<PAGE>


                                  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, 2001


                         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
August 2, 2001 was 29,659,057.


<PAGE>


EXCELON CORPORATION

INDEX TO FORM 10-Q


<TABLE>
<CAPTION>

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

         Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000          3

         Consolidated Statements of Operations for the three and six months
         ended June 30, 2001 and June 30, 2000                                          4

         Consolidated Statements of Cash Flows for the six months
         ended June 30, 2001 and June 30, 2000                                          5

         Notes to Consolidated Financial Statements                                     6

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                                      9

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                    13



PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                                            13

Item 5.   Stockholder Proposals                                                        13

Item 6. Exhibits and Reports on Form 8-K                                               14

Signatures                                                                             15
</TABLE>


                                       2
<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

EXCELON CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                               JUNE 30,       DECEMBER 31,
                                                                                 2001             2000
                                                                             -----------      ------------
ASSETS                                                                       (UNAUDITED)
<S>                                                                           <C>               <C>
Current assets:
     Cash and cash equivalents                                                $  6,716          $  7,048
     Short-term investments                                                      3,291             9,012
     Accounts receivable, net                                                    6,458            13,767
     Prepaid expenses and other current assets                                   3,343             1,826
                                                                              --------          --------
Total current assets                                                            19,808            31,653

Property and equipment, net                                                      5,031             6,233
Marketable securities                                                              667               610
Purchased software, net                                                            761             1,118
Other assets                                                                     1,011             1,132
                                                                              --------          --------
Total assets                                                                  $ 27,278          $ 40,746
                                                                              ========          ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                         $  6,882          $  4,418
     Accrued expenses                                                            2,538             3,006
     Accrued compensation                                                        1,455             3,511
     Deferred revenue                                                            7,905             8,511
                                                                              --------          --------
Total current liabilities                                                       18,780            19,446

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;
     29,659,000 and 29,551,000 shares issued and outstanding,
     respectively                                                                   30                30
  Additional paid-in capital                                                    71,072            70,929
  Unearned compensation                                                             --            (1,127)
  Accumulated deficit                                                          (59,988)          (46,065)
  Accumulated other comprehensive loss                                          (2,043)           (1,894)
  Advances to stockholders                                                        (573)             (573)
                                                                              --------          --------
Total stockholders' equity                                                       8,498            21,300
                                                                              --------          --------
Total liabilities and stockholders' equity                                    $ 27,278          $ 40,746
                                                                              ========          ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       3
<PAGE>


EXCELON CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                               THREE MONTHS ENDED                     SIX MONTHS ENDED
                                                    JUNE 30,                              JUNE 30,
                                              2001            2000                  2001           2000
                                              ----            ----                  ----           ----
<S>                                          <C>             <C>                  <C>             <C>
Revenues:
   Software                                  $ 4,020         $11,878              $ 12,813        $21,952
   Services                                    5,299           7,191                11,618         14,121
                                             -------         -------              --------        -------
      Total revenues                           9,319          19,069                24,431         36,073

Cost of revenues:
   Cost of software                              265             581                   631          1,214
   Cost of services                            3,545           4,653                 7,109          8,413
                                             -------         -------              --------        -------
      Total cost of revenues                   3,810           5,234                 7,740          9,627

Gross profit                                   5,509          13,835                16,691         26,446
                                             -------         -------              --------        -------
Operating expenses:
   Selling and marketing                       9,531          10,163                19,496         19,268
   Research and development                    3,456           3,294                 7,067          6,314
   General and administrative                  1,727           1,805                 3,791          3,342
   Restructuring costs                            --              --                   745             --
                                             -------         -------              --------        -------
      Total operating expenses                14,714          15,262                31,099         28,924

Operating loss                                (9,205)         (1,427)              (14,408)       (2,478)

Other income, net                                284             357                   485            697
                                             -------         -------              --------        -------

Net loss                                     $(8,921)        $(1,070)             $(13,923)       $(1,781)
                                             =======         =======              ========        =======

Loss per share:
Basic                                        $ (0.30)        $ (0.04)             $  (0.47)       $ (0.06)
Diluted                                      $ (0.30)        $ (0.04)             $  (0.47)       $ (0.06)

Weighted average shares outstanding:
Basic                                         29,631          29,366                29,599         29,225
Diluted                                       29,631          29,366                29,599         29,225
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       4
<PAGE>


