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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ------------------

                                    Form 10-Q

[ X ]    Quarterly report pursuant to Section 13 or 15(d) of the Securities 
         Exchange Act of 1934

                 FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1999

OR

[   ]    Transition 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)

                       100 CENTURY CENTER COURT, SUITE 302
                           SAN JOSE, CALIFORNIA 95112
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                            TELEPHONE: (408) 451-2000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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

                                    YES  X    NO
                                       -----    -----

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

  8,640,863 shares of Common Stock, $0.001 par value, as of February 28, 1999

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<PAGE>

                                UNIFY CORPORATION
                                    FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                         NUMBER
<S>          <C>                                                         <C>
PART I.      FINANCIAL INFORMATION

Item 1.      Condensed Consolidated Financial Statements

             Condensed Consolidated Balance Sheets as of
                 January 31, 1999 and April 30, 1998..................      3

             Condensed Consolidated Statements of Operations for
                 the three and nine months ended January 31, 1999
                 and 1998.............................................      4

             Condensed Consolidated Statements of Cash Flows
                 for the nine months ended January 31, 1999 and 1998..      5

             Notes to Condensed Consolidated Financial Statements.....      6

Item 2.      Management's Discussion and Analysis of
                 Financial Condition and Results of Operations........      8


PART II.     OTHER INFORMATION

Item 5.      Other Information........................................     14

Item 6.      Exhibits and Reports on Form 8-K.........................     14


SIGNATURE  ...........................................................     15

</TABLE>
                                      2
<PAGE>

PART I.       FINANCIAL INFORMATION
ITEM 1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                                UNIFY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                       January 31,      April 30,
                                                                          1999            1998
                                                                       ----------      ----------
ASSETS                                                                 (unaudited)        (1)
<S>                                                                    <C>              <C>
Current assets:
   Cash and cash equivalents                                            $  6,255       $  5,279
   Short-term investments                                                  4,300          5,460
   Accounts receivable, net                                                7,567          5,568
   Prepaid expenses and other current assets                                 678            779
                                                                        --------       --------
      Total current assets                                                18,800         17,086

Property and equipment, net                                                1,552          1,925
Other assets                                                                  76             88
                                                                        --------       --------
      Total assets                                                      $ 20,428       $ 19,099
                                                                        --------       --------
                                                                        --------       --------

LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
   Current portion of long-term debt                                    $      -       $     18
   Accounts payable                                                          989          1,041
   Amounts due to minority interest stockholders                             626            756
   Accrued compensation and related expenses                               1,390          1,889
   Other accrued liabilities                                               2,923          3,076
   Deferred revenue                                                        3,063          3,745
                                                                        --------       --------
      Total current liabilities                                            8,991         10,525

Long-term debt, net of current portion                                         -              4
Minority interest                                                            237            275

Stockholders' equity:
   Common stock                                                                9              8
   Additional paid-in capital                                             53,862         53,474
   Notes receivable from stockholders                                       (149)          (216)
   Cumulative translation adjustments                                       (594)          (521)
   Accumulated deficit                                                   (41,928)       (44,450)
                                                                        --------       --------
      Total stockholders' equity                                          11,200          8,295
                                                                        --------       --------
      Total liabilities and stockholders' equity                        $ 20,428       $ 19,099
                                                                        --------       --------
                                                                        --------       --------
</TABLE>

(1) Derived from the audited consolidated financial statements for the year
    ended April 30, 1998.

    See accompanying notes to condensed consolidated financial statements.


