<PAGE>   1
 
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-Q
 
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934
 
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
 
                                       OR
 
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
    ACT OF 1934
 
                FOR THE TRANSITION PERIOD FROM ________ TO ________
 
                          COMMISSION FILE NUMBER 0-25494
 
                                REMEDY CORPORATION
              (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                           <C>
                   DELAWARE                                     77-0265675
       (STATE OR OTHER JURISDICTION OF                       (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NUMBER)
     1505 SALADO DRIVE, MOUNTAIN VIEW, CA                         94043
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                     (ZIP CODE)
</TABLE>
 
                                 (415) 903-5200
              (REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE)
 
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
                               Yes  X      No __
 
There were 26,815,245 shares of the Company's Common Stock, par value $.00005,
outstanding on October 31st, 1996.
 
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<PAGE>   2
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                     PAGE NO.
                                                                                     --------
<S>       <C>                                                                        <C>
PART I    FINANCIAL INFORMATION
          ITEM 1. FINANCIAL STATEMENTS:
          Condensed Consolidated Balance Sheets as of September 30, 1996 and
          December 31, 1995........................................................      3
          Condensed Consolidated Statements of Income for the Three and Nine Months
          Ended September 30, 1996 and September 30, 1995..........................      4
          Condensed Consolidated Statements of Cash Flows for the Nine Months Ended
          September 30, 1996 and September 30, 1995................................      5
          Notes to Condensed Consolidated Financial Statements.....................      6
          ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS....................................................      7
PART II   OTHER INFORMATION........................................................     12
          ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURE..........................................................................     13
</TABLE>
 
                                        2
<PAGE>   3
 
PART I   FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
                               REMEDY CORPORATION
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                     SEPTEMBER 30,     DECEMBER 31,
                                                                         1996              1995
                                                                     --------------    -----------
                                                                      (UNAUDITED)
<S>                                                                  <C>               <C>
                                              ASSETS
Current assets:
  Cash and cash equivalents........................................     $42,049          $ 31,452
  Short-term investments...........................................      33,687            24,734
  Accounts receivable, net of allowance for doubtful accounts of
     $945 and $541 respectively....................................      14,563            11,590
  Income tax receivable............................................       1,529             2,669
  Prepaid expenses and other current assets........................       1,150               561
  Deferred tax assets..............................................       1,251             1,039
                                                                        -------           -------
     Total current assets..........................................      94,229            72,045
Property and equipment, net........................................       4,982             2,688
                                                                        -------           -------
                                                                        $99,211          $ 74,733
                                                                        =======           =======
                               LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable.................................................     $   866          $  1,168
  Accrued compensation and related liabilities.....................       4,205             3,550
  Other accrued liabilities........................................       4,753             1,734
  Deferred revenue.................................................       7,215             4,732
  Current portion of obligations under capital leases..............         226                94
                                                                        -------           -------
     Total current liabilities.....................................      17,265            11,278
Noncurrent portion of obligations under capital leases.............         573               324
Stockholders' equity:
  Common stock and additional paid-in capital......................      60,010            51,942
  Notes receivable from stockholders...............................         (60)              (60)
  Deferred compensation............................................        (300)             (434)
  Retained earnings................................................      21,723            11,683
                                                                        -------           -------
     Total stockholders' equity....................................      81,373            63,131
                                                                        -------           -------
                                                                        $99,211          $ 74,733
                                                                        =======           =======
</TABLE>
 
                            See accompanying notes.
 
