SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10Q

(Mark One)
__X__            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended MARCH 31, 1999

                                       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: 000-25590


                            DATASTREAM SYSTEMS, INC.

           Incorporated pursuant to the laws of the State of Delaware
                   -------------------------------------------

       Internal Revenue Service -- Employer Identification No. 57-0813674

                    50 DATASTREAM PLAZA, GREENVILLE, SC 29605

                                 (864) 422-5001
                   -------------------------------------------

                                 NOT APPLICABLE
           (Former Name, Former Address, if changed since last report)


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 ___

APPLICABLE  ONLY TO  CORPORATE  ISSUERS:  Indicate  the  number  of  shares
outstanding  of the  issuer's  common  stock as of the  latest  practicable
date: MARCH 31, 1998    19,216,659 shares, $0.01 par value.

<PAGE>

                            Datastream Systems, Inc.

                                    FORM 10-Q

                          Quarter ended March 31, 1999

                                      Index

                                    Page No.

Part I.    Consolidated Financial Information

           "Safe Harbor" Statement under the Private Securities
               Litigation Reform Act of 1995                          3

Item 1.    Consolidated Financial Statements (unaudited)

           Consolidated Balance Sheets-
               December 31, 1998 and March 31, 1999
                Assets                                                4
                Liabilities and Stockholders' Equity                  5

           Consolidated Income Statements -
                for the Three Months ended March 31,1998 and 1999     6

           Consolidated Statement of Changes in Stockholders'
                Equity and Comprehensive Income -
                for the Three Months ended March 31, 1999             7

           Consolidated Statements of Cash Flows -
                for the Three Months ended March 31, 1998 and 1999    8

           Notes to the Consolidated Financial Statements             9

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations              11

Item 3.    Quantitative and Qualitative Disclosures About             14
           Market Risk


Part II.   Other Information                                          15


Signature                                                             16
<PAGE>
PART I.     CONSOLIDATED FINANCIAL INFORMATION


                   "SAFE HARBOR" STATEMENT UNDER THE PRIVATE
                    SECURITIES LITIGATION REFORM ACT OF 1995

From time to time,  Datastream  Systems,  Inc.  ("Datastream"  or the "Company")
makes  oral  and  written   statements  that  may  constitute   "forward-looking
statements"  (rather than historical facts) as defined in the Private Securities
Litigation  Reform  Act  of  1995  (the  "Act")  or by the  SEC  in  its  rules,
regulations  and releases.  The Company  desires to take  advantage of the "safe
harbor" provisions in the Act for  forward-looking  statements made from time to
time, including, but not limited to, the forward-looking statements made in this
Quarterly  Report on Form 10-Q (the  "Report"),  as well as those  made in other
filings with the SEC.  Forward-looking  statements  contained in this Report are
based on management's  current plans and  expectations  and are subject to risks
and  uncertainties  that could cause actual  results to differ  materially  from
those described in the  forward-looking  statements.  In the preparation of this
Report, where such forward-looking  statements appear, the Company has sought to
accompany such  statements  with meaningful  cautionary  statements  identifying
important  factors that could cause  actual  results to differ  materially  from
those described in the forward-looking statements. Such factors include, but are
not  limited  to:  increasing  competition  in the  markets in which the Company
competes; the ability of the Company to enhance its current products and develop
new  products  that  address   technological  and  market  developments;   risks
associated with increasing  international sales, including,  but not limited to,
exposure  to foreign  exchange  fluctuations  and the  ability of the Company to
successfully  compete in foreign markets;  fluctuations in quarterly results due
to  seasonality  and longer  sales cycles in certain  regions  where the Company
markets its  products,  especially in  connection  with the  Company's  high-end
products;  the Company's ability to complete the implementation of its Year 2000
program on a timely basis and the ability of the Company's  suppliers,  vendors,
customers  and other third  parties on which the Company  relies to be Year 2000
ready;  and  changes  in  economic  conditions  generally,   both  domestic  and
international.  The preceding list of risks and uncertainties,  however,  is not
intended  to be  exhaustive,  and  should  be read  in  conjunction  with  other
cautionary  statements  made herein and in the Company's  other  publicly  filed
reports,  including,  but not  limited to, the "Risk  Factors"  set forth in the
Company's Form 10-K for the fiscal year ended December 31, 1998.

