UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

Form 10-K

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For the transition period
from                                       
toCommission File Number: 001-11807UNIFY CORPORATION(Exact name of
registrant as specified in its charter)

Delaware
    94-2710559(State or
      other jurisdiction of
    (I.R.S.
      Employerincorporation
      or organization)
    Identification
      Number)


1420 Rocky Ridge Drive, Suite
380Roseville, California 95661(Address of principal executive offices)

Telephone: (916)
218-4700(Registrants telephone number,
including area code)

Securities registered pursuant to
Section 12(b) of the Act:None

Securities registered pursuant to
Section 12(g) of the Act:Common Stock, $0.001
par value

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.YES oNOx

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15 of the Act.YESoNOx

Indicate by
check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. YESxNOo

Indicate by
check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of
registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to this
Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of large accelerated filer, accelerated filer
and smaller reporting company in Rule 12b-2 of the Exchange Act.

|Large
      accelerated filer o | Accelerated
      filer o | Non-accelerated filer o (Do not check
      if a smallerreporting company) | Smaller
      reporting companyx
|------------------------------- | ------------------------- | -------------------------------------------------------------------------- | --------------------------------

Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act.)YESoNOx

The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant was $13,429,565 based on the number of shares
held by non-affiliates of the registrant as of April 30, 2009, and computed by
reference to the reported last sale price of common stock on October 31, 2008,
which is the last business day of the registrants most recently completed
second fiscal quarter. Shares of common stock held by each officer and director
and by each person who owns 5% or more of the outstanding common stock have been
excluded in that such persons may be deemed to be affiliates. This determination
of affiliate status is not necessarily a conclusive determination for other
purposes. As of June 30, 2009, the registrant had 10,176,705 shares of common
stock outstanding.

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PART I

A Caution about Forward-Looking
Statements:

The
discussion in this Annual Report on Form 10-K contains forward-looking
statements that have been made pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
based on current expectations, estimates and projections about the software
industry and certain assumptions made by the Companys management. Words such as
anticipates, expects, intends, plans, believes, seeks, estimates,
projects, and variations of such words and similar expressions are intended to
identify such forward-looking statements. These statements are not guarantees of
future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict; therefore, actual results may differ
materially from those expressed or forecasted in any such forward-looking
statements. Such risks and uncertainties include, but are not limited to, those
set forth herein under Risk Factors. Unless required by law, the Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. However,
readers should carefully review the risk factors set forth in other reports or
documents the Company files from time to time with the Securities and Exchange
Commission (the SEC), particularly the Companys Quarterly Reports on Form
10-Q and any Current Reports on Form 8-K.

ITEM 1. BUSINESS

The Company

Unify (the Company, we, us or our) is a global provider of
application modernization, data management and application development
solutions. Our migration solutions, development software and embedded databases
allow customers to modernize and maximize their application environment. Our
award-winning technologies help organizations drive business optimization,
improve collaboration, increase customer service and reduce costs. Unifys
strategy is to help businesses modernize mission-critical legacy applications
and data. Based on market requirements for application modernization, our
solutions help companies increase speed and agility, improve asset reuse, lower
IT costs, reduce business risks and exposures, and free information previously
locked within proprietary systems.

The Company
sells and markets its application development and database software and services
and modernization solutions through two segments. The segments are the Database
and Development Products (DDP) and our Modernization & Migration
Products.

Unify serves more than 10,000 end user corporate information technology
(IT) department customers, 35 distributors and 250 software value-added
resellers (VARs), solutions integrators (SIs) and independent software
vendors (ISVs) partners across the globe. Our clients represent diverse
industries including energy, financial services, government, health care,
insurance, manufacturing, retail, telecommunications and more. We market and
sell products directly in the United States, Australia, United Kingdom (UK),
France, Germany and Canada, and indirectly to more than 50 countries through
worldwide distributors in Europe, Middle East and Africa (EMEA), Asia Pacific
and Latin America. On June 30, 2009, Unify acquired AXS-One Inc., as disclose in
footnote 2.

Over
the past five years, we have expanded our product offering to adapt to evolving
market requirements. Our application modernization solutions include Composer
for Lotus Notes, Composer Sabertooth, Composer for Oracle Forms and Composer for
COBOL. Our application development product families include NXJ Developer, Team
Developer, ACCELL and VISION; and our data management software includes SQLBase
and DataServer.

Unify was
initially incorporated in California in 1980 and later reincorporated in
Delaware on April 10, 1996. We are headquartered in Roseville, California, and
have offices in Maryland, Australia, France, Germany, the UK and Canada. Our
headquarters office is located at 1420 Rocky Ridge Drive, Suite 380, Roseville,
California 95661. Our telephone number is (916) 218-4700 and our website address
is http://www.unify.com.

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Products

Application Modernization and Migration
Solutions

Composer
for Lotus Notesis specifically designed for
customers that need to modernize and migrate proprietary applications to a new
technology platform. Composer for Lotus Notes is a software plus services
solution for migrating IBM Lotus Notes® applications to the Microsoft platform.
Composer delivers like-for-like, production-to-production migration of Lotus
Notes applications to the Microsoft stack while preserving the business
logic/workflow in order to avoid end-user disruption. With Composer, Lotus Notes
applications are decomposed and re-assembled: Data from the Lotus Notes
application is migrated into a normalized SQL Server database; Business logic is
restructured as C# Web Services in Visual Studio; User Interface is transformed
into SharePoint Lists and Web Parts; and ACL security is mapped into the
Microsoft Active Directory Services.

Composer
Sabertoothis designed for organizations
that are standardizing on Microsoft and are forced to transition Team Developer
applications to C# or VB.NET. The vast majority of Unifys worldwide Team
Developer customers continue to benefit from the ability to rapidly build and
deploy business applications fast and cost-effectively. From the latest Web
Services Consumption in Team Developer 5.1 to the planned .NET support in future
releases, Composer Sabertooth delivers complimentary solution for organizations
requiring standardization and consolidation of their IT systems and applications
to the Microsoft .NET platform, either now or in the near future.

Composer
for Oracle Formsautomatically converts
Oracle Forms and PL/SQL code to Java and we believe is the only one of its kind
to be validated by Oracle for migrating Forms to Java (J2EE). Utilizing J2EE
simplifies the application development process by using standardized and
reusable object oriented components and by automating multi-tier functionality.
As a result, the amount of time needed for programming and training is
decreased, saving time and money. Composer for Oracle Forms can convert all
releases of Oracle Forms including character-based versions such as Release 2.3,
3.0 and 4.5. By automating the migration process, Composer for Oracle Forms
removes the risk of human error and produces standardized business applications
that are fully maintainable, helping companies stay competitive.

Composer
for COBOLdelivers automation migration of
legacy COBOL, Ideal and Natural code to modern code and relational databases
through partnerships with Ateras Inc. and Information Analysis Inc (IAI).
Through the Ateras partnership, Composer for COBOL offers a complete solution
for companies needing to modernize their legacy mainframe applications,
including migrating mainframe code and non-relational databases from IDMS, IMS,
VSAM or from Natural / Adabas to COBOL, C# or JAVA code, with either a DB2, SQL
Server or Oracle database. The partnership with IAI enables Composer for COBOL
to migrate Ideal / Datacom applications to COBOL code with either a DB2 or
Oracle database. Composer for COBOL delivers an automated code conversion and
data migration for a functionally equivalent application. Unifys methodology is
designed to eliminate risk and substantially reduce time and costs of IT
departments.

Rapid Application Development
Products

NXJ
Developer and NXJ Enterprise®is a visual
environment for the rapid development of innovative Web 2.0 Rich Internet
Applications (RIA). NXJ Developer is distinguished by its combination of
intuitive visual design, flexible service-oriented architecture (SOA)
programming, and ease of integration with both Java code and .NET business logic
via Web services. The combination of AJAX-rich client technology and Web
services make NXJ Developer a powerful and competitive solution for delivering
SOA-based Rich Internet Applications. NXJ Enterprise® includes all of the
powerful technology of NXJ Developer but adds workflow and reporting for
delivering enterprise class RIA and web-based applications.

Team
Developer®is a visual object-oriented rapid
application development product that shortens the development cycle by providing
developers the tools needed to quickly design, develop and deploy Windows
solutions. Team Developer provides a completely integrated visual development
environment that includes a database explorer, integrated reporting tool,
team-oriented source code management facility, and a powerful component
developer facility that enables programmers to automate and customize the
development environment.

ACCELL® is a highly productive 4GL
application development suite and database software for developing and deploying
data-rich, database-driven applications. 4GL is a fourth generation programming
language designed to allow users to develop applications, particularly for the
purpose of querying databases and producing reports. The ACCELL products support
interfaces to leading database products including Unify DataServer, IBM DB2,
Informix, Microsoft SQL Server, Oracle and Sybase. The ACCELL product suite
includes ACCELL/Web, ACCELL/SQL and ACCELL/IDS.

- ACCELL/Web  enables our customers with existing
  ACCELL/SQL applications to convert them into fully featured graphical
  web-based applications without rewriting the application or modifying the
  source code.

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- ACCELL/SQL  is our 4GL-based rapid
  application development software for developing client/server applications.
  ACCELL/SQL connects to Unify, Oracle, Sybase and Informix databases creating a
  fast application performance environment.
- ACCELL/IDS  is our 4GL-based rapid
  application development software for applications that connect to Unifys
  DataServer ELS database.

VISION® is a graphical, client/server
application development system that allows for rapid creation and easy
modification of complex business applications based on 4GL technology. Unify
VISION consists of an object-oriented, repository-based component framework
designed to enable developers to rapidly create and easily modify application
components. VISION also contains an application server to allow organizations to
integrate custom-built and packaged applications with the Internet.

Database Management
Products

SQLBase®is a fully relational, high
performance, embedded database that allows organizations to manage data closer
to the customer, where capturing and organizing information is becoming
increasingly critical. SQLBase provides what other database companies cannot
deliver: a self-recovering, maintenance-free embedded database architecture that
enables IT, ISVs and VARs to focus on their solution, rather than the underlying
database technology.

**SQLBase®
Treasury**is an encrypted, secure version
of the SQLBase database.

DataServer®is a high performance
enterprise relational database management system with minimal maintenance and
memory requirements. It can quickly accommodate the growth of user requirements
over time, making it an attractive choice for mission critical applications.
DataServer makes it easy for developers to create graphical applications and
migrate existing database applications to enterprise network and Internet
environments.

DataServer® ELSis a high performance,
easily embeddable database. Its small footprint and proven reliability make it
an industry favorite for embedded applications that require relational
databases.

Report
Builderprovides individuals a quick and
easy way to create attractive reports and ad-hoc queries for databases. Report
Builder offers full Cross Platform capabilities and is available for Windows and
Linux desktop computers.

Customers

Unifys
customers include corporate information technology departments (IT), software
value-added resellers (VARs), solutions integrators (SIs) and independent
software vendors (ISVs) from a variety of industries, including insurance,
financial services, healthcare, government, manufacturing, retail, education,
and more. We had one customer in the year ended April 30, 2008 that accounted
for 12% of consolidated revenues. No single customer accounted for 10% or more
of consolidated revenue in the years ended April 30, 2009 and 2007.

Sales, Marketing and Distribution

Unifys
products and professional services are marketed and distributed to customers
globally using a combination of a direct corporate sales force and indirect
distribution channels, including ISVs, VARs, SIs and worldwide distributors. The
indirect sales channels leverage Unifys sales, support and consulting resources
to provide complete solutions to our customers.

Unifys
direct sales organization consists of sales representatives and pre-sales
consultants. Our North America sales representatives are located primarily in
our headquarters in Roseville, California. Unify markets its products
internationally through offices in the UK, France, Germany, Canada and
Australia. Unify has distributors in Asia Pacific, Europe, Japan, Latin and
South America, and Russia. International revenues accounted for 68%, 78% and 73%
of total revenues in fiscal 2009, 2008 and 2007, respectively.

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Unifys
marketing is focused on generating demand and marketing awareness for Unify
products including efforts to support the direct and indirect sales channels.
Marketing activities include e-business initiatives, strategic demand
generation, public relations, customer communications and events, trade shows
and our Web site.

As of April
30, 2009, Unify had 26 employees engaged in sales and marketing activities, 18
in North America and 8 in Europe.

Customer Support and Professional
Services

Unifys
customer support and professional services organizations play an important role
in maintaining customer satisfaction, facilitating license sales and enabling
customers to successfully architect, design, develop, deploy, manage or migrate
applications.

Customer Support and
Maintenance

Unify
provides customer support via telephone, Web, e-mail and fax from its support
centers located in California, Canada, Australia, France and Holland.
Distribution partners provide telephone support to international customers with
technical assistance from the U.S.-based support personnel who also respond to
e-mail inquiries. Customers are offered tailored support service levels
including response time, information reporting, and other features, such as
24-hour a day, seven-day a week support. During each of the past three fiscal
years, over 75% of our support and maintenance customers have renewed their
annual contracts.

Consulting

Unify offers
a full range of consulting services ranging from application implementation
services including delivering a proof of concept to completed applications using
our technology infrastructure. Our products allow companies to maximize return
on investment, get to market quickly or be more efficient. Consulting services
include: application migration, project implementations and application updates,
business process-centric application development, Web-enablement,
technology/knowledge transfer, application architecture audits and database
tuning. The level of consulting services is tailored to customer-defined needs
and includes development plans, hands-on development tasks and project
management.

Education

Unify offers
education courses at our training centers located in Roseville, California and
Paris, France. We also offer on-site training at customer and partner
facilities.

As of April
30, 2009, we had a total of 7 employees engaged in providing customer support.
Of those employees, 4 were located in the United States and 3 were located in
Europe.

Product Development

In fiscal
2009, we focused our development efforts primarily on the Composer for Lotus
Notes, Team Developer, SQLBase, Q, Report Builder and VISION products. During
fiscal 2009, we developed and released major new versions of SQLBase, Team
Developer, SQLBase Treasury and VISION, and transitioned the Composer for Lotus
Notes migration solution to a tool based product offering. Unifys product
development expenses for fiscal 2009, 2008 and 2007, were $2.9 million, $3.5
million and $2.4 million, respectively.

Most of
Unifys current software products have been developed internally; however, we
have licensed certain software components from third parties and we may do so
again in the future. We are committed to delivering products that meet customer
and market needs today and into the future.

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Intellectual Property

Unify relies
on a combination of copyright, trademark and trade-secret laws, non-disclosure
agreements and other methods to protect our proprietary technology. Despite
efforts to protect our proprietary rights, unauthorized parties may attempt to
copy aspects of our products or to obtain and use information that we regard as
proprietary. Policing unauthorized use of our products is difficult, and while
we are unable to determine the extent to which piracy of our software products
exists, software piracy can be expected to be a persistent problem. In addition,
the laws of some foreign countries in which we sell products do not protect our
proprietary rights as fully as do the laws of the United States. There can be no
assurance that our means of protecting our proprietary rights in the United
States or abroad will be adequate or that competition will not independently
develop similar technology.

Although
there are no pending lawsuits against Unify regarding infringement of any
existing patents or other intellectual property rights and we have not received
any notices that we are infringing or allegedly infringing the intellectual
property rights of others, there can be no assurance that infringement claims
will not be asserted by third parties in the future. If any such claims are
asserted, there can be no assurance that we will be able to defend such claim or
obtain licenses on reasonable terms. Our involvement in any patent dispute or
any other intellectual property dispute or action to protect trade secrets and
know-how may have an adverse effect on our business, operating results, and
financial condition. Adverse determinations in any litigation may subject us to
significant liabilities to third parties, require us to seek licenses from third
parties, and prevent us from developing and selling its products. Any of these
situations could have an adverse effect on our business, operating results and
financial condition.

Unify is
dependent on third-party suppliers for certain software which is embedded in
some of our products. Although we believe that the functionality provided by
software which is licensed from third parties is obtainable from multiple
sources, or could be developed by us if any such third-party licenses were
terminated, or not renewed, or if these third parties fail to develop new
products in a timely manner, we could be required to develop an alternative
approach to developing products which could require payment of additional fees
to third parties or internal development costs and delays that might not be
successful in providing the same level of functionality. Such delays, increased
costs, or reduced functionality could adversely affect our business, operating
results, and financial condition.

Competition

The market
for Unifys software is intensely competitive, subject to rapid change and
significantly affected by new product introductions and other activities of
market participants. Our products and software solutions compete in the market
with dozens of other companies that provide application modernization solutions,
application development products, and databases. These competitors include IBM,
Microsoft, Oracle and Sun. All of these competitors are large, well capitalized
companies with significantly greater financial, technical and marketing
resources as well as greater name recognition and larger customer bases. The
Unify solutions are competitive from a technical capability, rich interface and
ease of use, service and pricing perspectives, but our competitors have greater
brand recognition and perceived financial strength.

The Company
generally derives sales from new project initiatives, additional deployment of
existing applications and product upgrades. As a result, the key competitive
factor is generally the decision by a customer as to whether or not to begin a
new project initiative or upgrade or keep things status quo. Organizations
choose Unify software for a variety of factors including the ability to migrate
applications, build and deploy applications quickly, the knowledge of Unifys
software among its IT developers, the high level of customer service and support
Unify provides and our price point, which gives customers a cost-effective
solution to their business problem. Organizations will typically choose a
competitor because of their perceived financial strength.

As new
products and technologies are introduced, increased competition could result in
fewer customer orders, reduced prices and reduced gross margins, any one of
which could adversely affect our business, operating results, and financial
condition. In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties, thereby increasing the ability of their products to address the
needs of our prospective customers. Accordingly, it is possible that new
competitors or alliances among current and new competitors may emerge and gain
significant market share. Such competition could adversely affect our ability to
sell additional licenses and maintenance and support renewals on favorable
terms.

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Employees

As of April
30, 2009, we had a total of 89 employees, including 24 in product development,
26 in sales and marketing, 21 in customer support, consulting, and training, and
18 in finance, operations and general administration. Of these employees, 75
were located in the United States and 14 were located in Europe.

Unifys
success depends in large part on its ability to attract and retain qualified
employees, particularly senior management, engineering and direct sales. The
competition for such employees is intense. There can be no assurance that we
will be successful in attracting or retaining key employees. Any failure we have
in attracting and retaining qualified senior management, engineering, direct
sales, and support personnel could adversely affect our business, operating
results, and financial condition. None of our employees are represented by a
collective bargaining agreement, nor have we experienced any work stoppage. We
consider our relations with our employees to be good.

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WHERE YOU CAN FIND MORE
INFORMATION

You are
advised to read this Form 10-K in conjunction with other reports and documents
that we file from time to time with the SEC. In particular, please read our
Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K that we may
file from time to time. You may obtain copies of these reports directly from us
or from the SEC and the SECs Public Reference Room at 100 F Street, N.E.
Washington, D.C. 20549. In addition, the SEC maintains information for
electronic filers (including Unify) at its website at www.sec.gov. We make
available free of charge on or through our Internet website located at
www.unify.com our SEC filings on Forms 10-K, 10-Q and 8-K and any amendments to
those filings as soon as reasonably practicable after electronic filing with the
SEC.

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RISK FACTORS

In
evaluating the Companys business, readers should carefully consider the
business risks discussed in this section in addition to the other information
presented in this Annual Report on Form 10-K and in ourother filings with the
SEC.

Deterioration in general economic
conditions has caused and could cause additional decreases or delays in spending
by customers and could harm our ability to generate license and maintenance
revenues and our results of operations.

The state of the global economy and
availability of capital has and could further impact the spending patterns of
existing and potential future customers. Any reduction in spending by, or loss
of, existing or potential future customers would cause revenues to decline.
Further, it may be difficult to adjust expenses and capital expenditures quickly
enough to compensate for any unexpected revenue shortfall.

Software license and maintenance
purchases tend to be cyclical, reflecting overall economic conditions and
budgeting and buying patterns. Since most revenues are derived from sales of
software licenses, the current deterioration in economic conditions has caused
and could cause additional decreases in or delays in software spending and is
likely to reduce software license revenues and negatively impact our short term
ability to grow revenues. Further, any decreased collectability of accounts
receivable or early termination of agreements due to the current deterioration
in economic conditions could negatively impact our results of
operations.

The conversion ratio of certain
convertible notes and the exercise price of certain warrants may be
substantially below the market price of our stock at the time of exercise which
could potentially have a negative impact on our stock price.

In conjunction with the acquisition
of Gupta Technologies LLC in November 2006, we obtained debt financing that
included convertible notes in the principal amount of $5,350,000 and we also
issued 670,000 warrants. As of April 30, 2009, the remaining principal amount of
convertible notes resulting from our debt financing was approximately $1,400,000
which is convertible into our common stock at a fixed ratio of $5.00 per share.
As of April 30, 2009, there were 550,000 warrants issued as part of our debt
financing that were outstanding which are exercisable at fixed exercise prices
ranging from $1.35 per share to $1.90 per share. Subject to certain exceptions,
these conversion ratios and exercise prices are subject to downward adjustment
in the event we issue additional shares of common stock at prices below the
then-current conversion ratio or exercise price. Conversion of the notes or
exercise of the warrants is only likely to occur at such time as the conversion
ratio or exercise price, as the case may be, is lower than the current market
price for our stock. Issuance of common stock at a price below our current
market price would have a dilutive effect on current stockholders and could
potentially have a negative impact on our stock price.

If we default on any secured loan, all
or a portion of our assets could be subject to forfeiture.

To finance the cash portion of the
acquisition of Gupta and provide working capital, we entered into a Revolving
Credit and Term Loan Agreement (the Loan Agreement) with ComVest on November
20, 2006. Under the Loan Agreement, we granted to ComVest a first priority
security interest in substantially all of our assets. If we default on the Loan
Agreement and are unable to cure the default pursuant to the terms of the
agreement, our lender could take possession of any or all assets in which it
holds a security interest, including intellectual property, and dispose of those
assets to the extent necessary to pay off the debts, which could seriously harm
our business. Furthermore, we may enter into other secured credit or loan
agreements in the future. As of April 30, 2009, the outstanding loan balance of
convertible debt was $1.4 million.

We are subject to intense
competition.

We have
experienced and expect to continue to experience intense competition from
current and future competitors including IBM, Microsoft Corporation, and Oracle
Corporation. Often, these competitors have significantly greater financial,
technical, marketing and other resources than Unify, in addition to having
greater name recognition and more extensive customer bases. As a result, our
competitors may be able to respond more quickly to new or emerging technologies
and changes in customer requirements or devote greater resources to the
development, promotion and sale of their products than we can.

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In addition,
current and potential competitors may make strategic acquisitions or establish
cooperative relationships among themselves or with third parties, thereby
increasing the ability of their products to address the needs of our prospective
customers. Accordingly, it is possible that new competitors or alliances among
current and new competitors may emerge and rapidly gain significant market
share. Such competition could adversely affect our ability to sell additional
licenses and maintenance and support renewals on terms favorable to us. Further,
competitive pressures could require us to reduce the price of our products and
related services, which could adversely affect our business, operating results,
and financial condition. There can be no assurance that we will be able to
compete successfully against current and future competition, and the failure to
do so would have an adverse effect upon our business, operating results and
financial condition.

The markets in which we compete are
subject to rapid technological change.

The markets in which we compete are
characterized by rapid technological change, frequent introductions of new and
enhanced products, changes in customer demands and evolving industry standards.
The introduction of products embodying new technologies and the emergence of new
industry standards can render existing products obsolete and
unmarketable.

Our future success will depend in
part upon our ability to address the increasingly sophisticated needs of
customers by developing new product functionality and enhancements that keep
pace with technological developments, emerging industry standards and customer
requirements.

There can be no assurance that our
products will continue to be perceived by our customers as technologically
advantageous or that we will not experience difficulties that delay or prevent
the sale of enhancements to existing products that meet with a significant
degree of market acceptance. If the release dates of any future product
enhancements, or new products are delayed, or if when released, they fail to
achieve market acceptance, our business, operating results, and financial
condition would be adversely affected.

We are dependent on indirect sales
channels.

A significant portion of our
revenues are derived from indirect sales channels, including ISVs, VARs and
distributors. ISVs, VARs and distributors accounted for approximately 61%, 64%
and 61% of our software license revenues for fiscal 2009, 2008 and 2007,
respectively. Our success therefore depends in part upon the performance of our
indirect sales channels, over which we have limited influence. Our ability to
achieve significant revenue growth in the future depends in part on maintaining
and expanding our indirect sales channels worldwide. The loss of any major
partners, either to competitive products offered by other companies or to
products developed internally by those partners, or the failure to attract
effective new partners, could have an adverse effect on our business, operating
results, and financial condition.

There are numerous risks associated
with our international operations and sales.

Revenues derived from our
international customers accounted for 68%, 78% and 73% of our total revenues,
with the remainder from North America, in fiscal 2009, 2008 and 2007,
respectively. If the revenues generated by our international operations are not
adequate to offset the expense of maintaining such operations, our overall
business, operating results and financial condition will be adversely affected.
There can be no assurance that we will continue to be able to successfully
market, sell and deliver our products in these markets. Although we have had
international operations for a number of years, there are certain unique
business challenges and risks inherent in doing business outside of North
America, and such challenges and risks can vary from region to region. These
include unexpected changes in regulatory requirements; export restrictions,
tariffs and other trade barriers; difficulties in staffing and managing foreign
operations; longer payment cycles; problems in collecting accounts receivable;
political instability; fluctuations in currency exchange rates; seasonal
reductions in business activity during the summer months in Europe and other
parts of the world; unfamiliar or unusual business practices; and potentially
adverse tax consequences, any of which could adversely impact the success of our
international operations. There can be no assurance that one or more of these
factors will not have an adverse effect on our future international operations
and, consequently, on our business, operating results and financial condition.
In addition, the Companys subsidiaries and distributors in Europe and Japan
operate in local currencies. If the value of the U.S. dollar increases relative
to foreign currencies, our business, operating results and financial condition
could be adversely affected.

10

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Our stock price may be subject to
volatility.

Unifys common stock price has been
and is likely to continue to be subject to significant volatility. A variety of
factors could cause the price of the common stock to fluctuate, perhaps
substantially, including: announcements of developments related to our business;
fluctuations in the operating results and order levels of Unify or its
competitors; general conditions in the computer industry or the worldwide
economy; announcements of technological innovations; new products or product
enhancements from us or our competitors; changes in financial estimates by
securities analysts; developments in patent, copyright or other intellectual
property rights; and developments in our relationships with our customers,
distributors and suppliers; legal proceedings brought against the Company or its
officers; and significant changes in our senior management team. In addition, in
recent years the stock market in general, and the market for shares of equity
securities of many high technology companies in particular, have experienced
extreme price fluctuations which have often been unrelated to the operating
performance of those companies. Such fluctuations may adversely affect the
market price of our common stock.

Beginning on August 25, 2008, the
Companys stock started trading on the NASDAQ. Prior to being traded on the
NASDAQ, the Companys stock was traded over-the-counter on the bulletin board.
Even though our stock is now traded on the NASDAQ, we do not receive any analyst
coverage, our stock is thinly traded and our stock is considered to be micro-cap
stock. Our stock is therefore subject to greater price volatility than larger
companies whose stock trades more actively.

Our quarterly operating results may be
subject to fluctuations and seasonal variability.

Unifys quarterly operating results
have varied significantly in the past and we expect that they could vary
significantly in the future. Such variations could result from the following
factors: the size and timing of significant orders and their fulfillment; demand
for our products; the quantity, timing and significance of our product
enhancements and new product announcements or those of our competitors; our
ability to attract and retain key employees; seasonality; changes in our pricing
or our competitors; realignments of our organizational structure; changes in
the level of our operating expenses; incurrence of extraordinary operating
expenses, changes in our sales incentive plans; budgeting cycles of our
customers; customer order deferrals in anticipation of enhancements or new
products offered by us or our competitors; product life cycles; product defects
and other product quality problems; currency fluctuations; and general domestic
and international economic and political conditions.

Due to the foregoing factors,
quarterly revenues and operating results may vary on a quarterly basis. Revenues
and quarterly results may vary because software technology is rapidly evolving,
and our sales cycle, from initial evaluation to purchase and the providing of
maintenance services, can be lengthy and vary substantially from customer to
customer. Because we normally deliver products within a short time of receiving
an order, we typically do not have a backlog of orders. As a result, to achieve
our quarterly revenue objectives, we are dependent upon obtaining orders in any
given quarter for shipment in that quarter. Furthermore, because many customers
place orders toward the end of a fiscal quarter, we generally recognize a
substantial portion of our software license revenues at the end of a quarter.
Our expense levels largely reflect our expectations for future revenue and are
therefore somewhat fixed in the short term.

We expect that our operating results
will continue to be affected by the continually challenging IT economic
environment as well as by seasonal trends. In particular, we anticipate
relatively weaker demand in the fiscal quarters ending July 31 and October 31 as
a result of reduced business activity in Europe during the summer
months.

Our products are subject to lengthy
sales cycles.

