<PAGE>
 
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                                 UNITED STATES
 
                      SECURITIES AND EXCHANGE COMMISSION
 
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM 10-Q
                                  (MARK ONE)
 
  [X]Quarterly report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
 
                    FOR THE QUARTER ENDED DECEMBER 31, 1997
 
  [_]Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
 
                        COMMISSION FILE NUMBER 0-26948
 
                               ----------------
 
                            SCOPUS TECHNOLOGY, INC.
            (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                              <C>
          CALIFORNIA                               94-3134998
(STATE OR OTHER JURISDICTION OF                  (IRS EMPLOYER
INCORPORATION OR ORGANIZATION)                IDENTIFICATION NO.)
</TABLE>
 
                          1900 POWELL ST., 7TH FLOOR
                             EMERYVILLE, CA 94608
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES & ZIP CODE)
 
                 REGISTRANT'S TELEPHONE NUMBER: (510)-597-5800
 
                               ----------------
 
  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
 
  There were 20,551,405 shares of the registrant's $.001 par value Common
Stock outstanding as of December 31,1997.
 
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<PAGE>
 
                            SCOPUS TECHNOLOGY, INC.
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                           PAGE
                                                                           ----
<S>                                                                        <C>
PART I. FINANCIAL INFORMATION
  Item 1. Financial Statements
    Condensed Consolidated Balance Sheets.................................   3
    Condensed Consolidated Statements of Operations.......................   4
    Condensed Consolidated Statements of Cash Flows.......................   5
    Notes to Condensed Consolidated Financial Statements..................   6
  Item 2. Management's Discussion and Analysis of Financial Condition and
   Results of Operations..................................................   8
PART II. OTHER INFORMATION
  Item 6. List of Exhibits and Reports on Form 8-K........................  17
SIGNATURES................................................................  18
INDEX TO EXHIBITS.........................................................  19
</TABLE>
 
                                     Page 2
<PAGE>
 
                            SCOPUS TECHNOLOGY, INC.
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                    (UNAUDITED)
                                                          MARCH 31, DECEMBER 31,
                                                            1997        1997
(IN THOUSANDS)                                            --------- ------------
<S>                                                       <C>       <C>
ASSETS
Current assets:
  Cash and cash equivalents.............................. $ 54,824    $ 34,805
  Investments............................................   24,417      32,243
  Accounts receivable, net...............................   17,712      27,615
  Prepaid expenses and other.............................    2,686       3,966
                                                          --------    --------
    Total current assets.................................   99,639      98,629
Property and equipment, net..............................    7,038      12,773
Other assets.............................................    1,852       3,090
                                                          --------    --------
      Total assets....................................... $108,529    $114,492
                                                          ========    ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable....................................... $  2,234    $  2,475
  Accrued liabilities....................................    7,177       8,833
  Income taxes payable...................................    1,938         511
  Deferred revenue.......................................    4,856       3,848
                                                          --------    --------
    Total current liabilities............................   16,205      15,667
Shareholders' equity:
  Common stock and paid-in capital.......................   80,134      83,929
  Retained earnings......................................   12,190      14,896
                                                          --------    --------
    Total shareholders' equity...........................   92,324      98,825
                                                          --------    --------
      Total liabilities and shareholders' equity......... $108,529    $114,492
                                                          ========    ========
</TABLE>
 
 
                             See accompanying notes
 
                                     Page 3
<PAGE>
 
                            SCOPUS TECHNOLOGY, INC.
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                              (UNAUDITED)         (UNAUDITED)
                                          THREE MONTHS ENDED   NINE MONTHS ENDED
                                             DECEMBER 31,        DECEMBER 31,
                                          -------------------  -----------------
                                            1996      1997       1996     1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)  --------- ---------  -------- --------
<S>                                       <C>       <C>        <C>      <C>
Revenues:
  Licenses............................... $  13,005 $  15,387  $ 30,429 $ 43,420
  Services and maintenance...............     4,818     9,102    11,198   22,711
                                          --------- ---------  -------- --------
    Total revenues.......................    17,823    24,489    41,627   66,131
                                          --------- ---------  -------- --------
Cost of revenues:
  Licenses...............................       465       623     1,304    1,677
  Services and maintenance...............     3,069     6,160     7,247   14,777
                                          --------- ---------  -------- --------
    Total cost of revenues...............     3,534     6,783     8,551   16,454
                                          --------- ---------  -------- --------
Gross margin.............................    14,289    17,706    33,076   49,677
Operating expenses:
  Sales and marketing....................     6,832    11,254    16,535   30,432
  Research and development...............     2,315     3,255     6,175    8,499
  General and administrative.............     1,372     1,936     3,422    5,302
  Merger termination expenses............        --     3,298        --    3,298
                                          --------- ---------  -------- --------
    Total operating expenses.............    10,519    19,743    26,132   47,531
                                          --------- ---------  -------- --------
Income (loss) from operations............     3,770    (2,037)    6,944    2,146
Other income, net........................       431       645     1,007    2,150
                                          --------- ---------  -------- --------
Income (loss) before income taxes........     4,201    (1,392)    7,951    4,296
Provision (benefit) for income taxes.....     1,541      (515)    2,942    1,590
                                          --------- ---------  -------- --------
Net income (loss)........................ $   2,660 $    (877) $  5,009 $  2,706
                                          ========= =========  ======== ========
Basic earnings (loss) per share.......... $    0.14 $   (0.04) $   0.28 $   0.13
Diluted earnings (loss) per share........ $    0.13 $   (0.04) $   0.26 $   0.12
Basic--Shares used in per share
 computations............................    18,663    20,521    18,062   20,420
Diluted--Shares used in per share
 computations............................    20,211    20,521    19,545   21,704
</TABLE>
--------
 
