<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549        

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

                                   FORM 10-Q


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

       FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

                                       OR

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

       FOR THE TRANSITION PERIOD FROM _______ TO _______


                          COMMISSION FILE NO. 0-20740

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

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

            DELAWARE                                   33-0277592
(State or other jurisdiction of                      (IRS Employer
incorporation or organization)                     Identification No.)

                              195 TECHNOLOGY DRIVE
                         IRVINE, CALIFORNIA 92618-2402
               (Address of principal executive offices, zip code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 453-4000

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

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

   As of January 29, 1997, there were 18,685,199 shares of common stock
outstanding.





<PAGE>   2
                                     INDEX





<TABLE>
<S>                                                                                                                  <C>
PART I - FINANCIAL INFORMATION  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
         Item I -Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3
                   Unaudited Condensed Consolidated Balance Sheets  . . . . . . . . . . . . . . . . . . . . . . . .   3
                   Unaudited Condensed Consolidated Statements of Operations  . . . . . . . . . . . . . . . . . . .   4
                   Unaudited Condensed Consolidated Statements of Cash Flows  . . . . . . . . . . . . . . . . . . .   5
                   Notes to Unaudited Condensed Consolidated Financial Statements   . . . . . . . . . . . . . . . .   6
Item 2 -           Management's Discussion and Analysis of Financial Condition and Results of Operations  . . . . .   7
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
         Item 1 -Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14
         Item 4 -Submission of Matters to Vote of Security Holders  . . . . . . . . . . . . . . . . . . . . . . . .  14
         Item 6 -Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  15
SIGNATURE             . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  16
</TABLE>











                                       2
<PAGE>   3



                                     PART I

                             FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS:

                         PLATINUM SOFTWARE CORPORATION
                UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                               
---------------------------------------------------------------------------------------------------------------
                                                                             December 31,         June 30,
                                                                                 1996              1996        
---------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                   $    8,948        $    5,402
  Short-term investments                                                           5,534            10,098
  Restricted cash                                                                      -             1,006
  Accounts receivable, net                                                         7,807             7,893
  Notes receivable from divestitures, net                                            413               825
  Inventories                                                                        502               460
  Prepaid expenses and other                                                       1,813             1,638
---------------------------------------------------------------------------------------------------------------
        Total current assets                                                      25,017            27,322
Property and equipment, net                                                        7,873             8,896
Software development costs, net                                                    2,520             2,250
Acquired source code, net                                                            653             1,088
Other assets                                                                         508               446
---------------------------------------------------------------------------------------------------------------
                                                                              $   36,571        $   40,002
===============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                            $    3,297        $    3,436
  Other accrued expenses                                                           6,714             7,522
  Accrued restructuring costs                                                      1,533             1,921
  Deferred revenue                                                                 9,491            10,912
---------------------------------------------------------------------------------------------------------------
        Total current liabilities                                                 21,035            23,791
---------------------------------------------------------------------------------------------------------------
Stockholders' equity:
  Preferred stock                                                                 31,692            31,996
  Common stock                                                                        19                18
  Additional paid-in capital                                                     113,239           111,194
  Less: notes receivable from officers for issuance of restricted stock          (11,563)          (11,563)
  Accumulated foreign currency translation adjustments                               419               249
  Accumulated deficit                                                           (118,270)         (115,683)
---------------------------------------------------------------------------------------------------------------
        Total stockholders' equity                                                15,536            16,211
---------------------------------------------------------------------------------------------------------------
                                                                              $   36,571        $   40,002
===============================================================================================================
</TABLE>





   The accompanying notes are an integral part of these unaudited condensed
                         consolidated balance sheets.



                                       3
<PAGE>   4
                         PLATINUM SOFTWARE CORPORATION
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                   Three Months Ended                 Six Months Ended
                                                      December 31,                      December 31,
                                                  1996            1995             1996             1995
---------------------------------------------------------------------------------------------------------------
<S>                                            <C>              <C>              <C>              <C>          
Revenues:
  License fees                              $  6,524            $  4,201         $ 11,605         $ 10,977
  Consulting and professional services         2,362               2,872            4,483            6,101
  Support services                             3,658               2,786            7,181            5,211
  Royalty income                                 138                 297              273              505
---------------------------------------------------------------------------------------------------------------
                                              12,682              10,156           23,542           22,794

Cost of revenues                               4,743               5,042            8,905           10,550
---------------------------------------------------------------------------------------------------------------
Gross profit                                   7,939               5,114           14,637           12,244
---------------------------------------------------------------------------------------------------------------
Operating expenses:
  Sales and marketing                          5,413               4,513           10,473           10,694
  General and administrative                   1,047               1,722            2,726            3,287
  Software development                         2,168               3,932            4,409            8,145
  Charge for restructuring                         -               5,600                -            5,600
---------------------------------------------------------------------------------------------------------------
                                               8,628              15,767           17,608           27,726
---------------------------------------------------------------------------------------------------------------
Loss from operations                            (689)            (10,653)          (2,971)         (15,482)
Other income (expense), net                      162                (306)             384               40
---------------------------------------------------------------------------------------------------------------
Loss before provision for income taxes          (527)            (10,959)          (2,587)         (15,442)
Provision for income taxes                         -                   -                -                -
---------------------------------------------------------------------------------------------------------------
Net loss                                       $(527)            (10,959)         $(2,587)         (15,442)
===============================================================================================================
Net loss per share                           $ (0.03)            $ (0.82)        $  (0.14)         $ (1.13)
===============================================================================================================
Shares used in computing
  net loss per share                          18,378              13,353           18,256           13,682
===============================================================================================================
</TABLE>



   The accompanying notes are an integral part of these unaudited condensed
                           consolidated statements.





