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 March 31, 1999

                                       OR

            [ ] TRANSITION REPORT PURSUANT TO SECION 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 May 4, 1999

                 Class                          Number of Shares Outstanding

Common Stock, par value $0.0001 per share                 17,896,400



<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX


PART I      FINANCIAL INFORMATION


            Item 1.  Financial Statements

              Consolidated Balance Sheets
                June 30, 1998 and March 31, 1999       
              Consolidated Statements of Operations
                Three and nine months ended March 31, 1998 and 1999 
              Consolidated Statement of Stockholders' Equity
                Nine months ended March 31, 1999
              Consolidated Statements of Cash Flows
                Nine months ended March 31, 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)


<TABLE>
<CAPTION>


                                                                      March 31,
                                                           June 30,     1999
                                                            1998     (Unaudited)
                                                         ---------   ----------              
<S>                                                      <C>         <C>
ASSETS
Current assets:
     Cash and cash equivalents                           $ 42,222    $ 36,445
     Marketable securities, at market                           -       9,700
     Accounts receivable, net of allowance for doubtful
         accounts of $612 and $623, respectively           10,733       8,981
     Software license installments                          7,330      10,026
     Other current assets                                   1,682       2,707
                                                          -------     -------
              Total current assets                         61,967      67,859
Software license installments,
     non-current portion, net of allowance for
     doubtful accounts of $767 and $819, respectively      13,686      13,870
Property and equipment, net                                 2,932       3,662
Other assets                                                  215         471
                                                         --------    --------
Total assets                                             $ 78,800    $ 85,862
                                                         ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued expenses               $  9,471    $  9,973
     Deferred maintenance revenue                          11,408      13,332
     Deferred income taxes                                  2,054       3,595
     Other liabilities                                        969          51
                                                          -------     -------
              Total current liabilities                    23,902      26,951
                                                          -------     -------

Deferred maintenance revenue, non-current portion           5,616       4,110  
Deferred income taxes, non-current portion                  3,124       3,704
Capital lease obligations, less current portion                36           -
Stockholders' equity:
     Common stock $.0001 par value; authorized 
         40,000,000 shares; issued and outstanding 
         17,694,500 and 17,896,400 shares, respectively         2           2
     Additional paid-in capital                            47,994      48,396
     Deferred compensation                                 (2,076)     (1,156)
     Retained earnings                                     12,199      16,099
     Accumulated other comprehensive income, net of tax         3        (244)
     Treasury stock, at cost, 4,091,000
         and 4,091,000 shares, respectively               (12,000)    (12,000)
                                                         --------    --------
              Total stockholders' equity                   46,122      51,097
                                                         --------    --------
Total liabilities and stockholders' equity               $ 78,800    $ 85,862
                                                         ========    ========
</TABLE>


           See accompanying notes to consolidated financial statements.


<PAGE>



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

<TABLE>
<CAPTION>


                                            Three Months Ended       Nine Months Ended 
                                                March 31,                March 31
                                              1998       1999       1998         1999
                                           --------------------------------------------
<S>                                         <C>       <C>          <C>         <C>

Revenues:
   Software license revenues                $ 8,075   $ 11,223     $22,368     $ 34,645
   Maintenance and other revenues             4,816      6,660      13,594       18,099
                                           --------------------------------------------
     Total revenues                          12,891     17,883      35,962       52,744

Cost of revenues:
   Software license revenues                    217        282         895          825
   Maintenance and other revenues               866      1,209       2,420        3,687
                                           --------------------------------------------
     Total cost of revenues                   1,083      1,491       3,315        4,512
                                           --------------------------------------------
Gross profit                                 11,808     16,392      32,647       48,232

Operating expenses:
   Sales and marketing                        6,566      9,684      17,363       27,732
   Research and development                   1,975      2,630       5,525        7,907
   General and administrative                 1,740      2,098       4,744        6,078
   Stock compensation expense                   313        213         313          879
                                            -------------------------------------------  
     Total operating expenses                10,594     14,625      27,945       42,596

