SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

For the Quarter ended March 31, 1998

OR

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

For the transition period from to

                         Commission File Number: 0-24077

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

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



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


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


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


Number of shares outstanding of the issuer's common stock as of June 8, 1998

                 Class                          Number of Shares Outstanding

 Common Stock, par value $0.0001 per share                 17,694,000


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX

                                                                          Page
PART I      FINANCIAL INFORMATION                                        Number


            Item 1.  Financial Statements

              Consolidated Balance Sheets
                June 30, 1997 and March 31, 1998
              Consolidated Statements of Operations
                Three and nine months ended March 31, 1997 and 1998
              Consolidated Statements of Cash Flows
                Nine months ended March 31, 1997 and 1998
              Notes to Consolidated Interim Financial Statements

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

            Item 3.  Quantitative and Qualitative Disclosures
                                 About Market Risk

PART II     OTHER INFORMATION

                 Item 1.  Legal Proceedings

                 Item 2.  Changes in Securities and Use of Proceeds

                 Item 3.  Defaults Upon Senior Securities

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

                 Item 5.  Other Information

                 Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES


<PAGE>



Item 1 - Financial Statements

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


                                                                      March 31,
                                                        June 30,        1998
                                                          1997      (Unaudited)
ASSETS
Current assets:
     Cash and cash equivalents                         $  5,672     $  9,669
     Accounts receivable, net of allowance
          for doubtful accounts of $308, and
          $503 respectively                               7,793        3,142
     Software license installments, current portion       4,615        5,756
     Other current assets                                   474        1,941
                                                        -------       ------
              Total current assets                       18,554       20,508
Software license installments,
     non-current portion, net of allowance for
     doubtful accounts of $413 and $722 respectively      7,871       12,409
Property and equipment, net                               1,990        2,583
Other assets                                                 87          101
                                                       --------     --------  
              Total assets                             $ 28,502     $ 35,601
                                                       ========     ========

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued expenses             $  6,593      $ 4,304
     Deferred maintenance revenue                         7,494       10,416
     Deferred income taxes                                1,551        1,753
     Other liabilities                                      134          205
                                                         ------       ------
              Total current liabilities                  15,772       16,678
Deferred maintenance revenue,
     non-current portion                                  3,661        5,619
Deferred income taxes                                     1,420        2,651
Capital lease obligations, less current portion              95           52
Convertible preferred stock, $.01 par
     value; 40,910 shares outstanding                    11,898       12,000
Stockholders' equity (deficit):
     Common  stock  $.0001  par  value;  authorized 
       40,000,000  shares;  issued 15,000,000 and 
       15,000,000, shares respectively; outstanding,
       10,909,000, and 10,909,000 shares, respectively        1            1
     Additional paid-in capital                               -        2,718
     Deferred compensation                                    -       (2,405)
     Retained earnings                                    7,636       10,255
     Cumulative foreign currency
       translation adjustment                                19           32
     Treasury stock, at cost, 4,091,000
       and 4,091,000 shares, respectively               (12,000)     (12,000)
                                                        -------      -------
         Total stockholders' equity (deficit)            (4,344)      (1,399)
                                                        -------      -------
Total liabilities, preferred stock
       and stockholders' equity                        $ 28,502     $ 35,601
                                                       ========     ========  
                                        


          See accompanying notes to consolidated financial statements.


<PAGE>


<TABLE>
<CAPTION>

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



                                               Three months Ended           Nine months Ended
                                                    March 31,                   March 31,
                                                1997         1998          1997         1998
<S>                                             <C>          <C>         <C>          <C>

Revenues:
     Software license revenues                $ 5,237       $ 8,075      $15,476      $22,368
     Maintenance and other revenues             4,087         4,816       11,246       13,594
                                               ------        ------       ------       ------
         Total revenues                         9,324        12,891       26,722       35,962

Costs of revenues:
     Software license revenues                    276           217          804          895
     Maintenance and other revenues               751           866        2,192        2,420
                                                -----         -----        -----        -----
         Total costs of revenues                1,027         1,083        2,996        3,315

Gross profit                                    8,297        11,808       23,726       32,647

Operating expenses:
     Sales and marketing                        5,255         6,566       14,435       17,363
     Research and development                   1,533         1,975        4,343        5,525
     General and administrative                 1,136         1,740        3,047        4,744
     Stock compensation expense                     -           313            -          313
                                                -----        ------       ------       ------
         Total operating expenses               7,924        10,594       21,825       27,945

