10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-K

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended April 30, 2007
	OR
o	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: 001-11807

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

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

2101 Arena Blvd, Suite 100
Sacramento, California 95834
(Address of principal executive offices)

Telephone: (916) 928-6400
(Registrant’s telephone number, including area code)

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

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

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES o  NO x

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

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 o

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

Indicate by check mark whether registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer  o Accelerated filer  o Non-accelerated filer  x

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $4,348,339 based on the number of shares held by non-affiliates of the registrant as of April 30, 2007, and computed by reference to the reported last sale price of common stock on October 31, 2006, which is the last business day of the registrant’s most recently completed second fiscal quarter. Shares of common stock held by each officer and director and by each person who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of June 30, 2007, the registrant had 6,037,901 shares of common stock outstanding.

PART I

A Caution about Forward-Looking Statements:

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

Special Note on Reverse Stock Split

Effective as of 11:59 p.m. Eastern time on June 24, 2007, Unify completed a 1-for-5 reverse split of its outstanding shares of common stock. All share numbers and all exercise and conversion prices in this report are presented as adjusted for the reverse stock split.

ITEM 1.BUSINESS

The Company

     Unify (the “Company”, “we”, “us” or “our”) is a global provider of application development, data management and application modernization solutions that enable Service-Oriented Architecture (SOA). Our suite of migration solutions, easy to use development software and maintenance-free embedded databases allows customers to modernize and maximize their application environment. For organizations needing to modernize their systems, we help businesses service-enable legacy applications to support SOA initiatives. Based on market requirements, our solutions help companies increase speed and agility, improve asset reuse, lower IT costs and reduce risks and exposures.

    Unify’s strategy is to work with organizations to “Enable SOA.” We help businesses modernize and service-enable mission-critical legacy applications in support of enterprise-wide SOA initiatives. Based on market requirements for application modernization, our solutions help companies increase speed and agility, improve asset reuse, lower IT costs, reduce business risks and exposures, and free information previously locked within proprietary systems. The Company sells and markets its application development and database software and services and modernization solutions through two segments. The segments are the Americas, which includes the Company’s international distributors, and Europe, which includes the UK, France, Germany and other direct European customers.

     Unify expanded its 27-year heritage and technology innovation with the November 2006 acquisition of GUPTA Technologies LLC (“Gupta”), a complementary application development and data management software company. Unify now serves more than 3,000 end user corporate information technology departments (“IT”), customers, 35 distributors and 250 software value-added resellers (“VARs”), solutions integrators (“SIs”) and independent software vendors (“ISVs”) partners across the globe. Our clients represent diverse industries including energy, financial services, government, health care, insurance, manufacturing, retail, telecommunications and more. We market and sell products directly in the United States, Australia, UK, Germany and France, and indirectly through worldwide distributors in Europe, Middle East and Africa (“EMEA”), Asia Pacific and Latin America in more than 50 countries.

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

     Unify was initially incorporated in California in 1980 and later reincorporated in Delaware on April 10, 1996. We are headquartered in Sacramento, California, and have offices in Germany, France and the United Kingdom (“UK”). Our headquarters office is located at 2101 Arena Blvd., Suite 100, Sacramento, California 95834. Our telephone number is (916) 928-6400 and our website address is http://www.unify.com.

Products

     Prior to the acquisition of Gupta, the Company was comprised of technology products that included NXJ Developer, Composer, ACCELL, DataServer and the VISION product families. Gupta’s products include a popular database application, SQLBase, and a well-known set of application development tools, Team Developer.

Composer Solutions

The Composer technology is specifically designed for customers that need to modernize and migrate proprietary applications to a Service-Oriented Architecture (SOA) for either the .NET or J2EE platforms. Composer for Lotus Notes is targeted at companies with IBM Lotus Notes® applications proliferated throughout the enterprise, Composer integrates with the .NET and Java platforms, leverages open standards via an SOA environment, and provides the capabilities and technology necessary for a comprehensive migration of template and custom Notes applications. Composer modernizes Notes applications to enable organizations to share data previously locked in proprietary systems, reduce application license costs, and improve integration and collaboration within the enterprise.

Rapid Application Development Products

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

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

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

• ACCELL/Web™ — enables our customers with existing ACCELL/SQL applications to convert them into fully featured graphical web-based applications without rewriting the application or modifying the source code.
   
• ACCELL/SQL™ — is our powerful 4GL-based rapid application development software for developing client/server applications. ACCELL/SQL connects to Unify, Oracle, Sybase and Informix databases creating a fast application performance environment.
   
• ACCELL/IDS™ — powerful 4GL-based rapid application development software for applications that connect to Unify’s DataServer ELS database.

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

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Database Management Products

• SQLBase® is a fully relational, high performance, embedded database that allows organizations to manage data closer to the customer, where capturing and organizing information is becoming increasingly critical. SQLBase provides what other database companies cannot deliver: a self-recovering, maintenance-free embedded database architecture that enables IT, ISVs and VARs to focus on their solution, rather than the underlying database technology.
   
• DataServer® — A high performance enterprise relational database management system with minimal maintenance and memory requirements. It can quickly accommodate the growth of user requirements over time, making it an attractive choice for mission critical applications. DataServer makes it easy for developers to create graphical applications and migrate existing database applications to enterprise network and Internet environments.
   
• DataServer® ELS — A high performance, easily embeddable database. Its small footprint and proven reliability make it an industry favorite for embedded applications that require relational databases.

Discontinued Products

     As part of our acquisition of Gupta on November 20, 2006, the Company sold its IRM division and ViaMode software product to Halo.

      IRM’s primary product was NavRisk. NavRisk is an end-to-end policy administration and underwriting solution used by the underwriters, administrators and risk managers of risk pools, risk retention groups, captives and other self-insured entities. NavRisk is used to enable proactive risk management and administration of alternative risk groups by automating the complete policy cycle including renewal processing, rating, policy certificates, quoting, premium invoicing, reporting, loss control and communications with customers or members. NavRisk automates and enables data consolidation, tracking and valuing of exposures, all aspects of quoting and invoicing of premiums and the issuance of final policy certificates and endorsements. NavRisk integrates with claims and accounting systems for comprehensive real-time reporting and analysis on all lines of business.

     ViaMode is a transportation software and services solution delivered in partnership by Unify and one of our domain partners. The ViaMode solution combines a software application built on Unify NXJ with professional services for driver performance management within the transportation industry.

Customers

     Unify’s customers include corporate information technology departments (“IT”), software value-added resellers (“VARs”), solutions integrators (“SIs”) and independent software vendors (“ISVs”) from a variety of industries, including insurance, financial services, healthcare, government, manufacturing, retail, education, and more. In fiscal 2007 and 2005 no single customer accounted for 10% or more of revenues. In fiscal 2006, one customer accounted for approximately 12% of total revenue.

Sales, Marketing and Distribution

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

     Unify’s direct sales organization consists of sales representatives and pre-sales consultants. Our North America sales representatives are located primarily in our headquarters in Sacramento, California. Unify markets its products internationally through offices in the UK, Germany and France. Unify has distributors in Asia Pacific, Europe, Japan, Latin and South America, Russia and South Africa. International revenues accounted for 73%, 70% and 64% of total revenues in fiscal 2007, 2006 and 2005, respectively.

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

     As of April 30, 2007, Unify had 20 employees engaged in sales and marketing activities, 9 in North America and 11 in Europe.

Customer Support and Professional Services

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

Customer Support and Maintenance

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

Consulting

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

Education

     Unify offers education courses provided on a regularly scheduled basis at Unify training centers located in Sacramento, California and Paris, France. We also offer on-site training at customer facilities.

     As of April 30, 2007, we had a total of 14 employees engaged in providing professional services, 8 in support and 6 in consulting and training. Of those employees, 8 were located in the United States and 6 were located in Europe.

Product Development

     We focused our development efforts primarily on the Composer and NXJ products. Following the acquisition of Gupta, we also focused development efforts on both Gupta’s SQLBase and Team Developer products. We expect to release new versions of SQLBase and Team Developer in the second quarter of fiscal 2008. During fiscal 2007, we developed and released Unify NXJ Version 11, enhanced our Composer for Lotus Notes application migration product and also updated some of our database and tools products. Unify’s product development expenses for fiscal 2007, 2006, and 2005, were $2.4 million, $1.6 million and $2.8 million, respectively.

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

     Unify’s product development activities are conducted at the Sacramento, California headquarters facility. As of April 30, 2007, we had a total of 16 employees in product development, including 12 software development engineers.

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Intellectual Property

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

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

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

Competition

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

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

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

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Employees

     As of April 30, 2007, we had a total of 63 employees, including 16 in product development, 20 in sales and marketing, 14 in customer support, consulting, and training, and 13 in finance, operations and general administration. Of these employees, 43 were located in the United States and 20 were located in Europe.

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

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WHERE YOU CAN FIND MORE INFORMATION

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

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RISK FACTORS

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

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

In conjunction with the acquisition of Gupta, we obtained debt financing that included convertible notes in the principal amount of $5,350,000 and we also issued 670,000 warrants. The convertible notes resulting from our debt financing are currently convertible into our common stock at a fixed ratio of $2.50 per share for $1,000,000 of the convertible notes and $5.00 per share for the remaining $4,350,000 of convertible notes. The warrants are exercisable at fixed exercise prices ranging from $1.35 per share to $1.90 per share. Subject to certain exceptions, these conversion ratios and exercise prices are subject to downward adjustment in the event we issue additional shares of common stock at prices below the then-current conversion ratio or exercise price. Conversion of the notes or exercise of the warrants is only likely to occur at such time as the conversion ratio or exercise price, as the case may be, is lower than the current market price for our stock. Issuance of common stock at a price below our current market price would have a dilutive effect on current stockholders and could potentially have a negative impact on our stock price.

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

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

If we are unable to register the shares underlying the convertible notes and warrants issued pursuant to the Loan Agreement in a timely fashion we may be required to pay liquidated damages.

     We entered into a registration rights agreement with the investors under the Loan Agreement pursuant to which we agreed to register the shares of common stock issuable on conversion of the notes and exercise of the warrants. Recent changes in SEC policy with respect to transactions has made it more difficult to register shares in transactions such as the transaction contemplated by the Loan Agreement. Pursuant to the loan agreement we were required to have the shares registered on or before May 19, 2007 or be subject to a penalty equal to $1,000 for each day the registration statement is not effective, up to an aggregate maximum of $500,000. While we have filed a registration statement with SEC for the shares, to date we have not received SEC approval to have the related registration statement made effective. We have not obtained an extension or waiver from the investor with respect to registration statement being deemed effective and we may be required to pay to the investors a cash fee per the loan agreement. As of July 18, 2007, we have paid a total of $12,000 in liquidated damages under this provision.

We are subject to intense competition.

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

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

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

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

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

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

We are dependent on indirect sales channels.

     A significant portion of our revenues are derived from indirect sales channels, including ISVs, VARs and distributors. ISVs, VARs and distributors accounted for approximately 61%, 51% and 51% of our software license revenues for fiscal 2007, 2006 and 2005, respectively. Our success therefore depends in part upon the performance of our indirect sales channels, over which we have limited influence. Our ability to achieve significant revenue growth in the future depends in part on maintaining and expanding our indirect sales channels worldwide. The loss of any major partners, either to competitive products offered by other companies or to products developed internally by those partners, or the failure to attract effective new partners, could have an adverse effect on our business, operating results, and financial condition.

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

     Revenues derived from our international customers accounted for 73%, 70% and 64% of our total revenues, with the remainder from North America, in fiscal 2007, 2006 and 2005, respectively. If the revenues generated by our international operations are not adequate to offset the expense of maintaining such operations, our overall business, operating results and financial condition will be adversely affected. There can be no assurance that we will continue to be able to successfully market, sell and deliver our products in these markets. Although we have had international operations for a number of years, there are certain unique business challenges and risks inherent in doing business outside of North America, and such challenges and risks can vary from region to region. These include unexpected changes in regulatory requirements; export restrictions, tariffs and other trade barriers; difficulties in staffing and managing foreign operations; longer payment cycles; problems in collecting accounts receivable; political instability; fluctuations in currency exchange rates; seasonal reductions in business activity during the summer months in Europe and other parts of the world; unfamiliar or unusual business practices; and potentially adverse tax consequences, any of which could adversely impact the success of our international operations. There can be no assurance that one or more of these factors will not have an adverse effect on our future international operations and, consequently, on our business, operating results and financial condition. In addition, the Company’s subsidiaries and distributors in Europe and Japan operate in local currencies. If the value of the U.S. dollar increases relative to foreign currencies, our business, operating results and financial condition could be adversely affected.

The reverse stock split may have an effect on the trading market for our shares.

The reduction in the number of issued and outstanding shares occasioned by the reverse stock split resulted in an increase in the market price of our Common Stock, although such price increase is not necessarily in proportion to the ratio of the reverse stock split. The trading price of our Common Stock depends on many factors, including many which are beyond our control. A higher stock price may increase investor interest and reduce resistance of brokerage firms to recommend the purchase of our Common Stock. On the other hand, to the extent that negative investor sentiment regarding our Common Stock is not based on our underlying business fundamentals, the reverse stock split may not overcome such sentiment enough to increase our stock price. In addition, the liquidity of our Common Stock may be adversely affected by the reduced number of shares outstanding after the reverse stock split, and the reverse stock split will increase the number of stockholders who own “odd lots,” which consist of blocks of fewer than 100 shares. Stockholders who hold odd lots may be required to pay higher brokerage commissions when they sell their shares and may have greater difficulty in making sales.

Our stock price may be subject to volatility.

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

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     Unify’s stock trades over-the-counter on the “bulletin board.” Companies whose shares trade over-the-counter generally receive less analyst coverage and their shares are more thinly traded than stock that is traded on the NASDAQ National Market System or a major stock exchange. Our stock is therefore subject to greater price volatility than stock trading on national market systems or major exchanges.

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

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

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

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

Our products are subject to lengthy sales cycles.

     Our products are used to implement comprehensive solutions including policy administration and underwriting, transportation labor standards evaluations and process-centric, composite applications. As a result, the licensing and implementation of our applications and applications built using our products generally involve a five to ten week implementation time and a significant commitment of management attention and resources by prospective customers. Accordingly, our sales cycle is subject to delays associated with the long approval process that typically accompanies significant initiatives or capital expenditures. Our business, operating results, and financial condition could be adversely affected if customers reduce or delay orders. There can be no assurance that we will not continue to experience these and additional delays in the future. Such delays may contribute to significant fluctuations of quarterly operating results in the future and may adversely affect those results.

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

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

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

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

We rely upon technology from certain third-party suppliers.

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

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

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

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

Unify may not successfully integrate Gupta into its business and operations.

      Prior to the consummation of the Purchase and Exchange, Gupta and Unify operated as separate entities. Unify may experience material negative consequences to its business, financial condition or results of operations if it cannot successfully integrate Gupta’s operations with Unify’s. The integration of companies that have previously been operated separately involves a number of risks, including, but not limited to:

• demands on management related to the significant increase in the size of the business for which they are responsible;
   
• diversion of management’s attention from the management of daily operations to the integration of operations, whether perceived or actual;
   
• management of employee relations across facilities;
   
• difficulties in the assimilation of different corporate cultures and practices, as well as in the assimilation and retention of broad and geographically dispersed personnel and operations;
   
• difficulties and unanticipated expenses related to the integration of departments, systems (including accounting systems), technologies, books and records, procedures and controls (including internal accounting controls, procedures and policies), as well as in maintaining uniform standards, including environmental management systems;
   
• expenses of any undisclosed or potential liabilities; and
   
• Unify’s ability to maintain its customers Gupta’s customers after the acquisition.

      Successful integration of Gupta’s operations with Unify’s depends on Unify’s ability to manage the combined operations, to realize opportunities for revenue growth presented by broader product offerings and expanded geographic coverage and to eliminate redundant and excess costs. If Unify’s integration efforts are not successful, Unify may not be able to maintain the levels of revenues, earnings or operating efficiency that it and Gupta achieved or might achieve separately.

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

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

Rapid growth may significantly strain the resources of the Company.

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

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

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

ITEM 2.PROPERTIES

     Unify’s principal administrative offices and headquarters are in Sacramento, California where we lease a 38,000 square foot facility. We also lease offices in Redwood Shores, California, the United Kingdom, Germany and France. We believe that our existing facilities are adequate for our needs and that suitable additional or alternative space will be available on commercially reasonable terms as needed.

ITEM 3.LEGAL PROCEEDINGS

     The Company is subject to legal proceedings and claims that arise in the normal course of business. If such matters arise, the Company cannot assure that it would prevail in such matters, nor can it assure that any remedy could be reached on mutually agreeable terms, if at all. Due to the inherent uncertainties of litigation, were there any such matters, the Company would not be able to accurately predict their ultimate outcome. As of April 30, 2007, there were no current proceedings or litigation involving the Company that management believes would have a material adverse impact on its financial position, results of operations, or cash flows.

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

     The Company held its Annual Meeting of Stockholders on March 29, 2007. As part of the meeting, the election of Board members was voted on by the Company’s stockholders. Elected to serve on the board were Steven D. Whiteman, Richard M. Brooks, Robert J. Majteles, Tery R. Larrew and Todd E. Wille. All board members elected to serve were previously board members for the Company. The elected board members will serve until the next Annual Meeting of Stockholders and until their respective successors are duly elected and qualified.

     As part of the Annual Meeting, stockholders voted on the nominees for director and ratified the appointment of Grant Thornton LLP as the Company’s auditors for the fiscal year ending April 30, 2007. Stockholders also voted to effect a reverse stock split of the Company’s common stock at a ratio of not less than one-for-three and not more than one-for-ten at any time prior to June 30, 2007. Following are the results of the annual meeting.

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1. The election of each of the nominees for director were approved with the following votes:

	In Favor	Withheld
Steven D. Whiteman	3,966,336	575,230
Richard M. Brooks	4,148,610	392,956
Robert J. Majteles	4,021,229	520,337
Tery R. Larrew	4,148,510	393,056
Todd E. Wille	4,024,570	516,996

2.

The proposal to amend our Certificate of Incorporation to effect a reverse stock split of our common stock at a ratio of not less than one-for-three and not more than one-for-ten at any time prior to June 30, 2007, with the exact ratio to be set at a whole number within this range to be determined by our board of directors in its discretion, was approved as 3,612,221 shares voted in favor of the amendment, representing 60.8% of the shares voted at the meeting. This was sufficient to pass the amendment.

3.