Our application modernization
solutions are used to implement comprehensive solutions including complete
technology platform transitions and new applications. As a result, the delivery
of our application modernization solutions generally involves a four to ten week
implementation time and a significant commitment of management attention and
resources by prospective customers. Accordingly, our sales cycle is subject to
delays associated with the long approval process that typically accompanies
significant initiatives or capital expenditures. Our business, operating
results, and financial condition could be adversely affected if customers reduce
or delay orders. There can be no assurance that we will not continue to
experience these and additional delays in the future. Such delays may contribute
to significant fluctuations of quarterly operating results in the future and may
adversely affect those results.

Our software products could contain
defects and could be subject to potential release delays.

Software products frequently contain
errors or defects, especially when first introduced or when new versions or
enhancements are released. There can be no assurance that, despite testing by us
and current and potential customers, defects and errors will not be found in
current versions, new versions or enhancements after commencement of commercial
shipments, resulting in loss of revenues, delay in market acceptance, or
unexpected re-programming costs, which could have an adverse effect upon our
business, operating results and financial condition. Additionally, if the
release dates of any future Unify product line additions or enhancements are
delayed or if, when released, they fail to achieve market acceptance, our
business, operating results, financial condition and cash flows would be
adversely affected.

11

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Our license agreements may not protect
us from product liability claims.

The license
agreements we have with our customers typically contain provisions designed to
limit our exposure to potential product liability claims. It is possible,
however, that the limitation of liability provisions contained in these license
agreements may not be effective as a result of existing or future federal, state
or local laws or ordinances or unfavorable judicial decisions. The sale and
support of current and future products may involve the risk of such claims, any
of which are likely to be substantial in light of the use of these products in
the development of core business applications. A successful product liability
claim brought against the Company could have an adverse effect upon our
business, operating results, and financial condition.

We rely upon technology from certain
third-party suppliers.

Unify is
dependent on third-party suppliers for software which is embedded in some of its
products. We believe that the functionality provided by software which is
licensed from third parties is obtainable from multiple sources or could be
developed by the Company. However, if any such third-party licenses were
terminated, or not renewed, or if these third parties fail to develop new
products in a timely manner, we could be required to develop an alternative
approach to developing such products, which could require payment of additional
fees to third parties or internal development costs and delays that might not be
successful in providing the same level of functionality. Such delays, increased
costs or reduced functionality could adversely affect our business, operating
results and financial condition.

We may be subject to violations of our
intellectual property rights.

Unify relies on a combination of
copyright, trademark and trade secret laws, non-disclosure agreements and other
intellectual property protection methods to protect its proprietary technology. Despite
our efforts to protect proprietary rights, unauthorized parties may attempt to copy
aspects of our products or obtain and use information that we regard as proprietary.
Policing unauthorized use of our products is difficult, and while we are unable to
determine the extent to which piracy of our technology exists, piracy can be expected to
be a persistent problem. In addition, the laws of some foreign countries do not protect
our proprietary rights as fully as do the laws of the United States. There can be no
assurance that our means of protecting our proprietary rights will be adequate and, to the
extent such rights are not adequate, other companies could independently develop similar
products using similar technology.

On April 17, 2009, an individual
filed a complaint for patent infringement against Unify and 26 other companies in the
United States District Court for the District of Oregon captioned Gary Odom v.
Attachmate, et. al., 3:09-cv-00406-AC. The complaint alleges that the defendants
infringed a U.S. Patent issued on April 22, 2008. We have received a verbal
notification from the plaintiff that the lawsuit will be dismissed with prejudice as to
Unify without any payment or further action by Unify but as of the date of this Report the
dismissal has not yet been filed with the court. However, until the dismissal is filed,
there can be no assurance that we will not be required to defend this claim and there
can be no assurance that we will be able to defend any infringement claims that may be
asserted by third parties in the future, or if necessary obtain licenses on reasonable
terms. Our involvement in any patent dispute or other intellectual property dispute or
action to protect trade secrets and know-how may have an adverse effect on our business,
operating results, and financial condition regardless of outcome due to the resources we
may be required to commit. Adverse determinations in any litigation may subject us to
significant liabilities to third parties, require that we seek licenses from third parties
and prevent us from developing and selling our products. Any of these situations could
have an adverse effect on our business, operating results, and financial condition.

Our success is dependent upon the
retention of key personnel and we may be unable to retain key
employees.

Our future
performance depends on the continued service of key technical, sales and senior
management personnel. With the exception of Unifys president and chief
executive officer, there are no other Unify technical, sales, executive or
senior management personnel bound by an employment agreement. The loss of the
services of one or more of our officers or other key employees could seriously
harm our business, operating results and financial condition. Future success
also depends on our continuing ability to attract and retain highly qualified
technical, sales and managerial personnel. Competition for such personnel is
intense, and we may fail to retain our key technical, sales and managerial
employees, or attract, assimilate or retain other highly qualified technical,
sales and managerial personnel in the future.

12

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Rapid growth may significantly strain
our resources.

If we are
able to achieve rapid and successful market acceptance of our current and future
products, we may undergo a period of rapid growth. This expansion may
significantly strain management, financial resources, customer support,
operational and other resources. To accommodate this anticipated growth, we are
continuing to implement a variety of new and upgraded operating and financial
systems, procedures and controls, including the improvement of our internal
management systems. There can be no assurance that such efforts can be
accomplished successfully. Any failure to expand these areas in an efficient
manner could have an adverse effect on our business, operating results, and
financial condition. Moreover, there can be no assurance that our systems,
procedures and controls will be adequate to support our future
operations.

Our disclosure controls and procedures
and our internal control over financial reporting may not be effective to detect
all errors or to detect and deter wrongdoing, fraud or improper activities in
all instances.

While we
believe we currently have adequate internal control over financial reporting,
our management does not expect that our disclosure controls and procedures or
our internal control over financial reporting will prevent all errors and fraud.
In designing our control systems, management recognizes that any control system,
no matter how well designed and operated, can provide only reasonable, not
absolute, assurance of achieving the desired control objectives. Further the
design of a control system must reflect the necessity of considering the
cost-benefit relationship of possible controls and procedures. Because of
inherent limitations in any control system, no evaluation of controls can
provide absolute assurance that all control issues and instances of wrongdoing,
if any, that may affect our operations, have been detected. These inherent
limitations include the realities that judgments in decision-making can be
faulty, that breakdowns can occur because of simple error or mistake and that
controls may be circumvented by individual acts by some person, by collusion of
two or more people or by managements override of the control. The design of any
control system also is based in part upon certain assumptions about the
likelihood of a potential future event, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions. Because of the inherent limitations in cost-effective control
systems, misstatements due to error or wrongdoing may occur and not be detected.
Over time, it is also possible that controls may become inadequate because of
changes in conditions that could not be, or were not, anticipated at inception
or review of the control systems. Any breakdown in our control systems, whether
or not foreseeable by management, could cause investors to lose confidence in
the accuracy of our financial reporting and may have an adverse impact on our
business and on the market price for Unifys common stock.

ITEM 2. PROPERTIES

The
Companys principal administrative offices and headquarters are in Roseville,
California where we lease a 17,660 square foot facility. This lease is for a
period of 68 months and ends in April 2014. We also lease offices in the United
Kingdom, Germany, France, Canada and Baltimore, Maryland. We believe that our
existing facilities are adequate for our needs and that suitable additional or
alternative space will be available on commercially reasonable terms as
needed.

ITEM 3. LEGAL
PROCEEDINGS

The Company
is subject to legal proceedings and claims that arise in the normal course of
business. If such matters arise, the Company cannot assure that it would prevail
in such matters, nor can it assure that any remedy could be reached on mutually
agreeable terms, if at all. Due to the inherent uncertainties of litigation,
were there any such matters, the Company would not be able to accurately predict
their ultimate outcome. As of April 30, 2009, there were no proceedings or
litigation involving the Company that management believes would have a material
adverse impact on its financial position, results of operations, or cash
flows.

13

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

The Company
held its Annual Meeting of Stockholders on April 2, 2009. As part of the
meeting, the election of Board members was voted on by the Companys
stockholders. Elected to serve on the board were Steven D. Whiteman, Robert M.
Bozeman, Richard M. Brooks, Robert J. Majteles, Tery R. Larrew and Todd E. Wille.
All board members elected to serve were previously board members for the
Company. The elected board members will serve until the next Annual Meeting of
Stockholders and until their respective successors are duly elected and
qualified.

As part of
the Annual Meeting, stockholders voted on the nominees for director, an
amendment to increase the number of options reserved for issuance under the 2001
stock option plan and ratified the appointment of Grant Thornton LLP as the
Companys auditors for the fiscal year ending April 30, 2009.

|1. |  | The election of each of the
      nominees for director was approved with the following votes:
|-- |  | ----------------------------------------------------------------------------------------------
|   |  |                                                                                               

|                     |  | In Favor  |  | Withheld
|-------------------- |  | --------- |  | --------
|Steven D. Whiteman   |  | 4,838,693 |  | 60,547  
|Robert
      Bozeman |  | 4,839,261 |  | 59,978  
|Richard M. Brooks    |  | 4,839,267 |  | 59,972  
|Tery R.
      Larrew |  | 4,839,425 |  | 59,815  
|Robert J. Majteles   |  | 4,839,083 |  | 60,156  
|Todd E.
      Wille  |  | 4,847,761 |  | 51,478  

|2. |  | The proposal to amend the 2001
      Stock Option Plan to increase the number of shares of common stock
      reserved for issuance from 1,200,000 to 2,000,000, was approved as
      2,238,835 shares voted in favor of the amendment, representing 92% of the
      shares voted at the meeting. This was sufficient to pass the
      amendment.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |  |                                                                                                                                                                                                                                                                                                                                                     
|3. |  | The proposal to ratify the
      selection of Grant Thornton LLP as the Companys independent auditors for
      the fiscal year ending April 30, 2009 was approved as 4,873,732 shares
      voted in favor of the amendment, representing 99% of the shares voted at
      the meeting. This was sufficient to pass this
  proposal.              

14

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PART II

|ITEM 5. | **MARKET FOR
      REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY
SECURITIES**
|------- | ----------------------------------------------------------------------------------------------------------------------------

Market Information for Common
Stock

For all of
fiscal 2008 and through August 24, 2008 of fiscal 2009, Unifys common stock was
traded on the Over-The-Counter Bulletin Board (OTC BB) under the symbol UFYC.OB.
Beginning on August 25, 2008, Unify began trading on the NASDAQ under the symbol
UNFY. The following table sets forth the lowest and highest sale price of our
common stock, as reported on the over-the-counter market or the NASDAQ for the
periods presented. For common stock traded on the OTC BB, quotations reflect
prices between dealers, do not include retail mark-ups, mark-downs or
commissions and may not represent actual transactions.

|                     |  | High |  | Low 
|-------------------- |  | ---- |  | ----
|Fiscal 2009          |  |      |  |     
|Fourth
      Quarter |  | $    |  | 2.93
|Third Quarter        |  |      |  | 3.26
|Second
      Quarter |  |      |  | 5.50
|First Quarter        |  |      |  | 6.40
|                    
|Fiscal 2008          |  |      |  |     
|Fourth
      Quarter |  | $    |  | 7.10
|Third Quarter        |  |      |  | 6.70
|Second
      Quarter |  |      |  | 5.68
|First Quarter        |  |      |  | 3.00

Common Stockholders of
Record

As of May
31, 2009, there were approximately 304 stockholders of record of the Companys
common stock, as shown in the records of our transfer agent, excluding
stockholders whose stock was held in nominee or street name by
brokers.

Dividends

We have never paid dividends on our
common stock and our present policy is to retain anticipated future earnings for
use in our business.

15

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Equity Compensation Plan
Information

Unify maintains a compensation plan
that provides for the issuance of its Common Stock to officers, directors, other
employees or consultants. This plan is known as the 2001 Stock Option Plan (the
Option Plan) and it was approved by the stockholders. The 1991 Stock Option
Plan, which had a ten-year life, has expired and has therefore ceased to be
available for new grants. In fiscal 2003, the Board adopted, without a need for
shareholder approval, the 2002 Director Restricted Stock Plan (the Director
Restricted Stock Plan) as part of a program to provide compensation we felt was
necessary to attract, retain and reward members of our Board of Directors who
were willing to provide the time and energy that we believe is required to meet
our business goals. The following table sets forth information regarding
outstanding options and shares reserved for future issuance under the foregoing
plans as of April 30, 2009:

|                                                              |  |                    |  |                   |      |                    | Number
      of 
|------------------------------------------------------------- |  | ------------------ |  | ----------------- | ---- | ------------------ | ----------------
|                                                              |  |                    |  |                   |      |                    | shares          
|                                                              |  |                    |  |                   |      |                    | remaining       
|                                                              |  |                    |  |                   |      |                    | available       
|                                                              |  |                    |  |                   |      |                    | for
      future
|                                                              |  | Number
      of    |  |                   |      |                    | issuance        
|                                                              |  | shares to
      be |  | Weighted-         |      | under
      equity
|                                                              |  | issued
      upon  |  | average           |      | compensation      
|                                                              |  | exercise
      of  |  | exercise price of |      | plans             
|                                                              |  | outstanding        |  | outstanding       |      | [excluding        
|                                                              |  | options,           |  | options,          |      | shares            
|                                                              |  | warrants
      and |  | warrants and      |      | reflected
      in
|                                                              |  | rights             |  | rights            |      | column
      (a)] 
|Plan Category                                                 |  | (a)                |  | (b)               |      | (c)               
|Equity compensation plans approved by stockholders (1)        |  | 734,535            |  | $                 | 3.98 |                    | 1,147,189       
|Equity
      compensation plans not approved by stockholders: |  |                    |  |                   |      |                    |                 
|Director Restricted Stock Plan (2)                            |  | 96,137             |  | $                 | 2.45 |                    | 3,862           
|Non-Plan Options (3)                                          |  | 330,400            |  | $                 | 2.94 |                    | 0               

|(1) |  | Comprised entirely of shares
      reserved for future issuance under the Option Plan.                                                                                                                                                               
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                      
|(2) |  | There are 100,000 shares
      authorized under the Director Restricted Stock Plan, of which 96,137
      shares were awarded and were outstanding on April 30, 2009. As of April
      30, 2009 there were 3,862 shares available for future awards.
|   
|(3) |  | In fiscal 2003, the Board
      authorized the issuance of non-plan stock options for individual senior
      level executive recruitment.                                                                                                           

Material Features of Director
Restricted Stock Plan

On May 1,
2002 the Board approved the Director Restricted Stock Plan as part of a
compensation program designed to attract and retain independent members for our
board of directors. The maximum aggregate number of shares of common stock that
may be issued under the Director Restricted Stock Plan is 100,000. In fiscal
2009, there were no shares awarded under this plan. As of April 30, 2009 there
is a balance of 3,862 shares reserved for future awards under this
plan.

ITEM 6. SELECTED FINANCIAL
DATA

The
following selected consolidated financial data should be read in conjunction
with the Companys Consolidated Financial Statements and Notes thereto in Item 8
and Managements Discussion and Analysis of Financial Condition and Results of
Operations in Item 7.

16

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|                                                      | Years Ended
      April 30,                
|----------------------------------------------------- | -------------------------------------------
|                                                      | 2009                                       
|                                                      | (In
      thousands, except per share data)
|Consolidated Statement of Operations Data:            |                                            
|Revenues:                                             |                                            
|Software licenses                                     | $                                          
|Services                                              |                                            
|Migration Solutions                                   |                                            
|Total revenues                                        |                                            
|Cost of Revenues:                                     |                                            
|Software licenses                                     |                                            
|Services                                              |                                            
|Migration Solutions                                   |                                            
|Total cost of revenues                                |                                            
|Gross profit                                          |                                            
|Operating Expenses:                                   |                                            
|Product development                                   |                                            
|Selling, general and administrative                   |                                            
|Total operating expenses                              |                                            
|Income (loss) from operations                         |                                            
|Interest expense                                      |                                            
|Other income (expense), net                           |                                            
|Income (loss) before income taxes                     |                                            
|Provision (benefit) for income taxes                  |                                            
|Income (loss) from continuing operations              | $                                          
|Loss from discontinued operations                     |                                            
|Net income (loss)                                     | $                                          
|                                                     
|Net income (loss) per share:                          |                                            
|Basic earnings per share:                             |                                            
|Continuing operations                                 | $                                          
|Discontinued operations                               | $                                          
|Net income (loss) per share                           | $                                          
|                                                     
|Dilutive earnings per share:                          |                                            
|Continuing operations                                 | $                                          
|Discontinued operations                               | $                                          
|Net income (loss) per share                           | $                                          
|Shares used in computing net income (loss) per share: |                                            
|Basic                                                 |                                            
|Diluted                                               |                                            
|Consolidated Balance
      Sheet Data (As Restated)   |                                            
|Cash and cash equivalents                             | $                                          
|Working capital (deficit)                             |                                            
|Total assets                                          |                                            
|Long term debt, net                                   |                                            
|Total stockholders' equity                            |                                            

|(1) |  | The Company acquired Gupta
      Technologies LLC on November 20, 2006, so the fiscal 2007 results include
      only the activity through the end of the fiscal year. There was no Gupta
      activity for fiscal years 2006 and 2005.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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|ITEM
      7. |  | MANAGEMENTS
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
|------------- |  | -------------------------------------------------------------------------------------------------

*The following discussion of the
financial condition and results of operations of the Company contains
forward-looking statements that involve risks and uncertainties and should be
read in conjunction with the cautionary language applicable to such
forward-looking statements described above in A Caution About Forward-Looking
Statements found before Item 1 of this Form 10-K. You should not place undue
reliance on these forward-looking statements which speak only as of the date of
this Annual Report on Form 10-K. The following discussion should also be read in
conjunction with the Consolidated Financial Statements and Notes thereto in Item
8. 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, the Risk Factors discussed in this Annual Report and in the
Companys other filings with the SEC.*

Overview

Unify (the Company,
we, us or our) is a global provider of application modernization, data
management and application development solutions. Our migration solutions,
development software and embedded databases allow customers to modernize and
maximize their application environment. Our award-winning technologies help
organizations drive business optimization, improve collaboration, increase
customer service and reduce costs. Unifys strategy is to help businesses
modernize mission-critical legacy applications and data. Based on market
requirements for application modernization, our solutions help companies
increase speed and agility, improve asset reuse, lower IT costs, reduce business
risks and exposures, and free information previously locked within proprietary
systems.

The
Company sells and markets application development and database software and
services and modernization solutions through two segments. The segments are the
Database and Development Products (DDP) and our Modernization & Migration
Products.

On
June 30, 2009, the Company purchased AXS-One Inc. for approximately 3.1 million
shares of common stock.

On
January 30, 2009, the Company purchased privately held CipherSoft Inc.
(CipherSoft), headquartered in Calgary, Canada, for approximately $628,000
plus the assumption of debt of $1,032,000 and future potential royalty payments
to be paid over a four year period following the acquisition.

On
May 22, 2007, the Company purchased privately held Active Data Corporation
(ADC) for approximately $420,000 plus potential earn-out payments over a two
year period following the acquisition.

On September 13, 2006,
the Company entered into a Purchase and Exchange Agreement (Purchase
Agreement) with Halo Technology Holdings, Inc. (Halo) whereby Unify agreed to
purchase Gupta from Halo in exchange for: (i) the Companys Insurance Risk
Management (IRM) division, (ii) the Companys ViaMode software, (iii)
$6,100,000 in cash, and (iv) the amount, if any, by which Guptas net working
capital exceeds IRMs net working capital at the close of the transaction (the
Purchase and Exchange). The Companys acquisition of Gupta was consummated on
November 20, 2006. As a result of the Gupta acquisition the Companys fiscal
2007 financial results include approximately five months of Gupta
operations.

On November 20, 2006,
the Company entered into various agreements with ComVest Capital LLC (ComVest)
whereby ComVest, along with participation from Special Situations Funds,
provided debt financing for the Gupta acquisition and for working capital,
consisting of convertible term loans totaling $5.35 million and a revolving
credit facility of up to $2.5 million. The term loans had an initial interest
rate of 11.25% and have terms of 48 to 60 months. The agreement was modified in
April 2008 such that the interest rate on the term loans was reduced to 5% and
principal payments were deferred until June 2009. The revolver has an interest
rate of prime plus 2.25% and has a maturity date of November 30, 2010. As part
of the financing, ComVest received 402,000 warrants and Special Situations Funds
received 268,000 warrants. The warrants are for the purchase of common stock at
prices from $1.35 to $1.90 per share. The agreements provide for ComVest to have
a security interest in substantially all of the Companys assets.

18

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In February 2005, Unify
acquired privately-held Acuitrek Inc. (Acuitrek), a provider of policy
administration and underwriting solutions for the alternative risk market. The
acquisition was the result of a strategy to penetrate underserved specialty
markets with our solutions and led to the formation of the Unify IRM division.
However, with the September 2006 sale of the Companys IRM division and ViaMode
software asset to Halo, Acuitrek, Inc. was sold to Halo. In connection with this
sale, the Company amended certain terms of the agreement under which it had
purchased Acuitrek, Inc. in February 2005.

Today, Unifys
customers include corporate information technology departments (IT), software
value-added resellers (VARs), solutions integrators (SIs) and independent
software vendors (ISVs) from a variety of industries, including insurance,
financial services, healthcare, government, manufacturing, retail, education,
and more. We are headquartered in Roseville, California, with offices in
Maryland, Australia, France, Germany, the United Kingdom (UK) and Canada. We
market and sell products directly in the United States, Europe, and Australia
and indirectly through global distributors representing more than 50
countries.

Our mission is to
enable customers to modernize mission critical applications. Our software and
solutions give customers a rich user experience, quality information and a high
degree of customer satisfaction.

Our technology products
include NXJ Developer and NXJ Enterprise, Team Developer, ACCELL, VISION,
DataServer, SQLBase and SQLBase Treasury and our Composer product line
including, Lotus Notes, Sabertooth, Oracle Forms and COBOL. The Company is
committed to providing exceptional technology to this customer base and to
continue to meet their current and future technology needs. Services to our
extensive customer installed base include sales and marketing, support, and
professional services.

Critical Accounting Policies

The following
discussion and analysis of the Companys financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent liabilities. We base
our estimates on historical experience and on various other assumptions that are
believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions. The areas that
require significant judgment are as follows.

Revenue Recognition

The Company generates
revenue from software license sales and related services, including maintenance
and support, and consulting services. Additionally, the Company generates
revenue from its migration solutions products. The Company licenses its products
to end-user customers, independent software vendors (ISVs), international
distributors and value-added resellers (VARs). The Companys products are
generally sold with a perpetual license. The Companys contracts with ISVs, VARs
and international distributors do not include special considerations such as
rights of return, stock rotation, price protection or special acceptance. With
the exception of its migration solutions, the Company recognizes revenue in
accordance with Statement of Position (SOP) 97-2, Software Revenue
Recognition. For migration solutions, the Company recognizes revenue for
software licenses sales in accordance with Statement of Position 81-1,
Accounting for Performance of Construction-Type and Certain Production-Type
Contracts and Accounting Research Bulletin (ARB) 45, Long-Term Construction
Type Contracts. The Company exercises judgment in connection with the
determination of the amount of revenue to be recognized in each accounting
period. The nature of each contractual arrangement determines how revenues and
related costs are recognized.

For
software license arrangements that do not require significant modification or
customization of the underlying software, revenue is recognized when the
software product or service has been shipped or electronically delivered, the
license fees are fixed and determinable, uncertainties regarding customer
acceptance are resolved, collectability is probable and persuasive evidence of
an arrangement exists.

The
Company considers a signed noncancelable license agreement, a customer purchase
order, a customer purchase requisition, or a sales quotation signed by an
authorized purchaser of the customer to be persuasive evidence that an
arrangement exists such that revenue can be recognized.

19

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For
migration solution arrangements that require significant modification or
customization of software, revenue is recognized based on contract accounting
under the provisions of Accounting Research Bulletin (ARB) 45, Long-Term
Construction Type Contracts and Statement of Position (SOP) 81-1, Accounting
for Performance of Construction-Type and Certain Production-Type Contracts. For
migration solution products the Company uses the percentage-of-completion method
for revenue recognition. Under the percentage-of-completion method, progress
towards completion is measured by labor hours.

The
Companys customer contracts include multi-element arrangements that include a
delivered element (a software license) and undelivered elements (such as
maintenance and support and/or consulting). The value allocated to the
undelivered elements is unbundled from the delivered element based on
vendor-specific objective evidence (VSOE) of the fair value of the maintenance
and support and/or consulting, regardless of any separate prices stated within
the contract. VSOE of fair value is defined as: (i) the price charged when the
same element is sold separately, or (ii) if the element has not yet been sold
separately, the price for the element established by management having the
relevant authority when it is probable that the price will not change before the
introduction of the element into the marketplace. The Company then allocates the
remaining balance to the delivered element (a software license) regardless of
any separate prices stated within the contract using the residual method as the
fair value of all undelivered elements is determinable.

We
defer revenue for any undelivered elements, and recognize revenue for delivered
elements only when the fair values of undelivered elements are known,
uncertainties regarding customer acceptance are resolved, and there are no
customer-negotiated refund or return rights affecting the revenue recognized for
delivered elements. If we cannot objectively determine the fair value of any
undelivered element included in bundled software and service arrangements, we
defer revenue until all elements are delivered and services have been performed,
or until fair value can objectively be determined for any remaining undelivered
elements.

An
assessment of the ability of the Companys customers to pay is another
consideration that affects revenue recognition. In some cases, the Company sells
to undercapitalized customers. In those circumstances, revenue recognition is
deferred until cash is received, the customer has established a history of
making timely payments or the customers financial condition has improved.
Furthermore, once revenue has been recognized, the Company evaluates the related
accounts receivable balance at each period end for amounts that we believe may
no longer be collectible. This evaluation is largely done based on a review of
the financial condition via credit agencies and historical experience with the
customer. Any deterioration in credit worthiness of a customer may impact the
Companys evaluation of accounts receivable in any given period.

Revenue from support and maintenance
activities, which consist of fees for ongoing support and unspecified product
updates, are recognized ratably over the term of the maintenance contract,
typically one year, and the associated costs are expensed as incurred.
Consulting service arrangements are performed on a best efforts basis and may
be billed under time-and-materials arrangements or fixed price arrangements.
Revenues and expenses relating to providing consulting services are recognized
as the services are performed.

Valuation of Long-Lived Assets

Our long-lived assets
are comprised of long-term investments. The Company held a minority interest in
Arango, a privately held corporation located in Panama. In September 2007, The
Company sold all of its stock in Arango and the related gain on the sale of
stock is included in other income for the fiscal year ended April 30, 2008.
Additionally, in April 2008, we wrote off our investment in Unify Japan of
$39,000 based on our assessment that there was a permanent decline in value for
this investment. At April 30, 2009 and 2008, we had no long-term investments. We
assess the valuation of long-lived assets whenever circumstances indicate that
there is a decline in carrying value below cost that is other-than-temporary.
Several factors can trigger an impairment review such as significant
underperformance relative to expected historical or projected future operating
results and significant negative industry or economic trends. In assessing
potential impairment for such investments, we consider these factors as well as
the forecasted financial performance. When such decline in value is deemed to be
other-than-temporary, we recognize an impairment loss in the current period
operating results to the extent of the decline. Future adverse changes in market
conditions or poor operating results could result in losses or an inability to
recover the carrying value of the long-term investments that is not currently
reflected in the investments carrying value, thereby, possibly requiring
impairment charges in the future.

20

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Deferred Tax Asset Valuation Allowance

As of April 30, 2009,
we had approximately $17.1 million of deferred tax assets related principally to
net operating loss carryforwards, reserves and other accruals, and foreign tax
credits. The Companys ability to utilize net operating loss carryforwards may
be subject to certain limitations in the event of a change in ownership. A
valuation allowance has been recorded to offset these deferred tax assets. The
ability of the Company to ultimately realize its deferred tax assets will be
contingent upon the Company achieving taxable income. There is no assurance that
this will occur in amounts sufficient to utilize the deferred tax assets. Should
we determine that we would be able to realize the deferred tax assets in the
future in excess of the recorded amount, an adjustment to the deferred tax asset
would increase income in the period such determination was made.

21

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Results of Operations

The following table
sets forth our consolidated statement of operations expressed as a percentage of
total revenues for the periods indicated:

|                                                                   | Years Ended April 30,
|------------------------------------------------------------------ | ---------------------
|                                                                   | 2009                 
|Revenues:                                                          |                      
|Software licenses                                                  | 31.3                 
|Services                                                           | 56.7                 
|Migration Solutions                                                | 12.0                 
|Total
      revenues                                               | 100.0                
|Cost of revenues:                                                  |                      
|Software
      licenses                                            | 1.2                  
|Services                                                           | 4.9                  
|Migration
      Solutions                                          | 5.1                  
|Total cost of revenues                                             | 11.2                 
|Gross
      profit                                                 | 88.8                 
|Operating expenses:                                                |                      
|Product
      development                                          | 14.1                 
|Selling, general and administrative                                | 60.7                 
|Total operating expenses                                           | 74.8                 
|Income (loss) from operations                                      | 14.0                 
|Interest
      expense                                             | (0.9                 
|Other income (expense),
      net                                  | (0.6                 
|Income (loss)
      from continuing operations before income taxes | 12.5                 
|Provision for income
      taxes                                   | 0.9                  
|Income (loss)
      from continuing operations                     | 11.6                 
|Loss from discontinued operations, net of taxes                    | 0.0                  
|Net income
      (loss)                                            | 11.6                 

Total Revenues

The Company generates
revenue from software license sales and related services, including maintenance,
support and consulting services. We license our software through our direct
sales force in the United States and Europe, and through indirect channels
comprised of distributors, ISVs, VARs, and other partners worldwide. Revenues
from our distributor, ISV and VAR indirect channels accounted for approximately
61%, 64%, and 61% of our software license revenues for fiscal 2009, 2008 and
2007, respectively. International revenues include all our software license and
service revenues from customers located outside North America. International
revenues accounted for 68%, 78%, and 73% of total revenues in fiscal years 2009,
2008 and 2007, respectively.

