SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                          For the Quarter ended September 30, 2002

                                             OR

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

            For the transition period from ___________ to ___________

                         Commission File Number: 0-24077

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

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


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


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


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   YES |X|     NO | |


Number of shares  outstanding  of the  issuer's  common stock as of November 11,
2002

                 Class                          Number of Shares Outstanding

Common Stock, par value $0.0001 per share               17,416,219



<PAGE>


                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX


PART I.      FINANCIAL INFORMATION


      Item 1.  Financial Statements

               Consolidated Balance Sheets
                June 30, 2002 and September 30, 2002

               Consolidated Statements of Operations
                Three months ended September 30, 2001 and 2002

               Consolidated Statement of Stockholders' Equity
                Three months ended September 30, 2002

               Consolidated Statements of Cash Flows
                Three months ended September 30, 2001 and 2002

               Notes to Consolidated Financial Statements

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

      Item 3.  Quantitative and Qualitative Disclosures About Market Risk

      Item 4.  Controls and Procedures

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 Security Holders

      Item 5.  Other Information

      Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES

CERTIFICATIONS


<PAGE>


PART I. - FINANCIAL INFORMATION

Item 1. - Financial Statements

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

<TABLE>
<CAPTION>
                                                             June 30,   September 30,
                                                               2002         2002
                                                             --------     --------
<S>                                                          <C>          <C>
ASSETS
Current assets:
   Cash and cash equivalents                                 $ 31,099     $ 37,867
   Marketable securities, at market value                       2,635          498
   Accounts receivable, net of allowance for doubtful
      accounts of $1,043 and $980, respectively                15,959       10,026
   Software license installments, current portion               6,862        7,582
   Other current assets                                         2,846        2,600
                                                             --------     --------
         Total current assets                                  59,401       58,573

Software license installments, non-current portion,
   net of allowance for doubtful accounts of $453
   and $459, respectively                                       3,467        5,897
Property and equipment, net                                     6,435        5,942
Deferred income taxes                                           1,423        1,507
Other assets                                                      666          620
                                                             --------     --------
         Total assets                                        $ 71,392     $ 72,539
                                                             --------     --------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses                     $ 17,446     $ 14,655
   Deferred revenue                                            19,182       21,524
   Deferred income taxes                                        2,238        2,550
                                                             --------     --------
         Total current liabilities                             38,866       38,729

Deferred revenue                                                1,406        2,298
                                                             --------     --------
         Total liabilities                                     40,272       41,027
                                                             --------     --------

Stockholders' equity:
   Common stock $.0001 par value; authorized 40,000,000
      shares; issued 22,568,198 and 22,610,698 shares,
      respectively; outstanding 17,213,975 and 17,256,475
      shares, respectively                                          2            2
   Additional paid-in capital                                  49,827       49,880
   Accumulated deficit                                         (2,610)      (2,226)
   Deferred stock compensation                                    (43)         (25)
   Accumulated other comprehensive income                         (74)        (137)
   Treasury stock, at cost, 5,354,223
   and 5,354,223 shares, respectively                         (15,982)     (15,982)
                                                             --------     --------
         Total stockholders' equity                            31,120       31,512
                                                             --------     --------

Total liabilities and stockholders' equity                   $ 71,392     $ 72,539
                                                             --------     --------
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.


<PAGE>


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


                                                        Three Months Ended
                                                           September 30,
                                                        2001         2002
                                                      --------     --------
Revenues:
   Software license                                   $  5,407     $  7,756
   Maintenance                                           8,588        9,190
   Professional services and other                         583        1,968
                                                      --------     --------
      Total revenues                                    14,578       18,914
                                                      --------     --------
Costs of revenues:
   Software license                                        234           88
   Maintenance                                           1,292        1,482
   Professional services and other                         683        1,985
                                                      --------     --------
      Total costs of revenues                            2,209        3,555
                                                      --------     --------
Gross profit                                            12,369       15,359
                                                      --------     --------

Operating expenses:
   Sales and marketing                                   9,288        8,573
   Research and development                              3,744        4,067
   General and administrative                            2,589        2,430
                                                      --------     --------
         Total operating expenses                       15,621       15,070
                                                      --------     --------

Income (loss) from operations                           (3,252)         289

Interest income                                            539          326
Interest expense                                            (5)          (3)
Foreign currency transaction gains                           2           13
Gain on investment                                          --          113
                                                      --------     --------
Income (loss) before income taxes                       (2,716)         738

Provision for (benefit from) income taxes                 (860)         354
                                                      --------     --------
Net income (loss)                                     $ (1,856)    $    384
                                                      ========     ========

Basic earnings (loss) per share                       $  (0.10)    $   0.02
Basic weighted average shares outstanding               18,143       17,220
Diluted earnings (loss)per share                      $  (0.10)    $   0.02
Diluted weighted average shares outstanding             18,143       17,534




     See accompanying notes to unaudited consolidated financial statements.

<PAGE>


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

<TABLE>
<CAPTION>
                                                                                    Accumulated
                                  Common Stock    Additional                           Other        Treasury Stock     Total
                                -----------------  Paid-in  Accumulated  Deferred  Comprehensive  ----------------  Stockholders'
                                Shares    Amount   Capital    Deficit  Compensation    Loss       Shares   Amount     Equity
                                ------   -------  --------   --------    ------       ------      -----   --------   --------
<S>                             <C>        <C>    <C>        <C>         <C>          <C>         <C>     <C>        <C>
Balance at June 30, 2002        17,214     $ 2    $ 49,827   $ (2,610)   $  (43)      $  (74)     5,354   $(15,982)  $ 31,120
Net income                          --      --          --        384        --           --         --         --        384
Change in other comprehensive
  income, net of tax                --      --          --         --        --          (63)        --         --        (63)
                                                                                                                     --------
      Comprehensive income                                                                                                321

Stock options exercised             42      --          53         --        --           --         --         --         53
Change in deferred compensation     --      --          --         --        18           --         --         --         18
                                ---------------------------------------------------------------------------------------------
Balance at September 30, 2002   17,256     $ 2    $ 49,880   $ (2,226)   $  (25)      $ (137)     5,354   $(15,982)  $ 31,512
                                =============================================================================================
</TABLE>


     See accompanying notes to unaudited consolidated financial statements.



