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


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   Form 10-Q

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

               For the quarterly period ended September 30, 2000


                                       OR
[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934
        For the transition period from _______________ to ______________

                         Commission File Number 0-28672

                                  OPTIKA INC.
             (Exact name of registrant as specified in its charter)

                  Delaware                                  95-4154552
       (State or other jurisdiction of                   (I.R.S. Employer
       incorporation or organization)                   Identification No.)

        7450 Campus Drive, 2nd Floor                           80920
            Colorado Springs, CO
  (Address of principal executive offices)                  (Zip Code)


                                 (719) 548-9800
              (Registrant's telephone number, including area code)

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

            8,106,899 shares of the Registrant's Common Stock, $.001
         par value per share, were outstanding as of November 1, 2000.



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


<PAGE>



                                     INDEX


                                                                            PAGE

PART I - FINANCIAL INFORMATION

Item 1 -  Condensed Consolidated Financial Statements

      Condensed Consolidated Balance Sheets as of December 31, 1999 and
      September 30, 2000 (Unaudited)                                          1

      Condensed Consolidated Statements of Operations for the three-
      month and nine-month periods ended September 30, 1999 and
      2000 (Unaudited)                                                        2

      Condensed Consolidated Statements of Cash Flows for the nine-month
      periods ended September 30, 1999 and 2000 (Unaudited)                   3

      Notes to Condensed Consolidated Financial Statements (Unaudited)        4

Item 2 - Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                            6

Item 3 - Quantitative and Qualitative Disclosures About Market Risk          14


PART II - OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K                                    15

Signatures                                                                   16


<PAGE>
<TABLE>
<CAPTION>
                                  OPTIKA INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)

                                                                             December 31,     September 30,
                                                                                 1999              2000
                                                                            ----------------  ---------------
                                                                                                (unaudited)
<S>                                                                            <C>               <C>
Assets
Current assets:
   Cash and cash equivalents...........................................        $      3,359      $     5,008
   Short-term investments..............................................               3,823           10,532
   Accounts receivable, net............................................               4,741            2,332
   Other current assets................................................                 555            1,454
                                                                            ----------------  ---------------
         Total current assets..........................................              12,478           19,326
                                                                            ----------------  ---------------

Fixed assets, net......................................................               2,618            2,910
Deferred tax asset, net................................................               2,946                -
Other assets, net......................................................                  55              181
                                                                            ----------------  ---------------
                                                                               $     18,097      $    22,417
                                                                            ================  ===============
Liabilities, Redeemable Convertible Preferred Stock and Stockholders'
 Equity
Current liabilities:
   Accounts payable....................................................        $        869      $     1,560
   Accrued expenses....................................................               1,135            1,269
   Accrued compensation expense........................................                 910              835
   Deferred revenue....................................................               3,827            3,612
                                                                            ----------------  ---------------
          Total current liabilities....................................               6,741            7,276
                                                                            ----------------  ---------------

Redeemable convertible preferred stock.................................                   -           10,356

Commitments and contingencies
Stockholders' equity:
   Common stock; $.001 par value; 25,000,000 shares authorized;
      7,307,678 and 8,106,899 shares issued and outstanding
      at December 31, 1999 and September 30, 2000, respectively........                   7                8
  Additional paid-in capital...........................................              18,101           23,919
  Accumulated deficit..................................................              (6,648)         (19,095)
  Accumulated other comprehensive loss.................................                (104)             (47)
                                                                            ----------------  ---------------
          Total  stockholders' equity..................................              11,356            4,785
                                                                            ----------------  ---------------
                                                                               $     18,097      $    22,417
                                                                            ================  ===============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                  OPTIKA INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                    (In thousands, except per share amounts)


                                                           Three Months Ended               Nine Months Ended
                                                              September 30,                   September 30,
                                                       ----------------------------      -------------------------
                                                              1999         2000              1999          2000
<S>                                                      <C>           <C>               <C>           <C>
Revenues:
   Licenses........................................      $     2,863   $    1,251        $    8,050    $    4,130
   Maintenance and other...........................            2,721        2,650             7,669         8,100
                                                            ---------     --------          --------      --------
      Total revenues...............................            5,584        3,901            15,719        12,230

Cost of revenues:
   Licenses........................................              345          144               635           382
   Maintenance and other...........................            1,048        1,328             2,973         3,599
                                                            ---------     --------          --------      --------
      Total cost of revenues.......................            1,393        1,472             3,608         3,981
                                                            ---------     --------          --------      --------

Gross profit.......................................            4,191        2,429            12,111         8,249

Operating expenses:
   Sales and marketing.............................            2,815        3,764             8,252        10,123
   Research and development........................            1,333        2,149             3,992         6,371
   General and administrative......................              493          567             1,473         1,768
                                                            ---------     --------          --------      --------

      Total operating expenses.....................            4,641        6,480            13,717        18,262
                                                            ---------     --------          --------      --------

Loss from operations...............................             (450)      (4,051)           (1,606)      (10,013)
Other income, net..................................               79          217               146           533
                                                            ---------     --------          --------      --------

Loss before income taxes...........................             (371)      (3,834)           (1,460)       (9,480)
Income tax expense (benefit).......................             (130)       2,966              (511)        2,966
                                                            ---------     --------          --------      --------
Net loss...........................................             (241)      (6,800)             (949)      (12,446)
Preferred stock dividend...........................                -         (301)                -          (724)
Accretion of warrants and beneficial conversion
 feature...........................................                -         (184)                -        (4,846)
                                                            ---------     --------          --------      --------
Net loss applicable to common shareholders.........       $     (241)   $  (7,285)        $    (949)   $  (18,016)
                                                            =========     ========          ========      ========

Basic and diluted net loss per common share........       $    (0.03)   $   (0.90)        $   (0.13)   $    (2.28)
                                                            =========     ========          ========      ========

