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 September 30, 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:
September 30, 1999   19,505,763 shares, $0.01 par value.

<PAGE>

                           Datastream Systems, Inc.

                                   FORM 10-Q

                       Quarter ended September 30, 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 September 30, 1999
                Assets                                             4
                Liabilities and Stockholders' Equity               5

           Consolidated Income Statements -
                for the Three Months ended
                    September 30,  1998 and 1999                   6

           Consolidated Income Statements -
                for the Nine Months ended
                    September 30,  1998 and 1999                   7

           Consolidated Statement of Changes in Stockholders'
                Equity and Comprehensive Income - for the
                    Nine Months ended September 30, 1999           8

           Consolidated Statements of Cash Flows -
                for the Nine Months ended
                    September 30, 1998 and 1999                    9

           Notes to the Consolidated Financial Statements          10

Item 2.    Management's Discussion and Analysis of
           Financial Condition and Results of Operations           13

Item 3.    Quantitative and Qualitative Disclosures About          17
           Market Risk


Part II.   Other Information                                       18


Signature                                                          19

<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,    September 30,
                                                       1998             1999
                                                       ----             ----
                                                                    (unaudited)

   Cash and cash equivalents                         $6,739,209     $10,673,729
   Accounts receivable, net of allowance
     for doubtful accounts of $3,073,837
          and $ 3,926,337, respectively              32,440,963      32,499,240
   Unbilled receivables                               2,761,922       2,487,219
   Investments                                        2,574,898       2,034,904
   Prepaid expenses                                   1,633,227       1,779,841
   Inventories                                          274,502          89,450
   Deferred income taxes                              2,322,600       2,011,000
   Other assets                                       1,662,716       1,587,398
                                                      ---------       ---------
        Total current assets                         50,410,037      53,162,781

Investments                                           2,034,744       4,230,000
Property and equipment, net                          12,886,791      13,223,783
Goodwill, net                                        18,323,801      16,031,456
Capitalized software development costs,
     net of accumulated amortization of
          $3,180,813 and $5,969,792, respectively     3,134,779       1,312,806
                                                      ---------       ---------
        Total assets                                $86,790,152     $87,960,826
                                                    ===========     ===========

See accompanying notes to consolidated financial statements.
<PAGE>

                    Datastream Systems, Inc. and Subsidiaries

                     Consolidated Balance Sheets (Continued)

                       Liabilities and Stockholders' Equity

                                                   December 31,    September 30,
                                                       1998             1999
                                                       ----             ----
                                                                    (unaudited)
Current liabilities:
   Accounts payable                                  $3,143,893      $4,716,711
   Other accrued liabilities                          9,768,179       7,431,340
   Income taxes payable                               2,762,451       1,223,438
   Current portion of long-term debt                    650,884          15,770
   Unearned revenue                                   8,292,829       8,176,393
                                                     ----------      ----------
        Total current liabilities                    24,618,236      21,563,652

Long-term debt, less current portion                    297,092         264,766
Deferred income taxes                                 1,268,400         540,000
                                                      ---------      ----------
        Total liabilities                            26,183,728      22,368,418
                                                     ----------      ----------
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,
      19,505,763 shares issued and
          outstanding at September 30, 1999             191,833         195,058
   Additional paid-in capital                        66,138,405      68,781,708
   Accumulated deficit                               (6,675,096)        (13,873)
   Other accumulated comprehensive income               951,282         682,278
   Treasury stock, 0 shares at December 31, 1998 and
      405,000 shares at September 30, 1999, at cost           -      (4,052,763)
                                                     ----------      ----------
        Total stockholders' equity                   60,606,424      65,592,408
                                                     ----------      ----------
        Total liabilities and stockholders' equity  $86,790,152     $87,960,826
                                                    ===========     ===========

See accompanying notes to consolidated financial statements.
<PAGE>

                     Datastream Systems, Inc. and Subsidiaries

                      Consolidated Statements of Income
                                 (unaudited)
                 Three months ended September 30, 1998 and 1999

                                                   September 30,   September 30,
                                                       1998            1999
                                                       ----            ----
Revenues:
   Product                                        $   9,401,198   $   8,420,398
   Professional service                              11,168,981      14,958,040
   Support                                            4,591,265       5,856,972
                                                     ----------      ----------
      Total revenues                                 25,161,444      29,235,410