Income from operations                        1,214      1,767       4,702        5,636
Miscellaneous income, net                       533        687       1,353        2,021
                                            -------------------------------------------
Income before income taxes                    1,747      2,454       6,055        7,657
Provision for income taxes                      979      1,174       3,334        3,757
Accretion on preferred stock                      -          -         102            -
                                            -------------------------------------------
Net income                                    $ 768     $1,280     $ 2,619       $3,900
                                            ===========================================                                          

Basic weighted average shares                10,909     17,815      10,909       17,783
                                            ===========================================
Basic earnings per share                      $0.07      $0.07       $0.24        $0.22
                                            ===========================================

Diluted weighted average shares              16,435     19,239      16,277       18,973
                                            ===========================================
Diluted earnings per share                    $0.05      $0.07       $0.16        $0.21
                                            ===========================================

</TABLE>

        See  accompanying   notes  to  consolidated financial statements.



<PAGE>



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



<TABLE>
<CAPTION>
                                                                                     Accumulated   
                                                                                        Other
                                                    Additional                       Comprehensive                         Total
                                     Common  Stock    Paid in    Deferred   Retained    Income,     Treasury Stock    Stockholders'
                                     Shares  Amount   Capital  Compensation Earnings  net of tax    Shares    Amount      Equity
<S>                                  <C>     <C>      <C>       <C>         <C>         <C>          <C>   <C>            <C>

Balance at June 30, 1998             17,695  $  2     $47,994   $(2,076)    $12,199       $ 3        4,091 $(12,000)      $46,122
Net income                                -     -          -          -       3,900         -            -        -         3,900
Change in other comprehensive income      -     -          -          -           -      (247)           -        -          (247)
Stock options exercised                 201     -         443         -           -         -            -        -           443
Change in deferred compensation           -     -         (41)      920           -         -            -        -           879
                                     --------------------------------------------------------------------------------------------
Balance at March 31, 1999            17,896  $  2     $48,396   $(1,156)    $16,099     $(244)       4,091 $(12,000)      $51,097
                                     ============================================================================================
</TABLE>


    See  accompanying   notes  to  consolidated financial statements.



<PAGE>




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

                                                             Nine Months Ended
                                                                 March 31,
                                                              1998      1999
                                                           -------    -------
<S>                                                         <C>       <C>

Cash flows from operating activities:
  Net income                                               $ 2,619    $ 3,900
Adjustments to reconcile net income to 
  net cash provided by operating  activities:
   Deferred income taxes                                     1,433      2,121
   Depreciation and amortization                               508        841
   Accretion of Preferred Stock                                102          -
   Stock compensation expense                                  313        879  
Change in operating assets and liabilities:
   Accounts receivable, net                                  4,651      1,752
   Software license installments                            (5,679)    (2,880)
   Other assets                                             (1,481)    (1,281)
   Accounts payable and accrued expenses                    (2,289)       692
   Other liabilities                                            71       (918)
   Deferred maintenance revenue                              4,880        418
                                                           -------     ------
       Total adjustments                                     2,509      1,624
                                                           -------     ------
       Net cash provided by operating activities             5,128      5,524
                                                           -------     ------
Cash flows from investing activities:
   Purchase of marketable securities                             -     (9,697)
   Capital expenditures                                     (1,101)    (1,571)
                                                           -------     -------
       Net cash used in investing activities                (1,101)   (11,268)
                                                           -------     -------
Cash flows from financing activities:
   Cash received from exercise of stock options                  -        253
   Payments on capital lease obligations                       (43)       (36)
                                                           -------     ------
       Net cash (used in) provided by financing activities     (43)       217
                                                           -------     ------
Effect of exchange rate changes on
   cash and cash equivalents                                    13       (250) 
                                                           -------     ------
Net change in cash and cash equivalents                      3,997     (5,777)
Cash and cash equivalents at beginning
   of period                                                 5,672     42,222
                                                           -------    -------
Cash and cash equivalents at end of period                 $ 9,669    $36,445
                                                           =======    =======
</TABLE>

Supplemental disclosure of cash flow
   information:
   Cash paid during the period for:
     Interest                                              $     9    $    15
     Income taxes                                            1,804      3,222

       
     See  accompanying   notes  to  consolidated financial statements.


