UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON DC 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 March 31, 1998

                                       OR

[ ]  TRANSITION   REPORT  PURSUANT  TO   SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE  ACT OF 1934  FOR THE  TRANSITION  PERIOD  OF FROM  __________  TO
     __________

Commission file number 0-21077

                        INTERLINK COMPUTER SCIENCES, INC.
             (Exact name of registrant as specified in its charter)


       Delaware                                          94-2990567
(State of incorporation)                    (IRS Employer Identification Number)

                             47370 Fremont Boulevard
                            Fremont, California 94538
                                 (510) 657-9800

          (Address and telephone number of principal executive offices)

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

  Indicate by check mark whether  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, and (2) has been subject to such filing
                       requirements for the past 90 days.

                                  YES X   NO
                                     ---    ---

      8,066,277 shares of the registrant's Common stock, $0.001 par value,
                       were outstanding as of May 1, 1998


<PAGE>


                        INTERLINK COMPUTER SCIENCES, INC.
                                AND SUBSIDIARIES

                                    CONTENTS

                                                                            Page
                                                                            ----
                          PART I: FINANCIAL INFORMATION

Item 1.  Financial Statements
             Condensed Consolidated Balance Sheets:
                 March 31, 1998 and June 30, 1997.............................4
             Condensed Consolidated Statements of Operations:
                 Three and nine months ended March 31, 1998 and 1997..........5
             Condensed Consolidated Statements of Cash Flows:
                 Nine months ended March 31, 1998 and 1997....................6
             Notes to Condensed Consolidated Financial Statements.............7

Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.............................13
         Risk Factors that may affect Future Results.........................21


                           PART II: OTHER INFORMATION

Item 1   Legal Proceedings...................................................31
Item 4   Submission of Matters to a Vote of Security Holders.................31
Item 6   Exhibits and Reports on Form 8-K....................................32

Signatures    ...............................................................33

                                       2

<PAGE>


                          PART I: FINANCIAL INFORMATION

                                       3

<PAGE>


<TABLE>
                                INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                                  (in thousands)

<CAPTION>
                                                                                  March 31,             June 30,
                                                                                    1998                  1997
                                                                                  --------              --------
ASSETS:                                                                         (unaudited)
<S>                                                                               <C>                   <C>     
    Cash and cash equivalents ........................................            $ 20,059              $ 28,106
    Accounts receivable, net .........................................               7,328                 9,752
    Inventories ......................................................                 334                   674
    Current deferred tax asset .......................................               7,132                 2,092
    Other current assets .............................................                 731                 1,240
                                                                                  --------              --------
      Total current assets ...........................................              35,584                41,864
    Property and equipment, net ......................................               2,582                 1,676
    Long-term deferred tax asset .....................................               3,615                 1,541
    Purchased software products & other non-current assets ...........               1,763                 3,282
                                                                                  --------              --------
      Total assets ...................................................            $ 43,544              $ 48,363
                                                                                  ========              ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
    Current portion of long-term debt ................................            $    780              $    314
    Accounts payable .................................................               1,221                 1,421
    Deferred maintenance and product revenue .........................               6,790                 7,488
    Accrued compensation .............................................               1,682                 2,694
    Accrued income taxes .............................................               1,121                 2,296
    Other accrued liabilities ........................................               3,355                 2,296
                                                                                  --------              --------
      Total current liabilities ......................................              14,949                16,509
Long-term debt, less current portion .................................                 389                   802
Defered maintenance revenue ..........................................               1,143                 1,403
Other liabilities ....................................................               2,379                   975
Liabilities retained in connection with sale of Harbor (Note 4) ......               1,232                  --
                                                                                  --------              --------
      Total liabilities ..............................................              20,092                19,689
                                                                                  --------              --------
Commitments and contingencies (Note 6)
Common stock .........................................................                   7                     7
Additional paid-in capital ...........................................              52,156                50,814
Cumulative translation adjustment ....................................                (507)                 (591)
Accumulated deficit ..................................................             (28,204)              (21,556)
                                                                                  --------              --------
      Total stockholders' equity .....................................              23,452                28,674
                                                                                  --------              --------
      Total liabilities and stockholders' equity .....................            $ 43,544              $ 48,363
                                                                                  ========              ========

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

                                                                 4

<PAGE>


<TABLE>
                                    INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
                                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                         (in thousands, except per share amounts)

<CAPTION>
                                                              Three months ended                 Nine months ended
                                                                    March 31,                          March 31,
                                                            --------------------------         --------------------------
                                                              1998              1997             1998             1997
                                                            --------          --------         --------          --------
Revenues:                                                          (unaudited)                        (unaudited)
<S>                                                         <C>               <C>              <C>               <C>     
    Product .......................................         $  4,806          $  7,546         $ 11,027          $ 18,338
    Maintenance and consulting ....................            3,194             3,611           10,036            11,177
                                                            --------          --------         --------          --------
      Total revenues ..............................            8,000            11,157           21,063            29,515
                                                            --------          --------         --------          --------

Cost of revenues:
    Product .......................................              378               564            1,006             1,927
    Maintenance and consulting ....................            1,202             1,139            3,707             3,585
                                                            --------          --------         --------          --------
      Total cost of revenues ......................            1,580             1,703            4,713             5,512
                                                            --------          --------         --------          --------

Gross profit ......................................            6,420             9,454           16,350            24,003
                                                            --------          --------         --------          --------

Operating expenses:
    Product development ...........................            3,048             1,957            8,599             5,827
    Sales and marketing ...........................            3,473             4,142            9,271            10,400
    General and administrative ....................            1,235             1,301            4,492             3,320
    Purchased research and development and
       product amortization .......................            2,664               127            6,527               428
    Loss on sale of Harbor ........................             --                --              2,171              --
                                                            --------          --------         --------          --------
      Total operating expenses ....................           10,420             7,527           31,060            19,975
                                                            --------          --------         --------          --------

Operating income (loss) ...........................           (4,000)            1,927          (14,710)            4,028

Interest and other income, net ....................              184               256              704               344
                                                            --------          --------         --------          --------


Income (loss) before provision for (benefit
    from) income taxes ............................           (3,816)            2,183          (14,006)            4,372

Provision for (benefit from) income taxes .........           (1,358)              851           (7,358)            1,698
                                                            --------          --------         --------          --------

Net income (loss) .................................         $ (2,458)         $  1,332         $ (6,648)         $  2,674
                                                            ========          ========         ========          ========

Net income (loss) per share
    Basic .........................................         $  (0.31)         $   0.19         $  (0.86)         $   0.43
    Diluted .......................................         $  (0.31)         $   0.16         $  (0.86)         $   0.36

Shares used in per share calculation
    Basic .........................................            7,932             7,177            7,701             6,219
    Diluted .......................................            7,932             8,331            7,701             7,348

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

                                                                 5

<PAGE>


<TABLE>
                                  INTERLINK COMPUTER SCIENCES, INC. AND SUBSIDIARIES
                                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    (in thousands)

<CAPTION>
                                                                                         Nine months ended March 31,
                                                                                         1998                 1997
                                                                                        --------            --------
                                                                                                (unaudited)
Cash flows from operating activities:                                                        
<S>                                                                                     <C>                 <C>     
    Net income (loss) .........................................................         $ (6,648)           $  2,674
    Adjustments to reconcile net income (loss) to net cash provided by
      operating activities:
      Purchased research and development ......................................            6,228                --
      Loss on Sale of HARBOR ..................................................            2,171
      Depreciation and amortization ...........................................            1,352               1,210
      Provision for excess and obsolete inventory .............................               93                  30
      Reduction of allowance for doubtful accounts ............................             (141)                (24)
      Exchange loss ...........................................................               86                 311
      Deferred income taxes ...................................................           (7,519)               --
      Changes in operating assets and liabilities:
         Accounts receivable ..................................................            2,398              (1,926)
         Inventories ..........................................................              246                (592)
         Other Assets .........................................................              151               1,041
         Accounts payable .....................................................             (192)               (868)
         Accrued liabilities ..................................................           (1,200)                747
         Deferred maintenance and product revenue .............................             (622)                 (9)
         Other liabilities ....................................................             (397)                 48
                                                                                        --------            --------
              Net cash provided by (used in) operating activities .............           (3,994)              2,642
Cash flows from investing activities:
    Acquisition of NetLOCK network security technology ........................           (1,175)               --
    Acquisition of Networkers Engineering, Ltd. ...............................             (724)               --
    Acquisition of property and equipment .....................................           (2,145)               (957)
    Capitalization of software development costs ..............................             --                  (183)
                                                                                        --------            --------
              Net cash used in investing activities ...........................           (4,044)             (1,140)
Cash flows from financing activities:
    Payments on capital lease obligations .....................................              (39)               (190)
    Payments on notes payable and other .......................................             (157)             (4,400)
    Payments on bank line of credit ...........................................             --                (5,000)
    Proceeds from issuance of common stock, net ...............................              429              29,265
                                                                                        --------            --------
              Net cash provided by financing activities .......................              233              19,675
                                                                                        --------            --------
              Net increase (decrease) in cash and cash equivalents ............           (7,805)             21,177
Effect of exchange rate changes on cash .......................................             (243)               (291)
                                                                                        --------            --------
Cash and cash equivalents, beginning of period ................................           28,106               6,121
Cash and cash equivalents, end of period ......................................         $ 20,059            $ 27,007
                                                                                        ========            ========

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

                                                                 6

<PAGE>


1.   Basis of Presentation:

The unaudited condensed  consolidated  financial statements included herein have
been  prepared  by  Interlink  Computer  Sciences,  Inc.  and  its  subsidiaries
(collectively,  the "Company") in accordance with generally accepted  accounting
principles  and reflect all  adjustments,  consisting  only of normal  recurring
adjustments,  which in the opinion of management are necessary to fairly present
the Company's consolidated financial position,  results of operations,  and cash
flows for the periods presented.  The financial  statements include the accounts
of the Company and its wholly owned subsidiaries after all material intercompany
balances and transactions  have been  eliminated.  The Notes to the Consolidated
Financial  Statements  contained  in the  fiscal  year 1997  report on Form 10-K
should  be read in  conjunction  with  these  Condensed  Consolidated  Financial
Statements. The consolidated results of operations for the three and nine months
ended  March  31,  1998 are not  necessarily  indicative  of the  results  to be
expected for any subsequent period or for the entire fiscal year ending June 30,
1998.  The June 30,  1997  balance  sheet was  derived  from  audited  financial
statements,  but does not include all disclosures required by generally accepted
accounting principles.