Basic and diluted weighted average number of common
shares outstanding.................................            7,205        8,095             7,177         7,897
                                                            =========     ========          ========      ========
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                  OPTIKA INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (In thousands)

                                                                             Nine Months Ended September 30,
                                                                             ---------------------------------
                                                                                  1999              2000
<S>                                                                          <C>                <C>
Cash Flows From Operating Activities:
Net loss...............................................................      $          (949)   $     (12,446)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
   Depreciation and amortization.......................................                  742              794
   Deferred tax expense (benefit)......................................                 (582)           2,946
   Changes in assets and liabilities:
      Accounts receivable, net.........................................                1,370            2,409
      Other assets.....................................................                   34           (1,025)
      Accounts payable.................................................                  131              691
      Accrued expenses.................................................                 (694)              59
      Deferred revenue.................................................                   99             (215)
                                                                             ----------------  ---------------

       Net cash provided (used) by operations..........................                  151           (6,787)
                                                                             ----------------  ---------------

Cash Flows From Investing Activities:
Capital expenditures...................................................                 (415)          (1,086)
Purchase of short-term investments.....................................               (2,895)          (6,652)
                                                                             ----------------  ---------------

       Net cash used by investing activities...........................               (3,310)          (7,738)
                                                                             ----------------  ---------------

Cash Flows From Financing Activities:
Proceeds from issuance of common stock.................................                  279            1,498
Net proceeds from issuance of redeemable convertible preferred stock and
warrants...............................................................                   --           14,676
                                                                             ----------------  ---------------

       Net cash provided  by financing activities......................                  279           16,174
                                                                             ----------------  ---------------

Net increase (decrease) in cash and cash equivalents...................               (2,880)           1,649
Cash and cash equivalents at beginning of period.......................                6,811            3,359
                                                                             ----------------  ---------------
Cash and cash equivalents at end of period.............................      $         3,931   $        5,008
                                                                             ================  ===============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
                                  OPTIKA INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.      Basis of Presentations

     The unaudited condensed consolidated financial statements included herein
reflect all adjustments, consisting only of normal recurring adjustments,
which in the opinion of management are necessary to fairly present our
consolidated financial position, results of operations, and cash flows for the
periods presented.  Certain information and footnote disclosures normally
included in audited financial information prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the Securities and Exchange Commission's (SEC's) rules and
regulations. The consolidated results of operations for the period ended
September 30, 2000 are not necessarily indicative of the results to be
expected for any subsequent quarter or for the entire fiscal year ending
December 31, 2000.  These condensed consolidated financial statements should
be read in conjunction with the financial statements and notes thereto for the
year ended December 31, 1999, included in our Annual Report on Form 10-K for
the year ended December 31, 1999.

2.      Net Loss Per Common Share

     Basic loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding during the period.  Diluted loss
per share is computed using the weighted average number of common shares
outstanding plus all dilutive potential common shares outstanding.  During the
first nine months of 1999, 744,200 options to purchase our common stock were
granted.  During the first nine months of 2000, 867,265 options to purchase
our common stock were granted.

     Net loss applicable to common shareholders during the three and nine
months ended September 30, 2000 includes certain one-time and recurring
adjustments included in the loss per share computation relating to the $15
million convertible preferred stock private placement with Thomas Weisel
Capital Partners L.P., which closed on February 23, 2000. The private
placement provides funds for the development of Trading Partner Resolution
Networks, to increase the market presence of Optika's Acorde family of
products, and to aggressively expand the North American sales force. The net
loss per share includes a one-time adjustment of $4.4 million that treats the
beneficial conversion terms of the preferred stock as a one-time additional
return to the preferred shareholders. The beneficial conversion arises from
accounting pronouncement requirements to allocate a portion of the $15 million
private placement to the issuance of common stock warrants. The net loss per
share also includes a recurring adjustment that is comprised of the
accumulating 8% dividend on the convertible preferred stock and an allocation
of the discount associated with the preferred stock issuance, prorated for the
portion of the quarter that the preferred stock was outstanding. The
accumulating dividend and the discount allocation will continue until such
time as the preferred stock is converted to common stock or redeemed.

The following is the reconciliation of the numerators and denominators of the
basic and diluted earning per share computations (in thousands except per
share data):

                                            Quarter Ended    Nine Months Ended
                                             September 30,     September 30,
                                          -----------------  -----------------
                                           1999       2000    1999       2000

Loss Per Share:
   Net loss applicable to common
    shareholders.......................  $  (241) $ (7,285) $   (949) $ (18,016)
   Basic weighted average common shares
    outstanding........................    7,205     8,095     7,177      7,897
   Basic net loss per common share.....  $ (0.03) $  (0.90) $  (0.13) $   (2.28)
Effect of Dilutive Securities:
   Options and warrants................       --        --        --         --
   Diluted weighted average common
    shares outstanding.................    7,205     8,095     7,177      7,897
   Diluted net loss per common share...  $ (0.03) $  (0.90) $  (0.13) $   (2.28)

In 1999 and 2000, all options,  warrants, and the redeemable convertible
preferred stock were excluded from the dilutive stock calculation because of
their antidilutive effect on net loss per share.