Cost of revenues:
   Cost of product revenues                             407,889         495,067
   Cost of professional service revenues              5,971,820       9,587,786
   Cost of support revenues                           1,155,600       1,393,936
   Amortization and
    write-off of capitalized software                   636,665       1,439,943
                                                     ----------      ----------
      Total cost of revenues                          8,171,974      12,916,732
                                                     ----------      ----------
      Gross profit                                   16,989,470      16,318,678

Operating expenses:
   Sales and marketing                                6,325,960       8,676,118
   Product development                                1,855,410       3,912,895
   General and administrative                         1,575,821       3,060,840
   Amortization of goodwill                             718,534         764,115
   Write-off of in-process research and development
    and other acquisition charges                     1,103,967               -
                                                     ----------      ----------
      Total operating expenses                       11,579,692      16,413,968
                                                     ----------      ----------
      Operating income(loss)                          5,409,778         (95,290)

Other income (expense):
   Interest income                                      110,142         145,105
   Interest expense                                     (28,886)        (39,997)
   Other                                                (32,464)         (3,085)
                                                       --------        --------
      Net other income                                   48,792         102,023

      Income before income taxes                      5,458,570           6,733

Income taxes                                          2,625,047           2,490
                                                     ----------         -------
Net income                                          $ 2,833,523         $ 4,243
                                                    ===========         =======

   Basic net income per share                       $       .15         $   .00
                                                     ----------      ----------
   Diluted net income per share                     $       .14         $   .00
                                                     ----------      ----------
   Basic weighted average number of common and
      potential common shares outstanding            19,072,774      19,007,096
   Diluted weighted average number of common and
      potential common shares outstanding            20,288,891      20,229,085

See accompanying notes to consolidated financial statements.

<PAGE>
                     Datastream Systems, Inc. and Subsidiaries

                      Consolidated Statements of Income
                                 (unaudited)
                 Nine months ended September 30, 1998 and 1999

                                                   September 30,   September 30,
                                                       1998            1999
                                                       ----            ----
Revenues:
   Product                                        $  26,098,409   $  29,437,519
   Professional service                              29,956,410      42,313,355
   Support                                           12,677,755      16,827,390
                                                     ----------      ----------
      Total revenues                                 68,732,574      88,578,264

Cost of revenues:
   Cost of product revenues                           1,402,978       1,560,932
   Cost of professional service revenues             15,337,526      24,459,559
   Cost of support revenues                           3,299,930       3,992,749
   Amortization and
    write-off of capitalized software                 1,787,289       2,788,979
                                                     ----------      ----------
      Total cost of revenues                         21,827,723      32,802,219
                                                     ----------      ----------
      Gross profit                                   46,904,851      55,776,045

Operating expenses:
   Sales and marketing                               18,367,015      24,304,616
   Product development                                5,338,622      10,754,522
   General and administrative                         4,853,677       8,167,647
   Amortization of goodwill                           1,485,551       2,292,345
   Write-off of in-process research and development
    and other acquisition charges                     4,520,975               -
                                                     ----------      ----------
      Total operating expenses                       34,565,840      45,519,130
                                                     ----------      ----------
      Operating income                               12,339,011      10,256,915

Other income (expense):
   Interest income                                      462,430         383,272
   Interest expense                                     (88,400)       (121,965)
   Other                                                131,503         101,104
                                                       --------        --------
      Net other income                                  505,533         362,411

      Income before income taxes                     12,844,544      10,619,326

Income taxes                                          7,047,658       3,958,103
                                                     ----------      ----------
Net income                                          $ 5,796,886     $ 6,661,223
                                                    ===========     ===========
   Basic net income per share                       $       .31     $       .35
                                                     ----------      ----------
   Diluted net income per share                     $       .28     $       .33
                                                     ----------      ----------
   Basic weighted average number of common and
      potential common shares outstanding            18,861,271      19,075,539
   Diluted weighted average number of common and
      potential common shares outstanding            20,376,944      19,969,495