<PAGE>


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


                                                            Three Months Ended
                                                                September 30,
                                                             2001        2002
                                                           --------    --------

Cash flows provided by (used in) operating activities:
  Net income (loss)                                        $ (1,856)   $    384
                                                           --------    --------
Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
  Deferred income taxes                                        (945)        228
  Depreciation and amortization                               1,092         799
  Stock compensation expense                                     40          18
  Other                                                          12          --
Change in operating assets and liabilities:
    Accounts receivable, net                                  1,828       5,933
    Software license installments                              (319)     (3,151)
    Other assets                                                (82)        245
    Accounts payable and accrued expenses                    (1,094)     (2,791)
    Deferred revenue                                          2,984       3,234
                                                           --------    --------
      Total adjustments                                       3,516       4,515
                                                           --------    --------
      Net cash provided by operating activities               1,660       4,899
                                                           --------    --------

Cash flows provided by (used in) investing activities:
  Purchase of marketable securities                          (3,146)         --
  Sale of marketable securities                               5,975       2,042
  Capital expenditures                                          (75)       (259)
                                                           --------    --------
      Net cash provided by investing activities               2,754       1,783
                                                           --------    --------

Cash flows provided by (used in) financing activities:
  Cash used for stock repurchase program                     (1,298)         --
  Cash received from exercise of stock options                   --          53
                                                           --------    --------
      Net cash provided by (used in) financing activities    (1,298)         53
                                                           --------    --------
Effect of exchange rate changes on
  cash and cash equivalents                                     166          33
                                                           --------    --------
Net change in cash and cash equivalents                       3,282       6,768
Cash and cash equivalents at beginning of year               24,099      31,099
                                                           --------    --------
Cash and cash equivalents at end of period                 $ 27,381    $ 37,867
                                                           ========    ========
Supplemental disclosure of cash flow information:
  Cash paid during the period for:
    Interest                                               $      5    $      3
    Income taxes, net                                      $      8    $   (514)



     See accompanying notes to unaudited consolidated financial statements.

<PAGE>


                         MOBIUS MANAGEMENT SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Basis of Presentation

The  accompanying  consolidated  financial  statements  at  June  30,  2002  and
September 30, 2002 and for the three month periods ended  September 30, 2001 and
2002, have been prepared in accordance  with the  requirements of the Securities
and Exchange Commission (SEC) for interim reporting.  Under those rules, certain
footnotes or other financial information that are normally required by generally
accepted accounting principles (GAAP) can be condensed or omitted.

Revenues,  expenses,  assets  and  liabilities  vary  during  the  year and GAAP
requires the Company to make estimates and  assumptions in preparing the interim
financial  statements.  The Company  has made their best effort in  establishing
good faith estimates and assumptions. Actual results, however, 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."  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  net income  (loss) 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.

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

<TABLE>
<CAPTION>
                                             Three Months Ended September 30,
                                       2001                                   2002
                      ------------------------------------   ------------------------------------
                      Net Income      Shares     Per Share    Net Income     Shares     Per Share
                      (Numerator)  (Denominator)   Amount    (Numerator)  (Denominator)   Amount
                      -----------  ------------- ---------   -----------  ------------- ---------
<S>                    <C>            <C>         <C>          <C>          <C>           <C>
Basic EPS:
Net income (loss)      $(1,856)                                $384
                       =======                                 ====
Weighted average
shares outstanding                    18,143                                17,220
Basic  earnings
(loss) per share                                  $(0.10)                                 $0.02
                                                  ======                                  =====
Diluted earnings
(loss) per share:
Net income (loss)      $(1,856)                                $384
                       =======                                 ====
Dilutive effect of
 stock options                            --                                   314
                                       ------                               ------
Weighted average
shares outstanding                     18,143                               17,534
                                       ======                               ======
Diluted earnings
(loss) per share                                  $(0.10)                                 $0.02
                                                  ======                                  =====
</TABLE>


      Outstanding  stock  options,  representing  an aggregate of 2,930,175  and
2,767,880  shares of Common Stock for the three months ended  September 30, 2001
and 2002, respectively,  were excluded from the  calculation of diluted earnings
(loss) per share because the effect would be  antidilutive.  Stock options would
be the only dilutive  instruments  for the three months ended September 30, 2001
and 2002.

<PAGE>


(3)  Marketable Securities

      Marketable securities are categorized as available-for-sale securities, as
defined by Statement of Financial  Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". Unrealized holding gains and
losses are  reflected as a net amount in a separate  component of  stockholders'
equity until realized.  For the purpose of computing  realized gains and losses,
cost is identified on a specific identification basis. Realized gains and losses
for the three months ended September 30, 2001 were insignificant. Realized gains
for the three months ended September 30, 2002 were $113,000. As of June 30, 2002
and  September  30, 2002,  the  unamortized  investment  premium and  unrealized
holding gains and losses were also insignificant.

(4)  Software License Installments Receivable

      The Company  provides  payment  terms in excess of one year to some of its
customers.  For software  license  contracts with license terms of 15 years, the
related payment term is generally 5 years. For software  license  contracts with
license terms of 3 to 5 years,  generally the payments are due annually over the
term. Software license  installments  receivable 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
payment term. Using the interest method, interest income is periodically accrued
so  that  as an  installment  becomes  due the  installment  receivable  and the
interest receivable is equal to the payment.