Income from operations                            373         1,214        1,901        4,702

License and other interest income                 223           541          551        1,373
Interest expense                                   (4)           (3)         (15)          (9)
Foreign currency transaction losses                (8)           (5)          (7)         (11)
                                                -----         -----        -----        -----  
Income before income taxes                        584         1,747        2,430        6,055
Provision for income taxes                        354           979        1,397        3,334
Accretion on Preferred Stock                       --            --            -          102
                                                -----         -----        -----        -----      
Net income available to common stock            $ 230         $ 768       $1,033       $2,619
                                                =====         =====       ======       ======  

Basic earnings per share                      $  0.02       $  0.07      $  0.07      $  0.24
Basic weighted average shares
     outstanding                               15,000        10,909       15,000       10,909

Diluted earnings per share                    $  0.01       $  0.05      $  0.07      $  0.16
Diluted weighted average
     shares outstanding                        15,853        16,435       15,350       16,277

Pro forma data (unaudited):
     Pro forma basic earnings
         per share                                                                    $  0.17
     Pro forma basic weighted
         average shares outstanding                                                    15,080
     Pro forma diluted earnings
         per share                                                                    $  0.16
     Pro forma diluted weighted
         average shares outstanding                                                    16,321



                See accompanying notes to consolidated financial statements.

</TABLE>


<PAGE>


<TABLE>
<CAPTION>

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



                                                                                     Cumulative
                                                                                      Foreign                           Total
                                                  Additional                          Currency                      Stockholders'
                                  Common  Stock   Paid in       Deferred   Retained Translation  Treasury  Stock       Equity
                                  Shares  Amount   Capital    Compensation Earnings  Adjustment    Shares  Amount     (Deficit)
<S>                           <C>          <C>       <C>         <C>        <C>         <C>     <C>       <C>         <C>

Balance at June 30, 1997      10,909,000  $  1       $   -          $ -     $7,636       $19    4,091,000 $(12,000)   $(4,344)
Net  Income                            -     -           -            -      2,619         -            -        -      2,619
Unrealized translation gain            -     -           -            -          -        13            -        -         13
Deferred compensation                  -     -       2,718       (2,718)         -         -            -        -          -
Amortization of deferred
    compensation                       -     -           -          313          -         -            -        -        313
                              -------------------------------------------------------------------------------------------------
Balance at March 31, 1998     10,909,000  $  1      $2,718      $(2,405)   $10,255       $32    4,091,000 $(12,000)   $(1,399)
                              =================================================================================================


          See accompanying notes to consolidated financial statements.

</TABLE>


<PAGE>




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

                                                         Nine Months Ended
                                                              March 31,
                                                         1997           1998

Cash flows from operating activities:
  Net income                                            $1,033          $2,619
Adjustments to reconcile net
  income to net cash provided
  by operating  activities:
   Deferred income taxes                                   962           1,433
   Depreciation and amortization                           220             508
   Stock compensation expense                                -             313
   Accretion of Preferred Stock                              -             102
   Change in operating assets
      and liabilities:
      Accounts receivable, net                             151           4,651
      Software license installments                     (3,098)         (5,679)
      Other assets                                      (1,149)         (1,481)
      Accounts payable and accrued expenses                 50          (2,289)
      Other liabilities                                   (172)             71
      Deferred maintenance revenue                       2,933           4,880
                                                         -----           -----
          Total adjustments                               (103)          2,509
                                                         -----           -----
          Net cash provided by operating activities        930           5,128
                                                         
Cash flows used in investing activities:
   Capital expenditures                                   (589)         (1,101)
Cash flows used in financing activities:
   Payments on capital lease obligations                  (135)            (43)
Effect of exchange rate changes on
   cash and cash equivalents                                38              13
                                                         -----           -----
Net change in cash and cash equivalents                    244           3,997
Cash and cash equivalents at beginning
   of period                                             4,447           5,672
                                                         -----           -----
Cash and cash equivalents at end of period              $4,691          $9,669
                                                         =====           =====
Supplemental disclosure of cash flow
   information:
   Cash paid during the period for:
      Interest                                         $    15          $    9
      Income taxes                                      $1,259          $1,804

          See accompanying notes to consolidated financial statements.