The proposal to ratify the selection of Grant Thornton LLP as the Company’s independent auditors for the fiscal year ending April 30, 2007 was approved as 4,369,323 shares voted in favor of the amendment, representing 73.5% of the shares voted at the meeting. This was sufficient to pass the amendment.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information for Common Stock

     During fiscal 2007, Unify’s common stock was traded on the Over-The-Counter Bulletin Board (OTC BB) under the symbol UNFY.OB. The following table sets forth the average high and low bid quotations as reported on the over-the-counter market for shares of our common stock for the periods indicated. Such quotations reflect prices between dealers, do not include retail mark-ups, mark-downs or commissions and may not represent actual transactions.

	High		Low
Fiscal 2007
Fourth Quarter	$	2.85	$	1.45
Third Quarter		1.55		1.10
Second Quarter		1.90		1.00
First Quarter		2.30		1.60
Fiscal 2006
Fourth Quarter	$	2.45	$	1.70
Third Quarter		2.20		1.50
Second Quarter		2.10		1.55
First Quarter		2.80		1.75

Common Stockholders of Record

     At June 30, 2007, there were approximately 295 stockholders of record of the Company’s common stock, as shown in the records of our transfer agent, excluding stockholders whose stock was held in nominee or street name by brokers.

Dividends

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

Equity Compensation Plan Information

     Unify maintains a compensation plan that provides for the issuance of its Common Stock to officers, directors, other employees or consultants. This plan is known as the 2001 Stock Option Plan (the “Option Plan”) and it was approved by the stockholders. The 1991 Stock Option Plan, which had a ten-year life, has expired and has therefore ceased to be available for new grants. In fiscal 2003, the Board adopted, without a need for shareholder approval, the 2002 Director Restricted Stock Plan (the “Director Restricted Stock Plan”) as part of a program to provide compensation we felt was necessary to attract, retain and reward members of our Board of Directors who were willing to provide the time and energy that we believe is required to meet our business goals. The following table sets forth information regarding outstanding options and shares reserved for future issuance under the foregoing plans as of April 30, 2007:

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				Number of
				shares
				remaining
				available
				for future
	Number of			issuance
	shares to be	Weighted-		under equity
	issued upon	average		compensation
	exercise of	exercise price of		plans
	outstanding	outstanding		[excluding
	options,	options,		shares
	warrants and	warrants and		reflected in
	rights	rights		column (a)]
Plan Category	(a)	(b)		(c)
Equity compensation plans approved by stockholders (1)	326,750	$	2.00	163,111
Equity compensation plans not approved by stockholders:
Director Restricted Stock Plan (2)	96,137	$	2.45	3,862
Non-Registered Options (3)	95,000	$	1.70	0

____________________
 

(1)	Comprised entirely of shares reserved for future issuance under the Option Plan.
(2)	There are 100,000 shares authorized under the Director Restricted Stock Plan, of which 96,137 shares were awarded by and were outstanding on April 30, 2007. As of April 30, 2007 there were 3,862 shares available for future awards.
(3)	In fiscal 2003, the Board authorized the issuance of non-registered non-plan stock options for individual senior level executive recruitment.

Material Features of Director Restricted Stock Plan

     On May 1, 2002 the Board approved the Director Restricted Stock Plan as part of a compensation program designed to attract and retain independent members for our board of directors. The maximum aggregate number of shares of common stock that may be issued under the Director Restricted Stock Plan is 100,000. In fiscal 2007 there were no shares awarded under this plan. As of April 30, 2007 there is a balance of 3,862 shares reserved for future awards under this plan.

Material Features of Individual non-Registered Stock Options

     As of April 30, 2007 the Board granted options to purchase up to 40,000 shares of common stock under individual, non-plan option agreements. The options and shares issuable under such agreements are restricted securities under the Securities Act and may not be issued or sold except under an effective registration statement or an applicable exemption there from. The non-plan option agreements contain substantially similar terms as options issued under our Option Plan.

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ITEM 6.SELECTED FINANCIAL DATA

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

	Years Ended April 30,
	2007			2006			2005			2004			2003
	(In thousands, except per share data)
Consolidated Statement of Operations Data:
Revenues:
Software licenses	$	4,432		$	4,759		$	5,118		$	6,111		$	5,895
Services		6,755			5,384			6,085			5,814			6,278
Total revenues		11,187			10,143			11,203			11,925			12,173
Cost of Revenues:
Software licenses		377			448			337			595			263
Services		1,024			1,106			1,430			1,299			1,133
Total cost of revenues		1,401			1,554			1,767			1,894			1,396
Gross profit		9,786			8,589			9,436			10,031			10,777
Operating Expenses:
Product development		2,360			1,643			2,813			2,996			4,108
Selling, general and administrative		8,314			5,801			8,673			7,840			6,391
Write-down of other investments		—			—			—			175			200
Total operating expenses		10,674			7,444			11,486			11,011			10,699
Income (loss) from operations		(888	)		1,145			(2,050	)		(980	)		78
Interest expense		(527	)		(11	)		(23	)		(68	)		(27	)
Other income (expense), net		136			61			71			41			30
Income (loss) before income taxes		(1,279	)		1,195			(2,002	)		(1,007	)		81
Provision (benefit) for income taxes		82			-			9			3			(38	)
Income (loss) from continuing operations	$	(1,361	)	$	1,195		$	(2,011	)	$	(1,010	)	$	119
Loss from discontinued operations		(1,061	)		(1,823	)		(353	)		—			—
Net income (loss)	$	(2,422	)	$	(628	)	$	(2,364	)	$	(1,010	)	$	119
Net income (loss) per share:
Basic earnings per share:
Continuing operations	$	(0.23	)	$	0.21		$	(0.36	)	$	(0.23	)	$	0.03
Discontinued operations	$	(0.18	)	$	(0.32	)	$	(0.07	)	$	—		$	—
Net income (loss) per share	$	(0.41	)	$	(0.11	)	$	(0.43	)	$	(0.23	)	$	0.03
Dilutive earnings per share:
Continuing operations	$	(0.23	)	$	0.20		$	(0.36	)	$	(0.23	)	$	0.03
Discontinued operations	$	(0.18	)	$	(0.31	)	$	(0.07	)	$	—		$	—
Net income (loss) per share	$	(0.41	)	$	(0.11	)	$	(0.43	)	$	(0.23	)	$	0.03
Shares used in computing net income (loss) per share:
Basic		5,927			5,803			5,555			4,311			4,187
Diluted		5,927			5,875			5,555			4,311			4,338
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	2,064		$	1,881		$	3,675		$	6,606		$	3,030
Working capital (deficit)		(3,343	)		1,657			1,886			3,816			658
Total assets		16,038			8,351			9,490			10,743			6,675
Long term debt, net		4,910			3			31			—			—
Total stockholders' equity		853			2,235			2,567			4,492			1,509

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion of the financial condition and results of operations of the Company contains forward-looking statements that involve risks and uncertainties and should be read in conjunction with the cautionary language applicable to such forward-looking statements described above in “A Caution About Forward-Looking Statements” found before Item 1 of this Form 10-K. You should not place undue reliance on these forward-looking statements which speak only as of the date of this Annual Report on Form 10-K. The following discussion should also be read in conjunction with the Consolidated Financial Statements and Notes thereto in Item 8. The Company’s actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the Risk Factors discussed in this Annual Report and in the Company’s other filings with the SEC.

Overview

     Unify (the “Company”, “we”, “us” or “our”) is a global provider of application development and data management software, and Service-Oriented Architecture (SOA) Enablement Solutions. Our product suite of automated migration solutions, easy to use development software and no-maintenance-required embedded databases enable customers to enhance their SOA environment by improving time-to-market metrics, increasing collaboration and service-enabling legacy information. Specifically, our products include embedded and enterprise data management systems, application development software for legacy application modernization and rich Internet application development, and SOA enablement solutions.

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

     On November 20, 2006, the Company entered into various agreements with ComVest Capital LLC (“ComVest”) whereby ComVest, along with participation from Special Situations Funds, provided debt financing for the Gupta acquisition and for working capital, consisting of convertible term loans totaling $5.35 million and a revolving credit facility of up to $2.5 million. The term loans have an interest rate of 11.25% and have terms of 48 to 60 months. The revolver has an interest rate of prime plus 2.25% and has a maturity date of November 30, 2010. As part of the financing, ComVest received 402,000 warrants and Special Situations Funds received 268,000 warrants. The warrants are for the purchase of common stock at prices from $1.35 to $1.90 per share. The agreements provide for ComVest to have a security interest in substantially all of the Company’s assets.

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

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

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

     Our strategy is to work with IT organizations to “Enable SOA.” Our software and solutions help businesses modernize and service-enable mission critical legacy applications in support of enterprise-wide SOA initiatives. Based on market requirements for SOA-based application modernization, our strategy aims to help companies increase speed and agility, consolidate information from multiple sources, improve asset reuse, lower IT costs, reduce business risks and exposures, and free information previously locked within proprietary systems.

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     The Company sells and markets application development and database software and services and modernization solutions through two segments. The segments are the Americas, which includes the Company’s international distributors, and Europe, which includes the UK, France, Germany and other direct European customers.

     Our technology products include Composer, NXJ, Team Developer, ACCELL, VISION, DataServer, and SQLBase. Our customers are corporate end-user IT departments, ISVs and our worldwide distributors. The Company is committed to providing exceptional technology to this customer base and to continue to meet their current and future technology needs. Services to our extensive customer installed base include sales and marketing, support, and professional services.

Critical Accounting Policies

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

Revenue Recognition

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

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

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

     For our discontinued product, NavRisk, software license arrangements that require significant modification or customization of the underlying software, revenue is recognized based on contract accounting under the provisions of Accounting Research Bulletin 45, Long-Term Construction Type Contracts and Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts using the completed-contract method.

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

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

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

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

Valuation of Long-Lived Assets

     Our long-lived assets are comprised of long-term investments. At April 30, 2007, we had $214,000 in long-term investments, which are accounted for under the cost method. We assess the valuation of long-lived assets whenever circumstances indicate that there is a decline in carrying value below cost that is other-than-temporary. Several factors can trigger an impairment review such as significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends. In assessing potential impairment for such investments, we consider these factors as well as the forecasted financial performance. When such decline in value is deemed to be other-than-temporary, we recognize an impairment loss in the current period operating results to the extent of the decline. Future adverse changes in market conditions or poor operating results could result in losses or an inability to recover the carrying value of the long-term investments that is not currently reflected in the investments carrying value, thereby, possibly requiring impairment charges in the future.

Deferred Tax Asset Valuation Allowance

     As of April 30, 2007, we had approximately $6 million of deferred tax assets related principally to net operating loss carryforwards, reserves and other accruals, deferred revenue, and foreign tax credits. The Company’s ability to utilize net operating loss carryforwards may be subject to certain limitations in the event of a change in ownership. A valuation allowance has been recorded to offset these deferred tax assets. The ability of the Company to ultimately realize its deferred tax assets will be contingent upon the Company achieving taxable income. There can be no assurance that this will occur in amounts sufficient to utilize the deferred tax assets. Should we determine that we would be able to realize the deferred tax assets in the future in excess of the recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made.

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Results of Operations

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

	Years Ended April 30,
	2007			2006			2005
Revenues:
Software licenses	39.6		%	46.9		%	45.7		%
Services	60.4			53.1			54.3
Total revenues	100.0			100.0			100.0
Cost of revenues:
Software licenses	3.4			4.4			3.0
Services	9.1			10.9			12.8
Total cost of revenues	12.5			15.3			15.8
Gross profit	87.5			84.7			84.2
Operating expenses:
Product development	21.1			16.2			25.1
Selling, general and administrative	74.3			57.2			77.4
Total operating expenses	95.4			73.4			102.5
Income (loss) from operations	(7.9	)		11.3			(18.3	)
Interest expense	(4.7	)		0.0			0.0
Other income (expense), net	1.2			0.5			0.4
Income (loss) from continuing operations before income taxes	(11.4	)		11.8			(17.9	)
Provision for income taxes	0.7			0.0			0.1
Income (loss) from continuing operations	(12.1	)		11.8			(18.0	)
Loss from discontinued operations, net of taxes	(9.5	)		(18.0	)		(3.1	)
Net loss	(21.60	)	%	(6.20	)	%	(21.10	)	%

Total Revenues

     The Company generates revenue from software license sales and related services, including maintenance and support, and consulting services. We license our software through our direct sales force in the United States and Europe, and through indirect channels comprised of distributors, ISVs, VARs, and other partners worldwide. Revenues from our distributor, ISV and VAR indirect channels accounted for approximately 61%, 51%, and 51% of our software license revenues for fiscal 2007, 2006 and 2005, respectively. International revenues include all our software license and service revenues from customers located outside North America. International revenues accounted for 73%, 70%, and 64% of total revenues in fiscal years 2007, 2006 and 2005, respectively.

     Total revenues in fiscal 2007 were $11.2 million, an increase of $1.1 million or 11% from fiscal 2006 revenues of $10.1 million. The increase in total revenue was primarily the result of an increase in maintenance service revenues resulting from the Gupta acquisition. Total software license revenues in fiscal 2007 were $4.4 million, a decrease of $0.4 million or 8% from fiscal 2006. In March 2006, the Company announced that it had entered into a merger agreement to be acquired by Halo and in September 2006, the Company announced the termination of the merger agreement with Halo and also announced that it would be purchasing Gupta from Halo and selling its IRM division to Halo. The purchase of Gupta and sale of IRM was consummated on November 20, 2006. While the Company has experienced a slowdown in the sale of new software licenses for its database and development products, this factor was further negatively impacted by the variety of merger and acquisition announcements during fiscal 2007. Total services revenues were $6.8 million in fiscal 2007, an increase of $1.4 million or 26% from fiscal 2006. The maintenance revenues from the Unify database and development products from prior to the Gupta acquisition were up slightly as evidence of customer satisfaction with these Unify products. The increase in services revenues was primarily the result of additional maintenance revenues resulting from the Gupta acquisition. Total revenues in fiscal 2006 were $10.1 million, a decrease of $1.1 million or 10% from fiscal 2005 revenues of $11.2 million. In fiscal 2006 we had fewer higher dollar software license contracts than in the previous year causing a decrease in software license revenue compared to fiscal 2005. Total software license revenues in fiscal 2006 were $4.8 million for a decrease of $0.3 million or 6% from fiscal 2005, while total service revenues of $5.4 in fiscal 2006 decreased by $0.7 million or 11% from fiscal 2005.

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     For fiscal 2007 and 2006, total revenues from the Americas were 27% and 30% of total revenues, respectively. Total revenue from the Americas in absolute dollars was $3.0 million for both fiscal 2007 and fiscal 2006. Total revenue from our European territory was $6.3 million for fiscal 2007 and $5.3 million for fiscal 2006. On a percentage basis, revenue from our European territory was 57% for fiscal 2007 and 52% for fiscal 2006. For fiscal 2007 and 2006, total revenues from international distributors were 16% and 18% of total revenues, respectively. Total revenue from the international distributors in absolute dollars was $1.9 million for fiscal 2007 and $1.8 million for fiscal 2006.

Cost of Revenues

     Cost of Software Licenses. Cost of software licenses consists primarily of product packaging and production costs as well as the amortization of royalties and license fees paid for licensed technology. Costs associated with royalties and other direct production costs are expensed as incurred at the time of the sale and purchased technology from third parties are amortized ratably over their expected useful lives. Cost of software licenses was $0.4 million for both fiscal 2007 and 2006. In fiscal 2005 cost of software licenses was $0.3 million.

     Cost of Services. Cost of services consists primarily of employee, facilities and travel costs incurred in providing customer support under software maintenance contracts and consulting and implementation services. Total cost of services was $1.0 million for fiscal 2007, $1.1 million for fiscal 2006 and $1.4 million for fiscal 2005. Our cost of services as a percent of services revenues was 15% in fiscal 2007, 21% in fiscal 2006 and 24% in 2005. The favorable decrease in the percentage of cost of service expenses to services revenue in fiscal 2007 was the result of economies of scale relative to our cost structure and an increase in services revenue, both of which where direct results of our acquisition of Gupta.

Operating Expenses

     Product Development. Product development expenses consist primarily of employee and facilities costs incurred in the development and testing of new products and in the porting of new and existing products to additional hardware platforms and operating systems. Product development costs in fiscal 2007 were $2.4 million compared to $1.6 million in fiscal 2006. The increase in product development costs was the addition of the Gupta product development team plus additional outsourced development costs associated with efforts to enhance Gupta’s Team Developer product. In fiscal 2005 product development costs were $2.8 million. The decrease in product development costs from fiscal 2005 to 2006 was the result of shifting some development resources to the IRM division in fiscal 2006. These expenses are reflected in the loss from discontinued operations in fiscal 2006.

     Selling, General and Administrative. Selling, general and administrative (“SG&A”) expenses consist primarily of salaries and benefits, marketing programs, travel expenses, professional services, facilities expenses and bad debt expense. SG&A expenses were $8.3 million in fiscal 2007, $5.8 million for 2006 and $8.7 million for 2005. In fiscal 2006, the Company had a focused initiative to contain SG&A expenses with the largest reduction in expenses compared to fiscal 2005 being in the sales and marketing areas. The increase in SG&A costs in fiscal 2007 is the result of adding Gupta staff in the areas of sales, marketing and administrative services. Included also in fiscal 2007 expenses are $0.5 million in costs resulting from the aborted merger with Halo Technology Holdings and the acquisition of Gupta. These expenses consisted primarily of legal, accounting and printing costs. As a percentage of total revenue, SG&A expenses were 74% in fiscal 2007, 57% in fiscal 2006 and 77% in fiscal 2005. We expect SG&A costs as a percentage of total revenues to decrease in the future as we complete the Gupta integration and recognize additional economies of scale as a result of the acquisition. We do however, expect to incur some additional costs in fiscal 2008 related to our implementation of Sarbanes-Oxley Section 404 requirements. The major components of SG&A for fiscal 2007 were sales expenses of $4.1 million, marketing expenses of $0.6 million and general and administrative expenses of $3.6 million. For fiscal 2006, the major components of SG&A were sales expenses of $3.0 million, marketing expenses of $0.7 million, and general and administrative expenses of $2.1 million. The major components of SG&A for fiscal 2005 were sales expenses of $4.9 million, marketing expenses of $1.4 million and general and administrative expenses of $2.4 million.In fiscal 2005, SG&A expenses included $1.1 million of expenses associated with a reduction in the North American and UK sales management teams and the conversion of the UK subsidiary to a sales office.

     Write-down of Other Investments. We continue to periodically review the recorded value of our investments. We record an investment impairment charge if and when we believe an investment has experienced a decline in market value that is other than temporary. Future adverse changes in market conditions or poor operating results of an investment could result in losses or an inability to recover the carrying value of the investment, thereby possibly requiring impairment charges in the future.

