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, 2001

                          OR

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

      For the transition period from to

                         Commission File Number: 0-24077

                         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 8, 2001

                 Class                          Number of Shares Outstanding

 Common Stock, par value $0.0001 per share                17,211,786



<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX


PART I      FINANCIAL INFORMATION


         Item 1.  Financial Statements

              Consolidated Balance Sheets
                June 30, 2001 and September 30, 2001

           Consolidated Statements of Operations
                Three months ended September 30, 2000 and 2001

           Consolidated Statement of Stockholders' Equity
                Three months ended September 30, 2001
              Consolidated Statements of Cash Flows
                Three months ended September 30, 2000 and 2001

              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)



                                                                     Unaudited
                                                          June 30, September 30,
                                                           2001          2001
                                                        ---------   ------------
ASSETS

Current assets:
   Cash and cash equivalents                              $ 24,099     $ 27,381
   Marketable securities, at market value                   10,508        7,671
   Accounts receivable, net of allowance for doubtful
       accounts of $899 and $947, respectively              12,852       11,024
   Software license installments, current portion            9,317        9,004
   Other current assets                                      2,304        2,352
                                                           -------      -------
            Total current assets                            59,080       57,432

Software license installments, non-current portion,
  net of allowance for doubtful accounts of $551
   and $565, respectively                                    5,216        5,848
Property and equipment, net                                  9,231        8,289
Deferred income taxes                                        1,242        2,014
Other assets                                                   746          705
                                                           -------      -------
              Total assets                                 $75,515      $74,288
                                                           =======      =======

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses                  $ 15,498      $14,404
   Deferred revenue                                         16,950       20,064
   Deferred income taxes                                     3,199        3,026
                                                           -------      -------
            Total current liabilities                       35,647       37,494

Deferred revenue                                             1,398        1,268
                                                           -------      -------
       Total liabilities                                    37,045       38,762
                                                           -------      -------

Stockholders' equity:
   Common stock $.0001 par value; authorized 40,000,000
       shares; issued 22,481,436 shares; outstanding
       18,206,413 and 17,728,313 shares, respectively            2            2
   Additional paid-in capital                               49,624       49,624
   Retained earnings                                         2,611          755
   Deferred stock compensation                                (168)        (128)
   Accumulated other comprehensive income                     (878)        (708)
Treasury stock, at cost, 4,275,023
   and 4,753,123 shares, respectively                      (12,721)     (14,019)
                                                           -------      -------
            Total stockholders' equity                      38,470       35,526
                                                           -------      -------

Total liabilities and stockholders' equity                 $75,515      $74,288
                                                           =======      =======


See accompanying notes to unaudited consolidated financial statements.




<PAGE>



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

                                                   Three Months Ended
                                                       September 30,
                                                   2000            2001
                                                   ----            ----

Revenues:
     Software license revenues                   $10,406         $5,407
     Maintenance and other revenues                8,124          9,171
                                                  ------         ------
         Total revenues                           18,530         14,578
                                                  ------         ------
Costs of revenues:
     Software license revenues                       417            234
     Maintenance and other revenues                1,561          1,975
                                                  ------         ------
         Total costs of revenues                   1,978          2,209
                                                  ------         ------

Gross profit                                      16,552         12,369
                                                 -------         ------

Operating expenses:
     Sales and marketing                          11,682          9,288
     Research and development                      4,330          3,744
     General and administrative                    2,582          2,589
                                                 -------         ------
              Total operating expenses            18,594         15,621
                                                 -------         ------

Loss from operations                              (2,042)        (3,252)

License and other interest income                    696            539
Interest expense                                      (3)            (5)
Foreign currency transaction gains                     4              2
Investment impairment                               (218)            --
                                                 -------          ------
Loss before income taxes                          (1,563)        (2,716)

Benefit from income taxes                           (484)          (860)
                                                 -------         ------
Net loss                                         $(1,079)       $(1,856)
                                                 =======        =======

Basic and diluted loss per share                 $(0.06)         $(0.10)
Basic and diluted weighted average
     shares outstanding                           18,115         18,143


   See accompanying notes to unaudited consolidated financial statements.



<PAGE>



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

<TABLE>
<CAPTION>

                                                                                    Accumulated                      Total
                                                Additional                            Other                       Stockholders'
                                  Common Stock    Paid-in   Retained    Deferred   Comprehensive  Treasury Stock   (Deficit)
                                 Shares  Amount   Capital   Earnings  Compensation    Income     Shares    Amount    Equity
                                 ------  ------   -------   --------  ------------    ------     ------    ------    ------
<S>                               <C>      <C>    <C>         <C>         <C>         <C>         <C>    <C>         <C>

Balance at June 30, 2001          18,206   $ 2    $49,624     $2,611      $(168)      $(878)      4,275  $(12,721)  $38,470
Net loss                               -     -          -     (1,856)         -           -           -         -    (1,856)
Change in other comprehensive
  income, net of tax                   -     -          -          -          -         170           -         -       170
                                                                                                                      ------
   Comprehensive loss                  -     -          -          -          -           -           -         -    (1,686)
Stock repurchase program            (478)    -          -          -          -           -         478    (1,298)   (1,298)
Change in deferred compensation        -     -          -          -         40           -           -         -        40
                                ----------------------------------------------------------------------------------------------
Balance at September 30, 2001     17,728    $2    $49,624       $755      $(128)      $(708)      4,753   (14,019)  $35,526
                                ==============================================================================================



See accompanying notes to unaudited consolidated financial statements.
</TABLE>

<PAGE>





                         MOBIUS MANAGEMENT SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Unaudited, in thousands)

                                                              Three Months Ended
                                                                 September 30,
                                                               2000       2001
                                                               ----       ----


