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, 2001

                                       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
filingrequirements for the past 90 days.                 YES   |X|      NO    ||


Number of shares outstanding of the issuer's common stock as of May 8, 2001



                 Class                          Number of Shares Outstanding

Common Stock, par value $0.0001 per share                18,217,413



<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.


                                      INDEX


PART I      FINANCIAL INFORMATION


         Item 1.  Financial Statements

                  Consolidated Balance Sheets
                  June 30, 2000 and March 31, 2001

                  Consolidated Statements of Operations
                  Three and nine months ended March 31, 2000 and 2001

                  Consolidated Statements of Stockholders' Equity
                  Nine months ended March 31, 2001

                  Consolidated Statements of Cash Flows
                  Nine months ended March 31, 2000 and 2001

                  Notes to Consolidated Financial Statements

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

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk

PART II     OTHER INFORMATION

         Item 1.  Legal Proceedings

         Item 2.  Changes in Securities and Use of Proceeds


         Item 3.  Defaults Upon Senior Securities


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

         Item 5.  Other Information

         Item 6.  Exhibits and Reports on Form 8-K



SIGNATURES


<PAGE>



PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements

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



                                                                     March 31,
                                                          June 30,     2001
                                                            2000    (Unaudited)
                                                          --------  -----------

ASSETS

Current assets:
     Cash and cash equivalents ..........................$ 21,380    $ 27,209
     Marketable securities, at market ...................  10,287       9,534
     Accounts receivable, net of allowance for doubtful
         accounts of $1,084 and $975, respectively ......  14,857      10,894
     Software license installments, current portion .....   9,836       8,350
     Other current assets ...............................   3,804       2,323
                                                         --------    --------
              Total current assets ......................  60,164      58,310

Software license installments, non-current portion,
     net of allowance for doubtful accounts of $643
     and $599, respectively .............................   7,992       5,097
Investments .............................................     531          --
Property and equipment, net .............................   9,295       9,798
Deferred income taxes, non-current ......................      --         609
Other assets ............................................     411         540
                                                         --------    --------

              Total assets ..............................$ 78,393    $ 74,354
                                                         ========    ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses ..............$ 15,046      15,199
     Deferred revenue ...................................  16,488      17,078
     Deferred income taxes ..............................   2,570       2,854
                                                         --------    --------
              Total current liabilities .................  34,104      35,131
                                                         --------    --------

Deferred revenue, non-current ...........................   2,374       1,388
Deferred income taxes, non-current ......................   1,324        --
                                                                     --------
              Total liabilities .........................  37,802      36,519
                                                         --------    --------


Stockholders' equity:
     Common stock $.0001 par value; authorized
         40,000,000 shares; issued 22,218,473 and
         22,473,186 shares, respectively; outstanding
         18,114,000 and 18,236,413 shares, respectively .       2           2
     Additional paid-in capital .........................  48,831      49,613
     Retained earnings ..................................   4,601       1,819
     Deferred stock compensation ........................    (445)       (208)
     Accumulated other comprehensive income .............    (313)       (805)
     Treasury stock, at cost, 4,104,473
         and 4,236,773 shares, respectively ............. (12,085)    (12,586)
                                                         --------    --------
              Total stockholders' equity ................  40,591      37,835
                                                         --------    --------

Total liabilities and stockholders' equity ..............$ 78,393    $ 74,354
                                                         ========    ========


                See accompanying notes to consolidated financial statements.


<PAGE>



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


                                        Three months ended    Nine months ended
                                             March 31,             March 31,
                                         2000      2001        2000       2001
                                       --------  --------    --------  --------

  Software license revenues .......... $  6,522  $  7,719    $ 20,208  $ 28,605
  Maintenance and other revenues .....    7,478     8,931      21,520    25,680
                                       --------  --------    --------  --------
    Total revenues ...................   14,000    16,650      41,728    54,285
Cost of revenues:
  Software license revenues ..........      109       122         599       865
  Maintenance and other revenues .....    1,497     1,526       4,471     4,492
                                       --------  --------    --------  --------
    Total costs of revenues ..........    1,606     1,648       5,070     5,357

Gross profit .........................   12,394    15,002      36,658    48,928

Operating expenses:
  Sales and marketing ................   11,388    10,616      31,358    34,062
  Research and development ...........    4,134     4,109      10,406    12,392
  General and administrative .........    3,033     2,732       8,985     7,844
                                       --------  --------    --------  --------
    Total operating expenses .........   18,555    17,457      50,749    54,298

Loss from operations .................   (6,161)   (2,455)    (14,091)   (5,370)

License and other interest income ....      717       650       2,202     2,092
Interest expense .....................       (1)       (2)         (3)       (4)
Foreign currency transaction gains ...       (8)       90          40        97
Other income .........................       --        32          --        99
Investment impairment ................     (527)     (500)     (1,939)     (718)
                                       --------  --------    --------  --------
Loss before income taxes .............   (5,980)   (2,185)    (13,791)   (3,804)

Provision (benefit) from income taxes    (1,875)     (734)     (4,319)   (1,022)
                                       --------  --------    --------  --------

Net Loss ............................. $ (4,105) $ (1,451)   $ (9,472) $ (2,782)
                                       ========  ========    ========  ========

Basic and diluted loss per share ..... $  (0.23) $  (0.08)   $  (0.53) $  (0.15)

Basic and diluted weighted average
shares outstanding ........              18,007    18,281      17,962    18,234






