<PAGE>

                                  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, 1996
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)

                          181 METRO DRIVE, THIRD FLOOR
                           SAN JOSE, CALIFORNIA  95110
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                           TELEPHONE:  (408) 467-4500
              (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.

 8,042,930 shares of Common Stock, $.001 par value, as of  November 30, 1996

<PAGE>

                                UNIFY CORPORATION
                                   FORM 10-Q

                                     INDEX


                                                                PAGE NO.
                                                                --------

PART I.      FINANCIAL INFORMATION                   

Item 1.      Financial Statements

             Condensed Consolidated Balance Sheets as of
                October 31, 1996 and April 30, 1996...............  3

             Condensed Consolidated Statements of Operations for
                the three and six months ended October 31, 1996 
                and 1995..........................................  4

             Condensed Consolidated Statements of Cash Flows
                for the six months ended October 31, 1996 
                and 1995..........................................  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



                                   2
<PAGE>


PART I.         FINANCIAL INFORMATION
ITEM 1.         FINANCIAL STATEMENTS

                                UNIFY CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                October 31,      April 30,
                                                                   1996            1996
                                                                -----------      ----------
                                                                (unaudited)           *
<S>                                                             <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents                                       $  12,654       $  3,028
  Short-term investments                                              8,170              -
  Accounts receivable, net                                           10,147          5,270
  Prepaid expenses and other current assets                             695          1,012
                                                                -----------      ----------
    Total current assets                                             31,666          9,310

Property and equipment, net                                           3,416          3,358
Other assets                                                            239            329
                                                                -----------      ----------
    Total assets                                                  $  35,321      $  12,997
                                                                -----------      ----------
                                                                -----------      ----------

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Notes payable                                                    $  2,217           $  -
  Current portion of long-term debt                                     218            255
  Accounts payable                                                    1,376          1,866
  Amounts due to minority interest shareholders                       1,413          1,392
  Accrued compensation and related expenses                           2,582          1,655
  Other accrued liabilities                                           3,362          2,675
  Deferred revenue                                                    3,785          4,650
                                                                -----------      ----------
    Total current liabilities                                        14,953         12,493

Long-term debt, net of current portion                                  133          2,456
Minority interest                                                       493            495

Redeemable preferred stock                                                -         26,726

Shareholders' equity (deficit):
  Common stock                                                            8              2
  Additional paid-in capital                                         52,383          2,188
  Notes receivable from shareholders                                  (202)          (265)
  Cumulative translation adjustments                                  (776)          (816)
  Accumulated deficit                                              (31,671)       (30,282)
                                                                -----------      ----------
    Total shareholders' equity (deficit)                             19,742       (29,173)
                                                                -----------      ----------
    Total liabilities and shareholders' equity (deficit)          $  35,321      $  12,997
                                                                -----------      ----------
                                                                -----------      ----------
</TABLE>

*  Derived from audited financial statements.

        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 Oct. 31,     Six Months Ended Oct. 31,
                                               ---------------------------     -------------------------
                                                  1996           1995            1996            1995
                                               ----------     ------------     ---------       ---------
<S>                                            <C>            <C>              <C>             <C>
Revenues:
  Software licenses                            $  4,847         $  4,777       $  11,376       $  8,395
  Services                                        2,498            2,484           5,009          4,978
                                               ---------        ---------      ----------      ---------
    Total revenues                                7,345            7,261          16,385         13,373
                                               ---------        ---------      ----------      ---------

Cost of revenues:
  Software licenses                                 287              509             643          1,058
  Services                                        1,164              960           2,292          2,029
                                               ---------        ---------      ----------      ---------
    Total cost of revenues                        1,451            1,469           2,935          3,087
                                               ---------        ---------      ----------      ---------

Gross margin                                      5,894            5,792          13,450         10,286
                                               ---------        ---------      ----------      ---------