                                        3
<PAGE>   4
 
                               REMEDY CORPORATION
 
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                              THREE MONTHS
                                                             ENDED SEPTEMBER    NINE MONTHS ENDED
                                                                   30,            SEPTEMBER 30,
                                                            -----------------   -----------------
                                                             1996      1995      1996      1995
                                                            -------   -------   -------   -------
<S>                                                         <C>       <C>       <C>       <C>
Revenue:
  Product.................................................  $15,729   $ 7,630   $37,661   $18,044
  Maintenance and service.................................    5,284     2,588    13,365     6,942
                                                            --------  --------  --------  -------
     Total revenue........................................   21,013    10,218    51,026    24,986
Costs and expenses:
  Cost of product revenue.................................      666       606     1,868     1,374
  Cost of maintenance and service revenue.................    2,582     1,670     6,673     3,944
  Research and development................................    3,491     1,853     8,983     4,773
  Sales and marketing.....................................    6,250     2,731    14,992     6,714
  General and administrative..............................    1,802       771     4,623     2,176
                                                            --------  --------  --------   ------
     Total costs and expenses.............................   14,791     7,631    37,139    18,981
Income from operations....................................    6,222     2,587    13,887     6,005
Interest income, net......................................      642       463     1,800       914
                                                            --------  --------  --------
Income before provision for income taxes..................    6,864     3,050    15,687     6,919
Provision for income taxes................................    2,471       966     5,647     2,376
                                                            --------  --------  --------
Net income................................................  $ 4,393   $ 2,084   $10,040   $ 4,543
                                                            ========  ========  ========
Net income per common and common equivalent share(1)......  $  0.15   $  0.07   $  0.34   $  0.17
                                                            ========  ========  ========
Shares used in computing per share amounts(1).............   29,842    28,932    29,854    27,134
                                                            ========  ========  ========
</TABLE>
 
---------------
(1) All periods reflect a two-for-one stock dividend effected on October 25,
    1996. See note (2) to the condensed consolidated financial statements.
 
                               See accompanying notes.
 
                                        4
<PAGE>   5
 
                               REMEDY CORPORATION
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                                                                             SEPTEMBER 30,
                                                                         ---------------------
                                                                           1996         1995
                                                                         --------     --------
<S>                                                                      <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................  $ 10,040     $  4,543
  Adjustments to reconcile net income to net cash provided by operating
     activities:
     Depreciation and amortization.....................................     1,226          705
     Amortization of deferred compensation.............................       134          131
     Changes in assets and liabilities:
       Accounts receivable.............................................    (2,973)      (1,047)
       Prepaid expenses and other current assets.......................      (589)        (301)
       Deferred tax asset..............................................      (212)         (58)
       Accounts payable................................................      (302)        (427)
       Accrued compensation and related liabilities....................       655          288
       Income taxes....................................................     7,307       (1,720)
       Other accrued liabilities.......................................     3,019          960
       Deferred revenue................................................     2,483        1,035
                                                                         --------     --------
          Net cash provided by operating activities....................    20,788        4,109
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments....................................   (73,166)     (34,779)
Maturities of short-term investments...................................    64,213        4,250
Capital expenditures...................................................    (3,048)      (1,219)
                                                                         --------     --------
          Net cash used in investing activities........................   (12,001)     (31,748)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments under capital lease obligations.....................       (91)         (41)
Proceeds from issuance of common stock.................................     1,901       45,443
                                                                         --------     --------
          Net cash provided by financing activities....................     1,810       45,402
                                                                         --------     --------
Net increase in cash and cash equivalents..............................    10,597       17,763
Cash and cash equivalents at beginning of period.......................    31,452        3,007
                                                                         --------     --------
Cash and cash equivalents at end of period.............................  $ 42,049     $ 20,770
                                                                         ========     ========
</TABLE>
 
                            See accompanying notes.
 
                                        5
<PAGE>   6
 
                               REMEDY CORPORATION
 
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)
 
1. BASIS OF PRESENTATION
 
     The condensed consolidated balance sheet as of September 30, 1996, and the
condensed consolidated statements of income for the three months and nine months
ended September 30, 1996 and 1995, and the condensed consolidated statements of
cash flows for the nine months ended September 30, 1996 and 1995, have been
prepared by the Company, without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
September 30, 1996 and for all periods presented have been made. The condensed
consolidated balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
 
     Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the Securities and Exchange
Commission's rules and regulations. These condensed financial statements should
be read in conjunction with the audited financial statements and notes thereto
included in the Company's 1995 Annual Report and Report on Form 10-K filed with
the Securities and Exchange Commission in March 1996.
 
     The results of operations for the three and nine months ended September 30,
1996 are not necessarily indicative of results that may be expected for any
other interim period or for the full fiscal year.
 
2. STOCK SPLIT
 
     The Company authorized a three-for-two stock split in the form of a stock
dividend, effective March 25, 1996. Prior period amounts have been restated to
reflect the effect of the stock split.
 
     The Company authorized a two-for-one stock split in the form of a stock
dividend, effective October 25, 1996. Prior period amounts have been restated to
reflect the effect of the stock split.
 