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     Interest Expense. Interest expense is primarily the result of interest from outstanding debt and was $527,000, $11,000 and $23,000 in fiscal 2007, 2006 and 2005, respectively. Fiscal 2007 interest expense consists primarily of interest incurred on notes payable resulting from a debt financing in conjunction with the acquisition of Gupta and also the amortization of related debt issuance costs.

     Other Income (Expense). Other income (expense), net consists primarily of foreign exchange gains and losses and interest earned by the Company on our cash and cash equivalents. Other income (expense) was $136,000, $61,000 and $71,000 in fiscal 2007, 2006 and 2005, respectively.

     Provision for Income Taxes. For fiscal 2007, the Company recorded $82,000 in foreign tax expense and no expense for state or federal taxes. For fiscal 2006, the Company recorded no state, federal or foreign tax expense. For fiscal 2005, the Company recorded expenses of $9,000 for state income taxes. At April 30, 2007, the Company had approximately $40.7 million in federal net operating loss carryforwards that begin to expire in fiscal year 2008 through 2026, approximately $6.2 million in state net operating loss carryforwards that expire in fiscal years 2013 to 2016, approximately $0.6 million in foreign net operating loss carryforwards that do not expire and approximately $3.5 million in capital loss carryforwards that expire in 2010. The Company’s ability to utilize these net operating loss carryforwards may be subject to certain limitations in the event of a change in ownership.

Liquidity and Capital Resources

     At April 30, 2007, the Company had cash and cash equivalents of $2.1 million, compared to $1.9 million at April 30, 2006. The Company had accounts receivable of $4.4 million as of April 30, 2007 and $3.3 million as of April 30, 2006.

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

     We believe that existing cash, $2.1 million as of April 30, 2007, along with forecasted operating cash flows for fiscal year 2008 and the ComVest credit facility, will provide us with sufficient working capital for us to meet our operating plan for fiscal year 2008. The fiscal 2008 operating plan assumes normal operations for the Company, capital expenditures of approximately $50,000 and required interest and principal payments on debt.

     In fiscal 2008, we plan to aggressively market our Composer product and we also anticipate releasing new versions of Team Developer, SQLBase, NXJ and DataServer which will have enhanced functionality. The fiscal 2008 plan requires few additional strategic investments in sales, marketing or implementation services. We believe our fiscal 2008 plan will generate positive cash flow as a result of increased product sales for Composer, new license sales from the release of new versions of our Team Developer, SQLBase and NXJ products and a focused initiative to contain expenses and optimize economies of scale as a result of the Gupta acquisition. However, there is no assurance our plans will be successful.

     Operating Cash Flows. In fiscal 2007, we had cash flows from continuing operations of $0.5 million. This compares to fiscal 2006 and 2005 where cash flows from continuing operations were a negative $39,000 and a negative $2.2 million, respectively. Cash flows provided by operations for fiscal 2007 principally resulted from a $2.6 million increase in deferred revenue, a $0.4 million decrease in accounts receivable, a $0.2 million increase in prepaid expenses and other current assets, $0.3 million in amortization, $0.2 million in depreciation and $0.1 million in stock based expenses. Offsetting these amounts was a loss from continuing operations for fiscal year 2007 of $1.4 million, a decrease of $0.7 million in accrued compensation and related expenses, a $0.5 million decrease in accounts payable, a decrease of $0.3 million in other accrued liabilities, an increase of $0.2 million in other long term assets and fulfillment of support obligations of $0.2 million.

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In fiscal 2006, negative operating cash flow of $39,000 from continuing operations principally resulted from a $0.9 million increase in accounts receivable, a $0.3 million decrease in accounts payable, a $0.3 million decrease in other accrued liabilities and a $0.1 million decrease in deferred revenue. Offsetting these amounts was an increase of $0.1 million prepaid expense and other current assets, a $0.1 million increase in accrued compensation and related expenses, $0.1 million in stock based expenses, $0.2 million in depreciation and income from continuing operations of $1.2 million.

In fiscal 2005, we had negative cash flows from continuing operations totaling $2.2 million. The negative operating cash flow principally resulted from $2.0 million in net loss, a $0.4 million decrease in other accrued liabilities, a $0.4 million decrease in deferred revenue, a $0.1 million decrease in accrued compensation, and a $0.1 million increase in prepaid expenses and other current assets. Offsetting these amounts was a $0.4 million decrease in accounts receivable, a $0.1 million increase in accounts payable and $0.2 million in depreciation.

     Investing Cash Flows .Cash used in investing activities for continuing operations was a negative $6.2 million for fiscal 2007. The use of cash consisted of $6.2 million expended for the acquisition of Gupta and $0.1 million for the purchase of property and equipment. Cash used in investing activities for continuing operations was $41,000 in fiscal 2006 and $0.2 million in fiscal 2005. The use of cash in investing activities for continuing operations for both fiscal 2006 and fiscal 2005 was entirely related to the purchase of property and equipment.

     Financing Cash Flows. Net cash provided by financing activities for continuing operations in fiscal 2007 was $7.0 million. Sources of cash from financing activities included $7.7 million from borrowings and $0.2 million from the proceeds of the issuance of common stock. In fiscal 2007 $1.0 million in cash was used to make principal payments on debt obligations. In fiscal 2006 cash provided by financing activities was $42,000 and was the result of cash payments of $1.6 million for principal payments on debt offset by proceeds from borrowings of $1.4 million and proceeds of $0.1 million from the issuance of common stock. The cash provided in fiscal 2005 of $0.1 million was the result of $0.1 million from the proceeds of the issuance of common stock from stock options exercises and purchases under the employee stock purchase plan. In fiscal 2005, principal payments on debt of $1.7 million were offset by borrowings under debt obligations of $1.7 million also.

A summary of certain contractual obligations as April 30, 2007 is as follows (in thousands):

	Payments Due by Period
			1 year or						After 5
Contractual Obligations	Total		less		2-3 years		4-5 years		years
Long term debt, net	$	5,350	$	1,352	$	1,489	$	1,489	$	1,020
Revolver note		1,500		—		—		1,500		—
Other long-term liabilities		108		—		—		—		108
Capital leases		25		9		7		8		1
Operating leases		1,549		1,180		368		1		—
Total Contractual Cash Obligations	$	8,532	$	2,541	$	1,864	$	2,998	$	1,129

Recently Issued Accounting Standards

     In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement No. 123(R), Share-Based Payment. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, primarily with respect to transactions in which employee services are obtained in exchange for share-based payment. Statement 123(R) was adopted by the Company effective May 1, 2006.

     In June 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections – A Replacement of APB No. 20 and FAS No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS No. 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. The correction of an error in previously issued financial statements is not an accounting change. However, the reporting of an error correction involves adjustments to previously issued financial statements similar to those generally applicable to reporting an accounting change retrospectively. Therefore, the reporting of a correction of an error by restating previously issued financial statements is also addressed by SFAS No. 154. SFAS No. 154 became effective for the Company in the first quarter of fiscal year 2007 and did not have a material impact on our financial position, cash flows or results of operations.

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     In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments – An Amendment of FAS Statements No. 133 and 150. SFAS No. 155: (a) permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, (b) clarifies that certain instruments are not subject to the requirements of SFAS 133, (c) establishes a requirement to evaluate interests in securitized financial assets to identify interests that may contain an embedded derivative requiring bifurcation, (d) clarifies what may be an embedded derivative for certain concentrations of credit risk, and (e) amends SFAS 140 to eliminate certain prohibitions related to derivatives on a qualifying special-purpose entity. SFAS No. 155 is required to be adopted in fiscal years beginning after September 15, 2006. We do not expect the adoption of this accounting pronouncement to have a material impact on our financial position, cash flows or results of operations.

     In June 2006, the FASB issued Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006, and is applicable for Unify in the first quarter of fiscal 2008. The adoption of FIN No. 48 will not have a material impact on our financial position, results of operations or cash flows.

     In September 2006, the SEC released Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. In some situations, companies will be required to record errors that occurred in prior years even though those errors were immaterial for each year in which they arose. Companies may choose to either restate all previously presented financial statements or record the cumulative effect of such errors as an adjustment to retained earnings at the beginning of the period in which SAB 108 is applied. SAB 108 is effective for fiscal years ending after November 15, 2006 and was adopted by the Company in fiscal 2007. The adoption of SAB 108 by the Company did not have a material impact on our financial position, results of operations or cash flows.

     In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating the impact of adopting SFAS 157 on our consolidated financial statements.

     In September 2006, the FASB issued Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158 requires companies to recognize the overfunded or underfunded status of a defined benefit post-retirement plan as an asset or liability in their balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income, effective for fiscal years ending after December 15, 2006. SFAS 158 also requires companies to measure the funded status of the plan as of the date of its fiscal year-end, with limited exceptions, effective for fiscal years ending after December 15, 2008. The Company does not believe SFAS 158 will have a material impact on our financial position, cash flows or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value at specified election dates. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact, if any, of SFAS 159 on our consolidated financial statements.

     In June 2006, the FASB reached a consensus on EITF Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation). EITF 06-3 indicates that the income statement presentation on either a gross basis or a net basis of the taxes within the scope of the issue is an accounting policy decision that should be disclosed. EITF 06-3 is effective for interim and annual periods beginning after December 15, 2006. We present the taxes within the scope of EITF 06-3 on a net basis.

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ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest Rate Risk. The Company’s exposure to market rate risk for changes in interest rates relates primarily to its investment portfolio, which consists of cash equivalents. Cash equivalents are highly liquid investments with original maturities of three months or less and are stated at cost. Cash equivalents are generally maintained in money market accounts which have as their objective preservation of principal. The Company does not believe its exposure to interest rate risk is material for cash and cash equivalents, which totaled $2.1 million at April 30, 2007. Unify had no short-term investments at April 30, 2007.

     In November 2006, the Company entered into a revolving credit facility agreement with ComVest whereby ComVest would provide up to $2.5 million through a revolving credit facility. The revolver has an interest rate of prime plus 2.25% and has a maturity date of November 30, 2010. Should the prime interest rate increase during the life of the revolver, the Company would have exposure to interest rate risk if it has a large balance outstanding on the revolver.

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

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

Due to the substantial volatility of currency exchange rates, among other factors, the Company cannot predict the effect of exchange rate fluctuations on its future operating results. Although Unify takes into account changes in exchange rates over time in its pricing strategy, it does so only on an annual basis, resulting in substantial pricing exposure as a result of foreign exchange volatility during the period between annual pricing reviews. The Company also has currency exchange rate exposures on intercompany accounts receivable and intercompany accounts payable related to activities with the Company’s subsidiaries in France, Germany and the UK. At April 30, 2007, the Company had $2.1 million in such payables denominated in euros and a total $2.1 million in receivables denominated in euros and pounds sterling. The Company encourages prompt payment of intercompany balances in order to minimize its exposure to currency fluctuations, but it engages in no hedging activities to reduce the risk of such fluctuations. A hypothetical ten percent change in foreign currency rates could have a significant impact on the Company’s business, operating results and financial position. The Company has not experienced material exchange losses on intercompany balances in the past; however, due to the substantial volatility of currency exchange rates, among other factors, it cannot predict the effect of exchange rate fluctuations on its future business, operating results and financial position.

ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

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

Not applicable.

ITEM 9A.CONTROLS AND PROCEDURES

     (a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls were effective as of the end of the period covered by this annual report, except for the potential impact from reporting the Gupta acquisition, as more fully disclosed in Note 2 to the audited consolidated financials statements contained in this report. We are currently in the process of assessing and integrating Gupta disclosure controls and procedures into our financial reporting systems and expect to complete our integration activities over a period of 9 to 12 months from the acquisition date (November 20, 2006). Prior to being acquired by Unify, Gupta was a subsidiary of a public company, Halo Technology Holdings, Inc. In conjunction with Halo’s Form 10-KSB filing for the year ended June 30, 2006, Halo’s management reported no concerns relative to disclosure controls or procedures for Gupta or any of Gupta’s subsidiaries.

     (b) Changes in Internal Controls. There have been no changes in our internal controls over financial reporting that occurred during the fiscal year April 30, 2007, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, except for the potential impact from reporting the Gupta acquisition, as more fully disclosed in Note 2 to the audited consolidated financials statements contained in this report. We are currently in the process of assessing and integrating Gupta financial reporting into our financial reporting systems and expect to complete our integration activities over a period of 9 to 12 months from the acquisition date (November 20, 2006). Prior to being acquired by Unify, Gupta was a subsidiary of a public company, Halo Technology Holdings, Inc. In conjunction with Halo’s Form 10-KSB filing for the year ended June 30, 2006, Halo’s management reported no concerns relative to internal controls for Gupta or any of Gupta’s subsidiaries.

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PART III

ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information concerning our executive officers as of the date May 31, 2007.

Executive Officers

			Executive
			Officer
Name	Current Position with Company	Age	Since
Todd E. Wille	President and Chief Executive Officer	44	2000
Steven D. Bonham	Vice President and Chief Financial Officer	50	2005
Kevin Kane	Vice President and General Manager, Composer Solutions	39	2007
Mark Bygraves	Vice President, Sales – Europe, Middle East and Africa	50	2007
Frank Verardi	Vice President, Sales - Americas and Asia Pacific	58	2001
Duane George	Vice President, Development and Technical Services	49	2007
David Drager	Vice President, Product Management	46	2007

     Unify has a board of directors consisting of five (5) members. Set forth below is information with respect to their ages as of May 31, 2007, as well as their positions and offices held with the Company. Each director holds office until the next Annual Meeting of Stockholders and until his successor is duly elected and qualified.

			Director
Name	Current Position with Company	Age	Since
Steven D. Whiteman	Chairman of Board	56	1997
Richard M. Brooks	Director and Audit Committee Chair	53	2005
Robert J. Majteles	Director	42	2004
Tery R. Larrew	Director	53	2002
Todd E. Wille	President and Chief Executive Officer	44	2000

Executive Officers

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

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

     Kevin Kane joined Unify in January 2007 and is responsible for driving market adoption for the Company's service-oriented architecture (SOA) modernization product portfolio. He brings demonstrated sales success in growing top-line revenue for several enterprise software companies. Most recently he served as the global sales director for Sacramento, California based Meridian Systems, selling SOA applications to the construction industry. Additionally, Mr. Kane has lead sales organizations at industry leading software companies, which were then acquired, including VIEO, now Cesura; Dazel Corp., acquired by Hewlett Packard; Tivoli Systems, acquired by IBM; Beyond Software, acquired by NEON Systems; and Sterling Software, acquired by Computer Associates. Mr. Kane received his bachelor’s degree in business management from Saint Mary’s College of California.

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     Mark Bygraves joined the Company in November 2006 as part of the acquisition of Gupta Technologies and was appointed as an officer on May 1, 2007. Mr. Bygraves is responsible for driving the Unify channel sales programs together with day to day operational responsibilities for Northern Europe, Middle East and Africa (EMEA). Mr. Bygraves has worked in the IT industry for 20 years, holding a number of senior positions, most recently as Director of Channels at Hitachi Data Systems, where he established a partner program in the United Kingdom and Europe for their range of Storage RAID Arrays. Mr. Bygraves was also Sales Director of Transformation Software, running their Storage Division and was responsible for creating channel markets for companies such as Legato, Veritas and StorageTek. He was also instrumental in transitioning Network Associates direct business to a channel model on a worldwide basis.

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

     Duane George has served as vice president of development and technology since July 2006 and was appointed as an officer on May 1, 2007. Mr. George is responsible for Unify’s Technical Services Group which includes product development, customer support, consulting, training, documentation, quality control and assurance. Mr. George joined Unify in 1995 and has been a core member of the support, consulting and product development teams. Mr. George has been in the information technology and engineering industries for over 25 years. He began his career as an engineer with the Department of Defense managing the acquisition and implementation of Computer Aided Design and Manufacturing (CAD/CAM) systems. He eventually moved into software development, customer support and project management with an emphasis on customer satisfaction. He earned his B.S. in engineering from Brigham Young University in Provo, Utah.

David Drager joined the company in May 2007 as vice president of product management. Before joining Unify, Mr. Drager was the president of Active Data Corporation from its founding in 1990 till it acquisition by Unify in May 2007. At Active Data, Mr. Drager was an architect of several products including Sabertooth®, SalCompliance™ and QuickWork™. At Active Data, Mr. Drager also ran migration & software development projects for ADP, Toyota, Con Edison, Constellation Energy, Northrop Grumman, Sunoco, PG & E & the State of Maryland. Prior to Active Data Corporation, Mr. Drager worked at Arity Corporation where he developed Arity / Expert an expert system shell and worked on the Arity Prolog team. Mr. Drager earned an M.S.E. in Computer and Information Science from the Moore School of Electrical Engineering at the University of Pennsylvania. 

Board of Directors

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

     Richard M. Brooks was appointed director in August 2005. Since September 2006, Mr. Brooks has been a partner with Tatum LLC, a national Executive consulting services Company. Mr. Brooks previously served as chief executive officer for VantageMed from April 2002 to December 2004. In addition, Mr. Brooks served as a director of VantageMed Corporation from March 2001 to January 2005 and was appointed chairman of that board in May of 2002. Prior to being appointed CEO at VantageMed, Mr. Brooks served as a managing member of Brooks and Donde LLC, a financial and information technology company. From June 1998 to June 2001, Mr. Brooks served on the board of directors of NetStream, Inc., a communications and IT managed services company which he co-founded. He was also treasurer from May 2000 to June 2001, and served as the chief financial officer from June 1998 to May 2000, for NetStream, Inc. Mr. Brooks received a B.S. in business administration from Oregon State University.

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     Tery R. Larrew has served as a director of the Company since May 2002. Mr. Larrew served as the President and CEO of Vericept Corporation, a provider of network-based early warning and misuse prevention solutions, headquartered in Denver, Colorado. Prior to joining Vericept in 2002, Mr. Larrew co-founded IQ3G, a mobile services company, in 2000. From 1999 to 2000, Mr. Larrew was the chairman and chief executive officer of a start-up e-communication company, UPDATE Systems, Inc. Mr. Larrew also serves as the chief executive officer of Pinnacle Management, which he reformed in 1998. From 1996 to 1998, Mr. Larrew served on the executive management team of Metromail/CIC. He is a graduate of Colorado State University with a B.S. degree in business administration and a minor in finance and marketing.

     Robert J. Majteles joined our board in April 2004. Mr. Majteles founded Treehouse Capital, LLC, a firm focused on blending value and growth investment disciplines to make active investments in later-stage technology companies in 2001. In addition to Unify, Mr. Majteles is on the Board of Directors of Adept Technology, Inc., Macrovision Corporation, Vertical Communications, Inc., and WorldHeart Corporation. Mr. Majteles received a law degree from Stanford University and an undergraduate degree from Columbia University. Additionally, Mr. Majteles is a lecturer at the Lester Center for Entrepreneurship, Haas School of Business, University of California, Berkeley and is a Member of the Board of Trustees of the Head-Royce School, Oakland, California.

