<PAGE>

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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 OCTOBER 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.

   9,090,452 shares of Common Stock, $0.001 par value, as of November 30, 1999

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

<PAGE>

                                UNIFY CORPORATION
                                    FORM 10-Q

                                      INDEX

<TABLE>
<CAPTION>

                                                                                                 PAGE
                                                                                                NUMBER
                                                                                                ------
<S>                                                                                             <C>
PART I.               FINANCIAL INFORMATION

Item 1.               Financial Statements

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

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


                      Condensed Consolidated Statements of Cash Flows
                          for the six months ended October 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 4.               Submission of Matters to a Vote of Security Holders.................        15


Item 6.               Exhibits and Reports on Form 8-K....................................        15


SIGNATURE  ...............................................................................        16


</TABLE>

                                        2

<PAGE>


PART I.       FINANCIAL INFORMATION
ITEM 1.       FINANCIAL STATEMENTS

                                UNIFY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                        October 31,       April 30,
                                                                            1999             1999
                                                                        ----------       ----------
                                                                        (unaudited)           (1)
<S>                                                                     <C>              <C>
ASSETS
Current assets:
   Cash and cash equivalents                                            $    8,666       $    5,315
   Short-term investments                                                    4,713            6,072
   Accounts receivable, net                                                  8,957            9,156
   Prepaid expenses and other current assets                                   708              732
                                                                        ----------       ----------
      Total current assets                                                  23,044           21,275

Property and equipment, net                                                  1,240            1,417
Other assets                                                                 2,255              242
                                                                        ----------       ----------
      Total assets                                                      $   26,539       $   22,934
                                                                        ==========       ==========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                     $      916       $    1,138
   Amounts due to minority interest stockholders                               576              608
   Accrued compensation and related expenses                                 1,598            1,650
   Other accrued liabilities                                                 2,814            2,621
   Deferred revenue                                                          2,363            3,326
                                                                        ----------       ----------
      Total current liabilities                                              8,267            9,343

Minority interest                                                              346              265


Stockholders' equity:
   Common stock                                                                  9                9
   Additional paid-in capital                                               54,852           54,123
   Notes receivable from stockholder                                           (77)            (125)
   Cumulative other comprehensive income                                      (688)            (653)
   Accumulated deficit                                                     (36,170)         (40,028)
                                                                        ----------       ----------
      Total stockholders' equity                                            17,926           13,326
                                                                        ----------       ----------
      Total liabilities and stockholders' equity                        $   26,539       $   22,934
                                                                        ==========       ==========


</TABLE>

(1) Derived from the audited consolidated financial statements for the year
    ended April 30, 1999.


     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               Six Months Ended
                                                       October 31,                     October 31,
                                            ---------------------------      ---------------------------
                                                 1999            1998             1999            1998
                                             ---------       ---------        ---------       ---------
<S>                                         <C>              <C>             <C>              <C>
Revenues:
   Software licenses                         $   6,411       $   4,726        $  12,415       $   8,968
   Services                                      2,805           2,474            5,509           4,892
                                             ---------       ---------        ---------       ---------
      Total revenues                             9,216           7,200           17,924          13,860
                                             ---------       ---------        ---------       ---------


Cost of revenues:
   Software licenses                               210             236              439             462
   Services                                      1,205           1,074            2,348           2,127
                                             ---------       ---------        ---------       ---------
      Total cost of revenues                     1,415           1,310            2,787           2,589
                                             ---------       ---------        ---------       ---------

Gross margin                                     7,801           5,890           15,137          11,271
                                             ---------       ---------        ---------       ---------

Operating expenses:
   Product development                           1,594           1,484            3,158           2,933
   Selling, general and administrative           4,094           3,606            8,127           7,259
                                             ---------       ---------        ---------       ---------
      Total operating expenses                   5,688           5,090           11,285          10,192
                                             ---------       ---------        ---------       ---------

      Income from operations                     2,113             800            3,852           1,079
Other income, net                                  112             100              247             123
                                             ---------       ---------        ---------       ---------
      Income before income taxes                 2,225             900            4,099           1,202
Provision for income taxes                        (113)            (44)            (241)            (88)
                                             ----------      ---------        ---------       ---------
      Net income                             $   2,112       $     856        $   3,858       $   1,114
                                             =========       =========        =========       =========


Net income per share:
   Basic                                     $    0.24       $    0.10        $    0.43       $    0.13
                                             =========       =========        =========       =========
   Diluted                                   $    0.22       $    0.10        $    0.40       $    0.13
                                             =========       =========        =========       =========