3. PER SHARE INFORMATION
 
     Net income per share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the period.
Dilutive common equivalent shares consist of shares issuable upon the exercise
of stock options, using the treasury stock method.
 
                                        6
<PAGE>   7
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
     Remedy Corporation (the "Company") develops, markets and supports highly
adaptable, client/server applications software for support and business
processes. The Company was founded in November 1990 and made its initial product
shipments in December 1991. The Company has had eighteen consecutive profitable
quarters, beginning with the quarter ended June 30, 1992. There can be no
assurance, however, that the Company will remain profitable on a quarterly or
annual basis in the future.
 
     This Report on Form 10-Q contains forward-looking statements that involve
risks and uncertainties. The Company's actual results may differ materially from
the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in the
"Risk Factors" section of the Company's 1995 Annual Report on Form 10-K filed
with the Securities and Exchange Commission in March 1996.
 
                             RESULTS OF OPERATIONS
 
     The Company's revenue and operating results can vary significantly from
quarter to quarter. License revenue is difficult to forecast because the
Company's sales depend on factors such as the size and timing of transactions,
changes in customers' budget constraints and general economic conditions. The
license revenue in any quarter is predominantly dependent upon orders booked and
shipped in that quarter. The recognition of maintenance and support revenue
ratably over the term of the contract and the relative seasonality and lag of
consulting and training revenue contribute to the variability of service
revenue. However, a high percentage of the Company's operating expenses are
fixed and are based on anticipated revenue levels. Consequently, a small
variation in the timing of the recognition of revenue can result in significant
variations in operating results from quarter to quarter.
 
     The following table sets forth, as a percentage of total revenue, statement
of income data for the periods indicated.
 
<TABLE>
<CAPTION>
                                                                   THREE MONTHS       NINE MONTHS
                                                                       ENDED             ENDED
                                                                   SEPTEMBER 30,     SEPTEMBER 30,
                                                                   -------------     -------------
                                                                   1996     1995     1996     1995
                                                                   ----     ----     ----     ----
<S>                                                                <C>      <C>      <C>      <C>
Revenue:
  Product........................................................   75 %     75 %     74 %     72 %
  Maintenance and service........................................   25       25       26       28
                                                                   ----     ----     ----     ----
     Total revenue...............................................  100      100      100      100
Costs and expenses:
  Cost of product................................................    3        6        4        5
  Cost of maintenance and service revenue........................   12       16       13       16
  Research and development.......................................   17       18       18       19
  Sales and marketing............................................   30       27       29       27
  General and administrative.....................................    8        8        9        9
                                                                   ----     ----     ----     ----
     Total costs and expenses....................................   70       75       73       76
                                                                   ----     ----     ----     ----
Income from operations...........................................   30       25       27       24
Interest income, net.............................................    3        5        4        4
                                                                   ----     ----     ----     ----
Income before provision for income taxes.........................   33       30       31       28
Provision for income taxes.......................................   12       10       11       10
                                                                   ----     ----     ----     ----
Net income.......................................................   21 %     20 %     20 %     18 %
                                                                   ====     ====     ====     ====
</TABLE>
 
                                        7
<PAGE>   8
 
REVENUE
 
     The Company's revenue is derived from two sources: product licenses and
fees for services. License revenue is derived from product licensing fees, while
service revenue is derived from maintenance support services, training and
consulting. The Company recognizes revenue in accordance with the Statement of
Position on Software Revenue Recognition ("SOP 91-1"), issued by the American
Institute of Certified Public Accountants. Product revenue is recognized upon
delivery only if no significant vendor obligations remain and collection of the
resulting receivable is deemed probable. Delivery is defined in certain
contracts as delivery of the product master or first copy for noncancelable
product licensing arrangements under which the customer has certain software
reproduction rights. Service revenue from customer maintenance fees for ongoing
customer support and product updates is recognized ratably over the term of the
maintenance contract, which is typically twelve months. Service revenue from
training and consulting is recognized when the services are performed. Fees for
such services are charged separately from the Company's software products. The
Company's license agreements generally do not provide a right of return.
However, reserves are maintained for return allowances and potential credit
losses, which have not been significant to date.
 