                                      3
<PAGE>

                                UNIFY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                              Three Months Ended   Nine Months Ended
                                                  January 31,          January 31,
                                             -------------------   -----------------
                                              1999       1998       1999        1998
                                             ------     ------     -------    -------
<S>                                          <C>        <C>        <C>        <C>
Revenues:
   Software licenses                         $5,343     $4,154     $14,311    $11,017
   Services                                   2,734      2,348       7,626      6,883
                                             ------     ------     -------    -------
      Total revenues                          8,077      6,502      21,937     17,900
                                             ------     ------     -------    -------

Cost of revenues:
   Software licenses                            172        111         634        474
   Services                                   1,088      1,051       3,215      3,275
                                             ------     ------     -------    -------
      Total cost of revenues                  1,260      1,162       3,849      3,749
                                             ------     ------     -------    -------

Gross margin                                  6,817      5,340      18,088     14,151
                                             ------     ------     -------    -------

Operating expenses:
   Product development                        1,457      1,358       4,390      4,332
   Selling, general and administrative        3,933      3,926      11,192     12,782
                                             ------     ------     -------    -------
      Total operating expenses                5,390      5,284      15,582     17,114
                                             ------     ------     -------    -------

      Income (loss) from operations           1,427         56       2,506     (2,963)
Other income, net                                53         72         176        273
                                             ------     ------     -------    -------
      Income (loss) before income taxes       1,480        128       2,682     (2,690)
Provision for income taxes                      (72)       (52)       (160)      (142)
                                             ------     ------     -------    -------
      Net income (loss)                      $1,408     $   76     $ 2,522    $(2,832)
                                             ------     ------     -------    -------
                                             ------     ------     -------    -------

Net income (loss) per share:
   Basic                                     $ 0.17     $ 0.01     $  0.30    $ (0.35)
                                             ------     ------     -------    -------
                                             ------     ------     -------    -------
   Diluted                                   $ 0.15     $ 0.01     $  0.28    $ (0.35)
                                             ------     ------     -------    -------
                                             ------     ------     -------    -------

Shares used in computing net 
income (loss) per share:
   Basic                                      8,523      8,282       8,494      8,179
                                             ------     ------     -------    -------
                                             ------     ------     -------    -------
   Diluted                                    9,355      8,418       9,088      8,179
                                             ------     ------     -------    -------
                                             ------     ------     -------    -------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                      4
<PAGE>

                                UNIFY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                 Nine Months Ended January 31,
                                                                -----------------------------
                                                                     1999            1998
                                                                     ----            ----
<S>                                                                 <C>            <C>
Cash flows from operating activities:                                              
   Net income (loss)                                               $ 2,522         $(2,832)
   Reconciliation of net income (loss) to net cash used                            
   in operating activities:                                                        
      Depreciation                                                     826             798
      Provision for losses on accounts receivable                      481              57
      Minority interest                                                (38)            (84)
      Compensation expense recorded on forgiveness                                 
         of notes receivable from stockholders                          75               -
      Liquidation of Benelux subsidiary                                  -             136
      Changes in operating assets and liabilities:                                 
         Accounts receivable                                        (2,316)           (867)
         Prepaid expenses and other current assets                     113            (129)
         Accounts payable                                              (81)           (522)
         Amounts due to minority interest stockholders                (212)            (26)
         Accrued compensation and related expenses                    (521)           (276)
         Other accrued liabilities                                    (166)           (473)
         Deferred revenue                                             (760)             37
                                                                   -------          -------
            Net cash used in operating activities                      (77)         (4,181)
                                                                   -------          -------
                                                                                   
Cash flows from investing activities:                                              
   Purchases of available-for-sale securities                       (2,300)         (5,309)
   Sales of available-for-sale securities                            3,460           9,300
   Purchases of property and equipment                                (450)           (518)
   Other assets                                                         12             234
                                                                   -------         -------
            Net cash provided by investing activities                  722           3,707
                                                                   -------         -------
                                                                                   
Cash flows from financing activities:                                              
   Principal payments under debt obligations                           (22)         (2,341)
   Proceeds from issuance of common stock, net                         547             507
   Repurchase of common stock                                         (159)              -
   Accrual of interest on notes receivable from stockholders            (8)             (7)
                                                                   -------         -------
            Net cash provided by (used in) financing activities        358          (1,841)
                                                                   -------         -------
                                                                                   