<PAGE>



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



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

Balance at June 30, 2000             18,114   $ 2       $48,831    $4,601      $(445)      $(313)      4,104  $(12,085)    $40,591
Net loss                                  -     -            -     (2,782)         -           -           -        -       (2,782)
Change in other comprehensive loss,
  net of tax                              -     -            -         -           -        (492)          -        -         (492)
                                                                                                                           -------
Comprehensive loss                        -     -            -         -           -           -           -        -       (3,274)
Stock options exercised                   7     -           27         -           -           -           -        -           27
Stock purchase plan shares issued       239     -          755         -           -           -           -        -          755
Stock repurchase program               (132)    -            -         -           -           -         132     (501)        (501)
Change in deferred compensation           -     -            -         -         237           -           -        -          237
                                    -----------------------------------------------------------------------------------------------
Balance at March 31, 2001            18,228   $ 2       $49,613    $1,819      $(208)       $(805)     4,236 $(12,586)     $37,835
                                    ===============================================================================================



     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,
                                                         2000         2001
                                                       --------     --------

Cash flows provided by operating activities:
Net loss ............................................. $ (9,472)    $ (2,782)
Adjustments to reconcile net loss to net cash
  provided by operating  activities:
   Deferred income taxes .............................   (1,658)      (1,649)
   Depreciation and amortization .....................    1,974        3,099
   Stock compensation expense ........................      446          237
   Investment impairment .............................    1,939          718
Loss on disposal of fixed assets .....................       22           20
   Other .............................................     --            (99)
Change in operating assets and liabilities:
     Accounts receivable, net ........................    4,750        3,963
     Software license installments ...................    5,038        4,381
     Other assets ....................................     (527)       1,738
     Accounts payable and accrued expenses ...........   (1,566)         163
     Deferred revenue ................................     (652)        (396)
                                                       --------     --------
         Total adjustments ...........................    9,766       12,175
                                                       --------     --------
         Net cash provided by operating activities ...      294        9,393
Cash flows (used in) provided by investing activities:
   Purchase of marketable securities .................   (1,000)     (15,734)
   Purchase of investment ............................   (1,063)        (375)
Sale of marketable securities ........................    1,500       16,609
   Sale of fixed assets ..............................       --           51
   Capital expenditures ..............................   (4,649)      (3,667)
  Other investment ...................................       --         (204)
                                                       --------     --------
         Net cash (used in) investing activities .....   (5,212)      (3,320)
Cash flows (used in) provided by financing activities:
     Cash received from exercise of stock options ....       65           24
     Cash received from employee stock purchase ......      169          748
     Cash used for stock repurchase program ..........     --           (501)
     Payments on capital lease obligations ...........      (36)        --
                                                       --------     --------
         Net cash provided by financing activities ...      198          271
Effect of exchange rate changes on
   cash and cash equivalents .........................      169         (515)
                                                       --------     --------
Net change in cash and cash equivalents ..............   (4,551)       5,829
Cash and cash equivalents at beginning
   of period .........................................   33,546       21,380
                                                       --------     --------
Cash and cash equivalents at end of period ........... $ 28,995     $ 27,209
                                                       ========     ========
Supplemental disclosure of cash flow
   information:
   Cash paid (received) during the period for:
     Interest ........................................ $      3     $     4
     Income taxes .................................... $     10     $(1,690)


            See accompanying notes to consolidated financial statements


<PAGE>



                         MOBIUS MANAGEMENT SYSTEMS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(1)  Basis of Presentation

The accompanying consolidated financial statements at June 30, 2000 and March
31, 2001 and for the three and nine month periods ended March 31, 2000 and 2001,
have been prepared in accordance with the requirements of the Securities and
Exchange Commission (SEC) for interim reporting. Under those rules, certain
footnotes or other financial information that are normally required by generally
accepted accounting principles (GAAP) can be condensed or omitted.

Revenues, expenses, assets and liabilities vary during the year and GAAP
requires Mobius to make estimates and assumptions in preparing the interim
financial statements. Mobius has made their best effort in establishing good
faith estimates and assumptions, however, actual results may differ.

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

(2)  Earnings Per Share

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

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

                                                              Three Months Ended March 31,
                                                    2000                                          2001
                                -------------- --------------- -----------    -------------- --------------- -----------
                                  Net Loss         Shares      Per Share        Net Loss         Shares      Per Share
                                 (Numerator)   (Denominator)     Amount        (Numerator)   (Denominator)     Amount
<S>                               <C>              <C>           <C>            <C>             <C>           <C>

Basic loss per share:
Net loss                          $(4,105)                                      $(1,451)
                                  ========                                      ========
Weighted average shares
 outstanding                                       18,007                                       18,281
Basic loss per share                                            $(0.23)                                       $(0.08)
                                                                =======                                       =======
Diluted loss per share:
Net loss                          $(4,105)                                      $(1,451)
                                  ========                                      ========
Dilutive effect of
 stock options                                          -                                            -
                                                   ------                                       ------
Diluted loss per share                             18,007       $(0.23)                         18,281        $(0.08)
                                                   ======       =======                         ======        =======


</TABLE>
<PAGE>



(2)  Earnings Per Share (continued)

<TABLE>
<CAPTION>

                                                           Nine Months Ended March 31,
                                                           ---------------------------
                                                    2000                                          2001
                                -------------- --------------- -----------    -------------- --------------- -----------
                                  Net Loss         Shares      Per Share        Net Loss         Shares      Per Share
                                 (Numerator)   (Denominator)     Amount        (Numerator)   (Denominator)     Amount
<S>                               <C>               <C>          <C>            <C>               <C>          <C>

Basic loss per share:
Net loss                          $(9,472)                                      $(2,782)
                                  ========                                      ========
Weighted average shares
 outstanding                                        17,962                                       18,234
Basic loss per share                                            $(0.53)                                       $(0.15)
                                                                =======                                       =======
Diluted loss per share:
Net loss                          $(9,472)                                      $(2,782)
                                  ========                                      ========
Dilutive effect of
 stock options                                           -                                            -
                                                    ------                                       ------
Diluted loss per share                              17,962      $(0.53)                          18,234       $(0.15)
                                                    ======      =======                          ======       =======
</TABLE>


         Outstanding stock options, representing an aggregate of 3,139,556 and
3,218,727 shares of common stock equivalents, are antidilutive for the three and
nine months ended March 31, 2000 and 2001, respectively.

