================================================================================



                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 2000


                         Commission File Number 0-21041

                               EXCELON CORPORATION
                               -------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                                 02-0424252
         --------                                                 ----------
(State or other jurisdiction of                               (I.R.S.  Employer
 incorporation or organization)                              Identification No.)


     25 Mall Road, Burlington, MA                                      01803
     ----------------------------                                      -----
(Address of principal executive offices)                            (Zip Code)


Registrant's telephone number, including area code: (781) 674-5000

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days.

                               Yes X            No
                                  ---              ---

       The number of shares  outstanding of the registrant's  common stock as of
July 31, 2000 was 29,402,865.

================================================================================
<PAGE>

                              EXCELON CORPORATION

                               INDEX TO FORM 10-Q

<TABLE>

<S>                                                                                           <C>
PART I - FINANCIAL INFORMATION                                                                 Page
                                                                                               ----
Item 1.  Financial Statements

         Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999                   3

         Consolidated Statements of Operations for the three and six
         months ended June 30, 2000 and June 30, 1999                                            4

         Consolidated Statements of Cash Flows for the six months
         ended June 30, 2000 and June 30, 1999                                                   5

         Notes to the Consolidated Financial Statements                                          6

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                                              7

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                              11


PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders                                      12

Item 6. Exhibits and Reports on Form 8-K                                                         13

Signatures                                                                                       14

</TABLE>

                                       2
<PAGE>

ITEM 1.  FINANCIAL STATEMENTS


                               eXcelon Corporation
                           Consolidated Balance Sheets
                        (in thousands, except share data)
<TABLE>
<CAPTION>
                                                                                June 30,           December 31,
                                                                                 2000                  1999
                                                                                --------             --------
                                                                               (unaudited)
<S>                                                                            <C>                 <C>
ASSETS
Current assets:
     Cash and cash equivalents                                                  $  9,506            $  13,847
     Marketable securities                                                        11,625                5,327

     Accounts receivable, net of allowance for doubtful                           18,148               13,902
        accounts of  $1,198 and $1,232 at June 30, 2000 and
        December 30, 1999
     Prepaid expenses and other current assets                                     1,316                  946
                                                                                --------             --------
Total current assets                                                              40,595               34,022

Property and equipment, net                                                        5,398                5,169
Marketable securities                                                                989                4,589
Capitalized software, net                                                          2,252                2,503
Other assets                                                                       1,134                1,122
                                                                                --------             --------
Total assets                                                                    $ 50,368             $ 47,405
                                                                                ========             ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of capital lease obligations                               $      -             $     17
     Accounts payable                                                              4,629                3,404
     Accrued expenses                                                              4,402                3,898
     Accrued compensation                                                          2,926                2,876
     Deferred revenue                                                              8,944                7,697
                                                                                --------             --------
Total current liabilities                                                         20,901               17,892

Stockholders' equity:
  Preferred stock, $.01 par value; authorized 5,000,000
     shares; no shares issued or outstanding                                           -                    -
  Common stock, $.001 par value; authorized 200,000,000
     shares; 29,400,737 and 28,920,730 shares issued and
     outstanding                                                                      29                   29
  Additional paid-in capital                                                      70,270               66,731
  Accumulated deficit                                                            (36,835)             (35,054)
  Accumulated other comprehensive loss                                            (3,424)              (1,620)
  Advances to stockholders                                                          (573)                (573)
                                                                                ---------            ---------
Total stockholders' equity                                                        29,467               29,513
                                                                                --------             --------
Total liabilities and stockholders' equity                                      $ 50,368             $ 47,405
                                                                                ========             ========


                       The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
                                       3
<PAGE>

                               eXcelon Corporation
                      Consolidated Statements of Operations
                      (in thousands, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                         Three Months Ended                    Six Months Ended
                                                               June 30,                             June 30,
                                                        2000            1999                  2000           1999
                                                        ----            ----                  ----           ----
<S>                                                 <C>             <C>                   <C>             <C>
Revenues:
   Software                                          $ 11,878        $  8,407              $ 21,952        $ 16,611
   Services                                             7,191           6,240                14,121          11,144
                                                     --------        --------              --------        --------
      Total revenues                                   19,069          14,647                36,073          27,755