The Company does not have,  and  expressly  disclaims,  any  obligation  to
release  publicly any updates or any changes in the Company's  expectations
or any  changes  in  events,  conditions  or  circumstances  on  which  any
forward-looking statement is based.
<PAGE>
ITEM 1.  Consolidated Financial Statements

                    Datastream Systems, Inc. and Subsidiaries

                           Consolidated Balance Sheets

                                     Assets


                                                   December 31,       March 31,
                                                       1998             1999
                                                       ----             ----
                                                                   (unaudited)
Current assets:
   Cash and cash equivalents                         $6,739,209      $9,694,211
   Accounts receivable, net of allowance
      for doubtful accounts of $3,073,837
      and $ 3,482,977, respectively                  32,440,963      33,296,327
   Unbilled receivables                               2,761,922       2,899,014
   Investments                                        2,574,898             160
   Prepaid expenses                                   1,633,227       1,623,003
   Inventories                                          274,502         152,653
   Deferred income taxes                              2,322,600       2,322,600
   Other assets                                       1,662,716       1,662,605
                                                      ---------       ---------
        Total current assets                         50,410,037      51,650,573

Investments                                           2,034,744       6,344,744
Property and equipment, net                          12,886,791      12,647,699
Goodwill, net                                        18,323,801      17,559,686
Capitalized software development costs,
   net of accumulated amortization of
   $3,180,813 and $3,764,204, respectively            3,134,779       3,518,395
                                                      ---------       ---------
        Total assets                                $86,790,152     $91,721,097
                                                    ===========     ===========

See accompanying notes to consolidated financial statements.
<PAGE>




                    Datastream Systems, Inc. and Subsidiaries

                     Consolidated Balance Sheets (Continued)

                      Liabilities and Stockholders' Equity


                                                   December 31,       March 31,
                                                       1998             1999
                                                       ----             ----
                                                                   (unaudited)
Current liabilities:
   Accounts payable                                  $3,143,893      $3,769,529
   Other accrued liabilities                          9,768,179       8,844,917
   Income taxes payable                               2,762,451       4,491,898
   Current portion of long-term debt                    650,884         591,163
   Unearned revenue                                   8,292,829       9,780,062
                                                      ---------       ---------
        Total current liabilities                    24,618,236      27,477,569
Long-term debt, less current portion                    297,092         284,493
Deferred income taxes                                 1,268,400       1,268,400
                                                      ---------       ---------
        Total liabilities                            26,183,728      29,030,462
                                                     ----------      ----------

Stockholders' equity:
   Preferred stock, $1 par value,
     1,000,000 shares authorized;
     none issued                                              -               -
   Common stock, $.01 par value,
     40,000,000 shares authorized;
     19,183,305 shares issued and outstanding
           at December 31, 1998,
     19,216,659 shares issued and outstanding
           at March 31, 1999                            191,833         192,167
   Additional paid-in capital                        66,138,405      66,447,050
   Accumulated deficit                               (6,675,096)     (3,028,460)
   Other accumulated comprehensive income (loss)        951,282          (1,372)
   Treasury stock, 0 shares at December 31, 1998 and
      100,000 shares at March 31, 1999, at cost               -        (918,750)
                                                     ----------      ----------
        Total stockholders' equity                   60,606,424      62,690,635
                                                     ----------      ----------
        Total liabilities and stockholders' equity  $86,790,152     $91,721,097
                                                    ===========     ===========

See accompanying notes to consolidated financial statements.
<PAGE>

                    Datastream Systems, Inc. and Subsidiaries

                        Consolidated Statements of Income
                                   (unaudited)
                   Three months ended March 31, 1998 and 1999

                                                     March 31,        March 31,
                                                       1998             1999
                                                       ----             ----

Revenues:
   Product                                          $ 7,365,099    $ 10,422,468
   Professional service                               8,955,524      13,173,938
   Support                                            3,808,038       5,202,315
                                                      ---------       ---------
      Total revenues                                 20,128,661      28,798,721

Cost of revenues:
   Cost of product revenues                             776,139       1,118,477
   Cost of professional service revenues              4,144,932       6,689,912
   Cost of support revenues                             929,829       1,317,820
   Write-off of capitalized software                    597,944               -
                                                      ---------       ---------
      Total cost of revenues                          6,448,844       9,126,209
                                                      ---------       ---------
      Gross profit                                   13,679,817      19,672,512

Operating expenses:
   Sales and marketing                                5,549,360       7,655,576
   Product development                                1,521,755       2,897,020
   General and administrative                         2,029,787       3,407,420
   Write-off of in-process research and development   2,057,008               -
                                                      ---------       ---------
      Total operating expenses                       11,157,910      13,960,016
                                                     ----------      ----------
      Operating income                                2,521,907       5,712,496

Other income (expense):
   Interest income                                      205,790         128,600
   Interest expense                                     (28,266)        (52,370)
   Other                                                 75,988          45,823
                                                         ------          ------
      Net other income                                  253,512         122,053

      Income before income taxes                      2,775,419       5,834,549

Income taxes                                          2,064,156       2,187,913
                                                      ---------       ---------
Net income                                          $   711,263     $ 3,646,636
                                                    ===========     ===========

   Basic net income per share                       $       .04     $       .19
                                                    -----------     -----------
   Diluted net income per share                     $       .04     $       .18
                                                    -----------     -----------

   Basic weighted average number of common and
      common equivalent shares outstanding           18,640,122      19,203,241
   Diluted weighted average number of common and
      common equivalent shares outstanding           20,246,844      19,837,256

See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>

                   Datastream Systems, Inc. and Subsidiaries

     Consolidated Statement of Stockholders' Equity and Comprehensive Income
                                   (unaudited)

