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 December 31, 2000

                                       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 February 7, 2001

                 Class                          Number of Shares Outstanding

  Common Stock, par value $0.0001 per share                18,260,913



<PAGE>

                         MOBIUS MANAGEMENT SYSTEMS, INC.

                                      INDEX

PART I      FINANCIAL INFORMATION


         Item 1.  Financial Statements

                  Consolidated Balance Sheets
                    June 30, 2000 and December 31, 2000

                  Consolidated Statements of Operations
                    Three and six months ended December 31, 1999 and 2000

                  Consolidated Statements of Stockholders' Equity
                    Six months ended December 31, 2000

                  Consolidated Statements of Cash Flows
                    Six months ended December 31, 1999 and 2000

                  Notes to Consolidated Financial Statements

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

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk

PART II     OTHER INFORMATION

         Item 1.  Legal Proceedings

         Item 2.  Changes in Securities and Use of Proceeds

         Item 3.  Defaults Upon Senior Securities

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

         Item 5.  Other Information

         Item 6.  Exhibits and Reports on Form 8-K



SIGNATURES

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

                         MOBIUS MANAGEMENT SYSTEMS, INC.

                           CONSOLIDATED BALANCE SHEETS

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

<TABLE>
<CAPTION>

                                                                   June 30,        December 31,
                                                                     2000             2000
                                                                                   (Unaudited)
                                                                   --------       ------------
ASSETS

<S>                                                                <C>              <C>
Current assets:
     Cash and cash equivalents                                     $ 21,380         $24,590
     Marketable securities, at market                                10,287           8,805
     Accounts receivable, net of allowance for doubtful
         accounts of $1,084 and $1,269, respectively                 14,857          14,523
     Software license installments, current portion                   9,836           8,520
     Other current assets                                             3,804           3,457
                                                                    -------         -------
              Total current assets                                   60,164          59,895

Software license installments, non-current portion,
     net of allowance for doubtful accounts of $643
     and $684, respectively                                           7,992           6,165
Investments                                                             531             500
Property and equipment, net                                           9,295          10,340
Other assets                                                            411             389
                                                                   --------        --------

              Total assets                                         $ 78,393        $ 77,289
                                                                   ========        ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses                         $ 15,046        $ 14,871
     Deferred revenue                                                16,488          17,649
     Deferred income taxes                                            2,570           2,431
                                                                   --------        --------
              Total current liabilities                              34,104          34,951
                                                                   --------        --------

Deferred revenue                                                      2,374           1,662
Deferred income taxes                                                 1,324             736
                                                                   --------        --------
              Total liabilities                                      37,802          37,349
                                                                   --------        --------


Stockholders' equity:
     Common  stock  $.0001  par  value;  authorized
     40,000,000  shares;  issued 22,218,473 and
     22,465,686 shares, respectively; outstanding
     18,114,000 and 18,350,213 shares, respectively                       2               2
     Additional paid-in capital                                      48,831          49,467
     Retained earnings                                                4,601           3,270
     Deferred stock compensation                                       (445)           (264)
     Accumulated other comprehensive income                            (313)           (413)
     Treasury stock, at cost, 4,104,473
         and 4,115,473 shares, respectively                         (12,085)        (12,122)
                                                                   --------        --------
              Total stockholders' equity                             40,591          39,940
                                                                   --------        --------

Total liabilities and stockholders' equity                         $ 78,393        $ 77,289
                                                                   ========        ========

See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

                         MOBIUS MANAGEMENT SYSTEMS, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                (Unaudited, in thousands, except per share data)

<TABLE>
<CAPTION>

                                                              Three months ended               Six months ended
                                                                 December 31,                     December 31,
                                                            1999              2000             1999           2000
                                                            ----              ----             ----           ----
<S>                                                       <C>               <C>              <C>            <C>

Revenues:
  Software license revenues                               $ 7,256           $10,479          $13,686        $20,885
  Maintenance and other revenues                            7,089             8,625           14,042         16,749
                                                          -------           -------          -------        -------
    Total revenues                                         14,345            19,104           27,728         37,634
Cost of revenues:
  Software license revenues                                   305               326              490            743
  Maintenance and other revenues                            1,340             1,404            2,974          2,965
                                                          -------           -------          -------        -------
    Total costs of revenues                                 1,645             1,730            3,464          3,708

Gross profit                                               12,700            17,374           24,264         33,926

Operating expenses:
  Sales and marketing                                      10,102            11,764           19,970         23,446
  Research and development                                  3,281             3,953            6,272          8,283
  General and administrative                                2,982             2,531            5,952          5,113
                                                          -------           -------          -------        -------
    Total operating expenses                               16,365            18,248           32,194         36,842

Loss from operations                                       (3,665)             (874)          (7,930)        (2,916)

License and other interest income                             759               748            1,485          1,444
Interest expense                                               (1)               --               (2)            (3)
Foreign currency transaction gains                              2                 2               48              6
Other income                                                   --                67               --             67
Investment impairment                                        (821)               --           (1,412)          (218)
                                                           -------           -------         --------       --------
Loss before income taxes                                   (3,726)              (57)          (7,811)        (1,620)

Provision (benefit) from income taxes                      (1,202)              195           (2,444)          (289)
                                                           -------           -------         --------       --------

Net Loss                                                  $(2,524)           $ (252)         $(5,367)       $(1,331)
                                                          ========           =======         ========       ========

Basic loss per share                                       $ (0.14)          $(0.01)          $ (0.30)      $ (0.07)
Basic weighted average shares outstanding
                                                            17,963           18,272            17,940        18,195

Diluted loss per share                                     $ (0.14)          $(0.01)          $ (0.30)      $ (0.07)
Diluted weighted average shares outstanding
                                                            17,963           18,272            17,940        18,195
</TABLE>

<PAGE>

                         MOBIUS MANAGEMENT SYSTEMS, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                            (Unaudited, in thousands)