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


(1)  Basis of Presentation

The  accompanying   unaudited   consolidated   financial  statements  of  Mobius
Management Systems,  Inc. (the "Company") presented herein have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the  instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, the financial statements do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial  statements.  These consolidated  interim statements should be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended June 30, 1997 and the six months ended December 31, 1997, included in
the Company's  Registration  Statement on Form S-1 filed with the Securities and
Exchange Commission on April 27, 1998.

These  financial  statements  include  all  adjustments  (consisting  of  normal
recurring  adjustments)  which management  believes to be necessary for the fair
presentation  of the financial  position,  results of operations  and changes in
cash flow for the periods presented.  The preparation of financial statements in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities at the date of the financial  statements and the reported  amount of
revenues and expenses  during the reported  period.  Despite  management's  best
effort to establish  good faith  estimates and  assumptions,  actual results may
differ.

(2) Earnings Per Share

   Effective   December  1997,  the  Company  adopted   Statement  of  Financial
Accounting  Standards  (SFAS)  No.  128,  "Earnings  Per  Share".  SFAS No.  128
stipulates  that the  calculation  of earnings  per share (EPS) be shown for all
historical  periods  as Basic EPS and  Diluted  EPS.  Basic EPS is  computed  by
dividing income available to common  shareholders by the weighted average number
of common shares  outstanding  during the period. The computation of Diluted EPS
is similar to the  computation  of Basic EPS except that it gives  effect to all
potentially  dilutive  instruments that were outstanding during the period. Such
dilutive   instruments  include  stock  options,  the  conversion  of  Series  A
Convertible Preferred Stock, and the conversion of the Class A Non-Voting Common
Stock.

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

                                             Three Months Ended March 31,
                                       1997                            1998
                       ---------------------------------------------------------------------
                           Net        Shares      Per       Net       Shares         Per
                         Income                  Share    Income                    Share
                       (Numerator) (Denominator) Amount (Numerator)(Denominator)    Amount
<S>                       <C>           <C>      <C>       <C>          <C>         <C>

Basic EPS:
Net income                $230                             $768
                          ====                             ====
Weighted average
 shares outstanding                     15,000                          10,909
Basic EPS                                        $0.02                              $0.07
                                                 =====                              ===== 
Diluted EPS:
Net income                $230                             $768
                          ====                             ====
Dilutive effect of
convertible securities                       -                           4,171
Dilutive effect of
 stock options                             853                           1,355
                                        ------                          ------
Diluted EPS                             15,853   $0.01                  16,435      $0.05
                                        ======   =====                  ======      =====

</TABLE>

<PAGE>




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

                                                         Nine Months Ended March 31,
                                               1997                                        1998
                             ------------- -------------- -----------    ------------ --------------- ----------
                                 Net                         Per             Net                         Per
                                Income        Shares        Share          Income        Shares         Share
                             (Numerator)   (Denominator)    Amount       (Numerator)  (Denominator)     Amount
<S>                             <C>           <C>           <C>            <C>            <C>           <C>

Basic EPS:
Net income                      $1,033                                     $2,619
                                ======                                     ======
Weighted average
shares outstanding                             15,000                                     10,909
Basic EPS                                                   $0.07                                       $0.24
                                                            =====                                       ===== 
Diluted EPS:
Net income                      $1,033                                     $2,619
                                ======                                     ======
Dilutive effect of
convertible securities                             -                                       4,127
Dilutive effect of
 stock options                                   350                                       1,241
                                              ------                                      ------
Diluted EPS                                   15,350        $0.07                         16,277        $0.16
                                              ======        =====                         ======        ===== 

</TABLE>

(3)  Property and Equipment

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

                                                         March 31,
                                                           1998

         Furniture, fixtures and office equipment         $ 1,145
         Computer equipment                                 3,525
         Leasehold improvements                               421
                                                            -----
                                                            5,091
         Less accumulated depreciation and amortization    (2,508)
                                                            -----
         Property and equipment, net                      $ 2,583
                                                            =====

     Depreciation and amortization expense on property and equipment,  including
capital  leases,  was $962,000 and  $1,433,000  for the nine month periods ended
March 31, 1997 and March 31, 1998, respectively.

(4)  Accounts Payable and Accrued Expenses

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

                                                           March 31,
                                                             1998

         Accounts payable                                  $  737
         Compensation and related benefits                  1,729
         Royalty payable                                      905
         Other                                                932
                                                            -----
                                                           $4,303
                                                            =====

(5)  Common Stock

         The Board of  Directors  authorized  a  100-to-one  stock  split of the
Company's  common  stock.  All  common  share  and per share  amounts  have been
retroactively adjusted in the accompanying  consolidated financial statements to
reflect the stock split.


