings Online.

COREL PRINT OFFICE(TM). Corel Print Office is a powerful, comprehensive
publishing suite that is ideal for small- or home-office users and can be used
to create business documents. It also includes Corel Photo House and an all-in-
one Calendar, Address Book and List Manager.

COREL MEGA GALLERY(TM), COREL GALLERY(TM) MAGIC AND COREL GALLERY(TM) 1,000,000.
Corel MEGA GALLERY(TM) for MacIntosh contains over 50,000 vector clipart images,
60,000 Internet-ready professional photos, 1,000 fonts, 200 sound clips, and 100
video clips. Corel GALLERY Magic 65,000 contains 25,000 vector clipart images,
40,000 photos, 500 fonts, 100 animated GIFs and 100 Web theme sets. Corel
GALLERY Magic 200,000 is a collection of 105,000 clipart images, 80,000 photos
and hundreds of fonts, animated GIFs, sounds, video clips and Web theme sets.
Corel GALLERY 1,000,000 includes 815,000 Web images, 140,000 vector

                                       5
<PAGE>
 
clipart images, 60,000 photos, 1,000 fonts, 530 sounds and 125 videos. All
versions of Corel GALLERY allows users to drag and drop any of these images into
any OLE compatible application or export images to several industry standard
formats.

COREL(R) GRAPHICS PACK II. Corel Graphics Pack II includes eight fully
integrated graphics programs with a wizard-driven, task oriented user interface
which prompts the user to the appropriate program particular to the project
selected and guides them step by step through to completion of the task.
Designed for Windows 95 and Windows NT, Corel Graphics Pack II includes Corel
Print House; CorelFLOW(TM) 3, a business graphics and technical diagraming
program; Corel Presentations 8; Corel PHOTO-PAINT 7; Corel XARA 1.5; Corel
MOTION 3D, an animation tool and internet utilities; Corel CAPTURE(TM), a tool
that lets you capture the application window or elements of it and allows you
to define rectangular, elliptical or freehand areas for capture and Corel
GALLERY Magic 200,000.

COREL(R) WEBMASTER SUITE.  Corel WebMaster Suite offers a complete solution for
creating Intranet and Internet web sites.  Corel WebMaster Suite includes: Corel
WEB.DESIGNER, Internet authoring software using a familiar word processor-style
interface; Corel WEB.SiteManager, a tool that allows the user to manage local
and remote Web sites; Corel WEB.WORLD to enable the user to turn a Web site into
an interactive reality; Corel WEB.MOVE software that creates animation; design
and bitmap editing as well as the ability to do database and Java-based
publishing.

COREL(R) STOCK PHOTOS.  Corel Stock Photos on CD-ROM provide an easy and
inexpensive way for people to use professional photographs in all their visual
communications. Corel Stock Photos are available on individual CDs (100 photos
per CD), in packages of 10 CDs (100 photos per CD) or in one of four Corel Stock
Photo Libraries, each of which consists of 200 Corel Stock Photos CD-ROM titles.
Individual Corel Stock Photos can also be downloaded from Corel's World Wide Web
home page.

PERIPHERAL INTERFACE SOFTWARE.  CorelSCSI(TM) is a software package that allows
users to link up to seven peripheral devices with a single host adapter card.
CorelSCSI supports most major SCSI peripherals, including CD-ROM and other
optical drives, hard disk drives, tape drives, printers and scanners.

                                                     VIDEO AND NETWORK COMPUTERS
--------------------------------------------------------------------------------

As of December 1, 1998, Corel Computer Corporation was amalgamated with Corel
Corporation as a division. This division develops and sells video and network
computer products and offers turnkey computing and communication solutions for
corporate users. NetWinder(TM) network computers were developed from the
powerful, scalable, open source Linux operating system, and provide an
alternative to traditional systems at a fraction of the cost and upkeep; without
losing any of the power, speed or reliability that users need. Corel sold the
NetWinder Division to a third party in the first quarter of fiscal 1999, as
discussed in the Overview section of Management's Discussion and Analysis of
Financial Condition and Results of Operations in Exhibit 13.1.

The Company's current desktop video communications product, CorelVIDEO(TM), is a
hardware and software solution that provides television quality video and audio,
along with extensive communications features such as broadcasts, multi-party
calls, data collaboration, telecommuting and privacy control.  By running on a
parallel wire to the data network, CorelVIDEO does not affect the data network
bandwidth.  Corel intends to sell the Video division as soon as it is reasonably
possible and therefore expects sales to decrease in this area for fiscal 1999.

RESEARCH AND DEVELOPMENT
--------------------------------------------------------------------------------

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

Accordingly, Corel must be able to provide new software products and modify and
enhance existing products on a 

                                       6
<PAGE>
 
timely and continuing basis to be competitive. Corel employs a strategy of both
internally developing software, including overseeing third party development for
certain products 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.

In order to better serve the needs of users outside of Canada and the United
States, Corel "localizes" many of its products to reflect local languages and
conventions. Various Corel products have been localized into more than 20
languages.

Corel's research and development expenses were $65.9 million, $89.5 million and
$71.9 million in fiscal 1996, 1997 and 1998 respectively. Those amounts
represented approximately 20%, 34% and 29% respectively, of sales in each of
those years. Software acquired or licensed for incorporation into Corel's
product line totaled $171.1 million in fiscal 1996, of which $153.4 million was
for the acquisition of the WordPerfect technology on March 1, 1996, $12.2
million in fiscal 1997 and $4.7 million in fiscal 1998.  Corel intends to
continue significant expenditures for research and development activities.

MANUFACTURING
--------------------------------------------------------------------------------

The principal materials and components used in Corel's products include computer
media (diskettes, CD-ROMs or tapes), documentation, network computer hardware
for the NetWinder series and video hardware in the case of CorelVIDEO. 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, in
accordance with Corel's specifications. Corel believes there is an adequate
supply of and source for the raw materials used in its products, and that
multiple sources are available for media duplication, manual printing and final
packaging. Corel's products are generally shipped as orders are received and
accordingly, Corel has historically operated with little backlog.

MARKETING, SALES AND DISTRIBUTION
--------------------------------------------------------------------------------

Corel's marketing and sales efforts are directed towards several customer types
including end-users, corporate accounts, and Original Equipment Manufacturers
(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 three major geographic sales and marketing areas: North America,
Europe and the rest of the world.