                            See accompanying notes
 
                                    Page 4
<PAGE>
 
                             SCOPUS TECHNOLOGY, INC
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                              (UNAUDITED)
                                                           NINE MONTHS ENDED
                                                              DECEMBER 31,
                                                           -------------------
                                                             1996      1997
(IN THOUSANDS)                                             --------  ---------
<S>                                                        <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income.............................................. $  5,009  $   2,706
  Adjustments to reconcile net income to net cash provided
   by operating activities:
    Depreciation and amortization.........................    1,433      2,940
    Noncash charges (credits), net........................    1,405         (5)
    Changes in assets and liabilities:
      Increase in accounts receivable.....................   (7,028)    (9,903)
      Increase in prepaid expenses and other..............   (1,895)    (2,518)
      Increase in accounts payable........................    1,450        241
      Increase in accrued liabilities.....................    3,566      1,656
      Increase (decrease) in income taxes payable.........    1,168        (67)
      Increase (decrease) in deferred revenue.............    1,046     (1,008)
                                                           --------  ---------
Net cash provided by (used in) operating activities.......    6,154     (5,958)
                                                           --------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of investments.................................   (6,011)   (13,281)
  Proceeds from sale/maturity of investments..............    2,700      5,455
  Purchase of property and equipment......................   (4,627)    (8,624)
  Proceeds from disposal of property and equipment........        4          9
                                                           --------  ---------
Net cash used in investing activities.....................   (7,934)   (16,441)
                                                           --------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock in public
   offering...............................................   47,104        --
  Proceeds from exercise of common stock options..........      420      1,010
  Proceeds from issuance of stock under Employee Stock
   Purchase Plan..........................................      919      1,370
                                                           --------  ---------
Net cash provided by financing activities.................   48,443      2,380
                                                           --------  ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS......   46,663    (20,019)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD..........   21,792     54,824
                                                           --------  ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................ $ 68,455  $  34,805
                                                           ========  =========
</TABLE>
 
                             See accompanying notes
 
                                     Page 5
<PAGE>
 
                            SCOPUS TECHNOLOGY, INC.
 
           NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
NOTE 1. BASIS OF PRESENTATION
 
  The accompanying unaudited condensed consolidated financial statements have
been prepared on the same basis as the audited annual consolidated financial
statements and, in the opinion of management, include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial position, results of operations and cash flows.
The results of operations for the three and nine months ended December 31,
1997, are not necessarily indicative of the results to be expected for the
full year. Certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed consolidated
financial statements should be read in conjunction with the Notes to
Consolidated Financial Statements contained in Scopus Technology, Inc.'s
Report on Form 10-K for the year ended March 31, 1997.
 
NOTE 2. INCOME TAXES
 
  As a result of employee stock option exercises during the nine months ended
December 31, 1997, the Company recognized tax benefits of $1,360,000. This
benefit was credited directly to shareholders' equity and, accordingly, was
not reflected in the income tax provision.
 
NOTE 3. STOCK SPLIT
 
  All share and per share data in this Form 10-Q have been adjusted to give
effect to the three-for-two stock split distributed on February 19, 1997 to
holders of record on February 7, 1997.
 
NOTE 4. STOCK OPTIONS
 
  In December 1997, the Company completed a voluntary stock option repricing
program in which approximately 1,861,000 stock options, originally issued with
exercise prices ranging from $10.83 to $15.63 per share, were reissued with an
exercise price of $10.81 per share. These options are generally exercisable
over four years and the Company has maintained the vesting schedule from the
original grants.
 
NOTE 5. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
 
  In March 1997, Statement of Financial Accounting Standards No. 129,
"Disclosure of Information about Capital Structure" was issued and is
effective for the Company's year ending March 31, 1998. In June 1997,
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" and Statement of Financial Accounting Standards No. 131, "Disclosures
About Segments of An Enterprise and Related Information" were issued and are
also effective for the year ending March 31, 1998. The Company has not
determined the impact of the implementation of these pronouncements.
 
 
                                    Page 6
<PAGE>
 
NOTE 6. MERGER TERMINATION EXPENSES
 
  On January 7, 1998, the Company announced the termination of its planned
merger with Clear With Computers, Inc. The Company incurred approximately $3.3
million in merger costs which were expenses in the third quarter ended
December 31, 1997.
 
NOTE 7. NET EARNINGS (LOSS) PER SHARE
 
  In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, which
establishes standards for computing and presenting earnings (loss) per share.
Under the new standard, Basic earnings per share is computed based on the
weighted average number of common shares outstanding and excludes any
potential dilution; Diluted earnings per share reflects potential dilution
from the exercise or conversion of securities into common stock. SFAS No. 128
is effective for financial statements issued for periods ending after December
15, 1997 and earlier adoption is not permitted. The financial statements
presented have been prepared in accordance with SFAS No. 128 and earnings per
share data for all prior periods presented have been restated top conform with
current year presentation. Options to purchase 3,167,242 shares of common
stock with exercise prices ranging from $0.54 to $29.00 were outstanding as of
December 31, 1997 and were included from the loss per share calculation for
the quarter ended December 31, 1997 as they have the effect of decreasing loss
per share.
 