                                       4
<PAGE>   5
                         PLATINUM SOFTWARE CORPORATION
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                                      Six Months Ended
                                                                                      December 31,
                                                                                1996                1995
---------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>                    <C>
Cash flows from operating activities:
   Net loss                                                                 $    (2,587)           $(15,442)
   Adjustments to reconcile net loss to net
     cash used in operating activities
         Depreciation and amortization                                            2,691               2,864
         Interest accretion on class action settlement                                -                 605
         Charge for restructuring                                                     -               5,600
         Change in operating assets and liabilities:
           Decrease in accounts receivable, net                                      86                 170
           (Increase) decrease in inventories                                       (42)                 97
           Increase in prepaid expenses and other                                  (175)               (241)
           (Increase) decrease in other assets                                      (62)                 47
           Decrease in accounts payable                                            (139)               (684)
           Decrease in accrued expenses                                            (781)               (523)
           Decrease in accrued restructuring costs                                 (355)             (1,624)
           Decrease in deferred revenue                                          (1,421)             (1,100)
---------------------------------------------------------------------------------------------------------------
Cash used in operating activities                                                (2,785)            (10,231)
---------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
   Payments received on notes receivable from divestitures                          412                 338
   Increase in notes receivable from divestitures                                     -                (411)
   Capital expenditures, net                                                       (734)             (1,988)
   Capitalized software development costs                                          (769)               (306)
   Purchase of short-term investments                                            (4,500)                  -
   Sale of short-term investments                                                 9,064                   -
---------------------------------------------------------------------------------------------------------------
Cash provided by (used in) investing activities                                   3,473              (2,367)
---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
   Exercise of common stock options                                               1,597                 671
   Issuance of common stock under the Employee Stock Purchase Plan                   85                 172
   Decrease in restricted cash                                                    1,006                 476
---------------------------------------------------------------------------------------------------------------
Cash provided by financing activities                                             2,688               1,319
---------------------------------------------------------------------------------------------------------------
Effect of exchange rates on cash                                                    170                 (45)
---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents                              3,546             (11,324)
Cash and cash equivalents, beginning of period                                    5,402              26,276
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                                   $      8,948           $  14,952
===============================================================================================================
</TABLE>
   The accompanying notes are an integral part of these unaudited condensed
                           consolidated statements.





                                       5
<PAGE>   6
                         PLATINUM SOFTWARE CORPORATION
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1996

BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements present
the financial position of Platinum Software Corporation (the "Company") as of
December 31, 1996 and June 30, 1996, the results of its operations for the
three and six months ended December 31, 1996 and 1995 and its cash flows for
the six months ended December 31, 1996 and 1995, and have been prepared by the
Company in accordance with generally accepted accounting principles and
pursuant to the rules and regulations of the Securities and Exchange Commission
(the "SEC").  Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading.  The unaudited condensed consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended June 30, 1996.

In the opinion of management, the unaudited condensed consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) necessary for a fair presentation of the Company's financial
position, results of operations and cash flows.

The results of operations for the three and six months ended December 31, 1996,
are not necessarily indicative of the results of operations to be expected for
the entire fiscal year ending June 30, 1997.

REVENUE RECOGNITION

Revenue is recognized from licenses of software upon contract execution,
shipment of products and when the Company has performed all of its significant
contractual obligations.  When a software license agreement obligates the
Company to provide more than one software module, all license revenue under the
agreement is deferred until all modules achieve general availability and are
delivered, except when the license agreement contains a specific financial
remedy in the event the unavailable module is not delivered.  In such instance,
revenue is deferred in the amount attributable to the specific financial
remedy.  The Company generally does not provide any post-contract customer
service or support as part of the software license fee; however, when such
services are provided for in the license agreement, an appropriate portion of
the license fee is deferred and amortized over the service or support period.
The Company's customers may enter into maintenance agreements with the Company
and such revenue is recognized ratably over the term of the agreement.  Revenue
from consulting services is recognized as services are provided.

NET LOSS PER SHARE

Net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock and common stock equivalents outstanding
during the period. The shares of common stock issuable in connection with the
July 26, 1995 election to redeem the debenture have been treated as if they
were outstanding from July 26, 1995 to September 30, 1995.  Due to the
agreement to rescind the Company's July 26, 1995 election to repay the
debenture and the subsequent reinstatement of the debenture, the treatment for
net loss per share purposes of the shares of common stock issuable in
connection with the repayment of the debenture have been changed from being
outstanding to common stock equivalents from October 1, 1995 to December 31,
1995.  However, common stock equivalents were antidilutive for the three and
six months ended December 31, 1996 and 1995, and therefore, excluded from the
calculation of net loss per share for such periods.

