---

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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, 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,
      2009**
|                                                         
|**OR**                                                   
|                                                         
|o                                                         |  | **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)                              

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

Telephone: (916) 218-4700(Registrants telephone number, including
area code)

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

YESxNO o

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

|Large
      accelerated filer o | Accelerated filer o | Non-accelerated filer o                             | Smaller reporting company x
|------------------------------- | ------------------- | --------------------------------------------------- | ---------------------------
|                                |                     | (Do not check
      if a smaller reporting company) |                            

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

YESoNOx

Indicate the number of shares outstanding
of each of the issuers classes of common stock, as of the latest practicable
date: 10,121,857 shares of common stock, $0.001 par value, as of November 30,
2009.

---

---

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UNIFY CORPORATIONFORM
10-Q

INDEX

|PART I.            |  | FINANCIAL INFORMATION                                                                           |  | 3 
|------------------ |  | ----------------------------------------------------------------------------------------------- |  | --
|                   |  |                                                                                                 |  |   
|Item 1.            |  | Financial Statements                                                                            |  | 3 
|                   |  |                                                                                                 |  |   
|                   |  | Unaudited Condensed Consolidated Balance Sheets as of October 31,
      2009 and April 30, 2009 |  | 3 
|                   |  |                                                                                                 |  |   
|                   |  | Unaudited Condensed Consolidated Statements of Operations for the
      three and six months    |  | 4 
|                   |  | ended October 31, 2009 and 2008                                                                 |  |   
|                   |  |                                                                                                 |  |   
|                   |  | Unaudited Condensed Consolidated Statements of Cash Flows for the
      six months              |  | 5 
|                   |  | ended October 31, 2009 and 2008                                                                 |  |   
|                   |  |                                                                                                 |  |   
|                   |  | Notes to Unaudited Condensed Consolidated Financial
      Statements                            |  | 6 
|                   |  |                                                                                                 |  |   
|Item 2.            |  | Managements Discussion and Analysis of Financial Condition and
      Results of Operations     |  | 17
|                   |  |                                                                                                 |  |   
|Item 3.            |  | Quantitative and Qualitative Disclosures about Market
      Risk                                |  | 24
|                   |  |                                                                                                 |  |   
|Item 4.            |  | Controls and Procedures                                                                         |  | 24
|                   |  |                                                                                                 |  |   
|PART II.           |  | OTHER INFORMATION                                                                               |  | 25
|                   |  |                                                                                                 |  |   
|Item 1.            |  | Legal Proceedings                                                                               |  | 25
|                   |  |                                                                                                 |  |   
|Item 6.            |  | Exhibits                                                                                        |  | 26
|                  
|SIGNATURE          |  |                                                                                                 |  | 27
|                   |  |                                                                                                
|**CERTIFICATIONS** |  |                                                                                                

2

---

PART I. FINANCIAL
INFORMATION

Item 1. Financial
Statements

UNIFY CORPORATIONUNAUDITED CONDENSED CONSOLIDATED
BALANCE SHEETS(In thousands)

|                                                    |  | October 31, |         | April 30,
|--------------------------------------------------- |  | ----------- | ------- | ---------
|                                                    |  | 2009        |         | 2009     
|ASSETS                                              |  |             |         |          
|Current
      assets:                               |  |             |         |          
|Cash and cash
      equivalents                     |  | $           | 2,215   |          
|Accounts receivable, net                            |  |             | 9,275   |          
|Prepaid expenses and other current assets           |  |             | 880     |          
|Total current assets                                |  |             | 12,370  |          
|                                                   
|Property and equipment, net                         |  |             | 437     |          
|Goodwill                                            |  |             | 17,670  |          
|Intangibles, net                                    |  |             | 10,401  |          
|Other assets,
      net                             |  |             | 311     |          
|Total assets                                        |  | $           | 41,189  |          
|                                                   
|LIABILITIES AND STOCKHOLDERS' EQUITY                |  |             |         |          
|Current
      liabilities:                          |  |             |         |          
|Accounts payable                                    |  | $           | 716     |          
|Current portion of long term debt                   |  |             | 1,733   |          
|Accrued compensation and related expenses           |  |             | 2,021   |          
|Other accrued liabilities                           |  |             | 6,497   |          
|Deferred revenue                                    |  |             | 12,579  |          
|Total current liabilities                           |  |             | 23,546  |          
|                                                   
|Long term debt, net                                 |  |             | 811     |          
|Other long term
      liabilities                   |  |             | 1,469   |          
|                                                   
|Commitments and contingencies                       |  |             |        |          
|                                                   
|Stockholders equity:                               |  |             |         |          
|Common stock                                        |  |             | 10      |          
|Additional paid-in capital                          |  |             | 79,411  |          
|Accumulated other comprehensive income
      (loss) |  |             | 105     |          
|Accumulated deficit                                 |  |             | (64,163 | )        
|Total stockholders equity                          |  |             | 15,363  |          
|Total liabilities and stockholders equity          |  | $           | 41,189  |          

See accompanying notes to condensed
consolidated financial statements.

3

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

|                                                      |  | Three Months Ended |        | Six Months Ended
|----------------------------------------------------- |  | ------------------ | ------ | ----------------
|                                                      |  | October 31,        |        | October
  31,   
|                                                      |  | 2009               |        | 2008            
|Revenues:                                             |  |                    |        |                 
|Software licenses                                     |  | $                  | 1,413  |                 
|Services                                              |  |                    | 3,991  |                 
|Migration solutions                                   |  |                    | 1,683  |                 
|Total revenues                                        |  |                    | 7,087  |                 
|                                                     
|Cost of Revenues:                                     |  |                    |        |                 
|Software licenses                                     |  |                    | 51     |                 
|Services                                              |  |                    | 773    |                 
|Migration solutions                                   |  |                    | 653    |                 
|Total cost of revenues                                |  |                    | 1,477  |                 
|Gross
      profit                                    |  |                    | 5,610  |                 
|                                                     
|Operating Expenses:                                   |  |                    |        |                 
|Product development                                   |  |                    | 1,749  |                 
|Selling, general and administrative                   |  |                    | 5,127  |                 
|Total operating expenses                              |  |                    | 6,876  |                 
|Income (loss) from operations                         |  |                    | (1,266 | )               
|Other income
      (expense), net                     |  |                    | (76    | )               
|Income (loss) before income taxes                     |  |                    | (1,342 | )               
|Provision for
      income taxes                      |  |                    | 58     |                 
|Net income (loss)                                     |  | $                  | (1,400 | )               
|                                                     
|Net income (loss) per share:                          |  |                    |        |                 
|Basic                                                 |  | $                  | (0.14  | )               
|Dilutive                                              |  | $                  | (0.14  | )               
|                                                     
|Shares used in computing net income (loss) per share: |  |                    |        |                 
|Basic                                                 |  |                    | 10,119 |                 
|Dilutive                                              |  |                    | 10,119 |                 

See accompanying notes to condensed
consolidated financial statements.