                                    Page 7
<PAGE>
 
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
  This report contains forward-looking statements that involve risks and
uncertainties. The statements contained in this report that are not purely
historical are forward looking statements within in the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934, including without limitation statements regarding the Company's
expectations, beliefs, intentions or strategies regarding the future. All
forward looking statements included in this report are based on information
available to the Company on the date hereof, and the Company assumes no
obligation to update any such forward looking statements. The Company's actual
results could differ materially from those anticipated in these forward
looking statements as a result of certain factors, including those set forth
below, under "Overview", "Factors that May Affect Our Business" and elsewhere
in this report.
 
OVERVIEW
 
  The Company's quarterly operating results have varied substantially in the
past and are likely to vary substantially from quarter to quarter in the
future due to a variety of factors. In particular, the Company's period-to-
period operating results are significantly dependent upon the timing of the
closing of large license agreements. In this regard, the purchase of the
Company's products can require a significant capital investment from a
potential customer which the customer generally views as a discretionary cost
that can be deferred or canceled due to budgetary or other business reasons.
Estimating future revenues is also difficult because the Company ships its
products soon after an order is received and as such does not have a
significant backlog. Thus, quarterly license revenues are heavily dependent
upon orders received and shipped within the same quarter. Moreover, the
Company has generally recorded a significant portion of its total quarterly
revenues in the third month of a quarter, with a concentration of these
revenues in the last half of that third month. This concentration of revenues
is influenced by customer tendencies to make significant capital expenditures
at the end of a fiscal quarter. The Company expects these revenue patterns to
continue for the foreseeable future. In addition, quarterly license revenues
are also dependent on the timing of revenue recognition, which can be affected
by many factors, including the timing of customer installations and the
fulfillment of acceptance criteria. In this regard the Company has from time
to time experienced delays in recognizing revenues with respect to certain
orders. Despite the uncertainties in its revenue patterns, the Company's
operating expenses are based upon anticipated revenue levels and such expenses
are incurred on an approximately ratable basis throughout the quarter. As a
result, if expected revenues are deferred or otherwise not realized in a
quarter for any reason, the Company's business, operating results and
financial condition would be materially adversely affected.
 
  In recent periods, the Company has sought to increase the use of third party
consultants and system integrators to provide implementation, customization
and consulting services directly to the Company's customers. The Company's
increasing reliance on such third party consultants and systems integrators
poses several risks that could have a material adverse effect on the Company's
business, operating results and financial condition. For example, there can be
no assurance that these third party providers, who have direct obligations to
the Company's customers, will be able to continue to provide a level of
quality of service required to meet the needs of such customers. If the
Company is unable to develop further and to maintain effective, long-term
relationships with these third parties, or if these third parties fail to meet
the needs of the Company's customers in a timely fashion, the Company's
business, operating results and financial condition will be materially
adversely affected.
 
                                    Page 8
<PAGE>
 
RESULTS OF OPERATIONS
 
  The following table sets forth for the periods indicated certain condensed
consolidated statement of operations data expressed as a percentage of total
revenues:
 
<TABLE>
<CAPTION>
                                         (UNAUDITED)           (UNAUDITED)
                                     THREE MONTHS ENDED     NINE MONTHS ENDED
                                        DECEMBER 31,          DECEMBER 31,
                                     --------------------   ------------------
(IN THOUSANDS, EXCEPT PER SHARE        1996       1997        1996      1997
AMOUNTS)                             ---------  ---------   --------  --------
<S>                                  <C>        <C>         <C>       <C>
Revenues:
  Licenses..........................      73.0%      62.8%      73.1%     65.7%
  Services and maintenance..........      27.0       37.2       26.9      34.3
                                     ---------  ---------   --------  --------
    Total revenues..................     100.0      100.0      100.0     100.0
                                     ---------  ---------   --------  --------
Cost of revenues:
  Licenses..........................       2.6        2.5        3.1       2.6
  Services and maintenance..........      17.2       25.2       17.4      22.3
                                     ---------  ---------   --------  --------
    Total cost of revenues..........      19.8       27.7       20.5      24.9
                                     ---------  ---------   --------  --------
Gross margin........................      80.2       72.3       79.5      75.1
Operating expenses:
  Sales and marketing...............      38.3       46.0       39.7      46.0
  Research and development..........      13.0       13.3       14.8      12.9
  General and administrative........       7.7        7.8        8.3       8.0
  Merger termination expenses.......       --        13.5        --        5.0
                                     ---------  ---------   --------  --------
    Total operating expenses........      59.0       80.6       62.8      71.9
                                     ---------  ---------   --------  --------
Income (loss) from operations.......      21.2       (8.3)      16.7       3.2
Other income, net...................       2.4        2.6        2.4       3.3
                                     ---------  ---------   --------  --------
Income (loss) before income taxes...      23.6       (5.7)      19.1       6.5
Provision (benefit) for income
 taxes..............................       8.6       (2.1)       7.1       2.4
                                     ---------  ---------   --------  --------
Net income (loss)...................      15.0%      (3.6)%     12.0%      4.1%
                                     =========  =========   ========  ========
</TABLE>
 
 Revenues
 
  The Company recognizes revenue in accordance with the provisions of
Statement of Position 91-1 "Software Revenue Recognition." The Company
generates revenue primarily from licensing the rights to use its software
products to end users and to a lesser extent from sublicense fees from
resellers. The Company also generates revenues from consulting, training and
maintenance services performed for customers who license its products.
 
