<PAGE>   1

===============================================================================


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                             ----------------------

                                   FORM 10-Q

            [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 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 0-27574

                             POWERCERV CORPORATION
             (Exact name of registrant as specified in its charter)


         FLORIDA                                                 59-3350778
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)



            400 NORTH ASHLEY DRIVE, SUITE 2700, TAMPA, FLORIDA 33602
          (Address of principal executive offices, including zip code)

                                 (813) 226-2600
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X]    NO [ ]

As of August 12, 1999, there were 13,147,108 shares of the registrant's common
stock, $.001 par value, outstanding.


===============================================================================

<PAGE>   2

                             POWERCERV CORPORATION
                                   FORM 10-Q


                                     INDEX

<TABLE>
<CAPTION>

                                                                                                                  PAGE
                                                                                                                  ----
<S>                                                                                                                <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

      Condensed Consolidated Balance Sheets as of June 30, 1999 (unaudited)
         and December 31, 1998................................................................................      2

      Condensed Consolidated Statements of Operations for the Three and Six Months Ended
         June 30, 1999 and 1998 (unaudited)...................................................................      3

      Condensed Consolidated Statements of Cash Flows for the Six Months Ended
         June 30, 1999 and 1998 (unaudited)...................................................................      4

      Notes to Condensed Consolidated Financial Statements (unaudited)........................................      5

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations............................................................................     10

Item 3. Quantitative and Qualitative Disclosure of Market Risks...............................................     17

Independent Accountants' Review Report........................................................................     18


PART II. OTHER INFORMATION

Item 1. Legal Proceedings.....................................................................................     19

Item 4. Submission of Matters to a Vote of Security Holders...................................................     19

Item 6. Exhibits and Reports on Form 8-K......................................................................     20


Signatures....................................................................................................     21
</TABLE>




                                       1
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                             POWERCERV CORPORATION

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                   JUNE 30, 1999  DECEMBER 31, 1998
                                                                                   -------------  -----------------
                                                                                            (UNAUDITED)
<S>                                                                                <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents                                                          $ 7,742          $ 6,594
   Accounts receivable, net of allowance of $1,318 and
       $1,480, respectively                                                             4,294            5,007
   Other current assets                                                                   265              240
                                                                                      -------          -------

        Total current assets                                                           12,301           11,841

Property and equipment, net                                                             1,443            2,239
Intangible assets, net                                                                    111              556
Investment in third party                                                                 750            1,000
Note receivable                                                                           827               --
Deposits and other assets                                                                  99               94
                                                                                      -------          -------

        Total assets                                                                  $15,531          $15,730
                                                                                      =======          =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Accounts payable                                                                   $   713          $   637
   Accrued expenses                                                                     1,863            1,954
   Deferred revenue                                                                     1,662            1,864
                                                                                      -------          -------

        Total current liabilities                                                       4,238            4,455

Deferred gain on sale of business                                                         827               --

Shareholders' equity                                                                   10,466           11,275
                                                                                      =======          =======


        Total liabilities and shareholders' equity                                    $15,531          $15,730
                                                                                      =======          =======
</TABLE>


See accompanying independent accountants' review report and notes to condensed
consolidated financial statements.



                                       2

<PAGE>   4

                             POWERCERV CORPORATION

          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                             THREE MONTHS ENDED JUNE 30,       SIX MONTHS ENDED JUNE 30,
                                                1999             1998            1999             1998
                                             =========         =======         ========         ========
<S>                                          <C>               <C>             <C>               <C>
Revenues:
   License fees                                $ 1,789         $ 1,586         $  3,242         $  2,948
   Service fees                                  2,694           1,915            5,421            4,145
                                               -------         -------         --------         --------

      Total revenues                             4,483           3,501            8,663            7,093
                                               -------         -------         --------         --------

Costs and expenses:
   Cost of licenses                                235             121              413              299
   Cost of services                              1,934           1,757            3,960            3,643
   General and administrative                    1,311           1,121            2,526            2,249
   Sales and marketing                           2,053           1,340            4,183            2,592
   Research and development                      1,071             903            2,229            1,857
   Work force reduction and other                   --              --              485               --
                                               -------         -------         --------         --------
      Total costs and expenses                   6,604           5,242           13,796           10,640
                                               -------         -------         --------         --------

      Operating loss                            (2,121)         (1,741)          (5,133)          (3,547)

Interest and other income (net)                     94              69              144              150
                                               -------         -------         --------         --------

Operations disposed of during 1999
   Revenues                                         --           3,809            2,464            7,504
   Cost and expenses                                --           2,874            2,240            5,952
                                               -------         -------         --------         --------
                                                    --             935              224            1,552

   Gain on sale of business                      2,651              --            5,647               --
                                               -------         -------         --------         --------
                                                 2,651             935            5,871            1,552

   Income (loss) before income taxes               624            (737)             882           (1,845)

Provision for Income Taxes                          --              --               --               --
                                               -------         -------         --------         --------

      Net income (loss) and
        comprehensive income (loss)            $   624         $  (737)        $    882         $ (1,845)
                                               =======         =======         ========         ========

Net loss per share:
     Basic                                     $   .05         $  (.05)        $    .07         $   (.13)
                                               =======         =======         ========         ========
     Diluted                                   $   .05         $  (.05)        $    .06         $   (.13)
                                               ========        =======         ========         ========

Shares used in computing net income
(loss) per share:
     Basic                                      13,147          13,806           13,315           13,799
                                               =======         =======          =======         ========
     Diluted                                    13,434          13,806           13,665           13,799
                                               =======         =======          =======         ========
</TABLE>

See accompanying notes to condensed consolidated financial statements.