Effect of exchange rate changes on cash                                (27)           (109)
                                                                   -------         -------
Net increase (decrease) in cash and cash equivalents                   976          (2,424)
Cash and cash equivalents, beginning of period                       5,279           9,513
                                                                   -------         -------
Cash and cash equivalents, end of period                           $ 6,255         $ 7,089
                                                                   -------         -------
                                                                   -------         -------
Cash paid during the period for:                                                   
   Interest                                                        $   108         $   321
                                                                   -------         -------
                                                                   -------         -------
   Income taxes                                                    $    68         $   116
                                                                   -------         -------
                                                                   -------         -------
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                      5
<PAGE>
                                UNIFY CORPORATION

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION

     The condensed consolidated financial statements have been prepared by 
Unify Corporation (the "Company") pursuant to the rules and regulations of 
the Securities and Exchange Commission ("SEC"). While the interim financial 
information contained in this filing is unaudited, such financial statements 
reflect all adjustments (consisting only of normal recurring adjustments) 
which the Company considers necessary for a fair presentation. The results 
for interim periods are not necessarily indicative of the results to be 
expected for the entire fiscal year. These financial statements should be 
read in conjunction with the Consolidated Financial Statements and Notes 
thereto, together with Management's Discussion and Analysis of Financial 
Condition and Results of Operations, which are included in the Company's 
Annual Report on Form 10-K for the year ended April 30, 1998 as filed with 
the SEC.

2.   EARNINGS PER SHARE

     The following is a reconciliation of the numerators and denominators of 
the basic and diluted earnings per share computations for the periods 
indicated (in thousands, except per share amounts):
<TABLE>
<CAPTION>
                                              Three Months Ended          Nine Months Ended
                                                  January 31,                January 31,
                                             -------------------        --------------------
                                              1999         1998          1999         1998 
                                             ------       ------        ------       -------
<S>                                          <C>          <C>           <C>          <C>
NET INCOME (LOSS) (NUMERATOR):
Net income (loss), basic and diluted         $1,408       $   76        $2,522       $(2,832)
                                             ------       ------        ------       -------
                                             ------       ------        ------       -------

SHARES (DENOMINATOR):
Weighted average shares of common
 stock outstanding, basic                     8,523        8,282         8,494         8,179
Weighted average common equivalent
 shares outstanding                             832          136           594             -
                                             ------       ------        ------       -------
Weighted average shares of common
 stock outstanding, diluted                   9,355        8,418         9,088         8,179
                                             ------       ------        ------       -------
                                             ------       ------        ------       -------

PER SHARE AMOUNT:
Net income (loss) per share, basic           $ 0.17       $ 0.01        $ 0.30       $ (0.35)
Reduction in net income per share
 due to weighted average common
 equivalent shares                            (0.02)           -         (0.02)            -
                                             ------       ------        ------       -------
Net income (loss) per share, diluted         $ 0.15       $ 0.01        $ 0.28       $ (0.35)
                                             ------       ------        ------       -------
                                             ------       ------        ------       -------

ANTIDILUTIVE SHARES:                              -          794            22             -
                                             ------       ------        ------       -------
                                             ------       ------        ------       -------
</TABLE>

3.   COMPREHENSIVE INCOME

     Effective May 1, 1998, the Company adopted Statement of Financial 
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This 
statement requires that all items

                                        6
<PAGE>

                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

recognized under accounting standards as components of comprehensive income 
be reported in an annual financial statement that is displayed with the same 
prominence as other annual financial statements. This statement also requires 
that an entity classify items of other comprehensive income by their nature 
in an annual financial statement. For example, other comprehensive income 
includes foreign currency translation adjustments. Annual financial 
statements for prior periods will be reclassified, as required. The Company's 
total comprehensive income (loss) was as follows (in thousands):
<TABLE>
<CAPTION>
                                             Three Months Ended         Nine Months Ended
                                                 January 31,               January 31,
                                             -----------------        --------------------
                                              1999        1998         1999         1998
                                             ------       ----        ------       -------
<S>                                          <C>          <C>         <C>          <C>
Net income (loss)                            $1,408       $ 76        $2,522       $(2,832)
Foreign currency translation                    (32)       (42)          (73)           21
                                             ------       ----        ------       -------
Total comprehensive income (loss)            $1,376       $ 34        $2,449       $(2,811)
                                             ------       ----        ------       -------
                                             ------       ----        ------       -------
</TABLE>

4.   STOCK REPURCHASE PROGRAM

     In September 1998, the Company announced that its Board of Directors had 
authorized the repurchase of up to 500,000 of its outstanding common shares. 
At January 31, 1999, a total of 52,500 common shares had been reacquired 
under this program at an average price of $3.04 per share.

