---

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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549**______________________****Form 10-Q**

xQuarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934

For the quarterly period ended
October 31, 2008OR

cTransition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934

Commission File Number: 001-11807
______________________UNIFY
CORPORATION(Exact name of registrant as specified in its charter)

|Delaware                              | 94-2710559                           
|------------------------------------- | -------------------------------------
|(State or
      other jurisdiction of | (I.R.S.
      Employer Identification
|incorporation
      or organization)  | Number)                              

1420 Rocky Ridge Drive, Suite 380Roseville, California 95661(Address of principal executive
offices)

Telephone: (916) 218-4700(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.

YESxNOc

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.

|Large
      accelerated filerc | Accelerated
      filer c | Non-accelerated filer c                             | Smaller
      reporting companyx
|------------------------------ | ------------------------- | --------------------------------------------------- | --------------------------------
|                               |                           | (Do not check
      if a smaller reporting company) |                                 

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act),

YEScNOx

Indicate the number of shares outstanding
of each of the issuers classes of common stock, as of the latest practicable
date: 6,981,249 shares of common stock, $0.001 par value, as of October 31,
2008.

---

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UNIFY CORPORATION FORM
10-Q

INDEX

|PART I.            | FINANCIAL INFORMATION                                                                 | 3 
|------------------ | ------------------------------------------------------------------------------------- | --
|                   |                                                                                       |   
|Item 1.            | Financial Statements                                                                  | 3 
|                   |                                                                                       |   
|                   | Unaudited Condensed Consolidated Balance Sheets as of October 31,
      2008 and      | 3 
|                   | April 30, 2008                                                                        |   
|                   |                                                                                       |   
|                   | Unaudited Condensed Consolidated Statements of Operations for the
      three and six | 4 
|                   | months ended October 31, 2008 and 2007                                                |   
|                   |                                                                                       |   
|                   | Unaudited Condensed Consolidated Statements of Cash Flows for the
      six months    | 5 
|                   | ended October 31, 2008 and 2007                                                       |   
|                   |                                                                                       |   
|                   | Notes to Unaudited Condensed Consolidated Financial
      Statements                  | 6 
|                   |                                                                                       |   
|Item 2.            | Managements Discussion and Analysis of Financial Condition and
      Results of      | 16
|                   | Operations                                                                            |   
|                   |                                                                                       |   
|Item 3.            | Quantitative and Qualitative Disclosures about Market
      Risk                      | 23
|                   |                                                                                       |   
|Item 4.            | Controls and Procedures                                                               | 25
|                   |                                                                                       |   
|PART II.           | OTHER INFORMATION                                                                     | 26
|                   |                                                                                       |   
|Item 1.            | Legal Proceedings                                                                     | 26
|                   |                                                                                       |   
|Item 6.            | Exhibits                                                                              | 27
|                  
|SIGNATURE          |                                                                                       | 28
|                   |                                                                                       |   
|**CERTIFICATIONS** |                                                                                       |   

2

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PART I. FINANCIAL
INFORMATION

Item 1. Financial
Statements

UNIFY CORPORATIONUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS (In thousands)

|                                                 | October 31, |         | April 30,
|------------------------------------------------ | ----------- | ------- | ---------
|                                                 | 2008        |         | 2008     
|ASSETS                                           |             |         |          
|Current
      assets:                            |             |         |          
|Cash and cash equivalents                        | $           | 2,878   |          
|Accounts receivable, net                         |             | 4,655   |          
|Prepaid expenses and other current
      assets  |             | 713     |          
|Total current assets                             |             | 8,246   |          
|                                                
|Property and equipment, net                      |             | 514     |          
|Goodwill                                         |             | 5,643   |          
|Intangibles, net                                 |             | 1,837   |          
|Other assets,
      net                          |             | 80      |          
|Total assets                                     | $           | 16,320  |          
|                                                
|LIABILITIES AND STOCKHOLDERS' EQUITY             |             |         |          
|Current
      liabilities:                       |             |         |          
|Accounts payable                                 | $           | 428     |          
|Current portion of long term debt                |             | 543     |          
|Accrued compensation and related
      expenses  |             | 1,156   |          
|Other accrued liabilities                        |             | 1,053   |          
|Deferred revenue                                 |             | 5,188   |          
|Total current liabilities                        |             | 8,368   |          
|                                                
|Long term debt, net                              |             | 922     |          
|Other long term
      liabilities                |             | 397     |          
|                                                
|Commitments and contingencies                    |             |        |          
|                                                
|Stockholders equity:                            |             |         |          
|Common stock                                     |             | 7       |          
|Additional paid-in capital                       |             | 68,508  |          
|Accumulated other comprehensive income (loss)    |             | (75     | )        
|Accumulated deficit                              |             | (61,807 | )        
|Total stockholders equity                       |             | 6,633   |          
|Total liabilities and stockholders
      equity | $           | 16,320  |          

See accompanying notes to condensed
consolidated financial statements.

3

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

|                                               | Three Months Ended |       | Six Months Ended
|---------------------------------------------- | ------------------ | ----- | ----------------
|                                               | October 31,        |       | October 31,     
|                                               | 2008               |       | 2007            
|Revenues:                                      |                    |       |                 
|Software licenses                              | $                  | 1,987 |                 
|Services                                       |                    | 3,170 |                 
|Migration solutions                            |                    | 644   |                 
|Total
      revenues                           |                    | 5,801 |                 
|                                              
|Cost of Revenues:                              |                    |       |                 
|Software licenses                              |                    | 89    |                 
|Services                                       |                    | 298   |                 
|Migration solutions                            |                    | 358   |                 
|Total cost of revenues                         |                    | 745   |                 
|Gross
      profit                             |                    | 5,056 |                 
|                                              
|Operating Expenses:                            |                    |       |                 
|Product development                            |                    | 682   |                 
|Selling, general and
      administrative      |                    | 3,342 |                 
|Total operating expenses                       |                    | 4,024 |                 
|Income from
      operations                   |                    | 1,032 |                 
|Other income
      (expense), net              |                    | (151  | )               
|                                              
|Income before income
      taxes               |                    | 881   |                 
|Provision for
      income taxes               |                    | 156   |                 
|Net
      income                               | $                  | 725   |                 
|                                              
|Net income per share:                          |                    |       |                 
|Basic                                          | $                  | 0.10  |                 
|Dilutive                                       | $                  | 0.10  |                 
|                                              
|Shares used in computing net income per share: |                    |       |                 
|Basic                                          |                    | 6,981 |                 
|Dilutive                                       |                    | 7,605 |                 

See accompanying notes to condensed
consolidated financial statements.

4

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UNIFY CORPORATIONUNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (In thousands)

|                                                                                 | Six Months Ended October
      31,
|-------------------------------------------------------------------------------- | ----------------------------------
|                                                                                 | 2008                              
|Cash flows from operating activities:                                            |                                   
|Net income                                                                       | $                                 
|Reconciliation of net income to net cash provided by operating
      activities: |                                   
|Gain on sale of other investments                                                |                                   
|Depreciation                                                                     |                                   
|Loss on disposal of equipment                                                    |                                   
|Amortization of intangible assets                                                |                                   
|Fulfillment of support obligations                                               |                                   
|Amortization of discount on notes payable                                        |                                   
|Stock based compensation expense                                                 |                                   
|Changes in operating assets and liabilities:                                     |                                   
|Accounts receivable                                                              |                                   
|Prepaid expenses and other current assets                                        |                                   
|Other long term assets                                                           |                                   
|Accounts payable                                                                 |                                   
|Accrued compensation and related expenses                                        |                                   
|Other accrued liabilities                                                        |                                   
|Accrued acquisition costs                                                        |                                   
|Deferred revenue                                                                 |                                   
|Other long term liabilities                                                      |                                   
|Net cash provided by (used in) operating activities                              |                                   
|Cash flows from
      investing activities:                                      |                                   
|Acquisition, net of cash acquired                                                |                                   
|Purchases of property and equipment                                              |                                   
|Payments on acquisition obligations                                              |                                   
|Proceeds from sale of other investments                                          |                                   
|Net cash used in investing activities                                            |                                   
|Cash flows from
      financing activities:                                      |                                   
|Proceeds from issuance of common stock                                           |                                   
|Borrowings under revolver                                                        |                                   
|Payment on revolver                                                              |                                   
|Principal payments under debt obligations                                        |                                   
|Net cash used in financing activities                                            |                                   
|Effect of
      exchange rate changes on cash                                    |                                   
|Net increase (decrease) in cash and cash equivalents                             |                                   
|Cash and cash
      equivalents, beginning of period                             |                                   
|Cash and cash equivalents, end of period                                         | $                                 
|Supplemental
      cash flow information                                         |                                   
|Cash
      paid during the period for:                                           |                                   
|Interest                                                                         | $                                 
|Taxes                                                                            | $                                 

See accompanying notes to condensed
consolidated financial statements.