Cost of revenues:
   Cost of software                                       581             468                 1,214             886
   Cost of services                                     4,653           3,112                 8,413           6,096
                                                     --------        --------              --------        --------
      Total cost of revenues                            5,234           3,580                 9,627           6,982

Gross profit                                           13,835          11,067                26,446          20,773
                                                     --------        --------              --------        --------
Operating expenses:
   Selling and marketing                               10,163           9,046                19,268          17,026
   Research and development                             3,294           2,524                 6,314           4,995
   General and administrative                           1,805           1,451                 3,342           2,980
                                                     --------        --------              --------        --------
      Total operating expenses                         15,262          13,021                28,924          25,001

   Operating loss                                     (1,427)         (1,954)               (2,478)         (4,228)

Other income, net                                         357             326                   697             591

Loss before income taxes                              (1,070)         (1,628)               (1,781)         (3,637)
Provision for income taxes                                  -              43                     -              43
                                                     --------        --------              --------        --------
Net loss                                             $(1,070)        $(1,671)              $(1,781)        $(3,680)
                                                     ========        ========              ========        ========

Loss per share:
Basic                                                $ (0.04)        $ (0.06)              $ (0.06)        $ (0.13)
Diluted                                              $ (0.04)        $ (0.06)              $ (0.06)        $ (0.13)

Weighted average shares outstanding:
Basic                                                  29,366          28,232                29,225          28,160
Diluted                                                29,366          28,232                29,225          28,160




                       The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                       4
<PAGE>

                              eXcelon Corporation.
                      Consolidated Statements of Cash Flows
                                 (in thousands)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                             Six Months Ended June 30,
                                                                              2000               1999
                                                                            --------           --------
<S>                                                                         <C>               <C>
Cash flows from operating activities:
   Net loss                                                                   (1,781)           $(3,680)
   Adjustments to reconcile net income to net
     cash provided by (used for) operating activities:
     Depreciation and amortization                                             1,938              1,348
Amortization of deferred compensation                                            216                  -
     Bad debt expense                                                            160                462
     Other                                                                        23                 (3)
Changes in operating assets and liabilities:
     Accounts receivable                                                      (4,673)             2,721
     Prepaid expenses and other current assets                                  (429)              (402)
     Other assets                                                               (111)               (70)
     Accounts payable and accrued expenses                                     1,039               (753)
     Deferred revenue                                                          1,399                740
                                                                            --------           --------
Net cash (used for) provided by operating activities                          (2,219)               363
                                                                            --------           --------

Cash flows from investing activities:
     Capital expenditures                                                     (1,442)            (1,030)
     Purchased software                                                         (325)              (100)
     Purchases of marketable securities                                      (19,991)            (9,663)
     Proceeds from maturities and sales of marketable securities              17,292              8,136
                                                                            --------           --------
Net cash used for investing activities                                        (4,466)            (2,657)
                                                                            --------           --------

Cash flows from financing activities:
     Proceeds from exercise of stock options                                   1,566                426
     Purchase of treasury stock                                                    -               (251)
     Payments received from shareholder advances                                   -                  -
     Repayments of capital lease obligations                                     (17)                11
                                                                            ---------          --------
Net cash provided by financing activities                                      1,549                186
                                                                            --------           --------

Effect of exchange rate changes on cash                                          795               (145)
                                                                            --------           ---------

Net change in cash and cash equivalents                                       (4,341)            (2,253)


Cash and cash equivalents, beginning of period                                13,847             14,846
                                                                            --------           --------
Cash and cash equivalents, end of period                                    $  9,506           $ 12,593
                                                                            ========           ========