3.      Preferred Stock Transaction

     On February 23, 2000 we completed the sale of 731,851 shares of Series A
Convertible Preferred Stock (the "Preferred Stock") and Warrants (the
"Warrants") to purchase an aggregate of 307,298 shares of our common stock to
an investor group consisting principally of Thomas Weisel Capital Partners and
affiliated entities ("TWCP") for an aggregate purchase price of  $15 million.
The Preferred Stock has a $0.001 par value; 731,851 shares authorized, issued
and outstanding at September 30, 2000; and an aggregate liquidation value of
$15.4 million at September 30, 2000. The Preferred Stock can only be called
for redemption if, after one year, our common stock trades above $40.992 per
share for a specific period of time.  Until then, it accrues a cumulative
dividend of eight percent (8%) per annum.  The Preferred Stock is subject to
mandatory redemption provisions on the eighth anniversary of the issuance for
cash equal to the stated liquidation preference plus accumulated unpaid
dividends.  The Preferred Stock is convertible to common stock at the holder's
option based upon the conversion formula as defined in the Preferred Stock
Certificate of Designation.  In connection with the private placement we also
are required to make various representations and warranties to TWCP and are
obligated to indemnify them in connection with any breach of such
representations and warranties up to a maximum of $15 million for a period of
one year, with certain exceptions and limitations.  We also assumed an
obligation to register the shares of our common stock underlying the Preferred
Stock and Warrants.

4.      Income Taxes

     During the third quarter ended September 30, 2000 we took a $ 3.0 million
non-cash charge to earnings to fully reserve our net deferred tax asset, which
consists primarily of net operating loss carryforwards, to reflect that we may
be unable to use our net operating loss carryforwards in the foreseeable
future.  The deferred tax asset is available to reduce future tax expense
should we generate profits from operations.

5.      Contingencies

     We are, from time to time, subject to certain claims, assertions or
litigation by outside parties as part of its ongoing business operations.  The
outcome of any such contingencies are not expected to have a material adverse
effect upon our business, results of operations and financial condition.   We
are currently not a party to any material legal proceedings.

<PAGE>

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

        This management's discussion and analysis of financial condition and
results of operations includes a number of forward-looking statements which
reflect our current views with respect to future events and financial
performance.  These forward-looking statements are subject to risks and
uncertainties, including those discussed below and those under the caption
"Business Risks", that could cause actual results to differ materially from
historical results or those anticipated.

Overview

     Optika is a provider of business-to-business electronic commerce
solutions.  By leveraging the technology of the Internet, our software bridges
the gap between paper and electronic commerce across the enterprise and
throughout supply chains.

     The license of our software products is typically an executive-level
decision by prospective end-users and generally requires us and our Advantage
Partners, or APs, or Original Equipment Manufacturer, or OEMs, to engage in a
lengthy and complex sales cycle (typically between six and twelve months from
the initial contact date). We distribute our products through a direct sales
force and a network of APs and OEMs.  For 1999, approximately 71% of our
license revenues were derived from our APs, approximately 3% of our license
revenues were derived from sales by OEMs and the remaining license fees were
derived from direct sales. However, no individual AP accounted for more than
10% of our total revenues. For the years ended December 31, 1997, 1998 and
1999, we generated approximately 23%, 24% and 17%, respectively, of our total
revenues from international sales.  Our revenues consist primarily of license
revenues, which are comprised of one-time fees for the license of our
products; service revenues; and maintenance revenues, which are comprised of
fees for upgrades and technical support. Our APs and OEMs, which are
responsible for the installation and integration of the software for their
customers, enter into sales agreements with the end-user, and purchase
software directly from us.  We license software directly to the end-user
through software license agreements. Annual maintenance agreements are also
entered into between the APs and OEMs and the end-user, and the APs and OEMs
then purchase maintenance services directly from us. For fiscal years 1998 and
1999, approximately 60% and 53%, respectively, of our total revenues were
derived from software licenses and approximately 28% and 33%, respectively, of
our total revenues were derived from maintenance agreements. For fiscal years
1998 and 1999, other revenues, which are comprised of training, consulting and
implementation services, and third-party hardware and software products,
accounted for 12% and 14%, respectively, of our total revenues.

        We adopted the provisions of Statement of Position 97-2, "Software
Revenue Recognition" (SOP 97-2), for transactions entered into after January
1, 1998.  Under SOP 97-2, we will generally recognize license revenue upon
shipment when a non-cancelable license agreement has been signed or a purchase
order has been received, delivery has occurred, the fee is fixed or
determinable and collectibility is probable.  Where applicable, fees from
multiple element arrangements are unbundled and recorded as revenue as the
elements are delivered to the extent that vendor specific objective evidence
(VSOE) use of fair value exists for the delivered and undelivered elements.
Maintenance revenues are deferred and recognized ratably over the maintenance
period, which is generally one year.  Other revenues are recognized as
services are performed. We adopted SOP 98-9 "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions", which
amended SOP 97-2 on January 1, 2000.  SOP 98-9 requires the "residual
approach" for multiple element arrangements when VSOE exists for the
undelivered elements such as maintenance but is not known for the delivered
elements.  The adoption of SOP 98-9 had no material impact on our financial
position or results of operations.

     We generally do not grant rights to return products, except for
defects in the performance of the products relative to specifications and
pursuant to standard industry shrink-wrapped license agreements which provide
for 30-day rights of return if an end-user does not accept the terms of the
shrink-wrapped license agreements.  Our software license agreements generally
do not provide price adjustments or rotation rights.  We generally include a
90-day limited warranty with the software license, which entitles the end-user
to corrections for documented program errors or permits end-users to return
the software in the event that errors cannot be corrected. We have not
experienced significant software returns to date.

     Based on our research and development process, costs incurred between the
establishment of technological feasibility and general release of the software
products are immaterial and therefore have not been capitalized in accordance
with Statement of Financial Accounting Standards No. 86.  All internal
research and development costs have been expensed as incurred.

Revenues

     Total revenues decreased 22% from $15.7 million, for the nine months
ended September 30,1999, to $12.2 million, for the nine months ended September
30, 2000.   Total revenues decreased 30% from $5.6 million for the quarter
ended September 30, 1999 to $3.9 million for the quarter ended September 30,
2000.

