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, 2002

                                       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 May 1, 2002

Class                                          Number of Shares Outstanding

Common Stock, par value $0.0001 per share                17,227,286



<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX


PART I      FINANCIAL INFORMATION


         Item 1.  Financial Statements

               Consolidated Balance Sheets
                June 30, 2001 and March 31, 2002

            Consolidated Statements of Operations
                Three and nine months ended March 31, 2001 and 2002

            Consolidated Statements of Stockholders' Equity
                Nine months ended March 31, 2002
               Consolidated Statements of Cash Flows
                Nine months ended March 31, 2001 and 2002

               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
         (Unaudited, in thousands, except share data and per share data)



                                                          June 30,     March 31,
                                                            2001         2002
                                                          --------     --------
ASSETS
Current assets:
  Cash and cash equivalents                                $24,099      $30,052
  Marketable securities, at market value                    10,508        3,668
  Accounts receivable, net of allowance for
  doubtful accounts of $899 and $835, respectively          12,852        9,746
  Software license installments, current portion             9,317        6,870
  Other current assets                                       2,304        2,269
                                                            ------       ------
        Total current assets                                59,080       52,605

Software license installments, net of allowance for
doubtful accounts of $551 and $501, respectively             5,216        4,162
Property and equipment, net                                  9,231        7,125
Deferred income taxes, non-current                           1,242        2,727
Other non-current assets                                       746          535
                                                           -------      -------
        Total assets                                       $75,515      $67,154
                                                           =======      =======

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                    $15,498      $14,611
  Deferred revenues, current                                16,950       18,093
  Deferred income taxes, current                             3,199        2,218
                                                           -------      -------
        Total current liabilities                           35,647       34,922

Deferred revenues                                            1,398        1,278
                                                           -------      -------
        Total liabilities                                   37,045       36,200

Stockholders' equity:
  Common stock, $.0001 par value; authorized
  40,000,000 shares; issued 22,481,436 and
  22,581,759 shares; outstanding 18,206,413
  and 17,227,286 shares, respectively                            2            2
  Additional paid-in capital                                49,624       49,827
  Retained earnings (accumulated deficit)                    2,611       (2,032)
  Deferred stock compensation                                 (168)         (61)
  Accumulated other comprehensive income                      (878)        (800)
  Treasury stock, at cost, 4,275,023 and 5,354,223
  shares, respectively                                     (12,721)     (15,982)
                                                           -------      -------
        Total stockholders' equity                          38,470       30,954
                                                           -------      -------
Total liabilities and stockholder's equity                 $75,515      $67,154
                                                           =======      =======

See accompanying notes to consolidated financial statements.




<PAGE>







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

                                         Three months ended   Nine months ended
                                              March 31,            March 31,
                                           2001      2002       2001      2002
                                           ----      ----       ----      ----

Revenues:
  Software licenses                      $7,719     $5,157    $28,605   $17,728
  Maintenance                             8,536      8,732     24,579    26,000
  Professional service and other            395        908      1,101     3,252
                                         ------     ------     ------    ------
    Total revenues                       16,650     14,797     54,285    46,980

Cost of revenues:
  Software licenses                         122        218        865       657
  Maintenance                             1,387      1,465      3,910     4,322
  Professional service and other            139        873        582     3,125
                                         ------     ------     ------    ------
    Total cost of revenues                1,648      2,556      5,357     8,104

Gross profit                             15,002     12,241     48,928    38,876

Operating expenses:
  Sales and marketing                    10,616      9,007     34,062    28,078
  Research and development                4,109      4,118     12,392    11,608
  General and administrative              2,732      2,532      7,844     7,688
                                         ------     ------     ------    ------
    Total operating expenses             17,457     15,657     54,298    47,374

Loss from operations                     (2,455)    (3,416)    (5,370)   (8,498)

License and other interest income           650        330      2,092     1,359
Interest expense                             (2)       (11)        (4)      (15)
Foreign currency transaction gains           90          4         97        12
Other income (expense)                       32         --         99        (2)
Investment impairment                      (500)        --       (718)       --
                                        -------    -------    -------    ------
Loss before benefit from income taxes    (2,185)    (3,093)    (3,804)   (7,144)

Benefit from income taxes                  (734)    (1,216)    (1,022)   (2,501)
                                        -------    -------    -------   -------
Net loss                                $(1,451)   $(1,877)   $(2,782)  $(4,643)
                                        ========   ========   ========  =======

Basic and diluted loss per share         $(0.08)    $(0.11)   $ (0.15)   $(0.26)
Basic and diluted weighted average
shares outstanding                       18,281     17,227     18,234    17,535






