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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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Form 10-Q/A

AMENDMENT NO. 2

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|/x/ | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ---------------------------------------------------------------------------------------

For the quarterly period ended January 31, 2000

OR

|/ / | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ----------------------------------------------------------------------------------------

Commission File Number: 001-11807

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

Delaware

94-2710559(State or other jurisdiction
of incorporation or organization)

(I.R.S. Employer
Identification Number)


2101 Arena Blvd, Suite 100
Sacramento, California 95834(Address of principal executive offices)

Telephone: (916) 928-6400(Registrant's telephone number, including area code)

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /x/  No / /

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

18,391,419
shares of Common Stock, $0.0005 par value, as of February 29, 2000

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UNIFY CORPORATION
FORM 10-Q/A

EXPLANATORY STATEMENT

In July 2000, Unify Corporation ("Unify" or the "Company") announced that certain matters had come to the attention of the Company's Board of Directors
that indicated that the Company had engaged in improper accounting practices. Accordingly, the Company delayed the filing of its Form 10-K for the fiscal year ended April 30,
2000, and the Board of Directors authorized its Audit Committee to conduct an investigation of the Company's accounting and financial reporting practices and to recommend remedial action, if any, as a
result of the findings of its investigation. In connection with the ongoing investigation, the Company placed its chief executive officer and its chief financial officer on administrative leave, and
in November 2000, the Company terminated its chief executive officer and its chief financial officer resigned. Based on the results of the Audit Committee's investigation, the Company concluded
that revenue, and in some cases expenses, had been improperly accounted for in certain transactions during fiscal year 2000, and adjustments were made during the fiscal year ended April 30,
2000 for such transactions, including restatements of previously reported quarterly financial statements. The investigation also included a review of transactions in earlier fiscal years. After
evaluating information from the results of the investigation, the Company concluded that its financial statements for the fiscal year ended April 30, 1999 and earlier were not materially
misstated. Also, the Company concluded that the effect on the financial statements for fiscal year 2000 of adjustments relating to transactions of earlier years not being made in those years was not
material.

The
Company filed its Form 10-K for fiscal year ended April 30, 2000 on December 22, 2000. On January 30, 2001, Unify filed amended Quarterly
Reports on Forms 10-Q/A for the fiscal quarters ended July 31, 1999, October 31, 1999 and January 31, 2000. As a result of the Company's conclusion that its financial
statements for the fiscal year ended April 30, 2000 and earlier years were not materially misstated as a result of adjustments relating to transactions in 1999 and earlier years not being made
in those years, such adjustments were not reflected in the Company's financial statements contained in such Form 10-K and Form 10-Q/As. Subsequently, in
connection with comments by the Staff of the Securities and Exchange Commission (the "Staff") relating to the Staff's review of the Company's Form 10-K and
Form 10-Q/As for the year ended April 30, 2000, the Company and the Staff had extensive communications regarding the materiality of the adjustments relating to transactions
in 1999 and earlier years referred to above. Following such communications, management determined that the Company would record the adjustments in the applicable years. Accordingly, the consolidated
financial statements for the fiscal years ended April 30, 2000, 1999 and 1998 have been restated from amounts previously reported to reflect those adjustments. A summary of the effects of the
restatement is presented in Notes 16 and 18 to the consolidated financial statements included in the Company's form 10-K/A for the
year ended April 30, 2000, a summary of the effects of the restatement on the financial statements for the three and nine months period ended January 31, 2000 and 1999 is presented in
Note 1.

2

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UNIFY CORPORATION
FORM 10-Q

INDEX

|          |  |                                                                                                                                    |  | PAGE
NUMBER
|--------- |  | ---------------------------------------------------------------------------------------------------------------------------------- |  | -----------
|PART I.   |  | FINANCIAL INFORMATION                                                                                                              |  |            
|Item 1.   |  | Consolidated Financial Statements                                                                                                  |  |            
|          |  | Unaudited Condensed Consolidated Balance Sheets as of January 31, 2000 (Restated) and April 30, 1999                               |  | 4          
|          |  | Unaudited Condensed Consolidated Statements of Operations (Restated) for the three and nine months ended January 31, 2000 and 1999 |  | 5          
|          |  | Unaudited Condensed Consolidated Statements of Cash Flows (Restated) for the nine months ended January 31, 2000 and 1999           |  | 6          
|          |  | Notes to Unaudited Condensed Consolidated Financial Statements                                                                     |  | 7          
|Item 2.   |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                                              |  | 11         
|Item 3.   |  | Disclosure about Market Rate Risk                                                                                                  |  | 16         
|PART II.  |  | OTHER INFORMATION                                                                                                                  |  |            
|Item 6.   |  | Exhibits and Reports on Form 8-K                                                                                                   |  | 18         
|SIGNATURE |  | 19                                                                                                                                