Operating expenses:
  Product development                             1,683            1,532           3,374          2,933
  Selling, general and administrative             5,800            4,611          11,467          8,822
                                               ---------        ---------      ----------      ---------
    Total operating expenses                      7,483            6,143          14,841         11,755
                                               ---------        ---------      ----------      ---------

    Loss from operations                        (1,589)             (351)         (1,391)        (1,469)
Other income, net                                    67               33             114            237
                                               ---------        ---------      ----------      ---------
    Loss before income taxes                    (1,522)            (318)          (1,277)        (1,232)
Provision for income taxes                         (54)             (44)            (112)          (109)
                                               ---------        ---------      ----------      ---------
    Net loss                                   $(1,576)         $  (362)       $  (1,389)      $ (1,341)
                                               ---------        ---------      ----------      ---------
                                               ---------        ---------      ----------      ---------


Net loss per share                             $ (0.20)         $ (0.06)       $   (0.19)      $  (0.24)
                                               ---------        ---------      ----------      ---------
                                               ---------        ---------      ----------      ---------

Shares used in per share computations             7,917           5,627            7,292          5,690
                                               ---------        ---------      ----------      ---------
                                               ---------        ---------      ----------      ---------

</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,
                                                                          ------------------------------
                                                                              1996              1995
                                                                          -----------        -----------
<S>                                                                       <C>                <C>
Cash flows from operating activities:
  Net loss                                                                $   (1,389)         $  (1,341)
  Reconciliation of net loss to net cash used for operating
  activities:
    Depreciation                                                                 668                475
    Amortization of capitalized software                                           -                469
    Minority interest                                                             (2)              (321)
    Imputed interest on note payable to preferred shareholders                   145                  -
    Changes in assets and liabilities:
      Accounts receivable                                                     (4,929)              (141)
      Prepaid expenses and other current assets                                  200               (229)
      Accounts payable                                                          (497)              (162)
      Amounts due to minority interest shareholders                             (120)              (585)
      Accrued compensation and related expenses                                  926                100
      Other accrued liabilities                                                  843               (520)
      Deferred revenue                                                          (651)              (522)
                                                                          -----------        -----------
        Net cash used for operating activities                                (4,806)            (2,777)
                                                                          -----------        -----------

Cash flows from investing activities:
  Purchases of available-for-sale securities                                 (10,141)                 -
  Sales of available-for-sale securities                                       1,971                  -
  Purchases of property and equipment                                           (701)              (372)
  Other assets                                                                    74                (72)
                                                                          -----------        -----------
        Net cash used for investing activities                                (8,797)              (444)
                                                                          -----------        -----------

Cash flows from financing activities:
  Borrowings under shareholder line of credit                                      -                500
  Principal payments under debt obligations                                     (162)              (144)
  Proceeds from issuance of common stock, net                                 23,281                  5
  Collection of notes receivable from shareholders, net of
    interest accrual                                                              63                  -
  Additional investment in subsidiary by minority
    interest shareholders                                                          -                591
                                                                          -----------        -----------
        Net cash provided by financing activities                             23,182                952
                                                                          -----------        -----------
Effect of exchange rate changes on cash                                           47               (145)
                                                                          -----------        -----------
Net increase (decrease) in cash and cash equivalents                           9,626             (2,414)
Cash and cash equivalents at beginning of period                               3,028              3,776
                                                                          -----------        -----------
Cash and cash equivalents at end of period                                 $  12,654           $  1,362
                                                                          -----------        -----------
                                                                          -----------        -----------