Audit Committee

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

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

Compensation Committee

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

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

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

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Code of Conduct and Ethics

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

ITEM 11.EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

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

The Objectives of Our Executive Compensation Program

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

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

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

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

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

Provide compensation opportunities targeted at market median levels.
     To attract and retain executives with the ability and the experience necessary to lead us and deliver strong performance to our stockholders, we strive to provide a total compensation package that is competitive with total compensation provided by our industry peer group. We benchmark our salary and target incentive levels and practices as well as our performance results in relation to other comparable general technology and enterprise software companies of similar size in terms of revenue and market capitalization. In fiscal 2007, we engaged a compensation consultant to provide us with a comprehensive evaluation of our executive compensation program. The consultant used multiple data sources, including confidential market compensation surveys and public survey data to enable them to compare our company to others with similar attributes.

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

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

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

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

Our Executive Compensation Program Elements

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

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     Base Salary. Base salaries for our executives are established based on the scope of their responsibilities, taking into account competitive market compensation paid by other companies for similar positions. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions with similar responsibilities at comparable companies, in line with our compensation philosophy. Base salaries are reviewed annually, and adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance and experience. For 2007, this review occurred in the fourth quarter.

     Management Incentive Plan. The Company, through the compensation committee, maintains an annual Management Incentive Plan (“MIP”) such that executives of the Company can receive an incentive payment based the achievement of pre-defined objectives. The incentive plan awards are intended to compensate officers for achieving financial and operational goals and for achieving individual annual performance objectives. These objectives vary depending on the individual executive, but relate generally to the Company’s financial results. The Company’s financial performance did not meet the MIP pre-defined objective for fiscal 2007. Therefore, no MIP cash incentive bonuses were paid for fiscal 2007.

     Long-Term Equity Incentive Program. We believe that long-term performance is achieved through an ownership culture that encourages such performance by our executive officers through the use of stock and stock-based awards. Our stock compensation guidelines have been established to provide certain of our employees, including our executive officers, with incentives to help align those employees’ interests with the interests of stockholders. The compensation committee believes that the use of stock and stock-based awards is a significant component in enabling the company to achieve its compensation goals. We do maintain stock award guidelines and all stock awards are made at the direction of the compensation committee. We believe that the aggregate equity ownership levels for our executive officers should be set near competitive median levels for comparable companies. For fiscal 2007, this review occurred in the fourth quarter.

     Options and Stock Awards. Our 2001 Stock Option Plan authorizes us to grant options to purchase shares of common stock to our employees, directors and consultants. Our compensation committee is the administrator of the stock option plan. Stock option grants are made at the commencement of employment and, occasionally, following a significant change in job responsibilities or to meet other special retention or performance objectives. The compensation committee reviews and approves stock option awards to executive officers based upon a review of competitive compensation data, its assessment of individual performance, a review of each executive’s existing long-term incentives, and retention considerations. Periodic stock option grants are made at the discretion of the compensation committee to eligible employees and, in appropriate circumstances, the compensation committee considers the recommendations of members of management, such as Mr. Wille, our Chief Executive Officer. In 2007, certain named executive officers were awarded stock options and stock awards in the amounts indicated in the section entitled “Grants of Plan Based Awards”. These grants included stock awards and options grants made in November 2006, in recognition of their contributions to our company relating to the negotiation and subsequent closing of our acquisition of Gupta and securing the related debt financing.

     Other Compensation. In accordance with our compensation philosophy, the compensation committee may, in its discretion, revise, amend or authorize any changes to the executive officer’s compensation or benefits as deemed necessary. In fiscal 2007, the compensation committee awarded a discretionary bonus to the company’s chief executive officer, Todd Wille, in the amount of $25,000 and to its chief financial officer, Steven Bonham, in the amount of $15,000 primarily for their efforts related to the acquisition of Gupta and the completion of the related debt financing.

Tax Deductibility of Executive Compensation

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

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Compensation Committee Report

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

SUMMARY COMPENSATION TABLE

     The following table sets forth information concerning the compensation earned during the fiscal years ended April 30, 2007, 2006 and 2005 by President and Chief Executive Officer, our Chief Financial Officer, one other most highly-compensated officer and two former executive officers who would have been included among the highly compensated if they were still employed by the Company for services rendered in all capacities to the Company for the last three (3) fiscal years:

					Stock		Option		Sales Commission	All Other
Name and Principal		Salary		Bonus	Awards		Awards		Compensation	Compensation		Total
Position	Year	$ (1)		$ (2)	$ (3)		$ (4)		$ (5)	$		$
Todd E. Wille (6)	2007	$	220,000	—	34,540	(7)	—		—	25,000	(8)	279,540
President and Chief Executive	2006		220,000	—	—		—		—	—		220,000
Officer	2005		220,000	—	—		—		—	—		220,000
Steven D. Bonham (9)	2007		175,000	—	8,800	(10)	—		—	15,000	(11)	198,800
Chief Financial Officer	2006		142,900	—	—		69,240	(12)	—	—		212,140
	2005		—	—	—		—		—	—		—
Frank Verardi (13)	2007		125,000	—	—		—		64,663	—		189,663
Vice President, Americas and	2006		143,750	—	—		—		31,768	—		175,518
Asia Pacific	2005		150,000	—	—		8,884	(14)	8,610	—		167,494
Former Officers:
David M. Glende (15)	2007		75,001	—	—		—		—	—		75,001
Former Vice President of	2006		157,150	—	—		—		—	—		157,150
Products, IRM	2005		158,000	—	—		8,884	(16)	—	—		166,884
Daniel S. Romine (17)	2007		75,000	—	—		—		—	—		75,000
Former Vice President and	2006		140,000	—	—		—		—	323,700	(18)	463,700
General Manager, IRM	2005		30,000	—	—		55,525	(19)	—	—		85,525

____________________
  

(1)	Includes amounts, if any, deferred at the named executive officer’s option under Unify Corporation’s 401(k) plan.
(2)	Includes amounts, if any, paid under the Company’s Management Incentive Plan (“MIP”).
(3)	The value of stock awards granted to our executive officers equals the number of shares granted multiplied by the share price on the date of the grant.
(4)	The value of option awards granted to our executive officer has been estimated pursuant to SFAS No. 123(R) for fiscal years 2005, 2006 and 2007. In fiscal 2007, the Company adopted SFAS No. 123(R) and began to record stock option expenses. Our executive officers will not realize the estimated value of these awards in cash until these awards are vested and exercised.
(5)	Represents commissions earned and paid pursuant to the Company’s sales commission plans.
(6)	Mr. Wille was appointed president and chief executive officer in November 2000.
(7)	Relates to a stock grant of 31,400 shares of common stock to Mr. Wille on November 16, 2006.
(8)	Represents a discretionary bonus awarded by the Compensation Committee.

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(9)	Mr. Bonham joined the Company in June 2005 as chief financial officer.
(10)	Relates to a stock grant of 8,000 shares of common stock to Mr. Bonham on November 16, 2006.
(11)	Represents a discretionary bonus awarded by the Compensation Committee.
(12)	Represents the aggregate fair market value of options to purchase 40,000 shares of common stock granted to Mr. Bonham upon hiring on June 27, 2005 with an exercise price of $1.85 per share.
(13)	Mr. Verardi was appointed to the position of Vice President, Sales for the Americas and Asia Pacific in May 2007. Prior to that, he held the position of vice president and general manager of the Unify Business Solutions division.
(14)	Represents the aggregate fair market value of options to purchase 4,000 shares of common stock granted to Mr. Verardi on February 2, 2005 with an exercise price of $2.30 per share.
(15)	Mr. Glende was appointed vice president of products for the Insurance Risk Management (“IRM”) division and chief technology officer in March 2005. The Company sold the IRM division to Halo on November 20, 2006 and at that time Mr. Glende became an employee of Halo.
(16)	Represents the aggregate fair market value of options to purchase 4,000 shares of common stock granted to Mr. Glende on February 2, 2005 with an exercise price of $2.30 per share.
(17)	Mr. Romine joined the Company in February 2005 as vice president and general manager of the Insurance Risk Management (“IRM”) division. The Company sold the IRM division to Halo on November 20, 2006 and at that time Mr. Romine became an employee of Halo.
(18)	Represents earn-out payments made in accordance with the agreement related to Unify’s purchase of Acuitrek, Inc. from Mr. Romine in February 2005. The compensation is comprised of common stock of $140,000, tax gross up payment of $40,400, performance bonus of $8,300 and cash payments of $135,000.
(19)	Represents the aggregate fair market value of options to purchase 25,000 shares of common stock granted to Mr. Romine on February 2, 2005 with an exercise price of $2.30 per share.

Grants of Plan-Based Awards

The compensation committee approved option awards under our 2001 Stock Option Plan to certain of our named executives in fiscal 2005, 2006 and 2007 and awarded stock to Mr. Wille and Mr. Bonham in 2007. Set forth below is information regarding awards granted during fiscal 2005, 2006 and 2007.

			All Other
		All Other Stock	Option Awards:
		Awards:	Number of	Exercise or Base		Grant Date Fair
		Number of	Securities	Price of Options		Value of Stock
		Shares of	Underlying	Awards		and Option
Name	Grant Date	Stock (#)	Options (#)	($/share) (1)		Awards ($)
Todd E. Wille	11/16/2006	31,400	—	$	1.10	$	34,540
Steven D. Bonham	6/27/2005	—	40,000		1.85		69,240
	11/16/2006	8,000	—		1.10		8,800
Kevin Kane	1/8/2007	—	40,000		1.44		41,260
Mark Bygraves	11/20/2006	—	15,000		1.20		12,938
Frank Verardi	2/2/2005	—	4,000		2.30		8,884
Duane George	5/3/2004	—	3,000		4.70		14,100
	12/10/2004	—	1,400		2.05		2,771
	11/16/2006	—	15,000		1.10		11,865

____________________
 

(1) All options were granted with an exercise price equal to the fair market value per share of the common stock on the date of grant, as determined by the fair market value of the Company’s common stock on that day.

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Stock Option Plans

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

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

Options Available for Issuance
     Under the 2001 Stock Option Plan, the Company may grant options to purchase up to 595,000 shares of common stock to eligible employees, directors, and consultants at prices not less than the fair market value at the date of grant for incentive stock options and not less than 85% of the fair market value at the date of grant for non-statutory stock options. As of April 30, 2007, there were 163,111 options available under the 2001 Option Plan.

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

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

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

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

Other Stock Options

     In fiscal 2003, the Board authorized the issuance of non-registered non-plan stock options (“Non-Plan Options”) for individual senior level executive recruitment. These Non-Plan Options are granted pursuant to written agreements that are not subject to the terms of the 2001 Option Plan, but have similar terms and conditions. The options and shares issuable under the Non-Plan Options are restricted securities under the Securities Act and may not be issued or sold except under an effective registration statement or an applicable exemption there from. The Non-Plan Option agreements contain substantially similar terms as options issued under our 2001 Option Plan, including vesting schedule and option term. During fiscal 2007, the Board granted options to purchase 40,000 shares of common stock using Non-Plan Option agreements.

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Other Benefits

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

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

Employment Agreements and Termination and Change of Control Agreements

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

Change in Control

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

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Outstanding Equity Awards at April 30, 2007

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

	Number of	Number of
	Securities	Securities
	Underlying	Underlying
	Unexercised	Unexercised
	Options	Options	Option Exercise
	Exercisable	Unexercisable	Price		Option Expiration
Name	(#)	(#)	($)		Date
Todd E. Wille	30,000	—	$	1.25	9/26/2011
	30,000	—		1.30	11/16/2011
	30,000	—		2.75	5/9/2012
Steven D. Bonham	18,333	21,667		1.85	6/27/2015
Kevin Kane	2,500	37,500		1.44	1/8/2017
Mark Bygraves	—	15,000		1.20	11/20/2016
Frank Verardi	2,000	—		25.78	8/3/2009
	8,000	—		1.25	9/26/2011
	10,000	—		1.30	11/16/2011
	15,000	—		2.75	5/9/2012
	2,167	1,833		2.30	2/2/2015
Duane George	1,200	—		29.38	8/25/2009
	5,000	—		1.30	11/16/2011
	2,000	—		2.75	5/9/2012
	1,708	292		3.35	11/3/2013
	2,187	813		4.70	5/3/2014
	817	583		2.05	12/10/2014
	—	15,000		1.10	11/16/2016

Option Exercises and Stock Vested

     There have been no exercises of stock options by our named executive officers during the last fiscal year. On November 16, 2006, Mr. Wille was awarded 31,400 shares of common stock that was fully vested upon award. Also on November 16, 2006, Mr. Bonham was awarded 8,000 shares of common stock that was fully vested upon award.

Compensation of Directors

      In May 2002, the Company’s Board of Directors adopted the following compensation program for its non-employee (independent) members. This program has several components described in the table below. The compensation for each individual Director is assessed by the other members of the Board and is generally based upon the degree and quality of his/her participation in Board activities. Even though the director compensation program provides for the issuance of an annual stock retainer and annual stock option, no such awards were made to any non-employee directors for the year ended April 30, 2007.

38

	Summary of Compensation Program for Non-Employee Directors
	Based Upon	Annual Maximum	How Paid	When Paid
Annual Cash Retainer (1)	Active Board participation	$10,000 in cash	$2,500 per quarter	Within one week of end of fiscal quarter
Annual Stock Retainer (2)	Board determination of award to be made pursuant to the 2002 Director Restricted Stock Plan	Up to $10,000 in restricted stock using closing price at beginning of fiscal year	In shares of Unify common stock that may not be sold for one (1) year from grant date	In May
Annual Stock Option Grant (3)	Board determination of award to be made pursuant to the 2001 Stock Option Plan	Up to 4,000 shares of common stock	An option to purchase Unify common stock at FMV at time of grant with a three year vesting period	In June
Meeting Fees (4)	Active Board participation	None, but normally not expected to exceed $6,000	$1,000 per on-site meeting attended and $500 per conference call	As required
Consulting (5)	Request by Unify’s CEO	None	Cash or in restricted stock	As performed

____________________
 

(1)	Unify will pay non-employee directors an annual cash retainer fee of $10,000 which will be paid in four quarterly payments of $2,500 each. Payments are to be made no later than five business days after the end of each fiscal quarter (August 5th, November 5th, February 5th and May 5th).
(2)	Directors are eligible for an annual stock retainer up to the equivalent of $10,000 worth of restricted stock under the 2002 Director Restricted Stock Plan (a copy of which is available upon request to the Company). Such restricted stock may not be sold for a period of twelve (12) months from the date of issuance and is for services to be rendered during the upcoming fiscal year
(3)	Directors are eligible for an annual stock option grant of up to 4,000 shares of Unify common stock under the Company’s then current stock option program. Eligibility will be determined by the Board and will be based on several factors from the prior fiscal year, including the financial performance of the Company, the Director’s personal contribution to the Company and any other relevant factors or events. The stock option grant, if any, will be made in June of each year and the exercise price shall be equivalent to the fair market value of the stock at the time of the option grant. Any such option grant will vest monthly over a period of thirty-six (36) months.
(4)	Non-employee directors are eligible to receive fees for attending Board and related committee (such as the audit committee, nominating and corporate Governance committee and compensation committee) meetings. Directors receive $1,000 for each on-site meeting attended and $500 for each conference call meeting. Unify will typically hold a Board meeting and any committee meetings on the same day, which will be considered as one meeting for the purpose of calculating meeting fees.
(5)	Directors may be requested to provide certain consulting services to Unify. Should this take place, Unify shall pay a Director one thousand dollars ($1,000) per day, with a half-day minimum. Unify shall reimburse a Director for all travel expenses incurred in accordance with its Travel and Entertainment Policy.

39 

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

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

____________________
 

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

The following table sets forth certain information with respect to our non-employee director compensation during the fiscal year ended April 30, 2007.

Director Compensation Table

	Fees Earned or
	Paid in Cash		Stock Awards (1)	Option Awards (1)	Total
Name	($)		($)	($)	($)
Richard M. Brooks	$	26,000	—	—	$	26,000
Tery R. Larrew		15,000	—	—		15,000
Robert J. Majteles		14,000	—	—		14,000
Steven D. Whiteman		24,000	—	—		24,000

____________________
 

(1) Even though the director compensation program provides for the issuance of and annual stock retainer and annual stock option, no such awards were made to any non-employee directors for the year ended April 30, 2007.

Director Restricted Stock Plan

     In fiscal 2003, the Board adopted, without a need for shareholder approval, the 2002 Director Restricted Stock Plan (the “Director Restricted Stock Plan”) as part of a program to provide compensation we felt was necessary to attract, retain and reward members of our Board of Directors who were willing to provide the time and energy that we believe is required to meet our business goals. The maximum aggregate number of shares of common stock that may be issued under the Director Restricted Stock Plan is 100,000 shares. In May of each year, each independent director is eligible for a fully vested restricted stock award for the number of shares which is equal to $10,000 divided by the fair market value of a share of stock on the award date. There were no shares awarded in the fiscal 2007 under this Director Plan and there is a balance of 3,862 shares reserved for future awards at April 30, 2007.

Indemnification of Officer and Directors

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

40

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

     Based solely upon our review of such reports furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and more than ten percent (10%) stockholders for the fiscal year ended April 30, 2007, were met.

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information as of June 30, 2007 with respect to the beneficial ownership of our common stock by: (i) each member of our board of directors; (ii) each of our named executives; (iii) all of our directors and executive officers as a group; and (iv) each stockholder who is known to us to own beneficially more than 5% of our outstanding common stock. The following beneficial ownership table assumes full conversion of the convertible term notes resulting from the debt financing in conjunction with the acquisition of Gupta. The number of shares in the following table includes the effect of the five for one reverse stock split that occurred on June 24, 2007.