  Revenues from perpetual software license agreements are recognized as
revenue upon receipt of an executed license agreement, (or an unconditional
purchase order under an existing license agreement), and shipment of the
software, if there are no significant post-delivery obligations and collection
of the receivables is probable.
 
  Revenues from maintenance services are recognized ratably over the term of
the maintenance periods which are typically one year. If maintenance services
are included free of charge or discounted in a license agreement, such amounts
are unbundled from the license fee at their fair market value based upon the
value established by independent sales of such maintenance services to
customers.
 
  Consulting and training revenues are generally recognized as the services
are performed. Consulting services are typically performed under separate
service agreements and are usually performed on a time and materials basis.
Such services primarily consist of implementation services related to the
installation of the Company's products and do not include significant
customization to or development of the underlying software code.
 
                                    Page 9
<PAGE>
 
  Licenses. License revenues increased 18% from $13.0 million for the three
months ended December 31, 1996 to $15.4 million for the three months ended
December 31, 1997, representing 73% and 63% of total revenues in the
respective periods. License revenues also increased 43% from $30.4 million for
the nine months ended December 31, 1996 to $43.4 million for the nine months
ended December 31, 1997, representing 73% and 66% of total revenues in the
respective periods. The increase in license revenues in absolute dollars was
primarily due to increasing market awareness and acceptance of the Company's
product offerings, continuing enhancement and increasing breadth of the
Company's product offerings, expansion of the Company's sales and marketing
organization and sales to new industry segments. The reduced rate of growth of
license revenues for the three months ended December 31, 1997 over the prior
year period, as compared to the corresponding rate of growth for the first and
second quarter of the year, was primarily due a shift in the mix of license
transactions towards larger transactions and a corresponding lengthening of
the sales cycle with respect to these larger transactions as well as services
and maintenance revenues growing faster than license revenues.
 
  Services and Maintenance. Services and maintenance revenues increased 89%
from $4.8 million for the three months ended December 31, 1996 to $9.1 million
for the three months ended December 31, 1997, representing 27% and 37% of
total revenues in the respective periods. Services and maintenance revenues
also increased 103% from $11.2 million for the nine months ended December 31,
1996 to $22.7 million for the nine months ended December 31, 1997,
representing 27% and 34% of total revenues in the respective periods. The
increase in services and maintenance revenues were primarily the result of
increased demand for consulting and systems implementation services from
customers purchasing the Company's products for large scale enterprise-wide
implementations, and increases in maintenance revenues from a larger installed
product base. The increase in services and maintenance revenues as a
percentage of total revenues was primarily due to services and maintenance
revenues growing faster than license revenues, due to the shift in the mix of
license transactions towards larger transactions as discussed above.
 
 Cost of Revenues
 
  Licenses. Cost of licenses consist primarily of royalty payments to third
party software vendors and costs of product media, duplication and packaging.
Cost of licenses increased from $465,000 for the three months ended December
31, 1996 to $623,000 for the three months ended December 31, 1997,
representing 4% of license revenues. Cost of licenses increased from $1.3
million for the nine months ended December 31, 1996 to $1.7 million for the
nine months ended December 31, 1997, representing 4% of license revenues. The
increase in cost of licenses in absolute dollars for the three and nine months
ended December 31, 1997 is primarily a result of higher royalty fees paid to
third party software vendors because of a higher level of sales of third party
software incorporated in the solutions sold by the Company as compared to the
similar period in the prior year. Although the Company does not expect
revenues and costs from the distribution of third party software vendors to be
significant in future periods, period to period fluctuations in the level of
such revenues may occur and the Company's gross margins and results of
operations could be materially adversely affected.
 
  Services and Maintenance. Cost of services and maintenance increased from
$3.1 million and $7.2 million for the three month and nine month periods ended
December 31, 1996 to $6.2 million and $14.8 million for the comparable periods
in 1997. Cost of services and maintenance revenues as a percentage of services
and maintenance revenues were 64% and 65% for the three month and nine month
periods ended December 31, 1996 compared to 68% and 65% for the comparable
periods in the current fiscal year. This marginal increase as a percentage of
services and maintenance revenues, for the three months ended December 31,
1997, reflects the increased utilization of third party subcontractors for the
provision of consulting services.
 
Operating expenses
 
  Sales and Marketing. Sales and marketing expenses increased from $6.8
million and $16.5 million for the three and nine month periods ended December
31, 1996 to $11.3 million and $30.4 million for the comparable periods in
1997. Sales and marketing expenses represented 38% and 40% of total revenues
for the three month
 
                                    Page 10
<PAGE>
 
and nine month periods ended December 31, 1996 and 46% for the comparable
periods in the current fiscal year, respectively. These increases were
primarily the result of costs associated with the expansion of the Company's
sales and marketing organization, both domestically and internationally, and
the additional investments being made as the Company implements its vertical
market strategy. In addition, marketing expenses in the nine months ended
December 31, 1997 included increased expenditures related to the Company's
product launch of Scopus Series 5, the enterprise client/server application
suite based on a fifth generation open, highly scalable distributed component
architecture.
 
  Research and Development. Research and development expenses increased from
$2.3 million and $6.2 million for the three and nine month periods ended
December 31, 1996 to $3.3 million and $8.5 million for the comparable periods
in 1997. Research and development expenses represented 13% and 15% of total
revenues for the three and nine month periods ended December 31, 1996 and 13%
for the comparable periods in 1997, respectively. The increased investment in
research and development expenses in absolute dollars primarily reflects
increased expenses related to salaries and other expenses for the addition of
software engineers and reflects the Company's continued investment in
enhancing existing products and developing new product offerings. The Company
expects to continue to undertake significant investment in research and
development, but these expenses may vary as a percentage of total revenues.
 
