<PAGE>   1
                                    FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549



             [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                      FOR THE QUARTER ENDED MARCH 31, 1997

                                       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 0-25040

                                  APPLIX, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


     MASSACHUSETTS                                            04-2781676
(STATE OR OTHER JURISDICTION OF                            (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                           IDENTIFICATION NUMBER)


                112 TURNPIKE ROAD, WESTBORO, MASSACHUSETTS 01581
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                  (508)870-0300
                         (REGISTRANT'S TELEPHONE NUMBER)

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
                                       ---     ---

         INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S
CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE:

         REGISTRANT HAD 9,957,106 SHARES OF COMMON STOCK, $.0025 PAR VALUE,
OUTSTANDING AT MAY 9, 1997.



<PAGE>   2



                                  APPLIX, INC.
                                      INDEX

                                                                 Page No.
                                                                 --------


Part I - Financial Information

Item 1.  Consolidated Financial Statements:

     Consolidated Balance Sheets as of
          March 31, 1997 (unaudited) and December 31, 1996           3

     Consolidated Statements of Operations (unaudited)
          for the three months ended March 31, 1997 and 1996         4

     Consolidated Statements of Cash Flows (unaudited)
          for the three months ended March 31, 1997 and 1996         5

     Notes to Consolidated Financial Statements                     6-7

Item 2.  Management's Discussion and Analysis of Financial
     Condition and Results of Operations                           7-10

Part II - Other Information

Item 5.  Other Information                                          11

Item 6.  Exhibits and Reports on Form 8-K                           11

Signature                                                           12




                                      - 2 -


<PAGE>   3



PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

<TABLE>
                                                       APPLIX, INC.
                                                CONSOLIDATED BALANCE SHEETS
                                             (IN THOUSANDS EXCEPT SHARE DATA)

<CAPTION>
                                                                       MARCH 31,   DECEMBER 31,
                                                                         1997          1996
                                                                      (UNAUDITED)
                                                                      -----------  ------------

                                    ASSETS
                                    ------

<S>                                                                    <C>           <C>     
Current assets:
     Cash and cash equivalents                                         $ 19,315      $ 19,882
     Accounts receivable, less allowance for doubtful accounts            
          of $506 and $518 at March 31, 1997 and
          December 31, 1996, respectively                                 9,678        12,704
     Other current assets                                                 2,587         2,706
     Deferred tax asset                                                   2,946         2,946
                                                                       --------      --------
          Total current assets                                           34,526        38,238

Property and equipment, at cost                                          10,417        10,057
Less accumulated amortization and depreciation                           (5,847)       (5,401)
                                                                       --------      --------
     Net property and equipment                                           4,570         4,656
Capitalized software costs, net of accumulated
       amortization of $807 and $549 at March 31, 1997
     and December 31, 1996, respectively                                    482           482
Other assets                                                              1,020         1,138
                                                                       --------      --------
          Total assets                                                 $ 40,598      $ 44,514
                                                                       ========      ========


                   LIABILITIES AND STOCKHOLDERS' EQUITY
                   ------------------------------------
Current liabilities:
     Accounts payable                                                  $  1,599      $  3,012
     Accrued liabilities                                                  3,775         6,098
     Deferred revenue                                                     8,020         8,004
                                                                       --------      --------
          Total current liabilities                                      13,394        17,114
Stockholders' equity:
     Preferred stock, $0.01 par value; 1,000,000 shares authorized
     Common stock, $.0025 par value; 30,000,000 shares                       
          authorized; 10,227,506 and 10,182,562 shares issued at
          March 31, 1997 and December 31, 1996,
          respectively                                                       25            25
     Capital in excess of par value                                      40,496        40,053
     Accumulated deficit                                                (12,200)      (11,519)
     Treasury stock, 278,698 shares, at cost                               (933)         (933)
     Foreign currency translation adjustment                               (184)         (226)
                                                                       --------      --------
          Total stockholders' equity                                     27,204        27,400
                                                                       --------      --------
          Total liabilities and stockholders' equity                   $ 40,598      $ 44,514
                                                                       ========      ========

</TABLE>

        The accompanying notes are an integral part of the consolidated
                             financial statements.