     Licenses.    License revenues decreased 49% from $8.1 million, during the
nine months ended September 30, 1999, to $4.1 million, for the nine months
ended September 30, 2000, and decreased 56% from $2.9 million during the
quarter ended September 30, 1999 to $1.3 million for the quarter ended
September 30, 2000.  License revenues represented 51% and 34% of the total
revenues for the nine months ended September 30, 1999 and 2000, respectively
and represented 51% and 32% of the total revenues for the quarters ended
September 30, 1999 and 2000, respectively.  The decrease in license revenues
during the third quarter of 2000 is a result of slower than expected
development of the market for our Acorde products .  License revenues
generated outside of the United States accounted for approximately 18% of the
our revenues for the nine months ended September 30, 1999, compared to 22% for
the same period in 2000, and 17% and 31% for the quarter ended September 30,
1999 and 2000, respectively.  The increase in international revenues as a
percentage of total revenue is a result lower than expected United States
license revenues.

     Maintenance and Other.     Maintenance revenues, exclusive of other
revenue, increased 8% from $5.2 million during the nine months ended September
30, 1999, to $5.6 million for the nine months ended September 30, 2000 and
decreased 6% from $1.9 million during the quarter ended September 30, 1999, to
$1.8 million for the quarter ended September 30, 2000.  Maintenance revenue
represented 33% and 46% of the total revenues for the nine months ended
September 30, 1999 and 2000, respectively and 34% and 46% of the total
revenues for the quarters ended September 30, 1999 and 2000, respectively.
Maintenance revenue remained relatively flat between 1999 and 2000 as we are
transitioning our customers from our older Filepower products to our new
Acorde product suite.  Other revenue, consisting primarily of consulting
services, training and consulting fees represented 16% and 20% of total
revenues for the nine months ended September 30, 1999 and 2000, respectively,
and 15% and 22% of total revenues for the quarters ended September 30, 1999
and 2000, respectively.  The increases in other revenue as a percentage of
total revenue was primarily due to decreased license revenue in the first nine
months of 2000.

Cost of Revenues

     Licenses.     Cost of licenses consists primarily of royalty payments to
third-party vendors and costs of product media, duplication, packaging and
fulfillment.  Cost of licenses decreased  from $635,000, or 8% of license
revenues, to $382,000, or 9% of license revenues, for the nine months ended
September 30, 1999 and 2000 respectively, and decreased from $345,000 or 12%
of license revenues to $144,000, or 12% of license revenues, for the quarters
ended September 30, 1999 and 2000, respectively.  The absolute dollar decrease
in cost of licenses was attributable to the decreased license revenue.

     Maintenance and Other.    Costs of maintenance and other consists of the
direct and indirect costs of providing software maintenance and support,
training and consulting services to our APs, OEMs and end-users, and the cost
of third-party software products. Cost of maintenance and other increased
from $3.0 million, or 39% of maintenance and other revenues, to $3.6 million
or 44% of maintenance and other revenues for the nine months ended September
30, 1999 and 2000, respectively.  Cost of maintenance and other increased
from $1.0 million, or 39% of maintenance and other revenues, to $1.3 million,
or 50% of maintenance and other revenues, for the quarters ended September 30,
1999 and 2000, respectively.  The  increase in cost of maintenance and other
is primarily a result of the direct third-party costs associated with the
increased number of service and consulting contracts.


Operating Expenses

     Sales and Marketing.    Sales and marketing expenses consist primarily of
salaries, commissions and other related expenses for sales and marketing
personnel, marketing, advertising and promotional expenses.  Sales and
marketing expenses increased from $8.3 million, or 53% of total revenues, for
the nine months ended September 30, 1999 to $10.1 million, or 83% of total
revenues, for the nine months ended September 30, 2000.  Sales and marketing
expenses increased from $2.8 million, or 50% of total revenues, for the
quarter ended September 30, 1999 to $3.8 million, or 96% of total revenues,
for the quarter ended September 30, 2000. The increase in sales and marketing
expenses is primarily attributable to costs associated with the promotion of
the Optika Acorde family of products and the increase of sales staff in the
United States.  We anticipate that sales and marketing expenses will continue
at approximately this level throughout the remainder of the year.

     Research and Development.    Research and development expenses consist
primarily of salaries and other related expenses for research and development
personnel, contractors, as well as the cost of facilities and equipment.
Research and development expenses increased from $4.0 million, or 25% of total
revenues, for the nine months ended September 30, 1999 to $ 6.4 million, or
52% of total revenues, for the nine months ended September 30, 2000. Research
and development expenses increased from $1.3 million, or 24% of total
revenues, for the quarter ended  September 30, 1999 to $2.1 million, or 55% of
total revenues, for the quarter ended September 30, 2000.  The increase in
research and development costs is primarily the result of the continued cost
to develop the Optika Acorde family of products.  We anticipate that research
and development expenses will continue at this level throughout the year.

     General and Administrative.    General and administrative expenses
consist primarily of salaries and other related expenses of administrative,
executive and financial personnel, and outside professional fees. General and
administrative expenses increased from $1.5 million, or 9% of total revenues,
for the nine months ended September 30, 1999 to $1.8 million, or 14% of total
revenues, for the nine months ended September 30, 2000.  General and
administrative expenses increased from $493,000, or 9% of total revenues, for
the quarter ended September 30, 1999 to $567,000, or 15% of total revenues,
for the quarter ended September 30, 2000.  For the nine months ended September
30, 2000, the increase in general and administrative expenses as compared to
the same period in 1999 was primarily due to costs associated with hiring and
retaining staff, legal and accounting costs associated with revising and
updating certain employee benefit plans and certain payroll tax - related
charges related to the exercise of options under our non-qualified stock
option plan.  We anticipate that these charges will decrease in future
quarters.