  General and Administrative. General and administrative expenses increased
from $1.4 million and $3.4 million for the three and nine month periods ended
December 31, 1996 to $1.9 million and $5.3 million for the comparable periods
in 1997. General and administrative expenses as a percentage of total revenues
were 8% for all both the three and nine month periods ended December 31, 1996
and 1997. The increase in general and administrative expenses in absolute
dollars reflects the Company's continued investment in the enhancement of
infrastructure to support its growth.
 
  Merger Termination Expenses. In October 1997 the Company announced that it
planned to merge with Clear With Computers, Inc. of Mankato, MN. Subsequently
the parties mutually agreed to terminate the previously announced merger
agreement. The parties indicated that after carrying out extensive analysis in
connection with the integration of the companies, it became clear that a
strategic marketing, sales and development partnership would better serve the
interests of both companies and their respective customers. The two companies
intend to undertake such a relationship and work closely together to provide
an integrated solution to the market. As a result of terminating the merger
agreement the Company has recorded a one-time charge of $3.3 million to cover
investment banking fees , accounting fees , legal fees, pre-termination
integration expenses, and other merger related costs. Net income for the three
and nine months ended December 31, 1997, excluding the one-time charge related
to the termination of the planned merger, was $1.2 million or $0.06 per
diluted share, and $4.8 million or $0.22 per diluted share, respectively. The
diluted shares used in per share computations include the effect of
outstanding stock options.
 
LIQUIDITY AND CAPITAL RESOURCES
 
  The Company utilized cash of $6.0 million from operating activities during
the nine months ended December 31, 1997, primarily a result of the net income,
and increases in depreciation and accrued liabilities being more than offset
by the increases in accounts receivable, prepaid expenses and the decreases in
deferred revenue. The levels of accounts receivable at each quarter end is
impacted by the concentration of revenues in the final weeks of each quarter
and may be negatively affected by expanded international revenues in relation
to total revenues as licenses to international customers often have longer
payment terms.
 
  During the nine months ended December 31, 1997, the Company made a net
investment of $7.8 million in short term investments and invested $8.6 million
in property and equipment, which related primarily to computer hardware and
software to support the growing organization.
 
  Cash provided by financing activities for the nine months ended December 31,
1997, totaled $2.4 million, and consisted primarily of proceeds from the
exercise of stock options and from the issuance of stock under the Employee
Share Purchase Program.
 
                                    Page 11
<PAGE>
 
  The Company believes that cash flows from operations and existing cash and
cash equivalents and short-term investments will be sufficient to meet its
needs for at least the next twelve months.
 
FACTORS THAT MAY AFFECT OUR BUSINESS
 
  Variability of Operating Results; Uncertainty of Future Operating
Results. The Company was incorporated in 1991 and introduced its first product
in 1992. Although the Company has been profitable each fiscal year since
inception, there can be no assurance that the Company will be able to sustain
profitability on a quarterly or annual basis in the future. In addition, the
Company's revenues and operating results have varied substantially in the past
and are likely to vary substantially in the future due to a variety of
factors, including (i) the timing and size of the Company's individual license
transactions, and, in particular, the fact that the Company's revenues in any
quarter can be largely dependent on a limited number of large licenses, (ii)
the fact that a significant portion of the Company's revenues in any given
quarter are recognized in the last month, weeks or even days of the quarter,
(iii) the relatively long sales cycle for the Company's software products,
which is typically six to nine months, (iv) the relative proportion of total
revenues derived from license revenues and services and maintenance revenues,
(v) the timing of the introduction of new products or product enhancements by
the Company and its competitors, (vi) the extent of customization required by
any individual license transaction, which can result in deferral of
significant revenues until completion or acceptance of certain customized
portions of the software, (vii) changes in customers budgets, (viii)
seasonality of technology purchases by customers and general economic
conditions, (ix) the mix of revenues among various distribution channels and
between domestic and international customers, (x) the relative proportion of
implementation services performed by the Company for which the Company engages
independent contractors, which are typically more costly than internal
personnel and (xi) the relative proportion of license revenues derived from
third party products distributed by the Company in conjunction with its
products. Therefore, the Company believes that period to period comparisons of
its revenues and operating results are not necessarily meaningful and that
such comparison cannot be relied upon as indicators of future performance.
 
  Estimating future revenues is difficult because the Company ships its
products soon after an order is received and as such does not have a
significant backlog. Thus, quarterly license revenues are heavily dependent
upon orders received and shipped within the same quarter. Moreover, the
Company has generally recorded a significant portion of its total quarterly
revenues in the third month of the quarter, with a concentration of these
revenues in the last half of that third month. This concentration of revenues
is influenced by customer tendencies to make significant capital expenditures
at the end of a fiscal quarter. The Company expects these revenue patterns to
continue for the foreseeable future. In addition, quarterly license revenues
are dependent on the timing of revenue recognition, which can be affected by
many factors, including the timing of customer installations, a shift in the
mix of license transactions towards larger transactions and a lengthening of
the sales cycle with respect to these larger transactions, completion of
customization activity and the fulfillment of acceptance criteria. The Company
has from time to time experienced delays in recognizing revenues with respect
to certain orders. Despite the uncertainties in its revenue patterns, the
Company's operating expenses are based upon anticipated revenue levels and
such expenses are incurred on an approximately ratable basis throughout the
quarter. As a result, if expected revenues are deferred or otherwise not
realized in a quarter for any reason, the Company's business, operating
results and financial condition would be materially adversely affected.
 
