SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


         (Mark one)


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

                    For the Quarter ended September 30, 1999

                                       OR

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


                        For the transition period from to

                        Commission File Number: 0-24077

                         Mobius Management Systems, Inc.
             (Exact name of registrant as specified in its charter)


                Delaware                            13-3078745
       (State or other jurisdiction of          (I.R.S. Employer
       incorporation or organization)        Identification Number)



120 Old Post Road, Rye, New York                           10580
(Address of principal executive offices)                (zip code)


                                 (914) 921-7200
              (Registrant's telephone number, including area code)


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 ||



Number of shares outstanding of the issuer's common stock as of November 12,1999

                 Class                          Number of Shares Outstanding

Common Stock, par value $0.0001 per share                17,976,962



<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX


PART I      FINANCIAL INFORMATION


         Item 1.  Financial Statements

              Consolidated Balance Sheets
                June 30, 1999 and September 30, 1999

           Consolidated Statements of Operations
                Three months ended September 30, 1998 and 1999

           Consolidated Statement of Stockholders' Equity
                Three months ended September 30, 1999
              Consolidated Statements of Cash Flows
                Three months ended September 30, 1998 and 1999

              Notes to Consolidated Financial Statements

         Item 2.  Management's Discussion and Analysis of Financial
                           Condition and Results of Operations

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk

PART II     OTHER INFORMATION

         Item 1.  Legal Proceedings

         Item 2.  Changes in Securities and Use of Proceeds


         Item 3.  Defaults Upon Senior Securities


         Item 4.  Submission of Matters to a Vote of Securities Holders

         Item 5.  Other Information

         Item 6.  Exhibits and Reports on Form 8-K



SIGNATURES


<PAGE>



PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

                         MOBIUS MANAGEMENT SYSTEMS, INC.
                           CONSOLIDATED BALANCE SHEETS
              (in thousands, except share data and per share data)



                                                                   September 30,
                                                         June 30,       1999
                                                           1999     (Unaudited)
                                                        ---------  ------------
ASSETS

Current assets:
     Cash and cash equivalents                          $ 33,546     $ 33,104
     Marketable securities, at market                      9,362        9,328
     Accounts receivable, net of allowance for
       doubtful accounts of $860 and $864,
       respectively                                       12,631        9,631
     Software license installments, current portion       10,603        9,765
     Other current assets                                  2,281        2,709
                                                        --------      -------
              Total current assets                        68,423       64,537

Software license installments, non-current portion,
     net of allowance for doubtful accounts of $812
     and $826, respectively                               12,778       11,937
Investment, at cost                                        1,501          910
Property and equipment, net                                6,039        7,267
Other assets                                                 460          448
                                                        --------     --------
              Total assets                              $ 89,201     $ 85,099
                                                        ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses              $ 13,892     $ 11,996
     Deferred maintenance revenue                         12,840       14,037
     Deferred income taxes                                 3,293        2,973
     Other liabilities                                        36           21
                                                        --------     --------
              Total current liabilities                   30,061       29,027

Deferred maintenance revenue                               3,811        3,433
Deferred income taxes                                      3,801        3,438

Stockholders' equity:
     Common  stock  $.0001  par  value;  authorized
     40,000,000  shares;  issued 21,996,150 and
     22,014,150 shares, respectively;  outstanding
     17,905,150 and 17,923,150 shares, respectively            2            2
     Additional paid-in capital                           48,409       48,436
     Retained earnings                                    16,497       13,654
     Deferred stock compensation                            (982)        (816)
     Accumulated other comprehensive income                 (398)         (75)
     Treasury stock, at cost, 4,091,000
         and 4,091,000 shares, respectively              (12,000)     (12,000)
                                                        --------     --------
              Total stockholders' equity                  51,528       49,201
                                                        --------     --------
Total liabilities and stockholders' equity              $ 89,201     $ 85,099
                                                        ========     ========


          See accompanying notes to consolidated financial statements.


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                (Unaudited, in thousands, except per share data)

                                                       Three Months Ended
                                                           September 30,
                                                        1998          1999

Revenues:
     Software license revenues                       $10,169        $ 6,430
     Maintenance and other revenues                    5,587          6,953
                                                     -------        -------
         Total revenues                               15,756         13,383
Costs of revenues:
     Software license revenues                           311            185
     Maintenance and other revenues                    1,304          1,634
                                                     -------        -------
         Total costs of revenues                       1,615          1,819
                                                     -------        -------
Gross profit                                          14,141         11,564
                                                     -------        -------
Operating expenses:
     Sales and marketing                               8,346          9,742
     Research and development                          2,571          2,959
     General and administrative                        1,654          2,962
     Stock compensation expense                          323            166
                                                     -------        -------
         Total operating expenses                     12,894         15,829
                                                     -------        -------
Income (loss) from operations                          1,247         (4,265)