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)

(1)  Basis of Presentation

The accompanying consolidated financial statements as of June 30, 1998 and March
31, 1999 and for the three and nine month periods ended March 31, 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 us to make estimates and assumptions in preparing our interim financial
statements.  We have made our best effort in  establishing  good faith estimates
and assumptions, however, actual results may differ.

We are  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 our  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 our latest
Form 10-K.

(2) Significant Accounting Policies

Earnings Per Share

Basic EPS is computed by dividing income available to common stockholders by the
weighted average number of shares of common stock 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.  Stock options were dilutive  instruments in all
four periods and our Series A Convertible  Preferred  Stock was dilutive for the
three and nine  months  ended  March 31,  1998.  All of our Seris A  Convertible
Preferred  Stock was  converted  into common  stock upon the  completion  of our
initial public offering ("IPO").

The following is a  reconciliation  of the numerators and  denominators  for the
Basic and Diluted EPS calculations:
<TABLE>
<CAPTION>


                                                                   Three Months Ended March 31,
                                                      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                          $ 768                                          $ 1,280
                                      =====                                          =======
  Weighted average                     
    shares outstanding                               10,909                                          17,815
Basic EPS                                                           $0.07                                          $0.07
                                                                    =====                                          =====

Diluted EPS:
  Net income                          $ 768                                          $ 1,280
                                      =====                                          =======
  Dilutive effect of
    convertible securities                            4,171                                               -
  Dilutive effect of
    stock options                                     1,355                                           1,424
                                                     ------                                          ------
Diluted EPS                                          16,435         $0.05                            19,239        $0.07
                                                     ======         =====                            ======        =====


</TABLE>



<TABLE>
<CAPTION>



                                                                  Nine Months Ended March 31,
                                                     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                        $ 2,619                                         $ 3,900
                                    =======                                         =======
  Weighted average
    shares outstanding                              10,909                                          17,783
Basic EPS                                                          $0.24                                           $0.22
                                                                   =====                                           =====

Diluted EPS:
  Net income                        $ 2,619                                         $ 3,900
                                    =======                                         =======
  Dilutive effect of
    convertible securities                           4,127                                              -
  Dilutive effect of
    stock options                                    1,241                                           1,190
                                                    ------                                          ------
Diluted EPS                                         16,277         $0.16                            18,973         $0.21
                                                    ======         =====                            ======         =====

</TABLE>

Marketable Securities

Our 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.

Recent Accounting Pronouncements

On December 15,  1998,  the AICPA  issued SOP 98-9,  "Modification  of SOP 97-2,
Software Revenue Recognition,  With Respect to Certain  Transactions." SOP 98-9,
which is effective for transactions entered into in fiscal years beginning after
March 15, 1999,  requires the  application of the "residual  method" for certain
multiple  element  arrangements.  Under  this  method,  the  arrangement  fee is
recognized as follows: (1) the total fair value of the undelivered  elements, as
indicated by vendor-specific  objective  evidence,  is deferred and subsequently
recognized  in  accordance  with the  relevant  sections of SOP 97-2 and (2) the
difference  between the total  arrangement  fee and the amount  deferred for the
undelivered  elements  to be  recognized  as revenue  related  to the  delivered
elements.  All other provisions of SOP 97-2 remain in effect.  We will adopt SOP
98-9 for software  transactions in our next fiscal year, which begins on July 1,
1999. We believe our current accounting policies  substantially  comply with SOP
98-9 and therefore do not expect it to have a material effect on our operations.



<PAGE>





3)  Marketable Securities

In January 1999, we invested in marketable securities.  Our available for sale 
securities at March 31, 1999 are summarized as follows:

                                 Gross Unrealized    
                      Cost       Gain         Loss     Market Value

Debt Securities       $9,697      $4           $1       $9,700

The  difference  between  gross  unrealized  gains and  losses was  included  in
accumulated  other  comprehensive  income  in  the  consolidated   statement  of
stockholders'  equity as of March 31, 1999. There were no sales of available for
sale  marketable  securities  during the three and nine  months  ended March 31,
1999.