FISCAL 1996 RESTRUCTURING

During the second quarter of fiscal 1996, the Company restructured its business
operations.  The restructuring included the cessation of the marketing of the
version of the Company's Platinum SQL Enterprise  product that runs on the
Sybase/UNIX server platform as well as the elimination of the Company's direct
sales force for this product line.  The restructuring resulted in a charge of
$5.6 million which was recorded in the second quarter of fiscal 1996.





                                       6
<PAGE>   7
Such amount included charges for severance and other extended benefit costs
related to the reduction in force, lease termination and buyout costs related
to the closure of facilities and asset write-downs and other costs.  The
Company estimates that expense savings from the second quarter 1996
restructuring, on a quarterly basis, are $2.8 million.  In February 1996, the
Company had another reduction in force of approximately 40 people.  This
reduction in force resulted in an additional restructuring charge of $4.2
million which was recorded in the third quarter of fiscal 1996.  Such amount
included charges for severance and other extended benefit costs related to the
reduction in force, lease termination and buyout costs related to the closure
of facilities and asset write-downs and other costs.  The Company estimates
that expense savings from the third quarter 1996 restructuring, on a quarterly
basis, are $900,000.  The savings from the two fiscal 1996 restructurings have
been offset in part by the costs associated with the re-establishment of the
direct sales force.  See "Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations."  During the six months ended
December 31, 1996, the Company paid approximately $355,000 for severance, lease
termination and other costs relating to these two restructurings and the fiscal
1994 restructuring.

CONTINGENCIES

The Company is subject to miscellaneous legal proceedings in the normal course
of business and other legal proceedings related to or arising out of the fiscal
1994 restructuring, reductions in force and the discontinuance of certain
client/server applications.  The Company is currently defending these
proceedings and claims, and anticipates that it will be able to resolve these
matters in a manner that will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.

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

RESULTS OF OPERATIONS

Net loss for the second quarter of fiscal 1997 was $527,000, or $0.03 per
share, as compared to a net loss of $11.0 million, or $0.82 per share, for the
comparable quarter of fiscal 1996.  Net loss for the first six months of fiscal
1997 was $2.6 million or $0.14 per share, as compared to a net loss of $15.4
million, or $1.13 per share, for the comparable period of fiscal 1996.  The
following summarizes the significant aspects related to the Company's results
of operations.

Revenues

Revenues were approximately $12.7 million and $10.2 million for the three
months ended December 31, 1996 and 1995, respectively, representing an increase
of 25%.  Revenues were approximately $23.5 million and $22.8 million for the
six months ended December 31, 1996 and 1995, respectively, representing an
increase of 3%.

Total license fee revenues were approximately $6.5 million and $4.2 million for
the three months ended December 31, 1996 and 1995, respectively, representing
an increase of 55% and approximately $11.6 million and $11.0 million for the
six months ended December 31, 1996 and 1995, respectively, representing an
increase of 6%.

License fee revenues for the Company's Platinum SQL product (formerly named
Platinum SQL NT) were approximately $4.3 million and $1.7 million for the three
months ended December 31, 1996 and 1995, respectively, and $7.6 million and
$4.6 million for the six months ended December 31, 1996 and 1995, respectively.
The increases primarily resulted from the re-establishment of the Company's
direct sales force which began in the fourth quarter of fiscal 1996.

License fee revenues for the Platinum-DOS and Platinum for Windows products
were approximately $2.0 million and $1.6 million for the three months ended
December 31, 1996 and 1995, respectively, and $3.5 million and $3.1_million for
the six months ended December 31, 1996 and 1995.  The increases primarily
resulted from the availability of a complete suite of Platinum for Windows core
modules during the quarter ended December 31, 1996, as well as a change in
sales strategy to have the primary sales responsibility for this product reside
at the Company's corporate headquarters instead of in the field.





                                       7
<PAGE>   8
License fee revenues for the Company's Platinum SQL Enterprise product line
were approximately $0 and $550,000 for the three months ended December 31, 1996
and 1995, respectively, and $0 and $2.4 million for the six months ended
December 31, 1996 and 1995, respectively.  In October 1995, the Company
discontinued the marketing of the version of its Platinum SQL Enterprise
product line that runs on the Sybase/UNIX server platform because of lack of
recent license revenues (see Item 1 - "Notes to Unaudited Condensed
Consolidated Financial Statements -- Fiscal 1996 Restructuring").

International license fee revenues were $2.2 million and $1.3 million for the
three months ended December 31, 1996 and 1995, respectively, and $3.9 million
and $3.1 million for the six months ended December 31, 1996 and 1995,
respectively.  These increases were due to the increases in the license fee
revenues for the Platinum SQL and Platinum-DOS and Platinum for Windows
products.