<PAGE>



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

                                                               Retained                Accumulated                         Total
                                                  Additional   Earnings                  Other                         Stockholders'
                                    Common Stock    Paid-in  (Accumulated   Deferred  Comprehensive   Treasury Stock     (Deficit)
                                   Shares  Amount   Capital    Deficit)   Compensation    Loss       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                                -      -         -      (4,643)          -          -            -           -      (4,643)
Change in other comprehensive
loss, net of tax                        -      -         -           -           -         78            -           -          78
                                                                                                                           -------
   Comprehensive loss                   -      -         -           -           -          -            -           -      (4,565)
Stock options exercised                15      -        25           -           -          -            -           -          25
Stock purchase plan shares issued      85      -       178           -           -          -            -           -         178
Stock repurchase program           (1,079)     -         -           -           -          -        1,079     (3,261)      (3,261)
Change in deferred compensation         -      -         -           -         107          -            -           -         107
                                 -------------------------------------------------------------------------------------------------
Balance at March 31, 2002          17,227    $ 2   $49,827     $(2,032)       $(61)     $(800)       5,354   $(15,982)     $30,954
                                 =================================================================================================

</TABLE>


               See accompanying notes to consolidated financial statements.

<PAGE>





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


                                                             Nine Months Ended
                                                                  March 31,
                                                              2001       2002
                                                            --------  --------
Cash flows provided by operating activities:
Net loss                                                    $(2,782)   $(4,643)
                                                            -------    -------
Adjustments to reconcile net loss to net cash
provided by operating activities:
  Deferred income taxes                                      (1,649)    (2,466)
  Depreciation and amortization                               3,099      3,173
  Stock compensation expense                                    237        107
  Impairment of investment                                      718         --
  Other                                                         (79)       160
Change in operating assets and liabilities:
  Accounts receivable, net                                    3,963      3,106
  Software license installments                               4,381      3,501
  Other assets                                                1,738         58
  Accounts payable and accrued expenses                         163       (881)
  Deferred revenue                                             (396)     1,023
                                                            -------    -------
  Total adjustments                                          12,175      7,781
                                                            -------    -------
Net cash provided by operating activities                     9,393      3,138
                                                            -------    -------

Cash flows (used in) provided by investing activities:
  Purchase of marketable securities                         (15,734)    (7,921)
  Purchase of investment                                       (375)        --
  Sale of marketable securities                              16,609     14,705
  Sale of fixed assets                                           51          8
  Capital expenditures                                       (3,667)      (915)
  Other investment                                             (204)       (80)
                                                             ------     ------
Net cash (used in) provided by investing activities          (3,320)     5,797
                                                             ------     ------

Cash flows provided by (used in) financing activities:
  Cash received from exercise of stock options                   24         19
  Cash received from employee stock purchase                    748        178
  Cash used for stock repurchase program                       (501)    (3,261)
                                                             ------     ------
Net cash provided by (used in) financing activities             271     (3,064)
                                                             ------     ------

Effect of exchange rate changes on
cash and cash equivalents                                      (515)        82
                                                             ------     ------

Net change in cash and cash equivalents                       5,829      5,953
Cash and cash equivalents at beginning of period             21,380     24,099
                                                            -------    -------
Cash and cash equivalents at end of period                  $27,209    $30,052
                                                            =======    =======

Supplemental disclosure of cash flow information: Cash (received) paid during
the period for:
  Interest                                                     $ 4        $ 15
  Income taxes                                             $(1,690)       $ 12

See accompanying notes to consolidated financial statements.


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Basis of Presentation

         The accompanying consolidated financial statements at June 30, 2001 and
March 31, 2002 and for the three and nine month periods ended March 31, 2001 and
2002, 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 Mobius to make estimates and assumptions in preparing the interim
financial statements. Mobius has made its 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. In management's opinion, 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 are presented in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share". SFAS No.
128 stipulates that the calculation of earnings per share (EPS) be shown for all
historical periods as Basic EPS and Diluted EPS. Basic EPS is computed by
dividing income available to common shareholders by the weighted average number
of common shares outstanding during the period. The computation of Diluted EPS
is similar to the computation of Basic EPS except that it gives effect to all
potentially dilutive instruments that were outstanding during the period. Such
dilutive instruments include stock options.

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

                                          Three Months Ended March 31,
                                    2001                                2002
                   ------------------------------------------------------------------------
                     Net Loss      Shares   Per Share    Net Loss      Shares   Per Share
                    (Numerator)(Denominator)  Amount    (Numerator)(Denominator)  Amount
<S>                  <C>           <C>        <C>        <C>           <C>       <C>

Basic and diluted
loss per share:
Net loss             $(1,451)                            $(1,877)
                     ========                            ========
Weighted average
shares outstanding                 18,281                              17,227
Basic and diluted
loss per share                               $(0.08)                             $(0.11)
                                             =======                             =======

</TABLE>


<PAGE>



(2)  Earnings Per Share (continued)

<TABLE>
<CAPTION>

                                                           Nine Months Ended March 31,
                                                           ---------------------------
                                                    2001                                          2002
                                -------------- --------------- -----------    -------------- --------------- -----------
                                  Net Loss         Shares      Per Share        Net Loss         Shares      Per Share
                                 (Numerator)   (Denominator)     Amount        (Numerator)   (Denominator)     Amount
<S>                               <C>              <C>           <C>            <C>              <C>          <C>

Basic and diluted loss per share:
Net loss                          $(2,782)                                      $(4,643)
                                  ========                                      ========
Weighted average shares
 outstanding                                       18,234                                        17,535
Basic and diluted  loss per
share                                                           $(0.15)                                       $(0.26)
                                                                =======                                       =======
</TABLE>

         Outstanding stock options, representing an aggregate of 3,149,200 and
3,802,350 shares of common stock equivalents, are antidilutive for the three and
nine months ended March 31, 2001 and 2002, respectively.