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 nine months ended September 30, 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                          -             -     6,661,223            -            -        6,661,223
   Foreign currency
     translation adjustment            -             -             -     (269,004)           -         (269,004)
                                                                                                       --------
Total comprehensive income                                                                            6,392,219
                                                                                                      ---------
Exercise of stock options          2,853     2,210,427             -            -            -        2,213,280

Stock issued for Employee
   Stock Purchase Plan               372       349,026             -            -            -          349,398

Amortization of compensatory
   stock options                       -        83,850             -            -            -           83,850

Acquisition of 405,000 common shares   -             -             -            -   (4,052,763)      (4,052,763)


Balance at September 30, 1999   $195,058   $68,781,708   $   (13,873)   $ 682,278  $(4,052,763)     $65,592,408
                                ========   ===========   ===========    =========  ===========      ===========

<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
                  Datastream Systems, Inc. and Subsidiaries

                     Consolidated Statements of Cash Flows
                                  (unaudited)

                 Nine months ended September 30, 1998 and 1999

                                                   September 30,   September 30,
                                                       1998            1999
                                                       ----            ----
Cash flows from operating activities:
   Net income                                      $ 5,796,886      $ 6,661,223
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation                                   2,366,601        3,383,373
      Amortization of capitalized software
       development costs                             1,194,009        2,788,979
      Amortization of goodwill                       1,485,543        2,292,345
      Other accumulated comprehensive income (loss)    469,552         (269,004)
      Accretion of investment discount, net           (105,717)            (320)
      Gain on disposal of fixed assets                       -          (26,985)
      Provision for doubtful accounts                  312,005        1,039,500
      Amortization of compensatory stock options             -           83,850
      Deferred income taxes                                  -         (416,800)
      Write-off of in-process
          research and development                   4,520,975                -
      Write-off of capitalized software                597,944                -
      Changes in operating assets and liabilities,
          net of effects of   acquisitions:
       Accounts receivable                          (9,685,995)        (910,777)
       Unbilled receivable                            (943,112)          87,703
       Accrued interest receivable                      59,421           23,889
       Prepaid expenses                             (1,666,763)        (146,614)
       Inventories                                     241,892          185,052
       Other assets                                   (829,600)          51,430
       Accounts payable                               (241,929)       1,572,818
       Other accrued liabilities                    (4,035,634)      (2,336,834)
       Income taxes payable                          2,766,504       (1,539,013)
       Unearned revenue                              2,421,405         (116,436)
                                                     ---------         --------
       Net cash provided by operating activities     4,723,987       12,407,379
                                                     ---------         --------

Cash flows from investing activities:
   Purchase of investments                          (1,705,402)      (4,310,000)
   Proceeds from sale and maturities of investments 14,182,820        2,655,058
   Additions to property and equipment              (3,033,720)      (3,693,366)
   Capitalized software development costs           (2,485,647)        (967,007)
   Cash paid for acquisition, net of cash acquired (12,246,291)               -
                                                     ---------         --------
       Net cash used in investing activities        (5,288,240)      (6,315,315)
                                                     ---------         --------
Cash flows from financing activities:
   Proceeds from exercise of stock options           1,671,224        2,213,280
   Proceeds from issuances of shares under employee
       stock purchase plan                             246,145          349,398
   Cash paid to acquire treasury stock                       -       (4,052,763)
   Principal payments on long-term debt               (232,066)        (667,459)
                                                     ---------         --------
       Net cash provided by (used in)
          financing activities                       1,685,303       (2,157,544)
                                                     ---------         --------
Net increase in cash and cash equivalents            1,121,050        3,934,520
Cash and cash equivalents at beginning of period     2,409,387        6,739,209
                                                     ---------         --------
Cash and cash equivalents at end of period         $ 3,530,437      $10,673,729
                                                   ===========      ===========

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, Ireland, 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:

o     On March 31, 1998, the Company acquired Insta Instandhaltung  technischer
   Anlagen GmbH ("Insta"),  a German  corporation  headquartered in Munich,
   Germany.
o     On June 16, 1998, the Company acquired Strategic  Information Systems PTE
   Ltd., a Singapore corporation ("SIS").
o     On July 13,  1998,  the Company  acquired  certain  assets of  Datastream
   (Pacific) Pty Ltd., an Australian corporation ("DSTM-PAC").
o     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.  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. 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.

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.