5

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UNIFY CORPORATIONNOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTSOctober 31, 2008

1. Basis of
Presentation

The condensed consolidated financial
statements have been prepared by Unify Corporation (the Company, we, us,
our) 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, in the opinion of management,
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 for
the fiscal year ended April 30, 2008, as filed with the SEC.

Revenue
Recognition

The Company generates revenue from
software license sales and related services, including maintenance and support,
and consulting services. Additionally, the Company generates revenue from its
migration solutions products. The Company licenses its products to end-user
customers, independent software vendors (ISVs), international distributors and
value-added resellers (VARs). The Companys products are generally sold with a
perpetual license. The Companys contracts with ISVs, VARs and international
distributors do not include special considerations such as rights of return,
stock rotation, price protection or special acceptance. With the exception of
its migration solutions, the Company recognizes revenue in accordance with
Statement of Position (SOP) 97-2,Software
Revenue Recognition. For migration solutions,
the Company recognizes revenue for software licenses sales in accordance with
Statement of Position 81-1,Accounting for
Performance of Construction-Type and Certain Production-Type Contractsand Accounting Research Bulletin (ARB) 45,Long-Term Construction Type
Contracts. The Company exercises judgment in
connection with the determination of the amount of revenue to be recognized in
each accounting period. The nature of each contractual arrangement determines
how revenues and related costs are recognized.

For software license arrangements that do
not require significant modification or customization of the underlying
software, revenue is recognized when the software product or service has been
shipped or electronically delivered, the license fees are fixed and
determinable, uncertainties regarding customer acceptance are resolved,
collectability is probable and persuasive evidence of an arrangement
exists.

The Company considers a signed
noncancelable license agreement, a customer purchase order, a customer purchase
requisition, or a sales quotation signed by an authorized purchaser of the
customer to be persuasive evidence that an arrangement exits such that revenue
can be recognized.

For migration solution arrangements that
require significant modification or customization of software, revenue is
recognized based on contract accounting under the provisions of Accounting
Research Bulletin (ARB) 45,Long-Term
Construction Type Contractsand Statement of
Position (SOP) 81-1,Accounting for
Performance of Construction-Type and Certain Production-Type
Contracts. For migration solution products
the Company uses the completed-contract method for revenue recognition as the
Company has limited experience in estimating costs for these types of
arrangements. When a contract is completed, revenue is recognized and deferred
costs are expensed. The Company expects to use the percentage-of-completion
method for revenue recognition on new contracts in the third quarter of fiscal 2009.

The Companys customer contracts include
multi-element arrangements that include a delivered element (a software license)
and undelivered elements (such as maintenance and support and/or consulting).
The value allocated to the undelivered elements is unbundled from the delivered
element based on vendor-specific objective evidence (VSOE) of the fair value of
the maintenance and support and/or consulting, regardless of any separate prices
stated within the contract. VSOE of fair value is defined as: (i) the price
charged when the same element is sold separately, or (ii) if the element has not
yet been sold separately, the price for the element established by management
having the relevant authority when it is probable that the price will not change
before the introduction of the element into the marketplace. The Company then
allocates the remaining balance to the delivered element (a software license)
regardless of any separate prices stated within the contract using the residual
method as the fair value of all undelivered elements is determinable.

We defer revenue for any undelivered
elements, and recognize revenue for delivered elements only when the fair values
of undelivered elements are known, uncertainties regarding customer acceptance
are resolved, and there are no customer-negotiated refund or return rights
affecting the revenue recognized for delivered elements. If we cannot
objectively determine the fair value of any undelivered element included in
bundled software and service arrangements, we defer revenue until all elements
are delivered and services have been performed, or until fair value can
objectively be determined for any remaining undelivered elements.

6

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An assessment of the ability of the
Companys customers to pay is another consideration that affects revenue
recognition. In some cases, the Company sells to undercapitalized customers. In
those circumstances, revenue recognition is deferred until cash is received, the
customer has established a history of making timely payments or the customers
financial condition has improved. Furthermore, once revenue has been recognized,
the Company evaluates the related accounts receivable balance at each period end
for amounts that we believe may no longer be collectible. This evaluation is
largely done based on a review of the financial condition via credit agencies
and historical experience with the customer. Any deterioration in credit
worthiness of a customer may impact the Companys evaluation of accounts
receivable in any given period.

Revenue from support and maintenance
activities, which consist of fees for ongoing support and unspecified product
updates, are recognized ratably over the term of the maintenance contract,
typically one year, and the associated costs are expensed as incurred.
Consulting service arrangements are performed on a best efforts basis and may
be billed under time-and-materials arrangements or fixed price arrangements.
Revenues and expenses relating to providing consulting services are recognized
as the services are performed.

Recently Issued Accounting Standards

In September 2006, the FASB issued
Statement No. 157,Fair Value Measurements
(SFAS 157). SFAS 157 defines fair value,
establishes a framework and gives guidance regarding the methods used for
measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2008, and interim periods within those fiscal years. We are
currently assessing the impact, if any, of SFAS 157 on our consolidated
financial statements.

In December 2007, the FASB issued SFAS No.
141 (revised),Business
Combinations. The standard changes the
accounting for business combinations including the measurement of acquirer
shares issued in consideration for a business combination, the recognition of
contingent consideration, the accounting for pre-acquisition gain and loss
contingencies, the recognition of capitalized in-process research and
development, the accounting for acquisition-related restructuring cost accruals,
the treatment of acquisition related transaction costs and the recognition of
changes in the acquirers income tax valuation allowance. Statement 141(R) is
effective for fiscal years beginning after December 15, 2008, with early
adoption prohibited. We are currently assessing the impact, if any, of SFAS
141(R) on our consolidated financial statements.

In March 2008, the FASB issued Statement
No. 161,Disclosures about Derivative
Instruments and Hedging Activities, an
amendment of FASB Statement No. 133. (SFAS No. 161). SFAS No. 161 requires
enhanced disclosures about an entitys derivative instruments and hedging
activities with a view toward improving the transparency of financial reporting,
and is effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application encouraged.
SFAS No. 161 encourages, but does not require, comparative disclosures for
earlier periods at initial adoption. We are currently evaluating the impact, if
any, of adopting SFAS No. 161 on our consolidated financial statements.

On May 9, 2008, the FASB issued FASB Staff
Position No. APB 14-1(FSP APB 14-1),Accounting for Convertible Debt Instruments That May Be Settled in Cash
Upon Conversion (Including Partial Cash Settlement. FSP APB 14-1 requires issuers of convertible debt that may be settled
wholly or partly in cash when converted to account for the debt and equity
components separately. FSP APB 14-1 is effective for fiscal years beginning
after December 15, 2008 and must be applied retrospectively to all periods
presented. We are currently assessing the impact, if any, of FSP APB 14-1 on our
consolidated financial statements.

In April 2008, the FASB issued FASB Staff
Position ("FSP") FAS 142-3, "Determination of
Useful Life of Intangible Assets"("FSP FAS
142-3"). FSP FAS 142-3 amends the factors that should be considered in
developing the renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under FAS 142, "Goodwill and Other
Intangible Assets." FSP FAS 142-3 also requires expanded disclosure related to
the determination of intangible asset useful lives. FSP FAS 142-3 is effective
for fiscal years beginning after December 15, 2008. Earlier adoption is not
permitted. We believe that the adoption of FSP FAS 142-3 will not have a
material impact on our consolidated financial statements.

In May of 2008, the FASB issued SFAS No.
162,The Hierarchy of Generally Accepted
Accounting Principles.This statement
identifies literature established by the FASB as the source for accounting
principles to be applied by entities which prepare financial statements
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. This statement is effective 60 days following approval by the
SEC of the Public Company Accounting Oversight Board amendments to AU Section
411,The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles.This statement will require no changes in the Companys
financial reporting practices.

7

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2. Acquisitions

On September 13, 2006, the Company entered
into a Purchase and Exchange Agreement with Halo Technology Holdings, Inc.
whereby Unify agreed to purchase all of the outstanding stock of Gupta
Technologies LLC (Gupta) from Halo in exchange for: (i) the Companys
Insurance Risk Management (IRM) division, (ii) the Companys ViaMode software,
(iii) $6,100,000 in cash, and (iv) the amount, if any, by which Guptas net
working capital exceeds IRMs net working capital at the close of the
transaction. The Companys acquisition of Gupta was consummated on November 20,
2006. The total purchase price for Gupta was $7.7 million. Gupta was founded in
1984 and is a leading producer of secure, small-footprint, embeddable databases
and enterprise application development tools. The acquisition resulted in
additional revenue and market share in the Companys core markets and
significantly enhances the distribution channels through which the Companys
products can be sold. Guptas headquarters was in Redwood Shores, California
with offices in Germany and the UK and has distributors and partners in more
than 40 countries around the world. Guptas results of operations are included
in the Companys results from the date of acquisition.