2.   Inventories:

Inventories are stated at the lower of cost (determined on a first-in, first-out
basis) or market.  Inventories  are  principally  comprised of finished goods at
March 31, 1998 and June 30, 1997.

3.   Acquisitions:

On  September  18,  1997,  the  Company  acquired  the  NetLOCK  technology,  an
end-to-end  network  security  technology  that  encrypts data and helps prevent
security  break-ins,  and certain other assets from Hughes Aircraft  Company for
approximately  $2,144,000  in cash and  incurred  related  acquisition  costs of
$300,000. The Company also licensed certain core technology that is incorporated
into the NetLOCK technology from a third party licensor.  Under the terms of the
license agreement, the Company paid an up front fee of $175,000 and is obligated
to pay royalties  ranging from 3% to 9% of future NetLOCK revenues on an ongoing
basis, with guaranteed  future minimum royalties of $2,300,000  through 2002. As
of the  date  of  the  acquisition,  the  NetLOCK  technology  had  not  reached
technological   feasibility  nor  did  it  have  any  future   alternative  use.
Accordingly,   $3.1  million  has  been  recorded  as  purchased   research  and
development,  which  consists of the amount of the purchase  price  allocated to
purchased  research and development and the guaranteed minimum royalty payments,
net of present value discount of $724,000. The remaining portion of the purchase
price of $1,144,000 has been recorded as property and equipment.  In conjunction
with the NetLOCK  technology  purchase,  the Company  employed  approximately 25
people and entered into an operating  lease for  facilities  with a third party.
The related  employee and  facility  costs have been  included in the  Company's
results of operations from the date of the acquisition of the technology.

Under  the  terms of the  NetLOCK  facility  operating  lease,  the  Company  is
obligated  to make monthly  future  minimum  lease  payments  totaling  $364,000
through fiscal 2001.

                                       7

<PAGE>


On January 13, 1998, the Company  acquired  Networkers  Engineering  Limited,  a
software development company based in the United Kingdom. Under the terms of the
agreement,  the  Company  purchased  all the  outstanding  stock  of  Networkers
Engineering,  including all technology rights, in exchange for cash of $600,000,
deferred cash  payments with a net present value of $935,000 and 239,578  shares
of the Company's common stock valued at $914,000 on the date of the acquisition.
The deferred cash payments will be made in four  quarterly  payments of $250,000
beginning July 1, 1998. The  acquisition was accounted for as a purchase and the
results of operations of Networkers  Engineering Limited have been included with
those of the company  since the date of  acquisition.  Of the  approximate  $2.9
million  purchase  price which  includes  approximately  $400,000 of acquisition
costs, the Company  recorded $2.6 million as in-process  technology and recorded
approximately  $300,000 as purchased software products relating to the completed
technology.  As of January 13, 1998 the  in-process  technology  had not reached
technological   feasibility  nor  did  it  have  any  alternative   future  use.
Accordingly,  $2.6 has been recorded as purchased research and development.  The
Company  has  recorded a tax  benefit  $1.0  million  relating  to the charge to
operations  for purchased  research and  development.  In  conjunction  with the
acquisition,  the Company  employed three people and assumed an operating  lease
for the facilities in the United Kingdom.

4.  Write-Down of the HARBOR  Purchased  Software and Sale of the HARBOR Product
Line.

On December 29, 1995, the Company  acquired all of the outstanding  stock of New
Era Systems Services Ltd. ("New Era"), a Canadian company that develops, markets
and supports the HARBOR storage  management and software  distribution  products
and recorded $3.2 million on the balance sheet as purchased  software  products.
During the quarter ended September 30, 1997, revenue expectations for the HARBOR
product line declined.  As a result,  the Company  determined  that the recorded
amount  for  purchased  software  had  been  impaired  and  recorded  a loss  of
approximately $550,000, the amount by which the recorded intangible at September
30, 1997 exceeded the present value of the estimated  future net cash flows.  On
December 18, 1997 the Company sold substantially all of the assets of the HARBOR
product line to a former  executive  and member of the board of directors of the
Company  who  resigned  both  posts  effective  as of the date of the sale.  The
consideration  paid to the Company  consisted of $1,250,000 in installment notes
receivable  plus a  $600,000  convertible  note  receivable  that may,  upon the
occurrence of certain  events,  entitle the Company to an additional  payment of
$150,000.   In  addition,   the  purchasers  assumed  certain   liabilities  and
obligations,  including a note payable in the amount of $1,232,000 for which the
Company is the guarantor, and $356,000 in deferred maintenance  obligations.  As
the Company has continuing involvement in the HARBOR business, primarily through
its guarantee of the note payable,  and there is substantial  uncertainty  about
the ability of HARBOR to meet its obligations,  the Company has (i) not recorded
the  notes  receivable,  (ii)  provided  a  valuation  allowance  on all  assets
transferred to the purchaser and (iii) recorded a liability  equal to the amount
of the guarantee of the note assumed. As a result of this treatment, the Company
recorded  a loss of  $2,171,000  on the sale of the  HARBOR  product  line.  The
Company also recorded a tax benefit of $3.2 million  relating to the sale of the
HARBOR  product  line,  of which,  $2.8  million will be realized as a refund of
federal income taxes  previously paid, once the Company files its tax return for
the current fiscal year.

                                       8

<PAGE>


5.     Computation of Net Income (Loss) Per Share:

The Company has adopted the  provisions  of Statement  of  Financial  Accounting
Standards No. 128 ("SFAS 128")  effective  December 31, 1997.  SFAS 128 requires
the presentation of basic and diluted earnings per share.  Basic EPS is computed
by dividing  income  available to common  shareholders  by the weighted  average
number of common shares  outstanding for the period.  Diluted EPS is computed by
giving  effect to all dilutive  potential  common  shares that were  outstanding
during the period. For the Company,  dilutive potential common shares consist of
the  incremental  common shares  issuable upon the exercise of stock options and
warrants for all periods. In accordance with SFAS 128, all prior period earnings
per share amounts have been restated to reflect this method of calculation.

<TABLE>
Basic and diluted  earnings per share are calculated as follows during the three
and nine month periods  ended March 31, 1998 and 1997 (in  thousands  except for
per share amounts):

<CAPTION>
                                                             Three months ended                   Nine months ended
                                                                  March 31,                           March 31,
                                                          -------------------------           -------------------------
                                                           1998               1997             1998              1997
                                                          -------           -------           -------           -------
Basic:                                                           (unaudited)                         (unaudited)
<S>                                                         <C>               <C>               <C>               <C>  
    Weighted average shares .........................       7,932             7,177             7,701             6,219
                                                          -------           -------           -------           -------
    Shares used in per share calculation ............       7,932             7,177             7,701             6,219
                                                          =======           =======           =======           =======
    Net income (loss) ...............................      (2,458)            1,332            (6,648)            2,674
                                                          =======           =======           =======           =======
    Net income (loss) per share .....................     $ (0.31)          $ (0.19)          $ (0.86)          $  0.43
                                                          =======           =======           =======           =======

Diluted:
    Weighted average shares .........................       7,932             7,177             7,701             6,219
    Common equivalent shares from stock
    options and warrants ............................        --               1,154              --               1,129
                                                          -------           -------           -------           -------
  Shares used in per share calculation ..............       7,932             8,331             7,701             7,348
                                                          =======           =======           =======           =======
    Net income (loss) ...............................     $(2,458)          $ 1,332           $(6,648)          $ 2,674
                                                          =======           =======           =======           =======
    Net income (loss) per share .....................     $ (0.31)          $  0.16           $ (0.86)          $  0.36
                                                          =======           =======           =======           =======
</TABLE>


Outstanding  options and  warrants to purchase  the  following  shares of common
stock at the indicated  range of price per share during the three and nine month
periods ended March 31, 1998 and 1997,  were not included in the  computation of
diluted  earnings per share  because the exercise  price of options and warrants
was greater than the average  market price of the common  shares for each period
or  the  inclusion  of  the  options  and  warrants  in the  diluted  per  share
calculation was antidilutive (in thousands except for per share amounts):

                                       9

<PAGE>


                                                Options and         Range of
                                             warrants excluded   exercise prices
                                             -----------------   ---------------
Three months ended:
     March 31, 1998                                2,030           $ 0.70-$16.25
     March 31, 1997                                    7           $15.00-$16.25

Nine months ended:
     March 31, 1998                                2,030           $ 0.70-$16.25
     March 31, 1997                                   19           $10.50-$16.25


6.   Contingencies:

The  Company  is  involved  in  a  commercial  dispute  with  a  former  Italian
distributor  ("Claimant"),  which has  alleged  that the  Company and two of its
subsidiaries  have breached and unlawfully  terminated  various  distributorship
agreements for  distribution  of the Company's  TCPaccess and HARBOR Products in
Italy,  and which  has  asserted  various  claims in two  lawsuits  against  the
Company, its subsidiaries, and several officers of the Company.

