SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


(Mark One)

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

For the quarterly period ended March 31, 2001


                                       or

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

For the transition period from __________________ to __________________

                         Commission file number 0-19377


                                TCSI Corporation
             (Exact name of registrant as specified in its charter)


                 NEVADA                                  68-0140975
     (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)

                 1080 Marina Village Parkway, Alameda, CA 94501
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (510) 749-8500
              (Registrant's telephone number, including area code)

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

Yes  X           No
    ---            ---

     23,205,534  shares of Common Stock of the registrant were outstanding as of
May 4, 2001.


<PAGE>


                                Table of Contents


                                                                          Page


Part I - Financial Information

Item 1.  Consolidated Financial Statements

         Consolidated Balance Sheets at
              March 31, 2001 (Unaudited) and December 31, 2000             3

         Consolidated Statements of Operations for the three
              months ended March 31, 2001 and 2000 (Unaudited)             4

         Consolidated Statements of Cash Flows for the
              Three months ended March 31, 2001 and 2000 (Unaudited)       5

         Notes to Consolidated Financial Statements (Unaudited)            6

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                              10

Item 3.  Market Risk                                                      22

Part II - Other Information


Item 1.  Legal Proceedings                                               N/A

Item 2.  Changes in Securities                                           N/A

Item 3.  Defaults Upon Senior Securities                                 N/A

Item 4.  Submission of Matters to a Vote of Security Holders             N/A

Item 5.  Other Information                                               N/A

Item 6.  Exhibits and Reports on Form 8-K                                 23

Signature                                                                 24


                                       2
<PAGE>


Part I - Financial Information
Item 1.  Consolidated Financial Statements

                                TCSI CORPORATION
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                                                     March 31,            December 31,
                                                                                        2001                  2000
                                                                                  -----------------     -----------------
                                                                                    (Unaudited)
<S>                                                                                       <C>               <C>
ASSETS
Current assets:
     Cash and equivalents                                                                 $ 16,794          $ 11,886
     Marketable securities                                                                  15,926            21,523
     Receivables, net                                                                        2,429             4,827
     Other receivables                                                                         232               191
     Other current assets                                                                    1,006             1,238
                                                                                          --------          --------
         Total current assets                                                               36,387            39,665
Furniture, equipment, and leasehold improvements, net                                        4,979             5,568
Noncurrent equity investment                                                                   558               658
Other noncurrent assets                                                                        417               422
                                                                                          --------          --------
              Total assets                                                                $ 42,341          $ 46,313
                                                                                          ========          ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities                                             $  2,148          $  2,777
     Accrued compensation and related costs                                                  2,038             2,209
     Deferred revenues                                                                       1,272             1,715
     Income taxes payable                                                                    1,055             1,054
                                                                                          --------          --------
         Total current liabilities                                                           6,513             7,755

Shareholders' equity:
     Preferred stock, par value $0.01 per share; 5,000,000 shares authorized;
         none issued and outstanding                                                           --                 --
     Common stock,  par value  $0.10 per share; 75,000,000 shares authorized;
         23,205,534 and 23,144,219 shares issued and outstanding, at March 31,
         2001 and December 31, 2000, respectively                                            2,320             2,314
     Additional paid-in capital                                                             52,752            52,654
     Accumulated other comprehensive income                                                     21                21
     Accumulated deficit                                                                   (19,265)          (16,431)
                                                                                          --------          --------
         Total shareholders' equity                                                         35,828            38,558
                                                                                          --------          --------
            Total liabilities and shareholders' equity                                    $ 42,341          $ 46,313
                                                                                          ========          ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       3
<PAGE>

                                TCSI CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                         Three Months Ended March 31
                                                                      ---------------------------------
                                                                           2001               2000
                                                                      -------------    ----------------
Revenues:
<S>                                                                       <C>                  <C>
  Services                                                                $  1,586             $  3,290
  Software licensing fees                                                    2,067                2,057
                                                                          --------             --------
    Total revenues                                                           3,653                5,347

Costs, expenses, and special items:
  Services                                                                   1,637                2,347
  Product development                                                        2,193                3,369
  Selling, general, and administrative                                       2,885                3,182
  Nonrecurring special items, net                                               --                  364
                                                                          --------             --------
    Total costs, expenses, and special items                                 6,715                9,262
                                                                          --------             --------

Loss from operations                                                        (3,062)              (3,915)
Interest income and other income (expense), net                                381                  503
                                                                          --------             --------
Loss before income tax provision                                            (2,681)              (3,412)
Income tax provision                                                           153                   --
                                                                          ========             ========
Net loss                                                                  $ (2,834)            $ (3,412)
                                                                          ========             ========

Net loss per share - basic and diluted                                    $  (0.12)            $  (0.15)
                                                                          ========             ========
Shares used in computing basic and diluted  net loss
per share                                                                   23,185               22,875
                                                                          ========             ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       4
<PAGE>

                                TCSI CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                   Three Months Ended
                                                                                                        March 31
                                                                                          -----------------------------------
                                                                                               2001               2000
                                                                                          ----------------   ----------------
<S>                                                                                          <C>               <C>
Cash flows from operating activities:
   Net loss                                                                                  $ (2,834)         $ (3,412)
   Adjustments to reconcile net loss to net cash provided by (used in)
     operating activities:
       Depreciation and amortization                                                              616             1,131
       Compensation charge associated with grant of stock options to employees                     20                22
       Write-down of noncurrent equity investment for other than temporary
            decline in value
                                                                                                  100                --
       Net changes in operating assets and liabilities:
          Receivables, net                                                                      2,398             7,490
          Other receivables, other current assets and intangibles and other
               noncurrent assets, net                                                             196               866
          Accounts payable and accrued liabilities                                               (629)           (1,408)
          Accrued compensation and related costs                                                 (171)               97
          Deferred revenues                                                                      (443)              525
          Income taxes payable                                                                      1               411
                                                                                             --------          --------
              Net cash provided by (used in ) operating activities                               (746)            5,722

Cash flows from investing activities:
  Expenditures for furniture, equipment and leasehold improvements                                (27)             (299)
  Purchases of marketable securities                                                           (2,685)           (1,009)
  Redemptions of marketable securities                                                          8,282             6,944
                                                                                             --------          --------
              Net cash provided by investing activities                                         5,570             5,636

Cash flows from financing activities:
     Proceeds from issuance of common stock                                                        84             1,163
Net increase in cash and equivalents                                                            4,908            12,521
Cash and equivalents at the beginning of the period                                            11,886             8,788
                                                                                             --------          --------
Cash and equivalents at the end of the period                                                $ 16,794          $ 21,309
                                                                                             ========          ========

Supplemental disclosures of cash flow information:
Cash paid (refunds received) for income taxes, net                                           $    153          $   (394)
                                                                                             ========          ========
</TABLE>

          See accompanying notes to consolidated financial statements.


                                       5
<PAGE>

                                TCSI CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

     The unaudited consolidated interim financial statements of TCSI Corporation
("TCSI" or the "Company"), included herein, have been prepared on the same basis
as the December 31, 2000 audited  consolidated  financial statements and include
all  adjustments,  consisting of normal recurring  adjustments,  necessary for a
fair statement of the results for the interim periods presented.  The results of
operations for current interim periods are not necessarily indicative of results
to be expected for the current year or for any other period.  These consolidated
financial statements should be read in conjunction with the audited consolidated
financial  statements  and notes thereto for the fiscal year ended  December 31,
2000 included in the Company's Annual Report on Form 10-K (File No. 0-19377).

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally accepted in the United States requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosures of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting periods.  Actual results could differ materially from those
estimates.

NOTE 2 - RECEIVABLES AND CREDIT RISK

     Receivable  balances are primarily from large,  credit-worthy  customers in
the telecommunications industry. The Company performs ongoing credit evaluations
of its  customers  and  does  not  require  collateral.  The  Company  does  not
anticipate any significant default from a customer's inability to make a payment
for products  received and/or for services  rendered.  Allowances are maintained
for potential credit losses.

     Receivables consist of the following:

                                                    March 31,      December 31,
                                                       2001           2000
                                                  -------------    -----------
                                                         (In thousands)
     Billed receivables                              $ 2,836         $ 3,604
     Unbilled receivables                                208           1,838
     Less: allowance for doubtful accounts              (615)           (615)
                                                     -------         -------
                                                     $ 2,429         $ 4,827
                                                     =======         =======


NOTE 3 - FURNITURE, EQUIPMENT, AND LEASEHOLD IMPROVEMENTS, NET

     Furniture,  equipment,  and leasehold  improvements are stated at cost less
accumulated   depreciation  and   amortization.   Furniture  and  equipment  are
depreciated over the estimated service lives of the assets (three to five years)
utilizing the straight-line  method.  Leasehold  improvements are amortized over
the shorter of the term of the related  office  lease or the  estimated  service
lives of the assets (ten years) utilizing the straight-line method.