(3)  Marketable Securities

         Marketable securities are categorized as available-for-sale securities,
as defined by Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Unrealized holding gains
and losses are reflected as a net amount in a separate component of
stockholders' equity until realized. For the purpose of computing realized gains
and losses, cost is identified on a specific identification basis. There were
insignificant realized gains and losses for the three and nine months ended
March 31, 2000 and 2001. As of June 30, 2000 and March 31, 2001, the unamortized
investment premium and unrealized holding gains and losses were insignificant.

(4)  Software License Installments

         Mobius offers extended payment terms to some of its customers. For
software license contracts of 15 years, the related financing period is
generally 3 to 5 years. For software installment contracts of 3 to 5 years, the
payments are generally spread ratably over the term. Software license
installments are discounted at a market rate of interest at the date the
software license contract revenue is recognized. The discount is amortized to
interest income using the interest method over the term of the license contract.



<PAGE>



(5)  Property and Equipment

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

                                                        June 30,     March 31,
                                                          2000         2001
                                                        -------      --------

   Furniture, fixtures and office equipment              $1,089       $1,562
   Computer equipment                                    12,349       12,568
   Leasehold improvements                                 1,542        4,646
   Construction in progress                               1,062           --
                                                         ------       ------
                                                         16,042       18,776
   Less accumulated depreciation and amortization        (6,747)      (8,978)
                                                         ------       ------
   Property and equipment, net                           $9,295       $9,798
                                                         ======       ======

         Depreciation and amortization expense on property and equipment,
including capital leases, was $841,000 and $1.1 million for the quarters ended
March 31, 2000 and 2001, respectively and $1.9 million and $3.1 million for the
nine months ended March 31, 2000 and 2001, respectively. At June 30, 2000 there
was $214,000 of equipment under capital leases included in property and
equipment with accumulated depreciation of $135,000. The equipment under capital
lease was sold during the second quarter of fiscal 2001.

(6)      Investments

         In June 1999, Mobius invested $1,501,000 in Home Account Network
("HAN"), a privately-held, information technology company providing processing
and Internet outsourcing to financial services companies. During fiscal 2000,
Mobius provided an additional $750,000 to HAN in short term loans that were
converted to preferred stock in May 2000. In the first nine months of fiscal
2001, Mobius provided an additional $375,000 to HAN as short term loans.

         Mobius regularly assessed the recoverability of the HAN investment and
had concluded that an other than temporary impairment loss had occurred.
Accordingly, impairment losses were recorded in connection with this investment
aggregating $821,000 and $0 for the quarters ended March 31, 2000 and 2001,
respectively and $1.4 million and $218,000 for the nine months ended March 31,
2000 and 2001, respectively.

         In January 2001, HAN was purchased by Intelidata Technologies
("Intelidata"). The merger agreement established a fixed number of shares to be
allocated between debt holders and all shareholders, including Mobius. The
Intelidata shares will be released at specified time periods beginning after the
Intelidata shares are registered. The number of shares to be received by debt
holders will be based upon a formula that utilizes the market value of
Intelidata Stock on each release date. After the debtors are repaid, any
remaining shares will be distributed to HAN's management and shareholders based
on percentages in the merger agreement. Once the stock is released to the
debtors and shareholders, it is subject to a variety of trading restrictions. As
of March 31, 2001, Mobius has not received any Intelidata shares.

         As of March 31, 2001, the carrying value of this investment is $188,000
and is included within other current assets. Mobius believes that the carrying
value is reasonable based on estimates of the amount and value of shares to be
received from the transaction, discounted for the restrictions and estimated
time until the Intelidata shares are expected to be received.

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

         Mobius regularly reviews the assumptions underlying the operating
performance and cash flow forecasts of Flooz.com to assess the investment's
recoverability. At March 31, 2001, Mobius concluded that an other than temporary
impairment loss had occurred based on Flooz.com's recent operating performance
and announced reduction in workforce. Accordingly, Mobius recorded an impairment
loss of $500,000 in the quarter ended March 31, 2001.

<PAGE>

(7)  Accounts Payable and Accrued Expenses

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

                                                    June 30,       March 31,
                                                      2000           2001
                                                     ------         -------

         Accounts payable                           $ 2,563         $ 2,311
         Compensation and related benefits            6,569           6,874
         Royalties payable                            1,168           1,004
         Other                                        4,746           5,010
                                                    -------         -------
                                                    $15,046         $15,199
                                                    =======         =======
(8)  Common Stock

         In December 2000, the Board of Directors authorized a stock repurchase
program under which Mobius may repurchase up to 1,000,000 shares of Mobius's
outstanding common stock. The number of shares to be repurchased and timing of
purchases will be based on a variety of factors, including general market
conditions, the market price and trading volume of Mobius shares. As of March
31, 2001, 132,300 shares at an approximate cost of $501,000 were repurchased and
are held in treasury stock.