<TABLE>
<CAPTION>

                                                                                      Accumulated

                                                                                         Other                           Total
                                      Common Stock  Additional                       Comprehensive   Treasury Stock   Stocknolders'
                                      ------------   Paid-in   Retained   Deferred      Loss,        --------------     (Deficit)
                                  Shares    Amount   Capital   Earnings Compensation   net of tax   Shares    Amount      Equity
                                  -------------------------------------------------------------------------------------------------
<S>                               <C>      <C>       <C>        <C>        <C>           <C>         <C>    <C>          <C>

Balance at June 30, 2000          18,114   $ 2       $48,831    $4,601      $(445)       $(313)      4,104  $(12,085)    $40,591
Net loss                               -     -            -     (1,331)         -            -           -         -      (1,331)
Change in other comprehensive
  loss, net of tax                   -     -            -         -             -         (100)          -         -        (100)
                                                                                                                          ------
Comprehensive loss                     -     -            -         -           -            -           -         -      (1,431)
Stock options exercised                8     -           14         -           -            -           -         -          14
Stock purchase plan shares issued    239     -          622         -           -            -           -         -         622
Stock repurchase program             (11)    -            -         -           -            -          11       (37)        (37)
Change in deferred compensation        -     -            -         -         181            -           -         -         181
                                  ---------------------------------------------------- -------------------- -----------------------
Balance at December 31, 2000      18,350   $ 2      $ 49,467    $3,270      $(264)        $(413)     4,115  $(12,122)    $39,940
                                  ==================================================== ==================== =======================

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

                         MOBIUS MANAGEMENT SYSTEMS, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                            (Unaudited, in thousands)

<TABLE>
<CAPTION>

                                                                 Six Months Ended
                                                                  December 31,

                                                                   1999         2000
                                                                   ----         ----

<S>                                                             <C>           <C>

Cash flows provided by operating activities:

Net loss                                                        $ (5,367)     $ (1,331)
                                                                --------      --------
Adjustments to reconcile net loss to net cash
   provided by operating activities:
   Deferred income taxes                                            (926)         (727)
   Depreciation and amortization                                   1,197         1,994
   Stock compensation expense                                        333           181
   Impairment of investment                                        1,412           218
Loss on disposal of fixed assets                                      --            20
   Other                                                              --           (67)
Change in operating assets and liabilities:

     Accounts receivable, net                                      5,418           334
     Software license installments                                 2,690         3,143
     Other assets                                                    486           554
     Accounts payable and accrued expenses                        (2,693)         (200)
  Deferred revenue                                                    78           449
                                                                 -------       -------
         Total adjustments                                         7,995         5,899
                                                                 -------       -------
         Net cash provided by operating activities                 2,628         4,568
                                                                 -------       -------
Cash flows (used in) provided by investing activities:

   Purchase of marketable securities                                (500)       (9,787)
   Purchase of investment                                             --          (375)
   Sale of marketable securities                                      --        11,444
   Sale of fixed assets                                               --            51
   Capital expenditures                                           (3,589)       (3,110)
                                                                 -------       --------
         Net cash used in investing activities                    (4,089)       (1,777)
                                                                 -------       --------
Cash flows (used in) provided by financing activities:

     Cash received from exercise of stock options                     52            12
     Cash received from employee stock purchase                      168           619
     Cash used for stock repurchase program                           --           (37)
     Payments on capital lease obligations                           (31)           --
                                                                 -------       -------
         Net cash provided by financing activities                   189           594
                                                                 -------       -------
Effect of exchange rate changes on
   cash and cash equivalents                                         244          (175)
                                                                 --------      -------
Net change in cash and cash equivalents                           (1,028)        3,210
Cash and cash equivalents at beginning
   of period                                                      33,546        21,380
                                                                 -------       -------
Cash and cash equivalents at end of period                       $32,518       $24,590
                                                                 =======       =======
Supplemental  disclosure of cash flow  information:

Cash paid during the period for:
     Interest                                                    $     2       $     3
     Income taxes                                                $     -       $     -

</TABLE>

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, 2000 and December
31, 2000 and for the three and six month  periods  ended  December  31, 1999 and
2000, 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 their best effort in  establishing  good
faith estimates and assumptions, however, actual results may differ.

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

(2)  Earnings Per Share

         Earnings  per  share is  presented  in  accordance  with  Statement  of
Financial  Accounting  Standards (SFAS) No. 128,  "Earnings Per Share" and Staff
Accounting  Bulletin No. 98. SFAS No. 128  stipulates  that the  calculation  of
earnings  per share (EPS) be shown for all  historical  periods as Basic EPS and
Diluted  EPS.  Basic EPS is  computed  by dividing  income  available  to common
shareholders by the weighted average number of common shares  outstanding during
the period.  The  computation  of Diluted EPS is similar to the  computation  of
Basic EPS except that it gives effect to all  potentially  dilutive  instruments
that were outstanding during the period. Such dilutive instruments include stock
options.

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

<TABLE>
<CAPTION>

                                                            Three Months Ended December 31,

                                                    1999                                          2000
                                -------------- --------------- -----------    -------------- --------------- -----------
                                   Net Loss        Shares      Per Share        Net Loss        Shares       Per Share
                                 (Numerator)   (Denominator)     Amount        (Numerator)   (Denominator)     Amount
<S>                               <C>              <C>           <C>             <C>             <C>          <C>

Basic loss per share:
Net loss                          $(2,524)                                       $(252)
                                  ========                                       ======
Weighted average shares

 outstanding                                       17,963                                        18,272

Basic loss per share                                            $(0.14)                                       $(0.01)
                                                                =======                                       =======
Diluted loss per share:
Net loss                          $(2,524)                                       $(252)
                                  ========                                       ======
Dilutive effect of

 stock options                                          -                                             -
                                                   ------                                        ------
Diluted loss per share                             17,963       $(0.14)                          18,272       $(0.01)
                                                   ======       =======                          ======       =======