                                       6
<PAGE>

                                TCSI CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

                                   (Continued)


Equipment,   furniture,  and  leasehold  improvement  balances  consist  of  the
following:

<TABLE>
<CAPTION>
                                                            March 31,     December 31,
                                                             2001            2000
                                                         -------------   ------------
                                                                  (In thousands)
<S>                                                        <C>            <C>
     Computer equipment                                    $ 20,030       $ 20,011
     Furniture and fixtures                                   4,253          4,253
     Leasehold improvements                                   7,097          7,089
                                                           --------       --------

                                                             31,380         31,353
     Less: accumulated depreciation and amortization        (26,401)       (25,785)
                                                           --------       --------
                                                           $  4,979       $  5,568
                                                           ========       ========
</TABLE>


NOTE 4 - INCOME TAXES

     Due to  uncertainties  regarding  the amount  and timing of future  taxable
income,  the Company,  as of March 31, 2001 and  December  31, 2000,  had no net
deferred  tax  assets due to the  establishment  of a full  valuation  allowance
against its deferred tax assets.


                                       7
<PAGE>

                                TCSI CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

                                   (Continued)

NOTE 5 - NET LOSS PER SHARE

Per Share Information

     Basic net loss per share is computed  using the weighted  average number of
common  shares  outstanding.  Diluted net loss per share is  computed  using the
weighted  average number of common shares  outstanding and dilutive common stock
equivalents  from the  Company's  stock  option plans and  outstanding  warrant,
calculated using the treasury stock method.

     The  following  table sets forth the  computation  of basic and diluted net
loss per share:

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                 March 31
                                                      ------------------------------
                                                          2001             2000
                                                      -------------    -------------
                                                      (In  thousands,   except  per
                                                      share amounts)
<S>                                                     <C>                <C>
NUMERATOR:

    Numerator for basic net loss per share              $ (2,834)          $ (3,412)
                                                        ========           ========

DENOMINATOR:
    Denominator for basic net loss per share -            23,185             22,875
        weighted-average shares outstanding
    Effect of dilutive securities-employee
    Stock options*                                            --                 --
                                                        --------           --------
Denominator for diluted net loss per share                23,185             22,875
                                                        ========           ========
 Net  loss per share - basic and diluted                $  (0.12)          $  (0.15)
                                                        ========           ========
</TABLE>


* Since the Company had losses from  operations  during the three  months  ended
March 31, 2001 and March 31, 2000,  weighted-average shares were not included in
the computations because their effects would be antidilutive.


                                       8
<PAGE>

                                TCSI CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

                                   (Continued)
NOTE 6 - COMPREHENSIVE LOSS

     The  following  is a  summary  of  comprehensive  loss for the  three-month
periods ended March 31, 2001 and 2000, respectively:

                                               Three Months Ended
                                                    March 31
                                          ----------------------------
                                              2001             2000
                                          -----------       ----------
                                                 (In thousands)

Net loss                                   $(2,834)          $(3,412)
Unrealized gains on marketable
securities                                      --                 1
                                           =======           =======
Comprehensive loss                         $(2,834)          $(3,411)
                                           =======           =======


                                       9
<PAGE>

                                TCSI CORPORATION

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

     In addition to historical  information  contained herein, this Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
contains forward-looking  statements.  The forward-looking  statements contained
herein are subject to certain  factors that could cause actual results to differ
materially from those reflected in the forward-looking  statements. Such factors
include,  but are not limited to, those discussed  below under "Certain  Factors
That May Affect  Future  Results And Market Price Of Stock" and in the Company's
Form 10-K for the fiscal year ended December 31, 2000.

Overview

     TCSI  currently  operates in one  industry,  which is providing  integrated
software  products and services for the global telecom  industry.  Historically,
the  Company's  two product  lines have been:  (1)  Catalant(R),  which  offered
carrier-class   network  management   application  and  platform   capabilities,
targeting next generation voice, data and wireless networks and (2) WorldWin(R),
which  offered  integrated   Operations  Support  System  solutions,   including
providing service  assurance,  mediation and billing  functionality for emerging
service  providers.  On a  going-forward  basis,  the Company  will focus on the
following two products:  (1) Catalant and (2)  IncomeConnect(R),  a billing data
mediation  product  which  either  centrally,  or  in a  distributed  deployment
architecture,  collects  billing data  traversing  multiple  protocols,  network
device types and polling requirements. In the three months ended March 31, 2001,
TCSI Corporation launched two new products within the Catalant product line: (i)
the Catalant Service  Fulfillment  Suite, a scalable,  ready-to-use  network and
services   management   system   that   enables   the   delivery   of   complex,
customer-centric  data  communications   services  over  today's  Time  Division
Management  ("TDM"),  Frame Relay,  and  automated  Asynchronous  Transfer  Mode
("ATM")  technologies;  and (ii)  Catalant  Quickstart,  a turnkey  software and
services  package  that  allows  emerging  equipment  manufacturers  to deploy a
functional element management system ("EMS") for their devices.

     The Company  provides  services to customers  under  time-and-material  and
fixed   price    contracts.    The    Company    recognizes    revenues    under
time-and-material-type contracts as the services are performed. Service revenues
also include maintenance revenues, which the Company recognizes ratably over the
terms of the maintenance contracts,  which are usually based upon a twelve-month
period.  For fixed price contracts,  the Company  recognizes  revenues using the
percentage-of-completion  method,  which is based on the  percentage of contract
costs  incurred,  as measured  by labor  hours,  in relation to total  estimated
contract  costs.  The scope and size of the  Company's  system  solutions can be
large  and  complex,  often  requiring  delivery  over  several  quarters.  From
time-to-time,  customers  have  established  payment  milestones,  which  can be
achieved only after completion of the related  services.  In limited cases, some
customers have disputed fees charged for services provided. Although the Company
has been,  and is, under no  obligation to compromise  its billed  amounts,  the
Company has, in certain specific customer cases, reduced its accounts receivable
when such disputes could not be amicably resolved,  and may do so in the future,
if the specific  case  warrants  it.  Additionally,  a portion of the  Company's
revenues  has been,  and is expected to continue to be,  derived  from  software
licensing  fees from a limited  number of  customers.  The Company also licenses
software  to  customers  under  contracts,  which  do  not  require  significant
production,  modification or customization of software.  The Company  recognizes
revenues under these contracts when a non-cancelable  license agreement has been
signed,  the  product  has been  shipped,  the fees are  fixed or  determinable,
collectibility is probable and vendor-specific  objective evidence of fair value
exists to allocate the total fee to the elements of the arrangement.


                                       10
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

     The  licensing  and  implementation  of  the  Company's  software  products
generally   involve  a  significant   commitment  of  resources  by  prospective
customers.  As a result,  the  Company's  sales  process  is  subject  to delays
associated  with  lengthy  approval   processes   typically   accompanying  such
significant  capital  expenditures.  Accordingly,  the Company is  substantially
dependent on its customers' decisions as to the timing and level of expenditures
and resource  commitments.  The  variability in the timing of such  expenditures
could cause material  fluctuations in the Company's business,  operating results
and financial  condition.  In this regard, the consistency of the Company's 2001
and 2000  quarterly  results  for the three  months  ended  March 31,  have been
adversely  affected by delays in the  purchase of software  licenses and related
services.

     A substantial portion of the Company's revenues is derived from the sale of
the Company's  software products and services to major telecom service providers
and equipment manufacturers.  Due to the complex nature of the advanced element,
network, and service management systems being developed,  successful  deployment
of these systems can contain significant technological risks. The Company has in
the  past  relied,  and  will  in  the  future  rely,  on  its  development  and
implementation expertise. Additionally,  development and implementation of these
systems often occurs over several quarters.  There exists the risk that a change
in a customer's  technology or business strategy during such lengthy development
and  implementation  periods  may  cause  early  termination  of  a  project  or
discontinuance of future phases. In this regard, the Company,  in limited cases,
has  experienced,  and may continue to experience,  fluctuations in revenues and
operating  results on a quarterly  basis due to  termination,  cancellation,  or
non-renewal  of  agreements.  Management  believes that revenue growth is highly
dependent upon the development  and  enhancement of software  products that meet
market needs.  Management intends to target  Company-funded  product development
spending at levels consistent with the Company's growth objectives and improving
its competitive  position.  Furthermore,  management  expects that, from time to
time, it may  periodically  acquire  businesses,  products,  or  technologies to
enhance the Company's current product offerings.

Results of Operations

     Revenues.  The Company  generates  revenues  from  licensing  its  software
products and performing related services to the telecom industry. Total revenues
for the three months ended March 31, 2001  decreased 30% to $3.7  million,  from
$5.3 million for the comparable  2000 period.  The decline in total revenues was
the result of a decline in service  revenues,  while the software  licensing fee
revenues  for the three months  ended March 31, 2001  approximated  the software
licensing fee revenues for the comparable 2000 period.

     Revenues from services for the three months ended March 31, 2001  decreased
52% to $1.6  million,  from $3.3 million for the  comparable  2000  period.  The
decrease  resulted  primarily  from the  completion of several major projects in
2000, which were not replaced in 2001.