     The Company distributes the majority of its products through its
headquarters-based direct sales force that is complemented by indirect sales
channels, including value-added resellers ("VARs"), system integrators and
original equipment manufacturers ("OEMs"). Sales derived through indirect
channels accounted for approximately 41% and 43% of the Company's total billings
for the quarter ended September 30, 1996 and nine months ended September 30,
1996, respectively. The Company expects that sales derived through indirect
channels, which have lower average selling prices and gross margins than direct
sales, will increase as a percentage of total revenue. As a result, the Company
expects that its gross margins on product sales may decline if sales through
indirect channels increase.
 
     Product Revenue.  The Company currently derives substantially all of its
product revenue from licenses of the Action Request System and related products.
Revenue from product licenses increased by 107% from $7.6 million for the
quarter ended September 30, 1995 to $15.7 million in the comparable 1996
quarter. Product license fees increased 109% from $18.0 million for the nine
months ended September 30, 1995 to $37.7 million in the comparable 1996 period.
The increase in license fees was primarily attributable to increased market
acceptance, both domestic and international, of the Company's Action Request
System, as well as the introduction of several related products. International
sales accounted for approximately 26% and 34% of the Company's total revenue for
the quarters ended September 30, 1995 and 1996, respectively. International
sales accounted for approximately 27% and 36% of the Company's total revenue for
the nine months ended September 30, 1995 and 1996, respectively. Substantially
all of the period-to-period growth in product revenue was due to higher unit
sales volumes. The prices of the Company's products have remained relatively
constant from 1993 through September 30, 1996. Broad market acceptance of the
Company's products is critical to the Company's future success. The Company
expects that both market penetration and competition will increase, and, as a
result, that prior growth rates of the Company's product revenue may not be
sustainable in the future.
 
     Maintenance and Service Revenue.  Revenue from services increased by 104%
from $2.6 million for the quarter ended September 30, 1995 to $5.3 million in
the comparable 1996 quarter. Service revenue increased 94% from $6.9 million for
the nine months ended September 30, 1995 to $13.4 million in the comparable 1996
period. This growth is primarily due to increased licensing activity, which has
resulted in increases in revenue from services related to maintenance and
support, training and consulting. Renewal of maintenance contracts after the
initial one-year term also contributes to the growth rate. The Company expects
that as market penetration and competition increase, prior growth rates of the
Company's installed base and, consequently, in the Company's service revenue,
may not be sustainable in the future.
 
COSTS AND EXPENSES
 
     Cost of Product Revenue.  Cost of product revenue consists primarily of the
costs of royalties paid to third-party vendors, product media and duplication,
manuals, packaging materials, personnel-related costs and shipping expenses.
Cost of product revenue increased from $606,000 for the quarter ended September
30,
 
                                        8
<PAGE>   9
 
1995 to $666,000 for the comparable 1996 quarter, representing 8% and 4% of the
related product revenue in such quarters, respectively. Cost of product revenue
increased from $1,374,000 for the first nine months ended September 30, 1995 to
$1,868,000 in the comparable 1996 period, representing 8% and 5% of related
product revenue in such periods, respectively. The increases in the dollar
amounts of cost of product revenue were primarily due to the higher volumes of
product shipped in the respective 1996 periods. The decreases in cost as a
percentage of the related product revenue from September 30, 1995 to the
comparable 1996 period were primarily due to economies of scale realized as a
result of shipping greater quantities of product in the quarter ended September
30, 1996. Because all development costs incurred in the research and development
of software products and enhancements to existing software products have been
expensed as incurred, cost of product revenue includes no amortization of
capitalized software development costs. Cost as a percentage of product revenue
may fluctuate from quarter to quarter due to seasonality of revenue, offset by
cost of sales containing some fixed costs such as personnel costs and royalties.
 