</TABLE>

<PAGE>

(2)  Earnings Per Share (continued)
<TABLE>
<CAPTION>

                                                           Six Months Ended December 31,
                                                           -----------------------------
                                                    1999                                          2000
                                -------------- --------------- -----------    -------------- --------------- -----------
                                  Net Loss        Shares      Per Share         Net Loss        Shares      Per Share
                                 (Numerator)   (Denominator)     Amount        (Numerator)   (Denominator)     Amount
<S>                               <C>               <C>          <C>            <C>              <C>           <C>

Basic loss per share:
Net loss                          $(5,367)                                      $(1,331)
                                  ========                                      ========
Weighted average shares

 outstanding                                       17,940                                        18,195

Basic loss per share                                            $(0.30)                                       $(0.07)
                                                                =======                                       =======
Diluted loss per share:
Net loss                          $(5,367)                                      $(1,331)
                                  ========                                      ========
Dilutive effect of

 stock options                                          -                                             -
                                                   ------                                        ------
Diluted loss per share                             17,940       $(0.30)                          18,195       $(0.07)
                                                   ======       =======                          ======       =======
</TABLE>

     Outstanding  stock  options,  representing  an aggregate  of 3,285,352  and
3,134,359 shares of common stock equivalents, are antidilutive for the three and
six months ended December 31, 1999 and 2000, 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 six  months  ended
December 31, 2000.  As of June 30, 2000 and December 31, 2000,  the  unamortized
investment premium and unrealized holding gains and losses were insignificant.

(4)  Software License Installments

         Mobius  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 license contract.


<PAGE>



(5)  Property and Equipment

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

                                                         June 30,  December 31,
                                                           2000       2000
                                                         -------   -----------

      Furniture, fixtures and office equipment           $ 1,089    $ 1,136
      Computer equipment                                  12,349     13,202
      Leasehold improvements                               1,542      4,652
      Construction in progress                             1,062         --
                                                          ------     ------
                                                          16,042     18,990
      Less accumulated depreciation and amortization      (6,747)    (8,650)
                                                          ------    -------
      Property and equipment, net                         $9,295    $10,340
                                                          ======    =======

         Depreciation  and  amortization  expense  on  property  and  equipment,
including  capital leases,  was $530,000 and $1.0 million for the quarters ended
December 31, 1999 and 2000,  respectively  and $1.2 million and $2.0 million for
the six months ended December 31, 1999 and 2000, respectively.  At June 30, 2000
there was $214,000 of equipment  under capital  leases  included in property and
equipment with accumulated depreciation of $120,000. The equipment under capital
lease was sold during the second quarter of fiscal 2001.

(6)      Non-Current Investments

         In June  1999,  Mobius  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 six  months of fiscal
2001, Mobius provided an additional $375,000 to HAN as short term loans.

         As of December 31,  2000,  Mobius held a minority  ownership  position,
which, if the preferred stock were converted to common stock, would be less than
5%. Mobius did not sit on the Board of  Directors,  nor influence the day to day
operations of HAN.

         Mobius  regularly  reviewed the  assumptions  underlying  the operating
performance  and  cash  flow  forecasts  of  HAN  to  assess  the   investment's
recoverability. For periods through September 30, 2000, Mobius concluded that an
other  than  temporary  impairment  loss  occurred  based on the  amount of cash
consumed by HAN and the fact that there was no equity below the Mobius financing
rounds  and  there  was  no  obligation  for  any of the  investors  to  provide
additional capital.

     Impairment  losses have been  recorded in connection  with this  investment
aggregating  $821,000 and $0 for the quarters  ended December 31, 1999 and 2000,
respectively and $1.4 million and $218,000 for the six months ended December 31,
1999 and 2000,  respectively.  As of December 31, 2000,  the remaining  carrying
value of the HAN  investment  is $188,000 and is included  within other  current
assets. See Note 13, "Subsequent Events" for further information regarding HAN.

         In January  2000,  Mobius  made a strategic  investment  of $500,000 in
Flooz.com, a startup Internet company. Flooz is online gift currency that can be
sent to a recipient  over the Internet.  The flooz gift currency can be redeemed
by the recipient at Flooz.com participating merchants.  This is an investment in
preferred  stock,  which  converts  into  common  stock  if and  when  Flooz.com
completes  an  initial  public  offering.  Mobius  holds  a  minority  ownership
position,  which, if the preferred  shares  converted to common stock,  would be
less than 5%. Mobius does not sit on the Board of  Directors,  nor influence day
to day operations of Flooz.com.  The Chief  Executive  Officer of Flooz.com is a
member of the Board of Directors of Mobius.

         Mobius  regularly  reviews the  assumptions  underlying  the  operating
performance  and cash flow  forecasts of  Flooz.com  to assess the  investment's
recoverability.  At December 31, 2000, the investment is carried at its original
cost of $500,000 within investments.

(7)  Accounts Payable and Accrued Expenses

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

                                                  June 30,     December 31,
                                                    2000           2000
                                                  -------      -----------

         Accounts payable                         $ 2,563         $1,922
         Compensation and related benefits          6,569          6,851
         Royalties payable                          1,168          1,158
         Other                                      4,746          4,940
                                                  -------        -------
                                                  $15,046        $14,871
                                                  =======        =======
(8)  Common Stock

         In December 2000, the Board of Directors  authorized a stock repurchase
program  under which Mobius may  repurchase  up to 1,000,000  shares of Mobius's
outstanding  common stock.  The number of shares to be repurchased and timing of
purchases  will be based on a  variety  of  factors,  including  general  market
conditions, the market price and trading volume of Mobius shares. As of December
31, 2000,  11,000 shares at an approximate  cost of $37,000 were repurchased and
are held in treasury stock.