Total revenues in
fiscal 2009 were $20.6 million, an increase of $0.8 million or 4% from fiscal
2008 revenues of $19.8 million. Total software license revenues in fiscal 2009
were $6.4 million, a decrease of $2.1 million or 24% from fiscal 2008 software
license revenues of $8.5 million. The decrease in software license revenues was
due to the deterioration in worldwide economic conditions in fiscal 2009, the
decline of the Euro and an order of approximately $1 million received during
fiscal 2008 from our Russian distributor that did not reoccur in fiscal 2009.
Total services revenues were $11.7 million in fiscal 2009, an increase of $0.7
million or 6% from fiscal 2008. Total migration solutions revenue in fiscal 2009
was $2.5 million compared to $0.3 million in fiscal 2008. The increase in
migration solutions revenue is due to an increase in sales from our Composer for
Lotus Notes solution and sales from our new Composer solutions, Composer
Sabertooth and Composer for Oracle Forms. Total revenues in fiscal 2008 were
$19.8 million, an increase of $8.6 million or 77% from fiscal 2007 revenues of
$11.2 million. Total software license revenues in fiscal 2008 were $8.5 million
for an increase of $4.1 million or 92% from fiscal 2007, while total service
revenues of $11.0 million in fiscal 2008 increased by $4.3 million or 63% from
fiscal 2007. The increase in total revenue and service revenues was primarily
the result of the November 20, 2006 acquisition of Gupta Technologies
LLC.

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For
fiscal 2009 and 2008, total revenues from the Americas were 32% and 22% of total
revenues, respectively. Total revenue from the Americas in absolute dollars was
$6.7 million for fiscal 2009 and $4.4 million for fiscal 2008. Total revenue
from our European territory was $10.8 million for fiscal 2009 and $10.9 million
for fiscal 2008. On a percentage basis, revenue from our European territory was
52% for fiscal 2009 and 55% for fiscal 2008. For fiscal 2009 and 2008, total
revenues from international distributors were 15% and 23% of total revenues,
respectively. Total revenue from the international distributors in absolute
dollars was $3.1 million for fiscal 2009 and $4.5 million for fiscal
2008.

Cost of Revenues

Cost of Software
Licenses.Cost of software licenses consists primarily
of royalty payments and the amortization of purchased technology from third
parties that is amortized ratably over the technologys expected useful life.
Cost of software licenses was $0.2 million for fiscal 2009, $0.2 million for
fiscal 2008 and $0.4 for fiscal 2007.

Cost of
Services.Cost of services consists primarily of
employee, facilities and travel costs incurred in providing customer support
under software maintenance contracts and consulting and implementation services.
Total cost of services was $1.0 million for fiscal 2009, $1.2 million for fiscal
2008 and $1.0 million for fiscal 2007. Our cost of services as a percent of
services revenues was 5% in fiscal 2009, 6% in fiscal 2008 and 9% in 2007. The
favorable decrease in the percentage of cost of service expenses to services
revenue in fiscal 2008 versus fiscal 2007 was the result of economies of scale
relative to our cost structure and an increase in services revenue, both of
which were direct results of our acquisition of Gupta. This trend continued in
fiscal 2009.

Cost of Migration
Solutions.Cost of migration solutions consists
primarily of both expenses associated with employees involved in migration
projects and also expenses related to third party assistance. Cost of migration
solutions was $1.0 million in fiscal 2009 and $0.1 million in fiscal 2008. There
were no costs for migration solutions in fiscal 2007 as the company had no
related sales in fiscal 2007. The increase in cost of migration solutions in
fiscal 2009 over fiscal 2008 is directly related the increase in sales for
Composer for Lotus Notes, Composer Sabertooth and Composer for Oracle
Forms.

Operating Expenses

Product
Development.Product development expenses consist
primarily of employee and facilities costs incurred in the development and
testing of new products and in the porting of new and existing products to
additional hardware platforms and operating systems. Product development costs
in fiscal 2009 were $2.9 million compared to $3.5 million in fiscal 2008 and
$2.4 million in fiscal 2007. The increase in product development costs in fiscal
2008 compared to fiscal 2007 was the result of the addition of the Gupta product
development team plus additional outsourced development costs associated with
efforts to deliver the first major new version of the Gupta Team Developer
product in several years.

Selling, General and
Administrative.Selling, general and administrative
(SG&A) expenses consist primarily of salaries and benefits, marketing
programs, travel expenses, professional services, facilities expenses and bad
debt expense. SG&A expenses were $12.5 million in fiscal 2009, $12.0 million
for 2008 and $8.3 million for 2007. The increase in SG&A costs in fiscal
2009 was caused by having a full years expenses for the Composer sales
resources plus the additional costs during the fourth quarter from the
CipherSoft acquisition. The increase in SG&A in fiscal 2008 was the result
of having 12 months of the Gupta personnel, plus approximately $0.3 million in
closing costs for our German subsidiary, plus the launch of the Composer
business in terms of both personnel and sales and marketing activities. As a
percentage of total revenue, SG&A expenses were 61% in fiscal 2009, 61% in
fiscal 2008 and 74% in fiscal 2007. The major components of SG&A for fiscal
2009 were sales expenses of $6.5 million, marketing expenses of $0.9 million and
general and administrative expenses of $5.1 million. For fiscal 2008, the major
components were sales expenses of $5.8 million, marketing expenses of $1.4
million and general and administrative expenses of $4.8 million. For fiscal
2007, the major components of SG&A were sales expenses of $4.1 million,
marketing expenses of $0.6 million, and general and administrative expenses of
$3.6 million.

*Interest
Expense.*Interest expense is primarily the result of
interest from outstanding debt and was $194,000, $900,000 and $527,000 in fiscal
2009, 2008 and 2007, respectively. Fiscal 2009 interest expense consists
primarily of interest incurred on notes payable resulting from a debt financing
in conjunction with the acquisition of Gupta plus the amortization of related
debt issuance costs and the note discount representing the value of the issued
warrants. The decrease in interest expense was caused by the decrease in
outstanding debt and related amortization of the note discount.

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Other Income
(Expense).Other income (expense), net consists
primarily of the gain on the sale of the Other Investments, the foreign exchange
gains and losses and interest earned by the Company on our cash and cash
equivalents. Other income (expense) was $124,000, $130,000 and $136,000 in
fiscal 2009, 2008 and 2007, respectively. We continue to periodically review the
recorded value of our investments. We record an investment impairment charge if
and when we believe an investment has experienced a decline in market value that
is other than temporary. Future adverse changes in market conditions or poor
operating results of an investment could result in losses or an inability to
recover the carrying value of the investment, thereby possibly requiring
impairment charges in the future. In September 2007, the Company sold all of its
stock in Arango as part of a stock repurchase plan offered by Arango. At the
time of the sale, the Company had a carrying value of $175,000 for the Arango
stock. Proceeds from the sale of the Arango stock were $264,000 which generated
a gain that was included in other income. Additionally, during fiscal 2008, we
wrote off our investment in Unify Japan of $39,000 based on our assessment that
there was a permanent decline in value for this investment. The write off of
Unify Japan was recorded in other expense.

Provision for Income
Taxes.For fiscal 2009, the Company recorded $27,000 in
foreign tax benefit and $206,000 for state and federal tax expense. For fiscal
2008, the Company recorded $89,000 in foreign tax expense and $235,000 for state
or federal taxes. For fiscal 2007, the Company recorded $82,000 in foreign tax
expense and no expense for state and federal taxes. At April 30, 2009, the
Company had approximately $40.0 million in federal net operating loss
carryforwards that begin to expire in fiscal year 2010 through 2028,
approximately $9.5 million in state net operating loss carryforwards that expire
in fiscal years 2016 to 2019, approximately $1.5 million in foreign net
operating loss carryforwards that do not expire and approximately $4.3 million
in capital loss carryforwards that expire in 2010. The Companys ability to
utilize these net operating loss carryforwards may be subject to certain
limitations in the event of a change in ownership.

Liquidity and Capital Resources

At April 30, 2009, the
Company had cash and cash equivalents of $6.1 million, compared to $2.7 million
at April 30, 2008. The Company had net accounts receivable of $4.5 million as of
April 30, 2009 and $5.1 million as of April 30, 2008.

On November 20, 2006,
the Company entered into various agreements with ComVest whereby ComVest, along
with participation from Special Situations Funds, provided debt financing for
the Gupta acquisition and for working capital, consisting of convertible term
loans totaling $5.35 million and a revolving credit facility of up to $2.5
million. The term loans had an initial interest rate of 11.25% and have
repayment terms of 48 to 60 months. The agreement was modified in April 2008
whereby the interest rate on the term loans has been decreased to 5% and all
principal payments have been deferred until June 2009. The revolver has an
interest rate of prime plus 2.25% and has a maturity date of November 30, 2010.
As part of the financing, ComVest received 402,000 warrants and Special
Situations Funds received 268,000 warrants. The warrants are for the purchase of
common stock at prices from $1.35 to $1.90 per share. The agreements provide for
ComVest to have a security interest in substantially all of the Companys
assets.

We believe that
existing cash of $6.1 million as of April 30, 2009, along with forecasted
operating cash flows for fiscal year 2010 and the ComVest credit facility will
provide us with sufficient working capital for us to meet our operating plan for
fiscal year 2010. The fiscal 2010 operating plan assumes normal operations for
the Company, capital expenditures of approximately $150,000 and required
principal and interest payments on debt.

In fiscal 2010, we plan
to increase the marketing of our Composer product line and we also anticipate
releasing new versions of some of our Rapid Application Development Products as
well as our Database Management Products. The fiscal 2010 plan requires few
additional strategic investments in sales, marketing or implementation services.
We believe our fiscal 2010 plan will generate positive cash flow as a result of
increased revenues for our Composer product line, our Rapid Application
Development Products and our Database Management Products.

Operating Cash
Flows.In fiscal 2009, we had cash flows from continuing
operations of $3.8 million. This compares to fiscal 2008 and 2007 where cash
flows from continuing operations were $3.4 million and $0.6 million,
respectively. Cash flows provided by operations for fiscal 2009 principally
resulted from $2.3 million of income from operations, a $0.7 million decrease in
accounts receivable, a decrease in other long term assets of $0.1 million, an
increase in other accrued liabilities of $0.4 million, an increase in accounts
payable of $0.1 million, $0.8 million in amortization of intangible assets, $0.2
million in depreciation and $0.5 million in stock based expenses. Offsetting
these amounts was a $0.8 million decrease in deferred revenue, a decrease of
$0.4 million in accrued compensation and related expenses and an increase of
$0.1 million in prepaid expenses and other current assets.

24

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In fiscal 2008, we had
cash flows from continuing operations of $3.4 million. Cash flows provided by
operations for fiscal 2008 principally resulted from $1.6 million of income from
operations, a $0.9 million increase in deferred revenue, a $0.8 million increase
in accrued compensation and related expenses, $0.8 million in amortization of
intangible assets, $0.2 million for amortization of discount on notes payable,
$0.2 million in depreciation and $0.2 million in stock based expenses.
Offsetting these amounts was an increase of $0.6 million in accounts receivable,
an increase of $0.1 million in other long term assets, a $0.3 million decrease
in accounts payable, a decrease of $0.3 million in accrued acquisition costs,
and fulfillment of support obligations of $0.3 million.

In
fiscal 2007, we had cash flows provided by operations of $0.6 million
principally resulting from a $2.6 million increase in deferred revenue, a $0.4
million decrease in accounts receivable, a $0.2 million increase in prepaid
expenses and other current assets, a $0.5 million increase in accrued
acquisition costs, $0.3 million in amortization, $0.2 million in depreciation
and $0.1 million in stock based expenses. Offsetting these amounts was a loss
from continuing operations for fiscal year 2007 of $1.4 million, a decrease of
$0.7 million in accrued compensation and related expenses, a $0.5 million
decrease in accounts payable, a decrease of $0.8 million in other accrued
liabilities, an increase of $0.2 million in other long term assets and
fulfillment of support obligations of $0.2 million.

Investing Cash
Flows.Cash used in investing activities for continuing
operations was a negative $0.8 million for fiscal 2009. The use of cash
consisted of $0.5 million related to the acquisition of CipherSoft Inc., $0.2
million related to the purchase of property and equipment and $0.1 million
related to payments on acquisitions. Cash used in investing activities for
continuing operations was $0.6 million in fiscal 2008 and $5.9 million in fiscal
2007. The use of cash in investing activities for continuing operations for
fiscal 2007 was related to the acquisition of Gupta.

Financing Cash
Flows.Net cash provided by financing activities for
continuing operations in fiscal 2009 was $1.1 million. In fiscal 2009 sources of
cash included $1.2 million in proceeds from the exercise of warrants and $1.0
million from borrowings under debt obligations. This amount was offset by a
payment of $1.1 million for principal payments under debt obligations. Net cash
used in financing activities for continuing operations in fiscal 2008 was $2.3
million. In fiscal 2008 cash used for principal payments under debt obligations
was $3.3 million. This amount was offset by $1.0 million in borrowing under debt
obligations and $20,000 of proceeds from issuance of common stock. Net cash
provided by financing activities for continuing operations in fiscal 2007 was
$7.0 million. In fiscal 2007 sources of cash from financing activities included
$7.7 million from borrowings and $0.2 million from the proceeds of the issuance
of common stock. In fiscal 2007 $1.0 million in cash was used to make principal
payments on debt obligations.

A
summary of certain contractual obligations as April 30, 2009 is as follows (in
thousands):

|                                         |  | Payments Due by Period
|---------------------------------------- |  | ----------------------
|                                         |  |                       
|Contractual Obligations                  |  | Total                 
|Debt
      financing                     |  | $                     
|Estimated interest
      expense         |  |                       
|Other
      liabilities                  |  |                       
|Capital lease
      obligations          |  |                       
|Operating
      leases                   |  |                       
|Total contractual cash
      obligations |  | $                     

Recently Issued Accounting Standards

In May 2009, the FASB
issued SFAS No. 165,Subsequent Events(SFAS 165). This Statement is intended to establish general standards
of accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued.
It requires the disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date, that is, whether that date
represents the date the financial statements were issued or were available to be
issued. This disclosure should alert all users of financial statements that an
entity has not evaluated subsequent events after that date in the set of
financial statements being presented. SFAS 165 is effective for interim and
annual periods ending after June 15, 2009. We are currently assessing the
impact, if any, of SFAS 165 on our consolidated financial statements.

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In September 2006, the
FASB issued Statement No. 157,Fair Value
Measurements(SFAS 157). SFAS 157 defines fair value,
establishes a framework and gives guidance regarding the methods used for
measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2008, and interim periods within those fiscal years. We are
currently assessing the impact, if any, of SFAS 157 on our consolidated
financial statements.

In December 2007, the
FASB issued SFAS No. 141 (revised),Business
Combinations. The standard changes the accounting for
business combinations including the measurement of acquirer shares issued in
consideration for a business combination, the recognition of contingent
consideration, the accounting for pre-acquisition gain and loss contingencies,
the recognition of capitalized in-process research and development, the
accounting for acquisition-related restructuring cost accruals, the treatment of
acquisition related transaction costs and the recognition of changes in the
acquirers income tax valuation allowance. Statement 141(R) is effective for
fiscal years beginning after December 15, 2008, with early adoption prohibited.
We are currently assessing the impact of SFAS 141(R) on our consolidated
financial statements and will account for the acquisition of AXS-One Inc. under
SFAS 141(R). As of April 30, 2009, we have capitalized $75,000 in acquisition
costs that will be expensed in the first quarter of fiscal 2010 under SFAS
141(R).

In December 2007, the
FASB issued SFAS No. 160,Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB
No. 5, which changes the accounting and reporting for minority interests.
Minority interests will be recharacterized as noncontrolling interests and will
be reported as a component of equity separate from the parents equity, and
purchases or sales of equity interests that do not result in a change in control
will be accounted for as equity transactions. In addition, net income
attributable to the noncontrolling interest will be included in net income and,
upon a loss of control, the interest sold, as well as any interest retained,
will be recorded at fair value with any gain or loss recognized in net income.
SFAS No. 160 is effective for us beginning May 1, 2009. We are currently
evaluating additional impacts, if any, of adopting SFAS No. 160 on our
consolidated financial statements.

In March 2008, the FASB
issued Statement No. 161,Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB
Statement No. 133. (SFAS No. 161). SFAS No. 161 requires enhanced disclosures
about an entitys derivative instruments and hedging activities with a view
toward improving the transparency of financial reporting, and is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. SFAS No. 161 encourages,
but does not require, comparative disclosures for earlier periods at initial
adoption. We believe that the adoption of SFAS No. 161 will not have a material
impact on our consolidated financial statements.

On May 9, 2008, the
FASB issued FASB Staff Position No. APB 14-1(FSP APB 14-1),Accounting for Convertible Debt Instruments That May Be Settled in Cash
Upon Conversion(Including Partial Cash Settlement). FSP
APB 14-1 requires issuers of convertible debt that may be settled wholly or
partly in cash when converted to account for the debt and equity components
separately. FSP APB 14-1 is effective for fiscal years beginning after December
15, 2008 and must be applied retrospectively to all periods presented. We
believe that the adoption of FSP APB 14-1 will not have a material impact on our
consolidated financial statements.

In April 2008, the FASB
issued FASB Staff Position ("FSP") FAS 142-3,"Determination of Useful Life of Intangible Assets"("FSP FAS 142-3"). FSP FAS 142-3 amends the factors that should be
considered in developing the renewal or extension assumptions used to determine
the useful life of a recognized intangible asset under FAS 142, "Goodwill and
Other Intangible Assets." FSP FAS 142-3 also requires expanded disclosure
related to the determination of intangible asset useful lives. FSP FAS 142-3 is
effective for fiscal years beginning after December 15, 2008. Earlier adoption
is not permitted. We believe that the adoption of FSP FAS 142-3 will not have a
material impact on our consolidated financial statements.

In May of 2008, the
FASB issued SFAS No. 162,The Hierarchy of Generally
Accepted Accounting Principles.This statement
identifies literature established by the FASB as the source for accounting
principles to be applied by entities which prepare financial statements
presented in conformity with generally accepted accounting principles (GAAP) in
the United States. This statement is effective 60 days following approval by the
SEC of the Public Company Accounting Oversight Board amendments to AU Section
411, The Meaning of Present Fairly in Conformity With Generally Accepted
Accounting Principles. This statement will require no changes in the Companys
financial reporting practices.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK

Interest Rate
Risk. The Companys exposure to market rate risk for
changes in interest rates relates primarily to its investment portfolio, which
consists of cash equivalents. Cash equivalents are highly liquid investments
with original maturities of three months or less and are stated at cost. Cash
equivalents are generally maintained in money market accounts which have as
their objective preservation of principal. The Company does not believe its
exposure to interest rate risk is material for cash and cash equivalents, which
totaled $6.1 million at April 30, 2009. Unify had no short-term investments at
April 30, 2009.

In November 2006, the
Company entered into a revolving credit facility agreement with ComVest whereby
ComVest would provide up to $2.5 million through a revolving credit facility.
The revolver has an interest rate of prime plus 2.25% and has a maturity date of
November 30, 2010. Should the prime interest rate increase during the life of
the revolver, the Company would have exposure to interest rate risk if it has a
large balance outstanding on the revolver. At April 30, 2009 the Company had no
amount outstanding under the revolver.

Unify does not use
derivative financial instruments in its short-term investment portfolio, and
places its investments with high quality issuers only and, by policy, limits the
amount of credit exposure to any one issuer. The Company is averse to principal
loss and attempts to ensure the safety of its invested funds by limiting
default, market and reinvestment risk.

Foreign Currency
Exchange Rate Risk. As a global concern, the Company
faces exposure to adverse movements in foreign currency exchange rates. These
exposures may change over time as business practices evolve and could have an
adverse impact on the Companys business, operating results and financial
position. Historically, the Companys primary exposures have related to local
currency denominated sales and expenses in Europe, Japan and Australia. For
example, when the U.S. dollar strengthens against the major European currencies,
it results in lower revenues and expenses recorded for those regions when
translated into U.S. dollars.

Due to the substantial
volatility of currency exchange rates, among other factors, the Company cannot
predict the effect of exchange rate fluctuations on its future operating
results. Although Unify takes into account changes in exchange rates over time
in its pricing strategy, it does so only on an annual basis, resulting in
substantial pricing exposure as a result of foreign exchange volatility during
the period between annual pricing reviews. The Company also has currency
exchange rate exposures on intercompany accounts receivable and intercompany
accounts payable related to activities with the Companys operations in France,
Germany, UK and Canada. At April 30, 2009, the Company had $2.0 million in such
payables denominated in Euros and U.S. Dollars and a total $1.5 million in
receivables denominated in Euros, Canadian dollars, U.S. Dollars and pounds
sterling. The Company encourages prompt payment of intercompany balances in
order to minimize its exposure to currency fluctuations, but it engages in no
hedging activities to reduce the risk of such fluctuations. A hypothetical ten
percent change in foreign currency rates could have a significant impact on the
Companys business, operating results and financial position. The Company has
not experienced material exchange losses on intercompany balances in the past;
however, due to the substantial volatility of currency exchange rates, among
other factors, it cannot predict the effect of exchange rate fluctuations on its
future business, operating results and financial position.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA

See Part IV, Item 15
(a) for an index to the financial statements and supplementary financial
information, which are filed, as part of this report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not
applicable.

ITEM 9A.CONTROLS AND PROCEDURES

(a)Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, we evaluated the
effectiveness of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended. Based upon that evaluation, our chief executive officer and chief
financial officer concluded that our disclosure controls were effective as of
the end of the period covered by this annual report.

27

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(b)Changes in Internal Controls. There have been no changes in our internal controls over
financial reporting during the fiscal year April 30, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.

(c)Managements Report on Internal Control over
Financial Reporting.Management is
responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) under the Exchange Act, as
amended. The Companys internal control over financial reporting is designed to
provide reasonable assurance as to the reliability of the Companys financial
reporting and the preparation of financial statements in accordance with GAAP.
Our internal control over financial reporting includes those policies and
procedures that:

- Pertain to the maintenance of records that in reasonable detail
  accurately and fairly reflect the transactions and dispositions of the assets
  of the Company;
- Provide reasonable assurance that transactions are recorded as
  necessary to permit preparation of financial statements in accordance with
  GAAP, and that receipts and expenditures of the Company are being made only in
  accordance with authorizations of management and directors of the Company,
  and
- Provide reasonable assurance regarding
  prevention or timely detection of unauthorized acquisition, use or disposition
  of the Companys assets that could have a material effect on the Companys
  consolidated financial statements.

Internal
control over financial reporting, no matter how well designed, has inherent
limitations. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Therefore, internal
control over financial reporting determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and may not
prevent or detect all misstatements. Moreover, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Management
has assessed the effectiveness of the Companys internal control over financial
reporting as of April 30, 2009. In making this assessment, management used the
criteria established by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control  Integrated
Framework.

Based on the Companys
processes and assessment, as described above, management has concluded that, as
of April 30, 2009, the Companys internal control over financial reporting was
effective.

This Annual Report on
Form 10-K does not include an attestation report of the Companys registered
public accounting firm regarding internal control over financial reporting.
Managements report was not subject to attestation requirements by the Companys
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only managements report in this Annual Report on
Form 10-K for the year ended April 30, 2009.

28

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT

The
following table sets forth certain information concerning our executive officers
as of the date May 31, 2009.

Executive Officers

|                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                    |  |         |  | **Executive**
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------ |  | ------- |  | -------------
|                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                    |  |         |  | Officer      
|Name                                                                                                                                                                                                                                                                                                                                                              |  | Current Position with Company                                      |  | **Age** |  | Since        
|Todd E.
      Wille                                                                                                                                                                                                                                                                                                                                               |  | President
      and Chief Executive Officer                        |  | 46      |  | 2000         
|Steven D. Bonham                                                                                                                                                                                                                                                                                                                                                  |  | Vice President, Finance and
      Administration and CFO           |  | 52      |  | 2005         
|Mark T.
      Bygraves                                                                                                                                                                                                                                                                                                                                            |  | Vice
      President, Sales  Europe, Middle East and
      Africa |  | 52      |  | 2007         
|Duane V. George                                                                                                                                                                                                                                                                                                                                                   |  | Vice President, Product
      Development and CTO                  |  | 51      |  | 2007         
|Kevin R.
      Kane                                                                                                                                                                                                                                                                                                                                               |  | Vice
      President, Composer Solutions                           |  | 41      |  | 2007         
|Frank Verardi                                                                                                                                                                                                                                                                                                                                                     |  | Vice President, Sales -
      Americas and Asia Pacific            |  | 60      |  | 2001         
|                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                    |  |         |  |              
|Unify has a board of directors consisting of six (6) members. Set
      forth below is information with respect to their ages as of May 31, 2009,
      as well as their positions and offices held with the Company. Each
      director holds office until the next Annual Meeting of Stockholders and
      until his successor is duly elected and qualified.
|                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                    |  |         |  |              
|                                                                                                                                                                                                                                                                                                                                                                  |  |                                                                    |  |         |  | Director     
|Name                                                                                                                                                                                                                                                                                                                                                              |  | Current Position with Company                                      |  | Age     |  | Since        
|Steven D.
      Whiteman                                                                                                                                                                                                                                                                                                                                          |  | Chairman of
      Board                                            |  | 58      |  | 1997         
|Robert M. Bozeman                                                                                                                                                                                                                                                                                                                                                 |  | Director and Mergers and
      Acquisitions Committee Chair        |  | 60      |  | 2008         
|Richard M.
      Brooks                                                                                                                                                                                                                                                                                                                                           |  | Director and
      Audit Committee Chair                           |  | 55      |  | 2005         
|Tery R. Larrew                                                                                                                                                                                                                                                                                                                                                    |  | Director and Compensation
      Committee Chair                    |  | 55      |  | 2002         
|Robert J.
      Majteles                                                                                                                                                                                                                                                                                                                                          |  | Director                                                           |  | 44      |  | 2004         
|Todd E. Wille                                                                                                                                                                                                                                                                                                                                                     |  | President and Chief
      Executive Officer                        |  | 46      |  | 2000         

Executive Officers

Todd E.
Willehas served as president and chief executive
officer since November 2000. He rejoined the Company in October 2000 as the
chief operating officer and acting chief financial officer. Mr. Wille originally
joined Unify in August 1995 as the corporate controller. In September 1997, Mr.
Wille was promoted to vice president, finance and chief financial officer. In
March 1998, Mr. Wille left the Company and joined FRx Software Corporation as
the vice president of finance and chief financial officer. Subsequently, Mr.
Wille was promoted to senior vice president of operations. Mr. Wille received a
B.A. degree in business administration with concentrations in accounting and
finance and management information systems from Wartburg College.

*Steven D.
Bonham*joined the Company in June 2005, as vice
president of finance and administration and chief financial officer. Before
joining Unify, Mr. Bonham was the chief financial officer for LexisNexis/Examen,
a subsidiary of LexisNexis, from 1997-2005. Prior to LexisNexis/Examen, Mr.
Bonham spent nine years with Foundation Health Corporation, a former Fortune 500
publicly traded managed care insurance company, most recently serving as the
vice president of finance for Foundations, California Heath Plan. Mr. Bonham, a
licensed certified public accountant, has a B.S. degree in accounting from
California State University, Sacramento.

*Mark T.
Bygraves*joined the Company in November 2006 as part of
the acquisition of Gupta Technologies, where he had served since February 2002
and was appointed as an officer on May 1, 2007. Mr. Bygraves is responsible for
driving the Unify channel sales programs together with day to day operational
responsibilities for Northern Europe, Middle East and Africa (EMEA). Mr.
Bygraves has worked in the IT industry for 20 years, holding a number of senior
positions, most recently from January 1999 to January 2002 as Director of
Channels at Hitachi Data Systems. Prior to Hitachi Data Systems, Mr. Bygraves
was the Sales Director of Transformation Software.