     Revenues  outside of the United  States  accounted for 62% of the Company's
total revenues for the three months ended March 31, 2001 compared to 59% for the
comparable  2000 period.  Revenues  from the  Asia-Pacific  region for the three
months ended March 31, 2001 of $1.2 million,  approximated the revenues from the
Asia-Pacific  region for the comparable 2000 period.  Revenues from the European
region for the three months ended March 31, 2001  decreased 42% to $1.1 million,
from $1.9 million for the comparable  2000 period.  The decrease was due to both
the completion of several major projects in 2000 without follow-on work in 2001,
and due to the cancellation of maintenance  contracts for two major customers in
2001.  Revenues  from the  Americas  for the three  months  ended March 31, 2001
decreased 36% to $1.4 million, from $2.2 million for the comparable 2000 period.
The decrease was due to both the decline in professional


                                       11
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

services  work in 2001 for one major  customer,  due to that  customer's  severe
financial  hardships,  and due to decreases in maintenance  revenues in 2001 for
two other major customers,  due to their renewal contracts being deferred to the
second quarter of 2001.  The Company  expects that  international  revenues will
continue to account  for a  significant  portion of its total  revenue in future
periods  and  expects  the  geographical  mix of revenues to vary from period to
period, as it responds to global buying habits and develops  relationships  with
new and existing partners and channels.

     To-date, a portion of revenues has been concentrated among a limited number
of customers.  Three customers each individually  accounted for more than 10% of
the  Company's  revenue  during the three  months  ended  March 31,  2001,  with
Italtel,  NEC and  Cosine  contributing  25%,  20% and  15% of  total  revenues,
respectively.  For the three months ended March 31, 2001, the  concentration  of
revenues  from the  Company's  five  largest  customers  in  aggregate  was 77%,
compared to 51% for the comparable 2000 period. The Company  anticipates that it
will continue to experience significant customer concentration.  There can be no
assurance  that such  customers or any other  customers  will  continue to place
orders with the  Company  which will equal or exceed the  comparable  levels for
prior periods.  (See "Certain  Factors That May Affect Future Results and Market
Price of Stock - Customer Concentration" section.)

     Costs of Services.  The Company incurs direct costs in the  development and
deployment of its customers' software solutions.  The major components of direct
costs are employee  compensation,  subcontractor fees, training costs, and other
billable direct costs,  including travel expenses.  Direct costs also include an
allocation for benefits,  facilities,  telephone  expenses,  information systems
support,  depreciation,  and amortization of intangibles.  Costs of services for
the three months ended March 31, 2001  decreased 30% to $1.6 million,  from $2.3
million for the comparable 2000 period. The decrease is due to reduced headcount
and related  expenses in the current  quarter.  Included in the first quarter of
the current year, was a $100,000  one-time charge incurred in January related to
the write-off of license fees.  Had this charge not occurred,  costs of services
for the three months ended March 31, 2001 would have  decreased  35% compared to
the  comparable  2000 period.  As a  percentage  of service  revenues,  costs of
services for the three months ended March 31, 2001 approximated 100% of revenues
from services  compared to 70% of revenues from services for the comparable 2000
period. The cost of service percentage may fluctuate from the first quarter 2001
level as existing and future  customers  increase or decrease their  development
efforts.

     Product   Development.   Product  development   expenses  include  employee
compensation,  subcontractor fees, training costs, and other product development
costs for existing and  potential new  products,  along with an  allocation  for
benefits,  facilities,  telephone  expenses,  information  systems support,  and
depreciation.  For the three months ended March 31, 2001,  the Company  invested
$2.2  million,  or 59% of revenues,  in  internally-funded  product  development
compared with $3.4 million,  or 64% of revenues for the three months ended March
31,  2000.  During  the first  quarter  of 2001,  product  development  spending
decreased  35%  compared to the first  quarter of 2000.  The decrease in product
development expenses in 2001 is due primarily to the Company's expense reduction
efforts,  resulting in decreases in employee  headcount and related  costs.  The
Company expects to continue to invest in new component-based applications. There
can be no assurance,  however,  that the Company's product development  spending
will result in the successful introduction of new products.

     Selling,  General,  and Administrative  Expenses.  Selling expenses include
sales and marketing,  employee compensation,  promotional material, trade shows,
travel, and facilities  expenses.  General and  administrative  expenses include
compensation costs related to executive management,  finance, and administrative
personnel along with the other administrative costs including recruiting,  legal
and  accounting  fees,  insurance,  and bad debt expense.  Selling,  general and
administrative  expenses for the three months ended March 31, 2001  decreased 9%
to $2.9 million,  from $3.2 million for the comparable 2000 period. The


                                       12
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

decrease in such expenses in 2001 was due to the combined  reasons of reductions
in employee  headcount and related costs,  lower rent expense resulting from the
consolidation  of the  Company's  operations,  and a decline of $0.3  million in
amortization  costs due to the December 2000 write-off of the intangible  assets
and  goodwill  associated  with the  acquisition  of  GTE-NMO,  as a  result  of
impairment.  In an on-going  effort to reduce expenses and focus its operations,
the Company  closed its Bothell,  Washington  office in early April of 2001. The
facility  had  primarily   supported  the  WorldWin  product  line,  which  TCSI
transitioned  away from in the fourth quarter of 2000, due primarily to its poor
historical results. Selling, general and administrative expenses as a percentage
of revenues  for the three  months  ended  March 31, 2001 were 78% of  revenues,
compared to 60% of revenues  for the  comparable  2000  period.  The increase in
selling,  general,  and  administrative  expenses as a percentage of revenues in
2001  resulted  primarily  from the  reduction of such costs at a rate less than
that of the reduction in total revenues.

     Nonrecurring  Special Items. For the three months ended March 31, 2001, the
Company did not record any  nonrecurring  special  items.  For the three  months
ended March 31, 2000, the Company recorded charges of $0.4 million due primarily
to  severance  costs  associated  with  the  Company's   reorganization  of  its
operations.

     Income Tax  Provision.  For the three  months  ended  March 31,  2001,  the
Company recorded an income tax provision of $0.2 million related to payments for
taxes in foreign  jurisdictions.  For the three months ended March 31, 2000,  no
income tax provision was recorded by the Company.

Liquidity and Capital Resources

Operating Activities

     Net cash used in operating activities was $0.7 million for the three months
ended March 31, 2001  compared to net cash  provided by operating  activities of
$5.7 million for the comparable  2000 period.  The decrease in net cash provided
by  operations  was  principally  the result of the  decline in  collections  of
accounts  receivable in 2001 compared to collections of accounts  receivable for
the  comparable  2000 period,  due to the decrease in revenues and reductions in
accounts payable, deferred revenues, and accrued compensation.

Investing Activities

     Net cash  provided by  investing  activities  was $5.6 million for both the
three  months  ended March 31,  2001 and also for the  comparable  2000  period.
During the three  months  ended March 31,  2001,  the  purchases  of  marketable
securities were $2.7 million,  compared to $1.0 million of marketable securities
for the  comparable  2000 period and the  redemptions  of marketable  securities
during the three months ended March 31, 2001 were $8.3 million  compared to $6.9
million of marketable securities for the comparable 2000 period.

Financing Activities

     Net cash  provided by financing  activities  was $0.1 million for the three
months  ended March 31, 2001  compared to $1.2 million for the  comparable  2000
period. The decrease was the result of decreased stock purchases pursuant to the
Company's  Employee  Stock  Purchase Plan  ("ESPP"),  and the result of no stock
option  exercises for the three months ended March 31, 2001, which is a function
of market  conditions and investment  decisions made by employees.  The proceeds
from ESPP purchases for the three months ended


                                       13
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

March 31,  2001 were $0.1  million,  compared  to  proceeds  from  stock  option
exercises and ESPP purchases of $1.0 million and $0.2 million, respectively, for
the comparable 2000 period.

Additional Information on Liquidity and Capital Resources

     As of March 31, 2001, the Company had cash and  equivalents  and short-term
marketable  securities of $32.7 million,  a $0.7 million,  or 2% decrease,  from
December 31, 2000. The Company  believes that existing cash balances  (including
cash equivalents and marketable  securities),  together with existing sources of
liquidity, including cash flows from operating activities, will provide adequate
cash to fund its operations for at least the next twelve months.

     As of March 31, 2001, the Company had no outstanding debt.