     Other Income, net.  Other income, net consists primarily of interest
earned on our investing activities and foreign currency translation
adjustments.  Net other income was $146,000 during the nine months ended
September 30, 1999 compared to net other income of $533,000 during the nine
months ended September 30, 2000.  Net other income was $79,000 during the
quarter ended September 30, 1999 compared to net other income of $217,000
during the quarter ended September 30, 2000. The increase in net other income
was primarily as a result of interest income derived from the proceeds of our
preferred stock issuance.

     Income Tax Expense (Benefit).   During the third quarter ended September
30, 2000 we took a $ 3.0 million non-cash charge to earnings to fully reserve
our net deferred tax asset, which consists primarily of net operating loss
carryforwards, to reflect that we may be unable to use our net operating loss
carryforwards in the foreseeable future.  The deferred tax asset is available
to reduce future tax expense should we generate profits from operations.

Liquidity and Capital Resources

     Cash and cash equivalents, including short-term investments, at September
30, 2000 was $15.5 million, increasing by approximately $8.4 million from
December 31, 1999.  This increase  is primarily due to the proceeds from the
preferred stock transactions offset by our net loss and capital expenditures
associated with additional computer equipment.

     For the nine months ended September 30, 1999, net cash provided by
operating activities was $151,000 compared to net cash used by operating
activities of $6.8 million for the nine months ended September 30, 2000.  Cash
used by operating activities for the nine months ended September 30, 2000 is
primarily due to the net loss.

     Cash used by investing activities was $3.3 million for the nine months
ended September 30, 1999 compared to cash used of $7.7 million for the nine
months ended September 30, 2000.  The cash used in investing activities is
primarily due to the purchase of marketable securities during the first nine
months of 2000.

     Cash provided by financing activities was $279,000 for the nine months
ended September 30, 1999.  Cash provided by financing activities was $16.2
million for the nine months ended September 30, 2000.   Cash provided by
financing activities resulted primarily from proceeds from the private
placement of preferred stock and warrants for approximately $14.7 million of
proceeds, net of issuance costs.

     At September 30, 2000, our principal sources of liquidity included cash
and short-term investments of $15.5 million.  In addition, we have a secured
credit facility for up to $3.0 million, bearing interest at the bank's prime
rate.  As of September 30, 2000, we had $2.8 million available for borrowing
and no other debt outstanding.

     We believe that our current cash and short-term investments, together
with anticipated cash flow from operations and our bank credit facility, will
be sufficient to meet its working capital and capital expenditure requirements
for at least the next 12 months.

Business Risks

     In evaluating our business, you should carefully consider the business
risks discussed in this section.

     Fluctuation in our operating results may cause the price of our common
stock to decline.  Our sales and other operating results have varied
significantly in the past and will likely vary significantly in the future as
a result of factors such as:

o       The size and timing of significant orders and their fulfillment

o       Rate of rollout, demand and customer adoption of our product offerings,
        including, in particular, our products and solutions used to establish
        Trading Partner Resolution Networks, or TPRNs

o       Ability of third party products embedded or to be embedded in our
        products and our ability to negotiate license agreements with such third
        parties on favorable terms

o       Changes in pricing policies by us or our competitors

o       The number, timing and significance of product enhancements and new
        product announcements by us and our competitors

o       Changes in the level of our operating expenses

o       Warranty and customer support expenses

o       Changes in our end-users' financial condition and budgetary processes

o       Changes in our sales, marketing and distribution channels including the
        extent to which we are able to establish a direct sales force

o       Product life cycles

o       Software bugs and other product quality problems

o       The cancellation of licenses during the warranty period or nonrenewal
        of maintenance agreements

o       Customization and integration problems with the end-user's legacy system

o       Changes in our business strategy

o       Changes in accounting pronouncements

o       The level of international expansion and foreign currency exchange rates

o       Seasonal trends

     A significant portion of our revenues have been, and we believe will
continue to be, derived from a limited number of orders, and the timing of
such orders and their fulfillment have caused, and are expected to continue to
cause, material fluctuations in our operating results.  Revenues are also
difficult to forecast because the markets for our products are rapidly
evolving, and our sales cycle and the sales cycle of our APs and OEMs is
lengthy and varies substantially from end-user to end-user.  To achieve our
quarterly revenue objectives, we depend upon obtaining orders in any given
quarter for shipment in that quarter.  Product orders are typically shipped
shortly after receipt; consequently, order backlog at the beginning of any
quarter has in the past represented only a small portion of that quarter's
revenues.  Furthermore, we have often recognized most of our revenues in the
last month, or even in the last weeks or days, of a quarter.  Accordingly, a
delay in shipment near the end of a particular quarter may cause revenues in a
particular quarter to fall significantly below our expectations and may
materially adversely affect our operating results for such quarter.
Conversely, to the extent that significant revenues occur earlier than
expected, operating results for subsequent quarters may fail to keep pace with
results of previous quarters or even decline.  We also have recorded generally
lower sales in the first quarter than in the immediately preceding fourth
quarter, as a result of, among other factors, end-users' purchasing and
budgeting practices and our sales commission practices.  To the extent that
future international operations constitute a higher percentage of total
revenues, we anticipate that we may also experience relatively weaker demand
in the third quarter as a result of reduced sales in Europe during the summer
months.  Significant portions of our expenses are relatively fixed in the
short term.  Accordingly, if revenue levels fall below expectations, operating
results are likely to be disproportionately and adversely affected.  As a
result of these and other factors, we believe that our quarterly operating
results will vary in the future, and that period-to-period comparisons of our
results of operations are not necessarily meaningful and should not be relied
upon as indications of future performance.  Furthermore, due to all of the
foregoing factors, it is likely that in some future quarter our operating
results will be below the expectations of public market analysts and
investors.  In such event, the price of our common stock would likely decline
and such decline could be significant.