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*Duane V. George*has served as vice president of product development and
CTO since July 2006. Mr. George is responsible for Unifys Technical Services
Group which includes product development, customer support, training,
documentation, quality control and assurance. Mr. George provides technical
vision, leads all aspects of the Companys technology development and plays an
integral role in shaping the Companys strategic direction, development and
future growth. He is responsible for refining the technology strategy for
Company products and services and implementing projects aligned to that strategy
and delivering all technology applications, systems and solutions that are core
to the Companys offerings. Mr. George has been in the information technology
and engineering industries for over 25 years. He began his career as an engineer
with the Department of Defense managing the acquisition and implementation of
Computer Aided Design and Manufacturing (CAD/CAM) systems. Subsequently, Mr.
George joined the US Space Command to manage strategic space defense initiatives
and satellite Command Control and Communication (C3) programs. He eventually
moved into software development, customer support and project management with an
emphasis on customer satisfaction. Mr. George joined Unify in 1995 and has been
a core member of the support, consulting and product development teams. He
earned his B.S. in engineering from Brigham Young University in Provo,
Utah.

Kevin R.
Kanejoined Unify in January 2007 and is responsible for
driving market adoption for the Company's service-oriented architecture (SOA)
modernization product portfolio. Mr. Kane brings demonstrated sales success in
growing top-line revenue for several enterprise software companies. Most
recently he served as the global sales director for Sacramento, California based
Meridian Systems from 2005 to 2007. Trimble Navigation acquired Meridian Systems
in late 2006. Prior to Meridian Systems, Mr. Kane assisted in launching VIEO,
now Censure, as a senior sales executive from 2004 to 2005. Prior to VIEO, Mr.
Kane was with Dazel Corporation which was acquired by HP Printing and Imaging
Division from 1999 to 2004. Prior to HP, Mr. Kane held various sales management
positions with Tivoli Systems, an IBM software company, Beyond Software,
acquired by NEON Systems and Sterling Software, acquired by Computer Associates.
Mr. Kane received his B.A. degree in business management from Saint Marys
College of California.

Frank
Verardihas served in an executive officer position
since 2000. Mr. Verardi is currently responsible for driving the Unify channel
sales programs together with day to day operational responsibilities for the
Americas and Asia Pacific regions. Mr. Verardi served as vice president and
general manager of Unify Business Solutions from May 2005 to April 2007, where
he oversaw the sales and marketing for the Companys technology products. From
June 2003 to April 2005, he served as vice president of technical services, and
from May 2001 to May 2003, he served as vice president of worldwide sales and
marketing. Prior to these positions, Mr. Verardi served in various management
positions, including vice president of worldwide professional services, vice
president of worldwide product delivery and customer support, and director of
client services. Mr. Verardi joined the Company in August 1988. Before joining
Unify, Mr. Verardi held various positions with Computer Sciences Corporation,
including director of commercial professional services. Mr. Verardi received a
B.S. degree in computer science from California State University,
Chico.

Board of Directors

Steven D.
Whitemanhas served as a director of the Company since
May 1997. In August 2004, he was appointed chairman of the board. Mr. Whiteman
previously served as the president and chief executive officer of Intesource, an
Internet based procurement service specifically for the food industry. From June
2000 to May 2002, he worked as an independent consultant. From May 1993 until
June 2000, Mr. Whiteman served as president of Viasoft, Inc. (Viasoft), a
publicly traded software products and services company. From February 1994 to
June 2000, Mr. Whiteman also served as chief executive officer and director of
Viasoft, and from April 1997 to June 2000, he served as chairman of the board of
directors. Mr. Whiteman is also a director of Intesource, Actuate Corporation,
and Flypaper Inc. Mr. Whiteman holds a B.A. degree in business administration
from Taylor University and a M.B.A. from the University of Cincinnati.

Robert M.
Bozemanwas appointed director in January of 2008. Mr.
Bozeman currently serves as an advisor to companies in the technology industry.
He is experienced in business operations, venture capital investment, and
mergers and acquisitions having previously served in the capacities of CEO and
Board Member for a variety of software, information services and computer
supplier companies. Mr. Bozeman's last operating role was as CEO for Bricsnet
from July, 2003 through November, 2004; prior to that - from November, 1997
through December, 2003, Mr. Bozemen was General Partner of Angel Investors LP
for both its Fund I and Fund II. Investments by the firm included Ask Jeeves,
Brightmail, Google, Opsware, and PayPal. In addition, many of Angel Investors LP
investments became successful acquisitions, including AOLs acquisition of
Spinner, Microsofts acquisitions of eQuil, MongoMusic and Vacation Spot and
Sybases acquisition of AvantGo!. Mr. Bozeman is currently on the Board and/or
is an advisor to AkiiRa, Become.com, Pacific Art Group, Restoration Partners and
Vortex.

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Richard M.
Brookshas served as a director of the company since
August 2005. Since September 2006, Mr. Brooks has been a partner with Tatum LLC,
a national Executive Services consulting company. With Tatum LLC, Mr. Brooks has
acted as the project lead on a variety of finance assignments, including acting
as the interim CFO for Pixelworks, a publicly traded semi-conductor company. Mr.
Brooks previously served as chief executive officer for VantageMed, a public
company, from April 2002 to December 2004. In addition, Mr. Brooks served as a
director of VantageMed Corporation from March 2001 to January 2005 and was
appointed chairman of that board in May of 2002. Mr. Brooks received a B.S. in
business administration from Oregon State University.

Tery R.
Larrewhas served as a director of the Company since May
2002. Mr. Larrew is the founding and managing partner of Caddis Capital LLC, a
private equity firm that specializes in income oriented investments with strong
equity appreciation including International Gaming and Entertainment; Energy 
Oil & Gas Exploration and Production; Real Estate - Mobile Home Communities,
Apartment Complexes, Self Storage Units and Unimproved Land; Natural Resources 
Water and Secured Debt/Hard Asset financing. Until 2005, Mr. Larrew served as
the President and CEO of Vericept Corporation, a provider of network-based early
warning and misuse prevention solutions, headquartered in Denver, Colorado.
Prior to joining Vericept in 2002, Mr. Larrew co-founded IQ3G, a mobile services
company, in 2000. From 1999 to 2000, Mr. Larrew was the chairman and chief
executive officer of a start-up e-communication company, UPDATE Systems, Inc.
From 1989 to 1998, Mr. Larrew served as President of the Database Marketing
Services Division of Metromail/CIC. He is a graduate of Colorado State
University with a B.S. degree in business administration and serves on the
Global Leadership Council for the Colorado State University School of
Business.

Robert J.
Majteleshas served as a director of the Company since
April 2004. Mr. Majteles is the managing partner of Treehouse Capital LLC
(www.treehousecapital.com), an investment firm. In addition, Mr. Majteles is a
Lecturer at the Haas School of Business and the Boalt Hall School of Law at the
University of California, Berkeley. Mr. Majteles holds a B.A. from Columbia
University and a J.D. from Stanford University.

Audit Committee

We have established an
audit committee, the primary responsibilities of which are to oversee the
accounting and financial reporting processes of our company as well as our
affiliated and subsidiary companies, and to oversee the internal and external
audit processes. The audit committee also assists the board of directors in
fulfilling its oversight responsibilities by reviewing the financial information
which is provided to stockholders and others, and the system of internal
controls which management and the board of directors have established. The audit
committee oversees the independent auditors, including their independence and
objectivity. However, the committee members are not acting as professional
accountants or auditors, and their functions are not intended to duplicate or
substitute for the activities of management and the independent auditors. The
audit committee is empowered to retain independent legal counsel and other
advisors as it deems necessary or appropriate to assist the audit committee in
fulfilling its responsibilities, and to approve the fees and other retention
terms of the advisors.

The audit committee is
comprised of three members, each of whom was elected by the board of directors.
Richard Brooks, Tery Larrew, and Steven Whiteman currently serve as our audit
committee members. Our board of directors has determined that each of the
members of our audit committee is independent, as defined under and required
by the federal securities laws and the rules of the NASDAQ. Our board of
directors has determined that Mr. Brooks qualifies as an audit committee
financial expert under the federal securities laws and that each member of the
audit committee has the financial sophistication required under the rules of
the NASDAQ. Mr. Brooks is the chairperson of the audit committee.

Compensation Committee

We have established a
compensation committee, the primary responsibilities of which are to
periodically review and approve the compensation and other benefits for our
employees, officers and independent directors, including reviewing and approving
corporate goals and objectives relevant to the compensation of our executive
officers in light of those goals and objectives, and setting compensation for
these officers based on those evaluations. Our compensation committee also
administers and has discretionary authority over the issuance of stock awards
under our stock compensation plans.

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The
compensation committee has in the past, and may in the future, delegate
authority to review and approve the compensation of our employees to certain of
our executive officers, including with respect to stock option grants issued
under our Stock Option Plan. Even where the compensation committee has not
delegated authority, our executive officers typically make recommendations to
the compensation committee regarding compensation to be paid to our employees
and the size of stock options and stock grants.

The compensation
committee is comprised of three members, Messrs. Larrew, Majteles and Whiteman.
Mr. Larrew is the chairperson of the compensation committee. The board has
determined that Mr. Larrew meets the independence requirements of the NASDAQ
Marketplace Rules.

Code of Conduct and Ethics

Our board of directors
has adopted a code of conduct and ethics that establishes the standards of
ethical conduct applicable to all directors, officers and employees of our
company. The code addresses, among other things, conflicts of interest,
compliance with disclosure controls and procedures and internal control over
financial reporting, corporate opportunities and confidentiality requirements.
The audit committee is responsible for applying and interpreting our code of
conduct and ethics in situations where questions are presented to it. The board
has adopted a Code of Business Conduct that applies to all our employees,
officers and directors.

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

We provide what we
believe is a competitive total compensation package to our executive management
team through a combination of base salary, an annual cash incentive plan, a
long-term equity incentive compensation plan and broad-based benefits programs.
We place emphasis on pay for performance-based incentive compensation programs,
which make payments when certain company or revenue goals are achieved. This
Compensation Discussion and Analysis explains our compensation philosophy,
policies and practices with respect to our chief executive officer, chief
financial officer, and the other three most highly-compensated executive
officers, which are collectively referred to as the named executive
officers.

The Objectives of Our Executive Compensation
Program

Our compensation
committee is responsible for establishing and administering our policies
governing the compensation for our executive officers. Our executive officers
are elected by our board of directors. Our compensation committee is composed
entirely of non-employee independent directors. The primary goals of the
compensation committee with respect to executive compensation are to attract and
retain the most talented and dedicated executives possible, to tie annual and
long-term cash and equity incentives to achievement of specified performance
objectives, and to align executives incentives with stockholder value creation.
To achieve these goals, the compensation committee intends to implement and
maintain compensation plans that tie a substantial portion of executives
overall compensation to our financial and operational performance, as measured
by metrics such as revenue, revenue growth and profitability. The compensation
committee evaluates individual executive performance with a goal of setting
compensation at levels the committee believes are comparable with executives in
other companies of similar size and stage of development operating in the
software industry while taking into account our relative performance and our own
strategic goals. In March 2009, we retained a compensation consultant to review
our policies and procedures with respect to executive and board compensation and
update a market compensation study that was originally completed in March 2007.
The compensation committee used the results of the consultants analysis to
evaluate the appropriateness of compensation levels for our executives compared
to other companies of similar size.

Our compensation
committee meets outside the presence of all of our executive officers, including
the named executive officers, to consider appropriate compensation for our chief
executive officer, or CEO. For all other named executive officers, the committee
meets outside the presence of all executive officers except our CEO, Mr. Wille,
who reviews each other named executive officers performance with the committee
and makes recommendations to the compensation committee with respect to the
appropriate base salary, cash bonus incentives and equity incentives. The
compensation committee considers the annual performance of the executive
officer, the importance of the executive position to the Company, the past
salary history of the executive officer and the contributions to be made by the
executive officer to us. The compensation committee also reviews the analyses
and recommendations of the executive compensation consultant retained by the
committee. After considering the relevant information, the compensation
committee establishes the annual compensation package for our executive
officers.

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We
use the following principles to guide our decisions regarding executive
compensation:

Allocation between long-term and currently paid
out compensation.     The compensation we currently pay consists of base pay and annual cash
incentive compensation. The long-term compensation consists entirely of stock
awards or stock options pursuant to our 2001 Stock Option Plan. The allocation
between long-term and currently paid out compensation is based on an analysis of
how the enterprise software industry and companies of similar size in the
general technology market use long-term and currently paid compensation to pay
their executive officers.

Allocation between cash and non-cash
compensation.     It is our
intent to allocate all currently paid compensation and annual incentive pay in
the form of cash and all long-term compensation in the form of stock awards
and/or stock options to purchase our common stock. We consider competitive
market analyses when determining the allocation between cash and non-cash
compensation.

Provide compensation opportunities targeted at
market median levels.To attract and retain executives
with the ability and the experience necessary to lead us and deliver strong
performance to our stockholders, we strive to provide a total compensation
package that is competitive with total compensation provided by our industry
peer group. We benchmark our salary and target incentive levels and practices as
well as our performance results in relation to other comparable general
technology and enterprise software companies of similar size in terms of revenue
and market capitalization. In fiscal 2009, we engaged a compensation consultant
to provide us with a comprehensive evaluation of our executive compensation
program. The consultant used multiple data sources, including confidential
market compensation surveys and public survey data to enable them to compare our
company to others with similar attributes.

We target base salaries
and target total compensation to result in annual salaries equal to the market
median (50th percentile) pay level. We believe our executive compensation
packages are reasonable when considering our business strategy, our compensation
philosophy and the competitive market pay data.

Require performance goals to be substantially
achieved in order for the majority of the target pay levels to be
earned.Our executive compensation program
emphasizes pay for performance. Performance is measured based on the achievement
of company and divisional performance goals established by our board of
directors relative to our board of director approved annual business plan. The
goals for our company and divisional measures are established so that target
attainment is not assured. The attainment of these company and divisional goals
will require significant effort on the part of our executives.

Offer the same comprehensive benefits package
to all full-time employees.     We provide a
competitive benefits package to all full-time employees which includes health
and welfare benefits, such as medical, dental, vision care, disability
insurance, life insurance benefits, and a 401(k) savings plan. We have no
structured executive perquisite benefits (e.g., club memberships or company
vehicles) for any executive officer, including the named executive officers, and
we currently do not provide any deferred compensation programs or supplemental
pensions to any executive officer, including the named executive officers.

Provide fair and equitable
compensation.     We provide a
total compensation program that we believe will be perceived by both our
executive officers and our stockholders as fair and equitable. In addition to
conducting analyses of market pay levels and considering individual
circumstances related to each executive officer, we also consider the pay of
each executive officer relative to each other executive officer and relative to
other members of the management team. We have designed the total compensation
programs to be consistent for our executive management team.

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Our Executive Compensation Program
Elements

Overall, our executive
compensation programs are designed to be consistent with the objectives and
principles set forth above. For each fiscal year, the compensation committee
will select, in its discretion, the executive officers of the Company or its
subsidiaries who are to participate in the Companys incentive plans. The
compensation committee will establish the terms and conditions applicable to any
award granted under the plan and a participant will be eligible to receive an
award under the plan in accordance with such terms and conditions. Awards will
be paid in whole or in part in cash, common stockor other property and will generally be paid in the first quarter
following completion of a given fiscal year. The actual amount of any
discretionary bonus payment will be determined following a review of each
executives individual performance and contribution to our strategic goals. The
plan does not fix a maximum payout for any officers annual discretionary
incentive payment. With the exception of the Companys chief executive officer,
no other executive officers have an employment agreement. The basic elements of
our executive compensation programs are summarized below:

Base
Salary.Base salaries for our executives are
established based on the scope of their responsibilities, taking into account
competitive market compensation paid by other companies for similar positions.
Generally, we believe that executive base salaries should be targeted near the
median of the range of salaries for executives in similar positions with similar
responsibilities at comparable companies, in line with our compensation
philosophy. Base salaries are reviewed annually, and adjusted from time to time
to realign salaries with market levels after taking into account individual
responsibilities, performance and experience. For 2009, this review occurred at
the beginning of the first quarter.

Management Incentive Plan.The
Company, through the compensation committee, maintains an annual Management
Incentive Plan (MIP) such that executives of the Company can receive an
incentive payment based on the achievement of pre-defined objectives. The
incentive plan awards are intended to compensate officers for achieving
financial and operational goals and for achieving individual annual performance
objectives. These objectives vary depending on the individual executive, but
relate generally to the Companys financial results. The Companys financial
performance met the MIP predefined objective for fiscal 2009, therefore, MIP
cash incentive bonuses were accrued for fiscal 2009.

Long-Term
Equity Incentive Program.We believe that
long-term performance is achieved through an ownership culture that encourages
such performance by our executive officers through the use of stock and
stock-based awards. Our stock compensation guidelines have been established to
provide certain of our employees, including our executive officers, with
incentives to help align those employees interests with the interests of
stockholders. The compensation committee believes that the use of stock and
stock-based awards is a significant component in enabling the company to achieve
its compensation goals. We do maintain stock award guidelines and all stock
awards are made at the direction of the compensation committee. We believe that
the aggregate equity ownership levels for our executive officers should be set
near competitive median levels for comparable companies. For fiscal 2009, this
review occurred at the beginning of the first quarter.

Options
and Stock Awards.Our 2001 Stock Option Plan
authorizes us to grant options to purchase shares of common stock to our
employees, directors and consultants. Our compensation committee is the
administrator of the stock option plan. Stock option grants are made at the
commencement of employment and, occasionally, following a significant change in
job responsibilities or to meet other special retention or performance
objectives. The compensation committee reviews and approves stock option awards
to executive officers based upon a review of competitive compensation data, its
assessment of individual performance, a review of each executives existing
long-term incentives, and retention considerations. Periodic stock option grants
are made at the discretion of the compensation committee to eligible employees
and, in appropriate circumstances, the compensation committee considers the
recommendations of members of management, such as Mr. Wille, our Chief Executive
Officer. In 2009, certain named executive officers were awarded stock options in
the amounts indicated in the section entitled Grants of Plan Based Awards.
These grants included stock options grants made in May 2008.

Other
Compensation.In accordance with our
compensation philosophy, the compensation committee may, in its discretion,
revise, amend or authorize any changes to the executive officers compensation
or benefits as deemed necessary. There were no non-discretionary payments to
executive officers during fiscal 2009.

Tax Deductibility of Executive
Compensation

Limitations
on deductibility of compensation may occur under Section 162(m) of the Internal
Revenue Code which generally limits the tax deductibility of compensation paid
by a public company to its chief executive officer and certain other highly
compensated executive officers to $1 million in the year the compensation
becomes taxable to the executive officer. There is an exception to the limit on
deductibility for performance-based compensation that meets certain
requirements.

Compensation Committee Report

The
Compensation Committee is comprised entirely of independent directors. The
Committee has reviewed the Compensation Discussion and Analysis required by Item
402(b) of Regulation S-K with management and, based on such review and
discussions, the Committee recommended to our board of directors that the
Compensation Discussion and Analysis be included in this annual
report.

Submitted by the
Compensation Committee: Tery R. Larrew, Robert J. Majteles, Steven D. Whiteman.

34

---

SUMMARY COMPENSATION TABLE

The following table sets forth information concerning
the compensation earned during the fiscal years ended April 30, 2009, 2008 and
2007 by our President and Chief Executive Officer, our Chief Financial Officer
and our three other most highly-compensated executive officers for the last
three (3) fiscal years:

|                                 |  |      |  |         |  |         |  |        |      |         |      | Sales            |  |                  |      |        
|-------------------------------- |  | ---- |  | ------- |  | ------- |  | ------ | ---- | ------- | ---- | ---------------- |  | ---------------- | ---- | -------
|                                 |  |      |  |         |  |         |  | Stock  |      | Option  |      | Commission       |  | All
Other        |      |        
|Name and
      Principal         |  |      |  | Salary  |  | Bonus   |  | Awards |      | Awards  |      | **Compensation** |  | **Compensation** |      | Total  
|Position                         |  | Year |  | $ (1)   |  | $ (2)   |  | $ (3)  |      | $ (4)   |      | $ (5)            |  | $                |      | $      
|Todd E.
      Wille (6)          |  | 2009 |  | 250,000 |  | 55,000  |  |        |      | 348,525 | (7)  |                  |  |                  |      | 653,525
|President and Chief              |  | 2008 |  | 250,000 |  | 180,000 |  |        |      | 320,231 | (8)  |                  |  |                  |      | 750,231
|Executive Officer                |  | 2007 |  | 220,000 |  |         |  | 34,540 | (9)  |         |      |                  |  | 25,000           | (10) | 279,540
|                                
|Steven D.
      Bonham (11)      |  | 2009 |  | 185,000 |  | 42,500  |  |        |      | 69,705  | (12) |                  |  |                  |      | 297,205
|Chief Financial
    Officer      |  | 2008 |  | 185,000 |  | 138,000 |  |        |      | 38,641  | (13) |                  |  |                  |      | 361,641
|                                 |  | 2007 |  | 175,000 |  |         |  | 8,800  | (14) |         |      |                  |  | 15,000           | (15) | 198,800
|                                
|Frank
      Verardi (16)         |  | 2009 |  | 140,000 |  | 3,500   |  |        |      |         |      | 121,679          |  |                  |      | 265,179
|Vice President of Sales
      -  |  | 2008 |  | 125,000 |  | 15,000  |  |        |      |         |      | 157,352          |  |                  |      | 297,352
|Americas and Asia
      Pacific  |  | 2007 |  | 125,000 |  |         |  |        |      |         |      | 64,663           |  |                  |      | 189,663
|                                
|Mark
      Bygraves (17)         |  | 2009 |  | 149,664 |  | 5,000   |  |        |      | 116,175 | (18) | 115,780          |  | 13,736           | (19) | 400,355
|Vice President and
      General |  | 2008 |  | 170,985 |  | 12,000  |  |        |      | 96,220  | (20) | 163,130          |  | 19,311           | (21) | 461,646
|Manager - Software
    Group     |  | 2007 |  | 70,833  |  |         |  |        |      | 18,000  | (22) | 60,890           |  | 8,000            | (23) | 157,723
|                                
|Duane
      George (24)          |  | 2009 |  | 160,000 |  | 8,750   |  |        |      | 69,705  | (25) | 30,692           |  |                  |      | 269,147
|Chief Technical
    Officer      |  | 2008 |  | 160,000 |  | 42,000  |  |        |      | 60,577  | (26) | 31,867           |  |                  |      | 294,444
|                                 |  | 2007 |  | 139,583 |  |         |  |        |      | 16,500  | (27) | 32,995           |  |                  |      | 189,078

|(1) |  | Includes amounts, if any,
      deferred at the named executive officers option under Unify Corporations
      401(k) plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Includes amounts, if any, paid
      under the Companys Management Incentive Plan (MIP).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(3) |  | The value of stock awards granted
      to our executive officers equals the number of shares granted multiplied
      by the share price on the date of the grant.                                                                                                                                                                                                                                                                                                                                                                                                                  
|   
|(4) |  | The value of option awards
      granted to our executive officers has been estimated pursuant to SFAS No.
      123(R) for fiscal years 2009, 2008 and 2007. In fiscal 2006, the Company
      adopted SFAS No. 123(R) and began to record stock option expenses. In
      order for the executive officers to realize the estimated fair value of
      the fiscal 2009 awards in cash, the Companys share price would need to
      exceed $11 per share. Additionally, the value of these awards will not be
      realized in cash until these awards are vested and exercised.
|   
|(5) |  | Represents commissions earned and
      paid pursuant to the Companys sales commission plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(6) |  | Mr. Wille was appointed president
      and chief executive officer in November 2000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(7) |  | Relates to stock option grant of
      75,000 shares of common stock to Mr. Wille on May 2,
  2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

35

---

|(8)  |  | Relates to stock
      option grants of 54,000 and 60,000 shares of common stock to Mr. Wille on
      May 1, 2007 and November 27, 2007 respectively.                                                                                                       
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(9)  |  | Relates to a stock
      grant of 31,400 shares of common stock to Mr. Wille on November 16,
      2006.                                                                                                                                                     
|    
|(10) |  | Represents a
      discretionary bonus awarded by the Compensation Committee.                                                                                                                                                                                
|    
|(11) |  | Mr. Bonham joined the
      Company in June 2005 as chief financial officer.                                                                                                                                                                                 
|    
|(12) |  | Relates to stock
      option grant of 15,000 shares of common stock to Mr. Bonham on May 2,
      2008.                                                                                                                                                     
|    
|(13) |  | Relates to stock
      option grants of 14,400 and 6,000 shares of common stock to Mr. Bonham on
      May 1, 2007 and November 27, 2007 respectively.                                                                                                       
|    
|(14) |  | Relates to a stock
      grant of 8,000 shares of common stock to Mr. Bonham on November 16,
      2006.                                                                                                                                                     
|    
|(15) |  | Represents a
      discretionary bonus awarded by the Compensation Committee.                                                                                                                                                                                
|    
|(16) |  | Mr. Verardi was
      appointed to the position of Vice President, Sales for the Americas and
      Asia Pacific in May 2007. Prior to that, he held the position of vice
      president and general manager of the Unify Business Solutions
      division.
|    
|(17) |  | Mr. Bygraves was
      appointed to the position of Vice President, Sales  Europe, Middle East
      and Africa in May 2007. He joined the company in November 2006 upon the
      acquisition of Gupta Technologies.                                       
|    
|(18) |  | Relates to stock
      option grants of 25,000 shares of common stock to Mr. Bygraves on May 2,
      2008.                                                                                                                                                  
|    
|(19) |  | Represents the amount
      received by Mr. Bygraves under the car allowance program.                                                                                                                                                                        
|    
|(20) |  | Relates to stock
      option grants of 20,000 and 20,000 shares of common stock to Mr. Bygraves
      on May 1, 2007 and November 27, 2007 respectively.                                                                                                    
|    
|(21) |  | Represents the amount
      received by Mr. Bygraves under the car allowance program.                                                                                                                                                                        
|    
|(22) |  | Relates to a stock
      option grant of 15,000 shares of common stock to Mr. Bygraves on November
      20, 2006.                                                                                                                                           
|    
|(23) |  | Represents the amount
      received by Mr. Bygraves under the car allowance program.                                                                                                                                                                        
|    
|(24) |  | Mr. George was
      appointed to the position of Vice President of Product Development and
      Chief Technology Officer in May 2007. Prior to that, he held the position
      of Senior Director of Product Development.                                 
|    
|(25) |  | Relates to stock
      option grant of 15,000 shares of common stock to Mr. George on May 2,
      2008.                                                                                                                                                     
|    
|(26) |  | Relates to stock
      option grants of 17,400 and 10,000 shares of common stock to Mr. George on
      May 1, 2007 and November 27, 2007 respectively.                                                                                                      
|    
|(27) |  | Relates to a stock
      option grant of 15,000 shares of common stock to Mr. George on November
      16, 2006.                                                                                                                                             

36

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Grants of Plan-Based Awards

The compensation
committee approved option awards under our 2001 Stock Option Plan to certain of
our named executives in fiscal 2007, 2008 and 2009 and awarded stock to Mr.
Wille and Mr. Bonham in 2007. Set forth below is information regarding awards
granted during fiscal 2007, 2008 and 2009.

|                 |  |            |  |                       |  | All
      Other      |  |                  |      |                 |   |        
|---------------- |  | ---------- |  | --------------------- |  | -------------------- |  | ---------------- | ---- | --------------- | - | -------
|                 |  |            |  | All Other
      Stock |  | Option
      Awards: |  | Exercise or      |      |                 |  
|                 |  |            |  | Awards:               |  | Number
      of      |  | Base             |      | Grant Date Fair
|                 |  |            |  | Number
      of       |  | Securities           |  | Price of Options |      | Value of Stock 
|                 |  |            |  | Shares
      of       |  | Underlying           |  | or Awards        |      | and Option     
|Name             |  | Grant Date |  | Stock (#)             |  | Options (#)          |  | ($/share) (1)    |      | Awards ($) (2) 
|Todd E. Wille    |  | 11/16/2006 |  | 31,400                |  |                      |  | $                | 1.10 |                 | $ | 34,540 
|                 |  | 5/1/2007   |  |                       |  | 54,000               |  | $                | 2.55 |                 | $ | 101,393
|                 |  | 11/27/2007 |  |                       |  | 60,000               |  | $                | 5.20 |                 | $ | 218,838
|                 |  | 5/2/2008   |  |                       |  | 75,000               |  | $                | 6.40 |                 | $ | 348,525
|                
|Steven D. Bonham |  | 6/27/2005  |  |                       |  | 40,000               |  | $                | 1.85 |                 | $ | 69,240 
|                 |  | 11/16/2006 |  | 8,000                 |  |                      |  | $                | 1.10 |                 | $ | 8,800  
|                 |  | 5/1/2007   |  |                       |  | 14,400               |  | $                | 2.55 |                 | $ | 16,757 
|                 |  | 11/27/2007 |  |                       |  | 6,000                |  | $                | 5.20 |                 | $ | 21,884 
|                 |  | 5/2/2008   |  |                       |  | 15,000               |  | $                | 6.40 |                 | $ | 69,705 
|                
|Kevin R. Kane    |  | 1/8/2007   |  |                       |  | 40,000               |  | $                | 1.44 |                 | $ | 57,400 
|                 |  | 5/1/2007   |  |                       |  | 20,000               |  | $                | 2.55 |                 | $ | 29,700 
|                 |  | 5/2/2008   |  |                       |  | 15,000               |  | $                | 6.40 |                 | $ | 69,705 
|                
|Mark Bygraves    |  | 11/20/2006 |  |                       |  | 15,000               |  | $                | 1.20 |                 | $ | 18,000 
|                 |  | 5/1/2007   |  |                       |  | 20,000               |  | $                | 2.55 |                 | $ | 23,274 
|                 |  | 11/27/2007 |  |                       |  | 20,000               |  | $                | 5.20 |                 | $ | 72,946 
|                 |  | 5/2/2008   |  |                       |  | 25,000               |  | $                | 6.40 |                 | $ | 116,175
|                
|Frank Verardi    |  | 2/2/2005   |  |                       |  | 4,000                |  | $                | 2.30 |                 | $ | 8,884  

|(1) |  | All options were
      granted with an exercise price equal to the fair market value per share of
      the common stock on the date of grant, as determined by the fair market
      value of the Companys common stock on that day.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The fair value of the
      Option Awards is compensation expense of the option awards for financial
      reporting purposes under FAS 123R which may vary significantly from the
      actual intrinsic value ultimately realized by the named executive officers
      due to stock price fluctuations and timing factors. The intrinsic value is
      calculated as the difference between the market value of the option award
      based upon the current per share price of our Common Stock and the cash
      exercise price to buy the shares represented by the option award which is
      subAll options were granted with an exercise price equal to the fair
      market value per share of the common stock on the date of grant, as
      determined by the fair market value of the Companys common stock on that
      day.