<PAGE>



(6)  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 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
Company's Initial Public Offering ("IPO") range. As a result,  and assuming that
all such options vest in  accordance  with their terms,  the Company  expects to
incur total  compensation  expense of  approximately  $2,718,000,  which will be
amortized over the respective option holders' service periods. For the three and
nine  months  ended  March  31,  1998,  $313,000  of  compensation  expense  was
recognized.


(7)  Initial Public Offering

In April 1998, the Company sold  2,500,000  shares of common stock at a price of
$14.50 per share in the IPO. The net  proceeds to the Company  were  $33,112,500
after  deducting  the  underwriting  discount and  estimated  offering  expenses
payable by the Company. As a result of the IPO, the Company's outstanding Series
A Convertible  Stock and Class A Non-Voting  Common Stock were converted into an
aggregate of 4,171,000 shares of Common Stock.

(8)  Pro forma Earnings Per Share (unaudited)

         Pro forma basic  earnings per share is  calculated  by dividing  income
available to common  stockholders  by the pro forma  weighted  average number of
common shares  outstanding for the period.  Pro forma diluted earnings per share
is calculated by dividing  income  available to common  stockholders  by the pro
forma  weighted  average  number of common  shares and  potential  common shares
outstanding  for the  period.  Both the pro  forma  basic and  diluted  weighted
average  shares  include the  conversion of the Series A  Convertible  Preferred
Stock and the Class A Non-Voting  Common Stock into Common Stock.  The following
is a  reconciliation  of the numerators and denominators for the pro forma basic
and pro forma diluted EPS calculation (in thousands, except per share data):

                                                       Nine Months Ended
                                                        March 31, 1998
                                                     Net                   Per
                                                   Income      Shares     Share
                                                 (Numerator)(Denominator) Amount
Pro forma basic EPS:
   Net income                                      $2,619
                                                   ======
Weighted average shares outstanding                            10,909
Common shares expected to be issued for
   conversion of Preferred Stock                                4,091
Common shares expected to be issued for
   conversion of Class A Non-Voting Common Stock                   80
                                                               ------
Pro forma basic EPS                                            15,080     $0.17
                                                                          =====
Pro forma diluted EPS
   Net income                                      $2,619
                                                   ======
   Dilutive effect of stock options                             1,241
                                                               ------  
Pro forma diluted EPS                                          16,321     $0.16
                                                               ======     =====

         If the assumed  conversion of the Series A Convertible  Preferred Stock
and the Class A  Non-Voting  Common  Stock into Common  Stock had occurred as of
March 31, 1998, total stockholder's equity would have increased to $10,601,000.

         The pro forma basic and diluted earnings per share giving effect to the
2,500,000  shares in the offering would be $0.14 for the nine months ended March
31,  1997  based on the pro forma  basic and  diluted  weighted  average  shares
outstanding of 18,821,000 for the nine months ended March 31, 1997.


<PAGE>




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

         The  following  discussion  of the  financial  condition and results of
operations  of the  Company  should be read in  conjunction  with the  Company's
Consolidated  Financial  Statements and Notes thereto,  and the other  financial
information included in the Company's  registration  statement on Form S-1 dated
April 27,  1998.  Statements  contained  in this  quarterly  report,  other than
historical financial results, may contain forward-looking  statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements  involve  risks and  uncertainties.  In  particular,  any  statements
contained  herein  regarding  expectations  with  respect  to  future  sales and
profitability, as well as product development and/or introductions,  are subject
to known and unknown risks,  uncertainties and contingencies,  many of which are
beyond the Company's  control,  which may cause actual  results,  performance or
achievements  to differ  materially  from  those  projected  or  implied in such
forward-looking   statements.   Factors  that  might  affect   actual   results,
performance or achievements include,  among other things,  overall econcomic and
business  conditions,  the  demand for the  Company's  goods and  services,  and
technological  advances  and  competitive  factors  in the  markets in which the
Company  competes.  These risks and  uncertainties  are described in detail from
time to time in Mobius's  filings with the Securities  and Exchange  Commission,
including its  registration  statement on Form S-1 dated April 27, 1998.  Mobius
accepts no obligation to update these  forward-looking  statements  and does not
intend to do so.