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

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

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

                                       7
<PAGE>
 
                                                         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 Pinacor. Resellers include MicroWarehouse and
Multiple Zones International. Within the United States and Canada, Corel has
sales representatives and support personnel who solicit orders from distributors
and resellers and provide product training and sales support. In other
countries, Corel's marketing personnel provide product training and sales
support.

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

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

APPROVED SERVICE BUREAUS.  The Corel Approved Service Bureau Program ("CASB")
supports organizations that output and render files created with Corel's
graphics software applications such as CorelDRAW and Corel VENTURA. Under CASB,
the Company provides members with product information, free priority technical
support and referral services through Corel's bulletin board service ("BBS"),
CompuServe Forum 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.

                                                                     OEM CHANNEL
--------------------------------------------------------------------------------

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

                                                       ADVERTISING AND PROMOTION
--------------------------------------------------------------------------------

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

                                       8
<PAGE>
 
monitors the effectiveness of Corel's worldwide advertising. The Company
maintains a broad advertising campaign emphasizing the Corel brand identity.

CUSTOMERS
--------------------------------------------------------------------------------

As described above, Corel has three 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
that include certain Corel products with their hardware. Note 9 to the
Consolidated Financial Statements (see Item 8) identifies customers that
represent more than 10% of Corel's revenues.

PRODUCT SUPPORT
--------------------------------------------------------------------------------

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

Users have access to Corel's Knowledge Base, a database of technical support
articles that is updated regularly with useful information regarding Corel
products. Corel provides access to Knowledge Base, technical support information
and frequently asked question and answers via Corel's worldwide web site on the
Internet (http://www.corel.com). Corel maintains a bulletin board service
("BBS") 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
--------------------------------------------------------------------------------

The information set forth on pages 28-30 of the 1998 Annual Report to
Shareholders is incorporated herein by reference and is filed herewith as
Exhibit 13.1 under the heading "Factors That May Affect Future Results."

PROPRIETARY RIGHTS
--------------------------------------------------------------------------------

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

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

From time to time Corel receives notices from third parties asserting that Corel
has infringed their patents or other 

                                       9
<PAGE>
 
intellectual property rights. Corel may find it necessary or desirable in the
future to obtain licenses from third parties relating to one or more of its
products or relating to current or future technologies. There can be no
assurance that third parties will not assert infringement claims against Corel
in the future with respect to current or future products or that any such
assertion will not require Corel to enter into royalty arrangements or result in
costly litigation. As the number of software products in the industry increases
and the functionality of these products further overlap, Corel believes that
software developers may become increasingly subject to infringement claims. Any
such claims, with or without merit, can be time consuming and expensive to
defend.

EMPLOYEES
--------------------------------------------------------------------------------

As of November 30, 1998, Corel employed 1,265 people on a full-time basis,
including 561 in research and development, 547 in sales, marketing and support,
and 157 in finance and administration. Corel's success depends to a significant
extent upon the performance of Corel's executive officers and key technical,
sales and marketing personnel. Corel believes that its future success will also
depend in large part on its ability to attract and retain highly skilled
technical, managerial and sales and marketing personnel. Competition for
employees is intense in the software industry. To date, Corel believes it has
been successful in its efforts to recruit qualified employees, but there can be
no assurance that Corel will continue to be as successful in the future. None of
Corel's employees are subject to collective bargaining agreements. Corel
believes relations with its employees are favourable.

ITEM 2.  PROPERTIES

Corel leases 188,000 square feet of office space in a facility located in
Ottawa, Ontario under leases that expire in 2015; 20,484 square feet under a
lease that expires in 2002 in another facility in Ottawa, Ontario; 106,450
square feet of office space in a facility located in Orem, Utah under a lease
that expires in 2001; 23,520 square feet of office space in a facility located
in Dublin, Ireland under leases that expire in 2004 and office space in various
countries around the world under leases that expire between 1999 and 2000.

ITEM 3.  LEGAL AND GOVERNMENT PROCEEDINGS
 
On or about February 23, 1998, the Company became aware that a class action
lawsuit had been filed against it by named Plaintiff Great Neck Capital
Appreciation Investment Partnership in the United States District Court for the
Eastern District of New York. The complaint also names as co-defendants Dr.
Michael C. J. Cowpland, Corel's Chairman, President and Chief Executive Officer,
and Mr. Charles Norris, Corel's former Vice President, Finance and Chief
Financial Officer. The complaint was filed on behalf of all persons who
purchased or otherwise acquired Corel common shares between March 26, 1997 and
January 20, 1998 (the "Class Period"). The complaint alleges that the defendants
violated various provisions of the federal securities laws, including Section
10(b) and 10(a) of the Securities Exchange Act of 1934, as amended, and
Securities and Exchange Commission Rule 10b-5, by misrepresenting or failing to
disclose material information about Corel's financial condition. The complaint
alleges that the defendants issued false and misleading press releases and
financial statements for the first three quarters of fiscal 1997. Plaintiff
alleges, in part, that defendants (a) failed to disclose that they were
overstating Corel's reported profits by, among other things, inflating reported
revenues and earnings through improperly recognizing revenue on Java technology
exchange transactions, and (b) overstated revenues and earnings by understating
reserves in connection with sales to distributors who had no obligation to keep
or pay for the products. The complaint also alleges that Corel insiders,
including the individual co-defendants, sold common shares during the Class
Period at "artificially inflated prices". The complaint seeks an unspecified
amount of money damages.

The Great Neck complaint was consolidated by order dated June 1, 1998 with four
other previously filed complaints: Giskan, Meyer, Mangold and Hagler.  Also on
June 1, 1998, the court approved the plaintiff's motion for the appointment of
lead plaintiff and lead counsel.  The firm of Wechsler Harwood Halebian & Feffer
is counsel of record.  Great Neck (as lead plaintiff) filed a consolidated
amended complaint on behalf of lead plaintiff and the class on September 9, 1998
(the "Consolidated Complaint").  The Consolidated Complaint references a revised
Class Period (it has been filed on behalf of all persons who purchased or
otherwise acquired Corel common shares between January 15, 1997 and January 20,
1998); however, plaintiffs' theories from the individual complaints (as
summarized above) remain the same.