3

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UNIFY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
(unaudited)

|                                     |                                                 | January 31,
2000                           |       | April 30,
1999 |       
|------------------------------------ | ----------------------------------------------- | ------------------------------------------ | ----- | -------------- | ------
|
|Assets                               |                                                 |                                            |       |                |       
|Current assets:                      |                                                 |                                            |       |                |       
|                                     | Cash and cash equivalents                       |                                            | $     | 11,529         |       
|                                     | Investments                                     |                                            |       | 3,669          |       
|                                     | Accounts receivable, net                        |                                            |       | 4,108          |       
|                                     | Prepaid expenses and other current assets       |                                            |       | 710            |       
|                                     |                                                 |                                            |       |                |       
|                                     |                                                 | Total current assets                       |       |                | 20,016
|Property and equipment, net          |                                                 |                                            | 1,097 |                |       
|Other investments                    |                                                 |                                            | 550   |                |       
|Other assets                         |                                                 |                                            | 1,083 |                |       
|                                     |                                                 |                                            |       |                |       
|                                     |                                                 | Total assets                               |       | $              | 22,746
|                                     |                                                 |                                            |       |                |       
|Liabilities and Stockholders' Equity |                                                 |                                            |       |                |       
|Current liabilities:                 |                                                 |                                            |       |                |       
|                                     | Accounts payable                                |                                            | $     | 1,160          |       
|                                     | Notes payable to minority interest stockholders |                                            |       | 475            |       
|                                     | Accrued compensation and related expenses       |                                            |       | 1,604          |       
|                                     | Other accrued liabilities                       |                                            |       | 3,416          |       
|                                     | Deferred revenue                                |                                            |       | 5,624          |       
|                                     |                                                 |                                            |       |                |       
|                                     |                                                 | Total current liabilities                  |       |                | 12,279
|Stockholders' equity:                |                                                 |                                            |       |                |       
|                                     | Common stock                                    |                                            |       | 9              |       
|                                     | Additional paid-in capital                      |                                            |       | 55,290         |       
|                                     | Note receivable from stockholder                |                                            |       | (52            | )     
|                                     | Accumulated other comprehensive loss            |                                            |       | (799           | )     
|                                     | Accumulated deficit                             |                                            |       | (43,981        | )     
|                                     |                                                 |                                            |       |                |       
|                                     |                                                 | Total stockholders' equity                 |       |                | 10,467
|                                     |                                                 |                                            |       |                |       
|                                     |                                                 | Total liabilities and stockholders' equity |       | $              | 22,746
|                                     |                                                 |                                            |       |                |       

See
accompanying notes to unaudited condensed consolidated financial statements.

4

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UNIFY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)
(Unaudited)

|                                                      |                                     | Three Months Ended
January 31,    |       | Nine Months Ended
January 31,
|----------------------------------------------------- | ----------------------------------- | --------------------------------- | ----- | -----------------------------
|
|
|Revenues:                                             |                                     |                                   |       |                              
|                                                      | Software licenses                   |                                   | $     | 3,089                        
|                                                      | Services                            |                                   |       | 2,165                        
|                                                      |                                     |                                   |       |                              
|                                                      |                                     | Total revenues                    |       |                              
|                                                      |                                     |                                   |       |                              
|Cost of revenues:                                     |                                     |                                   |       |                              
|                                                      | Software licenses                   |                                   |       | 222                          
|                                                      | Services                            |                                   |       | 772                          
|                                                      |                                     |                                   |       |                              
|                                                      |                                     | Total cost of revenues            |       |                              
|                                                      |                                     |                                   |       |                              
|Gross margin                                          |                                     |                                   | 4,260 |                              
|                                                      |                                     |                                   |       |                              
|Operating expenses:                                   |                                     |                                   |       |                              
|                                                      | Product development                 |                                   |       | 1,562                        
|                                                      | Selling, general and administrative |                                   |       | 3,546                        
|                                                      |                                     |                                   |       |                              
|                                                      |                                     | Total operating expenses          |       |                              
|                                                      |                                     |                                   |       |                              
|                                                      |                                     | Income (loss) from operations     |       |                              
|Other income, net                                     |                                     |                                   | 78    |                              
|                                                      |                                     |                                   |       |                              
|                                                      |                                     | Income (loss) before income taxes |       |                              
|Provision for income taxes                            |                                     |                                   | 74    |                              
|                                                      |                                     |                                   |       |                              
|                                                      |                                     | Net income (loss)                 |       | $                            
|                                                      |                                     |                                   |       |                              
|Net income (loss) per share:                          |                                     |                                   |       |                              
|                                                      | Basic                               |                                   | $     | (0.05                        
|                                                      |                                     |                                   |       |                              
|                                                      | Diluted                             |                                   | $     | (0.05                        
|                                                      |                                     |                                   |       |                              
|Shares used in computing net income (loss) per share: |                                     |                                   |       |                              
|                                                      | Basic                               |                                   |       | 18,143                       
|                                                      |                                     |                                   |       |                              
|                                                      | Diluted                             |                                   |       | 18,143                       
|                                                      |                                     |                                   |       |                              

See
accompanying notes to unaudited condensed consolidated financial statements.

