UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 ---------------


                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

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

         For the transition period from _____________ to _______________


                         COMMISSION FILE NUMBER 0-24719


                                 SOFTWORKS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)



           DELAWARE                                  52-1092916
(State or other jurisdiction of                   (I.R.S. Employer
 incorporation or organization)                   Identification No.)



                        5845 RICHMOND HIGHWAY, SUITE 400
                              ALEXANDRIA, VA 22303
                                 (703) 317-2424
  (Address, including zip code, and telephone number, including area code, of
                    registrant's principal executive offices)


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 [ ]


Indicate the number of shares  outstanding of each of issuer's classes of common
stock as of the latest practicable date.



<TABLE>
<CAPTION>
                                        NUMBER OF SHARES OUTSTANDING ON
       TITLE OF CLASS                         September 30, 1999
       --------------                         ------------------
<S>                                               <C>
Common Stock, $.001 par value                     16,896,109
</TABLE>
<PAGE>
                                 SOFTWORKS, INC.
           Form 10-Q for the Quarterly Period Ended September 30, 1999
                                Table of Contents


                                                                            PAGE
                                                                            ----

PART I   FINANCIAL INFORMATION

 ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

  Consolidated Balance Sheets as of September 30, 1999 and December 31, 1998   3

  Consolidated Statements of Operations for the three and nine months ended    4
   September 30, 1999 and 1998

  Consolidated  Statements  of Cash  Flows  for the  three  and nine           5
   months ended September 30, 1999 and 1998

  Notes to Consolidated Financial Statements                                   6

 ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS                                       10


PART II   OTHER INFORMATION

 ITEM 1.  LEGAL PROCEEDINGS                                                   16

 ITEM 2.  CHANGES IN SECURITIES                                               16

 ITEM 3.  DEFAULTS IN SECURITIES                                              16

 ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS                   16

 ITEM 5.  OTHER INFORMATION                                                   16

 ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                    17


SIGNATURE                                                                     18
<PAGE>


                          PART I FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                        SOFTWORKS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                              September 30,  December 31,
                                                                   1999          1998
                                                              -------------  ------------
                                                                (unaudited)
                    ASSETS
<S>                                                               <C>           <C>
Current Assets:
   Cash and cash equivalents                                      $ 13,613      $  6,003
   Accounts receivable, net of allowance for doubtful accounts
     of $355 and $289 in 1999 and 1998, respectively                11,233        14,316
   Installment receivables, net of allowance for installment
     reserve of $150 and $0 in 1999 and 1998, respectively          16,937        16,406
   Prepaid expenses and other current assets                         2,194         1,349
   Deferred tax assets                                                   -           306
                                                                  --------      --------
     Total current assets                                           43,977        38,380
                                                                  --------      --------
   Installment receivables, noncurrent                              13,947         7,908
   Property and equipment, net                                       2,450         2,498
   Software development costs, net                                   2,137         3,039
   Goodwill, net of accumulated amortization of $4,011
     and $3,346 in 1999 and 1998, respectively                       3,478         4,143
   Other assets                                                      1,139         1,900
   Income taxes receivable                                             253             -
   Deferred tax assets, noncurrent                                     500           484
                                                                  --------      --------
     Total assets                                                 $ 67,881      $ 58,352
                                                                  ========      ========

        LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable and accrued expenses                          $  4,762      $  6,136
   Current portion of long-term debt                                 3,075         1,930
   Deferred maintenance revenue                                      9,754         9,064
   Deferred installment revenue                                      6,429         7,314
   Income taxes payable                                                  -         2,057
                                                                  --------      --------
        Total current liabilities                                   24,020        26,501
                                                                  --------      --------
   Deferred maintenance revenue, noncurrent                          7,958         3,882
   Deferred installment revenue, noncurrent                          6,158         7,883
   Long-term debt, noncurrent                                        1,479         1,401
                                                                  --------      --------
        Total liabilities                                           39,615        39,667
                                                                  --------      --------
Stockholders' Equity:
   Preferred stock, $.001 par value; 2,000,000 shares authorized;
      none issued or outstanding                                         -             -
   Common stock, $.001 par value; 50,000,000 and 150,000,000,           17            16
      respectively; 16,896,109 and 15,973,000 shares issued and
      outstanding, respectively
   Common stock in treasury, at cost   245,000 shares in 1999       (1,686)            -

   Additional paid-in capital                                       25,395        15,201
   Retained earnings                                                 4,481         3,535
   Accumulated other comprehensive income (loss)                        59           (67)
                                                                  --------      --------
      Total stockholders' equity                                    28,266        18,685
                                                                  --------      --------
         Total liabilities and stockholders' equity               $ 67,881      $ 58,352
                                                                  ========      ========
<FN>
  The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>
                        SOFTWORKS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                Three Months Ended September 30,    Nine Months Ended September 30,
                                                   1999                1998              1999               1998
                                                (unaudited)         (unaudited)       (unaudited)        (unaudited)
                                                -----------         ----------        -----------        -----------
<S>                                                <C>                 <C>              <C>               <C>
Revenue:
  Software licenses                                $ 11,303            $  8,172         $  26,355         $ 17,934
  Services                                            3,601               3,075            10,422            8,963
                                                   --------            --------         ---------         --------
     Total revenue                                   14,904              11,247            36,777           26,897
                                                   --------            --------         ---------         --------
Cost of revenue (exclusive of amortization and
   depreciation shown separately below except for
   amortization of software development costs):
   Software licenses                                    384                 426               920            1,059
   Services                                             369                 604             1,328            1,655
                                                   --------            --------         ---------         --------
      Total cost of revenue                             753               1,030             2,248            2,714
                                                   --------            --------         ---------         --------
Gross margin                                         14,151              10,217            34,529           24,183
                                                   --------            --------         ---------         --------

Operating expenses:
  Sales and marketing                                 8,208               5,181            20,354           13,092
  General and administrative                            998               1,087             3,106            3,443
  Amortization and depreciation                         708                 616             2,152            1,631
  Research and development                            2,233               2,165             7,132            5,486
                                                   --------            --------         ---------         --------
      Total operating expenses                       12,147               9,049            32,744           23,652
                                                   --------            --------         ---------         --------
Operating income                                      2,004               1,168             1,785              531

Other expenses                                         (133)                (84)             (234)            (253)
                                                   --------            --------         ---------         --------
Income from operations before provision for
   income taxes                                       1,871               1,084             1,551              278

Provision for income taxes                             (730)               (547)             (605)            (521)
                                                   --------            --------         ---------         --------
Net income (loss)                                  $  1,141            $    537         $     946         $   (243)
                                                   ========            ========         =========         ========
Basic net income (loss) per share                  $   0.07            $   0.04         $    0.06         $  (0.02)
                                                   ========            ========         =========         ========
Diluted net income (loss) per share                $   0.07            $   0.04         $    0.06         $  (0.02)
                                                   ========            ========         =========         ========