                                       10
<PAGE>
 
On November 9, 1998, the Company filed a Motion to Dismiss the Consolidated
Complaint in its entirety.  On December 30, 1998, Plaintiffs filed a related
Motion to strike certain documents referred to in the Company's Motion to
Dismiss.  Both motions were fully briefed by February 12, 1999.  The
plaintiffs have not yet brought their motion to certify the class and the
filing.

The Company intends to defend this class action litigation vigorously.  However,
due to the inherent uncertainties of litigation, the Company cannot accurately
predict the ultimate outcome of the litigation.  Investigating and defending the
Consolidated Complaint may require expenditure of material amounts of funds and
may require a significant amount of management's time and resources.  An
unfavorable outcome in the litigation could have a material adverse effect on
the Company's business, financial condition and results of operations.
Announcement of material developments in the litigation prior to its resolution
could adversely affect the market price of Corel's common shares.

On March 12, 1998, the Company received notice that a complaint had been filed
against it by Hedy Lamarr in the 9th Judicial Circuit for Orange County Florida.
The complaint was subsequently moved to the United States District Court for the
Middle District of Florida, Orlando Division. The complaint alleged that the
plantiff has suffered damages arising from Corel's use of her image in
connection with CorelDRAW 8 and related product packaging. The plaintiff
demanded payment of a reasonable royalty for Corel's use of her name and
likeness and sought injunctive relief enjoining further use. The plaintiff made
no efforts to obtain injunctive relief until she filed a motion on September 28,
1998 for Partial Summary Judgment and for Preliminary Injunction.

On December 1, 1998, Corel Corporation and Hedy Lamarr announced a settlement of
the lawsuit initiated by Ms. Lamarr in March 1998. In addition, Ms. Lamarr
granted Corel a five-year exclusive licence to use the lifelike vector
illustration of Hedy Lamarr on Corel's graphic software packaging.

On May 25, 1998, Revenue Canada advised the Company of proposed income tax
adjustments for fiscal years ended November 30, 1992 to 1995.  The Company filed
a Response to Revenue Canada's Proposal on October 23, 1998 and is awaiting
reply.  The Company has recorded a provision of $2,468,000, inclusive of
interest and penalties, for certain adjustments.  However, it is not possible to
accurately estimate the amount, if any, of additional income taxes that may
result from the remaining adjustments identified and therefore, no further
provision has been made.

On or about October 2, 1998, the Company became aware that a class action
lawsuit had been filed against it by plaintiff Karla A. Lyon in the Superior
Court of California, County of San Diego.  The complaint also names as co-
defendants Corel Corporation (USA), Corel, Inc., Fry's Electronics, and David
Bicknell, a manager of one of Fry's Electronics' stores.  The complaint was
filed on behalf of all persons whose photograph or likeness was, without that
person's consent, knowingly used by any of the defendants within the State of
California.

The complaint alleges that the defendants violated section 3344 of the
California Civil Code, respecting commercial use of identifiable individuals'
photographs, and section 3294 of the California Civil Code, respecting
oppression, fraud, and malice. The complaint alleges that the defendants entered
into a common plan to obtain photographs of the class members and use, without
consent, such photographs for commercial purposes including incorporating the
photographs into products, merchandise, and on-line sales through the Internet.
The complaint alleges that the defendants evaded just debts and royalties
payable to the class members together with monetary damages for unauthorized use
of those photographs.  The complaint further alleges that, to the extent
pecuniary compensation would not afford adequate relief, all class members are
entitled to an injunction preventing the defendants from further use of
identified photographs.  The Company cannot identify which of its products
contain identified photographs until the class is certified, which certification
the Company contests. The complaint seeks an unspecified amount of monetary
damages together with injunctive relief.

The plaintiff has propounded her first set of documentary and interrogatory
discovery on the Company and the Company has responded.  The plaintiff has not
yet brought her motion to certify the class and the filing.

The Company intends to aggressively defend this class action litigation.
However, due to the inherent uncertainties of litigation, the Company cannot
accurately predict the ultimate outcome of the litigation. Investigating and
defending the class action may require expenditure of material amounts of funds
and may require a significant amount of management's time and resources.  An
unfavorable outcome in this litigation could have a material adverse effect on
the Company's business, financial condition and results of operations.
Announcement 

                                       11
<PAGE>
 
of material developments in the litigation prior to its resolution could
adversely affect the market price of Corel's common shares.

The Company is a party to a number of additional claims arising in the ordinary
course of business relating to intellectual property and other matters.  The
Company believes that the ultimate resolution of these claims will not have a
material adverse effect on its business, financial position or results of
operations.

 ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 1998.

                                       12
<PAGE>
 
                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

PRICE RANGE OF COMMON SHARES

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

<TABLE>
<CAPTION>
                                        FISCAL 1998           FISCAL 1997
                                    HIGH          LOW        HIGH        LOW
                                    ----          ---        ----        ---
  THE TORONTO STOCK EXCHANGE                     (Canadian dollars)
-----------------------------------
<S>                                 <C>           <C>        <C>         <C> 
  First Quarter....................  $4.01        $2.17      $11.10       $7.45
  Second Quarter...................   4.24         2.75        9.70        6.90
  Third Quarter....................   3.30         1.78        9.15        7.60
  Fourth Quarter...................   4.15         1.75        8.95        3.13

  NASDAQ NATIONAL MARKET...........                   (US dollars)
-----------------------------------
  First Quarter....................  $2.94        $1.41      $ 8.25       $6.38
  Second Quarter...................   3.13         1.94        7.13        5.00
  Third Quarter....................   2.52         1.16        6.75        5.50
  Fourth Quarter...................   3.00         1.06        6.50        2.23
</TABLE>

As of February 16, 1999, there were 765 holders of record of Common Shares. A
substantial number of Common Shares of the Company are held by depositories,
brokerage firms and financial institutions in "street name." Based upon the
number of annual reports and proxy statements requested by such nominees, the
management of the Company estimates that the number of beneficial holders of
Common Shares approximates 35,000 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, other than the
withholding tax requirements described below.

TAXATION

The following discussion summarizes certain tax considerations relevant to an
investment by individuals and corporations who, for income tax purposes, are
resident in the United States and not in Canada, hold Common Shares as capital
property, and do not use or hold the Common Shares in carrying on business
through a permanent establishment or in connection with a fixed base in Canada
(collectively, "Unconnected US Shareholders"). The Canadian tax consequences of
an investment in the Common Shares by investors who are not Unconnected US
Shareholders may be expected to differ substantially from the tax consequences
discussed herein. The discussion is based upon the provisions of the Income Tax
Act (Canada) (the "Tax Act"), the Convention between Canada and the United
States of America with respect to taxes on Income and on Capital
(the"Convention") and the published administrative practices of Revenue Canada,
Taxation and judicial decisions; all of which are subject to change. The
discussion does not take into account the tax laws of the various provinces or
territories of Canada.