(9)  Stock Incentive Plan

         In January, February and March 1998 Mobius granted 350,000; 370,000 and
53,000 stock options,  respectively,  under the 1996 Stock  Incentive Plan at an
exercise price of $9.86, $11.00 and $11.00 per share,  respectively,  which were
deemed by the Board of  Directors  to be fair  market  values  for the shares on
these dates. Mobius  subsequently  determined that these options were granted at
exercise prices below the fair market value of $14.00 per share,  the low end of
the range of per share prices for Mobius's  initial public  offering  ("IPO") in
April 1998. As a result,  Mobius recognized  compensation expense as follows (in
thousands):

                                    Three Months ended   Six Months ended
                                       December 31,         December 31,
                                      1999     2000       1999       2000
                                      ----     ----       ----       ----
Sales and marketing                   $126      $66       $251       $131
Research and development                33       20         66         40
General and administrative               8        5         16         10
                                     ---------------     ----------------
Total                                 $167      $91       $333       $181
                                     ================    ================


         Relating to these 1998 option grants, there is approximately $83,000 of
expense  remaining to be  recognized  in fiscal 2001 and $134,000 and $37,000 of
expense to be  recognized  in fiscal  years 2002 and 2003,  respectively.  These
expenses are subject to adjustments for option holder terminations.

(10)  Comprehensive Loss

         Statement  of  Financial   Accounting  Standards  No.  130,  "Reporting
Comprehensive  Income"  requires the disclosure of comprehensive  income,  which
includes net income,  foreign  currency  translation  adjustments and unrealized
gains and losses on  marketable  securities  classified  as  available-for-sale.
Comprehensive  loss for the  quarters  ended  December  31,  1999 and 2000 is as
follows (in thousands):

                                       Three Months ended    Six Months ended
                                           December 31,         December 31,
                                        1999      2000        1999       2000
                                     --------------------  --------------------

Net loss                             $(2,524)   $ (252)    $(5,367)   $(1,331)
Unrealized marketable
   securities gain (loss)                (18)       56         (11)        75
Unrealized translation gain(loss)        (54)       78         262       (175)
                                    --------------------  ---------------------
Comprehensive loss                   $(2,596)   $ (118)    $(5,116)   $(1,431)
                                    ====================  =====================

(11)  Commitments and Contingencies

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

(12) Sale of INFOPAC-Tapesaver

         In January 1999, Mobius sold the  INFOPAC-TapeSaver  product to a third
party for  approximately  $3.0 million.  Under the terms of the sale,  the buyer
assumed  responsibility  for  maintenance  support  for all  existing  TapeSaver
licenses. As a result of this arrangement, Mobius will recognize $3.0 million of
license revenue over the contract period,  as the buyer makes payments,  and has
recognized  approximately  $1.1 million of maintenance  revenue through December
31, 1999.  Mobius recognized  license revenue of $322,000,  and $150,000 in last
year's  quarter and this year's  quarter,  respectively,  and Mobius  recognized
license  revenue of $479,000 and $262,500 in the first six months of fiscal 2000
and 2001,  respectively.  For the three and six months ended  December 31, 1999,
Mobius recognized $122,000 and $302,000 of maintenance revenue, respectively. No
maintenance  revenue was recognized in fiscal 2001.  Future  license  revenue is
expected to be $112,500 each quarter through December 31, 2003.

 (13)  Subsequent Events

         In  January  2001,   HAN  was  purchased  by  Intelidata   Technologies
("Intelidata").   Under  the  terms  of  the  purchase  agreement,  all  selling
shareholders and note holders including Mobius received  Intelidata common stock
in  exchange  for  Mobius's  HAN  preferred  stock  and  HAN  loan   receivable.
Intelidata's  common stock is publicly traded,  however,  the stock exchanged in
the transaction is subject to a variety of trading restrictions that extend over
18 months.  Mobius will account for this transaction as a non monetary  exchange
of a cost method  investment  therefore,  the  Intelidata  common  stock will be
recorded at its estimated fair value.  Mobius is in the process of  ascertaining
the estimated fair value of the restricted Intelidata stock but does not believe
that  such  value  will be less  than the  remaining  carrying  value of its HAN
investment of $188,000.


<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 December 31, 1999 and
2000,  respectively.  Mobius's  quarterly  revenues and  operating  results have
varied  substantially  from  quarter to  quarter in the past,  and are likely to
continue to do so in the future.  Certain factors  underlying such fluctuations,
as well as a number of other  factors  relevant to a reader's  understanding  of
this  Management's  Discussion  and  Analysis,  are set forth  under the heading
"Factors Affecting Future Performance" below.

         Statements  contained  in  this  quarterly  report,  including  without
limitation,  as set  forth  under  the  heading  "Forecast"  below,  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  Management  Systems,   Inc.  (together  with  its  consolidated
subsidiaries,  "Mobius") is a leading provider of software  products designed to
provide network and Web-based  access,  presentation  and  distribution of large
volumes of diverse enterprise information. Major financial services, healthcare,
manufacturing,  retail and telecommunications  companies and government entities
use Mobius's software to facilitate customer service and other  mission-critical
functions.  Mobius's software products store,  retrieve and present computer and
non-computer  generated  documents,   such  as  text,  images,  video  or  audio
recordings,  customer statements, checks, external correspondence and remittance
forms. The products can be used by a single department,  multiple departments or
centrally by an entire enterprise.