5

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UNIFY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)
(Unaudited)

|                                               |                                                                                                | Nine Months Ended January 31,                |                                                
|---------------------------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------------------------- | -----------------------------------------------
|
|
|Cash flows from operating activities:          |                                                                                                |                                              |                                                
|                                               | Net income (loss)                                                                              |                                              | $                                              
|                                               | Reconciliation of net income (loss) to net cash provided by (used in) in operating activities: |                                              |                                                
|                                               |                                                                                                | Depreciation                                 |                                                
|                                               |                                                                                                | Changes in operating assets and liabilities: |                                                
|                                               |                                                                                                |                                              | Accounts receivable, net                       
|                                               |                                                                                                |                                              | Prepaid expenses and other current assets      
|                                               |                                                                                                |                                              | Accounts payable                               
|                                               |                                                                                                |                                              | Notes payable to minority interest stockholders
|                                               |                                                                                                |                                              | Accrued compensation and related expenses      
|                                               |                                                                                                |                                              | Other accrued liabilities                      
|                                               |                                                                                                |                                              | Deferred revenue                               
|                                               |                                                                                                |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|Cash flows from investing activities:          |                                                                                                |                                              |                                                
|                                               | Purchases of available-for-sale securities                                                     |                                              |                                                
|                                               | Sales of available-for-sale securities                                                         |                                              |                                                
|                                               | Purchases of property and equipment                                                            |                                              |                                                
|                                               | Increase in other investments                                                                  |                                              |                                                
|                                               | Other assets                                                                                   |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|Cash flows from financing activities:          |                                                                                                |                                              |                                                
|                                               | Principal payments under debt obligations                                                      |                                              |                                                
|                                               | Proceeds from issuance of common stock, net                                                    |                                              |                                                
|                                               | Repurchase of common stock                                                                     |                                              |                                                
|                                               | Accrual of interest on notes receivable from stockholder                                       |                                              |                                                
|                                               | Collection of note receivable from stockholder, net of interest receivable                     |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|                                               |                                                                                                |                                              |                                                
|Effect of exchange rate changes on cash        |                                                                                                |                                              | (75                                            
|                                               |                                                                                                |                                              |                                                
|Net increase in cash and cash equivalents      |                                                                                                |                                              | 6,214                                          
|Cash and cash equivalents, beginning of period |                                                                                                |                                              | 5,315                                          
|                                               |                                                                                                |                                              |                                                
|Cash and cash equivalents, end of period       |                                                                                                | $                                            | 11,529                                         
|                                               |                                                                                                |                                              |                                                
|Supplemental cash flow information:            |                                                                                                |                                              |                                                
|Cash paid during the period for:               |                                                                                                |                                              |                                                
|                                               | Interest                                                                                       |                                              | $                                              
|                                               |                                                                                                |                                              |                                                
|                                               | Income taxes                                                                                   |                                              | $                                              
|                                               |                                                                                                |                                              |                                                

See
accompanying notes to unaudited condensed consolidated financial statements.

6

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UNIFY CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Restatement of financial Statements

Investigation and Restatement

In June 2000, certain matters came to the attention of the Board of Directors of Unify Corporation (the "Company") that indicated that the Company had
engaged in improper accounting practices. The Company's Board of Directors authorized its Audit Committee to conduct an investigation of the Company's accounting and financial reporting practices and
to recommend remedial action, if any, as a result of the findings of their investigation. In July 2000, in connection with the ongoing investigation, the Company placed its chief executive
officer and its chief financial officer on administrative leave, and in November 2000, the Company terminated its chief executive officer and its chief financial officer resigned. Based on the
results of the Audit Committee's investigation, the Company concluded that revenue, and in some cases expenses, had been improperly accounted for in certain transactions during the fiscal year ended
April 30, 2000, and adjustments were made for such transactions, including restatements of previously reported quarterly financial statements. The investigation also identified commissions,
bonuses and other payments made to the Company's former chief executive officer during the fiscal year ended April 30, 2000, which the Company believes were not appropriate. Such payments in
the amount of approximately $500,000 have been charged to expense in that fiscal year; however, the Company is seeking to have the amounts repaid by the former chief executive officer. The
investigation also included a review of transactions in earlier fiscal years. After evaluating information from the results of the investigation, the Company concluded that its financial statements
for the fiscal year ended April 30, 1999 and earlier were not materially misstated. Also, the Company concluded that the effect on the financial statements for fiscal 2000 of adjustments
relating to transactions of earlier years not being made in those years was not material.