License and other interest income                        672            726
Interest expense                                          (7)            (1)
Foreign currency transaction (losses) gains              (33)            46
Investment impairment                                      -           (591)
                                                     -------        -------
Income (loss) before income taxes                      1,879         (4,085)

Provision (benefit) for income taxes                     988         (1,242)
                                                     -------        -------
Net income (loss)                                    $   891        $(2,843)
                                                     =======        =======

Basic earnings (loss) per share                      $  0.05         $(0.16)
Basic weighted average shares
     outstanding                                      17,747         17,916

Diluted earnings (loss) per share                    $  0.05         $(0.16)
Diluted weighted average
     shares outstanding                               18,724         17,916


          See accompanying notes to consolidated financial statements.



<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                            (Unaudited, in thousands)


<TABLE>
<CAPTION>

                                                                                     Accumulated
                                                                                        Other                           Total
                                                   Additional                        Comprehensive                   Stockholders'
                                    Common  Stock    Paid-in   Retained   Deferred   Income, net   Treasury Stock     (Deficit)
                                    Shares  Amount   Capital   Earnings Compensation   of tax      Shares  Amount      Equity
<S>                                <C>       <C>    <C>        <C>        <C>          <C>         <C>    <C>         <C>
Balance at June 30, 1999           17,905     2     $48,409    $16,497    $(982)       $(398)      4,091  $(12,000)   $51,528
Net loss                                -     -          -      (2,843)         -           -           -         -     (2,843)
Change in other comprehensive
  income, net of tax                    -     -          -         -           -         323           -         -        323
                                                                                                                       ------
Comprehensive loss                      -     -          -         -           -           -           -         -     (2,520)
Stock options exercised                18     -         27         -           -           -           -         -         27
Change in deferred compensation         -     -          -         -        166            -           -         -        166
                                  ===========================================================================================
Balance at September 30, 1999      17,923  $  2     $48,436   $13,654    $ (816)       $ (75)      4,091  $(12,000)   $49,201
                                  ===========================================================================================
</TABLE>

See  accompanying   notes  to  consolidated financial statements.

<PAGE>





                         MOBIUS MANAGEMENT SYSTEMS, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited, in thousands)

                                                        Three Months Ended
                                                           September 30,
                                                           1998       1999


Cash flows provided by operating activities:
  Net income (loss)                                  $    891      $ (2,843)
                                                     --------      --------
Adjustments to reconcile net
  income (loss) to net cash provided
  by operating  activities:
   Deferred income taxes                                  (42)         (683)
   Depreciation and amortization                          264           561
   Stock compensation expense                             323           166
   Impairment of investment                                --           591
Change in operating assets
     and liabilities:
     Accounts receivable, net                           3,629         3,000
     Software license installments                       (933)        1,679
     Other assets                                        (129)         (358)
     Accounts payable and accrued expenses             (2,580)       (1,896)
     Other liabilities                                    810           (15)
     Deferred maintenance revenue                       1,290           819
                                                     --------      --------
         Total adjustments                              2,632         3,864
                                                     --------      --------
         Net cash provided by operating activities      3,523         1,021
                                                     --------      --------
Cash flows used in investing activities:
     Capital expenditures                                (412)       (1,789)
                                                     --------      --------
         Net cash used in investing activities           (412)       (1,789)
                                                     --------      --------
Cash flows (used) provided by financing activities:
   Cash received from exercise of stock options           116            22
   Payments on capital lease obligations                  (15)           --
                                                     --------      --------
         Net cash provided by financing activities        101            22
Effect of exchange rate changes on
   cash and cash equivalents                              139           304
                                                     --------      --------
Net change in cash and cash equivalents                 3,351          (442)
Cash and cash equivalents at beginning
   of period                                           42,222        33,546
                                                     --------      --------
Cash and cash equivalents at end of period           $ 45,573      $ 33,104
                                                     ========      ========
Supplemental disclosure of cash flow
   information:
   Cash paid during the period for:
     Interest                                         $     7        $    1
     Income taxes                                     $   200        $    -


 See  accompanying   notes  to  consolidated financial statements.


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Basis of Presentation

The  accompanying  consolidated  financial  statements  at  June  30,  1999  and
September 30, 1999 and for the three month periods ended  September 30, 1998 and
1999, have been prepared in accordance  with the  requirements of the Securities
and Exchange Commission (SEC) for interim reporting.  Under those rules, certain
footnotes or other financial information that are normally required by generally
accepted accounting principles (GAAP) can be condensed or omitted.