On November 20, 2006, the Company entered
into various agreements with ComVest Capital LLC (ComVest) whereby ComVest,
along with participation from Special Situations Funds, provided debt financing
for the Gupta acquisition. The debt financing consisted of $5.35 million in
convertible term notes and a revolver of up to $2.5 million. There are three
tranches that comprise the convertible term notes: Tranche 1 is for $1,000,000,
Tranche 2 is for $3,250,000 and Tranche 3 is for $1,100,000. The term loans have
an interest rate of 11.25% and have repayment terms of 48 to 60 months. As of
October 31, 2008, the remaining balance on the term notes is $1.3 million, net
of discounts. The agreement was modified in April 2008, whereby the interest
rate on the term loans has been decreased to 5% and all principal payments have
been deferred until June 2009. As part of the debt financing the Company
provided the lenders with 670,000 warrants to purchase common stock. There are
200,000 warrants to purchase common stock at a price of $1.35 per share, 270,000
warrants at a price of $1.60 per share and 200,000 warrants at a price of $1.90
per share. The warrants have an expiration date of October 31, 2012. In November
2007, ComVest elected to exercise 120,000 warrants to purchase common stock at a
price of $1.35 per share. Additionally, the holder of the term notes may, at
their option, upon written notice to Unify given at any time and from time to
time from the date Unify has sufficient authorized, unissued and unreserved
shares of common stock convert the outstanding principal and any accrued
interest into shares of Unify common stock. Tranche 1 is convertible at $2.50
per common share and Tranches 2 and 3 are convertible at $5.00 per common share.
Unify may require conversion of the convertible term notes if its common stock
price closes at or above 160% of the applicable conversion price for 20 or more
consecutive market days. In October 2007, the outstanding balance for Tranche 1
of $0.9 million was converted into 352,380 shares of common stock. Additionally,
during the third quarter of fiscal 2008, $1.0 million of the outstanding balance
for Tranche 2 was converted into 198,670 shares of common stock. The agreement
provides for ComVest to have a security interest in substantially all of the
Companys assets. Unify capitalized $238,000 of debt issuance costs associated
with the debt financing and also recorded a discount on the notes payable of
approximately $743,000 that is attributed to the warrants that were issued in
conjunction with the financing. The debt issuance costs and the discount on
notes payable are being amortized using the effective interest method over the
stated life of the related notes. The amortization of both the debt issuance
costs and the discount on the notes payable was approximately $41,000 for the
six months ended October 31, 2008 and is included in interest expense. The
unamortized amount of the discount on the notes payable was $53,000 as of
October 31, 2008 and $76,000 as of April 30, 2008 and is included in long term
debt, net. As of October 31, 2008 and April 30, 2008 the unamortized portion of
debt issuance costs was $42,000 and $60,000, respectively, which is included in
other assets, net.

8

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The Gupta purchase price was allocated to
tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values at the acquisition date, November 20, 2006. The
determination of goodwill and intangibles is based on the results of an
independent valuation experts report. The excess of the purchase price over the
fair value of net assets acquired was allocated to goodwill. The Company
believes the fair values assigned to the assets acquired and liabilities assumed
were based on reasonable assumptions. The following table summarizes the fair
values of net assets acquired and represents the opening balance sheet for Gupta
Technologies LLC as of the acquisition date, November 20, 2006 (in thousands):

|Current assets                                   |  | $ | 1,281 
|------------------------------------------------ |  | - | ------
|Property and
      equipment, net                |  |   | 99    
|Long term assets                                 |  |   | 71    
|Goodwill                                         |  |   | 6,161 
|Intangibles                                      |  |   | 2,950 
|Total assets                                     |  | $ | 10,562
|                                                
|Current liabilities                              |  | $ | 2,844 
|Long term
      liabilities                      |  |   | 18    
|Shareholders' equity                             |  |   | 7,700 
|Total liabilities and
      shareholders' equity |  | $ | 10,562

Active Data Corporation

On May 22, 2007, the Company purchased
privately held Active Data Corporation (ADC) for approximately $420,000 plus
potential earn-out payments over a two year period following the acquisition.
ADC provided application migration software that added Microsofts .NET
functionality to Unifys Team Developer product and provided an additional
application migration solution for the Company. Pursuant to the terms of the
purchase agreement, Unify acquired all the outstanding stock of ADC. ADC did not
represent the addition of a significant subsidiary as the investment in ADC was
less than 10% of the Companys assets, ADCs total assets at date of acquisition
were less than 10% of Unifys assets and ADCs net loss represented less than
10% of Unifys net loss. The acquisition of Active Data did not have a material
impact on the financials of Unify and the results of operations for Active Data
Corporation are included in the Companys results from the date of acquisition.
The ADC purchase price was allocated to tangible and intangible assets acquired
and liabilities assumed based on their estimated fair values. The determination
of goodwill and intangibles is based on the results of a report prepared by an
independent valuation expert. The excess of the purchase price over the fair
value of net assets acquired was allocated to goodwill. The Company believes the
fair values assigned to the assets acquired and liabilities assumed were based
on reasonable assumptions.

3. Stock Compensation
Information

Effective May 1, 2006, the Company adopted
the provisions of Statement of Financial Accounting Standards (SFAS) No.
123(R),Share-Based Payment,using the modified version of prospective application. Under
this method, compensation expense includes the estimated fair value of equity
awards vested during the reported period. Expense for equity awards vested is
determined based on the grant date fair value previously calculated for pro
forma disclosures under SFAS No. 148, Accounting for Stock-Based CompensationTransition and DisclosureAn
Amendment of FASB Statement No. 123. For the
quarter ended October 31, 2008, equity-based compensation expense from
operations was comprised of the following (in thousands):

|                                      |  | Three Months Ended |     | Six Months Ended
|------------------------------------- |  | ------------------ | --- | ----------------
|                                      |  | October 31,        |     | October 31,     
|                                      |  | **2008**           |     | 2007            
|Cost of Sales                         |  | $                  | 4   |                 
|Product
      Development             |  |                    | 21  |                 
|Selling, General and Administrative   |  |                    | 124 |                 
|Total
      Equity-Based Compensation |  | $                  | 149 |                 

9

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The following table shows remaining
unrecognized compensation expense on a pre-tax basis related to all types of
nonvested equity awards outstanding as of October 31, 2008. This table does not
include an estimate for future grants that may be issued (amounts in thousands).

|Fiscal Year
      Ending April 30, |  | Amount
|---------------------------------- |  | ------
|Remainder of 2009                  |  | $     
|2010                               |  |       
|2011                               |  |       
|2012                               |  |       
|2013                               |  |       
|Total                              |  | $     

The cost above is expected to be
recognized over a weighted-average period of 1.31 years.

The Company continues to use the
Black-Scholes option pricing model to estimate fair value of equity awards,
which requires the input of highly subjective assumptions, including the
expected stock price volatility. The Companys calculations are made using the
Black-Scholes option pricing model, with the following weighted average
assumptions for the three months ended October 31, 2008 and 2007, respectively:
expected option life, 12 to 18 months following vesting; stock volatility of 89%
and 99%; risk-free interest rates of 3.0% and 4.1% and no dividends during the
expected term. Not all stock options that have been granted will be exercised.
Accordingly, the Companys calculation of equity-based compensation expense
includes an adjustment for the estimated number of options that will be
forfeited.

Under the 2001 Stock Option Plan (the
2001 Option Plan), the Company may grant options to purchase up to 1,200,000
shares of common stock to eligible employees, directors, and consultants at
prices not less than the fair market value at the date of grant for incentive
stock options and not less than 85% of the fair market value at the date of
grant for non-statutory stock options. Options granted under the 2001 Stock
Option Plan generally vest over four years, are exercisable to the extent
vested, and expire 10 years from the date of grant. Under the 1991 Stock Option
Plan (the 1991 Option Plan) which expired as of March 2001, the Company was
able to grant options to eligible employees, directors and consultants at prices
not less than the fair market value at the date of grant for incentive stock
options and not less than 85% of the fair market value at the date of grant for
non-statutory stock options. Options granted under the 1991 Option Plan
generally vest over four years, are exercisable to the extent vested, and expire
10 years from the date of grant.