EXCELON CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                   SIX MONTHS ENDED
                                                                                       JUNE 30,
                                                                               2001               2000
                                                                               ----               ----
<S>                                                                         <C>                <C>
Cash flows from operating activities:
   Net loss                                                                 $(13,923)          $ (1,781)
   Adjustments to reconcile net loss to net
   cash (used for) operating activities:
   Depreciation and amortization                                               1,811              1,938
   Amortization of deferred compensation                                       1,127                216
   Bad debt expense                                                              511                160
   Other                                                                           1                 23
Changes in operating assets and liabilities:
     Accounts receivable                                                       6,441             (4,673)
     Prepaid expenses and other current assets                                (1,571)              (429)
     Other assets                                                                 18               (111)
     Accounts payable and accrued expenses                                       499              1,039
     Deferred revenue and customer deposits                                     (583)             1,399
                                                                            --------           --------
Net cash used for operating activities                                        (5,669)            (2,219)
                                                                            --------           --------
Cash flows from investing activities:
     Capital expenditures                                                       (362)            (1,442)
     Purchased software                                                           --               (325)
     Purchases of marketable securities                                       (1,399)           (19,991)
     Proceeds from maturities and sales of marketable securities               7,081             17,292
                                                                            --------           --------
Net cash provided by (used for) investing activities                           5,320             (4,466)
                                                                            --------           --------
Cash flows from financing activities:
     Proceeds from exercise of stock options                                     143              1,566
     Repayments of capital lease obligations                                      --                (17)
                                                                            --------           --------
Net cash provided by financing activities                                        143              1,549
                                                                            --------           --------

Effect of exchange rate changes on cash                                         (126)               795
                                                                            --------           --------

Net change in cash and cash equivalents                                         (332)            (4,341)

Cash and cash equivalents, beginning of period                                 7,048             13,847
                                                                            --------           --------
Cash and cash equivalents, end of period                                    $  6,716           $  9,506
                                                                            ========           ========
</TABLE>


The accompanying notes are an integral part of the consolidated financial
statements.


                                       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 (as amended) for the year ended December 31, 2000. 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.


B.  Net Loss Per Share

Basic earnings per share is computed by dividing net income (loss) 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, 2001 and 2000, respectively
(in thousands, except per share amounts):

<TABLE>
<CAPTION>

                                            THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                              2001             2000             2001              2000
                                              ----             ----             ----              ----
<S>                                          <C>              <C>             <C>                <C>
Net loss                                     $(8,921)         $(1,070)        $(13,923)          $(1,781)
                                             =======          =======         ========           =======

Weighted average shares outstanding:          29,631           29,366           29,599            29,225
Stock options (dilutive)                          --               --               --                --
                                             -------          -------         --------           -------
Diluted shares                                29,631           29,366           29,599            29,225
                                             =======          =======         ========           =======

Basic EPS                                    $ (0.30)         $ (0.04)        $  (0.47)          $ (0.06)
Diluted EPS                                  $ (0.30)         $ (0.04)        $  (0.47)          $ (0.06)
</TABLE>

Options to purchase 10,668,795 and 3,943,568 shares of common stock were
outstanding for the three months ended June 30, 2001 and 2000, respectively, but
were excluded from the calculation of diluted net loss per share as the effect
of their inclusion would have been anti-dilutive due to the net loss incurred in
both periods presented. For the three months ended June 30, 2001 and 2000,
options to purchase 217,477 and 2,668,235 shares, respectively, of common stock
had an exercise price that was below the average market value per share of our
common stock during such respective periods.

Options to purchase 10,338,377 and 3,938,203 shares of common stock were
outstanding for the six months ended June 30, 2001 and 2000, respectively, but
were excluded from the calculation of diluted net loss per share as the effect
of their inclusion would have been anti-dilutive due to the net loss incurred in
both periods presented. For the six months ended June 30, 2001 and 2000, options
to purchase 254,803 and 3,819,544 shares, respectively, of common stock had an
exercise price that was below the average market value per share of our common
stock during such respective periods.