4

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

| |                                                                                                   |  | Six Months Ended October
      31,
| | ------------------------------------------------------------------------------------------------- |  | ----------------------------------
| |                                                                                                   |  | 2009                              
| | Cash flows from operating activities:                                                             |  |                                   
| | Net income (loss)                                                                                 |  | $                                 
| |                                                                                                  
| | Reconciliation of net income
      (loss) to net cash provided by (used in) operating activities: |  |                                   
| | Depreciation                                                                                      |  |                                   
| | Loss on disposal of equipment                                                                     |  |                                   
| | Amortization of intangible assets                                                                 |  |                                   
| | Amortization of discount on notes payable                                                         |  |                                   
| | Stock based compensation expense                                                                  |  |                                   
| | Changes in operating assets and liabilities:                                                      |  |                                   
| | Accounts receivable                                                                               |  |                                   
| | Prepaid expenses and other current assets                                                         |  |                                   
| | Other long term assets                                                                            |  |                                   
| | Accounts payable                                                                                  |  |                                   
| | Accrued compensation and related expenses                                                         |  |                                   
| | Other accrued liabilities                                                                         |  |                                   
| | Accrued acquisition costs                                                                         |  |                                   
| | Deferred revenue                                                                                  |  |                                   
| | Other long term liabilities                                                                       |  |                                   
| | Net cash provided by (used in) operating activities                                               |  |                                   
| |                                                                                                  
| | Cash flows from investing activities:                                                             |  |                                   
| | Acquisition, net of cash acquired                                                                 |  |                                   
| | Purchases of property and equipment                                                               |  |                                   
| | Payments on acquisition obligations                                                               |  |                                   
| | Net cash provided by (used in) investing activities                                               |  |                                   
| |                                                                                                  
| | Cash flows from financing activities:                                                             |  |                                   
| | Borrowings on revolving line of credit                                                            |  |                                   
| | Principal payments under debt obligations                                                         |  |                                   
| | Net cash used in
      financing activities                                                       |  |                                   
| | Effect of exchange rate changes on cash                                                           |  |                                   
| | Net increase
      (decrease) in cash and cash equivalents                                        |  |                                   
| | Cash and cash equivalents, beginning of period                                                    |  |                                   
| | Cash and cash
      equivalents, end of period                                                    |  | $                                 
| | Supplemental cash flow information:                                                               |  |                                   
| | Cash paid during the period for:                                                                  |  |                                   
| | Interest                                                                                          |  | $                                 
| | Taxes                                                                                             |  | $                                 
| |                                                                                                  
| | Supplemental non-cash financing activities:                                                       |  |                                   
| | Common stock issued in conjunction with
      acquisition                                         |  | $                                 

See accompanying notes to condensed
consolidated financial statements.

5

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UNIFY CORPORATIONNOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTSOctober 31, 2009

1. Basis of
Presentation

The condensed consolidated financial
statements have been prepared by Unify Corporation (the Company, we, us,
our) pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). The accompanying condensed consolidated financial statements
include our accounts and those of our subsidiaries that we control due to
ownership of a controlling interest. Intercompany transactions and balances have
been eliminated. While the interim financial information contained in this
filing is unaudited, such financial statements, in the opinion of management,
reflect all adjustments (consisting only of normal recurring adjustments) which
the Company considers necessary for a fair presentation. The results for interim
periods are not necessarily indicative of the results to be expected for the
entire fiscal year. These financial statements should be read in conjunction
with the Consolidated Financial Statements and Notes thereto, together with
Managements Discussion and Analysis of Financial Condition and Results of
Operations, which are included in the Companys Annual Report on Form 10-K for
the fiscal year ended April 30, 2009, as filed with the SEC.

Revenue
Recognition

The Company generates revenue from
software license sales and related services, including maintenance and support,
and consulting services. Additionally, the Company generates revenue from its
migration solutions products. The Company licenses its products to end-user
customers, independent software vendors (ISVs), international distributors and
value-added resellers (VARs). The Companys products are generally sold with a
perpetual license. The Companys contracts with ISVs, VARs and international
distributors do not include special considerations such as rights of return,
stock rotation, price protection or special acceptance. The Company exercises
judgment in connection with the determination of the amount of revenue to be
recognized in each accounting period. The nature of each contractual arrangement
determines how revenues and related costs are recognized.

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

For fixed price arrangements that require
significant modification or customization of software, the Company uses the
percentage-of-completion method for revenue recognition. Under the
percentage-of-completion method, progress towards completion is measured by
labor hours.

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

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

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

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

6

---

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

Recently Issued Accounting Standards

In June 2009, the Financial Accounting
Standards Board (FASB) issued authoritative guidance that establishes the
Accounting Standards Codification (Codification or "ASC") as the single source
of authoritative U.S. generally accepted accounting principles (GAAP)
recognized by the FASB to be applied by non-governmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The Codification supercedes all existing non-SEC accounting
literature not included in the Codification. The FASB will not issue new
standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates, which
will serve to update the Codification, provide background information about the
guidance and provide the basis for conclusions on the changes to the
Codification. GAAP is not intended to be changed as a result of the FASBs
Codification project, but it will change the way guidance is organized and
presented. As a result, these changes will have a significant impact on how
companies reference GAAP in their financial statements and in their accounting
policies for financial statements issued for interim and annual periods ending
after September 15, 2009. The Company has implemented the Codification in this
Quarterly Report by providing a plain English approach when describing any new
or updated authoritative guidance.

In May 2009, the FASB issued authoritative
guidance for the accounting and reporting of subsequent events that occur
between the balance sheet date and issuance of financial statements. Issuers
will be required to recognize the effects, if material, of subsequent events in
the financial statements if the subsequent event provides additional evidence
about conditions that existed as of the balance sheet date. The issuer must also
disclose the date through which subsequent events have been evaluated and the
nature of any nonrecognized subsequent events. This guidance became effective for
financial reporting periods ending after June 15, 2009. The Company evaluated
its October 31, 2009 financial statements for subsequent events through December
11, 2009, the date the financial statements were available to be issued.

In October 2009, the FASB issued
authoritative guidance on revenue arrangements with multiple deliverables that
are outside the scope of the software revenue recognition guidance. Under the
new guidance, when vendor specific objective evidence or third party evidence
for deliverables in an arrangement cannot be determined, a best estimate of the
selling price is required to separate deliverables and allocate arrangement
consideration using the relative selling price method. The new guidance includes
new disclosure requirements on how the application of the relative selling price
method affects the timing and amount of revenue recognition. The new guidance
will become effective for Unify beginning May 1, 2011, with earlier adoption
permitted. The Company is currently assessing the impact of the adoption of this
guidance.

2. Acquisitions

Active Data
Corporation

On May 22, 2007, the Company purchased
privately held Active Data Corporation (ADC) for approximately $420,000 plus
earn-out payments of $97,000. ADC provided application migration software that
added Microsofts .NET functionality to Unifys Team Developer product and
provided an additional application migration solution for the Company. Pursuant
to the terms of the purchase agreement, Unify acquired all the outstanding stock
of ADC. ADC did not represent the addition of a significant subsidiary. The
acquisition of ADC did not have a material impact on the financials of Unify and
the results of operations for ADC are included in the Companys results from the
date of acquisition. The ADC purchase price was allocated to tangible and
intangible assets acquired and liabilities assumed based on managements
determination of their estimated fair values. The excess of the purchase price
over the fair value of net assets acquired was allocated to goodwill. The
Company believes the fair values assigned to the assets acquired and liabilities
assumed were based on reasonable assumptions.

CipherSoft Inc.

On January 30, 2009, the Company purchased
privately held CipherSoft Inc. (CipherSoft), headquartered in Calgary, Canada,
for approximately $628,000 plus the assumption of debt of $1,032,000 and future
potential royalty payments to be paid over a four year period following the
acquisition. The royalty payments are based on a percentage of revenue and will increase goodwill upon being earned. As of
October 31, 2009, royalty payments earned totaled $64,000. CipherSoft is a
leading Oracle partner for modernization and migration of Oracle applications
and provides an additional application migration solution for the Company.
Pursuant to the terms of the purchase agreement, Unify acquired all the
outstanding stock of CipherSoft. CipherSoft did not represent the addition of a
significant subsidiary.