Certain Factors That May Affect Future Results and Market Price of Stock

     All statements contained herein that are not statements of historical facts
constitute "forward-looking statements" and are made pursuant to the Safe Harbor
provisions  of the  Private  Securities  Litigation  Reform  Act of 1995.  These
forward-looking  statements  include  statements  relating  to our  expectations
regarding the results of our  operations,  the  development and direction of the
Company's  product  strategy,  expectations  regarding  new services and product
offerings,  future customers and future business strategies.  Any one or more of
our  expectations may not be realized.  Although TCSI Corporation  believes that
the  expectations  reflected in its  forward-looking  statements are reasonable,
such forward-looking  statements involve certain risks,  uncertainties and other
factors that could cause the actual results of TCSI Corporation to be materially
different  from the historical  results or from any future results  expressed or
implied by such  forward-looking  statements.  TCSI  Corporation  undertakes  no
obligation   to  publicly   release  the  results  of  any   revisions  to  such
forward-looking statements, which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

Potential Fluctuations in Future Operating Results

     The  Company  has   experienced  and  expects  to  continue  to  experience
significant  fluctuations in revenues and operating results on a quarterly or an
annual  basis as a result of a number of  factors,  many of which are beyond the
control of the Company. These factors include the cancellation, modification, or
non-renewal of service, license, or maintenance agreements;  the size and timing
of significant customer engagements and license fees; the relative proportion of
services  and software  licensing  fees;  personnel  changes;  capital  spending
patterns of the Company's  customers;  concentration of the Company's customers;
the lengthy  sales  cycles of the  Company's  products  and  services;  industry
acceptance  of  the  Company's  products  and  services;  changes  in  operating
expenses;  new product  introductions and product enhancements by the Company or
its competitors;  the ability of the Company to develop,  introduce,  and market
new  products and product  enhancements  on a timely  basis;  changes in pricing
policies  by  the  Company  or its  competitors;  regulatory  changes,  currency
fluctuations,  and general  economic  factors.  These  factors are  difficult to
forecast, and these or other factors could have a material adverse effect on the
Company's business, operating results, and financial condition.

     Historically,  a portion of the  Company's  revenue has been  derived  from
software  licensing fees from a limited number of customers.  Variability in the
timing of such  license  fees has caused,  and may  continue to cause,  material
fluctuations  in  the  Company's  business,  operating  results,  and  financial
condition.  The Company's  products and services  generally require  significant
capital  expenditures  by  customers as well as


                                       14
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

the  commitment  of  resources to  implement,  monitor,  and test the  Company's
enhancements  to  such  systems.   Accordingly,  the  Company  is  substantially
dependent  on its  customers'  decisions  as to the  timing  and  level  of such
expenditures and resource commitments.

     In  addition,  the  Company  typically  realizes a  significant  portion of
license revenues in the last weeks or even days of a quarter.  As a result,  the
magnitude of quarterly  fluctuations  may not become  evident  until late in, or
after the close of, a particular  quarter.  The Company's  expenses are based in
part on the Company's  expectations  as to future  revenue levels and to a large
extent are fixed in the short-term.  If revenues do not meet  expectations,  the
Company's business,  operating results, and financial condition are likely to be
materially  adversely affected.  In particular,  because only a small portion of
the  Company's  expenses  varies with  revenues,  results of  operations  may be
disproportionately affected by a reduction in revenues. As a result, the Company
believes that  period-to-period  comparisons  of its  operating  results are not
necessarily  meaningful  and should not be relied upon as  indications of future
performance.

Lengthy Sales and Implementation Cycles

     The Company's  products are typically intended for use in applications that
may be critical to a customer's  business.  The licensing and  implementation of
the Company's software products  generally involves a significant  commitment of
resources by prospective  customers.  Historically,  the Company's sales process
has been subject to delays  associated  with  lengthy  approval  processes  that
typically accompany  significant capital  expenditures.  However,  the Company's
latest  products  are  intended to reduce the time and  resources  required  for
delivery to customers,  and,  therefore reduce the sales cycle.  Still, the time
required to implement the  Company's  products can vary  significantly  with the
needs of its  customers  and is  generally  a process  that  extends for several
months.  Because of their complexity,  larger  implementations may take multiple
quarters to complete.  From time to time,  the Company has provided  services to
implement certain large projects,  and, although no contractual basis exists for
the customer to do so, certain  customers  have delayed  payment of a portion of
service fees and in some cases have disputed the fees  charged.  There can be no
assurance  the  Company  will  not  experience  additional  delays  or  disputes
regarding payment in the future, particularly if the Company receives orders for
large, complex installations. Therefore, the Company believes that its quarterly
and  annual  operating  results  and  financial  condition  are  likely  to vary
significantly in the future.

Acceptance of the Company's Products; Product Development Risks

     A substantial  portion of the Company's  revenues are derived from the sale
of the Company's products and services which provide software solutions to major
corporations  in  the  worldwide  telecom  services  and  equipment  industries.
Although  many telecom  companies  currently  seek to integrate  their  business
operation systems and network operation systems,  there can be no assurance that
these or other service  providers will continue to seek the  integration of such
systems  or that such  companies  will use the  Company's  products.  Due to the
complex nature of the OSS software developed by the Company,  the Company has in
the past relied, and will in the future continue to rely, on its development and
implementation  expertise.  The Company  continues to develop software  products
that reduce the customization  necessary to fully integrate  customers' systems.
There  can  be  no  assurance,  however,  that  the  Company  will  continue  to
successfully  develop and market such products or, even if successful,  that the
revenue  from  such  products  will   compensate  for  any  concurrent  loss  of
development and implementation  service revenues.  The failure by the Company to
successfully  develop and market such  products  and  technologies  would have a
material  adverse  effect on its  business,  operating  results,  and  financial
condition.


                                       15
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

     The Company's future business,  operating results,  and financial condition
are  significantly  dependent  upon  the  continued  market  acceptance  of  its
portfolio of products and services. There can be no assurance that the Company's
technology  will continue to achieve market  acceptance or that the Company will
be successful  in  developing,  introducing,  or marketing  improvements  to its
products.  Moreover, the life cycle of component-based  products is difficult to
estimate  due in large part to the recent  changes in the  telecom  market,  the
effect of future product enhancements,  and competition. A decline in the demand
for the Company's software as a result of new or existing competing technologies
or other factors would have a material adverse effect on the Company's business,
operating results, and financial condition.

Customer Concentration

     To  date,  a  significant  portion  of  the  Company's  revenues  has  been
concentrated among a limited number of customers.  The Company  anticipates that
it will continue to experience significant customer concentration.  There can be
no  assurance  that such  customers  or any other  customers  will in the future
continue to place orders with the Company  which equal or exceed the  comparable
levels  for prior  periods.  In  addition,  the  Company's  customers  typically
designate one individual to procure network management software. If any of these
individuals  were  terminated,  transferred,  or replaced,  the Company would be
vulnerable  to  cancellation  of  an  order  if,  for  example,   the  Company's
competitors had preexisting relationships with the individual's replacement.  As
a result of these  factors,  the  Company's  business,  operating  results,  and
financial condition could be materially adversely affected.

Product Defects

     The Company provides complex software  products for major telecom equipment
manufacturers,  systems integrators,  and service providers. The development and
enhancement  of such  complex  software  entails  substantial  risks of  product
defects.  The Company has in the past identified  software defects in certain of
its  products.  There  can be no  assurance  that  errors  will  not be found in
existing or new products or releases after commencement of commercial licensing,
which may result in delay or loss of revenues,  loss of market share, failure to
achieve  market  acceptance,  or may  otherwise  adversely  impact the Company's
business, operating results, and financial condition.

Implementation Risks

     As is  characteristic  of  companies  providing  software  solutions to the
telecom  industry,  the  complexities  involved in  implementing  the  Company's
software  solutions entail risks of performance  shortfalls.  In some cases, the
Company  has  agreed to accept  some  financial  responsibility,  in the form of
negotiated   penalty   amounts,   if  the   Company's   products  did  not  meet
specifications  or caused  customer system  downtime.  There can be no assurance
that the Company will not  encounter  delays or other  difficulties  due to such
implementation  complexities.  Because the Company's customer base consists of a
relatively  limited number of customers,  the product defects or  implementation
errors  could be  potentially  damaging to the  Company's  reputation.  Any such
occurrence  could have a material  adverse  effect upon the Company's  business,
operating results, and financial condition.

International Sales

     Revenues  outside of the United  States  accounted for 62% of the Company's
total  revenues for the three months ended March 31, 2001.  The Company  expects
that international  revenues will continue to


                                       16
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

account for a significant  portion of its total revenues in future periods.  The
Company  intends to penetrate  additional  international  markets and to further
expand  its  existing  international  operations.  The  Company's  international
business involves a number of inherent risks,  including  greater  difficulty in
accounts  receivable  collection  and,  therefore,  longer  accounts  receivable
collection periods;  difficulty in staffing and managing foreign  operations;  a
longer sales cycle than with domestic customers;  potentially unstable political
and economic conditions;  language barriers; cultural differences in the conduct
of  business;  seasonality;   unexpected  changes  in  regulatory  requirements,
including a slowdown in the rate of privatization of telecom service  providers;
reduced   protection  for  intellectual   property  rights  in  some  countries;
potentially adverse tax consequences;  tariffs and other trade barriers.  Access
to  foreign  markets is often  difficult  due to the  established  relationships
between  government  owned or  controlled  communications  companies  and  local
suppliers of communications products. There can be no assurance the Company will
be able to successfully  penetrate such foreign markets. In addition,  there can
be no assurance  that the Company  will be able to sustain or increase  revenues
derived from international  licensing and services or that the foregoing factors
will not have a material  adverse effect on the Company's  future  international
business,  and consequently,  on the Company's business,  operating results, and
financial condition.