                       The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>


                                       5
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  Basis of Presentation

The  consolidated   financial   statements   include  the  accounts  of  eXcelon
Corporation  and its wholly owned  subsidiaries.  All  significant  intercompany
transactions  and balances have been  eliminated.  In the opinion of management,
the  accompanying   unaudited  consolidated  financial  statements  contain  all
adjustments,  consisting only of those of a normal recurring  nature,  necessary
for a fair presentation of our financial  position,  results of operations,  and
cash flows at the dates and for the periods indicated. While we believe that the
disclosures presented are adequate to make the information not misleading, these
financial  statements  should  be  read in  conjunction  with  the  consolidated
financial  statements  and related  notes  included in our Annual Report on Form
10-K for the year ended  December 31,  1999.  Certain  information  and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant to Securities and Exchange  Commission rules and  regulations.  Certain
reclassifications  have been made for consistent  presentation.  We operate in a
single industry segment: computer software and related services.

The results for the three and six months ended June 30, 2000 are not necessarily
indicative  of the  results to be  expected  for the entire  fiscal  year ending
December 31, 2000.

B.  Net Loss Per Share

Basic   earnings   per  share  is  computed  by  dividing   net  income  by  the
weighted-average  number of common shares  outstanding  for the period.  Diluted
earnings  per  share  is  computed  by  dividing  net  income  by the sum of the
weighted-average  number of common  shares  outstanding  for the period plus the
number of common  shares  issuable  upon the assumed  exercise  of all  dilutive
securities,  such as stock  options.  The following is a calculation of earnings
per share ("EPS") for the three and six months ended June 30, 2000 and 1999:

<TABLE>
<CAPTION>
                                                     Three Months Ended June 30,            Six Months Ended June 30,
(in thousands, except per share amounts)                   2000              1999             2000              1999
                                                           ----              ----             ----              ----
<S>                                                  <C>               <C>              <C>               <C>
Net loss                                              $ (1,070)         $ (1,671)        $ (1,781)         $ (3,680)
                                                      =========         =========        =========         =========

Weighted average shares outstanding:                    29,366            28,232           29,225            28,160
Stock options (dilutive)                                     -                 -                -                 -
                                                      ---------         ---------        ---------         ---------
Diluted shares                                          29,366            28,232           29,225            28,160
                                                      =========         =========        =========         =========

Basic EPS                                             $  (0.04)         $  (0.06)        $  (0.06)         $  (0.13)
Diluted EPS                                           $  (0.04)         $  (0.06)        $  (0.06)         $  (0.13)

</TABLE>

Options to purchase  6,446,985 and 1,355,254 shares of common stock  outstanding
with weighted  average  exercise prices of $4.36 and $1.71 as of the three month
periods ended June 30, 2000 and 1999, respectively,  and 7,317,476 and 3,026,893
shares of common stock  outstanding  with weighted  average  exercise  prices of
$5.14  and  $3.01  as of the  six  month  periods  ended  June  2000  and  1999,
respectively,  were excluded from the  calculation of diluted net loss per share
as the effect of their inclusion would have been anti-dilutive.

                                       6
<PAGE>

C.   Comprehensive Loss

The table  below  sets forth  comprehensive  loss as  defined  by  Statement  of
Financial Accounting Standards No. 130 "Reporting  Comprehensive Income" for the
three month and six month periods ended June 30, 2000 and 1999 (in thousands):

<TABLE>
<CAPTION>
                                                         Three Months Ended June 30,        Six Months Ended June 30,
                                                         ---------------------------        -------------------------
                                                             2000            1999              2000            1999
                                                             ----            ----              ----            ----
<S>                                                      <C>              <C>               <C>             <C>
Net Loss                                                  $ (1,070)        $(1,671)          $ (1,781)       $ (3,680)

Other comprehensive income, net of tax:
   Foreign currency translation adjustments                   (115)           (129)              (250)           (470)
   Unrealized holding gain (loss) on securities                  8             (48)                 6             (53)
                                                          ---------       ---------          ---------       ---------
Total other comprehensive loss                                (107)           (177)              (244)           (523)
                                                          ---------       ---------          ---------       ---------
Comprehensive loss                                        $ (1,177)       $ (1,848)          $ (2,025)       $ (4,203)
                                                          =========       =========          =========       =========
</TABLE>