                                       6
<PAGE>


C.   Comprehensive Loss

 The table below sets forth comprehensive loss for the three months and six
months ended June 30, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>

                                                               THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                     JUNE 30,                      JUNE 30,
                                                               2001          2000             2001         2000
                                                               ----          ----             ----         ----
<S>                                                           <C>          <C>            <C>            <C>
Net loss                                                      $(8,921)     $(1,070)       $(13,923)      $(1,781)
Accumulated other comprehensive income (loss), net
of tax:
  Foreign currency translation adjustments                        102         (115)           (180)         (250)
  Net unrealized gain on marketable securities                      2            8              31             6
                                                              -------      -------        --------       -------
Total other comprehensive income (loss)                           104         (107)           (149)         (244)
                                                              -------      -------        --------       -------
Comprehensive loss                                            $(8,817)     $(1,177)       $(14,072)      $(2,025)
                                                              =======      =======        ========       =======
</TABLE>


D. Segment Information:

We operate within a single industry segment - computer software and related
services. We have two major product categories within that one segment: (1) our
B2B product line of XML-based software and (2) our Object Design product line of
database management software.

On January 8, 2001, the chief operating decision-making group elected to divide
our business operations into two separate operating units: the B2B division and
the Object Design division. Effective January 1, 2001, results of operations are
being presented as two separate business units. Common corporate expenses are
allocated between the two business units mainly based on headcounts of the two
business units. The prior period has been restated to reflect the results of
the two operating units.

<TABLE>
<CAPTION>

                                               THREE MONTHS ENDED         SIX MONTHS ENDED
                                                    JUNE 30,                  JUNE 30,
                                                2001         2000        2001         2000
                                                ----         ----        ----         ----
<S>                                           <C>          <C>         <C>           <C>
    REVENUES
      B2B product line                        $ 2,856      $ 5,399     $  7,161      $ 9,025
      Object Design product line                6,463       13,670       17,270       27,048
                                              -------       ------       ------       ------
        Total revenues                        $ 9,319      $19,069     $ 24,431      $36,073
                                              =======   ==========     ========      =======


    OPERATING LOSS
      B2B product line                         (6,901)      (3,518)     (13,777)      (5,641)
      Object Design product line               (2,304)       2,091          114        3,163
      Restructuring                                --           --         (745)          --
                                              -------       ------       ------       ------
        Total operating loss                  $(9,205)     $(1,427)    $(14,408)     $(2,478)
                                              =======      =======     ========      =======
</TABLE>


E. Restructuring Charge:

In January 2001, we reorganized our operations by reducing our workforce by 45
employees, for which we incurred a restructuring charge of $745,000. All of the
charge related to employee severance payments to the employees terminated as a
result of the restructuring. At June 30, 2001, $66,000 of the severance had yet
to be paid. This amount is expected to be fully paid by December 31, 2001. As a
result of this restructuring, we expect savings of approximately $1.3 million
per quarter.


                                       7
<PAGE>


F. New Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 141, "Business Combinations" and SFAS No.
142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that all
business combinations be accounted for under the purchase method only and that
certain acquired intangible assets in a business combination be recognized as
assets apart from goodwill. SFAS No. 142 requires that ratable amortization of
goodwill be replaced with periodic tests of the goodwill's impairment and that
intangible assets other than goodwill be amortized over their useful lives. SFAS
No. 141 is effective for all business combinations initiated after June 30, 2001
and for all business combinations accounted for by the purchase method for which
the date of acquisition is after June 30, 2001. The provisions of SFAS No. 142
will be effective for fiscal years beginning after December 15, 2001, and will
thus be adopted us, as required, in fiscal 2002. We have not yet assessed the
impact from the adoption of SFAS No. 141 and SFAS No. 142 on our financial
statements.


G. Merger Arrangement:

On May 22, 2001, eXcelon entered into an agreement to acquire all of the
outstanding capital stock of C-bridge Internet Solutions, Inc., by merging a
wholly owned subsidiary of eXcelon into C-bridge. The merger is intended to
qualify as a tax-free, stock-for-stock exchange and will be accounted for using
the purchase method of accounting in accordance with SFAS No. 142. Based on the
number of shares of C-bridge outstanding on August 2, 2001 and on an exchange
ratio of 1.2517 shares of eXcelon common stock for each share of C-bridge common
stock, eXcelon expects to issue approximately 27,115,856 shares of its common
stock in exchange for all of the outstanding capital stock of C-bridge. In
connection with the merger, eXcelon will assume all outstanding options to
purchase C-bridge common stock and, based on the number of C-bridge stock
options outstanding on August 2, 2001 and the foregoing exchange ratio of
1.2517, eXcelon expects that the assumed C-bridge options will represent options
to purchase approximately 12,884,079 shares of eXcelon common stock.

eXcelon expects to incur costs related to the merger principally in the quarter
in which the acquisition is consummated. These costs, which are currently
estimated to be approximately $3.2 million, will primarily consist of fees to
investment bankers, legal counsel and independent accountants, and printing and
other fees and expenses relating to preparing the necessary proxy statement
prospectus. However, additional, unanticipated expenses may be incurred in
connection with the merger.