Option Awards Fair Value vs. Intrinsic
Value.The fair value of each option award
represents the grant-date fair value-based compensation expense calculated under
FAS 123R for each named executive officer that will be charged to the Companys
financial statements over the vesting period of the option award. This
recognized compensation expense of the option awards for financial reporting
purposes may vary significantly from the actual intrinsic value ultimately
realized by the named executive officers due to stock price fluctuations and
timing factors. The intrinsic value is calculated as the difference between the
market value of the option award based upon the current per share price of our
Common Stock and the cash exercise price to buy the shares represented by the
option award.

The
supplemental table below compares the fair value to the intrinsic value for each
of the fiscal 2009 option awards. Due to the decline in the market price of our
Common Stock after the grant date, there is no economic value to the executive
as all of these option awards are out of the money and have no intrinsic
value.

37

---

Option Awards Fair Value v. Intrinsic
Value (supplemental table)

|                       |  |                 |  |               |         |                 | Intrinsic Value of Stock Option to
      Executive
|---------------------- |  | --------------- |  | ------------- | ------- | --------------- | --------------------------------------------------
|                       |  | Number          |  |               |         |                 | Cash Paid by                                      
|                       |  | of
      Option |  | Fair Value of |         | Executive to    |                                                   
|                       |  | Shares          |  | Option Award  |         | Exercise Option |                                                   
|Executive Officer      |  | Granted         |  | (1)           |         | (2)             |                                                   
|Todd E. Wille          |  | 75,000          |  | $             | 348,525 |                 | $                                                 
|Steven D.
      Bonham |  | 15,000          |  | $             | 69,705  |                 | $                                                 
|Mark T. Bygraves       |  | 25,000          |  | $             | 116,175 |                 | $                                                 
|Duane V.
      George  |  | 15,000          |  | $             | 69,705  |                 | $                                                 
|Kevin R. Kane          |  | 15,000          |  | $             | 69,705  |                 | $                                                 

|(1) |  | The Fair Value of the
      Option Award represents the total compensation expense the Company will
      record over the vesting period in accordance with the grant-date fair
      value-based compensation expense calculated under FAS 123R. This is the
      amount reported in the Summary Compensation Table below.                                        
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | The total cash amount
      the executive will be required to pay to the Company to buy the stock
      represented by the option award at the time of exercise. The exercise
      price for these option awards is $6.40 which was the closing price of the
      Companys common stock on the date of grant.                                                    
|   
|(3) |  | The current market
      value is based on the April 30, 2009 closing price of $2.93.                                                                                                                                                                                                                                                                               
|   
|(4) |  | The economic gain or
      loss to the executive officer is calculated as the difference between the
      market value of the option award at $2.93 per share and the cash cost to
      exercise these shares at $6.40 per share. Based on this calculation, all
      of the above listed option awards are out of the money and have no
      intrinsic value.

Stock Option Plans

Our 2001
Stock Option Plan (the 2001 Option Plan) is administered by our compensation
committee. The objectives of the plan include attracting, motivating and
retaining key personnel and promoting our success by linking the interests of
our employees, directors and consultants with our success.

Prior to the
2001 Option Plan, the Company had a 1991 Stock Options Plan (the 1991 Option
Plan) which expired as of March 2001. Under the 1991 Option Plan, the Company
was able to grant options to eligible employees, directors and consultants at
prices not less than the fair market value at the date of grant for incentive
stock options and not less than 85% of the fair market value at the date of
grant for non-statutory stock options. Options granted under the 1991 Option
Plan generally vest over four years, are exercisable to the extent vested, and
expire 10 years from the date of grant.

Options Available for
Issuance     Under the 2001 Stock Option Plan, the Company may grant options to
purchase up to 2,000,000 shares of common stock to eligible employees,
directors, and consultants at prices not less than the fair market value at the
date of grant for incentive stock options and not less than 85% of the fair
market value at the date of grant for non-statutory stock options. As of April
30, 2009 there were 1,147,189 options available under the 2001 Option Plan.

Term of
Options     The term of each option is ten years from the date of the grant of the
option, unless a shorter period is established for incentive stock options or
the administrator of the 2001 Stock Option Plan establishes a shorter
period.

38

---

Vesting
Schedule     Options
granted under our 2001 Stock Option Plan, unless waived or modified in a
particular option agreement or by action of the compensation committee, vest
over a four year period. The options generally have no vesting until the end of
one year at which time they become 25% vested. Following the first year, the
options generally vest monthly on a ratable basis over the next three years. At
the end of four years the options are fully vested.

Administration     The compensation committee has full discretionary authority to determine
all matters relating to options granted under the plan. The compensation
committee has the authority to determine the persons eligible to receive
options, the number of shares subject to each option, the exercise price of each
option, any vesting schedule, any acceleration of the vesting schedule and any
extension of the exercise period.

Amendment and
Termination     Our
board of directors has authority to suspend, amend or terminate the plan, except
as would adversely affect participants rights to outstanding awards without
their consent. As the plan administrator, our compensation committee has the
authority to interpret the plan and options granted under the plan and to make
all other determinations necessary or advisable for plan administration.

Other Stock Options

In fiscal 2003, the
Board authorized the issuance of non-registered non-plan stock options
(Non-Plan Options) for individual senior level executive recruitment. These
Non-Plan Options are granted pursuant to written agreements that are not subject
to the terms of the 2001 Option Plan, but have similar terms and conditions. The
options and shares issuable under the Non-Plan Options are restricted securities
under the Securities Act and may not be issued or sold except under an effective
registration statement or an applicable exemption there from. The Non-Plan
Option agreements contain substantially similar terms as options issued under
our 2001 Option Plan, including vesting schedule and option term.

Other Benefits

Retirement Savings
Opportunity     The
Company maintains a 401(k) employee retirement savings plan. Eligible employees
may contribute up to 100% of their pre-tax salary, but not more than statutory
limits. We match a portion of employee contributions, currently 50% of the first
6% of compensation deferred. We do not provide an option for our employees to
invest in our common stock in the 401(k) plan.

Health and Welfare
Benefits     All
full-time employees, including our named executive officers, may participate in
our health and welfare benefit programs, including medical, dental and vision
care coverage, disability insurance and life insurance.

Employment Agreements and Termination and Change
of Control Agreements

We have an employment
agreement with Mr. Wille, our president and chief executive officer which became
effective October 1, 2000. Under the agreement, he originally received an annual
salary, of $220,000, subject to Board adjustment, and is eligible to receive
bonuses upon Unify achieving certain benchmarks in its business plan. Following
a merger of the Company or sale of substantially all of its assets, the unvested
portion of all options held by Mr. Wille as of the date of the transaction will
automatically vest. Should Mr. Wille be terminated without cause or resign for
good reason, all options held by Mr. Wille will have the benefit of twelve (12)
additional months of vesting and he will receive an amount equal to twelve (12)
months salary and the continuation of health benefits for 12 months following
termination.

Change in Control

Under our 1991 and 2001
Stock Option Plans, should we merge with or be otherwise acquired by another
company in a transaction where our stockholders do not retain a majority of the
voting stock, a Change of Control occurs. If there is a Change of Control and
the successor company fails to either assume the outstanding options or
substitute substantially equivalent options for its own stock, the vesting of
all outstanding Unify options shall accelerate to become fully vested and
immediately exercisable. Any outstanding options will terminate if they are not
exercised upon consummation of the merger or assumed or replaced by the
successor corporation.

39

---

Outstanding Equity Awards at May 31, 2009

The following table
summarizes the outstanding equity award holdings by our named executive
officers.

|                       |  | Number
of   |  | Number
of     |  |                       |       |                         |           
|---------------------- |  | ----------- |  | ------------- |  | --------------------- | ----- | ----------------------- | ----------
|                       |  | Securities  |  | Securities    |  |                       |       |                         |           
|                       |  | Underlying  |  | Underlying    |  |                       |       |                         |           
|                       |  | Unexercised |  | Unexercised   |  |                       |       |                         |           
|                       |  | Options     |  | Options       |  | Option
      Exercise |       |                        
|                       |  | Exercisable |  | Unexercisable |  | Price                 |       | Option
      Expiration
|Name                   |  | (#)         |  | (#)           |  | ($)                   |       | Date                   
|Todd E.
      Wille    |  | 30,000      |  |               |  | $                     | 1.25  |                         | 9/26/2011 
|                       |  | 30,000      |  |               |  |                       | 1.30  |                         | 11/16/2011
|                       |  | 30,000      |  |               |  |                       | 2.75  |                         | 5/9/2012  
|                       |  | 38,375      |  | 15,625        |  |                       | 2.55  |                         | 5/1/2017  
|                       |  | 21,250      |  | 38,750        |  |                       | 5.20  |                         | 11/27/2017
|                       |  | 17,187      |  | 57,813        |  |                       | 6.40  |                         | 5/2/2018  
|                      
|Steven D.
      Bonham |  | 38,333      |  | 1,667         |  |                       | 1.85  |                         | 6/27/2015 
|                       |  | 14,400      |  |               |  |                       | 2.55  |                         | 5/1/2017  
|                       |  | 2,125       |  | 3,875         |  |                       | 5.20  |                         | 11/27/2017
|                       |  | 3,437       |  | 11,563        |  |                       | 6.40  |                         | 5/2/2018  
|                      
|Kevin
      Kane       |  | 22,500      |  | 17,500        |  |                       | 1.44  |                         | 1/8/2017  
|                       |  | 17,395      |  | 2,605         |  |                       | 2.55  |                         | 5/1/2017  
|                       |  | 3,437       |  | 11,563        |  |                       | 6.40  |                         | 5/2/2018  
|                      
|Mark
      Bygraves    |  | 9,062       |  | 5,938         |  |                       | 1.20  |                         | 11/20/2016
|                       |  | 20,000      |  |               |  |                       | 2.55  |                         | 5/1/2017  
|                       |  | 7,083       |  | 12,917        |  |                       | 5.20  |                         | 11/27/2017
|                       |  | 5,729       |  | 19,271        |  |                       | 6.40  |                         | 5/2/2018  
|                      
|Frank
      Verardi    |  | 2,000       |  |               |  |                       | 25.78 |                         | 8/3/2009  
|                       |  | 8,000       |  |               |  |                       | 1.25  |                         | 9/26/2011 
|                       |  | 10,000      |  |               |  |                       | 1.30  |                         | 11/16/2011
|                       |  | 15,000      |  |               |  |                       | 2.75  |                         | 5/9/2012  
|                       |  | 4,000       |  |               |  |                       | 2.30  |                         | 2/2/2015  
|                      
|Duane
      George     |  | 1,200       |  |               |  |                       | 29.38 |                         | 8/25/2009 
|                       |  | 5,000       |  |               |  |                       | 1.30  |                         | 11/16/2011
|                       |  | 2,000       |  |               |  |                       | 2.75  |                         | 5/9/2012  
|                       |  | 2,000       |  |               |  |                       | 3.35  |                         | 11/3/2013 
|                       |  | 3,000       |  |               |  |                       | 4.70  |                         | 5/3/2014  
|                       |  | 1,400       |  |               |  |                       | 2.05  |                         | 12/10/2014
|                       |  | 9,062       |  | 5,938         |  |                       | 1.10  |                         | 11/16/2016
|                       |  | 15,837      |  | 1,563         |  |                       | 2.55  |                         | 5/1/2017  
|                       |  | 3,437       |  | 11,563        |  |                       | 6.40  |                         | 5/2/2018  

40

---

Option Exercises and Stock Vested

There have been no exercises of
stock options by our named executive officers during the last fiscal year.

Compensation of Directors

The compensation for
each individual non-employee (independent) Director is assessed by the other
members of the Board and is generally based upon the degree and quality of
his/her participation in Board activities. Directors receive an annual cash
retainer and an annual stock option. For the year ended April 30, 2009 each
director was awarded 5,000 options to purchase common stock. A summary of the
compensation for individual non-employee (independent) Director is included on
the following table.

|                               |  | Based Upon                                                                                 |  | Annual Maximum                            |  | How Paid                                                                                                       
|------------------------------ |  | ------------------------------------------------------------------------------------------ |  | ----------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------
|Annual Cash
      Retainer (1) |  | Board
      participation                                                                  |  | $25,000 in
      cash                     |  | $6,250 per
      quarter                                                                                       
|                              
|Annual Stock Option Grant (2)  |  | Board
      determination of award to be made pursuant to the 2001 Stock Option
      Plan |  | Up to
      10,000 shares of common stock |  | An
      option to purchase Unify common stock at FMV at the date of grant with a
      one year vesting
period

|(1) |  | Unify pays non-employee directors
      an annual cash retainer fee of $25,000 which is paid in four quarterly
      payments of $6,250 each. Payments are to be made in the middle of each
      fiscal quarter. Directors also receive compensation for their
      participation or chairing of committees. These payments are paid in four
      quarterly payments are to be made in the middle of each fiscal quarter.
      The Chairman of the Board, Chairman of the Audit Committee and Chairman of
      the M&A Committee are paid $10,000 annually. The Chairman of the
      Compensation Committee is paid an annual fee of $5,000. An annual fee of
      $2,000 is paid for participation in the Compensation Committee and an
      annual fee of $3,000 is paid for participation on the Audit
      Committee.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Directors can receive an annual
      stock option grant of up to 10,000 shares of Unify common stock.
      Eligibility will be determined by the Board and will be based on several
      factors from the prior fiscal year, including the financial performance of
      the Company, the Directors personal contribution to the Company and any
      other relevant factors or events. The stock option grant, if any, will be
      made in May of each year and the exercise price shall be equivalent to the
      fair market value of the stock at the time of the option grant. Any such
      option grant will vest monthly over a period of twelve (12)
    months.                                                                                                                                               

41

---

The following
table details the Companys committee structure and committee membership
information.

|                     |  |             |  |              |  |               |  |             |  | Mergers
      &
|-------------------- |  | ----------- |  | ------------ |  | ------------- |  | ----------- |  | ---------------
|                     |  | Audit       |  | Compensation |  | Disclosure    |  | Nominating  |  | Acquisitions   
|Name of Director (1) |  | Committee   |  | Committee    |  | Committee (2) |  | Committee   |  | Committee      
|Todd E. Wille        |  |             |  |              |  | Member        |  |             |  | Member         
|                     |  |             |  |              |  |               |  |             |  |                
|Robert Bozeman       |  |             |  |              |  | Member        |  |             |  | Chairperson    
|                     |  |             |  |              |  |               |  |             |  |                
|Richard M. Brooks    |  | Chairperson |  |              |  | Member        |  | Member      |  |                
|                     |  |             |  |              |  |               |  |             |  |                
|Tery R. Larrew       |  | Member      |  | Chairperson  |  | Member        |  | Member      |  |                
|                     |  |             |  |              |  |               |  |             |  |                
|Robert J. Majteles   |  |             |  | Member       |  | Member        |  | Member      |  |                
|                     |  |             |  |              |  |               |  |             |  |                
|Steven D. Whiteman   |  | Member      |  | Member       |  | Member        |  | Chairperson |  |                

|(1) |  | With the exception of
      Mr. Wille, the companys CEO, all other board members are
      non-employees. 
|--- |  | -----------------------------------------------------------------------------------------------------------
|   
|(2) |  | The Disclosure
      Committee is chaired by the Companys Chief Financial Officer, Steven D.
      Bonham.

The following table sets forth
certain information with respect to our non-employee director compensation
during the fiscal year ended April 30, 2009.

Director Compensation
Table

|                   |  | Fees Earned
      or |  | Stock  |  | Option |     |          
|------------------ |  | -------------------- |  | ------ |  | ------ | --- | ---------
|                   |  | Paid in
      Cash   |  | Awards |  | Awards |     | **Total**
|Name               |  | ($)                  |  | ($)    |  | ($)    |     | **($)**  
|Robert Bozeman     |  | 35,000               |  |        |  | 9,100  | (1) | 44,100   
|                   |  |                      |  |        |  |        |     |          
|Richard M. Brooks  |  | 35,000               |  |        |  | 9,100  | (1) | 44,100   
|                   |  |                      |  |        |  |        |     |          
|Tery R. Larrew     |  | 33,000               |  |        |  | 9,100  | (1) | 42,100   
|                   |  |                      |  |        |  |        |     |          
|Robert J. Majteles |  | 27,000               |  |        |  | 9,100  | (1) | 36,100   
|                   |  |                      |  |        |  |        |     |          
|Steven D. Whiteman |  | 40,000               |  |        |  | 9,100  | (1) | 49,100   

|(1) |  | Represents the
      aggregate fair market value of options to purchase 5,000 shares of common
      stock on May 2, 2008 with an exercise price of $6.40 per
  share.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Director Restricted Stock Plan

In fiscal
2003, the Board adopted, without a need for shareholder approval, the 2002
Director Restricted Stock Plan (the Director Restricted Stock Plan) as part of
a program to provide compensation we felt was necessary to attract, retain and
reward members of our Board of Directors who were willing to provide the time
and energy that we believe is required to meet our business goals. At the end of
fiscal 2007, the Board changed the Director Compensation such that were is no
longer a stock award component. Since the sole purpose of the Director
Restricted Stock Plan was to provide stock awards to the Directors, this plan
will no longer be used. Consequently, there were no shares awarded in the fiscal
2009 under the Director Restricted Stock Plan and there is a balance of 3,862
shares available at April 30, 2009.

42

---

Indemnification of Officer and
Directors

Unifys Restated Certificate of
Incorporation (the Certificate) limits the liability of our directors to the
maximum extent permitted by Delaware law. Delaware law provides that a
corporations certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director for monetary damages for breach
of their fiduciary duties as directors, except for liability for (i) any breach
of their duty of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the Delaware General
Corporation Law, or (iv) any transactions from which the director derived an
improper personal benefit. Our bylaws call for us to indemnify our directors,
executive officers, and trustees to the fullest extent permitted by law. We
believe that such indemnification covers negligence and gross negligence. Our
bylaws also permit us to secure insurance on behalf of any executive officer,
director, employee or other agent for any liability arising out of his or her
actions in such capacity (subject to certain exclusions), regardless of whether
the bylaws permit indemnification.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our executive
officers, directors and persons who beneficially own more than ten percent (10%)
of Unifys common stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission (SEC). Such
persons are required by SEC regulations to furnish us with copies of all Section
16(a) reports filed by them.

Based solely upon our review of such
reports furnished to us and written representations from certain reporting
persons, we believe that all filing requirements applicable to our executive
officers, directors and more than ten percent (10%) stockholders for the fiscal
year ended April 30, 2009, were met.

43

---

STOCK OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT

The
following table sets forth certain information as of April 30, 2009 with respect
to the beneficial ownership of our common stock by: (i) each member of our board
of directors; (ii) each of our named executives; (iii) all of our directors and
executive officers as a group; and (iv) each stockholder who is known to us to
own beneficially more than 5% of our outstanding common stock. The following
beneficial ownership table assumes full conversion of the convertible term notes
resulting from the debt financing in conjunction with the acquisition of Gupta.

|                                                                        |  | Shares Owned (1)
|----------------------------------------------------------------------- |  | ----------------
|                                                                        |  | Number
      of 
|Name of Beneficial Owner                                                |  | Shares          
|Directors                                                               |  |                 
|Steven D. Whiteman
    (2)                                              |  | 51,731          
|Tery R.
      Larrew (3)                                                |  | 52,581          
|Robert J.
      Majteles (4)                                            |  | 14,094          
|Richard M.
      Brooks (5)                                             |  | 16,783          
|Robert
      Bozeman (6)                                                |  | 8,083           
|                                                                       
|Executive Officers                                                      |  |                 
|Todd E. Wille
      (7)                                                 |  | 278,749         
|Steven D.
      Bonham (8)                                              |  | 70,733          
|Kevin R. Kane
      (9)                                                 |  | 48,020          
|Mark Bygraves
      (10)                                                |  | 47,811          
|Frank Verardi
      (11)                                                |  | 71,326          
|Duane George
      (12)                                                 |  | 53,162          
|All Directors
      and Executive Officers as a group (11 persons) (13) |  | 713,073         
|                                                                       
|5% Stockholders                                                         |  |                 
|AWM Investment
      Company, Inc. (14)                                 |  | 2,787,550       
|c/o Special
      Situations Funds                                      |  |                 
|153 East 53rd
      St., 55th Floor                                     |  |                 
|New York, NY
      10022-4611                                           |  |                 
|                                                                       
|Diker Management LLC (15)                                               |  | 692,700         
|745 Fifth
      Avenue, Suite 1409                                      |  |                 
|New York, NY
      10151                                                |  |                 
|                                                                       
|Sophrosyne Technology Fund Ltd (16)                                     |  | 430,477         
|Queensgate
      House, South Church Street, P.O. Box 12349T            |  |                 
|Grand
      Cayman                                                      |  |                 

*Less than 1%

44

---

|(1)  |  | Number of shares beneficially
      owned and the percentage of shares beneficially owned are based on
      7,496,705 shares of the Companys common stock outstanding as of April 30,
      2009. Beneficial ownership is determined in accordance with the rules of
      the Securities and Exchange Commission. In computing the number of shares
      beneficially owned by a person and the percentage ownership of that
      person, shares of common stock subject to options or warrants held by that
      person that are currently exercisable, or will become exercisable within
      60 days of April 30, 2009, are deemed outstanding. Such shares, however,
      are not deemed outstanding for purposes of computing the percentage
      ownership of any other person. Except as indicated in the footnotes to
      this table, the persons named in the table have sole voting and investment
      power with respect to all shares of common stock shown as beneficially
      owned by them, subject to community property laws where applicable. Unless
      otherwise indicated, the individuals in the table may be contacted in care
      of Unify Corporation, 1420 Rocky Ridge Drive, Suite 380, Roseville, CA
      95661.
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|(2)  |  | Includes 27,083 shares subject to
      options held by Mr. Whiteman exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(3)  |  | Includes 20,083 shares subject to
      options held by Mr. Larrew exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(4)  |  | Includes 8,083 shares subject to
      options held by Mr. Majteles exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|(5)  |  | Includes 13,083 shares subject to
      options held by Mr. Brooks exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(6)  |  | Includes 8,083 shares subject to
      options held by Mr. Bozeman exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(7)  |  | Includes 180,770 shares subject
      to options held by Mr. Wille exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(8)  |  | Includes 62,733 shares subject to
      options held by Mr. Bonham exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(9)  |  | Includes 48,020 shares subject to
      options held by Mr. Kane exercisable within 60 days of May 31,
    2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(10) |  | Includes 47,811 shares subject to
      options held by Mr. Bygraves exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(11) |  | Includes 39,937 shares subject to
      options held by Mr. Verardi exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    
|(12) |  | Includes 50,728 shares subject to
      options held by Mr. George exercisable within 60 days of May 31,
      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(13) |  | Includes 506,414 shares subject
      to options and exercisable within 60 days of May 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(14) |  | AWM Investment Company, Inc. is a
      hedge fund management firm based in New York. The firm is owned by David
      Greenhouse and Austin Marxe. They manage the Special Situations Fund III,
      L.P., Special Situations Cayman Fund L.P., Special Situations Private
      Equity Fund, L.P., and Special Situations Tech. Fund, L.P.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    
|(15) |  | Diker Management, LLC is a
      Registered Investment Advisor of certain managed accounts and investment
      funds.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(16) |  | Sophrosyne Technology Fund Ltd.
      is a Cayman Island corporation and is engaged primarily in investments in
      securities of companies that are beneficiaries of technological
      change.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

45

---

ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Amounts
Due from Officers, Directors and Principal Stockholders.Except for advances of reimbursable expenses we have made no
other loans to executive officers, directors, stockholders or other affiliates.
Any such loan must be approved by a majority of those board members who are
independent of and have no interest in the transaction.

Upon
consummation of Unifys 2004 equity financing, the investors affiliated with
Special Situations Funds (SSF) exercised their right to designate a director
nominee and designated Robert J. Majteles to serve as a member of our Board of
Directors. Mr. Majteles joined the Board of Directors in 2004. Mr. Majteles is
the founder of Treehouse Capital, LLC, an investment firm. SSF has entered into
an agreement with Mr. Majteles and Treehouse Capital pursuant to which Treehouse
Capital, through Mr. Majteles, provides certain management and financial
advisory services for the funds on request. If Mr. Majteles services are
requested by the funds with respect to a particular portfolio investment,
Treehouse Capital is entitled to ten percent of the funds net gain (as defined)
or net loss (as defined) on the investment during the term of the agreement,
offset by certain fees that may be paid by the portfolio company to Treehouse
Capital or Mr. Majteles directly. Under the agreement, Mr. Majteles is required
to act independently of the funds in discharging his fiduciary duties to
stockholders of any company for which he serves as a member of the Board of
Directors and also is obligated not to disclose to the funds or use for his own
benefit any confidential information he obtains in connection with his service
for a particular portfolio company. Mr. Majteles does not have or share voting
or dispositive power over any securities held by the funds. Mr. Majteles has
agreed to serve as a member of Unifys Board of Directors pursuant to this
agreement.

Director
Independence.Five of our six directors are
independent under the rules of the NASDAQ Marketplace. Only our CEO, Mr. Wille,
is not considered independent under such rules.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND
SERVICES

Audit Fees

Fees billed
by our principal accountant, Grant Thornton LLP, for fiscal 2009 and fiscal 2008
audit services totaled approximately $250,000 and $249,000, respectively. This
includes fees associated with the annual audit, review of the Companys
quarterly reports on Form 10-Q and the statutory audit required for our French
subsidiary.

Audit-Related Fees

Audit-related service fees billed by Grant Thornton for fiscal 2009 and
fiscal 2008 were approximately $9,000 and $34,000, respectively. The fiscal fees
primarily related to registration statements and other filings required to be
filed with the SEC.

Other Fees

Our principal accountant, Grant
Thornton LLP, had no other fees for fiscal year 2009 and fiscal year 2008.

Pre-Approval Policies and Procedures

The Audit
Committee has adopted a policy that requires advance approval of all audit,
audit-related, tax services, and other services performed by the independent
auditor. The policy provides for pre-approval by the Audit Committee of
specifically defined audit and non-audit services. Unless the specific service
has been pre-approved with respect to that year, the Audit Committee must
approve the permitted service before the independent auditor is engaged to
perform it.

46

---

PART IV

ITEM 15. EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES

(a)The following documents are filed as part of
this Annual Report on Form 10-K:

*1.*Consolidated Financial Statements

|                                                                                                           | Page  
|---------------------------------------------------------------------------------------------------------- | ------
|                                                                                                           | Number
|Report
      of Grant Thornton LLP, Independent Registered Public Accounting
      Firm                    | 50    
|Consolidated Balance
      Sheets as of April 30, 2009 and 2008                                            | 51    
|Consolidated Statements of Operations for the years ended April 30,
      2009, 2008, 2007                 | 52    
|Consolidated Statements
      of Stockholders Equity for the years ended April 30, 2009, 2008,
      2007 | 53    
|Consolidated Statements of Cash Flows for the years ended April 30,
      2009, 2008, 2007                 | 54    
|Notes to Consolidated
      Financial Statements                                                           | 55    

Schedules are omitted
because they are not applicable, or the required information is shown in the
Consolidated Financial Statements or Notes thereto.

*2. Exhibits*See Item 15(b) below.