A summary of the Companys stock option
activity for the period ended October 31, 2008 is as follows:

WeightedWeighted
    
    average
      remaining
    
    Aggregateaverage
    
    contractual
    
    intrinsicShares
    
    exercise price
    
    term (in years)
    
    value (1)Outstanding at April 30, 2008
    
    760,017
    
    
    $
    3.23
    
    7.35
    
    $
    2,699,038Granted
    
    427,100
    
    
    $
    6.08Exercised
    
    (500
    )
    
    $
    2.55Canceled or expired
    
    (4,905
    )
    
    $
    6.04Outstanding at October 31, 2008
    
    1,181,712
    
    
    $
    4.25
    
    7.81
    
    $
    869,392Exercisable at October 31, 2008
    
    522,798
    
    
    $
    3.16
    
    6.07
    
    $
    669,208


|(1) |  | Aggregate intrinsic value is
      defined as the difference between the current market value and the
      exercise price and is estimated using the closing price of the Companys
      common stock on the last trading day of the periods ended as of the dates
      indicated.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total intrinsic value of awards exercised
during the quarters ended October 31, 2008 and October 31, 2007 was $0 and
$10,000, respectively. The total fair value of awards vested during the quarters
ended October 31, 2008 and October 31, 2007 was $124,535 and $27,000,
respectively.

10

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A summary of the Companys nonvested stock
option activity for the period ended October 31, 2008 is as follows:

| |                                     |  |          |   |       | Weighted    
| | ----------------------------------- |  | -------- | - | ----- | ------------
| |                                     |  |          |   |       | average fair
| |                                     |  | Shares   |   | value
| | Nonvested at April 30, 2008         |  | 338,490  |   |       | $           
| | Granted                             |  | 427,100  |   |       | $           
| | Vested                              |  | (102,663 | ) |       | $           
| | Canceled or expired                 |  | (4,013   | ) |       | $           
| | Nonvested at October 31,
      2008 |  | 658,914  |   |       | $           

4.Goodwill and Intangible
Assets

The following tables present details of
the Companys goodwill and intangible assets as of October 31, 2008 and April
30, 2008 (in thousands).

|                 |  | Gross    |       |              |   |          |   | Net         |   |      
|---------------- |  | -------- | ----- | ------------ | - | -------- | - | ----------- | - | -----
|                 |  | carrying |       | Accumulated  |   | carrying |   | Estimated  
|October 31, 2008 |  | amount   |       | amortization |   | amount   |   | useful life
|Infinite Lives:  |  |          |       |              |   |          |   |             |   |      
|Goodwill         |  | $        | 5,643 |              | $ |         |   |             | $ | 5,643
|Finite Lives:    |  |          |       |              |   |          |   |             |   |      
|Customer-related |  |          | 1,500 |              |   | (575     | ) |             |   | 925  
|Technology-based |  |          | 1,050 |              |   | (503     | ) |             |   | 547  
|Trademarks       |  |          | 300   |              |   | (144     | ) |             |   | 156  
|Trade name       |  |          | 100   |              |   | (100     | ) |             |   |     
|Technologies     |  |          | 288   |              |   | (102     | ) |             |   | 186  
|Customer lists   |  |          | 36    |              |   | (13      | ) |             |   | 23   
|Total            |  | $        | 8,917 |              | $ | (1,437   | ) |             | $ | 7,480
|                
|                 |  | Gross    |       |              |   |          |   | Net         |   |      
|                 |  | carrying |       | Accumulated  |   | carrying |   | Estimated  
|April 30, 2008   |  | amount   |       | amortization |   | amount   |   | useful life
|Infinite Lives:  |  |          |       |              |   |          |   |             |   |      
|Goodwill         |  | $        | 5,643 |              | $ |         |   |             | $ | 5,643
|Finite Lives:    |  |          |       |              |   |          |   |             |   |      
|Customer-related |  |          | 1,500 |              |   | (425     | ) |             |   | 1,075
|Technology-based |  |          | 1,050 |              |   | (372     | ) |             |   | 678  
|Trademarks       |  |          | 300   |              |   | (106     | ) |             |   | 194  
|Trade name       |  |          | 100   |              |   | (100     | ) |             |   |     
|Technologies     |  |          | 288   |              |   | (66      | ) |             |   | 222  
|Customer lists   |  |          | 36    |              |   | (8       | ) |             |   | 28   
|Total            |  | $        | 8,917 |              | $ | (1,077   | ) |             | $ | 7,840

Acquired finite-lived intangibles are
generally amortized on a straight line basis over their estimated useful life.
The useful life of finite-lived intangibles is the period over which the asset
is expected to contribute directly or indirectly to future cash flows of the
Company. Intangible assets amortization expense for the six months ended October
31, 2008, was $360,000. Amortization expense for the fiscal year ended April 30,
2008, was $770,000 and was related to the Gupta and Active Data acquisitions.
The estimated future amortization expense related to intangible assets as of
October 31, 2008, is as follows (in thousands):

| | Fiscal Year Ending April
      30, |  | Amount
| | ---------------------------------- |  | ------
| | Remainder of 2009                  |  |       
| | 2010                               |  |       
| | 2011                               |  |       
| | 2012                               |  |       
| | Total                              |  | $     

11

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Goodwill at October 31, 2008, represents
the excess of the Gupta and Active Data Corporation purchase prices over the sum
of the amounts assigned to assets acquired less liabilities assumed. The Company
believes the acquisition of Gupta and Active Data Corporation will produce the
following results:

- Increased Market Presence and
  Opportunities: The combination of the Company with Gupta and Active Data
  Corporation should increase the combined companys market presence and
  opportunities for growth in sales and earnings.
- Enhanced Product Mix: The complementary
  nature of the Companys products with those of Gupta and Active Data
  Corporation should benefit current customers of both companies and provide the
  combined company with the ability to access new customers.
- Operating Efficiencies: The combination of
  the Company with Gupta and Active Data Corporation provides the opportunity
  for potential economies of scale and cost savings.

The Company believes these primary factors
support the amount of goodwill recognized as a result of the purchase price for
Gupta and Active Data Corporation. Goodwill is tested for impairment on an
annual basis as of April 30, and between annual tests if indicators of potential
impairment exist, using a fair-value-based approach in accordance with FASB
142,Goodwill and Other Intangible
Assets. The determination of goodwill and
intangibles is based on the results of an independent valuation experts report.

5. Credit Facility

On November 20, 2006, the Company entered
into a revolving credit note agreement with ComVest Capital LLC. Under the terms
of the agreement the Company can borrow up to $2.5 million. As of October 31,
2008, there was no amount outstanding on the revolver. The amount that can be
borrowed under the revolver is based on the amount of eligible foreign and
domestic accounts receivable outstanding. The revolver has an expiration date of
November 30, 2010, and the Company incurs interest expense on funds borrowed at
the prevailing prime rate plus 2.25% per annum (6.25% and 7.25% as of October
31, 2008 and April 30, 2008, respectively).

6. Long-Term Debt

The Companys debt consists of the
following at October 31, 2008 and April 30, 2008 (in thousands):

|                                                                                           |  | October 31, |       | April 30,
|------------------------------------------------------------------------------------------ |  | ----------- | ----- | ---------
|                                                                                           |  | 2008        |       | 2008     
|Convertible notes payable to ComVest Capital LLC, interest rate of
      5%, payable in    |  |             |       |          
|installments through September 30, 2010. These notes include
      certain negative        |  |             |       |          
|covenants and the Company is in compliance with such
      covenants.                      |  | $           | 1,400 |          
|                                                                                          
|Revolving note payable to ComVest Capital LLC, interest rate of
      prime plus 2.25% and |  |             |       |          
|a maturity date of November 30, 2010                                                       |  |             |      |          
|                                                                                          
|Capital leases payable, payable in monthly installments through
      September 2011       |  |             | 118   |          
|                                                                                           |  |             | 1,518 |          
|Less discount on notes payable, net                                                        |  |             | (53   | )        
|Less current
      portion                                                                 |  |             | (543  | )        
|Total long term debt, net                                                                  |  | $           | 922   |          

7. Other Long-Term
Liabilities

In France, the Company is subject to
mandatory employee severance costs associated with a statutory government
regulated plan covering all employees. The plan provides for one month of
severance for the first five years of service with an employer and one fifth of
one year of severance for every one year of service thereafter. In order to
receive their severance payment the employee generally may not retire before age
65 and must be employed at the time of retirement. As of October 31, 2008 and
April 30, 2008 the amount of severance is $99,000 and $121,000, respectively.
Also, included in other long term liabilities as of October 31, 2008 and April
30, 2008 is $26,000 and $115,000, respectively, related to the onetime charge
associated with abandoning the German office and $272,000 and $219,000 of
deferred tax liabilities, respectively.