                                       3
<PAGE>   5


                             POWERCERV CORPORATION

          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                                         SIX MONTHS ENDED JUNE 30,
                                                                        ---------------------------
                                                                          1999               1998
                                                                        -------             -------
<S>                                                                     <C>                 <C>
Cash flows from operating activities:
   Net income (loss)                                                    $   882             $(1,845)
   Adjustments to reconcile net loss to net cash provided by
          (used in) operating activities:
      Depreciation and amortization                                         685                 709
      Gain on sale of business                                           (5,647)                 --
      Deferred revenue                                                      (66)                222
      Changes in assets and liabilities                                  (1,451)              1,909
                                                                        -------             -------

             Net cash flows (used in) provided by
                operating activities                                     (5,597)                995
                                                                        -------             -------

Cash flows from investing activities:
   Sale of business                                                       6,680                  --
   Return of investment in third party                                      250                  --
   Purchases of property and equipment, net                                (205)               (442)
                                                                        -------             -------

             Net cash flows provided by (used in)
                investing activities                                      6,725                (442)
                                                                        -------             -------

Cash flows from financing activities:
   Net proceeds from issuance of common stock                                20                 115
                                                                        -------             -------

             Net cash flows provided by
                financing activities                                         20                 115
                                                                        -------             -------

Net increase in cash and cash equivalents                                 1,148                 668
Cash and cash equivalents, beginning of period                            6,594               6,360
                                                                        -------             -------

Cash and cash equivalents, end of period                                $ 7,742             $ 7,028
                                                                        =======             =======
</TABLE>


See accompanying independent accountants' review report and notes to condensed
consolidated financial statements.




                                       4
<PAGE>   6

                             POWERCERV CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


A.       BASIS OF PRESENTATION

         The condensed consolidated balance sheet of PowerCerv Corporation and
its subsidiary (collectively, the "Company") as of June 30, 1999, and the
condensed consolidated statements of operations for the three and six months
ended June 30, 1999 and 1998 and the condensed consolidated statements of cash
flows for the six months ended June 30, 1999 and 1998 have been prepared by the
Company, without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at June 30, 1999, and
for all periods presented have been made. The condensed consolidated balance
sheet at December 31, 1998, has been derived from the Company's audited
consolidated financial statements at that date.

         Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission ("SEC") rules and regulations. These condensed consolidated
financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto for the year ended December
31, 1998, included in the Company's 1998 Annual Report on Form 10-K filed with
the SEC on April 14, 1999 ("1998 Annual Report").

         The results of operations for the three and six months ended June 30,
1999 are not necessarily indicative of results that may be expected for any
other interim period or for the full fiscal year.

B.       REVENUE RECOGNITION

         License fees represent revenue from the licensing of the Company's
Enterprise Resource Planning ("ERP") application products and, to a lesser
extent, its development tools. License fees also include royalties earned on
the Company's ERP application products and related intellectual properties.
Service fees represent revenue from consulting services, education services and
support and maintenance services.

         The Company recognizes revenue in accordance with the American
Institute of Certified Public Accountants' Statement of Position 97-2, Software
Revenue Recognition ("SOP 97-2"), as amended by Statement of Position 98-4,
Deferral of the Effective Date of a Provision of SOP 97-2 ("SOP 98-4") and
Statement of Position 98-9, Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions ("SOP 98-9"). Revenue is
recognized from licenses of the Company's software products when the contract
has been executed, the product(s) has been shipped, collectibility is probable
and the software license fees are fixed or determinable. In the event that the
contract provides for multiple elements (e.g., software products, post-contract
customer support, consulting services), the total fee is allocated to these
elements based on "vendor-specific objective evidence" of fair value. If any
portion of the license fees is subject to forfeiture, refund or other
contractual contingencies, the Company will postpone revenue recognition until
these contingencies have been removed. Historically, product returns and
allowances have been immaterial. The Company generally accounts for consulting
and education services separate from software license fees for those
multi-element arrangements where






                                       5
<PAGE>   7

                             POWERCERV CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


services are a separate element and are not essential to the customer's
functionality requirements and there is "vendor-specific objective evidence" of
fair value for these services. Consulting and education revenue is recognized
as the services are performed. Revenue from support and maintenance activities
is recognized ratably over the term of the maintenance period and the
unrecognized portion is recorded as deferred revenue.

C.       EARNINGS PER SHARE DATA

         The following table sets forth the computation of basic and diluted
earnings (loss) per share ("EPS") for the periods indicated:

<TABLE>
<CAPTION>
                                                             (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                              THREE MONTHS ENDED           SIX MONTHS ENDED
                                                                     JUNE 30,                  JUNE 30,
                                                            ---------------------------------------------------
                                                              1999          1998           1999          1998
                                                            --------      --------       --------      --------

         <S>                                                <C>           <C>            <C>           <C>
         Basic:
                Net income (loss)                           $    624      $   (737)      $    882      $ (1,845)
                                                            ========      ========       ========      ========
                Average shares outstanding                    13,147        13,806         13,315        13,799
                                                            ========      ========       ========      ========
         Basic EPS                                          $    .05      $   (.05)      $    .07      $   (.13)
                                                            ========      ========       ========      ========


         Diluted:
                Net income (loss)                           $    624      $   (737)      $    882      $ (1,845)
                                                            ========      ========       ========      ========
                Average shares outstanding                    13,147        13,806         13,315        13,799
                Net effect of dilutive stock options--
                   based on the treasury stock method            287            --            350            --
                                                            ========      ========       ========      ========
                Totals                                        13,434        13,806         13,665        13,799
                                                            ========      ========       ========      ========
         Diluted EPS                                        $    .05      $   (.05)      $    .06      $   (.13)
                                                            ========      ========       ========      ========
</TABLE>

         Common stock equivalents in the three and six month periods ended June
30, 1998 were anti-dilutive due to the net loss sustained by the Company
during this period, thus the diluted net loss per share in this period is the
same as the basic net loss per share. During the quarter ended June 30, 1999,
employees exercised no stock options.