Overview

         The  Company is a leading  provider  of  enterprise  software  products
designed to optimize the storage, retrieval and presentation of large volumes of
transactional information. Major financial services, healthcare,  manufacturing,
retail  and  telecommunications  companies  and  governmental  entities  use the
Company's  products to facilitate  customer  service and other  mission-critical
functions.  Founded in 1981, the Company provided information storage, retrieval
and presentation products and support, as well as consulting services throughout
its first decade.  In 1991, the Company decided to focus primarily on developing
and marketing software products and, as a result,  sold its consulting  services
business.


<PAGE>




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
periods indicated:

                                            Three Months         Nine Months
                                                Ended               Ended
                                              March 31,            March 31,
                                         1997       1998       1997        1998
                                                       (Unaudited)
 
Revenues:
  Software license revenues             56.2%       62.6%     57.9%        62.2%
  Maintenance and other revenues        43.8        37.4      42.1         37.8
                                       -----       -----     -----        -----
         Total revenues                100.0       100.0     100.0        100.0
Costs of revenues:
  Software license revenues              3.0         1.7       3.0          2.5
  Maintenance and other revenues         8.0         6.7       8.2          6.7
                                        ----        ----      ----         ----
         Total costs of revenues        11.0         8.4      11.2          9.2

Gross profit                            89.0        91.6      88.8         90.8
Operating expenses:
  Sales and marketing                   56.4        51.0      54.0         48.3
  Research and development              16.4        15.3      16.3         15.4
  General and administrative            12.2        13.5      11.4         13.2
  Stock compensation expense             -           2.4       -            0.9
                                        ----        ----      ----         ----
         Total operating expenses       85.0        82.2      81.7         77.8

Income from operations                   4.0         9.4       7.1         13.0
License and other interest income        2.3         4.2       2.0          3.8
                                        ----        ----      ----         ----
Income before income taxes               6.3        13.6       9.1         16.8
Provision for income taxes               3.8         7.6       5.2          9.2
Accretion on Preferred Stock               -           -         -          0.3
                                        ----        ----      ----         ----
Net income available to common stock     2.5%        6.0%      3.9%         7.3%
                                        ====        ====      ====         ====



Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1998

         Revenues.  Total revenues,  consisting  principally of software license
revenues and maintenance  and other revenues,  increased 38.3% from $9.3 million
in the first  three  months of fiscal  1997 to $12.9  million in the first three
months of fiscal 1998.  Domestic  revenues  increased 40.3% from $8.4 million in
the first  three  months of fiscal  1997 to $11.8  million in the same period in
fiscal  1998.  International  revenues  increased  20.3% from $946,000 in the
first three  months of fiscal 1997 to $1.1  million in the same period in fiscal
1998.

         Software  license  revenues  increased  54.2% from $5.2  million in the
first three  months of fiscal 1997 to $8.1 million in the  comparable  period of
fiscal 1998. The increase was primarily  attributable  to increased sales of the
ViewDirect and DocumentDirect products.

         Maintenance  and other revenues  increased  17.8% from $4.1 million for
the first three  months of fiscal 1997 to $4.8 million in the first three months
of fiscal 1998.  The increase was  primarily  attributable  to the growth of the
number and size of software  licenses  covered by maintenance  contracts.  Other
revenues for both periods were not significant.


<PAGE>




         Costs of  Revenues.  Costs of license  revenues  consist  primarily  of
royalties and sublicense  fees. The costs of license  revenues  decreased  21.4%
from  $276,000  in the first  three  months of fiscal  1997 to  $217,000  in the
comparable period of fiscal 1998, representing 5.3% and 2.7%,  respectively,  of
license revenues in those periods. The decrease in the costs of license revenues
was   primarily   related  to  a   decrease   in  the   royalty   fees  for  the
INFOPAC-TapeSaver product.

         Costs of maintenance and other revenues  consist  primarily of customer
support staff costs.  The costs of  maintenance  revenues  increased  15.3% from
$751,000 in the first three months of fiscal 1997 to $866,000 in the first three
months of fiscal 1998,  representing  18.4% and 18.0% of  maintenance  revenues,
respectively.  The increase in the costs of  maintenance  and other  revenues is
primarily  attributable to increased  staffing,  bad debt reserves and personnel
related costs.