4)  Software License Installments

We offer extended  payment terms to some of our customers.  For software license
contracts of 15 years,  the related  financing  period is generally 5 years. For
software  license  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 consist of the following:


                                                      June 30,    March 31,
                                                        1998        1999 
                                                       ------     --------

    Furniture, fixtures and office equipment          $   508      $  590
    Computer equipment and software                     4,410       5,899
    Leasehold improvements                                544         602
                                                       ------      ------
                                                        5,462       7,091
    Less accumulated depreciation and amortization     (2,530)     (3,429)
                                                       ------      ------
    Property and equipment, net                        $2,932      $3,662
                                                       ======      ======


     Depreciation and amortization expense on property and equipment,  including
capital  leases,  was $203,  $508,  $311 and $841 for the  three and nine  month
period ended March 31, 1998 and March 31, 1999, respectively.

(6)  Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

                                                    June 30,  March 31,
                                                      1998       1999
                                                    ------     ------- 

      Accounts payable                              $  801      $1,051
      Compensation and related benefits              4,872       4,893
      Royalty payable                                1,318       1,164
      Other                                          2,480       2,865
                                                    ------      ------
                                                    $9,471      $9,973
                                                    ======      ======


<PAGE>





(7)  Stock Incentive Plan

In January,  February and March 1998 we granted  350, 370 and 53 stock  options,
respectively, under our 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.  We
subsequently determined that these options were granted at exercise prices below
the fair market value of $14.00 per share, the low end of our range of per share
prices for our Initial Public  Offering  ("IPO") in April 1998. As a result,  we
recognized  compensation  expense  of $313 for the three and nine  months  ended
March 31, 1998 and $213 and $879 for the three and nine  months  ended March 31,
1999,  respectively.  We expect to recognize additional  compensation expense of
approximately  $1,156 in  future  periods.  This  compensation  expense  will be
amortized over the respective  option  holders'  service  periods,  adjusted for
option holders' terminations.

(8)  Comprehensive Income

Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income"  requires  that we disclose  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
is as follows:


                                       Three months ended   Nine months ended
                                            March 31,            March 31,
                                         1998     1999       1998      1999
                                         ----     ----       ----      ----

Net Income                               $ 768   $1,280     $2,619    $3,900
Unrealized marketable securities gain        -        3          -         3
Unrealized translation gain (loss)          83     (295)        13      (250)
                                       -------------------------------------
Comprehensive Income                     $ 851    $ 988     $2,632    $3,653
                                       =====================================


(9) Commitments and Contingencies

Our revolving line of credit expired on October 20, 1998. We are in negotiations
to expand our line of credit for working capital. We expect that the new line of
credit  will be secured by certain  assets  and may  contain  certain  financial
restrictions  and covenants  such as  maintaining  minimum  amounts of cash, net
worth  and  profitability.  In  compliance  with  the  lease  of  our  corporate
headquarters, our landlord holds a letter of credit with Silicon Valley Bank for
$275. This letter of credit is secured by a certificate of deposit.

(10) Sale of INFOPAC-Tapesaver

In January 1999, we sold our  INFOPAC-TapeSaver  product to Technologic Software
Concepts, Incorporated of Irvine, California for approximately $3,000. Under the
terms of the  sale,  Technologic  will  assume  responsibility  for  maintenance
support for all current TapeSaver licenses. As a result of this arrangement,  we
will recognize  $3,000 of license  revenue as  Technologic  makes payments to us
over the next  five  years,  and  approximately  $1,000 of  maintenance  revenue
through  December 31, 1999.  For the quarter ended March 31, 1999, we recognized
approximately  $400 of license  revenue and  approximately  $400 of  maintenance
revenue  related to this  arrangement.  Future license  revenue will be variable
through  December 31, 1999 as Technologic  sells  TapeSaver to its customers and
will be $112,500 each quarter  thereafter  for the  remaining  four years 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 our operating
results  and  changes in  financial  position.  This  section  should be read in
conjunction with our Consolidated  Financial  Statements and Notes.  Please note
that  references  in this  section to "last year's  quarter" and "this  quarter"
refer to our fiscal  quarters ended March 31, 1998 and 1999,  respectively.  Our
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 our Form 10-K, 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 our 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 our goods and
services,  and technological  advances and competitive factors in the markets in
which we compete.  These risks and  uncertainties  are  described in detail from
time to  time in our  filings  with  the  Securities  and  Exchange  Commission,
including  our Form 10-K filed on September 28, 1998. We accept no obligation to
update these forward-looking statements and do not intend to do so.