(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
insignificant realized gains and losses for the three and nine months ended
March 31, 2001 and 2002. As of June 30, 2001 and March 31, 2002, 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 with extended payment terms the related financing
period is generally 3 to 5 years. 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.



<PAGE>



(5)  Property and Equipment

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

                                                          June 30,    March 31,
                                                            2001        2002
                                                          -------     --------
     Computer equipment and software                      $12,689      $13,568
     Furniture, fixtures and office equipment               1,650        1,654
     Leasehold improvements                                 4,665        4,624
                                                          -------      -------
                                                           19,004       19,846
     Less accumulated depreciation and amortization        (9,773)     (12,721)
                                                          -------      -------
     Property and equipment, net                          $ 9,231      $ 7,125
                                                          =======      =======

         Depreciation and amortization expense on property and equipment,
including capital leases, was $1.1 million and $1.0 million for the three months
ended March 31, 2001 and 2002 and $3.1 million and $3.0 million for the nine
months ended March 31, 2001 and 2002, respectively.

(6)      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 nine months of fiscal
2001, Mobius provided an additional $375,000 as a short term loan to HAN.
Mobius's investment in HAN was a minority ownership position, which was less
than 5%.

         Mobius regularly assessed the recoverability of the HAN investment and
concluded that other than temporary impairment losses occurred. Impairment
losses of $2.2 million were recorded through June 30, 2000 and for the three
months ended September 30, 2000 an impairment loss of $218,000 was recorded. As
of March 31, 2002, the remaining carrying value of the HAN investment is
$188,000 and is included within other current assets.

     In  January   2001,   HAN  was   purchased   by   Intelidata   Technologies
("Intelidata"). As a result, in March and April 2002, Mobius received Intelidata
shares for its  investment in HAN.  Mobius  believes that the $188,000  carrying
value of the HAN investment at March 31, 2002 is  recoverable  based on the fair
market value of the Intelidata shares.

<PAGE>




(7)  Accounts Payable and Accrued Expenses

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

                                                    June 30,        March 31,
                                                      2001            2002
                                                    -------         --------

         Accounts payable                           $ 2,101          $1,843
         Compensation and related benefits            6,728           6,559
         Royalties payable                            1,143           1,041
         Other                                        5,526           5,168
                                                    -------         -------
                                                    $15,498         $14,611
                                                    =======         =======

(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. Since the inception of the program in December 2000,
the entire 1,250,000 shares were repurchased at a cost of approximately $3.9
million. The number of shares repurchased and timing of purchases were based on
a variety of factors, including general market conditions, the market price and
trading volume of Mobius shares.





<PAGE>



(9)  Comprehensive Loss

         Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires the disclosure of comprehensive income, which
includes net income (loss), foreign currency translation adjustments and
unrealized gains and losses on marketable securities classified as
available-for-sale. Comprehensive loss for the three and nine months ended March
31, 2001 and 2002 is as follows (in thousands):

                                        Three Months ended  Nine Months ended
                                             March 31,           March 31,
                                          2001      2002      2001       2002
                                          ----      ----      ----       ----

Net loss                                $(1,451)  $(1,877)  $(2,782)   $(4,643)
Unrealized marketable securities
gain (loss)                                 (52)       (4)       23         (3)
Unrealized translation gain(loss)          (340)      (90)     (515)        81
                                       ---------------------------------------
Comprehensive loss                      $(1,843)  $(1,971)  $(3,274)   $(4,565)
                                       =======================================


(10)  Commitments and Contingencies

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

         From time to time, Mobius is involved in litigation relating to claims
arising out of their operations in the normal course of business. In
management's opinion, Mobius 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 Mobius's business, operating results and financial
condition.