	Shares Owned (1)
		Percentage
	Number of	of
Name of Beneficial Owner	Shares	Class
Directors
Steven D. Whiteman (2)	44,453	*
Tery R. Larrew (3)	44,998	*
Robert J. Majteles (4)	6,511	*
Richard M. Brooks (5)	7,533	*
Executive Officers
Todd E. Wille (6)	189,854	3.10	%
Steven D. Bonham (7)	29,666	*
Kevin Kane (8)	5,833	*
Mark Bygraves (9)	-	*
Frank Verardi (10)	68,889	1.13	%
Duane George (11)	16,279	*
David Drager (12)	1,875	*
All directors and executive officers as a group (9 persons) (13)	415,890	6.66	%
5% Stockholders
AWM Investment Company, Inc. (14)	2,593,337	35.52	%
c/o Special Situations Funds
153 East 53rd Street, 55th Floor
New York, NY 10022-4611
Diker Management LLC (15)	692,703	11.47	%
745 Fifth Avenue, Suite 1409
New York, NY 10151
ComVest Capital, LLC (16)	1,164,000	16.16	%
One North Clematis, Suite 300
West Palm Beach, FL 33401

41

____________________

*	Less than 1%
(1)	Number of shares beneficially owned and the percentage of shares beneficially owned are based on 6,037,901 shares of the Company’s common stock outstanding as of June 30, 2007. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable, or will become exercisable within 60 days of June 30, 2007, are deemed outstanding. Such shares, however, are not deemed outstanding for purposes of computing the percentage ownership of any other person. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable. Unless otherwise indicated, the individuals in the table may be contacted in care of Unify Corporation, 2101 Arena Blvd, Suite 100, Sacramento, California 95834.
(2)	Includes 19,805 shares subject to options held by Mr. Whiteman exercisable within 60 days of June 30, 2007.
(3)	Includes 12,500 shares subject to options held by Mr. Larrew exercisable within 60 days of June 30, 2007.
(4)	Includes 500 shares subject to options held by Mr. Majteles exercisable within 60 days of June 30, 2007.
(5)	Includes 3,833 shares subject to options held by Mr. Brooks exercisable within 60 days of June 30, 2007.
(6)	Includes 91,875 shares subject to options held by Mr. Wille exercisable within 60 days of June 30, 2007.
(7)	Includes 21,666 shares subject to options held by Mr. Bonham exercisable within 60 days of June 30, 2007.
(8)	Includes 5,833 shares subject to options held by Mr. Kane exercisable within 60 days of June 30, 2007.
(9)	Mr. Bygraves has not been granted any options which are exercisable within 60 days of June 30, 2007.
(10)	Includes 37,500 shares subject to options held by Mr. Verardi exercisable within 60 days of June 30, 2007.
(11)	Includes 13,845 shares subject to options held by Mr. George exercisable within 60 days of June 30, 2007.
(12)	Includes 1,875 shares subject to options held by Mr. Drager exercisable within 60 days of June 30, 2007.
(13)	Includes 415,890 shares subject to options and exercisable within 60 days of June 30, 2007.
(14)	AWM Investment Company, Inc. is a hedge fund management firm based in New York. The firm is owned by David Greenhouse and Austin Marxe. They manage the Special Situations Fund III, L.P., Special Situations Cayman Fund L.P., Special Situations Private Equity Fund, L.P., and Special Situations Tech. Fund, L.P.
(15)	Diker Management, LLC is a Registered Investment Advisor of certain managed accounts and investment funds.
(16)	ComVest Capital, LLC is a private equity firm based in West Palm Beach, Florida.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

     One of our directors, Robert J. Majteles, is the managing member of Treehouse Capital, which has an agreement with Special Situations Funds (“SSF”), the largest stockholder of Unify, pursuant to which Treehouse, through Mr. Majteles, provides certain management and financial advisory services for SSF on request. As a result, Treehouse is entitled to 10% of Special Situations Funds’ net gain (as defined) or net loss (as defined) on its investment in Unify during the term of the agreement, offset by certain fees that may be paid by Unify to Treehouse or Mr. Majteles directly. Mr. Majteles does not have or share voting or dispositive power over any securities held by Special Situations Funds.

42

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

     Fees billed by our principal accountant, Grant Thornton LLP, for fiscal 2007 and fiscal 2006 audit services totaled approximately $265,000 and $239,000, respectively. This includes fees associated with the annual audit, review of the Company’s quarterly reports on Form 10-Q and the statutory audit required for our French subsidiary.

Audit-Related Fees

     Audit-related service fees billed by Grant Thornton for fiscal 2007 and fiscal 2006 were approximately $55,000 and $26,000, respectively. The fiscal 2007 fees primarily related to activities associated with the acquisition of Gupta Technologies, LLC and the fiscal 2006 fees were related to the review of S-4 filings for the proposed Halo merger.

Tax Fees

     Fees billed by our principal tax accountant, Macias Gini & O’Connell LLP, for tax services in fiscal 2007 and 2006 were $21,000 and $30,000, respectively. Tax fees consisted of amounts incurred for tax compliance, tax advice and tax planning.

Other Fees

Our principal accountant, Grant Thornton LLP, had no other fees for fiscal year 2007 and fiscal year 2006.

Pre-Approval Policies and Procedures

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

43

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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

1.Consolidated Financial Statements

	Page Number
Report of Grant Thornton LLP, Independent Registered Public Accounting Firm	47
Consolidated Balance Sheets as of April 30, 2007 and 2006	48
Consolidated Statements of Operations for the years ended April 30, 2007, 2006 and 2005	49
Consolidated Statements of Stockholders’ Equity for the years ended April 30, 2007, 2006 and 2005	50
Consolidated Statements of Cash Flows for the years ended April 30, 2007, 2006 and 2005	51
Notes to Consolidated Financial Statements	52

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

2. Exhibits—See Item 15(b) below.

(b)Exhibits

Exhibit No.		Description
2	.1	Purchase and Exchange Agreement between Halo Technology Holdings, Inc and Unify, dated September 13, 2006 as amended by Amendment No. 1 dated November 20, 2006 (10) (11)
3	.1	Restated Certificate of Incorporation of the Company (1)
3	.2	Amendment to Restated Certificate of Incorporation of the Company
3	.3	Bylaws of the Registrant (1)
4	.1	Form of Stock Certificate (1)
4	.2	Revolving Credit and Term Note Agreement by and between ComVest and Unify, dated November 20, 2006 (11)
4	.3	Convertible Term Note – Tranche 1
4	.4	Convertible Term Note – Tranche 2
4	.5	Convertible Term Note – Tranche 3
4	.6	Registration Rights Agreement dated November 20, 2006 (11)
4	.7	Form of 2006 Warrants
4	.8	Acuitrek Inc. Stock Purchase Agreement dated February 2, 2005 as amended by Amendment No. 1 dated November 20, 2006 (7) (11)
4	.9	Acuitrek Inc. Registration Rights Agreement dated February 2, 2005 (7)
4	.10	Special Situations Stock Purchase Agreement dated April 23, 2004 (6)
4	.11	Special Situations Registration Rights Agreement dated April 23, 2004 (6)
4	.12	Form of 2004 Warrant
10	.1*	1991 Stock Option Plan, as amended (1)
10	.2*	2001 Stock Option Plan (4)
10	.3*	Employment Agreement by and between Todd Wille and the Registrant dated December 29, 2000 (3)
10	.4	Form of Indemnification Agreement (1)

44

Exhibit No.		Description
10	.5	Office Building Lease for Sacramento Facility, Dated December 17, 1999, as Amended (2)
10	.6	Fourth Amendment Effective January 1, 2002 to Office Building Lease Dated December 17, 1999 (6)
10	.7	Fifth Amendment to Lease and Termination of Stock Pledge Agreement dated September 18, 2003 (6)
10	.8	Silicon Valley Bank Loan and Security Agreement dated June 6, 2003(5), as amended by Silicon Valley Bank Amendment to Loan Documents dated June 3, 2004, June 5, 2005 (8) and May 24, 2006 (9) and Amended Schedule to Loan and Security Agreement dated June 3, 2004(6) and June 5, 2005 (8)
14		Code of Ethics for Senior Officers(6)
21	.1	Subsidiaries of the Registrant
23	.1	Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm
31	.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	.1	Certification of Todd E. Wille, Chief Executive Officer of Unify Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32	.2	Certification of Steven D. Bonham, Chief Financial Officer of Unify Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________________

(1)	Incorporated by reference to the exhibit filed with Registrant’s Form S-1 Registration Statement (No. 333-3834) declared effective by the Securities and Exchange Commission on June 14, 1996.
(2)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on December 22, 2000.
(3)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 30, 2001.
(4)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-Q on March 14, 2002.
(5)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 17, 2003.
(6)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 21, 2004.
(7)	Incorporated by reference to the exhibit filed with Registrant’s Form 8-K on February 2, 2005.
(8)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 28, 2005.
(9)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 31, 2006.
(10)	Incorporated by reference to the exhibit filed with Registrant’s Form 8-K on September 20, 2006.
(11)	Incorporated by reference to the exhibit filed with Registrant’s Form 8-K on November 29, 2006.
*	Exhibit pertains to a management contract or compensatory plan or arrangement.

45

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UNIFY CORPORATION
By:	/s/ TODD E. WILLE
	Todd E. Wille
	President and Chief Executive Officer

Dated: July 20, 2007

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

/s/ TODD E. WILLE	President and Chief Executive Officer	July 20, 2007
Todd E. Wille	(Principal Executive Officer)
/s/ STEVEN D. BONHAM	Vice President and Chief Financial Officer	July 20, 2007
Steven D. Bonham	(Principal Financial and Accounting Officer)
/s/ STEVEN D. WHITEMAN	Director and Chairman of the Board	July 20, 2007
Steven D. Whiteman
/s/ ROBERT J. MAJTELES	Director	July 20, 2007
Robert J. Majteles
/s/ TERY R. LARREW	Director	July 20, 2007
Tery R. Larrew
/s/ RICHARD M. BROOKS	Director	July 20, 2007
Richard M. Brooks

46

Report of Grant Thornton LLP, Independent Registered Public Accounting Firm

Board of Directors and Stockholders of Unify Corporation

     We have audited the accompanying consolidated balance sheets of Unify Corporation and subsidiaries as of April 30, 2007 and 2006, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in the period ended April 30, 2007. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Unify Corporation and subsidiaries as of April 30, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended April 30, 2007 in conformity with accounting principles generally accepted in the United States of America.

     As discussed in Note 1 to the consolidated financial statements, in 2007 the Company changed its method of accounting for share-based payments in accordance with the guidance provided in Statement of Financial Accounting Standards No. 123(R), Share Based Payment.

/s/ GRANT THORNTON LLP
Reno, Nevada
July 17, 2007

47

UNIFY CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

	April 30,			April 30,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	2,064		$	1,881
Accounts receivable, net of allowances of $193 in 2007, and $48 in 2006		4,219			3,283
Accounts receivable-related party		8			76
Prepaid expenses and other current assets		520			499
Assets of discontinued operations held for sale		—			1,954
Total current assets		6,811			7,693
Property and equipment, net		229			244
Other investments		214			214
Goodwill		5,667			—
Intangibles, net		2,643			—
Other assets, net of allowances of $213 in 2007, and $246 in 2006		474			200
Total assets	$	16,038		$	8,351
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	620		$	353
Current portion of long term debt		1,361			33
Accrued compensation and related expenses		804			773
Other accrued liabilities		1,792			713
Deferred revenue		5,577			2,880
Liabilities of discontinued operations		—			1,284
Total current liabilities		10,154			6,036
Long term debt, net		4,910			3
Other long term liabilities		121			77
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; no shares
issued or outstanding		—			—
Common stock, $0.001 par value; 40,000,000 shares authorized, 6,029,201
and 5,904,721 shares outstanding in 2007 and 2006		30			29
Additional paid-in capital		64,949			63,937
Accumulated other comprehensive income		45			19
Accumulated deficit		(64,171	)		(61,750	)
Total stockholders’ equity		853			2,235
Total liabilities and stockholders’ equity	$	16,038		$	8,351

See accompanying notes

48

UNIFY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Years Ended April 30,
	2007			2006			2005
Revenues:
Software licenses	$	4,432		$	4,759		$	5,118
Services		6,755			5,384			6,085
Total revenues		11,187			10,143			11,203
Cost of Revenues:
Software licenses		377			448			337
Services		1,024			1,106			1,430
Total cost of revenues		1,401			1,554			1,767
Gross profit		9,786			8,589			9,436
Operating Expenses:
Product development		2,360			1,643			2,813
Selling, general and administrative		8,314			5,801			8,673
Total operating expenses		10,674			7,444			11,486
Income (loss) from operations		(888	)		1,145			(2,050	)
Other Income (Expense):
Interest expense		(527	)		(11	)		(23	)
Other, net		136			61			71
Other expense, net		(391	)		50			48
Income (loss) from continuing operations before income
taxes		(1,279	)		1,195			(2,002	)
Provision for income taxes		82			—			9
Income (loss) from continuing operations	$	(1,361	)	$	1,195		$	(2,011	)
Loss from discontinued operations		(1,061	)		(1,823	)		(353	)
Net loss	$	(2,422	)	$	(628	)	$	(2,364	)
Net income (loss) per share:
Basic earnings per share:
Continuing operations	$	(0.23	)	$	0.21		$	(0.36	)
Discontinued operations		(0.18	)		(0.32	)		(0.07	)
Net loss per share	$	(0.41	)	$	(0.11	)	$	(0.43	)
Dilutive earnings per share:
Continuing operations	$	(0.23	)	$	0.20		$	(0.36	)
Discontinued operations		(0.18	)		(0.31	)		(0.07	)
Net loss per share	$	(0.41	)	$	(0.11	)	$	(0.43	)
Shares used in computing net income (loss) per share:
Basic		5,927			5,803			5,555
Diluted		5,927			5,875			5,555

See accompanying notes

49

UNIFY CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share data)

							Accumulated
				Additional			Other						Total			Comprehensive
	Common Stock			Paid-In			Comprehensive			Accumulated			Stockholders’			Income
	Shares	Amount		Capital			Income (loss)			Deficit			Equity			(Loss)
Balances at April 30, 2004	5,454,784	$	27	$	63,205		$	18		$	(58,758	)	$	4,492
Comprehensive loss
Net loss from continued operations	—		—		—			—			(2,011	)		(2,011	)	$	(2,011	)
Net loss from discontinued operations	—		—		—			—			(353	)		(353	)		(353	)
Translation adjustments	—		—		—			55			—			55			55
Total comprehensive loss																$	(2,309	)
Issuance of common stock	104,166		1		249			—			—			250
Costs related to private placement	—		—		(93	)		—			—			(93	)
Issuance of common stock warrants	—		—		3			—			—			3
Net exercise of common stock warrants	13,603		—		—			—			—			—
Exercise of stock options	53,834		—		83			—			—			83
Issuance of common stock under employee
stock purchase plan	53,632		—		101			—			—			101
Stock-based compensation	8,511		—		40			—			—			40
Balances at April 30, 2005	5,688,530		28		63,588			73			(61,122	)		2,567
Comprehensive loss
Net income from continued operations	—		—		—			—			1,195			1,195		$	1,195
Net loss from discontinued operations	—		—		—			—			(1,823	)		(1,823	)		(1,823	)
Translation adjustments	—		—		—			(54	)		—			(54	)		(54	)
Total comprehensive loss																$	(682	)
Issuance of common stock	88,527		1		172			—			—			173
Exercise of stock options	62,523		—		58			—			—			58
Issuance of common stock under employee
stock purchase plan	42,060		—		62			—			—			62
Stock-based compensation	23,081		—		57			—			—			57
Balances at April 30, 2006	5,904,721		29		63,937			19			(61,750	)		2,235
Comprehensive loss
Net loss from continued operations	—		—		—			—			(1,361	)		(1,361	)	$	(1,361	)
Net loss from discontinued operations	—		—		—			—			(1,061	)		(1,061	)		(1,061	)
Translation adjustments	—		—		—			26			1			27			27
Total comprehensive loss																$	(2,395	)
Issuance of common stock	—		—		43			—			—			43
Exercise of stock options	85,080		1		152			—			—			153
Fair value of warrants issued	—		—		743			—			—			743
Stock-based compensation	39,400		—		74			—			—			74
Balances at April 30, 2007	6,029,201	$	30	$	64,949		$	45		$	(64,171	)	$	853

See accompanying notes

50

UNIFY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	Years Ended April 30,
	2007			2006			2005
Cash flows from operating activities:
Net loss	$	(2,422	)	$	(628	)	$	(2,364	)
Loss from discontinued operations		(1,061	)		(1,823	)		(353	)
Income (loss) from continuing operations		(1,361	)		1,195			(2,011	)
Reconciliation of income (loss) to net cash provided by (used in) continuing operating
Depreciation		185			169			183
Loss on disposal of property		—			3			—
Amortization		307			12			—
Fulfillment of support obligations		(224	)		—			—
Amortization of discount on notes payable		138			—			—
Stock based expense		117			102			43
Changes in operating assets and liabilities:
Accounts receivable		387			(925	)		419
Prepaid expenses and other current assets		172			125			(112	)
Other long term assets		(200	)		—			—
Accounts payable		(520	)		(300	)		129
Accrued compensation and related expenses		(723	)		68			(121	)
Other accrued liabilities		(331	)		(339	)		(403	)
Deferred revenue		2,623			(149	)		(352	)
Net cash provided by (used in) continuing operating activities		570			(39	)		(2,225	)
Cash flows from investing activities:
Acquisition, net of cash acquired		(6,188	)		—			—
Purchases of property and equipment		(63	)		(41	)		(208	)
Decrease in other assets		—			—			4
Net cash used in investing activities of continuing operations		(6,251	)		(41	)		(204	)
Cash flows from financing activities:
Proceeds from issuance of common stock		153			58			92
Borrowings under debt obligations		7,749			1,494			1,681
Principal payments under debt obligations		(927	)		(1,594	)		(1,694	)
Net cash provided by (used in) financing activities from continuing operations		6,975			(42	)		79
Effect of exchange rate changes on cash		(50	)		(54	)		65
Cash flows of discontinued operations:
Net cash used in operating activities		(1,061	)		(1,549	)		(142	)
Net cash used in investing activities		—			(6	)		(504	)
Net cash used in financing activities		—			(63	)		—
Net cash used in discontinued operations		(1,061	)		(1,618	)		(646	)
Net increase (decrease) in cash and cash equivalents		183			(1,794	)		(2,931	)
Cash and cash equivalents, beginning of year		1,881			3,675			6,606
Cash and cash equivalents, end of year	$	2,064		$	1,881		$	3,675
Supplemental cash flow information for continuing operations:
Cash received (paid) during the year for interest, net	$	(482	)	$	98		$	36
Cash paid during the year for income taxes	$	82		$	—		$	9
Supplemental non-cash financing activities:
Warrants issued in conjuction with the issuance of long term debt	$	743		$	—		$	—

See accompanying notes

51

UNIFY CORPORATIONNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. The Company and Summary of Significant Accounting Policies

The Company

     Unify (the “Company”, “we”, “us” or “our”) is a global provider of application development, data management and application modernization solutions that enable Service-Oriented Architecture (SOA). Our suite of migration solutions, easy to use development software and maintenance-free embedded databases allows customers to modernize and maximize their application environment. For organizations needing to modernize their systems, we help businesses service-enable legacy applications to support SOA initiatives. Based on market requirements, our solutions help companies increase speed and agility, improve asset reuse, lower IT costs and reduce risks and exposures.