Through June 30, 2001, we have incurred approximately $1.4 million in costs
directly relating to the merger. These costs are being capitalized and will be
part of the capitalized purchase price on the consummation of the merger. As of
June 30, 2001, none of these costs has been paid.

On May 21 2001, we signed an OEM agreement with C-bridge granting C-bridge the
right to resell eXcelon products to C-bridge's customers. Because of the
expected merger, revenue is recognized on a sell-through basis. We are deferring
any revenue related to this agreement until C-bridge resells products to an
end-user customer. As of June 30, 2001, approximately $1.1 million was
classified as deferred revenue relating to such transaction. C-bridge made full
payment to eXcelon according to the terms of the agreement by June 30, 2001.


H. Subsequent Events:

In July 2001, we announced a restructuring plan in which we reduced our
workforce by 51 employees. As a result, we expect to incur a restructuring
charge of approximately $364,000 in the third quarter. All of the expected
charges relate to employee severance payments to those employees terminated as a
result of the restructuring. As a result of this restructuring, we expect
savings of approximately $1.4 million per quarter of total expenses.

These charges are in addition to any restructuring charges resulting from the
previously announced expected merger (as described in footnote G, above) with
C-bridge.


                                       8
<PAGE>


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

FORWARD-LOOKING STATEMENTS

From time to time, information provided by us, statements made by our
employees or information included in our filings with the Securities and
Exchange Commission may contain statements that are not historical facts but
which are "forward-looking statements" that involve risks and uncertainties.
The words "expect", "anticipate", "intend", "plan", "believe," "seek",
"estimate" and similar expressions are intended to identify such
forward-looking statements. In particular, statements in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
below relating to our products, competition, future development, revenue and
expense levels and profitability, as well as the sufficiency of capital and
cash flows to meet working capital and capital expenditure requirements, may
be forward-looking statements. This Report also contains other
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
anticipated savings from our restructuring, in January, 2001 (see note E,
above) and July, 2001 (see note H, above), costs and expenses related to the
prospective merger with C-bridge, future revenue and expense levels,
expectations of selling and marketing expenses in response to increases in
our revenue, the impact of legal claims, and the adequacy of liquidity to
meet our capital and operating requirements for the next twelve months. Such
statements are not guarantees of future performance, and are subject to
substantial risks and uncertainties and involve 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 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 Annual Report on Form 10-K (as amended) for the year ended December 31,
2000 filed on April 2, 2001 with the Securities and Exchange Commission,
which you can access at http://www.sec.gov., and which section is
incorporated herein by reference.

RESULTS OF OPERATIONS

The following table shows our consolidated financial data as a percentage of our
total revenues for the three and six months ended June 30, 2001 and 2000:

<TABLE>
<CAPTION>

                                           THREE MONTHS ENDED       SIX MONTHS ENDED
                                                JUNE 30,                JUNE 30,
                                            2001        2000        2001        2000
                                            ----        ----        ----        ----
<S>                                         <C>         <C>         <C>         <C>
Revenues:
   Software                                   43 %        62 %        52 %         61 %
   Services                                   57          38          48           39
                                             ---         ---         ---          ---
Total revenues                               100         100         100          100

Cost of revenues:
  Software                                     3           3           3            4
  Services                                    38          24          29           23
                                             ---         ---         ---          ---
Total cost of revenues                        41          27          32           27

Gross profit                                  59          73          68           73
                                             ---         ---         ---          ---

Operating expenses:
  Selling and marketing                      102          53          80           53
  Research and development                    37          17          29           18
  General and administrative                  19          10          15            9
  Restructuring                               --          --           3           --
                                             ---         ---         ---          ---
Total operating expenses                     158          80         127           80

Operating loss                               (99)         (7)        (59)          (7)

Other income, net                              3           2           2            2

Loss before income taxes                     (96)         (5)        (57)          (5)
Provision for income taxes                    --          --          --           --
                                             ---         ---         ---          ---
Net loss                                     (96)%        (5)%       (57)%         (5)%
                                             ===          ===        ===          ===
</TABLE>


                                       9
<PAGE>


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

RESULTS OF OPERATIONS:

