The following is an excerpt from the Company's Form 10-K filed on September
28,  1999.  Mobius  accepts  no  obligation  to  update  these   forward-looking
statements and does not intend to do so.


                      FACTORS AFFECTING FUTURE PERFORMANCE

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

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

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

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

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

Technological Change

         The market for Mobius's  software is  characterized by a high degree of
technological  change,  frequent new product  introductions,  evolving  industry
standards  and changes in customer  demands.  The  introduction  of  competitive
products  embodying new technologies and the emergence of new industry standards
could render Mobius's  existing  products  obsolete and  unmarketable.  Mobius's
future success will depend in part on its ability to enhance existing  products,
to develop and  introduce  new products to meet  diverse and  evolving  customer
requirements,  and to keep pace with  technological  developments  and  emerging
industry  standards  such as 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.


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Product Concentration

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

Competition

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


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

         An  increase  in the  value  of the U.S.  dollar  relative  to  foreign
currencies  could  make  Mobius's  products  more  expensive,   and,  therefore,
potentially  less  competitive  in  those  markets.  Although  Mobius  does  not
currently  engage  in  international  currency  hedging  transactions,   we  are
exploring the possibility of doing so in the future. To the extent that the U.S.
dollar strengthens against foreign currencies in international  markets in which
the Company  maintains  operations,  its net assets that are denominated in such
foreign currencies will be devalued, resulting in a foreign currency translation
loss. For more information on its  international  operations,  see "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  in
Item 7 and Notes 2 and 16 of Notes to Consolidated Financial Statements.

Expansion of Indirect Channels

         To  date,   sales  through   indirect  sales  channels  have  not  been
significant  although  Mobius  intends  to invest  resources  to  develop  these
channels.  Mobius's  ability to  achieve  revenue  growth in the future  will be
affected  by its  success in  expanding  existing  and  establishing  additional
relationships  with  strategic  partners.  Mobius  expects to receive lower unit
prices  when  selling  through  indirect  channels;   therefore,  if  Mobius  is
successful in selling products through indirect channels, its gross margins as a
percentage of revenue will decrease.

Extended Payment Risk

         Terms of sale are a  competitive  factor in  Mobius's  markets.  Mobius
offers  extended  payment terms to some of its customers,  generally three years
for server products and five years for client products.  The license revenue for
these extended payment agreements is recorded at the time of sale as the present
value of the contract payments  expected over the life of the agreement,  net of
bundled  maintenance  fees.  Interest income from these agreements is recognized
over the term of the financing based on the discount rate used by the Company to
determine  present  value.  Although  Mobius has  established  reserves  against
possible  future bad debts and believes  that these  installment  contracts  are
enforceable and that ultimate collection is probable, there can be no assurances
that customers will not default under such financing  arrangements,  or that any
such  default  would not have a material  adverse  effect on Mobius's  business,
operating  results  and  financial  condition.  For  more  information  on these
extended payment agreements see Notes 2 and 3 of Notes to Consolidated Financial
Statements.


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Protection of Intellectual Property

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

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

         Mobius  is  not  aware  that  any  of  its  products  infringe  on  the
proprietary rights of third parties.  There can be no assurance,  however,  that
third parties will not claim  infringement  by Mobius with respect to current or
future  products.  Defense of any such claims,  with or without merit,  could be
time-consuming,  result in costly  litigation,  cause product shipment delays or
require  Mobius to enter into royalty or licensing  agreements.  Such royalty or
licensing agreements,  if required,  may not be available on terms acceptable to
Mobius or at all,  which could have a material  adverse  effect on its business,
operating results and financial condition.

Dependence on Licensed Technology

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

Risk of Product Defects; Product Liability

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

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

Year 2000 Compliance

      Many currently installed operating systems and software products are coded
to accept only two digit entries in the date code field.  These date code fields
need  additional  digits to  distinguish  21st  century  dates from 20th century
dates. As a result,  computer systems and/or software used by many companies may
need to be upgraded to comply  with such "Year 2000"  requirements.  Significant
uncertainty  exists in the software  industry  concerning the potential  effects
associated  with such  compliance.  For a discussion on Year 2000  compliance by
Mobius and how Year 2000  compliance  may affect  its  future  performance,  see
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" in Item 7.

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

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


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