                    For the three months ended March 31, 1999

<CAPTION>

                                                                           Other
                                             Additional   Accumulated   Accumulated                  Total
                                  Common      Paid-In      Earnings    Comprehensive   Treasury   Stockholders'
                                   Stock      Capital      (Deficit)      Income         Stock       Equity
                                   -----      -------      ---------      ------         -----       ------
<S>                                 <C>         <C>          <C>           <C>            <C>          <C>

Balance at December 31, 1998    $191,833   $66,138,405   $(6,675,096)   $ 951,282      $       -    $60,606,424

Comprehensive income
   Net income                          -             -     3,646,636            -              -      3,646,636
   Foreign currency
     translation adjustment            -             -             -     (952,654)             -       (952,654)
                                                                                                       --------
Total comprehensive income                                                                            2,693,982
                                                                                                      ---------
Exercise of stock options            133       112,395             -            -              -        112,528

Stock issued for Employee
   Stock Purchase Plan               201       196,250             -            -              -        196,451

Acquisition of 100,000 common shares   -             -             -            -       (918,750)      (918,750)


Balance at March 31, 1999       $192,167   $66,447,050   $(3,028,460)   $  (1,372)     $(918,750)   $62,690,635
                                ========   ===========   ===========    =========      =========    ===========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>

                    Datastream Systems, Inc. and Subsidiaries

                            Statements of Cash Flows
                                   (unaudited)

                   Three months ended March 31, 1998 and 1999

                                                     March 31,        March 31,
                                                       1998             1999
                                                       ----             ----

Cash flows from operating activities:
   Net income                                       $   711,263     $ 3,646,636
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation                                      683,900       1,140,395
      Amortization of capitalized software
          development costs                             195,133         583,391
      Amortization of goodwill                          272,750         764,115
      Other accumulated comprehensive income           (323,882)       (952,648)
      Accretion of investment discount, net             (60,115)           (320)
      (Gain) Loss on disposal of fixed assets                 -         (32,809)
      Provision for doubtful accounts                   282,377         409,140
      Write-off of in-process
          research and development                    2,057,008               -
      Write-off of capitalized software                 597,944               -
      Changes  in  operating assets and liabilities,   
          net  of  effects  of acquisitions:
          Accounts receivable                        (1,837,672)     (1,264,504)
          Unbilled receivable                          (771,969)       (137,092)
          Accrued interest receivable                   (24,194)         10,237
          Prepaid expenses                             (582,338)         10,224
          Inventories                                   112,782         121,849
          Other assets                                 (437,541)        (10,127)
          Accounts payable                              659,629         625,635
          Other accrued liabilities                     694,499        (923,262)
          Income taxes payable                          983,101       1,729,047
          Unearned revenue                            2,284,878       1,487,233
                                                      ---------       ---------
       Net cash provided by (used in)
          operating activities                        5,497,553       7,207,140
                                                      ---------       ---------
Cash flows from investing activities:
   Purchase of investments                             (372,891)     (4,310,000)
   Proceeds from sale and maturities of investments   4,853,860       2,575,058
   Additions to property and equipment               (1,212,368)       (868,098)
   Capitalized software development costs              (806,836)       (967,007)
   Cash paid for acquisition, net of cash acquired   (6,467,189)              -
                                                      ---------       ---------
       Net cash used in investing activities         (4,005,424)     (3,570,047)
                                                      ---------       ---------
Cash flows from financing activities:
   Proceeds from exercise of stock options              473,699         112,528
   Proceeds from issuances of shares under employee
          stock purchase plan                            74,547         196,451
   Cash paid to acquire treasury stock                        -        (918,750)
   Principal payments on long-term debt                  (1,667)        (72,320)
                                                      ---------       ---------
       Net cash provided by (used in)
          financing activities                          546,579        (682,091)
                                                      ---------       ---------
Net increase (decrease) in cash and cash equivalent   2,038,708       2,955,002
Cash and cash equivalents at beginning of perio       2,409,387       6,739,209
                                                      ---------       ---------
Cash and cash equivalents at end of period          $ 4,448,095     $ 9,694,211
                                                    ===========     ===========

See accompanying notes to consolidated financial statements.

<PAGE>


                    Datastream Systems, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements


1)  Summary of Significant Accounting Policies

A. Organization and Basis of Presentation

Datastream  Systems,  Inc. (the "Company" or  "Datastream")  develops,  markets,
sells  and  supports  Microsoft  and  Oracle  based  software  products  for the
industrial  automation  market.  These products serve the desktop,  file server,
client-server and enterprise-wide networking environments. Datastream's software
enables users to schedule preventive  maintenance,  record equipment maintenance
histories, organize and control spare parts inventories,  schedule equipment and
parts inventory purchases and deploy maintenance  personnel.  In addition to its
U.S. operations, the Company has direct sales or distribution offices in Canada,
the United Kingdom, The Netherlands,  France, Germany,  Denmark, Sweden, Norway,
Portugal,   Mexico,  Brazil,  Argentina,   Chile,  Venezuela,   Peru,  Malaysia,
Australia,  Indonesia,  Singapore,  China and South Africa. The company operates
principally in one industry segment.