                                       6
<PAGE>   8

                             POWERCERV CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


D.       ACCRUED EXPENSES

         Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                 (DOLLARS IN THOUSANDS)

                                               JUNE 30,        DECEMBER 31,
                                                 1999              1998
                                               --------        ------------
         <S>                                   <C>               <C>
         Compensation                           $1,126            $1,055
         Severance and related costs               117                57
         Other                                     620               842
                                                ------            ------
                                                $1,863            $1,954
                                                ======            ======
</TABLE>

E.       COMMITMENTS

         The Company has entered into employment agreements with certain of its
executive officers. Information regarding these agreements is available in the
Company's 1998 Annual Report.

F.       CONTINGENCIES

         A complaint was filed on July 24, 1997 in the United States District
Court for the Middle District of Florida, captioned J. Conrad Lifsey vs. Harold
R. Ross, Gerald R. Wicker, Marc J. Fratello, Roy E. Crippen, III, Donald B.
Hebb, Jr., Thomas S. Roberts, PowerCerv Corporation, Alex Brown & Sons, Inc.,
Robertson, Stephens & Company, ABS Capital Partners, L.P., Summit Investors II,
L.P., and Summit Ventures III, L.P. The complaint purports to be a class action
on behalf of those persons who purchased shares of the Company's common stock
from March 1, 1996 (the date of the Company's initial public offering of its
common stock ("IPO")) through July 24, 1996. The complaint alleges, among other
things, that the defendants violated the Securities Act of 1933 and the
Securities Exchange Act of 1934 in connection with the Company's IPO and in its
subsequent securities filings, press releases and other public statements. The
plaintiff seeks damages of an unspecified amount, rescission of certain
securities sales and certain other remedies. On March 19, 1998, the defendants
filed their motions to dismiss this complaint. An effect of this motion filing
is to postpone any discovery on this case until after the motions are ruled on
by the Court. No ruling has yet been handed down. On April 5, 1998, the Court
ordered the parties to attend a mediation conference by July 30, 1998. The
parties did not resolve this lawsuit in the mediation conference. In June of
1999 the Court once again recommended to the parties that they attend a
mediation conference to resolve the matter. The parties agreed to forego a
second mediation conference until the Court's ruling on the motion to dismiss
the claim. The defendants continue to deny any wrongdoing and intend to contest
the suit vigorously.

         The Company is also subject to miscellaneous legal proceedings in the
normal course of business. The Company is currently defending these proceedings
and claims and anticipates that it will be able to resolve these matters in a
manner that will not have a material adverse effect on the Company's
consolidated financial position.


                                       7
<PAGE>   9

                             POWERCERV CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


G.       INCOME TAXES

         For the three and six month period ended June 30, 1999, the Company
recorded no income tax expense since its net operating loss carryforwards
should substantially offset any tax expense applicable to the net income for
the period.

H.       SEGMENT REPORTING

         The Company has identified its operating segments as its services and
license product segments. In 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, Disclosures about Segments of an Enterprise and
Related Information. The services segment provides consulting, education,
support and maintenance services and the license product segment provides ERP
application products.

         The following tables provide the various segment data (dollars in
thousands):


<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED JUNE 30, 1999               SIX MONTHS ENDED JUNE 30, 1999

                                    License      Services   Unallocated    Total      License      Services   Unallocated    Total
                                    -------      --------   -----------   ------      -------      --------   -----------   ------
<S>                                 <C>          <C>        <C>           <C>         <C>          <C>        <C>           <C>
Revenues from external
  customers                         $ 1,789       $2,694          --      $4,483      $ 3,242       $5,421          --      $8,663
Segment profit (loss)               $(1,570)         760      $1,434      $  624      $(3,583)      $1,461      $3,004      $  882
</TABLE>



<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED JUNE 30, 1998               SIX MONTHS ENDED JUNE 30, 1998

                                    License      Services   Unallocated   Total       License      Services   Unallocated    Total
                                    -------      --------   -----------   ------      -------      --------   -----------   -------
<S>                                 <C>          <C>        <C>           <C>         <C>          <C>        <C>           <C>

Revenues from external
  customers                         $ 1,586       $1,915          --      $3,501      $ 2,948       $4,145          --      $ 7,093
Segment profit (loss)               $  (778)      $  158      $ (117)     $ (737)     $(1,800)      $  502      $ (547)     $(1,845)
</TABLE>



         There were no transactions between segments. The unallocated amounts
are made up of the following items:


<TABLE>
<CAPTION>

                                                             THREE                SIX                THREE                SIX
                                                          MONTHS ENDED        MONTHS ENDED        MONTHS ENDED        MONTHS ENDED
                                                         JUNE 30, 1999       JUNE 30, 1999        JUNE 30, 1998       JUNE 30, 1998
                                                         -------------       -------------        -------------       -------------
<S>                                                      <C>                 <C>                  <C>                 <C>
General and administrative costs                            $(1,311)            $(2,526)            $(1,121)            $(2,249)
Work force reduction                                             --                (485)                 --                  --
Interest and other income                                        94                 144                  69                 150
Operations disposed of in 1999                                   --                 224                 935               1,552
Gain on sale of business                                      2,651               5,647                  --                  --
                                                            -------             -------             -------             -------
                                                            $ 1,434             $ 3,004             $  (117)            $  (547)
</TABLE>


         The Company does not use assets as a measure of the segment's
performance, thus no assets are disclosed by segment in the tables above.