Overview

We are a leading provider of enterprise  software  products designed to optimize
the  storage,  retrieval  and  presentation  of large  volumes of  transactional
information.  Major financial services,  healthcare,  manufacturing,  retail and
telecommunications  companies  and  governmental  entities  use our  products to
facilitate customer service and other mission-critical functions.


<PAGE>




Results of Operations

The  following  table  presents  our  Consolidated  Statements  of  Income  as a
percentage of total revenues for the periods indicated:
<TABLE>
<CAPTION>


                                                  Three Months Ended          Nine Months Ended
                                                       March 31,                   March 31,
                                                 1998            1999         1998           1999
                                                ------           -----        ----           -----
                                                       (Unaudited)                 (Unaudited)
<S>                                             <C>             <C>          <C>             <C>   

Revenues:
  Software license revenues                      62.6%           62.8%        62.2%           65.7%
  Maintenance and other revenues                 37.4            37.2         37.8            34.3
                                                -----           -----        -----           -----
         Total revenues                         100.0           100.0        100.0           100.0
Costs of revenues:
  Software license revenues                       1.7             1.6          2.5             1.6
  Maintenance and other revenues                  6.7             6.7          6.7             7.0
                                                -----           -----        -----           -----
         Total costs of revenues                  8.4             8.3          9.2             8.6
                                                -----           -----        -----           -----
Gross profit                                     91.6            91.7         90.8            91.4
Operating expenses:
  Sales and marketing                            51.0            54.2         48.3            52.5
  Research and development                       15.3            14.7         15.4            15.0
  General and administrative                     13.5            11.7         13.2            11.5
  Stock compensation expense                      2.4             1.2          0.9             1.7
                                                -----           -----        -----           -----
         Total operating expenses                82.2            81.8         77.8            80.7
                                                -----           -----        -----           -----
Income from operations                            9.4             9.9         13.0            10.7
Miscellaneous income, net                         4.2             3.8          3.8             3.8
                                                -----           -----        -----           -----
Income before income taxes                       13.6            13.7         16.8            14.5
Provision for income taxes                        7.6             6.5          9.2             7.1
Accretion on preferred stock                        -               -          0.3               -
                                                ------          -----        -----           -----
Net income                                        6.0%            7.2%         7.3%            7.4%
                                                =====           =====        =====           =====

</TABLE>


Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1999

Revenues.

o    Software license revenues  increased 39.0% from $8.1 million in last year's
     quarter  to  $11.2  million  this  quarter.   The  increase  was  primarily
     attributable  to  increased  sales  of our  ViewDirect  and  DocumentDirect
     products. These increases were offset by decreased sales of the INFOPAC ABS
     product.

o    Maintenance  and other revenues  increased  38.3% from $4.8 million in last
     year's  quarter to $6.7 million this  quarter.  The increase was  primarily
     attributable  to the  growth of the  number of  maintenance  contracts  and
     within the contracts,  the number of users. Other revenues for both periods
     were not significant.

o    Total revenues increased 38.7% from $12.9 million in last year's quarter to
     $17.9  million  this  quarter.  U.S.  revenues  increased  36.2% from $11.8
     million  in  last  year's  quarter  to  $16.0  million  this  quarter.  Our
     international  revenues  increased  64.9% from $1.1  million in last year's
     quarter to $1.9 million this quarter.  Our total  revenues  have  increased
     primarily  because we have sold more  licenses  for our products to new and
     existing customers.