7

---

The CipherSoft purchase price was
allocated to tangible and intangible assets acquired and liabilities assumed
based on managements determination of their estimated fair values at the
acquisition date, January 30, 2009. Intangible assets include technologies of
$1,060,000, non-competition agreements of $85,000, consulting agreements of
$110,000 and trade names of $80,000. The excess of the purchase price over the
fair value of net assets acquired was allocated to goodwill. The Company
believes the fair values assigned to the assets acquired and liabilities assumed
were based on reasonable assumptions. The following table summarizes the fair
values of net assets acquired and represents the opening balance sheet for
CipherSoft as of the acquisition date, January 30, 2009 (in thousands):

|Current assets                  | $ | 236  
|------------------------------- | - | -----
|Long term
      assets          |   | 22   
|Goodwill                        |   | 780  
|Intangibles                     |   | 1,335
|Total assets                    | $ | 2,373
|                               
|Current Liabilities             | $ | 1,099
|Long term
      liabilities     |   | 646  
|Total liabilities
      assumed | $ | 1,745
|                               
|Total
      consideration       | $ | 628  

AXS-One Inc.

On June 30, 2009, the Company acquired all
of the issued and outstanding shares of common stock and warrants of AXS-One.
The common stock and warrants were converted into, in the aggregate, 1,000,000
shares of Unify common stock. The outstanding convertible notes of AXS-One with
an aggregate outstanding principal and interest balance of approximately $13
million were exchanged for 1,642,600 shares of Unify common stock. The note
holders may also be issued additional shares of Unify common stock based on
revenue generated from AXS-Ones products over 13 months after the effective
date of the merger.

AXS-One is a leading provider of
integrated content archiving software solutions which enables organizations to
implement secure, scalable and enforceable policies that address records
management for corporate governance, legal discovery and industry regulations.
The acquisition of AXS-One advances the Companys growth strategy to acquire
superior technology companies that can leverage its technology strengths,
extensive customer base and worldwide distribution channel while enabling the
combined company to meet a broader set of customers needs, accelerate direct
and channel sales, and achieve cost synergies.

8

---

The goodwill of $11.0 million arising from
the acquisition consists of increased market presence and opportunities,
enhanced product mix and operating efficiencies expected from combining the
operations of Unify and AXS-One. All of the goodwill was assigned to Unifys
Integrated Content Archiving Solutions segment. None of the goodwill recognized
is expected to be deductible for income tax purposes.

The following table summarizes the
consideration paid for AXS-One and the amounts of the assets acquired and
liabilities assumed recognized at the acquisition date, June 30, 2009.

|Consideration                                                                                      |   |        |  
|-------------------------------------------------------------------------------------------------- | - | ------ | -
|Equity
      instruments (2,642,600 common shares of Unify)                                        | $ | 8,853  |  
|Contingent consideration arrangement                                                               |   | 4,285  |  
|Fair value of
      total consideration                                                            | $ | 13,138 |  
|                                                                                                  
|Recognized amounts of identifiable assets acquired and liabilities
      assumed                   |   |        |  
|Financial
      assets                                                                             | $ | 117    |  
|Accounts receivable                                                                                |   | 591    |  
|Other
      assets                                                                                 |   | 679    |  
|Property, plant and equipment                                                                      |   | 132    |  
|Identifiable
      intangible assets                                                               |   | 8,685  |  
|Financial liabilities                                                                              |   | (5,616 | )
|Deferred
      revenue                                                                             |   | (2,493 | )
|Total identifiable net assets                                                                      | $ | 2,095  |  
|Goodwill                                                                                           |   | 11,043 |  
|                                                                                                   | $ | 13,138 |  
|                                                                                                  
|Acquisition related costs(included in selling, general and administrative expense in
      Unify's |   |        |  
|statement of operations for six months ended October 31,
      2009)                               | $ | 611    |  

The fair value of the 2,642,600 common
shares issued as part of the consideration paid for AXS-One ($8,853,000) was
determined on the basis of the closing market price of Unifys common shares on
the acquisition date.

The contingent consideration arrangement
requires Unify to issue to the former holders of AXS-One convertible notes 0.35
shares of Unify common stock for every $1 of AXS-One net license revenue over
the first $2,000,000 for the 13 month period following the acquisition date.
After the holders of AXS-One convertible notes have received in the aggregate
2,580,000 Unify shares (as adjusted to reflect stock splits, stock dividends and
reverse stock splits of Unify) under the earn-out, the shares issued as the
earn-out shall be distributed one-half to the holders of AXS-One convertible
notes and one-half to the former management members until the management members
have received 171,250 Unify shares under the earn-out. Thereafter, any
additional Unify shares issued as earn-out shall be distributed solely to the
holders of AXS-One convertible notes. There is no limit to the total number of
shares that can be earned. The estimated number of shares that Unify will issue
under the contingent consideration arrangement is 1,184,000. The fair value of
the contingent consideration of $4.9 million is based on managements estimate
of both expected net license revenue and share price. The fair value of the
contingent consideration is provisional pending the receipt of a final
valuation.

Based on the receipt of a preliminary
valuation, acquisition date provisional values were adjusted to decrease
contingent consideration by $477,000, decrease identifiable intangible assets by
$1,325,000, increase deferred revenue by $423,000 and increase goodwill by
$1,271,000. The fair values of the contingent consideration, acquired
identifiable intangible assets, deferred income tax liabilities and deferred
revenue remain provisional pending the receipt of a final valuation.Intangible assets include technologies of $5.1
million, trademarks of $1.2 million, backlog of $0.1 million, and customer
relationships of $2.3 million.

9

---

The amounts of AXS-Ones revenue and
earnings included in the Companys consolidated statement of operations for the
six months ended October 31, 2009, and the supplemental pro forma revenue and
earnings of the combined entity had the acquisition date been May 1, 2009, or
May 1, 2008, are:

|(in
      thousands, except per share amounts)                    | Revenue |        | Net loss |   | Net loss per share
|----------------------------------------------------------------- | ------- | ------ | -------- | - | ------------------
|Actual from July 1, 2009 to October 31, 2009                      | $       | 2,815  |          | $ | (1,542            
|Supplemental pro
      forma from May 1, 2009 to October 31, 2009 | $       | 13,108 |          | $ | (4,219            
|Supplemental pro forma from May 1, 2008 to October 31,
    2008   | $       | 17,905 |          | $ | (3,029            

3. Stock Compensation
Information

Compensation expense includes the
estimated fair value of equity awards vested during the reported period. Expense
for equity awards vested is determined based on the grant date fair value
previously calculated for pro forma disclosures. For the quarter ended October
31, 2009, equity-based compensation expense from operations was comprised of the
following (in thousands):

|                                      | Three Months Ended |     | Six Months Ended
|------------------------------------- | ------------------ | --- | ----------------
|                                      | October 31,        |     | October 31,     
|                                      | 2009               |     | 2008            
|Cost of Sales                         | $                  | 5   |                 
|Product
      Development             |                    | 32  |                 
|Selling, General and Administrative   |                    | 135 |                 
|Total
      Equity-Based Compensation | $                  | 172 |                 

The following table shows remaining
unrecognized compensation expense on a pre-tax basis related to all types of
non-vested equity awards outstanding as of October 31, 2009. This table does not
include an estimate for future grants that may be issued (amounts in thousands).

|Fiscal Year
      Ending April 30, | Amount
|---------------------------------- | ------
|Remainder of 2010                  | $     
|2011                               |       
|2012                               |       
|2013                               |       
|2014                               |       
|Total                              | $     

The cost above is expected to be
recognized over a weighted-average period of 1.48 years.

The Company continues to use the
Black-Scholes option pricing model to estimate fair value of equity awards,
which requires the input of highly subjective assumptions, including the
expected stock price volatility. The Companys calculations are made using the
Black-Scholes option pricing model, with the following weighted average
assumptions for the six months ended October 31, 2009 and 2008, respectively:
expected option life, 12 to 18 months following vesting; stock volatility of 93%
and 89%; risk-free interest rates of 1.9% and 3.0% and no dividends during the
expected term. Not all stock options that have been granted will be exercised.
Accordingly, the Companys calculation of equity-based compensation expense
includes an adjustment for the estimated number of options that will be
forfeited.