     International   sales  also   entail   risks   associated   with   currency
fluctuations.  The Company has attempted to reduce the risk of  fluctuations  in
currency  exchange rates associated with  international  revenues by pricing its
products and services in United States dollars whenever  possible.  The Company,
however,  generally pays the expenses of its  international  operations in local
currencies and generally does not engage in hedging transactions with respect to
such obligations. Upward fluctuations in currency exchange rates could cause the
Company's  products to become  relatively  more expensive to foreign  customers,
leading  to  a  reduction  in  sales  or  profitability.   Furthermore,   future
international activity may result in foreign currency denominated sales, and, in
such  event,  gains and losses on the  conversion  to U.S.  dollars of  accounts
receivable  and accounts  payable  arising  from  international  operations  may
contribute to fluctuations in the Company's operating results.

Dependence on Telecommunications Carriers; Government Regulation

     Many of the Company's principal customers are major telecom carriers.  Such
companies  operate  within  the  telecom  industry,   which  has  recently  been
characterized  by intense  competition  in the  development  of new  technology,
equipment,  and  customer  services.  The Company  believes  that large  telecom
carriers  have  become  increasingly  cautious  in  making  significant  capital
expenditures,  due in  part  to  increased  competition  from  smaller,  rapidly
developing  alternative  carriers,  decreasing  prices for telecom  services and
equipment, and regulatory rate structures that have become less dependent on the
level of carriers'  capital  expenditures.  These and other  factors have in the
past and may in the  future  cause  such  customers  to  experience  significant
fluctuations in capital expenditures for network management software solutions.

     The  telecom  industry  is subject to  extensive  regulation  in the United
States and other countries,  and the Company's  customers generally must receive
regulatory  approvals  in  conducting  their  businesses.  Although  the telecom
industry has been  characterized  by  government  deregulation,  there can be no
assurance that  deregulatory  trends will continue or that deregulation will not
occur.  Government  regulatory  policies  are likely to continue to have a major
impact on the Company's  ability to attract and retain  customers.  For example,
regulatory  authorities  may continue to oversee the pricing of new and existing
telecom  services,  which, in turn impact carriers'  ability to make significant
capital expenditures. The enactment by federal, state, or foreign governments of
new laws or regulations or change in the interpretation of existing  regulations
could adversely affect the Company's customers, and thereby affect the Company's
business, operating results, and financial condition.


                                       17
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

Competition

     The Company offers products and services in the evolving market for telecom
software.  The telecom industry is intensely  competitive,  subject to extremely
rapid technological  change and is characterized by evolving industry standards,
changing  regulatory  requirements,  frequent  product  introductions  and rapid
changes  in  customer  requirements.  These  market  factors  represent  both an
opportunity  and a competitive  threat to TCSI. The rapid pace of  technological
change continually creates new opportunities for existing and new competitors.

     The Catalant  product  competes in the equipment  manufacturer  and service
provider markets,  providing solutions for next generation telecom  applications
and platforms,  while the IncomeConnect product competes in the emerging service
provider market,  providing integrated OSS and billing data mediation solutions.
The Company  competes  with  numerous  vendors in each  product  category.  TCSI
expects that the overall number of competitors providing next generation network
solutions  will  increase due to the market's  attractive  growth.  On the other
hand,  the Company  expects the number of vendors  supplying  OSS  solutions for
basic telephone services solutions will decrease, due to maturity of this market
and the rapid introduction of more cost-effective technologies.

     TCSI's competitors include Dorado Systems,  Objective Systems  Integrators,
AdventNet,  Lumos and  MicroMuse for the Catalant  product and Openet,  Computer
Generation,  Inc, and Comptel for the IncomeConnect  product.  Hardly any of the
Company's  competitors compete across both TCSI's product lines.  Several of the
Company's current and potential  competitors have greater  financial,  marketing
and  technical  resources  than the  Company.  Additionally,  several  of TCSI's
competitors may be involved in joint ventures or strategic  alliances with other
businesses to expand their services.  The principal  competitive  factors in the
markets in which the Company  presently  competes  and may compete in the future
are quality,  price,  performance,  customer support,  corporate  reputation and
product   features  such  as   scalability,   interoperability,   functionality,
customizability and ease of use.

     The Company also faces  competition in each of the three  functional  areas
that the Company  believes are necessary for the delivery of network  management
software solutions:  development  environments,  turnkey applications and custom
services.  The  Company's  Catalant and  IncomeConnect  product lines enable the
Company to provide  its  customers  with  development  environments  and turnkey
applications,  as well as custom  services.  Because  certain  of the  Company's
competitors  focus only on one functional  area,  such  competitors  may be in a
position to develop  competitive  products  targeted  solely at the segment they
serve.

     There  can  be  no  assurance  that  the  Company's  current  or  potential
competitors will not develop products  comparable or superior to those developed
by the  Company  or adapt more  quickly  than the  Company to new  technologies,
evolving  industry  standards,  new product  introductions or changing  customer
requirements.

Rapid Technological Change; Need to Manage Product Transitions

     The market for the Company's  products is characterized by rapidly changing
technologies,  evolving industry standards,  changing  regulatory  environments,
frequent new product introductions,  and rapid changes in customer requirements.
The introduction of products embodying new technologies and the emergence of new
industry  standards  and  practices can render  existing  products  obsolete and
unmarketable.  As a  result,  the life  cycles  of the  Company's  products  are
difficult to estimate.  This poses substantial risks for the Company because the
Company's products and software solutions typically have lengthy development and
sales cycles. The Company's future success will depend on its ability to enhance
its  existing   products  and  to  develop  and  introduce,   on  a  timely  and
cost-effective  basis,  new  products and product  features  that keep pace with


                                       18
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

technological  developments  and  emerging  industry  standards  and address the
evolving needs of its customers. There can be no assurance that the Company will
be successful in developing and marketing new products or product  features that
respond to technological change or evolving industry standards, that the Company
will not  experience  difficulties  that could delay or prevent  the  successful
development,  introduction, and marketing of these new products and features, or
that its new products or product  features will adequately meet the requirements
of the marketplace and achieve market acceptance.  If the Company is unable, for
technological  or other  reasons,  to  develop  and  introduce  enhancements  of
existing  products or new products in a timely manner,  the Company's  business,
operating  results,   and  financial  condition  will  be  materially  adversely
affected.

     The Company's products are designed to operate on a variety of hardware and
software  platforms and with a variety of databases employed by its customers in
their networks.  The Company must continually modify and enhance its products to
keep  pace  with  changes  in  hardware  and  software  platforms  and  database
technology.  As a result,  uncertainties related to the timing and nature of new
product announcements, and introductions or modifications by systems vendors and
by vendors of relational database software could materially adversely impact the
Company's business, operating results, and financial condition. In addition, the
failure of the  Company's  products to operate  across the various  existing and
evolving versions of hardware and software  platforms and database  environments
employed by  consumers  would have a material  adverse  effect on the  Company's
business, operating results, and financial condition.

     The  introduction or announcement of products by the Company or one or more
of its competitors embodying new technologies,  or changes in industry standards
or customer  requirements,  could  render the  Company's  software  products and
solutions obsolete or unmarketable. The introduction of new or enhanced versions
of its  products  requires  the  Company  to manage  the  transition  from older
products in order to minimize  disruption in customer ordering.  There can be no
assurance that the introduction or announcement of new product  offerings by the
Company  or one or more of its  competitors  will not cause  customers  to defer
licensing of existing Company products or engaging the Company's  services.  Any
deferral of license or service  revenues could have a material adverse effect on
the Company's business, operating results, and financial condition.

Protection of Intellectual Property

     The Company's  success and ability to compete is dependent in part upon its
proprietary software technology.  The Company relies on a combination of patent,
trade secret,  copyright and trademark laws, nondisclosure and other contractual
agreements,  and technical measures to protect its proprietary  rights. To date,
the Company has eight  patents.  The Company  expects to continue to file patent
applications  where it believes  it is  appropriate  to protect its  proprietary
technologies.  Despite the Company's efforts to protect its proprietary  rights,
unauthorized parties may attempt to copy aspects of the Company's products or to
obtain and use information that the Company regards as proprietary. There can be
no  assurance  that the steps taken by the  Company to protect  its  proprietary
technology will prevent misappropriation of such technology,  and such steps may
not preclude competitors from developing products with functionality or features
similar to the Company's  products.  In addition,  effective patent,  copyright,
trademark,  and trade secret protection may be unavailable or limited in certain
foreign  countries.  The  failure  of the  Company to  protect  its  proprietary
information  could have a material  adverse  effect on the  Company's  business,
operating results, and financial condition.