5.   NOTE RECEIVABLE FROM STOCKHOLDER

     In November 1998, the Company entered into a new employment agreement 
with one if its officers which was effective May 1, 1998. Under the terms of 
this new agreement, the Company's note receivable from this officer in the 
principal amount of $195,000 will be forgiven at the rate of $25,000 per 
quarter, contingent upon the officer's continued employment with the Company. 
Accordingly, $75,000 in debt forgiveness was recorded as a charge to 
compensation expense in the third quarter of fiscal 1999.

6.   NEW ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 
133, "Accounting for Derivative Instruments and Hedging Activities." This 
statement establishes accounting and reporting standards for derivative 
instruments and hedging activities. This statement is effective for all 
fiscal quarters of fiscal years beginning after June 15, 1999. The Company 
has not yet determined the impact of SFAS No. 133 on the Company's financial 
statements.

                                        7
<PAGE>

                                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 
REPORTS 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 year ended April 30, 1998 as filed with the SEC.

RESULTS OF OPERATIONS

REVENUES

     The Company's strategy focuses on the marketing and enhancement of its 
graphical product, Unify VISION. In February 1999, the Company released Unify 
VISION 5.0 which enables customers to deliver e-commerce applications by 
integrating Microsoft Internet and Windows client/server applications with 
UNIX application services. Unify continues to support its installed base of 
character products, which the Company believes represents a significant 
source of potential customers for Unify VISION. The Company also generates a 
significant portion of its revenues from services, including customer 
maintenance, consulting and training. The following table sets forth revenues 
from licenses of its graphical and character products and from services for 
the periods indicated (in thousands):

                                        8
<PAGE>

                                UNIFY CORPORATION
<TABLE>
<CAPTION>
                                              Three Months Ended          Nine Months Ended
                                                 January 31,                  January 31,
                                             -------------------        ---------------------
                                              1999         1998          1999           1998
                                             ------       ------       --------       -------
<S>                                          <C>          <C>           <C>             <C>
License revenues:
   Graphical                                 $3,139       $2,022        $ 8,008       $ 5,287
   Character                                  2,204        2,132          6,303         5,730
                                             ------       ------        -------       -------
      Total license revenues                  5,343        4,154         14,311        11,017
Services revenues                             2,734        2,348          7,626         6,883
                                             ------       ------        -------       -------
      Total revenues                         $8,077       $6,502        $21,937       $17,900
                                             ------       ------        -------       -------
                                             ------       ------        -------       -------
</TABLE>

     Total revenues for the three and nine months ended January 31, 1999 
increased 24% and 23%, respectively, over the same periods of the prior year. 
License revenues from graphical products for the three and nine months ended 
January 31, 1999 were 55% and 51% higher, respectively, than for the same 
periods of the prior year, reflecting increased customer acceptance of Unify 
VISION. Because of factors such as those described in "Volatility of Stock 
Price and General Risk Factors Affecting Quarterly Results," there can be no 
assurance that the Company will be able to maintain the same level of 
graphical product license revenues as recorded for the quarter ended January 
31, 1999. License revenues from character products were stable at 
approximately $2.2 million in each of the quarters ended January 31, 1999 and 
1998. Character license revenues of $6.3 million for the nine months ended 
January 31, 1999 increased 10% over the same period of the prior year due to 
the timing of certain larger orders. Service revenues for the three and nine 
months ended January 31, 1999 increased 16% and 11%, respectively, over the 
same periods of the prior year principally due to an increase in customer 
maintenance contracts associated with higher license revenues in the fiscal 
1999 periods.