Shares used in computing net income
per share:
   Basic                                         8,952           8,435            8,906           8,414
                                             =========       =========        =========       =========
   Diluted                                       9,733           8,547            9,704           8,538
                                             =========       =========        =========       =========


</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                        4

<PAGE>


                                UNIFY CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                          SIX MONTHS ENDED OCTOBER 31,
                                                                          ----------------------------
                                                                               1999              1998
                                                                           ----------          -------
<S>                                                                       <C>               <C>
Cash flows from operating activities:
   Net income                                                             $    3,858        $   1,114
   Reconciliation of net income to net cash provided by
   (used in) in operating activities:
      Depreciation                                                               496              554
      Minority interest                                                           81              (27)
      Changes in operating assets and liabilities:
         Accounts receivable, net                                               (703)              97
         Prepaid expenses and other current assets                                34               32
         Accounts payable                                                       (245)             188
         Amounts due to minority interest stockholders                          (109)            (198)
         Accrued compensation and related expenses                               (73)            (239)
         Other accrued liabilities                                               184             (359)
         Deferred revenue                                                       (996)          (1,288)
                                                                          ----------        ---------
            Net cash provided by in operating activities                       2,527             (126)
                                                                          ----------        ---------

Cash flows from investing activities:
   Purchases of available-for-sale securities                                 (4,713)           1,160
   Sales of available-for-sale securities                                      6,072                -
   Purchases of property and equipment                                          (313)            (344)
   Other assets                                                                 (913)              12
                                                                          -----------       ---------
            Net cash provided by (used) investing activities                     133              828
                                                                          ----------        ---------

Cash flows from financing activities:
   Principal payments under debt obligations                                       -              (22)
   Proceeds from issuance of common stock, net                                   729              211
   Repurchase of common stock                                                      -              (91)
   Collection of notes receivable from stockholders,
    net of interest receivable                                                    49               (5)
                                                                          ----------        ---------
            Net cash provided by financing activities                            778               93
                                                                          ----------        ---------

Effect of exchange rate changes on cash                                          (87)             (25)
                                                                          ----------        ---------
Net increase in cash and cash equivalents                                      3,351              770
Cash and cash equivalents, beginning of period                                 5,315            5,279
                                                                          ----------        ---------
Cash and cash equivalents, end of period                                  $    8,666        $   6,049
                                                                          ==========        =========

Supplemental schedule of noncash investing and financing activities:
Cash paid during the period for:
   Interest                                                               $       27        $      81
                                                                          ==========        =========
   Income taxes                                                           $      254        $      54
                                                                          ==========        =========


</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, 1999 as filed with
the SEC.

2.   AMOUNTS DUE TO MINORITY INTEREST STOCKHOLDERS

In September 1995, Unify Japan entered into a 100 million yen loan agreement
with a bank affiliated with Sumitomo metals Industries, Ltd. ("SMI"). The
loan bears interest at the Japanese prime rate (approximately 1% at September
30, 1999), and is secured by the assets of Unify Japan. In September 1999,
this loan was extended for an additional year with a guarantee letter from
SMI. The balance of the loan was 60 million yen at September 30, 1999.

3.   EARNINGS PER SHARE

SFAS No. 128, EARNINGS PER SHARE, requires a dual presentation of basic and
diluted earnings per share ("EPS"). Basic EPS excludes dilution and is
computed by dividing net income attributable to common stockholders by the
weighted average of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock (e.g. common stock options) were exercised or
converted into common stock.


                                        6

<PAGE>


                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the periods indicated:

<TABLE>
<CAPTION>

                                                   Three Months Ended                Six Months Ended
                                                      October 31,                       October 31,
                                            ---------------------------      ---------------------------
                                                 1999            1998             1999            1998
                                             ---------       ---------        ---------       ---------
<S>                                         <C>              <C>              <C>             <C>
NET INCOME  (NUMERATOR):
Net income, basic and diluted                $   2,112       $     856        $   3,858       $   1,114
                                             =========       =========        =========       =========

SHARES  (DENOMINATOR):
Weighted average shares of common
    stock outstanding, basic                     8,952           8,435            8,906           8,414
Weighted average common equivalent
    shares outstanding                             781             112              798             124
                                             ---------       ---------        ---------       ---------
Weighted average shares of common
    stock outstanding, diluted                   9,733           8,547            9,704           8,538
                                             =========       =========        =========       =========