The company made the following acquisitions during 1998:

On March 31, 1998, the Company acquired Insta Instandhaltung technischer Anlagen
GmbH ("Insta"), a German corporation headquartered in Munich, Germany.

On June 16, 1998, the Company acquired Strategic Information Systems PTE Ltd., a
Singapore corporation ("SIS").

On July 13, 1998, the Company  acquired  certain assets of Datastream  (Pacific)
Pty Ltd., an Australian corporation ("DSTM-PAC").

On  September  2,  1998,  the  Company  acquired   Computec  Sistemas  S.A.,  an
Argentinean  corporation,  and its affiliate  Computec Sistemas Mexicana S.A. de
C.V., a Mexican corporation (together "Computec").


The  interim  financial  information  included  herein  is  unaudited.   Certain
information  and  footnote   disclosures  normally  included  in  the  financial
statements have been condensed or omitted  pursuant to the rules and regulations
of the Securities and Exchange  Commission (SEC),  although the Company believes
that the  disclosures  made are adequate to make the  information  presented not
misleading.   These  consolidated   financial   statements  should  be  read  in
conjunction  with  the  consolidated  financial  statements  and  related  notes
contained in the Company's  Form 10-K for the year ended December 31, 1998 filed
with the SEC on March 31, 1999. Other than as indicated herein,  there have been
no significant  changes from the financial  data published in those reports.  In
the opinion of management,  such unaudited information reflects all adjustments,
consisting only of normal recurring  accruals and other adjustments as disclosed
herein, necessary for a fair presentation of the unaudited information.

Results for interim periods are not necessarily  indicative of results  expected
for the full year.

B.  Accounting Policies

Revenue Recognition

The  Company's  revenue,  which  consists  primarily of fees for product  sales,
professional  services and  support,  is  recognized  in  accordance  with AICPA
Statement of Position 97-2 ("SOP 97-2"), "Software Revenue Recognition". Revenue
earned on software  arrangements  involving  multiple  elements (i.e.,  software
products,  upgrades/enhancements,  postcontract customer support,  installation,
training,  etc.) is allocated to each element  based on the relative fair values
of the  elements.  The fair value of an element  is based on  evidence  which is
specific to the vendor.  The revenue allocated to software  products  (including
specified  upgrades/enhancements)  generally is recognized  upon delivery of the
products.  The revenue  allocated to postcontract  customer support generally is
recognized ratably over the term of the support and revenue allocated to service
elements  (such as training and  installation)  generally is  recognized  as the
services are performed.  If the Company does not have evidence of the fair value
for all  elements  in a  multiple-element  arrangement,  all  revenue  from  the
arrangement  is deferred  until such  evidence  exists or until all elements are
delivered.

The Company  continually  evaluates its obligations  with respect to warranties,
returns and refunds.  Based on historical trends and management's  evaluation of
current conditions,  any potential obligations that are inherent in the accounts
receivable  balance  are  adequately  provided  for through  the  allowance  for
doubtful accounts. The Company may in certain circumstances grant discounts when
a purchase  order is  received.  The  discounts  are  recognized  in the product
revenue at the time of shipment. 
<PAGE> 
Net Income Per Share

Basic net income  (loss) per share is computed by dividing net income  (loss) by
the weighted  average  number of common shares  outstanding.  Diluted net income
(loss) per share is  computed  by  dividing  net income  (loss) by the  weighted
average  number of common  and  potential  common  shares  outstanding.  Diluted
weighted  average  common and potential  common shares include common shares and
stock options using the treasury stock method.  The  reconciliation of basic and
diluted income per share is as follows:

                                                           Per Share
                                        Income     Shares   Amount
    March 31, 1999:
        Basic income per share               $ 3,646,636   19,203,241     .19
        Effect of dilutive securities:                                    ===
           Stock options                               -      634,015
                                             -----------   ----------
        Diluted income per share             $ 3,646,636   19,837,256     .18
                                             ===========   ==========     ===

      March 31, 1998:
        Basic income per share               $   711,263   18,640,122     .04
                                                                          ===
        Effect of dilutive securities:
           Stock options                               -    1,606,722
                                             -----------   ----------
        Diluted income per share             $   711,263   20,246,844     .04
                                             ===========   ==========     ===

C. Restructuring Charges

In 1998, the Company  determined that it was necessary to  aggressively  migrate
its  current and future  products to a new  web-based  technology  platform  and
developed  a plan to  restructure  certain  of its  operations  in  response  to
increased  competition and rapidly changing  technology.  The restructuring plan
required  the  discontinuance  of  certain  internally  developed  and  acquired
products  and  the  reorganization  of the  Company's  product  development  and
distribution structures domestically and internationally to improve efficiencies
and customer service and eliminate redundancy. As a result, the Company recorded
a  restructuring  charge at December  31,  1998 of  $3,977,000  and  established
certain reserves for the costs.