Basic weighted average shares outstanding            17,050              15,275            16,474           14,485
                                                   ========            ========         =========         ========
Diluted weighted average shares outstanding          17,154              15,275            17,112           14,485
                                                   ========            ========         =========         ========
<FN>
 The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>
                        SOFTWORKS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                        Nine Months Ended September 30,
                                                             1999            1998
                                                        --------------- ---------------
                                                          (unaudited)     (unaudited)
<S>                                                        <C>             <C>
Cash flows from operating activities:
   Net income (loss)                                       $    946        $   (243)
   Adjustments to reconcile net income (loss) to net cash
     Provided by operating activities
     Amortization and depreciation
       Property and equipment                                   859             589
       Software development costs                               902           1,172
       Goodwill                                                 665             647
       Other                                                    218               -
     Allowance for doubtful accounts                             66             159
     Allowance for installment reserve                          150               -
     Deferred taxes                                             290             289
   Changes in operating assets and liabilities---
     Accounts receivable and installment receivables         (3,703)         (3,938)
     Prepaid expenses and other current assets                 (845)           (422)
     Other assets                                               543            (322)
     Income taxes                                            (2,310)            356
     Accounts payable and accrued expenses                   (1,374)           (497)
     Deferred revenue                                         2,156           3,308
                                                           --------      ----------
       Net cash (used in) provided by operating activities   (1,437)          1,098
                                                           --------      ----------
Cash flows from investing activities:
   Purchases of property and equipment                         (811)           (564)
   Software development and technology purchases                  -          (1,286)
   Additional consideration for SOFTWORKS, Inc.
       Acquisition                                                -            (408)
                                                           --------      ----------
       Net cash used in investing activities                   (811)         (2,258)
                                                           --------      ----------
Cash flows from financing activities:
   Net borrowings from Principal Shareholder                      -          (2,177)
   Repayments of long-term debt                              (1,239)              -
   Proceeds from long-term debt                               2,462              49
   Net proceeds from secondary public offering                9,204               -
   Net proceeds from initial public offering                      -           9,654
   Purchase of Treasury Stock                                (1,686)
   Proceeds from stock option exercises                         991               -
                                                           --------      ----------
       Net cash provided by financing activities              9,732           7,526
                                                           --------      ----------
Effect of exchange rate changes on cash and cash
 equivalents                                                    126             (22)
                                                           --------      ----------
Net increase in cash and cash equivalents                     7,610           6,344
Cash and cash equivalents, beginning of period                6,003             360
                                                           --------      ----------

Cash and cash equivalents, end of period                   $ 13,613      $    6,704
                                                           ========      ==========
Supplemental disclosure of cash flow information:
  Interest paid                                            $  1,000      $       21
                                                           --------      ----------
  Income taxes paid                                        $  1,715      $       14
                                                           ========      ==========
<FN>
 The accompanying notes are an integral part of these consolidated statements.
</FN>
</TABLE>
<PAGE>
                                 SOFTWORKS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            AS OF SEPTEMBER 30, 1999


Note 1.  Basis of Presentation

     The  accompanying  unaudited  consolidated  financial  statements and notes
thereto have been  prepared in accordance  with  generally  accepted  accounting
principles for interim  financial  information and should be read in conjunction
with the audited  consolidated  financial statements for the year ended December
31, 1998 included in the Company's Form 10-K.  Certain  information and footnote
disclosures  normally  included  in  annual  financial  statements  prepared  in
accordance with generally accepted accounting  principles have been condensed or
omitted as permitted by rules and  regulations  of the  Securities  and Exchange
Commission.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.  In the opinion of management,  all adjustments (consisting of normal
recurring  entries)  necessary  for the fair  presentation  of the  consolidated
financial  position,  results of  operations,  and changes in cash flows for the
periods presented have been included. Interim results of operations for the nine
month  period  ended  September  30,  1999  are not  necessarily  indicative  of
operating results for the full fiscal year.


Note 2. Organization and Nature of Operations:

The Company

     SOFTWORKS, Inc. ("SOFTWORKS" or the "Company") designs, develops,  markets,
and supports  systems  management  software  products for  enterprise  computing
environments primarily addressing storage management and performance.  SOFTWORKS
wholly owns  subsidiaries  in the United  Kingdom,  France,  Brazil,  Australia,
Italy, Germany, and Spain that operate primarily as sales offices. SOFTWORKS was
incorporated in 1977 under the state laws of Maryland and reincorporated in 1998
under the state laws of Delaware.



Stock Repurchase

     On  August  9,  1999,  the  Company's  Board of  Directors  authorized  the
repurchase of up to 2 million shares of SOFTWORKS,  Inc.  common stock.  Through
September 30, 1999, the Company has  repurchased  245,000 shares of common stock
at an average price of $6.88 per share.


Voting Trust Agreement

     In conjunction  with the initial public offering on August 4, 1998,  shares
owned by Computer Concepts Corp. (the "Principal Shareholder") were deposited in
a voting trust. The voting power of the shares deposited in the trust is held by
three trustees who are members of the Board of Directors of SOFTWORKS.  A former
trustee, Daniel DelGiorno,  Jr., is the Chief Executive Officer of the Principal
Shareholder  who  resigned as trustee  and  director of the Company on April 22,
1999. The three trustees  currently  serving are directors of the Company who do
not have a significant financial interest in the Principal  Shareholder.  One of
the  trustees is the Chairman of  SOFTWORKS.  The voting  trust  agreement  will
remain in effect until the earliest of: (i) the  Principal  Shareholder  and its
affiliates collectively ceasing to own 25% or more of the common stock, (ii) the
acquisition by a person other than the Principal  Shareholder and its affiliates
of a  greater  percentage  of the  common  stock  than  that  then  owned by the
Principal  Shareholder and its affiliates or (iii) 10 years from the date of the
voting trust  agreement.  As of September 30, 1999,  the  Principal  Shareholder
owned 39% of the Company's common stock.


Principles of Consolidation

     The consolidated financial statements include the accounts of SOFTWORKS and
its wholly-owned  subsidiaries.  All significant  intercompany  transactions and
balances have been eliminated in consolidation.
<PAGE>
Risks and Other Factors

     As a company  that  develops,  markets,  licenses  and supports a family of
enterprise systems management  software products for data and storage management
and  performance  management,  SOFTWORKS  faces  certain  risks.  These  include
dependence on proprietary  technology,  rapid  technological  change,  errors or
failures in its products, dependence on key personnel,  challenges in recruiting
personnel and a highly competitive marketplace.

     As of  September  30,  1999,  the  Principal  Shareholder  owned 39% of the
outstanding shares of the Company.  The Principal  Shareholder  received a going
concern  opinion with respect to its audited  financial  statements for the year
ended  December  31, 1997.  A going  concern  opinion was not rendered for 1998.
Under certain circumstances, the Principal Shareholder's financial condition may
influence  its  decisions as the  controlling  stockholder  of the Company.  The
voting trust agreement  noted above gives the majority of trustees  control over
significant corporate actions, including certain dispositions or encumbrances of
assets and the payment of dividends.