     Our sales strategy may not be successful.  During 1998, we altered our
sales strategy with the introduction of a direct sales team, but we had
limited experience in marketing and selling our products on a direct sales
basis.  Consequently, we may not be successful in achieving a significant
level of direct sales on a timely basis, or at all.  In 2000, our direct sales
team has had to adapt to selling our new TPRN product, Acorde Resolve, which
presents a different series of sales challenges than our historical software
products.  We have also had to recruit a signficant number of new salespeople
to focus on selling our products and train our existing salespeople on selling
our new product, Acorde Resolve.  If we are unable to execute our direct sales
strategy, it could have a material adverse effect on our business and results
of operations.

     We have limited product offerings and our business will suffer if demand
for our products declines or fails to develop as we expect. The Optika Acorde
family of products (which included Optika eMedia) account for substantially
all of our current license revenue.  Our future financial performance will
depend in general on the acceptance of our product offerings, and in
particular on the successful development, introduction and customer acceptance
of new and enhanced versions of our products.  Such markets, primarily the
market for our TPRN product, may not grow and we may not be successful in
developing and marketing these or any other products, and these products may
not achieve widespread customer acceptance.  To date, we have not recognized
any material revenue from the sale of our TPRN product, Acorde Resolve, which
was first released June 30, 2000.  In addition, when and if Acorde Resolve
constitutes a greater share of our revenues, we will become increasingly
subject to many of the risks faced by companies that are dependent on the
growth of the Internet.  These risks include, but are not limited to, the
possibility that the Internet will fail to achieve broad acceptance as a
business-to-business electronic commerce medium, a relatively new and unproven
business model, our ability to anticipate and adapt to a rapidly developing
market, and that many well-financed Internet companies may seek to enter our
market niche.  We may not be successful in launching or selling Acorde
Resolve, and we may encounter unexpected delays or costs in such rollout, and
any such failures could have a material adverse effect on our business and
results or operations.

     Our business may be adversely impacted if we are unable to generate
sufficient capital in the future. We believe that our existing cash balances
and liquid resources will be sufficient to fund our operating activities,
capital expenditures and other obligations through at least the next twelve
months. Recently capital market conditions have materially and adversely
affected the ability of many Internet companies to raise additional capital in
both private and public markets.  If market conditions do not improve and we
are not successful in generating sufficient cash flow from operations or in
raising additional capital when required in sufficient amounts and on terms
acceptable to us, we may be required to reduce our planned expenditures and
scale back the scope of our business plan, either of which could have a
material adverse effect on our business.

     The success of our business depends upon our ability to hire, retain and
integrate highly skilled personnel.  Most of our senior management team has
joined us within the last five years.   These individuals may not be able to
achieve and manage growth, if any, or build an infrastructure necessary for us
to operate.  Our ability to compete effectively and to manage any future
growth will require that we continue to assimilate new personnel and to
expand, train and manage its work force. Our future performance depends to a
significant degree upon the continuing contributions of our key management,
sales, marketing, customer support, and product development personnel.  We
have at times experienced, and continue to experience, difficulty in
recruiting qualified personnel, particularly in sales, software development
and customer support.  We believe that there may be only a limited number of
persons with the requisite skills to serve in those positions, and that it may
become increasingly difficult to hire such persons.  Competitors and others
have in the past, and may in the future, attempt to recruit our employees.  We
have from time to time experienced turnover of key management, sales and
technical personnel.  The loss of key management, sales or technical
personnel, or the failure to attract and retain key personnel, could harm our
business.

     Any discontinuation or disruption of our relationships with APs and OEMs
or competition from them could adversely affect our results of operations and
financial condition. Our future results of operations will depend on the
success of our marketing and distribution strategy, which has relied, to a
significant degree, upon APs and OEMs to sell and install our software, and
provide post-sales support. These relationships are usually established
through formal agreements that generally do not grant exclusivity, do not
prevent the distributor from carrying competing product lines and do not
require the distributor to purchase any minimum dollar amount of our
software.  Some APs may not continue to represent Optika or sell our
products.  Other APs, some of which have significantly greater financial
marketing and other resources than us, may not develop or market software
products that compete with our products or may otherwise discontinue their
relationship with, or support of, us.  Some of our APs are small companies
that have limited financial and other resources that could impair their
ability to pay us.  Our strategy may not be successful and our strategy may
adversely impact sales through our APs and OEMs.  Our OEMs occasionally
compete with our APs and us.  Selling through indirect channels may also
hinder our ability to forecast sales accurately, evaluate customer
satisfaction, provide quality service and support or recognize emerging
customer requirements.

     Our business will suffer if we fail to develop and successfully introduce
new and enhanced products to meet the changing needs of our customers. The
markets for our products are characterized by rapid technological change,
changes in customer requirements, frequent new product introductions and
enhancements, and emerging industry standards. Our future performance will
depend in significant part upon our ability to respond effectively to these
developments. The introduction of products embodying new technologies and the
emergence of new industry standards can render existing products obsolete,
unmarketable or noncompetitive. We are unable to predict the future impact of
such technology changes on our products.  Moreover, the life cycles of our
products are difficult to estimate. Our future performance will depend in
significant part upon our ability to enhance current products, and to develop
and introduce new products and enhancements that respond to evolving customer
requirements.  We have in the recent past experienced delays in the
development and commencement of commercial shipments of new products and
enhancements, resulting in customer frustration and delay or loss of
revenues.  Our inability, for technological or other reasons, to develop and
introduce new products or enhancements in a timely manner in response to
changing customer requirements, technological change or emerging industry
standards, or maintain compatibility with heterogeneous computing
environments, would have a material adverse effect on our business and results
of operations.