12

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8. Maintenance
Contracts

The Company offers maintenance contracts
to its customers at the time they enter into a product license agreement and
renew those contracts and at the customers option, generally annually
thereafter. These maintenance contracts are priced as a percentage of the value
of the related license agreement. The specific terms and conditions of these
initial maintenance contracts and subsequent renewals vary depending upon the
product licensed and the country in which the Company does business. Generally,
maintenance contracts provide the customer with unspecified product maintenance
updates and customer support services. Revenue from maintenance contracts is
initially deferred and then recognized ratably over the term of the agreements.

Changes in the Companys deferred
maintenance revenue during the periods are as follows (in thousands):

|                                                            |  | Three Months Ended |        | Six Months Ended
|----------------------------------------------------------- |  | ------------------ | ------ | ----------------
|                                                            |  | October 31,        |        | October 31,     
|                                                            |  | 2008               |        | 2007            
|Deferred maintenance revenue beginning balance              |  | $                  | 5,218  |                 
|Deferred
      maintenance revenue recognized during period |  |                    | (2,889 | )               
|Deferred maintenance revenue of new maintenance contracts   |  |                    | 2,484  |                 
|Deferred maintenance revenue ending
      balance           |  | $                  | 4,813  |                 

9. Income Taxes

The Company adopted the provisions of FASB
Interpretation (FIN) No. 48,Accounting for
Uncertainty in Income Taxes, on May 1, 2007.
As required by Interpretation 48, which clarifies Statement 109,Accounting for Income Taxes, the Company recognizes the financial statement benefit of a tax
position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the more-likely-than-not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than 50 percent
likelihood of being realized upon ultimate settlement with the relevant tax
authority. At the adoption date, the Company applied Interpretation 48 to all
tax positions for which the statute of limitations remained open.

The Company is subject to income taxes in
the U.S. federal jurisdiction, and various states and foreign jurisdictions. Tax
regulations within each jurisdiction are subject to the interpretation of the
related tax laws and regulations and require significant judgment to apply. In
general, the Company is no longer subject to U.S. federal, state and local, or
non-U.S. income tax examinations by tax authorities for the fiscal years before
2004. The Company does not believe there will be any material changes in its
unrecognized tax positions over the next 12 months. Therefore, no reserves for
uncertain income tax positions have been recorded pursuant to FIN No. 48. The
adoption of FIN No. 48 did not have a material effect on the Companys
consolidated financial position or results of operations.

The Companys policy is to recognize
interest and penalties accrued on any unrecognized tax benefits as a component
of income tax expense. As of October 31, 2008, the Company did not have any
accrued interest or penalties associated with any unrecognized tax benefits, nor
did the Company record any interest expense in the six months ended October 31,
2008.

10. Comprehensive Income
(Loss)

Comprehensive income includes net income
(loss) and net foreign currency translation adjustments. A comprehensive gain
(loss) on foreign currency translations for the three months ended October 31,
2008 and 2007 was ($203,000) and $10,000, respectively. A comprehensive gain
(loss) on foreign currency translations for the six months ended October 31,
2008 and 2007 was ($194,000) and $29,000, respectively.

11. Reverse Stock Split

On June 24, 2007, the Company implemented
a 1 for 5 reverse stock split. The reverse stock split had been previously
approved by the Companys stockholders as part of the Companys March 29, 2007
Annual Meeting.

13

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12. Income Per Share

Basic earnings per share is computed by
dividing net income by the weighted average number of common shares outstanding
during the reporting period. Diluted earnings per share is computed similar to
basic earnings per share except that it reflects the potential dilution that
could occur if dilutive securities or other obligations to issue common stock
were exercised or converted into common stock.

|                                                                   |  | Three Months Ended |       | Six Months Ended
|------------------------------------------------------------------ |  | ------------------ | ----- | ----------------
|(in
      thousands, except per share amounts)                     |  | October 31,        |       | October 31,     
|                                                                   |  | 2008               |       | 2007            
|Net income                                                         |  | $                  | 725   |                 
|                                                                  
|Weighted average shares of common stock outstanding,
basic         |  |                    | 6,981 |                 
|Effect of
      dilutive securities                                |  |                    | 624   |                 
|Weighted average shares of common
      stock outstanding, diluted |  |                    | 7,605 |                 
|                                                                  
|Earnings per share of common stock:                                |  |                    |       |                 
|Basic                                                              |  | $                  | 0.10  |                 
|Diluted                                                            |  | $                  | 0.10  |                 

The dilutive securities above represent
only those stock options, warrants and convertible debt whose exercise prices
were less than the average market price of the stock during the respective
periods and therefore were dilutive. The number of shares of stock options
excluded from the above amount because their exercise prices exceeded the
average market price of the stock was 544,235 and 529,834 for the three and six
months ended October 31, 2008, respectively and common stock warrants of 487,387
for both periods. The number of shares of stock options excluded from the above
amount because their exercise prices exceeded the average market price of the
stock was 164,205 and 256,283 for the three and six months ended October 31,
2007, respectively and common stock warrants of 1,157,387 for both
periods.

14

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13. Segment Information

FASB Statement No. 131,Disclosures about Segments of an Enterprise and Related
Information, establishes standards for
reporting information about operating segments. Operating segments are defined
as components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, or
decision making group, in deciding how to allocate resources and in assessing
performance. Our chief operating decision maker is our Chief Executive Officer.
We have evaluated our approach for making operating decisions and assessing the
performance of our business and, beginning in the first quarter of fiscal year
2009, we have determined that we have two reportable segments: Database and
Development Products (DDP) and our Modernization & Migration Solutions
Products. Prior to the first quarter of fiscal year 2009, the Company maintained
reportable segments based on its geographic structure, the segments were the
Americas and Europe. The accounting policies of the segments are the same as
those described in Note 1. We evaluate performance based on gross margins (total
revenues less costs of licenses, services and migration solutions) before
operating costs. We do not manage our operating costs on a segment basis as many
of our sales, marketing and support personnel regularly work with product from
both segments. Additionally, we do not track assets by segment and therefore
asset disclosures by segment are not relevant and are not presented.

Included in the DDP segment there is one
customer that represented $1.0 million and $1.1 million of total revenues for
the three and nine months ended October 31, 2008, respectively.

For the second quarter of fiscal 2009 and
2008, total revenue from the United States was $1.6 million and $1.0 million,
respectively. Total revenue from all other countries was $4.2 million in the
second quarter of fiscal 2009 and $3.9 million for the second quarter of fiscal
2008. Total long-lived assets as of October 31, 2008 and 2007, for the United
States, was $8.0 million and $8.5 million, respectively. Total assets in all
other countries were $100,000 as of October 31, 2008 and $200,000 as of October
31, 2007.

Financial information for the Companys
reportable segments is summarized below (in thousands). Fiscal 2008 segment
information has been reclassified to conform to the fiscal 2009 presentation.

Three Months Ended
    
    Six Months EndedOctober 31,
    
    October 31,2008
    
    2007
    
    2008
    
    2007Total revenues:Database and Development
      Products
    
    $
    5,157
    
    $
    4,899
    
    $
    9,665
    
    $
    8,821Modernization and Migration
      Products
    
    
    644
    
    
    50
    
    
    1,163
    
    
    89Total revenues
    
    $
    5,801
    
    $
    4,949
    
    $
    10,828
    
    $
    8,910Cost of revenue:Database and Development
      Products
    
    $
    387
    
    $
    319
    
    $
    687
    
    $
    543Modernization and Migration
      Products
    
    
    358
    
    
    23
    
    
    518
    
    
    41Total Cost of Revenues
    
    $
    745
    
    $
    342
    
    $
    1,205
    
    $
    584Gross profit:Database and Development
      Products
    
    $
    4,770
    
    $
    4,580
    
    $
    8,978
    
    $
    8,278Modernization and Migration
      Products
    
    
    286
    
    
    27
    
    
    645
    
    
    48Total Gross Profit
    
    $
    5,056
    
    $
    4,607
    
    $
    9,623
    
    $
    8,326


15

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UNIFY CORPORATION

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

The discussion in this Quarterly Report
on Form 10-Q 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 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 Report on Form 10-K, Quarterly Reports on Form
10-Q 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 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 for
the fiscal year ended April 30, 2008, as filed with the SEC.

Overview

Unify (the Company, we, us or our)
is a global provider of application modernization, data management and
application development solutions. Our migration solutions, development software
and embedded databases allow customers to modernize and maximize their
application environment. Our award-winning technologies help organizations drive
business optimization, improve collaboration, increase customer service and
reduce costs. Unifys strategy is to help businesses modernize mission-critical
legacy applications and data. Based on market requirements for application
modernization, our solutions help companies increase speed and agility, improve
asset reuse, lower IT costs, reduce business risks and exposures, and free
information previously locked within proprietary systems.