(11) 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 and nine months ended March 31, 2001, the Company recognized $112,500
and $375,000 of TapeSaver license revenue, respectively. As the buyer is
delinquent on these payments since June 2001, no TapeSaver license revenue was
recognized in the three and nine months ended March 31, 2002. Mobius commenced
arbitration proceedings with the buyer to enforce the payment terms in the sales
agreement. On March 26, 2002, the arbitrator issued an award in Mobius's favor
against the buyer and its president in the amount of $381,750, which represents
amounts past due under the sales agreement. The arbitrator also directed the
buyer and its president to pay Mobius $37,500 each month from March 31, 2002
through December 31, 2003 and to pay Mobius's share of the arbitration expenses.
On April 12, 2002, Mobius commenced an action against the buyer and its
president in the United States District Court for the Southern District of New
York to confirm the arbitration awards. The outstanding balance of payments due
to Mobius from the buyer, will be recognized as license revenue when the buyer
makes such 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 March 31, 2001 and 2002, 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 integrated solutions for total content
management. For over two decades, Mobius has delivered innovative technology
that provides access to mission-critical documents through a common portal,
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. Mobius's packaged software products support a broad range of
content-intensive e-business requirements, including customer relationship
management, enterprise resource planning, Internet presentment and payment,
imaging and workflow.


<PAGE>



Critical Accounting Policies and Estimates

         Mobius's discussion and analysis of its financial condition and results
of operations are based upon Mobius's consolidated financial statements, which
have been prepared in accordance with GAAP. The preparation of financial
statements in accordance with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenue and expenses during the
reporting period. Management bases its estimates and judgements on historical
experience and on various other factors that are believed to be reasonable under
the circumstances. These estimates are evaluated on an on-going basis. Actual
results could differ from those estimates.

         Management believes that its significant judgements and estimates used
in the preparation of its consolidated financial statements are influenced by
the following critical accounting policies, among others.

Revenue recognition

         License and maintenance revenue are recognized in accordance with
Statement of Position 97-2, "Software Revenue Recognition" ("SOP 97-2"). Revenue
from software license contracts includes license fees related to long-term
licenses, generally 5 or 15 years, and fees for term license contracts, which
are generally 3 to 5 years. Revenue from executed software license contracts is
recognized upon delivery of the software to the customer if no significant
vendor obligations remain and collection of the resulting receivable is
probable. Software license revenue includes the present value of future payments
under non-cancelable license arrangements which provide for payment in
installments generally over periods from 3 to 5 years. A portion of the discount
is recognized as interest income over the term of the arrangement.

         SOP 97-2 generally requires revenue earned on multiple element software
arrangements, such as additional software products, upgrades or enhancements,
rights to exchange or return software, maintenance or services, including
elements deliverable only on a when-and-if-available basis, to be allocated to
the various elements of such sale based on "vendor-specific objective evidence
of fair values" allocable to each such element. If sufficient vendor-specific
objective evidence of fair market values does not exist, revenue from the sale
is deferred until such sufficient evidence exists, or until all elements have
satisfied the requirements for revenue recognition. Statement of Position (SOP)
98-9, "Modification of SOP 97-2, Software Revenue Recognition, With Respect to
Certain Transactions", which amended SOP 97-2 and clarified what is considered
vendor-specific evidence of fair value for the various elements in a multiple
element arrangement, was adopted by Mobius on July 1, 1999.

         According to these guidelines, when the Company sells a software
license contract that includes maintenance, the maintenance revenue is typically
unbundled from the initial license fee and recognized ratably over the
maintenance period, starting from the inception of the software license
agreement. The unearned portion of such maintenance revenue is classified as
deferred revenue with amounts extending beyond one-year reported as non-current.

         Revenue on maintenance contracts is recognized on a straight-line basis
over the term of the maintenance contract, generally twelve months. The unearned
portion of maintenance revenue is classified as deferred revenue.

Software Development Costs

         Statement of Financial Accounting Standards No. 86 (SFAS No. 86)
requires the capitalization of certain software development costs once
technological feasibility is established. The capitalized costs are then
amortized on a straight-line basis over the estimated product life, or on the
ratio of current revenues to total projected product revenues, whichever is
greater.

         The Company determines technological feasibility based on the working
model method. The period between establishment of a working model and the
general availability of its software has historically been short and,
accordingly, software development costs qualifying for capitalization have been
insignificant. As a result, the Company has expensed all software development
costs.

Income Taxes

         The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No. 109). SFAS
No. 109 requires using the asset and liability method of accounting for income
taxes. Under this method, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities, and their
respective tax bases. Deferred tax assets are recognized for deductible
temporary differences, net operating loss carryforwards, and tax credit
carryforwards if it is more likely than not that the tax benefits will be
realized. A valuation allowance is established if it is more likely than not
that a deferred tax asset will not be realized.