Note 3.  Significant Accounting Policies

Revenue Recognition

     Revenue  from  the  sale  of  perpetual  and  term  software   licenses  is
recognized,  net  of  provisions  for  returns,  at the  time  of  delivery  and
acceptance  of  software  products  by  the  customer,  when  collectibility  is
probable. The Company provides customers with the option to pay for license fees
in one lump sum or in installments over extended periods of time,  generally one
to five years.  Through 1998, the Company did not consider sales  contracts with
amounts  due  for  periods  greater  than  one  year  from  delivery  fixed  and
determinable,  and  accordingly,  recognized  such  amounts as revenue when they
became due.  Beginning  January 1, 1999, the Company  considers  sales contracts
with  amounts  due for  periods  of 3  years  or less  fixed  and  determinable.
Accordingly,  the  Company  recognizes  license  revenue  associated  with these
contracts, net of provisions for returns, at the time of delivery and acceptance
of software  products by the  customer,  when  collectibility  is probable.  For
contracts  with amounts due greater than 3 years,  the Company does not consider
sales  fixed and  determinable,  and  accordingly,  recognizes  such  amounts as
revenue  when they  become  due.  Maintenance  revenue  that is bundled  with an
initial  license fee is deferred and  recognized  ratably  over the  maintenance
period.  Amounts  deferred  for  maintenance  are  based  on the  fair  value of
equivalent  maintenance  services  sold  separately.  Revenue from  professional
services  is  recognized  as  the  services  are  performed.   Maintenance   and
professional   service  revenue  are  classified  as  services  revenue  on  the
accompanying statement of operations.

     The American  Institute  of Certified  Public  Accountants  (AICPA)  issued
Statement of Position 97-2 "Software Revenue  Recognition"  ("SOP 97-2"),  which
superceded  Statement of Position 91-1 "Software Revenue  Recognition." SOP 97-2
provides  additional  guidance  with respect to multiple  element  arrangements;
returns,  exchanges, and platform transfer rights;  resellers;  services; funded
software  development  arrangements;   and  contract  accounting.   The  Company
implemented  SOP 97-2 for the year  ended  December  31,  1997.  In March  1998,
Statement of Position  98-4 ("SOP 98-4"),  "Deferral of the Effective  Date of a
Provision  of SOP  97-2",  amended a  portion  of SOP  97-2.  Subsequent  to the
issuance  of SOP 98-4 the  AICPA  issued  SOP 98-9,  "Modification  of SOP 97-2,
Software Revenue Recognition,  With Respect to Certain Transactions".  SOP 97-2,
the amendment  contained in SOP 98-4 and the modification  contained in SOP 98-9
were adopted by the Company but did not have a material  effect on the Company's
software revenue recognition policy for software transactions.


Installment Receivables

     The Company offers customers  extended payment terms to purchase  software.
The extended payment plans consist  generally of plans with payment terms of one
to five years.  The Company  records an installment  receivable for the payments
not yet billed by the Company.  When the payment is billed by the  Company,  the
payment is classified as accounts receivable.


Impairment of Long-Lived Assets

     The Company reviews its long-lived  assets,  including  goodwill  resulting
from business acquisitions, capitalized software development costs, and property
and  equipment,  for  impairment  whenever  events or changes  in  circumstances
indicate that the carrying amount of the assets may not be fully recoverable. To
determine  recoverability  of its long-lived  assets,  the Company evaluates the
probability that future  undiscounted net cash flows,  without interest charges,
will be less than the carrying amount of the assets.  The Company has determined
that as of September  30,  1999,  there has been no  impairment  in the carrying
value of long-lived assets.
<PAGE>
Income Taxes

     The  Company  accounts  for  income  taxes  under  Statement  of  Financial
Accounting  Standards No. 109,  "Accounting  for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires the  determination  of deferred tax assets and liabilities
based on the differences between the financial statement and income tax bases of
assets and liabilities,  using enacted tax rates. SFAS No. 109 requires that the
net deferred tax asset is to be adjusted by a valuation  allowance  if, based on
the weight of available  evidence,  it is more likely than not that some portion
or all of the net deferred tax asset will not be realized.


Basic and Diluted Net Loss Per Share

     In March 1997, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement  No.  128,  "Earnings  Per Share"  ("SFAS No.  128").  SFAS No. 128 is
effective for financial  statements issued for periods ending after December 15,
1997 and has been implemented for all periods  presented.  SFAS No. 128 requires
dual  presentation of basic and diluted  earnings per share.  Basic earnings per
share  includes no dilution and is computed by dividing net income  available to
common  stockholders by the weighted average number of common shares outstanding
for the period.  Diluted earnings per share includes the potential dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
exercised or converted into common stock.  Basic net income (loss) per share and
diluted net income  (loss) per share can be  reconciled  as indicated  below (in
thousands, except income and per share data):
<TABLE>
<CAPTION>
                                                 Three months ended               Three months ended
                                                 September 30, 1999               September 30, 1998
                                             ----------------------------    ------------------------------
                                                                Per-Share                         Per-Share
                                             Income    Shares     Amount     Income      Shares     Amount
                                             ----------------------------    ------------------------------
<S>                                        <C>         <C>       <C>       <C>           <C>       <C>
Basic net income per share:
  Income available to common shareholders  $1,141,000  17,050    $ 0.07    $ 537,000     15,275    $ 0.04
Effect of dilutive options                                104                                -
                                           ------------------------------  --------------------------------
Diluted net income per share:
  Income available to common shareholders  $1,141,000  17,154    $ 0.07    $ 537,000     15,275    $ 0.04
                                           ==============================  ================================

                                                 Nine months ended               Nine months ended
                                                 September 30, 1999             September 30, 1998
                                             ----------------------------    ------------------------------
                                                                Per-Share                         Per-Share
                                             Income    Shares     Amount     Income      Shares     Amount
                                             ----------------------------    ------------------------------
<S>                                        <C>         <C>       <C>       <C>           <C>       <C>
Basic net income (loss) per share:
  Income available to common shareholders  $  946,000  16,474    $ 0.06    $(243,000)    14,485    $(0.02)
Effect of dilutive options                                638                                 -
                                           ------------------------------  --------------------------------
Diluted net income (loss) per share:
  Income available to common shareholders  $  946,000  17,112   $  0.06    $(243,000)    14,485    $(0.02)
                                           ==============================  ================================
</TABLE>
Foreign Currency

     The functional currency for all of the Company's international subsidiaries
is the  subsidiary's  local currency.  Assets and  liabilities of  international
subsidiaries are translated into U.S.  dollars at period-end  exchange rates and
revenue and expense  accounts and cash flows are translated at average  exchange
rates  during  the  period.  Gains and losses  resulting  from  translation  are
recorded as accumulated  other  comprehensive  income in  stockholders'  equity.
Transaction  gains and losses are recognized in the  consolidated  statements of
operations as incurred.  The Company does not engage in any hedging  activities.
As a result, there is no guarantee that fluctuations in exchange rates might not
have a material adverse effect on the Company's financial results.