Cash flows provided by (used in) operating activities:
  Net loss                                                 $ (1,079)    $(1,856)
Adjustments to reconcile net loss to net cash provided
  by operating  activities:
   Deferred income taxes                                       (260)       (945)
   Depreciation and amortization                              1,009       1,092
   Stock compensation expense                                    91          40
   Impairment of investment                                     218          --
   Other                                                         --          12
Change in operating assets and liabilities:
     Accounts receivable, net                                  (964)      1,828
     Software license installments                            1,005        (319)
     Other assets                                              (221)        (82)
     Accounts payable and accrued expenses                      274      (1,094)
     Deferred revenue                                         1,496       2,984
                                                            -------     -------
         Total adjustments                                    2,648       3,516
                                                            -------     -------
    Net cash provided by operating activities                 1,569       1,660

Cash flows provided by (used in) investing activities:
   Purchase of marketable securities                         (2,485)     (3,146)
   Purchase of investments                                     (281)         --
   Sale of marketable securities                              2,500       5,975
   Capital expenditures                                      (2,572)        (75)
                                                            -------     -------
    Net cash provided by (used in) investing activities      (2,838)      2,754
                                                            -------     -------

Cash flows provided by (used in) financing activities:
   Cash used for stock repurchase program                        --      (1,298)
   Cash received from exercise of stock options                   5          --
                                                            -------     -------
    Net cash provided by (used in) financing activities           5      (1,298)
                                                            -------     -------
Effect of exchange rate changes on
   cash and cash equivalents                                   (253)        166
                                                            -------     -------
Net change in cash and cash equivalents                      (1,517)      3,282
Cash and cash equivalents at beginning of year               21,380      24,099
                                                            -------   ---------
Cash and cash equivalents at end of year                    $19,863     $27,381
                                                            =======     =======
Supplemental disclosure of cash flow
   information:
   Cash paid during the period for:
     Interest                                               $     3     $     5
     Income taxes, net                                      $     -     $     8


See accompanying notes to unaudited 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, 2001 and
September 30, 2001 and for the three month periods ended September 30, 2000 and
2001, 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

         Earnings per share is presented in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share" and Staff
Accounting Bulletin No. 98. 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,
                                               2000                                          2001
                           -------------- --------------- -----------    -------------- --------------- -----------
                            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)            $(1,079)                                      $(1,856)
                             ========                                      ========
Weighted average shares
 outstanding                                  18,115                                        18,143
Basic earnings (loss)
per share                                                  $(0.06)                                       $(0.10)
                                                           =======                                       =======
Diluted earnings (loss)
per share:
Net income (loss)            $(1,079)                                      $(1,856)
                             ========                                      ========
Dilutive effect of
 stock options                                     -                                             -
                                              ------                                        ------
Diluted earnings (loss)
per share                                     18,115       $(0.06)                          18,143       $(0.10)
                                              ======       =======                          ======       =======
</TABLE>

         Outstanding stock options, representing an aggregate of 2,626,375 and
2,930,175 shares of Common Stock equivalents, are antidilutive for the three
months ended September 30, 2000 and 2001, respectively.


<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, 2000 and
2001, respectively. As of June 30, 2001 and September 30, 2001, 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 3 to 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 financing.

(5)  Property and Equipment

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

                                                       June 30,   September 30,
                                                         2001         2001
                                                       -------    ------------
   Computer equipment                                  $12,689      $12,777
   Furniture, fixtures and office equipment              1,650        1,675
   Leasehold improvements                                4,665        4,675
                                                        ------       -------
                                                        19,004       19,127
   Less accumulated depreciation and amortization       (9,773)     (10,838)
                                                        ------      -------
   Property and equipment, net                          $9,231      $ 8,289
                                                        ======      =======

         Depreciation and amortization expense on property and equipment,
including capital leases, was $988,000 and $1,017,000 for the three months ended
September 30, 2000 and 2001, respectively.

(6)      Non-Current Investments

         In June 1999, the Company invested $1,501,000 in Home Account Network
("HAN") a privately-held, information technology company providing processing
and Internet outsourcing to financial services companies. During fiscal 2000,
Mobius provided an additional $750,000 to HAN in short term loans that were
converted to preferred stock in May 2000. In the first quarter of fiscal 2001,
Mobius provided an additional $281,000 as a short term loan to HAN. Mobius's
investment in HAN was a minority ownership position, which was less than 5%.
Mobius did not sit on the Board of Directors, nor influence day to day
operations of HAN.


<PAGE>




(6)      Non-Current Investments (continued)

         Mobius regularly assessed the recoverability of the Home Account
Network ("HAN") and had concluded that an other than temporary impairment loss
had occurred in the three months ended September 30, 2000. Accordingly, an
impairment loss of $218,000 was recorded for the three months ended September
30, 2000. As of September 30, 2000, the remaining carrying value of the HAN
investment was $94,000 and is included within other current assets. In the
second quarter of fiscal 2001, Mobius provided an additional $94,000 as a short
term loan to HAN which was convertible to preferred stock, which increased the
carrying value to $188,000.

         In January 2001, HAN was purchased by Intelidata Technologies
("Intelidata"). The merger agreement established a fixed number of shares to be
allocated between debt holders and all shareholders, including Mobius. The
Intelidata shares will be released at specified time periods beginning after the
Intelidata shares are registered. The number of shares to be received by debt
holders will be based upon a formula that utilizes the market value of
Intelidata stock on each release date. After the debtors are repaid, any
remaining shares will be distributed to HAN's management and shareholders based
on percentages in the merger agreement. Once the stock is released to the
debtors and shareholders, it is subject to a variety of trading restrictions. As
of September 30, 2001, Mobius has not received any Intelidata shares.