(5)  Property and Equipment

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

<TABLE>
<CAPTION>
                                                 Useful      June 30,   September 30,
                                                  Life         2002        2002
                                                ----------   -------   -------------
<S>                                              <C>         <C>        <C>
      Computer equipment                         2-5 years   $13,788    $13,943
      Furniture, fixtures and office equipment    5 years      1,701      1,694
      Leasehold improvements                    5-15 years     4,653      4,658
                                                             -------    -------
                                                              20,142     20,295
      Less accumulated depreciation and amortization         (13,707)   (14,353)
                                                             -------    -------
      Property and equipment, net                            $ 6,435    $ 5,942
                                                             =======    =======
</TABLE>

      Depreciation  and  amortization  expense on  property  and  equipment  was
$1,017,000 and $751,000 for the three months ended  September 30, 2001 and 2002,
respectively.

(6)   Non-Current Investments

      In June 1999,  the Company  invested  $1,501,000  in Home Account  Network
("HAN") a privately-held,  information  technology company providing  processing
and Internet  outsourcing to financial services  companies.  During fiscal 2000,
Mobius  provided  an  additional  $750,000  to HAN in short term loans that were
converted to preferred  stock in May 2000.  In the first quarter of fiscal 2001,
Mobius  provided an  additional  $281,000 as a short term loan to HAN.  Mobius's
investment in HAN represented an ownership position of less than 5%.

      Mobius  regularly  assessed the  recoverability  of the HAN investment and
concluded  that other than  temporary  impairment  losses  occurred.  Impairment
losses of $2.4 million were recorded through September 30,2000.

      In  January   2001,   HAN  was   purchased  by   Intelidata   Technologies
("Intelidata").  As a result,  during fiscal 2002,  Mobius  received  Intelidata
shares for its investment in HAN.  Mobius sold a portion of the shares  received
and realized a $150,000 gain in fiscal 2002.  During the quarter ended September
30, 2002, the remaining  shares of Intelidata  were sold resulting in a realized
gain of $113,000.

<PAGE>


(7)  Accounts Payable and Accrued Expenses

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

                                                   June 30,        September 30,
                                                     2002              2002
                                                   -------         -------------
      Accounts payable                             $ 3,531            $ 2,145
      Compensation and related benefits              6,746              6,306
      Facilities restructuring                       1,394              1,252
      Royalties payable                              1,305                719
      Other                                          4,470              4,233
                                                   -------           --------
                                                   $17,446           $ 14,655
                                                   =======           ========

(8)  Treasury Stock

      In September  2001,  the Board of Directors  expanded the Company's  stock
repurchase  program to allow  repurchases of up to 1,250,000  shares of Mobius's
outstanding common stock. Since the program's inception in December 2000 through
October 2001,  the entire  1,250,000  shares were  repurchased at an approximate
cost of $3.9 million.  The number of shares  repurchased and timing of purchases
were based on a variety of factors,  including  general market  conditions,  the
market price and trading volume of Mobius shares.

(9)  Stock Incentive Plan

      In January,  February and March 1998 the Company granted 350,000,  370,000
and 53,000 stock options,  respectively,  under the 1996 Stock Incentive Plan at
an exercise  price of $9.86,  $11.00 and $11.00 per share,  respectively,  which
were deemed by the Board of Directors to be fair market values for the shares on
these dates. The Company subsequently determined that these options were granted
at exercise prices below the fair market value of $14.00 per share,  the low end
of the range of per share prices for the Initial Public  Offering in April 1998.
As a result, the Company  recognized stock  compensation  expense of $40,000 and
$18,000 for the three months ended  September  30, 2001 and 2002,  respectively.
Such compensation  expense is included within Sales and marketing of $26,000 and
$12,000,  Research  and  development  of  $11,000  and  $5,000,and  General  and
administrative  expenses  of  $3,000  and  $1,000  for the  three  months  ended
September 30, 2001 and 2002,  respectively.  There is  approximately  $25,000 of
stock compensation expense relating to these 1998 option grants to be recognized
as stock  compensation  expense in fiscal 2003, subject to adjustment for option
holders' terminations.

(10)  Comprehensive Income (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  income (loss) for the quarters ended  September 30, 2001 and 2002
is as follows (in thousands):

                                                          Three Months ended
                                                            September 30,
                                                            2001         2002
                                                            ----         ----
Net income (loss)                                        $(1,856)        $ 384
Unrealized marketable securities gain (loss)                   5           (95)
Unrealized translation gain                                  165            32
                                                       -------------------------
Comprehensive income (loss)                              $(1,686)         $321
                                                       =========================


<PAGE>


(11)  Commitments and Contingencies

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

(12) Sale of INFOPAC-TapeSaver

      In January 1999, the Company sold the INFOPAC-TapeSaver product to a third
party for  approximately  $3.0 million  payable over a five year period.  As the
buyer is delinquent  on these  payments  since June 2001,  no TapeSaver  license
revenue was recognized in the three months ended September 30, 2001 and 2002.

      Mobius  commenced  arbitration  proceedings  with the buyer to enforce the
payment terms in the sales agreement.  On March 26, 2002, the arbitrator  issued
an award in Mobius's  favor against the buyer and its president in the amount of
$381,750,  which  represents  amounts  past due under the sales  agreement.  The
arbitrator  also directed the buyer and its president to pay Mobius $37,500 each
month from March 31, 2002 through December 31, 2003 and to pay Mobius's share of
the arbitration  expenses. In April 2002, Mobius commenced an action against the
buyer and its  president in the United  States  District  Court for the Southern
District of New York to confirm the  arbitration  award.  The Court granted that
motion and issued an order confirming the award on September 23, 2002.