     Revenues,  expenses,  assets and liabilities  vary during the year and GAAP
requires the Company to make estimates and  assumptions in preparing the interim
financial  statements.  The Company  has made their best effort in  establishing
good faith estimates and assumptions, however, actual results may differ.

Mobius is responsible for the financial  statements  included in this Form 10-Q.
These financial statements include all normal and recurring adjustments that are
necessary for the fair presentation of Mobius's financial  position,  results of
operations  and  changes  in  cash  flow.  These  statements  should  be read in
conjunction  with the  consolidated  financial  statements and notes in Mobius's
latest Form 10-K.

(2)  Earnings Per Share

         Effective  December  1997, the Company  adopted  Statement of Financial
Accounting  Standards  (SFAS)  No.  128,  "Earnings  Per  Share".  SFAS No.  128
stipulates  that the  calculation  of earnings  per share (EPS) be shown for all
historical  periods  as Basic EPS and  Diluted  EPS.  Basic EPS is  computed  by
dividing income available to common  shareholders by the weighted average number
of common shares  outstanding  during the period. The computation of Diluted EPS
is similar to the  computation  of Basic EPS except that it gives  effect to all
potentially  dilutive  instruments that were outstanding during the period. Such
dilutive instruments include stock options.

         The following is a  reconciliation  of the numerators and  denominators
for the Basic and  Diluted  EPS  calculations  (in  thousands,  except per share
data):
<TABLE>
<CAPTION>


                                                    Three Months Ended September 30,
                                         1998                                       1999
                        -------------------------------------    ----------------------------------------
                         Net Income      Shares   Per Share       Net Income        Shares      Per Share
                         (Numerator) (Denominator)  Amount        (Numerator)   (Denominator)     Amount
                        -------------------------------------    ----------------------------------------
<S>                          <C>         <C>        <C>             <C>              <C>         <C>

Basic EPS:
Net income(loss)             $891                                   $(2,843)
                             ====                                   =======
Weighted average shares
 outstanding                             17,747                                      17,916
Basic earnings(loss)
  per share                                         $0.05                                        $(0.16)
                                                    =====                                        ======
Diluted earnings(loss)
  per share:
Net income(loss)             $891                                   $(2,843)
                             ====                                   =======
Dilutive effect of
  stock options                             977                                          -
                                         ------                                     ------
Diluted earnings (loss)
  per share                              18,724     $0.05                           17,916       $(0.16)
                                         ======     =====                           ======       ======

</TABLE>

         For the three months ended September 30, 1999 options were not included
in the Diluted EPS  calculation  because their effect was  anti-dilutive.  There
were no anti-dilutive shares for the three months ended September 30, 1998.


<PAGE>



(3)  Marketable Securities

         Marketable securities are categorized as available-for-sale securities,
as defined by Statement of Financial  Accounting  Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Unrealized holding gains
and  losses  are  reflected  as  a  net  amount  in  a  separate   component  of
stockholders' equity until realized. For the purpose of computing realized gains
and losses, cost is identified on a specific identification basis. There were no
realized  gains and losses for the three months ended  September 30, 1999. As of
June 30, 1999 and September 30, 1999,  the  unamortized  investment  premium and
unrealized holding gains and losses were insignificant.

(4)  Software License Installments

         The Company offers extended payment terms to some of its customers. For
software  license  contracts  of 15  years,  the  related  financing  period  is
generally 5 years.  For  software  installment  contracts  of 3 to 5 years,  the
payments  are  generally   spread  ratably  over  the  term.   Software  license
installments  are  discounted  at a  market  rate of  interest  at the  date the
software license  contract  revenue is recognized.  The discount is amortized to
interest income using the interest method over the term of the license contract.

(5)  Property and Equipment

   Property and equipment consists of the following (in thousands):

                                                          June 30  September 30,
                                                             1999       1999
                                                          -------  ------------

   Furniture, fixtures and office equipment               $  939      $ 1,025
   Computer equipment                                      7,803        9,291
   Leasehold improvements                                  1,153        1,415
                                                          ------      -------
                                                           9,895       11,731
   Less accumulated depreciation and amortization         (3,856)      (4,464)
                                                          ------      -------
   Property and equipment, net                            $6,039      $ 7,267
                                                          =======     =======

         Depreciation  and  amortization  expense  on  property  and  equipment,
including  capital leases,  was $264,000 and $561,000 for the three months ended
September  30, 1998 and 1999,  respectively.  At June 30, 1998 and September 30,
1999 there was $214,000 of equipment  under capital leases  included in property
and  equipment   with   accumulated   depreciation   of  $104,000  and  $112,000
respectively.