     While the Company  believes that its products and  trademarks and their use
by customers  does not infringe upon the  proprietary  rights of third  parties,
there  can  be  no  assurance   that  the  Company   will  not  receive   future
communications from third parties asserting that the Company's products or their
use by


                                       19
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

customers  infringe,  or may  infringe,  the  proprietary  rights of such  third
parties.   The  Company  expects  that  software  product   developers  will  be
increasingly  subject to  infringement  claims as the  numbers of  products  and
competitors in the Company's  industry  segment grows and the  functionality  of
products in different  industry segments  overlaps.  Any such claims,  including
meritless  claims,  could  result  in  costly,  time-consuming  litigation,  and
diversion of technical and  management  personnel.  In the event any third party
was to make a valid claim and a license was not made  available on  commercially
reasonable  terms,  or if the  Company  was  unable  to  develop  non-infringing
alternative technology, the Company's business, operating results, and financial
condition could be materially adversely affected.

     In  addition,  certain of the  Company's  customers  regard  the  solutions
provided by the Company to be  proprietary  to such customers and may attempt to
prohibit  the Company  from using or  otherwise  benefiting  from certain of the
advances  made in developing  such  solutions.  Although the Company  intends to
increasingly   standardize  its  integration   solutions   through  the  use  of
component-based   software  products,   there  can  be  no  assurance  that  the
prohibition or restrictions  imposed by certain  customers on the use of certain
intellectual   property  will  not  adversely  affect  the  Company's  business,
operating results, and financial condition.

     The Company relies on certain software that it licenses from third parties,
including  software that 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 software licenses will continue to be available
to the Company on commercially  reasonable  terms or that such licenses will not
be  terminated.  Although  the Company  believes  that  alternative  software is
available from other third-party suppliers, the loss of or inability to maintain
any of these software  licenses or the inability of the third parties to enhance
their products in a timely and  cost-effective  manner could result in delays or
reductions in product  shipments by the Company until equivalent  software could
be developed  internally or identified,  licensed,  and integrated,  which would
have a material adverse effect on the Company's business, operating results, and
financial condition.

Dependence on Key Personnel

     The Company's future growth and success depends to a significant  extent on
its ability to attract and retain  qualified  managerial,  sales,  and  software
engineering  personnel.  The Company has at times  experienced  and continues to
experience  difficulty in  attracting  and retaining  qualified  personnel.  The
Company's  future  success  will also  depend on the  ability of its current and
future management personnel to operate effectively,  both independently and as a
group.  The Company has experienced  changes in its executive  management in the
first quarter of 2001. For example,  in March,  2001,  Ellen Ahearn  resigned as
Vice  President - Finance  and  Administration,  Secretary,  and  Treasurer  and
Kenneth E. Elmer was hired as Chief Financial Officer, Secretary, and Treasurer.
In addition, in March, 2001, the positions of Vice President of Global Sales and
Vice President of Engineering  were also filled.  Competition  for the hiring of
such  personnel  in the  software  industry  is  intense,  and  there  can be no
assurance  that the  Company  will be  successful  in locating  candidates  with
appropriate  qualifications.  Failure to attract and retain key personnel  could
have a material adverse effect on the Company's business, operating results, and
financial condition.

Risks Associated with Acquisitions

     The Company periodically  evaluates potential acquisitions of complementary
businesses, products, and technologies. To support its growth plans, the Company
may acquire companies that have a significant installed base of products not yet
offered  by the  Company,  have  strategic  distribution  channels  or  customer
relationships,  or otherwise  present  opportunities  which management  believes
enhance the Company's competitive position.


                                       20
<PAGE>

                                TCSI CORPORATION

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

                                   (Continued)

     Such  acquisitions  could subject the Company to numerous risks,  including
risks  associated  with the  integration  into the Company of new  employees and
technology.  Moreover,  the  negotiation  and  acquisition of such  transactions
involve the diversion of substantial  management resources and the evaluation of
such   opportunities   requires   substantial   diversion  of  engineering   and
technological resources. In addition, transactions involving the issuance by the
Company  of common  stock or other  securities  could  result in  immediate  and
substantial  dilution to the Company's  existing  shareholders,  large  one-time
write-offs,  or the creation of goodwill or other  intangible  assets that could
result in amortization expenses. The failure to successfully evaluate, negotiate
and effect acquisition  transactions could have a material adverse effect on the
Company's business, operating results, and financial condition.

Volatility of Stock Price

     The market price of the shares of the  Company's  Common Stock has been and
is likely to continue to be highly volatile and may be significantly affected by
factors such as actual or anticipated  fluctuations  in the Company's  business,
operating  results,  and financial  condition,  announcements  of  technological
innovations,  new products,  or new contracts by the Company or its competitors,
developments  with respect to  proprietary  rights,  adoption of new  accounting
standards  affecting the software industry,  general market conditions and other
factors.  Due to the foregoing factors, it is likely that the Company's revenues
or operating  results will be below the  expectations  of public market analysts
and investors in some future period.  In such event,  the price of the Company's
Common Stock could be  materially  adversely  affected.  In addition,  the stock
market  from  time  to  time  has  experienced   significant  price  and  volume
fluctuations  that have  particularly  affected the market  prices of technology
company stocks.  These types of broad market  fluctuations  may adversely affect
the market price of the Company's Common Stock. In the past,  following  periods
of volatility in the market price of a company's  securities,  securities  class
action litigation has often been initiated against such company. Such litigation
could result in substantial costs and a diversion of management's  attention and
resources,  which  could  have a  material  adverse  effect  upon the  Company's
business, operating results, and financial condition.


                                       21
<PAGE>

                                TCSI CORPORATION

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     Interest Rate Risk. As of March 31, 2001, the Company's cash and investment
portfolio included only fixed-income securities. These securities are subject to
interest rate risk and may decline in value if interest rates increase. However,
due to the short duration of the Company's  investment  portfolio,  an immediate
100 basis  points  increase  or  decrease  in  interest  rates  would not have a
material effect on the fair market value of the Company's portfolio. The Company
has the  ability  to hold its  fixed  income  investments  until  maturity,  and
therefore the Company would not expect its operating results or cash flows to be
affected to any  significant  degree by the effect of a sudden  change in market
interest rates in its investment portfolio.

     Foreign Currency Exchange Risk. The majority of the Company's  revenues are
denominated in U.S. dollars and, as a result,  the Company has relatively little
exposure to foreign currency  exchange risk. The Company  currently does not use
derivative financial instruments for trading or speculative purposes.


                                       22
<PAGE>

                                TCSI CORPORATION

Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K


(a)  The following exhibit is filed herewith:

       Exhibit No.     Description
       -----------     -----------
        10.33          Arrangement for Employment with Chief Financial Officer,
                       dated March 12, 2001.


(b)  Reports on Form 8-K.

     There were no reports on Form 8-K filed during the three months ended March
31, 2001.


                                       23
<PAGE>

                                TCSI Corporation


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.


                            TCSI CORPORATION
                            (Registrant)


May 14, 2001                By: /s/ Kenneth E. Elmer
                                --------------------
                            Kenneth E. Elmer
                            Chief Financial Officer, Secretary, and Treasurer
                            (Principal Financial Officer and Principal
                            Accounting Officer)



                                       24
<PAGE>


[TCSI LOGO]
--------------------------------------------------------------------------------

            EMPLOYMENT AGREEMENT                       EXHIBIT 10.33


THIS EMPLOYMENT  AGREEMENT is entered into as of the 12th day of March,  2001 by
and  between  Kenneth  Elmer  (the   "EMPLOYEE")  and  TCSI   Corporation   (the
"EMPLOYER").

1.   Employment. EMPLOYER employs EMPLOYEE, and EMPLOYEE accepts employment with
     EMPLOYER,  on the terms and  conditions set forth in this  Agreement.  Your
     effective date of hire will be March 12, 2001.

2.   Term of  Employment.  The  employment  relationship  between  EMPLOYEE  and
     EMPLOYER may be terminated as follows:

     (a)  During the first  ninety  (90) days of  employment,  either  party may
          terminate  without prior notice and for any reason  whatsoever with or
          without cause.

     (b)  After  the first  ninety  (90) days of  employment,  either  party may
          terminate for any reason  whatsoever,  with or without cause, upon the
          giving of (i) two (2) weeks'  written  notice to the other  party,  or
          (ii) pay equal to two (2) weeks of  EMPLOYEE'S  salary in lieu of such
          notice.

     (c)  At any time,  EMPLOYER may terminate EMPLOYEE without prior notice and
          without  additional  pay if EMPLOYEE  materially  fails to perform any
          obligation or duty owed to EMPLOYER.

3.   Duties.

     EMPLOYEE'S Job Title shall be Chief Financial Officer.

     EMPLOYEE  shall  perform  such  tasks  and  duties  as may be  assigned  by
     EMPLOYER,  from time to time.  At all times  EMPLOYEE  shall  follow all of
     EMPLOYER'S instructions and directions and shall abide by all of EMPLOYER'S
     rules and  procedures in force from time to time while  employed.  EMPLOYEE
     shall devote his/her full time,  attention,  skill and efforts to the tasks
     and duties  assigned  by  EMPLOYER.  Without the prior  written  consent of
     EMPLOYER,  EMPLOYEE shall not provide services,  for  compensation,  to any
     other person or business entity while employed by EMPLOYER.