     Cost of Maintenance and Service Revenue.  Cost of maintenance and service
revenue consists primarily of personnel-related costs incurred in providing
telephone support, consulting and training to customers. Cost of maintenance and
service revenue increased from $1.7 million for the quarter ended September 30,
1995 to $2.6 million in the comparable 1996 quarter, representing 65% and 49% of
the related maintenance and service revenue for the respective quarters. Cost of
maintenance and service revenue increased from $3.9 million for the nine months
ended September 30, 1995 to $6.7 million in the comparable 1996 period,
representing 57% and 50%, respectively, of the related maintenance and service
revenue in such periods. Cost of maintenance and service revenue increased
significantly in absolute dollars from the quarter ended September 30, 1995 to
the quarter ended September 30, 1996 primarily due to increased
personnel-related costs as the Company continued to build its customer support
and training organizations. In addition, such costs increased from quarter to
quarter due to the Company's increased partnering with third-party service
providers to deliver consulting services to its customers. The Company believes
that cost of maintenance and service revenue will increase in dollar amounts and
may increase as a percentage of total revenue in the future.
 
     Research and Development.  Research and development expenses were $1.9
million and $3.5 million, or 18% and 17% of total revenue, for the quarters
ended September 30, 1995 and September 30, 1996, respectively. Research and
development expenses increased from $4.8 million for the nine months ended
September 30, 1995 to $9.0 million in the comparable 1996 period, or 19% and 18%
of total revenue, respectively. The increases in dollar amounts in research and
development expenses were primarily attributable to increased staffing and
associated support for software engineers required to expand and enhance the
Company's product line. The Company believes that research and development
expenses will continue to increase in dollar amounts and may increase as a
percentage of total revenue in the future.
 
     Sales and Marketing.  Sales and marketing expenses consist primarily of
salaries, commissions and bonuses of sales and marketing personnel, as well as
promotional expenses. Sales and marketing expenses were $2.7 million and $6.3
million, or 27% and 30% of total revenue, for the quarters ended September 30,
1995 and September 30, 1996, respectively. Sales and marketing expenses
increased from $6.7 million for the nine months ended September 30, 1995 to
$15.0 million in the comparable 1996 period, or 27% and 29% of total revenue,
respectively. The increases in sales and marketing expenses in both absolute
dollar amounts and in percentages were primarily due to the expansion of sales
and marketing resources and increased marketing activities, including trade
shows and promotional activities. The Company believes that such expenses will
increase in dollar amounts and may increase as a percentage of total revenue in
the future as the Company expands its sales and marketing staff.
 
     General and Administrative.  General and administrative expenses were
$771,000 and $1.8 million, or 8% of total revenue, for both quarters ended
September 30, 1995 and September 30, 1996. General and administrative expenses
increased from $2.2 million for the nine months ended September 30, 1995 to $4.6
million for the comparable 1996 period, or 9% of total revenue. The increases in
dollar amounts were primarily the result of increased staffing and associated
expenses necessary to manage and support the Company's growth. The Company
believes that its general and administrative expenses will increase in dollar
amounts and may increase as a percentage of total revenue in the future as the
Company expands its staffing.
 
                                        9
<PAGE>   10
 
INTEREST INCOME, NET
 
     Interest Income, net.  Interest income, net was $463,000 and $642,000 for
the quarters ended September 30, 1995 and September 30, 1996, respectively.
Interest income, net increased from $914,000 for the nine months ended September
30, 1995 to $1.8 million for the comparable 1996 period. The increase in
interest income, net for the quarter ended September 30, 1996 is primarily due
to the investment of proceeds from the Company's March 1995 initial public
offering and investment of cash provided by operating activities.
 
PROVISION FOR INCOME TAXES
 
     The Company had recorded $1.3 million in net deferred tax assets at
September 30, 1996. No valuation allowance has been provided on this amount
based on management's assessment that current levels of taxable income in future
years will be sufficient to realize the net deferred tax assets. The effective
tax rate of 36% for the quarter ended September 30, 1996 differs from the
federal statutory rate primarily due to state income taxes, offset by tax-exempt
interest income.
 
                        LIQUIDITY AND CAPITAL RESOURCES
 
     During the nine months ended September 30, 1995 and September 30, 1996, the
Company's cash provided by operating activities was $4.1 million and $20.8
million, respectively. The Company's net cash provided by operations for the
nine months ended September 30, 1996 was primarily attributable to the net
income generated in the nine-month period.
 
     During the nine months ended September 30, 1995 and September 30, 1996, the
Company's investing activities have consisted of purchases of short-term
investments and property and equipment. Purchases of short-term investments
exceeded maturities by $9.0 million for the nine months ended September 30,
1996, primarily due to investment of cash provided by operating activities
during the period. To date, the Company has not invested in derivative
securities or any other financial instruments that involve a high level of
complexity or risk. Management expects that, in the future, cash in excess of
current requirements will continue to be invested in investment grade,
interest-bearing securities.
 