D.  New Accounting Standards

In March 2000,  the  Financial  Accounting  Standards  Board (FASB)  issued FASB
Interpretation  No. 44,  Accounting  for Certain  Transactions  involving  Stock
Compensation,  an  interpretation  of APB  Opinion  No.  25 (FIN No.  44).  This
interpretation,  which is generally  effective  July 1, 2000,  clarifies,  among
other  issues,  the  definition  of employee  for the  purposes of applying  the
provisions  of APB Opinion No. 25, the criteria for  determining  whether a plan
qualifies as a noncompensatory  plan, and the accounting  consequence of various
modifications  to the terms of a  previously  fixed stock  option or award.  The
adoption  of FIN  No.  44 is not  expected  to  have a  material  effect  on the
Company's financial position or results of operations.

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin No. 101, Revenue  Recognition in Financial  Statements (SAB
101),  which among other  guidance,  clarifies  certain  conditions to be met in
order to  recognize  revenue.  In June  2000,  the SEC issued  Staff  Accounting
Bulletin No. 101B which delayed the  implementation  of SAB 101 until the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 is not  expected to have a material  effect on the  Company's  financial
position or results or operations.

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standard No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities." This statement was originally effective for all fiscal
year ends beginning after June 15, 1999. In June 1999, the FASB issued Statement
137,  which delayed the effective  date of Statement 133 by one year.  Statement
133 will be effective for the Company's  fiscal year beginning  January 1, 2001.
SFAS 133 requires  that all  derivative  instruments  be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current  earnings or other  comprehensive  income,  depending  on
whether a derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction.  The Company is currently  evaluating the effects
of this  change but  anticipates  that the  adoption of SFAS 133 will not have a
significant effect on the Company's  financial position or results of operations
in the near term.

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

FORWARD-LOOKING STATEMENTS

This Report contains forward-looking statements, which reflect the current views
of  management  with  respect to future  events  that will have an effect on our
future financial performance,  including without limitation statements regarding
future  revenue  and  expense  levels,  the impact of various  legal  claims and
changes in accounting  standards and adequate  liquidity to meet our capital and
operating  requirements for the next twelve months. These statements include the
words "expect,"  "believe,"  "anticipate,"  "estimate," and similar expressions.
Such  statements  are  not  guarantees  of  future   performance,   and  involve
substantial  risks,  uncertainties  and assumptions  that could cause our future
results  to  differ  materially  from  those  expressed  in any  forward-looking
statements.  We  disclaim  any  intent  or  obligation  to update  publicly  any
forward-looking statements whether in response to new information, future events
or otherwise.  Information  about the basis for those  assumptions and important
factors  that could  cause our actual  results to differ  materially  from these
forward-looking  statements  is  contained  in "Certain  Factors That May Affect
Future Results"  included in "Management's  Discussion and Analysis of Financial
Condition and Results of Operations" contained in our 1999 Annual Report on Form
10-K, which section is incorporated herein by reference.

                                       7
<PAGE>

RESULTS OF OPERATIONS

The following table shows certain consolidated financial data as a percentage of
our total revenue for the three and six months ended June 30, 2000 and 1999:



                                    Three Months Ended          Six Months Ended
                                           June 30,                 June 30,

                                      2000        1999        2000        1999
                                      ----        ----        ----        ----

Total revenues:                       100%        100%        100%        100%

Cost of revenues:
  Software                               3           3           4           3
  Services                              24          21          23          22
                                     ------      ------      ------      ------
Total cost of revenues                  27          24          27          25

Gross profit                            73          76          73          75
                                     ------      ------      ------      ------

Operating expenses:
  Selling and marketing                 53          62          53          61
  Research and development              17          17          18          18
  General and administrative            10          10           9          11
                                     ------      ------      ------      ------
Total operating expenses                80          89          80          90