     International revenues decreased to 48% and 52% of total revenues in the 
three and nine months ended January 31, 1999 from 61% and 54% of total 
revenues in the three and nine months ended January 31, 1998. The decrease in 
international revenues as a percentage of total revenues for the three months 
ended January 31, 1999 is primarily attributable to the faster growth of U.S. 
revenues during the period. U.S. revenues increased 68% in the third quarter 
of fiscal 1999 compared to the same period of the prior year due to improved 
acceptance of the Company's graphical products in that market. International 
revenues as a percentage of total revenues were similar in the nine months 
ended January 31, 1999 and 1998 as both U.S. and European revenues for that 
period increased 28% while revenues in the rest of the world were stable. The 
revenue increases in absolute dollars in the U.S. and in Europe in the nine 
months ended January 31, 1999 were due to improved penetration of Unify 
VISION in Value Added Reseller ("VAR") accounts as a result of a renewed 
focus on those accounts.

COST OF REVENUES

     Cost of software licenses represented 3% of software licenses for the 
three months ended January 31, 1999 and 1998 and 4% of software license 
revenues for the nine months ended January 31, 1999 and 1998.

                                        9
<PAGE>

                                UNIFY CORPORATION

     Cost of services for the three and nine months ended January 31, 1999 in 
absolute dollars were comparable to the same periods of the prior year as 
headcount in the U.S. customer maintenance organization stabilized in the 
third quarter of fiscal 1999. Cost of services for the three and nine months 
ended January 31, 1999 decreased as a percentage of service revenues to 40% 
and 42%, respectively, from 45% and 48% in the same periods of the prior year 
primarily due to more efficient utilization of service personnel.

PRODUCT DEVELOPMENT

     Product development expenses for the quarters ended January 31, 1999 and 
1998 were comparable at $1.5 million and $1.4 million, respectively, and 
represented 18% and 21% of total revenues for those periods. Product 
development expenses for the nine months ended January 31, 1999 and 1998 were 
also stable at $4.4 million and $4.3 million, respectively, and represented 
20% and 24% of total revenues for those periods. The decreases in product 
development expenses as a percentage of total revenues were due to the growth 
in total revenues during the fiscal 1999 periods as compared to the same 
periods of the prior year. The Company believes that substantial investment 
in product development is critical to maintaining technological leadership 
and therefore intends to continue to devote significant resources to product 
development.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative ("SG&A") expenses for the quarter 
ended January 31, 1999 and 1998 were comparable at $3.9 million and 
represented 49% and 60% of total revenues for those periods. SG&A expenses 
for the nine months ended January 31, 1999 decreased to $11.2 million, or 51% 
of total revenues, as compared to $12.8 million, or 71% of total revenues, 
for the same period of the prior year. Fiscal 1999 SG&A expenses were 
comparable or decreased in absolute dollars compared to the same periods of 
the prior year primarily due to a cost control program which began in the 
second quarter of fiscal 1998 and included lower headcount and a flattening 
of the management structure in sales, marketing and finance. The decreases in 
SG&A expenses as a percentage of total revenues were attributable to the 
decreases in absolute dollars as well as to the increase in fiscal 1999 total 
revenues as compared to the same periods of the prior year. The Company 
expects that total SG&A expenses will fluctuate from quarter to quarter 
primarily because of variability in marketing program spending and sales 
commission expense.

PROVISION FOR INCOME TAXES

     The Company recorded tax provisions for the three and nine months ended 
January 31, 1999 and 1998 which related primarily to foreign income tax 
withholding on software license royalties paid to the Company by certain 
foreign licensees. For the same periods, the Company recorded no significant 
federal or state income tax provisions as the Company had substantial net 
operating loss carryforwards.

                                       10
<PAGE>
                                UNIFY CORPORATION

YEAR 2000 COMPLIANCE

INTRODUCTION

     Many of the world's computer systems currently record years in a 
two-digit format. Such computer systems will be unable to properly interpret 
dates beyond the year 1999, which could lead to business disruption (the 
"Year 2000" issue).