As the Company  implemented its restructuring plan during Q1 1999, it determined
that  certain  of the  estimates  used at the  time the  restructuring  plan was
prepared  had changed.  Due to natural  attrition,  restructuring  costs for the
involuntary  terminations  related to  centralization  of  product  development,
services  and support  functions  were  determined  to be lower than  originally
estimated. The Company also recognized it would face higher costs related to the
credit risks and warranty on outstanding receivables balances in connection with
product obsolescence. The change in the estimated costs are as follows:

                                        Original Charge      Reallocated Charge
Involuntary terminations related to
     centralized functions               $2,421,000           $1,425,000
Provision for credit risk and warranty
     on obsolete products                   900,000            2,000,000
Costs of closing redundant facilities       656,000              552,000
                                            -------              -------
Total                                    $3,977,000           $3,977,000
                                         ==========           ==========

As of March 31, 1999,  approximately $679,000 of the restructuring accruals were
utilized as follows:  $120,000 for  severance  and related  costs,  $237,000 for
costs of closing redundant  facilities and $322,000 for provisions for increased
credit risks.

D.  Datastream Systems, Inc. Argentinean Stock Option Plan

On March 12, 1999, the Company's board of directors authorized the establishment
of the Datastream  Systems,  inc.  Argentinean Stock option Plan (the "Argentina
Plan") and authorized  and reserved for issuance  125,000 shares of common stock
for grants of stock options  under the  Argentina  Plan for the employees of the
Company's  Argentinean  subsidiary.  Generally,  options granted pursuant to the
Argentina  Plan will  vest  incrementally  over a period of one to three  years,
depending on the terms of the particular option agreement,  and expire ten years
from the date of grant.  Options  are  granted at the fair  market  value of the
underlying shares at the grant date.


E. Recent Accounting Pronouncements

In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments and Hedging Activities"  (Statement No. 133). This standard requires
a public company to recognize all derivatives as either assets or liabilities in
the statement of financial position and measure those instruments at fair value.
The Company is required to adopt this standard in the first quarter of 2000. The
Company has not yet assessed the impact this standard will have on its financial
condition or results of operations at the time of adoption;  however, the impact
will ultimately depend on the amount and type of derivative  instruments held at
the time of adoption, if any. 
<PAGE>

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

     This Report contains certain forward-looking statements with respect to the
Company's  operations,   industry,  financial  condition  and  liquidity.  These
statements   reflect  the  Company's   assessment  of  a  number  of  risks  and
uncertainties.  The Company's  actual results could differ  materially  from the
results anticipated in these  forward-looking  statements as a result of certain
factors set forth in this Report.  An additional  statement made pursuant to the
Private Securities  Litigation Reform Act of 1995 and summarizing certain of the
principal risks and uncertainties inherent in the Company's business is included
in Part I of this Report under the caption  "'Safe Harbor'  Statement  Under the
Private  Securities  Litigation Reform Act of 1995".  Readers of this Report are
encouraged to read such statement carefully.

Overview

     The  Company  offers  a  complete  family  of   "computerized   maintenance
management  systems" ("CMMS") and "enterprise asset management"  ("EAM") systems
to the  maintenance,  repair and operations  ("MRO")  industry.  Generally these
products  consists  of 4 major  categories  based  on price  and  functionality.
MaintainIt/MaintainIt Pro are off-the-shelf,  entry-level solutions for small to
medium businesses.  MP2 Professional is a full-featured  integrated  maintenance
system for small to mid-size companies.  MP2 Enterprise combines the benefits of
PC servers and PC  networks  with a Windows  graphical  user  interface  and SQL
relational  database.  MP5 (formally R5 CAMMS) is a high-end  client-server  EAM
product.   Datastream  supports  its  software  products  through   professional
services, including installation,  consulting,  integration,  custom programming
and  training.  On-going  technical  support  services are supplied  pursuant to
renewable annual technical support contracts.

Results of Operations

     Total Revenues.  The Company reported higher revenues for the first quarter
of 1999.  Total  revenues  increased 43% to  $28,798,721 in the first quarter of
1999  from  $20,128,661  in the  first  quarter  of  1998  due to the  continued
acceptance of the Company's products in the industrial automation market and the
expansion of the Company's  sales,  professional  service and technical  support
service organizations.  The first quarter of 1999 includes $3,246,029 of revenue
from the entities of Insta,  SIS,  DSTM-PAC and  Computec,  which were  acquired
during 1998.

     Product  revenues  increased 42% to $10,422,468  (36% of total revenues) in
the first quarter of 1999 from  $7,365,099  (37% of total revenues) in the first
quarter of 1998, as a result of the growth in product sales,  including MP5, MP2
Enterprise and MP2 Professional - Access, and the growth in international sales.

     Professional  service  revenues  increased 47% to $13,173,938 (46% of total
revenues) in the first quarter of 1999 from  $8,955,524  (45% of total revenues)
in the first  quarter  of 1998.  The  increase  resulted  from the  addition  of
professional  service personnel to service expansion of the Company's  installed
base of systems.