     EMPLOYEE  understands  and  acknowledges  that EMPLOYER has a policy not to
     engage  directly  or  indirectly,  deliberately  or  inadvertently,  in any
     recruitment  or employment  policies that cause the EMPLOYEE to violate any
     contract  commitment  such EMPLOYEE may have with a prior EMPLOYER or other
     third  party.  By accepting  employment,  EMPLOYEE  certifies  that no such
     conflict exists and that any questions  regarding a potential conflict have
     been fully disclosed in writing to EMPLOYER.

4.   Compensation.  As compensation  for all services to be rendered by EMPLOYEE
     to  EMPLOYER,  EMPLOYEE  shall  be  paid a  salary  at the  annual  rate of
     $170,000,  which covers all hours worked  unless  EMPLOYEE is non-exempt in
     which case overtime for work in excess of 40 hours per week will be paid in
     conformance   with  applicable  laws.

<PAGE>

EMPLOYMENT AGREEMENT
================================================================================

     Said  salary  shall be  payable  in  accordance  with  EMPLOYER'S  standard
     procedures, less regular payroll deductions.

     (a)  Generally,  EMPLOYEE'S salary will be reviewed annually in conjunction
          with a focal review of  performance.  EMPLOYEE  understands and agrees
          that EMPLOYEE'S salary may be adjusted by EMPLOYER prospectively,  and
          at its sole  discretion  from  time to  time,  without  affecting  the
          remaining terms of this Agreement.

     (b)  EMPLOYEE  understands and agrees that any other  compensation that may
          be paid to EMPLOYEE for services rendered, or to be rendered, (whether
          by way of an incentive  payment,  opportunity  to acquire stock or any
          other  form  of  additional  compensation)  shall  rest  in  the  sole
          discretion of EMPLOYER.

     (c)  EMPLOYEE will be eligible to participate  in EMPLOYER'S  discretionary
          incentive plan as determined by company  profitability  and EMPLOYEE'S
          performance.

     (d)  Signing  Bonus
          EMPLOYEE  will  receive a signing  bonus in the  amount of  $10,000 in
          his/her  first   paycheck.   If  EMPLOYEE  should  leave  the  company
          voluntarily within the first twelve months of employment,  the sign-on
          bonus will be  repayable  to EMPLOYER  proportionate  to the length of
          EMPLOYEE'S employment.

5.   Adjustments and Changes in Employment  Status.  EMPLOYEE  understands  that
     EMPLOYER  reserves  the  right  to  make  personnel   decisions   regarding
     EMPLOYEE'S employment, including but not limited to decisions regarding any
     promotion,  salary adjustment,  transfer or disciplinary  action, up to and
     including termination, consistent with the needs of the business.

6.   Immigration   Documentation.   EMPLOYEE'S  employment  is  contingent  upon
     EMPLOYEE'S  ability to prove his or her identity and  authorization to work
     in the U.S. for EMPLOYER.


7.   Benefits.  EMPLOYEE will be eligible for paid time off in  accordance  with
     company policy for executive staff. Executive staff members do not accrue a
     fixed  amount of paid time off and  instead may  schedule  paid time off as
     required, taking into consideration the needs of the company. EMPLOYEE will
     be provided with medical,  dental,  vision, life, accident,  and disability
     insurance  benefits,  as provided in EMPLOYER'S benefit plans, and pursuant
     to the eligibility  requirements of the plans. EMPLOYEE will be eligible to
     participate in EMPLOYER'S 401(k)  retirement plan,  employee stock purchase
     plan, and annual stock option  awards,  pursuant to the terms of each plan.
     These benefits may change from time to time.

8.   Additional  Benefits,  If Any. EMPLOYEE will be provided with the following
     additional benefits, which may also change from time to time:


                                       2
<PAGE>

EMPLOYMENT AGREEMENT
================================================================================

     Stock Options
     EMPLOYEE will receive a grant of 125,000 stock  options.  The options price
     will be the  closing  price  on  EMPLOYEE'S  employment  date.  As  further
     described in the stock purchase agreement and stock option plan that govern
     EMPLOYEE'S  options,  the  options  have a six year  term and a three  year
     vesting  schedule with one-third of the options  vesting after one year and
     1/36th vesting each month thereafter.

9.   Property Rights; Duty to Disclose.  EMPLOYEE agrees to execute and be bound
     by the provisions of the EMPLOYER'S  "Non-Disclosure/Assignment  Agreement"
     attached  hereto as Exhibit A and made a part hereof by this  reference  as
     though set forth in full herein.  The provisions of Exhibit A shall survive
     any termination of this Agreement.

10.  Nonsolicitation of Employees.  EMPLOYEE specifically agrees that during the
     term of  this  Agreement  and for a  period  of one  (1)  year  thereafter,
     EMPLOYEE shall not,  directly or indirectly,  either for himself or for any
     other person,  firm,  corporation  or other legal entity,  solicit any then
     employee of EMPLOYER to leave the employment of EMPLOYER.

11.  No Assignment.  This Agreement may not be assigned by EMPLOYEE  without the
     written consent of EMPLOYER.  This Agreement shall be binding on the heirs,
     executors, administrators, personal representatives, successors and assigns
     of EMPLOYEE and EMPLOYER.

12.  Governing  Law.  This  Agreement  shall be  governed by and  construed  and
     enforced in accordance  with and subject to the laws of the state where the
     EMPLOYEE was principally rendering services for EMPLOYER.

13.  Notices. All notices or other communications provided for by this Agreement
     shall be made in writing and shall be deemed  properly  delivered  when (i)
     delivered personally or (ii) by the mailing of such notice by registered or
     certified mail, postage prepaid,  to the parties at the addresses set forth
     on the  signature  page of this  Agreement (or to such other address as one
     party designates to the other in writing).

14.  Entire Agreement and Waiver. This Agreement is the entire agreement between
     the parties  relating to EMPLOYEE'S  employment.  It  supersedes  all prior
     agreements, arrangements, negotiations and understandings, both written and
     verbal,  related thereto. No waiver of any term,  provision or condition of
     this Agreement shall be deemed to be, or shall constitute,  a waiver of any
     other term, provision or condition herein,  whether or not similar. No such
     waiver shall be binding unless in writing and signed by the waiving party.

15.  Amendments. No supplement, modification or amendment of any term, provision
     or  condition  of this  Agreement  shall be binding or  enforceable  unless
     evidenced in writing  executed by EMPLOYEE and Chief  Financial  Officer of
     EMPLOYER.

16.  Counterparts.  This Agreement may be executed in one or more  counterparts,
     each of which shall be deemed an original,  but all of which together shall
     constitute one and the same instrument.


                                       3
<PAGE>

EMPLOYMENT AGREEMENT
================================================================================

17.  Dispute  Resolution  Procedure.  The parties agree that any dispute arising
     out of or related to the employment  relationship  between them,  including
     the  termination  of that  relationship  and any  allegations  of unfair or
     discriminatory  treatment  arising under state or federal law or otherwise,
     shall be resolved by final and binding  arbitration,  except  where the law
     specifically  forbids the use of arbitration as a final and binding remedy.
     The parties shall first submit any dispute to non-binding  mediation before
     a mediator to be jointly selected by the parties. If the mediation does not
     resolve the dispute,  the parties  agree that the dispute shall be resolved
     by final and binding arbitration, to be held in Alameda County, pursuant to
     the  Employment  Dispute  Resolution  Rules  of  the  American  Arbitration
     Association. Each party shall be responsible for paying its own legal fees.
     The parties shall split the costs of any mediation. The EMPLOYER shall bear
     the costs of arbitration if the EMPLOYEE  prevails.  The EMPLOYEE shall pay
     half the costs of arbitration  or $500,  whichever is less, if the EMPLOYER
     prevails.

     Arbitration shall be the exclusive final remedy for any dispute between the
     parties,  including  but not  limited  to  disputes  involving  claims  for
     discrimination  or harassment (such as claims under the Fair Employment and
     Housing Act,  Title VII of the Civil Rights Act of 1964, the Americans with
     Disabilities Act, or the Age  Discrimination  in Employment Act),  wrongful
     termination,  breach of  contract,  breach of public  policy,  physical  or
     mental harm or distress, or any other disputes.

18.  Reformation/Severability.  If any  provision of this  Agreement is declared
     invalid by any tribunal,  then such provision shall be deemed automatically
     adjusted to the minimum extent necessary to conform to the requirements for
     validity as declared  at such time and, as so  adjusted,  shall be deemed a
     provision of this Agreement as though  originally  included herein.  In the
     event that the provision  invalidated is of such a nature that it cannot be
     so adjusted,  the provision  shall be deemed deleted from this Agreement as
     though such provision had never been included  herein.  In either case, the
     remaining provisions of this Agreement shall remain in effect.

After carefully reading and considering the foregoing  provisions and Exhibit A,
EMPLOYEE  has  voluntarily  signed  this  Agreement  as of the date first  above
written.