Supplemental schedule of noncash financing activities:
  Conversion of redeemable preferred stock to common stock                 $  26,726           $      -
                                                                          -----------        -----------
                                                                          -----------        -----------
  Cancellation of common stock and shareholder's receivable                $       -           $   (432)
                                                                          -----------        -----------
                                                                          -----------        -----------
Cash paid during the period for:
  Interest                                                                 $      45           $     32
                                                                          -----------        -----------
                                                                          -----------        -----------
  Income taxes                                                             $      93           $    180
                                                                          -----------        -----------
                                                                          -----------        -----------
</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, the financial statements 
presented reflect all adjustments (consisting only of normal recurring 
adjustments) which the Company considers necessary for a fair presentation of 
the financial position as of October 31, 1996 and April 30, 1996, the results 
of operations for the three and six months ended October 31, 1996 and 1995, 
and the cash flows for the six months ended October 31, 1996 and 1995.  The 
results for interim periods are not necessarily indicative of the results to 
be expected for the entire 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, included in the Company's Final Prospectus (the "Final 
Prospectus") dated June 14, 1996 as filed with the SEC pursuant to Rule 
424(b).

2.   PER SHARE INFORMATION

     Net loss per share is computed using the weighted average number of 
common shares outstanding and redeemable preferred stock (using the as if 
converted method, even if antidilutive).  Pursuant to certain SEC Staff 
Accounting Bulletins, common and common equivalent shares issued at prices 
below the initial public offering ("IPO") price during the 12 month period 
prior to the offering have been included in the calculation, even if 
antidilutive, as if they were outstanding for all periods presented using the 
treasury stock method and the IPO price.

3.   SHORT-TERM INVESTMENTS

     The Company's investments are classified as available-for-sale under the 
provisions of Statement of Financial Accounting Standards ("SFAS") No. 115, 
"Accounting for Certain Investments in Debt and Equity Securities."  The 
investments are carried at cost, which approximates fair value.  Material 
unrealized gains or losses are reported as a separate component of 
shareholders' equity.  Realized gains and losses and declines in value judged 
to be other than temporary on available-for-sale securities are included in 
net interest income. The cost of securities sold is based on the specific 
identification method. Interest and dividends on securities classified as 
available-for-sale are included in net interest income.

     The investments included in the Company's current assets under the 
caption "Short-Term Investments" at October 31, 1996 consist entirely of 
corporate debt securities and there were no material realized or unrealized 
gains or losses for the three and six months ended October 31, 1996.  All 
short-term investments held at October 31, 1996 mature within one year.

                                     6


<PAGE>

                                UNIFY CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 


4.   CONCENTRATION OF CREDIT RISK
     
     Accounts receivable of $10.1 million at October 31, 1996 included 
amounts due from two customers in the People's Republic of China which 
totaled $4.1 million or 40% of total accounts receivable.

5.   INITIAL PUBLIC OFFERING OF COMMON STOCK

     In June 1996, the Company completed an initial public offering of 
2,187,000 shares of common stock at $12 per share with net proceeds to the 
Company of $23.3 million.  In connection with the IPO, all of the outstanding 
preferred stock and accrued dividends automatically converted into 2,876,136 
and 690,161 shares of common stock, respectively, and warrants to purchase 
185,825 out of a total of 190,459 shares of common stock were exercised.

6.   RECENTLY ISSUED ACCOUNTING STANDARD

     In October 1995, the Financial Accounting Standards Board issued SFAS 
No. 123, "Accounting for Stock-Based Compensation."  The new standard defines 
a fair value method of accounting for stock options and other equity 
instruments, such as stock purchase plans.  Under this method, compensation 
cost is measured based on the fair value of the stock award when granted and 
is recognized as an expense over the service period, which is usually the 
vesting period.  This standard will be effective for the Company beginning in 
fiscal 1997 and requires measurement of the awards made beginning in fiscal 
1996.

     The new standard permits companies to continue to account for equity 
transactions with employees under existing accounting rules, but requires 
disclosure in a note to the financial statements of the pro forma net income 
(loss) and earnings (loss) per share as if the company had applied the new 
method of accounting.  The Company intends to implement these disclosure 
requirements for its employee stock plans beginning in fiscal 1997.  Based on 
the Company's current use of equity instruments, adoption of the new standard 
will not impact reported net income (loss) or net income (loss) per share, 
and will have no effect on the Company's cash flows.