Results of Operations

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

                                     Three months ended      Nine months ended
                                          March 31,              March 31,
                                        2001    2002           2001    2002
                                        ----    ----           ----    ----

Revenues:
  Software licenses                     46.4%    34.9           52.7%    37.8
  Maintenance                           51.3     59.0           45.3     55.3
  Professional service and other         2.3      6.1            2.0      6.9
                                       -----    -----          -----    -----
    Total revenues                     100.0    100.0          100.0    100.0

Cost of revenues:
  Software licenses                      0.7      1.5            1.6      1.4
  Maintenance                            8.3      9.9            7.2      9.2
  Professional service and other         0.8      5.9            1.1      6.6
                                       -----    -----          -----    -----
    Total costs of revenues              9.8     17.3            9.9     17.2

Gross profit                             90.2    82.7           90.1     82.8

Operating expenses:
  Sales and marketing                    63.8    60.9           62.7    59.8
  Research and development               24.7    27.8           22.8    24.7
  General and administrative             16.4    17.1           14.5    16.4
                                        -----   -----          -----   -----
    Total operating expenses            104.9   105.8          100.0   100.9

Loss from operations                    (14.7)  (23.1)          (9.9)  (18.1)

License and other interest income         3.9     2.2            3.8     2.9
Foreign currency transaction gains        0.5      --            0.2      --
Other income                              0.2      --            0.2      --
Investment impairment                    (3.0)     --           (1.3)     --
                                        -----    ----          -----   -----
Loss before income taxes                (13.1)  (20.9)          (7.0)  (15.2)

Benefit from income taxes                (4.4)   (8.2)          (1.9)   (5.3)
                                        -----   -----          -----   -----
Net Loss                                 (8.7)% (12.7)%         (5.1)%  (9.9)%
                                        =====   =====          =====    ====


Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2002

Revenues.

o    Total  revenues  decreased  11.1% from $16.7 million in last year's
     quarter to $14.8 million this quarter. U.S. total revenues  decreased
     13.0% from $14.6 million in last year's quarter to $12.7 million this
     quarter. Total U.S. revenues  decreased due to less U.S. license revenues,
     offset by an increase in U.S.  professional service revenues.
     International total revenues were $2.1 million in last year's quarter and
     this quarter.

o    Software license revenues decreased 33.2% from $7.7 million in last year's
     quarter to $5.2 million this quarter. Mobius believes this decrease was
     primarily attributable to the current economic environment which
     contributed to Mobius selling fewer licenses of its products to new and
     existing customers.


<PAGE>




o    Maintenance revenues increased 2.3% from $8.5 million in last year's
     quarter to $8.7 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 increases in the maintenance fees
     charged by Mobius.

o    Professional service and other revenues increased 129.9% from $395,000 in
     last year's quarter to $908,000 this quarter. Professional service revenues
     have significantly increased as a result of Mobius dedicating more
     resources to the development of the Company's professional service business
     and Mobius entering into more professional service arrangements. 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 increased 78.7%
     from $122,000 in last year's quarter to $218,000 this quarter, representing
     1.6% and 4.2% respectively, of software license revenues in those quarters.
     The costs of software license revenues are a variable expense related to
     license revenues that were subject to royalties. In this quarter, a higher
     percentage of license revenues were subject to royalties.

o    Costs of maintenance revenues consist primarily of customer support staff
     costs. The costs of maintenance revenues increased 5.6% from $1.4 million
     in last year's quarter to $1.5 million this quarter, representing 16.2% and
     16.8% respectively, of maintenance revenues in those quarters. This
     increase was primarily attributable to an increase in the number of support
     staff needed to support more maintenance agreements.

o    Costs of professional  service and other revenues consist primarily of
     personnel and  subcontractor  costs associated  with  providing
     professional  services.  The costs of  professional  service  and other
     revenues increased 528.1% from $139,000 in last year's quarter to $873,000
     this quarter,  representing  35.2% and 96.2% respectively, of professional
     service  and other  revenues  in those  quarters.  The costs of
     professional service  and other  revenues  increased  as the  result  of
     Mobius  entering  into more  professional  service arrangements. The costs
     of professional  service  revenue as a percentage of  professional service
     and other revenues has  increased  due to Mobius  developing  this business
     and dedicating  more internal resources to providing professional services.

 Operating Expenses.

o    Sales and marketing expenses  consist  primarily  of the cost of personnel
     associated  with selling and marketing  Mobius's  products,  including
     salaries,   commissions,   performance  based  bonuses  and  travel
     expenses.  Sales and  marketing  costs  also  include  the  cost of branch
     sales offices, marketing, and advertising.  These expenses  decreased 15.2%
     from  $10.6 million in last year's quarter to $9.0 million  this quarter,
     representing  63.8% and  60.9%, respectively, of total  revenues  in those
     quarters.  Sales  and marketing  expenses  decreased  primarily due to
     decreased  commissions and  consolidation of the Click-n-Done sales and
     marketing  departments into Mobius's established sales and marketing
     structures.  Commissions are a variable expense related to license revenues
     and the decrease in commissions  corresponds  with the decrease in license
     revenues.

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 were
     $4.1 million in last year's quarter and this quarter, representing 24.7%
     and 27.8%, respectively, of total revenues in those quarters.

o    General and administrative expenses consist of personnel costs related to
     management, accounting, human resources, network services and associated
     overhead costs, as well as fees for professional services. General and
     administrative expenses decreased 7.3% from $2.7 million in last year's
     quarter to $2.5 million this quarter, representing 16.4% and 17.1%,
     respectively, of total revenues in those quarters. The decrease in general
     and administrative expenses is primarily due to utilizing less
     subcontractors.