                                       8
<PAGE>   10

                             POWERCERV CORPORATION

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


I.       WORK FORCE REDUCTION AND OTHER

         During the first quarter of 1999, the Company recorded a charge
related to a work force reduction and other related expenses totaling $485.
This amount included severance and related costs of $391 (11 employees,
primarily management level) and costs of $94 related to office downsizings or
closings. The Company expects to realize gross annual savings of approximately
$1,200 as a result of these actions. As of June 30, 1999, the Company had paid
approximately $355 of the total $485 charged to expense and expects to pay the
remaining amounts within the next six months.

J.       SALE OF BUSINESS

         Effective March 31, 1999, the Company sold its general consulting and
general education business (consulting and education services other than its
application-related services) to a third party. Consideration totaled
approximately $10 million and consisted of a combination of cash, the Company's
common stock, and promissory notes.


                                       9
<PAGE>   11

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)


OVERVIEW

         The Company is focused on delivering open, modifiable ERP and
front-office enterprise application software solutions to mid-size U.S.
discrete manufacturing companies with annual revenues between $25 million and
$750 million. The Company has focused its resources, including product
development, marketing and sales efforts, on the needs and requirements of
companies in this market. The Company's revenues consist primarily of software
license fees and fees for services, including consulting, education and
maintenance.

         License fees represent revenue from the licensing of the Company's ERP
application products and, to a lesser extent, its development tools. License
fees also include royalties earned on the Company's ERP application products
and related intellectual properties. Service fees represent revenue from
consulting services, education services and support and maintenance services.

         The Company recognizes revenue in accordance with the American
Institute of Certified Public Accountants' SOP 97-2, as amended by SOP
98-4 and SOP 98-9. Revenue is recognized from licenses of the Company's
software products when the contract has been executed, the product(s) has been
shipped, collectibility is probable and the software license fees are fixed or
determinable. In the event that the contract provides for multiple elements
(e.g., software products, post-contract customer support, consulting services),
the total fee is allocated to these elements based on "vendor-specific
objective evidence" of fair value. If any portion of the license fees is
subject to forfeiture, refund or other contractual contingencies, the Company
will postpone revenue recognition until these contingencies have been removed.
Historically, product returns and allowances have been immaterial. The Company
generally accounts for consulting and education services separate from software
license fees for those multi-element arrangements where services are a separate
element and are not essential to the customer's functionality requirements and
there is "vendor-specific objective evidence" of fair value for these services.
Consulting and education revenue is recognized as the services are performed.
Revenue from support and maintenance activities is recognized ratably over the
term of the maintenance period, and the unrecognized portion is recorded as
deferred revenue.

         This Quarterly Report on Form 10-Q and any documents incorporated
herein by reference contain forward-looking statements that have been made
pursuant to the provisions of the Private Securities Litigation Reform Act of
1995. Such forward-looking statements are based on current expectations,
estimates and projections about the Company's industry, management's beliefs
and certain assumptions made by the Company's management. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
variations of such words and similar expressions are intended to identify such
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and assumptions
that are difficult to predict; therefore, actual results may differ materially
from those expressed or forecasted in any such forward-looking statements.
Forward-looking statements include, without limitation, statements regarding
the extent and timing of future revenues and expenses and customer demand for
the Company's products and services as described in the Company's 1998 Annual
Report on Form 10-K filed with the SEC on April 14, 1999, under




                                      10
<PAGE>   12

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)


"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Forward-Looking Statements and Associated Considerations;"
"--Fluctuations in Quarterly Activity and Results of Operations;"
"--Competition;" "--Economic and Market Condition Risks;" "Year 2000
Readiness;" "--Lengthy Sales Cycle;" "Ability to Manage Change;" "--Liquidity;"
"--Availability of Consulting Personnel;" "--Dependence on Product Development;
and Associated Risks;" "--Dependence on New Products;" "--Dependence on
PowerBuilder(R) and Other Third Party Products;" "--Dependence on Proprietary
Technology; Risks of Third-Party Claims for Infringement;" "--Expansion of
Indirect Channels; and Potential for Channel Conflict;" "--Voting Control by
Management;" "--Dependence on Key Personnel;" and "--Possible Volatility of
Stock Price." The Company assumes no obligation to update any such
forward-looking statement. It is important to note that the Company's actual
results could differ materially from those in such forward-looking statements.

RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, certain
financial data regarding the Company's revenues derived from license fees and
service fees from continuing operations:

<TABLE>
<CAPTION>
REVENUES                                            THREE MONTHS ENDED JUNE 30,                  SIX MONTHS ENDED JUNE 30,
                                                ----------------------------------          ----------------------------------
                                                 1999         CHANGE         1998            1999         CHANGE         1998
                                                ------        ------        ------          ------        ------        ------
<S>                                             <C>           <C>           <C>             <C>           <C>           <C>
License fees                                    $1,789          13%         $1,586          $3,242          10%         $2,948
Percentage of total revenues                        40%                         45%             37%                         42%
                                                ------          --          ------          ------          --          ------

Service fees                                     2,694          41%          1,915           5,421          31%          4,145
Percentage of total revenues                        60%                         55%             63%                         58%
                                                ------          --          ------          ------          --          ------
</TABLE>

         License fees. The Company's license fees are derived from licensing
the Company's application products. In addition, any royalty fees earned are
included in license fees. The Company establishes its licensing fees using a
tiered pricing approach based on the number of concurrent servers and users.
Source code licenses are available at an additional cost.

License fees revenue increased for the three month period ended June 30, 1999
and for the six month period ended June 30, 1999. The increase in the three
month period is primarily a result of the investment the Company made to
strengthen its marketing and sales organizations in the prior quarter; the six
month increase was also impacted by the purchase of an internal use license and
OEM agreement by the purchaser of the Company's former general consulting and
education business. The Company has become aware, however, that there is
significant uncertainty in the ERP software industry concerning the potential
effects associated with Year 2000 readiness. Management believes that customers
and potential customers purchasing patterns may be affected in a number of
ways. Many companies are expending significant resources to upgrade their
systems. These expenditures may result in reduced funds available to purchase
software products such those as the Company offers.

         Services fees. The Company's service fees consist of revenue from
consulting, education, and support and maintenance services on its ERP
applications products. Consulting services are primarily provided on a time and
materials basis, education services are generally priced on a per-student basis
and annual support and maintenance service fees are based on a percentage of
the related license fees. The increase in service fees for both the three month
and six month periods ending June 30, 1999 is




                                      11
<PAGE>   13

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)


attributable to productivity improvements, broader applications base and a
higher level of customizations and multi-plant implementations.

On March 31, 1999, the Company sold its general consulting and general
education business to a third party. During 1998, it also discontinued its
technology resales business. These discontinued businesses contributed revenue
of $3,809 and margins of $935 for the three months ended June 30, 1998. They
contributed revenues of $2,464 and margins of $224 for the six months ended
June 30, 1999 and revenues of $7,504 and margins of $1,552 for the six months
ended June 30, 1998.

COSTS AND EXPENSES

         The following table sets forth, for the periods indicated, certain
financial data regarding the Company's costs associated with its license fees
and services:

<TABLE>
<CAPTION>
COST OF REVENUES                                    THREE MONTHS ENDED JUNE 30,                  SIX MONTHS ENDED JUNE 30,
                                                ----------------------------------          ----------------------------------
                                                 1999         CHANGE         1998            1999         CHANGE         1998
                                                ------        ------        ------          ------        ------        ------
<S>                                             <C>           <C>           <C>             <C>           <C>           <C>

Cost of licenses                               $  235           94%         $  121          $  413          38%          $  299
Gross profit percentage                            87%                          92%             87%                          90%
                                                -----           --           -----           -----          --            -----

Cost of services                                1,934           10%          1,757           3,960           9%           3,643
Gross profit percentage                            28%                           8%             27%                          12%
                                                -----           --           -----           -----          --            -----
</TABLE>

         Cost of licenses. The cost of licenses consists primarily of
production costs, royalties associated with third-party products sold with the
Company's products, the cost associated with resales made by VAR's, and the
amortization of intangible assets. The higher cost incurred in 1999 is a result
of higher expenses associated with VAR sales in 1999.

         Cost of services. The cost of services consists primarily of
compensation and travel costs associated with providing consulting, product
support and maintenance, technical services and education. The increase in
dollar costs is associated with the increase in volume of revenue for services
both in the three and six month periods ending June 30, 1999. The increase in
gross margin for both periods is primarily a result of improved productivity
and efficiencies in part derived from the Company's work force reduction and
reorganization.

The following table sets forth, for the periods indicated, certain financial
data regarding the Company's operating expenses:
<TABLE>
<CAPTION>

OPERATING EXPENSES:                             THREE MONTHS ENDED JUNE 30,                  SIX MONTHS ENDED JUNE 30,
                                              ----------------------------------          ----------------------------------
                                               1999         CHANGE         1998            1999         CHANGE         1998
                                              ------        ------        ------          ------        ------        ------
<S>                                           <C>           <C>           <C>             <C>           <C>           <C>
General and administrative                    $1,311           17%        $1,121          $2,526           12%        $2,249
Percentage of total revenues                      29%                         32%             29%                         32%
                                              ------           --         ------          ------           --         ------

Sales and marketing                            2,053           53%         1,340           4,183           61%         2,592
Percentage of total revenues                      46%                         38%             48%                         37%
                                              ------           --         ------          ------           --         ------

Research and development                       1,071           19%           903           2,229           20%         1,857
Percentage of total revenues                      24%                         26%             26%                         26%
                                              ------           --         ------          ------           --         ------
</TABLE>



                                      12
<PAGE>   14

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)


         General and administrative (G&A). G&A expenses include compensation
paid to accounting, human resources, legal and corporate staff and related
communications and facilities expenses. The increase in G&A expenses for both
the three month and six month periods is related to unusually high outside legal
expenses primarily associated with the class action litigation referenced in
Section F, Contingencies, and settlement of certain outstanding litigation
matters.