The discussion is intended to be a general description of the Canadian tax
considerations and does not take into account the individual circumstances of
any particular shareholder.

Any cash dividends and stock dividends on the Common Shares payable to
Unconnected US Shareholders 

                                       13
<PAGE>
 
generally will be subject to Canadian withholding tax. Under the Convention, the
rate of withholding tax generally applicable to Unconnected US Shareholders is
15%. In the case of a United States corporate shareholder owning 10% or more of
the voting shares of the Company, the applicable withholding tax under the
revised Canada US Income Tax Convention is reduced to 5% for 1997 and 1998.

Capital gains realized on the disposition of Common Shares by Unconnected US
Shareholders will not be subject to tax under the Tax Act unless such Common
Shares are taxable Canadian property within the meaning of the Tax Act. Common
Shares will generally not be taxable Canadian property to a holder unless, at
any time during the five-year period immediately preceding a disposition, the
holder, or persons with whom the holder did not deal at arm's length, or any
combination thereof, owned 25% or more of the issued shares of any class or
series of the Company. If the Common Shares are considered taxable Canadian
property to a holder, the Convention will generally exempt Unconnected US
Shareholders from tax under the Tax Act in respect of a disposition of Common
Shares provided the value of the shares of the Company is not derived
principally from real property situated in Canada. Neither Canada nor any
province thereof currently imposes any estate taxes or succession duties.

DIVIDEND POLICY

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

ITEM 6.  SELECTED FINANCIAL DATA

The statement of operations data set forth below with respect to the years ended
November 30, 1996, 1997 and 1998 and the balance sheet data at November 30, 1997
and 1998 are derived from the audited financial statements of Corel included in
Item 8 hereof and should be read in conjunction with those financial statements
and the notes thereto. The statement of operations data set forth below with
respect to the fiscal years ended November 30, 1994 and 1995 and the balance
sheet data at November 30, 1994, 1995 and 1996 are derived from audited
financial statements not included in this Annual Report on Form 10-K. All
amounts are in United States dollars.

<TABLE> 
<CAPTION> 
                                                            YEAR ENDED NOVEMBER 30
                                              ------------------------------------------------------
                                                  1998        1997       1996       1995      1994
                                              ------------------------------------------------------
<S>                                           <C>           <C>         <C>        <C>       <C>
                                                       (in thousands, except per share data)
CANADIAN GAAP
 
Sales ......................................     $246,827   $ 260,581   $334,245   $196,379  $164,313
Income (loss) from continuing operations          (30,448)   (231,678)    (2,750)    14,484    32,503
Income (loss) from continuing
   operations per share (fully diluted).....        (0.51)      (3.84)     (0.05)      0.26      0.63
Cash and short-term investments.............       24,506      30,629      6,924     81,816    85,618
Working capital.............................         (108)     20,356    120,945    149,353   129,094
Total assets................................      140,159     163,743    398,478    221,346   191,422
Novell Obligations..........................       27,885      37,544     49,330          -         -
Shareholders' equity........................       28,583      59,809    290,260    195,858   164,953
 
US GAAP
 
Income (loss) from continuing operations          (30,448)   (231,678)    (2,750)    14,484    32,503
 
Net income (loss) from continuing
   operations per share (fully diluted).....        (0.51)      (3.84)     (0.05)      0.29      0.67
</TABLE>

                                       14
<PAGE>
 
Note:   The summary financial information is prepared on the basis of Canadian
         GAAP, which is different in some respects from US GAAP. Significant
         differences between Canadian GAAP and US GAAP are set forth in Note 12
         of "Notes to Consolidated Financial Statements" included in Item 8
         hereof.

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

The information set forth on pages 20-35 of the 1998 Annual Report to
Shareholders is incorporated herein by reference on pages 27-40 and is filed
herewith as Exhibit 13.1.

ITEM 7A. FINANCIAL INSTRUMENTS - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK

As described in Note 4 to the 1998 Consolidated Financial Statements (included
in exhibit 13.2), the Company's Product Return Obligation includes interest
charges of 1% over the US prime rate and is therefore subject to interest rate
risk.  Assuming principal repayments of $7,000,000 in 1999 and $5,322,000 in
2000 as set out in Note 4 to the 1998 Consolidated Financial Statements and a US
prime rate of 7.75% (rate at November 30, 1998 according to the US Federal
Reserve Bank), a 10% increase in the US prime rate would result in interest
charges of $586,835 in 1999 and $253,460 in 2000; using a weighted average
principal balance.  The interest charges using the above US prime rate and the
weighted average principal balances would be $539,088 in 1999 and $232,838 in
2000.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following financial statements and independent auditors' report set forth on
pages 36-55 and the back cover of the 1998 Annual Report to Shareholders is
incorporated herein by reference on pages 41-59 and is filed herewith as Exhibit
13.2.

 .    Independent Auditors' Report;
 .    Consolidated Balance Sheets at November 30, 1998 and 1997;
 .    Consolidated Statements of Operations and Retained Earnings (Deficit) for
     the years ended November 30, 1998, 1997, and 1996;
 .    Consolidated Statements of Changes in Financial Position for the years
     ended November 30, 1998, 1997, and 1996; and
 .    Notes to Consolidated Financial Statements.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.