Basis of Presentation

     The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

     The functional currency of the Company’s foreign subsidiaries is their local currency. Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at average rates of exchange in effect during the reporting period. Foreign currency transaction gains or losses are included in other income, net. Foreign currency adjustments resulting from the translation process are excluded from net loss and recorded in other comprehensive loss. At April 30, 2007, the Company had $982,000 in foreign banks.

     The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company sustained substantial losses from operations in fiscal 2005 and fiscal 2007 and from discontinued operations for both fiscal 2007 and fiscal 2006. In fiscal 2006 and 2005, the Company used, rather than provided, cash in its operations.

     In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet as of April 30, 2007 is dependent upon continued operations of the Company, which in turn is dependent upon the Company’s ability to meet its financing requirements on a continuing basis, to maintain present financing, and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of and classification of liabilities that might be necessary should the Company be unable to continue in existence.

     Management has taken steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue in existence. These steps include limiting staff additions, minimizing capital expenditures, timely billing and collection for services and products provided to customers, reducing variable expenses such as consultants, marketing and travel and maintaining access to other sources of cash via credit lines and capital markets. Additionally, management believes the acquisition of Gupta Technologies LLC will positively impact future financial results as the acquisition has provided operating efficiencies, enhanced the Company’s mix of products and increased the Company’s market presence and market opportunities.

Use of Estimates

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

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Cash Equivalents

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

Fair Value of Financial Instruments

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

Concentrations of Credit Risk and Credit Evaluations

     Financial instruments potentially subjecting the Company to concentrations of credit risk consist primarily of cash, cash equivalents and accounts receivable. The Company places its cash and cash equivalents primarily with four financial institutions. The Company licenses its products principally to companies in the United States, Europe, and Japan and no single customer accounted for 10% or more of consolidated revenues in the years ended April 30, 2007 and 2005. For the year ended April 30, 2006, the Company did have one customer that accounted for 12% of consolidated revenues. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential credit losses. International revenues include all our software license and service revenues from customers located outside North America. International revenues accounted for 73%, 70% and 64% of total revenues in fiscal years 2007, 2006 and 2005, respectively.

Allowance for Doubtful Accounts

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

		Charges
	Balance at	(Credits) to				Balance at
	Beginning	Operating		Write-offs		End of
	of Year	Expenses		of Accounts		Year
	(In thousands)
Allowance for doubtful accounts receivable:
Year ended April 30, 2005	175	27		(7	)	195
Year ended April 30, 2006	195	(109	)	(38	)	48
Year ended April 30, 2007	48	204		(59	)	193
Allowance for long-term accounts and notes
receivable – reflected in other assets:
Year ended April 30, 2005	357	-		(179	)	178
Year ended April 30, 2006	178	71		(3	)	246
Year ended April 30, 2007	246	(33	)	-		213

Other Investments

The Company carries other investments at the lower of cost or estimated fair value (Note 5).

53

Property and Equipment

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

Capitalized Software

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

Long-Lived Assets

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

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

Goodwill

     Goodwill is the excess of cost of an acquired entity over the amounts assigned to assets acquired and liabilities assumed in a business combination. Goodwill is not amortized. Goodwill is tested for impairment on an annual basis as of April 30, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. No impairment of goodwill has been identified during any of the periods presented (Note 6).

Intangible Assets

     Intangible assets are amortized using the straight-line method over their estimated period of benefit. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. No impairments of intangible assets have been identified during any of the periods (Note 6).

Revenue Recognition

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

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

54

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

     For our discontinued product, NavRisk, software license arrangements that require significant modification or customization of the underlying software, revenue is recognized based on contract accounting under the provisions of ARB 45, Long-Term Construction Type Contracts and Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts using the completed-contract method.

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

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

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

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

Warranties and Indemnification

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

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

55

Stock-Based Compensation

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

	April 30, 2007		April 30, 2006
Cost of Sales	$	2	$	—
Product Development		7		—
Selling, General and Administrative		33		—
Total Equity-Based Compensation, Continuing Operations		42		—
Equity-Based Compensation, Discontinued Operations		32		—
Total Equity-Based Compensation	$	74	$	—

     The following table shows remaining unrecognized compensation expense from continuing operations on a pre-tax basis related to all types of nonvested equity awards outstanding as of April 30, 2007. This table does not include an estimate for future grants that may be issued (amounts in thousands).

Fiscal Year Ended April 30,	Amount
2008	$	48
2009		39
2010		22
Total	$	109

The cost above is expected to be recognized over a weighted-average period of 1.50 years.

     As permitted by SFAS No. 148, prior to the adoption of SFAS No. 123(R), the Company accounted for equity award expense under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, under which no compensation was recognized in the Company’s financial statements for the twelve months ended April 30, 2006 and April 30, 2005. In connection with the modified prospective method, disclosures made for periods prior to the adoption of SFAS No. 123(R) do not reflect restated amounts.

The following table illustrates the effect on net loss and net loss per share if Unify had applied the fair value recognition provisions of SFAS 123, to stock-based employee compensation (in thousands, except per share amounts):

	Year Ended April 30,
	2007			2006			2005
Income (loss) from continuing operations	$	(1,361	)		1,195			2,011
Loss from discontinued opearations		(1,061	)		(1,823	)		(353	)
Net loss as reported	$	(2,422	)	$	(628	)	$	(2,364	)
Add: stock-based employee compensation included
in reported net loss		74			119			40
Less: stock-based employee compensation expense,
determined under fair value method for all awards		(74	)		(289	)		(583	)
Pro forma net loss	$	(2,422	)	$	(798	)	$	(2,907	)
Net loss per share (basic and diluted), as reported	$	(0.41	)	$	(0.11	)	$	(0.43	)
Net loss per share (basic and diluted), pro forma	$	(0.41	)	$	(0.14	)	$	(0.52	)

56

The Company continues to use the Black-Scholes option pricing model to estimate fair value of equity awards, which requires the input of highly subjective assumptions, including the expected stock price volatility. The Company’s calculations are made using the Black-Scholes option pricing model, with the following weighted average assumptions: expected option life, 12 months following vesting; stock volatility, 193% in fiscal 2007, 207% in fiscal 2006 and 223% in fiscal 2005; risk-free interest rates, 4.7% in fiscal 2007, 4.3% in fiscal 2006 and 3.3% in fiscal 2005; and no dividends during the expected term. Not all stock options that have been granted will be exercised. Accordingly, the Company’s calculation of equity-based compensation expense includes an adjustment for the estimated number of options that will be forfeited.

A summary of the Company’s stock option activity for the fiscal year ended April 30, 2007 is as follows:

					Weighted
			Weighted		average remaining	Aggregate
			average		contractual	intrinsic
	Shares		exercise price		term (in years)	value (1)
Outstanding at April 30, 2006	528,982		$	4.10	6.60	$	171,848
Granted	79,000		$	1.35
Exercised	(85,080	)	$	1.80
Canceled or expired	(69,660	)	$	11.45
Outstanding at April 30, 2007	453,242		$	2.90	6.46	$	277,608

____________________
 

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

     The total intrinsic value of awards exercised during the year ended April 30, 2007 and 2006 was $75,215 and $51,544, respectively. The total fair value of awards vested during the year ended April 30, 2007 and 2006 was $131,748 and $120,980, respectively.

A summary of the Company’s nonvested stock option activity for the fiscal year ended April 30, 2007 is as follows:

			Weighted
			average fair
	Shares		value
Nonvested at April 30, 2006	155,558		$	2.15
Granted	79,000		$	0.95
Exercised	(101,597	)	$	2.05
Canceled or expired	(16,801	)	$	2.75
Nonvested at April 30, 2007	116,160		$	1.40

Income Taxes

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

Loss Per Share

     Statement of Financial Accounting Standards No. 128, Earnings per Share, requires a dual presentation of basic and diluted income (loss) per share (“EPS”). Basic EPS excludes dilution and is computed by dividing net income attributable to common stockholders by the weighted average of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock (e.g. convertible preferred stock, warrants, and common stock options) were exercised or converted into common stock. Potential common shares in the diluted EPS computation are excluded for fiscal years 2007 and 2005 as their effect would be antidilutive. For fiscal 2006 there are approximately 72,800 potential common shares included in the diluted EPS computation.

57

Comprehensive Loss

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

Segment Reporting

     The Company maintains two segments that sell and market application development software and related services. The segments are the Americas, which includes the Company’s international distributors, and Europe, which includes the UK, France, Germany and other direct European customers.

Recently Issued Accounting Standards

     In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement No. 123(R), Share-Based Payment. This Statement establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services, primarily with respect to transactions in which employee services are obtained in exchange for share-based payment. Statement 123(R) was adopted by the Company effective May 1, 2006 and the impact of Statement 123(R) is reflected in Note 1.

     In June 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections – A Replacement of APB No. 20 and FAS No. 3. SFAS No. 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS No. 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. The correction of an error in previously issued financial statements is not an accounting change. However, the reporting of an error correction involves adjustments to previously issued financial statements similar to those generally applicable to reporting an accounting change retrospectively. Therefore, the reporting of a correction of an error by restating previously issued financial statements is also addressed by SFAS No. 154. SFAS No. 154 became effective for the Company in the first quarter of fiscal year 2007 and did not have a material impact on our financial position, cash flows or results of operations.

     In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments – An Amendment of FAS Statements No. 133 and 150. SFAS No. 155: (a) permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, (b) clarifies that certain instruments are not subject to the requirements of SFAS 133, (c) establishes a requirement to evaluate interests in securitized financial assets to identify interests that may contain an embedded derivative requiring bifurcation, (d) clarifies what may be an embedded derivative for certain concentrations of credit risk, and (e) amends SFAS 140 to eliminate certain prohibitions related to derivatives on a qualifying special-purpose entity. SFAS No. 155 is required to be adopted in fiscal years beginning after September 15, 2006. We do not expect the adoption of this accounting pronouncement to have a material impact on our financial position, cash flows or results of operations.

     In June 2006, the FASB issued Interpretation (“FIN”) No. 48, Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109. This Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This Interpretation is effective for fiscal years beginning after December 15, 2006, and is applicable for Unify in the first quarter of fiscal 2008. The adoption of FIN No. 48 will not have a material impact on our financial position, results of operations or cash flows.

58

      In September 2006, the SEC released Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. SAB 108 provides guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. In some situations, companies will be required to record errors that occurred in prior years even though those errors were immaterial for each year in which they arose. Companies may choose to either restate all previously presented financial statements or record the cumulative effect of such errors as an adjustment to retained earnings at the beginning of the period in which SAB 108 is applied. SAB 108 is effective for fiscal years ending after November 15, 2006 and was adopted by the Company in fiscal 2007. The adoption of SAB 108 by the Company did not have a material impact on our financial position, results of operations or cash flows.

      In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are currently evaluating the impact of adopting SFAS 157 on our consolidated financial statements.

     In September 2006, the FASB issued Statement No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R) (SFAS 158). SFAS 158 requires companies to recognize the overfunded or underfunded status of a defined benefit post-retirement plan as an asset or liability in their balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income, effective for fiscal years ending after December 15, 2006. SFAS 158 also requires companies to measure the funded status of the plan as of the date of its fiscal year-end, with limited exceptions, effective for fiscal years ending after December 15, 2008. The Company does not believe SFAS 158 will have a material impact on our financial position, cash flows or results of operations.

     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities ("SFAS 159"). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value at specified election dates. SFAS 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact, if any, of SFAS 159 on our consolidated financial statements.

     In June 2006, the FASB reached a consensus on EITF Issue No. 06-3, How Taxes Collected from Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation). EITF 06-3 indicates that the income statement presentation on either a gross basis or a net basis of the taxes within the scope of the issue is an accounting policy decision that should be disclosed. EITF 06-3 is effective for interim and annual periods beginning after December 15, 2006. We present the taxes within the scope of EITF 06-3 on a net basis.

Reclassifications

     Certain items in the fiscal 2006 and 2005 consolidated financial statements have been reclassified to conform to the fiscal 2007 presentation. These reclassifications had no effect on operating results or stockholders’ equity.

Note 2. Purchase and Exchange Agreement with Halo Technology Holdings and Discontinued Operations

     On March 14, 2006, the Company entered into an Agreement and Plan of Merger with Halo Technology Holdings Inc. (“Halo”). Under the terms of the merger agreement Halo would acquire all of the outstanding stock of Unify. On September 13, 2006, Halo and Unify entered into a Termination Agreement terminating the merger agreement.

On September 13, 2006, the Company entered into a Purchase and Exchange Agreement with Halo whereby Unify agreed to purchase all of the outstanding stock of Gupta Technologies LLC (“Gupta”) from Halo in exchange for: (i) the Company’s Insurance Risk Management (“IRM”) division, (ii) the Company’s ViaMode software, (iii) $6,100,000 in cash, and (iv) the amount, if any, by which Gupta’s net working capital exceeds IRM’s net working capital at the close of the transaction. The Company’s acquisition of Gupta was consummated on November 20, 2006. The total purchase price for Gupta was $7.7 million. Gupta was founded in 1984 and is a leading producer of secure, small-footprint, embeddable databases and enterprise application development tools. The acquisition resulted in additional revenue and market share in the Company’s core markets and significantly enhances the distribution channels through which the Company’s products can be sold. Gupta’s headquarters was in Redwood Shores, California with offices in Germany and the UK and has distributors and partners in more than 40 countries around the world. Gupta’s results of operations are included in the Company’s results from the date of acquisition, November 20, 2006, to April 30, 2007.

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On November 20, 2006, the Company entered into various agreements with ComVest Capital LLC (“ComVest”) whereby ComVest, along with participation from Special Situations Funds, provided debt financing for the Gupta acquisition. The debt financing consisted of $5.35 million in convertible term notes and a revolver of up to $2.5 million. There are three tranches that comprise the convertible term notes, Tranche 1 is for $1,000,000, Tranche 2 is for $3,250,000 and Tranche 3 is for $1,100,000. The term loans have an interest rate of 11.25% and have repayment terms of 48 to 60 months. As part of the debt financing the Company provided the lenders with 670,000 warrants to purchase common stock. There are 200,000 warrants to purchase common stock at a price of $1.35 per share, 270,000 warrants at a price of $1.60 per share and 200,000 warrants at a price of $1.90 per share. The warrants have an expiration date of October 31, 2012. Additionally, the holder of the term notes may, at their option, upon written notice to Unify given at any time and from time to time from the date Unify has sufficient authorized, unissued and unreserved shares of common stock convert the outstanding principal and any accrued interest into shares of Unify common stock. Tranche 1 is convertible at $2.50 per common share and Tranches 2 and 3 are convertible at $5.00 per common share. Unify may require conversion of the convertible term notes if its common stock price closes at or above 160% of the applicable conversion price for 20 or more consecutive market days. The agreement provides for ComVest to have a security interest in substantially all of the Company’s assets. We capitalized $238,000 of debt issuance costs associated with the debt financing and also recorded a discount on the notes payable of approximately $743,000 that is attributed to the warrants that were issued in conjunction with the financing. The debt issuance costs and the discount on notes payable are being amortized using the effective interest method over the stated life of the related notes. The amortization of both the debt issuance costs and the discount on the notes payable was approximately $163,000 in fiscal 2007 and is included in interest expense. The unamortized amount of the discount on the notes payable was $604,000 as of April 30, 2007 and is included in long-term debt, net. As of April 30, 2007 the unamortized portion of debt issuance costs was $214,000 which is included in other assets, net.

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

Current assets	$	1,281
Property and equipment, net		99
Long term assets		71
Goodwill		6,161
Intangibles		2,950
Total assets	$	10,562
Current liabilities		2,844
Long term liabilities		18
Shareholders' equity		7,700
Total liabilities and shareholders' equity	$	10,562

Unaudited Pro Forma Financial Information

The unaudited financial information in the table below summarizes the combined results of the operations of Unify and Gupta, on a pro forma basis, as though the companies had been combined as of May 1, 2005. The pro forma information gives effect to the acquisition of Gupta and the sale of both the Company’s IRM division and its ViaMode Product. The pro forma information also assumes the financing raised in connection with the acquisition took place on May 1, 2005.

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     The unaudited pro forma financial information combines the historical results of Unify for the twelve months ended April 30, 2007 and 2006 and due to differences in our reporting periods, the historical results of Gupta for the twelve months ended June 30, 2006 and the six months September 30, 2006.

	Year ended April 30,
(in thousands, except per share data)	2007		2006
Total revenues	$	19,363	$	21,600
Net income	$	957	$	(728	)
Basic net income per share	$	0.16	$	(0.13	)
Diluted net income per share	$	0.16	$	(0.13	)

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

Discontinued Operations

In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the results of the Company’s IRM division and ViaMode software product have been reported as discontinued operations for the years ended April 30, 2007 and 2006, respectively. In addition, the assets and liabilities of the IRM division and the ViaMode software product have been reclassified as held for sale in the Balance Sheet at April 30, 2006. The divestitures of these businesses were made pursuant to the Company’s strategy to refocus on its core software development and embedded database products.

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

	Year ended April 30,
	2007			2006			2005
Revenue	$	541		$	1,106		$	101
Loss from discontinued operations	$	(1,061	)	$	(1,823	)	$	(353	)

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Assets and liabilities of the IRM division and the ViaMode product as of April 30, 2006 were as follows (in thousands):

	April 30,
	2006
Accounts receivable	$	114
Other assets		200
Property and equipment, net		23
Intangibles, net		212
Goodwill		1,405
Total assets	$	1,954
Accounts payable	$	26
Other accrued liabilities		737
Accrued compensation and related expenses		105
Deferred revenue		416
Total liabilities	$	1,284

Intangibles, net of amortization and goodwill disposed of in the divestiture of the IRM division amounted to $212,000 and $1,405,000, respectively. No amortization expense was recorded once the related assets were held for sale, prior to their divestiture on November 20, 2006. The ViaMode software asset had no intangibles or goodwill associated with it.

Note 3. Acquisition of Acuitrek

On February 2, 2005, the Company acquired all of the issued and outstanding equity securities of Acuitrek, Inc. Acuitrek Inc., is a software provider of policy administration and underwriting solutions for the public entity self insured and risk pools insurance market. As part of the November 20, 2006 acquisition of Gupta, Acuitrek, Inc., which comprised the company’s IRM division, was sold to Halo Technology Holdings, Inc. Following is the opening balance sheet, including the purchase price allocation adjustments, for Acuitrek as of the acquisition date, February 2, 2005 (in thousands):

Current assets	$	142
Property and equipment, net		27
Goodwill		1,070
Technology based intangible		200
Customer based intangible		164
Total assets	$	1,603
Current liabilities	$	512
Long-term liabilities		636
Shareholders’ equity		455
Total liabilities and shareholders’ equity	$	1,603

The unaudited financial information in the table below summarizes the combined results of operations of Unify and Acuitrek, on a pro forma basis, as though the companies had been combined as of the beginning of each of the periods presented. The pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of each of the periods presented.