Operating loss                          (7)        (13)         (7)        (15)

Other income, net                        2           2           2           2

Loss before income taxes                (5)        (11)         (5)        (13)
Provision for income taxes               -           -           -           -
                                     ------      ------      ------      ------
Net loss                                (5)        (11)         (5)        (13)
                                     ======      ======      ======      ======




                                       8
<PAGE>

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

RESULTS OF OPERATIONS:

TOTAL  REVENUES.  Our total  revenues  increased to $19.1  million for the three
months ended June 30, 2000 from $14.6 million for the  three-month  period ended
June 30, 1999.  Total  revenues for the six months ended June 30, 2000 increased
30.0% to $36.1 million from $27.8  million for the  six-month  period ended June
30,  1999.  These  increases  were  primarily  due to  increased  demand for our
recently expanded line of business-to-business ("B2B") products and services.

SOFTWARE  REVENUES.  Software revenues  increased 41.3% to $11.9 million for the
three months ended June 30, 2000 from $8.4  million for the  three-month  period
ended June 30,  1999.  For the  six-month  period  ended June 30, 2000  software
revenues  increased  32.2% to $36.1 million from $16.6 million for the six-month
period ended June 30, 1999.  This increase was primarily due to increased  sales
of B2B software, including our new B2B Integration Server, which was released in
March  2000.  We expect  software  license  revenues  from our B2B  business  to
increase in future  periods.  As we continue to place  greater  focus on our B2B
product line, our Data Server software license revenues may stabilize or decline
in future periods. The timing of closing large-sized software deals could result
in fluctuations of future software license revenues in any given quarter.

SERVICES  REVENUES.  Service  revenues  increased  15.2% to $7.2 million for the
three-month  period  ended June 30, 2000 from $6.2  million for the  three-month
period  ended June 30,  1999.  For the six months  ended June 30,  2000  service
revenues  increased  26.7% to $14.1 million from $11.1 million for the six-month
period  ended  June 30,  1999.  The  increase  is due to higher  demand  for our
consulting  services  related to customer  deployments  of our  software  and to
higher maintenance revenues,  reflecting continued growth in our installed base.
We expect to hire  additional  consulting  personnel  during 2000 to accommodate
projected   additional  growth  for  our  consulting   services  driven  by  our
expectation of growing B2B software revenues in future periods.

REVENUES  FROM  INTERNATIONAL  OPERATIONS.   Revenues  from  operations  of  our
international  subsidiaries  as a percentage of our total revenues  increased to
42.0% for the three  months  ended  June 30,  2000  compared  with 37.4% for the
three-month period ended June 30, 1999.  Revenues from international  operations
as a percentage of total revenues for the six-month  periods ended June 30, 2000
and 1999 were  45.1% and  40.3%  respectively.  The  increase  in  international
revenues as a percent of total  revenues was primarily due to growth in both the
Asia Pacific and European regions.

COST  OF  SOFTWARE.  Cost  of  software  increased  24.1%  to  $581,000  for the
three-month  period ended June 30, 2000 from $468,000 for the three-month period
ended June 30, 1999 and decreased as a percent of software revenues to 4.9% from
5.6%  for the  three-month  periods  ended  June 30,  2000  and  June 30,  1999,
respectively. For the six months ended June 30, 2000, cost of software increased
37.1%, to $1,215,000 from $886,000 for the six-month period ended June 30, 1999,
and  increased  as a  percent  of  software  revenues  to 5.5% from 5.3% for the
six-month  periods  ended June 30,  2000 and June 30,  1999,  respectively.  The
increase  is  primarily  due to  higher  amortization  expense  associated  with
additional  purchases  of  technology  from  third  parties in 1999 and 2000 for
inclusion in our recently expanded B2B product line.