     Technical  support  revenues for the first  quarter 1999  increased  37% to
$5,202,315  (18% of total  revenues) from  $3,808,038 (19% of total revenues) in
the first  quarter of 1998,  primarily  due to the  expansion  of the  Company's
installed base of systems.

     Cost of Revenues.  Cost of revenues  increased  42% to  $9,126,209  (32% of
total  revenues) in the first quarter of 1999, as compared to $6,448,844 (32% of
total  revenues)  in the  comparable  quarter of 1998.  The  increase in cost of
revenues is  attributed  to  increased  expenses  incurred  in the  Professional
Services and Support  Departments  related to salaries  and customer  reimbursed
travel and increased amortization of capitalized software.

     Cost of product  revenues was 4% of total  revenues in the first quarter of
1999,  and 4% of total  revenues  during the same  period of 1998.  The  overall
increase in cost of product  revenues is  attributed  to increased  amortization
expense for capitalized software.

     Cost of professional  service revenues was 23% of total revenues during the
first quarter of 1999, and 21% of total revenues during the same period in 1998.
The  increase  as a  percentage  of total  revenues  was due to higher  costs of
providing  services in the companies  acquired during 1998 and costs incurred in
implementing international organizational changes.

     Cost of technical  support service revenues was 5% of total revenues during
the first  quarter of 1999 and 5% of total  revenues  during the same  period in
1998.

     Cost of  revenues  for  the  first  quarter  of 1998  includes  a  $597,944
write-off of capitalized  software (3% of total  revenues) which became obsolete
as a result of the acquisition of Insta.

     Sales and Marketing Expenses. Sales and marketing expenses increased 38% to
$7,655,576  (27% of total  revenues)  during  the  first  quarter  of 1998  from
$5,549,360 (28% of total revenues) during the first quarter in 1998, as a result
of an increased  number of sales personnel and  commissions  associated with the
increase in sales revenue. 
<PAGE>
     Product  Development  Expenses.   Total  product  development  expenditures
increased 66% to $3,864,027 (13% of total revenues)  during the first quarter of
1999 from $2,328,591 (12% of total revenues) during the same period in 1998. The
capitalized  portion of these amounts were $967,007 and $806,836,  respectively.
Giving effect to amounts capitalized,  product development expense increased 90%
to  $2,897,020  (10% of  total  revenues)  in the  first  quarter  of 1999  from
$1,521,755 (8% of total  revenues)  during the same period in 1998. The increase
in total product  development  expense  resulted from  increasing  the number of
development  personnel to support  continued  development  of MP2 7.0 and e-mro,
foreign language development and other new products. FASB No. 86 "Accounting for
the  Costs of  Computer  Software  to be Sold,  Leased  or  Otherwise  Marketed"
requires software  development costs to be capitalized upon the establishment of
technological  feasibility.   The  establishment  of  technological  feasibility
requires considerable judgment by management with respect to changes in software
and  hardware  technologies.  Due to  changes  in the  development  process  and
increased  complexity  in  the  products,  costs  incurred  after  technological
feasibility  has been  attained  are not  expected to be  significant  in future
quarters and will be expensed as incurred.

     General and Administrative  Expenses.  General and administrative  expenses
increased 68% to $3,407,420 (12% of total revenues)  during the first quarter of
1999 from  $2,029,787  (10% of total  revenues)  in the first  quarter  of 1998,
primarily  due to  increased  amortization  of  goodwill  related  to  the  1998
acquisitions of Insta, SIS,  DSTM-PAC,  Computec and  Computec-Mexico  and costs
incurred implementing international organizational changes.

     Write-off of in-process  research and development  costs.  During the first
quarter of 1998,  the Company  expensed  $2,057,008 of  in-process  research and
development acquired as part of the acquisition of Insta.

     Miscellaneous  Income.  Miscellaneous  income  decreased  to $45,823 in the
first  quarter of 1999 from $75,988 in the first  quarter of 1998.  The decrease
was due to decreased  rental  income from leasing of the  Company's  building in
Greenville,  South Carolina. Beginning in the third quarter of 1998, the Company
no longer leased any of the building to third parties.

     Interest  Income/(Expense).  Interest  income  decreased to $128,600 in the
first quarter of 1999 from  $205,790 in the first quarter of 1998,  due to lower
investment balances realized upon completion of the 1998 acquisitions.  Interest
expense  increased  to $52,370 in the first  quarter of 1999 from $28,266 in the
first quarter of 1998,  due to increase debt balances  acquired  during the 1998
acquisitions.

     Tax Rate. The Company's  effective tax rate was 37.5% for the first quarter
of 1999 as  compared  to 38% before  non-deductible  items  associated  with the
acquisition of Insta for the first quarter of 1998.

     Net Income.  Net income increased 81% to $3,646,635 (13% of total revenues)
in the first quarter of 1999 from  $711,263 (4% of total  revenues) in the first
quarter of 1998.  This  increase  is largely  attributed  to the charges for the
acquisition of Insta on March 31, 1998. Without the acquisition related charges,
net income would have increased 8%.