In January 1997,  the Claimant  initiated a lawsuit in Milan,  Italy against the
Company's  Canadian  Subsidiary,  New Era Systems Services Ltd. ("New Era"); the
Company; the Company's French subsidiary,  Interlink France S.A.R.L. ("Interlink
France");  and the Company's current  distributor in Italy, an unrelated Italian
Corporation.  The  litigation  is based on the  Claimant's  distribution  of the
Company's  HARBOR  products  pursuant to a  distributor  agreement  with New Era
Systems  Services  Ltd., an affiliated  Irish  corporation  ("New Era Ireland"),
which   pre-dates  the  Company's   acquisition  of  New  Era.  The  distributor
relationship  with the Claimant for the distribution of HARBOR products in Italy
and Spain has terminated.  Pursuant to court documents, Claimant alleges damages
for breach of contract  and related  tort claims in the amount of  2,500,000,000
Italian Lira (approximately $1,500,000) and requests that the defendants pay all
expenses  resulting  from the  litigation.  New Era  Ireland has filed a lawsuit
against  the  Claimant in Ireland  for  recovery  of amounts due on  outstanding
invoices and a declaration that the distributor relationship has terminated.

In March  1997 the  Claimant  initiated  a separate  lawsuit in Alameda  County,
California against the Company, certain officers of the Company and of Interlink
France,  and  the  Company's  current  Italian  distributor.  In the  complaint,
Claimant alleges various tort claims related to the defendants'  alleged actions
with respect to prior distribution agreements between Claimant, the Company, and
Interlink France for distribution of the Company's  TCPaccess products in Italy.
The claims  alleged  include  fraud,  deceit,  defamation,  trade libel,  unfair
competition,   misappropriation,   breach  of  confidential  relationship,   and
conversion.  Claimant  demands  compensatory  damages  in excess of  $2,000,000,
unspecified  punitive  damages,  interest,  attorneys'  fees,  and  costs of the
litigation.  The Company has  successfully  moved to compel  arbitration  of the
claims in accordance with the arbitration clauses in the earlier distributorship
agreements  with the  Claimant.  The lawsuit was stayed as to all parties by the
Alameda  County  Superior  Court pending  arbitration  of the claims against the
Company.

                                       10

<PAGE>


On or about March 9, 1998 the Claimant initiated arbitration  proceedings in San
Francisco,  California under the International Chamber of Commerce ("ICC") Rules
of Arbitration. The request for arbitration purports to allege claims for breach
of  contract,  fraudulent  inducement,  trade  libel,  use of trade  secrets and
confidential information, unfair business practices, interference with customers
and  improper  use of  confidential  information  and ideas.  The request  seeks
damages in the amount of  $3,000,000,  plus punitive  damages in an  unspecified
amount,  less an offset for amounts owed to Interlink France, and a constructive
trust.

The Company has accrued  $300,000 for  litigation or settlement of any liability
that may result upon  resolution of these  matters.  No estimate of the ultimate
liability  that may result upon the  resolution  of these  matters is  presently
determinable.  Should the  Company be  unsuccessful  in  defending  any of these
claims, the Company's  business,  financial  condition and results of operations
could be materially adversely affected.

<TABLE>
7. Supplemental Cash Flow Disclosures (in thousands):

<CAPTION>
                                                                                                 Nine months ended March 31
                                                                                                     1998             1997
                                                                                                    ------           ------
<S>                                                                                                 <C>              <C>   
Interest paid ...............................................................................       $   14           $  184
Income taxes paid ...........................................................................        1,305            1,848
Non cash transactions from financing activities:
    Conversion of preferred stock to common stock in connection with initial
       public offering ......................................................................         --              6,310
    Liabilities assumed in connection with the purchase of the NetLOCK
       network security technology ..........................................................        1,876
    Liabilities assumed in connection with the purchase of Networkers
       Engineering Limited ..................................................................        1,094             --
    Stock issued in connection with purchase of Networkers Engineering Limited
                                                                                                                        914
    Assets of the HARBOR product line sold to a related party ...............................        2,265             --
    Liabilities of the HARBOR product line sold to a related party ..........................          356             --
    Costs accrued related to the sales of the HARBOR product line ...........................       $  262           $ --
</TABLE>


8.  Concentrations of Revenues:

During the three and nine months ended March 31, 1998, 7% and 11%, respectively,
of the  Company's  total  revenues  were derived from sales to and through Cisco
Systems, Inc. ("Cisco").  During the three and nine months ended March 31, 1997,
no one customer accounted for more than 10% of total revenues.

9.  Income Taxes:

The  effective  tax rate was  approximately  28% and 39% for the  three and nine
month periods ended March 31, 1998 and 1997,  respectively.  The decrease in the
effective tax rate is due to operating losses  experienced  during the three and
nine months  ended March 31,  1998.  The Company  will  continue to evaluate the
recoverability of its deferred tax assets.

                                       11

<PAGE>


10. Recent Pronouncements:

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No. 130 (SFAS  130),  Reporting  Comprehensive
Income. This statement establishes  requirements for disclosure of comprehensive
income and becomes  effective for the Company for fiscal years  beginning  after
December 15, 1997, with  reclassification  of earlier  financial  statements for
comparative  purposes.  Comprehensive income generally represents all changes in
stockholders' equity except those resulting from investments or contributions by
stockholders.  The Company is evaluating alternative formats for presenting this
information,  but does not expect this  pronouncement  to materially  impact the
Company's results of operations.

In June 1997,  The  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 131 (SFAS 131), Disclosures about Segments of
an Enterprise and Related Information.  This statement establishes standards for
disclosure about operating segments in annual financial  statements and selected
information in interim  financial  reports.  It also  establishes  standards for
related  disclosures  about  products and services,  geographic  areas and major
customers. This statement supersedes Statement of Financial Accounting Standards
No. 14,  Financial  Reporting  for  Segments of a Business  Enterprise.  The new
standard  becomes  effective for fiscal years beginning after December 15, 1997,
and requires  that  comparative  information  from earlier  years be restated to
conform to the  requirements  of this  standard.  The Company is evaluating  the
requirements  of SFAS 131 and the  effects,  if any,  on the  Company's  current
reporting and disclosures.

In October 1997, the Accounting  Standards  Executive Committee issued Statement
of Position 97-2 (SOP 97-2),  Software  Revenue  Recognition as amended on March
31, 1998,  which  delineates the accounting for software product and maintenance
revenues.  SOP 97-2  supersedes the  Accounting  Standards  Executive  Committee
Statement of Position 91-1, Software Revenue  Recognition,  and is effective for
transactions entered into in fiscal years beginning after December 15, 1997. The
Company is evaluating  the  requirements  of SOP 97-2 and its amendments and the
effects, if any on the Company's current revenue recognition policies.

11. Shareholder Rights Plan:

In February 1998,  Interlink Computer Sciences Inc's. board of directors adopted
a Shareholder  Rights Plan  designed to assure that the  company's  shareholders
receive fair and equal  treatment  in the event of any proposed  takeover of the
company and to guard against  partial tender offers and other abusive tactics to
gain control of Interlink Computer Sciences Inc.

                                       12

<PAGE>


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

The following  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations contains forward-looking statements that involve risks and
uncertainties.  The Company's actual results could differ  materially from those
discussed  herein.  Factors that could cause or contribute  to such  differences
include,  but are not limited to, those  discussed in the section below entitled
"Risk Factors That May Affect Future  Results," as well as those risks discussed
in this section and elsewhere in this Report.

Overview

The Company offers a suite of  high-performance,  network transport products and
system management applications,  which efficiently transport,  store and protect
the integrity of mission-critical  data and applications.  The Company sells its
products  principally  for use in data  centers of Fortune 1000  companies.  The
principal products include TCP/IP connectivity, fault tolerance, remote printing
services, and CICS and IMS-to-LAN application integration, as well as management
and control  products  built on its new  "OpenMAX"  technology.  Interlink  also
offers  a  suite  of  security  products,  which  includes  NetLOCK,  the  first
transparent solution to provide  enterprise-wide,  end-to-end  protection of all
information that crosses the network; and Sentinel/IP,  which provides audit and
access control for mainframe users.

In December  1996,  the Company  entered  into a strategic  alliance  with Cisco
Systems,  Inc.  ("Cisco") pursuant to which Cisco acquired 622,000 shares of the
Company's Common Stock for $6.8 million.  In January 1997, Cisco and the Company
agreed to  cooperate  to develop and market  certain  TCP/IP  software  known as
IOS/390.   As  a  result  of  the  agreement,   the  Company's  sales  personnel
significantly  reduced direct  selling  efforts in favor of supporting the Cisco
sales  teams.  However,  the  level of sales  achieved  by Cisco  fell  short of
expectations, and in August 1997, the Company and Cisco amended the agreement to
provide that  Interlink  would resume  selling its TCP/IP product and would also
resell the IOS/390 software and certain Cisco router products.  In October 1997,
the Company formally amended the development and marketing agreement.