Under the 2001 Stock Option Plan (the
2001 Option Plan), the Company may grant options to purchase up to 2,000,000
shares of common stock to eligible employees, directors, and consultants at
prices not less than the fair market value at the date of grant for incentive
stock options and not less than 85% of the fair market value at the date of
grant for non-statutory stock options. Options granted under the 2001 Stock
Option Plan generally vest over four years, are exercisable to the extent
vested, and expire 10 years from the date of grant. Under the 1991 Stock Option
Plan (the 1991 Option Plan) which expired as of March 2001, the Company was
able to grant options to eligible employees, directors and consultants at prices
not less than the fair market value at the date of grant for incentive stock
options and not less than 85% of the fair market value at the date of grant for
non-statutory stock options. Options granted under the 1991 Option Plan
generally vest over four years, are exercisable to the extent vested, and expire
10 years from the date of grant.

10

---

A summary of the Companys stock option
activity for the six months ended October 31, 2009 is as follows:

|                                |           |   |                |          |                 |                         | Weighted  |           |   |        
|------------------------------- | --------- | - | -------------- | -------- | --------------- | ----------------------- | --------- | --------- | - | -------
|                                |           |   |                | Weighted |                 | average
      remaining |           | Aggregate
|                                |           |   |                | average  |                 | contractual             |           | intrinsic
|                                | Shares    |   | exercise price |          | term (in years) |                         | value (1)
|Outstanding at April 30, 2009   | 1,075,804 |   |                | $        | 3.93            |                         | 7.22      |           | $ | 496,992
|Granted                         | 649,700   |   |                | $        | 2.82            |                         |           |           |   |        
|Exercised                       | 0         |   |                | $        | -               |                         |           |           |   |        
|Canceled or expired             | (63,495   | ) |                | $        | 8.09            |                         |           |           |   |        
|Outstanding at October 31, 2009 | 1,662,009 |   |                | $        | 3.34            |                         | 7.52      |           | $ | 681,631
|                               
|Exercisable at October 31, 2009 | 745,987   |   |                | $        | 3.10            |                         | 6.24      |           | $ | 448,126

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

Total intrinsic value of awards exercised
during the quarters ended October 31, 2009 and October 31, 2008 was $0 for both
periods. The total fair value of awards vested during the quarters ended October
31, 2009 and October 31, 2008 was $176,630 and $124,535, respectively.

A summary of the Companys nonvested stock
option activity for the period ended October 31, 2009 is as follows:

|                              |          |   |       | Weighted    
|----------------------------- | -------- | - | ----- | ------------
|                              |          |   |       | average fair
|                              | Shares   |   | value
|Nonvested at April 30, 2009   | 460,464  |   |       | $           
|Granted                       | 649,700  |   |       | $           
|Vested                        | (145,158 | ) |       | $           
|Canceled or
      expired     | (48,984  | ) |       | $           
|Nonvested at October 31, 2009 | 916,022  |   |       | $           

11

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4.Goodwill and Intangible
Assets

The following tables present details of
the Companys goodwill and intangible assets as of October 31, 2009 and April
30, 2009 (in thousands).

|                           |  | Gross    |        |              |   |          |   | Net         |   |       
|-------------------------- |  | -------- | ------ | ------------ | - | -------- | - | ----------- | - | ------
|                           |  | carrying |        | Accumulated  |   | carrying |   | Estimated  
|October 31, 2009           |  | amount   |        | amortization |   | amount   |   | useful life
|Infinite Lives:            |  |          |        |              |   |          |   |             |   |       
|Goodwill                   |  | $        | 17,670 |              | $ |         |   |             | $ | 17,670
|Finite Lives:              |  |          |        |              |   |          |   |             |   |       
|Customer-related           |  |          | 3,836  |              |   | (973     | ) |             |   | 2,863 
|Technology-based           |  |          | 7,633  |              |   | (1,523   | ) |             |   | 6,110 
|Trademarks                 |  |          | 1,500  |              |   | (299     | ) |             |   | 1,201 
|Trade
      name           |  |          | 191    |              |   | (123     | ) |             |   | 68    
|Backlog                    |  |          | 90     |              |   | (60      | ) |             |   | 30    
|Non-compete                |  |          | 96     |              |   | (18      | ) |             |   | 78    
|Consulting
      agreement |  |          | 125    |              |   | (74      | ) |             |   | 51    
|Total                      |  | $        | 31,141 |              | $ | (3,070   | ) |             | $ | 28,071
|                          
|                           |  | Gross    |        |              |   |          |   | Net         |   |       
|                           |  | carrying |        | Accumulated  |   | carrying |   | Estimated  
|April 30, 2009             |  | amount   |        | amortization |   | amount   |   | useful life
|Infinite Lives:            |  |          |        |              |   |          |   |             |   |       
|Goodwill                   |  | $        | 6,425  |              | $ |         |   |             | $ | 6,425 
|Finite Lives:              |  |          |        |              |   |          |   |             |   |       
|Customer-related           |  |          | 1,536  |              |   | (742     | ) |             |   | 794   
|Technology-based           |  |          | 2,395  |              |   | (827     | ) |             |   | 1,568 
|Trademarks                 |  |          | 300    |              |   | (181     | ) |             |   | 119   
|Trade
      name           |  |          | 180    |              |   | (107     | ) |             |   | 73    
|Non-compete                |  |          | 85     |              |   | (7       | ) |             |   | 78    
|Consulting
      agreement |  |          | 110    |              |   | (22      | ) |             |   | 88    
|Total                      |  | $        | 11,031 |              | $ | (1,886   | ) |             | $ | 9,145 

Acquired
finite-lived intangibles are generally amortized on a straight line basis over
their estimated useful life. The useful life of finite-lived intangibles is the
period over which the asset is expected to contribute directly or indirectly to
future cash flows of the Company. Intangible assets amortization expense for the
six months ended October 31, 2009, was $1,176,000. Amortization expense for the
six months ended October 31, 2008, was $360,000. The estimated future
amortization expense related to intangible assets as of October 31, 2009, is as
follows (in thousands):

|Fiscal Year Ending April
      30, |  | Amount
|---------------------------------- |  | ------
|Remainder of 2010                  |  | $     
|2011                               |  |       
|2012                               |  |       
|2013                               |  |       
|2014                               |  |       
|2015                               |  |       
|Thereafter                         |  |       
|Total                              |  | $     

Goodwill at October 31, 2009, represents
the excess of purchase prices over the sum of the amounts assigned to assets
acquired less liabilities assumed. The Company believes these acquisitions will
produce the following results:

- Increased Market Presence and Opportunities:The addition of the acquired companies should increase the combined
  companys market presence and opportunities for growth in sales and
  earnings.

12

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- Enhanced Product Mix: The complementary
  nature of the Companys products with its acquisitions should benefit current
  customers and provide the combined company with the ability to access new
  customers.
- Operating Efficiencies:The combination of the Company with its acquisitions
  provides the opportunity for potential economies of scale and cost savings.

The Company believes these primary factors
support the amount of goodwill recognized as a result of the purchase price for
companies it has acquired. Goodwill is tested for impairment on an annual basis
as of April 30, and between annual tests if indicators of potential impairment
exist, using a fair-value-based approach.