                                      -3-


<PAGE>   4




                                  APPLIX, INC.
<TABLE>

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS EXCEPT PER SHARE DATA)

<CAPTION>

                                                               THREE MONTHS ENDED
                                                               ------------------
                                                             MARCH 31,      MARCH 31,
                                                               1997           1996
                                                               ----           ----

<S>                                                          <C>           <C>    
License revenue                                              $  7,510      $  7,809
Service revenue                                                 3,586         2,979
                                                             --------      --------

          Total revenues                                       11,096        10,788

Cost of license revenue                                           813           522
Cost of service revenue                                         1,535         1,077
                                                             --------      --------

          Gross margin                                          8,748         9,189

Operating expenses:
          Selling and marketing                                 6,946         4,680
          Research and development                              2,263         1,448
          General and administrative                              857           788
                                                             --------      --------

          Total operating expenses                             10,066         6,916
                                                             --------      --------

Operating (loss) income                                        (1,318)        2,273
Interest income, net                                              230           327
                                                             --------      --------

Net (loss) income before income taxes                          (1,088)        2,600

Provision for (benefit from) income taxes                        (407)          908
                                                             --------      --------

Net (loss) income                                            $   (681)     $  1,692
                                                             ========      ========

Net (loss) income per common and common equivalent share
(see Note C)                                                 $  (0.07)     $   0.16
                                                             ========      ========

Weighted average common and common equivalent shares
outstanding                                                     9,933        10,769
                                                             ========      ========
</TABLE>

               The accompanying notes are an integral part of the
                       consolidated financial statements.

                                      -4-

<PAGE>   5



                                  APPLIX, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                  THREE MONTHS ENDED
                                                                                  ------------------

                                                                                 MARCH 31,      MARCH 31,
                                                                                   1997           1996
                                                                                   ----           ----

<S>                                                                              <C>             <C>    
Operating activities:
Net income (loss)                                                                $  (681)        $ 1,692
Adjustments to reconcile net income (loss) to net cash provided by (used in)                 
operating activities:                                                                        
   Depreciation                                                                      446             268
   Amortization of capitalized software costs                                        258             101
   Amortization of goodwill                                                          125               -
   Provision for doubtful accounts                                                   (12)              -
   Changes in operating assets and liabilities:                                              
     Accounts receivable                                                           3,038          (1,259)
     Other assets                                                                    112             110
     Accounts payable                                                             (1,413)           (409)
     Accrued liabilities                                                          (2,323)            125
     Deferred revenue                                                                 16              75
                                                                                 -------         -------

   Cash provided by (used in) operating activities                                  (434)            703

Investing activities:                                                                        
   Purchase of property and equipment                                               (360)           (736)
   Capitalized software costs                                                       (258)           (219)
                                                                                 -------         -------
   Cash used in investing activities                                                (618)           (955)

Financing activities:                                                                        
   Principal payments under capital lease obligations                                  -             (19)
   Proceeds from exercise of incentive stock options and                             
     employee stock purchase plans                                                   443             444         
                                                                                 -------         -------
   Cash provided by financing activities                                             443             425

   Effect of exchange rate changes on cash                                            42            (125)
                                                                                 -------         -------
   Net increase (decrease) in cash and cash equivalents                             (567)             48

Cash and cash equivalents at beginning of period                                  19,882          25,380
                                                                                 -------         -------
Cash and cash equivalents at end of period                                       $19,315         $25,428
                                                                                 =======         =======
Supplemental disclosure of cash flow information:                                            

Cash paid during the period for interest                                         $     -         $     3
                                                                                 =======         =======
Cash paid during the period for taxes                                            $    44         $   282
                                                                                 =======         =======
</TABLE>


               The accompanying notes are an integral part of the
                       consolidated financial statements.