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:
<PAGE>

For the three months ended September 30,1999 and 1998

                                                               Per Share
                                             Income     Shares   Amount
    Three months ended September 30, 1999:
        Basic income per share              $ 4,243   19,007,096     .00
        Effect of dilutive securities:
           Stock options                          -    1,221,989
                                         -----------  ----------
        Diluted income per share            $ 4,243   20,229,085     .00
                                         ===========  ==========     ===

    Three months ended September 30, 1998:
        Basic income per share           $2,833,523   19,072,774     .15
        Effect of dilutive securities:
           Stock options                          -    1,216,117
                                         -----------  ----------
        Diluted income per share         $2,833,523   20,288,891     .14
                                         ===========  ==========     ===

For the nine months ended September 30,1999 and 1998

                                                               Per Share
                                             Income     Shares   Amount
    Nine months ended September 30, 1998:
        Basic income per share           $6,661,223   19,075,539     .35
        Effect of dilutive securities:
           Stock options                          -      893,956
                                         -----------  ----------
        Diluted income per share         $6,661,223   19,969,495     .33
                                         ===========  ==========     ===

    Nine months ended September 30, 1998:
        Basic income per share           $5,796,886   18,861,271     .31
        Effect of dilutive securities:
           Stock options                          -    1,515,673
                                         -----------  ----------
        Diluted income per share         $5,796,886   20,376,944     .28
                                         ===========  ==========     ===

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  receivable balances in connection with
product obsolescence. The change in the estimated costs are as follows:

                                         Original Charge      Revised 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 September 30, 1999, approximately $1,595,000 of the restructuring accruals
were utilized as follows: $359,000 for severance and related costs, $478,000 for
costs of closing redundant  facilities and $758,000 for provisions for increased
credit risks.

D. Capitalized Software Development Costs

Capitalized  software  development  costs  consist  principally  of salaries and
certain other expenses  related to  development  and  modifications  of software
products and are  capitalized in accordance  with the provisions of Statement of
Financial  Accounting  Standards No. 86,  "Accounting  for the Costs of Computer
Software to be Sold,  Leased,  or Otherwise  Marketed".  Capitalization  of such
costs begins only upon  establishment  of  technological  feasibility,  which is
defined by the Company as completion of a working model of the software and ends
when the resulting product is available for sale.

Amortization  of  capitalized  software  development  costs  is  provided  on  a
product-by-product  basis and begins  when the  product is  available  for sale.
Annual  amortization  is the greater of the amount  computed  using the ratio of
current product revenue to the total of current and anticipated  product revenue
or the  straight-line  basis over the remaining  estimated  economic life of the
software,  which  is  generally  from  six  months  to 36  months.  The  ongoing
assessment of the realizability of these costs requires considerable judgment as
to anticipated  future product revenues,  related  estimated  economic life, and
changes  in  hardware  and  software   technology.   Amortization   of  software
development  costs is included in cost of product  revenues in the  accompanying
statements of income.

During the third quarter of 1999, the Company  evaluated the estimated  economic
lives of the capitalized  software  resulting in a reduction in the lives of the
capitalized  software.  The change in  estimated  economic  lives  resulted in a
decrease  in net income of $387,000  ($0.02  basic net income per share) for the
third quarter of 1999 and for the nine months ended September 30, 1999.

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.
In July 1999, the Financial  Accounting  Standards Board (FASB) issued Statement
of  Financial   Accounting   Standards  No.  137,   "Accounting  for  Derivative
Instruments and Hedging Activities- Deferral of Effective Date of FASB Statement
No. 133 - an amendment of FASB Statement No. 133" (Statement No. 137). Statement
No. 137 delayed  the  effective  date for  Statement  No. 133 for one year.  The
Company is required to adopt Statement No. 133 in the first quarter of 2001. 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  consist  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,  and MP2  Enterprise  and MP5i  provide
solutions  for  larger  global  operations.  Datastream  supports  its  software
products through  professional  services,  including  installation,  consulting,
integration  and  training.  On-going  technical  support  services are supplied
pursuant to renewable annual technical support contracts.