(b)Exhibits

|Exhibit |  |                                                                                                                                                                                                           
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |  | Description                                                                                                                                                                                               
|2.1     |  | Agreement and Plan of Merger, dated April 16, 2009, by and among
      Unify, UCAC, Inc., a Delaware corporation and wholly owned subsidiary of
      Unify, and AXS-One Inc., a Delaware corporation (7).
|        |  |                                                                                                                                                                                                           
|3.1     |  | Restated Certificate of Incorporation of the Company
  (1).                                                                                                                                               
|        |  |                                                                                                                                                                                                           
|3.2     |  | Amendment to Restated Certificate of Incorporation of the
      Company (6).                                                                                                                              
|        |  |                                                                                                                                                                                                           
|3.3     |  | Bylaws
      of the Registrant (1).                                                                                                                                                                       
|        |  |                                                                                                                                                                                                           
|4.1     |  | Form of
      Stock Certificate (1).                                                                                                                                                                      
|        |  |                                                                                                                                                                                                           
|4.2     |  | Revolving Credit and Term Note Agreement by and between ComVest and
      Unify, dated November 20, 2006 (5).                                                                                             
|        |  |                                                                                                                                                                                                           
|4.3     |  | Convertible Term Note  Tranche 1 (6).                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|4.4     |  | Convertible Term Note  Tranche 2 (6).                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|4.5     |  | Convertible Term Note  Tranche 3 (6).                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|4.6     |  | Registration Rights Agreement dated November 20, 2006
  (5).                                                                                                                                              
|        |  |                                                                                                                                                                                                           
|4.7     |  | Form of
      2006 Warrants (6).                                                                                                                                                                          
|       
|4.8     |  | Special
      Situations Stock Purchase Agreement dated April 23, 2004 (4).                                                                                                                               
|        |  |                                                                                                                                                                                                           
|4.9     |  | Special
      Situations Registration Rights Agreement dated April 23, 2004
    (4).                                                                                                                      

47

---

|4.10   |  | Form of
      2004 Warrants (6).                                                                                                                                                                          
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |  |                                                                                                                                                                                                           
|4.11** |  | Form of
      2009 Warrants.                                                                                                                                                                              
|       |  |                                                                                                                                                                                                           
|10.1*  |  | 1991
      Stock Option Plan, as amended (1).                                                                                                                                                             
|       |  |                                                                                                                                                                                                           
|10.2*  |  | 2001
      Stock Option Plan (3).                                                                                                                                                                         
|       |  |                                                                                                                                                                                                           
|10.3*  |  | Employment Agreement by and between Todd Wille and the Registrant
      dated December 29, 2000 (2).                                                                                                      
|       |  |                                                                                                                                                                                                           
|10.4   |  | Note
      Exchange Agreement, dated April 16, 2009, between and among Unify and
      holders of certain convertible notes of AXS-One Inc., a Delaware
      corporation (7).                            
|       |  |                                                                                                                                                                                                           
|10.5** |  | Form of
      Indemnification Agreement.                                                                                                                                                                  
|       |  |                                                                                                                                                                                                           
|10.6** |  | Office
      Building Lease for Roseville, California facility, dated November 1, 2007,
      and amended November 21, 2007.                                                                              
|       |  |                                                                                                                                                                                                           
|14     |  | Code of
      Ethics for Senior Officers (4).                                                                                                                                                             
|       |  |                                                                                                                                                                                                           
|21.1   |  | Subsidiaries of the Registrant.                                                                                                                                                                           
|       |  |                                                                                                                                                                                                           
|23.1   |  | Consent
      of Grant Thornton LLP, Independent Registered Public Accounting
      Firm.                                                                                                                 
|       |  |                                                                                                                                                                                                           
|31.1   |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
      or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002. 
|       |  |                                                                                                                                                                                                           
|31.2   |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
      or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002. 
|       |  |                                                                                                                                                                                                           
|32.1   |  | Certification of Todd E. Wille, Chief Executive Officer of Unify
      Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.        
|       |  |                                                                                                                                                                                                           
|32.2   |  | Certification of Steven D. Bonham, Chief Financial Officer of Unify
      Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.     
|       |  |                                                                                                                                                                                                           
|(1)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form S-1 Registration Statement (No. 333-3834) declared effective by the
      Securities and Exchange Commission on June 14, 1996.
|       |  |                                                                                                                                                                                                           
|(2)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-K on July 30, 2001.                                                                                                        
|       |  |                                                                                                                                                                                                           
|(3)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-Q on March 14, 2002.                                                                                                       
|       |  |                                                                                                                                                                                                           
|(4)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-K on July 21, 2004.                                                                                                        
|      
|(5)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form 8-K on November 29, 2006.                                                                                                     
|       |  |                                                                                                                                                                                                           
|(6)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-K/A on December 18, 2007.                                                                                                  
|       |  |                                                                                                                                                                                                           
|(7)    |  | Incorporated by reference to the exhibit filed with Registrants
      Form 8-K on April 20, 2009.                                                                                                        
|       |  |                                                                                                                                                                                                           
|*      |  | Exhibit
      pertains to a management contract or compensatory plan or
      arrangement.                                                                                                                
|       |  |                                                                                                                                                                                                           
|**     |  | Filed
      herewith.                                                                                                                                                                                     

48

---

SIGNATURES

Pursuant to the
requirements of Section 13 or 15(d) 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.

|                           | UNIFY CORPORATION
|-------------------------- | -----------------
|                           |                  
|                           | By:              
|                           |                  
|                           |                  
|                          
|Dated: July 21,
      2009 |                  

Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed
by the following persons on behalf of the Registrant and in the capacities on
the dates indicated.

|/s/ TODDE. WILLE           |  | President and Chief
      Executive Officer        |  | June 30,
      2009
|-------------------------- |  | -------------------------------------------------- |  | -------------------
|Todd E.
      Wille        |  | (Principal Executive
      Officer)                |  |                    
|                          
|/s/ STEVEND. BONHAM        |  | Vice President and Chief
      Financial Officer   |  | June 30,
      2009
|Steven D.
      Bonham     |  | (Principal Financial and
      Accounting Officer) |  |                    
|                          
|/s/ STEVEND. WHITEMAN      |  | Director and Chairman of
      the Board           |  | June 30,
      2009
|Steven D.
      Whiteman   |  |                                                    |  |                    
|                          
|/S/
      ROBERTM. BOZEMAN |  | Director                                           |  | June 30,
      2009
|Robert M.
      Bozeman    |  |                                                    |  |                    
|                          
|/s/ RICHARDM. BROOKS       |  | Director                                           |  | June 30,
      2009
|Richard M.
      Brooks    |  |                                                    |  |                    
|                          
|/s/ TERYR. LARREW          |  | Director                                           |  | June 30,
      2009
|Tery R.
      Larrew       |  |                                                    |  |                    
|                          
|/s/ ROBERTJ. MAJTELES      |  | Director                                           |  | June 30,
      2009
|Robert J.
      Majteles   |  |                                                    |  |                    

49

---

Report of Independent Registered
Public Accountants

Board of Directors and
ShareholdersUnify Corporation

We have audited the accompanying
consolidated balance sheets of Unify Corporation (a Delaware corporation) and
subsidiaries as of April 30, 2009 and 2008, and the related statements of
operations, stockholders equity, and cash flows for each of the three years in
the period ended April 30, 2009. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we engaged to
perform an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Companys internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the
financial position of Unify Corporation as of April 30, 2009 and 2008, and the
results of their operations and their cash flows for each of the three years in
the period ended April 30, 2009 in conformity with accounting principles
generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Reno, NevadaJuly 16, 2009

50

---

UNIFY CORPORATIONCONSOLIDATED BALANCE
SHEETS(In thousands, except per share
data)

|                                                                                |  | April
      30, |         | April
      30,
|------------------------------------------------------------------------------- |  | --------------- | ------- | ---------------
|                                                                                |  | 2009            |         | 2008           
|ASSETS                                                                          |  |                 |         |                
|Current assets:                                                                 |  |                 |         |                
|Cash and cash equivalents                                                       |  | $               | 6,147   |                
|Accounts receivable, net of allowances of $183 in 2009, and $169 in
      2008  |  |                 | 4,501   |                
|Accounts receivable-related party                                               |  |                 | -       |                
|Prepaid
      expenses and other current assets                                 |  |                 | 717     |                
|Total current assets                                                            |  |                 | 11,365  |                
|                                                                               
|Property
      and equipment, net                                               |  |                 | 472     |                
|Goodwill                                                                        |  |                 | 6,425   |                
|Intangibles, net                                                                |  |                 | 2,720   |                
|Other assets, net of
      allowances of $80 in 2009, and $96 in 2008           |  |                 | 99      |                
|Total assets                                                                    |  | $               | 21,081  |                
|                                                                               
|LIABILITIES AND STOCKHOLDERS' EQUITY                                            |  |                 |         |                
|Current liabilities:                                                            |  |                 |         |                
|Accounts payable                                                                |  | $               | 685     |                
|Current portion of long term debt                                               |  |                 | 1,663   |                
|Accrued compensation and related expenses                                       |  |                 | 1,178   |                
|Other accrued liabilities                                                       |  |                 | 905     |                
|Deferred revenue                                                                |  |                 | 5,617   |                
|Total current liabilities                                                       |  |                 | 10,048  |                
|                                                                               
|Long term
      debt, net of current portion                                    |  |                 | 837     |                
|Other long term
      liabilities                                               |  |                 | 893     |                
|                                                                               
|Commitments
      and contingencies                                             |  |                 | -       |                
|                                                                               
|Stockholders equity:                                                           |  |                 |         |                
|Preferred stock, $0.001 par value; 7,931,370 shares authorized; no
      shares |  |                 | -       |                
|issued or outstanding                                                           |  |                 |         |                
|Common stock, $0.001 par value; 40,000,000 shares
      authorized, 7,476,705   |  |                 | 7       |                
|and 6,980,749 shares outstanding in 2009 and
      2008                         |  |                 |         |                
|Additional paid-in capital                                                      |  |                 | 69,941  |                
|Accumulated other comprehensive income
      (loss)                             |  |                 | (113    | )              
|Accumulated deficit                                                             |  |                 | (60,532 | )              
|Total stockholders equity                                                      |  |                 | 9,303   |                
|Total liabilities and stockholders equity                                      |  | $               | 21,081  |                

See accompanying
notes.

51

---

UNIFY
CORPORATIONCONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share data)

|                                                            |  | Years Ended April 30,
|----------------------------------------------------------- |  | ---------------------
|                                                            |  | 2009                 
|Revenues:                                                   |  |                      
|Software licenses                                           |  | $                    
|Services                                                    |  |                      
|Migration solutions                                         |  |                      
|Total revenues                                              |  |                      
|                                                           
|Cost of Revenues:                                           |  |                      
|Software licenses                                           |  |                      
|Services                                                    |  |                      
|Migration solutions                                         |  |                      
|Total cost of revenues                                      |  |                      
|Gross
      profit                                          |  |                      
|                                                           
|Operating Expenses:                                         |  |                      
|Product development                                         |  |                      
|Selling, general and administrative                         |  |                      
|Total operating expenses                                    |  |                      
|Income (loss) from operations                               |  |                      
|Interest
      expense                                      |  |                      
|Other income (expense), net                                 |  |                      
|Income (loss) from continuing operations before incometaxes |  |                      
|Provision for income taxes                                  |  |                      
|Income (loss) from continuing operations                    |  |                      
|Loss from discontinued operations                           |  |                      
|Net income
      (loss)                                     |  | $                    
|                                                           
|Net income (loss) per share:                                |  |                      
|Basic earnings per share:                                   |  |                      
|Continuing operations                                       |  | $                    
|Discontinued operations                                     |  |                      
|Net
      income (loss) per share                           |  | $                    
|                                                           
|Dilutive earnings per share:                                |  |                      
|Continuing operations                                       |  | $                    
|Discontinued operations                                     |  |                      
|Net income (loss) per share                                 |  | $                    
|Shares used in computing net income (loss) per share:       |  |                      
|Basic                                                       |  |                      
|Diluted                                                     |  |                      

**See accompanying
notes.**

52

---

UNIFY
CORPORATIONCONSOLIDATED STATEMENTS OF
STOCKHOLDERS EQUITY(In thousands, except share data)

|                                                          |  |              |  |         |   |               |            |               | Accumulated |               |      |        |       |        |              
|--------------------------------------------------------- |  | ------------ |  | ------- | - | ------------- | ---------- | ------------- | ----------- | ------------- | ---- | ------ | ----- | ------ | -------------
|                                                          |  |              |  |         |   |               | Additional |               | Other       |               |      |        | Total |        | Comprehensive
|                                                          |  | Common Stock |  | Paid-In |   | Comprehensive |            | Accumulated   |             | Stockholders |      | Income
|                                                          |  | Shares       |  | Amount  |   | Capital       |            | Income (loss) |             | Deficit       |      | Equity |       | (Loss)
|Balances at April 30, 2006                                |  | 5,904,721    |  | $       | 6 |               | $          | 63,961        |             | $             | 19   |        |       | $      | (61,750      
|Comprehensive
      loss                                  |  |              |  |         |   |               |            |               |             |               |      |        |       |        |              
|Net loss from continuing operations                       |  |             |  |         |  |               |            |              |             |               |     |        |       |        | (1,361       
|Net loss from
      discontinued operations (as restated) |  |             |  |         |  |               |            |              |             |               |     |        |       |        | (1,445       
|Translation adjustments                                   |  |             |  |         |  |               |            |              |             |               | 26   |        |       |        | 1            
|Total
      comprehensive loss                            |  |              |  |         |   |               |            |               |             |               |      |        |       |        |              
|Issuance of common stock                                  |  |             |  |         |  |               |            | 43            |             |               |     |        |       |        |             
|Exercise of
      stock options                           |  | 85,080       |  |         |  |               |            | 152           |             |               |     |        |       |        |             
|Fair value of warrants issued                             |  |             |  |         |  |               |            | 743           |             |               |     |        |       |        |             
|Stock-based
      compensation                            |  | 39,400       |  |         |  |               |            | 74            |             |               |     |        |       |        |             
|Balances at April 30, 2007 (as restated)                  |  | 6,029,201    |  |         | 6 |               |            | 64,973        |             |               | 45   |        |       |        | (64,555      
|Comprehensive
      income                                |  |              |  |         |   |               |            |               |             |               |      |        |       |        |              
|Net income                                                |  |             |  |         |  |               |            |              |             |               |     |        |       |        | 1,631        
|Translation
      adjustments                             |  |             |  |         |  |               |            |              |             |               | 74   |        |       |        | 2            
|Total comprehensive income                                |  |              |  |         |   |               |            |               |             |               |      |        |       |        |              
|Issuance of
      common stock                            |  | 41,108       |  |         |  |               |            | 183           |             |               |     |        |       |        |             
|Exercise of stock options                                 |  | 13,390       |  |         |  |               |            | 23            |             |               |     |        |       |        |             
|Conversion of
      warrants and debt to stock            |  | 897,050      |  |         | 1 |               |            | 2,826         |             |               |     |        |       |        |             
|Stock-based compensation                                  |  |             |  |         |  |               |            | 210           |             |               |     |        |       |        |             
|Balances at
      April 30, 2008                          |  | 6,980,749    |  |         | 7 |               |            | 68,215        |             |               | 119  |        |       |        | (62,922      
|Comprehensive income                                      |  |              |  |         |   |               |            |               |             |               |      |        |       |        |              
|Net
      income                                          |  |             |  |         |  |               |            |              |             |               |     |        |       |        | 2,390        
|Translation adjustments                                   |  |             |  |         |  |               |            |              |             |               | (232 | )      |       |        |             
|Total
      comprehensive loss                            |  |              |  |         |   |               |            |               |             |               |      |        |       |        |              
|Issuance of common stock                                  |  | 20,000       |  |         |  |               |            | 52            |             |               |     |        |       |        |             
|Exercise of
      stock options                           |  | 500          |  |         |  |               |            | 2             |             |               |     |        |       |        |             
|Conversion of warrants to stock                           |  | 475,456      |  |         |  |               |            | 876           |             |               |     |        |       |        |             
|Fair value of
      warrants issued                       |  |             |  |         |  |               |            | 312           |             |               |     |        |       |        |             
|Stock-based compensation                                  |  |             |  |         |  |               |            | 484           |             |               |     |        |       |        |             
|Balances at
      April 30, 2009                          |  | 7,476,705    |  | $       | 7 |               | $          | 69,941        |             | $             | (113 | )      |       | $      | (60,532      

**See accompanying
notes.**

53

---

UNIFY CORPORATIONCONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)

|                                                                                   |  | Twelve Months Ended April 30,
|---------------------------------------------------------------------------------- |  | -----------------------------
|                                                                                   |  | **2009**                     
|Cash flows from operating activities:                                              |  |                              
|Net income (loss)                                                                  |  | $                            
|Loss from discontinued operations                                                  |  |                              
|Income (loss) from continuing operations                                           |  |                              
|Reconciliation of income (loss) to net cash
      provided by continuing operating |  |                              
|activities:                                                                        |  |                              
|Depreciation                                                                       |  |                              
|Gain on disposal of other investments                                              |  |                              
|Amortization of intangible assets                                                  |  |                              
|Fulfillment of support obligations                                                 |  |                              
|Amortization of discount on notes payable                                          |  |                              
|Stock based compensation expense                                                   |  |                              
|Changes in operating assets and liabilities:                                       |  |                              
|Accounts receivable                                                                |  |                              
|Prepaid expenses and other current assets                                          |  |                              
|Other long term assets                                                             |  |                              
|Accounts payable                                                                   |  |                              
|Accrued compensation and related expenses                                          |  |                              
|Accrued acquisition costs                                                          |  |                              
|Other accrued liabilities                                                          |  |                              
|Deferred revenue                                                                   |  |                              
|Net cash provided by continuing operating activities                               |  |                              
|Cash flows from
      investing activities:                                        |  |                              
|Acquisition, net of cash acquired                                                  |  | $                            
|Purchases of property and equipment                                                |  |                              
|Proceeds from sale of property and
      equipment                                 |  |                              
|Payments on acquisitions                                                           |  |                              
|Proceeds from sale of other investments                                            |  |                              
|Net cash used in
      investing activities of continuing operations               |  |                              
|Cash flows from financing activities:                                              |  |                              
|Short term borrowings, net                                                         |  |                              
|Proceeds from issuance of common stock                                             |  |                              
|Proceeds from exercise of warrants                                                 |  |                              
|Borrowings under debt obligations                                                  |  |                              
|Principal payments under debt obligations                                          |  |                              
|Net cash provided by (used in) financing activities of continuing
      operations |  |                              
|Effect of
      exchange rate changes on cash                                      |  |                              
|Cash flows of discontinued operations:                                             |  |                              
|Net cash used in operating activities                                              |  |                              
|Net increase in cash and cash equivalents                                          |  |                              
|Cash and cash
      equivalents, beginning of year                                 |  |                              
|Cash and cash equivalents, end of year                                             |  | $                            
|Supplemental
      cash flow information for continuing operations:                |  |                              
|Cash paid during the year for interest                                             |  | $                            
|Cash paid during the year for income taxes                                         |  | $                            
|Supplemental non-cash financing activities:                                        |  |                              
|Warrants issued in conjunction with the issuance of long
      term debt           |  | $                            
|Warrants converted into common stock                                               |  | $                            
|Debt converted into common stock                                                   |  | $                            

See accompanying
notes.

54

---

UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTSApril 30, 2009(Tables in thousands of dollars, except share and per share data, unless otherwise indicated)

Note 1. The Company and Summary of
Significant Accounting Policies

The Company

Unify (the
Company, we, us or our) is a global provider of application
modernization, data management and application development solutions. Our
migration solutions, development software and embedded databases allow customers
to modernize and maximize their application environment. Our award-winning
technologies help organizations drive business optimization, improve
collaboration, increase customer service and reduce costs. Unifys strategy is
to help businesses modernize mission-critical legacy applications and data.
Based on market requirements for application modernization, our solutions help
companies increase speed and agility, improve asset reuse, lower IT costs,
reduce business risks and exposures, and free information previously locked
within proprietary systems.

Basis of Presentation

The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries including Unify Corporation France
S.A., Gupta Technologies, LLC, Gupta Technologies Ltd., Gupta Technologies GmbH,
Active Data Corporation, Unify Acquisition Corp. and CipherSoft Inc. All
significant intercompany balances and transactions have been
eliminated.

The
functional currency of the Companys foreign subsidiaries is their local
currency. Assets and liabilities denominated in foreign currencies are
translated into U.S. dollars at period-end exchange rates. Income and expense
accounts are translated at average rates of exchange in effect during the
reporting period. Foreign currency transaction gains or losses are included in
other income, net. Foreign currency adjustments resulting from the translation
process are excluded from net income and recorded in other comprehensive income.
At April 30, 2009, the Company had $2,992,000 in foreign bank
accounts.

The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America.

Use of Estimates

The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Significant estimates include the
assessment of the valuation of goodwill and other intangible assets, valuation
allowance for deferred taxes and the allowance for doubtful accounts for
accounts receivable, long-term receivables, revenue recognition and notes
receivable. Actual results could differ from these estimates.

Cash Equivalents

Cash
equivalents are highly liquid investments with original maturities of three
months or less when purchased and are stated at cost. Cash equivalents consist
primarily of demand deposits with banks and money market funds.

Fair Value of Financial
Instruments

The carrying
amounts of cash and cash equivalents, accounts receivable and accounts payable
approximate fair value because of the short-term maturity of these instruments.
The carrying amounts of long term accounts receivable approximate fair value
based on the collection analysis performed and recording of necessary reserves.
The fair values of the Company's long term borrowings are estimated based on the
Company's current incremental borrowing rates for similar types of borrowing
arrangements and such values approximate the carrying value of the borrowings as
of fiscal year end.

55

---

UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Concentrations of Credit Risk and
Credit Evaluations

Financial
instruments potentially subjecting the Company to concentrations of credit risk
consist primarily of cash, cash equivalents and accounts receivable. The Company
places its cash and cash equivalents primarily with four financial institutions
which at times may exceed federal issued levels. The Company licenses its
products principally to companies in the United States, Europe, Latin America
and Japan. No single customer accounted for 10% or more of consolidated revenue
in the years ended April 30, 2009 and 2007. One single customer accounted for
12% of consolidated revenues in the year ended April 30, 2008. The Company
performs periodic credit evaluations of its customers and generally does not
require collateral. Allowances are maintained for potential credit losses.
International revenues include all our software license and service revenues
from customers located outside North America. International revenues accounted
for 68%, 78% and 73% of total revenues in fiscal years 2009, 2008 and 2007,
respectively.

Allowance for Doubtful
Accounts

An allowance for doubtful accounts
is established to ensure trade receivables are not overstated due to
uncollectability. Bad-debt reserves are maintained for all customers based on a
variety of factors, including the length of time receivables are past due,
significant one-time events and historical experience. Additional reserves for
individual accounts are recorded when the Company becomes aware of a customers
inability to meet its financial obligations, such as in the case of bankruptcy
filings or deterioration in the customers operating results or financial
position. If circumstances related to customers change, estimates of the
recoverability of receivables would be further adjusted. Following is a schedule
that details activity for the allowance for doubtful accounts and the allowance
for long-term accounts and notes receivable.

|                                            |  |                |     | Charges      |     |             |  |                 
|------------------------------------------- |  | -------------- | --- | ------------ | --- | ----------- |  | ----------------
|                                            |  | Balance at     |     | (Credits) to |     |             |  | Balance
      at
|                                            |  | Beginning      |     | Operating    |     | Write-offs  |  | End
      of    
|                                            |  | of Year        |     | Expenses     |     | of Accounts |  | Year            
|                                            |  | (In thousands)
|Allowance for doubtful accounts receivable: |  |                |     |              |     |             |  |                 
|Year ended April
      30, 2007             |  | $              | 48  |              | 204 |             |  | (59             
|Year ended April 30, 2008                   |  |                | 193 |              | 15  |             |  | (39             
|Year ended April
      30, 2009             |  |                | 169 |              | 73  |             |  | (59             
|                                           
|Allowance for long-term accounts            |  |                |     |              |     |             |  |                 
|receivable  reflected in other assets:     |  |                |     |              |     |             |  |                 
|Year ended April 30, 2007                   |  | $              | 246 |              | (33 | )           |  | -               
|Year ended April 30, 2008                   |  |                | 213 |              | 23  |             |  | (140            
|Year ended April 30, 2009                   |  |                | 96  |              | (14 | )           |  | (2              

Property and Equipment

Property and
equipment are stated at cost. Depreciation is recorded on a straight-line basis
over the estimated useful lives of the related assets, generally three to five
years. Leasehold improvements are amortized over the shorter of their estimated
useful lives or the lease term.

Capitalized Software

Under the
criteria set forth in Statement of Financial Accounting Standard (SFAS) No. 86Accounting for the Costs of Computer Software
to be Sold, Leased or Otherwise Marketed,
capitalization of software development costs begins upon the establishment of
technological feasibility of the product. With respect to the Companys software
development process, technological feasibility is established upon completion of
a working model. To date, the Companys products have been released shortly
after reaching technological feasibility. Therefore, development costs incurred
after completion of a working model and prior to general release have not been
significant. Accordingly, no software development costs have been capitalized by
the Company to date.

56

---

UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Long-Lived Assets

The Company
evaluates its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of such assets or intangibles
may be in excess of fair value or not recoverable. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the
assets.

The Company
periodically reevaluates the original assumptions and rationale utilized in the
establishment of the carrying value and estimated useful lives of the long-lived
assets. The criteria used for these evaluations include managements estimate of
the assets continuing ability to generate income from operations and positive
cash flows in future periods.

Goodwill

Goodwill is
the excess of cost of an acquired entity over the amounts assigned to assets
acquired and liabilities assumed in a business combination. Goodwill is not
amortized. Goodwill is tested for impairment on an annual basis as of April 30,
and between annual tests if indicators of potential impairment exist, using a
fair-value-based approach. No impairment of goodwill has been identified during
any of the periods presented (Note 4).

Intangible Assets

Intangible
assets are amortized using the straight-line method over their estimated period
of benefit. We evaluate the recoverability of intangible assets periodically and
take into account events or circumstances that warrant revised estimates of
useful lives or that indicate that impairment exists. All of our intangible
assets are subject to amortization. No impairments of intangible assets have
been identified during any of the periods (Note 4).

Revenue Recognition

The Company generates revenue from
software license sales and related services, including maintenance and support,
and consulting services. The Company licenses its products to end-user
customers, independent software vendors (ISVs), international distributors and
value-added resellers (VARs). The Companys products are generally sold with a
perpetual license. The Companys contracts with ISVs, VARs and international
distributors do not include special considerations such as rights of return,
stock rotation, price protection, special acceptance or warranty provisions.
With the exception of its migration solutions, the Company recognizes revenue in
accordance with Statement of Position (SOP) 97-2,Software Revenue Recognition. For
migration solutions, the Company recognizes revenue for software licenses sales
in accordance with Statement of Position 81-1,Accounting for Performance of Construction-Type and Certain
Production-Type Contractsand Accounting
Research Bulletin (ARB) 45,Long-Term
Construction Type Contracts. The Company
exercises judgment in connection with the determination of the amount of revenue
to be recognized in each accounting period. The nature of each contractual
arrangement determines how revenues and related costs are recognized.

For software
license arrangements that do not require significant modification or
customization of the underlying software, revenue is recognized when the
software product or service has been shipped or electronically delivered, the
license fees are fixed and determinable, uncertainties regarding customer
acceptance are resolved, collectability is probable and persuasive evidence of
an arrangement exists.

The Company
considers a signed noncancelable license agreement, a customer purchase order, a
customer purchase requisition, or a sales quotation signed by an authorized
purchaser of the customer to be persuasive evidence that an arrangement exists
such that revenue can be recognized.

For migration solution arrangements
that require significant modification or customization of software, revenue is
recognized based on contract accounting under the provisions of Accounting
Research Bulletin (ARB) 45,Long-Term
Construction Type Contractsand Statement of
Position (SOP) 81-1,Accounting for
Performance of Construction-Type and Certain Production-Type
Contracts. For migration solution products
the Company uses the percentage-of-completion method for revenue recognition.
Under the percentage-of-completion method, progress towards completion is
measured by the ratio of labor hours incurred to date over total estimated labor
hours.

57

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

The
Companys customer contracts include multi-element arrangements that include a
delivered element (a software license) and undelivered elements (such as
maintenance and support and/or consulting). The value allocated to theundelivered elements is unbundled from the delivered element based on
vendor-specific objective evidence (VSOE) of the fair value of the maintenance
and support and/or consulting, regardless of any separate prices stated within
the contract. VSOE of fair value is defined as: (i) the price charged when the
same element is sold separately, or (ii) if the element has not yet been sold
separately, the price for the element established by management having the
relevant authority when it is probable that the price will not change before the
introduction of the element into the marketplace. The Company then allocates the
remaining balance to the delivered element (a software license) regardless of
any separate prices stated within the contract using the residual method as the
fair value of all undelivered elements is determinable.

We defer
revenue for any undelivered elements, and recognize revenue for delivered
elements only when the fair values of undelivered elements are known,
uncertainties regarding customer acceptance are resolved, and there are no
customer-negotiated refund or return rights affecting the revenue recognized for
delivered elements. If we cannot objectively determine the fair value of any
undelivered element included in bundled software and service arrangements, we
defer revenue until all elements are delivered and services have been performed,
or until fair value can objectively be determined for any remaining undelivered
elements.