                                         7 


<PAGE>

                                 UNIFY CORPORATION


ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

GENERAL RISK FACTORS AFFECTING QUARTERLY RESULTS

     The following discussion should be read in conjunction with the 
unaudited condensed consolidated financial statements and notes thereto 
included in Part 1,  Item 1 of this Quarterly Report and with the audited 
consolidated financial statements and notes thereto and management's 
discussion and analysis of financial condition and results of operations 
contained in the Final Prospectus.

     The Company's common stock price has been and in the future will be 
likely to be subject to significant volatility.  For any given quarter, a 
shortfall in the Company's announced revenues or earnings from the levels 
expected by securities analysts could have an immediate and adverse effect on 
the trading price of the Company's common stock.  The Company may not learn 
of, nor be able to confirm, revenue or earnings shortfalls until late in the 
quarter or following quarter end.  The Company participates in a very dynamic 
high technology industry, which can result in significant fluctuations in the 
Company's common stock price at any time.

     The Company's operating results are subject to quarterly and other 
fluctuations due to a variety of factors, including 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 or its competitors, seasonality, changes in 
pricing policies by the Company or its competitors, changes in the level of 
operating expenses, changes in the Company's sales incentive plans, budgeting 
cycles of its 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, 
personnel changes, the results of international expansion, currency 
fluctuations, and general domestic and international economic and political 
conditions.  The Company typically receives a number of orders ranging in 
size from several hundred thousand dollars to approximately $1 million in any 
fiscal quarter.  Because a significant portion of the Company's revenues have 
been, and the Company believes will increasingly be, derived from such large 
orders, 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 application development software is rapidly 
evolving, and the Company's sales cycle, from initial evaluation to purchase 
and the provision of support 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 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 regarding future revenues and are therefore relatively fixed in 
the short term, if  revenue  levels  fall  below expectations,  net  income  
is  likely to be disproportionately 

                                        8

<PAGE>

                                UNIFY CORPORATION

adversely affected.  The Company is increasing its sales, marketing and 
product development expenditures, and operating results will be materially 
adversely affected if the Company does not achieve revenue growth.  The 
Company currently expects a net loss for the quarter ending January 31, 1997 
due to the foregoing factors.  There can be no assurance that the Company 
will be able to achieve or maintain profitability on a quarterly or annual 
basis in the future.  Due to the foregoing factors, it is likely that in some 
future quarter the Company's operating results will be below the expectations 
of public market analysts and investors.  In such event, the price of the 
Company's common stock would likely be materially adversely affected.

  This report contains forward looking statements regarding, among other 
matters, the Company's future strategy, projected financial results, product 
development plans, and sales and marketing strategy.  The forward looking 
statements are made pursuant to the safe harbor provisions of the Private 
Securities Litigation Reform Act of 1995.  Forward looking statements address 
matters which are subject to a number of risks and uncertainties.  In 
addition to the general risks associated with the development of complex 
technology, as noted above, future results of the Company will depend on a 
variety of factors. Reference is made to the Final Prospectus and the 
Company's filings with the SEC for further discussion of risks and 
uncertainties regarding the Company's business.

RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED OCTOBER 31, 1996 AND 1995

REVENUES

  The Company recognizes software license revenue when a non-cancelable 
license agreement has been executed, the product has been shipped, all 
significant contractual obligations have been satisfied and collection of the 
resulting receivable is deemed probable by management.  Software licenses 
include both development and run-time licenses.  Maintenance revenues are 
recognized ratably over the maintenance period.  Payments for maintenance 
fees are generally received in advance and are nonrefundable.  Revenues from 
consulting and training services are recognized as the services are performed.