In September 1997, the Company acquired the NetLOCK network security  technology
from Hughes  Aircraft  Company and recorded a charge in its fiscal first quarter
of  approximately  $3.1 million  relating to  in-process  software  development.
Revenue from the NetLOCK product commenced in January 1998.

In December 1997, the Company sold its HARBOR product line and recorded a charge
of $2.2  million,  offset  by a tax  benefit  of $3.2  million.  Most of the tax
benefit,  or $2.8 million,  will be realized as a refund of federal income taxes
previously  paid.  The sale of the HARBOR  product line  resulted in a charge to
earnings  because the Company  guaranteed a Canadian  loan in the amount of $1.2
million,  which was assumed by the buyers,  and because the notes  receivable of
$1.9 million  from the sale could not  presently be  recognized.  Revenues  from
HARBOR products were $667,000 and $1.5 million and direct expenses were $775,000
and $1.5  million for the three and  nine-month  periods  ended March 31,  1998,
respectively.

                                       13

<PAGE>


In January 1998, the Company purchased  Networkers  Engineering  Limited and the
customer  contracts of a related business,  for a combined cost of approximately
$2.9  million,  of which  approximately  $2.6  million was charged to  purchased
research and  development in the quarter ended March 31, 1998.  The  acquisition
gives  the  Company  a base  of  technology  and  additional  resources  for the
development  of its  management  and control  products.  Revenues from these new
products  are expected to commence in the fourth  quarter of the current  fiscal
year but are only expected to become significant during fiscal year 1999.

                                       14

<PAGE>


Results of Operations

<TABLE>
The  following  table sets forth,  as a percentage  of total  revenues,  certain
condensed consolidated statement of operations data for the periods indicated:

<CAPTION>
                                                                       Three months ended             Nine months ended
                                                                            March 31,                      March 31,
                                                                     ---------------------          ---------------------
                                                                     1998            1997           1998             1997
                                                                     -----           -----          -----           -----
<S>                                                                   <C>             <C>            <C>             <C>  
Revenues:
    Product .....................................................     60.1%           67.6%          52.4%           62.1%
    Maintenance and consulting ..................................     39.9            32.4           47.6            37.9
                                                                     -----           -----          -----           -----
      Total revenues ............................................    100.0           100.0          100.0           100.0
                                                                     =====           =====          =====           =====

Cost of revenues:
    Product .....................................................      4.7             5.1            4.8             6.5
    Maintenance and consulting ..................................     15.0            10.2           17.6            12.2
                                                                     -----           -----          -----           -----
      Total cost of revenues ....................................     19.7            15.3           22.4            18.7
                                                                     =====           =====          =====           =====

Gross Profit ....................................................     80.3            84.7           77.6            81.3

Operating expenses:
    Product development .........................................     38.1            17.6           40.8            19.7
    Sales and marketing .........................................     43.4            37.1           44.0            35.2
    General and administrative ..................................     15.4            11.7           21.3            11.3
    Purchased research and development and
       product amortization .....................................     33.3             1.1           31.0             1.5
    Loss on sale of Harbor ......................................     --              --             10.3            --
                                                                     -----           -----          -----           -----
      Total operating expenses ..................................    130.3            67.5          147.5            67.7
                                                                     =====           =====          =====           =====

Operating income (loss) .........................................    (50.0)           17.2          (69.8)           13.6
Interest and other income, net ..................................      2.3             2.3            3.3             1.2
                                                                     -----           -----          -----           -----
    Income (loss) before provision for
       (benefit from) income taxes ..............................    (47.7)           19.5          (66.5)           14.8
                                                                     -----           -----          -----           -----
Provision for (benefit from) income taxes .......................    (17.0)           17.6          (34.9)            5.8
                                                                     -----           -----          -----           -----
    Net income (loss) ...........................................    (30.7)%          11.9%         (31.6)%           9.0%
                                                                     =====           =====          =====           =====

Cost of sales as a percentage of the related revenues:
    Product .....................................................       7.9%           7.5%            9.1%          10.5%
    Maintenance and consulting ..................................      37.6%          31.5%           36.9%          32.1%
</TABLE>


Revenues:

Total  revenues  were $8.0  million and $11.2  million for the three  months and
$21.1  million and $29.5  million  for the nine months  ended March 31, 1998 and
1997,  respectively,  representing  a year  over year  decrease  of 28% and 29%,
respectively.  Product  sales were $4.8  million and $7.5  million for the three
months and $11.0  million and $18.3  million for the nine months ended March 31,
1998 and 1997,  respectively,  representing a year over year decrease of 36% and
40%, respectively. These decreases were primarily due to fewer sales through the
Cisco sales force than the Company  anticipated.  During the period from January
1997  through  August  1997,  the

                                       15

<PAGE>


Company's  sales force focused  attention on  supporting  the Cisco sales effort
pursuant to its strategic  relationship instead of continuing its direct selling
efforts.  From  September  1997  forward,  the  Company's  sales force was again
focused on rebuilding its sales leads as well as supporting  Cisco's  efforts to
sell the  Company's  software.  An  additional a factor in the decrease was $2.0
million of non-refundable,  prepaid licenses from Cisco which were recognized in
the nine months  ended March 31,  1997,  including  $1.0  million in each of the
quarters ended December 31, 1996 and March 31, 1997.  Maintenance and consulting
revenues  were $3.2  million  and $3.6  million  for the three  months and $10.0
million and $11.2  million  for the nine  months  ended March 31, 1998 and 1997,
respectively,  representing  a  decrease  of 12% and  10%,  respectively.  These
decreases resulted  principally from a decrease in maintenance revenues from the
DECnet  product line and the reduction of  maintenance  and  consulting  revenue
relating to the HARBOR product line, which was sold in December 1997.

Cost of Revenues:

Product. Cost of product revenues consists primarily of hardware, product media,
documentation,  third  party  royalties  and  packaging  costs.  Cost of product
revenue was $378,000 and $564,000, representing 8% of total product revenues for
the three months ended March 31, 1998 and 1997. Cost of product revenue was $1.0
million and $1.9 million,  representing  9% and 11% of product  revenues for the
nine months  ended March 31, 1998 and 1997,  respectively.  Both the revenue and
cost of revenue from selling  hardware  products  declined while the Company was
receiving  credit from Cisco for Cisco's sales of hardware  into accounts  using
the Company's products in favor of reselling  hardware  directly.  These credits
from Cisco will cease when the Company  receives  total  credits of $1.2 million
but not later than June 30, 1998.  As of March 31, 1998 the Company has recorded
$990,000 of such credits.  At that time, the Company presently intends to resell
third party hardware products once again.

Maintenance and Consulting. Cost of maintenance and consulting revenues consists
primarily of personnel related costs incurred in providing telephone support and
software updates.  Cost of maintenance and consulting  revenues was $1.2 million
and $1.1  million  for the three  month  periods  ended March 31, 1998 and 1997,
representing  38%  and  32%  of  total  maintenance  and  consulting   revenues,
respectively.  Cost of maintenance and consulting  revenues was $3.7 million and
$3.6  million,  representing  37% and 32% of total  maintenance  and  consulting
revenues for the nine months ended March 31, 1998 and 1997, respectively.  These
increases in  maintenance  and  consulting  costs as a percentage of the related
revenue is due to lower  maintenance  revenue with costs remaining stable as the
majority of costs are fixed.

Operating Expenses:

Total operating expenses were $10.4 million and $7.5 million,  representing 130%
and 68% of total  revenues  for the three  months ended March 31, 1998 and 1997,
respectively.  Total  operating  expenses were $31.1 million and $20.0  million,
representing  148% and 68% of total revenues for the nine months ended March 31,
1998 and 1997,  respectively.  The  increases  in total  operating  expenses  is
primarily due to the purchased research and development  expense relating to the
acquisition  of NetLOCK  incurred in the quarter ended  September 30, 1997,  the
charge  relating to the sale of the HARBOR  product  line in the  quarter  ended
December 31, 1997,

                                       16

<PAGE>


the purchased  research and development  expense  relating to the acquisition of
Networkers Engineering Limited incurred in the quarter ended March 31, 1998, the
costs  associated with operating both HARBOR and NetLOCK  operations  during the
periods and one-time charges of  approximately  $500,000 for legal and severance
costs. See further discussion below.

Product Development. Product development expenses consist primarily of personnel
related costs.  Product development expenses were $3.0 million and $2.0 million,
representing  38% and 18% of total revenues for the three months ended March 31,
1998 and 1997, respectively.  Product development expenses were $8.6 million and
$5.8  million,  representing  41% and 20% of total  revenues for the nine months
ended  March  31,  1998 and  1997,  respectively.  These  increases  in  product
development  expenses  resulted from the expansion of the Company's product line
as a result of the acquisition of Networkers Engineering Limited and the NetLOCK
network security  technology and ongoing product  development  efforts offset by
the sale of the  HARBOR  product  line in  December  1997.  Product  development
expenses related to the HARBOR product line was $1.5 million for the nine months
ended  March  31,  1998,  all of which  was  incurred  prior to the sales of the
product line.