Subsequent
to the issuance of the Company's financial statements for the fiscal year ended April 30, 2000, and in connection with comments by the Staff of the Securities and
Exchange Commission (the "Staff") relating to the Staff's review of the Company's Form 10-K for the year ended April 30, 2000, the Company and the Staff had extensive
communications regarding the materiality of the adjustments relating to transactions in 1999 and earlier years referred to above. Following such communications, management determined that the Company
would record the adjustments in the applicable years. Accordingly, the condensed consolidated financial statements for the fiscal years ended April 30, 2000, 1999 and 1998 have been restated
from amounts previously reported to reflect those adjustments. As a result, the accompanying unaudited condensed consolidated financial statements for the three and nine months ended
January 31, 2000, 1999 have been restated to give effect to those adjustments applicable to those interim periods.

7

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The following summarizes the significant effects of the restatement on the unaudited condensed consolidated financial statements as of January 31, 2000 and for the three and
nine month periods ended January 31, 2000 and 1999:

|                                            |                   | Three Months Ended January 31,
|------------------------------------------- | ----------------- | ------------------------------
|
|
|
|Unaudited Condensed                         |                   |                               
|Consolidated Statements of Operation        |                   |                               
|Revenues:                                   |                   |                               
|                                            | Software licenses |                               
|                                            | Services          |                               
|                                            |                   |                               
|                                            |                   | Total revenues                
|                                            |                   |                               
|Gross margin                                |                   | $                             
|Selling, general and administrative expense |                   |                               
|Other income, net                           |                   |                               
|Net income (loss)                           |                   | $                             
|Basic Earnings (Loss) per share             |                   | $                             
|Diluted Earnings (loss) per share           |                   | $                             

|                                            |                   | Nine Months Ended January 31,
|------------------------------------------- | ----------------- | -----------------------------
|
|
|
|Unaudited Condensed                         |                   |                              
|Consolidated Statements of Operation        |                   |                              
|Revenues:                                   |                   |                              
|                                            | Software licenses |                              
|                                            | Services          |                              
|                                            |                   |                              
|                                            |                   | Total revenues               
|                                            |                   |                              
|Cost of services                            |                   | $                            
|Gross margin                                |                   | $                            
|Selling, general and administrative expense |                   | $                            
|Other income, net                           |                   | $                            
|Net income (loss)                           |                   | $                            
|Basic Earnings (Loss) per share             |                   | $                            
|Diluted Earnings (loss) per share           |                   | $                            

8

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|                                           |  | January 31, 1999 |        
|------------------------------------------ |  | ---------------- | -------
|
|Unaudited Condensed                        |  |                  |        
|Consolidated Balance Sheets                |  |                  |        
|Assets                                     |  |                  |        
|Accounts receivable, net                   |  |                  |        
|Prepaid expenses and other current assets  |  |                  |        
|Other assets                               |  | $                | 1,064  
|Total assets                               |  | $                | 22,727 
|Liabilities                                |  |                  |        
|Accounts payable                           |  |                  |        
|Other accrued liabilities                  |  | $                | 3,417  
|Deferred revenue                           |  | $                | 5,559  
|Minority interest                          |  |                  |        
|Stockholders' Equity                       |  |                  |        
|Accumulated other comprehensive loss       |  | $                | (777   
|Accumulated Deficit                        |  | $                | (43,958
|Total stockholders' equity                 |  | $                | 10,512 
|Total liabilities and stockholders' equity |  | $                | 22,727 

Basis of Presentation

The unaudited condensed consolidated financial statements have been prepared by Unify Corporation (the "Company") pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). While the interim financial information contained in this filing is unaudited, such financial statements reflect all adjustments (consisting only of normal
recurring adjustments) which the Company considers necessary for a fair presentation. The results for interim periods are not necessarily indicative of the results to be expected for the entire fiscal
year. These financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto, together with Management's Discussion and Analysis of Financial Condition
and Results of Operations, which are included in the Company's Annual Report on Form 10-K/A for the fiscal year ended April 30, 2000 as filed with the SEC on April 27,
2001.

Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,Accounting for Derivative Instruments and
Hedging Activities. This statement establishes accounting and reporting standards for derivative instruments and hedging activities and is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The statement requires balance sheet recognition of derivatives as assets or liabilities measured at fair value. Accounting for gains and losses
resulting from changes in the values of derivatives is dependent on the use of the derivative and whether it qualifies for hedge accounting. The Company believes that the adoption of SFAS
No. 133 will not have a material impact on its financial position or results of operations.

9

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2. Notes Due to Minority Interest Stockholders

In September 1995, Unify Japan entered into a 100 million yen loan agreement with a bank affiliated with Sumitomo Metals Industries, Ltd.
("SMI"). The loan bears interest at the Tokyo International Bank Offered Rate ("TIBOR") plus 50 basis points (approximately 1% at October 31, 1999), and is secured by the assets of Unify Japan.