TOTAL REVENUES. Our total revenues decreased 51.1% to $9.3 million for the three
months ended June 30, 2001 from $19.1 million for the same period for 2000. For
the six months ended June 30, 2001, total revenues decreased 32.3% to $24.4
million from $36.1 million for the six months ended June 30, 2000. Revenues from
our B2B product line decreased by 47.1% to $2.9 million for the three months
ended June 30, 2001 from $5.4 million for the same period for 2000. For the six
months ended June 30, 2001, revenues from our B2B product line decreased by
20.6% to $7.2 million compared to $9.0 million for the same period in 2000.
These decreases from the prior periods are the result of lower software license
sales. Revenues from our Object Design product line decreased 52.7%, to $6.5
million for the three months ended June 30, 2001 from $13.7 million for the same
period for 2000. For the six months ended June 30, 2001, revenues from our
Object Design product line decreased by 36.2% to $17.3 million compared to $27.0
million for the same period in 2000. These decreases from the prior periods are
the result primarily of decreased software license sales and reduced consulting
engagements. We believe this decrease is due to the ongoing weakness in the
global economy.

SOFTWARE REVENUES. Software revenues decreased 66.2% to $4.0 million for the
three months ended June 30, 2001 from $11.9 million for the same period in 2000.
For the six months ended June 30, 2001, software revenues decreased 41.6% to
$12.8 million from $22.0 million for the six months ended June 30, 2000.
Software revenues from our B2B product line decreased by 72.5%, to $1.0 million
for the three months ended June 30, 2001 from $3.5 million for the same period
for 2000. For the six months ended June 30, 2001, B2B software revenues
decreased by 46.5% to $3.3 million compared to $6.1 million for the same period
in 2000. Software revenues from our Object Design product line decreased by
63.5% to $3.1 million for the three months ended June 30, 2001 from $8.4 million
for the same period for 2000. For the six months ended June 30, 2001, Object
Design software revenues decreased by 39.9% to $9.6 million compared to $15.9
million for the same period in 2000. The decreases in software revenues for both
product lines can primarily be attributed to generally smaller purchases per
sales engagement as a result of uncertain economic conditions.

SERVICES REVENUES. Services revenues decreased 26.3% to $5.3 million for the
three months ended June 30, 2001 from $7.2 million for the same period in
2000. For the six months ended June 30, 2001, services revenues decreased
17.7% to $11.6 million from $14.1 million for the six months ended June 30,
2000. Services revenues from our B2B product line remained flat at $1.9
million for the three months ended June 30, 2001 compared to $1.9 million for
the same period for 2000. For the six months ended June 30, 2001, B2B
services revenues increased by 29.7% to $3.9 million compared to $3.0 million
for the same period in 2000. This increase is due to a slightly higher demand
for our consulting services during the first quarter related to new B2B
customer deployments and to higher maintenance revenues, reflecting growth in
our installed base. Services revenues from our Object Design product line
decreased by 35.7% to $3.4 million for the three months ended June 30, 2001
from $5.3 million for the same period for 2000. For the six months ended June
30, 2001, Object Design services revenues decreased by 31.2% to $7.7 million
compared to $11.2 million for the same period in 2000. This decrease results
mainly from a decline in our consulting services, due primarily to a slowdown
in data management customer deployments in the United States. The decrease
also resulted in part from a decline in Object Design maintenance revenues,
which was a result of fewer new customers and a slightly smaller installed
base.

                                       10
<PAGE>


REVENUES FROM INTERNATIONAL OPERATIONS. Revenues from operations of our
international subsidiaries as a percentage of our total revenues increased to
51.7% for the three months ended June 30, 2001 compared with 42.0% for the three
months ended June 30, 2000. Revenues from international operations as a
percentage of total revenues for the six months ended June 30, 2001 and 2000
were 57.5% and 45.1%, respectively. This overall shift in revenues to our
international subsidiaries is largely attributed to a greater weakness in the
United States economy when compared to the international economy.