An
assessment of the ability of the Companys customers to pay is another
consideration that affects revenue recognition. In some cases, the Company sells
to undercapitalized customers. In those circumstances, revenue recognition is
deferred until cash is received, the customer has established a history of
making timely payments or the customers financial condition has improved.
Furthermore, once revenue has been recognized, the Company evaluates the related
accounts receivable balance at each period end for amounts that we believe may
no longer be collectible. This evaluation is largely done based on a review of
the financial condition via credit agencies and historical experience with the
customer. Any deterioration in credit worthiness of a customer may impact the
Companys evaluation of accounts receivable in any given period.

Revenue from
support and maintenance activities, which consist of fees for ongoing support
and unspecified product updates, are recognized ratably over the term of the
maintenance contract, typically one year, and the associated costs are expensed
as incurred. Consulting service arrangements are performed on a best efforts
basis and are billed under either time-and-materials or fixed price
arrangements. Revenues and expenses relating to providing consulting services
are recognized as the services are performed.

Warranties and Indemnification

The Company
offers a limited warranty for product and service sales that generally provide
the customer a sixty-day warranty period against defects. To date, the Company
has not incurred any material costs as a result of such warranties and has not
accrued any liabilities related to such obligations in the accompanying
consolidated financial statements.

The
Companys license agreements generally include certain provisions for
indemnifying customers against liabilities if its product or services infringe
upon a third-partys intellectual property rights. To date, the Company has not
incurred any material costs as a result of such indemnifications and has not
accrued any liabilities related to such obligations in the accompanying
consolidated financial statements.

58

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Stock-Based Compensation

Effective
May 1, 2006, the Company adopted the provisions of SFAS No. 123(R),Share-Based Payment, using the modified version of prospective application. Under this
method, compensation expense includes the estimated fair value of equity awards
vested during the reported period. Expense for equity awards vested is
determined based on grant date fair value previously calculated for pro forma
disclosures under SFAS No. 148,Accounting for
Stock-Based CompensationTransition and DisclosureAn Amendment of FASB
Statement No. 123. For the fiscal years ended
April 30, 2009, 2008 and 2007, stock-based compensation expense was comprised of
the following (in thousands):

|                                                             |  | April 30, 2009 |     | April 30, 2008 |   | April 30, 2007
|------------------------------------------------------------ |  | -------------- | --- | -------------- | - | --------------
|Cost of Sales                                                |  | $              | 14  |                | $ | 4             
|Product
      Development                                    |  |                | 75  |                |   | 30            
|Selling, General and Administrative                          |  |                | 395 |                |   | 176           
|Total
      Equity-Based Compensation, Continuing Operations |  |                | 484 |                |   | 210           
|Equity-Based Compensation, Discontinued Operations           |  |                |    |                |   |              
|Total
      Equity-Based Compensation                        |  | $              | 484 |                | $ | 210           

The
following table shows remaining unrecognized compensation expense from
continuing operations on a pre-tax basis related to all types of nonvested
equity awards outstanding as of April 30, 2009. This table does not include an
estimate for future grants that may be issued (amounts in
thousands).

|Fiscal Year Ending April
      30, |  | Amount
|---------------------------------- |  | ------
|2010                               |  | $     
|2011                               |  |       
|2012                               |  |       
|2013                               |  |       
|Total                              |  | $     

The cost above is expected to be
recognized over a weighted-average period of 1.33 years.

The Company continues to use the
Black-Scholes option pricing model to estimate fair value of equity awards,
which requires the input of highly subjective assumptions, including the
expected stock price volatility. The Companys calculations are made using the
Black-Scholes option pricing model, with the following weighted average
assumptions: expected option life, 12 months following vesting; stock
volatility, 90% in fiscal 2009, 104% in fiscal 2008, and 193% in fiscal 2007;
risk-free interest rates, 2.9% in fiscal 2009, 4.2% in fiscal 2008, and 4.7% in
fiscal 2007; and no dividends during the expected term. Not all stock options
that have been granted will be exercised. Accordingly, the Companys calculation
of equity-based compensation expense includes an adjustment for the estimated
number of options that will be forfeited. The Company uses a forfeiture rate of
20%, which is based on historical trends.

A summary of the Companys stock
option activity for the fiscal year ended April 30, 2009 is as
follows:

|                              |  |           |   |       | Weighted |                 | Weighted                |           |          
|----------------------------- |  | --------- | - | ----- | -------- | --------------- | ----------------------- | --------- | ---------
|                              |  |           |   |       | Average  |                 | average
      remaining |           | Aggregate
|                              |  |           |   |       | Exercise |                 | contractual             |           | intrinsic
|                              |  | Shares    |   | Price |          | term (in years) |                         | value (1)
|Outstanding at April 30, 2008 |  | 760,017   |   |       | $        | 3.23            |                         | 7.35      |          
|Granted                       |  | 455,900   |   |       | $        | 5.85            |                         |           |          
|Exercised                     |  | (500      | ) |       | $        | 2.55            |                         |           |          
|Cancelled/expired             |  | (139,613  | ) |       | $        | 6.39            |                         |           |          
|Outstanding at April 30, 2009 |  | 1,075,804 |   |       | $        | 3.93            |                         | 7.22      |          

|(1) |  | Aggregate intrinsic value is
      defined as the difference between the current market value and the
      exercise price and is estimated using the closing price of the Companys
      common stock on the last trading day of the periods ended as of the dates
      indicated.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The total intrinsic value of awards
exercised during the year ended April 30, 2009 and 2008 was $1,975 and $26,566,
respectively. The total fair value of awards vested during the year ended April
30, 2009 and 2008 was $561,190 and $258,297, respectively.

59

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

A summary of the Companys nonvested
stock option activity for the fiscal year ended April 30, 2009 is as
follows:

|                            |  |          |   |       | Weighted
|--------------------------- |  | -------- | - | ----- | --------
|                            |  |          |   |       | Average 
|                            |  |          |   |       | Fair    
|                            |  | Shares   |   | Value
|Nonvested at April 30, 2008 |  | 338,490  |   |       | $       
|Granted                     |  | 455,900  |   |       | $       
|Vested                      |  | (201,850 | ) |       | $       
|Cancelled/expired           |  | (132,076 | ) |       | $       
|Nonvested at April 30, 2009 |  | 460,464  |   |       | $       

Income Taxes

Deferred taxes are recorded for the
difference between the financial statement and tax basis of the Companys assets
and liabilities and net operating loss carryforwards. A valuation allowance is
recorded to reduce deferred tax assets to an amount whose realization is more
likely than not. U.S. income taxes are not provided on the undistributed
earnings of foreign subsidiaries as they are considered to be permanently
reinvested.

Income (loss) Per Share

Statement of
Financial Accounting Standards No. 128,Earnings per Share, requires a dual
presentation of basic and diluted income (loss) per share (EPS). Basic EPS
excludes dilution and is computed by dividing net income attributable to common
stockholders by the weighted average of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock (e.g. convertible preferred
stock, warrants, and common stock options) were exercised or converted into
common stock. Potential common shares in the diluted EPS computation are
excluded for fiscal year 2007 as their effect would be antidilutive.

Comprehensive Income
(loss)

Comprehensive income (loss) includes
net income (loss) and comprehensive income (loss). The Companys components of
other comprehensive income (loss) are gains and losses on foreign currency
translation.

Segment Reporting

The Company sells and markets
application development and database software and services and modernization
solutions through two segments. The segments are the Database and Development
Products (DDP) and our Modernization & Migration Products.

Recently Issued Accounting
Standards

In May 2009,
the FASB issued SFAS No. 165,Subsequent
Events(SFAS 165). This Statement is
intended to establish general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. It requires the disclosure of the date
through which an entity has evaluated subsequent events and the basis for that
date, that is, whether that date represents the date the financial statements
were issued or were available to be issued. This disclosure should alert all
users of financial statements that an entity has not evaluated subsequent events
after that date in the set of financial statements being presented. SFAS 165 is
effective for interim and annual periods ending after June 15, 2009. We are
currently assessing the impact, if any, of SFAS 165 on our consolidated
financial statements.

In September
2006, the FASB issued Statement No. 157,Fair
Value Measurements(SFAS 157). SFAS 157
defines fair value, establishes a framework and gives guidance regarding the
methods used for measuring fair value, and expands disclosures about fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2008, and interim periods within those fiscal
years. We are currently assessing the impact, if any, of SFAS 157 on our
consolidated financial statements.

60

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

In December
2007, the FASB issued SFAS No. 141 (revised),Business Combinations. The standard
changes the accounting for business combinations including the measurement of
acquirer shares issued in consideration for a business combination, the
recognition of contingent consideration, the accounting for pre-acquisition gain
and loss contingencies, the recognition of capitalized in-process research and
development, the accounting for acquisition-related restructuring cost accruals,
the treatment of acquisition related transaction costs and the recognition of
changes in the acquirers income tax valuation allowance. Statement 141(R) is
effective for fiscal years beginning after December 15, 2008, with early
adoption prohibited. We are currently assessing the impact of SFAS 141(R) on our
consolidated financial statements and will account for the acquisition of
AXS-One Inc. under SFAS 141(R). As of April 30, 2009, we have capitalized
$75,000 in acquisition costs that will be expensed in the first quarter of
fiscal 2010 under SFAS 141(R).

In December
2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial
Statements an amendment of ARB No. 5, which
changes the accounting and reporting for minority interests. Minority interests
will be recharacterized as noncontrolling interests and will be reported as a
component of equity separate from the parents equity, and purchases or sales of
equity interests that do not result in a change in control will be accounted for
as equity transactions. In addition, net income attributable to the
noncontrolling interest will be included in net income and, upon a loss of
control, the interest sold, as well as any interest retained, will be recorded
at fair value with any gain or loss recognized in net income. SFAS No. 160 is
effective for us beginning May 1, 2009. We are currently evaluating additional
impacts, if any, of adopting SFAS No. 160 on our consolidated financial
statements.

In March
2008, the FASB issued Statement No. 161,Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement
No. 133. (SFAS No. 161). SFAS No. 161 requires enhanced disclosures about an
entitys derivative instruments and hedging activities with a view toward
improving the transparency of financial reporting, and is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. SFAS No. 161 encourages,
but does not require, comparative disclosures for earlier periods at initial
adoption. We believe that the adoption of SFAS No. 161 will not have a material
impact on our consolidated financial statements.

On May 9,
2008, the FASB issued FASB Staff Position No. APB 14-1(FSP APB 14-1),Accounting for Convertible Debt Instruments
That May Be Settled in Cash Upon Conversion(Including Partial Cash Settlement). FSP APB 14-1 requires issuers of
convertible debt that may be settled wholly or partly in cash when converted to
account for the debt and equity components separately. FSP APB 14-1 is effective
for fiscal years beginning after December 15, 2008 and must be applied
retrospectively to all periods presented. We believe that the adoption of FSP
APB 14-1 will not have a material impact on our consolidated financial
statements.

In April
2008, the FASB issued FASB Staff Position ("FSP") FAS 142-3,"Determination of Useful Life of Intangible Assets"("FSP FAS 142-3"). FSP FAS 142-3 amends the
factors that should be considered in developing the renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under FAS 142, "Goodwill and Other Intangible Assets." FSP FAS 142-3 also
requires expanded disclosure related to the determination of intangible asset
useful lives. FSP FAS 142-3 is effective for fiscal years beginning after
December 15, 2008. Earlier adoption is not permitted. We believe that the
adoption of FSP FAS 142-3 will not have a material impact on our consolidated
financial statements.

In May of
2008, the FASB issued SFAS No. 162,The
Hierarchy of Generally Accepted Accounting Principles.This statement identifies literature established by the FASB
as the source for accounting principles to be applied by entities which prepare
financial statements presented in conformity with generally accepted accounting
principles (GAAP) in the United States. This statement is effective 60 days
following approval by the SEC of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles. This statement will require no
changes in the Companys financial reporting practices.

Reclassifications

Certain items in the fiscal 2008 and
2007 consolidated financial statements have been reclassified to conform to the
fiscal 2009 presentation. These reclassifications had no effect on operating
results or stockholders equity.

61

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

**Note 2. Acquisitions and
Discontinued Operations**

On September 13, 2006, the Company
entered into a Purchase and Exchange Agreement with Halo Technology Holdings
Inc. (Halo) whereby Unify agreed to purchase all of the outstanding stock of
Gupta Technologies LLC (Gupta) from Halo in exchange for: (i) the Companys
Insurance Risk Management (IRM) division, (ii) the Companys ViaMode software,
(iii) $6,100,000 in cash, and (iv) the amount, if any, by which Guptas net
working capital exceeds IRMs net working capital at the close of the
transaction. The Companys acquisition of Gupta was consummated on November 20,
2006. The total purchase price for Gupta was $7.7 million. Gupta was founded in
1984 and is a leading producer of secure, small-footprint, embeddable databases
and enterprise application development tools. The acquisition resulted in
additional revenue and market share in the Companys core markets and
significantly enhanced the distribution channels through which the Companys
products can be sold. Guptas headquarters was in Redwood Shores, California
with offices in Germany and the UK and has distributors and partners in more
than 40 countries around the world. Guptas results of operations are included
in the Companys results from the date of acquisition, November 20, 2006, to
April 30, 2009.

On November 20, 2006, the Company
entered into various agreements with ComVest Capital LLC (ComVest) whereby
ComVest, along with participation from Special Situations Funds, provided debt
financing for the Gupta acquisition. The debt financing consisted of $5.35
million in convertible term notes and a revolver of up to $2.5 million. There
are three tranches that comprise the convertible term notes, Tranche 1 is for
$1,000,000, Tranche 2 is for $3,250,000 and Tranche 3 is for $1,100,000. The
term loans had an initial interest rate of 11.25% and have repayment terms of 48
to 60 months. The agreement was modified in April 2008 whereby the interest rate
on the term loans has been decreased to 5% and all principal payments have been
deferred until June 2009. As part of the debt financing the Company provided the
lenders with 670,000 warrants to purchase common stock. There are 200,000
warrants to purchase common stock at a price of $1.35 per share, 270,000
warrants at a price of $1.60 per share and 200,000 warrants at a price of $1.90
per share. The warrants have an expiration date of October 31, 2012.
Additionally, the holder of the term notes may, at their option, upon written
notice to Unify given at any time and from time to time from the date Unify has
sufficient authorized, unissued and unreserved shares of common stock convert
the outstanding principal and any accrued interest into shares of Unify common
stock. Tranche 1 is convertible at $2.50 per common share and Tranches 2 and 3
are convertible at $5.00 per common share. Unify may require conversion of the
convertible term notes if its common stock price closes at or above 160% of the
applicable conversion price for 20 or more consecutive market days. In October
2007, the outstanding balance for Tranche 1 of $0.9 million was converted into
352,380 shares of common stock. Additionally, in fiscal 2008, $1.6 million of
the outstanding balance of Tranche 2 and $0.5 million of the outstanding balance
of Tranche 3 was converted into 424,670 shares of common stock. The agreement
provides for ComVest to have a security interest in substantially all of the
Companys assets. We capitalized $238,000 of debt issuance costs associated with
the debt financing and also recorded a discount on the notes payable of
approximately $743,000 that is attributed to the warrants that were issued in
conjunction with the financing. The debt issuance costs and the discount on
notes payable are being amortized using the effective interest method over the
stated life of the related notes. The amortization of both the debt issuance
costs and the discount on the notes payable was approximately $77,000 in fiscal
2009 and is included in interest expense. The unamortized amount of the discount
on the notes payable was $29,000 as of April 30, 2009 and is included in
long-term debt, net. As of April 30, 2009 the unamortized portion of debt
issuance costs was $30,000 which is included in other assets, net.

62

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

The Gupta purchase price was
allocated to tangible and intangible assets acquired and liabilities assumed
based on managements determination of their estimated fair values at the
acquisition date, November 20, 2006. The excess of the purchase price over the
fair value of net assets acquired was allocated to goodwill. The Company
believes the fair values assigned to the assets acquired and liabilities assumed
were based on reasonable assumptions. The following table summarizes the fair
values of net assets acquired and represents the opening balance sheet for Gupta
Technologies LLC as of the acquisition date, November 20, 2006 (in
thousands):

|                                           |  | November 20,
|------------------------------------------ |  | ------------
|Gupta Technologies LLC                     |  | 2006        
|Current Assets                             |  | $           
|Property and
      equipment, net          |  |             
|Long Term assets                           |  |             
|Goodwill                                   |  |             
|Intangibles                                |  |             
|Total assets                               |  | $           
|                                          
|Current liabilities                        |  | $           
|Long term
      liabilities                |  |             
|Shareholder's equity                       |  |             
|Total liabilities and shareholders' equity |  | $           

Unaudited Pro Forma Financial
Information

The
unaudited financial information in the table below summarizes the combined
results of the operations of Unify and Gupta, on a pro forma basis, as though
the companies had been combined as of May 1, 2006. The pro forma information
gives effect to the acquisition of Gupta and the sale of both the Companys IRM
division and its ViaMode Product. The pro forma information also assumes the
financing raised in connection with the acquisition took place on May 1,
2006.

The
unaudited pro forma financial information combines the historical results of
Unify for the twelve months ended April 30, 2007.

|                                            |  | Year ended April 30,
|------------------------------------------- |  | --------------------
|(in thousands, except per share
      data) |  | 2007                
|Total revenues                              |  | $                   
|Net
      income                            |  | $                   
|Basic net income per share                  |  | $                   
|Diluted net
      income per share          |  | $                   

The
unaudited pro forma information is not necessarily indicative of the operational
results, or of the financial position that would have occurred if the
acquisition had been consummated on the dates indicated, nor is it necessarily
indicative of future operating results or financial position of the consolidated
enterprise.

Active Data
Corporation

On May 22,
2007, the Company purchased privately held Active Data Corporation (ADC) for
approximately $420,000 plus potential earn-out payments over a two year period
following the acquisition. ADC provided application migration software that
added Microsofts .NET functionality to Unifys Team Developer product and
provided an additional application migration solution for the Company. Pursuant
to the terms of the purchase agreement, Unify acquired all the outstanding stock
of ADC. ADC did not represent the addition of a significant subsidiary as the
investment in ADC was less than 10% of the Companys assets, ADCs total assets
at date of acquisition were less than 10% of Unifys assets and ADCs net loss
represented less than 10% of Unifys net loss. The acquisition of Active Data
did not have a material impact on the financials of Unify and the results of
operations for Active Data Corporation are included in the Companys results
from the date of acquisition. The ADC purchase price was allocated to tangible
and intangible assets acquired and liabilities assumed based on managements
determination of their estimated fair values. The excess of the purchase price
over the fair value of net assets acquired was allocated to goodwill. The
Company believes the fair values assigned to the assets acquired and liabilities
assumed were based on reasonable assumptions.

63

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

CipherSoft Inc.

On
January 30, 2009, the Company purchased privately held CipherSoft Inc.
(CipherSoft), headquartered in Calgary, Canada, for approximately $628,000
plus the assumption of debt of $1,032,000 and future potential royalty payments
to be paid over a four year period following the acquisition. The royalty
payments are based on a percentage of revenue and will increase goodwill upon
being earned. CipherSoft is a leading Oracle partner for modernization and
migration of Oracle applications and provides an additional application
migration solution for the Company. Pursuant to the terms of the purchase
agreement, Unify acquired all the outstanding stock of CipherSoft. CipherSoft
did not represent the addition of a significant subsidiary.

The
CipherSoft purchase price was allocated to tangible and intangible assets
acquired and liabilities assumed based on managements determination of their
estimated fair values at the acquisition date, January 30, 2009. Intangible
assets include technologies of $1,060 million, non-competition agreements of
$85,000, consulting agreements of $110,000 and trade names of $80,000. The
excess of the purchase price over the fair value of net assets acquired was
allocated to goodwill. The Company believes the fair values assigned to the
assets acquired and liabilities assumed were based on reasonable assumptions.
The following table summarizes the fair values of net assets acquired and
represents the opening balance sheet for CipherSoft as of the acquisition date,
January 30, 2009 (in thousands):

|Current
      assets        | $ | 236  
|--------------------------- | - | -----
|Long term assets            |   | 22   
|Goodwill                    |   | 780  
|Intangibles                 |   | 1,335
|Total assets                | $ | 2,373
|                           
|Current
      Liabilities   | $ | 1,099
|Long term
      liabilities |   | 646  
|Total liabilities assumed   | $ | 1,745
|                           
|Total consideration         | $ | 628  

AXS-One Inc.

On April 16, 2009, Unify Corporation, UCAC, Inc., a
Delaware corporation and wholly-owned subsidiary of Unify (Merger Sub) and
AXS-One Inc. (AXS-One), entered into an Agreement and Plan of Merger (the
Agreement), whereby Merger Sub will merge with and into AXS-One and AXS-One
shall become a wholly-owned subsidiary of Unify (the Merger). The Agreement
and the Merger were unanimously approved by the Board of Directors of Unify and
AXS-One. Pursuant to the terms of the Merger Agreement:

- All of the issued and outstanding shares of common stock of
  AXS-One, and all warrants to purchase shares of common stock of AXS-One, will
  be converted into, in the aggregate, 1,000,000 shares of Unify common stock,
  or warrants to purchase shares of Unify common stock, as the case may
  be;
- The outstanding convertible notes of AXS-One with an
  aggregate outstanding principal and interest balance of approximately $13
  million were exchanged for 2,100,000 shares of Unify common stock, subject to
  certain adjustments based on AXS-Ones working capital at the effective time
  of the merger. The note holders may also be issued additional shares of Unify
  common stock based on revenue generated from AXS-Ones products over the 12
  months after the effective date of the Merger.

64

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Both Unify and AXS-One held a special
meeting of their stockholders on June 30, 2009 whereby both groups of
stockholders approved the merger. Since the acquisition of AXS-One commenced on
June 30, 2009, it is impractical to include the additional disclosures as
described in SFAS 141(R).

Discontinued
Operations

In
accordance with SFAS No. 144,Accounting for
the Impairment or Disposal of Long-Lived Assets,the results of the Companys IRM division and ViaMode software product
have been reported as discontinued operations for the year ended April 30, 2007.
The divestitures of these businesses were made pursuant to the Companys
strategy to refocus on its core software development and embedded database
products.

The IRM division sold and marketed the NavRisk application. The NavRisk
application is a policy administration and underwriting software application
used by underwriters, administrators and risk managers of risk pools, risk
retention groups, captives and self-insured entities. ViaMode is a software and
services solution that is used for driver performance management within the
transportation industry. Both IRM and ViaModes historic revenues were the
result of sales solely in North America. The IRM division was previously
reported as a separate segment and ViaMode was included in the Americas segment.
Operating results for the IRM division and ViaMode software product are
summarized as follows (in thousands):

|                                        |  | Year end April 30,
|--------------------------------------- |  | ------------------
|                                        |  | 2009              
|Revenue                                 |  | $                 
|Loss from
      discontinued operations |  | $                 

Note 3. Property and
Equipment

Property and equipment at April 30, 2009
and 2008 consisted of the following (in thousands):

|                                                     |  | 2009 |        | 2008
|---------------------------------------------------- |  | ---- | ------ | ----
|Equipment                                            |  | $    | 1,661  |     
|Furniture and
      leasehold improvements           |  |      | 626    |     
|                                                     |  | $    | 2,287  |     
|Less accumulated
      depreciation and amortization |  |      | (1,815 | )   
|Property and equipment, net                          |  | $    | 472    |     

65

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 4. Goodwill and Intangible
Assets

The following tables present details of the Companys goodwill and
intangible assets as of April 30, 2009 and April 30, 2008 (in thousands). The
April 30, 2008 amounts relate entirely to the purchase of Gupta Technologies
LLC. See Note 2. The April 30, 2009 amounts relates to the purchase of Gupta
Technologies LLC, Active Data Corporation and CipherSoft Inc.

|                      |  | Gross    |        |              |   | Net      |   |            
|--------------------- |  | -------- | ------ | ------------ | - | -------- | - | -----------
|                      |  | carrying |        | Accumulated  |   | carrying |   | Estimated  
|April 30,
      2009  |  | amount   |        | amortization |   | amount   |   | useful life
|Infinite Lives:       |  |          |        |              |   |          |   |            
|Goodwill              |  | $        | 6,425  |              | $ | -        |   |            
|Finite Lives:         |  |          |        |              |   |          |   |            
|Customer - related    |  |          | 1,536  |              |   | (742     | ) |            
|Technology-based      |  |          | 2,395  |              |   | (827     | ) |            
|Trademarks            |  |          | 300    |              |   | (181     | ) |            
|Trade name            |  |          | 180    |              |   | (107     | ) |            
|Non-compete           |  |          | 85     |              |   | (7       | ) |            
|Consulting Agreements |  |          | 110    |              |   | (22      | ) |            
|Total                 |  | $        | 11,031 |              | $ | (1,886   | ) |            
|                     
|                      |  | Gross    |        |              |   |          |   | Net        
|                      |  | carrying |        | Accumulated  |   | carrying |   | Estimated  
|April 30,
      2008  |  | amount   |        | amortization |   | amount   |   | useful life
|Infinite Lives:       |  |          |        |              |   |          |   |            
|Goodwill              |  | $        | 5,643  |              | $ | -        |   |            
|Finite Lives:         |  |          |        |              |   |          |   |            
|Customer - related    |  |          | 1,536  |              |   | (433     | ) |            
|Technology-based      |  |          | 1,338  |              |   | (438     | ) |            
|Trademarks            |  |          | 300    |              |   | (106     | ) |            
|Trade name            |  |          | 100    |              |   | (100     | ) |            
|Total                 |  | $        | 8,917  |              | $ | (1,077   | ) |            

Acquired
finite-lived intangibles are generally amortized on a straight line basis over
their estimated useful life. The useful life of finite-lived intangibles is the
period over which the asset is expected to contribute directly or indirectly to
future cash flows of the Company. Intangible assets amortization expense for
continuing operations for fiscal 2009 was $809,000. Amortization expense for the
fiscal year ended April 30, 2008, was $770,000. The estimated future
amortization expense related to intangible assets as of April 30, 2009, is as
follows (in thousands):

|Fiscal Year Ending April
      30 |  | Amount
|--------------------------------- |  | ------
|2010                              |  | $     
|2011                              |  |       
|2012                              |  |       
|2013                              |  |       
|2014                              |  |       
|Total                             |  | $     

66

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Goodwill at
April 30, 2009, represents the excess of the Gupta, Active Data Corporation and
CipherSoft Inc. purchase prices over the sum of the amounts assigned to assets
acquired less liabilities assumed. The Company believes the acquisition of
Gupta, Active Data Corporation and CipherSoft Inc. will produce the following
results:

- *Increased Market Presence and Opportunities:*The combination of the Company, Gupta, Active Data and CipherSoft
  Inc. should increase the combined companys market presence and opportunities
  for growth in sales andearnings.
- *Enhanced Product Mix:*The complementary
  nature of the Companys products with those of Gupta, Active Data and
  CipherSoft Inc. should benefit current customers of both companies and provide
  the combined company with the ability to access new
  customers.
- *Operating Efficiencies:*The combination
  of the Company, Gupta, Active Data and CipherSoft Inc. provides the
  opportunity for potential economies of scale and cost savings.

The Company
believes these primary factors support the amount of goodwill recognized as a
result of the purchase price for Gupta, Active Data and CipherSoft Inc. Goodwill
is tested for impairment on an annual basis as of April 30, and between annual
tests if indicators of potential impairment exist, using a fair-value-based
approach in accordance with FASB 142,Goodwill
and Other Intangible Assets. Based on our
testing as of April 30, 2009, we do not believe goodwill is impaired and
accordingly have made no adjustments to its carrying value.

Note 5. Credit Facility

On November
20, 2006, the Company entered into a revolving credit note agreement with
ComVest Capital LLC. Under the terms of the agreement the Company can borrow up
to $2.5 million. As of April 30, 2009, there was no amount outstanding on the
revolver. The amount that can be borrowed under the revolver is based on the
amount of eligible foreign and domestic accounts receivable outstanding. The
revolver has an expiration date of November 30, 2010, and the Company incurs
interest expense on funds borrowed at the prevailing prime rate plus 2.25% per
annum (5.5% as of April 30, 2009).