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

<TABLE>
<CAPTION>
                                    Three Months Ended Oct. 31,         Six Months Ended Oct. 31,
                                    ---------------------------         -------------------------
                                        1996            1995                1996           1995
                                    ----------      -----------         ----------      ---------
<S>                                 <C>             <C>                  <C>            <C>
License revenues:
  Unify VISION                      $  1,749        $  1,012             $  3,943       $  1,552
  Unify ACCELL and DataServer          3,098           3,765                7,433          6,843
                                    ----------      -----------         ----------      ---------
    Total license revenues             4,847           4,777               11,376          8,395
Services revenues                      2,498           2,484                5,009          4,978
                                    ----------      -----------         ----------      ---------
    Total revenues                  $  7,345        $  7,261            $  16,385      $  13,373
                                    ----------      -----------         ----------      ---------
                                    ----------      -----------         ----------      ---------
</TABLE>

                                        9

<PAGE>

                                UNIFY CORPORATION

     Total revenues and software license revenues for the quarter ended 
October 31, 1996 were $7.3 million and $4.8 million, respectively, which 
approximated total revenues and software license revenues for the same 
quarter of the prior year.  License revenues from Unify VISION increased 73% 
over the same quarter of the prior year to $1.7 million, reflecting increased 
customer demand for Unify VISION.  License revenues from Unify ACCELL and 
DataServer decreased 18% over the same quarter of the prior year to $3.1 
million, due to the absence of large character orders and to customer 
migration from character to graphical client/server solutions.  Services 
revenues remained constant at $2.5 million in both periods.  

     International revenues increased to 59% of total revenues in the quarter 
ended October 31, 1996 from 54% in the same quarter of the prior year.  The 
increase in international revenues was due to slightly lower U. S. sales 
which were offset by stronger Pacific Rim sales.

     Unify VISION 3.0 began shipping to commercial customers in September 
1996 and general availability of its companion product, VISION/Web, is 
scheduled by the end of calendar 1996.  While the announcement and release of 
these graphical products have generally created opportunities to compete for 
larger, enterprise-level sales transactions, the Company is experiencing 
lengthening sales cycles as a result.  The Company believes that it will 
continue to experience extended customer evaluation and decision-making 
processes for large, complex Unify VISION and VISION/Web sales transactions 
over the next several quarters.

COST OF REVENUES

     Cost of software licenses consists primarily of product documentation, 
packaging and production costs in the U.S. and Japan, costs related to funded 
development contracts, and royalties paid for licensed technology costs.  
Cost of software licenses for the quarter ended October 31, 1996 decreased to 
$0.3 million, or 6% of software license revenues, as compared to $0.5 
million, or 11% of software license revenues, for the same quarter of the 
prior year.  There was no amortization of capitalized software development 
costs for the quarter ended October 31, 1996, as compared to $0.2 million for 
the same quarter of the prior year.

     Cost of services consists primarily of employee, facilities and travel 
costs incurred in providing customer support under software maintenance 
contracts and consulting and training services.  Cost of services for the 
quarter increased to $1.2 million, or 47% of services revenues, as compared 
to $1.0 million, or 39% of services revenues, for the same quarter of the 
prior year.  This increase occurred primarily in consulting services where 
employee and travel costs rose due to higher staffing levels as compared to 
the same quarter of the prior year.

PRODUCT DEVELOPMENT

     Product development expenses consist primarily of employee and facilities
costs incurred in the development and testing of new products and in the porting
of new and existing products to additional hardware platforms and operating
systems.  Product development expenses for the quarter ended October 31, 1996
increased to $1.7 million, or 23% of total revenues, as compared to $1.5
million, or 21% of total revenues, for the same quarter of the prior year.  The
increase in product development expenses in absolute dollars was primarily the
result of increased staffing required  to  complete  Unify  VISION 3.0  and 
VISION / Web.   The Company believes that

                                       10 

<PAGE>
                                UNIFY CORPORATION

substantial investment in product development is critical to maintaining 
technological leadership and therefore intends to continue to increase 
product development expenditures in absolute dollars over comparable periods 
in the prior year.

SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative ("SG&A") expenses consist primarily 
of salaries, bonuses and commissions, promotional and travel expenses, 
professional services, facilities, and bad debt expense.  SG&A for the 
quarter ended October 31, 1996 increased to $5.8 million, or 79% of total 
revenues, as compared to $4.6 million, or 64% of total revenues for the same 
quarter of the prior year. The increase in SG&A expenses was primarily due to 
the recruitment of several key sales and marketing employees, additional 
professional services costs incurred as a result of becoming a publicly 
traded company and an increased level of general bad debt reserves recorded 
in the quarter ended October 31, 1996.  The Company expects to continue to 
increase SG&A expenditures in absolute dollars over comparable periods in the 
prior year.

OTHER INCOME, NET

     Other income, net, consists of the minority interest in the Company's 
Japanese joint venture, interest income earned by the Company on its cash, 
cash equivalents and short-term investments offset by interest expense, and 
exchange gains and losses.  Other income was $67,000 for the quarter ended 
October 31, 1996 and $33,000 for the same quarter of the prior year.  

PROVISION FOR INCOME TAXES

     The Company recorded tax provisions for the quarters ended October 31, 
1996 and 1995 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 federal or state income tax 
provisions as the Company had available federal net operating loss 
carryforwards of approximately $10.7 million as of April 30, 1996.

COMPARISON OF SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995

REVENUES

     Total revenues for the six months ended October 31, 1996 increased by 
23%, from $13.4 million to $16.4 million, over the same period of the prior 
year. Software license revenues increased by 36%, from $8.4 million to $11.4 
million, over the same period of the prior year. License revenues from Unify 
VISION increased 154% over the same period of the prior year to $3.9 million, 
reflecting increased customer demand for Unify VISION.  License revenues from 
Unify ACCELL and DataServer increased 9% to $7.4 million, reflecting 
essentially stable demand for these more mature products.  Services revenues 
remained constant at $5.0 million in both periods.  

          Revenues for the quarter ended July 31, 1996 (and therefore for the 
six months ended October 31, 1996)  reflected the impact of several 
significant contracts relating to the Company's

                                       11


<PAGE>

                               UNIFY CORPORATION 

ongoing efforts to generate revenues from customers based in the People's 
Republic of China ("China").  Unify VISION and Unify ACCELL and DataServer 
license revenues included a $1.2 million and a $2.6 million order, 
respectively, from two separate China based end-users.  The Company expects 
to continue to devote significant efforts toward the development of revenues 
from China. However, there can be no assurances of the timing or amount of 
additional license revenues, if any, which the Company can derive from 
customers in China. Business with customers in China is impacted by a number 
of additional risks, including, but not limited to, whether China maintains 
its "most favored nation" trade status with the United States.  In addition, 
the extent to which the current trade discussions between the United States 
and China favorably affected the orders received by the Company during the 
six months ended October 31, 1996 and the impact which future discussions may 
have on future business by the Company in China cannot be determined.

     In part based upon the transactions with customers in China, 
international revenues increased to 68% of total revenues in the six months 
ended October 31, 1996 from 61% in the same period of the prior year.

COST OF REVENUES

     Cost of software licenses for the six months ended October 31, 1996 
decreased to $0.6 million, or 6% of software license revenues, as compared to 
$1.1 million, or 13% of software license revenues, for the same period of the 
prior year.  There was no amortization of capitalized software development 
costs for the six months ended October 31, 1996, as compared to $0.5 million 
for the same period of the prior year.

     Cost of services for the six month period increased to $2.3 million or 
46% of services revenues, as compared to $2.0 million or 41% of services 
revenues, for the same period of the prior year.  This increase occurred 
primarily in consulting services where employee and travel costs rose due to 
higher staffing levels as compared to the same period of the prior year.