<PAGE>



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     Six months ended
                                          December 31,          December 31,
                                         1999      2000       1999       2000
                                       ---------------------------------------
Revenues:
  Software license revenues              50.6%    54.9%       49.4%      55.5%
  Maintenance and other revenues         49.4      45.1       50.6       44.5
                                        -------------------------------------
    Total revenues                      100.0     100.0      100.0      100.0
Cost of revenues:
  Software license revenues               2.1       1.7        1.8        2.0
  Maintenance and other revenues          9.4       7.4       10.7        7.9
                                        -------------------------------------
    Total costs of revenues              11.5       9.1       12.5        9.9

Gross profit                             88.5      90.9       87.5       90.1

Operating expenses:
  Sales and marketing                    70.4      61.6       72.0       62.2
  Research and development               22.9      20.7       22.6       22.0
  General and administrative             20.8      13.2       21.5       13.6
                                        -------------------------------------
    Total operating expenses            114.1      95.5      116.1       97.8

Loss from operations                    (25.6)     (4.6)     (28.6)      (7.7)

License and other interest income         5.3       3.9        5.4        3.8
Foreign currency transaction gains         --        --        0.1         --
Other income                               --       0.4         --        0.2
Investment impairment                    (5.7)       --       (5.1)      (0.6)
                                        -------------------------------------
Loss before income taxes                (26.0)     (0.3)     (28.2)      (4.3)
Provision (benefit) from income taxes    (8.4)      1.0       (8.8)       0.8
                                        -------------------------------------
Net Loss                                (17.6)%    (1.3)%    (19.4)%     (3.5)%
                                        =====================================


         Three Months Ended December 31, 1999 Compared to Three Months
                             Ended December 31, 2000

Revenues.

o    Total revenues  increased 33.2% from $14.3 million in last year's quarter
     to  $19.1 million  this quarter.  Domestic  revenues increased 25.4% from
     $12.2 million in last year's quarter to $15.3 million this quarter.
     International  revenues  increased 80.9% from $2.1 million in last year's
     quarter to $3.8 million this quarter.  Mobius believes that Year 2000 (Y2K)
     issues significantly affected the  purchasing  patterns of its customers
     and potential  customers  during the quarter ended  December 31, 1999.
     Mobius believes many companies expended  significant  resources to correct
     or modify their software systems to be Year 2000 compliant and these
     expenditures  reduced funds available to purchase software products such
     as those that Mobius offers. For the quarter ending December 31, 2000,
     Mobius believes that although the software marketplace remains turbulent,
     the market for Mobius's products may be returning to its pre Y2K conditions
     and accordingly,  total revenues increased  primarily because Mobius sold
     more licenses for its products to new and existing customers.

o    Software license revenues  increased 44.4% from $7.3 million in last year's
     quarter  to  $10.5  million  this  quarter.  This  increase  was  primarily
     attributable  to sales of more  licenses for  Mobius's  products to new and
     existing customers.

o    Maintenance  and other revenues  increased  21.7% from $7.0 million in last
     year's  quarter to $8.6 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.  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 6.9% from
     $305,000 in last year's quarter to $326,000 this quarter, representing 4.2%
     and 3.1% respectively,  of software license revenues in those quarters. The
     costs of software  license  revenue as a  percentage  of  software  license
     revenues  decreased from last year's quarter to this quarter  primarily due
     to increased license revenue sales.

o    Costs of  maintenance  and other  revenues  consist  primarily  of customer
     support staff costs.  The costs of maintenance and other revenues were $1.3
     million in last  year's  quarter and $1.4  million in this year's  quarter,
     representing  18.9%  and  16.3%  respectively,  of  maintenance  and  other
     revenues  in those  quarters.  The  decrease in this  quarter's  costs as a
     percentage of maintenance and other revenues was primarily  attributable to
     cost  savings  strategies  implemented  in Mobius's  international  support
     departments.

 Operating Expenses.

o    Sales and  marketing  expenses  consist  primarily of the cost of personnel
     associated with the selling and marketing of Mobius's  products,  including
     salaries, commissions, performance based bonuses and travel expenses. Sales
     and  marketing  costs  also  include  the  cost of  branch  sales  offices,
     marketing,  and  advertising.  These  expenses  increased  16.5% from $10.1
     million in last year's quarter to $11.8 million this quarter,  representing
     70.4% and 61.6%,  respectively,  of total revenues in those quarters. Sales
     and marketing  expenses have increased  primarily  because Mobius paid more
     commissions and bonuses for selling more software licenses and Mobius hired
     additional marketing personnel. This quarter's sales and marketing expenses
     as a percentage of revenues  decreased from last year's  quarter  primarily
     due to increases in total 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
     increased  20.5% from $3.3  million in last year's  quarter to $4.0 million
     this quarter, representing 22.9% and 20.7%, respectively, of total revenues
     in those quarters.  The increases in research and development  expenses was
     primarily attributable to increased staffing and personnel-related costs.

o    General and  administrative  expenses consist of personnel costs related to
     management,  accounting, human resources, network services,  administration
     and associated  overhead costs, as well as fees for professional  services.
     General and  administrative  expenses  decreased 15.1% from $3.0 million in
     last year's  quarter to $2.5 million this quarter,  representing  20.8% and
     13.2%, respectively,  of total revenues in those quarters. The decrease was
     attributable   to  the   elimination   of   Click-n-Done's   administration
     department,  implementation of administrative  cost savings  strategies and
     completion  of  special  projects,  offset by  increased  depreciation  for
     capitalized infrastructure projects.

         License and other interest income;  interest expense;  foreign currency
transaction  gains (losses).  License and other interest income was $759,000 and
$748,000 in last  year's  quarter and this  quarter,  respectively.  During both
quarters   interest  expense  and  foreign  currency   transaction   gains  were
insignificant.

         Provision for Income  Taxes.  The tax benefit for income taxes was $1.2
million in last year's  quarter  compared to a tax provision of $195,000 in this
quarter.  The  effective  (benefit)  provision for taxes as a percentage of loss
before taxes was (32.3)% for last year's  quarter and 342.1% this  quarter.  The
effective  tax rate for last quarter  reflects the statutory tax benefit for the
loss in the United States offset by  limitations on the tax benefit which can be
taken from losses in Mobius's  foreign  subsidiaries.  The tax provision in this
quarter is derived by domestic taxable income with no tax benefit for certain
foreign losses since it is more likely than not that the tax benefit would not
be realized.