Sales and Marketing.  Sales and marketing expenses consist primarily of salaries
and commissions for sales and marketing personnel and resellers, the fixed costs
of worldwide sales offices, and promotional costs. The Company sells through its
direct sales force, resellers and distributors.  The direct channel produced 94%
and 89% of product  revenues for the three months ended March 31, 1998 and 1997,
respectively,  and 91% and 87% of product  revenues  for the nine  months  ended
March 31, 1998 and 1997,  respectively.  Sales and marketing  expenses were $3.5
million and $4.1  million,  representing  43% and 37% of total  revenues for the
three months ending March 31, 1998 and 1997,  respectively.  Sales and marketing
expenses were $9.3 million and $10.4 million,  representing 44% and 35% of total
revenues for the three months ending March 31, 1998 and 1997, respectively.  The
decreased cost was a result of lower commission expense on lower revenues.

General  and  Administrative.   General  and  administrative   expenses  include
personnel  and  other  costs  of  the  finance,   human  resources,   legal  and
administrative  departments of the Company.  General and administrative expenses
were $1.2 million and $1.3 million,  representing  15% and 12% of total revenues
for the three  months ended March 31, 1998 and 1997,  respectively.  General and
administrative expenses were $4.5 million and $3.3 million, representing 21% and
11% of total  revenues  for the nine  months  ended  March  31,  1998 and  1997,
respectively. The increases in the nine month period ended March 31, 1998 were a
result of higher legal costs,  recruiting costs,  severance costs and consulting
expenses,  including  approximately  $500,000 in one-time  expenses in the three
months ended December 31, 1997.

Purchased Research and Development and Product Amortization.  Purchased research
and  development  and  product  amortization  was  $2.7  million  and  $127,000,
representing  33% and 1% of total  revenues for the three months ended March 31,
1998 and 1997,  respectively.  Purchased  research and  development  and product
amortization  was $6.5 million and  $428,000,  representing  31% and 2% of total
revenues  for the nine  months  ended  March 31,  1998 and  1997,  respectively.
One-time  charges of $3.1 million and $2.6 million were  recorded for  purchased
research and  development  related to the NetLOCK  acquisition in September 1997
and the Networkers

                                       17

<PAGE>


Engineering Limited acquisition in January 1998,  respectively.  A write-down of
$550,000  relating to purchased  research and development in connection with the
December 1995 HARBOR  acquisition  was recorded in September  1997. (See Notes 3
and 4 to Condensed Consolidated Financial Statements)

Loss on Sale of HARBOR Product Line. The loss on sale of the HARBOR product line
was $2.2 million,  representing  10% of total revenues for the nine months ended
March 31, 1998.  The sale of the HARBOR  product line  occurred in December 1997
and  included  the  establishment  of a valuation  allowance  related to certain
assets and  liabilities  and the continuing  guarantee of a Canadian loan in the
amount of $1.2 million, which was assumed by the buyers.
(See Note 4 to Condensed Consolidated Financial Statements)

Interest and Other  Income,  Net. Net interest and other income was $184,000 and
$256,000 for the three months ended March 31, 1998 and 1997,  respectively.  Net
interest  and other  income was  $704,000 and $344,000 for the nine months ended
March 31, 1998 and 1997,  respectively.  The increases in net interest and other
income for the nine month  period  ended March 31, 1998 was due  primarily  to a
reduction of bank borrowings related to the Harbor  acquisition.  The decline in
net  interest  and other income for the three month period is due to a reduction
in cash from  approximately  $27 million at March 31, 1997 to approximately  $20
million at March 31, 1998.

Provision  for (Benefit  from) Income Taxes.  The  provision for (benefit  from)
income  taxes was ($1.4  million)  and $851,000 for the three months ended March
31, 1998 and 1997,  respectively.  The provision for (benefit from) income taxes
was ($7.4 million) and $1.7 million for the nine months ended March 31, 1998 and
1997,  respectively.  Included in the nine months  ended March 31, 1998 is a tax
benefit of $3.2 million relating to the sale of the HARBOR product line. Of this
tax benefit,  $2.8 million will be realized as a refund of federal  income taxes
previously  paid,  once the Company files its tax return for the current  fiscal
year.  The  effective tax rate was  approximately  28% and 39% for the three and
nine month periods ended March 31, 1998 and 1997, respectively.  The decrease in
the effective tax rate is due to operating losses  experienced  during the three
and nine months ended March 31, 1998.  The Company will continue to evaluate the
recoverability of its deferred tax assets.

Recent Pronouncements

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  No. 130 (SFAS  130),  Reporting  Comprehensive
Income. This statement establishes  requirements for disclosure of comprehensive
income and becomes  effective for the Company for fiscal years  beginning  after
December 15, 1997, with  reclassification  of earlier  financial  statements for
comparative  purposes.  Comprehensive income generally represents all changes in
stockholders' equity except those resulting from investments or contributions by
stockholders.  The Company is evaluating alternative formats for presenting this
information,  but does not expect this  pronouncement  to materially  impact the
Company's results of operations.

In June 1997,  The  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards No. 131 (SFAS 131), Disclosures about Segments of
an Enterprise and

                                       18

<PAGE>


Related Information.  This statement  establishes standards for disclosure about
operating  segments in annual financial  statements and selected  information in
interim financial reports. It also establishes standards for related disclosures
about  products  and  services,  geographic  areas  and  major  customers.  This
statement  supersedes  Statement  of  Financial  Accounting  Standards  No.  14,
Financial  Reporting  for  Segments of a Business  Enterprise.  The new standard
becomes  effective  for fiscal years  beginning  after  December  15, 1997,  and
requires that comparative  information from earlier years be restated to conform
to the requirements of this standard. The Company is evaluating the requirements
of SFAS 131 and the effects,  if any, on the  Company's  current  reporting  and
disclosures.

In October 1997, the Accounting  Standards  Executive Committee issued Statement
of Position 97-2 (SOP 97-2),  Software  Revenue  Recognition as amended on March
31, 1998,  which  delineates the accounting for software product and maintenance
revenues.  SOP 97-2  supersedes the  Accounting  Standards  Executive  Committee
Statement of Position 91-1, Software Revenue  Recognition,  and is effective for
transactions entered into in fiscal years beginning after December 15, 1997. The
Company is evaluating  the  requirements  of SOP 97-2 and its amendments and the
effects, if any on the Company's current revenue recognition policies.

Liquidity and Capital Resources

Working  capital was $20.6  million and $25.4 million at March 31, 1998 and June
30, 1997, respectively. The decrease in working capital was primarily due to the
acquisition  of NetLOCK  network  security  technology and related  assets,  the
acquisition of Networkers Engineering Limited and net losses for the nine months
ended March 31, 1998.

For the nine months ended March 31, 1998, net cash used in operating  activities
resulted  primarily  from the net loss,  decreases  in accrued  liabilities  and
deferred  maintenance  and product  revenue,  and an  increase  in deferred  tax
assets, partially offset by a decrease in accounts receivable, increase in other
liabilities, a write-off of purchased research and development,  and sale of the
HARBOR product line. For the nine months ended March 31, 1997, net cash provided
by operations resulted primarily from net income, depreciation and amortization,
an increase in accrued  liabilities  and a decrease in other  assets,  partially
offset by an increase in accounts  receivable,  an increase in inventories and a
decrease in accounts payable.

For the nine months ended March 31, 1998,  the  Company's  investing  activities
have  consisted  primarily  of  the  acquisition  of  NetLOCK  network  security
technology,  the acquisition of Networkers  Engineering Limited and purchases of
property  and  equipment   including  $1.1  million  purchased  in  the  NetLOCK
acquisition.  For the nine months ended March 31, 1997, the Company's  investing
activities consisted primarily of purchases of property and equipment.

For the nine months ended March 31, 1998,  the  Company's  financing  activities
have consisted  primarily of proceeds from the issuance of common stock. For the
nine months ended March 31, 1997, the Company's financing  activities  consisted
of proceeds from the initial public offering and the equity  investment by Cisco
partially  offset by  payments  on the  Company's  bank line of credit and notes
payable.

                                       19

<PAGE>


At March 31, 1998,  the Company had $20.1 million in cash and cash  equivalents.
The  Company had $7.3  million in  accounts  receivable,  net of  allowance  for
doubtful accounts,  and $7.9 million of unearned revenues, the majority of which
are expected to be earned over the 12 month period following March 31, 1998.

The Company believes that its current cash and cash equivalents balances as well
as its  cash  flow  from  operations,  if any,  will be  sufficient  to meet its
anticipated  working capital and capital  expenditure  requirements for at least
the next 12 months.

Year 2000 Compliance

Many currently  installed  computer  systems and software  products are coded to
accept  only two digit  entries in the date code  field.  These date code fields
will need to accept four digit  entries to  distinguish  21st century dates from
20th century dates. As a result, in less than two years, computer systems and/or
software  used by many  companies  may need to be  upgraded  to comply with such
"Year 2000" requirements.

The Company has  reviewed  the Year 2000  compliance  status of the software and
systems used in its internal  business  processes  and of the products  that the
Company  sells to third  parties.  As of the date of this  report,  the  Company
believes that it is materially  compliant with the Year 2000 requirements of its
internal  systems and external  products.  The Company has and will  continue to
monitor its Year 2000  compliance  status but there can be no assurance that the
company will continue to remain compliant with Year 2000  requirements  that may
affect the Company's business, financial condition, and results of operations.