5. Credit Facility

On November 20, 2006, the Company entered
into a revolving credit note agreement with ComVest Capital LLC. Under the terms
of the agreement the Company can borrow up to $2.5 million. As of October 31,
2009, there was $350,000 outstanding on the revolver. The amount that can be
borrowed under the revolver is based on the amount of eligible foreign and
domestic accounts receivable outstanding. The revolver has an expiration date of
November 30, 2010, and the Company incurs interest expense on funds borrowed at
the prevailing prime rate plus 2.25% per annum (5.5% as of October 31, 2009 and
April 30, 2009).

6. Long-Term Debt

The Companys debt consists of the
following at October 31, 2009 and April 30, 2009 (in thousands):

|                                                                                        | October 31, |        | April 30,
|--------------------------------------------------------------------------------------- | ----------- | ------ | ---------
|                                                                                        | 2009        |        | 2009     
|Convertible notes payable to ComVest Capital LLC, interest rate of
      5%, payable in |             |        |          
|installments through September 30, 2010. These notes include
      certain negative     |             |        |          
|covenants and the Company is in compliance with such
      covenants.                   | $           | 998    |          
|                                                                                       
|Note Payable, interest rate of 5%, payable in installments through
      April 2011.    |             | 878    |          
|                                                                                       
|Note Payable, interest rate of 5%, payable in installments through
      May 2011.      |             | 250    |          
|                                                                                       
|ComVest Capital LLC credit facility, interest rate 5.5%, payable
      November 2010.   |             | 350    |          
|                                                                                       
|Capital leases payable, payable in monthly installments through
      September 2011.   |             | 77     |          
|                                                                                        |             | 2,553  |          
|Less discount on notes payable, net                                                     |             | (9     | )        
|Less current
      portion                                                              |             | (1,733 | )        
|Total long term debt, net                                                               | $           | 811    |          

7. Other Long-Term
Liabilities

In France, the Company is subject to
mandatory employee severance costs associated with a statutory government
regulated plan covering all employees. The plan provides for one month of
severance for the first five years of service with an employer and one fifth of
one year of severance for every one year of service thereafter. In order to
receive their severance payment the employee generally may not retire before age
65 and must be employed at the time of retirement. As of October 31, 2009 and
April 30, 2009 the amount of severance is $92,000 and $81,000, respectively.
Also included in other long term liabilities as of October 31, 2009 and April
30, 2009 is $571,000 and $541,000, respectively, of deferred tax liabilities and
$245,000 and $271,000 of deferred rent related to the Roseville, California
office. Additionally, included in other long term liabilities as October 31,
2009, is $561,000 related to the purchase accounting valuation for the
Rutherford, New Jersey office lease.

13

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8. Maintenance
Contracts

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

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

|                                                            | Three Months Ended |        | Six Months Ended
|----------------------------------------------------------- | ------------------ | ------ | ----------------
|                                                            | October 31,        |        | October 31,     
|                                                            | 2009               |        | 2008            
|Deferred maintenance revenue beginning balance              | $                  | 7,803  |                 
|Deferred
      maintenance revenue recognized during period |                    | (3,562 | )               
|Deferred maintenance revenue of new maintenance contracts   |                    | 4,082  |                 
|Deferred
      maintenance revenue ending balance           | $                  | 8,323  |                 

9. Income Taxes

The Company recognizes the financial
statement benefit of a tax position only after determining that the relevant tax
authority would more likely than not sustain the position following an audit.
For tax positions meeting the more-likely-than-not threshold, the amount
recognized in the financial statements is the largest benefit that has a greater
than 50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority.

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

The Companys policy is to recognize
interest and penalties accrued on any unrecognized tax benefits as a component
of income tax expense. As of October 31, 2009, the Company did not have any
accrued interest or penalties associated with any unrecognized tax benefits, nor
did the Company record any interest expense in the six months ended October 31,
2009.

In September 2008, the State of California
suspended the ability to use net operating loss carry-forwards to offset taxable
income for a two year period.

10. Comprehensive Income
(Loss)

Comprehensive income includes net income
(loss) and net foreign currency translation adjustments. A comprehensive gain
(loss) on foreign currency translations for the three months ended October 31,
2009 and 2008 was $250,000 and ($203,000), respectively. A comprehensive gain
(loss) on foreign currency translations for the six months ended October 31,
2009 and 2008 was $218,000 and ($194,000), respectively.

11. Reverse Stock Split

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

14

---

12. Income (Loss) Per
Share

Basic earnings (loss) per share is
computed by dividing net income (loss) by the weighted average number of common
shares outstanding during the reporting period. Diluted earnings (loss) per
share is computed similar to basic earnings (loss) per share except that it
reflects the potential dilution that could occur if dilutive securities or other
obligations to issue common stock were exercised or converted into common stock.
For the six months ended October 31, 2009, because of our reported net loss,
potentially dilutive securities were excluded from the per share computations
due to their anti-dilutive effect.

|                                                                 | Three Months Ended |        | Six Months Ended
|---------------------------------------------------------------- | ------------------ | ------ | ----------------
|(in
      thousands, except per share amounts)                   | October 31,        |        | October 31,     
|                                                                 | 2009               |        | 2008            
|Net income (loss)                                                | $                  | (1,400 | )               
|                                                                
|Weighted average shares of common stock outstanding,
basic       |                    | 10,119 |                 
|Effect of
      dilutive securities                              |                    | -      |                 
|Weighted average shares of common stock outstanding,
    diluted |                    | 10,119 |                 
|                                                                
|Earnings (loss) per share of common stock:                       |                    |        |                 
|Basic                                                            | $                  | (0.14  | )               
|Diluted                                                          | $                  | (0.14  | )               

The dilutive securities above represent
only those stock options, warrants and convertible debt whose exercise prices
were less than the average market price of the stock during the respective
periods and therefore were dilutive. Potentially dilutive securities that are
not included in the diluted net loss calculation because they would be
antidilutive are employee stock options of 258,799 and common stock warrants of
354,242 as of October 31, 2009. The number of shares of stock options excluded
from the above amount because their exercise prices exceeded the average market
price of the stock was 545,558 for the six months ended October 31,
2009.

13. Subsequent Event

Stock Repurchase Plan.On December 1, 2009, the Company announced that its Board of
Directors had approved a stock repurchase program authorizing the repurchase of
up to 300,000 shares of its common stock. Under the program, shares may be
repurchased from time to time in open market transactions at prevailing market
prices or in privately negotiated purchases. The timing and actual number of
shares purchased will depend on a variety of factors, such as price, corporate
and regulatory requirements, alternative investment opportunities, and other
market and economic conditions. Repurchases under the program will be funded
from available working capital. The program may be commenced, suspended or
terminated at any time, or from time-to-time at managements discretion without
prior notice. No shares have been repurchased as of the date of this
report.

15

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14. Segment Information

Operating segments are defined as
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker, or
decision making group, in deciding how to allocate resources and in assessing
performance. Our chief operating decision maker is our Chief Executive Officer.
We have evaluated our approach for making operating decisions and assessing the
performance of our business and, beginning in the first quarter of fiscal year
2010, we have determined that we have three reportable segments: Database and
Development Products (DDP), Integrated Content Archiving Solutions and
Modernization & Migration Solutions. Prior to the first quarter of fiscal
year 2010, the Company maintained two reportable segments, Database and
Development Products and Modernization & Migration Solutions. The accounting
policies of the segments are the same as those described in Note 1. We evaluate
performance based on gross margins (total revenues less costs of licenses,
services and migration solutions) before operating costs. We do not manage our
operating costs on a segment basis as many of our sales, marketing and support
personnel regularly work with products from all segments. Additionally, we do
not track assets by segment and therefore asset disclosures by segment are not
relevant and are not presented.