3. Earnings Per Share

SFAS No. 128,Earnings Per Share,requires a dual presentation of basic and diluted income (loss) per
share ("EPS"). Basic EPS excludes dilution and is computed by dividing net income attributable to common stockholders by the weighted average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other contracts to issue common stock (e.g. convertible preferred stock, warrants, and common stock options) were exercised or
converted into common stock. The effect of dilutive securities (stock options) is excluded in the diluted EPS computation for the three and nine months ended January 31, 2000 as their effect
would be antidilutive. The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the periods indicated (in thousands, except per
share amounts):

|                                                             |  | Three Months Ended
January 31, |        | Nine Months Ended
January 31,
|------------------------------------------------------------ |  | ------------------------------ | ------ | -----------------------------
|
|Net Income (Loss) (Numerator):                               |  |                                |        |                              
|Net income (loss), basic and diluted                         |  | $                              | (844   | )                            
|                                                             |  |                                |        |                              
|Shares (Denominator):                                        |  |                                |        |                              
|Weighted average shares of common stock outstanding, basic   |  |                                | 18,143 |                              
|Effect of dilutive securities (stock options)                |  |                                |       |                              
|                                                             |  |                                |        |                              
|Weighted average shares of common stock outstanding, diluted |  |                                | 18,143 |                              
|                                                             |  |                                |        |                              
|Per Share Amount:                                            |  |                                |        |                              
|Net income (loss) per share, basic                           |  | $                              | (0.05  | )                            
|Effect of dilutive securities (stock options)                |  |                                |       |                              
|                                                             |  |                                |        |                              
|Net income (loss) per share, diluted                         |  | $                              | (0.05  | )                            
|                                                             |  |                                |        |                              
|Antidilutive Shares:                                         |  |                                | 1,598  |                              
|                                                             |  |                                |        |                              

10

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4. Comprehensive Income (Loss)

The Company's total comprehensive income (loss) for the periods shown was as follows:

|                             |                                   | Three Months Ended
January 31, |      | Nine Months Ended
January 31, |  
|---------------------------- | --------------------------------- | ------------------------------ | ---- | ----------------------------- | -
|
|Net income (loss)            |                                   | $                              | (844 | )                             | $
|Foreign currency translation |                                   |                                | (42  | )                             |  
|                             |                                   |                                |      |                               |  
|                             | Total comprehensive income (loss) |                                | $    | (886                          | )
|                             |                                   |                                |      |                               |  

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

The discussion in this Quarterly Report on Form 10-Q/A contains forward-looking statements that have been made
pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about the software
industry and certain assumptions made by the Company's management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words and similar
expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are
difficult to predict;
therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Such risks and uncertainties include, but are not limited to, those set forth
herein under "Volatility of Stock Price and General Risk Factors Affecting Quarterly Results" and in the Company's Annual Report on Form 10-K/A under "BusinessRisk
Factors." Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However,
readers should carefully review the risk factors set forth in other reports or documents the Company files from time to time with the SEC, particularly the Company's Annual Reports on
Form 10-K/A, Quarterly Reports on Form 10-Q/A and any Current Reports on Form 8-K.

The
following discussion should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and Notes thereto in Part I, Item 1 of this Quarterly
Report on Form 10-Q/A and with the audited Consolidated Financial Statements and Notes thereto, together with Management's Discussion and Analysis of Financial Condition and Results
of Operations, which are included in the Company's Annual Report on Form 10-K/A for the fiscal years ended April 30, as filed with the SEC on April 27, 2001.

Results of Operations

Unify develops, markets and supports Internet software that extends business applications to the Web. The Company provides features-rich products
and services for organizations growing their business on the Web, based on open, Java technologies. Unify's products provide enterprise, scalable and affordable software for building and managing
online applications. The Company's flagship product line, Unify eWave, includes a Web application server, enterprise application server and commerce framework built on the Java 2 Enterprise Edition
("J2EE") platform technology. These products are designed to enable developers to rapidly build production-ready, scalable Internet and e-commerce applications that are easy to manage and
run with minimal down-time.