Consulting and professional services revenue decreased 18% from revenues of
$2.9 million in the three months ended December 31, 1995 to $2.4 million in the
three months ended December 31, 1996 and decreased 27% from revenues of $6.1
million in the six months ended December 31, 1995 to $4.5 million in the six
months ended December 31, 1996.  The decreases were primarily attributable to
the involvement of the consulting and professional services division during
fiscal 1996 in providing formal training to the Company's distributors and
dealers, and the transferring of expertise gained in Platinum SQL Enterprise
and Platinum SQL NT implementations.  During fiscal 1997, the consulting and
professional services division has and will focus more of its efforts on
providing consulting and implementation services to customers, and the Company
expects the dollar amount of professional services revenues to continue to
increase when compared to the second and first quarter of fiscal 1997.  See
"Certain Factors That May Affect Future Results - Forward Looking Statements."

Support services revenue increased 31% from revenues of $2.8 million in the
three months ended December 31, 1995 to $3.7 million in the three months ended
December 31, 1996 and increased 38% from revenues of $5.2_million in the six
months ended December 31, 1995 to $7.2 million in the six months ended December
31, 1996.  The increase was primarily attributable to an overall rise in the
installed base of end-users of Platinum SQL and an increased effort to renew
customers on maintenance contracts which the Company commenced in early fiscal
1997.

Gross Profit

Gross profit increased as a percentage of revenues from 50% for the three
months ended December 31, 1995 to 63% for the three months ended December 31,
1996.  Gross profit increased as a percentage of revenues from 54% for the six
months ended December 31, 1995 to 62% for the six months ended December 31,
1996  The increases in gross profit percentage are primarily due to higher
license fee revenues and higher support services revenues as a percentage of
total revenues, which have higher margins than consulting and professional
services revenues.

Operating Expenses

Excluding the restructuring charge of $5.6 million in the three months ended
December 31, 1995, total operating expenses decreased from $10.2 million for
the three months ended December 31, 1995 to $8.6 million for the three months
ended December 31, 1996.  The decrease was primarily attributable to cost
savings achieved from the fiscal 1996 restructurings. Excluding the
restructuring charge of $5.6 million in the three months ended December 31,
1995, total operating expenses as a percentage of revenues were 68% and 100%
for the three months ended December 31, 1996 and 1995, respectively. Excluding
the restructuring charge of $5.6 million in the six months ended December 31,
1995, total operating expenses decreased from $22.1 million for the six months
ended December 31, 1995 to $17.6 million for the six months ended December 31,
1996.  Excluding the restructuring charge of $5.6 million in the six months
ended December 31, 1995, total operating expenses as a percentage of revenues
were 75% and 97% for the six months ended December 31, 1996 and 1995,
respectively.

Sales and marketing expenses were approximately $5.4 million and $4.5 million
for the three months ended December 31, 1996 and 1995, respectively, or
approximately 43% and 44% of total revenues.  Sales and marketing expenses were
approximately $10.5 million and $10.7 million for the six months ended December
31, 1996 and 1995, respectively, or approximately 45% and 47% of total revenues.
The slight decrease in the six months ended December 31, 1996 resulted from cost
savings achieved from the termination of the Company's direct sales force in
October 1995.  In the fourth quarter of fiscal 1996, the Company re-established
a smaller direct sales force for its Platinum SQL product and this accounts for
the increase in expenses for the three months ended December 31, 1996, as
compared to the three months ended December 31, 1995.





                                       8
<PAGE>   9
General and administrative expenses were approximately $1.0 million and $1.7
million for the three months ended December 31, 1996 and 1995, respectively, or
approximately 8% and 17% of total revenues.  General and administrative
expenses were approximately  $2.7 million and $3.3 million for the six months
ended December 31, 1996 and 1995, respectively, or approximately 12% and 14% of
total revenues.  The decreases were primarily a result of the decreased
reserves provided for uncollectible accounts receivable and decreased reserves
provided for litigation and threatened litigation.

Software development expenditures were approximately $2.4 million and $4.2
million for the three months ended December 31, 1996 and 1995, respectively,
before capitalization of software costs of approximately $269,000 and $229,000,
respectively.  Software development expenditures were approximately $5.2
million and $8.5 million for the six months ended December 31, 1996 and 1995,
respectively, before capitalization of software costs of approximately $769,000
and $306,000, respectively.   The decreases in the amount of software
development expenses were due to a lesser number of development employees which
resulted from personnel cuts in the fiscal 1996 restructurings and other cost
savings in the fiscal 1996 restructurings.  Upon the release for general
availability of the Company's software products, the Company amortizes
capitalized software development costs over a five year period. Such
amortization is included in cost of revenues. The percentage of capitalized
software development costs to total software development costs was 11% for the
three months ended December 31, 1996 and 6% for the three months ended December
31, 1995.  The percentage of capitalized software development costs to total
software development costs was 15% for the six months ended December 31, 1996
and 4% for the six months ended December 31, 1995.  During the three and six
months ended December 31, 1996, costs were capitalized for the Platinum for
Windows purchase order, inventory and order entry modules and the
multi-currency functionality for Platinum SQL.  The Company expects that gross
development expenditures should remain constant for the remainder of fiscal
1997.  See "Certain Factors That May Affect Future Results - Forward Looking
Statements."