(13) Facilities Restructuring

      In connection with management's plan to reduce costs and improve operating
efficiencies,  the Company  recorded a facilities  restructuring  charge of $1.4
million in the fourth  quarter of fiscal  2002.  The charge  reflects  estimated
future lease obligations, net of estimated sublease income, for office space the
Company will no longer utilize.  The Company worked with an external real estate
consultant to determine the best estimate for the accrual.  However, if the real
estate  market  continues  to worsen and the Company is not able to sublease the
properties as expected,  additional  adjustments to the accrual may be required,
which  would  result  in  additional  restructuring  costs  in the  period  such
determination was made. Likewise, if the real estate market strengthens, and the
Company is able to sublease the properties  earlier or at more  favorable  rates
than  projected,  adjustments to the accrual may be required that would increase
net income in the period such determination was made.

      The balance of the facilities  restructuring  accrual and the transactions
for the three months ended September 30, 2002 are as follows (in thousands):

                                             June 30,      Cash    September 30,
                                               2002      Payments      2002
                                             -------     --------  -------------
      Rent and related operating expenses    $ 1,066      $ 122       $  944
      Other                                      328         20          308
                                             -------      -----       ------
                                             $ 1,394      $ 142       $1,252
                                             =======      =====       ======

(14) Subsequent Event - Cytura Asset Acquisition

      On  October  11,  2002  (the  "Closing  Date"),  the  Company,  through  a
wholly-owned subsidiary,  acquired technology and certain other assets of Cytura
Corp. ("Cytura").  Mobius paid Cytura, a privately held company, $2.2 million in
cash  for the  acquired  assets.  No  later  than 60 days  following  the  first
anniversary of the Closing Date,  Mobius may be obligated to pay Cytura up to an
additional $800,000,  if the average closing price of the common stock of Mobius
achieves  appreciation  levels defined in the agreement during any 30-day period
during the thirteen months following the Closing Date.

<PAGE>


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

      In this section,  readers are given a more detailed assessment of Mobius's
operating results and changes in financial position. This section should be read
in conjunction with Mobius's Consolidated Financial Statements and Notes. Please
note that references in this section to "last year's quarter" and "this quarter"
refer  to  Mobius's   fiscal   quarters  ended  September  30,  2001  and  2002,
respectively.  Mobius's  quarterly  revenues and  operating  results have varied
substantially from quarter to quarter in the past, and are likely to continue to
do so in the future.

      Statements  contained  in this  quarterly  report,  other than  historical
financial results, may contain forward-looking  statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve risks and uncertainties.  They are not historical facts or guarantees of
future performance or events. They are based on current expectations, estimates,
beliefs,  assumptions,  goals and objectives,  and are subject to  uncertainties
that are difficult to predict.  In particular,  any statements  contained herein
regarding  expectations with respect to future sales and profitability,  as well
as product  development and/or  introductions,  are subject to known and unknown
risks,  uncertainties  and  contingencies,  many of which  are  beyond  Mobius's
control,  which may cause actual results,  performance or achievements to differ
materially from those projected or implied in such  forward-looking  statements.
Important factors that might affect actual results,  performance or achievements
include,  among other  things,  overall  economic and business  conditions,  the
demand for Mobius's goods and services,  including  budget  allocations  for new
software  products  especially within larger corporate  environments  which have
traditionally licensed Mobius's products, technological advances and competitive
factors in the markets in which Mobius  competes,  including  price  competition
from products  providing  similar  functionality to Mobius's products as well as
competition for experienced, seasoned employees (including retention) to support
Mobius's key business  operations,  ongoing product  development and growth, and
acceptance  and or adoption of Mobius's  new  products or  services.  Certain of
these  risks and  uncertainties  are  described  in detail  from time to time in
Mobius's filings with the Securities and Exchange Commission,  including without
limitation,   as  set  forth  under  the  heading   "Factors   Affecting  Future
Performance" below. Forward looking statements included in this quarterly report
are based on information known to Mobius as of the date of this quarterly report
and Mobius accepts no obligation  (and expressly  disclaims any  obligations) to
update these forward-looking statements and does not intend to do so.

Overview

      Mobius is a leading  provider of  integrated  solutions  for total content
management.  For over two decades,  Mobius has delivered  innovative  technology
that provides for storage and access to mission-critical documents,  reports and
images.  Mobius  solutions  have achieved  industry-wide  recognition  for their
ability   to   support   high-volume,   high-performance,    simultaneous-access
requirements  in  distributed  environments  that range from the  desktop to the
mainframe.  Mobius's  packaged  software  products  support  a  broad  range  of
content-intensive  e-business  requirements,  including Web content  management,
workflow and imaging,  Internet  presentment and payment,  and enterprise report
distribution.

Critical Accounting Policies and Estimates

      Mobius's discussion and analysis of its financial condition and results of
operations are based upon Mobius's consolidated financial statements, which have
been prepared in accordance with GAAP. The  preparation of financial  statements
in accordance  with GAAP requires  management to make estimates and  assumptions
that affect the reported  amounts of assets and  liabilities  and  disclosure of
contingent assets and liabilities at the date of the financial  statements,  and
the  reported  amounts of revenue  and  expenses  during the  reporting  period.
Management  bases its estimates and  judgments on historical  experience  and on
various other factors that



<PAGE>


are believed to be  reasonable  under the  circumstances.  These  estimates  are
evaluated  on  an  on-going  basis.  Actual  results  could  differ  from  those
estimates.

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

Revenue Recognition

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

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

      According  to the SOP 97-2  guidelines,  when the  Company  enters  into a
contract  that  includes  both a software  license and an  obligation to provide
maintenance,  the maintenance  revenue is unbundled from the initial license fee
and recognized ratably over the maintenance period,  starting from the inception
of the software  license  agreement.  We  determine  the portion of the contract
price  attributable to maintenance  (which, as per SOP 97-2, may not necessarily
track  the  allocation  between  license  and  maintenance  fees  set out in the
contract) using a percentage derived from our pricing  structure.  The unbundled
portion of such  maintenance  revenue is  classified  as deferred  revenue  with
amounts extending beyond one-year reported as non-current.