The Company sells and markets application
development and database software and services and modernization solutions
through two segments. The segments are the Database and Development Products
(DDP) and our Modernization & Migration Products.

Unifys customers include corporate
information technology departments (IT), software value-added resellers
(VARs), solutions integrators (SIs) and independent software vendors
(ISVs) from a variety of industries, including insurance, financial services,
healthcare, government, manufacturing, retail, education, and more. We are
headquartered in Roseville, California, with sales offices in Australia, France,
Germany, and the United Kingdom (UK). We market and sell products directly in
the United States, Europe, and Australia and indirectly through global
distributors and reseller representing more than 50 countries.

Our application modernization solutions
help organizations migrate and maximize investments in their existing
applications and data. Our Modernization and Migration Solutions, and Software
products are built to increase productivity, eliminate risk and substantially
reduce time and costs. Our application development and data management software
products include Team Developer, SQLBase, SQLBase Treasury, NXJ, DataServer,
VISION and ACCELL. Our Modernization and Migration Solutions, include Composer
for Lotus Notes which delivers a like-for-like migration of Lotus Notes
applications to the Microsoft .NET and SharePoint platforms and Composer
Sabertooth which speeds the conversion of Team Developer or SQLWindows
applications to Microsoft .NET.

Critical Accounting
Policies

The following discussion and analysis of
the Companys financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent liabilities. We base our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The areas that require
significant judgment are as follows.

16

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Revenue Recognition

The Company generates revenue from
software license sales and related services, including maintenance and support,
and consulting services. Additionally, the Company generates revenue from its
migration solutions products. The Company licenses its products to end-user
customers, independent software vendors (ISVs), international distributors and
value-added resellers (VARs). The Companys products are generally sold with a
perpetual license. The Companys contracts with ISVs, VARs and international
distributors do not include special considerations such as rights of return,
stock rotation, price protection or special acceptance. With the exception of
its migration solutions, the Company recognizes revenue in accordance with
Statement of Position (SOP) 97-2,Software
Revenue Recognition. For migration solutions,
the Company recognizes revenue for software licenses sales in accordance with
Statement of Position 81-1,Accounting for
Performance of Construction-Type and Certain Production-Type Contractsand Accounting Research Bulletin (ARB) 45,Long-Term Construction Type
Contracts. The Company exercises judgment in
connection with the determination of the amount of revenue to be recognized in
each accounting period. The nature of each contractual arrangement determines
how revenues and related costs are recognized.

For software license arrangements that do
not require significant modification or customization of the underlying
software, revenue is recognized when the software product or service has been
shipped or electronically delivered, the license fees are fixed and
determinable, uncertainties regarding customer acceptance are resolved,
collectability is probable and persuasive evidence of an arrangement
exists.

The Company considers a signed
noncancelable license agreement, a customer purchase order, a customer purchase
requisition, or a sales quotation signed by an authorized purchaser of the
customer to be persuasive evidence that an arrangement exists such that revenue
can be recognized.

For migration solution arrangements that
require significant modification or customization of software, revenue is
recognized based on contract accounting under the provisions of Accounting
Research Bulletin (ARB) 45,Long-Term
Construction Type Contractsand Statement of
Position (SOP) 81-1,Accounting for
Performance of Construction-Type and Certain Production-Type
Contracts. For migration solution products
the Company uses the completed-contract method for revenue recognition as the
Company has limited experience in estimating costs for these types of
arrangements. When a contract is completed, revenue is recognized and deferred
costs are expensed. The Company expects to use the percentage-of-completion method
for revenue recognition on new contracts in the third quarter of fiscal 2009.

The Companys customer contracts include
multi-element arrangements that include a delivered element (a software license)
and undelivered elements (such as maintenance and support and/or consulting).
The value allocated to the undelivered elements is unbundled from the delivered
element based on vendor-specific objective evidence (VSOE) of the fair value of
the maintenance and support and/or consulting, regardless of any separate prices
stated within the contract. VSOE of fair value is defined as: (i) the price
charged when the same element is sold separately, or (ii) if the element has not
yet been sold separately, the price for the element established by management
having the relevant authority when it is probable that the price will not change
before the introduction of the element into the marketplace. The Company then
allocates the remaining balance to the delivered element (a software license)
regardless of any separate prices stated within the contract using the residual
method as the fair value of all undelivered elements is determinable.

We defer revenue for any undelivered
elements, and recognize revenue for delivered elements only when the fair values
of undelivered elements are known, uncertainties regarding customer acceptance
are resolved, and there are no customer-negotiated refund or return rights
affecting the revenue recognized for delivered elements. If we cannot
objectively determine the fair value of any undelivered element included in
bundled software and service arrangements, we defer revenue until all elements
are delivered and services have been performed, or until fair value can
objectively be determined for any remaining undelivered elements.

An assessment of the ability of the
Companys customers to pay is another consideration that affects revenue
recognition. In some cases, the Company sells to undercapitalized customers. In
those circumstances, revenue recognition is deferred until cash is received, the
customer has established a history of making timely payments or the customers
financial condition has improved. Furthermore, once revenue has been recognized,
the Company evaluates the related accounts receivable balance at each period end
for amounts that we believe may no longer be collectible. This evaluation is
largely done based on a review of the financial condition via credit agencies
and historical experience with the customer. Any deterioration in credit
worthiness of a customer may impact the Companys evaluation of accounts
receivable in any given period.

17

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Revenue from support and maintenance
activities, which consist of fees for ongoing support and unspecified product
updates, are recognized ratably over the term of the maintenance contract,
typically one year, and the associated costs are expensed as incurred.
Consulting service arrangements are performed on a best efforts basis and may
be billed under time-and-materials or fixed price arrangements. Revenues and
expenses relating to providing consulting services are generally recognized as
the services are performed.

18

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Deferred Tax Asset Valuation
Allowance

As of May 1, 2008, we had approximately
$18.3 million of deferred tax assets related principally to net operating loss
carryforwards, reserves and other accruals, and foreign tax credits. The
Companys ability to utilize net operating loss carryforwards may be subject to
certain limitations in the event of a change in ownership. A valuation allowance
has been recorded to offset these deferred tax assets. The ability of the
Company to ultimately realize its deferred tax assets will be contingent upon
the Company achieving taxable income. There is no assurance that this will occur
in amounts sufficient to utilize the deferred tax assets. Should we determine
that we would be able to realize the deferred tax assets in the future in excess
of the recorded amount, an adjustment to the deferred tax asset would increase
income in the period such determination was made. At May 1, 2008, the Company
had approximately $44.4 million in federal net operating loss carryforwards that
begin to expire in fiscal year 2009 through 2027, approximately $11.0 million in
state net operating loss carryforwards that expire in fiscal years 2013 to 2017,
approximately $0.7 million in foreign net operating loss carryforwards that do
not expire, and approximately $4.3 million in capital loss carryforwards that
expire in 2010.

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Results of Operations

The following table sets forth, for the
periods indicated, certain financial data as a percentage of total revenue:

|                                                            |  | Three Months Ended |   |   | Six Months Ended |      
|----------------------------------------------------------- |  | ------------------ | - | - | ---------------- | -----
|                                                            |  | October 31,        |   |   | October 31,      |      
|                                                            |  | 2008               |   |   | 2007             |      
|Revenues:                                                   |  |                    |   |   |                  |      
|Software licenses                                           |  | 34.3               |   | % |                  | 39.0 
|Services                                                    |  | 54.6               |   | % |                  | 60.0 
|Migration solutions                                         |  | 11.1               |   |   |                  | 1.0  
|Total revenues                                              |  | 100.0              |   | % |                  | 100.0
|                                                           
|Cost of
      Revenues:                                     |  |                    |   |   |                  |      
|Software licenses                                           |  | 1.5                |   | % |                  | 0.9  
|Services                                                    |  | 5.1                |   | % |                  | 5.5  
|Migration solutions                                         |  | 6.2                |   |   |                  | 0.5  
|Total cost of revenues                                      |  | 12.8               |   | % |                  | 6.9  
|                                                           
|Gross
      profit                                          |  | 87.2               |   | % |                  | 93.1 
|                                                           
|Operating Expenses:                                         |  |                    |   |   |                  |      
|Product development                                         |  | 11.8               |   | % |                  | 16.1 
|Selling, general and
      administrative                   |  | 57.6               |   | % |                  | 57.7 
|Total operating expenses                                    |  | 69.4               |   | % |                  | 73.8 
|Income from
    operations                                  |  | 17.8               |   | % |                  | 19.3 
|Other income (expense),
      net                           |  | (2.6               | ) | % |                  | (3.3 
|Income (loss) from continuing
      operations before taxes |  | 15.2               |   | % |                  | 16.0 
|Provision for income
      taxes                            |  | 2.7                |   | % |                  | (2.0 
|Net income (loss )                                          |  | 12.5               |   | % |                  | 14.0 

Total Revenues

The Company generates revenue from
software license sales and related services, including maintenance and support,
and consulting services. We license our software through our direct sales force
in the United States and Europe, and through indirect channels comprised of
distributors, ISVs, VARs, and other partners worldwide.