PER SHARE AMOUNT:
Net income per share, basic                  $    0.24       $    0.10        $    0.43       $    0.13
Reduction in net income per share due
    due to weighted average common
    common equivalent shares                    (0.02)               -           (0.03)               -
                                             ---------       ---------        ---------       ---------
Net income per share, diluted                $    0.22       $    0.10        $    0.40       $    0.13
                                             =========       =========        =========       =========

ANTIDILUTIVE SHARES:                                 4             528                4             533
                                             =========       =========        =========       =========


4.   COMPREHENSIVE INCOME

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

<CAPTION>

                                                Three Months Ended                  Six Months Ended
                                                    October 31,                       October 31,
                                            ---------------------------      ---------------------------
                                                 1999            1998             1999            1998
                                             ---------       ---------        ---------       ---------
<S>                                         <C>              <C>             <C>              <C>
Net income                                   $   2,112       $     856        $   3,858       $   1,114
Foreign currency translation                        (6)            (75)             (35)            (41)
                                             ---------       ---------        ---------       ---------
    Total comprehensive income               $   2,106       $     781        $   3,823       $   1,073
                                             =========       =========        =========       =========


</TABLE>


                                        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, 1999 as filed with the SEC.

RESULTS OF OPERATIONS

REVENUES

The Company's strategy is to aggressively market and enhance its e-commerce
and Internet products. The Company continues to support its extensive
installed base of client/server products, which the Company believes
represents a significant source of potential customers for its Internet
products. The Company also generates significant revenues from services,
including customer maintenance, consulting and training. The following table
sets forth revenues from licenses of its Internet and client/server products
and from services for the periods indicated:


                                        8

<PAGE>

                                UNIFY CORPORATION

<TABLE>
<CAPTION>

                                                Three Months Ended               Six Months Ended
                                                    October 31,                      October 31,
                                            ---------------------------      ---------------------------
                                                 1999            1998             1999            1998
                                             ---------       ---------        ---------       ---------
<S>                                         <C>              <C>             <C>              <C>
License revenues:
   Internet products                         $   4,210       $   2,719        $   8,027       $   4,869
   Client/server products                        2,201           2,007            4,388           4,099
                                             ---------       ---------        ---------       ---------
      Total license revenues                     6,411           4,726           12,415           8,968
Services revenues                                2,805           2,474            5,509           4,892
                                             ---------       ---------        ---------       ---------
      Total revenues                         $   9,216       $   7,200        $  17,924       $  13,860
                                             =========       =========        =========       =========


</TABLE>

Total revenues for the three and six months ended October 31, 1999 increased
28% and 29%, respectively, over the same periods of the prior year. License
revenues from internet products for the three and six months ended October
31, 1999 were 55% and 65% higher, respectively, than for the same periods of
the prior year, reflecting increased customer acceptance of those products.
License revenues from client/server products were comparable at $2 million in
each of the quarters ended October 31, 1999 and 1998. Client/server license
revenues for the six months ended October 31, 1999 increased 7% over the same
period of the prior year. Service revenues for the three and six months ended
October 31, 1999 increased 13% and 13%, respectively, over the same periods
of the prior year principally due to higher consulting revenues which
resulted from the company's pursuit of new internet consulting opportunities
during fiscal 2000.

International revenues decreased to 40% and 38% of total revenues in the
three and six months ended October 31, 1999 from 56% and 54% of total
revenues in the three and six months ended October 31, 1998, due to increased
focus on the domestic internet and e-commerce market.

COST OF REVENUES

Cost of software licenses represented 3% of software license revenues for the
three and 4% of software licenses for the six months ended October 31, 1999
and were comparable to cost of software licenses in the same periods of the
prior year.

Cost of services for the three and six months ended October 31, 1999
increased 12% and 9% compared to the same periods of the prior year,
primarily due to higher consulting costs associated with the company's
pursuit of new internet consulting opportunities during fiscal 2000. Cost of
services for the three months ended October 31, 1999 reflected no change (at
43%) and for the six months ended October 31, 1999 decreased as a percentage
of service revenues to approximately 43% in the same periods of the prior
year primarily due to higher service revenues in these fiscal 2000 periods.