           Six Months Ended December 31, 1999 Compared to Six Months
                            Ended December 31, 2000

Revenues.

o    Total revenues  increased  35.7% from $27.7 million in the first six months
     of fiscal 2000 to $37.6 million in the first six months of fiscal  2001.
     Domestic  revenues  increased  33.0% from $22.7  million in the first six
     months of fiscal  2000 to $30.2 million in the first six months of fiscal
     2001.  International  revenues increased 48.0% from $5.0 million in the
     first six months of fiscal 2000 to $7.4 million in the first six months
     of fiscal 2001.  Mobius believes that Year 2000 (Y2K) issues  significantly
     affected the  purchasing  patterns of its  customers and potential
     customers  during the first six months of fiscal 2000.  Mobius believes
     many companies expended  significant  resources to correct or modify their
     software systems to be Year 2000 compliant and these  expenditures reduced
     funds available to purchase software products such as those that Mobius
     offers.  Mobius believes that although the software  marketplace  remains
     turbulent during the first six months of fiscal 2001, the market for
     Mobius's products may be returning to its pre Y2K conditions and
     accordingly,  total revenues increased  primarily because Mobius sold
     more licenses for its products to new and existing customers.

o    Software license  revenues  increased 52.6% from $13.7 million in the first
     six  months  of fiscal  2000 to $20.9  million  in the first six  months of
     fiscal 2001.  This  increase was  primarily  attributable  to sales of more
     licenses for Mobius's products to new and existing customers.

o    Maintenance  and other revenues  increased  19.3% from $14.0 million in the
     first six months of fiscal 2000 to $16.7 million in the first six months of
     fiscal  2001.   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. Other revenues in the first six months of fiscal 2000 and 2001 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 51.6%
     from  $490,000  in the first six months of fiscal  2000 to  $743,000 in the
     first six months of fiscal  2001,  representing  3.6% of  software  license
     revenues  in the  first  six  months  of both  fiscal  years.  The costs of
     software license  revenues  increased  proportionally  with the increase in
     license revenues.

o    Costs of  maintenance  and other  revenues  consist  primarily  of customer
     support staff costs.  The costs of maintenance  and other revenues was $3.0
     million in the first six months of fiscal 2000 and 2001, representing 21.2%
     and 17.7%  respectively,  of  maintenance  and other  revenues in those six
     month  periods.  The  decrease  in the first six months of fiscal 2001 as a
     percentage of maintenance and other revenues was primarily  attributable to
     cost  savings  strategies  implemented  in Mobius's  international  support
     departments.


<PAGE>



Operating Expenses.

o    Sales and marketing expenses consist primarily of the cost of  personnel
     associated  with the selling and marketing  of Mobius's  products,
     including salaries, commissions, performance based bonuses and travel
     expenses.  Sales and marketing costs also include the cost of branch
     sales offices,  marketing,  promotional materials and advertising.  These
     expenses increased 17.4% from  $20.0 million in the first six months of
     fiscal 2000 to  $23.4 million in the first six months of fiscal 2001,
     representing 72.0% and 62.2%, respectively, of total revenues in those six
     month  periods.  Sales and  marketing  expenses  have  increased primarily
     because Mobius paid more commissions and bonuses for selling more software
     licenses,  Mobius hired additional marketing personnel  and an increase in
     depreciation  for  capitalized infrastructure  projects.  These  increased
     costs were offset by a decrease in sales salary costs. The first six months
     of fiscal  2001's sales and  marketing  expenses as a percentage of
     revenues decreased from last year's quarter primarily due an increase in
     total 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
     increased 32.1% from $6.3 million in the first six months of fiscal 2000 to
     $8.3 million in the first six months of fiscal 2001, representing 22.6% and
     22.0%,  respectively,  of total  revenues in those six month  periods.  The
     increases in research and development  expenses was primarily  attributable
     to increased staffing and personnel-related costs.

o    General and  administrative  expenses consist of personnel costs related to
     management,  accounting, human resources, network services,  administration
     and associated  overhead costs, as well as fees for professional  services.
     General and  administrative  expenses  decreased 14.1% from $6.0 million in
     the first six months of fiscal 2000 to $5.1 million in the first six months
     of fiscal  2001,  representing  21.5%  and  13.6%,  respectively,  of total
     revenues in those six month  periods.  The  decrease  was  attributable  to
     decreased  bonuses,  completion  of  special  projects,  implementation  of
     administrative   cost   savings   strategies   and   the   elimination   of
     Click-n-Done's  administration department, offset by increased depreciation
     for capitalized infrastructure projects.

         License and other interest income;  interest expense;  foreign currency
transaction  gains (losses).  License and other interest income was $1.5 million
and $1.4 million in the first six months of fiscal 2000 and 2001,  respectively.
During both six month periods interest expense and foreign currency  transaction
gains were insignificant.

         Provision for Income  Taxes.  The tax benefit for income taxes was $2.4
million  and  $289,000  in the  first  six  months  of  fiscal  2000  and  2001,
respectively.  The  effective  benefit for taxes as a percentage  of loss before
taxes was 31.3%  and  17.8%  for the first six  months of fiscal  2000 and 2001,
respectively.  The  effective  tax rate for both six month  periods  reflect the
statutory  tax benefit for the year to date loss in the United  States offset by
limitations  on the tax  benefit  which can be taken  from  losses  in  Mobius's
foreign subsidiaries.


<PAGE>



Investment in Home Account Network

         In June  1999,  Mobius  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,  which were
converted  to preferred  stock in May 2000.  In first six months of fiscal 2001,
Mobius  provided an additional  $375,000 in short term loans to HAN.  After this
round of  financing,  Mobius had made  investments  in HAN totaling  $2,626,000.
There are several reasons for the investing in HAN. First,  Mobius believed that
HAN had experienced management and a significant market opportunity in a related
industry sector. Second, Mobius believed that, if the venture was successful, it
would provide substantial return to Mobius shareholders.