Concentrations and Fair Value of Financial Instruments

     Financial   instruments   that   potentially   subject   the   Company   to
concentrations of credit risk consist  principally of cash equivalents and trade
accounts receivables.  At September 30, 1999, the Company's cash investments are
held at  various  financial  institutions,  which  limits  the  amount of credit
exposure to any one financial  institution.  Concentrations  of credit risk with
respect to trade  accounts  receivables  are limited due to the large  number of
customers  comprising  the Company's  revenue base and their  dispersion  across
different  industries and geographic  areas. The Company performs ongoing credit
evaluations  of its  customers'  financial  condition but requires no collateral
from its  customers.  Unless  otherwise  disclosed,  the fair value of financial
instruments approximates their recorded values.
<PAGE>
Note 4.  Segment Reporting

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures  about  Segments of an Enterprise and Related  Information,"  which
establishes  standards  for the way  that  public  business  enterprises  report
information  about  operating  segments in the annual  financial  statements and
requires  selected  information  about operating  segments in interim  financial
reports.  SFAS No. 131 also establishes  standards for related disclosures about
products and services, geographic areas and major customers.

     The Company is primarily engaged in a single line of business.  The Company
aggregates  and reports  revenues  from  products  which have  similar  economic
characteristics  in their nature,  production,  and  distribution  process.  The
Company's  geographic  locations vary between full  operating  offices and sales
offices.  The Company has identified the reportable  operating segments as North
America and  International.  These operating  segments are representative of the
Company's  management  approach  to  its  evaluation  of  the  operations.   The
accounting  policies of the reportable  operating segments are the same as those
described in the summary of significant  accounting policies.  The International
segment includes an aggregation of certain  operations  consisting  primarily of
sales operations through the Company's international  subsidiaries in the United
Kingdom,  France,  Brazil,  Australia,  Spain,  Germany,  and  Italy,  and sales
generated through international  distributors  primarily in Europe and Asia. The
following information is presented in accordance with SFAS No.
131 for all periods presented (in thousands):

<TABLE>
<CAPTION>
                                Three months ending           Nine months ending
                              -----------------------------------------------------
                              September     September       September    September
                              30, 1999       30, 1998       30, 1999     30, 1998
                              -----------------------------------------------------
                             (unaudited)    (unaudited)    (unaudited)   (unaudited)

<S>                           <C>            <C>            <C>           <C>
Revenue
  North America               $ 12,140       $  8,827       $ 27,679      $ 21,139
  International                  2,764          2,420          9,098         5,758
                              -----------------------------------------------------
      Total                   $ 14,904       $ 11,247       $ 36,777      $ 26,897
                              =====================================================
Operating Income (Loss)
  North America               $  1,869       $  1,395       $   (469)     $  1,475
  International                    135           (227)         2,254          (944)
                              -----------------------------------------------------
      Total                   $  2,004       $  1,168       $  1,785      $    531
                              =====================================================
Identifiable Assets
  North America               $ 53,976       $ 39,478       $ 53,976      $ 39,478
  International                 13,905          6,517         13,905         6,517
                              -----------------------------------------------------
      Total                   $ 67,881       $ 45,995       $ 67,881      $ 45,995
                              =====================================================
</TABLE>
     Revenue  from  unaffiliated  customers  is  based  on the  location  of the
customer.  Operating  income (loss) consists of the related income (loss) of the
Company's  subsidiaries based upon the location of their respective  operations.
Identifiable  assets are those assets used in the Company's  operations in those
operating  segments.  For the nine months ended  September  30, 1999,  no single
customer represented greater than five percent of revenues.
<PAGE>
ITEM 2 MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS
       OF OPERATIONS


Forward-Looking Statements.

     All statements  other than  statements of historical  fact included in this
Form  10-Q  including,  without  limitation,   statements  under,  "Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations"
regarding  SOFTWORKS'  financial  position,  business strategy and the plans and
objectives of SOFTWORKS'  management for future operations,  are forward-looking
statements.  When used in this Form 10-Q, words such as "anticipate," "believe,"
"estimate,"  "expect,"  "intend"  and  similar  expressions,  as they  relate to
SOFTWORKS  or  its  management,   identify  forward-looking   statements.   Such
forward-looking statements are based on the beliefs of SOFTWORKS' management, as
well as assumptions made by, and information  currently available to, SOFTWORKS'
management.  Actual results could differ  materially from those  contemplated by
the forward-looking  statements as a result of certain factors including but not
limited to, fluctuations in future operating results,  technological  changes or
difficulties,   management  of  future   growth,   expansion  of   international
operations,  the risk of errors or failures  in  SOFTWORKS'  software  products,
dependence on proprietary technology, competitive factors, risks associated with
potential acquisitions,  the ability to recruit personnel, the dependence on key
personnel,  and  control  of  SOFTWORKS  by  the  Principal  Shareholder.   Such
statements  reflect the current views of SOFTWORKS with respect to future events
and are subject to these and other risks, uncertainties and assumptions relating
to the  operations,  results of  operations,  growth  strategy and  liquidity of
SOFTWORKS.   All  subsequent   written  and  oral   forward-looking   statements
attributable  to  SOFTWORKS  or  persons  acting  on its  behalf  are  expressly
qualified in their entirety by this paragraph.


OVERVIEW

     SOFTWORKS develops,  markets, licenses and supports storage and performance
management  software  products.  SOFTWORKS'  products  are  designed to optimize
system and application  performance and the management of multi-platform storage
resources in order to maximize the value of purchased hardware and software. The
Company's   products  address  these  issues  for   organizations   that  employ
enterprise-scale  servers,  OS/390,  UNIX,  and  Microsoft  Windows NT computing
environments. The Company has over 6,700 licenses of our products in use at over
2,000 installations  worldwide.  SOFTWORKS' products are installed at 88% of the
Fortune 100 and 55% of the Fortune 500 companies.

     SOFTWORKS'   revenue  consists  of  revenue  from  licensing  its  software
products,  revenue from the maintenance and support of its software products and
professional  services  relating to information  technology  ("IT")  consulting.
Generally,  the  Company  is  required  by  its  license  agreement  to  provide
maintenance and enhancements during a stated maintenance  period.  "Maintenance"
includes  diagnosis  and  correction  of errors in the  current  version  of the
product  and  telephone  consultation  to  discuss  general  support  questions.
"Enhancements" include upgrades to the products as they become available and new
releases of products,  except for those that are sold as charged  options to the
Company's  general  customer base.  Substantially  all of the Company's  license
agreements are perpetual. Maintenance agreements are typically for a term of one
year and renew  automatically  upon the  payment  by the  customer  of an annual
maintenance fee.