     In July  1999,  the  Company  established  a new wholly  owned  subsidiary,
Maintenance.com,    Inc.    This    subsidiary    focuses   on    Internet-based
business-to-business  electronic  commerce solutions.  Maintenance.com,  Inc. is
structured to include Datastream's  e-commerce assets,  including  iProcure.com,
Datastream's   internet   based   industrial   procurement   application,    and
BizSurplus.com, Datastream's industrial auction site.

Results of Operations

     Total Revenues.  The Company reported higher revenues for the third quarter
of 1999.  Total  revenues  increased 16% to  $29,235,410 in the third quarter of
1999 from  $25,161,444  in the third  quarter of 1998,  due  principally  to the
expansion of the Company's  professional  service and technical  support service
organizations. The third quarter of 1998 includes $3,231,038 of revenue from the
newly acquired entities of Insta, SIS, DSTM-PAC,  Computec and  Computec-Mexico.
Total revenues increased 29% to $88,578,264 during the first nine months of 1999
from  $68,732,574 in the first nine months of 1998.  Revenues for the first nine
months of 1998 includes  $5,084,362 of revenue from the newly acquired  entities
of Insta, SIS, DSTM-PAC, Computec and Computec-Mexico.

     Product revenues decreased 10% to $8,420,398 (29% of total revenues) in the
third  quarter  of 1999 from  $9,401,198  (37% of total  revenues)  in the third
quarter of 1998, as a result of changes within the sales organization  causing a
disruption to license sales.  Product revenues increased 13% to $29,437,519 (33%
of total  revenues)  in the first nine months of 1999 from  $26,098,409  (38% of
total revenues) in the first nine months of 1998.

     Professional  service  revenues  increased 34% to $14,958,040 (51% of total
revenues) in the third quarter of 1999 from  $11,168,981 (44% of total revenues)
in the third  quarter  of 1998.  The  increase  resulted  from the  addition  of
professional  service personnel to service expansion of the Company's  installed
base of systems. Professional service revenues increased 41% to $42,313,355 (48%
of total  revenues)  in the first nine months of 1999 from  $29,956,410  (44% of
total revenues) in the first nine months of 1998.

     Technical support services revenues for the third quarter of 1999 increased
28% to  $5,856,972  (20% of  total  revenues)  from  $4,591,265  (18%  of  total
revenues) in the third  quarter of 1998,  primarily  due to the expansion of the
Company's  installed  base  of  systems.  Technical  support  services  revenues
increased 33% to $16,827,390 (19% of total revenues) in the first nine months of
1999 from $12,677,755 (18% of total revenues) in the first nine months of 1998.

     Cost of Revenues.  Cost of revenues  increased 58% to  $12,916,732  (44% of
total  revenues) in the third quarter of 1999, as compared to $8,171,974 (33% 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  increased  head  count to meet
customer  demand,   increased   travel  costs  and  increased   amortization  of
capitalized software.

     Cost of  revenues  increased  50% to  $32,802,219  (37% of total  revenues)
during the first nine months of 1999 from $21,827,723 (32% of total revenues) in
the first nine months of 1999.

     Cost of product  revenues was 2% of total  revenues in the third quarter of
1999 and 2% of total revenues during the same period in 1998.
<PAGE>
     Cost of professional  service revenues was 33% of total revenues during the
third quarter of 1999, and 24% 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 third  quarter of 1999 and 5% of total  revenues  during the same  period in
1998.

     Amortization  and write  off of  capitalized  software  costs for the third
quarter of 1999  includes  $1,439,943  (5% of total  revenues)  of  amortization
expense and $636,665 (3% of total revenues) of amortization expense for the same
period in 1998.  Cost of  revenues  for the first nine  months of 1999  includes
$2,788,979 (3% of total revenues) of amortization  expense. Cost of revenues for
the first nine months of 1998  includes  $1,189,345  (2% of total  revenues)  of
amortization  expense and a $597,944  write-off of  capitalized  software (1% of
total revenues), which became obsolete as a result of the acquisition of Insta.

     Sales and Marketing Expenses. Sales and marketing expenses increased 37% to
$8,676,118  (30% of total  revenues)  during  the  third  quarter  of 1999  from
$6,325,960 (25% of total revenues) during the third quarter of 1998, as a result
of an increased  number of sales  personnel  and  increased  sales and marketing
expenditures  for  the  Company's  internet  businesses  strategies.  Sales  and
marketing  expenses  increased 32% to $24,304,616 (27% of total revenues) in the
first nine months of 1999 from  $18,367,015 (27% of total revenues) in the first
nine months of 1998.