In
June 2000, certain matters came to the attention of the Company's Board of Directors that indicated that the Company had engaged in improper accounting practices. The
Company's Board of Directors authorized its Audit Committee to conduct an investigation of the Company's accounting and financial reporting practices and to recommend remedial action, if any, as a
result of the findings of its

11

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investigation. In July 2000, in connection with the ongoing investigation, the Company placed its chief executive officer and its chief financial officer on administrative leave, and in
November 2000, the Company terminated its chief executive officer and its chief financial officer resigned. Based on the results of the Audit Committee's investigation, the Company concluded
that revenue, and in some cases expenses, had been improperly accounted for in certain transactions during the fiscal year ended April 30, 2000, primarily related to the following:



Based
on the results of the Audit Committee's investigation, adjustments were made during the fiscal year ended April 30, 2000 for such transactions, including restatements of
previously reported quarterly financial statements. The investigation also identified commissions, bonuses and other payments made to the Company's former chief executive officer during the fiscal
year ended April 30, 2000, which the Company believes were not appropriate. Such payments in the amount of approximately $500,000 have been charged to expense in that fiscal year; however, the
Company is seeking to have these amounts repaid by the former chief executive officer. The investigation also included a review of transactions in earlier fiscal years. After evaluating information
from the results of the investigation, the Company concluded that its financial statements for the fiscal year ended April 30, 1999 and earlier were not materially misstated. Also, the Company
concluded that the effect on the financial statements for fiscal 2000 of adjustments relating to transactions of earlier years not being made in those years was not material.

Subsequent
to the issuance of the Company's financial statements for the fiscal year ended April 30, 2000, and in connection with comments by the Staff of the Securities and
Exchange Commission (the "Staff") relating to the Staff's review of the Company's Form 10-K for the year ended April 30, 2000, the Company and the Staff had extensive
communications regarding the materiality of the adjustments relating to transactions in 1999 and earlier years referred to above. Following such communications, management determined that the Company
would record the adjustments in the applicable years. Accordingly, the financial statements for the fiscal years ended April 30, 2000, 1999 and 1998 have been restated from amounts previously
reported to reflect those adjustments. The significant effects of the restatement on the unaudited condensed consolidated financial statements as of January 31, 2000 and for the three and nine
month periods ended January 31, 2000 and 1999 are summarized in Note 1. The information in Management's Discussion and Analysis of Financial Condition and Results of Operations as
presented herein has been revised to reflect the effects of the restatement.

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Revenues

The Company's strategy is to market and enhance its e-commerce and Internet products. The Company also generates significant revenues from
services, including customer maintenance, consulting and training.

Total
revenue for the third quarter ended January 31, 2000 decreased $2.4 million (31%) to $5.2 million from $7.7 in the third quarter ended January 31,
1999. Total revenue for the nine months ended January 31, 2000 decreased $4.5 million (21%) to $16.5 million from $20.9 for the nine months ended January 31, 1999.

The
decrease in total revenues was primarily driven by software license revenues, which decreased by 40%, or $2.0 million for the three months ended January 31, 2000,
and 28% or $3.9 million for the nine months period ended January 31, 2000 as compared to the same periods in the prior fiscal year. The decrease was primarily related to the Company's
shift in focus from its client/server product line to its Unify eWave product line, for which the revenues to date have not met expectations. As the Company emphasized the sale and marketing of the
Unify eWave product line, the Unify VISION and client-server software license revenues also declined further.

Service
revenue for the third quarter ended January 31, 2000 decreased $0.4 million (15%) to $2.2 million from $2.6 for the same quarter in fiscal 1999. Total
service revenue for the nine months ended January 31, 2000 decreased $0.6 million (8%) to $6.5 million from $7.1 for the nine months ended January 31, 1999. Maintenance
revenues remained flat for the three month and nine month periods at $1.9 million and $5.3 million, respectively, compared to the same periods during the prior fiscal year. With the
reduction in sales, new maintenance orders decreased, impacting the generation of addition revenues in this area. Consulting revenues were down 28% for the nine months ended January 31, 2000,
however for the three months ended January 31, 2000 consulting revenues increased $0.1 million (46%). The cumulative impact of the decrease reflects the reduction in sales for the first
six months of fiscal 2000.

International
revenues include all software license and service revenues from customers located outside the United States. International revenues from the Company's direct sales
organizations in Europe and Japan and from value added resellers, distributors, and other partners in all international locations accounted for 57% and 47% of total revenues in the quarters ended
January 31, 2000 and 1999 respectively, and 57% and 52% for the comparative nine months period ended January 31, 2000 and 1999, respectively.

Cost of Revenues

Total cost of revenue for the third quarter ended January 31, 2000 decreased 21% from the cost reported during the third quarter ended
January 31, 1999. Total cost of revenue for the nine months ended January 31, 2000 decreased 4% when compared to the same period in the prior year.

Cost
of software licenses represented 7% of software license revenues for the three and nine month periods ended January 31, 2000 and comparable to the absolute dollar cost of
software licenses in the same periods of the prior year. Cost of services consists primarily of employee, facilities and travel costs incurred in providing customer support under software maintenance
contracts and consulting and training services. Cost of services decreased 29%, and 6%, respectively, for the three and nine months period ended January 31, 2000 when compared to the same two
periods of the prior year. The costs associated with training and consulting were primarily responsible for the decrease in the third quarter, as the Company required less contract labor as a result
of reduced revenues.