<PAGE>



Costs of Revenues.

o    Costs of license  revenues  consist  primarily of royalties and  sublicense
     fees. The costs of license  revenues  increased 30.0% from $217,000 in last
     year's  quarter  to  $282,000  this  quarter,  representing  2.7% and 2.5%,
     respectively,   of  license  revenues  in  those  periods.   Royalties  and
     sublicense fees decreased as a percentage of license revenue as a result of
     changes in the mix of products  subject to royalties  and a decrease in the
     number of software components subject to royalties.

o    Costs of  maintenance  and other  revenues  consist  primarily  of customer
     support staff costs. The costs of maintenance and other revenues  increased
     39.6% from  $866,000 in last year's  quarter to $1.2 million this  quarter,
     representing   18.0%  and  18.2%  of   maintenance   and  other   revenues,
     respectively.   This  increase  was  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 our  products,  including
     salaries,   commissions,   performance   based   bonuses   and  travel  and
     entertainment  costs. Sales and marketing expenses also include the cost of
     branch sales offices,  marketing,  promotional  materials and  advertising.
     Sales and  marketing  expenses  increased  47.5% from $6.6  million in last
     year's  quarter to $9.7 million this  quarter.  This increase was primarily
     attributable to hiring more sales staff, which increased  personnel related
     costs.

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  33.2% from $2.0  million in last year's  quarter to $2.6 million
     this quarter. The increase was primarily attributable to increased staffing
     and  personnel-related  costs.  We  believe  that a  significant  level  of
     research  and  development  expenses  will  be  required  to  maintain  our
     competitive position in the future.

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 20.6% from $1.7 million in
     last year's quarter to $2.1 million this quarter.  This increase was due to
     hiring  additional  personnel,  using  more  subcontractors  to  assist  in
     enhancing  and  improving  our  infrastructure  for  future  growth  and an
     increase  in  professional  fees.  We  expect  general  and  administrative
     expenses to increase in fiscal 1999 as a result of adding  personnel needed
     to support our continued expansion of our operations.

Miscellaneous  Income  consists of license and other interest  income,  interest
expense and  foreign  currency  transaction  gains  (losses).  License and other
interest  income  consists of interest on cash balances and a portion of license
payments under installment  contracts  allocated to interest based on a discount
rate.  License and other interest income  increased from $541,000 in last year's
quarter to $700,000 this quarter primarily as a result of the earnings on higher
cash and marketable securities balances as a result of our IPO in April 1998 and
higher software license installment sales.

Interest expense  consists  primarily of costs associated with our capital lease
obligations.  Foreign  currency  losses consist of realized  transaction  losses
relating to foreign currency exchange rate fluctuations.  Both, interest expense
and foreign currency transaction losses were not material in last year's quarter
nor this quarter.

<PAGE>




Provision  for Income  Taxes was $1.0  million in last  year's  quarter and $1.2
million this quarter.  The effective tax rates were 56.0% in last year's quarter
and 47.8% this  quarter.  The  effective  tax rate has  decreased due to new tax
structures for certain new foreign  subsidiaries  which permit  consolidation of
losses for U.S.  tax  purposes,  tax free  investment  earnings  on higher  cash
balances in the U.S. and smaller losses in some of our foreign subsidiaries.

Nine Months Ended March 31, 1998 Compared to Nine Months Ended March 31, 1999

Revenues.

o    Software license  revenues  increased 54.9% from $22.4 million in the first
     nine months of fiscal 1998 to $34.6 million the first nine months of fiscal
     1999.  The increase was primarily  attributable  to increased  sales of our
     ViewDirect  and  DocumentDirect  products.  These  increases were offset by
     decreased sales of our Infopac ABS product.

o    Maintenance and other revenues  increased 33.1% from $13.6 million in first
     nine months of fiscal 1998 to $18.1 million the first nine months of fiscal
     1999. The increase was primarily  attributable  to the growth of the number
     of  maintenance  contracts and within the  contracts,  the number of users.
     Other revenues for both periods were not significant.

o    Total revenues  increased 46.7% from $36.0 million in the first nine months
     of fiscal 1998 to $52.7 million the first nine months of fiscal 1999.  U.S.
     revenues  increased  41.8% from $32.1  million in the first nine  months of
     fiscal  1998 to $45.5  million the first nine  months of fiscal  1999.  Our
     international  revenues increased 87.8% from $3.8 million in the first nine
     months of fiscal 1998 to $7.2 million the first nine months of fiscal 1999.
     Our total  revenues  have  increased  primarily  because  we have sold more
     licenses for our products to new and existing customers.