     We rely on third party licenses of software we incorporate into our
products.  The unavailability of  such licenses would adversely affect our
business and results of operations.  We license software from third parties,
which is incorporated into our products.  These licenses expire from time to
time.  These third-party software licenses may not continue to be available to
us on commercially reasonable terms.  The loss of, or inability to maintain,
any such software licenses could result in shipment delays or reductions until
equivalent software could be developed, identified, licensed and integrated,
which in turn could materially and adversely affect our business and financial
condition.  In addition, we generally do not have access to source code for
the software supplied by these third parties.  Certain of these third parties
are small companies that do not have extensive financial and technical
resources.  If any of these relationships were terminated or if any of these
third parties were to cease doing business, we may be forced to expend
significant time and development resources to replace the licensed software.
Such an event would have a material adverse effect upon our business and
results of operations.

     Delays in the lengthy and complex sales and implementation cycles of our
customers could adversely affect our results of operations and our business.
The license of our software products is typically an executive-level decision
by prospective end-users, and generally requires us and our APs and OEMs to
engage in a lengthy and complex sales cycle (typically between six and twelve
months from the initial contact date).  In addition, the implementation by
customers of our products may involve a significant commitment of resources by
such customers over an extended period of time.  For these and other reasons,
the sales and customer implementation cycles are subject to a number of
significant delays over which we have little or no control.  Our future
performance also depends upon the capital expenditure budgets of our customers
and the demand by such customers for our products.  Certain industries to
which we sell our products, such as the financial services industry, are
highly cyclical.  Our operations may in the future be subject to substantial
period-to-period fluctuations as a consequence of such industry patterns,
domestic and foreign economic and other conditions, and other factors
affecting capital spending.  Such factors may have a material adverse effect
on our business and results of operations.

     Intense competition for our product offerings may result in our price
reductions, reduced gross margins and loss of market share.  The market for
our product offerings is intensely competitive and can be significantly
affected by new product introductions and other market activities of industry
participants.  We anticipate that the TPRN market will also be highly
competitive and subject to competitive forces that do not currently exist.
Our competitors offer a variety of products and services to address the
emerging market for e-business solutions. Because our products are designed to
operate in non-proprietary computing environments and because of low barriers
to entry in the e-business market, we expect additional competition from
established and emerging companies, as the market for e-business continues to
evolve.  Current and potential competitors have established or may establish
cooperative relationships among themselves or with third parties, to increase
the ability of their products to address the needs of our prospective
customers.  In addition, several competitors have recently made, or attempted
to make, acquisitions to enter the market or increase their market presence.
Accordingly, new competitors or alliances among competitors may emerge and
rapidly acquire significant market share.  Increased competition is likely to
result in price reductions, reduced gross margins and loss of market share,
any of which would have a material adverse effect on our business and results
of operations. We may not be able to compete successfully against current or
future competitors.

     Our competitors have significantly greater resources than we do.  We may
not have the resources necessary to successfully compete in our market.  Many
of our current and potential competitors are substantially larger than we are,
have significantly greater financial, technical and marketing resources and
have established more extensive channels of distribution.  As a result, such
competitors may be able to respond more rapidly to new or emerging
technologies and changes in customer requirements, or to devote greater
resources to the development, promotion and sale of their products than we
can. We expect our competitors to continue to improve the performance of their
current products and to introduce new products or new technologies that
provide added functionality and other features.  Our failure to keep pace with
our competitors through new product introductions or enhancements could cause
a significant decline in our sales or loss of market acceptance of our
products and services, result in continued intense price competition, or make
our products and services or technologies obsolete or noncompetitive.  To be
competitive, we will be required to continue to invest significant resources
in research and development, and in sales and marketing.

     We may not be able to adequately protect our intellectual property and we
may be exposed to infringement claims by third parties.  Our performance
depends in part on our ability to protect our proprietary rights to the
technologies used in our principal products.  We rely on a combination of
copyright and trademark laws, trade secrets, confidentiality provisions and
other contractual provisions to protect our proprietary rights, which are
measures that afford only limited protection.  Despite our 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.
In addition, the laws of some foreign countries do not protect our proprietary
rights as fully as do the laws of the United States.  Our means of protecting
our proprietary rights in the United States or abroad may not be adequate, and
competitors may independently develop similar technologies. Third parties may
claim infringement by our products of their intellectual property rights.  We
expect that software product developers will increasingly be subject to
infringement claims if the number of products and competitors in our industry
segment grows and the functionality of products in different industry segments
overlaps. Any such claims, with or without merit, and regardless of the
outcome of any litigation, will be time consuming to defend, result in costly
litigation, divert management's attention and resources, cause product
shipment delays, or require us to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on
terms acceptable to us, if at all.  A successful claim of infringement against
our products and failure or inability to license the infringed or similar
technology may adversely affect our business and results of operations.

     We rely upon and intend to increase our international sales activities,
which subjects us to additional business risks.  Sales outside the United
States accounted for approximately 23%, 24% and 17% of our revenues in 1997,
1998 and 1999, respectively.  We intend to expand our international
operations, third-party distributor relationships and hiring of additional
sales representatives, each of which involves a significant investment of time
and resources. We may not be successful in expanding our international
operations.  In addition, we have only limited experience in developing
localized versions of our products and cannot assure you that we will be able
to successfully localize, market, sell and deliver our products
internationally.  Our inability to successfully expand our international
operations in a timely manner, or at all, could materially and adversely
affect our business and results of operations.  Our international revenues may
be denominated in foreign currencies or the U.S. dollar.  We do not currently
engage in foreign currency hedging transactions; as a result, a decrease in
the value of foreign currencies relative to the U.S. dollar could result in
losses from transactions denominated in foreign currencies, could make our
software less price-competitive, and could have a material adverse effect upon
our business, results of operations, and financial condition.