                                      - 5 -


<PAGE>   6



                                  APPLIX, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  NATURE OF BUSINESS:
         Applix develops, markets and supports Applixware, Applix TM1, Applix
Anyware and Applix Enterprise. Applixware is an integrated family of software
applications and tools for the real time enterprise, which provides the ability
to access, analyze and communicate dynamically changing (real time) information
such as stock market data or information from databases. Applix TM1 software is
multi-dimensional on-line analytical processing software for real time on-demand
calculations and analysis. Applix Anyware is a family of software products for
Internet and Intranet applications which provides users the ability to connect
to server-based information resources via Java-enabled Web browsers such as
Netscape Navigator. Applix Enterprise is a family of software products that
offers customers the ability to research, track and escalate activities for
customer interaction applications, including help desk and customer service.

B.  BASIS OF PRESENTATION:
         The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting only of those of a normal
recurring nature, necessary for a fair presentation of the Company's financial
position, results of operations and cash flows at the dates and for the periods
indicated. While the Company believes that the disclosures presented are
adequate to make the information not misleading, these financial statements
should be read in conjunction with the audited consolidated financial statements
and related notes included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
         The results of the three month period ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full fiscal year.

C.  COMPUTATION OF NET INCOME PER COMMON SHARE
         Net income per common share is computed based upon the weighted average
number of common and common equivalent shares outstanding. Common equivalent
shares are included in the per share calculations where the effect of their
inclusion would be dilutive. Common equivalent shares result from the assumed
exercise of outstanding common stock options at the average market price during
the period (the treasury stock method). Fully diluted net income per common
share is substantially the same as primary earnings per share.

D. RECENTLY ISSUED ACCOUNTING STANDARD
         In February, 1997, The Financial Accounting Standards Board issued
Statement on Financial Accounting Standards No. 128, Earnings per Share (SFAS
128). This statement attempts to simplify current standards used in the United
States for computing earnings per share and make them more comparable with
international standards. SFAS 128 replaces APB Opinion 15 and related
interpretations (APB 15). APB 15 requires the dual presentation of primary and
fully diluted earnings per share. Primary EPS shows the amount of income
attributed to each share of common stock if every common stock equivalent were
converted into common stock. 

                                      -6-
<PAGE>   7


Fully diluted EPS considers common stock equivalents and all other securities
that could be converted into common stock.
         SFAS 128 simplifies the computation of EPS by replacing the
presentation of primary EPS and fully-diluted EPS with a presentation of basic
EPS and diluted EPS, respectively. Basic EPS includes no dilution and is
computed by dividing income available to common stockholders by all the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution of securities that could share in the earnings
of an entity, similar to fully diluted EPS. SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997, including interim
periods, and earlier application is not permitted. SFAS 128 requires restatement
of all prior period earnings per share data. The Company will adopt SFAS 128 in
1997, and has not yet determined the impact.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
RESULTS OF OPERATIONS

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1996

         From the second quarter of 1993 through the fourth quarter of 1996, the
Company's revenues increased over the prior quarter. In support of that growth,
the Company's infrastructure and employee base have grown accordingly. For the
quarter ended March 31, 1997, the Company experienced disappointing sales in its
European operations, and several large anticipated sales in other territories
did not close during the quarter. Lower than expected revenues, combined with
the Company's existing expense levels, resulted in a net loss. In response to
these results, the Company is refocusing its business strategy, with increased
emphasis on its emerging product groups, represented by the Applix Enterprise
and Applix TM1 product lines. In addition, the Company is in the process of
consolidating certain of the functions in its European subsidiaries, which has
resulted in a reduction of its European employee base by 10 people, and is
realigning its domestic resources according to current product needs, which has
resulted in a reduction of its domestic work force by 10.
         License revenue decreased 4% to $7,510,000 for the quarter ended March
31, 1997 from $7,809,000 for the quarter ended March 31, 1996. Domestic license
revenue increased 6% to $4,824,000 from $4,563,000 for the same period in 1996.
International license revenue decreased 17% to $2,686,000 from $3,246,000 for
the same period in 1996. Revenue from the financial services sector increased 1%
to $3,747,000 from $3,693,000 for the quarter ended March 31, 1996. Revenue from
the government sector increased 86% to $2,381,000 from $1,279,000 for the
quarter ended March 31, 1996. Revenue from the government sector has fluctuated
significantly in the past, and the Company expects fluctuations to continue. The
Company's future operating results will be partially dependent upon the 
continued acceptance of Applixware, and the success of the Applix Enterprise, 
Applix TM1 and Applix Anyware products.
         Service revenue increased 20% to $3,586,000 (or 32% of total revenues)
from $2,979,000 (or 28% of total revenues) for the same period in 1996. This
increase was due to increased maintenance revenue from the Company's growing
customer base as well as an increased emphasis by the Company on selling
training and consulting services.
         Of the total revenue for the quarter ended March 31, 1997, 74% was
derived from the Decision Support Software (DSS) product line (i.e., Applixware,
Anyware and TM1), and 26% was derived from the Customer Interaction Software
(CIS) product line (i.e., Enterprise). For the quarter ended March 31, 1996, the
revenue was derived 89% from the DSS product line, and 11% from the CIS product
line.