STATE OF READINESS

     The Company believes that its current products are fully Year 2000 
compliant. All current Unify products use four-digit years for all internal 
manipulations and representations. The Company has informed its customers 
that it will be phasing out support for certain older versions of Unify 
products that are not Year 2000 compliant by December 15, 1999. However, 
there can be no assurance that the Company's products will function properly 
with other potentially non-compliant products, including third party software 
and hardware. Additionally, there can be no assurance that the Company's 
products contain or will contain all features and functionality considered 
necessary by customers, distributors, resellers and system integrators to be 
Year 2000 compliant. If Unify's products cannot manage and manipulate data 
related to the Year 2000, the result could be a material adverse effect on 
the Company's business.

     The Company sought to identify all significant internal applications and 
business processes that would require modification to ensure Year 2000 
compliance during fiscal 1996 and believes that, with the exception of its 
accounting systems and certain older equipment and software, all appropriate 
modification and testing of those applications and processes were completed 
by the end of fiscal 1997. With regard to its accounting systems, the 
reprogramming necessary for Year 2000 compliance has been identified and is 
underway; the Company expects that reprogramming and testing of these systems 
will be complete by the end of fiscal 1999. With regard to the older 
equipment and software, primarily personal computers and related software, 
upgrades and replacements have been identified and are in the process of 
being ordered and installed. The Company expects that installation and 
testing of new equipment and software will be complete by the end of fiscal 
1999. However, no assurance can be given that the Company will not experience 
unanticipated material costs caused by undetected errors or defects in its 
internal systems.

     An assessment of the readiness of significant suppliers and service 
providers with which the Company electronically interacts is ongoing. To 
date, the Company is not aware of any significant supplier or service 
provider with a Year 2000 issue that would materially impact the Company's 
business, operating results or financial condition. However, the Company has 
no means of ensuring that suppliers and service providers will be Year 2000 
compliant. The inability of suppliers and service providers to complete their 
Year 2000 resolution process in a timely fashion could materially and 
adversely impact the Company.

                                       11
<PAGE>

                                UNIFY CORPORATION

COSTS

     The costs incurred in addressing the Year 2000 issue are being expensed 
as incurred in compliance with generally accepted accounting principles. The 
total cost to date of these Year 2000 compliance activities is approximately 
$550,000 and the cost of future Year 2000 compliance activities is estimated 
to be approximately $350,000. Funding of these costs will come from existing 
cash resources and future operating cash flows.

RISKS

     The Company believes that the purchasing patterns of customers and 
potential customers may be affected by the Year 2000 issue in a variety of 
ways. Many companies are expending significant resources to correct their 
current software systems for Year 2000 compliance. These expenditures may 
result in reduced funds available to purchase enterprise application software 
products such as those offered by the Company. The impact of the foregoing on 
the Company's business, operating results and financial condition is not 
determinable.

CONTINGENCY PLANS

     The Company currently expects that the Year 2000 issue will not pose 
significant internal operational problems. However, a delay in implementing 
new information systems, or a failure to fully identify all Year 2000 
dependencies in Unify's internal systems or in the systems of the Company's 
suppliers and service providers could have material adverse consequences, 
including delays in the delivery of products. Therefore, the Company is 
developing contingency plans for continuing operations should these types of 
problems arise. The Company believes that its contingency plans will be 
complete and tested by the end of fiscal 1999.

VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

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

     The Company's quarterly operating results have varied significantly in 
the past, and the Company expects that its operating results are likely to 
vary significantly from time to time in

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                                UNIFY CORPORATION

the future. Such variations result from, among other factors, the following: 
the size and timing of significant orders and their fulfillment; demand for 
the Company's products; the number, timing and significance of product 
enhancements and new product announcements by the Company and its 
competitors; ability of the Company to attract and retain key employees; 
seasonality; changes in pricing policies by the Company or its competitors; 
realignments of the Company's organizational structure; changes in the level 
of the Company's operating expenses; changes in the Company's sales incentive 
plans; budgeting cycles of the Company's customers; customer order deferrals 
in anticipation of enhancements or new products offered by the Company or its 
competitors; product life cycles; product defects and other product quality 
problems; the results of international expansion; currency fluctuations; and 
general domestic and international economic and political conditions. Because 
a significant portion of the Company's revenues have been, and the Company 
believes will continue to be, derived from orders ranging in size from 
several hundred thousand dollars to approximately $1 million, the timing of 
such orders and their fulfillment has caused and is expected to continue to 
cause material fluctuations in the Company's operating results, particularly 
on a quarterly basis.