For the second quarter of fiscal 2010 and
2009, total revenue from the United States was $3.0 million and $1.6 million,
respectively. Total revenue from all other countries was $4.1 million in the
second quarter of fiscal 2010 and $4.2 million for the second quarter of fiscal
2009. Total long-lived assets as of October 31, 2009 and April 30, 2009, for the
United States, was $26.7 million and $9.6 million, respectively. Total
long-lived assets in all other countries were $2.1 million as of October 31,
2009 and $68,000 as of April 30, 2009.

Financial information for the Companys
reportable segments is summarized below (in thousands). Fiscal 2009 segment
information has been reclassified to conform to the fiscal 2010
presentation.

|                                             | Three Months
      Ended |       | Six Months
      Ended
|-------------------------------------------- | ------------------------ | ----- | ----------------------
|                                             | October 31,              |       | October 31,           
|                                             | 2009                     |       | 2008                  
|Total
      Revenues:                        |                          |       |                       
|Database and Development
      Products      | $                        | 3,672 |                       
|Integrated Content Archiving
      Solutions |                          | 1,732 |                       
|Modernization and Migration
      Solutions  |                          | 1,683 |                       
|Total Revenues                               | $                        | 7,087 |                       
|                                            
|Cost
      of Revenue:                       |                          |       |                       
|Database and Development
      Products      | $                        | 252   |                       
|Integrated Content Archiving
      Solutions |                          | 572   |                       
|Modernization and Migration
      Solutions  |                          | 653   |                       
|Total Cost of
      Revenues                 | $                        | 1,477 |                       
|                                            
|Gross
      Profit:                          |                          |       |                       
|Database and Development
      Products      | $                        | 3,420 |                       
|Integrated Content Archiving
      Solutions |                          | 1,160 |                       
|Modernization and Migration
      Solutions  |                          | 1,030 |                       
|Total Gross
    Profit                       | $                        | 5,610 |                       

16

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UNIFY CORPORATION

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

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

The following discussion should be read in
conjunction with the unaudited Condensed Consolidated Financial Statements and
Notes thereto in Part I, Item 1 of this Quarterly Report on Form 10-Q and with
the audited Consolidated Financial Statements and Notes thereto, together with
Managements Discussion and Analysis of Financial Condition and Results of
Operations, which are included in the Companys Annual Report on Form 10-K for
the fiscal year ended April 30, 2009, as filed with the SEC.

Overview

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

The Company sells and markets application
development and database software and services, integrated content archiving
solutions and modernization solutions through three segments. The segments are
the Database and Development Products (DDP), Integrated Content Archiving
Solutions and our Modernization & Migration Solutions.

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

Our application modernization solutions
help organizations migrate and maximize investments in their existing
applications and data. Our Modernization and Migration Solutions, and Software
products are built to increase productivity, eliminate risk and substantially
reduce time and costs. Our application development and data management software
products include Team Developer, SQLBase, SQLBase Treasury, NXJ, DataServer,
VISION and ACCELL. Our Modernization and Migration Solutions include Composer
for Lotus Notes which delivers a like-for-like migration of Lotus Notes
applications to the Microsoft .NET and SharePoint platforms and Composer
Sabertooth which speeds the conversion of Team Developer or SQLWindows
applications to Microsoft .NET. We also have an integrated content archiving
software solution, the AXS-One Compliance Platform , which enables
organizations to securely capture, index, archive, retrieve, review, share,
search, supervise and manage the retention, disposition, preservation and
destruction of electronic records.

17

---

Critical Accounting
Policies

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

Revenue Recognition

The Company generates revenue from
software license sales and related services, including maintenance and support,
and consulting services. Additionally, the Company generates revenue from its
migration solutions products. The Company licenses its products to end-user
customers, independent software vendors (ISVs), international distributors and
value-added resellers (VARs). The Companys products are generally sold with a
perpetual license. The Companys contracts with ISVs, VARs and international
distributors do not include special considerations such as rights of return,
stock rotation, price protection or special acceptance. The Company exercises
judgment in connection with the determination of the amount of revenue to be
recognized in each accounting period. The nature of each contractual arrangement
determines how revenues and related costs are recognized.

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

For fixed price arrangements that require
significant modification or customization of software, the Company uses the
percentage-of-completion method for revenue recognition. Under the
percentage-of-completion method, progress towards completion is measured by
labor hours.

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

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

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

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

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

18

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Deferred Tax Asset Valuation
Allowance

As of April 30, 2009, we had approximately
$17.1 million of deferred tax assets related principally to net operating loss
carryforwards, reserves and other accruals, and foreign tax credits. The
Companys ability to utilize net operating loss carryforwards may be subject to
certain limitations in the event of a change in ownership. A valuation allowance
has been recorded to offset these deferred tax assets. The ability of the
Company to ultimately realize its deferred tax assets will be contingent upon
the Company achieving taxable income. There is no assurance that this will occur
in amounts sufficient to utilize the deferred tax assets. Should we determine
that we would be able to realize the deferred tax assets in the future in excess
of the recorded amount, an adjustment to the deferred tax asset would increase
income in the period such determination was made.

19

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Results of Operations

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

|                                          | Three Months
      Ended |   |   | Six Months
      Ended |      
|----------------------------------------- | ------------------------ | - | - | ---------------------- | -----
|                                          | October 31,              |   |   | October 31,            |      
|                                          | 2009                     |   |   | 2008                   |      
|Revenues:                                 |                          |   |   |                        |      
|Software licenses                         | 19.9                     |   | % |                        | 34.3 
|Services                                  | 56.3                     |   | % |                        | 54.6 
|Migration solutions                       | 23.8                     |   | % |                        | 11.1 
|Total
      revenues                      | 100.0                    |   | % |                        | 100.0
|                                         
|Cost
      of Revenues:                   |                          |   |   |                        |      
|Software licenses                         | 0.7                      |   | % |                        | 1.5  
|Services                                  | 10.9                     |   | % |                        | 5.1  
|Migration solutions                       | 9.2                      |   | % |                        | 6.2  
|Total cost of
      revenues              | 20.8                     |   | % |                        | 12.8 
|                                         
|Gross
      profit                        | 79.2                     |   | % |                        | 87.2 
|                                         
|Operating Expenses:                       |                          |   |   |                        |      
|Product development                       | 24.7                     |   | % |                        | 11.8 
|Selling, general and
      administrative | 72.3                     |   | % |                        | 57.6 
|Total operating
      expenses            | 97.0                     |   | % |                        | 69.4 
|Income (loss) from
    operations         | (17.8                    | ) | % |                        | 17.8 
|Other income (expense),
      net         | (1.1                     | ) | % |                        | (2.6 
|Income (loss) before income
      taxes   | (18.9                    | ) | % |                        | 15.2 
|Provision for income
      taxes          | 0.8                      |   | % |                        | 2.7  
|Net income (loss)                         | (19.7                    | ) | % |                        | 12.5 

Total Revenues

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

Total revenues in the second quarter of
fiscal 2010 were $7.1 million, an increase of $1.3 million from the second
quarter of fiscal 2009. This represents an increase of 22% from the second
quarter of fiscal 2009 revenues of $5.8 million. While the Company continued to
feel the impact of the world-wide slowdown in the economic environment in the
second quarter of 2010 there was a noticeable increase in sales activity in most
parts of the world compared to the first quarter of 2010. While total revenue in
the second quarter was up compared to the first quarter, the Company is not
experiencing as large a number of high dollar value orders being placed as it
has in prior years. Late in the second quarter of 2010 the Company released a
new version of its Team Developer product. We expect sales of this product to
increase during the remainder of the fiscal year. Total software license
revenues in the second quarter of fiscal 2010 were $1.4 million, a decrease of
$0.6 million from the second quarter of fiscal 2009. This represents a decrease
of 29% over the second quarter of fiscal 2009 revenues of $2.0 million. Total
services revenues in the second quarter of fiscal 2010 and 2009 were $4.0
million and $3.2 million, respectively. The increase in services revenue
primarily related to the services revenue generated by AXS-One. Total migration
solutions revenue in the second quarter of fiscal 2010 was $1.7 million compared
to $0.6 million for the second quarter of fiscal 2009. The increase in migration
solutions revenue was primarily related to a multi-million dollar database
migration project for a governmental entity.