                                       15
<PAGE>
 
                                    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:

<TABLE>
<CAPTION>
    NAME                        AGE  POSITION WITH THE COMPANY
    <S>                         <C>  <C>
    Dr. Michael C.J. Cowpland    55  Chairman of the Board; President; Chief Executive Officer

    Derek Burney                 36  Executive Vice President, Engineering

    Kim E. Dixon                 37  Executive Vice President, Corporate Communications

    Sandra Gibson                35  Executive Vice President, Corporate Services

    Tony O'Dowd                  32  Executive Vice President, International Product
                                     Development, General Manager, Corel Corporation
                                     Limited

    Jim Orban                    30  Executive Vice President, Marketing

    Michael P. O'Reilly          46  Executive Vice President Finance; Chief Financial
                                     Officer; Treasurer

    Eric Smith                   32  Corporate Counsel and Secretary

    Carey Stanton                31  Executive Vice President, Business Development and
                                     Legal Affairs

    Don Sylvester                44  Executive Vice President, Sales

    Kerry D. Williams            36  Executive Vice President, Manufacturing

    Lyle B. Blair (1)            68  Director

    Hon. William G. Davis (1)    69  Director

    Hunter S. Grant (1)          56  Director

    Jean-Louis Malouin           55  Director

    Hon. Barbara McDougall       61  Director
</TABLE>

________
(1)    Member of the Audit Committee

DR. MICHAEL C.J. COWPLAND founded the Company and has served as a Director,
Chairman of the Board and President of the Company since May 1986. Prior to
founding the Company in 1985, Dr. Cowpland held a variety of executive positions
with Mitel Corporation, a telecommunications company; most recently as Chairman
of the Board.

DEREK BURNEY joined the Company in April 1994 as the Project Leader for Corel
Flow.  Mr. Burney was promoted to Technology Manager in August 1995 and then as
the Director of CAD 3D in February 1996.  He held this position until October
1997 when he went 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 Corel in May 1998, Mr. Burney was appointed Senior
Vice President - Engineering until December 1998 at which time he was promoted
to his current position, Executive Vice President, Engineering.

KIM E. DIXON joined the Company in August 1990 as Senior Product Specialist -
Central USA and was appointed Corporate Accounts Manager - USA in December 1990
and North American Marketing Manager in November 1991. Ms. Dixon held the
positions of Manager of Media and Market Development - United Kingdom,
Australia, New Zealand from January 1993 until July 1993, Manager of
International Advertising and Product Marketing from August 1993 until August
1995, Creative Director from September 1995 until January 1997 and Vice
President, Marketing from February 1997 until December 1998 at which time she
was appointed to her current position, Executive Vice President, Corporate
Communications.

                                       16
<PAGE>
 
SANDRA GIBSON joined the Company in March 1990 as a Human Resource Generalist.
She held the positions of Supervisor, Human Resources from January 1993 until
March 1995, Manager, Human Resources from March 1995 until February 1996,
Director, Human Resources from March 1996 until September 1996, Director,
Corporate Services from September 1996 until January 1997 and Vice President,
Human Resources from February 1997 until December 1998 at which time she was
appointed to her current position, Executive Vice President, Corporate Services.

TONY O'DOWD joined the Company in 1995 as a Senior Development Engineering
Manager.  Before joining Corel, he was a principal development engineer with
Lotus Development Corporation and a technology manager with Symantec
Corporation.  In September 1996, he was appointed Operations Director and
General Manager and held this position until May 1998 when he was promoted to
General Manger, Corel Corporation Limited.  Mr. O'Dowd was promoted to Vice
President, International Product Development in July 1998 and again to his
current position of Executive Vice President, International Product Development,
General Manager, Corel Corporation Limited in December 1998. Mr. O'Dowd holds a
Bachelor of Science in Computer Science from Dublin's Trinity College, where he
spent three years lecturing on Assembly Language and Micro Processor Design.

JIM ORBAN joined the Company in October 1995 as a Senior Account Manager.  He
held this position until November 1997 when he was promoted to Vice President of
North American Channel Sales.  Mr. Orban moved into the Marketing department of
the Company in September 1998 and was appointed Senior Vice President of
Marketing.  In December 1998 he was appointed to his current position, Executive
Vice President, Marketing.

MICHAEL P. O'REILLY was appointed Executive Vice President, Finance, Chief
Financial Officer and Treasurer in December, 1997. Prior to joining Corel, Mr.
O'Reilly was a senior tax partner in the Ottawa practice of KPMG, the
international professional advisory services firm.  Mr. O'Reilly is a Chartered
Accountant.  He holds a B.A. from the University of Western Ontario and an Hons.
B.Comm from the University of Windsor.

ERIC SMITH joined Corel in May 1996 as Corporate Counsel and continues to hold
this position. He received his appointment to Corporate Counsel and Secretary in
October 1998. Mr. Smith was called to the bar in 1996 and holds an LL.B. from
the University of Western Ontario.

CAREY STANTON joined the Company in May 1991 as Sales Leads Coordinator and was
appointed Account Executive for CorelSCSI - USA in October 1991 and Product
Marketing Manager in December 1991. He held the positions of Manager, OEM Sales
for CorelSCSI, RAID and other Network related product lines from August 1992
until August 1993, Business Manager from September 1993 until January 1997 and
Vice President, Business Development from February 1997 until December 1998; at
which time he was appointed to his current position, Executive Vice President,
Business Development and Legal Affairs.

DON SYLVESTER joined Corel in August 1997.  As Executive Vice President, Sales,
Mr. Sylvester has twenty years of sales and marketing experience, including
seven years with Dell Computer Corporation as the Director of Commercial Sales.
Mr. Sylvester holds an MBA from the University of Windsor.

KERRY D. WILLIAMS joined the Company in November 1989 as Materials
Administrator. He held the positions of Manufacturing Manager from February 1990
until January 1994, Director, Operations and Advertising from January 1994 until
August 1995, Director, Operations from September 1995 until January 1997 and
Vice President, Manufacturing from February 1997 until December 1998; at which
time he was appointed to his most recent position, Executive Vice President,
Manufacturing.

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.

HON. WILLIAM G. DAVIS has been a Director since September 1989. Mr. Davis has
been counsel to Tory Tory DesLauriers & Binnington, Barristers and Solicitors,
since February 1986. He served as Canada's Special Envoy on Acid Rain from March
1985 to March 1986 and prior to March 1985 was Premier of the Province of
Ontario. Mr. Davis is a director of The Seagram Company Ltd., Magna 
International Inc. and First American Title Insurance Company, all of which are
reporting companies under the Securities Exchange Act of 1934.

                                       17
<PAGE>
 
HUNTER S. GRANT has been a Director since September 1989. Mr. Grant was the Co-
Publisher, President and General Manager of the Recorder and Times Limited, a
newspaper publishing company, from July 1977 until July 1998.  He is currently
the President of Kingmer Holding Ltd.