         Operating  Expenses.  Sales and marketing expenses consist primarily of
the cost of personnel associated with the selling and marketing of the Company's
products,  including salaries,  commissions,  bonus and travel and entertainment
costs.  Sales and  marketing  expenses  also  include  the cost of branch  sales
offices,  marketing  and  promotional  materials  and  advertising.   Sales  and
marketing  expenses  increased 24.9% from $5.3 million in the first three months
of fiscal 1997 to $6.6 million in the  comparable  period of fiscal  1998.  This
increase was primarily  attributable  to increased  commissions  and the cost of
travel and  entertainment  associated  with increased  revenues and expenses for
additional  sales staff and  personnel  related  costs,  offset by a decrease in
subcontractor fees.

         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 28.8% from $1.5
million  in the  first  three  months  of  fiscal  1997 to $2.0  million  in the
comparable  period of fiscal 1998.  The increase is  primarily  attributable  to
increased  staffing and  personnel-related  costs.  The Company  believes that a
significant  level of  research  and  development  expenses  will be required to
maintain its competitive position in the future.

         General and  administrative  expenses  primarily  consist of  personnel
costs related to management,  accounting,  human  resources,  network  services,
administration  and associated  overhead costs, as well as fees for professional
services.  General and administrative expenses increased 53.2% from $1.1 million
in the first  three  months of fiscal  1997 to $1.7  million  in the  comparable
period of fiscal 1998.  The increase  primarily  reflects  additional  personnel
related  costs as a result of the  Company's  expanded  operations.  The Company
expects  general  and  administrative  expenses  to increase in fiscal 1998 as a
result  of  the  costs   associated   with  the  regulatory  and   communication
requirements applicable to public companies.

         License and other interest income;  interest expense;  foreign currency
transaction gains (losses). License and other interest income consists primarily
of the portion of license payments under installment  contracts allocated by the
Company to interest based on a discount rate.  License and other interest income
increased  from $223,000 in the first three months of fiscal 1997 to $541,000 in
the  comparable  period of fiscal  1998 as a result of the  larger  balances  of
software license installments.

         Interest  expense  consists  primarily  of  costs  associated  with the
Company's capital lease obligations. Foreign currency transaction losses consist
of income or expenses associated with the valuation of the Company's  non-dollar
denominated assets held by its foreign  subsidiaries.  Both interest expense and
foreign  currency  transaction  losses were not material in the third quarter of
each of fiscal years 1997 and 1998.

         Provision for Income Taxes. The provision for income taxes was $354,000
for the first three months of fiscal 1997 and $979,000 for the comparable period
of fiscal 1998. The effective tax rates for these respective  periods were 60.6%
and 56.0%. The difference between these rates and the applicable statutory rates
is primarily  attributable to the  unrecognized tax benefit related to operating
losses of the Company's foreign subsidiaries.


Nine Months Ended March 31, 1997 Compared to Nine Months Ended March 31, 1998

         Revenues.  Total revenues,  consisting  principally of software license
revenues and maintenance and other revenues,  increased 34.6% from $26.7 million
in the first  nine  months of fiscal  1997 to $36.0  million  in the first  nine
months of fiscal 1998.  Domestic revenues  increased 33.2% from $24.1 million in
the first nine  months of fiscal  1997 to $32.1  million  in the same  period in
fiscal 1998.  International  revenues  increased  47.1% from $2.6 million in the
first nine  months of fiscal  1997 to $3.9  million in the same period in fiscal
1998.

         Software  license  revenues  increased  44.5% from $15.5 million in the
first nine months of fiscal 1997 to $22.4  million in the  comparable  period of
fiscal 1998. The increase was primarily  attributable  to increased sales of the
ViewDirect and DocumentDirect products and, to a lesser extent, the INFOPAC- ABS
product and DocuAnalyzer.

         Maintenance  and other revenues  increased 20.9% from $11.2 million for
the first nine months of fiscal  1997 to $13.6  million in the first nine months
of fiscal 1998.  The increase was  primarily  attributable  to the growth of the
installed base of customers with maintenance contracts, and, to a lesser extent,
increases in the fees charged by the  Company.  Other  revenues for both periods
were not significant.

         Costs of  Revenues.  Costs of license  revenues  consist  primarily  of
royalties and sublicense  fees. The costs of license  revenues  increased  11.3%
from  $804,000  in the  first  nine  months of fiscal  1997 to  $895,000  in the
comparable period of fiscal 1998, representing 5.2% and 4.0%,  respectively,  of
license revenues in those periods. The increase in the costs of license revenues
was  primarily  related to increased  sales of  DocuAnalyzer,  which require the
Company to pay third party royalty fees.