     Product  Development  Expenses.   Total  product  development  expenditures
increased 48% to $3,912,895 (13% of total revenues)  during the third quarter of
1999 from $2,646,976 (11% of total revenues) during the same period in 1998. The
capitalized  portion of these  amounts were $0 and $791,566,  respectively.  The
increase in total  product  development  expense  resulted from  increasing  the
number of  development  personnel to support  continued  development of MP2i and
iProcure.com,  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.

     Total product development expenditures increased 50% to $11,721,529 (13% of
total  revenues)  during the first nine months of 1999 from  $7,824,269  (11% of
total revenues) during the same period in 1998. The capitalized portion of these
amounts were $967,007 and $2,485,647, respectively.

     General and Administrative  Expenses.  General and administrative  expenses
increased 94% to $3,060,840 (11% of total revenues)  during the third quarter of
1999  from  $1,575,821  (5% of total  revenues)  in the third  quarter  of 1998,
primarily  due  to  costs  incurred  implementing  international  organizational
changes and  increased  administrative  costs  incurred  at acquired  companies.
General and  administrative  expenses  increased 68% to $8,167,647  (9% of total
revenues)  during the first  nine  months of 1999 from  $4,853,677  (7% of total
revenues) in the first nine months of 1998.

     Amortization of Goodwill.  Amortization of goodwill expense increased 6% to
$764,115 (3% of total  revenues)  during the third quarter of 1999 from $718,534
(3% of total  revenues) in the third quarter of 1998, due to increased  goodwill
balances from the acquisitions of Insta, SIS, DSTM-PAC and Computec during 1998.
Amortization  of  goodwill  expense  increased  54% to  $2,292,345  (3% of total
revenues)  during the first  nine  months of 1999 from  $1,485,551  (2% of total
revenues) in the first nine months of 1998.

     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.  During the second
quarter of 1998,  the Company  expensed  $1,110,000 of  in-process  research and
development acquired as part of the acquisition of SIS. During the third quarter
of 1998, the Company  expensed  $373,000 of in-process  research and development
acquired as part of the acquisition of Computec and Computec-Mexico.

     Miscellaneous   Income(Loss).   Miscellaneous   income(loss)  increased  to
($3,085)  in the third  quarter of 1999 from  ($32,464)in  the third  quarter of
1998.  Miscellaneous  income  decreased  to $101,104 in the first nine months of
1999 from  $131,503 in the first nine months 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  increased to $145,105 in the
third quarter of 1999 from $110,142 in the third quarter of 1998,  due to higher
cash  balances.  Interest  expense  increased to $39,997 in the third quarter of
1999 from $28,886 in the third  quarter of 1998.  Interest  income  decreased to
$383,272 in the first nine months of 1999 from $462,430 in the first nine months
of 1998. Interest expense increased to $121,965 in the first nine months of 1999
from $88,400 in the first nine months of 1998.

     Tax Rate. The Company's effective tax rate was 37% for the third quarter of
1999 as compared to 48% for the third quarter of 1998.  The Company's  effective
tax rate was 37.3% for the first nine  months of 1999 as compared to 55% for the
first nine months of 1998.  Acquisition  related charges were included in income
before  income  taxes for the third  quarter of 1998 and the nine  months  ended
September  30,  1998.  The  effective  tax  rate  before   non-deductible  items
associated with the 1998  acquisitions was 40% for the third quarter of 1998 and
39% for the nine months ended September 30, 1998.

     Net Income.  Net income  decreased 100% to $4,243 (0% of total revenues) in
the third quarter of 1999 from  $2,833,523  (11% of total revenues) in the third
quarter of 1998.  The decrease is  attributed  to lower than expect sales during
the third quarter of 1999.  Net income  increased 15% to $6,661,223 (8% of total
revenues)  in the  first  nine  months  of 1999  from  $5,796,886  (8% of  total
revenues)  in the  first  nine  months  of 1998.  These  increases  are  largely
attributed to the charges for the 1998 acquisition.