Total revenues in the second quarter of
fiscal 2009 were $5.8 million, an increase of $0.9 million over the second
quarter of fiscal 2008. This represents an increase of 17% over the second
quarter of fiscal 2008 revenues of $4.9 million. Total software license revenues
in the second quarter of fiscal 2009 were $2.0 million, an increase of $0.1
million from the second quarter of fiscal 2008. This represents an increase of
3% over the second quarter of fiscal 2008 revenues of $1.9 million. Included in
the second quarter of fiscal 2009 were $1.0 million in sales generated by our
distributer in Russia. Total services revenues in the second quarter of fiscal
2009 were $3.2 million, an increase of $0.2 million. This represents an increase
of 7% over the second quarter of fiscal 2008 revenues of $3.0 million. Total
migration solutions revenue in the second quarter of fiscal 2009 was $0.6
million compared to $50,000 for the second quarter of fiscal 2008. The increase
in migration solutions revenue is due to an increase in sales for our Composer
for Lotus Notes product. Total revenues for the six months ended fiscal 2009
were $10.8 million, an increase of $1.9 million. This represents an increase of
22% over the six month period of fiscal 2008 revenues of $8.9 million. Total
software license revenues for the six months ended fiscal 2009 were $3.6
million, an increase of $0.2 million from the second quarter of fiscal 2008.
This represents an increase of 5% over the six month period of fiscal 2008
revenues of $3.4 million. Total services revenues for the six months ended
fiscal 2009 were $6.1 million, an increase of $0.7 million. This represents an
increase of 13% over the six month period of fiscal 2008 revenues of $5.4
million. Total migration solutions revenue for the six months ended fiscal 2009
were $1.2 million compared to $89,000 in the same period of the prior year. The
increase in migration solutions revenue is due to an increase in sales for our
Composer for Lotus Notes product.

For the second quarter of fiscal 2009 and
2008, total revenues from the United States were 28% and 20% of total revenues,
respectively. Total revenue from the United States in absolute dollars was $1.6
million for the second quarter of fiscal 2009 and $1.0 million for the second
quarter of fiscal 2008. Total revenue from all other countries was $4.2 million
in the second quarter of fiscal 2009 and $3.9 million for the second quarter of
fiscal 2008. On a percentage basis, revenue from other countries was 72% for the
second quarter of fiscal 2009 and 80% for fiscal 2008.

20

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Cost of Revenues

Cost of Software Licenses.Cost of software licenses consists primarily
of royalty payments and the amortization of purchased technology from third
parties that is amortized ratably over the technologys expected useful life.
Cost of software licenses was $89,000 and $46,000 for the second quarter of
fiscal 2009 and fiscal 2008, respectively. The increase in cost of software
licenses represents an increase in software royalty payments. For the six months
ended October 31, 2008 and 2007, cost of software licenses was $139,000 and
$93,000, respectively.

Cost of Services.Cost of services consists primarily of employee, facilities
and travel costs incurred in providing customer support under software
maintenance contracts and consulting and services. Cost of services was $298,000
and $296,000 for the second quarter of fiscal 2009 and fiscal 2008,
respectively. For the six months ended October 31, 2008 and 2007, cost of
services was $548,000 and $450,000, respectively.

Cost of Migration Solutions.Cost of migration solutions consists
primarily of both expenses associated with employees involved in migration
projects and also expenses related to third party assistance. Cost of migration
solutions was $358,000 and $23,000 for the second quarter of fiscal 2009 and
fiscal 2008, respectively. For the six months ended October 31, 2008 and 2007,
cost of services was $518,000 and $41,000, respectively. The increase in cost of
migration solutions is due to an increase in sales for both Composer for Lotus
Notes and Composer Sabertooth.

Operating Expenses

Product Development.Product development expenses consist primarily of employee and
facilities costs incurred in the development and testing of new products and in
the porting of new and existing products to additional hardware platforms and
operating systems. Product development costs in the second quarter of fiscal
2009 were $0.7 million compared to $0.8 million in the same period of fiscal
2008. For the six months ended October 31, 2008 and 2007 product development
costs were $1.4 million and $1.7 million, respectively.

Selling, General and Administrative.Selling, general and administrative
(SG&A) expenses consist primarily of salaries and benefits, marketing
programs, travel expenses, professional services, facilities expenses and bad
debt expense. SG&A expenses were $3.3 million in the second quarter of
fiscal 2009 and $2.9 million for the second quarter of fiscal 2008. The increase
in SG&A costs in fiscal 2009 is the result of adding sales and technical
staff in our migration solutions business and increased costs related to
accounting, tax and legal services. The major components of SG&A for the
second quarter of fiscal 2009 were sales expenses of $1.6 million, marketing
expenses of $0.3 million and general and administrative expenses of $1.4
million. For the second quarter of fiscal 2008, the major components of SG&A
were sales expenses of $1.4 million, marketing expenses of $0.4 million and
general and administrative expenses of $1.1 million. In the six months ended
October 31, 2008 and 2007, our SG&A expenses were $6.7 million and $5.6
million, respectively. The major components of SG&A for the six month period
ended October 31, 2008 were sales expenses of $3.3 million, marketing expenses
of $0.5 million and general and administrative expenses of $2.9 million.

Other Income (Expense),
Net.Other income (expense), net consists
primarily of interest expense, foreign exchange gains and losses and interest
earned by the Company on our cash and cash equivalents. Interest expense for the
second quarter of fiscal 2009 and 2008 was $41,000 and $297,000, respectively.
For the six months ended October 31, 2008 and 2007, interest expense was $87,000
and $576,000, respectively. Interest expense consists primarily of interest
incurred on notes payable resulting from a debt financing in conjunction with
the acquisition of Gupta plus the amortization of related debt issuance costs
and the amortization of the discount on notes payable. The decrease in interest
expense in fiscal 2009 primarily relates to the decrease in notes payable as a
result of the repayment and conversion of debt to equity in fiscal 2008 and
2009. Foreign exchange rate losses for the second quarter of fiscal 2009 were
$119,000. Foreign exchange rate gains in the second quarter of fiscal 2008 were
$26,000. Foreign exchange rate losses for the six months ended October 31, 2008
were $110,000. Foreign exchange rate gains for the six months ended October 31,
2007 were $56,000. The change in foreign exchange rate from the prior year is
due to the significant strengthening of the dollar against the euro and pound in
the second quarter of fiscal 2009.

Provision for Income Taxes.For the second quarter of fiscal 2009, the
Company recorded $156,000 in federal and state income tax. For the second
quarter of fiscal 2008, the Company recorded $99,000 in federal and state income
tax. The increase in tax expense primarily relates to California suspending the
use of net operating loss carryforwards for tax years 2008 and 2009.

21

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Liquidity and Capital
Resources

At October 31, 2008, the Company had cash
and cash equivalents of $2.9 million, compared to $2.7 million at April 30,
2008. The Company had net accounts receivable of $4.7 million as of October 31,
2008, and $5.1 million as of April 30, 2008.

On November 20, 2006, the Company entered
into various agreements with ComVest whereby ComVest, along with participation
from Special Situations Funds, provided debt financing for the Gupta acquisition
and for working capital, consisting of convertible term loans totaling $5.35
million and a revolving credit facility of up to $2.5 million. The term loans
had an initial interest rate of 11.25% and have repayment terms of 48 to 60
months. The agreement was modified in April 2008, whereby the interest rate on
the term loans has been decreased to 5% and all principal payments have been
deferred until June 2009. The revolver has an interest rate of prime plus 2.25%
and has a maturity date of November 30, 2010. As part of the financing, ComVest
received 402,000 warrants and Special Situations Funds received 268,000
warrants. The warrants are for the purchase of common stock at prices from $1.35
to $1.90 per share. The agreements provide for ComVest to have a security
interest in substantially all of the Companys assets.

We believe the existing cash balance of
$2.9 million as of October 31, 2008, along with forecasted operating cash flows
for fiscal year 2009 and the ComVest revolver credit facility, will provide us
with sufficient working capital for us to meet our operating plan for fiscal
year 2009. The fiscal 2009 operating plan assumes normal operations for the
Company and the required debt service payments.