COST OF SERVICES. Cost of services increased 49.5% to $4.7 million for the three
months  ended June 30, 2000 from $3.1 million for the  three-month  period ended
June 30, 1999 and  increased as a percent of service  revenues to 64.7% to 49.9%
for the three-month periods ended June 30, 2000 and June 30, 1999, respectively.
For the six months ended June 30, 2000, cost of services increased 38.0% to $8.4
million  from $6.1  million  for the six month  period  ended June 30,  1999 and
increased as a percent of service revenues to 59.6% from 54.7% for the six-month
periods  ended June 30, 2000 and June 30,  1999,  respectively.  The increase in
cost of services in absolute  dollar terms and as a percent of service  revenues
reflects  expenses  related to the growth in staffing  necessary to generate and
support increased  worldwide service revenues and to provide customer support to
our installed base. We expect to hire additional  service  personnel during 2000
to accommodate  projected additional growth driven by our expectation of growing
B2B software revenues in future periods.

                                       9
<PAGE>

SELLING AND MARKETING.  Selling and marketing  expenses increased 12.3% to $10.2
million for the three months ended June 30, 2000 from $9.0 million for the three
months ended June 30, 1999 and  decreased  as a percentage  of revenues to 53.3%
from 61.8% for the  three-month  periods  ended June 30, 2000 and June 19, 1999,
respectively.  Selling and marketing  expenses  increased 13.2% to $19.3 million
for the six months  ended June 30,  2000 from $17.0  million  for the six months
ended June 30, 1999 and decreased to 53.4% from 61.3% of total  revenues for the
six-month  periods  ended June 30,  2000 and June 30,  1999,  respectively.  The
increase in dollar amount primarily reflects the cost of hiring additional sales
and  marketing  personnel,   the  development  of  expanded  sales  distribution
channels,  and an increase in  promotional  activities  and marketing  programs,
primarily  relating to our B2B  products  and  services.  We expect  selling and
marketing  expenses  to  continue  to  increase  in  absolute  dollars in future
periods, but to decline as a percentage of revenues over the upcoming quarters.

RESEARCH AND DEVELOPMENT.  Research and development  expenses increased 30.5% to
$3.3  million for the three months ended June 30, 2000 from $2.5 million for the
three  months ended June 30, 1999 and  increased  as a percentage  of revenue to
17.3% from 17.2% for the three  months  ended June 30,  2000 and June 30,  1999,
respectively.  Research and development expenses increased 26.4% to $6.3 million
for the six months  ended  June 30,  2000 from $5.0  million  for the six months
ended June 30, 1999 and decreased to 17.5% from 18.0% of total  revenues for the
six months ended June 30, 2000 and June 30, 1999, respectively.  The increase in
dollar  amount was  primarily  due to  increased  staffing  associated  with the
development of our B2B products and services.

GENERAL AND ADMINISTRATIVE.  General and administrative expenses increased 24.4%
to $1.8  million for the three  months ended June 30, 2000 from $1.5 million for
the three months ended June 30, 1999 and decreased as a percentage of revenue to
9.5% from  10.0% for the three  months  ended June 30,  2000 and June 30,  1999,
respectively.  General  and  administrative  expenses  increased  12.1%  to $3.3
million  for the six months  ended June 30,  2000 from $3.0  million for the six
months ended June 30, 1999 and  decreased  to 9.3% from 10.7% of total  revenues
for the six months  ended June 30,  2000 and June 30,  1999,  respectively.  The
increase  is  primarily  due to the  additional  outside  professional  services
required to support the overall  operations of the business.  We expect  general
and administrative expense to continue to increase in absolute dollars in future
periods, but to continue to decline as a percentage of revenues for the upcoming
quarters.

OTHER INCOME. Other income increased 9.5% to $357,000 for the three-month period
ended June 30, 2000 from  $326,000  for the  three-month  period  ended June 30,
1999.  Other income  increased 18.3% to $699,000 for the six-month  period ended
June 30, 2000 from  $591,000 for the six-month  period ended June 30, 1999.  The
increase was largely the result of increased  cash  balances and higher rates of
return on our cash and investments.