JEAN-LOUIS MALOUIN became a Director in November 1997. Since 1992, Dr. Malouin
has been the Dean of the Faculty of Administration at the University of Ottawa.
From 1989 to 1992, Dr. Malouin was the Dean of Administration at the University
of Alberta and is a former dean at the Universite 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 Universite du Quebec and the Ottawa Economic Development 
Corporation (OCEDCO).

HON. BARBARA MCDOUGALL became a Director in April 1998. As a Member of
Parliament, Mrs. McDougall was appointed to a number of Cabinet posts,
including Employment and Immigration and Secretary of State for Internal
Affairs. Mrs. McDougall has held a number of positions in the business
community since her retirement from politics in 1993. Currently, Mrs.
McDougall serves as the Chairperson of Morguard Real Estate Investment Trust
and the Japan Society; Director of AT&T Canada, the Independent Order of
Foresters, the Canadian Opera Company and the Council for Canadian Unity and
Governor of York University. She was appointed President and CEO of the
Canadian Institute of International Affairs in February 1999.


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 officers of the Company serve at the
discretion of the Board of Directors of the Company. There are no family
relationships among any of the directors and executive officers of the Company.

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

The Compensation Committee has a mandate to: (a) monitor compliance with
provincial legislation applicable in respect of employment practices of the
Company, (b) determine the appropriate allocation of stock options to eligible
participants in the Corel Corporation Stock Option Plan, (c) determine Chief
Executive Officer and senior officer compensation, (d) monitor compliance with
statutory requirements for employment matters including remittances and
legislation, and (e) review general policy matters relating to employment and
wage equity, compensation and benefits of employees of the Company generally.
The Committee met 5 times in fiscal 1998 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.

                                       18
<PAGE>
 
ITEM 11.  EXECUTIVE COMPENSATION

The following table, presented in accordance with the regulations to the
Securities Act (Ontario), sets forth all compensation paid in respect of the
individuals who were, at November 30, 1998, the Chief Executive Officer and the
other four most highly compensated executive officers of the Company (the "named
executive officers").


                           SUMMARY COMPENSATION TABLE
                                        
<TABLE>
<CAPTION>
                                                                     LONG-TERM
                                          ANNUAL COMPENSATION       COMPENSATION
                                     ------------------------------
                                                         OTHER         AWARDS         ALL
                                                                   --------------
                                                         ANNUAL      SECURITIES      OTHER
NAME AND PRINCIPAL                                       COMPEN-    UNDER OPTIONS    COMPEN-
POSITION                        YEAR   SALARY   BONUS   SATION (1)   GRANTED (#)    SATION (2)
-------------------------      ------ --------  -----  -----------  --------------------------
<S>                            <C>    <C>       <C>    <C>         <C>             <C>         
Michael C.J. Cowpland           1998  $201,384    Nil   $      -         275,000
  Chairman, President and       1997   213,236    Nil          -               -
  Chief Executive Officer       1996   188,388    Nil          -       1,175,000
                                                    
Michael P. O'Reilly             1998   130,565    Nil          -         131,800
  Executive Vice President      1997         -    Nil          -               -
  Finance, CFO and Treasurer    1996         -    Nil          -               -
                                                    
Carey Stanton                   1998   134,254    Nil          -          81,200
  Executive Vice President,     1997   119,962    Nil          -               -
  Business Development and      1996    97,916    Nil          -          38,800
  Legal Affairs
                                             
Don Sylvester                   1998   135,848    Nil     32,420(4)       31,800
  Executive Vice President      1997    48,288    Nil      9,221(4)      100,000
  Sales                         1996         -    Nil          -               -
                                                    
Kerry D. Williams               1998   134,254    Nil          -          31,200
  Executive Vice President,     1997   130,287    Nil          -               -
  Manufacturing                 1996   128,414    Nil          -          36,800
                                                    
Paul Skillen (3)                1998   154,000    Nil          -         100,000    $110,000
  former Vice President,        1997   184,304    Nil          -               -
  Software Development          1996   117,296    Nil          -          80,000
----------------------------------------------------------------------------------------------
</TABLE>

Notes:

(1)  Perquisites and other personal benefits do not exceed the lesser of $50,000
     and 10% of the total of the annual salary and bonus for any of the named
     executive officers.
(2)  These include the amounts paid, payable or accrued to any named executive
     officer pursuant to an arrangement in connection with the resignation of
     such executive officer's employment with the Company.
(3)  This additional disclosure includes an individual for whom disclosure would
     have been provided as part of the four most highly paid executive officers
     above but for the fact that the individual was not serving as an executive
     officer of the Company at the end of fiscal 1998.
(4)  Represents commissions paid to Mr. Sylvester.


                                       19
<PAGE>
 
The following table sets forth the stock options granted under the Plan during
the fiscal year ended November 30, 1998 to the named executive officers.

              OPTION GRANTS FOR THE YEAR ENDED NOVEMBER 30, 1998
            AND POTENTIAL REALIZABLE VALUE OF EACH GRANT OF OPTIONS

<TABLE>
<CAPTION>
                                                                                Potential Realizable
                                                                                 Value at Assumed   
                                                                                  Annual Rates of   
                                                                                    Stock Price     
                          Number of    % of total    Exercise                    Appreciation for   
                         Securities      Options      or base                       Option Term     
                         underlying    granted to      Price                           (CAD$)        
                          options     employees in   ($/share)   Expiration     ---------------------
        Name             granted (#)   fiscal year     (CAD$)        Date          5% ($)    10% ($)
-----------------------------------------------------------------------------------------------------
<S>                      <C>          <C>            <C>        <C>             <C>         <C>
Michael C.J. Cowpland       275,000              8%     $3.00   June 23, 2002   $177,793    $382,883
Michael P. O'Reilly         100,000              3%     $3.15   Dec   9, 2001     67,884     146,192
                             31,800              1%     $3.00   June 23, 2002     20,559      44,275
Carey Stanton                50,000              1%     $3.73   May   4, 2002     40,192      85,555
                             31,200              1%     $3.00   June 23, 2002     20,171      43,440
Don Sylvester                31,800              1%     $3.00   June 23, 2002     20,559      44,275
Kerry D. Williams            31,200              1%     $3.00   June 23, 2002     20,171      43,440
Paul Skillen (1)            100,000              3%     $2.60   March 1, 2000     24,375      49,833
</TABLE>
                                                                               
(1) All dollar amounts applicable to Paul Skillen's options are in US Dollars.
 