(9)  Stock Incentive Plan

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

                                      Three Months ended     Nine Months ended
                                           March 31,               March 31,
                                       2000      2001          2000      2001
                                       ----      ----          ----      ----

Sales and marketing                    $80       $36           $331      $167
Research and development                26        16             92        56
General and administrative               7         4             23        14
                                  --------------------        ----------------
Total                                 $113       $56           $446      $237
                                  ====================        ================


         There is approximately $27,000 of expense remaining to be recognized in
fiscal 2001 relating to these 1998 option grants and $134,000 and $47,000 of
expense to be recognized in fiscal years 2002 and 2003, respectively. These
expenses are subject to adjustments for option holder terminations.


<PAGE>




(10)  Comprehensive Loss

         Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires the disclosure of comprehensive income, which
includes net income, foreign currency translation adjustments and unrealized
gains and losses on marketable securities classified as available-for-sale.
Comprehensive loss for the three and nine months ended March 31, 2000 and 2001
is as follows (in thousands):

                                      Three Months ended    Nine Months ended
                                           March 31,            March 31,
                                        2000     2001       2000       2001
                                        ----     ----       ----       ----

Net loss                             $(4,105)  $(1,451)   $(9,472)   $(2,782)
Unrealized marketable securities
  gain (loss)                              7       (52)        (5)        23
Unrealized translation gain(loss)        (94)     (340)       169       (515)
                                     ----------------------------------------
Comprehensive loss                   $(4,192)  $(1,843)   $(9,308)   $(3,274)
                                     ========================================

(11)  Commitments and Contingencies

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

(12) Sale of INFOPAC-Tapesaver

         In January 1999, Mobius sold the INFOPAC-TapeSaver product to a third
party for approximately $3.0 million. Under the terms of the sale, the buyer
assumed responsibility for maintenance support for all existing TapeSaver
licenses. As a result of this arrangement, Mobius will recognize $3.0 million of
license revenue over the contract period, as the buyer makes payments, and has
recognized approximately $1.1 million of maintenance revenue through March 31,
2000. Mobius recognized license revenue of $82,000, and $112,500 during the
three months ended March 31, 2000 and 2001, respectively, and $561,000 and
$375,000 during the nine months ended March 31, 2000 and 2001, respectively.
Mobius recognized $0 and $302,000 of maintenance revenue in the three and nine
months ended March 31, 2000, respectively. No maintenance revenue was recognized
in fiscal 2001. Future license revenue is expected to be $112,500 each quarter
through December 31, 2003.




<PAGE>




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

         In this section, readers are given a more detailed assessment of
Mobius's operating results and changes in
financial position. This section should be read in conjunction with Mobius's
Consolidated Financial Statements and Notes. Please note that references in this
section to "last year's quarter" and "this quarter" refer to Mobius's fiscal
quarters ended March 31, 2000 and 2001, respectively. Mobius's quarterly
revenues and operating results have varied substantially from quarter to quarter
in the past, and are likely to continue to do so in the future. Certain factors
underlying such fluctuations, as well as a number of other factors relevant to a
reader's understanding of this Management's Discussion and Analysis, are set
forth under the heading "Factors Affecting Future Performance" below.

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

Overview

         Mobius Management Systems, Inc. (together with its consolidated
subsidiaries, "Mobius") is a leading provider of software products designed to
provide network and Web-based access, presentation and distribution of large
volumes of diverse enterprise information. Major financial services, healthcare,
manufacturing, retail and telecommunications companies and government entities
use Mobius's software to facilitate customer service and other mission-critical
functions. Mobius's software products store, retrieve and present computer and
non-computer generated documents, such as text, images, video or audio
recordings, customer statements, checks, external correspondence and remittance
forms. The products can be used by a single department, multiple departments or
centrally by an entire enterprise.


<PAGE>



Results of Operations

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

                                         Three months ended    Nine months ended
                                              March 31,             March 31,
                                            2000      2001        2000     2001
                                           ------   -------     ------   ------

Revenues:
  Software license revenues .........       46.6%     46.4%      48.4%    52.7%
  Maintenance and other revenues ....       53.4      53.6       51.6     47.3
                                           -----     -----      -----    -----
    Total revenues ..................      100.0     100.0      100.0    100.0
Cost of revenues:
  Software license revenues .........        0.8       0.7        1.4      1.6
  Maintenance and other revenues ....       10.7       9.1       10.8      8.3
                                           -----     -----      -----    -----
    Total costs of revenues .........       11.5       9.8       12.2      9.9

Gross profit ........................       88.5      90.2       87.8     90.1

Operating expenses:
  Sales and marketing ...............       81.3      63.8       75.2     62.7
  Research and development ..........       29.5      24.7       24.9     22.8
  General and administrative ........       21.7      16.4       21.5     14.5
                                           -----     -----      -----    -----
    Total operating expenses ........      132.5     104.9      121.6    100.0

Loss from operations ................      (44.0)    (14.7)     (33.8)    (9.9)

License and other interest income ...        5.1       3.9        5.3      3.8
Foreign currency transaction gains ..         --       0.5        0.1      0.2
Other income ........................         --       0.2         --      0.2
Investment impairment ...............       (3.8)     (3.0)      (4.6)    (1.3)
                                           -----     -----      -----    -----
Loss before income taxes ............      (42.7)    (13.1)     (33.0)    (7.0)
Provision (benefit) from income taxes      (13.4)     (4.4)     (10.3)    (1.9)
                                           -----     -----      -----    -----
Net Loss ............................      (29.3)%    (8.7)%    (22.7)%   (5.1)%
                                           =====     =====      =====    =====


Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 2001

Revenues.