         Sales and marketing. Sales and marketing expenses primarily consist of
compensation paid to sales and marketing personnel, cost of marketing, direct
mail and telemarketing activities, advertising, cost of public relations, trade
shows and conferences, and related communications costs. Sales and marketing
costs increased 53% and 61%, respectively, for the three and six month periods
ended June 30, 1999 over the same periods in 1998. This was primarily a result
of the Company's accelerated investments in its marketing and sales
organizations. These investments included hiring additional personnel in the
direct sales organization, including regional vice presidents, field sales
representatives and pre-sales specialists; a change in the Company's commission
structure designed to drive growth in ERP Plus application product sales; broad
investments in marketing programs focused on increasing awareness of the
Company and its products; and expansion of the Company's marketing and
telemarketing organizations.

         Research and development (R&D). R&D costs consist primarily of
compensation and related facilities and equipment costs associated with
developing, maintaining and enhancing the Company's products. Since inception,
the Company has not capitalized any internal R&D costs, as the costs incurred
during the period between the point in time that technological feasibility is
established and that a product is released to the market have been
insignificant. R & D costs increased 19% and 20%, respectively, for the three
and six month periods ended June 30, 1999 over the corresponding periods in
1998, primarily due to increased personnel costs.

         Work force reduction and other. During the first quarter of 1999, the
Company recorded a charge related to a work force reduction and other related
expenses totaling $485. This amount included severance and related costs of
$391 (11 employees, primarily management level) and costs of $94 related to
office downsizing or closings. The Company expects to realize gross annual
savings of approximately $1,200 as a result of these actions. As of June 30,
1999, the company has paid approximately $355 of the total $485 charged to
expense and expects to pay the remaining amounts within the next six months.

         Income taxes. For the three month and six month periods ended June 30,
1999, the Company recorded no income tax expense, since its net operating loss
carryforwards substantially offset any taxable income realized during the
periods.

IMPACT OF THE YEAR 2000 ISSUE

         The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Affected
computer programs or hardware that have date-sensitive software or embedded
chips may recognize a date using "00" as the year 1900 rather than the year
2000. Potential implications include system failures or miscalculations that
could impair a company's ability to conduct normal business operations and
process transactions. This Year 2000 issue affects the Company in two general
areas: (i) its software products sold to customers, and (ii) its internal
information systems.



                                      13
<PAGE>   15

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)


         Based on its assessments, management believes that the current
versions of the Company's ERP application products generally are Year 2000
ready. However, these products are developed and produced using third-party
development tools that, themselves, may be subject to Year 2000 issues. The
Company has tested its products in an attempt to identify any such issues, but
there is no assurance that all such issues have been identified and corrected.
The Company has a published Year 2000 Readiness Disclosure statement that
provides guidance to its customers and prospects on the status of the Year 2000
issue with respect to its products. From time to time, customers require this
statement to be included as a warranty in their license agreements, which the
Company will do. This could result in additional exposure for the Company to
Year 2000-related litigation. Furthermore, it has been widely reported that a
significant amount of litigation surrounding business interruptions will arise
out of Year 2000 issues. It is uncertain whether, or to what extent, the
Company may be affected by such litigation. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Forward Looking
Statements and Associated Considerations--Year 2000 Readiness" in the Company's
1998 Annual Report.

         The Company's efforts to resolve the Year 2000 issue with respect to
its internal information systems involve the following four phases: assessment,
remediation or replacement, testing and contingency planning. The Company has
completed the assessment process for its information technology and
non-information technology exposures. The Company presently believes that its
internal software systems, which include its application products and other
internally developed software and its relational database management system,
are Year 2000 ready.

         The Company has determined that it will be required to modify or
replace certain hardware and upgrade certain operating system software so that
those systems will properly utilize dates beyond December 31, 1999. The Company
presently believes that with modifications or replacements of certain hardware
and upgrades to operating system software, the Year 2000 issue can be
mitigated. However, if such modifications, replacements, and upgrades are not
made, or are not completed timely, the Year 2000 issue could have a material
impact on the operations of the Company. The Company expects to have completed
substantially all the phases of its efforts by September 30, 1999.

         The Company has queried its significant suppliers and subcontractors
that do not share information systems with the Company (external agents). To
date, the Company is not aware of any external agent with a Year 2000 issue
that would materially impact the Company's results of operations, liquidity or
capital resources. However, the Company has no means of ensuring that external
agents will be Year 2000 ready. The inability of external agents to complete
their Year 2000 resolution process in a timely fashion could materially impact
the Company. The effect of non-compliance by external agents is not
determinable.

         The Company is utilizing internal resources to address Year 2000
issues. The total cost of its Year 2000 effort is estimated to be approximately
$0.4 million and is being funded through operating cash flows. To date, the
Company has incurred approximately $0.3 million related to all phases of its
Year 2000 efforts. The remaining project costs primarily relate to
modifications to hardware and operating system software and will be expensed as
incurred.

         Management believes it has an effective program in place to resolve
the Year 2000 issue in a timely manner. As noted above, the Company has not yet
completed all of its Year 2000 efforts. In the




                                      14
<PAGE>   16

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)

event that the Company does not complete its efforts, the Company could
experience Year 2000-related disruptions that might affect its ability to serve
its customers and process transactions. In addition, disruptions in the economy
generally resulting from Year 2000 issues could also materially adversely
affect the Company. The Company also could be subject to Year 2000-related
litigation. The amount of potential liability or potential lost revenue cannot
be reasonably estimated at this time.

         The Company currently has no contingency plans in place in the event
it does not complete all phases of the Year 2000 efforts but will continue to
evaluate the need for such plans on an ongoing basis.