Liquidity and Capital Resources

     The  Company  has  funded  its  operating  activities  entirely  from  cash
generated  from  operations.  The Company  ended its third  quarter of 1999 with
$10,673,729 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 September 30, 1999 the
Company had repurchased  405,000 shares at a cost of $4,052,763.  The shares are
classified as treasury stock on the balance sheet and are reported at cost.

     The Company's  principal  commitments  as of September 30, 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 and cash flow from
operations   will  be  sufficient  to  meet  its  working  capital  and  capital
expenditure needs for the next 12 months.
<PAGE>
Year 2000

     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,  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 upon 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.

     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 believes that all of Datastream's Internal Systems
are currently Year 2000 ready.

     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 for the entire  operational  range,  (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 current products,  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  continues to run regression  tests on certain earlier versions
of its products.  These tests have identified  areas in certain earlier versions
of its  products  that  do not  meet  the  Company's  definition  of  Year  2000
compliant.  As the Company becomes aware of these Year 2000 issues,  it notifies
its  customers  of the need to  migrate  to  current  versions  that  management
believes  are Year 2000  compliant  and/or  makes  available  to them a software
release  that  management  believes  will bring  these  products  into Year 2000
compliance.  The Company has  developed a seamless  migration  path from earlier
versions to current versions.

     The  Company  does not intend to test all of the  earlier  versions  of its
products.  Certain  customers of the Company may still be running  these earlier
versions of the Company's products that may not be Year 2000 compliant. However,
the Company has and will continue,  as necessary,  to notify these  customers of
the need to migrate to current  products that management  believes are Year 2000
compliant.

     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 or
that  the  Company's  products  do not  contain  undetected  errors  or  defects
associated  with  Year  2000  issues.  In  addition,   the  Company's   products
increasingly are customized  and/or installed as part of substantial  integrated
systems  utilized by  customers,  which  customized  products,  systems or their
components  may  not  be  Year  2000  compliant.   Datastream  provides  limited
warranties  as to Year 2000  compliance of certain of our products and services.
Except as specifically provided for in the limited warranties,  the Company does
not believe that it is legally  responsible  for costs  incurred by customers to
achieve Year 2000 compliance.  Commentators have predicted a significant  amount
of litigation concerning Year 2000 compliance issues and the Company is aware of
such claims having been asserted  against other software  companies.  Because of
the unprecedented  nature of the Year 2000 issues, it is uncertain whether or to
what extent the Company  may be affected by any such  claims.  If the Company is
substantially involved in Year 2000 claims made by its customers or customers of
systems  integrators,  whether or not such claims have merit, the Company cannot
be certain the extent to which it may be affected by such  claims.  For example,
while the  Company  does not  believe  that it is  legally  responsible  for its
customers' Year 2000  compliance  obligations,  it is unclear whether  different
governments  or  governmental  agencies may decide to allocate  liability to the
Company  relating to its customers' Year 2000  compliance  without regard to the
absence or  limitation  of  warranties  or specific  warranty  disclaimers.  The
Company's  business,  operating  results  or  financial  condition  in any given
quarter could suffer if such liability is allocated to the Company.

     Most of the  costs of  addressing  Year 2000  issues  are  included  in the
budgets for the Company's  individual  business units or for system upgrades and
the Company cannot separately identify those costs with precision.  Although the
Company  believes that the total costs  associated with its Year 2000 efforts in
connection  with its Internal  Systems and products  will not be material in the
aggregate,  it currently  estimates that such costs will be  approximately  $1.3
million (of which  approximately $1 million has been spent through September 30,
1999).  These costs are estimates  because the Company does not separately track
internal  labor costs  associated  with Year 2000 issues,  unless such costs are
incurred by individuals assigned primarily to Year 2000 compliance.  The Company
plans to fund its Year 2000 efforts with  operating cash flows and cash on hand.
The  Company  cannot  make any  assurances  that  total  costs  associated  with
corrective  actions taken with respect to its Internal Systems and products will
not become material.