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

      Professional  service  revenue  is  recognized  using  the  percentage  of
completion  method of accounting.  In accordance with this method,  revenue from
professional  service  contracts is recognized  based on the percentage of costs
incurred  to date  to  total  estimated  costs  of the  project.  The  financial
reporting  for these  contracts  depends  on  estimates,  which are  continually
assessed and subject to revision as the contract progresses to completion.  When
the current  estimate of total  contract  costs  indicates  that a contract will
result in a loss, a provision for the full loss is recognized.

Software Development Costs

      Statement of Financial  Accounting  Standards ("SFAS") No. 86, "Accounting
for the Costs of Computer  Software to be Sold,  Leased or Otherwise  Marketed,"
requires  the   capitalization  of  certain  software   development  costs  once
technological


<PAGE>


feasibility  is  established.  The  capitalized  costs are then  amortized  on a
straight-line  basis over the estimated product life, or on the ratio of current
revenues to total projected product revenues, whichever is greater.

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

Income Taxes

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


Results of Operations

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

                                                 Three Months Ended
                                                    September 30,
                                                    2001    2002
                                                   -----    -----
                                                     (Unaudited)
Revenues:
  Software license                                  37.1%    41.0%
  Maintenance                                       58.9     48.6
  Professional service and other                     4.0     10.4
                                                   -----    -----
      Total revenues                               100.0    100.0
                                                   -----    -----
Costs of revenues:
  Software license                                   1.6      0.5
  Maintenance                                        8.9      7.8
  Professional service and other                     4.7     10.5
                                                   -----    -----
      Total costs of revenues                       15.2     18.8
                                                   -----    -----
Gross profit                                        84.8     81.2

Operating expenses:
  Sales and marketing                               63.7     45.3
  Research and development                          25.7     21.5
  General and administrative                        17.7     12.9
                                                   -----    -----
      Total operating expenses                     107.1     79.7
                                                   -----    -----
Income (loss) from operations                      (22.3)     1.5
                                                   -----    -----

Interest income                                      3.7      1.7
Interest expense                                      --       --
Foreign currency transaction gains                    --      0.1
Gain on investment                                    --      0.6
                                                   -----    -----
Income (loss) before income taxes                  (18.6)     3.9
Provision (benefit) from income taxes               (5.9)     1.9
                                                   -----    -----
Net income (loss)                                  (12.7)%    2.0%
                                                   =====    =====

<PAGE>


      Three  Months  Ended  September  30, 2001  Compared to Three  Months Ended
September 30, 2002

Revenues.

o    Total revenues increased 29.7% from $14.6 million in last year's quarter to
     $18.9 million this quarter.  Domestic  revenues  increased 38.8% from $11.6
     million in last year's quarter to $16.1 million this quarter. International
     revenues  decreased  4.8% from $3.0 million in last year's  quarter to $2.8
     million this quarter. The increase in total revenues is due to increases in
     software  license  revenues,  maintenance,  professional  service and other
     revenues.

o    Software license revenues  increased 43.4% from $5.4 million in last year's
     quarter to $7.8 million this quarter.  For the quarter ended  September 30,
     2002,  license  revenues  increased  due to  increased  spending for Mobius
     products by new and existing  Mobius  customers.  Mobius  believes that the
     quarter  ended  September  30, 2001 was severely  impacted by  geopolitical
     events  surrounding  the  terrorist  attacks of September  11, 2001,  which
     caused customers to defer information technology spending.

o    Maintenance  revenues  increased  7.0% from  $8.6  million  in last  year's
     quarter to $9.2 million this quarter.  The increase in maintenance  revenue
     was primarily attributable to the growth in the amount of licensed software
     covered by maintenance agreements.

o    Professional  service and other revenues  increased 237.6% from $583,000 in
     last year's  quarter to $2.0 million  this  quarter.  Professional  service
     revenues have significantly increased as a result of Mobius dedicating more
     resources to the development of the Company's professional service business
     and Mobius  entering into more  professional  service  arrangements.  Other
     revenues for both quarters were not significant.

Costs of Revenues.

o    Costs of license  revenues  consist  primarily of the cost of royalties and
     sublicense  fees. The costs of software  license  revenues  decreased 62.4%
     from $234,000 in last year's quarter to $88,000 this quarter,  representing
     4.3%  and  1.1%,  respectively,  of  software  license  revenues  in  those
     quarters.  The  decrease  from last  year's  quarter  to this  quarter  was
     primarily  due to  negotiating  more  favorable  terms  with  respect to an
     existing  royalty  agreement,  which  terms  included a decrease in current
     royalty rates and a credit for past royalty expense.

o    Costs of maintenance  revenues consist  primarily of customer support staff
     costs. The costs of maintenance  revenues increased 14.7% from $1.3 million
     in last year's quarter to $1.5 million this quarter, representing 15.0% and
     16.1%,  respectively,  of  maintenance  revenues  in  those  quarters.  The
     increase in this quarter's  costs as a percentage of  maintenance  revenues
     was primarily attributable to an increase in the cost of support staff. The
     increase was offset by negotiating  more favorable terms with respect to an
     existing  royalty  agreement,  which  terms  included a decrease in current
     royalty rates and a credit for past royalty expense.

o    Costs of  professional  service and other  revenues  consist  primarily  of
     personnel and  subcontractor  costs associated with providing  professional
     services.  The costs of professional  service and other revenues  increased
     190.6% from  $683,000 in last year's  quarter to $2.0 million this quarter,
     representing 117.2% and 100.9%  respectively,  of professional  service and
     other revenues in those  quarters.  The costs of  professional  service and
     other  revenues  increased  as the  result  of  Mobius  entering  into more
     professional service arrangements and dedicating more internal resources to
     developing this business.