o    Total revenues increased 18.9% from $14.0 million in last year's quarter to
     $16.7 million this quarter.  Domestic  revenues  increased 23.7% from $11.8
     million in last year's quarter to $14.6 million this quarter. International
     revenues  decreased  4.5% from $2.2 million in last year's  quarter to $2.1
     million  this  quarter.   Mobius  believes  that  Year  2000  (Y2K)  issues
     significantly  affected  the  purchasing  patterns  of  its  customers  and
     potential  customers  during  the  quarter  ended  March 31,  2000.  Mobius
     believes many companies expended significant resources to correct or modify
     their  software  systems to be Year 2000  compliant and these  expenditures
     reduced funds  available to purchase  software  products such as those that
     Mobius offers.  For the quarter ending March 31, 2001, Mobius believes that
     although  the  software  marketplace  remains  turbulent,  the  market  for
     Mobius's   products  may  be  returning  to  its  pre  Y2K  conditions  and
     accordingly,  total revenues  increased  primarily because Mobius sold more
     licenses for its products to new and existing customers.

o    Software license revenues increased 18.4% from $6.5 million in last year's
     quarter to $7.7 million this quarter. This increase was primarily
     attributable to sales of more licenses for Mobius's products to new and
     existing customers.

o    Maintenance and other revenues increased 19.4% from $7.5 million in
     last  year's  quarter  to $8.9  million  this  quarter.  This  increase  in
     maintenance revenue was primarily  attributable to the growth in the amount
     of licensed software covered by maintenance agreements and increases in the
     maintenance  fees charged by Mobius.  Other revenues for both quarters were
     not significant.

<PAGE>

Costs of Revenues.


o    Costs of license revenues consist primarily of the cost of royalties and
     sublicense fees. The costs of software license revenues remained consistent
     this quarter compared with last year's quarter totaling $109,000 in last
     year's quarter and $122,000 this quarter, representing 1.7% and 1.6%
     respectively, of software license revenues in those quarters.

o    Costs of maintenance and other revenues consist primarily of customer
     support staff costs. The costs of maintenance and other revenues were $1.5
     million in last year's quarter and this year's quarter, representing 20.0%
     and 17.1% respectively, of maintenance and other revenues in those
     quarters. The decrease in this quarter's costs as a percentage of
     maintenance and other revenues was primarily attributable to increased
     maintenance revenues without increasing maintenance costs.

 Operating Expenses.

o    Sales and  marketing  expenses  consist  primarily of the cost of personnel
     associated with the selling and marketing of Mobius's  products,  including
     salaries, commissions, performance based bonuses and travel expenses. Sales
     and  marketing  costs  also  include  the  cost of  branch  sales  offices,
     marketing,  and  advertising.  These  expenses  decreased  6.8% from  $11.4
     million in last year's quarter to $10.6 million this quarter,  representing
     81.3% and 63.8%,  respectively,  of total revenues in those quarters. Sales
     and marketing expenses have decreased primarily because Mobius consolidated
     Click-n-Done's  sales and marketing  departments  into Mobius'  established
     sales and marketing structures.  This cost savings was offset by additional
     marketing  personnel being hired and an increase in commissions and bonuses
     for selling more software licenses.

o    Research and development expenses consist primarily of personnel costs
     attributable to the development of new software products and the
     enhancement of existing products. Research and development expenses were
     $4.1 million in last year's quarter and this quarter, representing 29.5%
     and 24.7%, respectively, of total revenues in those quarters. Research and
     development expenses as a percentage of total revenues decreased from last
     year's quarter to this quarter primarily due to increased revenues.

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 9.9% from $3.0 million in
     last year's quarter to $2.7 million this quarter, representing 21.7% and
     16.4%, respectively, of total revenues in those quarters. The decrease was
     attributable to the elimination of Click-n-Done's administration department
     and completion of special projects, offset by increased depreciation for
     capitalized infrastructure projects.

<PAGE>

         License and other interest income; interest expense; foreign currency
transaction gains (losses). License and other interest income was $717,000 and
$650,000 in last year's quarter and this quarter, respectively. During both
quarters interest expense and foreign currency transaction gains were
insignificant.

         Benefit for Income Taxes. The tax benefit for income taxes was $1.9
million in last year's quarter compared to $734,000 in this quarter. The
effective benefit for taxes as a percentage of loss before taxes was 31.4% for
last year's quarter and 33.6% this quarter. The effective tax rate for both
quarters reflect the statutory tax benefit for the loss in the United States
offset by limitations on the tax benefit which can be taken from losses in
Mobius's foreign subsidiaries.

Nine Months Ended March 31, 2000 Compared to Nine Months Ended March 31, 2001

Revenues.

o    Total revenues  increased 30.1% from $41.7 million in the first nine months
     of fiscal 2000 to $54.3  million in the first nine  months of fiscal  2001.
     Domestic  revenues  increased  29.6% from  $34.5  million in the first nine
     months of fiscal  2000 to $44.7  million in the first nine months of fiscal
     2001. International revenues increased 33.3% from $7.2 million in the first
     nine  months of fiscal  2000 to $9.6  million in the first  nine  months of
     fiscal 2001.  Mobius  believes  that Year 2000 (Y2K)  issues  significantly
     affected the purchasing  patterns of its customers and potential  customers
     during the first nine months of fiscal 2000. Mobius believes many companies
     expended significant  resources to correct or modify their software systems
     to be Year 2000 compliant and these expenditures reduced funds available to
     purchase  software  products  such as  those  that  Mobius  offers.  Mobius
     believes that although the software  marketplace  remains  turbulent during
     the first nine months of fiscal 2001, the market for Mobius's  products may
     be returning to its pre Y2K  conditions  and  accordingly,  total  revenues
     increased  primarily  because Mobius sold more licenses for its products to
     new and existing customers.

o    Software license revenues increased 41.6% from $20.2 million in the first
     nine months of fiscal 2000 to $28.6 million in the first nine months of
     fiscal 2001. This increase was primarily attributable to sales of more
     licenses for Mobius's products to new and existing customers.

o    Maintenance and other revenues increased 19.3% from $21.5 million in the
     first nine months of fiscal 2000 to $25.7 million in the first nine months
     of fiscal 2001. This increase in maintenance revenue was primarily
     attributable to the growth in the amount of licensed software covered by
     maintenance agreements and increases in the maintenance fees charged by
     Mobius. Other revenues in the first nine months of fiscal 2000 and 2001
     were not significant.