Other Income (Expense)

Other income (expense) for the three months ended December 31, 1996 and 1995,
was approximately $162,000 and ($306,000), respectively. Other income for the
six months ended December 31, 1996 and 1995, was approximately $384,000 and
$40,000, respectively.  For the three and six months ended December 31, 1996,
other income primarily represented interest earned on the Company's cash and
cash equivalents and short-term investments.  For the three and six months
ended December 31, 1995, other income (expense) primarily represented interest
earned on the Company's cash and cash equivalents and short-term investments,
offset by interest expense on the Company's debenture.

FINANCIAL CONDITION

Liquidity and Capital Resources

As of December 31, 1996, the Company's principal sources of liquidity included
cash and cash equivalents of approximately $8.9 million.  Cash and cash
equivalents increased by approximately $3.5 million over the June 30, 1996
balance.  The increase is primarily attributable to the net sale of short term
investments, proceeds received from the exercise of stock options and the
decrease in restricted cash, offset by cash used in operations.  The Company
had working capital of $3.5 million at June 30, 1996 as compared to working
capital of $4.0 million at December 31, 1996.

The Company's operations used approximately $2.8 million of cash and cash
equivalents in the six months ended December 31, 1996.  This was primarily due
to the net loss from operations offset by non-cash items, principally
depreciation and amortization, and to the reduction of current liabilities.

As part of the sale of certain Company product lines and divisions in the
fiscal 1994 restructuring, the Company received payments on notes receivable
from divestitures of approximately $412,000 during the six months ended
December 31, 1996.  The Company also paid approximately $355,000 in severance,
lease and other costs related to the fiscal 1994 and fiscal 1996 restructurings
during the six months ended December 31, 1996.  At December 31, 1996, the
Company had a $1.5 million cash obligation related to lease termination and
other costs of the fiscal 1994 and fiscal 1996 restructurings and this
obligation will be funded from existing cash reserves and working capital.







                                       9
<PAGE>   10
The Company has taken steps to significantly reduce its operating expenses,
through several reductions in work force over the past two years, as well as
the disposition of several business units.  If the Company is not successful in
achieving targeted revenues, the Company may be required to take further
actions to align its operating expenses with its reduced revenues, such as
further reductions in work force.

The Company experienced negative cash flow from operations for the first nine
months of fiscal 1996 and the first six months of fiscal 1997 and positive cash
flow from operations during the fourth quarter of fiscal 1996.  The Company
expects to be cash flow positive from operations commencing the third quarter
of fiscal 1997.  See "Business - Certain Factors That May Affect Future Results
- Forward Looking Statements." Accordingly, the Company is dependent upon its
ability to generate cash flow from license fees and other operating revenues,
as well as the collection of its outstanding accounts receivable to maintain
current liquidity levels.  However, the Company believes that its current cash
reserves, together with existing sources of liquidity, will satisfy the
Company's projected short-term liquidity and other cash requirements for the
next 12 months.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

Liquidity.  The Company's cash and cash equivalents increased from $5.4 million
at June 30, 1996 to $8.9 million at December 31, 1996, principally due to the
net sale of short term investments, proceeds received from the exercise of
stock options and the decrease in restricted cash, offset by cash used in
operations.  Although, the Company's fiscal 1994 restructuring is substantially
complete, there will be additional cash outlays in connection with lease
terminations, estimated to be approximately $131,000.  In addition, there will
be further cash outlays estimated at approximately $967,000 in connection with
the second quarter fiscal 1996 restructuring and approximately $395,000 in
connection with the third quarter fiscal 1996 restructuring.  The Company has
taken steps to significantly reduce its operating expenses, through the
reductions in work force, as well as the disposition of several business units
that were not within the Company's core financial software application
business.  The Company has experienced negative cash flow from operations for
the first nine months of fiscal 1996 and the first six months of fiscal 1997
and positive cash flow from operations during the fourth quarter of fiscal
1996.  The Company expects to be cash flow positive from operations during the
third quarter of fiscal 1997.  See "Forward Looking Statements."  If the
Company is not successful in achieving targeted revenues or positive cash flow,
the Company may be required to take further actions to align its operating
expenses with its reduced revenues, such as further reductions in work force.

Fluctuations in Quarterly Operating Results.  The Company's operating results
can vary substantially from period-to-period.  The Company's quarterly
operating results fluctuate in part due to the number and timing of new product
introductions and enhancements, discontinuance of product lines, the timing of
product orders and shipments, recognition of deferred revenue upon the
Company's completion of its contractual obligations, marketing and product
development expenditures and promotional programs.  A significant portion of
the Company's quarterly revenues are recorded in the final month of the
quarter, with a concentration of such revenues in the final 10 business days of
that month.  Also, the timing of the closing of direct sales in the latter part
of each quarter increases the risk of quarter-to-quarter fluctuations.
Accordingly, the Company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be relied
upon as an indication of future performance. If revenues do not meet the
Company's expectations in any given quarter, operating results may be adversely
affected.  There can be no assurance that the Company will be profitable in any
quarter or at all.