<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  and
     entertainment  costs.  Sales and  marketing  costs also include the cost of
     branch sales offices,  marketing,  promotional  materials and  advertising.
     These  expenses  decreased 7.7% from $9.3 million in last year's quarter to
     $8.6 million this quarter,  representing 63.7% and 45.3%, respectively,  of
     total revenues in those quarters.  Sales and marketing  expenses  decreased
     primarily due to lower personnel costs (reflecting lower headcount),  lower
     lease  costs due to the  facilities  restructuring  charge  related  to the
     Chicago  sales office,  and lower  professional  fees,  offset by increased
     commission and bonus costs as a result of increased license  revenues,  and
     an increase in bad debt expense.

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  8.6% from $3.7  million in last year's  quarter to $4.1  million
     this quarter, representing 25.7% and 21.5%, respectively, of total revenues
     in those quarters.  The increase in research and  development  expenses was
     primarily due to increased  subcontractor  fees and personnel costs to work
     on development projects.

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  6.1% from $2.6 million in
     last year's  quarter to $2.4 million this quarter,  representing  17.7% and
     12.9%,  respectively,  of total revenues in those quarters. The decrease in
     general and  administrative  expenses was primarily  attributable  to lower
     depreciation  and  telecommunications  costs,  offset by  higher  personnel
     costs.

Interest income;  interest expense;  foreign currency transaction gains; gain on
investment.

      Interest  income was $539,000 and $326,000 in last year's quarter and this
quarter,  respectively.  The  decrease  in interest  income is due to  decreased
returns on investments,  as well as lower interest income from  installment sale
receivables  during the current quarter.  Gain on investments of $113,000 during
the quarter ended September 30, 2002 was the result of the sale of the remaining
investment  in  Intelidata  stock.  During both  quarters  interest  expense and
foreign currency transaction gains were insignificant.

Liquidity and Capital Resources

      Since its inception,  Mobius has funded its operations principally through
cash flows from operating  activities  and, to a lesser  extent,  equity or bank
financings.  As of September 30, 2002,  Mobius had cash and cash  equivalents of
$37.9  million,  an increase of $6.8 million from the $31.1 million held at June
30,  2002.  In  addition,  Mobius had  marketable  securities  of $498,000 as of
September 30, 2002, a decrease of $2.1 million from $2.6 million held as of June
30, 2002.

      Net cash provided by operating  activities was $1.7 million in last year's
quarter and $4.9 million this quarter.  Mobius's  primary sources of cash during
this quarter were from decreased accounts receivable, increased deferred revenue
and improved results of operations.  These sources were offset by an increase in
software  license  installment  receivables and a decrease in accounts  payable.
Mobius's   depreciation  and  amortization   expense   adjustment  in  operating
activities  decreased 26.8% from $1.1 million in last year's quarter to $800,000
in this quarter. Deferred revenue increased 15.7% from $20.6 million at June 30,
2002 to $23.8 million at September 30, 2002. Net software  license  installments
increased  30.5%  from  $10.3  million  at June  30,  2002 to $13.5  million  at
September 30, 2002. Net accounts  receivable  decreased 37.2% from $16.0 million
at June 30, 2002 to $10.0 million at September 30, 2002.

<PAGE>


      Cash  provided by  investing  activities  was $2.8  million in last year's
quarter and $1.8 million in this quarter.  During the quarter  ending  September
30, 2001 and 2002,  the Company sold  marketable  securities of $6.0 million and
$2.0 million,  respectively, and purchased marketable securities of $3.1 million
during the quarter ended September 30, 2001.

      Cash used by financing  activities was $1.3 million in last year's quarter
versus cash provided by financing activities of $53,000 in this quarter. In last
year's quarter,  the cash was used to repurchase  Mobius's common stock. In this
quarter, the cash was provided by the exercise of stock options by employees.

      The Company's material obligations and commitments to make future payments
under contracts consist of its operating leases for its office facilities. These
leases expire on various dates  through  fiscal 2010 and provide for  additional
payments relating to utility costs. As of September 30, 2002, the future minimum
lease payments for these operating leases is as follows (in thousands):

                                                                  Operating
                                                                   Leases
                                                                  ---------
Year Ended:
-----------
September 30, 2003                                                $ 3,113
September 30, 2004                                                  2,800
September 30, 2005                                                  2,171
September 30, 2006                                                  1,549
September 30, 2007                                                  1,461
Thereafter                                                          3,454
                                                                  -------
Total minimum lease payments                                      $14,548
                                                                  =======

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

      The  Company  believes  that its  existing  cash  balances  and cash flows
expected from future operations will be sufficient to meet the Company's capital
requirements for at least 12 months.

      On  October  11,  2002  (the  "Closing  Date"),  the  Company,  through  a
wholly-owned subsidiary,  acquired technology and certain other assets of Cytura
Corp. ("Cytura").  Mobius paid Cytura, a privately held company, $2.2 million in
cash  for the  acquired  assets.  No  later  than 60 days  following  the  first
anniversary of the Closing Date,  Mobius may be obligated to pay Cytura up to an
additional $800,000,  if the average closing price of the common stock of Mobius
achieves  appreciation  levels defined in the agreement during any 30-day period
during the thirteen months following the Closing Date.

      The Company continues to evaluate potential  acquisition  candidates whose
products or technology would enhance Mobius's strategic market position.