Costs of Revenues.

o    Costs of license revenues consist primarily of the cost of royalties and
     sublicense fees. The costs of software license revenues increased 44.4%
     from $599,000 in the first nine months of fiscal 2000 to $865,000 in the
     first nine months of fiscal 2001, representing 3.0% of software license
     revenues in the first nine months of both fiscal years. The costs of
     software license revenues increased proportionally with the increase in
     license revenues.

o    Costs of maintenance and other revenues consist primarily of customer
     support staff costs. The costs of maintenance and other revenues was $4.5
     million in the first nine months of fiscal 2000 and 2001, representing
     20.8% and 17.5% respectively, of maintenance and other revenues in those
     nine month periods. The decrease in the first nine months of fiscal 2001 as
     a percentage of maintenance and other revenues was primarily attributable
     to increased maintenance revenues without increasing maintenance costs.


<PAGE>



Operating Expenses.

o    Sales and  marketing  expenses  consist  primarily of the cost of personnel
     associated with the selling and marketing of Mobius's  products,  including
     salaries, commissions, performance based bonuses and travel expenses. Sales
     and  marketing  costs  also  include  the  cost of  branch  sales  offices,
     marketing,  promotional materials and advertising. These expenses increased
     8.6% from $31.4  million in the first nine  months of fiscal  2000 to $34.1
     million in the first nine  months of fiscal  2001,  representing  75.2% and
     62.7%,  respectively,  of total revenues in those nine month periods. Sales
     and marketing  expenses have increased  primarily  because Mobius paid more
     commissions  and bonuses for selling more software  licenses,  Mobius hired
     additional   marketing  personnel  and  an  increase  in  depreciation  for
     capitalized infrastructure projects. These increased costs were offset by a
     decrease  in sales  and  marketing  expenses  because  Mobius  consolidated
     Click-n-Done's  sales and marketing  departments  into Mobius'  established
     structure.  The first  nine  months of fiscal  2001's  sales and  marketing
     expenses as a percentage  of revenues  decreased  from last year's  quarter
     primarily due an increase in total revenues.

o    Research and development expenses consist primarily of personnel costs
     attributable to the development of new software products and the
     enhancement of existing products. Research and development expenses
     increased 19.1% from $10.4 million in the first nine months of fiscal 2000
     to $12.4 million in the first nine months of fiscal 2001, representing
     24.9% and 22.8%, respectively, of total revenues in those nine month
     periods. The increases in research and development expenses was primarily
     attributable to increased staffing and personnel-related costs. Research
     and development expenses as a percentage of total revenues decreased from
     last year's quarter to this quarter primarily due to increased revenues.

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 12.7% from $9.0 million in
     the first nine months of fiscal 2000 to $7.8 million in the first nine
     months of fiscal 2001, representing 21.5% and 14.5%, respectively, of total
     revenues in those nine month periods. The decrease was attributable to the
     elimination of Click-n-Done's administration department, decreased bonuses,
     completion of special projects, implementation of administrative cost
     savings strategies and, offset by increased depreciation for capitalized
     infrastructure projects.

         License and other interest income; interest expense; foreign currency
transaction gains (losses). License and other interest income was $2.2 million
and $2.1 million in the first nine months of fiscal 2000 and 2001, respectively.
During both nine month periods interest expense and foreign currency transaction
gains were insignificant.

         Benefit for Income Taxes. The tax benefit for income taxes was $4.3
million and $1.0 million in the first nine months of fiscal 2000 and 2001,
respectively. The effective benefit for taxes as a percentage of loss before
taxes was 31.3% and 26.9% for the first nine months of fiscal 2000 and 2001,
respectively. The effective tax rate for both nine month periods reflect the
statutory tax benefit for the year to date loss in the United States offset by
limitations on the tax benefit which can be taken from losses in Mobius's
foreign subsidiaries.



<PAGE>



Investments

         In June 1999, Mobius invested $1,501,000 in Home Account Network
("HAN"), a privately-held, information technology company providing processing
and Internet outsourcing to financial services companies. During fiscal 2000,
Mobius provided an additional $750,000 to HAN in short term loans that were
converted to preferred stock in May 2000. In the first nine months of fiscal
2001, Mobius provided an additional $375,000 to HAN as short term loans.

         Mobius regularly assessed the recoverability of the HAN investment and
had concluded that an other than temporary impairment loss had occurred.
Accordingly, impairment losses were recorded in connection with this investment
aggregating $821,000 and $0 for the quarters ended March 31, 2000 and 2001,
respectively and $1.4 million and $218,000 for the nine months ended March 31,
2000 and 2001, respectively.

         In January 2001, HAN was purchased by Intelidata Technologies
("Intelidata"). The merger agreement established a fixed number of shares to be
allocated between debt holders and all shareholders, including Mobius. The
Intelidata shares will be released at specified time periods beginning after the
Intelidata shares are registered. The number of shares to be received by debt
holders will be based upon a formula that utilizes the market value of
Intelidata Stock on each release date. After the debtors are repaid, any
remaining shares will be distributed to HAN's management and shareholders based
on percentages in the merger agreement. Once the stock is released to the
debtors and shareholders, it is subject to a variety of trading restrictions. As
of March 31, 2001, Mobius has not received any Intelidata shares.