  The Company intends to continue to increase its research and development
expenditures in order to pursue its strategy of developing applications
tailored to the requirements of specific additional vertical markets, and to
continue to increase sales and marketing expenditures significantly as the
Company expands its domestic and international sales and marketing staff and
develops indirect sales and distribution channels. In addition, general and
administrative expenses have increased as the Company invests in the
infrastructure needed to support its growing operations. Accordingly, to the
extent that such expenses precede or are not subsequently followed by
increased revenues, the Company's business, operating results and financial
condition will be materially adversely affected.
 
                                    Page 12
<PAGE>
 
  Due to all of the foregoing factors, it is likely that in some future
quarter the Company's total revenues or operating results will be below the
expectations of public market analysts and investors. In such event, the price
of the Company's Common Stock would likely decline, perhaps substantially.
 
  Intense Competition. The customer information management software market is
relatively new, intensely competitive, highly fragmented, subject to rapid
change, and highly sensitive to new product introductions and marketing
efforts by industry participants. The Company competes with a variety of other
companies depending on the target market for their products. These competitors
include (i) a select number of companies, such as Clarify Inc. and The Vantive
Corporation, targeting the enterprise-wide customer information market; (ii) a
substantial number of small private companies and certain public companies,
such as Remedy Corporation, Siebel Systems, Inc., Aurum Software, Inc. and
Software Artistry, Inc., which offer products targeted at one or more specific
markets, including the customer support market, the help desk market, the
quality assurance market and the sales and marketing automation market; (iii)
professional services organizations, such as Anderson Consulting, that design
and develop customer systems; (iv) large information technology providers such
as International Business Machines Corporation ("IBM") and Computer Associates
International, Inc.; and (v) the internal information technology departments
of potential customers, which develop proprietary customer information
management applications. Among the Company's potential competitors are also a
number of large hardware and software companies that may develop or acquire
products that compete with the Company's products. In this regard, SAP AG and
Oracle Corporation have each introduced a customer support module as part of
their application suites. The Company believes that many existing competitors
and new market entrants will attempt to develop fully integrated customer
information management systems that will compete with the Company's products.
 
  Current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties to increase
the ability of their products to address the needs of the Company's
prospective customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. Increased competition is likely to result in price reductions, reduced
operating margins and loss of market share, any one of which could materially
adversely affect the Company's business, results of operations or financial
condition. Many of the Company's current and potential competitors have
significantly greater financial, technical, marketing and other resources than
the Company. As a result, they may be able to respond more quickly to new or
emerging technologies and to changes in customer requirements, or to devote
greater resources to the development, promotion and sale of their products,
than can the Company. There can be no assurance that the Company will be able
to compete successfully against current or future competitors or that
competitive pressures will not materially adversely affect the Company's
business operating results and financial condition.
 
  Dependence on Implementation Relationships. The Company historically relied
on internal resources and subcontracted consultants on an as-needed basis to
provide consulting and implementation services for the Company's products. In
recent periods, the Company has sought to increase the use of third party
consultants and system integrators to provide implementation, customization
and consulting services directly to the Company's customers. The Company's
increasing reliance on such third party consultants and systems integrators
poses several risks that could have a material adverse effect on the Company's
business, operating results or financial condition. For example, there can be
no assurance that these third party providers, who will have direct
obligations to the Company's customers, will be able to provide a level of
quality of service required to meet the needs of such customers. If the
Company is unable to develop further and to maintain effective, long term
relationships with these third parties, or if these third parties fail to meet
the needs of the Company's customers in a timely fashion, the Company's
business, operating results and financial condition will be materially and
adversely affected. Further, there can be no assurance that these third party
providers, many of whom have significantly greater financial, technical,
personnel and marketing resources than the Company, will not market software
products that compete with the Company's products, or will not otherwise
reduce or discontinue their relationship with or support of the Company and
its products. Finally, many of these current and potential third party
providers have existing relationships or may undertake relationships with the
Company's
 
                                    Page 13
<PAGE>
 
direct competitors. The inability to recruit, or the loss of, important third
party systems integrators or professional consulting firms would have a
material adverse effect on the Company's business, operating results and
financial condition.
 
  Rapid Technological Change; Dependence on Product Development. The market
for the Company's products is characterized by rapid technological advances,
evolving industry standards in computer hardware and software technology,
changes in customer requirements and frequent new product introductions and
enhancements. The Company is currently investing significant resources in
product development and expects to continue to do so in the future. The
Company's future success will depend on its ability to continue to enhance its
current product line and to continue to develop and introduce new products
that keep pace with competitive product introductions and technological
developments, satisfy diverse and evolving customer requirements and otherwise
achieve market acceptance. There can be no assurance that the Company will be
successful in continuing to develop and market on a timely and cost effective
basis fully functional product enhancements or new products that respond to
technological advances by others, or that these products will achieve market
acceptance. In addition, the Company has in the past experienced delays in the
development, introduction and marketing of new enhanced products, and there
can be no assurance that the Company will not experience similar delays in the
future. Any failure by the Company to anticipate or respond adequately to
changes in technology and customer preferences, or any significant delays in
product development or introduction, would have a material adverse effect on
the Company's business, operating results and financial condition.
 