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Product Development

Product development expenses for the quarters ended January 31, 2000 and 1999 were comparable, with a slight increase during fiscal 2000, at
$1.6 million and $1.5 million, respectively. Product development expenses for the nine months ended January 31, 2000 and 1999 were also comparable with a slight increase during
fiscal 2000, at $4.8 million and $4.4 million, respectively. The increases in product development expenses is the result of the development of the Unify eWave family of products and the
resources required to maintain and support this product line. The Company believes that substantial investment in product development is critical to maintaining technological leadership and therefore
intends to continue to devote significant resources to product development.

Selling, General and Administrative

Selling, general and administrative ("SG&A") expenses for the quarter ended January 31, 2000 decreased to $3.5 million, or 67% of total revenues,
as compared to $3.8 million, or 50% of total revenues, for the same quarter of the prior year. SG&A expenses for the nine months ended January 31, 2000 increased to $12.5 million,
or 76% of total revenues, as compared to $11.1 million, or 53% of total revenues, for the same periods of the prior year. The major components of SG&A for the third quarter of fiscal 2000 were
sales expenses of $2.2 million, marketing expenses of $0.7 million, general and administrative of $0.6 million. Sales expenses decreased $0.2 million when compared to the
same quarter of the prior fiscal year, as a result of the shift in focus to the Unify eWave product line which had not been fully implemented in the first quarter. This expense decrease was partially
offset by an increase in marketing expense of $0.2 million as a result of this new product promotion. General and administrative expenses decreased less than $0.1 million for the third
quarter of fiscal 2000 as compared to the same quarter of fiscal 1999. On a year to date basis for the nine months ended January 31, 2000 sales expenses decreased $0.7 million as a
result of the shift in focus to the Unify eWave product line; marketing expense increased $0.7 million as a result of the new Unify eWave promotion; general and administrative expenses
decreased $0.5 million and bad debt expenses increased by $0.5 million when compared to the same nine months period for fiscal year 1999. The Company expects that total SG&A expenses
will fluctuate from quarter to quarter primarily because of variability in marketing program spending and sales commission expense.

Provision for Income Taxes

The Company recorded tax provisions for the three and nine months ended January 31, 2000 and 1999 which related primarily to foreign income taxes and
withholding taxes on software license royalties paid to the Company by certain foreign licensees. For the same periods, the Company recorded no significant federal or state income tax provisions as
the Company utilized net operating loss carryforwards.

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Liquidity and Capital Resources

At January 31, 2000, the Company had cash, cash equivalents and short-term investments of $15.2 million, compared to
$11.4 million at April 30, 1999. Working capital decreased to $7.7 million at January 31, 2000 from $12.3 million at April 30, 1999.

The
Company's operating activities generated cash of $4.5 million during the nine months ended January 31, 2000, as a result of increases in deferred revenue of
$1.5 million and increases in other accrued liabilities of $1.9 million, and accounts receivable of $5.1 million, offset by operating losses of $4.6 million for the fist nine
months of fiscal year 2000. Accounts receivable decreased by $5.1 million of which $2.8 million was achieved through the sale of receivables without recourse. Increases in other
liabilities were due primarily to accrued software and developmental costs. Investing activities during the period generated cash of $0.6 million, consisting principally of net sales of
available-for-sale securities of $2.4 million of which $1.4 million was used to acquire other investments and developed software. Cash provided by financing
activities during the period was $1.2 million, which represented proceeds the issuance of common stock under the Company's stock option and stock purchase plan of $1.2 million.

Recently Issued Accounting Standards

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,Accounting for Derivative Instruments and
Hedging Activities. This statement establishes accounting and reporting standards for derivative instruments and hedging activities and is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. The statement requires balance sheet recognition of derivatives as assets or liabilities measured at fair value. Accounting for gains and losses
resulting from changes in the values of derivatives is dependent on the use of the derivative and whether it qualifies for hedge accounting. The Company believes that the adoption of SFAS
No. 133 will not have a material impact on its financial position or results of operations.

Volatility of Stock Price and General Risk Factors Affecting Quarterly Results

The Company's common stock price has been and is likely to continue to be subject to significant volatility. A variety of factors could cause the price of the
Company's common stock to fluctuate, perhaps substantially, including: announcements of developments related to the Company's business; fluctuations in the Company's or its competitors' operating
results and order levels; general conditions in the computer industry or the worldwide economy; announcements of technological innovations; new
products or product enhancements by the Company or its competitors; changes in financial estimates by securities analysts; developments in patent, copyright or other intellectual property rights; and
developments in the Company's relationships with its customers, distributors and suppliers; legal proceedings brought against the Company or its officers; significant changes in the Company' senior
management team. In addition, in recent years the stock market in general, and the market for shares of equity securities of many high technology companies in particular, has experienced extreme price
fluctuations which have often been unrelated to the operating performance of those companies. Such fluctuations may adversely affect the market price of the Company's common stock.