                                      -7-


<PAGE>   8


         Gross margin decreased to 79% for the quarter ended March 31, 1997 from
85% for the quarter ended March 31, 1996. License revenue gross margin decreased
to 89% from 93% for the same period in 1996 primarily due to the reduction in
license revenue, and the increase in capitalized software amortization and
royalty costs. A portion of the royalty increase was attributable to the
increased sales of the Enterprise product, which has a higher royalty expense
than the Applixware product line. Service revenue gross margin decreased to 57%
for the quarter ended March 31, 1997 from 64% for the quarter ended March 31,
1996, due to the increase in the number of support and consultant employees.
         Selling and marketing expenses, which include domestic sales and 
marketing expenses and the cost of the Company's international operations,
increased 48% to $6,946,000 for the quarter ended March 31, 1997 from $4,680,000
for the quarter ended March 31, 1996. The expense increase was due primarily to
increased staffing and marketing programs to support the Company's anticipated
sales growth and the acquisition of Sinper Corporation in October 1996. These
expenses increased as a percentage of total revenues to 63% for quarter ended
March 31, 1997 from 43% for quarter ended March 31, 1996. Additionally, the
Company is refocusing its investment in marketing activities for the emerging
products groups, represented by the Applix Enterprise and Applix TM1 product
lines. The Company expects to maintain current levels of spending for the
remainder of 1997. However, the current spending level as a percentage of
revenue may not be indicative of spending levels for future years due to this
marketing investment.
         Research and development expenses, which consist primarily of employee
salaries and benefits and related expenses, increased 56% to $2,263,000 for the
quarter ended March 31, 1997 from $1,448,000 for the quarter ended March 31,
1996, and increased as a percentage of total revenues to 20% for the quarter
ended March 31, 1997 from 13% for the quarter ended March 31, 1996. The increase
in these expenses was primarily due to the hiring of additional personnel and
the acquisition of Sinper Corporation in October 1996. Total research and
development expenditures, including capitalized software costs, were $2,521,000,
including $258,000 in capitalized software development costs, or 23% of total
revenues for the quarter ended March 31, 1997 and $1,667,000, including $219,000
in capitalized software development costs, or 15% of total revenues for the
quarter ended March 31, 1996.
         General and administrative expenses, which include the costs of the
finance, human resources and administrative functions, increased 9% to $857,000
from $788,000 for the same period in 1996, and increased as a percentage of
total revenues between these periods to 8% from 7%.
         Interest income decreased to $230,000 from $327,000 due to lower cash
balances available for investments as a result of the purchase of Sinper
Corporation in October, 1996 and the use of operating cash during the quarter
ended March 31, 1997.
         The Company recorded a provision for income tax benefit for the quarter
ended March 31, 1997 of $407,000 consistent with the Company's estimated annual
effective tax rate of 37% compared to a provision of $908,000 or 35% of net
income for the same period in 1996. In 1997, the Company increased the effective
tax rate after determining that anticipated income would be sufficient to enable
the Company to utilize its net operating loss carryforwards and tax credit
carryforwards.
         This Form 10-Q contains a number of forward-looking statements. Any
statements contained herein (including without limitation statements to the
effect that the Company or its management "believes", "expects", "anticipates",
"plans", and similar expressions) that are not statements of historical fact
should be considered forward-looking statements. There are a 