     Maintenance revenue that is bundled with an initial license fee is deferred
and  recognized  ratably  over the  maintenance  period.  Amounts  deferred  for
maintenance are based on the fair value of equivalent  maintenance services sold
separately. Revenue from professional services is recognized as the services are
performed.  Deferred  license revenue  resulting from certain  extended  payment
agreements  is included in  installment  receivables  and  deferred  installment
revenue.  Related sales  commissions  are also deferred and recognized  over the
period of the installment payment plan. Maintenance and support services revenue
represents the ratable  recognition of fees to enroll  licensed  products in our
software  maintenance and support program.  Enrollment  entitles the customer to
product enhancements, technical support services, and ongoing compatibility with
third party  operating  systems.  Maintenance  revenue also includes the ratable
recognition of the bundled fees included in any extended term payment agreement.
Once a product license is acquired and paid for,  maintenance fees are generally
incurred  annually and equal 15% to 20% of the current list price of the product
at the time of renewal,  less any applicable discounts.  Information  concerning
the Company's revenue recognition policy is set forth in Note 3 to the September
30,  1999  Consolidated   Financial  Statements  included  in  Item  1,  and  is
incorporated herein by reference.
<PAGE>
RESULTS OF OPERATIONS

     The  following  table  sets  forth  for  the  periods   indicated   certain
consolidated  statement of  operations  data  expressed as a percentage of total
revenue.
<TABLE>
<CAPTION>
                                                  Three Months Ended September 30,     Nine Months Ended September 30,
                                                      1999              1998               1999              1998
                                                  -----------        -----------       -----------        -----------
                                                  (unaudited)        (unaudited)       (unaudited)        (unaudited)
<S>                                                   <C>               <C>               <C>               <C>
Revenue:
  Software licenses                                    75.8%             72.7%             71.7%             66.7%
  Services                                             24.2%             27.3%             28.3%             33.3%
                                                  -----------        -----------       -----------        -----------
     Total revenue                                    100.0%            100.0%            100.0%            100.0%
                                                  -----------        -----------       -----------        -----------
Cost of revenue (exclusive of amortization and
  Depreciation shown separately below except for
  Amortization of software development costs):
  Software licenses                                     2.6%              3.8%              2.5%              3.9%
  Services                                              2.5%              5.4%              3.6%              6.2%
                                                  -----------        -----------       -----------        -----------
     Total cost of revenue                              5.1%              9.2%              6.1%             10.1%
                                                  -----------        -----------       -----------        -----------
Gross margin                                           94.9%             90.8%             93.9%             89.9%
                                                  -----------        -----------       -----------        -----------
Operating expenses:
  Sales and marketing                                  55.1%             46.1%             55.3%             48.7%
  General and administrative                            6.7%              9.6%              8.4%             12.8%
  Amortization and depreciation                         4.7%              5.5%              5.9%              6.1%
  Research and development                             15.0%             19.3%             19.4%             20.3%
                                                  -----------        -----------       -----------        -----------
     Total operating expenses                          81.5%             80.5%             89.0%             87.9%
                                                  -----------        -----------       -----------        -----------
Operating income                                       13.4%             10.3%              4.9%              2.0%

Other expenses                                         (0.8%)            (0.7%)            (0.7%)            (1.0%)
                                                  -----------        -----------       -----------        -----------
Income from operations before provision for
   income taxes                                        12.6%              9.6%              4.2%              1.0%

Provision for income taxes                             (4.9%)            (4.8%)            (1.6%)            (1.9%)
                                                  -----------        -----------       -----------        -----------
Net income (loss)                                       7.7%              4.8%              2.6%             (0.9%)
                                                  ==========         ===========       ===========        ===========
</TABLE>
Three Months Ended September 30, 1999 and 1998

     Revenue.  Total  revenue  increased  32.5% to $14.9  million  for the three
months ended  September  30, 1999 from $11.2  million for the same period in the
prior year.  License revenue  increased 38.3% to $11.3 million from $8.2 million
for the three  months  ended  September  30,  1999 and 1998,  respectively.  The
increase was  primarily due to the  increased  sales of  SOFTWORKS'  products in
North  America   resulting   from  an  increase  in  average   contract   price.
International  revenue  decreased as a percentage of total revenue to 18.5% from
21.5% for the three months ended September 30, 1999 and 1998,  respectively.  In
terms  of  absolute  dollars,  international  revenues  increased  14.2% to $2.8
million for the three months ended  September 30, 1999 from $2.4 million for the
same  period in the prior  year.  This  increase is  primarily  attributable  to
SOFTWORKS' expansion into Germany, commencing in January 1999.

     Sales in the storage  management  segment  accounted for 63.5% and 61.6% of
total  license  revenue for the three months ended  September 30, 1999 and 1998,
respectively.  License revenue from the performance management segment accounted
for  32.4%  and  30.1% of total  license  revenue  for the  three  months  ended
September 30, 1999 and 1998,  respectively.  License  revenue from the Year 2000
segment  accounted for 1.2% of total license  revenue for the three months ended
September 30, 1999 and 3.4% for the same period in 1998.

     Services revenue,  comprised of maintenance revenue and to a lesser extent,
revenue  from  professional  services,  increased  17.1% to $3.6 million for the
three months ended  September  30, 1999 from $3.1 million for the same period in
the prior year. This increase is attributable to overall growth in, and renewals
of, maintenance contracts by the installed customer base.

     Cost of Revenue.  Cost of software license revenue includes  royalties paid
to  Company  developers  and to a  third  party  under  a  licensing  agreement,
amortization of capitalized software development costs and costs of shipping and
fulfillment.  Cost of software  license revenue  decreased 9.9% to $384,000,  or
2.6% of total  revenue  for the  three  months  ended  September  30,  1999 from
$426,000,  or 3.8% of total  revenue for the same period in 1998.  This decrease
was primarily  attributable to the  termination of certain  royalty  agreements,
offset in part by increased amortization of software development costs that were
capitalized  subsequent  to  September  30, 1998.  Costs of services  revenue is
<PAGE>
comprised of costs of maintenance and to a lesser extent,  costs of professional
services. Cost of services revenue decreased 38.9% to $369,000, or 2.5% of total
revenue for the three months ended September 30, 1999 from $604,000,  or 5.4% of
total revenue for the same period in the prior year.  This decrease is primarily
attributable to a decline in certain  professional  service  expenses during the
period.

     Sales and Marketing Expense.  Sales and marketing expenses include salaries
and related costs,  commissions,  travel,  facilities,  communications costs and
promotional  expenses for  SOFTWORKS'  direct sales  organization  and marketing
staff.  Sales and marketing  expenses  increased 58.4% to $8.2 million from $5.2
million for the three months ended September 30, 1999 and 1998, respectively. As
a percentage of revenue, sales and marketing expenses increased to 55.1% for the
three  months  ended  September  30,  1999 from 46.1% for the same period in the
prior year.  This increase was  attributable  primarily to increased  commission
expenses  resulting from increased  sales and to increased  sales overhead costs
resulting  from growth in  SOFTWORKS'  sales  organization,  including  five new
offices that opened since September 30, 1998.