(6)      Non-Current Investments

         In June 1999, the Company invested $1,501,000 in equity securities of a
privately-held,  information  technology company.  This investment was accounted
for under the cost method. The Company has and will continue to regularly review
the assumptions  underlying the operating performance and cash flow forecasts of
this  technology  company  to assess  this  investment's  recoverability.  As of
September 30, 1999, events and circumstances have indicated that this investment
is impaired, therefore a $591,000 impairment loss has been recorded.


<PAGE>



(7)  Accounts Payable and Accrued Expenses

         Accounts  payable and accrued  expenses  consist of the  following  (in
thousands):

                                                  June 30,   September 30,
                                                    1999         1999
                                                  -------    ------------

         Accounts payable                         $ 2,179      $ 1,850
         Compensation and related benefits          5,897        5,456
         Royalties payable                          1,358        1,172
         Other                                      4,458        3,518
                                                  -------      -------
                                                  $13,892      $11,996
                                                  =======      =======

(8)  Stock Incentive Plan

         In January, February and March 1998 the Company granted 350,000 370,000
and 53,000 stock options,  respectively,  under the 1996 Stock Incentive Plan at
an exercise  price of $9.86,  $11.00 and $11.00 per share,  respectively,  which
were deemed by the Board of Directors to be fair market values for the shares on
these dates. The Company subsequently determined that these options were granted
at exercise prices below the fair market value of $14.00 per share,  the low end
of the range of per share  prices  for the  Company's  initial  public  offering
("IPO") in April 1998. As a result, the Company recognized  compensation expense
of $323,000 and $166,000 for the three months ended September 30, 1998 and 1999,
respectively. There is approximately $381,000, $264,000, $134,000 and $37,000 of
expense  relating to these 1998 option  grants to be  recognized in fiscal years
2000,  2001,  2002 and 2003,  respectively,  subject to  adjustments  for option
holder terminations.

(9)  Comprehensive Income

         Statement  of  Financial   Accounting  Standards  No.  130,  "Reporting
Comprehensive  Income"  requires the disclosure of comprehensive  income,  which
includes net income,  foreign  currency  translation  adjustments and unrealized
gains and losses on  marketable  securities  classified  as  available-for-sale.
Comprehensive  income for the quarters  ended  September 30, 1998 and 1999 is as
follows:

                                                         Three Months ended
                                                            September 30,
                                                       1998            1999
                                                      ------         -------

Net income (loss)                                     $ 891          $(2,843)
Unrealized marketable securities gain, net of tax        --                7
Unrealized translation gain, net of tax                 139              316
                                                     ------          -------
Comprehensive income, net of tax                     $1,030          $(2,520)
                                                     ======          =======



<PAGE>



(10)  Commitments and Contingencies

         In  compliance  with  the  lease  of the  corporate  headquarters,  the
Company's  landlord  holds a letter  of  credit  with  Silicon  Valley  Bank for
$275,000. This letter of credit is secured by a certificate of deposit.

(11) Sale of INFOPAC-Tapesaver

         In January 1999,  the Company sold the  INFOPAC-TapeSaver  product to a
third party for  approximately  $3.0 million.  Under the terms of the sale,  the
buyer assumed  responsibility for maintenance support for all existing TapeSaver
licenses.  As a result of this  arrangement,  the Company  will  recognize  $3.0
million of license revenue as the buyer makes payments over the next five years,
and approximately $1.0 million of maintenance revenue through December 31, 1999.
For the three months ended September 30, 1999, the Company  recognized  $157,000
of  license  revenue  and  $180,000  of  maintenance  revenue  related  to  this
arrangement.  Future license revenue will be variable  through December 31, 1999
as the buyer sells  TapeSaver  products to customers  and will be $112,500  each
quarter thereafter for the remaining four year term of the contract.


<PAGE>




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


         In this  section,  readers  are  given a more  detailed  assessment  of
Mobius's  operating  results and changes in  financial  position.  This  section
should  be  read  in  conjunction  with  the  Company's  Consolidated  Financial
Statements  and Notes.  Please  note that  references  in this  section to "last
year's quarter" and "this quarter" refer to the Company's  fiscal quarters ended
September  30, 1998 and 1999,  respectively.  Mobius's  quarterly  revenues  and
operating results have varied substantially from quarter to quarter in the past,
and are likely to continue to do so in the future.  Certain  factors  underlying
such  fluctuations,  as well as a number of other factors relevant to a reader's
understanding  of this Management  Discussion and Analysis,  are set forth under
the heading "Factors  Affecting Future  Performance"  contained in the Company's
Form 10-K filed on September 28, 1999, the full text of which is incorporated in
this Form 10-Q by this reference and filed as an exhibit hereto.