         As of September 30, 2001, the carrying value of the HAN is $188,000 and
is included within other current assets. Mobius believes that the carrying value
is recoverable based on estimates of the amount and value of shares to be
received from the transaction, discounted for the restrictions and estimated
time until the Intelidata shares are expected to be received.


(7)  Accounts Payable and Accrued Expenses

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

                                             June 30,    September 30,
                                               2001          2001
                                             -------     ------------

 Accounts payable                            $ 2,101       $ 1,364
 Compensation and related benefits             6,728         5,465
 Royalties payable                             1,143         1,156
 Other                                         5,526         6,419
                                             -------       -------
                                             $15,498       $14,404
                                             =======       =======

(8)  Common Stock

         In September 2001, the Board of Directors expanded the Company's stock
repurchase program to allow repurchases of up to 1,250,000 shares of Mobius's
outstanding common stock of which 648,900 shares at an approximate cost of $1.9
million were repurchased from the program's inception through September 30,
2001. The number of shares to be repurchased and timing of purchases are based
on a variety of factors, including general market conditions, the market price
and trading volume of Mobius shares.


<PAGE>



(9)  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 Initial Public Offering in
April 1998. As a result, the Company recognized stock compensation expense of
$91,000 and $40,000 for the three months ended September 30, 2000 and 2001,
respectively. Such compensation expense is included within Sales and marketing
of $66,000 and $26,000, Research and development of $20,000 and $11,000 and
General and administrative expenses of $5,000 and $3,000 for the three months
ended September 30, 2000 and 2001, respectively. There is approximately $85,000
and $43,000 of stock compensation expense relating to these 1998 option grants
to be recognized as stock compensation expense in fiscal years 2002 and 2003,
respectively, to be adjusted for option holders' terminations.

(10)  Comprehensive Loss

         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 loss for the quarters ended September 30, 2000 and 2001 is as
follows (in thousands):

                                                      Three Months ended
                                                         September 30,
                                                       2000        2001
                                                       ----        ----

Net loss                                            $(1,079)     $(1,856)
Unrealized marketable securities gain                    19            5
Unrealized translation gain (loss)                     (253)         165
                                                  -----------------------
Comprehensive loss                                  $(1,313)     $(1,686)
                                                  =======================


(11)  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.

(12) Sale of INFOPAC-Tapesaver

         In January 1999, the Company sold the INFOPAC-TapeSaver product to a
third party for approximately $3.0 million payable over a five year period. For
the three months ended September 30, 2000, the Company recognized $112,500 of
TapeSaver license revenue. As the buyer is delinquent on these payments since
June 2001, no TapeSaver license revenue was recognized in the three months ended
September 30, 2001. Mobius has commenced arbitration proceedings with the buyer
to enforce the payment terms in the sales agreement. The outstanding balance of
payments due to Mobius from the buyer is approximately $1.2 million, which will
be recognized when the buyer makes the remaining payments.



<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 Mobius's Consolidated Financial Statements and Notes. Please
note that references in this section to "last year's quarter" and "this quarter"
refer  to  Mobius's   fiscal   quarters  ended  September  30,  2000  and  2001,
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.

         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. They are not historical facts or guarantees of
future performance or events. They are based on current expectations, estimates,
beliefs, assumptions, goals and objectives, and are subject to uncertainties
that are difficult to predict. 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 Mobius's
control, which may cause actual results, performance or achievements to differ
materially from those projected or implied in such forward-looking statements.
Important 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, including budget allocations for new
software products especially within larger corporate environments which have
traditionally licensed Mobius's products, technological advances and competitive
factors in the markets in which Mobius competes, including price competition
from products providing similar functionality to Mobius's products as well as
competition for experienced, seasoned employees (including retention) to support
Mobius's key business operations, ongoing product development and growth, and
acceptance and or adoption of Mobius's new internet products or services.
Certain of these risks and uncertainties are described in detail from time to
time in Mobius's filings with the Securities and Exchange Commission, including
without limitation, as set forth under the heading "Factors Affecting Future
Performance" below. Forward looking statements included in this quarterly report
are based on information known to Mobius as of the date of this quarterly report
and Mobius accepts no obligation (and expressly disclaims any obligations) to
update these forward-looking statements and does not intend to do so.

Overview

         Mobius is a leading provider of content management software solutions
that manage and present enterprise content. For over two decades, Mobius has
delivered innovative technology that provides access through a common portal to
mission-critical documents, reports and images. Mobius solutions have achieved
industry-wide recognition for their ability to support high-volume,
high-performance, simultaneous-access requirements in distributed environments
that range from the desktop to the mainframe. Today, our ViewDirect(R)
technology stores and integrates information in virtually any format, presenting
and distributing it over the Internet and corporate networks. Personalized views
and automated distribution options deliver information in the format needed by
each employee, customer and partner. This versatile technology supports a broad
range of e-business requirements, including corporate portals, customer service,
customer relationship management, electronic bill presentment and payment, and
archiving and output management for enterprise resource planning systems.