Liquidity and Capital Resources

     The  Company  has  funded  its  operating  activities  entirely  from  cash
generated  from  operations.  The Company  ended its first  quarter of 1999 with
$9,694,211 in cash and cash equivalents  defined as securities  maturing in less
than 90 days.  The Company  intends to re-invest  the proceeds of maturing  U.S.
Government securities in similar U.S. Government securities.

     On March 19, 1999 the Company  announced  that its board of  directors  had
authorized the repurchase of up to 500,000  shares of  Datastream's  outstanding
common  stock.  The  repurchased  shares  will be  used  for  general  corporate
purposes,  including  grants of employee  stock  options.  At March 31, 1999 the
company had  repurchased  100,000  shares at a cost of $918,750.  The shares are
classified as treasury stock on the balance sheet and are reported at cost.

     The  Company's  principal  commitments  as of  March  31,  1999,  consisted
primarily  of long term debt  assumed  in the  acquisitions,  and there  were no
material  commitments for capital  expenditures.  The Company  believes that its
current cash  balances,  availability  under its line of credit,  cash flow from
operations  and  available for sale  investments  will be sufficient to meet its
working capital and capital expenditure needs for at least the next 12 months.

Year 2000

DATASTREAM  DESIGNATES  ALL STATEMENTS  MADE BY IT IN THIS REPORT  REGARDING ITS
YEAR 2000 EFFORTS AS "YEAR 2000 READINESS DISCLOSURES." SUCH DISCOSURES ARE MADE
PURSUANT TO THE YEAR 2000 INFORMATION AND READINESS DISCLOSURE ACT.

     Many currently  installed  computer systems and software products are coded
to accept only a two-digit format in the date field. These date code fields will
need to accept a four-digit  format to distinguish  21st century dates from 20th
century  dates.  As a  result,  in less  than a year,  computer  systems  and/or
software  used by many  companies  may need to be  upgraded  to comply with such
"Year  2000"  requirements.  To address  the Year 2000  issue,  the  Company has
organized a Year 2000  Committee  with the  responsibility  of  determining  the
Company's  Year  2000  readiness,  as well as the Year 2000  readiness  of third
parties on which the  Company  relies,  including  suppliers  and  vendors.  The
Committee includes the Company's directors of development and corporate systems,
product managers,  and representatives from the Company's  financial,  legal and
technical  support areas. The Committee has focused its efforts on both internal
operating  and  information  systems  ("Internal  Systems")  and  the  Company's
products. 
<PAGE>
     The Committee is responsible for (i) identifying and collecting data on all
Internal  Systems,  (ii)  determining  which  Internal  Systems need  corrective
action,  (iii)  modifying,  upgrading or replacing  those systems and conducting
follow-up  testing,  and  (iv)  establishing  related  contingency  plans  where
necessary.  The Committee has identified all Internal Systems that may have Year
2000 issues,  has  contacted  the  manufacturers  of those  systems to determine
whether  they are Year  2000  ready,  and has  assessed  the cost and  timing of
achieving readiness. Based on information received from substantially all of the
manufacturers,  the  Committee  anticipates  that  corrective  actions  for  the
Company's Internal Systems will be completed and tested by the end of the second
quarter  of 1999.  However,  the  Committee  believes  that all of  Datastream's
critical  Internal Systems are currently Year 2000 ready. The Committee  intends
to complete  contingency  planning for Internal Systems (if any) that may not be
Year 2000  ready  during  the second and third  quarters  of 1999.  The  Company
expects its  contingency  plans to  include,  among  other  things,  manual work
arounds for software and hardware failures,  as well as substitution of systems,
suppliers and/or vendors, if necessary.

     The Company  believes  that the current  versions of its  products are Year
2000 compliant. The Company generally defines a product as Year 2000 "compliant"
when that product (i) stores and calculates  dates  consistent with a four-digit
format,  (ii)  provides the user a two-digit  short-cut  that is recognized in a
four-digit  format  clearly  defined in its  documentation,  (iii) can correctly
execute leap year calculations,  (iv) does not use special values for dates, and
(v) correctly  processes  date specific data from and after January 1, 2000. The
Company regularly runs regression tests on its software,  including tests of the
Year 2000 date rollover.  Based on these tests,  the Company does not anticipate
that current  versions of the Company's  products  will be materially  adversely
affected by date  changes  involving  year 2000.  The Company has  notified  its
customers of the need to migrate to current  products that  management  believes
are Year 2000  compliant and,  where  appropriate,  has made available to them a
software patch that management believes will bring these products into Year 2000
compliance.  However,  there can be no  assurance  that the  Company's  products
contain and will contain all features and functionality  considered necessary by
customers,  distributors,  resellers  and  systems  integrators  to be Year 2000
compliant.  The  Company's  products  increasingly  are  installed  as  part  of
substantial  integrated systems utilized by customers,  which systems may not be
Year 2000 compliant. Also, certain customers of the Company may still be running
earlier versions of the Company's products that are not Year 2000 compliant.  If
the Company is included in any Year 2000 claims by its customers or customers of
systems  integrators,  whether or not such claims  have  merit,  it could have a
material  adverse  effect  on the  Company's  business,  operating  results  and
financial condition.