Costs of Revenues.

o    Costs of license  revenues  decreased  7.8% from $895,000 in the first nine
     months of fiscal  1998 to $825,000  the first nine  months of fiscal  1999,
     representing  4.0% and 2.4%,  respectively,  of license  revenues  in those
     periods.  This  decrease was a result of decreases in the sales of products
     subject to royalties.

o    Costs of maintenance  and other revenues  increased 52.4% from $2.4 million
     in the first  nine  months of fiscal  1998 to $3.7  million  the first nine
     months of fiscal  1999,  representing  17.8% and 20.4% of  maintenance  and
     other revenues,  respectively.  This increase was primarily attributable to
     increased staffing and personnel-related costs.

Operating Expenses.

o    Sales and  marketing  expenses  increased  59.7% from $17.4  million in the
     first nine months of fiscal 1998 to $27.7  million the first nine months of
     fiscal 1999. This increase was primarily  attributable to hiring more sales
     staff, which increased personnel related costs.

o    Research and development  expenses increased 43.1% from $5.5 million in the
     first nine months of fiscal  1998 to $7.9  million the first nine months of
     fiscal 1999. The increase is primarily  attributable to increased  staffing
     and personnel-related costs.

o    General and  administrative  expenses  increased 28.1% from $4.7 million in
     the first nine months of fiscal 1998 to $6.1  million the first nine months
     of fiscal 1999.  This  increase is due to hiring  additional  personnel and
     using  more  subcontractors  to  assist  in  enhancing  and  improving  our
     infrastructure for future growth.


<PAGE>



Miscellaneous  Income.  License and other  interest  income  increased from $1.4
million in the first nine months of fiscal  1998 to $2.1  million the first nine
months of fiscal 1999  primarily as a result of earnings on higher cash balances
as a result of our IPO in April 1998 and higher software  license  installments.
Interest  expense  was not  material in the first nine months of fiscal 1998 and
the first  nine  months of fiscal  1999.  Foreign  currency  transaction  losses
increased  from  $12,000 in the first nine  months of fiscal 1998 to $102,000 in
the first nine months of fiscal  1999.  This loss is due to the  increase in the
value of the dollar in relation to the foreign  currency in the countries  where
we operate our largest subsidiaries.

Provision  for Income Taxes was $3.3 million for the first nine months of fiscal
1998 and $3.8  million for the first nine months of fiscal 1999.  The  effective
tax rates for these  respective  periods were 55.1% and 49.1%. The effective tax
rate  has  decreased  due  to  new  tax   structures  for  certain  new  foreign
subsidiaries  which permit  consolidation  of losses for U.S. tax purposes,  tax
free investment  earnings on higher cash balances in the U.S. and smaller losses
of some of our foreign subsidiaries.

Liquidity and Capital Resources

Since our  inception,  we have funded our  operations  principally  through cash
flows from operating  activities  and, to a lesser extent,  bank  financings and
capital leases.  As of March 31, 1999, we had cash and cash equivalents of $36.4
million,  a decrease of $5.8  million  from the $42.2  million  held at June 30,
1998.  This  decrease was the result of investing  $9.7 million of our cash into
marketable securities.

Net cash provided by operating  activities  was $5.1 million and $5.5 million in
the first nine months of fiscal 1998 and 1999, respectively. Our primary sources
of cash during the first nine months of fiscal 1999 were  increased  net income,
increased deferred taxes and decreased accounts  receivable.  These sources were
offset by increases in software license installments,  increases in other assets
and decreases in other  liabilities.  Accounts  receivable  decreased 16.3% from
$10.7  million  at June  30,  1998 to $9.0  million  at  March  31,  1999  which
corresponds  with  fluctuations in license  revenue,  software  installments and
maintenance billings.  Software license installments  increased 13.7% from $21.0
million at June 30, 1998 to $23.9 million at March 31, 1998.

Cash  used in  investing  activities  primarily  consisted  of the  purchase  of
investments of $9.7 million in marketable  securities.  In addition,  there were
capital expenditures of $1.1 million in the first nine months of fiscal 1998 and
$1.6  million  in the  first  nine  months of fiscal  1999 for the  purchase  of
computer equipment and software.