         In addition to the concerns discussed above on the Year 2000 issue and
how it affects the Company's products and its internal information systems,
significant uncertainty exists in the ERP software industry concerning the
potential effects associated with Year 2000 readiness. As noted previously,
management believes that customers and potential customers purchasing patterns
may be affected in a number of ways. Many companies are expending significant
resources to upgrade their systems. These expenditures may result in reduced
funds available to purchase software products such as those the Company offers.
Additionally, it is possible that certain of the Company's customers are
purchasing support contracts only to ensure that they are Year 2000 ready and
then will cancel such contracts. Many potential customers may defer purchasing
Year 2000 ready products as long as possible, accelerate purchasing such
products, switch to other systems or suppliers, or purchase the Company's
products only as an interim solution. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Forward Looking Statements
and Associated Considerations--Year 2000 Readiness" in the Company's 1998
Annual Report.

LIQUIDITY AND CAPITAL RESOURCES

         The following tables set forth, for the periods indicated, certain
financial data regarding the Company's working capital balances, cash and cash
equivalents, cash provided by (used in) operating activities, cash provided by
(used in) investing activities and cash provided by financing activities:

<TABLE>
<CAPTION>
                                                                              AS OF
                                                           -----------------------------------------------
                                                           June 30,                           December 31,
                                                             1999             CHANGE              1998
                                                           --------           ------          ------------
<S>                                                        <C>                <C>             <C>
Working capital                                             $8,063                9%             $7,386
Cash and cash equivalents                                    7,742               17%              6,594
</TABLE>

<TABLE>
<CAPTION>
                                                                            FOR THE
                                                                    SIX MONTHS ENDED JUNE 30,
                                                           --------------------------------------------
                                                            1999              CHANGE              1998
                                                           -------            ------              -----
<S>                                                        <C>                <C>                 <C>
Cash provided (used in) by operating activities            ($5,597)            >100%              $ 995
Cash provided (used in) by investing activities              6,725             >100%               (442)
Cash provided by financing activities                           20              (83%)               115
</TABLE>

         Working capital and cash and cash equivalents increased as of June 30,
1999, compared to December 31, 1998, principally due to proceeds from the sale
of the Company's general consulting and general education business to a third
party, partially offset by negative cash flow from operations.


                                      15
<PAGE>   17

                             POWERCERV CORPORATION

                 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                            (DOLLARS IN THOUSANDS)


         For the six month period ended June 30, 1999, cash used by operating
activities totaled $5,597, due principally to lower than anticipated license
revenue in the first quarter and increased operating expenses for the six
month period as a result of the Company's investment in its sales and
marketing organizations.

         The Company's cash provided by investing activities totaled $6,725 for
the six month period ended June 30, 1999, principally due to the proceeds from
the sale of the Company's general consulting and general education business
($6,680 in the six months ended June 30, 1999) and proceeds from a return of
the Company's investment in a third party ($250), offset by purchases of
property and equipment ($205).

         At June 30, 1999, the Company's primary source of liquidity consisted
of its cash and cash equivalents balance of $7,742 and its short term
receivables of $4,294. The Company has an agreement with its bank for a credit
facility of $10 million ("1999 Line of Credit"). As of June 30, 1999 there was
no outstanding balance against this facility. The 1999 Line of Credit consists
of a commitment for a revolving line of credit totaling $5 million, with an
additional $5 million of uncommitted funding. The agreement requires the
Company to maintain certain financial ratios. The first $2 million of the 1999
Line of Credit is unsecured, with an interest rate equal to the 90-day floating
LIBOR rate plus 150 or 200 basis points, based on the Company's tangible net
worth. Draws from $2 million to $5 million will be conditioned upon the
Company's compliance with an additional financial ratio, or alternatively, may
be secured by the Company's accounts receivable and inventory. Draws in excess
of $5 million will be subject to terms agreed to at the time of the draw.

         The Company believes that, based upon its projected revenues and
operating expense levels, that funds generated from operations, existing cash
and cash equivalents and its short-term accounts receivable, together with the
availability of the 1999 Line of Credit, will be sufficient to finance the
Company's operations at least for a reasonable period of time. See "Forward
Looking Statements and Associated Considerations--Liquidity" as set forth in
the Company's 1998 Annual Report.


                                      16
<PAGE>   18

                             POWERCERV CORPORATION

         ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK


         The Company had no holdings of derivative financial or commodity
instruments at June 30, 1999. The Company has no significant exposure to
interest rate or foreign currency exchange rate risks. An increase in interest
rates of 100 basis points would not significantly impact the Company's net
income. Generally, all of the Company's business is transacted in U.S. dollars.
Accordingly, foreign exchange rate fluctuations should not have a significant
impact on the Company.



                                      17
<PAGE>   19

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT




The Board of Directors
PowerCerv Corporation

We have reviewed the accompanying condensed consolidated balance sheet of
PowerCerv Corporation and subsidiary as of June 30, 1999, and the related
condensed consolidated statements of operations for the three-month and the
six-month periods ended June 30, 1999 and 1998 and the condensed statements of
cash flows for the six month periods ended June 30, 1999 and 1998. These
financial statements are the responsibility of the Company's management. The
condensed consolidated statements of operations and cash flows for the
three-month period ended March 31, 1998, not separately presented herein, were
reviewed by other accountants whose report (dated April 17, 1998) stated that
they were not aware of any material modifications that should be made to those
statements for them to be in conformity with generally accepted accounting
principles.

We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements at June 30, 1999, and for the
three-month and six-month periods then ended for them to be in conformity with
generally accepted accounting principles.