The following table sets forth each exercise of stock options under the Plan
during the fiscal year ended November 30, 1998 to the named executive officers.

            AGGREGATED OPTION EXERCISES DURING THE FISCAL YEAR ENDED
              NOVEMBER 30, 1998 AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
                                                                            Value of
                                                                          Unexercised
                          Securities                      Unexercised     in-the-Money
                           Acquired    Aggregate Value     Options at      Options at
                         on Exercise       Realized      Nov. 30, 1998   Nov. 30, 1998
         Name                (#)            (CAD$)            (#)            (CAD$)
-----------------------  -----------   ---------------   -------------   --------------
<S>                      <C>           <C>               <C>             <C>
Michael C.J. Cowpland              -       $         -       1,450,773        $261,250
Michael P. O'Reilly                -                 -         131,800         110,210
Carey Stanton                      -                 -         116,215          40,640
Don Sylvester                      -                 -         131,800          30,210
Kerry D. Williams                  -                 -         132,863          29,640
Paul Skillen                       -                 -          39,155               -
</TABLE>

All options are exercisable when granted.  The only exception is when options 
are granted during an employee's probationary period, usually six months in 
length.  There are no unexercisable options held by the named executive 
officers.

COMPENSATION OF DIRECTORS

Directors who are salaried officers of the Company receive no compensation for
serving on the Board. The other directors (the "independent directors"), of
which there are currently five, receive an annual retainer of CAD$16,000 and a
fee of CAD$800 (CAD$1,600 for Committee Chairman) for each Board of Directors
and Committee meeting they attend and are reimbursed for traveling costs and
other out-of-pocket expenses incurred in attending such meetings.  Each member
of the Irish Board of Directors that is not a salaried officer of the Company
receives an annual retainer of IEP 8,000.

                                       20
<PAGE>
 
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN CONTROL
ARRANGEMENTS

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

BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The philosophy of the Company in the determination of senior executive
compensation is to encourage performance in order to maintain the position of
the Company in a highly competitive environment. As a result, the compensation
package is based upon salaries which provide a reasonable level of remuneration
and broad distribution of employee stock options. Given the nature of the
industry, the performance of the stock is sensitive to the financial performance
of Corel and as such, provides a compensation regime which encourages active
support of the Company's competitive efforts. There is also an incentive program
for those executives for which financial performance is directly related to the
department(s) they are responsible for.  This program includes commissions
and/or bonuses that are paid based on the performance targets outlined at the
beginning of the year.

With the concurrence of the Compensation Committee, the Chief Executive Officer
participates directly in the fixing of the compensation for all levels of
employees. Base compensation is reviewed annually to verify compatibility with
industry norms. This is accomplished through the Company's participation in the
High Tech Industry Compensation Survey, an online survey run by Personnel
Systems and sponsored by CATA Alliance. This survey encompasses a broad spectrum
of software development organizations and ranks the remuneration of Corel
employees and executives in comparison with the other organizations included in
the survey. As a result of this survey, it was determined that the Company's
remuneration practices for executives are competitive with those of the industry
in general. The Chief Executive Officer is involved in all aspects of
compensation determination and he assesses, with the assistance of the relevant
managers on an on-going basis, performance of the individual incumbents.
Individual salaries are set in an appropriate salary range and reflect the
employee's experience and proven or expected performance.

The Compensation Committee reviews and approves the compensation for the Chief 
Executive Officer on an annual basis. The compensation set for the Chief 
Executive Officer in fiscal 1998 was appropriate under the circumstances.

The Corel Corporation Stock Option Plan (the "Plan") is administered by the
Compensation Committee (the "Committee") of the Board of Directors. Under the
Plan, the Committee may grant options to purchase Common Shares of the Company
to all eligible participants including directors on the Board of Directors and
persons appointed as an officer of the Company by the Board of Directors. The
factors which the Committee considers when granting options include outstanding
performance and/or contribution to Corel. To ensure a linkage of management with
the shareholder, stock options are granted at 100% of market value at the time
of the stock option grant. All options granted under the Plan are non-
transferable and the exercise price thereof must be paid at the time of
exercise. Options are exercisable for a period of four years from the date of
grant. Options held by a participant who ceases to hold a board or office
position or whose employment is terminated for any reason, including death, are,
for options granted prior to November 1, 1993, exercisable to a date which is
not later than four years from the date of the grant. Options granted since that
date are exercisable for 30 days following termination, unless otherwise
determined by the Chief Executive Officer. The number of stock options available
for grant under the program are determined by shareholder resolution and fixed
as at April 18, 1997 at 16,000,000. They are restricted for certain participants
to 10% of the issued and outstanding capital of the Company from time to time.

No additional benefits or perquisites are provided to members of management that
are not available to employees of Corel generally. These currently include
health, long-term disability, dental and group life insurance and a fitness
membership.

The members of the compensation committee as at November 30, 1998 are as
follows:

Hunter S. Grant (Chairman)
The Honourable William G. Davis

                                       21
<PAGE>
 
PERFORMANCE GRAPH

The following chart and graph compares the yearly percentage change over the
last five years in the cumulative total shareholder return on the Company's
Common Shares with the cumulative total return of the S&P 500 Index and the
NASDAQ Computer and Data Processing Services Stock Index:


FIVE-YEAR TOTAL RETURN ON $100 INVESTMENT

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
                                                      1994    1995    1996    1997    1998
----------------------------------------------------------------------------------------------
<S>                                                  <C>     <C>     <C>     <C>     <C>
Corel                                                100.00  122.48   59.01   16.79   18.80
Computer and Data Processing Services Stock Index    100.00  156.00  192.46  248.41  361.81
S&P 500 Index                                        100.00   97.92  111.51  143.93  155.80
-------------------------------------------------------------------------------------------
</TABLE>

                       [PERFORMANCE GRAPH APPEARS HERE]

                                       22
<PAGE>
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of February 24, 1999, 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 executive officer and (3) by all
directors and executive officers as a group.