Bad Debt Reserves

      Accounts  receivable  reserves are  primarily  calculated  by  identifying
problem  accounts and in  recognition  that some  customers  decide to cancel or
reduce the number of products  covered by  maintenance  arrangements  upon their
anniversary  but do not always notify Mobius in sufficient  time to prevent some
portion of the annual  maintenance  billings from being recognized.  Mobius also
has a small reserve to absorb losses based upon  historical  experience that may
result from current receivables. Mobius specifically identifies problem accounts
by the age of the  receivable  and through  discussions  with the  customer  and
Mobius sales  representatives.  Based on that information,  Mobius exercises its
judgment  as to what  portion  of the  accounts  receivable  balance  requires a
reserve.  At September 30, 2001



<PAGE>


and  September  30,  2002  approximately  87%  and  93%  of the  total  accounts
receivable  reserve  balances were related to specific  accounts.  To the extent
that an account  for which a  specific  reserve  was  provided  is  subsequently
collected, Mobius reduces the reserves in the period of collection.

      Software license installment reserves have consistently been determined as
a  percentage  of  software  license   installments  to  provide  for  potential
bankruptcies and contractual  disputes.  Customer  balances for software license
installments  tend to be large due to the selling  price of  Mobius's  products.
Software license  installment and accounts receivable reserves were $1.5 million
and $1.4 million at June 30, 2002 and September 2002, respectively.


Other Matters

      In January 1999, the Company sold the INFOPAC-TapeSaver product to a third
party for  approximately  $3.0 million  payable over a five year period.  As the
buyer is delinquent  on these  payments  since June 2001,  no TapeSaver  license
revenue was recognized in the three months ended September 2001 and 2002.

      Mobius  commenced  arbitration  proceedings  with the buyer to enforce the
payment terms in the sales agreement.  On March 26, 2002, the arbitrator  issued
an award in Mobius's  favor against the buyer and its president in the amount of
$381,750,  which  represents  amounts  past due under the sales  agreement.  The
arbitrator  also directed the buyer and its president to pay Mobius $37,500 each
month from March 31, 2002 through December 31, 2003 and to pay Mobius's share of
the arbitration  expenses. In April 2002, Mobius commenced an action against the
buyer and its  president in the United  States  District  Court for the Southern
District of New York to confirm the  arbitration  award.  The Court granted that
motion and issued an order confirming the award on September 23, 2002.


Recent Accounting Pronouncements

      In June  2002,  the  FASB  issued  SFAS No.  146,  "Accounting  for  Costs
Associated  with  Exit  or  Disposal   Activities,"  which  addresses  financial
accounting and reporting for costs  associated with exit or disposal  activities
and nullifies  Emerging  Issues Task Force ("EITF")  Issue No. 94-3,  "Liability
Recognition for Certain Employee  Termination  Benefits and Other Costs to Exist
an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146
requires  that a  liability  for a cost  associated  with an  exit  or  disposal
activity be recognized  when the liability is incurred,  rather than at the date
of an entity's  commitment to an exit plan as prescribed by EITF Issue No. 94-3.
The  provisions of SFAS No. 146 are  effective  for exit or disposal  activities
that are initiated  after  December 31, 2002. As disclosed in Note 17, in fiscal
2002, Mobius recognized a facilities  restructuring  charge of $1.4 million. The
estimated accrual was recognized in accordance with EITF Issue No. 94-3 based on
the estimated fair value of the liability.


<PAGE>


                      FACTORS AFFECTING FUTURE PERFORMANCE


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

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

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

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

      Mobius  expects that the difficult  global  economy,  as well as delays in
information  technology  spending,  will  continue  to impact  future  quarterly
operating  results.  Mobius  believes  that the state of the global  economy has
influenced  certain Mobius customers to defer information  technology  spending.
The current  economic  environment  may  continue  to have an adverse  effect on
Mobius.

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

Technological Change

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

<PAGE>


Product Concentration

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

Competition

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

International Sales and Operations

      Mobius believes that its revenues and future operating results will depend
in part on its ability to increase sales in international  markets.  As a group,
Mobius's  international  subsidiaries have been unprofitable to date, and Mobius
expects achieving  profitability will continue to require significant management
attention and financial resources. There can be no assurance that Mobius will be
able to maintain or increase  international  market  demand for its  products or
attract and retain 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  internationally,  including unexpected
changes in regulatory requirements,  tariffs and other trade barriers, costs and
difficulties  of  localizing  products  for  international  countries,  lack  of
acceptance of localized  products in  international  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 international laws and
economic instability.  There can be no assurance that such factors will not have
a  material  adverse  effect on  Mobius's  future  international  revenues  and,
consequently, on its business, operating results or financial condition.

      An increase in the value of the U.S. dollar relative to foreign currencies
could make Mobius's products more expensive,  and,  therefore,  potentially less



<PAGE>


competitive in those  markets.  To the extent that the U.S.  dollar  strengthens
against foreign  currencies in  international  markets in which Mobius maintains
operations,  its net assets that are denominated in such foreign currencies will
be  devalued,  resulting  in a  foreign  currency  translation  loss.  For  more
information on Mobius's international  operations,  see "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in Item 2 of this
report.

Expansion of Indirect Channels

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

Increased Investment in Professional Services

      In  recent  periods,  we have  committed  greater  resources  to grow  our
professional services business relating to the implementation of and training on
Mobius's  packaged  software  products.  The growth of business  areas  requires
increased  management  time  and  resources  prior  to  generating   significant
revenues.  There is no assurance that Mobius will generate  significant revenues
in the professional services marketplace,  or that the direct and indirect costs
associated with expanding the professional services business will not be greater
than revenues generated therefrom.

Extended Payment Risk

      The Company offers  extended  payment terms to some of its customers.  For
software license  contracts with extended  payment terms, the related  financing
period is generally 3 to 5 years.  Software license  installments are discounted
at a market rate of interest at the date the software  license  contract revenue
is recognized.  The discount is amortized to interest  income using the interest
method over the term of the financing.  Although Mobius has established reserves
against possible future bad debts and believes that these installment  contracts
are  enforceable  and that  ultimate  collection  is  probable,  there can be no
assurances that customers will not default under such financing arrangements, or
that any such  default  would not have a  material  adverse  effect on  Mobius's
business, operating results or financial condition.