     General and Administrative  Expense.  General and  administrative  expenses
include the costs of corporate operations,  legal, finance and accounting, human
resources  and other general  operations.  General and  administrative  expenses
decreased  8.2% to  $998,000  from  $1.1  million  for the three  months  ending
September 30, 1999 and 1998,  respectively.  As a percentage of revenue, general
and  administrative  expenses  decreased  to 6.7% for the  three  months  ending
September  30, 1999 from 9.6% for the same  period in the prior  year.  Although
general  and  administrative  expenses  decreased,  management  expects  them to
increase in the future to support the Company's growth.

     Amortization  and  Depreciation  Expense.   Amortization  and  depreciation
expenses  increased  14.9% to $708,000  from $616,000 for the three months ended
September  30, 1999 and 1998,  respectively.  This  increase is primarily due to
purchases of equipment for SOFTWORKS' data center operations since September 30,
1998.

     Research and Development Expense. Research and development expenses include
salaries  and related  costs for  software  developers,  quality  assurance  and
documentation personnel involved in SOFTWORKS' research and development efforts,
as well as support for  research  and  development,  including  SOFTWORKS'  data
center operations.  Research and development  expenses were $2.2 million for the
three  months ended  September  30, 1999 and 1998.  As a percentage  of revenue,
research and development  expenses decreased to 15.0% for the three months ended
September 30, 1999 from 19.3% for the same period in the prior year.


Nine Months Ended September 30, 1999 and 1998

     Revenue. Total revenue increased 36.7% to $36.8 million for the nine months
ended  September  30,  1999 from $26.9  million for the same period in the prior
year.  License  revenue  increased 47.0% to $26.4 million from $17.9 million for
the nine months ended  September 30, 1999 and 1998,  respectively.  The increase
was primarily due to the increased sales of SOFTWORKS' products in North America
resulting  from an increase in average  contract  price.  International  revenue
increased  as a  percentage  of total  revenue  to 24.7% from 21.4% for the nine
months ended  September  30, 1999 and 1998,  respectively.  In terms of absolute
dollars,  international  revenues  increased  58% to $9.1  million  for the nine
months  ended  September  30, 1999 from $5.8  million for the same period in the
prior year. This increase is primarily attributable to SOFTWORKS' expansion into
Germany.

     Sales in the storage  management  segment  accounted for 68.9% and 58.0% of
total  license  revenue for the nine months ended  September  30, 1999 and 1998,
respectively.  License revenue from the performance management segment accounted
for 28.0% and 32.6% of total license revenue for the nine months ended September
30, 1999 and 1998,  respectively.  License  revenue  from the Year 2000  segment
accounted for 1.2% of total license  revenue for the nine months ended September
30, 1999 and 4.8% for the same period in 1998.

     Services revenue,  comprised of maintenance revenue and to a lesser extent,
revenue from  professional  services,  increased  16.3% to $10.4 million for the
nine months  ended  September  30, 1999 from $9.0 million for the same period in
the prior year. This increase is attributable to overall growth in, and renewals
of, maintenance contracts by the installed customer base.

     Cost of Revenue.  Cost of software license revenue includes  royalties paid
to  Company  developers  and to a  third  party  under  a  licensing  agreement,
amortization of capitalized software development costs and costs of shipping and
fulfillment.  Cost of software license revenue  decreased 13.1% to $920,000,  or
2.5% of total  revenue for the nine months  ended  September  30, 1999 from $1.1
million,  or 3.9% for the same  period  in 1998.  This  decrease  was  primarily
attributable to the termination of certain royalty agreements, offset in part by
increased  amortization  of  software  development  costs that were  capitalized
subsequent  to  September  30, 1998.  Costs of services  revenue is comprised of
costs of maintenance  and to a lesser extent,  costs of  professional  services.
Cost of  services  revenue  decreased  19.8% to $1.3  million,  or 3.6% of total
revenue for the nine months ended September 30, 1999 from $1.7 million,  or 6.2%
of total  revenue  for the same  period  in the prior  year.  This  decrease  is
primarily  attributable to a decline in certain professional service expenses in
1999.
<PAGE>
     Sales and Marketing Expense.  Sales and marketing expenses include salaries
and related costs,  commissions,  travel,  facilities,  communications costs and
promotional  expenses for  SOFTWORKS'  direct sales  organization  and marketing
staff.  Sales and marketing expenses increased 55.5% to $20.4 million from $13.1
million for the nine months ended September 30, 1999 and 1998, respectively.  As
a percentage of revenue, sales and marketing expenses increased to 55.3% for the
nine months ended September 30, 1999 from 48.7% for the same period in the prior
year. This increase was attributable  primarily to increased commission expenses
resulting from increased  sales and to increased  sales overhead costs resulting
from growth in SOFTWORKS'  sales  organization,  including five new offices that
opened subsequent to September 30, 1998.

     General and Administrative  Expense.  General and  administrative  expenses
include the costs of corporate operations,  legal, finance and accounting, human
resources  and other general  operations.  General and  administrative  expenses
decreased  9.8% to $3.1  million  from $3.4  million for the nine months  ending
September  30,  1999  and  1998.  As  a  percentage  of  revenue,   general  and
administrative  expenses  decreased to 8.4% for the nine months ending September
30, 1999 from 12.8% for the same period in the prior year.  Although general and
administrative  expenses  decreased,  management  expects  them to  increase  in
absolute dollars in the future to support the Company's growth.

     Amortization  and  Depreciation  Expense.   Amortization  and  depreciation
expenses  increased  31.9% to $2.2 million from $1.6 million for the nine months
ended September 30, 1999 and 1998, respectively.  This increase is primarily due
to purchases of equipment subsequent to September 30, 1998.

     Research and Development Expense. Research and development expenses include
salaries  and related  costs for  software  developers,  quality  assurance  and
documentation personnel involved in SOFTWORKS' research and development efforts,
as well as support for  research  and  development,  including  SOFTWORKS'  data
center operations.  Research and development  increased 30.0% to $7.1 million or
19.4% of revenue for the nine months ended  September 30, 1999 from $5.5 million
or 20.3% of revenue  for the same  period in the prior  year.  The amount of the
increase is primarily  attributable to the capitalization of $854,000 of certain
software  development  costs associated with  multiplatform  products during the
nine months ended September 30, 1998.