PROVISION  FOR INCOME  TAXES.  No  provision  for income  taxes were made in the
three- and  six-month  periods  ending June 30,  2000,  due to the net losses we
incurred in both periods.


LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2000, our principal  sources of liquidity  included $21.1 million of
cash  and  cash  equivalents  and  short-term  investments  and a  $2.0  million
revolving line of credit with Silicon Valley Bank.  Availability  under the line
of credit,  expiring  September 2000, is based on a formula of eligible accounts
receivable,  subject  to  compliance  with  certain  covenants.  Borrowings  are
collateralized by our assets, excluding intellectual property, and bear interest
at the bank's prime rate. At June 30, 2000, no borrowings were outstanding,  and
we were in  compliance  with the  bank's  covenants.  A letter  of credit in the
amount of $325,000 under the line of credit was outstanding at that date.

Net cash used for operating activities was $2.2 million for the six months ended
June 30, 2000  compared to $0.4  million  provided for the six months ended June
30, 1999. The net use of cash was due to an increase in the  receivable  balance
related to revenue  growth,  partially  offset by a decrease in net loss, and an
increase in accounts  payable and deferred  revenue  during the six months ended
June 30, 2000.

Our investing activities used $4.5 million of cash for the six months ended June
30,  2000,  as compared to $2.7 million  used by  investing  activities  for the
six-month  period ended June 30, 1999.  The use from  investment  activities was
primarily  attributable  to a net  purchase  of  marketable  securities  of $2.7
million for the six months ended June 30, 2000,  as compared to the net purchase
of $1.6 million of investments for the six months ended June 30, 1999.

                                       10
<PAGE>

Our  financing  activities  provided net cash of $1.5 million for the six months
ended June 30,  2000,  as compared to $186,000 of cash  provided  for  financing
activities  in the same  period  in 1999.  The  increase  in cash  provided  was
primarily due to an additional $1.1 million in cash from stock option  exercises
during the six months ended June 30, 2000 compared to the same period in 1999.

We believe that our current cash, cash equivalents,  marketable securities, bank
facilities and funds generated from  operations,  if any, will provide  adequate
liquidity  to meet our capital and  operating  requirements  for the next twelve
months.

EURO CONVERSION

On January 1, 1999, eleven of the fifteen member countries of the European Union
established fixed conversion rates between their existing  sovereign  currencies
and the Euro,  making the Euro their  common  legal  currency on that date.  The
legacy  currencies  will remain legal tender in the  participating  countries as
denominations  of the Euro  between  January  1, 1999 and  January  1, 2002 (the
"transition period").

During the transition  period,  public and private parties may pay for goods and
services using either the Euro or the participating country's legacy currency on
a "no compulsion,  no prohibition"  basis.  However,  conversion rates no longer
will be  computed  directly  from one legacy  currency to  another.  Instead,  a
triangular  process  will  apply  whereby  an amount  denominated  in one legacy
currency will first be converted into the Euro.  The resultant  Euro-denominated
amount will then be converted into the second legacy currency.

We have evaluated the business implications of conversion to the Euro, including
technical adaptation of information  technology and other systems to accommodate
Euro-denominated   transactions,   long-term  competitive  implications  of  the
conversions and the effect on market risk with respect to financial  instruments
and do not expect a material impact on our operations.

NEW ACCOUNTING STANDARDS

In March 2000,  the  Financial  Accounting  Standards  Board (FASB)  issued FASB
Interpretation  No. 44,  Accounting  for Certain  Transactions  involving  Stock
Compensation,  an  interpretation  of APB  Opinion  No.  25 (FIN No.  44).  This
interpretation,  which is generally  effective  July 1, 2000,  clarifies,  among
other  issues,  the  definition  of employee  for the  purposes of applying  the
provisions  of APB Opinion No. 25, the criteria for  determining  whether a plan
qualifies as a noncompensatory  plan, and the accounting  consequence of various
modifications  to the terms of a  previously  fixed stock  option or award.  The
adoption  of FIN  No.  44 is not  expected  to  have a  material  effect  on the
Company's financial position or results of operations.