         The  costs of  maintenance  and other  revenues  consist  primarily  of
customer support staff costs. The costs of maintenance  revenues increased 10.4%
from $2.2 million in the first nine months of fiscal 1997 to $2.4 million in the
first nine months of fiscal 1998,  representing  19.5% and 17.8% of  maintenance
revenues,  respectively.  The  increase  in the costs of  maintenance  and other
revenues is primarily  attributable to increased staffing and  personnel-related
costs.

         Operating  Expenses.  Sales and marketing expenses consist primarily of
the cost of personnel associated with the selling and marketing of the Company's
products, including salaries,  commissions,  bonus and travel and entertainment.
Sales and marketing expenses also include the cost of branch sales offices,  bad
debts,  marketing and promotional materials,  tradeshows and advertising.  Sales
and  marketing  expenses  increased  20.3% from $14.4  million in the first nine
months of fiscal 1997 to $17.4 million in the comparable  period of fiscal 1998.
This increase was primarily attributable to increased commissions and travel and
entertainment  expenses  associated  with  increased  revenues  and expenses for
additional  sales staff and  personnel  related  costs,  offset by a decrease in
subcontractor expenses.

         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 27.2% from $4.3
million  in the  first  nine  months  of  fiscal  1997  to $5.5  million  in the
comparable  period of fiscal 1998.  The increase is  primarily  attributable  to
increased  staffing and personnel  related  costs.  The Company  believes that a
significant  level of  research  and  development  expenses  will be required to
maintain its competitive position in the future.

         General and  administrative  expenses  primarily  consist of  personnel
costs   related   to   management,    accounting,   human   resources,   network
services,administration  and  associated  overhead  costs,  as well as fees  for
professional services.  General and administrative expenses increased 55.7% from
$3.0  million in the first  nine  months of fiscal  1997 to $4.7  million in the
comparable  period of fiscal 1998. The increase  primarily  reflects  additional
personnel related costs as a result of the Company's  expanded  operations.  The
Company expects general and  administrative  expenses to increase in fiscal 1998
as a result  of the  costs  associated  with the  regulatory  and  communication
requirements applicable to public companies.

         License and other interest income;  interest expense;  foreign currency
transaction gains (losses). License and other interest income consists primarily
of the portion of license payments under installment  contracts allocated by the
Company to interest based on a discount rate.  License and other interest income
increased  from $551,000 in the first nine months of fiscal 1997 to $1.4 million
in the  comparable  period of fiscal 1998 as a result of larger  balance of
software license installments.

         Interest  expense  consists  primarily  of  costs  associated  with the
Company's capital lease obligations. Foreign currency transaction losses consist
of income or expenses associated with the valuation of the Company's  non-dollar
denominated assets held by its foreign  subsidiaries.  Both interest expense and
foreign currency  transaction  losses were not material in the first nine months
of each of fiscal years 1997 and 1998.

         Provision  for Income  Taxes.  The  provision for income taxes was $1.4
million  for the  first  nine  months of fiscal  1997 and $3.3  million  for the
comparable  period of fiscal 1998. The effective tax rates for these  respective
periods  were  57.5% and  55.1%.  The  difference  between  these  rates and the
applicable  statutory rates is primarily  attributable to the  unrecognized  tax
benefit related to operating losses of the Company's foreign subsidiaries.

Liquidity and Capital Resources

         Since its inception,  the Company has funded its operations principally
through  cash flows from  operating  activities  and, to a lesser  extent,  bank
financings  and capital  leases.  As of March 31, 1998, the Company had cash and
cash  equivalents  of $9.7  million,  an increase of $4.0  million from the $5.7
million held at June 30, 1997.

         Net cash provided by operating activities was $930,000 and $5.1 million
in the first nine months of fiscal 1997 and 1998,  respectively.  The  Company's
cash position was improved by diligent  collection  efforts,  resulting in lower
accounts  receivable  per dollar of revenue,  offset by the increase in software
license installments.  Software license installments, which, in total, increased
45.5% to $18.2  million  at the nine  months  ended  March  31,  1998  represent
payments due from  customers for license fees that are paid over the term of the
installment  agreement.  These  payments are typically made over 3-5 year terms.
Since  payments  are made over  multiple  reporting  periods,  software  license
installments  will  increase  with  the  increase  in  license  revenue  if  the
percentage of licenses sold on this basis remains  relatively  stable, as it has
over the past 3 years.