  Due to the complexity and sophistication of the Company's software products,
the Company's products from time to time contain defects or "bugs" which can
be difficult to correct. Furthermore, as the Company continues to develop and
enhance its products, there can be no assurance that the Company will be able
to identify and correct defects in such a manner as will permit the timely
introduction of such products. Moreover, despite extensive testing, the
Company has from time to time discovered defects only after its products have
been used by many customers. There can be no assurance that software defects
will not cause delays in product introductions and shipments, result in
increased costs, require design modifications, or impair customer satisfaction
with the Company's products. Any such event could materially adversely affect
the Company's business, operating results and financial condition.
 
  Expansion of Distribution Channels. The Company has historically sold its
products through its direct sales force and a limited number of distributors.
The Company's ability to achieve significant revenue growth in the future will
depend in large part on its success in recruiting and training sufficient
sales personnel and establishing relationships with distributors, resellers
and systems integrators. The Company is currently investing, and plans to
continue to invest, significant resources to expand its domestic and
international direct sales force and develop distribution relationships with
certain third party distributors, resellers and systems integrators. The
Company's existing distribution relationships are generally non-exclusive and
can be terminated by either party without cause. The Company's distributors
also sell or can potentially sell products offered by the Company's
competitors. There can be no assurance that the Company will be able to retain
or attract a sufficient number of its existing or future third party
distribution partners or that such partners will recommend, or continue to
recommend, the Company's products. The inability to establish or maintain
successful relationships with distributors, resellers or systems integrators
could have a material adverse effect on the Company's business, operating
results or financial condition. In addition, there can be no assurance that
the Company will be able to successfully expand its direct sales force or
other distribution channels. Any failure by the company to expand its direct
sales force or other distribution channels would materially adversely affect
the Company's business, operating results and financial condition.
 
  Expansion of International Operations; Foreign Currency Fluctuations. An
important element of the Company's strategy is to expand its international
operations. The Company has established subsidiaries in the United Kingdom,
Canada and France and is currently investing significant resources in its
international operations, including the development of certain third party
distributor relationships and the hiring of additional sales representatives.
However, international sales to date have been limited and there can be no
assurance that the Company will be successful in expanding its international
revenue base. If the Company is able to achieve a
 
                                    Page 14
<PAGE>
 
material increase in international revenues, the Company's business, operating
results or financial condition could be materially adversely affected by risks
inherent in conducting business internationally, such as changes in currency
exchange rates, longer payment cycles, difficulties in staffing and managing
international operations, problems in collecting accounts receivable, seasonal
reductions in business activity during the summer months in Europe and certain
other parts of the world, increases in tariffs, duties, price controls or
other restrictions on foreign currencies and trade barriers imposed by foreign
nationalities. In this regard, to the extent the Company's international
operations expand, the Company expects that an increasing portion of its
international license revenues will be denominated in foreign currencies. In
addition, the Company has only limited experience in developing localized
versions of its products and marketing and distributing its products
internationally. There can be no assurance that the Company will be able to
successfully localize, market, sell and deliver its products internationally.
The inability of the Company to successfully expand its international
operations in a timely manner could materially adversely affect the Company's
business, operating results or financial condition.
 
  Management of Growth. The Company's business has grown rapidly. The growth
of the Company's business and expansion of its customer base has placed and is
expected to continue to place a significant strain on the Company's management
and operations. The Company's future operating results will depend on its
ability to continue to broaden the Company's senior management group. From
time to time, sales personnel, engineers and other employees have left the
Company for various reasons, and the Company's future success will depend on
its ability to attract, hire and retain skilled employees and to hire
replacements for employees that leave the Company. The Company's expansion has
also resulted in substantial growth in the number of its employees and the
burden placed upon its operating and financial systems, resulting in increased
responsibility for both existing and new management personnel. The Company has
recently experienced some turnover of sales personnel and understands that it
is important to focus its efforts on continuing to maintain and build a
quality sales organization. In addition, the Company's ability to effectively
manage and support its growth will be substantially dependent on its ability
to continue to build upon its financial and management controls, reporting
systems and procedures on a timely basis and to expand and maintain highly
trained internal and third party resources to provide product customization,
implementation, training and other support services. The Company also expects
to increase its customer support operations to the extent the installed base
of the Company's products continues to grow. Accordingly, the Company's future
operating results will depend on the ability of its management and other key
employees to continue to implement and improve its systems for operations,
financial control and information management, to recruit, train and manage its
employee base, in particular, its direct sales force and customer support
organization, and to work effectively with third party consulting and
implementation service providers. There can be no assurance that the Company
will be able to manage or continue to manage its recent or any future growth
successfully, and any inability to do so would have a material adverse effect
on the Company's business, operating results and financial condition. There
also can be no assurance that the Company will be able to sustain the rates of
revenue growth that it has experienced in the past.
 
  Developing Markets; Product Concentration. The Company's future financial
performance will depend in large part on the growth in demand for individual
customer information management applications as well as the number of
organizations adopting comprehensive customer information systems for their
client/server computing environments. The markets for these applications are
relatively new and developing. If the demand for customer information
management applications develops more slowly than the Company currently
anticipates, it would have a material adverse effect on the demand for the
Company's applications and on its business, operating results and financial
condition. The Company currently markets five application products, together
with related application service modules and a customization tool, which are
licensed for use in conjunction with the Company's applications. Although the
Company's application service modules and customization tool are offered
separately from the Company's applications, the Company believes it is
unlikely that any significant revenues could be derived from such modules and
such tool unless the customer is using at least one of the Company's
applications. Accordingly, in the event the Company's applications are not
accepted by the marketplace, the Company's business, operating results and
financial condition would be materially adversely affected.
 