                                       20

<PAGE>


RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

The Company operates in a rapidly changing environment that involves a number of
risks,  some of  which  are  beyond  the  Company's  control,  and  include  the
following:

Dependence on Current Products

During the three  months  ended  March 31,  1998 and 1997,  sales of the network
transport   products,   excluding   maintenance  and  hardware,   accounted  for
approximately  47% and 51%, and,  including  related  maintenance  and hardware,
accounted for  approximately 94% and 88%,  respectively,  of the Company's total
revenues.  The Company's  operating results have historically been significantly
dependent  upon sales of the  network  transport  products.  Approximately  $1.0
million per quarter of  maintenance  revenues is from customers of the Company's
DECnet product.  The Company no longer actively markets the DECnet product,  and
maintenance  revenues  from DECnet  customers  have declined each year since the
fiscal year ended June 30, 1993, and are expected to continue to decline.

Since its  availability on May 13, 1997, the Company has experienced  difficulty
in deriving  significant revenues from sales by Cisco of the IOS/390 product. As
a result of  renegotiating  its agreement with Cisco in August 1997, the Company
has resumed direct sales of its TCPaccess product and continues to support Cisco
in its sales of  IOS/390.  Increased  sales of  network  transport  products  is
dependent upon the Company's  ability to continue to expand its sales leads and,
in part, on cooperation  with Cisco in the sale of IOS/390 into larger accounts.
The failure to increase  sales levels of TCPaccess  or IOS/390  could  adversely
affect the Company's results of operations.

Reliance on IBM and the Mainframe as an Enterprise Server

The  Company's  network  transport  products  are  designed for use with IBM and
IBM-compatible mainframe computers. Specifically, these software products target
users of the MVS  operating  system,  the Customer  Information  Control  System
communications  subsystem and the IMS and DB2 database  management systems. As a
result, future sales of the Company's existing products and associated recurring
maintenance  revenues are dependent  upon  continued use of mainframes and their
related systems software. In addition, because the Company's products operate in
conjunction with IBM systems software,  changes to such software may require the
Company to adapt its products to these  changes,  and any inability to do so, or
delays in doing so, may  adversely  affect  the  Company's  business,  financial
condition and results of operations.

Currently,  TCP/IP is the communications  protocol for the Internet and is being
adopted  by  many  organizations  as  the  communications   protocol  for  their
client/server  local area  networks and wide area  networks.  This  adoption has
allowed  IBM  MVS  mainframe  computers  to act as  enterprise  servers  on such
networks.  The use of  mainframes as  enterprise  servers is relatively  new and
still emerging.  The Company's future financial performance will depend in large
part  on the  acceptance  and  growth  in the  market  for  centralized  network
management.   Adoption  of  another  communications  protocol  on  client/server
networks could make TCP/IP  communication not viable,  which would undermine the
demand for the  Company's  IOS/390 and  TCPaccess  product,

                                       21

<PAGE>


and  have a  material  adverse  effect  on  the  Company's  business,  financial
condition and results of operations.

New TCP/IP Products and Rapid Technological Change

The markets for the Company's network transport  products and systems management
applications  are  characterized  by  rapidly  changing  technologies,  evolving
industry  standards,  frequent new product  introductions  and rapid  changes in
customer requirements.  The Company believes that its future success will depend
upon its ability to develop and market  products which meet changing user needs,
to continue to enhance its  products  and to develop and  introduce  in a timely
manner new products that take  advantage of  technological  advances,  keep pace
with emerging  industry  standards,  and address the increasingly  sophisticated
needs of its  customers.  There can be no assurance that TCP/IP will continue to
be accepted as a communications protocol on client/server networks. Furthermore,
there can be no assurance  that the Company  will be  successful  in  acquiring,
developing or marketing, on a timely basis, product enhancements or new products
(including new versions of TCPaccess or IOS/390),  either  independently or with
strategic  partners,  that respond to technological  change or evolving industry
standards, that the Company will not experience difficulties that could delay or
prevent the successful development,  introduction and sale of these products, or
that any such new  products or product  enhancements  will  adequately  meet the
requirements  of the marketplace  and achieve market  acceptance.  The Company's
failure  or  inability  to adapt its  products  to  technological  changes or to
acquire or  develop  new  products  successfully  would have a material  adverse
effect on the Company's business, financial condition and results of operations.

The  introduction  or  announcement of products by the Company or one or more of
its competitors,  including, but not limited to IBM, embodying new technologies,
or changes in customer  requirements or the emergence of new industry  standards
and  practices  could  render  the  Company's  existing  products  obsolete  and
unmarketable. There can be no assurance that the introduction or announcement of
new product  offerings by the Company or one or more of its competitors will not
cause customers to defer purchasing the existing products of the Company or that
the Company will  successfully  manage the transition from older products.  Such
deferment of purchases or inability to manage the  transition of products  could
have a material adverse effect on the Company's  business,  financial  condition
and results of operations.

Customer  Acceptance  and  Scalability  of New  Products;  History  of  Acquired
Technologies

During the past several  quarters,  the Company has expanded its market focus to
include  products that provide  security for and  management and control of data
and programs in  electronic  commerce.  In pursuit of that  vision,  the Company
acquired  the  NetLOCK  product  technology  in  September  1997 and the OpenMAX
technology  in  January  1998.  Further  development  of these  technologies  is
required.  There can be no  assurance  that the Company  will be  successful  in
integrating  the  operations  and  personnel  associated  with these new product
lines,  successfully  commercializing  the  technologies,  deriving  significant
future sales therefrom,  or in establishing and maintaining  uniform  standards,
controls,  procedures  and policies,  or overcoming  other  problems that may be
encountered  in  connection  with these  acquisitions.  To the  extent  that the
Company is unable to accomplish the foregoing, the Company's business, financial
condition and

                                       22

<PAGE>


results of operations may be materially adversely affected.

To date, the Company's core  technologies  for its principal  network  transport
products and systems  management  applications  have been  acquired and have not
been developed internally.  There can be no assurance that the Company will have
the  opportunity  to  successfully  acquire or develop new  technologies  in the
future or that such technology,  if acquired, can be successfully integrated and
commercialized by the Company. An inability to acquire, develop or commercialize
new technologies would have a material adverse effect on the Company's business,
financial  condition  and  results of  operations.  The Company may also seek to
acquire  or  invest  in  businesses,   products  or  technologies  that  expand,
complement  or otherwise  relate to the  Company's  current  business or product
line. There can be no assurance that such  acquisitions  will be successfully or
cost-effectively  integrated into the Company's current operations,  or that the
acquired  technologies  will provide the  necessary  complement to the Company's
current products.

Competition

General.  The market in which the Company operates is intensely  competitive and
is characterized by extreme price  competition and rapid  technological  change.
The  competitive  factors  influencing  the markets for the  Company's  products
include  product  performance,   price,  reliability,   features,   scalability,
interoperability across multiple platforms, adherence to industry standards, and
the provision of support and maintenance  services.  The Company competes with a
number of  companies,  principally  IBM,  that  specialize in one or more of the
Company's  product  lines,  and such  competitors  may have  greater  financial,
technical sales and marketing resources to devote to the development,  promotion
and sale of their products,  and may have longer  operating  histories,  greater
name recognition,  and greater market acceptance for their products and services
compared to those of the Company.  There can be no assurance  that the Company's
current  competitors  or any new  market  entrants  will not  develop  networked
systems  management  products  or  other  technologies  that  offer  significant
performance,  price or other  advantages  over the Company's  technologies,  the
occurrence  of which  would  have a  material  adverse  effect on the  Company's
business, financial condition and results of operations.

Network Transport Products. The Company historically sold its TCPaccess suite of
products principally to customers who had installed IBM mainframes using the MVS
operating  system.  The Company's main competition for its IOS/390 and TCPaccess
products is IBM. IBM sells TCP/IP and associated  products for its MVS mainframe
systems that compete directly with the Company's products.  IBM has continued to
enhance the  functionality  and performance of its TCP/IP product.  In addition,
IBM's OS/390 operating system, which includes TCP/IP communications  software in
a  bundle  of  software  provided  to  purchasers  of  OS/390,  has  been and is
aggressively  marketed  by IBM,  and the  Company  believes  it has lost and may
continue  to lose sales of the  Company's  IOS/390 and  TCPaccess  products as a
result.  IBM has in some cases  included  and may continue to include its TCP/IP
product in the bundle of software provided to purchasers of its OS/390 operating
system without charge.  The Company believes that any general reduction in price
of the IBM TCP/IP products, or the widespread bundling of those products without
charge in its OS/390  operating  system,  would make  marketing of the Company's
IOS/390 and TCPaccess  products  difficult,  which would have a material adverse

                                       23

<PAGE>


effect on the Company's business, financial condition and results of operations.

Security and System Management Products. The primary competitors for the NetLOCK
products based on the Company's  recently acquired  end-to-end  network security
product,  are Network Associates,  Inc., Security Dynamics  Technologies,  Inc.,
Cylink, Time Step, Red Creek Communications Inc., V-One Technologies,  Inc., and
Security First Technologies,  Inc. In addition,  security products comparable to
NetLOCK are currently available and are already incorporated into some operating
systems,  thereby significantly  diminishing the market for NetLOCK. The primary
competitors  for the  management  and control  products to be  developed  on the
OpenMAX technology acquired with the purchase of Networkers Engineering Limited,
include IBM, Computer Associates and Sterling Software.  Many other companies in
the  computer  industry  have  announced  products  and plans to  compete in the
management and control of computer systems and networks.