     While  the  Company  does not  currently  believe  that it will  experience
material disruptions 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 or
products.  Those  Internal  Systems and the  Company's  products  may utilize or
include third-party  software or hardware that may contain embedded  technology.
The  Company  cannot  make any  assurance  that such third  party  software  and
hardware,  including  embedded  technology,  is Year 2000 compliant.  Similarly,
while 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 assess the  likelihood  of  failures  of  infrastructure
services  provided by third  parties,  such as  electricity,  phone  service and
Internet services  (particularly  outside of countries such as the United States
where Year 2000  remediation  has progressed the furthest) and what effects such
potential  failures  will have on such third  party  vendors.  As a result,  the
Company is unable to assess the  likelihood of a material  adverse effect on the
Company's  business,  operating  results  and  financial  condition  due to such
failures.

     The contingency  planning process involves  identifying  reasonably  likely
business  disruption  scenarios  that,  if they  were  to  occur,  could  create
significant  problems in the critical  functions or  operations of each business
unit. The Company's business units are continuing to develop plans to respond to
such scenarios so that critical  business  functions and operations may continue
to operate  with minimal  disruption.  If these plans are not  successful  or if
unanticipated  Year 2000 issues not covered by the Company's  plans emerge,  the
Company's business and operating results may be adversely affected.  Contingency
planning  for  Internal  Systems was  substantially  completed  during the third
quarter of 1999 and the Company  anticipates  that its plans will continue to be
reviewed  and  updated,  as  necessary,  up to  and  into  2000.  The  Company's
contingency plans include,  among other things, manual work arounds for software
and hardware  failures,  as well as  substitution of systems,  suppliers  and/or
vendors,  if necessary.  With regard to its products,  the Company has projected
the most  reasonably  likely worst case Year 2000  scenario to include a partial
failure of a widely-used Company product that is of mission-critical  importance
to  the  Company's  customers.  Datastream  believes  it  has  skilled  in-house
developers  and  relationships  with third party  vendors  sufficient to allow a
prompt  response  in the  event  of any  such  failure.  If it is  necessary  to
re-deploy  internal  resources to address  Year 2000  concerns on a large scale,
however, such efforts could divert resources from other aspects of the Company's
business.  In addition,  such  re-deployment  could result in a delay or loss of
revenue,  increased  service and warranty  costs,  and/or  increased  litigation
claims, any of which could potentially affect materially the Company's business,
operating results or financial condition. Because of the unprecedented nature of
the Year 2000  issues,  it is  uncertain  to what  extent the  Company  could be
affected by such a scenario.

     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 and
cost of trained  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.

Datastream  designates  all  statements  in this Report  regarding its Year 2000
efforts  as  "Year  2000  Readiness  Disclosures"  pursuant  to  the  Year  2000
Information and Readiness Disclosure Act.
<PAGE>

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk


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

<PAGE>

PART II.     OTHER INFORMATION

Item 1.    Legal Proceedings

     On January 11, 1999,  several  shareholders  filed a putative  class action
complaint  in the  United  States  District  Court  for the  District  of  South
Carolina,  Greenville  Division,  naming as  defendants,  the Company,  Larry G.
Blackwell   and  the  Company's   former  Chief   Financial   Officer.   Several
substantially   similar   complaints  were  filed  in  the  same  court  shortly
thereafter. The complaints alleged violations of Sections 10(b) and 20(a) of the
Securities  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. On June 25, 1999, the court ordered that the actions be  consolidated  and
that a  single  consolidated  complaint  be  filed.  On  August  13,  1999,  the
plaintiffs filed a consolidated amended class action complaint. The consolidated
amended complaint  alleges that defendants  artificially  inflated  Datastream's
earnings  and  stock  price  by  (i)  taking  certain  one-time  charges  not in
accordance with generally accepted accounting  principles ("GAAP") in connection
with Datastream's acquisitions of Insta and SIS and (ii) materially understating
the Company's  reserves for doubtful accounts in violation of GAAP. On September
13,  1999,  the  Company  and the  individual  defendants  moved to dismiss  the
consolidated  amended  complaint.  That motion to dismiss is  currently  pending
before the court. The Company intends to defend this action 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  claims  arising out of its
operations  in the  normal  course  of  business,  none of which  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

                None.

<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.


                               /s/ C. Alex Estevez
Date:   11/12/99                   ______________________
                               C. Alex Estevez
                               Chief Financial Officer (principal
                                financial and accounting officer)
<PAGE>

                                EXHIBIT INDEX



Exhibit Number                 Description

27                        Financial Data Schedule


<PAGE>