<TABLE>
<CAPTION>                                                      
                                                   COMMON SHARES     
                                                   BENEFICIALLY      EXERCISABLE     PERCENTAGE 
NAME AND ADDRESS OF BENEFICIAL OWNER                  OWNED            OPTIONS        OWNED (1) 
-------------------------------------              -------------     -----------     ----------
<S>                                                <C>               <C>             <C>
Dr. Michael C.J. Cowpland                              5,450,558       1,450,773           11.0
Novell, Inc                                            4,296,000               -            7.0
    1555 N. Technology Way                                                                    
    Orem, Utah 84057                                                                        
Lyle B. Blair                                              3,000          37,107              *
Hon. William G. Davis                                      1,500          37,620              *
Hunter S. Grant                                                -          40,186              *
Jean Louis Malouin                                             -          15,000              *
Barbara McDougall                                              -          15,000              *
Derek Burney                                                 300          12,623              *
Kim E. Dixon                                                   -          41,273              *
Sandra Gibson                                                  -          11,343              *
Tony O'Dowd                                                1,000          39,463              *
Jim Orban                                                      -          22,853              *
Michael P. O'Reilly                                            -         131,800              *
Eric Smith                                                     -             811              *
Carey Stanton                                                  -          85,015              *
Don Sylvester                                             33,800         131,800              *
Kerry D. Williams                                            290         101,663              *
Directors and Executive Officers as a                  5,498,148       2,112,098           12.0
 group (15 persons) (2)
</TABLE>
                                                    *     Indicates less than 1%

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

(2)  The address for each director and executive officer is Corel Corporation,
     1600 Carling Avenue, Ottawa, Ontario, Canada  K1Z 8R7.
 
Statements contained in the table as to securities beneficially owned by
directors, executive officers and beneficial owners of more than 5% of the
Company's outstanding Common Shares are, in each instance, based upon
information obtained from such directors and executive officers. Statements
contained in the table as to securities beneficially owned by beneficial owners
of holders of 5% or more of the Company's outstanding Common Shares are based on
Schedules 13G or 13D filed by such persons with the U.S. Securities and Exchange
Commission.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

                                       23
<PAGE>
 
                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A)  FINANCIAL STATEMENTS AND SCHEDULES

       The following audited financial statements of Corel (together with the
       independent auditors reports thereon and the notes thereto) are included
       in this Report:

       (a)   Consolidated Balance Sheets at November 30, 1998 and 1997.
       (b)   Consolidated Statements of Operations and Retained Earnings
             (Deficit) for the years ended November 30, 1998, 1997 and 1996.
       (c)   Consolidated Statements of Changes in Financial Position for the
             years ended November 30, 1998, 1997 and 1996.
 
       Financial statement schedules have been omitted because the required
       information is included in the financial statements or notes thereto as
       set forth under Item 8 of this Report on Form 10-K.

(B)  REPORTS ON FORM 8-K

       On October 23, 1998, the Company filed a report on form 8-K to report on
       the resignation of KPMG LLP Chartered Accountants as its independent
       auditor and certifying accountant and the appointment of
       PricewaterhouseCoopers LLP as the Company's independent auditor and
       certifying accountant.

(C)  LISTING OF 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 - Corel Corporation
                    and Corel Computer Corp.
 
            4.1     Specimen of Common Share Certificate (1)        
                                                                    
           10.1     Distribution Agreement dated October 2, 1991 between Corel
                    Corporation and Ingram Micro Inc. (1)  

           10.2     Distribution Agreement dated May 11, 1989 between Corel
                    Corporation and Merisel, Inc. (formerly Softsel Computer
                    Products, Inc.) (1)

           10.3     Agreement for Purchase and Sale by and among Novell, Inc.,
                    Corel Corporation, Corel Corporation Limited, and Corel
                    Corporation (Delaware) (3)

           13.1     Management's Discussion and Analysis of Financial Condition
                    and Results of Operations (Incorporated by Reference to
                    pages 20-35 of the 1998 Annual Report to Shareholders ("1998
                    Annual Report"))
                    
           13.2     Financial Statements (Incorporated by Reference to pages 36-
                    55 and Cover Back of the 1998 Annual Report) 

           21.1     Subsidiaries of Registrant (Incorporated by Reference to 
                    Exhibit 13.2 filed herein)
                                     
           23.1     Auditors' Report - KPMG LLP Chartered  Accountants
                                                                  
           99.1     Form of License Agreement, including Limited Warranty (1)

________________

                                       24
<PAGE>
 
       (1)  Incorporated by reference to Registration Statement on Form F-1 File
            No. 33-50886.
       (2)  Incorporated by reference to Annual Report on Form 10-K for the
            fiscal year ended November 30, 1994.
       (3)  Incorporated by reference to Exhibit 2.01 to the Company's Report on
            Form 8-K/A, Amendment No. 2, dated March 1, 1996.

                                  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 22, 1999.


                                   COREL CORPORATION
 

                                   By /s/ Michael P. O'Reilly
                                      ------------------------------------------
                                          Michael P. O'Reilly
            Executive Vice President Finance; Chief Financial Officer; Treasurer


                               POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints MICHAEL C.J. COWPLAND and MICHAEL P. O'REILLY,
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 22, 1999.


            SIGNATURE                                  TITLE
 
    /s/ Michael C.J. Cowpland           Chairman of the Board of Directors,
  -----------------------------
      Michael C.J. Cowpland            President and Chief Executive Officer
 

        /s/ Lyle B. Blair                           Director
  -----------------------------                              
          Lyle B. Blair                                    
                                                           
                                                           
      /s/ William G. Davis                          Director
  -----------------------------                              
        William G. Davis                                   
                                                           
                                                           
       /s/ Hunter S. Grant                          Director
  -----------------------------                              
         Hunter S. Grant                                   
                                                           
                                                           
     /s/ Jean-Louis Malouin                         Director
  -----------------------------                              
       Jean-Louis Malouin                                  
                                                           
                                                           
      /s/ Barbara McDougall                         Director
  -----------------------------
        Barbara McDougall
 

     /s/ Michael P. O'Reilly              Executive Vice President Finance;
  -----------------------------
       Michael P. O'Reilly             Chief Financial Officer and Treasurer
                                   (principal financial and accounting officer)

                                       25
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------

<TABLE>
<CAPTION>
Exhibit Number    Description                                            
--------------    -----------                                            
<S>               <C>                                                    
 3.3              Certificate and Articles of Amalgamation 

13.1              Management's Discussion and Analysis of Financial 
                  Condition and Results of Operations
                                                                            
13.2              Financial Statements
                                                                            
21.1              Subsidiaries of Registrant
                                                                            
23.1              Auditors' Report - KPMG LLP Chartered Acountants

</TABLE>