         Statements  contained in this quarterly  report,  other than historical
financial results, may contain forward-looking  statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks and uncertainties.  In particular, any statements contained herein
regarding  expectations with respect to future sales and profitability,  as well
as product  development and/or  introductions,  are subject to known and unknown
risks,  uncertainties and contingencies,  many of which are beyond the Company's
control,  which may cause actual results,  performance or achievements to differ
materially from those projected or implied in such  forward-looking  statements.
Factors that might affect actual results,  performance or achievements  include,
among other things,  overall  economic and business  conditions,  the demand for
Mobius's goods and services,  and technological advances and competitive factors
in the  markets in which  Mobius  competes.  These risks and  uncertainties  are
described  in  detail  from  time to  time in the  Company's  filings  with  the
Securities and Exchange  Commission,  including the Company's Form 10-K.  Mobius
accepts no obligation to update these  forward-looking  statements  and does not
intend to do so.

Overview

         Mobius is a leading provider of software  products  designed to provide
network- and Web-based access to present and distribute large volumes of diverse
enterprise  information.  Major financial services,  healthcare,  manufacturing,
retail  and  telecommunications  companies  and  governmental  entities  use the
Company's products to record transactions,  facilitate customer service, billing
and other mission-critical functions.



<PAGE>



Results of Operations

         The  following  table  sets  forth  certain  items  from the  Company's
Consolidated  Statement  of Income as a  percentage  of total  revenues  for the
fiscal years indicated:



                                               Three Months Ended
                                                  September 30,
                                                 1998        1999
                                               --------------------
                                                   (Unaudited)

Revenues:
  Software license revenues                      64.5%        48.0%
  Maintenance and other revenues                 35.5         52.0
                                                -----        -----
         Total revenues                         100.0        100.0
Costs of revenues:
  Software license revenues                       2.0          1.4
  Maintenance and other revenues                  8.3         12.2
                                                -----        -----
         Total costs of revenues                 10.3         13.6
                                                -----        -----
Gross profit                                     89.7         86.4

Operating expenses:
  Sales and marketing                            53.0         72.8
  Research and development                       16.3         22.1
  General and administrative                     10.5         22.1
  Stock compensation expense                      2.0          1.2
                                                -----        -----
         Total operating expenses                81.8        118.2
                                                -----        -----
Income (loss) from operations                     7.9        (31.8)
License and other interest income                 4.3          5.4
Interest expense                                  (.1)          --
Foreign currency transaction(losses)gains         (.2)          .3
Investment impairment                              --         (4.4)
                                                -----        -----
Income (loss) before income taxes                11.9        (30.5)
Provision (benefit) for income taxes              6.2         (9.3)
                                                -----        -----
Net income (loss)                                 5.7%       (21.2)%
                                                =====        =====


      Three Months Ended September 30, 1998 Compared to Three Months Ended
                               September 30, 1999

Revenues.

o    Total revenues decreased 15.1% from $15.8 million in last year's quarter to
     $13.4 million this quarter.  Domestic  revenues  decreased 16.8% from $12.5
     million in last year's quarter to $10.4 million this quarter. International
     revenues  decreased  9.1% from $3.3 million in last year's  quarter to $3.0
     million this  quarter.  Total  revenues  decreased  primarily  because of a
     deferral of purchase  decisions  in the  domestic  market and a weakness in
     sales in Europe.  The  Company  anticipates  continued  softness in license
     revenues for the next two quarters. Mobius believes that the overall market
     demand for the Company's  products  remains strong and that license revenue
     growth will resume in the second half of fiscal 2000.

o    Software license revenues decreased 36.8% from $10.2 million in last year's
     quarter  to  $6.4  million  this  quarter.   This  decrease  was  primarily
     attributable  to  decreased  sales of  licenses  in the  United  States and
     Europe.  Mobius believes that Year 2000 issues have significantly  affected
     the  purchasing  patterns of its customers and  potential  customers.  Many
     companies  have expended  significant  resources to correct or modify their
     current software systems for Year 2000 compliance.  These expenditures have
     resulted in reduced funds available to purchase  software  products such as
     those that Mobius offers.

o    Maintenance  and other revenues  increased  24.4% from $5.6 million in last
     year's  quarter to $7.0 million this quarter.  This increase in maintenance
     revenue was primarily  attributable to the growth in the amount of licensed
     software  covered  by  maintenance  agreements  and  to  a  lesser  extent,
     increases in the  maintenance  fees charged by the Company.  Other revenues
     for both quarters were not significant.