LIQUIDITY AND CAPITAL RESOURCES

     SOFTWORKS has funded its operations through cash generated from operations,
external  financing and proceeds from its initial  public  offering on August 4,
1998  and its  secondary  public  offering  on June 4,  1999.  In  addition,  in
September 1999, the Company sold $4.9 million of unbilled  accounts  receivable.
In the future, the Company may sell additional unbilled accounts receivable from
time to time.  SOFTWORKS had cash and cash equivalents of $13.6 million and $6.0
million at September 30, 1999 and December 31, 1998, respectively.

     On  August  9,  1999,  the  Company's  Board of  Directors  authorized  the
repurchase of up to 2 million shares of SOFTWORKS,  Inc.  common stock.  Through
September 30, 1999, the Company has  repurchased  245,000 shares of common stock
at an average price of $6.88 per share.

     SOFTWORKS has not sustained  material foreign currency  exchange losses and
presently  does not  attempt to hedge its  exposure to  fluctuations  in foreign
currency exchange rates.  Should  SOFTWORKS'  revenue from  international  sales
increase  as  intended,   and  should  such  sales  be  denominated  in  foreign
currencies,  SOFTWORKS  intends to adopt an adequate  hedging  strategy to guard
against foreign currency fluctuations.

     Net cash used in operating  activities was $1.4 million for the nine months
ended  September  30,  1999,  as compared  with net cash  provided by  operating
activities of $1.1 million for the same period in the prior year.  This decrease
is  primarily a result of the  increase  in income  taxes paid and the growth in
accounts receivable and installment  receivables.  The Company paid income taxes
of $1.7 million  during the nine months  ended  September  30, 1999.  During the
first  eight  months  of the same  period  in 1998,  the  Company  reported  its
financial  results on a consolidated  basis with its former parent,  and did not
file separate tax returns.

     SOFTWORKS'  investing  activities  primarily include expenditures for fixed
assets  in  support   of   SOFTWORKS'   product   development   activities   and
infrastructure.  Net  cash  used in  investing  activities  decreased  64.1%  to
$811,000 for the nine months ended  September 30, 1999 from $2.3 million for the
same period in the prior year. The decrease was primarily a result of a decrease
in costs for  software  development  and  technology  purchases  and  additional
contingent  consideration paid to two former stockholders in connection with the
acquisition  of  SOFTWORKS  by the  Principal  Shareholder,  offset  in  part by
increased purchases of property and equipment.

     For the nine months ended September 30, 1999 and 1998, net cash provided by
financing  activities  was $9.7  million  and $7.5  million,  respectively.  The
increase in cash  provided by  financing  activities  was  primarily a result of
proceeds  received from the Company's  secondary public offering.  The secondary
public  offering  provided  the Company with  approximately  $9.2 million in net
proceeds.  During the period,  the Company also received proceeds from long-term
debt of $2.5 million,  primarily a result of  borrowings  under a line of credit
agreement,  as well as certain capital leases.  Stock option exercises  provided
the Company with  proceeds of $1.0  million.  Cash used in financing  activities
during the period include debt repayment of  approximately  $1.2 million and the
purchase of $1.7 million in treasury stock.
<PAGE>
     SOFTWORKS'  principal  commitments  as  of  September  30,  1999  consisted
primarily of (i) leases on its corporate headquarters facilities,  various sales
offices and operating equipment,  (ii) employment  agreements,  (iii) a software
licensing and  distribution  agreement,  and (iv)  long-term debt arising from a
line of credit.

     SOFTWORKS'  current cash and cash equivalent  balances,  and cash flow from
its  operations  are expected to be sufficient  to meet its working  capital and
capital expenditure needs for at least the next 12 months. However, there can be
no assurance that SOFTWORKS will have  sufficient  capital to finance  potential
acquisitions or other growth oriented activities,  which could require SOFTWORKS
to incur additional debt or obtain other financing.


YEAR 2000 ISSUES

     Background.   Some  computers,   software,   and  other  equipment  include
programming  code in which calendar year data is abbreviated to only two digits.
As a result of this design decision, some of these systems could fail to operate
or fail to produce correct  results if "00" is interpreted to mean 1900,  rather
than 2000.  These  problems  are widely  expected to increase in  frequency  and
severity  as the year  2000  approaches,  and are  commonly  referred  to as the
"Millennium Bug" or "Year 2000 problem."

     Assessment.  The Year 2000 problem could affect  computers,  software,  and
other  equipment  which SOFTWORKS  uses,  operates,  or maintains.  Accordingly,
SOFTWORKS has reviewed its internal computer programs and systems to ensure that
the programs and systems are Year 2000 compliant.  SOFTWORKS  presently believes
that its computer systems are Year 2000 compliant.  However, while the estimated
cost of these  efforts is not  expected to be material to its overall  financial
position, or any year's results of operations, there can be no assurance to this
effect.  SOFTWORKS  has obtained  certification  of its processes to assess Year
2000 problems from the  Information  Technology  Association of America  (ITAA).
Because its business  involves  software  development,  SOFTWORKS has not sought
further   verification  or  validation  by  independent  third  parties  of  its
corrections of Year 2000 problems.

     Software Sold to Consumers.  SOFTWORKS  believes that it has  substantially
identified  and  resolved all  potential  Year 2000  problems  with the software
products it develops  and  markets.  However,  it also  believes  that it is not
possible  to  determine  with  complete  certainty  that all Year 2000  problems
affecting  its software  products  have been  identified or corrected due to the
complexity  of these  products and the fact that these  products  interact  with
other third party vendor products and operate on computer  systems which are not
under its control.

     SOFTWORKS  recognizes the significance of the Year 2000 issue as it relates
to its  internal  systems,  including  IT and  non-IT  systems.  To that  extent
SOFWORKS has achieved the following:

     Internal Information Technology Infrastructure.  SOFTWORKS believes that it
has identified,  modified,  upgraded, or replaced substantially all of the major
computers, software applications,  and related equipment used in connection with
its  internal  operations  in order to minimize  the  possibility  of a material
disruption to its business. While most of the upgrades were planned as part of a
general  enchancement  to its  infrastructure,  the timing of the upgrades  also
result in Year 2000 compliance.

     Systems Other than Information Technology Systems. In addition to computers
and related systems, the operation of office and facilities  equipment,  such as
fax machines, photocopiers, telephone switches, security systems, elevators, and
other common  devices may be affected by the Year 2000  problem.  SOFTWORKS  has
assessed  and  remediated  the effect of the Year 2000 problem on its office and
facilities  equipment  under its control,  and the total costs  associated  with
completing  the  required  modifications,  upgrades,  or  replacements  of these
internal systems were not material.