                                      -8-

<PAGE>   9


number of important factors that could cause the Company's actual results to
differ materially from those indicated by such forward-looking statements. These
factors include, without limitation, those set forth below.
         During the past several years, the Company has derived the substantial
majority of its revenue from its Applixware product family; however, Applixware
sales have been declining in recent quarters. The Company introduced the Applix
Enterprise product line, based on technology acquired in its acquisition of
Target Systems Corporation in late 1995, and introduced its Applix TM1 product
line, acquired through its acquisition of Sinper Corporation, in late 1996. In
addition, the Company has developed and introduced the Applix Anyware product
line. The future success of the Company is substantially dependent upon these
product lines, and there can be no assurance that these product lines will
achieve the sales levels anticipated by the Company. Moreover, it is possible
that the introduction of certain of these new product lines may have an adverse
affect on the sales of the Company's existing products. In addition, the
existence of a number of different product lines presents management, sales and
marketing, and product development challenges that the Company has not had to
address in the past, and there can be no assurance that the Company will be
successful in addressing these challenges.
         The Company's DSS product line is marketed as real-time decision
support software. Accordingly, the Company's future success is substantially
dependent upon the growth of the demand for real-time decision support solutions
in a number of industry sectors and the Company's ability to identify this
demand, develop solutions for the industry-specific needs and successfully
market its products to customers requiring such solutions. In addition, the
Company's success within any particular market for real-time decision support
applications is dependent in large part upon its ability to establish strategic
marketing relationships with leading vendors within that market.
         Substantially all of the Applixware licenses sold by the Company are 
for use on UNIX operating systems. As a result, the Company's financial
performance is significantly dependent upon the continued market acceptance of
this operating system and continued sales of UNIX-based workstations,
particularly by Sun Microsystems. With newer operating systems that permit
32-bit processing on the desktop, such as Microsoft Windows/NT and Windows 95,
the Company is now competing directly with vendors of PC software applications
such as Microsoft, Lotus and Novell. This represents a more competitive
environment than the Company has faced in its UNIX market and will likely result
in lower prices and lower gross margins for the Company's products.
         The Company is still dependent to a significant degree on revenue from
domestic and international customers in the securities trading industry, which
has been the first industry to embrace real-time decision support solutions.
License revenue from the financial services sector comprises over 40% of the
Company's total license revenue, and the Company believes that the substantial
majority of its financial services sector revenue was derived from companies
engaged in the trading of securities. The securities trading industry is
volatile as a result of its dependence upon unpredictable factors such as
economic conditions and securities market conditions. The Company's financial
performance will be subject to, and may be adversely affected by, factors
affecting the economic performance and capital expenditure levels of the
securities trading industry.
         Future revenue growth will also depend significantly on sales from the
Applix Enterprise product line in the CIS market. This market is growing
rapidly, but the Company faces intense competition from larger companies also in
this market, such as Remedy, Vantive, and Clarify.
         The Company's quarterly operating results have varied and may continue
to vary significantly depending on factors such as the timing of significant
orders, the timing of new product introductions and upgrades by the Company and
its competitors, and the mix of distribution channels through which the products
are sold. Revenues are particularly difficult to predict because of the sales
cycle of the Company's products, which varies substantially from customer to
customer and industry to industry. The majority of the Company's license revenue
in a quarter is derived from orders received in that quarter. Accordingly,
delays in orders are 