Costs of Revenues.

o    Cost of license  revenues  consist  primarily of the cost of royalties  and
     sublicense  fees. The costs of software  license  revenues  decreased 40.5%
     from $311,000 in last year's quarter to $185,000 this quarter, representing
     3.1% and 2.9% respectively, of software license revenues in those quarters.
     The costs of software  license revenue as a percentage of software  license
     revenues  decreased from last year's quarter to this quarter  primarily due
     to increased license revenues from products that were developed exclusively
     by the Company and therefore do not require royalty payments.

o    Costs of  maintenance  and other  revenues  consist  primarily  of customer
     support staff costs. The costs of maintenance and other revenues  increased
     25.3%  from $1.3  million  in last  year's  quarter  to $1.6  million  this
     quarter,  representing  23.3% and 23.5%  respectively,  of maintenance  and
     other revenues in those quarters. The increases in costs of maintenance and
     other  revenues  were  primarily  attributable  to  increased  staffing and
     personnel-related costs.

Operating Expenses.

o    Sales and  marketing  expenses  consist  primarily of the cost of personnel
     associated with the selling and marketing of Mobius's  products,  including
     salaries,   commissions,   performance   based   bonuses   and  travel  and
     entertainment  costs.  Sales and  marketing  costs also include the cost of
     branch sales offices,  marketing,  promotional  materials and  advertising.
     These expenses  increased 16.7% from $8.3 million in last year's quarter to
     $9.7 million this quarter,  representing 53.0% and 72.8%, respectively,  of
     total  revenues  in those  quarters.  Sales  and  marketing  expenses  have
     increased   primarily  because  the  Company  hired  additional  sales  and
     marketing personnel and expanded branch sales office facilities,  offset by
     a decrease in sales  commissions as a result of decreased sales of software
     licenses.

o    Research and  development  expenses  consist  primarily of personnel  costs
     attributable  to  the   development  of  new  software   products  and  the
     enhancement  of  existing  products.   Research  and  development  expenses
     increased  15.1% from $2.6  million in last year's  quarter to $3.0 million
     this quarter, representing 16.3% and 22.1%, respectively, of total revenues
     in those quarters.  The increases in research and development expenses were
     primarily  attributable to increased staffing and  personnel-related  costs
     for technical staff.

o    General and  administrative  expenses consist of personnel costs related to
     management,  accounting, human resources, network services,  administration
     and associated  overhead costs, as well as fees for professional  services.
     General and  administrative  expenses  increased 79.1% from $1.7 million in
     last year's  quarter to $3.0 million this quarter,  representing  10.5% and
     22.1%, respectively,  of total revenues in those quarters. The increase was
     primarily   attributable  to  additional   personnel  costs  and  increased
     professional  services to assist in enhancing  and  improving the Company's
     infrastructure as a basis for future growth.

o    Stock  compensation  expense was the result of issuing options in 1998 that
     were deemed to be below market value. Stock compensation  expense decreased
     48.6% from $323,000 to $166,000.  This expense will continue to decrease as
     this expense is amortized over the option holder's vesting periods, subject
     to  adjustments  for  option  holder  terminations.  See  footnote 8 in the
     consolidated financial statements for further information.

         License and other interest income;  interest expense;  foreign currency
transaction  gains (losses).  License and other interest income was $672,000 and
$726,000 in last  year's  quarter and this  quarter,  respectively.  During both
quarters interest expense was insignificant. Foreign currency transaction losses
were $33,000 in last year's quarter and foreign currency  transaction gains were
$46,000 this quarter.  These losses and gains are the result of foreign currency
fluctuations  in  the  foreign  jurisdictions  within  which  the  Company  does
business.

         Investment  Impairment.  In June 1999,  Mobius  invested  $1,501,000 in
equity securities of a privately-held,  information  technology  company.  As of
September 30, 1999, events and circumstances have indicated that this investment
is impaired therefore a $591,000  impairment loss was recorded.  The Company has
and will continue to regularly  review the assumptions  underlying the operating
performance  and cash flow forecasts of this  technology  company to assess this
investment's recoverability.

         Provision for Income Taxes. The provision for income taxes was $988,000
in last  year's  quarter  compared  to a tax  benefit  of $1.2  million  in this
quarter.  The  provision  (benefit)  for taxes as a percentage  of income (loss)
before  taxes was 52.6% and (30.4)% for last  year's  quarter and this  quarter,
respectively.  The change in the effective tax rate from last year's  quarter to
this  quarter  primarily  reflects a  statutory  tax benefit for the loss in the
United  States  offset by  limitations  on the tax benefit which can be taken in
this quarter from losses in the Company's foreign subsidiaries.