For the second quarter of fiscal 2010 and
2009, total revenues from the United States were 43% and 28% of total revenues,
respectively. Total revenue from the United States in absolute dollars was $3.0
million for the second quarter of fiscal 2010 and $1.6 million for the second
quarter of fiscal 2009. Total revenue from all other countries was $4.1 million
in the second quarter of fiscal 2010 and $4.2 million for the second quarter of
fiscal 2009. On a percentage basis, revenue from other countries was 57% for the
second quarter of fiscal 2010 and 72% for fiscal 2009.

20

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Cost of Revenues

Cost of Software Licenses.Cost of software licenses consists primarily
of royalty payments and the amortization of purchased technology from third
parties that is amortized ratably over the technologys expected useful life.
Cost of software licenses was $51,000 and $89,000 for the second quarter of
fiscal 2010 and fiscal 2009, respectively. The decrease in cost of software
licenses represents a decrease in software royalty payments. For the first six
months ended October 31, 2009 and 2008, cost of software licenses was $145,000
and $139,000, respectively.

Cost of Services.Cost of services consists primarily of employee, facilities
and travel costs incurred in providing customer support under software
maintenance contracts and consulting and services. Cost of services was $773,000
and $298,000 for the second quarter of fiscal 2010 and fiscal 2009,
respectively. For the first six months ended October 31, 2009 and 2008, cost of
services was $1,210,000 and $548,000, respectively. The increase in cost of
services for both the three months and six months ended October 31, 2009 was due
primarily to the addition of AXS-One employees.

Cost of Migration Solutions.Cost of migration solutions consists
primarily of both expenses associated with employees involved in migration
projects and also expenses related to third party assistance. Cost of migration
solutions was $653,000 and $358,000 for the second quarter of fiscal 2010 and
fiscal 2009, respectively. For the six months ended October 31, 2009 and 2008,
cost of migration solutions was $716,000 and $518,000, respectively. The
increase in cost of migration solutions for both the three and six months ended
October 31, 2009 was primarily due to a large migration project in the current
year.

Operating Expenses

Product Development.Product development expenses consist primarily of employee and
facilities costs incurred in the development and testing of new products and in
the porting of new and existing products to additional hardware platforms and
operating systems. Product development costs in the second quarter of fiscal
2010 were $1.7 million compared to $0.7 million in the same period of fiscal
2009. For the six months ended October 31, 2009 and 2008, product development
expenses were $3.2 million and $1.4 million, respectively. The increase in
product development expenses in fiscal 2010 was primarily the result of expenses
related to our acquisition of CipherSoft in January 2009 and our acquisition of
AXS-One in June 2009.

Selling, General and Administrative.Selling, general and administrative
(SG&A) expenses consist primarily of salaries and benefits, marketing
programs, travel expenses, professional services, facilities expenses and bad
debt expense. SG&A expenses were $5.1 million in the second quarter of
fiscal 2010 and $3.3 million for the second quarter of fiscal 2009. The major
components of SG&A for the second quarter of fiscal 2010 were sales expenses
of $2.6 million, marketing expenses of $0.4 million and general and
administrative expenses of $2.1 million. For the second quarter of fiscal 2009,
the major components of SG&A were sales expenses of $1.6 million, marketing
expenses of $0.3 million and general and administrative expenses of $1.4
million. In the six months ended October 31, 2009 and 2008, our SG&A
expenses were $9.9 million and $6.7 million, respectively. The major components
of SG&A for the six month period ended October 31, 2009 were sales expenses
of $4.8 million, marketing expenses of $0.7 million and general and
administrative expenses of $4.4 million. The major components of SG&A for
the six month period ended October 31, 2008 were sales expenses of $3.3 million,
marketing expenses of $0.5 million and general and administrative expenses of
$2.9 million. The increase in SG&A expenses in fiscal 2010 was primarily the
result of expenses incurred related to our acquisition of CipherSoft in January
2009 and our acquisition of AXS-One in June 2009.

Other Income (Expense),
Net.Other income (expense), net consists
primarily of interest expense, foreign exchange gains and losses and other
income. Interest expense for the second quarter of fiscal 2010 and 2009 was
$66,000 and $41,000, respectively. For the six months ended October 31, 2009 and
2008, interest expense was $124,000 and $87,000, respectively. Interest expense
consists primarily of interest incurred on notes payable resulting from a debt
financing in conjunction with the November 2006 acquisition of Gupta
Technologies LLC and the acquisition of CipherSoft Inc., plus the amortization
of related debt issuance costs and the amortization of the discount on notes
payable. Foreign exchange rate losses for the second quarter of fiscal 2010 were
$13,000. Foreign exchange rate losses in the second quarter of fiscal 2009 were
$119,000. Foreign exchange rate gains for the six months ended October 31, 2009
were $64,000. Foreign exchange rate losses for the six months ended October 31,
2008 were $110,000. Other income for the second quarter of fiscal 2010 and 2009
was $1,000 and $0, respectively. Other income for the six months ended October
31, 2009 was $61,000. Other income for the six months ended October 31, 2008 was
$19,000.

Provision for Income Taxes.For the second quarter of fiscal 2010, the
Company recorded $58,000 in foreign withholding tax expense. For the second
quarter of fiscal 2009, the Company recorded $156,000 in federal and state
income tax expenses. For the six months ended October 31, 2009 the Company
recorded $66,000 in foreign withholding tax expense. For the six months ended
October 31, 2008, the Company recorded $188,000 in federal and state income tax
expenses.

21

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Liquidity and Capital
Resources

At October 31, 2009, the Company had cash
and cash equivalents of $2.2 million, compared to $6.1 million at April 30,
2009. The decrease in cash from April 30, 2009 to October 31, 2009 was primarily
the result of payments on obligations related to the June 30, 2009 acquisition
of AXS-One. The Company had net accounts receivable of $9.3 million as of
October 31, 2009, and $4.5 million as of April 30, 2009.

As of October 31, 2009 the Company has
various notes payable outstanding in the amount of $2.1 million of which $1.7
million is current. The notes payable all have an interest rate of 5%. The
Company also has a $2.5 million revolving line of credit with an interest rate
of prime plus 2.25% which has a maturity date of November 30, 2010. As of
October 31, 2009 there is $350,000 outstanding on the revolving line of credit.

We believe the existing cash balance of
$2.2 million as of October 31, 2009, along with forecasted operating cash flows
and the revolver credit facility, will provide us with sufficient working
capital for us to meet our operating needs for the next 12 months. Our operating
plan assumes normal operations for the Company and the required debt service
payments.

In fiscal 2010, we plan to increase the
marketing of our Composer product lines and we also anticipate releasing new
versions of some of our Rapid Application Development Products as well as our
Database Management Products. Additionally, as a result of our purchase of
AXS-One we expect to offer our integrated content archiving solutions through
our distribution channels andaccelerate direct and channel sales in fiscal 2010. The fiscal
2010 plan requires few additional strategic investments in sales, marketing or
implementation services.

Operating Cash Flow. For the first six months of fiscal year 2010 cash used by
operations was $3.9 million. This compares to cash flows provided by operations
of $0.8 million for the first six months of fiscal 2009. Cash flows used by
operations for the first six months of fiscal 2010 principally resulted from a
net loss of $3.6 million, an increase in accounts receivable of $4.0 million, a
decrease in accounts payable of $1.4 million, a decrease in accrued compensation
and related expenses of $0.3 million, a decrease in other accrued liabilities of
$1.2 million, and a decrease in other long term liabilities of $0.2 million.
Offsetting these amounts was an increase in deferred revenue of $4.8 million, a
decrease in prepaid expenses and other current assets of $0.5 million,
amortization of intangible assets of $1.2 million, depreciation of $0.1 million
and stock based compensation expense of $0.3 million.