         As of March 31, 2001, the carrying value of this investment is $188,000
and is included within other current assets. Mobius believes that the carrying
value is reasonable based on estimates of the amount and value of shares to be
received from the transaction, discounted for the restrictions and estimated
time until the Intelidata shares are expected to be received.

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

         Mobius regularly reviews the assumptions underlying the operating
performance and cash flow forecasts of Flooz.com to assess the investment's
recoverability. At March 31, 2001, Mobius concluded that an other than temporary
impairment loss had occurred based on Flooz.com's recent operating performance
and announced reduction in workforce. Accordingly, Mobius recorded an impairment
loss of $500,000 in the quarter ended March 31, 2001.

Forecast

      Mobius believes that although the software marketplace remains turbulent,
the market may be returning to its pre-Y2K conditions and accordingly, Mobius's
total revenue growth in fiscal 2001 may be starting to return to the growth
rates achieved prior to the impact of Y2K. If in fact the software markets
continue on their recovery trend and return to pre-Y2K conditions, Mobius
believes that its fiscal year 2001 total revenue will be between $75.0 million
and $77.0 million, or a per diluted share loss between ($0.12) and ($0.06), as
compared to its fiscal year 2000 total revenue of $60.2 million or per diluted
share loss of ($0.66).



<PAGE>




Liquidity and Capital Resources

         Since its inception, Mobius has funded its operations principally
through cash flows from operating activities and, to a lesser extent, bank
financings. In April 1998, Mobius completed its initial public offering, which
generated net proceeds of $33.0 million. As of March 31, 2001, Mobius had cash
and cash equivalents of $27.2 million, an increase of $5.8 million from the
$21.4 million held at June 30, 2000. Mobius's marketable securities decreased
$750,000 from $10.3 million as of June 30, 2000 to $9.5 million as of March 31,
2001.

         Net cash provided by operating activities was $294,000 in the first
nine months of fiscal 2000 and $9.4 million in the first nine months of fiscal
2001. The primary reason for the increase in Mobius's cash during the first nine
months of fiscal 2001 was a decrease in accounts receivable, software license
installments and other assets. Net software license installments decreased 24.6%
from $17.8 million at June 30, 2000 to $13.5 million at March 31, 2001.

         Software license installments and accounts receivable reserves have
decreased 8.9% from $1.7 million at June 30, 2000 to $1.6 million at March 31,
2001. The decrease in these reserves is attributable to management's overall
assessment of the collectability of specific accounts.

         Accounts receivable reserves are primarily calculated by identifying
problem accounts and in recognition that some customers decide to cancel or
reduce the number of products covered by maintenance arrangements upon their
anniversary but do not always notify Mobius in sufficient time to prevent some
portion of the annual maintenance billings being recognized. In addition, Mobius
has a general reserve for current receivables that is based upon Mobius's
historical collection experience. Mobius specifically identifies problem
accounts by the age of the receivable and through discussions with the customer
and Mobius sales representatives. Based on such information, Mobius exercises
its best judgment as to what portion of the accounts receivable balance requires
a reserve. At June 30, 2000 and March 31, 2001 approximately 78% and 81%,
respectively, of the total accounts receivable reserve balances related to
specific accounts. To the extent that an account for which a specific reserve
was provided is subsequently collected, Mobius reduces the reserves in the
period of collection.

         At June 30, 2000 and March 31, 2001, software license installments were
approximately $18.5 million and $14.0 million of which 81% and 74% were customer
balances greater than $100,000, respectively. Customer balances for software
license installments tend to be large due to the selling price of Mobius's
products. Reserves for software installments are calculated as a percentage of
software license installments and identifying problem accounts.

         Cash used in investing activities was $5.2 million and $3.3 million in
the first nine months of fiscal 2000 and 2001, respectively. During the first
nine months of fiscal 2001, Mobius completed the expansion of its Rye
headquarters and purchased $15.7 million of marketable securities. These uses of
cash were offset by the sale of $16.6 million of marketable securities during
the first nine months of fiscal 2001.


<PAGE>




         Cash provided by financing activities was $198,000 in first nine months
of fiscal 2000 and $271,000 in the first nine months of fiscal 2001. In the
first nine months of fiscal 2001, the cash provided by financing activities is
primarily due to cash received from the sale of shares through the employee
stock purchase plan, offset by the stock purchases from the stock repurchase
program.

         In December 1999, Mobius introduced Click-n-Done products which are
designed to support the major models for electronic bill presentment and
payment, including biller direct, third-party consolidator and desktop
consolidator. Mobius's expenses for Click-n-Done were approximately $3.2 million
and $1.0 million in last year's quarter and this year's quarter, respectively,
and $5.4 million and $4.0 million in the first nine months of fiscal 2000 and
2001, respectively. During the first nine months of fiscal 2000 and 2001, there
was an insignificant amount of revenue generated from Click-n-Done products.
Mobius anticipates that it will continue to incur additional costs to develop
these products.