The
Company's quarterly operating results have varied significantly in the past, and the Company expects that its operating results are likely to vary significantly from time to time
in the future. Such variations result from, among other factors, the following: the size and timing of significant orders and their fulfillment; demand for the Company's products; the number, timing
and significance of product enhancements and new product announcements by the Company and its competitors; ability of the Company to attract and retain key employees; seasonality; changes in pricing
policies by the Company or its competitors; realignments of the Company's organizational structure; changes in the level of the Company's operating expenses; changes in the Company's sales incentive
plans; budgeting cycles of the

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Company's customers; customer order deferrals in anticipation of enhancements or new products offered by the Company or its competitors; product life cycles; product defects and other product quality
problems; the results of international expansion; currency fluctuations; and general domestic and international economic and political conditions. Due to the foregoing factors, quarterly revenues and
operating results are difficult to forecast. Revenues are also difficult to forecast because the market for Internet and e-commerce application development software is rapidly evolving,
and the Company's sales cycle, from initial evaluation to purchase and the provision of maintenance services, is lengthy and varies substantially from customer to customer. Because the Company
normally ships products within a short time after it receives an order, it typically does not have any material backlog. As a result, to achieve its quarterly revenue objectives, the Company is
dependent upon obtaining orders in any given quarter for shipment in that quarter. Furthermore, because many customers place orders toward the end of a fiscal quarter, the Company generally recognizes
a substantial portion of its revenues at the end of a quarter. As the Company's expense levels are based in significant part on the Company's expectations as to future revenues and are therefore
relatively fixed in the short term, if revenue levels fall below expectations operating results are likely to be disproportionately adversely affected. The Company also expects that its operating
results will be affected by seasonal trends, and that it may experience relatively weaker demand in fiscal quarters ending July 31 and October 31 as a result of reduced business activity
in Europe during the summer months.

Item 3. Disclosures about Market Rate Risk

Interest Rate Risk.The Company's exposure to market rate risk for changes in interest rates relates primarily to its
investment portfolio, which consists of cash equivalents and short-term investments. Cash equivalents are highly liquid investments with original maturities of three months or less and are
stated at cost. Cash equivalents are generally maintained in money market accounts which have as their objective preservation of principal and which hold investments with maturity dates of less than
90 days. The Company does not believe its exposure to interest rate risk is material for these balances, which totaled $11.5 million at January 31, 2000. The securities in the
Company's short-term investment portfolio are generally classified as available-for-sale and, consequently, are recorded on the consolidated balance sheet at fair
value with unrealized gains or losses reported as a separate component of stockholders' equity. Short-term investments totaled $3.7 million at January 31, 2000 and there were
no material realized or unrealized gains or losses on short-term investments during the first nine months of fiscal 2000. The Company does not use derivative financial instruments in its
investment portfolio, places its investments with high quality issuers and, by policy, limits the amount of credit exposure to any one issuer. The Company is averse to principal loss and attempts to
ensure the safety of its invested funds by limiting default, market and reinvestment risk. The Company's short-term investments at January 31, 2000 consisted of $3.7 million
in high quality corporate bonds maturing within one year, which the Company does not believe carry any material interest rate exposure. If market interest rates were to change immediately and
uniformly by ten percent from levels at January 31, 2000, the fair value of the Company's cash equivalents and short-term investments would change by an insignificant amount.

Foreign Currency Exchange Rate Risk.As a global concern, the Company faces exposure to adverse movements in foreign
currency exchange rates. These exposures may change over time as business practices evolve and could have a material adverse impact on the Company's business, operating results and financial position.
Historically, the Company's primary exposures have related to local currency denominated sales and expenses in Europe, Japan and Australia. Due to the substantial volatility of currency exchange
rates, among other factors, the Company cannot predict the effect of exchange rate fluctuations on its future operating results. The Company also has currency exchange rate exposures on intercompany
accounts receivable owed to the Company as a result of local currency sales of software licenses by the Company's international subsidiaries in the United Kingdom, France and Japan. At
January 31, 2000, the Company had $2.0 million, $0.4 million and $1.0 million in such

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receivables denominated in British pounds, French francs and Japanese yen, respectively. The Company encourages prompt payment of these intercompany balances in order to minimize its exposure to
currency fluctuations, but it engages in no hedging activities to reduce the risk of such fluctuations. A hypothetical ten percent change in foreign currency rates would have an insignificant impact
on the Company's business, operating results and financial position. The Company has not experienced material exchange losses on intercompany balances in the past; however, due to the substantial
volatility of currency exchange rates, among other factors, it cannot predict the effect of exchange rate fluctuations on its future business, operating results and financial position.

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PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K





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SIGNATURE

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

|Date: |  | May 11, 2001 |  | Unify Corporation (Registrant)
|----- |  | ------------ |  | ------------------------------
|      |  |              |  | By:                           

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