     License and other interest income; interest expense; foreign currency
transaction gains. License and other interest income decreased 49.2% from
$650,000 in last year's quarter to $330,000 this quarter due to a significant
decrease in investment returns and, to a lesser extent, less interest income
being generated from a decreasing amount of installment sales. During both
quarters interest expense and foreign currency transaction gains were
insignificant.

     Benefit from Income Taxes. The benefit from income taxes was $734,000 in
last year's quarter compared to $1.2 million this quarter. The benefit from
taxes as a percentage of loss before taxes was 33.6% and 39.3% for last year's
quarter and this quarter, respectively. The effective tax rate for these
quarters reflect a statutory tax benefit from the losses in the United States
offset by limitations on the tax benefit which can be taken from certain foreign
subsidiary losses.

Nine Months Ended March 31, 2001 Compared to Nine Months Ended March 31, 2002

Revenues.

o    Total  revenues  decreased  13.5%  from  $54.3  million in the  first nine
     months  of  fiscal  2001  to $47.0 million  in the first nine months of
     fiscal 2002. U.S. revenues  decreased 11.9% from $44.7 million in the first
     nine  months  of  fiscal  2001  to  $39.4  million  in the  first  nine
     months  of  fiscal  2002. International  revenues  decreased  20.5%  from
     $9.6  million  in the  first  nine  months  of fiscal  2001 to $7.6 million
     in the first nine months of fiscal 2002.  Mobius  believes the  difficult
     economic  environment contributed to Mobius selling fewer  licenses of its
     products to new and existing  customers.  The decrease in license revenues
     has been  partially  offset by an increase in revenue from  professional
     service and other revenues.

o    Software license revenues decreased 38.0% from $28.6 million in the first
     nine months of fiscal 2001 to $17.7 million in the first nine months of
     fiscal 2002. Mobius believes this decrease was primarily attributable to
     the difficult economic environment which resulted in Mobius selling fewer
     licenses of its products to new and existing customers.

o    Maintenance revenues increased 5.8% from $24.6 million in the first nine
     months of fiscal 2001 to $26.0 million in the first nine months of fiscal
     2002. This increase in maintenance revenue was primarily attributable to
     the growth in the amount of licensed software covered by maintenance
     agreements and increases in the maintenance fees charged by Mobius.

o    Professional fee and other revenues increased 195.4% from $1.1 million in
     the first nine months of fiscal 2001 to $3.3 million in the first nine
     months of fiscal 2002. Professional service revenues have significantly
     increased as a result of Mobius dedicating more resources to the
     development of the Company's professional service business and Mobius
     entering into more professional service arrangements. Other revenues for
     both nine month periods 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 24.0%
     from $865,000 in the first nine months of fiscal 2001 to $657,000 in the
     first nine months of fiscal 2002, representing 3.0% and 3.7% of software
     license revenues in fiscal 2001 and 2002, respectively. The costs of
     software license revenues are a variable expense related to license
     revenues that were subject to royalties. The decrease in cost of license
     revenues is consistent with the decrease in license revenues.

o    Costs of maintenance revenues consist primarily of customer support staff
     costs. The costs of maintenance and other revenues increased 10.5% from
     $3.9 million to $4.3 million in the first nine months of fiscal 2001 and
     2002, respectively. This represents 15.9% and 16.6% of maintenance revenues
     in fiscal 2001 and 2002, respectively. The increase in costs for the nine
     months ended March 31, 2002 was primarily attributable to an increase in
     the number of support staff needed to support more maintenance agreements.

o    Costs of professional service and other revenues consist primarily of
     personnel and subcontractor  costs associated  with  providing professional
     services.  The cost of  professional  service  and  other  revenues
     increased  436.9% from  $582,000  in the first nine  months of fiscal 2001
     to $3.1 million in the first nine months of fiscal 2002, representing 52.9%
     and 96.1% respectively,  of professional service and other revenues
     in those nine month periods. The costs of professional  service and other
     revenues increased  significantly as the result of Mobius entering into
     more professional service  arrangements.  The costs of professional service
     revenue as a percentage of  professional service and other  revenues has
     increased due to Mobius  developing this business and dedicating of more
     internal resources to providing professional services.

Operating Expenses.

o    Sales and  marketing  expenses consist  primarily of the cost of personnel
     associated  with selling and marketing  Mobius's  products,  including
     salaries, commissions, performance  based  bonuses  and  travel expenses.
     Sales and marketing  costs also include the cost of branch sales  offices,
     marketing,  promotional materials and  advertising.  These expenses
     decreased  17.6% from  $34.1 million  in the first nine months of fiscal
     2001 to  $28.1 million  in the first  nine  months  of  fiscal  2002,
     representing  62.7% and  59.8%, respectively,  of total revenues  in those
     nine  month  periods.  Sales  and  marketing  expenses  decreased
     primarily due to decreased commissions and consolidation of the
     Click-n-Done sales and marketing  departments into Mobius's existing sales
     and marketing  structures.  Commissions are a variable expense related to
     license revenues and the decrease in commissions is consistent with the
     decrease in license revenues.