COST OF SOFTWARE. Cost of software decreased 54.3% to $265,000 for the three
months ended June 30, 2001 from $581,000 for the three months ended June 30,
2000, but increased as a percentage of software revenues to 6.6% from 4.9%
for the three months ended June 30, 2001 and June 30, 2000, respectively. The
absolute dollar decrease is a direct result of lower software sales and lower
amortization costs on software purchased from third-party vendors, primarily
in the B2B product line. However, the increase in costs as a percentage for
the three month- period can be attributed to minimum royalties that must be
paid to third-party vendors based on the number of product units sold. For
the six months ended June 30, 2001, cost of software decreased 48.0% to
$631,000 from $1,214,000 for the six months ended June 30, 2000, and
decreased as a percentage of software revenues to 4.9% from 5.5% for the six
months ended June 30, 2001 and June 30, 2000, respectively. The decrease in
both absolute dollars and as a percentage of revenues is a direct result of
lower software sales and lower amortization costs on software purchased from
third-party vendors, primarily in the B2B product line. In the year 2000, we
wrote off approximately $800,000 of purchased technologies as a result of our
decision to discontinue the use of this technology.

COST OF SERVICES. Cost of services decreased 23.8% to $3.5 million for the
three months ended June 30, 2001 from $4.7 million for the three months ended
June 30, 2000 and increased as a percentage of services revenues to 66.9%
from 64.7% for the three months ended June 30, 2001 and June 30, 2000,
respectively. For the six months ended June 30, 2001, cost of services
decreased 15.5% to $7.1 million from $8.4 million for the six months ended
June 30, 2000 and increased as a percentage of services revenues to 61.2%
from 59.6% for the six months ended June 30, 2001 and June 30, 2000,
respectively. The decrease in cost of services is attributable to the
reduction in the number of our consulting personnel and related expenses as a
result of our restructuring in the three months ended March 31, 2001. The
increase in cost of services as a percentage of services revenues reflects
lower utilization of our remaining consulting personnel, partially offset by
an overall increase in maintenance revenue.

SELLING AND MARKETING. Selling and marketing expenses decreased 6.2% to $9.5
million for the three months ended June 30, 2001 from $10.2 million for the
three months ended June 30, 2000 and increased as a percentage of revenues to
102.3% from 53.3% for the three months ended June 30, 2001 and June 30, 2000,
respectively. The decrease in absolute dollars is mainly attributable to a $1.0
million reduction in commissions as a result of lower revenues, offset by
approximately $300,000 in severance pay not associated with the restructuring.
The increase in costs as a percentage of revenues was due to the sharp decline
in revenues. Selling and marketing expenses increased 1.2% to $19.5 million for
the six months ended June 30, 2001 from $19.3 million for the six months ended
June 30, 2000 and increased to 79.8% from 53.4% of total revenues for the six
months ended June 30, 2001 and June 30, 2000, respectively. The increase in
absolute dollars was primarily due to a non-cash charge for amortization of
unearned compensation relating to the acceleration of vesting of certain
employee stock options in the amount of approximately $705,000 taken in the
quarter ending March 31, 2001, as well as continued investment in the sales
distribution channels and marketing programs relating both to our B2B product
line and, to a lesser extent, to our Object Design product line, offset by a
decrease in commissions. The increase in costs as a percentage of revenues was
due to the sharp decline in revenues.

RESEARCH AND DEVELOPMENT. Research and development expenses increased 4.9% to
$3.5 million for the three months ended June 30, 2001 from $3.3 million for the
three months ended June 30, 2000 and increased as a percentage of revenues to
37.1% from 17.3% for the three months ended June 30, 2001 and June 30, 2000,
respectively. Research and development expenses increased 11.9% to $7.1 million
for the six months ended June 30, 2001 from $6.3 million for the six months
ended June 30, 2000 and increased to 28.9% from 17.5% of total revenues for the
six months ended June 30, 2001 and June 30, 2000, respectively. The increase in
absolute dollars for the six months ended June 30, 2001 was due to a non-cash
charge for amortization of unearned compensation relating to the acceleration of
vesting of certain employee stock options in the amount of approximately
$422,000, as well as an increase in headcount for the six months ended June 30,
2001 as compared to the six months ended June 30, 2000. The increase in costs as
a percentage of revenues was due mainly to the sharp decline in revenue.


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<PAGE>


GENERAL AND ADMINISTRATIVE. General and administrative expenses decreased 4.3%
to $1.7 million for the three months ended June 30, 2001 from $1.8 million for
the three months ended June 30, 2000 and increased as a percentage of revenues
to 18.5% from 9.5% for the three months ended June 30, 2001 and June 30, 2000,
respectively. General and administrative expenses increased 13.4% to $3.8
million for the six months ended June 30, 2001 from $3.3 million for the six
months ended June 30, 2000 and increased to 15.5% from 9.3% of total revenues
for the six months ended June 30, 2001 and June 30, 2000, respectively. This
increase in the six-month period in absolute dollar terms is primarily due to
increased compensation costs associated with a reorganization of our various
general and administrative groups. The increase in costs as a percentage of
revenues was due mainly to the decline in revenue. We expect general and
administrative expenses to decrease in absolute dollars in the third quarter of
2001, and then stay at a consistent level for the remainder of 2001.