<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 periods indicated:



                                                      Three Months Ended
                                                          September 30,
                                                        2000        2001
                                                      -------------------
                                                           (Unaudited)

Revenues:
  Software license revenues                            56.2%        37.1%
  Maintenance and other revenues                       43.8         62.9
                                                      -----        -----
         Total revenues                               100.0        100.0
                                                      -----        -----
Costs of revenues:
  Software license revenues                             2.3          1.6
  Maintenance and other revenues                        8.4         13.6
                                                      -----        -----
         Total costs of revenues                       10.7         15.2
                                                       ----        -----
Gross profit                                           89.3         84.8

Operating expenses:
  Sales and marketing                                  63.0         63.7
  Research and development                             23.4         25.7
  General and administrative                           13.9         17.7
                                                      -----        -----
         Total operating expenses                     100.3        107.1
                                                      -----        -----
Loss from operations                                  (11.0)       (22.3)
                                                      -----        -----

License and other interest income                       3.8          3.7
Interest expense                                         --           --
Foreign currency transaction (losses) gains              --           --
Investment impairment                                  (1.2)          --
                                                      ------       ------
Loss before income taxes                               (8.4)       (18.6)
Benefit from income taxes                              (2.6)        (5.9)
                                                      -----        -----
Net loss                                               (5.8)%      (12.7)%
                                                      =====        =====


Three Months Ended September 30, 2000 Compared to Three Months
Ended September 30, 2001

Revenues.

o    Total revenues decreased 21.3% from $18.5 million in last year's quarter to
     $14.6 million this quarter. Domestic revenues decreased 22.2% from $14.9
     million in last year's quarter to $11.6 million this quarter. International
     revenues decreased 16.7% from $3.6 million in last year's quarter to $3.0
     million this quarter. The decrease in total revenues is due to a decrease
     in software license revenues, offset by an increase in maintenance and
     other revenues.

o    Software license revenues decreased 48.0% from $10.4 million in last year's
     quarter to $5.4 million this quarter. The Company believes that the
     worsening global economy and recent geopolitical events caused customers to
     defer additional information technology capital spending, therefore there
     were less revenues this quarter than in last year's quarter.

o    Maintenance and other revenues increased 12.9% from $8.1 million in last
     year's quarter to $9.2 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    Costs of license revenues consist primarily of the cost of royalties and
     sublicense fees. The costs of software license revenues decreased 43.9%
     from $417,000 in last year's quarter to $234,000 this quarter, representing
     4.0% and 4.3%, respectively, of software license revenues in those
     quarters. The costs of software license revenue as a percentage of software
     license revenues increased from last year's quarter to this quarter
     primarily due to increased license revenues from products that require
     royalty payments and sublicense fee payments.


o    Costs of maintenance and other revenues consist primarily of customer
     support staff costs. The costs of maintenance and other revenues were $1.6
     million in last year's quarter and $2.0 million this quarter, representing
     19.2% and 21.5%, respectively, of maintenance and other revenues in those
     quarters. The increase in this quarter's costs as a percentage of
     maintenance and other revenues was primarily attributable to an increase in
     the cost of other revenues offset by maintenance revenues that did not
     require additional expenditures for support staff.

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 decreased 20.5% from $11.7 million in last year's quarter to
     $9.3 million this quarter,  representing 63.0% and 63.7%, respectively,  of
     total revenues in those quarters.  Sales and marketing  expenses  decreased
     primarily  due to  decreased  commission  costs  as a result  of  decreased
     license revenues and a decrease in sales and marketing  expenses related to
     the consolidation of the Click-n-Done sales and marketing  departments into
     Mobius's established sales and marketing structures.

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
     decreased 13.5% from $4.3 million in last year's quarter to $3.7 million
     this quarter, representing 23.4% and 25.7%, respectively, of total revenues
     in those quarters. The decrease in research and development expenses,
     including the development costs associated with Click-n-Done.com, were
     primarily attributable to the consolidation of dedicated Click-n-Done
     research and development department into Mobius's established research and
     development departments and utilizing fewer outside research contractors.

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 were $2.6 million in last year's
     quarter and this quarter, representing 13.9% and 17.7%, respectively, of
     total revenues in those quarters.

         License and other interest income; interest expense; foreign currency
transaction gains (losses). License and other interest income was $696,000 and
$539,000 in last year's quarter and this quarter, respectively. The decrease in
interest income is due to a decrease in the cash balance during last year's
quarter and less returns on investments during fiscal 2002. During both quarters
interest expense and foreign currency transaction gains were insignificant.

         Investment Impairment. In June 1999, the Company invested $1,501,000 in
Home Account Network ("HAN") a privately-held, information technology company
providing processing and Internet outsourcing to financial services companies.
During fiscal 2000, Mobius provided an additional $750,000 to HAN in short term
loans that were converted to preferred stock in May 2000. In the first quarter
of fiscal 2001, Mobius provided an additional $281,000 as a short term loan to
"HAN". Mobius's investment in HAN was a minority ownership position, which was
less than 5%. Mobius did not sit on the Board of Directors, nor influence day to
day operations of HAN.

         Mobius regularly assessed the recoverability of the Home Account
Network ("HAN") and had concluded that an other than temporary impairment loss
had occurred in the three months ended September 30, 2000. Accordingly, an
impairment loss of $218,000 was recorded for the three months ended September
30, 2000. As of September 30, 2000, the remaining carrying value of the HAN
investment was $94,000 and is included within other current assets. In the
second quarter of fiscal 2001, Mobius provided an additional $94,000 as a short
term loan to HAN which was convertible to preferred stock, which increased the
carrying value to $188,000.

         In January 2001, HAN was purchased by Intelidata Technologies
("Intelidata"). The merger agreement established a fixed number of shares to be
allocated between debt holders and all shareholders, including Mobius. The
Intelidata shares will be released at specified time periods beginning after the
Intelidata shares are registered. The number of shares to be received by debt
holders will be based upon a formula that utilizes the market value of
Intelidata stock on each release date. After the debtors are repaid, any
remaining shares will be distributed to HAN's management and shareholders based
on percentages in the merger agreement. Once the stock is released to the
debtors and shareholders, it is subject to a variety of trading restrictions. As
of September 30, 2001, Mobius has not received any Intelidata shares.

         As of September 30, 2001, the carrying value of the HAN is $188,000 and
is included within other current assets. Mobius believes that the carrying value
is recoverable based on estimates of the amount and value of shares to be
received from the transaction, discounted for the restrictions and estimated
time until the Intelidata shares are expected to be received.