                                      -9-

<PAGE>   10


likely to result in the associated revenue not being realized by the Company in
that period. Moreover, the Company's expense levels are based in part on
expectations of future revenue levels, and a shortfall in the expected revenue
could therefore result in a disproportionate decrease in the Company's net
income.
         Most of the Company's international sales through subsidiaries are
denominated in foreign currencies. Accordingly, a decrease in the value of
foreign currencies relative to the U.S. dollar could result in a significant
decrease in U.S. dollar revenue received by the Company for its international
sales. Due to the number of currencies involved in the Company's international
sales and the volatility of foreign currency exchange rates, the Company cannot
predict the effect of exchange rate fluctuations on future operating results. To
date, foreign currency fluctuations have not had a material adverse effect on
the Company's operating results. The Company has engaged in hedging transactions
to cover its currency translation exposure or intercompany balances for the
purpose of mitigating the effect of foreign currency fluctuations. The
international portion of the Company's business is also subject to a number of
inherent risks, including difficulties in building and managing foreign
operations and foreign reseller networks, difficulties or delays in translating
products into foreign languages, import/export duties and quotas, and unexpected
regulatory, economic or political changes in foreign markets.
         License revenue from sales (directly or indirectly) to branches or
agencies of the U.S. Government represented approximately 20%, 28% and 14% of
total license revenue during 1996, 1995 and 1994, respectively. The Company
typically derives its government contract revenue from a relatively small number
of subcontract awards which tend to be significant in amount for a company of
Applix's size. Consequently, any failure to obtain a particular subcontract
award, or any delay on the part of the government agency in making the award or
ordering products under an awarded contract, could have a material adverse
effect on the financial performance of the Company within a given period, and
the Company's government contract revenue is therefore likely to continue to
fluctuate significantly from period to period.

LIQUIDITY AND CAPITAL RESOURCES

         The Company used funds from operations of $434,000 for the three months
ended March 31, 1997. An additional $618,000 was used in investing activities
for the purchase of equipment, and in capitalized software costs. $443,000 was
generated from proceeds of the exercise of incentive stock options and employee
stock purchase plans. As of March 31, 1997, the Company had cash and cash
equivalents of $19,315,000 and working capital of $21,132,000.
         The Company believes that the funds currently available will be
sufficient to fund the Company's operations at least through the next twelve
months. The Company has no commitments or specific plans for any significant
capital expenditures in 1997.
         To date, inflation has not had a material adverse effect on the 
Company's operating results.



                                      -10-
<PAGE>   11



                                  APPLIX, INC.



PART II.  OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

         On April 29, 1997, the Board of Directors approved a stock option
exchange program (the "Exchange Program"), pursuant to which full-time employees
holding stock options issued in 1995, 1996 and 1997 under the Company's 1994
Equity Incentive Plan with an exercise price of $7.00 or more per share were
given the opportunity to exchange the unexercised portion of such options (the
"Existing Options") for new options (the "New Options"). The New Options will
cover such number of shares as is equal to the unexercised portion of the
Existing Options and shall have an exercise price of $3.25 per share (the fair
market value of the Company's Common Stock on such date). The New Options will
have similar terms as the Existing Options, but will restart a five-year vesting
schedule on the date of grant of the New Options.
         The Company uses stock options as a significant element of the
compensation of employees, in part because it believes options provide an
incentive to employees to maximize shareholder value. Stock options, because
they become exercisable over time, also serve as a means of retaining employees.
Because the market value of the Company's Common Stock has fallen below the
exercise price of most outstanding options, the value of such stock options as a
means of motivation and retaining employees has been significantly diminished.
Accordingly, the Board of Directors has concluded that the Company needed to
restore the value of the existing stock options as a means of motivating,
retaining and providing incentive to employees in order to promote the
successful implementation of the Company's growth strategies.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A)  EXHIBITS
The exhibit filed as a part of this Form 10-Q is the following:

EXHIBIT 27.1:  Financial Data Schedule



                                      -11-


<PAGE>   12



                                   SIGNATURE


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


                                       APPLIX, INC.


                                       By: /s/ Patrick J. Scannell, Jr.
                                          -----------------------------------
                                           Patrick J. Scannell, Jr.
                                           Executive Vice President
                                           Chief Financial Officer and Treasurer




Date:   May 12, 1997




                                      -12-