RESTRUCTURING CHARGE. In January 2001, we reorganized our operations by reducing
our workforce by 45 employees, or approximately 11%. As a result, we recorded a
restructuring charge in the amount of $745,000 in the three months ended March
31, 2001. All of the charge relates to severance payments to employees whose
employment was terminated in the restructuring. At June 30, 2001, $66,000 of the
severance has yet to be paid, but is expected to be fully paid by December 31,
2001. As a result of the restructuring, we expect savings of approximately $1.3
million per quarter of total expenses.

In July 2001, we announced a restructuring plan in which we reduced our
workforce by 51 employees. As a result, we expect to incur a restructuring
charge of approximately $364,000 in the third quarter. All of the expected
charges relate to employee severance payments to the employees terminated as a
result of the restructuring. As a result of this restructuring, we expect a
savings of approximately $1.4 million per quarter of total expenses.

OTHER INCOME. Other income decreased 20.4% to $284,000 for the three months
ended June 30, 2001 from $357,000 for the three months ended June 30, 2000.
Other income decreased 30.4% to $485,000 for the six months ended June 30, 2001
from $697,000 for the six months ended June 30, 2000. The decrease was largely
the result of lower cash and investments balances.

PROVISION FOR INCOME TAXES. No income taxes were provided during the three and
six months ended June 30, 2001 and 2000 due to the net losses we incurred in
those periods.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2001, our principal sources of liquidity included $10.0 million of
cash, cash equivalents and short-term marketable securities and $667,000 of
long-term marketable securities. $175,000 of cash and cash equivalents is
restricted and is being held in a certificate of deposit with Silicon Valley
Bank as collateral for a security deposit on leased office space in our
Burlington, Massachusetts location.

Net cash used by our operating activities was $5.7 million for the six months
ended June 30, 2001, as compared to $2.2 million used by operating activities
for the same period in 2000. The increase in cash used was primarily due to a
net loss that was greater by $12.1 million, which was mainly offset by an
increase in receivable collections.

Our investing activities provided $5.3 million of cash for the six months ended
June 30, 2001, as compared with cash used by investing activities of $4.5
million for the same period in 2000. The increase of $9.8 million in cash
provided was primarily attributable to the conversion of $8.4 million of
marketable securities into cash as well as a reduction of capital expenditures
of approximately $1.4 million.

Our financing activities provided net cash of $143,000 for the six months ended
June 30, 2001, as compared to $1.5 million of cash provided by financing
activities in the same period in 2000. The decrease in cash provided was
primarily due to $1.4 million less in cash from stock option exercises during
the six months ended June 30, 2001 compared to the same period in 2000.


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<PAGE>


On May 22, 2001, eXcelon entered into an agreement to acquire all of the
outstanding capital stock of C-bridge Internet Solutions, Inc., by merging a
wholly owned subsidiary of eXcelon into C-bridge. The merger is intended to
qualify as a tax-free, stock for stock exchange and will be accounted for using
the purchase method of accounting in accordance with SFAS No. 142. Based on the
number of shares of C-bridge outstanding on August 2, 2001 and on an exchange
ratio of 1.2517 shares of eXcelon common stock for each share of C-bridge common
stock, eXcelon expects to issue approximately 27,115,856 shares of its common
stock in exchange for all of the outstanding capital stock of C-bridge. In
connection with the merger, eXcelon will assume all outstanding options to
purchase C-bridge common stock and, based on the number of C-bridge stock
options outstanding on August 2, 2001 and the foregoing exchange ratio of
1.2517, eXcelon expects that the assumed C-bridge options will represent options
to purchase approximately 12,884,079 shares of eXcelon common stock.

eXcelon expects to incur costs related to the merger principally in the
quarter in which the merger is consummated. These costs, which are currently
estimated to be approximately $3.2 million, will primarily consist of fees to
investment bankers, legal counsel and independent accountants, and printing
and other fees and expenses relating to preparing the necessary proxy
statement / prospectus. However, additional, unanticipated expenses may be
incurred in connection with the merger.