         The  Company's  cash  position  has also  benefited  from  increases in
deferred  maintenance  revenue,  which in total,  has  increased  43.7% to $16.0
million for the nine months ended March 31, 1998.  Deferred  maintenance revenue
represents the unrecognized portion of maintenance billings and the unrecognized
portion of maintenance  revenue unbundled from customer license agreements which
are recognized ratably over the term of the agreement,  or the first year of the
license  agreement.  These  increases  are primarily due to increases in license
fees, the increase in the number of customers covered by maintenance  agreements
and,  to a  lesser  extent,  increases  in the fees  charged  to  customers  for
maintenance.

         Cash used in investing  activities,  consisting of capital expenditures
for the purchase of computer equipment and software used in product  development
and customer support,  was $589,000 and $1.1 million in the first nine months of
fiscal 1997 and 1998, respectively.

     Cash used in financing activities, consisting of repayment of capital lease
obligations,  was  $135,000 and $43,000 for the first nine months of fiscal 1997
and 1998, respectively.

         The Company  currently  has a $5.0  million  line of credit for working
capital  purposes  secured by certain assets of the Company.  The line of credit
requires  the Company to maintain  certain  financial  ratios and  provides  for
certain negative covenants by the Company including, among others, restrictions,
subject  to  the  qualifications  and  limitations  contained  therein,  on  the
Company's  ability  to (i)  dispose of a  substantial  part of its  business  or
property;  (ii)  change its  business;  (iii)  materially  change the  Company's
ownership  or  management;  (iv) merge or  consolidate  with any other  business
organization,  or  acquire  all or  substantially  all of the  capital  stock or
property of another person;  (v) incur any indebtedness or  encumbrances,  other
than indebtedness or encumbrances  specifically permitted by the line of credit;
and (vi) make any other  distribution  with respect to any capital  stock of the
Company. The line of credit expires on October 20, 1998.

        In April 1998,  the Company sold  2,500,000  shares of common stock at a
price of $14.50  per  share in the IPO.  The net  proceeds  to the  Company  was
$33,112,500  after deducting the  underwriting  discount and estimated  offering
expenses  payable  by the  Company. 

         The Company believes that the net proceeds from the IPO,  combined with
its existing  cash  balances,  its line of credit and cash flows  expected  from
future operations, will be sufficient to meet the Company's capital requirements
for at least 12 months.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable


<PAGE>



                           PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

None

Item 2 - Changes in Securities and Use of Proceeds

None

Item 3 - Defaults Upon Senior Securities

None

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

On  February  25,  1998,  in a  Written  Consent  in  lieu of a  meeting  of the
stockholders of the Company,  a majority of the holders of the then  outstanding
securities  of the  Company  approved:  (i)  the  Second  Amended  and  Restated
Certificate  of  Incorporation  of the  Company;  (ii) the Amended and  Restated
By-laws of the Company;  (iii) the Company's  1998 Employee  Stock Purchase Plan
(the  "Purchase  Plan") and the  reservation  of 300,000  shares of Common Stock
which may be issued thereunder;  (iv) the Company's 1998 Executive  Compensation
Plan; (v) the Company's 1998 Director Incentive Plan (the "Director's Plan") and
the  reservation  of  250,000  shares  of  Common  Stock  which  may  be  issued
thereunder;  and (vi) the amendment to the Company's  1996 Stock  Incentive Plan
(the  "Incentive  Plan") which,  (a)  increased the maximum  number of shares of
Common Stock authorized for issuance thereunder from 3,000,000 to 3,480,000, (b)
reserved an additional  480,000 shares of Common Stock for issuance  thereunder,
and ( c ) increased  the number of shares the Board of  Directors of the Company
is authorized  to add to the Incentive  Plan on an annual basis from 1% to 3% of
the then outstanding shares of Common Stock.

Item 5 - Other Information

None

Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits


Exhibit
  No.                    Description


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

     * Filed as an exhibit to the  Registration  Statement on Form S-1 
      (File No. 333-47117) and incorporated herein by reference.


(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:  June  9, 1998

                                   MOBIUS MANAGEMENT SYSTEMS, INC.

                                   By: /s/ E. Kevin Dahill
                                           E. Kevin Dahill
                                       Vice President, Finance, Chief Financial
                                       Officer and Treasurer (Principal 
                                       Financial and Accounting Officer)



<PAGE>





                                  EXHIBIT INDEX

Exhibit                                                  
  No.                Description                                       Page no.


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

*  Filed as an exhibit to the Registration Statement on Form S-1 
   (File No. 333-47117) and incorporated herein by reference.