Disruption of Revenues.  The negative events that have occurred at the Company
since April 1994, including the fiscal 1994 restatement of the Company's
financial statements for prior periods, an investigation by the SEC relating to
the circumstances underlying the restatement, a securities class action
lawsuit, several reductions in force, the closing of business units and poor
financial performance, have caused potential customers to curtail or delay
purchasing decisions or make purchases from other software vendors and have,
accordingly, adversely impacted the Company's ability to generate revenue.
Although, the Company has settled the securities class action, raised
additional equity financing, and the SEC investigation has concluded, the
negative effects on revenue from the negative events at the Company have
continued.  There can be no assurance that the difficulty in closing sales of
software licenses will not continue in the future or that Authorized Dealers or
Authorized Consultants will continue to represent the Company's products and,
accordingly, revenues may be significantly impacted in the future.

Dependence on Distribution Channels.  The Company distributes its Platinum DOS
and Platinum for Windows products exclusively through third- party dealers and
VARs, and distributes its Platinum SQL software product













                                       10
<PAGE>   11
through a direct sales force as well as through VARs and distributors.  The
Company's distribution channel includes distributors, resellers, software
consultants and systems integrators, and Authorized Consultants, which consist
primarily of professional firms. Although no one of these distribution channel
members is responsible for any material amount of the Company's license fees,
the Company's results of operations could be adversely affected if significant
numbers of its Authorized Dealers or Authorized Consultants were to cease
distributing or recommending the Company's products or were to choose to
emphasize competing products.  Generally, the Company's agreements with its
Authorized Dealers and Authorized Consultants do not require them to
exclusively offer or recommend the Company's products and may be terminated by
either party with or without cause.

In the fourth quarter of fiscal 1996, the Company began reestablishing a direct
sales force for its middle market client server financial software product,
Platinum SQL.  There can be no assurance that the direct sales force will be
successful in generating revenues or that it will not lead to conflicts with
the Company's dealer channel.

The Company's Platinum SQL product (formerly named Platinum SQL NT) was first
introduced on a limited basis to the network of Authorized Dealers during the
quarter ended December 31, 1994.  Platinum SQL, a client/server financial
software application designed to run on Microsoft Windows NT and Microsoft SQL
server, is a more technically complex product than Platinum for Windows and
Platinum-DOS and requires additional skill and training to successfully
implement.  The Company presently has over 70 authorized Platinum SQL dealers
who have completed training from which approximately 30 dealers generate
greater than 90% of the indirect sales of Platinum SQL and is actively seeking
additional skilled Authorized Dealers to sell Platinum SQL.  Delays in training
Authorized Dealers or recruiting additional skilled Authorized Dealers could
adversely impact the Company's ability to generate license revenues from its
Platinum SQL product line.  There can be no assurance that the Company's direct
or indirect sales efforts will be successful.

Dependence on Platinum SQL Product Line. Platinum SQL, which is a successor
product to Platinum SQL Enterprise which was first introduced in June 1992, and
to Platinum SQL NT, which was first introduced in December 1994, is a
relatively new integrated financial and management information software product
for use on client/server computing systems.  It is common for complex programs
such as Platinum SQL to contain undetected errors when first released, which
are discovered only after the product has been used with many different
computer systems and in varying applications.  The Company has been informed by
customers of certain errors with respect to its Platinum SQL product which the
Company is addressing. The inability of the Company to correct the errors, or
any significant delay in correcting the errors in Platinum SQL, will have a
material adverse effect on the Company's results of operations.  In addition,
there can be no assurance that significant technical problems will not be
discovered, or if discovered, corrected in a timely manner.  Technical problems
with the current release of the database platforms on which Platinum SQL
operates could impact sales of these Company products, and any significant
technical problems could have a material adverse effect on the Company's
results of operations.

New Product Introductions.  The Company's future success will depend upon its
ability to develop and successfully introduce new products, enhance its current
products on a timely basis and increase customer acceptance of its existing
products.  The Company has two principal product lines, Platinum for Windows
(including Platinum-DOS)  and Platinum SQL.  The Company continues to provide
maintenance and support services for its Platinum SQL Enterprise product for
existing customers.  Platinum SQL was released in the quarter ended December
31, 1994 and all of the core accounting modules of Platinum for Windows were
released during the quarter ended June 30, 1995 and calendar 1996.  Version 4.1
of Platinum SQL, which includes multi-currency functionality for the core
accounting modules, is scheduled for release during the fourth quarter of
fiscal 1997.  In the past, the Company has occasionally experienced delays in
the introduction of new products and product enhancements.  There can be no
assurance that the Company will be successful in developing and marketing these
new products or product enhancements on a timely basis or that the Company will
not experience significant delays in introducing new products in the future,
which could have a material adverse effect on the Company's results of
operations.  In addition, there can be no assurance that new products or
product enhancements developed by the Company will achieve market acceptance.