Through June 30, 2001, we have incurred approximately $1.4 million in costs
directly related to the merger. These costs are being capitalized and will be
part of the capitalized purchase price on the consummation of the merger. As of
June 30, 2001, none of these costs has been paid.

We believe that our current cash, cash equivalents, marketable securities,
and funds generated from operations, if any, will provide adequate liquidity
to meet our capital and operating requirements for the next twelve months.
While we believe that our cash and securities balance at June 30, 2001 are
sufficient to meet our needs, the failure to generate sufficient revenues or,
in the absence of sufficient revenues, the failure to obtain additional
capital, whether through the proposed merger with C-bridge or otherwise, or
reduce certain discretionary spending could have a material adverse effect on
our ability to continue as a going concern and achieve our business
objectives.

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 Annual Report on Form 10-K (as amended) for the year
ended December 31, 2000, which description is incorporated herein by reference.


PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

We are subject to various legal proceedings and claims that arise in the
ordinary course of business. We currently believe that resolving these matters
will not have a material adverse impact on our consolidated financial
statements.

ITEM 5.  STOCKHOLDER PROPOSALS

We expect to hold our 2002 annual meeting of stockholders on or about May 22,
2002.

If a stockholder would like to make a proposal at our 2002 annual meeting of
stockholders or special meeting in lieu thereof, the stockholder must comply
with the notice requirements in Section 3 of our by-laws. To make such a
proposal, the stockholder must give us written notice describing the proposal
not less than sixty days before the


                                       13
<PAGE>


scheduled date of the annual meeting. For the 2002 annual meeting of
stockholders, the stockholder must deliver the required written notice of the
proposal to the Secretary of eXcelon no later than March 22, 2002.

In addition, if a stockholder would like to include a proposal in our proxy
materials relating to our 2002 annual meeting or special meeting in lieu
thereof, we must receive the written proposal at our executive offices no later
than December 18, 2001, which we believe is a reasonable time before we expect
to begin printing and mailing our proxy materials. If we move the date of the
annual meeting or special meeting in lieu thereof by more than 30 days, we must
receive the written proposal a reasonable time before we begin to print and mail
our proxy materials for the meeting.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

EXHIBIT NO.                                 DESCRIPTION

2.1(1)     Agreement and Plan of Reorganization dated as of May 22, 2001, among
           the Company, Comet Acquisition Corp. and C-bridge Internet Solutions,
           Inc.
3.3(2)     Amended and Restated Certificate of Incorporation of the Company
3.5(2)     Amended and Restated By-laws of the Company
3.6(3)     Certificate of Amendment to the Amended and Restated Certificate of
           Incorporation of the Company (regarding change of corporate name)
4.1(2)     Specimen certificate for Common Stock of the Company
10.54(4)*  Separation Agreement and General Release dated April 17, 2001 between
           the Company and Ross Hinchcliffe
10.55(1)   Investor Rights Agreement, dated June 12, 2001, between the Company
           and Insight Capital Partners III, L.P., Insight Capital Partners
           (Cayman) III, L.P. and Insight Capital Partners Co-Investors, L.P.
10.56(1)*  Executive employment agreement dated May 22, 2001 between the Company
           and Robert N. Goldman
10.57(1)*  Executive employment agreement dated May 22, 2001 between the Company
           and Satish Maripuri
10.58(1)*  Executive employment agreement dated May 22, 2001 between the Company
           and Lacey P. Brandt
10.59(1)*  Chief Executive Officer employment agreement dated May 22, 2001
           between the Company and Joseph M. Bellini

------------------
*     Management contracts and compensatory arrangements.

Where a numbered note follows an exhibit number, we incorporate that exhibit by
reference to the similarly named document filed as an exhibit to the following
documents:

         (1)      Our registration statement on Form S-4, Securities and
                  Exchange Commission File No. 333-63048.
         (2)      Our registration statement on Form S-1, Securities and
                  Exchange Commission File No. 333-05241.
         (3)      Our quarterly report on Form 10-Q for the period ended June
                  30, 2000.
         (4)      Our quarterly report on Form 10-Q for the period ended March
                  31, 2001.

(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the quarter ended June 30, 2001.


                                       14
<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, 2001                       By: /s/ Robert N. Goldman
                                          ------------------------------------
                                          Robert N. Goldman
                                          Chairman and Chief Executive Officer



August 14, 2001                       By: /s/ Lacey P. Brandt
                                          ------------------------------------
                                          Lacey P. Brandt
                                          Chief Financial Officer



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