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

         In January 1999, Mobius sold the INFOPAC-TapeSaver product to a third
party for approximately $3.0 million. Under the terms of the sale, the buyer
assumed responsibility for maintenance support for all existing TapeSaver
licenses. As a result of this arrangement, Mobius will recognize $3.0 million of
license revenue over the contract period, as the buyer makes payments, and has
recognized approximately $1.1 million of maintenance revenue through March 31,
2000. Mobius recognized license revenue of $82,000, and $112,500 during the
three months ended March 31, 2000 and 2001, respectively, and $561,000 and
$375,000 during the nine months ended March 31, 200 and 2001, respectively.
Mobius recognized $0 and $302,000 of maintenance revenue in the three and nine
months ended March 31, 2000, respectively. No maintenance revenue was recognized
in fiscal 2001. Future license revenue is expected to be $112,500 each quarter
through December 31, 2003.






<PAGE>



                      FACTORS AFFECTING FUTURE PERFORMANCE

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

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

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

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

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

Technological Change

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


<PAGE>



Product Concentration

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

Competition

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


<PAGE>



International Sales and Operations

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

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

Expansion of Indirect Channels

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

Extended Payment Risk

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


<PAGE>



Protection of Intellectual Property

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

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

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

Dependence on Licensed Technology

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

Risk of Product Defects; Product Liability

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

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

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

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

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



<PAGE>



If Widespread Internet Adoption Does Not Continue, or if the Internet Cannot
Accommodate Continued Growth, Mobius's Business Will Be Harmed.

         Acceptance of Mobius's Internet based products depends upon continued
adoption of the Internet for commerce. As is typical in the case of an emerging
industry characterized by rapidly changing technology, evolving industry
standards and frequent new product and service introductions, demand for and
acceptance of recently introduced e-commerce enabling products and services are
subject to a high level of uncertainty. To the extent that businesses or
consumers do not consider the Internet a viable commercial medium, Mobius's
customer base for its Internet-based products may not grow. In addition,
critical issues concerning the commercial use of the Internet remain unresolved
and may affect the growth of Internet use. The adoption of the Internet for
commerce, communications and access to content, particularly by those who have
historically relied upon alternative methods, generally requires understanding
and acceptance of a new way of conducting business and exchanging information.
In particular, companies and consumers maybe reluctant or slow to adopt a new,
Internet-based bill payment system that may render existing practices obsolete.
If the use of the Internet fails to develop or develops more slowly than
expected, Mobius's business may be harmed.

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

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

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

The Internet Industry Is Characterized by Rapid Technological Change.

         Rapid technological developments, evolving industry standards and user
demands, and frequent new product introductions and enhancements characterize
the market for Internet products and services. These market characteristics are
exacerbated by the emerging nature of the market and the fact that many
companies are expected to introduce new Internet products and services in the
near future. Mobius's future success will depend on its ability to continually
improve its internet product offerings and services.


<PAGE>




Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Mobius investment portfolio is subject to interest rate sensitivity. The
primary objective of Mobius's investment activities is to preserve principal,
while at the same time maximizing the interest income, without significantly
increasing risk. Some of the marketable securities that Mobius has invested in
may be subject to market rate interest risk. This means a change in prevailing
interest rates may cause the market value of the security to fluctuate. For
example, if Mobius holds a security that was issued with a fixed interest rate
at the then-prevailing rates and the prevailing interest rates later rise, the
market value of the marketable security will probably decline. At March 31,
2001, Mobius primarily held debt securities.

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


<PAGE>



PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

  From time to time, Mobius is involved in litigation relating to claims arising
out of their operations in the normal course of business. Mobius is not a party
to any legal proceedings, the adverse outcome of which, individually or in the
aggregate, would have a material adverse effect on Mobius's business, operating
results and financial condition.

Item 2 - Changes in Securities and Use of Proceeds

(a)  Not applicable

(b)  Not applicable

(c)  Not applicable

(d) On April 27, 1998, the Securities and Exchange Commission declared effective
Mobius's Registration Statement on Form S-1 (File No. 333-47117) with respect to
Mobius's initial public offering. To date, of the $33.0 million of proceeds from
the offering Mobius has used approximately $3.0 million for working capital and
capital expenditures. The remaining proceeds are currently invested in cash and
short term, investment grade, interest bearing securities.

Item 3 - Defaults Upon Senior Securities

None



<PAGE>



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

Mobius held its Fiscal 2000 Annual Meeting of Stockholders on February 6, 2001.
The matters submitted to a vote of our stockholders were the election of two
members of the Board of Directors to the class of directors whose terms expires
at the Fiscal 2003 Annual Meeting of Stockholders (the "2003 Annual Meeting"),
approval of an amendment to the 1998 Employee Stock Purchase Plan and the
ratification of the appointment of Mobius's independent auditors.

Mobius stockholders elected Mitchell Gross and Gary Greenfield to the Board of
Directors, to hold office until the 2003 Annual Meeting and until their
respective successors are duly elected and qualified. The results of the voting
were as follows:

                  Mitchell Gross

                  Voted for                 13,663,152
                  Against                       20,582

                  Gary Greenfield

                  Voted for                 13,663,152
                  Against                       20,582

Mobius stockholders approved the amendment to the 1998 Employee Stock Purchase
Plan (the "plan") to increase the maximum number of shares of Mobius's Common
Stock available for issuance under the plan from 650,000 to 1,150,000. The
results of the voting were as follows:

                  Voted for                 13,525,504
                  Against                      156,930
                  Abstain                        1,300

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

                  Voted for                 13,665,523
                  Against                       14,080
                  Abstain                        4,131


Item 5 - Other Information

None



<PAGE>



Item 6 - Exhibits and Reports on Form 8-K

(a)      Exhibits

Exhibit
  No.    Description

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


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

(b)      Reports on Form 8-K

         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:  May 15, 2001

                                  MOBIUS MANAGEMENT SYSTEMS, INC.


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



<PAGE>





                                  EXHIBIT INDEX

Exhibit
  No.       Description


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



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