Operating Cash Flow. For the first six months of fiscal year 2009 cash provided
by operations was $0.8 million. This compares to cash flows used in operations
of $0.1 million for the first six months of fiscal 2008. Cash flows provided by
operations for the first six months of fiscal 2009 principally resulted from
$1.1 million in net income, amortization of intangible assets of $0.4 million,
stock based compensation expense of $0.3 million, a decrease of $0.3 million in
accounts receivable, an increase of $0.1 million in accounts payable and an
increase of $0.3 million in other long term liabilities. Offsetting these
amounts was an increase of $0.1 million of prepaid expenses and other current
assets, a decrease of $0.4 million of accrued compensation and related expenses
and a decrease of $1.3 million in deferred revenue.

Cash flows used by operations for the
first six months of fiscal 2008 principally resulted from a $1.0 million
decrease in deferred revenue, a decrease of $0.2 million in other accrued
liabilities, a decrease of $0.4 million in accrued acquisition costs, a decrease
of $0.3 million in fulfillment of support obligations and a $0.1 million
decrease in accounts payable. Offsetting these amounts was net income of $0.5
million from continuing operations, a decrease of $0.4 million in accounts
receivable, a decrease of $0.2 million in prepaid expenses and other current
assets, a decrease in amortization of discount on notes payable of $0.1 million,
$0.1 million in depreciation and $0.4 million in amortization of intangibles.

Investing Cash Flows. Cash used in investing activities was $0.3 million for the
first six months of fiscal 2009. The use of cash consisted of $0.1 million
expended related to the acquisition of Active Data Corporation and $0.2 million
for the purchase of property and equipment. Cash used in investing activities
was $0.1 million for the first six months of fiscal 2008. The use of cash
consisted of $0.3 million expended related to the acquisition of Active Data
Corporation and $50,000 for the purchase of property and equipment. Offsetting
these amounts was proceeds from the sale of other investments of $0.3 million.

Financing Cash Flows.Net cash used in financing activities for the first six
months of fiscal 2009 was $11,000. Cash used in financing activities was the
result of principal payments on the Companys capital lease obligations. Net
cash used in financing activities for the first six months of fiscal 2008 was
$0.1 million. The use of cash consisted of principal payments under debt
obligations.

22

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A summary of certain contractual
obligations as October 31, 2008 is as follows (in thousands):

|                                         |  | Payments Due by
      Period
|---------------------------------------- |  | ----------------------------
|                                         |  |                             
|Contractual
      Obligations            |  | Total                       
|Long-term debt                           |  | $                           
|Revolver
      note                      |  |                             
|Other long-term liabilities              |  |                             
|Capital
      leases                     |  |                             
|Operating leases                         |  |                             
|Total
      contractual cash obligations |  | $                           

Volatility of Stock Price and General
Risk Factors Affecting Quarterly Results

Unify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 common stock to fluctuate, perhaps substantially,
including: announcements of developments related to our business; fluctuations
in the operating results and order levels of Unify or its competitors; general
conditions in the computer industry or the worldwide economy; announcements of
technological innovations; new products or product enhancements from us or our
competitors; changes in financial estimates by securities analysts; developments
in patent, copyright or other intellectual property rights; and developments in
our relationships with our customers, distributors and suppliers; legal
proceedings brought against the Company or its officers; and significant changes
in our 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, have 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 our common stock.

Unifys stock began trading on the NASDAQ
under the symbol UNFY on August 25, 2008. Previously the Companys shares traded
over-the-counter on the bulletin board. Even though the Company has moved to a
larger exchange with the NASDAQ, the Companys shares are still thinly traded
and therefore are subject to significant price volatility.

Unifys quarterly operating results have
varied significantly in the past and we expect that they could vary
significantly in the future. Such variations could result from the following
factors: the size and timing of significant orders and their fulfillment; demand
for our products; the quantity, timing and significance of our product
enhancements and new product announcements or those of our competitors; our
ability to attract and retain key employees; seasonality; changes in our pricing
or our competitors; realignments of our organizational structure; changes in
the level of our operating expenses; incurrence of extraordinary operating
expenses, changes in our sales incentive plans; budgeting cycles of our
customers; customer order deferrals in anticipation of enhancements or new
products offered by us or our competitors; product life cycles; product defects
and other product quality problems; currency fluctuations; and general domestic
and international economic and political conditions.

Due to the foregoing factors, quarterly
revenues and operating results may vary on a quarterly basis. Revenues and
quarterly results may vary because software technology is rapidly evolving, and
our sales cycle, from initial evaluation to purchase and the providing of
maintenance services, can be lengthy and varies substantially from customer to
customer. Because we normally deliver products within a short time of receiving
an order, we typically do not have a backlog of orders. As a result, to achieve
our quarterly revenue objectives, we are 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, we generally recognize a
substantial portion of our software license revenues at the end of a quarter.
Our expense levels largely reflect our expectations for future revenue and are
therefore somewhat fixed in the short term.

Item 3. Quantitative and Qualitative
Disclosures about Market 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. 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. The Company does not believe its exposure to interest
rate risk is material for cash and cash equivalents, which totaled $2.9 million
as of October 31, 2008. Unify had no short-term investments at October 31, 2008.

23

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In November 2006, the Company entered into
a revolving credit facility agreement with ComVest whereby ComVest would provide
up to $2.5 million through a revolving credit facility. The revolver has an
interest rate of prime plus 2.25% and has a maturity date of November 30, 2010.
Should the prime interest rate increase during the life of the revolver, the
Company would have exposure to interest rate risk if it has a large balance
outstanding on the revolver. As of October 31, 2008, there was no amount
outstanding on the revolver.

Unify does not use derivative financial
instruments in its short-term investment portfolio, and places its investments
with high quality issuers only 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.

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 an
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. For
example, when the U.S. dollar strengthens against the major European currencies,
it results in lower revenues and expenses recorded for those regions when
translated into U.S. dollars.

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. Although
Unify takes into account changes in exchange rates over time in its pricing
strategy, it does so only on an annual basis, resulting in substantial pricing
exposure as a result of foreign exchange volatility during the period between
annual pricing reviews. The Company also has currency exchange rate exposures on
intercompany accounts receivable and intercompany accounts payable related to
activities with the Companys operations in France, Germany and the UK. At
October 31, 2008, the Company had $2.0 million in such payables denominated in
euros and a total $0.7 million in receivables denominated in euros and pounds
sterling. The Company encourages prompt payment of 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 could have a significant 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.

24

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Item 4. Controls and Procedures

(a)Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our
management, including our chief executive officer and chief financial officer,
we evaluated the effectiveness of our disclosure controls and procedures, as
such term is defined under Rule 13a-15(e) promulgated under the Securities
Exchange Act of 1934, as amended. Based upon that evaluation, our chief
executive officer and chief financial officer concluded that our disclosure
controls were effective as of the end of the period covered by this quarterly
report.

(b)Changes in Internal Controls. There
have been no changes in our internal controls over financial reporting that
occurred during the first six months of fiscal year 2009 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.

25

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UNIFY CORPORATION

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Litigation

The Company is subject to legal
proceedings and claims arising in the ordinary course of business. The Company
intends to vigorously assert its rights and defend itself in any litigation that
may arise from such claims. While the ultimate outcome and resolution of these
matters could affect the results of operations in future periods, and while
there can be no assurance with respect thereto, management believes after final
disposition, any financial impact to the Company would not be material to the
Companys consolidated financial position, results of operations and cash
flows.

26

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Item 6. Exhibits



|     |  | **Exhibits**                                                                                                                                          
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer under Section 302 of the
      Sarbanes-Oxley Act of 2002.                                                   
|     |  |                                                                                                                                                       
|31.2 |  | Certification of Chief Financial Officer under Section 302 of the
      Sarbanes-Oxley Act of 2002.                                                   
|     |  |                                                                                                                                                       
|32.1 |  | Certification of Chief Executive Officer under 18 U.S.C Section
      1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.
|     |  |                                                                                                                                                       
|32.2 |  | Certification of Chief Financial Officer under 18 U.S.C Section
      1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.

27

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UNIFY
CORPORATIONSIGNATURE

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



|Date: November
      21, 2008 | Unify
      Corporation                           
|----------------------------- | --------------------------------------------------
|                              | (Registrant)                                      
|                             
|                              | By:                                               
|                             
|                              | /s/ STEVEN D. BONHAM                              
|                              | Steven D.
      Bonham                            
|                              | Chief Financial
      Officer                     
|                              | (Principal
      Financial and Accounting Officer)

28

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