Protection of Intellectual Property

      Mobius's   success  is  heavily   dependent  upon  its   confidential  and
proprietary  intellectual  property.  Mobius has no issued patents  covering any
aspect of its software products,  but it has two patent applications  pending in
the U.S. with corresponding  international filings. Mobius relies primarily on a
combination of confidentiality agreements, copyright, trademark and trade secret
laws and  confidentiality  procedures to protect its proprietary  rights.  Trade
secret and  copyright  laws afford only  limited  protection.  Despite  Mobius's
efforts to protect its proprietary rights,  unauthorized  parties may attempt to
copy aspects of its products or obtain and use  information  that Mobius regards
as proprietary.  In addition,  the laws of some  international  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


<PAGE>


provision,  the delivery of source code to customers may increase the likelihood
of misappropriation or other misuse of its intellectual property.

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

Dependence on Licensed Technology

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

Risk of Product Defects; Product Liability

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

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

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

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


<PAGE>


if any.  If  Mobius  is  unable to  manage  growth  effectively,  its  business,
operating results or financial condition would be materially adversely affected.

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

If  Widespread  Internet  Usage 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 use
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 e-commerce enabling
products and services is subject to a high level of  uncertainty.  To the extent
that  businesses  or consumers do not consider the Internet a viable  commercial
medium,  Mobius's customer base for its Internet-based products may not grow. In
addition,  critical issues  concerning the commercial use of the Internet remain
unresolved  and may affect the  growth of  Internet  use.  The  adoption  of the
Internet for commerce,  communications  and access to content,  particularly  by
those who have historically relied upon alternative methods,  generally requires
understanding and acceptance of a new way of conducting  business and exchanging
information. In particular,  companies and consumers may be reluctant or slow to
adopt a new,  Internet-based  bill  payment  system  that  may  render  existing
practices obsolete. If the use of the Internet fails to develop or develops more
slowly than expected, Mobius's business may be harmed.

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

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

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

<PAGE>


Item 3. - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      Mobius's 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  security  will  probably  decline.  At September  30, 2002,
Mobius primarily held debt securities.

      Mobius may be subject to foreign  currency  fluctuations  in  relation  to
accounts  receivable  and accounts  payable that may be denominated in a foreign
currency   other  than  the   functional   currency  in  certain   international
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.  Mobius does not use
derivative foreign exchange financial investments.

Item 4. - CONTROLS AND PROCEDURES

      Within the 90-day period prior to the filing date of this report, Mobius's
Chief Executive Officer and Chief Financial Officer carried out an evaluation of
the  effectiveness  of the  Company's  disclosure  controls and  procedures  (as
defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934,
as  amended).  Based  on that  evaluation,  these  officers  concluded  that the
Company's  disclosure controls and procedures are adequate and effective.  There
have been no  significant  changes in  Mobius's  internal  controls  or in other
factors that could significantly affect these controls subsequent to the date of
that  evaluation,  including any  corrective  actions with regard to significant
deficiencies and material weaknesses.


<PAGE>


PART II. - OTHER INFORMATION

Item 1. - Legal Proceedings

      From time to time,  Mobius is  involved in  litigation  relating to claims
arising out of its 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 its business,  operating
results or financial condition.

Item 2. - Changes in Securities and Use of Proceeds

(a)  Not applicable

(b)  Not applicable

(c)  Not applicable

(d)  Not applicable

Item 3. - Defaults Upon Senior Securities

None

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

None

Item 5. - Other Information

      During the quarterly period covered by this filing, the audit committee of
the   Board   of   Directors   of   Mobius    approved   the    engagement    of
PricewaterhouseCoopers  LLP, the  Company's  external  auditor,  for tax related
services.  These  services are not in  connection  with  PricewaterhouseCoopers'
audit or review of the Company's financial statements.

Item 6. - Exhibits and Reports on Form 8-K

(a)   Exhibits

      Exhibit No.   Description
      ----------    -----------
      3.1(1)     Form of Second Amended and Restated Certificate of
                 Incorporation of the Registrant
      3.2(1)     Form of Restated By-Laws of the Registrant
      4.1(1)     Specimen certificate representing the Common Stock
      99.1       CEO Certification pursuant to Section 906 of the Sarbanes-Oxley
                 Act of 2002
      99.2       CFO Certification pursuant to Section 906 of the Sarbanes-Oxley
                 Act of 2002

      (1) Filed as an exhibit to Mobius's Registration Statement on Form S-1
          Registration Number 333-47117) or an amendment thereto and
          incorporated herein by reference to the same exhibit number.

(b)   Reports on Form 8-K

      Not Applicable

<PAGE>


                                   SIGNATURES

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

Date:  November 11, 2002

                                   MOBIUS MANAGEMENT SYSTEMS, INC.

                                   By: /s/ Peter E. Takiff
                                       ---------------------------------------
                                           Peter E. Takiff
                                           Chief Financial Officer
                                           (Principal Financial and Accounting
                                            Officer)

<PAGE>


                                       CERTIFICATIONS


I, Mitchell Gross, certify that:

1.   I have reviewed  this  quarterly  report on Form 10-Q of Mobius  Management
     Systems, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


/s/ Mitchell Gross
-----------------------
Mitchell Gross
Chief Executive Officer
November 11, 2002

<PAGE>


I, Peter E. Takiff, certify that:

1.   I have reviewed  this  quarterly  report on Form 10-Q of Mobius  Management
     Systems, Inc.;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officers  and I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   Evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   Presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying  officers and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of  registrant's  board of directors (or persons  performing  the
     equivalent function):

     a)   All  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   Any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officers and I have indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

/s/ Peter E. Takiff
-----------------------
Peter E. Takiff
Chief Financial Officer
November 11, 2002