Dependence on Client/Server Environment.  The Company's development tools,
application products and consulting and education services are intended to help
organizations build, customize or deploy solutions that operate in a
client/server computing environment.  The client/server market is relatively
new, and there can be no assurance that organizations will continue to adopt
client/server environments or that customers of the Company that have begun the
migration to a client/server environment will broadly implement this model of
computing.  The










                                       11
<PAGE>   12
Company's future financial performance will depend in large part on continued
growth in the market for client/server software applications and related
services, which in turn will depend in part on the growth in the number of
organizations implementing client/server computing environments and the number
of applications developed for use in those environments.  There can be no
assurance that these markets will continue to grow or that the Company will be
able to respond effectively to the evolving requirements of these markets.  If
the market for client/server application products and services does not grow in
the future, or grows more slowly than the Company anticipates, or if the
Company fails to respond effectively to evolving requirements of this market,
the Company's business, financial condition and results of operations would be
materially adversely affected.

Competition.  The financial computer software industry is intensely competitive
and rapidly changing.  A number of companies offer products similar to the
Company's products that target the same markets.  Some of the Company's
existing competitors, as well as a number of new potential competitors, have
larger technical staffs, more established and larger marketing and sales
organizations and significantly greater financial resources than the Company.
There can be no assurance that competitors will not develop products that are
superior to the Company's products or that achieve greater market acceptance.
The Company's future success will depend significantly upon its ability to
increase its share of its target markets and to license additional products and
product enhancements to existing customers.  The adverse publicity relating to
the restatement of previously issued financial results has resulted in
increased competitive challenges, which the Company expects will continue.  In
addition, adverse publicity relative to the Company's restructuring efforts,
downsizing and poor financial results has resulted in further competitive
challenges.  There can be no assurance that the Company will be able to compete
successfully or that competition will not have a material adverse effect on the
Company's financial condition and results of operations.

Exposure to Rapid Technological Change.  The market for the Company's financial
accounting software products is characterized by rapid technological advances,
changes in end-user requirements, frequent new product introductions and
enhancements and evolving industry standards.  The introduction of products
embodying new technologies and the emergence of new industry standards could
render the Company's existing products and products under development obsolete
and unmarketable.  The Company's future success will depend upon its ability to
address the increasingly sophisticated needs of its customers by enhancing its
current products and by developing and introducing on a timely basis new
products that keep pace with technological developments and emerging industry
standards, respond to evolving end user requirements and achieve market
acceptance. Any failure by the Company to anticipate or adequately respond to
technological developments or end-user requirements, or any significant delays
in product development or introduction, could result in a loss of
competitiveness or reduced revenues.  If the Company is unable, for
technological or any other reason, to develop, introduce and sell its products
in a timely manner, the Company's business, operating results and financial
condition would be materially adversely affected.  From time to time, the
Company or its present or future competitors may announce new products,
capabilities or technologies that have the potential to replace or shorten the
life cycles of the Company's existing products.  There can be no assurance that
announcements of currently planned or other new products will not cause
customers to delay or alter their purchasing decisions in anticipation of such
products, which could have a material adverse effect on the Company's business,
operating results and financial condition.

Shares Eligible for Future Sale.  As of January 29, 1997, the Company had
18,685,199 shares of common stock outstanding.  There are presently 2,435,000
shares of Series B Preferred Stock and 231,598 shares of Series C Preferred
Stock outstanding.  Each share of Series B Preferred Stock is convertible into
one share of common stock, as adjusted for stock dividends, combinations or
splits at the option of the holder.  Each share of Series C Preferred Stock is
convertible into ten shares of common stock, as adjusted for stock dividends,
combinations or splits at the option of the holder.  As a result, the Series B
and Series C Preferred Stock are convertible into 2,435,000 and 2,315,980
shares of common stock, respectively.  The holders of the Series B and Series C
Preferred Stock have the right to cause the Company to register the sale of the
shares of common stock issuable upon conversion of the Series B and Series C
Preferred Stock.  Also, the Company has a substantial number of options or
shares issuable to employees under employee option plans.  In addition, certain
third parties hold warrants to purchase an aggregate of 105,000 shares of
common stock.  The holders of these warrants have the right to require the
Company to register the sale of the shares of common stock issuable upon
exercise of the warrants.  As a result, a substantial number of shares of
common stock will be eligible for sale in the public market at various times in
the future.  Sales of substantial amounts of such shares could adversely affect
the market price of the Company's common stock.








                                       12
<PAGE>   13
Possible Volatility of Stock Prices.  The market prices for securities of
technology companies, including the Company, have been volatile.  Quarter to
quarter variations in operating results, changes in earnings estimates by
analysts, announcements of technological innovations or new products by the
Company or its competitors, announcements of major contract awards and other
events or factors may have a significant impact on the market price of the
Company's Common Stock.  In addition, the securities of many technology
companies have experienced extreme price and volume fluctuations, which have
often been unrelated to the companies' operating performance.  These conditions
may adversely affect the market price of the Company's Common Stock.

Forward Looking Statements.  This quarterly report contains certain forward
looking statements that involve risks and uncertainties.  Certain risks and
uncertainties which may impact the accuracy of the forward looking statements
with respect to revenues, expenses and operating results include, without
limitation, the impact of competitive products, pricing, the discovery of
undetected errors or software bugs in the Company's products, subsequent
changes in business strategy or plan, the ability of the Company to overcome
recent negative events such as restructurings and reductions in force, and the
ability of the Company to recruit and train dealers for the Platinum SQL
product.  Certain other risks and uncertainties are described under "Certain
Factors That May Affect Future Results."