Liquidity and Capital Resources

         Since its inception, Mobius has funded its operations principally
through cash flows from operating activities and, to a lesser extent, equity or
bank financings. As of September 30, 2001, Mobius had cash and cash equivalents
of $27.4 million, a 13.6% increase from the $24.1 million held at June 30, 2001.
In addition, Mobius had marketable securities of $7.7 million and $10.5 million
as of September 30, 2001 and June 30, 2001, respectively.

         Net cash provided by operating activities was $1.6 million in last
year's quarter and $1.7 million this quarter. Mobius's primary sources of cash
during this quarter were increased deferred revenue and decreased accounts
receivable. These sources were offset by a net loss and decreases in accounts
payable. Mobius's depreciation and amortization expense adjustment in operating
activities was $1.0 million and $1.1 million in last year's quarter and this
quarter, respectively. Deferred revenue increased 16.3% from $18.3 million at
June 30, 2001 to $21.3 million at September 30, 2001. Net software license
installments increased 2.2% from $14.5 million at June 30, 2001 to $14.9 million
at September 30, 2001. Net accounts receivable decreased 14.2% from $12.9
million at June 30, 2001 to $11.0 million at September 30, 2001.

         Cash used in investing activities was $2.8 million in last year's
quarter and cash provided by investing activities was $2.8 million in this
quarter, respectively. During the quarter ending September 30, 2001, the Company
sold $6.0 million of marketable securities and purchased $3.1 million of
marketable securities.

         Cash provided by financing activities was $5,000 in last year's quarter
and cash used by financing activities was $1.3 million in this quarter. In this
quarter, the cash was used to repurchase Mobius's common stock.

Bad Debt Reserves

         Accounts receivable reserves are primarily calculated by identifying
problem accounts and in recognition that some customers decide to cancel or
reduce the number of products covered by maintenance arrangements upon their
anniversary but do not always notify Mobius in sufficient time to prevent some
portion of the annual maintenance billings from being recognized. Mobius also
has a small reserve to absorb losses based upon historical experience that may
result from current receivables. Mobius specifically identifies problem accounts
by the age of the receivable and through discussions with the customer and
Mobius sales representatives. Based on that information, Mobius exercises its
best judgment as to what portion of the accounts receivable balance requires a
reserve. At September 30, 2000 and September 30, 2001 approximately 80% and 87%
of the total accounts receivable reserve balances were related to specific
accounts. To the extent that an account for which a specific reserve was
provided is subsequently collected, Mobius reduces the reserves in the period of
collection.

         Software license installment reserves have consistently been determined
as a percentage of software license installments to provide for potential
bankruptcies and contractual disputes. Customer balances greater than $100,000
comprised 80% of net software license installments of $14.5 million at June 30,
2001 and $14.9 million at September 30, 2001. Customer balances for software
license installments tend to be large due to the selling price of Mobius's
products. Software license installment and accounts receivable reserves were
$1.5 million at June 30, 2000 and September 2001.

Other Matters

         In September 2001, the Board of Directors expanded the Company's stock
repurchase program to allow repurchases of up to 1,250,000 shares of Mobius's
outstanding common stock of which 648,900 shares at an approximate cost of $1.9
million were repurchased from the program's inception through September 30,
2001. The number of shares to be repurchased and timing of purchases are based
on a variety of factors, including general market conditions, the market price
and trading volume of Mobius shares. The expanded program was completed in
October 2001.

         In January 1999, the Company sold the INFOPAC-TapeSaver product to a
third party for approximately $3.0 million payable over a five year period. For
the three months ended September 30, 2000, the Company recognized $112,500 of
TapeSaver license revenue. As the buyer is delinquent on these payments since
June 2001, no TapeSaver license revenue was recognized in the three months ended
September 30, 2001. Mobius has commenced arbitration proceedings with the buyer
to enforce the payment terms in the sales agreement. The outstanding balance of
payments due to Mobius from the buyer is approximately $1.2 million, which will
be recognized when the buyer makes the remaining payments.

         During fiscal 2001, Mobius integrated Click-n-Done with Mobius's other
products, to provide an integrated architecture that supports electronic
statement presentment, electronic bill presentment and payment and electronic
invoice presentment and payment. Mobius's segregated expenses for Click-n-Done
were approximately $1.8 million for the quarter ended September 30, 2000. For
the quarter ended September 30, 2001, Click-n-Done's expenses are combined with
Mobius's other product expenses.

         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.

         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.

Recent Accounting Pronouncements

         In July 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations" which addresses financial accounting and
reporting for business combinations and supersedes APB Opinion No. 16, "Business
Combinations" and SFAS No. 38, "Accounting for Pre-acquisition Contingencies of
Purchased Enterprises". All business combinations in the scope of this Statement
are to be accounted for using one method, the purchase method. The Statement
also provides guidance on purchase accounting related to the recognition of
intangible assets and accounting for negative goodwill. The provisions of this
Statement apply to all business combinations initiated after June 30, 2001. As
of July 1, 2001, the Company adopted this statement.

         Also in July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets", which addresses financial accounting and reporting for
acquired goodwill and other intangible assets. Statement 142 changes the
accounting for goodwill from an amortization method to an impairment-only
approach. Goodwill will be tested for impairment annually or whenever events or
circumstances occur that indicate goodwill could have been impaired. Upon
adoption of Statement 141, amortization of goodwill recorded for business
combinations consummated prior to July 1, 2001 will cease, and intangible assets
acquired prior to July 1, 2001 that do not meet the criteria for recognition
under Statement 141 will be reclassified to goodwill. Companies are required to
adopt Statement 142 for fiscal years beginning after December 15, 2001. In
connection with the adoption of Statement 142, companies will be required to
perform a transitional goodwill impairment assessment. The Company plans to
adopt this statement on July 1, 2002. The adoption of SFAS No. 142 is not
expected to have a significant impact on the Company's financial position or
results of operations as the Company does not have significant amounts of
recorded goodwill or intangible assets associated with any prior business
combination.