67

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 6. Long-Term Debt

The Companys long-term debt
consists of the following at April 30, 2009 and April 30, 2008 (in
thousands):

|                                                                                       | April 30, |        | April 30,
|-------------------------------------------------------------------------------------- | --------- | ------ | ---------
|                                                                                       | 2009      |        | 2008     
|Convertible notes payable to ComVest Capital LLC, interest rate of
      5%, payable   |           |        |          
|in installments through September 30, 2010. These notes include
      certain negative |           |        |          
|covenants and the Company is in compliance with such
      covenants.                  | $         | 1,400  |          
|                                                                                      
|Revolving note payable to ComVest Capital LLC, interest rate of
      prime plus       |           |        |          
|2.25% and a maturity date of November 30, 2010                                         |           |       |          
|                                                                                      
|Note Payable, interest rate of 5%, payable in equal monthly
      installments through |           |        |          
|April 2011                                                                             |           | 1,032  |          
|                                                                                      
|Capital leases payable, payable in monthly installments through
      September 2011   |           | 97     |          
|                                                                                       |           | 2,529  |          
|Less discount on notes payable, net                                                    |           | (29    | )        
|Less current
      portion                                                             |           | (1,663 | )        
|Total long term debt, net                                                              | $         | 837    |          

A summary future payments on
long-term debt obligations as of April 30, 2009 is as follows (in
thousands):

|Fiscal Year Ending April
      30,          |  | Amount
|------------------------------------------- |  | ------
|2010                                        |  | $     
|2011                                        |  |       
|2012                                        |  |       
|Thereafter                                  |  |       
|                                            |  | $     
|Unamortized
      discount on notes payable |  |       
|Current portion of long term debt           |  |       
|Total long term
      debt, net             |  | $     

Note 7. Other Long Term
Liabilities

In France,
the Company is subject to mandatory employee severance costs associated with a
statutory government regulated plan covering all employees. The plan provides
for one month of severance for the first five years of service with an employer
and one fifth of one year of severance for every one year of service thereafter.
In order to receive their severance payment the employee may not retire before
age 65 and must be employed at the time of retirement. The balance as of April
30, 2009 and 2008 is $81,000 and $121,000, respectively and is reflected as
other long-term liabilities. Also, included in other long term liabilities as of
April 30, 2009 is $541,000 of deferred tax liabilities and $271,000 of deferred
rent related to the Roseville office.

68

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 8. Maintenance
Contracts

The Company
offers maintenance contracts to its customers at the time they enter into a
product license agreement and renew those contracts, at the customers option,
annually thereafter. These maintenance contracts are priced as a percentage of
the value of the related license agreement. The specific terms and conditions of
these initial maintenance contracts and subsequent renewals vary depending upon
the product licensed and the country in which the Company does business.
Generally, maintenance contracts provide the customer with unspecified product
maintenance updates and customer support services. Revenue from maintenance
contracts is initially deferred and then recognized ratably over the term of the
agreements.

Changes in
the Companys deferred maintenance revenue from continuing operations during the
periods are as follows (in thousands):

|                                                            | Year Ended |         | Year Ended |  | Year Ended
|----------------------------------------------------------- | ---------- | ------- | ---------- |  | ----------
|                                                            | April 30,  |         | April 30,  |  | April 30, 
|                                                            | 2009       |         | 2008       |  | 2007      
|Deferred maintenance revenue beginning balance              | $          | 6,130   |            |  | $         
|Deferred
      maintenance revenue recognized during period |            | (11,239 | )          |  |           
|Deferred maintenance revenue of new maintenance contracts   |            | 10,582  |            |  |           
|Deferred
      maintenance revenue ending balance           | $          | 5,473   |            |  | $         

Note 9. Stockholders
Equity

Preferred Stock

The Company
may issue up to 7,931,370 shares of preferred stock in one or more series upon
authorization by its board of directors. The board of directors, without further
approval of the stockholders, is authorized to fix the dividend rights and
terms, conversion rights, voting rights, redemption rights and terms,
liquidation preferences, and any other rights, preferences, privileges and
restrictions applicable to each series of preferred stock.

Stock Option Plan

Under the 2001 Stock Option Plan
(the 2001 Option Plan), the Company may grant options to purchase up to
2,000,000 shares of common stock to eligible employees, directors, and
consultants at prices not less than the fair market value at the date of grant
for incentive stock options and not less than 85% of the fair market value at
the date of grant for non-statutory stock options. Options granted under the
2001 Stock Option Plan generally vest over four years, are exercisable to the
extent vested, and expire 10 years from the date of grant. Under the 1991 Stock
Option Plan (the 1991 Option Plan) which expired as of March 2001, the Company
was able to grant options to eligible employees, directors and consultants at
prices not less than the fair market value at the date of grant for incentive
stock options and not less than 85% of the fair market value at the date of
grant for non-statutory stock options. Options granted under the 1991 Option
Plan generally vest over four years, are exercisable to the extent vested, and
expire 10 years from the date of grant.

69

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

A summary of stock option activity
is as follows:

|                                                     |           |   |          | Weighted
|---------------------------------------------------- | --------- | - | -------- | --------
|                                                     |           |   |          | Average 
|                                                     | Number of |   | Exercise
|                                                     | Shares    |   | Price   
|Outstanding at April 30, 2006                        | 528,982   |   |          | $       
|Granted
      (weighted average fair value of $1.35) | 79,000    |   |          | $       
|Exercised                                            | (85,080   | ) |          | $       
|Cancelled/expired                                    | (69,660   | ) |          | $       
|Outstanding at April 30, 2007                        | 453,242   |   |          | $       
|Granted
      (weighted average fair value of $3.58) | 393,300   |   |          | $       
|Exercised                                            | (13,390   | ) |          | $       
|Cancelled/expired                                    | (73,135   | ) |          | $       
|Outstanding at April 30, 2008                        | 760,017   |   |          | $       
|Granted
      (weighted average fair value of $5.85) | 455,900   |   |          | $       
|Exercised                                            | (500      | ) |          | $       
|Cancelled/expired                                    | (139,613  | ) |          | $       
|Outstanding at April 30, 2009                        | 1,075,804 |   |          | $       

Additional information regarding
options outstanding at April 30, 2009 is as follows:

|                             |  | Options Outstanding |  | Options Exercisable
|---------------------------- |  | ------------------- |  | -------------------
|                             |  |                     |  | Average            
|                             |  |                     |  | Remaining          
|                             |  | Number              |  | Contractual        
|Range of Exercise
    Prices |  | Outstanding         |  | Life (Years)       
|$   1.10 - 1.30              |  | 130,500             |  | 3.66               
|1.40 -
      2.05            |  | 117,635             |  | 6.33               
|2.10 - 2.50                  |  | 92,000              |  | 8.24               
|2.55 -
      2.55            |  | 181,000             |  | 8.01               
|2.70 - 3.90                  |  | 133,000             |  | 5.32               
|4.10 -
      5.00            |  | 18,500              |  | 8.36               
|5.20 - 5.20                  |  | 135,000             |  | 8.58               
|5.70 -
      6.25            |  | 12,000              |  | 8.93               
|6.40 - 6.40                  |  | 239,900             |  | 9.01               
|6.48 -
      44.06           |  | 17,020              |  | 3.01               

Options to purchase 616,091 and
422,278 shares at weighted average prices of $3.33 and $3.06 were exercisable at
April 30, 2009 and 2008. At April 30, 2009, there were 1,147,189 shares reserved
for future grants under the Stock Option Plan.

Restricted Stock

On May 1,
2002, the Company established the 2002 Director Restricted Stock Plan (Director
Restricted Stock Plan) as part of a compensation program designed to attract
and retain independent members for our board of directors. The maximum aggregate
number of shares of common stock that may be issued under the Director
Restricted Stock Plan is 100,000. There were no shares awarded under the plan in
fiscal 2009 or fiscal 2008 leaving a balance of 3,862 shares reserved for future
awards at April 30, 2009.

Private Placement

On April 23,
2004, the Company issued through a private placement 1,126,780 shares of common
stock to a group of institutional investors at a price of $3.55 per share and
5-year warrants to purchase an aggregate of 450,712 shares of common stock at an
exercise price of $4.50 per share. Net proceeds from the private placement were
$3,696,000, net of estimated accrued costs of $304,000. The Companys actual
costs for the private placement were $397,000 which resulted in a further
reduction of additional paid-in-capital of $93,000 during fiscal 2005. The
warrants were subject to an anti-dilution provision such that future stock
issuances would cause an adjustment to the number of warrants.

70

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

As a result
of issuances of additional common stock the number of warrant shares purchasable
as of April 30, 2009 was increased to 491,792. On April 24, 2009, the warrant
agreement was amended and the exercise price was reduced to $2.50 per share as
an inducement to have the warrant holder exercise the warrants. On April 24,
2009, 475,456 of the warrants were exercised at $2.50 per share and the
remaining 16,336 warrants expired. Further, in consideration of the exercise of
the warrants, the Company granted an additional 190,182 warrants at an exercise
price of $2.75 per share. Under certain circumstances, where the closing bid
price of a share of common stock equals or exceeds $5.50, appropriately adjusted
for any stock split, reverse stock split, stock dividend or other
reclassification or combination of common stock, for 20 consecutive trading days
commencing after the registration statement covering the warrants shares has
been declared effective, the Company, upon 20 days prior written notice to the
warrant holders within one business day immediately following the end of such 20
day trading period, may call the warrants for 25% of the shares of the common
stock initially purchasable pursuant to the warrants at a redemption price equal
to $0.01 per share of common stock then purchasable pursuant to the warrants. If
the call conditions are met again during the 30 day period immediately after
consummation of a previous call, the Company may once again call the warrants
for an additional increment of 25% of the shares of common stock initially
purchasable pursuant to the warrants or such less amount as shall then remain
purchasable and in the same manner and subject to the same notice requirements
as the initial call, until all of the shares have been called.

Reverse Stock Split

On June 24,
2007, the Company implemented a 1 for 5 reverse stock split. The reverse stock
split had been previously approved by the Companys stockholders as part of the
Companys March 29, 2007 Annual Meeting. All amounts have been adjusted to
reflect the impact of the split.

Note 10. Income Taxes

Income (loss) from continuing
operations before income taxes and provision for income taxes, which consisted
solely of current tax expense, for the years ended April 30 were as follows (in
thousands):

|                                              | 2009 |       | 2008 |  | 2007
|--------------------------------------------- | ---- | ----- | ---- |  | ----
|Domestic                                      | $    | 3,004 |      |  | $   
|Foreign                                       |      | (435  | )    |  |     
|Total income (loss) before income
      taxes | $    | 2,569 |      |  | $   
|                                             
|Foreign taxes                                 | $    | (27   | )    |  | $   
|Federal and
      state income taxes          |      | 206   |      |  |     
|Provision for income taxes                    | $    | 179   |      |  | $   

71

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

The
provision for income taxes for the years ended April 30, 2009, 2008 and 2007
differs from the amounts computed by applying the statutory U.S. federal income
tax rate to pretax income (loss) as a result of the following (in
thousands):

|                                                            | 2009 |        | 2008 |  | 2007
|----------------------------------------------------------- | ---- | ------ | ---- |  | ----
|Computed tax expense (benefit) at statutory rate            | $    | 1,144  |      |  | $   
|Increases
      (reductions) in tax expense resulting from: |      |        |      |  |     
|Change in valuation allowance
      for deferred tax assets |      | (1,226 | )    |  |     
|Expiration of net operating loss
      carryforwards        |      | -      |      |  |     
|Change in tax contingency reserve                           |      | 67     |      |  |     
|Change in deferred revenue                                  |      | -      |      |  |     
|Other                                                       |      | 194    |      |  |     
|Provision for
      income taxes                            | $    | 179    |      |  | $   

The Company provides deferred income
taxes which reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
for income tax purposes. Significant components of the Companys deferred tax
assets and liabilities at April 30 were as follows (in thousands):

|                                                | 2009 |         | 2008
|----------------------------------------------- | ---- | ------- | ----
|Deferred tax assets (liabilities):              |      |         |     
|Non-current
      assets                        |      |         |     
|Net operating loss carryforwards                | $    | 14,501  |     
|Capital loss carryforward                       |      | 1,702   |     
|Foreign tax credits                             |      | 108     |     
|Domestic fixed assets and other
    intangibles |      | 296     |     
|Others                                          |      | 206     |     
|Current
      assets                            |      |         |     
|Deferred revenue                                |      | 64      |     
|Allowance for losses on accounts
    receivable |      | 83      |     
|Reserves and other accruals                     |      | 151     |     
|Total deferred tax assets                       |      | 17,111  |     
|Valuation allowance                             |      | (17,111 | )   
|Non-current
      liabilities                   |      |         |     
|Foreign fixed assets and other intangibles      |      | (211    | )   
|Goodwill                                        |      | (330    | )   
|Net deferred tax assets (liabilities)           | $    | (541    | )   

Realization
of deferred tax assets is dependent upon future earnings, the timing and amount
of which are uncertain. Accordingly, the net deferred tax assets have been fully
offset by a valuation allowance. The valuation allowance decreased by $1.2
million in fiscal 2009, increased by $298,000 in fiscal 2008 and decreased by
$14.3 million in fiscal 2007. At April 30, 2009, the Company had approximately
$40.3 million in federal net operating loss carryforwards that begin to expire
in fiscal year 2010 through 2028, approximately $5.8 million in state net
operating loss carryforwards that expire in fiscal years 2016 to 2021,
approximately $1.5 million in foreign net operating loss carryforwards that do
not expire and approximately $4.3 million in capital loss carryforwards that
expire in 2010. The Companys ability to utilize these net operating loss
carryforwards may be subject to certain limitations in the event of a change in
ownership.

FIN 48 Disclosure

The Company
adopted the provisions of FASB Interpretation (FIN) No. 48,Accounting for Uncertainty in Income Taxes, on May 1, 2007. As required by Interpretation 48, which
clarifies Statement 109,Accounting for Income
Taxes, the Company recognizes the financial
statement benefit of a tax position only after determining that the relevant tax
authority would more likely than not sustain the position following an audit.
For tax positions meeting the more-likely-than-not threshold, the amount
recognized in the financial statements is the largest benefit that has a greater
than 50 percent likelihood of being realized upon ultimate settlement with the
relevant tax authority. At the adoption date, the Company applied Interpretation
48 to all tax positions for which the statute of limitations remained open. The
adoption of FIN No. 48 did not have a material effect on the Companys
consolidated financial position or results of operations.

72

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

In FY09, the
Company identified some uncertain tax positions and accrued the FIN 48 reserve
accordingly. A reconciliation of the beginning and ending amount of unrecognized
tax benefits is as follows:

|Balance as of April 30, 2008                          | $ | - 
|----------------------------------------------------- | - | --
|Gross increases
      - tax positions in prior period |   | 67
|Gross decreases - tax positions in prior period       |   | - 
|Gross increases
      - current-period tax positions  |   | - 
|Decreases relating to settlements                     |   | - 
|Reductions as a
      result of a lapse of statute of |   | - 
|limitations                                           |   |   
|Balance as of April 30, 2009                          | $ | 67

If recognized, the entire amount of
unrecognized tax benefits would be recorded as a reduction in income tax
expense. The Companys policy is to recognize interest and penalties accrued on
any unrecognized tax benefits as a component of income tax expense. As of April
30, 2009, the Company did not have material interest or penalties associated
with any unrecognized tax benefits. We do not expect the total amount of
unrecognized tax benefits to significantly increase or decrease within the next
twelve months.

The Company
is subject to income taxes in the U.S. federal jurisdiction, and various states
and foreign jurisdictions. Tax regulations within each jurisdiction are subject
to the interpretation of the related tax laws and regulations and require
significant judgment to apply. In general, the Company is no longer subject to
U.S. federal, state and local, or non-U.S. income tax examinations by tax
authorities for the fiscal years before 2004.

Note 11. Other Income
(Expenses)

Other income (expenses), net for the
years ended April 30, consisted of the following (in thousands):

|                                            | 2009 |      | 2008 |  | 2007
|------------------------------------------- | ---- | ---- | ---- |  | ----
|Interest income                             | $    | 20   |      |  | $   
|Foreign currency
      exchange gain (loss) |      | (205 | )    |  |     
|Other                                       |      | 61   |      |  |     
|Other income (expenses), net                | $    | (124 | )    |  | $   

73

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 12. Earnings (loss) per
Share

Basic earnings per share is computed
by dividing net income (loss) by the weighted average number of common shares
outstanding during the reporting period. Diluted earnings (loss) per share is
computed similar to basic earnings per share except that it reflects the
potential dilution that could occur if dilutive securities or other obligations
to issue common stock were exercised or converted into common stock. For fiscal
2007, because of our reported net loss, potentially dilutive securities were
excluded from the per share computations due to their antidilutive
effect.

|(in
      thousands, except per share amounts)                   | Year Ended April 30,
|---------------------------------------------------------------- | --------------------
|                                                                 | 2009                
|Income (loss) from continuing operations                         | $                   
|Loss from
      discontinued operations                          |                     
|Net income (loss)                                                | $                   
|                                                                
|Weighted average shares of common stock outstanding,
basic       |                     
|Effect of dilutive securities (stock
      options)              |                     
|Weighted average shares of common stock outstanding,
    diluted | $                   
|                                                                
|Earnings (loss) per share of common stock:                       |                     
|Basic:                                                           |                     
|Continuing operations                                            | $                   
|Discontinued operations                                          |                     
|Total                                                            | $                   
|                                                                
|Assuming dilution:                                               |                     
|Continuing operations                                            | $                   
|Discontinued operations                                          |                     
|Net income
      (loss) per share, diluted                       | $                   

The dilutive
securities above represent only those stock options, warrants and convertible
debt whose exercise prices were less than the average market price of the stock
during the respective periods and therefore were dilutive. The number of shares
of stock options excluded from the above amounts because their exercise prices
exceeded the average market price of the stock during the respective periods was
584,688 in fiscal 2009, 85,319 in fiscal 2008, and 453,200 in fiscal 2007. The
number of shares of common stock warrants excluded from the above amounts
because their exercise prices exceeded the average market price of the stock
during the respective periods was none in fiscal 2009 and fiscal 2008, and
1,124,600 in fiscal 2007.

Note 13. Related Party
Transactions

Prior to its
write off in fiscal 2008, Unify had an investment of less than 15% in Unify
Japan KK who is the Companys master distributor in Japan. Sales to Unify Japan
KK in fiscal 2009 and 2008 were $0.2 million for both periods, respectively.
Accounts receivable from Unify Japan KK as of April 30, 2009 and 2008 were
$13,000 for both periods, respectively.

Other investments represent stock in
closely held companies, which are accounted for under the cost method. At April
30, 2009, we had no long-term investments. The Company has an ownership interest
in Unify Japan KK which is less than 15%. In April 2008, we wrote off our
investment in Unify Japan of $39,000 based on our assessment that there was a
permanent decline in value for this investment. Unify Japan KK is a Japanese
corporation that is a master distributor for the Company in Japan. Sales to
Unify Japan KK in fiscal 2009 and 2008 were $0.2 million for both periods,
respectively. Accounts receivable from Unify Japan KK as of April 30, 2009 and
2008 were $13,000 for both periods, respectively. The Company records an
investment impairment charge if and when the Company believes an investment has
experienced a decline in market value that is other than temporary. Several
factors can trigger an impairment review such as significant underperformance
relative to expected historical or projected future operating results and
significant negative industry or economic trends. In assessing potential
impairment for such investments, we consider these factors as well as the
forecasted financial performance.

74

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 14. Employee Retirement
Plan

The Company
maintains a 401(k) profit sharing plan (the 401(k) Plan). Eligible employees
may contribute up to 100% of their pre-tax annual compensation to the 401(k)
Plan, subject to certain statutory limitations. The Company can, at its
discretion, voluntarily match the participating employees contributions not to
exceed 6% of each employees annual compensation. In fiscal years 2009, 2008 and
2007, the Company contributed $140,000, $114,000 and $72,000, respectively, to
the 401(k) Plan.

Note 15. Commitments and
Contingencies

Operating Leases

The Company leases office space and
equipment under non-cancelable operating lease arrangements expiring at various
dates through fiscal 2014. Future minimum rental payments under these leases as
of April 30, 2009 are as follows (in thousands):

|Years Ending
      April 30, |   |      
|---------------------------- | - | -----
|2010                         | $ | 685  
|2011                         |   | 581  
|2012                         |   | 564  
|2013                         |   | 569  
|2014                         |   | 581  
|Thereafter                   |   | -    
|                             | $ | 2,980

Rent expense
under operating leases was $667,200, $1,095,500 and $1,038,400 for the years
ended April 30, 2009, 2008 and 2007, respectively.

Litigation

The Company
is subject to legal proceedings and claims that arise in the normal course of
business. If such matters arise, the Company cannot assure that it would prevail
in such matters, nor can it assure that any remedy could be reached on mutually
agreeable terms, if at all. Due to the inherent uncertainties of litigation,
were there any such matters, the Company would not be able to accurately predict
their ultimate outcome. As of April 30, 2009, there were no current proceedings
or litigation involving the Company that management believes would have a
material adverse impact on its financial position, results of operations, or
cash flows.

75

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 16. Segment
Information

FASB
Statement No. 131, Disclosures about Segments
of an Enterprise and Related Information,
establishes standards for reporting information about operating segments.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. Our chief operating decision
maker is our Chief Executive Officer. We have evaluated our approach for making
operating decisions and assessing the performance of our business and, beginning
in the first quarter of fiscal year 2009, we have determined that we have two
reportable segments: Database and Development Products (DDP) and our
Modernization & Migration Solutions Products. Prior to the first quarter of
fiscal year 2009, the Company maintained reportable segments based on its
geographic structure, the segments were the Americas and Europe. The accounting
policies of the segments are the same as those described in Note 1. We evaluate
performance based on gross margins (total revenues less costs of licenses,
services and migration solutions) before operating costs. We do not manage our
operating costs on a segment basis as many of our sales, marketing and support
personnel regularly work with product from both segments. Additionally, we do
not track assets by segment and therefore asset disclosures by segment are not
relevant and are not presented.

For the
fourth quarter of fiscal 2009 and 2008, total revenue from the United States was
$1.6 million and $1.2 million, respectively. Total revenue from all other
countries was $3.1 million in the fourth quarter of fiscal 2009 and $3.9 million
for the fourth quarter of fiscal 2008. Total long-lived assets as of April 30,
2009 and 2008, for the United States, was $9.6 million and $8.3 million,
respectively. Total long-lived assets in all other countries were $68,000 as of
April 30, 2009 and $98,000 as of April 30, 2008.

Financial
information for the Companys reportable segments is summarized below (in
thousands). Fiscal 2008 and 2007 segment information has been reclassified to
conform to the fiscal 2009 presentation.

|                                        | For the Twelve Months Ended April
      30,
|--------------------------------------- | -------------------------------------------
|                                        | 2009                                       
|Total revenues:                         |                                            
|Database and Development
      Products | $                                          
|Modernization and Migration Products    |                                            
|Total revenues                          | $                                          
|                                       
|Cost of revenue:                        |                                            
|Database and Development Products       | $                                          
|Modernization and Migration Products    |                                            
|Total Cost of Revenues                  | $                                          
|                                       
|Gross profit:                           |                                            
|Database and Development Products       | $                                          
|Modernization and Migration Products    |                                            
|Total Gross Profit                      | $                                          

76

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UNIFY
CORPORATIONNOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (continued)

Note 17. Quarterly Results of
Operations (Unaudited)

The following interim financial
information presents the fiscal 2009 and 2008 results on a quarterly
basis:

|                                                      | Quarter Ended                        
|----------------------------------------------------- | -------------------------------------
|                                                      | July 31,                             
|                                                      | (In thousands, except per share data)
|Year ended 2009:                                      |                                      
|Total revenues                                        | $                                    
|Gross profit                                          | $                                    
|Net income                                            | $                                    
|                                                     
|Net income per share:                                 |                                      
|Basic earnings per share:                             |                                      
|Net income per share                                  | $                                    
|                                                     
|Dilutive earnings per share:                          |                                      
|Net income per share                                  | $                                    
|                                                     
|Shares used in computing net income per share:        |                                      
|Basic                                                 |                                      
|Diluted                                               |                                      
|                                                     
|Year ended 2008:                                      |                                      
|Total revenues                                        | $                                    
|Gross profit                                          | $                                    
|Net income (loss)                                     | $                                    
|                                                     
|Net income (loss) per share:                          |                                      
|Basic earnings per share:                             |                                      
|Net income (loss) per share                           | $                                    
|                                                     
|Dilutive earnings per share:                          |                                      
|Net income (loss) per share                           | $                                    
|                                                     
|Shares used in computing net income (loss) per share: |                                      
|Basic                                                 |                                      
|Diluted                                               |                                      

77

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INDEX OF EXHIBITS

|Exhibit |  |                                                                                                                                                                                                           
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     |  | Description                                                                                                                                                                                               
|2.1     |  | Agreement and Plan of Merger, dated April 16, 2009, by and among
      Unify, UCAC, Inc., a Delaware corporation and wholly owned subsidiary of
      Unify, and AXS-One Inc., a Delaware corporation (7).
|        |  |                                                                                                                                                                                                           
|3.1     |  | Restated Certificate of Incorporation of the Company
  (1).                                                                                                                                               
|        |  |                                                                                                                                                                                                           
|3.2     |  | Amendment to Restated Certificate of Incorporation of the
      Company (6).                                                                                                                              
|        |  |                                                                                                                                                                                                           
|3.3     |  | Bylaws of the Registrant (1).                                                                                                                                                                             
|        |  |                                                                                                                                                                                                           
|4.1     |  | Form of Stock Certificate (1).                                                                                                                                                                            
|        |  |                                                                                                                                                                                                           
|4.2     |  | Revolving Credit and Term Note Agreement by and between ComVest and
      Unify, dated November 20, 2006 (5).                                                                                             
|        |  |                                                                                                                                                                                                           
|4.3     |  | Convertible Term Note  Tranche 1 (6).                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|4.4     |  | Convertible Term Note  Tranche 2 (6).                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|4.5     |  | Convertible Term Note  Tranche 3 (6).                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|4.6     |  | Registration Rights Agreement dated November 20, 2006
  (5).                                                                                                                                              
|        |  |                                                                                                                                                                                                           
|4.7     |  | Form of 2006 Warrants (6).                                                                                                                                                                                
|       
|4.8     |  | Special Situations Stock Purchase Agreement dated April 23, 2004
      (4).                                                                                                                               
|        |  |                                                                                                                                                                                                           
|4.9     |  | Special Situations Registration Rights Agreement dated April 23,
      2004 (4).                                                                                                                          
|        |  |                                                                                                                                                                                                           
|4.10    |  | Form of 2004 Warrants (6).                                                                                                                                                                                
|        |  |                                                                                                                                                                                                           
|4.11**  |  | Form of 2009 Warrants.                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                           
|10.1*   |  | 1991 Stock Option Plan, as amended (1).                                                                                                                                                                   
|        |  |                                                                                                                                                                                                           
|10.2*   |  | 2001 Stock Option Plan (3).                                                                                                                                                                               
|        |  |                                                                                                                                                                                                           
|10.3*   |  | Employment Agreement by and between Todd Wille and the Registrant
      dated December 29, 2000 (2).                                                                                                      
|        |  |                                                                                                                                                                                                           
|10.4    |  | Note Exchange Agreement, dated April 16, 2009, between and among
      Unify and holders of certain convertible notes of AXS-One Inc., a Delaware
      corporation (7).                                  
|        |  |                                                                                                                                                                                                           
|10.5**  |  | Form of Indemnification Agreement.                                                                                                                                                                        
|        |  |                                                                                                                                                                                                           
|10.6**  |  | Office Building Lease for Roseville, California facility, dated
      November 1, 2007, and amended November 21, 2007.                                                                                    
|        |  |                                                                                                                                                                                                           
|14      |  | Code of Ethics for Senior Officers (4).                                                                                                                                                                   
|        |  |                                                                                                                                                                                                           
|21.1    |  | Subsidiaries of the Registrant.                                                                                                                                                                           
|        |  |                                                                                                                                                                                                           
|23.1    |  | Consent of Grant Thornton LLP, Independent Registered Public
      Accounting Firm.                                                                                                                       

78

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|31.1 |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
      or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002. 
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                                                                                           
|31.2 |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
      or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002. 
|     |  |                                                                                                                                                                                                           
|32.1 |  | Certification of Todd E. Wille, Chief Executive Officer of Unify
      Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.        
|     |  |                                                                                                                                                                                                           
|32.2 |  | Certification of Steven D. Bonham, Chief Financial Officer of Unify
      Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
      Section 906 of the Sarbanes-Oxley Act of 2002.     
|     |  |                                                                                                                                                                                                           
|(1)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form S-1 Registration Statement (No. 333-3834) declared effective by the
      Securities and Exchange Commission on June 14, 1996.
|     |  |                                                                                                                                                                                                           
|(2)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-K on July 30, 2001.                                                                                                        
|     |  |                                                                                                                                                                                                           
|(3)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-Q on March 14, 2002.                                                                                                       
|     |  |                                                                                                                                                                                                           
|(4)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-K on July 21, 2004.                                                                                                        
|    
|(5)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form 8-K on November 29, 2006.                                                                                                     
|     |  |                                                                                                                                                                                                           
|(6)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form 10-K/A on December 18, 2007.                                                                                                  
|     |  |                                                                                                                                                                                                           
|(7)  |  | Incorporated by reference to the exhibit filed with Registrants
      Form 8-K on April 20, 2009.                                                                                                        
|     |  |                                                                                                                                                                                                           
|*    |  | Exhibit pertains to a management contract or compensatory plan or
      arrangement.                                                                                                                      
|     |  |                                                                                                                                                                                                           
|**   |  | Filed herewith.                                                                                                                                                                                           

79

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