Liquidity and Capital Resources

         Since its  inception,  Mobius  has funded  its  operations  principally
through  cash flows from  operating  activities  and, to a lesser  extent,  bank
financings.  In April 1998, the Company  completed its initial public  offering,
which generated net proceeds of $33.0 million.  As of September 30, 1999, Mobius
had cash and cash equivalents of $33.1 million,  a decrease of $400,000 from the
$33.5  million  held at June  30,  1999.  In  addition,  Mobius  had  marketable
securities  of $9.4 million and $9.3  million as of June 30, 1999 and  September
30, 1999, respectively.

         Net cash  provided by  operating  activities  was $3.5  million in last
year's quarter and $1.0 million this quarter.  Mobius's  primary sources of cash
during  this  year's  quarter  were  decreased  software  license  installments,
decreased accounts receivable and increased deferred maintenance revenue.  These
sources were offset by a net loss and decreases in accounts  payable and accrued
expenses. Net software license installments decreased 7.2% from $23.4 million at
June 30, 1999 to $21.7  million at September 30, 1999.  Net accounts  receivable
decreased 23.8% from $12.6 million at June 30, 1999 to $9.6 million at September
30, 1999. Deferred maintenance revenue increased 4.9% from $16.7 million at June
30, 1999 to $17.5 million at September 30, 1999.

         Cash used in investing  activities,  consisting of capital expenditures
to purchase computer equipment and complete leasehold improvements, was $412,000
and $1.8 million in last year's quarter and this quarter, respectively.

     Cash provided by financing  activities  was $101,000 in last year's quarter
and $22,000 this  quarter,  primarily  due to cash received from the exercise of
stock options.

         During this year's quarter,  Mobius recorded  approximately $400,000 in
sales and marketing  expenses and $350,000 in research and development  expenses
related to the marketing,  development and testing of a new business-to-consumer
transaction-based  Internet  offering.  The  Company  plans  to make a  official
announcement  about  this  at a  later  date.  Mobius  anticipates  that it will
continue to incur additional costs related to the this consumer focused Internet
opportunity for at least the next year.

         The Company  believes  that its existing  cash  balances and cash flows
expected from future operations will be sufficient to meet the Company's capital
requirements  for at least  12  months.  In  compliance  with  the  lease of the
Company's  corporate  headquarters  in Rye, NY, the  landlord  holds a letter of
credit with Silicon  Valley Bank for $275,000.  This letter of credit is secured
by a certificate of deposit.

         In January 1999,  the Company sold the  INFOPAC-TapeSaver  product to a
third party for  approximately  $3.0 million.  Under the terms of the sale,  the
buyer will  assume  responsibility  for  maintenance  support  for all  existing
TapeSaver licenses. As a result of this arrangement,  the Company will recognize
$3.0 million of license  revenue as the buyer makes  payments over the next five
years, and  approximately  $1.0 million of maintenance  revenue through December
31, 1999. For the three months ended September 30, 1999, the Company  recognized
$157,000 of license revenue and $180,000 of maintenance  revenue related to this
arrangement.  Future license revenue will be variable  through December 31, 1999
as the buyer sells  TapeSaver  products to customers  and will be $112,500  each
quarter thereafter for the remaining four year term of the contract.


<PAGE>



Year 2000

         Many currently  installed  operating  systems and software products are
coded to accept only two digit  entries in the date code field.  These date code
fields  need  additional  digits to  distinguish  21st  century  dates from 20th
century  dates.  As a result,  computer  systems  and/or  software  used by many
companies may need to be upgraded to comply with such "Year 2000"  requirements.
Significant uncertainty exists in the software industry concerning the potential
effects  associated  with such  compliance.  Since the  Company's  products  are
designed for long-term storage and retrieval of data with end of life dates well
beyond  2000,  Mobius  believes  that its  products  are and have been Year 2000
compliant.  There  can be no  assurance  that the  Company's  products  will not
experience  Year 2000  compliance  difficulties,  or that third party  products,
including  operating  systems,  that are not Year 2000 compliant will not have a
detrimental effect on the operation of the Company's products.

         The Company believes that Year 2000 issues may significantly affect the
purchasing  patterns of its customers and potential  customers.  Many  companies
have expended significant  resources to correct or modify their current software
systems for Year 2000 compliance. These expenditures may result in reduced funds
available to purchase software products such as those the Company offers.