         In  January  2001,   HAN  was  purchased  by  Intelidata   Technologies
("Intelidata").   Under  the  terms  of  the  purchase  agreement,  all  selling
shareholders and note holders including Mobius received  Intelidata common stock
in exchange for their HAN preferred stock and HAN loan receivable.  Intelidata's
common stock is publicly traded, however, the stock exchanged in the transaction
is  subject to a variety of trading  restrictions  that  extend  over 18 months.
Mobius will account for this  transaction  as a non monetary  exchange of a cost
method investment  therefore the Intelidata common stock will be recorded at its
estimated  fair value.  Mobius is in the process of  ascertaining  the estimated
fair value of the  restricted  Intelidata  stock but does not believe  that such
value will be less than the remaining carrying value of its HAN investment.

         Mobius held a minority  ownership  position,  which,  if the  preferred
stock was converted to common  stock,  would be less than 5%. Mobius did not sit
on the Board of Directors, nor influence the day to day operations of HAN.

         Mobius  regularly  reviewed the  assumptions  underlying  the operating
performance  and  cash  flow  forecasts  of  HAN  to  assess  the   investment's
recoverability. For periods through September 30, 2000, Mobius concluded that an
other  than  temporary  impairment  loss  occurred  based on the  amount of cash
consumed  since (1) HAN had consumed  most of the cash provided (2) there was no
equity below those  financing  rounds and (3) there is no obligation  for any of
the investors to provide  additional  capital.  Based on those  factors,  Mobius
concluded  that the  investment  had been impaired and that the  impairment  was
other than temporary.  For six months ended December 31, 2000, Mobius recorded a
$218,000  impairment  loss in connection with this  investment.  At December 31,
2000,  the  remaining  carrying  value of the HAN  investment is $188,000 and is
included within other current assets.

Forecast

      Mobius believes that although the software  marketplace remains turbulent,
the market may be returning to its pre-Y2K conditions and accordingly,  Mobius's
total  revenue  growth in fiscal  2001 may be  starting  to return to the growth
rates  achieved  prior to the  impact of Y2K.  If in fact the  software  markets
continue  on their  recovery  trend and  return to  pre-Y2K  conditions,  Mobius
believes  that its fiscal year 2001 total  revenue will be between $76.5 million
and $79.0 million,  or a per diluted share loss between ($0.12) and ($0.05),  as
compared to its fiscal year 2000 total  revenue of $60.2  million or per diluted
share loss of ($0.66).


<PAGE>




Liquidity and Capital Resources

         Since its  inception,  Mobius  has funded  its  operations  principally
through  cash flows from  operating  activities  and, to a lesser  extent,  bank
financings.  In April 1998, Mobius completed its initial public offering,  which
generated  net proceeds of $33.0  million.  As of December 31, 2000,  Mobius had
cash and cash equivalents of $24.6 million, an increase of $3.2 million from the
$21.4 million held at June 30, 2000. In addition, Mobius's marketable securities
decreased $1.5 million from $10.3 million as of June 30, 2000 to $8.8 million as
of December 31, 2000.

         Net cash provided by operating activities was $2.6 million in the first
six  months of fiscal  2000 and $4.6  million  in the first six months of fiscal
2001.  The primary reason for the increase in Mobius's cash during the first six
months of fiscal  2001 was a decrease  in  software  license  installments.  Net
software  license  installments  decreased  17.6% from $17.8 million at June 30,
2000 to $14.7 million at December 31, 2000.

         Software  license  installment  and accounts  receivable  reserves have
increased  13.1% from $1.7  million at June 30, 2000 to $2.0 million at December
31, 2000. The increase in these reserves is attributable to management's overall
assessment of the collectability of specific accounts.

         Accounts  receivable  reserves are primarily  calculated by identifying
problem  accounts and in  recognition  that some  customers  decide to cancel or
reduce the number of products  covered by  maintenance  arrangements  upon their
anniversary  but do not always notify Mobius in sufficient  time to prevent some
portion of the annual maintenance billings being recognized. In addition, Mobius
has a small  reserve  for  current  receivables  that  is  based  upon  Mobius's
historical  collection  experience.   Mobius  specifically   identifies  problem
accounts by the age of the receivable and through  discussions with the customer
and Mobius sales  representatives.  Based on such information,  Mobius exercises
its best judgment as to what portion of the accounts receivable balance requires
a reserve.  At June 30, 2000 and  December 31, 2000  approximately  78% and 80%,
respectively,  of the total  accounts  receivable  reserve  balances  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 are determined as a percentage of
software license installments and identifying problem accounts. At June 30, 2000
and December 31, 2000,  software license  installments were approximately  $18.5
million and $15.4  million of which 81% and 69% were customer  balances  greater
than $100,000, respectively. Customer balances for software license installments
tend to be large due to the selling price of Mobius's products.

         Cash used in investing  activities was $4.1 million and $1.8 million in
first six  months of fiscal  2000 and 2001,  respectively.  During the first six
months of fiscal 2001,  Mobius  completed the expansion of its Rye  headquarters
and  purchased  $9.8 million of marketable  securities.  These uses of cash were
offset by the sale of $11.4  million of marketable  securities  during the first
six months of fiscal 2001. Mobius also provided an additional $375,000 to HAN in
short term loans.


<PAGE>




         Cash provided by financing  activities was $189,000 in first six months
of fiscal 2000 and $594,000 in the first six months of fiscal 2001. In the first
six  months of  fiscal  2001,  the cash  provided  by  financing  activities  is
primarily  due to cash  received  from the sale of shares  through the  employee
stock purchase plan.