Other Factors.  The Company's  ability to compete  successfully  depends on many
factors,  including  the  Company's  success in  developing  new  products  that
implement new technologies,  performance,  price, product quality,  reliability,
success of competitors' products, general economic conditions, and protection of
Interlink  products by effective  utilization of intellectual  property laws. In
particular,  competitive  pressures from existing or new  competitors  who offer
lower prices or other incentives or introduce new products could result in price
reductions, which would adversely affect the Company's profitability.  There can
be no assurance  that the Company's  current or other new  competitors  will not
develop  enhancements to, or future  generations of,  competitive  products that
offer superior price or performance  features,  that the Company will be able to
compete  successfully in the future, or that the Company will not be required to
incur   substantial   additional   investment   costs  in  connection  with  its
engineering,  research,  development,  marketing and customer service efforts in
order to meet  any  competitive  threat.  The  Company  expects  competition  to
intensify,  and increased  competitive pressure could cause the Company to lower
prices for its products,  or result in reduced  profit margins or loss of market
share,  any of which  could  have a  material  adverse  effect on the  Company's
business, financial condition and results of operations.

Dependence on Distributors and New Sales Channels

The Company's sales are primarily made through the Company's  direct sales force
and its  distributors in some  international  markets.  The Company is currently
investing, and plans to continue to invest, significant resources to develop new
strategic   marketing   relationships   and  channels  of  distribution,   which
investments  could  adversely  affect  the  Company's   operating  margins.   In
particular, the Company plans to develop new channels of distribution, including
new  distributors  and  resellers  and  has  developed  a  tele-sales  marketing
organization in connection with sales of its new security products.  The Company
believes  that its success in  penetrating  markets for its products  depends in
large part on its ability to maintain its existing  marketing  and  distribution
relationships,  to cultivate  additional  relationships and to develop these new
sales  channels.  There  can  be no  assurance  that  any  distributor,  systems
integrator or strategic  partner will not discontinue its relationship  with the
Company, form competing arrangements with the Company's competitors,  or dispute
the Company's other strategic relationships.

                                       24

<PAGE>


The  loss  of  or a  significant  reduction  in  revenues  from,  the  Company's
international  distributors  through  which the  Company  sells  certain  of its
products  could  have a  material  adverse  effect  on the  Company's  business,
financial  condition  and  results of  operations.  In  addition,  if one of the
Company's  distributors declares bankruptcy,  becomes insolvent,  or is declared
bankrupt  before the  distributor  remits to the  Company the  payments  for the
Company's products,  the Company may not be able to obtain the revenues to which
it would be entitled for sales made by such distributor  prior to the bankruptcy
or insolvency  proceeding.  In addition,  the Company's  distributors  generally
offer other products and these distributors may give higher priority to sales of
such other products.

The Company is involved in a  commercial  dispute and  litigation  with a former
distributor (See Notes to Condensed Consolidated Financial Statements). Although
the Company  has  accrued  amounts  for  potential  liabilities  related to this
dispute,  should the distributor  prevail on its claims to a greater degree, the
Company's  business,  financial  condition  and results of  operations  could be
materially adversely affected.

Dependence on Key Personnel

The Company is highly dependent on the continued  service of, and on its ability
to attract and retain,  qualified  technical,  sales,  marketing and  managerial
personnel.  The competition for qualified  personnel in the software industry is
intense,  and the loss of any such  persons,  as well as the  failure to recruit
additional  key  personnel  in a timely  manner,  could have a material  adverse
effect on the Company's business, financial condition and results of operations.
There can be no  assurance  that the Company will be able to continue to attract
and  retain  the  qualified  personnel  necessary  for  the  development  of its
business. The Company has employment agreements with certain executive officers,
but such  agreements  do not ensure  their  continued  service to the Company or
prevent  their   competition  with  the  Company   following  a  termination  of
employment. The Company does not maintain key man life insurance on the lives of
its key employees.

Product Errors; Product Liability

Software products as complex as those offered and being developed by the Company
often  contain  undetected  errors or failures  when first  introduced or as new
versions  are  released.  Testing  of the  Company's  products  is  particularly
challenging  because it is  difficult  to simulate the wide variety of computing
environments  in  which  the  Company's   customers  may  deploy  its  products.
Accordingly,  there can be no assurance that, despite testing by the Company and
by current and potential customers,  errors will not be found after commencement
of commercial shipments,  resulting in lost revenues, loss of or delay in market
acceptance  and negative  publicity  about the Company and its products,  any of
which could have a material adverse effect on the Company's business,  financial
condition  and  results  of   operations.   In  addition,   in  the  process  of
commercializing  new  products  the Company may detect  errors or failures  that
delay or prevent  commercialization,  any of which could have a material adverse
effect on the Company's business, financial condition and results of operations.

                                       25

<PAGE>


The Company's license  agreements with customers  typically  contain  provisions
designed to limit the Company's  exposure to potential product liability claims.
The limitation of liability  provisions contained in such license agreements may
not be  effective  under  the laws of some  jurisdictions,  particularly  if the
Company in the future  relies on "shrink  wrap"  licenses that are not signed by
licensees.  The Company's products are generally used to manage data critical to
organizations,  and as a result, the sale and support of products by the Company
may entail the risk of product  liability  claims. A successful  liability claim
brought  against  the  Company  could  have a  material  adverse  effect  on the
Company's business, financial condition and results of operations.

Fluctuations in Operating Results; Absence of Backlog; Seasonality

The  Company's  operating  results have  historically  been subject to quarterly
fluctuations  due to a variety of factors.  The Company has  typically  sold its
products   through  a  trial   process  to  allow   customers  to  evaluate  the
effectiveness of the Company's  products before  determining  whether to proceed
with broader  deployment of such products.  The Company's sales cycle,  from the
date the  sales  agent  first  contacts  a  prospective  customer  to the date a
customer ultimately purchases the Company's product, has typically been three to
nine months. In recent periods,  the Company has experienced longer sales cycles
in certain instances. There can be no assurance that customers will purchase the
Company's  products after a trial period or that the Company's  sales cycle will
not  lengthen,  exposing  it to  the  possibility  of  shortfalls  in  quarterly
revenues,  which could have a material adverse effect on the Company's business,
financial  condition  or results of  operations  and cause  results to vary from
period to period.  The  Company's  operating  results  will also be  affected by
general  economic and other  conditions  affecting the timing of customer orders
and capital spending, and order cancellations or rescheduling.

The Company  operates with very little backlog and most of its product  revenues
in each quarter  result from orders  closed in that  quarter,  and a substantial
majority of those orders are completed at the end of that  quarter.  The Company
establishes its expenditure levels for sales, marketing, product development and
other  operating  expenses based in large part on its  expectations as to future
revenues,  and revenue  levels  below  expectations  could cause  expenses to be
disproportionately  high.  If revenues fall below  expectations  in a particular
quarter,  operating results and net income are likely to be materially adversely
affected.  Any  inability of the Company to adjust  spending to  compensate  for
failure  to meet  sales  forecasts  or to collect  accounts  receivable,  or any
unexpected increase in product returns or other costs, could magnify the adverse
impact of such events on the Company's operating results.

The Company's business has historically  experienced and is expected to continue
to experience significant  seasonality.  The Company has had higher sales of its
software  products in the quarters  ending in December and June and weaker sales
in the quarters ending in September and March.  The decrease in product revenues
in the  quarters  ending  in  September  is due  to the  international  customer
seasonal buying patterns. The quarters ending in March are historically weak due
to  government  and  large  organization  annual  budgeting  cycles.  Due to the
foregoing  factors,  quarterly  revenue and operating results are likely to vary
significantly in the future and  period-to-period  comparisons of its results of
operations  are not  necessarily  meaningful  and should  not be relied  upon as
indications  of future  performance.  Further,  it is likely that in some

                                       26

<PAGE>


future  quarters the  Company's  revenue or operating  results will be below the
expectations of public market analysts and investors.  In such event,  the price
of the Company's Common Stock would likely be materially adversely affected.

Reliance on and Risks Associated with International Sales

During the three months ended March 31, 1998 and 1997, 31% and 34%, respectively
of the  Company's  total  revenues  were  derived  from  sales to  international
customers.  During the nine months  ended March 31, 1998 and 1997,  34% and 41%,
respectively,  of the  Company's  total  revenues  were  derived  from  sales to
international  customers.  The  decrease  in sales in the three  and nine  month
periods  ended  March  31,  1998 are  indicative  of the risks  associated  with
international  sales and there can be no assurance that such a decrease will not
occur again in the future. The Company's international sales have been primarily
to European  markets,  and sales are generally  denominated in local currencies.
Although the Company  plans to focus its initial  NetLOCK  sales  efforts in the
U.S.  market,  the  regulatory  environment  with respect to sales of NetLOCK to
international  customers  is complex and  uncertain.  Should the Company wish to
sell  NetLOCK  internationally  it may be unable to do so or may be  required to
incur considerable regulatory costs to do so.