         Management  has  implemented  a  Company-wide  program to  prepare  its
internal  computer  systems and  applications  (such as its  accounting and word
processing programs) for Year 2000 compliance. The Company has and will continue
to incur  internal staff costs as well as other  expenses  necessary  during the
course of such  efforts and the Company  has and will  continue to replace  some
systems and upgrade others.  Maintenance or modification  costs will be expensed
as incurred.  The total cost is not expected to be  material.  In addition,  the
Company has obtained  assurances from its primary service and product  providers
regarding their Year 2000 readiness, which Mobius believes is adequate.

      In light of the above,  the Company does not  anticipate  any serious Year
2000 problems.  However,  in compliance with the SEC Release No.  34-40649,  the
Company is required to estimate the impact of a broad  systemic  failure that is
caused by the "Y2K" problem. While the Company does not expect this to occur, if
the Company's  primary  service and product  providers have not completed  their
remediation  efforts for the Year 2000  problem,  it could impact the  Company's
ability to develop and maintain its products,  apply cash  collections  and make
electronic  disbursements,   since  these  activities  are  dependent  upon  the
continued  operation of the national  power and telephony  grids and the banking
system.  Other aspects of Mobius's operations could be maintained  manually,  at
substantially   reduced  efficiency,   until  these  systems  were  restored  to
operation.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Mobius investment  portfolio is subject to interest rate  sensitivity.  The
primary objective of Mobius's  investment  activities is to preserve  principal,
while at the same time  maximizing the interest  income,  without  significantly
increasing  risk. Some of the marketable  securities that Mobius has invested in
may be subject to market rate interest  risk.  This means a change in prevailing
interest  rates may cause the market  value of the  security to  fluctuate.  For
example,  if Mobius holds a security that was issued with a fixed  interest rate
at the  then-prevailing  rates and the prevailing interest rates later rise, the
market value of the marketable  security will probably decline. At September 30,
1999, Mobius primarily held debt securities.

     Mobius may be  subject to foreign  currency  fluctuations  in  relation  to
accounts  receivable  and accounts  payable that may be denominated in a foreign
currency other than the functional currency in certain foreign jurisdictions. To
the extent that such foreign currency  transactions are negatively or positively
effected by foreign currency  fluctuations,  foreign currency transaction losses
or gains would be recognized.


<PAGE>



PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

  From time to time,  we are involved in litigation  relating to claims  arising
out of our  operations in the normal  course of business.  We are not a party to
any legal  proceedings,  the adverse  outcome of which,  individually  or in the
aggregate,  would  have a material  adverse  effect on our  business,  operating
results and financial condition.

Item 2 - Changes in Securities and Use of Proceeds

(a)  Not applicable

(b)  Not applicable

(c)  Not applicable

(d) On April 27, 1998, the Securities and Exchange Commission declared effective
our Registration  Statement on Form S-1 (File No. 333-47117) with respect to our
initial  public  offering.  To date,  we have not used any of the  approximately
$33.0 million of proceeds from the offering. The proceeds are currently invested
in short term, investment grade, interest bearing securities.

Item 3 - Defaults Upon Senior Securities

None

Item 4 - Submission of Matters to a Vote of Security Holders

None


Item 5 - Other Information

None


<PAGE>



Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits


Exhibit
  No.             Description


3.1*              Form of Second Amended and Restated Certificate of
                  Incorporation of the Registrant.
3.2*              Form of Amended and Restated By-Laws of the Registrant.
4.1*              Specimen certificate representing the Common Stock
27                Financial Data Schedule (EDGAR only)
99.1              Factors Affecting Future Performance

* Filed as an exhibit to Mobius'  Registration  Statement on Form S-1
  (File No.  333-47117)  or an amendment  thereto and  incorporated
  herein by reference to the same exhibit number.

(b)      Reports on Form 8-K

         Not Applicable



<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements  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.

Date:  November 15, 1999

                                        MOBIUS MANAGEMENT SYSTEMS, INC.

                                        By:     /s/ E. Kevin Dahill
                                                E. Kevin Dahill
                                                Vice President, Finance,
                                                Chief Financial Officer
                                                and Treasurer
                                                (Principal Financial and
                                                Accounting Officer)



<PAGE>





                                  EXHIBIT INDEX

Exhibit
  No.    Description

3.1*     Form of Second Amended and Restated Certificate of Incorporation
         of the Registrant.
3.2*     Form of Amended and Restated By-Laws of the Registrant.
4.1*     Specimen certificate representing the Common Stock
27       Financial Data Schedule (EDGAR only)
99.1     Factors Affecting Future Performance

* Filed as an exhibit to Mobius'  Registration  Statement on Form S-1
  (File No.  333-47117)  or an amendment  thereto and  incorporated
  herein by reference to the same exhibit number.