         In August 2001, the FASB issued FASB Statement No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets", which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
Statement 144 requires an entity to test an asset for recoverability whenever
events or changes in circumstances indicate that the entity may not be able to
recover the asset's carrying amount. Companies are required to adopt Statement
142 for fiscal years beginning after December 15, 2001, therefore Mobius plans
to adopt this statement on July 1, 2002. The adoption of SFAS No. 142 is not
expected to have a significant impact on the Company's financial position or
results of operations as the Company does not have significant amounts of
long-lived assets.



<PAGE>



                      FACTORS AFFECTING FUTURE PERFORMANCE


Fluctuations in Period to Period Results; Seasonality; Uncertainty of
Future Operating Results

         Mobius's quarterly revenues and operating results have varied
significantly in the past and are likely to vary substantially from quarter to
quarter in the future. Quarterly revenues and operating results are expected to
fluctuate as a result of a variety of factors, including lengthy product sales
cycles, changes in the level of operating expenses, demand for Mobius's
products, introductions of new products and product enhancements by Mobius or
its competitors, changes in customer budgets, competitive conditions in the
industry and general domestic and international economic conditions.

         The timing, size and nature of individual license transactions are
important factors in Mobius's quarterly operating results. Many of Mobius's
license transactions involve large dollar commitments by customers, and the
sales cycles for these transactions are often lengthy and unpredictable. There
can be no assurance that Mobius will be successful in closing large license
transactions within the fiscal period in which they are budgeted, if at all.

         Mobius's business has experienced and is expected to continue to
experience significant seasonality, with revenues typically peaking primarily in
the fourth (June) fiscal quarter and to a lesser extent in the second (December)
fiscal quarter. These fluctuations are caused primarily by customer purchasing
patterns and Mobius's sales force incentive programs, which recognize and reward
sales personnel on the basis of achievement of annual and other periodic
performance quotas, as well as by the factors described above.

         Mobius expects that the worsening global economy and recent
geopolitical events will continue to impact future quarterly operating results.
The state of the global economy has caused certain Mobius customers to defer
additional information technology spending. The current unstable economic
environment may have an adverse effect on Mobius.

         Due to all of the foregoing factors and other factors described below,
revenues for any period are subject to significant variation, and Mobius
believes that period-to-period comparisons of its operating results are not
necessarily meaningful and may not be reliable indicators of future performance.

Technological Change

         The market for Mobius's software is characterized by a high degree of
technological change, frequent new product introductions, evolving industry
standards and changes in customer demands. The introduction of competitive
products embodying new technologies and the emergence of new industry standards
could render Mobius's existing products obsolete and unmarketable. Mobius's
future success will depend in part on its ability to enhance existing products,
to develop and introduce new products to meet diverse and evolving customer
requirements, and to keep pace with technological developments and emerging
industry standards such as web-based functionality, new operating systems,
hardware platforms, user interfaces and storage media. The development of new
products or enhanced versions of existing products and services entails
significant technical risks. There can be no assurance that Mobius will be
successful in developing and marketing product enhancements or that new products
will respond to technological change or evolving industry standards, or that
Mobius will not experience difficulties that could delay or prevent the
successful development, introduction, implementation and marketing of these
products and enhancements, or that any new products and product enhancements
Mobius may introduce will achieve market acceptance.


<PAGE>



Product Concentration

         To date, a substantial portion of Mobius's revenues have been
attributable to the licensing and related maintenance service of its ViewDirect
and DocumentDirect suite of products. Mobius currently expects this to continue
for the foreseeable future. As a result, factors adversely affecting the pricing
of, or demand for, these products and services, such as competition or
technological change, could have a material adverse effect on its business,
operating results or financial condition.

Competition

         The market for Mobius's products is intensely competitive, subject to
rapid change and significantly affected by new product introductions and other
market activities of industry participants. Mobius believes that the most
important competitive factors in the market for storage, retrieval and
presentation software are scalability, breadth of supported operating systems
and document formats, ease of use, product reputation, quality, performance,
price, sales and marketing effort and customer service. Mobius currently
encounters direct competition from a number of public and private companies
including Computer Associates International, Computron Software, Inc., FileNet
Corporation, International Business Machines Corp., BMC Software, Inc., Quest
Software, Inc. and RSD S.A. Due to the relatively low barriers to entry in the
software market, additional competition from other established and emerging
companies is likely as the market for storage, retrieval and presentation
software continues to develop and expand. Some of these companies are
substantially larger than Mobius and have significantly greater financial,
technical and marketing resources, and a larger installed base of customers,
than Mobius. Some of such competitors also have extensive direct and indirect
channels of distribution. As a result, they may be able to respond more quickly
to new or emerging technologies and changes in customer requirements, or to
devote greater resources to the development, promotion and sale of their
products than Mobius. In addition, current and potential competitors have
established or may establish cooperative relationships among themselves with
prospective customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. Increased competition may result in price reductions, reduced gross
margins and loss of market share, any of which would have a material adverse
effect on Mobius's business, operating results or financial condition. There can
be no assurance that Mobius will be able to compete successfully against current
or future competitors or that competitive pressures will not have a material
adverse effect on Mobius's business, operating results or financial condition.