                                    Page 15
<PAGE>
 
  Intellectual Property Rights. The Company's success is dependent on its
ability to protect its proprietary technology. The Company licenses its
products in object code form only, although it has source code escrow
arrangement with certain customers. The Company relies on a combination of
copyright, trademark and trade secret laws, as well as confidentiality
agreements and licensing arrangements, to establish and protect its
proprietary rights. The Company does not have any patents or patent
applications pending, and existing copyright, trademark and trade secret laws
afford only limited protection. In addition, the laws of certain countries do
not protect the Company's proprietary rights as do the laws of the United
States. Accordingly there can be no assurance that the Company will be able to
protect its proprietary rights against unauthorized third party copying or
use, which could materially adversely affect the Company's business, operating
results or financial condition.
 
  Despite the Company's efforts to protect its proprietary rights, attempts
may be made to copy or reverse engineer aspects of the Company's products or
to obtain and use information that the Company regards as proprietary.
Moreover, there can be no assurance that others will not develop products that
infringe the Company's proprietary rights, or that are similar or superior to
those developed by the Company. Policing the unauthorized use of the Company's
products is difficult. Litigation may be necessary in the future to enforce
the Company's intellectual property rights, to protect the Company's trade
secrets or to determine the validity and scope of the proprietary right of
others. Such litigation could result in substantial costs and diversion of
resources and could have a material adverse effect on the Company's business,
operating results or financial condition.
 
  As is common in the software industry, the Company from time to time
receives notices from third parties claiming infringement by the Company's
products of third party proprietary rights. While the Company is not currently
subject to any such claim, the Company expects its software products will
increasingly be subject to such claims as the number of products and
competitors in the Company's industry segments grows and the functionality of
product overlaps. Any such claim, with or without merit, could result in
significant litigation costs and require the Company to enter into royalty and
licensing agreements, which could have a material adverse effect on the
Company's business, operating results or financial condition. Such royalty and
licensing agreements, if required, may not be available on terms acceptable by
the Company or at all.
 
  The Company also relies on certain technology which it licenses from third
parties, including software which is integrated with internally developed
software and used in the Company's products to perform key functions. There
can be no assurance that these third party technology licenses will continue
to be available to the Company on commercially reasonable terms. The loss of,
or inability of the Company to maintain, any of these technology licenses
could result in delays or reductions in product shipments until equivalent
technology could be identified, licensed and integrated. Any such delays or
reductions in product shipments would materially adversely affect the
Company's business, operating results and financial condition.
 
  Dependence on Key Personnel. The Company's success depends to a significant
extent upon a limited number of members of senior management and other key
employees, including Ori Sasson, the Company's Chairman, President and Chief
Executive Officer. The Company does not maintain key man life insurance on any
such persons. The loss of the service of one or more key managers or other
employees could have a material adverse effect upon the Company's business,
operating results or financial condition. In addition, the Company believes
that its future success will depend in large part upon its ability to attract
and retain additional highly skilled technical, management, sales and
marketing personnel. Competition for such personnel in the computer software
industry is intense. There can be no assurance the Company will be successful
in attracting and retaining such personnel, and, the failure to do so, could
have a material adverse effect on the Company's business, operating results or
financial condition.
 
  Product Liability. Although the Company has not experienced any product
liability claims to date, the sale and support of products by the Company and
the incorporation of products from other companies may entail the risk of
product liability claims. The Company's license agreements with its customers
typically contain provisions intended to limit the Company's exposure to such
claims, but such provisions may not be effective in
 
                                    Page 16
<PAGE>
 
limiting the Company's exposure. A successful product liability action brought
against the Company could have a material adverse effect upon the Company's
business, operating results or financial condition.
 
  Volatility of Share Price. The market price for the Company's Common Stock
has been and is expected to continue to be significantly affected by factors
such as the announcement of new products or product enhancements by the
Company or its competitors, technological innovations by the Company or its
competitors, quarterly variations in the Company's results of operations or
the results of operations of the Company's competitors, changes in earnings
estimates or recommendations by securities analysts and general market
conditions. In particular, the stock prices for many companies in the
technology and emerging growth sector have experienced wide fluctuations which
have often been unrelated to the operating performance of such companies. Such
fluctuations may adversely affect the market price of the Company's Common
Stock.
 
PART II. OTHER INFORMATION
 
Item 6. Exhibits and Reports on Form 8-K
 
 List of Exhibits
 
<TABLE>
    <C>  <S>
    11.1 Statement of Computation of Net Income per Share
    27   Financial Data Schedule
</TABLE>
 
 Reports on Form 8-K:
 
  None
 
                                    Page 17
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
                                          SCOPUS TECHNOLOGY, INC.
                                           (Registrant)
 
Dated: February 13, 1998
 
                                          /s/ Ori Sasson
                                          _____________________________________
                                          Ori Sasson
                                          Chairman of the Board, President and
                                           Chief Executive Officer (Principal
                                           Executive Officer)
 
                                          /s/ Michele L. Axelson
                                          _____________________________________
                                          Michele L. Axelson
                                          Chief Financial Officer (Principal
                                           Financial and Accounting Officer)
 
                                    Page 18
<PAGE>
 
                            SCOPUS TECHNOLOGY, INC.
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
     EXHIBIT DESCRIPTION                                        PAGE
     ------- -----------                                        ----
     <C>     <S>                                                <C>
      11.1   Statement of Computation of Net Income per Share    20
</TABLE>
 
                                    Page 19