     Due to the foregoing factors, quarterly revenues and operating results 
are difficult to forecast. Revenues are also difficult to forecast because 
the market for client/server and Internet application development software is 
rapidly evolving, and the Company's sales cycle, from initial evaluation to 
purchase and the provision of maintenance services, is lengthy and varies 
substantially from customer to customer. Because the Company normally ships 
products within a short time after it receives an order, it typically does 
not have any material backlog. As a result, to achieve its quarterly revenue 
objectives, the Company is dependent upon obtaining orders in any given 
quarter for shipment in that quarter. Furthermore, because many customers 
place orders toward the end of a fiscal quarter, the Company generally 
recognizes a substantial portion of its revenues at the end of a quarter. As 
the Company's expense levels are based in significant part on the Company's 
expectations as to future revenues and are therefore relatively fixed in the 
short term, if revenue levels fall below expectations operating results are 
likely to be disproportionately adversely affected.

     The Company also expects that its operating results will be affected by 
seasonal trends. The Company believes that, in general, it is likely it will 
experience relatively higher revenues in fiscal quarters ending April 30 and 
relatively lower revenues in fiscal quarters ending July 31 as a result of 
efforts by its direct and channel sales forces to meet fiscal year-end sales 
quotas. The Company also anticipates that it may experience relatively weaker 
demand in fiscal quarters ending July 31 and October 31 as a result of 
reduced business activity in Europe during the summer months.

     Due to the foregoing factors, the operating results of the Company for 
the quarter ending April 30, 1999 are subject to significant uncertainty. The 
Company has incurred net losses in three of the last eight fiscal quarters 
and in each of the last five fiscal years. Although the Company recorded 
operating profits in each of the five quarters ended January 31, 1999, there 
can be no assurance regarding the Company's continued profitability.

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<PAGE>
                                UNIFY CORPORATION

LIQUIDITY AND CAPITAL RESOURCES

     At January 31, 1999, the Company had cash, cash equivalents and 
short-term investments of $10.6 million, compared to $10.7 million at April 
30, 1998. Working capital increased to $9.8 million at January 31, 1999 from 
$6.6 million at April 30, 1998.

     The Company's operating activities used cash of $0.1 million during the 
nine months ended January 31, 1999. Investing activities during the period 
generated cash of $0.7 million, consisting principally of net sales of short 
term investments of $1.2 million offset by equipment purchases of $0.5 
million. Cash provided by financing activities during the period was $0.4 
million, representing primarily proceeds of $0.5 million from the issuance of 
common stock offset by the acquisition of $0.2 million in common stock under 
the Company's stock repurchase program.

     The Company believes that current cash, cash equivalents and short-term 
investments will be sufficient to meet its cash requirements during the next 
12 months. Thereafter, depending on its operating results, the Company may 
require additional equity or debt financing to meet its working capital or 
capital equipment requirements. There can be no assurance that additional 
financing will be available when required or, if available, that it will be 
on terms satisfactory to the Company.

PART II.      OTHER INFORMATION

ITEM 5.       OTHER INFORMATION

              The address and telephone number on the cover of this Form
              10-Q reflect a new principal executive office for the
              Company.

              On February 1, 1999, John Davis joined the Company as Vice
              President, Business Development.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

              (a)    Exhibits

                     Exhibit 27          Financial Data Schedule

              (b)    Reports on Form 8-K

                     The Company filed no reports on Form 8-K during the
                     quarter ended January 31, 1999.


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<PAGE>

                                UNIFY CORPORATION

                                    SIGNATURE

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: March 10, 1999                   Unify Corporation

                                       (REGISTRANT)

                                       By:

                                       /s/ Gary Pado
                                       ---------------------------------------
                                       Gary Pado
                                       Vice President, Finance, and Chief 
                                       Financial Officer (Principal Financial 
                                       and Accounting Officer)

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