                                        9

<PAGE>

                                UNIFY CORPORATION

PRODUCT DEVELOPMENT

Product development expenses for the quarters ended October 31, 1999 and 1998
were comparable at $1.6 million and $1.5 million, respectively, and
represented 17% and 21% of total revenues for those periods. Product
development expenses for the six months ended October 31, 1999 and 1998 were
also stable at approximately $3.2 million and $2.9 million, respectively and
represented 18% and 21% of total revenues for those periods. The decreases in
product development expenses as a percentage of total revenues were due to
the growth in license revenues during the fiscal 2000 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
October 31, 1999 increased to $4.1 million, or 44% of total revenues, as
compared to $3.6 million, or 50% of total revenues, for the same quarter of
the prior year. SG&A expenses for the six months ended October 31, 1999
increased to $8.1 million, or 45% of total revenues, as compared to $7.3
million, or 52% of total revenues, for the same period of the prior year.
Fiscal 2000 SG&A expenses were higher in absolute dollars compared to the
same period of the prior year as the Company executed marketing programs to
support the launch of its new eWave family of Internet products and augmented
its bad debt reserves. These increases were partially offset by a decrease in
sales expense due to open sales positions. The decreases in SG&A expenses as
a percentage of total revenues were attributable to the increase in fiscal
2000 license 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 six months ended
October 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.

VOLATILITY OF STOCK PRICE AND GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

The Company's common stock price has been and is likely to continue to be
subject to significant volatility. A variety of factors could cause the price
of the Company's common stock to fluctuate, perhaps substantially, including:
announcements of developments related to the Company's business; fluctuations
in the Company's or its competitors' 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


                                       10

<PAGE>

                                UNIFY CORPORATION

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 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; realignment 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 $250,000 to approximately $1 million or more, 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 Internet and e-commerce application development software is
rapidly evolving, and the Company's sales cycle, from initial evaluation to
purchase and the provision of maintenance services, is lengthy and varies
substantially from customer to customer. Because the Company normally ships
products within a short time after it receives an order, it typically does
not have any material backlog. As a result, to achieve its quarterly revenue
objectives, the Company is dependent upon obtaining orders in any given
quarter for shipment in that quarter. Furthermore, because many customers
place orders toward the end of a fiscal quarter, the Company generally
recognizes a substantial portion of its revenues at the end of a quarter. As
the Company's expense levels are based in significant part on the Company's
expectations as to future revenues and are therefore relatively fixed in the
short term, if revenue levels fall below expectations operating results are
likely to be disproportionately adversely affected.

The Company also expects that its operating results will be affected by
seasonal trends. 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 sales force 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.


                                       11

<PAGE>

                                UNIFY CORPORATION

LIQUIDITY AND CAPITAL RESOURCES

At October 31, 1999, the Company had cash, cash equivalents and short-term
investments of $13.4 million, compared to $11.4 million at April 30, 1999.
Working capital increased to $14.7 million at October 31, 1999 from $11.9
million at April 30, 1999.

The Company's operating activities generated cash of $2.5 million during the
six months ended October 31, 1999, primarily from net income. Investing
activities during the period generated cash of $.1 million, consisting
principally of net purchases of available-for-sale securities. Cash provided
by financing activities during the period was $0.8 million, primarily
comprised of proceeds from issuance of common stock under the Company's stock
option and stock purchase plans.

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.

DISCLOSURES ABOUT MARKET RATE RISK

INTEREST RATE RISK. The Company's exposure to market rate risk for changes in
interest rates relates primarily to its investment portfolio, which consists
of cash equivalents and short-term investments. Cash equivalents are highly
liquid investments with original maturities of three months or less and are
stated at cost. Cash equivalents are generally maintained in money market
accounts which have as their objective preservation of principal and which
hold investments with maturity dates of less than 90 days. The Company does
not believe its exposure to interest rate risk is material for these
balances, which totaled $8.7 million at October 31, 1999. The securities in
the Company's short-term investment portfolio are generally classified as
available-for-sale and, consequently, are recorded on the consolidated
balance sheet at fair value with unrealized gains or losses reported as a
separate component of stockholders' equity. Short-term investments totaled
$4.7 million at October 31, 1999 and there were no material realized or
unrealized gains or losses on short-term investments during the first six
months of fiscal 2000. Unify does not use derivative financial instruments in
its short-term investment portfolio, places its investments with high quality
issuers and, by policy, limits the amount of credit exposure to any one
issuer. The Company is averse to principal loss and attempts to ensure the
safety of its invested funds by limiting default, market and reinvestment
risk. Unify's short-term investments at October 31, 1999 consisted of $4.7
million in high quality corporate bonds maturing within one year, which the
Company does not believe carry any material interest rate exposure. If market
interest rates were to change immediately and uniformly by ten percent from
levels at October 31, 1999, the fair value of the Company's cash equivalents
and short-term investments would change by an insignificant amount.