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The unaudited pro forma financial information in fiscal 2005 combines the historical results for Unify for the year ended April 30, 2005, which includes the Acuitrek results for the three months ended April 30, 2005 and the historical results for Acuitrek for the nine months ended December 31, 2004. The unaudited pro forma financial information in fiscal 2004 combines the historical results for Unify for the year ended April 30, 2004 and the historical results for Acuitrek for the twelve months ended March 31, 2004.

	Year ended April 30,
	2005			2004
	Unaudited
	(in thousands, except per share data)
Total revenues	$	11,973		$	12,190
Net income (loss)		(2,568	)		(1,592	)
Basic net income (loss) per share	$	(0.43	)	$	(0.27	)
Diluted net income (loss) per share	$	(0.43	)	$	(0.27	)

Note 4. Property and Equipment

Property and equipment at April 30, 2007 and 2006 consisted of the following (in thousands):

	2007			2006
Equipment	$	2,046		$	2,027
Furniture and leasehold improvements		942			891
		2,988			2,918
Less accumulated depreciation and amortization		(2,759	)		(2,674	)
Property and equipment, net	$	229		$	244

Note 5. Other Investments

     Other investments represent stock in closely held companies, which are accounted for under the cost method. The Company’s ownership interest in both Arango Software International, Inc. (“Arango”) and Unify Japan KK, is less than 15%.

At April 30, 2007 and 2006 other investments consisted of the following (in thousands):

	2007		2006
Arango Software International, Inc.	$	175	$	175
Unify Japan KK		39		39
	$	214	$	214

     Unify Japan KK is a Japanese corporation that is a master distributor for the Company in Japan. Sales to Unify Japan KK in fiscal 2007, 2006 and 2005 were $0.2 million, $0.3 million and $0.5 million, respectively. Accounts receivable from Unify Japan KK as of April 30, 2007 and 2006 were $7,900 and $76,100, respectively.

     The Company holds a minority interest in Arango, a privately held corporation located in Panama. The Company records an investment impairment charge if and when the Company believes an investment has experienced a decline in market value that is other than temporary. Several factors can trigger an impairment review such as significant underperformance relative to expected historical or projected future operating results and significant negative industry or economic trends. In assessing potential impairment for such investments, we consider these factors as well as the forecasted financial performance. Future adverse changes in market conditions or poor operating results of Arango could result in losses or an inability to recover the carrying value of the investment that is not currently reflected in the investment’s carrying value, thereby possibly requiring an impairment charge in the future.

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Note 6. Goodwill and Intangible Assets

     The following tables present details of the Company’s goodwill and intangible assets as of April 30, 2007 and April 30, 2006 (in thousands). The April 30, 2006 amounts relate entirely to the Company’s IRM division which was sold on November 20, 2006. The April 30, 2007 amounts relate entirely to the purchase of Gupta Technologies LLC and the sale of the Company’s IRM division on November 20, 2006. See Note 2.

	Gross					Net
	carrying		Accumulated			carrying		Estimated
April 30, 2007	amount		amortization			amount		useful life
Infinite Lives:
Goodwill	$	5,667	$	—		$	5,667	—
Finite Lives:
Customer-related		1,500		(125	)		1,375	5 years
Technology-based		1,050		(109	)		941	4 years
Trademarks		300		(31	)		269	4 years
Trade name		100		(42	)		58	1 year
Total	$	8,617	$	(307	)	$	8,310
	Gross					Net
	carrying		Accumulated			carrying		Estimated
April 30, 2006	amount		amortization			amount		useful life
Infinite Lives:
Goodwill	$	1,405	$	—		$	1,405	—
Finite Lives:
Technology-based		200		(83	)		117	3 years
Customer-related		164		(69	)		95	3 years
Total	$	1,769	$	(152	)	$	1,617

     Acquired finite-lived intangibles are generally amortized on a straight line basis over their estimated useful life. The useful life of finite-lived intangibles is the period over which the asset is expected to contribute directly or indirectly to future cash flows of the Company. Intangible assets amortization expense for continuing operations for fiscal 2007 was $307,000 and was related entirely to the Gupta acquisition. Amortization expense for the fiscal year ended April 30, 2006, was $121,000 and was related entirely to the IRM division that was sold on November 20, 2006. The estimated future amortization expense related to intangible assets as of April 30, 2007, is as follows (in thousands):

Fiscal Year Ending April 30,	Amount
2008		696
2009		638
2010		638
2011		496
2012		175
Total	$	2,643

     Goodwill is included in the Company’s Americas segment as part of corporate assets. Goodwill at April 30, 2007, represents the excess of the Gupta purchase price over the sum of the amounts assigned to assets acquired less liabilities assumed. The Company believes the acquisition of Gupta will produce the following results:

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

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     The Company believes these primary factors support the amount of goodwill recognized as a result of the purchase price for Gupta. Goodwill will be tested for impairment on an annual basis as of April 30, and between annual tests if indicators of potential impairment exist, using a fair-value-based approach in accordance with FASB 142, Goodwill and Other Intangible Assets. The determination of goodwill and intangibles is based on the results of an independent valuation expert’s report.

Note 7. Credit Facility

     On November 3, 2006, the Company’s revolving line of credit with Silicon Valley Bank expired and was not renewed. At the expiration the Company had no amounts outstanding on the line of credit.

     On November 20, 2006, the Company entered into a revolving credit note agreement with ComVest Capital LLC. Under the terms of the agreement the Company can borrow up to $2.5 million. As of April 30, 2007, $1.50 million was outstanding on the revolver. The amount that can be borrowed under the revolver is based on the amount of eligible foreign and domestic accounts receivable outstanding. The revolver has an expiration date of November 30, 2010, and the Company incurs interest expense on funds borrowed at the prevailing prime rate plus 2.25% per annum (10.5% as of April 30, 2007).

Note 8. Long-Term Debt

The Company’s debt consists of the following at April 30, 2007 and April 30, 2006 (in thousands):

	April 30,			April 30,
	2007			2006
Note payable to a financial institution repaid in September 2006	$	—		$	26
Convertible notes payable to ComVest Capital LLC, interest rate of 11.25%,
payable in installments through October 31, 2011. These notes include certain
negative covenants and the Company is in compliance with such covenants.		5,350			—
Revolving note payable to ComVest Capital LLC, interest rate of prime plus
2.25% and a maturity date of November 30, 2010		1,500			—
Capital leases payable, payable in monthly installments through June 2010		25			10
		6,875			36
Less discount on notes payable, net		(604	)		—
Less current portion		(1,361	)		(33	)
Total long term debt, net	$	4,910		$	3

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A summary of long term debt obligations as April 30, 2007 is as follows (in thousands):

Fiscal Year Ending April 30,	Amount
2008	$	1,361
2009		1,496
2010		2,997
2011		883
2012		138
		6,875
Unamortized discount on notes payable		(604	)
Current portion of long term debt		(1,361	)
Total long term debt, net	$	4,910

Note 9. Other Long Term Liabilities

     In France, the Company is subject to mandatory employee severance costs associated with a statutory government regulated plan covering all employees. The plan provides for one month of severance for the first five years of service with an employer and one fifth of one year of severance for every one year of service thereafter. In order to receive their severance payment the employee may not retire before age 65 and must be employed at the time of retirement. The balance as of April 30, 2007 and 2006 is $108,000 and $77,000, respectively and is reflected as other long-term liabilities. Also included in other long term liabilities as of April 30, 2007 is $13,000 in deferred rent.

Note 10. Maintenance Contracts

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

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

	Year Ended			Year Ended			Year Ended
	April 30,			April 30,			April 30,
	2007			2006			2005
Deferred maintenance revenue beginning balance	$	2,810		$	2,837		$	3,081
Deferred maintenance revenue recognized during period		(6,155	)		(4,976	)		(5,448	)
Deferred maintenance revenue of new maintenance
contracts		8,845			4,949			5,204
Deferred maintenance revenue ending balance	$	5,500		$	2,810		$	2,837

Note 11. Stockholders’ Equity

Preferred Stock

     The Company may issue up to 5,000,000 shares of preferred stock in one or more series upon authorization by its board of directors. The board of directors, without further approval of the stockholders, is authorized to fix the dividend rights and terms, conversion rights, voting rights, redemption rights and terms, liquidation preferences, and any other rights, preferences, privileges and restrictions applicable to each series of preferred stock.

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Stock Option Plan

     Under the 2001 Stock Option Plan (the “2001 Option Plan”), the Company may grant options to purchase up to 595,000 shares of common stock to eligible employees, directors, and consultants at prices not less than the fair market value at the date of grant for incentive stock options and not less than 85% of the fair market value at the date of grant for non-statutory stock options. Options granted under the 2001 Stock Option Plan generally vest over four years, are exercisable to the extent vested, and expire 10 years from the date of grant. In fiscal year 2007, we granted 55,000 option shares on a four-year vesting schedule to the management team outside of the 2001 Stock Option Plan. Under the 1991 Stock Option Plan (the “1991 Option Plan”) which expired as of March 2001, the Company was able to grant options to eligible employees, directors and consultants at prices not less than the fair market value at the date of grant for incentive stock options and not less than 85% of the fair market value at the date of grant for non-statutory stock options. Options granted under the 1991 Option Plan generally vest over four years, are exercisable to the extent vested, and expire 10 years from the date of grant. Of the options outstanding as of April 30, 2007 in the table below, 39,400 expired in May 2007 and were cancelled as they were not exercised.

A summary of stock option activity is as follows:

			Weighted
			Average
	Number of		Exercise
	Shares		Price
Outstanding at April 30, 2004	594,511		$	4.60
Granted (weighted average fair value of $2.05)	251,900		2.35
Exercised	(53,834	)	1.55
Cancelled/expired	(224,101	)	2.75
Outstanding at April 30, 2005	568,476		4.60
Granted (weighted average fair value of $1.55)	95,000		1.90
Exercised	(62,523	)	1.75
Cancelled/expired	(71,971	)	8.10
Outstanding at April 30, 2006	528,982		4.10
Granted (weighted average fair value of $1.35)	79,000		1.35
Exercised	(85,080	)	1.80
Cancelled/expired	(69,660	)	11.45
Outstanding at April 30, 2007	453,242		2.90

Additional information regarding options outstanding at April 30, 2007 is as follows:

	Options Outstanding				Options Exercisable
		Average	Weighted			Weighted
		Remaining	Average			Average
	Number	Contractual	Exercise		Number	Exercise
Range of Exercise Prices	Outstanding	Life (Years)	Price		Outstanding	Price
$  1.10 -   1.25	68,000	6.68	$	1.20	38,000	$	1.25
1.30 -   1.30	65,400	4.55		1.30	65,400		1.30
1.40 -   1.45	48,500	8.98		1.45	9,500		1.40
1.60 -   1.85	62,050	8.27		1.80	31,827		1.80
1.95 -   2.50	70,100	7.67		2.25	54,591		2.30
2.60 -   2.70	4,500	8.09		2.60	4,000		2.60
2.75 -   2.75	85,300	5.02		2.75	85,300		2.75
3.25 - 29.40	47,892	3.32		10.80	44,774		11.25
30.15 - 32.50	1,200	2.07		31.70	1,200		31.70

     Options to purchase 379,573 and 394,634 shares at weighted average prices of $4.80 and $5.60 were exercisable at April 30, 2006 and 2005. At April 30, 2007, there were 163,111 shares reserved for future grants under the Stock Option Plan.

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Restricted Stock

     On May 1, 2002, the Company established the 2002 Director Restricted Stock Plan (“Director Restricted Stock Plan”) as part of a compensation program designed to attract and retain independent members for our board of directors. The maximum aggregate number of shares of common stock that may be issued under the Director Restricted Stock Plan is 100,000. In May, each independent director is eligible for a fully vested restricted stock award for the number of shares which is equal to $10,000 divided by the fair market value of a share of stock at the award date. There were no shares awarded under the plan in fiscal 2007 and 23,080 shares awarded under the plan in fiscal 2006, leaving a balance of 3,862 shares reserved for future awards at April 30, 2007.

Private Placement

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

     Due to the initial issuance of shares in the acquisition of Acuitrek in February 2005, which caused the application of the anti-dilution provision of the warrants, the warrant exercise price has been adjusted to $4.45 per share and the total number of warrant shares purchasable on exercise of the warrants has increased to 454,543 shares. The debt financing on November 20, 2006 in conjunction with the acquisition of Gupta Technologies LLC (see Note 2) also caused the application of the anti-dilution provision and the warrant exercise price was adjusted to $4.15 per share and the number of warrant shares purchasable on exercise of the warrants has increased to 487,387 shares. Under certain circumstances, where the closing bid price of a share of common stock equals or exceeds $9.00, appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of common stock, for 20 consecutive trading days commencing after the registration statement covering the warrants shares has been declared effective, the Company, upon 20 days’ prior written notice to the warrant holders within one business day immediately following the end of such 20 day trading period, may call the warrants for 25% of the shares of the common stock initially purchasable pursuant to the warrants at a redemption price equal to $0.05 per share of common stock then purchasable pursuant to the warrants. If the call conditions are met again during the 30 day period immediately after consummation of a previous call, the Company may once again call the warrants for an additional increment of 25% of the shares of common stock initially purchasable pursuant to the warrants or such less amount as shall then remain purchasable and in the same manner and subject to the same notice requirements as the initial call, until all of the shares have been called.

Note 12. Income Taxes

     For fiscal 2007, the Company recorded $82,000 for foreign tax expense and no expense for state or federal taxes. For fiscal 2006, the Company recorded no state, federal or foreign tax expense. For fiscal 2005, the Company recorded expenses of $9,000 for various taxes.

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

	2007			2006		2005
Domestic	$	(1,546	)	$	1,165	$	(1,315	)
Foreign		267			30		(687	)
Total income (loss) before income taxes	$	(1,279	)	$	1,195	$	(2,002	)
Foreign taxes	$	82		$	—	$	—
Federal and state income taxes		—			—		9
Provision for income taxes	$	82		$	—	$	9

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     The provision for income taxes for the years ended April 30, 2007, 2006 and 2005 differs from the amounts computed by applying the statutory U.S. federal income tax rate to pretax loss as a result of the following (in thousands):

	2007			2006			2005
Computed tax benefit	$	(824	)	$	(214	)	$	(801	)
Increases (reductions) in tax expense resulting from:
Change in valuation allowance for deferred tax assets		14,321			(15,560	)		710
Expiration of net operating loss carryforwards		(13,024	)		15,460			—
Change in deferred revenue		(1,088	)		—			—
Other		697			314			100
Provision for income taxes	$	82		$	—		$	9

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

	2007			2006
Deferred tax assets:
Non-current
Net operating loss carryforwards	$	14,649		$	1,625
Capital loss carryforward		1,515			1,724
Foreign tax credits		—			46
Current deferred tax assets (liabilities)
Deferred revenue		2,151			1,063
Allowance for losses on accounts receivable		97			39
Reserves and other accruals		200			(206	)
Total deferred tax assets	$	18,612		$	4,291
Valuation allowance		(18,612	)		(4,291	)
Net deferred tax assets	$	—		$	—

     Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $14.3 in fiscal 2007, decreased by $15.6 million in fiscal 2006 and increased by $0.7 million in fiscal 2005. At April 30, 2007, the Company had approximately $40.7 million in federal net operating loss carryforwards that begin to expire in fiscal year 2008 through 2026, approximately $6.2 million in state net operating loss carryforwards that expire in fiscal years 2013 to 2016 and approximately $0.6 million in foreign net operating loss carryforwards that do not expire, approximately $3.5 million in capital loss carryforwards that expire in 2010. The Company’s ability to utilize these net operating loss carryforwards may be subject to certain limitations in the event of a change in ownership.

Note 13. Other Income (Expenses)

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

	2007		2006			2005
Interest income	$	45	$	109		$	59
Foreign currency exchange loss		15		(48	)		(3	)
Other		76		—			15
Other income (expenses), net	$	136	$	61		$	71

Note 14. Earnings (loss) per Share

     Basic earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted earnings (loss) per share is computed similar to basic earnings per

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share except that it reflects the potential dilution that could occur if dilutive securities or other obligations to issue common stock were exercised or converted into common stock. For fiscal 2007 and fiscal 2005, because of our reported net loss, potentially dilutive securities were excluded from the per share computations due to their antidilutive effect. For fiscal 2006 there are approximately 72,800 potential common shares included in the diluted EPS computation.

(in thousands, except per share amounts)	Years Ended April 30,
	2007			2006			2005
Income (loss) from continuing operations	$	(1,361	)	$	1,195		$	(2,011	)
Loss from discontinued operations		(1,061	)		(1,823	)		(353	)
Net loss	$	(2,422	)	$	(628	)	$	(2,364	)
Weighted average shares of common stock outstanding, basic		5,927			5,803			5,555
Effect of dilutive securities		—			72			—
Weighted average shares of common stock outstanding, diluted		5,927			5,875			5,555
Earnings (loss) per share of common stock:
Basic:
Continuing operations	$	(0.23	)	$	0.21		$	(0.36	)
Discontinued operations		(0.18	)		(0.32	)		(0.07	)
Total	$	(0.41	)	$	(0.11	)	$	(0.43	)
Assuming dilution:
Continuing operations	$	(0.23	)	$	0.20		$	(0.36	)
Discontinued operations		(0.18	)		(0.31	)		(0.07	)
Total	$	(0.41	)	$	(0.11	)	$	(0.43	)

     Potentially dilutive securities that are not included in the diluted net loss calculation because they would be antidilutive are employee stock options of 453,200, 529,000 and 568,400 as of April 30, 2007, 2006 and 2005 respectively, and common stock warrants of 1,124,600 as of April 30, 2007 and 454,600 as of April 30, 2006 and 2005.

Note 15. Related Party Transactions

     Unify has an investment of less than 15% in Unify Japan KK who is the Company’s master distributor in Japan. Sales to Unify Japan KK in fiscal 2007, 2006 and 2005 were $0.2 million, $0.3 million and $0.5 million, respectively. Accounts receivable from Unify Japan KK as of April 30, 2007 and 2006 were $7,900 and $76,100, respectively.

Transaction with an Officer

     As part of the acquisition of Acuitrek (see Note 3), the Company assumed a note payable to a major stockholder of Acuitrek that was paid in full on July 12, 2005.