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 6.3% from $12.4 million in the first nine months of fiscal 2001
     to $11.6 million in the first nine months of fiscal 2002, representing
     22.8% and 24.7%, respectively, of total revenues in those nine month
     periods. The decrease in research and development expenses was primarily
     attributable to utilizing fewer outside research contractors. These
     decreases were offset by an increase in personnel costs.

o    General and administrative expenses consist of personnel costs related to
     management, accounting, human resources, network services and associated
     overhead costs, as well as fees for professional services. General and
     administrative expenses decreased 2.0% from $7.8 million in the first nine
     months of fiscal 2001 to $7.7 million in the first nine months of fiscal
     2002, representing 14.5% and 16.4%, respectively, of total revenues in
     those nine month periods.

         License and other interest income; interest expense; foreign currency
transaction gains. License and other interest income decreased 35.0% from $2.1
million in the first nine months of fiscal 2001 to $1.4 million in the first
nine months of fiscal 2002, due to a significant decrease in investment returns
and to a lesser extent less interest income being generated from a decreasing
amount of installment sales. During both nine month periods interest expense and
foreign currency transaction gains were insignificant.

     Benefit from Income Taxes. The benefit from income taxes was $1.0 million
and $2.5 million in the first nine months of fiscal 2001 and 2002, respectively.
The effective benefit from taxes as a percentage of loss before taxes was 26.9%
and 35.0% for the first nine months of fiscal 2001 and 2002, respectively. The
effective tax rate for fiscal 2001 and 2002 reflects the statutory tax benefit
from the losses in the United States offset by limitations on the tax benefit
which can be taken from certain foreign subsidiary losses.

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 March 31, 2002, Mobius had cash and cash equivalents of
$30.1 million, a 24.7% increase from $24.1 million held at June 30, 2001.
Mobius's marketable securities decreased 65.1% to $3.7 million from $10.5
million as of March 31, 2002 and June 30, 2001, respectively.

         Net cash provided by operating activities was $9.4 million in the first
nine months of fiscal 2001 and $3.1 million in the first nine months of fiscal
2002. Mobius's primary sources of cash during this period were the changes in
software installments, accounts receivable and deferred revenue. These sources
were offset by a net loss and the change in deferred taxes. Mobius's
depreciation and amortization expense adjustment in operating activities was
$3.1 million and $3.2 million in the first nine months of fiscal 2001 and 2002,
respectively. Deferred revenue increased 5.6% from $18.3 million at June 30,
2001 to $19.4 million at March 31, 2002. Net software license installments
decreased 24.1% from $14.5 million at June 30, 2001 to $11.0 million at March
31, 2002. Net accounts receivable decreased 24.2% from $12.9 million at June 30,
2001 to $9.7 million at March 31, 2002.

         Cash used in investing activities was $3.3 million in the first nine
months of fiscal 2001 and cash provided by investing activities was $5.8 million
in the first nine months of fiscal 2002. During the first nine months of fiscal
2002, Mobius sold $14.7 million of marketable securities and purchased $7.9
million of marketable securities.

         Cash provided by financing activities was $271,000 in the first nine
months of fiscal 2001 and cash used by financing activities was $3.1 million in
first nine months of fiscal 2002. In the first nine months of fiscal 2002, the
cash was used to repurchase Mobius's common stock pursuant to Mobius's stock
repurchase program, offset by cash received for employee stock purchases and
stock option exercises.

Bad Debt Reserves

         Accounts receivable reserves are primarily calculated by identifying
problem accounts and potential adjustments to maintenance agreements. 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. As of June 30, 2001 and March 31, 2002 approximately 80% and 87%,
respectively, 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 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
and $1.3 million at June 30, 2001 and March 31, 2002, respectively.


<PAGE>



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. Since the inception of the program in December 2000,
the entire 1,250,000 shares were repurchased at a cost of approximately $3.9
million. The number of shares repurchased and timing of purchases were based on
a variety of factors, including general market conditions, the market price and
trading volume of Mobius shares.

         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 nine months of fiscal
2001, Mobius provided an additional $375,000 as a short term loan to HAN.
Mobius's investment in HAN was a minority ownership position, which was less
than 5%.

         Mobius regularly assessed the recoverability of the HAN investment and
concluded that other than temporary impairment losses occurred. Impairment
losses of $2.2 million were recorded through June 30, 2000 and for the three
months ended September 30, 2000 an impairment loss of $218,000 was recorded. As
of March 31, 2002, the remaining carrying value of the HAN investment is
$188,000 and is included within other current assets.

     In  January   2001,   HAN  was   purchased   by   Intelidata   Technologies
("Intelidata"). As a result, in March and April 2002, Mobius received Intelidata
shares for its  investment in HAN.  Mobius  believes that the $188,000  carrying
value of the HAN investment at March 31, 2002 is  recoverable  based on the fair
market value of the Intelidata shares.