Sales to  international  customers  are subject to  additional  risks  including
longer receivables collection periods, greater difficulty in accounts receivable
collection,  failure of distributors to report sales of the Company's  products,
political and economic  instability,  nationalization,  trade restrictions,  the
impact of possible  recessionary  environments  in economies  outside the United
States,  reduced protection for intellectual  property rights in some countries,
currency  fluctuations  and tariff  regulations and  requirements for export and
import licenses.  There can be no assurance that foreign  intellectual  property
laws will adequately  protect the Company's  intellectual  property  rights.  In
addition,  effective copyright and trade secret protection may be unavailable or
limited  in  certain  foreign  countries.  Substantially  all of  the  Company's
distribution and other agreements with  international  distributors  require any
dispute  between the Company and any  distributor to be settled by  arbitration.
Under these agreements, the party bringing the action, suit or claim is required
to conduct the arbitration in the domicile of the defendant. The result is that,
if the Company has a cause of action against a party, it may not be feasible for
the Company to pursue such action,  as  arbitration  in a foreign  country could
prove to be excessively  costly and have a less certain outcome depending on the
laws and customs in the foreign country.  These international factors could have
a  material  adverse  effect  on  future  sales  of the  Company's  products  to
international end users and,  consequently,  the Company's  business,  financial
condition and results of operations.

Most of the Company's  international  sales are denominated in local currencies.
The  Company  generally  has not  attempted  to  reduce  the  risk  of  currency
fluctuations  by  hedging  except in  certain  limited  circumstances  where the
Company expects to hold an account receivable for a period of at least 6 months.
The Company may be  disadvantaged  with respect to its competitors  operating in
foreign  countries by foreign currency  exchange rate fluctuations that make the
Company's products more expensive  relative to those of local  competitors.  The
Company may  attempt to reduce  these  risks by  continuing  to hedge in certain
limited transactions in the future.  Accordingly,  changes in the exchange rates
or exchange  controls may adversely affect the 

                                       27

<PAGE>


Company's  results of  operations.  There can be no assurance that the Company's
current or any future currency  exchange strategy will be successful in avoiding
exchange  related losses or that any of the factors listed above will not have a
material  adverse  effect  on the  Company's  future  international  sales  and,
consequently,  on the  Company's  business,  financial  condition and results of
operations.

Dependence  Upon  Proprietary   Technology;   Risk  of  Third-Party   Claims  of
Infringement

The  Company's  success  and  ability to compete is  dependent  in part upon its
proprietary  information.  The Company  relies  primarily  on a  combination  of
copyright and trademark laws, trade secrets, software security measures, license
agreements and  nondisclosure  agreements to protect its proprietary  technology
and software products. There can be no assurance,  however, that such protection
will be adequate to deter  misappropriation,  deter  unauthorized  third parties
from  copying  aspects  of, or  otherwise  obtaining  and using,  the  Company's
software  products  and  technology  without  authorization,  or that the rights
secured thereby will provide competitive advantages to the Company.

There can be no assurance  that others will not  independently  develop  similar
products or duplicate the Company's products. There can be no assurance that the
steps taken by the Company to protect its  proprietary  technology  will prevent
misappropriation  of such  technology,  and such  protections  may not  preclude
competitors from developing  products with  functionality or features similar to
or superior to the Company's  products.  A  substantial  amount of the Company's
sales are in international  markets,  and the laws of other countries may afford
the Company little or no effective protection of its intellectual property.

While the Company believes that its products and trademarks do not infringe upon
the  proprietary  rights of third  parties,  there can be no assurance  that the
Company will not receive future communications from third parties asserting that
the Company's products infringe,  or may infringe,  on the proprietary rights of
third  parties.  The  Company was denied a  trademark  registration  of the name
"Interlink" based on the use of similar names by other companies in the computer
industry.   The  Company  expects  that  software  product  developers  will  be
increasingly  subject  to  infringement  claims as the  number of  products  and
competitors in the Company's  industry segments grow and the  functionality's of
products in  different  industry  segments  overlap.  Any such  claims,  with or
without  merit,  could  be time  consuming,  result  in  costly  litigation  and
diversion of technical and management  personnel,  cause product shipment delays
or  require  the  Company  to develop  non-infringing  technology  or enter into
royalty or  licensing  agreements,  any of which  could have a material  adverse
effect on the Company's business, financial condition and results of operations.
Moreover,  an adverse outcome in litigation or similar  adversarial  proceedings
could subject the Company to significant  liabilities to third parties,  require
expenditure  of  significant  resources  to develop  non-infringing  technology,
require  disputed  rights to be  licensed  from others or require the Company to
cease the  marketing  or use of  certain  products,  any of which  could  have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.

                                       28

<PAGE>


Possible Volatility of Share Price

There can be no assurance  that the market price of the  Company's  Common Stock
will not decline or remain  below  current  levels.  The  trading  prices of the
Company's  Common  Stock may be subject to wide  fluctuations  in  response to a
number of factors, including variations in operating results, alliances, changes
in earnings  estimates by securities  analysts,  announcements  of extraordinary
events  such  as  litigation,  alliances,  or  acquisitions,   announcements  of
technological innovations or new products or new contracts by the Company or its
competitors,  announcements and reports about the number of mainframe  computers
shipped,  press  releases  or  reports of IBM or other  competitors  introducing
competitive or substitute products,  as well as general economic,  political and
market  conditions.   In  addition,  the  stock  market  has  from  time-to-time
experienced  significant  price and volume  fluctuations  that have particularly
affected the market  prices for the common  stocks of  technology  companies and
that have  often been  unrelated  to the  operating  performance  of  particular
companies.  These broad market fluctuations may also adversely affect the market
price  of  the  Company's  Common  Stock.  In the  past,  following  periods  of
volatility  in the market  price of a  company's  securities,  securities  class
action  litigation  has occurred  against the issuing  company.  There can be no
assurance that such  litigation will not occur in the future with respect to the
Company.  Such litigation  could result in substantial  costs and a diversion of
management's attention and resources, which would have a material adverse effect
on the Company's business,  financial  condition and results of operations.  Any
adverse  determination  in such  litigation  could also  subject  the Company to
significant liabilities.

                                       29

<PAGE>


                           PART II: OTHER INFORMATION

                                       30

<PAGE>


ITEM 1.  Legal Proceedings

         Incorporated  by  reference  from the Notes to  Condensed  Consolidated
         Financial StatementsItem 6. Contingencies, provided in Part I hereto.

ITEM 4:  Submission of Matters to a Vote of Security Holders

         On February 5, 1998, the Company held an Annual Meeting of stockholders
         (the  "Annual  Meeting").  Votes were cast by the  stockholders  on the
         following matters in the manner described below.

         (i)   At the Annual  Meeting  Augustus J. Berkeley and Ralph B. Godfrey
               were elected and Thomas H. Bredt,  Ronald W. Braniff,  and Andrew
               J. Fillat were reelected to the Company's Board of Directors.

               Director                  Votes For          Votes Witheld
               --------                  ---------          -------------
               Augustus Berkeley         5,760,041              38,591
               Ronald W. Braniff         5,756,041              42,591
               Thomas H. Bredt           5,758,619              40,013
               Andrew J. Fillat          5,756,791              41,841
               Ralph B. Godfrey          5,758,591              40,041

         (ii)  Approval    of    an    Votes For  Votes Against  Votes Abstained
               amendment   to   the    ---------  -------------  ---------------
               1992  stock   option  
               plan  increasing the    4,905,525      839,179          53,928
               the number of shares 
               available  under the 
               plan from  2,105,000 
               to 2,405,000         
               
         (iii) Ratification of the     Votes For  Votes Against  Votes Abstained
               appointment of          ---------  -------------  ---------------
               Coopers & Lybrand       5,742,370      19,366          36,896
               L.L.P. as independent
               accountants for the
               1998 fiscal year

         The foregoing  matters are described in more detail in the Registrant's
         definitive proxy statement dated December 30, 1997.

                                       31

<PAGE>


ITEM 6.  Exhibits and Reports on Form 8-K

         (a) Exhibit 4*               Shareholder Rights Plan

         (b) Exhibit 10.21            Change of Control Severance Agreement

         (c) Exhibit 10.22            Letter  Agreement  between the Company and
                                      Augustus J. Berkeley dated 10/97

         (d) Exhibit 10.23            Letter  Agreement  between the Company and
                                      James A. Barth dated 11/97

         (e) Exhibit 10.24            Letter  Agreement  between the Company and
                                      Vic Langford dated 3/98

         (f) Exhibit 10.25            Letter  Agreement  between the Company and
                                      William Jones dated 4/98

         (g) Exhibit 10.26            Severance  Agreement  between  the Company
                                      and Charles W. Jepson dated 5/97

         (h) Exhibit 10.27            Severance  Agreement  between  the Company
                                      and Gloria Mae Purdy dated 12/98

         (i) Exhibit 27               Financial  Data  Schedule  (EDGAR  version
                                      only)

         (j) Reports on Form 8-K      The Company filed a current report on Form
                                      8-K on January 2, 1998


         *  Incorporated  by  reference  from the  Company's  report on Form 8-A
            filed with the  Securities  and Exchange  Commission on February 26,
            1998.


                                       32

<PAGE>


SIGNATURES

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


                                                INTERLINK COMPUTER SCIENCES INC.
                                                AND SUBSIDIARIES
                                                (Registrant)



Date: May 15, 1998                              By:   /s/  James A. Barth
                                                      -------------------
                                                      James A. Barth
                                                      Chief Financial Officer
                                                      and Secretary

Date: May 15, 1998                              By:   /s/  Augustus J. Berkeley
                                                      -------------------------
                                                      Augustus J. Berkeley
                                                      President and Chief
                                                      Executive Officer

                                       33