     Our products are complex and may contain defects that would lead to
increased costs, reduction of net revenues and damage to our reputation.  Our
license agreements typically contain provisions designed to limit our exposure
to potential product liability claims.  These limitations of liability
provisions may not be effective under the laws of certain jurisdictions.  The
sale and support of our products may entail the risk of such claims, and we
cannot assure you that we will not be subject to such claims in the future.  A
successful product liability claim against us could have a material adverse
effect upon our business and results of operations.  Software products such as
those we offer frequently contain errors or failures, especially when first
introduced or when new versions are released. We have in the past released
products that contained defects, and have discovered software errors in
certain of our new products and enhancements after introduction.  We could in
the future lose or delay recognition of revenues as a result of software
errors or defects, the failure of our products to meet customer specifications
or otherwise.  Our products are typically intended for use in applications
that may be critical to a customer's business.  As a result, we expect that
our customers and potential customers have a greater sensitivity to product
defects than the market for general software products. Despite our testing and
testing by current and potential customers, errors or defects may be found in
new products or releases after commencement of commercial shipments, and our
products may not meet customer specifications, resulting in loss or deferral
of revenues, diversion of resources, damage to our reputation, or increased
service and warranty and other costs, any of which could have a material
adverse effect upon our business and operating results.

    The price of our common stock has been and is likely to continue to be
highly volatile.  The market price of our shares of common stock is likely to
be highly volatile and may be significantly affected by factors such as:

o       Actual or anticipated fluctuations in our operating results

o       Announcements of technological innovations

o       New products or new contracts by us or our competitors

o       Sales of common stock by management

o       Sales of significant amounts of common stock into the market

o       Developments with respect to proprietary rights

o       Conditions and trends in the software and other technology industries

o       Adoption of new accounting standards affecting the software industry

o       Changes in financial estimates by securities analysts and others

o       General market conditions

o       Other factors that may be unrelated to us or our performance

In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have particularly affected the market
prices for the common stock of technology companies.  These broad market
fluctuations may adversely affect the market price of our common stock.  In
the past, following periods of volatility in the market price of a particular
company's securities, securities class action litigation has often been
brought against such company.  Such litigation may be brought against us in
the future.  Such litigation, regardless of its outcome, would result in
substantial costs and a diversion of management's attention and resources that
could have a material adverse effect upon our business and results of
operations.

     Our existing stockholders could take actions that are not in your best
interest.  Holders of our Series A Preferred Stock and members of our Board of
Directors and our executive officers, together with members of their families
and entities that may be deemed affiliates of, or related to, such persons or
entities, beneficially own, as of November 1, 2000, approximately 26% of the
outstanding shares of our voting stock.  Accordingly, these stockholders
could, if acting in concert, be able to substantially influence the election
of all members of our Board of Directors and determine the outcome of
corporate actions requiring stockholder approval, such as mergers and
acquisitions.

     Provisions in our charter documents and Delaware law could prevent or
delay a change in control of our company, even if such a change in control
would be beneficial to the stockholders.  Certain provisions of our
Certificate of Incorporation, equity incentive plans, Bylaws, and Delaware law
may discourage certain transactions involving a change in control of our
company.  Our classified Board of Directors and the ability of the Board of
Directors to issue "blank check" preferred stock without further stockholder
approval, may have the effect of delaying, deferring or preventing a change in
our control and may also affect the market price of our stock.

     Risks Associated with Recently Completed Financing.  On February 23, 2000
we completed the sale of $15.0 million of Series A Convertible Preferred Stock
and warrants to purchase our common stock to an investor group consisting
principally of Thomas Weisel Capital Partners and affiliated entities, or
TWCP. The preferred stock can only be redeemed by us if, after one year, our
stock trades above a specified price level for a period of time.  The
Preferred Stock is subject to mandatory redemption provisions on the eighth
anniversary of the issuance for cash equal to the stated liquidation
preference plus accumulated unpaid dividends.  Until then, it accrues a
cumulative dividend of eight percent (8%) per annum.  In connection with the
financing, we were also required to make various representations and
warranties to TWCP and are obligated to indemnify them in connection with any
breach of such representations and warranties up to a maximum of $15 million
for a period of one year, with certain exceptions and limitations.  We also
assumed an obligation to register the shares of our common stock underlying
the preferred stock and the warrants.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     As of September 30, 2000 we had $10.4 million in short-term investments
that are sensitive to market risks.  Our investment portfolio is used to
preserve our capital until it is required to fund operations, including our
research and development activities.  We do not own any derivative financial
instruments.  Due to the nature of our investment portfolio we are primarily
subject to interest rate risk.

     Our investment portfolio includes fixed rate debt instruments that are
primarily United States government and agency bonds of duration ranging from
one to five years.  The market value of these bonds is subject to interest
rate risk, and could decline in value if interest rates increase.  Any
material change in the interest rates would have a material change in the
market value of our debt instruments.  A hypothetical increase or decrease in
market interest rates by 10% from interest rates at September 30, 2000 would
cause the fair market value of these short-term investments to change by an
insignificant amount.

<PAGE>


                          PART II - OTHER INFORMATION


Item 6 - Exhibits and Reports on Form 8-K.
(a)     Exhibits

        10.19  Loan Modification Agreement dated as of October 15,
               2000, by and between the registrant and Silicon Valley Bank.
        27.    Financial Data Schedule for the nine months ended September 30,
               2000.

(b)     Reports on Form 8-K

        No reports on Form 8-K have been filed during the quarter ended
        September 30, 2000.



<PAGE>

SIGNATURES

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

                                                            OPTIKA INC.
                                                           (Registrant)




             11/13/2000                            /s/   Mark K. Ruport
             ----------                    ------------------------------------
               (Date)                                 Mark K. Ruport
                                            President, Chief Executive Officer
                                                 and Chairman of the Board



             11/13/2000                            /s/ Steven M. Johnson
             ----------                    ------------------------------------
               (Date)                                Steven M. Johnson
                                         Chief Financial Officer, Vice President
                                          Finance and Administration, Secretary
                                               and Chief Accounting Officer