                                       12

<PAGE>

                                UNIFY CORPORATION

FOREIGN CURRENCY EXCHANGE RATE RISK. As a global concern, the Company faces
exposure to adverse movements in foreign currency exchange rates. These
exposures may change over time as business practices evolve and could have a
material adverse impact on the Company's business, operating results and
financial position. Historically, the Company's primary exposures have
related to local currency denominated sales and expenses in Europe, Japan and
Australia. Due to the substantial volatility of currency exchange rates,
among other factors, the Company cannot predict the effect of exchange rate
fluctuations on its future operating results. The Company also has currency
exchange rate exposures on intercompany accounts receivable owed to the
Company as a result of local currency sales of software licenses by the
Company's international subsidiaries in the United Kingdom, France and Japan.
At October 31, 1999, the Company had $1.3 million, $0.3 million and $1.2
million in such receivables denominated in British pounds, French francs and
Japanese yen, respectively. The Company encourages prompt payment of these
intercompany balances in order to minimize its exposure to currency
fluctuations, but it engages in no hedging activities to reduce the risk of
such fluctuations. A hypothetical ten percent change in foreign currency
rates would have an insignificant impact on the Company's business, operating
results and financial position. The Company has not experienced material
exchange losses on intercompany balances in the past; however, due to the
substantial volatility of currency exchange rates, among other factors, it
cannot predict the effect of exchange rate fluctuations on its future
business, operating results and financial position.

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, the Company's products are generally integrated with other systems
involving sophisticated computer hardware and software products that the
Company cannot adequately evaluate for Year 2000 compliance. 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 and partners 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 may face
claims based on Year 2000 problems in other companies' products or issues
arising from the integration of multiple products within an overall system.


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<PAGE>

                                UNIFY CORPORATION

Although the Company has not been a party to any litigation or arbitration
proceeding involving its products or services related to Year 2000 compliance
issues, the Company may in the future be required to defend its products or
services in such proceedings or to negotiate resolutions of claims based on
Year 2000 issues. The costs of defending and resolving Year 2000 issues,
regardless of the merits of such disputes, and any liability the Company may
have for such Year 2000 related damages, could materially adversely affect
the Company's business, operating results, and financial condition.

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 and testing necessary for Year 2000 compliance was complete by
the end of the second quarter of fiscal 2000. With regard to the older
equipment and software, primarily personal computers and related software,
the installation and testing of upgrades and replacements was complete by the
end of the second quarter of fiscal 2000. 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.

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
was approximately $950,000 and no significant costs remain. Funding of these
costs have come from existing cash resources.

RISKS. See STATE OF READINESS. Also, 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
e-commerce and Internet 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


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<PAGE>

                                UNIFY CORPORATION

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 has developed contingency plans
for continuing operations should these types of problems arise.

PART II.            OTHER INFORMATION

ITEM 4.             SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                    At the annual meeting of the Company's stockholders held on
                    October 8, 1999, the following matters were voted upon:


                    1.   The election of each of the nominees for director were
                         approved with the following votes:

<TABLE>
<CAPTION>

                                                                IN FAVOR          WITHHELD
                                                                --------          --------
<S>                                                             <C>               <C>
                         Reza Mikailli                          8,246,655          189,320
                         Kurt M. Garbe                          8,247,963          188,012
                         Steven D. Whiteman                     8,249,813          186,162

</TABLE>

                    2.   The amendment of the Company's 1991 Stock Option Plan
                         to increase the maximum aggregate number of shares of
                         the Company's Common Stock authorized for issuance from
                         2,700,000 shares to 3,100,000. Of the total shares
                         voting on the foregoing amendment, 6,663,486 voted in
                         favor, 1,752,134 voted against, and 20,355 abstained.

                    3.   The appointment of Deloitte & Touche LLP as the
                         Company's independent accountants for the fiscal
                         year ending April 30, 2000. Of the total shares
                         voting on the foregoing resolution, 8,361,935 voted
                         in favor, 60,005 voted against, and 14,035 abstained.

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 October 31, 1999.


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                                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:   December XX, 1999        Unify Corporation
                                 (REGISTRANT)


                                 By:

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


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