International Sales and Operations

         Mobius believes that its revenues and future operating results will
depend in part on its ability to increase sales in international markets. As a
group, Mobius's international subsidiaries have not achieved budgeted sales and
have been unprofitable to date, and Mobius expects achieving profitability will
continue to require significant management attention and financial resources.
There can be no assurance that Mobius will be able to maintain or increase
international market demand for its products or hire additional qualified
personnel who will successfully be able to market its products internationally.
Mobius's international sales are subject to the general risks inherent in doing
business abroad, including unexpected changes in regulatory requirements,
tariffs and other trade barriers, costs and difficulties of localizing products
for foreign countries, lack of acceptance of localized products in foreign
countries, longer accounts receivable payment cycles, difficulties in managing
international operations, potentially adverse tax consequences, restrictions on
the repatriation of earnings, the burdens of complying with a wide variety of
foreign laws and economic instability. There can be no assurance that such
factors will not have a material adverse effect on Mobius's future international
revenues and, consequently, on its business, operating results or financial
condition.

         An increase in the value of the U.S. dollar relative to foreign
currencies could make Mobius's products more expensive, and, therefore,
potentially less competitive in those markets. Although Mobius does not
currently engage in international currency hedging transactions, we are
exploring the possibility of doing so in the future. To the extent that the U.S.
dollar strengthens against foreign currencies in international markets in which
Mobius maintains operations, its net assets that are denominated in such foreign
currencies will be devalued, resulting in a foreign currency translation loss.
For more information on its international operations, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
Item 2 of this annual report on Form 10-K.

Expansion of Indirect Channels

         To date, sales through indirect sales channels have not been
significant although Mobius continues to invest resources to develop these
channels. Mobius's ability to achieve revenue growth in the future will be
affected by its success in expanding existing and establishing additional
relationships with strategic partners.

Extended Payment Risk

         Terms of sale are a competitive factor in Mobius's markets. Mobius
offers extended payment terms to some of its customers, generally three years
for server products and five years for client products. The license revenue for
these extended payment agreements is recorded at the time of sale as the present
value of the contract payments expected over the life of the agreement, net of
bundled maintenance fees. Interest income from these agreements is recognized
over the term of the financing based on the discount rate used by Mobius to
determine present value. Although Mobius has established reserves against
possible future bad debts and believes that these installment contracts are
enforceable and that ultimate collection is probable, there can be no assurances
that customers will not default under such financing arrangements, or that any
such default would not have a material adverse effect on Mobius's business,
operating results or financial condition.


<PAGE>



Protection of Intellectual Property

         Mobius's success is heavily dependent upon its confidential and
proprietary intellectual property. Mobius has no patents covering any aspect of
its software products and it has two patent applications pending in the U.S. and
one patent application pending internationally. Mobius relies primarily on a
combination of confidentiality agreements, copyright, trademark and trade secret
laws and confidentiality procedures to protect its proprietary rights. Trade
secret and copyright laws afford only limited protection. Despite Mobius's
efforts to protect its proprietary rights, unauthorized parties may attempt to
copy aspects of its products or obtain and use information that Mobius regards
as proprietary. In addition, the laws of some foreign countries do not protect
its proprietary rights to as great an extent as do the laws of the United
States. There can be no assurance that its means of attempting to protect
Mobius's proprietary rights will be adequate or that its competitors will not
independently develop similar or competitive technology.

         Mobius's products are generally provided to customers in object code
format only. However, Mobius enters into arrangements with its customers that
releases the source code to the customer upon the occurrence of certain events,
such as bankruptcy or insolvency of Mobius or certain material breaches of the
license agreement by Mobius. In the event of any release of the source code
pursuant to these arrangements, the customer's license is generally limited to
use of the source code to maintain, support and configure its software products.
Notwithstanding such provision, the delivery of source code to customers may
increase the likelihood of misappropriation or other misuse of its intellectual
property.

         Mobius is not aware that any of its products infringe on the
proprietary rights of third parties. From time to time, however, third parties
may claim infringement by Mobius with respect to current or future products.
Defense of any such claims, with or without merit, could be time-consuming,
result in costly litigation, cause product shipment delays or require Mobius to
enter into royalty or licensing agreements. Such royalty or licensing
agreements, if required, may not be available on terms acceptable to Mobius or
at all, which could have a material adverse effect on its business, operating
results or financial condition.

Dependence on Licensed Technology

         Mobius relies on certain software and other information that it
licenses from third parties, including software that is used to perform certain
functions in its products. Although Mobius believes that there are alternatives
for these products, any significant interruption in the availability of such
third-party software could have a material adverse impact on its sales unless
and until Mobius can replace the functionality provided by these products. In
addition, Mobius is to a certain extent dependent upon such third parties'
abilities to enhance their current products, to develop new products on a timely
and cost-effective basis and to respond to emerging industry standards and other
technological changes. There can be no assurance that Mobius would be able to
replace the functionality provided by the third party software currently offered
in conjunction with its products in the event that such software becomes
obsolete or incompatible with future versions of its products or is otherwise
not adequately maintained or updated. The absence of or any significant delay in
the replacement of that functionality could have a material adverse effect on
its business, operating results or financial condition.

Risk of Product Defects; Product Liability

         Software products as complex as those offered by Mobius frequently
contain defects, especially when first introduced or when new versions are
released. Although Mobius conducts extensive product testing, Mobius has in the
past discovered software defects in certain of its new products and enhancements
after their introduction. Mobius could in the future lose, or delay recognition
of, revenues as a result of software errors or defects. Mobius believes that its
customers and potential customers are highly sensitive to defects in Mobius's
software. Although Mobius's business has not been materially adversely affected
by any such errors to date, there can be no assurance that, despite testing by
Mobius and by current and potential customers, errors will not be found in new
products or releases after commencement of commercial shipments, resulting in
loss of revenue or delay in market acceptance, diversion of development
resources, damage to Mobius's reputation, or increased service and warranty
costs, any of which could have a material adverse effect on its business,
operating results or financial condition.