Because of these and other factors affecting the Company's operating results,
past financial performance should not be considered an indicator of future
performance, and investors should not use historical trends to anticipate
results or trends in future periods.















                                       13
<PAGE>   14
                                    PART II

                               OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS:

The Company is subject to miscellaneous legal proceedings in the normal course
of business and other legal proceedings related to or arising out of the fiscal
1994 restructuring, reductions in force and the discontinuance of certain
client/server applications.  The Company is currently defending these
proceedings and claims, and anticipates that it will be able to resolve these
matters in a manner that will not have a material adverse effect on the
Company's financial position, results of operations or cash flows.

ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS:

On October 24, 1996, the Company held its annual meeting of stockholders and at
such meeting L. George Klaus, Carmelo J. Santoro, W. Douglas Hajjar, Richard J.
Goeglein, Robert Finzi and Donald R. Dixon were elected as directors of the
Company by the Common, Series B and Series C stockholders.  Each share of
Series B Preferred Stock is entitled to vote with the holders of Common Stock
on an as-converted basis on all matters presented for stockholder approval and
is also entitled to designate two members of the Board of Directors at each
election of directors.  Each Share of Series C Preferred Stock is convertible
into ten (10) shares of Common Stock and is entitled to vote with the holders
of Common Stock on an as-converted basis on all matters presented for
stockholder approval.  The holders of Series B Preferred Stock designated, by
written consent, Arthur J. Marks and L. John Doerr as members of the Board of
Directors.  Other items considered at the annual meeting of stockholders
included the ratification of the appointment of Ernst & Young, LLP as the
Company's independent auditors for the fiscal year ending June 30, 1997 and the
approval of an amendment to the Company's Certificate of Incorporation to
eliminate actions by written consent by common stockholders.

The ratification of the appointment of Ernst & Young, LLP was approved by a
majority of the stockholders present and entitled to vote at the meeting.
Specifically, the total outstanding shares available for voting at the meeting
was 18,157,286 shares of Common Stock of which 16,049,721 were present or
represented at the meeting; 2,490,000 shares of Series B Preferred Stock of
which all 2,490,000 shares were present or represented at the meeting; and
2,315,980 shares of Series C Preferred Stock (on an as-converted basis) of
which 2,315,980 were present or represented at the meeting.  A total of
20,855,701 shares of Common Stock, Series B Preferred Stock and Series C
Preferred Stock (on an as- converted basis) were present or represented at the
meeting.  15,999,280 shares of Common Stock, 2,490,000 shares of Series B
Preferred Stock and 2,315,980 shares of Series C Preferred Stock voted in favor
of the ratification of Ernst & Young, LLP, 27,523 shares of Common Stock voted
against, and 22,918 shares of Common Stock abstained from voting.

The proposal to amend the Company's Certificate of Incorporation to eliminate
actions by written consent by common stockholders was approved by a majority of
the outstanding shares of Common Stock, Series B Preferred Stock and Series C
Preferred Stock voting together as one class.  With respect to the amendment to
the Certificate of Incorporation, 7,450,354 shares of Common Stock, 2,490,000
shares of Series B Preferred Stock, 2,315,980 shares of Series C Preferred
Stock (on an as-converted basis) or a total of 12,256,334 shares voted in favor
of the amendment.  1,465,233 shares of Common Stock voted against the amendment
and 119,889 shares of Common Stock abstained from voting.

With respect to the election of directors, 16,049,721 shares of Common Stock
were available for voting at the meeting and 2,490,000 shares of Series B
Preferred Stock and 2,315,980 shares of Series C Preferred Stock (on an
as-converted basis) were available for voting at the meeting.  All shares of
Series B and Series C Preferred Stock voted in favor of all of the nominated
directors.  The following nominees received the votes by common stockholders as
noted below:







                                       14
<PAGE>   15
<TABLE>
<CAPTION>
                               NAME                            VOTES FOR                      WITHHELD AUTHORITY
                     <S>                                       <C>                                  <C>
                     L. George Klaus                           15,961,673                           88,048
                     Carmelo J. Santoro                        15,958,783                           90,938
                     W. Douglas Hajjar                         15,961,673                           88,048
                     Richard J. Goeglein                       15,961,661                           88,060
                     Robert Finzi                              15,961,529                           88,192
                     Donald R. Dixon                           15,961,517                           88,204
</TABLE>

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:

      (a)    Exhibits

          3.2      Certificate of Amendment to Second Restated Certificate of
                   Incorporation

          3.3      Amended and Restated Bylaws of the Company as currently in 
                   effect

         27        Financial Data Schedule

      (b)    Reports on Form 8-K

             None.



















                                       15
<PAGE>   16
                                   SIGNATURE



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

                                        
                                              PLATINUM SOFTWARE CORPORATION
                                              -----------------------------
                                                   (Registrant)


Date:  February 10, 1997                      /s/ MICHAEL J. SIMMONS
                                              -----------------------------
                                                   Michael J. Simmons
                                                   Chief Financial Officer
                                                   (Principal Financial Officer
                                                   and Duly Authorized Officer)
















                                       16