         In  December  1999,  Mobius  announced  Click-n-Done,  its new suite of
Internet-based  bill and presentment  products.  The  Click-n-Done  products are
being designed to seamlessly  and securely  retrieve,  consolidate,  and archive
bills and statements on a consumer or business'  desktop,  while  preserving the
bill or statement  issuers total control of their one-to-one  relationship  with
their customer.  Mobius's  expenses for  Click-n-Done  were  approximately  $1.5
million  and $1.4  million  in last  year's  quarter  and this  year's  quarter,
respectively,  and $2.2  million  and $3.0  million  in the first six  months of
fiscal 2000 and 2001,  respectively.  During the first six months of fiscal 2000
and 2001, there an insignificant  amount of revenue  generated from Click-n-Done
products.  Mobius anticipates that it will continue to incur additional costs to
develop these consumer focused Internet products.

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

         In January 1999, Mobius sold the  INFOPAC-TapeSaver  product to a third
party for  approximately  $3.0 million.  Under the terms of the sale,  the buyer
assumed  responsibility  for  maintenance  support  for all  existing  TapeSaver
licenses. As a result of this arrangement, Mobius will recognize $3.0 million of
license revenue over the contract period,  as the buyer makes payments,  and has
recognized  approximately  $1.1 million of maintenance  revenue through December
31, 1999.  Mobius recognized  license revenue of $322,000,  and $150,000 in last
year's  quarter and this year's  quarter,  respectively,  and Mobius  recognized
license  revenue of $479,000 and $262,500 in the first six months of fiscal 2000
and 2001,  respectively.  For the three and six months ended  December 31, 1999,
Mobius recognized $122,000 and $302,000 of maintenance revenue, respectively. No
maintenance  revenue was recognized in fiscal 2001.  Future  license  revenue is
expected to be $112,500 each quarter through December 31, 2003.


<PAGE>



                      FACTORS AFFECTING FUTURE PERFORMANCE

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

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

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

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

         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 of its ViewDirect and DocumentDirect  software and
the provision of related maintenance services.  Mobius currently expects this to
continue for the foreseeable  future. As a result,  factors adversely  affecting
the pricing of, or demand for, these products and services,  such as competition
or technological  change,  could have a material adverse effect on its business,
operating results and financial condition.

Competition

         The market for Mobius's products is intensely  competitive,  subject to
rapid change and significantly  affected by new product  introductions and other
market  activities  of  industry  participants.  Mobius  believes  that the most
important  competitive  factors  in  the  market  for  storage,   retrieval  and
presentation  software are scalability,  breadth of supported  operating systems
and document formats,  ease of use, product  reputation,  quality,  performance,
price,  sales and  marketing  effort  and  customer  service.  Mobius  currently
encounters  direct  competition  from a number of public and  private  companies
including Computer Associates  International,  Computron Software, Inc., FileNet
Corporation, International Business Machines Corp., Quest Software, Inc. and RSD
S.A.  Due to the  relatively  low  barriers  to  entry in the  software  market,
additional  competition from other established and emerging  companies is likely
as the market for storage,  retrieval  and  presentation  software  continues to
develop and expand. Some of these companies are substantially larger than Mobius
and have significantly greater financial, technical and marketing resources, and
a larger installed base of customers, than Mobius. Some of such competitors also
have extensive direct and indirect channels of distribution.  As a result,  they
may be able to respond more quickly to new or emerging  technologies and changes
in customer  requirements,  or to devote greater  resources to the  development,
promotion  and sale of their  products  than Mobius.  In  addition,  current and
potential   competitors   have   established   or  may   establish   cooperative
relationships among themselves with prospective  customers.  Accordingly,  it is
possible that new  competitors  or alliances  among  competitors  may emerge and
rapidly acquire  significant market share.  Increased  competition may result in
price  reductions,  reduced gross margins and loss of market share, any of which
would have a material adverse effect on Mobius's business, operating results and
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 and financial condition.


<PAGE>



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
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 and financial
condition.

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

Expansion of Indirect Channels

         To  date,   sales  through   indirect  sales  channels  have  not  been
significant  although  Mobius  intends  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.  Mobius  expects to receive lower unit
prices  when  selling  through  indirect  channels;   therefore,  if  Mobius  is
successful in selling products through indirect channels, its gross margins as a
percentage of revenue will decrease.

Extended Payment Risk

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


<PAGE>



Protection of Intellectual Property

         Mobius's  success  is  heavily  dependent  upon  its  confidential  and
proprietary intellectual property.  Mobius has no patents covering any aspect of
its software products and it has one patent application  pending.  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 and 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 and 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 and 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 and financial condition.

<PAGE>

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  and  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 and 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 are
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  maybe 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  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
Click-n-Done Product Sales.

         A significant  barrier to electronic commerce and communications is the
secure transmission of private information over public networks.  Click-n-Done's
products 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  Click-n-Done  products  uses  to  protect  customer
transaction data. Any breaches in security could cause a significant decrease in
the use of  Click-n-Done  software,  which could undermine  future  Click-n-Done
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 December 31,
2000, 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.  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


<PAGE>



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

None

Item 5 - Other Information

None

Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits

Exhibit
  No.                  Description

3.1*   Form of Second Amended and Restated Certificate of
         Incorporation of the Registrant.
3.2*   Form of Amended and Restated By-Laws of the Registrant.
4.1*   Specimen certificate representing the Common Stock


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

(b)      Reports on Form 8-K

         Not Applicable


<PAGE>




                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

Date:  February 14, 2001

                            MOBIUS MANAGEMENT SYSTEMS, INC.


                            By:     /s/ David Gordon
                                    David Gordon
                                    Assistant Secretary, Interim Chief
                                    Financial Officer and Assistant Treasurer
                                    (Principal Financial and Accounting Officer)



<PAGE>





                                  EXHIBIT INDEX


Exhibit
  No.                    Description


3.1*      Form of Second Amended and Restated Certificate of
            Incorporation of the Registrant.
3.2*      Form of Amended and Restated By-Laws of the Registrant.
4.1*      Specimen certificate representing the Common Stock



* 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.

<PAGE>