     Cash used to purchase property and equipment was $1.2 million and $3.0
million during the nine months ended September 30, 1995 and September 30, 1996,
respectively, primarily for computer workstations and file servers for the
Company's growing employee base. The Company expects that the rate of purchases
of property and equipment will remain constant or increase as the Company's
employee base grows. The Company's principal commitments consist primarily of
leases on its headquarters facilities and its telephone system.
 
     At September 30, 1996, the Company had $42.0 million in cash and cash
equivalents, $33.7 million in short-term investments and $77.0 million of
working capital. The Company also has available a $10.0 million unsecured bank
line of credit that expires in June 1997. There were no borrowings outstanding
under this line of credit as of September 30,1996.
 
     The Company believes that its current cash and short-term investments
balances, cash available under its line of credit and cash flow from operations
will be sufficient to meet its working capital and capital expenditure
requirements for at least the next 12 months. Although operating activities may
provide cash in certain periods, to the extent the Company experiences growth in
the future, the Company anticipates that its operating and investing activities
may use cash. Consequently, significant future growth may require the Company to
obtain additional equity or debt financing.
 
ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS:
 
     Although the Company has experienced significant percentage growth in
revenue and net income in recent years, the Company does not believe prior
growth rates are sustainable or indicative of future operating results. There
can be no assurance that the Company will remain profitable on a quarterly or
annual basis. In addition, the Company's limited operating history makes the
prediction of future operating results difficult or
 
                                       10
<PAGE>   11
 
impossible. The Company currently derives substantially all of its revenue from
licenses of the Action Request System and related products and services. Broad
market acceptance of the Action Request System is critical to the Company's
future success. As a result, a decline in demand for or failure to achieve broad
market acceptance of the Action Request System as a result of competition,
technological change or otherwise, would have a material adverse effect on the
business, operating results and financial condition of the Company.
 
     The Company intends to continue to hire a significant number of additional
sales personnel in 1996 and beyond, which is required if the Company is to
achieve significant revenue growth in the future. Competition for such personnel
is intense and there can be no assurance that the Company can retain its
existing sales personnel or that it can attract, assimilate or retain additional
highly qualified sales persons in the future. If the Company is unable to hire
such personnel on a timely basis, the Company's business, operating results and
financial condition could be adversely affected.
 
     Due to factors noted above, the Company's future earnings and stock price
may be subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenue or earnings from levels anticipated by securities analysts
could have an immediate and significant adverse effect on the trading price of
the Company's common stock. The Company typically receives and fulfills a
majority of its orders within the quarter, with a substantial portion occurring
in the third month of the fiscal quarter. As a result, the Company may not learn
of revenue shortfalls until late in a fiscal quarter, which could result in an
even more immediate and adverse effect on the trading price of the Company's
common stock.
 
     The Company's business entails a variety of additional risks, which are set
forth in the "Risk Factors" section of the Company's 1995 Report on Form 10-K
filed with the Securities and Exchange Commission.
 
                                       11
<PAGE>   12
 
PART II   OTHER INFORMATION
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
     (a) List of Exhibits
 
<TABLE>
<CAPTION>
NUMBER                           EXHIBIT DESCRIPTION
------    -----------------------------------------------------------------
<S>       <C>
11.1      Computation of Net Income per Common and Common Equivalent Share
27        Financial Data Schedule (Filed Electronically)
</TABLE>
 
     (b) Reports on Form 8-K: None
 
                                       12
<PAGE>   13
 
                                   SIGNATURE
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
Dated: November 11, 1996
 
                                          REMEDY CORPORATION
 
                                          /s/ GEORGE A. DE URIOSTE
 
                                          --------------------------------------
                                          George A. de Urioste
                                          Vice President, Finance and Chief
                                          Financial Officer
                                          (Duly Authorized Officer and Principal
                                          Financial and
                                          Accounting Officer)
 
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<PAGE>   14
                               INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION
------                       -------------------
<S>       <C>
11.1      Computation of Net Income per Common and Common Equivalent Share
27        Financial Data Schedule (Filed Electronically)
</TABLE>
 
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