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting  Bulletin No. 101, Revenue  Recognition in Financial  Statements (SAB
101),  which among other  guidance,  clarifies  certain  conditions to be met in
order to  recognize  revenue.  In June  2000,  the SEC issued  Staff  Accounting
Bulletin No. 101B which delayed the  implementation  of SAB 101 until the fourth
quarter of fiscal years beginning after December 15, 1999. The implementation of
SAB 101 is not  expected to have a material  effect on the  Company's  financial
position or results or operations.

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting Standard No. 133,  "Accounting for Derivative  Instruments
and Hedging  Activities." This statement was originally effective for all fiscal
year ends beginning after June 15, 1999. In June 1999, the FASB issued Statement
137,  which delayed the effective  date of Statement 133 by one year.  Statement
133 will be effective for the Company's  fiscal year beginning  January 1, 2001.
SFAS 133 requires  that all  derivative  instruments  be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each period in current  earnings or other  comprehensive  income,  depending  on
whether a derivative is designated as part of a hedge transaction and, if it is,
the type of hedge transaction.  The Company is currently  evaluating the effects
of this  change but  anticipates  that the  adoption of SFAS 133 will not have a
significant effect on the Company's  financial position or results of operations
in the near term.

                                       11
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant  changes in our market risk exposure as described
in  Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  included in our 1999 Annual Report on Form 10-K which description is
incorporated herein by reference.

PART II: OTHER INFORMATION

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

On May 24, 2000,  the Annual  Meeting of  Stockholders  was held in  Burlington,
Massachusetts  to act upon proposals to elect a Class I Director of the Company;
to amend the  Company's  1996 Employee  Stock  Purchase  Plan;  and to amend the
Company's 1996 Incentive and Nonqualified  Stock Option Plan. These matters were
voted upon and  approved  by the  stockholders  of the Company at the meeting as
follows:

1. A proposal to consider and vote upon the election of Gerald B. Bay as a Class
   I Director of the Company.


TOTAL VOTE FOR             TOTAL VOTE WITHHELD

 24,049,331                     97,085


2. A proposal to approve an  amendment  to the  Company's  1996  Employee  Stock
Purchase  Plan to increase  the number of shares of Common Stock  available  for
grant thereunder by 200,000.

FOR               AGAINST           ABSTAIN

23,549,122        558,499           38,795


3. A proposal  to approve an  amendment  to the  Company's  1996  Incentive  and
Nonqualified  Stock Option Plan to increase the number of shares of Common Stock
available for grant thereunder by 1,000,000.

FOR               AGAINST           ABSTAIN

19,339,395        4,757,758         49,263




                                       12
<PAGE>


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)    Exhibits

EXHIBIT NUMBER                              DESCRIPTION

*3.3      Amended and Restated Certificate of Incorporation
*3.5      Amended and Restated By-laws of the Company
27.1      Financial Data Schedule (filed herewith)

* This exhibit is  incorporated by reference to the similarly  numbered  exhibit
filed as part of the Company's  Registration  Statement on Form S-1,  Securities
and Exchange Commission File No. 333-05241.

(b)   Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended June 30, 2000.








                                       13
<PAGE>


SIGNATURES



Pursuant to the  requirements  of the Securities  Exchange Act of 1934,  eXcelon
Corporation  has duly caused this Quarterly  Report on Form 10-Q to be signed on
its behalf by the undersigned, thereunto duly authorized.



                                    EXCELON CORPORATION
                                    (Registrant)



August 14, 2000                     By: /s/ Robert N. Goldman
                                      -------------------------------------
                                      Robert N. Goldman
                                      President and Chief Executive Officer



August 14, 2000                    By: /s/ Lacey P. Brandt
                                     -------------------------------------
                                     Lacey P. Brandt
                                     Chief Financial Officer




                                       14