      Mobius's license agreements with its customers typically contain
provisions designed to limit its exposure to potential product liability claims.
However, it is possible that the limitation of liability provisions contained in
its license agreements may not be effective under the laws of certain
jurisdictions. Although Mobius has not experienced any product liability claims
to date, the sale and support of products by Mobius may entail the risk of such
claims, and there can be no assurance that Mobius will not be subject to such
claims in the future. Mobius does not maintain product liability insurance. A
successful product liability claim brought against Mobius could have a material
adverse effect on its business, operating results or financial condition.

Management of Growth; Dependence on Senior Management and Other Key Employees

         Mobius's ability to effectively manage its future growth, if any, will
require it to continue to improve Mobius's operational, financial and management
controls, accounting and reporting systems, and other internal processes. There
can be no assurance that Mobius will be able to make such improvements in an
efficient or timely manner or that any such improvements will be sufficient to
manage its growth, if any. If Mobius is unable to manage growth effectively, its
business, operating results or financial condition would be materially adversely
affected.

      Mobius's success depends to a significant extent upon its senior
management and certain other key employees of Mobius. The loss of the service of
senior management or other key employees could have a material adverse effect on
Mobius. Furthermore, Mobius believes that its future success will also depend to
a significant extent upon its ability to attract, train and retain highly
skilled technical, management, sales and marketing personnel. Competition for
such personnel is intense, and Mobius expects that such competition will
continue for the foreseeable future. Mobius has from time to time experienced
difficulty in locating candidates with appropriate qualifications. The failure
to attract or retain such personnel could have a material adverse effect on
Mobius's business, operating results or financial condition.



<PAGE>



If Widespread Internet Adoption Does Not Continue, or if the Internet Cannot
Accommodate Continued Growth, Mobius's Business Will Be Harmed.

         Acceptance of Mobius's Internet-based products depends upon continued
adoption of the Internet for commerce. As is typical in the case of an emerging
industry characterized by rapidly changing technology, evolving industry
standards and frequent new product and service introductions, demand for and
acceptance of recently introduced e-commerce enabling products and services is
subject to a high level of uncertainty. To the extent that businesses or
consumers do not consider the Internet a viable commercial medium, Mobius's
customer base for its Internet-based products may not grow. In addition,
critical issues concerning the commercial use of the Internet remain unresolved
and may affect the growth of Internet use. The adoption of the Internet for
commerce, communications and access to content, particularly by those who have
historically relied upon alternative methods, generally requires understanding
and acceptance of a new way of conducting business and exchanging information.
In particular, companies and consumers may be reluctant or slow to adopt a new,
Internet-based bill payment system that may render existing practices obsolete.
If the use of the Internet fails to develop or develops more slowly than
expected, Mobius's business may be harmed.

         To the extent that there is an increase in Internet use, an increase in
frequency of use or an increase in the required bandwidth of users, the Internet
infrastructure may not be able to support the demands placed upon it. In
addition, the Internet could lose its viability as a commercial medium due to
delays in development or adoption of new standards or protocols required to
handle increased levels of Internet activity. Changes in, or insufficient
availability of, telecommunications or similar services to support the Internet
also could result in slower response times and could adversely impact use of the
Internet generally. If the Internet infrastructure, standards, protocols or
complementary products, services or facilities do not effectively or efficiently
support any growth in Internet usage that may occur, our business may be harmed.

Concerns about Transaction Security on the Internet May Hinder Mobius's
Internet Product Sales.

         A significant barrier to electronic commerce and communications is the
secure transmission of private information over public networks. Mobius's
products for the Internet rely on encryption and authentication technology some
of which it has developed and some of which may be licensed from third parties
to provide the required security and authentication to ensure the privacy of
Internet transactions. Advances in computer capabilities, new discoveries in the
field of cryptography or other events or developments may result in a compromise
or breach of the algorithms Mobius's Internet products use to protect customer
transaction data. Any breaches in security could cause a significant decrease in
Mobius's Internet products, which could undermine future Internet product sales.

The Internet Industry Is Characterized by Rapid Technological Change.

         Rapid technological developments, evolving industry standards and user
demands, and frequent new product introductions and enhancements characterize
the market for Internet products and services. These market characteristics are
exacerbated by the emerging nature of the market and the fact that many
companies are expected to introduce new Internet products and services in the
near future. Mobius's future success will depend on its ability to continually
improve its Internet product offerings and services.


<PAGE>




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,
2001, 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.

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

  From time to time, the Company is involved in litigation relating to claims
arising out of their operations in the normal course of business. The Company is
not a party to any legal proceedings, the adverse outcome of which, individually
or in the aggregate, would have a material adverse effect on the Company's
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 the Company's Registration Statement on Form S-1 (File No.
        333-47117) with respect to the Company's public offering. To date, of
        the $33.0 million of proceeds received from the offering, the Company
        has used approximately $3.0 million for working capital. The remaining
        proceeds are currently invested in cash and short term, investment
        grade, interest bearing securities.

Item 3 - Defaults Upon Senior Securities

None


<PAGE>



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

None

Item 5 - Other Information

None

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
10.4A     Mobius Management Systems,  Inc. 1998 Amended  Non-Employee
          Director Stock Option Plan

* Filed as an exhibit to Mobius's 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 13, 2001

                                   MOBIUS MANAGEMENT SYSTEMS, INC.

                                   By:     /s/ David J. Gordon
                                           David J. Gordon
                                           Assistant Secretary, Interim
                                           Chief Financial Officer and
                                           Assistant 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
10.4A     Amendment #1 to Mobius Management Systems,  Inc. 1998 Non-Employee
                Director Stock Option Plan




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