Net cash used in  financing  activities  was $43,000 in the first nine months of
fiscal 1998 and related to the repayment of capital leases. Net cash provided by
financing  activities  was  $217,000  in the first  nine  months of fiscal  1999
primarily due to cash received from the exercise of stock options.

We believe that our existing cash  balances and cash flows  expected from future
operations will be sufficient to meet our capital  requirements  for at least 12
months.  We  continue  negotiations  to expand  our line of credit  for  working
capital and expect that the new line of credit will be secured by certain assets
and may contain certain financial restrictions and covenants such as maintaining
minimum  amounts of cash, net worth and  profitability.  In compliance  with the
lease of our corporate  headquarters  in Rye, NY, our 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, we sold our  INFOPAC-TapeSaver  product to Technologic Software
Concepts, Incorporated of Irvine, California for approximately $3,000. Under the
terms of the  sale,  Technologic  will  assume  responsibility  for  maintenance
support for all current TapeSaver licenses. As a result of this arrangement,  we
will recognize  $3,000 of license  revenue as  Technologic  makes payments to us
over the next  five  years,  and  approximately  $1,000 of  maintenance  revenue
through  December 31, 1999.  For the quarter ended March 31, 1999, we recognized
approximately  $400 of license  revenue and  approximately  $400 of  maintenance
revenue  related to this  arrangement.  Future license  revenue will be variable
through  December 31, 1999 as Technologic  sells  TapeSaver to its customers and
will be $112,500 each quarter  thereafter  for the  remaining  four years of the
contract.

Year 2000 Compliance

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 our products are designed for long-term
storage  and  retrieval  of data with end of life dates  well  beyond  2000,  we
believe that our products are and have been Year 2000 compliant. There can be no
assurance   that  our  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 our products.

We  believe  that Year 2000  issues  may  significantly  affect  the  purchasing
patterns of our customers and potential customers.  Many companies are expending
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 we offer.  Conversely,  Year 2000
issues may cause other  companies to accelerate  purchases,  thereby  causing an
increase in short-term demand and a consequent  decrease in long-term demand for
software products.

Additionally,  Year 2000 compliance  issues could cause a significant  number of
companies,  including our customers to re-evaluate their current systems' needs,
and as a result,  consider  switching to other systems or suppliers.  This could
have a material adverse effect on our business,  operating results and financial
condition.

Management  has  implemented  a  Company-wide  program to prepare  our  internal
computer  systems and  applications  (such as our accounting and word processing
programs) for Year 2000  compliance.  We expect to incur internal staff costs as
well as other expenses necessary during the course of such efforts and we expect
to both replace some systems and upgrade  others.  Maintenance  or  modification
costs will be expensed as incurred. The total cost of this effort is still being
evaluated, but we do not expect the cost to be material.

In light of the above,  we do not anticipate any serious Year 2000 problems.  We
will,  however,  continue to assess this situation and develop contingency plans
as necessary.  Our expectations with respect to these Year 2000 issues are based
on the  assumption  that there will be no general  failure of  external  systems
(including  power,   communications,   transportation,   or  financial  systems)
necessary for the ordinary conduct of business.

Recent Accounting Pronouncements

On March  15,  1998,  the AICPA  issued  SOP  98-9,  "Modification  of SOP 97-2,
Software Revenue Recognition,  With Respect to Certain Transactions".  SOP 98-9,
which is effective for transactions entered into in fiscal years beginning after
March 15, 1999,  requires the application of the "residual  method" for multiple
element  arrangements.  Under this method,  the arrangement fee is recognized as
follows: (1) the total fair value of the undelivered  elements,  as indicated by
vendor-specific  objective evidence, is deferred and subsequently  recognized in
accordance with the relevant sections of SOP 97-2 and (2) the difference between
the total  arrangement fee and the amount deferred for the undelivered  elements
is recognized as revenue related to the delivered elements. All other provisions
of SOP 97-2 remain in effect.  We will adopt SOP 98-9 for software  transactions
in our next fiscal year,  which  begins on July 1, 1999.  We believe our current
accounting  policies  substantially  comply with SOP 98-9 and  therefore  do not
expect it to have a material effect on our operations.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable


<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
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:  May 14, 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                                                              Sequential
  No.           Description                                           Page no.


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.








<PAGE>