COMPANY:                                             EMPLOYEE:

TCSI Corporation   /s/ Yasushi Furukawa         /s/ Kenneth Elmer
---------------------------------------         -------------------------
                                                Kenneth Elmer
                                                Employee Signature


March 12, 2001                                  March 12, 2001
---------------------------------------         --------------------------
Date                                            Date


                                       4
<PAGE>

EMPLOYMENT AGREEMENT
================================================================================

EXHIBIT A

Kenneth Elmer  ("EMPLOYEE") is employed,  or is being hired, by TCSI Corporation
("the  COMPANY")  and may learn,  or has learned,  information  that the COMPANY
keeps secret from its  competitors  and others.  As a condition of employment or
continued employment, EMPLOYEE agrees to the terms of this Agreement.

1.   Proprietary  Information Defined. The term "Proprietary  Information" means
     the following classes of information relating to the COMPANY's business:

     (a)  Trade secrets and other proprietary and confidential information which
          are owned by the COMPANY and which have to do with:

          (i)  the operation of the COMPANY's business, consisting, for example,
               and  not  intending  to be  inclusive,  of  its  lists  or  other
               identifications of clients or prospective  clients of the COMPANY
               (and key  individuals  employed  or  engaged  by such  clients or
               prospective clients), the nature and type of services rendered to
               such clients (or proposed to be rendered to prospective clients),
               fees   charged   or  to  be   charged,   proposals,   inventions,
               methodologies,  algorithms, formulae, processes,  compilations of
               information,  form and content of data bases, designs,  drawings,
               models,  equipment,  results of  research  proposals,  job notes,
               reports,   records,   specifications,   software,   firmware  and
               procedures used in, or related to, the COMPANY's products; and

          (ii) the COMPANY's  relations  with its employees,  including  without
               limitations, salaries, job classifications and skill levels;

     (b)  Financial, sales and marketing data compiled by the COMPANY as well as
          the COMPANY's  financial,  sales and marketing  plans and  strategies,
          customer lists and non-public pricing;

     (c)  All ideas,  concepts,  information and written material about a client
          disclosed to EMPLOYEE by the COMPANY, or acquired from a client of the
          COMPANY,  and all financial,  accounting,  statistical,  personnel and
          business data and plans of clients,  are and shall remain the sole and
          exclusive property and proprietary information of the COMPANY, or said
          client;

     (d)  Any other  information  designated by the COMPANY to be  confidential,
          secret and/or proprietary.

2.   Obligation to Keep Confidential.  EMPLOYEE acknowledges and agrees that all
     Proprietary  Information that comes into EMPLOYEE's  possession  (including
     any  information  originated or developed by EMPLOYEE while employed by the
     COMPANY) is secret and is the exclusive  property of the COMPANY.  EMPLOYEE
     agrees  to  use  the  Proprietary   Information  only  in  connection  with
     EMPLOYEE's work for the COMPANY.  EMPLOYEE agrees,  while employed with the
     COMPANY and thereafter,  to hold the Proprietary  Information in confidence
     and agrees  not to  disclose  or reveal,  in any  manner,  any  Proprietary
     Information to any person or entity.

3.   Return of Information.  EMPLOYEE agrees, upon the request of the COMPANY or
     upon leaving the employ of the COMPANY,  to return  promptly to the COMPANY
     the  original  and all  copies of any  documents,  reports,  notes or other
     materials  incorporating  or  reflecting,   in  any  way,  any  Proprietary
     Information in the possession or under the control of EMPLOYEE.


                                       5
<PAGE>

4.   Inventions Belong to the COMPANY. EMPLOYEE acknowledges and agrees that any
     inventions,  discoveries  or  improvements  which EMPLOYEE has conceived or
     made or may conceive or make during EMPLOYEE's employment with the COMPANY,
     whether made individually or jointly with others, which:

          (i)  relate or  pertain  to,  or are in any way  connected  with,  the
               systems,  products,  apparatus  or methods  utilized,  or are the
               subject of research or development (actual or anticipated) by the
               COMPANY; or

          (ii) utilize   equipment,    supplies,   facilities   or   Proprietary
               Information   belonging   to  the   COMPANY   (collectively   the
               "Inventions")  shall be the sole and  exclusive  property  of the
               COMPANY and the Inventions shall be deemed to be works for hire.

     (a)  EMPLOYEE  agrees to make prompt and full  disclosure to the COMPANY of
          all inventions,  discoveries or  improvements  made by EMPLOYEE during
          the term of the Agreement,  solely or jointly with others,  whether or
          not such invention,  discovery or improvement will actually become the
          property of the COMPANY pursuant to this Agreement. EMPLOYEE agrees to
          make such disclosures with the  understanding and the agreement of the
          COMPANY that, as to any  invention,  discovery or improvement to which
          the  COMPANY  is not  entitled,  the  information  disclosed  will  be
          received and held  strictly in confidence by the COMPANY and that such
          disclosure  is for the sole  purpose  of  determining  whether  or not
          rights to such invention,  discovery or improvement is the property of
          the COMPANY.

     (b)  To the  extent  EMPLOYEE  would be deemed to be an owner of any of the
          rights in the  Inventions,  EMPLOYEE hereby assigns to the COMPANY all
          such rights in the  Inventions.  EMPLOYEE hereby agrees to execute and
          sign any and all applications,  assignments or other instruments which
          the COMPANY may deem  necessary in order to enable it, at its expense,
          to apply  for,  prosecute  and obtain  Letters of Patent,  trademarks,
          copyrights or other legal  protections in the United States or foreign
          countries  for the  Inventions,  or in order to assign or convey to or
          vest in the COMPANY the sole and exclusive  right,  title and interest
          in and to the Inventions.

     (c)  The  obligations  contained  in  this  Paragraph  4,  except  for  the
          requirements as to disclosure, do not apply to any rights EMPLOYEE may
          have   acquired  in  connection   with  an  invention,   discovery  or
          improvement for which no equipment, supplies, facility or trade secret
          information  of the COMPANY was used and which was developed  entirely
          on  the  EMPLOYEE's  own  time,  and  provided  that  such  invention,
          discovery or improvement  does not: (i) relate  directly or indirectly
          to  the  business  of  the  COMPANY  or to  the  COMPANY's  actual  or
          demonstrable anticipated research or development; and (ii) result from
          any work performed by EMPLOYEE for, or on behalf of, the COMPANY.

5.   Injunctive Relief.  EMPLOYEE  acknowledges and agrees that, because any use
     or disclosure of the COMPANY's  Proprietary  Information other than for the
     COMPANY's  benefit and without the COMPANY's  prior  written  consent would
     cause irreparable  injury to the COMPANY,  the COMPANY,  in addition to any
     other  remedies  available,  will be  entitled to obtain an  injunction  to
     enforce the provisions of this Agreement.


                                       6
<PAGE>

EMPLOYMENT AGREEMENT
================================================================================

6.   Reformation/Severability.  If any  provision of this  Agreement is declared
     invalid by any tribunal,  then such provision shall be deemed automatically
     adjusted to the minimum extent necessary to conform to the requirements for
     validity as declared  at such time and, as so  adjusted,  shall be deemed a
     provision of this Agreement as though  originally  included herein.  In the
     event that the provision  invalidated is of such a nature that it cannot be
     so adjusted,  the provision  shall be deemed deleted from this Agreement as
     though such provision had never been included  herein.  In either case, the
     remaining provisions of this Agreement shall remain in effect.

NOTE: POLICY STATEMENT AGAINST THE USE OF TRADE SECRETS OF OTHERS.
      -----------------------------------------------------------

It is the practice and policy of COMPANY not to use the trade secrets of others.
Thus,  EMPLOYEE  should  not  use  any  information  which  any  prior  employer
identified  specifically  as a  trade  secret  or  as  Proprietary  Information.
However,  EMPLOYEE  is not  required  to  maintain  the  confidentiality  of any
information which is:

          (i)  known to EMPLOYEE prior to the disclosure by the prior  employer;
               or

          (ii) known,  or becomes known, to third parties  knowledgeable  in the
               industry without the fault or negligence of EMPLOYEE; or

          (iii)subsequently   rightly   received  from  a  third  party  without
               restrictions regarding secrecy of confidentiality; or

          (iv) independently  developed  by  EMPLOYEE  or  by  EMPLOYEE  without
               recourse to the "trade secret" of another; or

          (v)  furnished  by  a  prior   employer  to  a  third  party   without
               restriction   or  obligation  to  maintain  the  secrecy  or  the
               confidentiality of such information; or

          (vi) approved  for  release  by  the  owner  of  the  "trade   secret"
               information.

I acknowledge that I have read and understood the above terms and conditions and
agree to be bound  thereby.  In addition,  I  acknowledge a receipt of a copy of
this Agreement.

COMPANY:                             EMPLOYEE:

TCSI Corporation
                                     /s/  Kenneth Elmer
-------------------------------      ------------------------------
                                     Kenneth Elmer
                                     Employee's Signature


                                       7