         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 and nine months ended March 31, 2001, the Company recognized $112,500
and $375,000 of TapeSaver license revenue, respectively. As the buyer is
delinquent on these payments since June 2001, no TapeSaver license revenue was
recognized in the three and nine months ended March 31, 2002. Mobius commenced
arbitration proceedings with the buyer to enforce the payment terms in the sales
agreement. On March 26, 2002, the arbitrator issued an award in Mobius's favor
against the buyer and its president in the amount of $381,750, which represents
amounts past due under the sales agreement. The arbitrator also directed the
buyer and its president to pay Mobius $37,500 each month from March 31, 2002
through December 31, 2003 and to pay Mobius's share of the arbitration expenses.
On April 12, 2002, Mobius commenced an action against the buyer and its
president in the United States District Court for the Southern District of New
York to confirm the arbitration awards. The outstanding balance of payments due
to Mobius from the buyer, will be recognized as license revenue when the buyer
makes such 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 $1.0 million and $4.0 million for the quarter and nine months
ended March 31, 2001. For the quarter and nine months ended March 31, 2002,
Click-n-Done's expenses are included with Mobius's core product expenses.

         The Company's material obligations and commitments to make future
payments under contracts consist of its operating leases for its office
facilities. These leases expire on various dates through fiscal 2010 and provide
for additional payments relating to utility costs. The future minimum lease
payments for these operating leases are $3.0 million, $2.7 million, $2.1
million, $1.6 million, $1.5 million for the years ending June 30, 2003, 2004,
2005, 2006, 2007, respectively and $3.8 million in the years thereafter.

         In compliance with the lease of the Company's corporate headquarters in
Rye, NY, the landlord holds a $275,000 letter of credit with Silicon Valley
Bank. This letter of credit is collateralized 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
144 for fiscal years beginning after December 15, 2001, and Mobius plans to
adopt this statement on July 1, 2002. The adoption of SFAS No. 144 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, general domestic and international economic conditions, demand for
Mobius's products, changes in the level of operating expenses, introductions of
new products and product enhancements by Mobius or its competitors and
competitive conditions in the industry. .

         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 difficult global economy, as well as delays in
information technology spending, will continue to impact future quarterly
operating results. Mobius believes that the state of the global economy has
influenced certain Mobius customers to defer information technology spending.
The current economic environment may continue to 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 economic downturns,
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, BMC Software, Inc., FileNet
Corporation, International Business Machines Corp., and Quest Software, Inc. 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 Mobius's international operations, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
Item 2 of this report.

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

         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.
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.

Protection of Intellectual Property

         Mobius's success is heavily dependent upon its confidential and
proprietary intellectual property. Mobius has no issued patents covering any
aspect of its software products and it has two patent applications pending in
the U.S. with corresponding international filings. 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.

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 March 31,
2002, Mobius primarily held debt securities.

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



<PAGE>



PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

  From time to time, Mobius is involved in litigation relating to claims arising
out of their operations in the normal course of business. In management's
opinion, Mobius 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
Mobius'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
Mobius's Registration Statement on Form S-1 (File No. 333-47117) with respect to
Mobius's initial public offering. To date, of the $33.0 million of proceeds from
the offering Mobius has used approximately $3.0 million for working capital and
capital expenditures. The remaining proceeds are currently invested in cash and
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

     Mobius held its Fiscal 2001 Annual Meeting of Stockholders on January 10,
2002. The matters submitted to a vote of our stockholders were the election of a
member of the Board of Directors to the class of directors whose terms expires
at the Fiscal 2004 Annual Meeting of Stockholders (the "2004 Annual Meeting) and
the ratification of the appointment of Mobius's independent auditors.

     Mobius stockholders elected Kenneth P. Kopelman to the Board of Directors,
to hold office until the 2004 Annual Meeting and until his successor are duly
elected and qualified. The results of the voting were as follows:

                  Kenneth P. Kopelman

                  Voted for                 12,868,825
                  Withheld                      36,607

     Mobius stockholders ratified the appointment of KPMG LLP as Mobius's
independent auditors. The results of the voting were as follows:

                  Voted for                 12,891,916
                  Against                       12,886
                  Abstain                          630

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



* 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

     On March 1, 2002, Mobius filed a Form 8-K to report that on February 22,
2002, Mobius appointed PricewaterhouseCoopers LLP as the independent accounting
firm to audit the financial statements of the Company for the year ended June
30, 2002, and dismissed KPMG LLP. This decision was approved by the Audit
Committee of the Board of Directors.




<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 13, 2002

                          MOBIUS MANAGEMENT SYSTEMS, INC.


                          By:     /s/ Peter Takiff
                              -------------------------
                                     Peter Takiff
                                     Chief Financial Officer
                                     and Senior Vice President,
                                     Finance (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


* 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.