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

Investing Cash Flows. Cash flow from investing activities was $30,000 for the
first six months of fiscal 2010 and was primarily the result of cash gained in
the acquisition of AXS-One. Net cash used in investing activities for the first
six months of fiscal 2009 was $261,000 and was the result of the purchase of
property and equipment of $151,000 and payments on acquisition obligations of
$110,000.

Financing Cash Flows.Net cash used in financing activities for the first six
months of fiscal 2010 was $366,000. Cash from financing activities was the
result of proceeds from debt obligations of $350,000. Offsetting this amount was
$716,000 of principal payments on debt obligations. Net cash used in financing
activities for the first six months of fiscal 2009 was $11,000.

22

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A summary of certain contractual
obligations as October 31, 2009 is as follows (in thousands):

|                                         |  | Payments Due by Period
|---------------------------------------- |  | ----------------------
|                                         |  |                       
|Contractual Obligations                  |  | Total                 
|Long-term debt                           |  | $                     
|Estimated interest
      expense         |  |                       
|Other
      liabilities                  |  |                       
|Capital leases                           |  |                       
|Operating leases                         |  |                       
|Total contractual cash
      obligations |  | $                     

Other liabilities primarily include
contractual severance payments related to the AXS-One acquisition.

Stock Repurchase Plan. On December 1, 2009, the Company announced that its Board of
Directors had approved a stock repurchase program authorizing the repurchase of
up to 300,000 shares of its common stock. Under the program, shares may be
repurchased from time to time in open market transactions at prevailing market
prices or in privately negotiated purchases. The timing and actual number of
shares purchased will depend on a variety of factors, such as price, corporate
and regulatory requirements, alternative investment opportunities, and other
market and economic conditions. Repurchases under the program will be funded
from available working capital. The program may be commenced, suspended or
terminated at any time, or from time-to-time at managements discretion without
prior notice. No shares have been repurchased as of the date of this
report.

Volatility of Stock Price and General
Risk Factors Affecting Quarterly Results

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

Unifys stock began trading on the NASDAQ
under the symbol UNFY on August 25, 2008. Previously the Companys shares traded
over-the-counter on the bulletin board. Even though the Company has moved to a
larger exchange with the NASDAQ, we do not receive any analyst coverage, the
Companys shares are still thinly traded and our stock is considered to be a
micro-cap stock. Our stock is therefore subject to greater price volatility than
larger companies whose stock trades more actively.

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

Due to the foregoing factors, quarterly
revenues and operating results may vary on a quarterly basis. Revenues and
quarterly results may vary because software technology is rapidly evolving, and
our sales cycle, from initial evaluation to purchase and the providing of
maintenance services, can be lengthy and varies substantially from customer to
customer. Because we normally deliver products within a short time of receiving
an order, we typically do not have a backlog of orders. As a result, to achieve
our quarterly revenue objectives, we are dependent upon obtaining orders in any
given quarter for shipment in that quarter. Furthermore, because many customers
place orders toward the end of a fiscal quarter, we generally recognize a
substantial portion of our software license revenues at the end of a quarter.
Our expense levels largely reflect our expectations for future revenue and are
therefore somewhat fixed in the short term. We expect that our operating results will continue to be
affected by the continually challenging IT economic environment as well as by
seasonal trends.

23

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Item 3. Quantitative and Qualitative
Disclosures about Market Risk

Interest Rate Risk. The Companys exposure to market rate risk for changes in
interest rates relates primarily to its investment portfolio, which consists of
cash equivalents. Cash equivalents are highly liquid investments with original
maturities of three months or less and are stated at cost. Cash equivalents are
generally maintained in money market accounts which have as their objective
preservation of principal. The Company does not believe its exposure to interest
rate risk is material for cash and cash equivalents, which totaled $2.2 million
as of October 31, 2009. Unify had no short-term investments at October 31, 2009.

In November 2006, the Company entered into
a revolving credit facility agreement with ComVest whereby ComVest would provide
up to $2.5 million through a revolving credit facility. The revolver has an
interest rate of prime plus 2.25% and has a maturity date of November 30, 2010.
Should the prime interest rate increase during the life of the revolver, the
Company would have exposure to interest rate risk if it has a large balance
outstanding on the revolver. As of October 31, 2009, there was $350,000
outstanding on the revolver.

Unify does not use derivative financial
instruments in its short-term investment portfolio, and places its investments
with high quality issuers only and, by policy, limits the amount of credit
exposure to any one issuer. The Company is averse to principal loss and attempts
to ensure the safety of its invested funds by limiting default, market and
reinvestment risk.

Foreign Currency Exchange Rate
Risk. As a global concern, the Company faces
exposure to adverse movements in foreign currency exchange rates. These
exposures may change over time as business practices evolve and could have an
adverse impact on the Companys business, operating results and financial
position. Historically, the Companys primary exposures have related to local
currency denominated sales and expenses in Europe, Japan and Australia. For
example, when the U.S. dollar strengthens against the major European currencies,
it results in lower revenues and expenses recorded for those regions when
translated into U.S. dollars.

Due to the substantial volatility of
currency exchange rates, among other factors, the Company cannot predict the
effect of exchange rate fluctuations on its future operating results. Although
Unify takes into account changes in exchange rates over time in its pricing
strategy, it does so only on an annual basis, resulting in substantial pricing
exposure as a result of foreign exchange volatility during the period between
annual pricing reviews. The Company also has currency exchange rate exposures on
intercompany accounts receivable and intercompany accounts payable related to
activities with the Companys operations in France, Germany, UK, Australia,
Singapore and Canada. At October 31, 2009, the Company had $2.2 million in such
payables denominated in Euros and U.S. dollars, and a total $5.0 million in
receivables denominated in Euros, Canadian dollars, U.S. dollars and pounds
sterling. The Company engages in no hedging activities to reduce the risk of
such fluctuations. A hypothetical ten percent change in foreign currency rates
could have a significant impact on the Companys business, operating results and
financial position. The Company has not experienced material exchange losses on
intercompany balances in the past; however, due to the substantial volatility of
currency exchange rates, among other factors, it cannot predict the effect of
exchange rate fluctuations on its future business, operating results and
financial position.

Item 4. Controls and Procedures

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

(b)Changes in Internal Controls. There
have been no changes in our internal controls over financial reporting that
occurred during the first six months of fiscal year 2010 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.

24

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UNIFY CORPORATION

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Litigation

The Company is subject to legal
proceedings and claims arising in the ordinary course of business. If such
matters arise, the Company cannot assure that it would prevail in such matters,
nor can it assure that any remedy could be reached on mutually agreeable terms,
if at all. Due to the inherent uncertainties of litigation, were there any such
matters, the Company would not be able to accurately predict their ultimate
outcome. As of October 31, 2009, there were no current proceedings or litigation
involving the Company that management believes would have a material adverse
impact on its financial position, results of operations, or cash flows.

25

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Item 6. Exhibits

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

26

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UNIFY CORPORATIONSIGNATURE

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

|Date: December 11,
      2009 | Unify
      Corporation                           
|----------------------------- | --------------------------------------------------
|                              | (Registrant)                                      
|                             
|                              | By:                                               
|                             
|                              | /s/ STEVEN D. BONHAM                              
|                              | Steven D.
      Bonham                            
|                              | Chief Financial
      Officer                     
|                              | (Principal Financial and
      Accounting Officer)

27

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