     Suppliers. SOFTWORKS has initiated communications,  including surveys, with
business  critical third party suppliers of the major computers,  software,  and
other  equipment which it uses,  operates,  or maintains to identify and, to the
extent possible,  to resolve issues  involving the Year 2000 problem.  SOFTWORKS
has received vendor  certification that all of its business critical information
technology systems,  including internal communications  systems,  accounting and
finance  systems,  customer service  systems,  and sales and marketing  tracking
systems, are Year 2000 compliant. Accordingly, SOFTWORKS does not anticipate any
significant  Year 2000 problems with these  systems;  however,  it cannot ensure
that these  suppliers  will resolve any or all of their Year 2000  problems with
these systems before the occurrence of a material  disruption to its business or
that of its customers. SOFTWORKS believes that its primary exposure is presently
with respect to public utilities and telecommunications  suppliers.  Any failure
of these third  parties to resolve Year 2000  problems  with their  systems in a
timely  manner  could have a material  adverse  effect on  SOFTWORKS'  business,
financial condition, and results of operation.
<PAGE>
     Additionally,  SOFTWORKS has initiated  communications,  including surveys,
with all other vendors or businesses that supply any service to SOFTWORKS. While
it has limited or no control over  responses to its inquiries and the actions of
these third party  suppliers,  SOFTWORKS does not view this category of services
to be  business  critical  and  in  the  event  of a Year  2000  problem  with a
particular  vendor,  believes  that  those  goods or  services  could  easily be
obtained from other sources.

     Banking Relationships.  SOFTWORKS has confined its banking relationships to
top tier finanical institutions around the world who have represented that their
respective  systems  are Year 2000  compliant.  Any  failure  of these  banks to
resolve Year 2000 problems with their systems in a timely manner would result in
financial  inconvenience and, depending upon the duration of the failure,  could
have a material adverse effect on SOFTWORKS'  financial condition and results of
operation.

     Most Likely Consequences of Year 2000 Problems.  SOFTWORKS believes that it
has identified all Year 2000 problems that could materially adversely affect its
business  operations.  However,  it does  not  believe  that it is  possible  to
determine  with complete  certainty  that all Year 2000 problems which affect it
have been identified or corrected.  The number of devices that could be affected
and the interactions  among these devices are simply too numerous.  In addition,
one cannot accurately  predict how many Year 2000 problem- related failures will
occur or the  severity,  duration,  or financial  consequences  of these perhaps
inevitable  failures.  In addition,  SOFTWORKS  is unable to determine  with any
degree of certainty  the changes in buying  habits of its current and  potential
customers due to their  concerns over Year 2000 issues.  As a result,  SOFTWORKS
expects that it could  likely  experience a  significant  number of  operational
inconveniences  and  inefficiencies   that  may  divert  management's  time  and
attention  and its  financial  and human  resources  from its ordinary  business
activities.  In addition,  SOFTWORKS  may  experience a lesser number of serious
system failures that may require  significant  efforts by it or its customers to
prevent or alleviate material business disruptions.

     Contingency  Plans.   SOFTWORKS  has  developed  contingency  plans  to  be
implemented  in the  event of any Year  2000  problems  affecting  its  internal
systems. Depending on the systems affected, these plans could include the use of
company owned cellular  telephones,  conducting  business from alternate company
locations,  accelerated replacement of affected equipment or software,  short to
medium-term use of backup  equipment and software,  and possible  increased work
hours  for  its  personnel  or  use  of  contract  personnel  to  correct  on an
accelerated  schedule  any Year 2000  problems  that arise or to provide  manual
workarounds for information systems, and similar approaches. Should SOFTWORKS be
required to implement any of these  contingency  plans, it could have a material
adverse effect on its financial condition and results of operations.

     Disclaimer.   The  discussion  of  SOFTWORKS'  efforts,   and  management's
expectations,  relating to Year 2000 compliance are forward-looking  statements.
SOFTWORKS  ability to achieve Year 2000  compliance and the level of incremental
costs  associated with such  compliance,  could be adversely  affected by, among
other things,  the availability  and cost of programming and testing  resources,
vendors' ability to modify  proprietary  software,  and  unanticipated  problems
identified in its ongoing compliance review.
<PAGE>
                            PART II OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     None.


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     None.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None.


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

     The Annual Meeting of Shareholders of SOFTWORKS was held on August 9, 1999.
The  following is a brief  description  of each matter voted upon at the meeting
and the  number of votes  cast  for,  withheld  or  against,  and the  number of
abstentions  with respect to each matter.  Both  proposals  were approved by the
shareholders.

     (a)  The  shareholders  approved  the  election  of  the  nominees  to  the
          Company's board of directors.
<TABLE>
<CAPTION>
          Director              Votes For      Votes Withheld
          --------              ---------      --------------
          <S>                   <C>                 <C>
          Robert Devine         14,307,743          5,750

          Charles Feld          14,307,743          5,750
</TABLE>

     (b)  The  shareholders  approved the  amendment to Article  "FOURTH" of the
          Company's  Certificate  of  Incorporation  to  reduce  the  number  of
          authorized shares of common stock from 152,000,000 to 52,000,000.
<TABLE>
<CAPTION>
                    Votes For      Votes Withheld    Abstained
                    ---------      --------------    ---------
                   <S>                  <C>           <C>
                   14,297,663           4,380         11,450
</TABLE>
ITEM 5.   OTHER INFORMATION

     None.

<PAGE>
ITEM 6    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K


     Exhibits


     Exhibit Number                      Description
     ---------------------------------------------------------------------------
      3.1 Certificate of Incorporation of Registrant, as amended
      3.2 By-Laws of Registrant*
      4.1 Specimen Common Stock Certificate*
     10.1 Lease  Agreement  dated June 14, 1994 between  Registrant and WHT Real
          Estate Limited Partnership*
     10.2 First Amendment to Lease Agreement*
     10.3 Second Amendment to Lease Agreement*
     10.4 Employment Agreement between the Registrant and James Cannavino*
     10.5 Employment Agreement between the Registrant and C.R. Kinsey, III*
     10.6 Employment Agreement between the Registrant and Judy G. Carter*
     10.7 Employment Agreement between the Registrant and Lisa Welch*
     10.8 Employment Agreement between the Registrant and Robert McLaughlin*
     10.9 Form  of  Indemnification   Agreement  between  the  Company  and  its
          officers and directors*
     10.10Distribution  Agreement  dated July 8, 1997 between the Registrant and
          Cognizant Technology Solutions Corporation*
     10.11 1998 Long-term Incentive Plan, as amended **
     10.12 1999 Stock Option Plan, as amended***
     27   Financial Data Schedule

     *    Incorporated by reference to Registration Statement No. 333-53939.
     **   Incorporated  by  reference  to Form S-8  Registration  Statement  No.
          333-77747.
     ***  Incorporated by reference to June 1998 Form 10-Q



(b)  Reports on Form 8-K
     None.
<PAGE>
                                    SIGNATURE

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                 Softworks, Inc.


Date: November 10, 1999          By:  /s/  Judy G. Carter
                                 -------------------------------------
                                 Judy G. Carter
                                 President, Chief Executive Officer and Director




Date: November 10, 1999          By:  /s/  Robert C. McLaughlin
                                 -------------------------------------
                                 Robert C. McLaughlin
                                 Treasurer and Chief Financial Officer