     To date, the Company has not incurred expenses in excess of $325,000 in its
Year 2000 efforts in  connection  with both Internal  Systems and products.  The
Company estimates that total costs associated with corrective actions taken with
respect to its Internal Systems and product upgrades will be immaterial.

     Although the Company  does not  currently  believe that it will  experience
material  disruptions  in its business  associated  with  preparing its Internal
Systems  and  products  for the year 2000,  there can be no  assurance  that the
Company will not experience  unanticipated negative consequences and/or material
costs  caused by  undetected  errors or  defects in the  technology  used in its
Internal  Systems,  which are composed of third party software,  and third party
hardware  that  contain  embedded  technology.  Although  the  Company  does not
anticipate  that it will  experience  any  disruptions in its supplier or vendor
relationships due to Year 2000 issues,  it is not currently  possible to predict
whether failure of infrastructure  services  provided by third parties,  such as
electricity,  phone service and Internet  services will have a material  adverse
effect on the Company's business, operating results and financial condition.

     The estimates  and  conclusions  regarding the Company's  Year 2000 program
contain forward looking  statements and are based on management's best estimates
of future events.  Risks to completing the program  include the  availability of
resources,  the Company's  ability to discover and correct  potential  Year 2000
problems,  and the ability of certain  third parties to bring their systems into
Year 2000 compliance.

<PAGE>


ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk


     The Company did not experience  any material  changes in market risk in the
first quarter of 1999.

<PAGE>

PART II.     OTHER INFORMATION

Item 1.    Legal Proceedings

     Since  January  11,  1999,  Datastream,  Larry G.  Blackwell  and Daniel H.
Christie  have been named as  defendants in  shareholder  class action  lawsuits
filed in the United States  District  Court for the District of South  Carolina,
Greenville  Division.  The  complaints  alleged  violations of Section 10(b) and
20(a) of the  Exchange  Act of 1934.  Plaintiffs  seek to  represent  a class of
individuals who purchased the Company's common stock from April 1 to October 20,
1998. The Company has not yet filed its answer to the complaints  filed to date,
and expects a single,  consolidated,  amended  complaint  to be filed during the
second or third quarter of 1999.

     The complaints filed to date allege that defendants  artificially  inflated
Datastream's  earnings and stock price by taking certain one-time charges not in
compliance with generally accepted accounting  principles ("GAAP") in connection
with  Datastream's  acquisitions  of Insta and SIS and  materially  understating
operating  costs by  improperly  capitalizing  certain  expenses  in the  fiscal
quarter ended June 30, 1998 in violation of GAAP. The Company  intends to defend
these  lawsuits  vigorously,  but  due  to  the  inherent  uncertainties  of the
litigation  process,  the  Company  is unable to  predict  the  outcome  of this
litigation. If the outcome of the litigation is adverse to the Company, it could
have a material adverse effect on the Company's  business,  financial  condition
and results of operations.

     Datastream is occasionally  involved in other litigation relating to claims
arising out of its  operations in the normal course of business.  Other than the
above-described shareholder litigations,  Datastream is currently not engaged in
any legal  proceedings that are expected,  individually or in the aggregate,  to
have a material adverse affect on the Company.

Item 2.    Changes in Securities

           Not Applicable

Item 3.    Defaults Upon Senior Securities

           Not Applicable

Item 4.    Submission of Matters to a Vote of Stockholders

           Not Applicable

Item 5.    Other Information

           Not Applicable

Item 6.    Exhibits and Reports on Form 8-K

           (a)      Exhibits

                27   Financial Data Schedule

           (b)  Reports on Form 8-K

                The  Company  filed an Amended  Current  Report on Form 8-K/A on
                January 11, 1999 to report the  Company's  issuance of shares of
                common stock related to the acquisition of Datastream  (Pacific)
                PTY Ltd. on July 13, 1998.

                The Company  filed a Current  Report on Form 8-K on February 17,
                1999 to  report  the  Company's  announcement  of its  voluntary
                restatement of results of operations  for the first,  second and
                third  quarters  of fiscal  year 1998 to reduce  the  charge for
                in-process  research and development and to increase the related
                goodwill   amortization   expense   in   connection   with   the
                acquisitions of Insta Instandhaltung technischer Anlagen GmbH on
                March 31,  1998 and  Strategic  Information  Systems PTE Ltd. on
                June 16, 1998.

                The Company filed a Current Report on Form 8-K on March 19, 1999
                to report the Company's announcement of a stock repurchase plan.

                The Company filed a Current Report on Form 8-K on April 26, 1999
                to report changes in the Company's management.

<PAGE>


SIGNATURES



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.


                               Datastream Systems, Inc.


 Date:   5/7/99                /s/ C. Alex Estevez
                               -------------------
                               C. Alex Estevez
                               Chief Financial Officer (principal
                               financial and accounting officer)
<PAGE>

                                  EXHIBIT INDEX



Exhibit Number                 Description

27                             Financial Data Schedule


<PAGE>