Tampa, Florida
July 16, 1999



                                      18
<PAGE>   20

                             POWERCERV CORPORATION

                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         A complaint was filed on July 24, 1997 in the United States District
Court for the Middle District of Florida, captioned J. Conrad Lifsey vs. Harold
R. Ross, Gerald R. Wicker, Marc J. Fratello, Roy E. Crippen, III, Donald B.
Hebb, Jr., Thomas S. Roberts, PowerCerv Corporation, Alex Brown & Sons, Inc.,
Robertson, Stephens & Company, ABS Capital Partners, L.P., Summit Investors II,
L.P., and Summit Ventures III, L.P. The complaint purports to be a class action
on behalf of those persons who purchased shares of the Company's common stock
from March 1, 1996 (the date of the Company's initial public offering of its
common stock ("IPO")) through July 24, 1996. The complaint alleges, among other
things, that the defendants violated the Securities Act of 1933 and the
Securities Exchange Act of 1934 in connection with the Company's IPO and in its
subsequent securities filings, press releases and other public statements. The
plaintiff seeks damages of an unspecified amount, rescission of certain
securities sales and certain other remedies. On March 19, 1998, the defendants
filed their motions to dismiss this complaint. An effect of this motion filing
is to postpone any discovery on this case until after the motions are ruled on
by the Court. No ruling has yet been handed down. On April 5, 1998, the Court
ordered the parties to attend a mediation conference by July 30, 1998. The
parties did not resolve this lawsuit in the mediation conference. In June of
1999 the Court once again recommended to the parties that they attend a
mediation conference to resolve the matter. The parties agreed to forego a
second mediation conference until the Court's ruling on the motion to dismiss
the claim. The defendants continue to deny any wrongdoing and intend to contest
the suit vigorously.

         The Company is also subject to miscellaneous legal proceedings in the
normal course of business. The Company is currently defending these proceedings
and claims and anticipates that it will be able to resolve these matters in a
manner that will not have a material adverse effect on the Company's
consolidated financial position.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company held its Annual Meeting of Shareholders on June 2, 1999
("1999 Annual Meeting"). At the 1999 Annual Meeting, the shareholders voted to
elect Marc J. Fratello, Roy E. Crippen, III, Michael J. Simmons, O.G. Greene
and Stuart C. Johnson as directors of the Company, to hold office until the
Company's 2000 Annual Meeting and until their successors are elected and
qualified or earlier resignation, removal from office or death. The
shareholders also voted to approve a proposal to amend the Company's 1995 Stock
Option Plan ("Stock Option Plan") to increase the number of shares available
for issuance under the Stock Option Plan from 3,675,000 shares to 4,675,000
shares.

         The total number of shares of the Company's common stock, $.001 par
value ("Common Stock"), issued, outstanding and entitled to vote at the 1999
Annual Meeting was 13,147,408 shares, of which 12,051,417 shares of Common
Stock were present in person or by proxy. The following list indicates the
number of votes received by each of the nominees for the Company's Board of
Directors:

<TABLE>
<CAPTION>
                NAME                       VOTES FOR               ABSTENTIONS
                ----                       ---------               -----------
          <S>                              <C>                     <C>
          Marc J. Fratello                 11,169,750                881,667
          Roy E. Crippen, III              11,169,767                881,650
          Michael J. Simmons               11,174,167                876,950
          O.G. Greene                      11,169,767                881,650
          Stuart C. Johnson                11,169,767                881,650
</TABLE>


                                      19
<PAGE>   21
 The Stock Option Plan proposal was approved by a majority of the shareholders
present and entitled to vote at the 1999 Annual Shareholders Meeting.
Specifically, of the 12,051,417 shares of Common Stock present in person or by
proxy, a total of 7,653,459 voted in favor of this proposal, 1,635,040 shares
of Common Stock voted against, and 2,762,918 shares of Common Stock abstained
from voting.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         10.1  Loan Agreement and related promissory note, dated March 29,
               1999, among NationsBank, N.A. and the Company, related to the
               Company's $10,000,000 credit facility (incorporated herein by
               reference from Exhibit Number 10.4 to the Company's 1998 Annual
               Report).

         10.2  Asset Purchase Agreement, dated March 30, 1999, by and between
               the Company and R.O.I Consulting, Inc. (incorporated herein by
               reference from Exhibit Number 2 to the Company's Current Report
               on Form 8-K filed with the SEC on April 13, 1999).

         15.1  Accountants' Letter regarding Unaudited Interim Financial
               Information.

         27.1  Financial Data Schedule.

(b)      Reports on Form 8-K

         The Company filed a report on Form 8-K on April 13, 1999.


                                      20
<PAGE>   22

                             POWERCERV CORPORATION

                                   FORM 10-Q

                 (for the quarterly period ended June 30, 1999)


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.


                                       PowerCerv Corporation



Date:  August 16, 1999                 /s/ Marc J. Fratello
                                       ---------------------------------------
                                       Marc J. Fratello,
                                       Chairman and Chief Executive Officer
                                       (Duly Authorized Officer)



Date:  August 16, 1999                 /s/ Michael J. Simmons
                                       ---------------------------------------
                                       Michael J. Simmons,
                                       President and Chief Operating Officer
                                       (Duly Authorized Officer)



Date:  August 16, 1999                 /s/ Lawrence J. Alves
                                       ---------------------------------------
                                       Lawrence J. Alves,
                                       Chief Financial Officer, Treasurer
                                       (Principal Financial Officer)




                                      21