PRODUCT DEVELOPMENT

     Product development expenses for the six months ended October 31, 1996 
increased to $3.4 million, or 21% of total revenues, as compared to $2.9 
million, or 22% of total revenues, for the same period of the prior year.  
The increase in product development expenses in absolute dollars was 
primarily the result of increased staffing required to complete Unify VISION 
3.0 and VISION/Web.

SELLING, GENERAL AND ADMINISTRATIVE

     SG&A expenses for the six months ended October 31, 1996 increased to 
$11.5 million, or 70% of total revenues, as compared to $8.8 million, or 66% 
of total revenues, for the same period of the prior year.  The increase in 
SG&A expenses was primarily due to the recruitment of several key sales and 
marketing employees, increased commission expense related to higher revenues, 
additional professional services costs incurred as a result of becoming a 
publicly traded company and an increased level of general bad debt reserves 
recorded in the quarter ended October 31, 1996.

                                       12 


<PAGE>

                                UNIFY CORPORATION

OTHER INCOME, NET

     Other income was $0.1 million for the six months ended October 31, 1996 
and $0.2 million for the same period of the prior year.  

PROVISION FOR INCOME TAXES

     The Company recorded tax provisions for the six months ended October 31, 
1996 and 1995 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 federal or state income tax 
provisions as the Company had available federal net operating loss 
carryforwards of approximately $10.7 million as of April 30, 1996.

LIQUIDITY AND CAPITAL RESOURCES

     In June 1996, the Company completed an initial public offering of 
2,187,000 shares of common stock at $12.00 per share with net proceeds to the 
Company of $23.3 million.

     As of October 31, 1996, the Company had cash, cash equivalents and 
short-term investments of $20.8 million, compared to $3.0 million as of April 
30, 1996.  Working capital increased to $16.7 million at October 31, 1996 
from a deficit of $3.2 million at April 30, 1996.  

     The Company's operating activities used cash of $4.8 million during the 
six months ended October 31, 1996,  primarily for operating losses and 
increases in accounts receivable.  The increase in accounts receivable 
reflects the two large China orders with extended payment terms that were 
received during the period as well as a high percentage of sales transactions 
occurring near the end of the period.

     Investing activities during the period used cash of $8.8 million, 
consisting principally of net purchases of short term investments of $8.2 
million and property and equipment purchases of $0.7 million.

     Cash provided by financing activities during the period was $23.2 
million, representing primarily net proceeds from the Company's IPO.

     The Company has a $2.2 million line of credit provided by certain 
shareholders of the Company, with the full amount outstanding as of October 
31, 1996.  This facility expires in July 1997 and bears interest at 3.75% per 
annum. 

     The Company believes that current cash balances and investments, 
anticipated cash generated from operations, and unused borrowing capacity 
will be sufficient to meet its cash requirements during the next 12 months. 
Thereafter, depending on its rate of growth and profitability, 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, with terms 
satisfactory to the Company.

                                       13


<PAGE>

                                UNIFY CORPORATION


PART II.   OTHER INFORMATION


ITEM 5.    OTHER INFORMATION

           James Fleming, Vice President, Worldwide Sales and Paul Bach,
           Vice President, U.S. Commercial Sales, resigned their positions
           effective October 1996 and November 1996, respectively.


ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

            (a)    Exhibits

                   Exhibit 11.01     Statement Regarding Computation of Net 
                                     Loss Per Share 

                   Exhibit 27        Financial Data Schedule


            (b)    Reports on Form 8-K

                   A Form 8-K reporting a change in independent accountants was
                   filed on September 6, 1996.



                                       14


<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:   December 16, 1996            Unify Corporation
                                     (REGISTRANT)


                                     By:
                                     Susan Salvesen
                                     ----------------------------------------
                                     Susan Salvesen
                                     Vice President, Finance and Administration
                                     and Chief Financial Officer  (Principal
                                     Financial and Accounting Officer)


                                       15