Note 16. Employee Retirement Plan

     The Company maintains a 401(k) profit sharing plan (the “401(k) Plan”). Eligible employees may contribute up to 100% of their pre-tax annual compensation to the 401(k) Plan, subject to certain statutory limitations. The Company can, at its discretion, voluntarily match the participating employees’ contributions not to exceed 6% of each employee’s annual compensation. In fiscal years 2007, 2006 and 2005, the Company contributed $72,000, $59,000 and $47,000, respectively, to the 401(k) Plan.

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Note 17. Commitments and Contingencies

Operating Leases

     The Company leases office space and equipment under non-cancelable operating lease arrangements expiring at various dates through fiscal 2011. Future minimum rental payments under these leases as of April 30, 2007 are as follows (in thousands):

Years Ending April 30,
2008		1,180
2009		230
2010		138
2011		1
	$	1,549

     Rent expense under operating leases was $1,095,500, $1,038,400 and $1,117,100 for the years ended April 30, 2007, 2006 and 2005, respectively.

Litigation

     The Company is subject to legal proceedings and claims that arise in the normal course of business. If such matters arise, the Company cannot assure that it would prevail in such matters, nor can it assure that any remedy could be reached on mutually agreeable terms, if at all. Due to the inherent uncertainties of litigation, were there any such matters, the Company would not be able to accurately predict their ultimate outcome. As of April 30, 2007, there were no current proceedings or litigation involving the Company that management believes would have a material adverse impact on its financial position, results of operations, or cash flows.

Note 18. Segment Information

     FASB Statement No. 131, Disclosures about Segments of an Enterprise and Related Information, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker is our Chief Executive Officer. We are organized geographically. While our Chief Executive Officer evaluates results in a number of different ways, our geographic structure is the primary basis for which the allocation of resources and financial results are assessed. The Company maintains two segments that sell and market application development software and related services. The segments are the Americas, which includes the Company’s international distributors, and Europe, including the UK, France, Germany and other direct European customers. Previously, the Company also maintained a reportable segment for its Insurance Risk Management (“IRM”) division. The IRM division sold and marketed the NavRisk application. In November 2006, the IRM division and the Company’s ViaMode software product were sold. In the tables below, the IRM division and the Company’s ViaMode software product comprise the amounts presented as discontinued operations.

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Financial information for the Company’s reportable segments is summarized below (in thousands):

	For the Twelve Months Ended April 30,
	2007			2006			2005
Total revenues:
Americas (1)	$	4,851		$	4,889		$	5,792
Europe (1)		6,336			5,254			5,411
Total revenues from continuing operations		11,187			10,143			11,203
Total revenues from discontinued operations		541			1,106			101
Total revenues	$	11,728		$	11,249		$	11,304
Operating Income (loss):
Americas (2)	$	(4,081	)	$	(1,238	)	$	(3,192	)
Europe		3,193			2,383			1,142
Total operating income (loss) from continuing operations		(888	)		1,145			(2,050	)
Total operating loss from discontinued operations		(1,061	)		(1,823	)		(353	)
Total operating loss	$	(1,949	)	$	(678	)	$	(2,403	)
Interest income (3)	$	45		$	109		$	59
Interest expense (3)	$	527		$	11		$	23

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Total assets by segment were as follows (in thousands):
	As of April 30,
	2007		2006		2005
Assets:
Americas	$	12,374	$	4,218	$	5,323
Europe		3,664		2,179		2,295
Total assets of continuing operations	$	16,038	$	6,397	$	7,618
Assets held for sale		—		1,954		1,872
Total assets	$	16,038	$	8,351	$	9,490
Total intersegment revenues were as follows (in thousands):
	For the Twelve Months Ended April 30,
	2007		2006		2005
Intersegment revenues:
Americas	$	490	$	982	$	1,639
Europe		611		—		3
Total intercompany revenues	$	1,101	$	982	$	1,642
Depreciation (5)	$	185	$	169	$	183
Captial expenditures (5)	$	63	$	41	$	208
Revenues and long-lived assets by geographic area were as follows (in thousands):
Total revenues:
Americas	$	2,986	$	3,048	$	4,014
International Distributors		1,865		1,841		1,778
Subtotal Americas		4,851		4,889		5,792
United Kingdom		984		1,128		1,388
Central Europe - Germany, Benelux, Other		3,039		2,349		1,776
France		2,313		1,777		2,247
Subtotal Europe		6,336		5,254		5,411
Discontinued operations		541		1,106		101
Total revenues	$	11,728	$	11,249	$	11,304
Long-lived assets:
Americas	$	241	$	47	$	77
Europe		237		132		107
Corporate Assets		8,749		479		601
Total long-lived assets	$	9,227	$	658	$	785

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____________________
 

(1)	The Company allocates revenues to operating segments based on the location of the country where the license is installed or service is delivered. The accounting policies of the segments are the same as those described in Note 1.
(2)	Americas operating income (loss) is net of corporate product development and general and administrative expenses.
(3)	Interest income and interest expense were primarily attributable to corporate assets located in the Americas for the periods presented. Interest income and interest expense in the Americas and Europe were not significant in those periods.
(4)	Corporate assets are located in the Americas and consist primarily of cash equivalents, investments, purchased technology and related maintenance contracts, property and equipment, intangibles, goodwill and intercompany receivables from Europe.
(5)	The majority of the Company’s capital expenditures are incurred for product development (which occurs exclusively in the Americas) and for corporate infrastructure. Consequently, capital expenditures and depreciation expense were primarily attributable to the Americas in the periods presented.

Note 19. Subsequent Events

     On June 24, 2007, the Company implemented a 1 for 5 reverse stock split. The reverse stock split had been previously approved by the Company’s stockholders as part of the Company’s March 29, 2007 Annual Meeting.

     On May 22, 2007 the Company purchased privately held Active Data Corporation. Active Data Corporation provides application migration software that will add Microsoft’s ..NET functionality to Unify’s Team Developer product and provide an additional application migration solution for the Company. Pursuant to the terms of the purchase agreement, Unify acquired all the outstanding stock of Active Data Corporation for cash, a note payable over the next twelve months and future earn-out payments.

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Note 20. Quarterly Results of Operations (Unaudited)

The following interim financial information presents the fiscal 2007 and 2006 results on a quarterly basis:

	Quarter Ended
	July 31,			October 31,			January 31,			April 30,
	(In thousands, except per share data)
Year ended 2007:
Total revenues	$	1,734		$	2,190		$	3,310		$	3,953
Gross margin	$	1,420		$	1,903		$	2,869		$	3,594
Net income (loss) from continuing operations	$	(291	)	$	291		$	(777	)	$	(584	)
Net income loss from discontinued operations	$	(463	)	$	(478	)	$	(120	)	$	—
Net loss	$	(754	)	$	(187	)	$	(897	)	$	(584	)
Net income (loss) per share:
Basic earnings per share:
Continuing operations	$	(0.05	)	$	0.05		$	(0.13	)	$	(0.10	)
Discontinued operations		(0.08	)		(0.08	)		(0.02	)		0.00
Net loss per share	$	(0.13	)	$	(0.03	)	$	(0.15	)	$	(0.10	)
Dilutive earnings per share:
Continuing operations	$	(0.05	)	$	0.05		$	(0.13	)	$	(0.10	)
Discontinued operations		(0.08	)		(0.08	)		(0.02	)		0.00
Net loss per share	$	(0.13	)	$	(0.03	)	$	(0.15	)	$	(0.10	)
Shares used in computing net income (loss) per share:
Basic		5,904			5,904			5,935			5,966
Diluted		5,904			5,911			5,935			5,966
Year ended 2006:
Total revenues	$	2,467		$	2,362		$	1,994		$	3,320
Gross margin	$	2,021		$	1,975		$	1,619		$	2,974
Net income (loss) from continuing operations	$	80		$	295		$	(71	)	$	891
Net income (loss) from discontinued operations	$	(193	)	$	(290	)	$	(617	)	$	(723	)
Net income (loss)	$	(113	)	$	5		$	(688	)	$	168
Net income (loss) per share:
Basic earnings per share:
Continuing operations	$	0.01		$	0.05		$	(0.01	)	$	0.15
Discontinued operations		(0.03	)		(0.05	)		(0.11	)		(0.12	)
Net loss per share	$	(0.02	)	$	0.00		$	(0.12	)	$	0.03
Dilutive earnings per share:
Continuing operations	$	0.01		$	0.05		$	(0.01	)	$	0.15
Discontinued operations		(0.03	)		(0.05	)		(0.11	)		(0.12	)
Net loss per share	$	(0.02	)	$	0.00		$	(0.12	)	$	0.03
Shares used in computing net income (loss) per share:
Basic		5,724			5,770			5,829			5,889
Diluted		5,830			5,843			5,829			5,947

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INDEX OF EXHIBITS

Exhibit No.		Description
2	.1	Purchase and Exchange Agreement between Halo Technology Holdings, Inc and Unify, dated September 13, 2006 as amended by Amendment No. 1 dated November 20, 2006 (10) (11)
3	.1	Restated Certificate of Incorporation of the Company (1)
3	.2	Amendment to Restated Certificate of Incorporation of the Company
3	.3	Bylaws of the Registrant (1)
4	.1	Form of Stock Certificate (1)
4	.2	Revolving Credit and Term Note Agreement by and between ComVest and Unify, dated November 20, 2006 (11)
4	.3	Convertible Term Note – Tranche 1
4	.4	Convertible Term Note – Tranche 2
4	.5	Convertible Term Note – Tranche 3
4	.6	Registration Rights Agreement dated November 20, 2006 (11)
4	.7	Form of 2006 Warrants
4	.8	Acuitrek Inc. Stock Purchase Agreement dated February 2, 2005 as amended by Amendment No. 1 dated November 20, 2006 (7) (11)
4	.9	Acuitrek Inc. Registration Rights Agreement dated February 2, 2005 (7)
4	.10	Special Situations Stock Purchase Agreement dated April 23, 2004 (6)
4	.11	Special Situations Registration Rights Agreement dated April 23, 2004 (6)
4	.12	Form of 2004 Warrant
10	.1*	1991 Stock Option Plan, as amended (1)
10	.2*	2001 Stock Option Plan (4)
10	.3*	Employment Agreement by and between Todd Wille and the Registrant dated December 29, 2000 (3)
10	.4	Form of Indemnification Agreement (1)
10	.5	Office Building Lease for Sacramento Facility, Dated December 17, 1999, as Amended (2)
10	.6	Fourth Amendment Effective January 1, 2002 to Office Building Lease Dated December 17, 1999 (6)
10	.7	Fifth Amendment to Lease and Termination of Stock Pledge Agreement dated September 18, 2003 (6)
10	.8	Silicon Valley Bank Loan and Security Agreement dated June 6, 2003(5), as amended by Silicon Valley Bank Amendment to Loan Documents dated June 3, 2004, June 5, 2005 (8) and May 24, 2006 (9) and Amended Schedule to Loan and Security Agreement dated June 3, 2004(6) and June 5, 2005 (8)
14		Code of Ethics for Senior Officers(6)
21	.1	Subsidiaries of the Registrant
23	.1	Consent of Grant Thornton LLP, Independent Registered Public Accounting Firm
31	.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31	.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	.1	Certification of Todd E. Wille, Chief Executive Officer of Unify Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32	.2	Certification of Steven D. Bonham, Chief Financial Officer of Unify Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

____________________

(1)	Incorporated by reference to the exhibit filed with Registrant’s Form S-1 Registration Statement (No. 333-3834) declared effective by the Securities and Exchange Commission on June 14, 1996.
(2)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on December 22, 2000.
(3)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 30, 2001.
(4)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-Q on March 14, 2002.
(5)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 17, 2003.
(6)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 21, 2004.
(7)	Incorporated by reference to the exhibit filed with Registrant’s Form 8-K on February 2, 2005.
(8)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 28, 2005.
(9)	Incorporated by reference to the exhibit filed with Registrant’s Form 10-K on July 31, 2006.
(10)	Incorporated by reference to the exhibit filed with Registrant’s Form 8-K on September 20, 2006.
(11)	Incorporated by reference to the exhibit filed with Registrant’s Form 8-K on November 29, 2006.
*	Exhibit pertains to a management contract or compensatory plan or arrangement.

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EX-3.2

EXHIBIT 3.2

UNIFY CORPORATION

CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION

(Pursuant to Section 242 of the General Corporation Law of the State of Delaware)

     Unify Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

1. Paragraph A of Article Fourth of the Restated Certificate of Incorporation of the Corporation, filed with the Secretary of State of the State of Delaware on April 18, 1996 (the “Restated Certificate of Incorporation”), is amended and restated to read in its entirety as follows:

“A. This Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of all classes of stock which the Corporation will have authority to issue is 47,931,370 shares, 40,000,000 of which shall be Common Stock with a par value of $0.01 each and 7,931,370 shores of which shall be Preferred Stock with a par value of $0.001 each.

Effective at 11:59 p.m., Eastern Daylight Time on June 24, 2007 (the “Effective Time”), every five (5) shares of the Corporation’s Common Stock issued and outstanding immediately prior to the Effective Time (the “Old Common Stock”), will automatically and without any action on the part of the respective holders thereof be combined and converted into one (1) share of Common Stock, par value $0.001 per share, of the Corporation (the “New Common Stock”). The combination and conversion of the Old Common Stock shall be referred to as the “Reverse Stock Split”.

     No fractional shares of New Common Stock shall be issued to the holders of record of Old Common Stock in connection with the Reverse Stock Split and the Corporation shall not recognize on its stock record books any purported transfer of any fractional share of New Common Stock. All shares of Old Common Stock (including fractions thereof) held by a holder immediately prior to the Reverse Stock Split shall be aggregated for purposes of determining whether the Reverse Stock Split would result in the issuance of a fractional share. Any fractional share resulting from such aggregation of Old Common Stock upon the Reverse Stock Split shall be converted into the right to receive a cash payment in an amount equal to the fair value of Old Common Stock that would have been exchanged for fractional shares of New Common Stock in the Reverse Stock Split if fractional shares had been issued in the Reverse Stock Split in an amount equal to the closing price of such Old Common Stock on the OTC/BB Market on June 22, 2007.

The Corporation shall not be obligated to issue certificates evidencing the shares of New Common Stock outstanding as a result of the Reverse Stock Split unless and until the certificates evidencing the shares held by a holder prior to the Reverse Stock Split are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or its transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection with such certificates. Each stock certificate that, immediately prior to the Effective Time, represented shares of Old Common Stock shall, from and after the Effective Time, automatically and without the necessity of presenting the same for exchange, represent that number of whole shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified (as well as the right to receive cash in lieu of any fractional shares of New Common Stock as set forth above), provided, however, that each holder of record of a certificate that represented shares of Old Common Stock shall receive, upon surrender of such certificate, a new certificate representing the number of whole shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified, as well as any cash in lieu of fractional shares of New Common Stock to which such holder may be entitled as set forth above.”

     2.The foregoing amendment of the Restated Certificate of Incorporation has been duly approved by the Board of Directors of the Corporation in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

     3.The Corporation’s stockholders approved the amendment of the Restated Certificate of Incorporation of the Corporation as required by the Bylaws of the Corporation and in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment of the Restated Certificate of Incorporation of the Corporation to be signed by the Corporation’s President this 20th day of April, 2007.

UNIFY CORPORATION
By:	(s) TODD E. WILLE
Name: Todd E. Wille
Title: President and CEO

2

EX-4.2

EXHIBIT 4.2

AMENDMENT NO. 1 TO
REVOLVING CREDIT AND TERM LOAN AGREEMENT

     AGREEMENT (this “Agreement”), made as of the 4^th day of May, 2007, but effective retroactive to and from and after the date of the Loan Agreement described below, by and between COMVEST CAPITAL LLC, a Delaware limited liability company (the “Lender”), and UNIFY CORPORATION., a Delaware corporation (the “Borrower”);

WITNESSETH:

     WHEREAS, the Lender and the Borrower are parties to a Revolving Credit and Term Loan Agreement dated as of November 20, 2006 (the “Loan Agreement”), the terms and conditions of which are hereby incorporated herein by reference); and

     WHEREAS, in order to effect a technical correction to the Loan Agreement, the Lender has requested the amendments to the Loan Agreement set forth herein; and

     WHEREAS, the Borrower is in agreement with the amendments set forth in this Agreement;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereby agree, effective on and as of the date hereof, as follows:

1. Definitions.

          (a) Except as otherwise defined herein, all capitalized terms used in this Agreement have the respective meanings ascribed to them in the Loan Agreement.

          (b) The following additional definition is hereby added to Section 1.01 of the Loan Agreement in the appropriate alphabetical location:

“Register” shall have the meaning provided in Section 8.03(a) below.

2. Additional Assignment Provisions.

(a) The following new Section 8.03 is hereby added to the Loan Agreement:

               “Section 8.03. Recordation of Assignment. In respect of any negotiation, transfer or assignment of all or any portion of any Lender’s interest in this Agreement, any Note and/or any other Loan Documents at any time and from time to time, the following provisions shall be applicable:

3

(a) The Borrower, or any agent appointed by the Borrower, shall maintain a register (the “Register”) in which there shall be recorded the name and address of each Person holding any Note(s) hereunder or any commitment to lend hereunder, and the principal amount payable to such Person under such Person’s Note(s) or committed by such Person under such Person’s lending commitment. The Borrower hereby irrevocably appoints the Lender (and/or any subsequent Lender appointed by the Lender then maintaining the Register) as the Borrower’s agent for the purpose of maintaining the Register.

               (b) In connection with any negotiation, transfer or assignment as aforesaid, the transferor/assignor shall deliver to the Lender then maintaining the Register an assignment and assumption agreement executed by the transferor/assignor and the transferee/assignee, setting forth the specifics of the subject transaction, including but not limited to the amount of Obligations and/or lending commitments being transferred or assigned (and being assumed, as applicable), and the proposed effective date of such transfer or assignment and the related assumption (if applicable).

               (c) Subject to receipt of completed tax forms (indicating withholding status, or exemption from withholding, as applicable, of the transferee/assignee) reasonably required by the Person then maintaining the Register, and (if required by such Person) surrender of the negotiated, transferred or assigned Note(s) for reissuance by the Borrower, such Person shall record the subject negotiation, assignment and assumption in the Register. Anything contained in any Note or other Loan Document to the contrary notwithstanding, no negotiation, transfer or assignment shall be effective until it is recorded in the Register pursuant to this Section 8.03(c). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error; and the Borrower and each Lender shall treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and each Lender at any reasonable time and from time to time upon reasonable prior notice.”

     3. Amendment and Replacement of Notes. By reason of and in furtherance of the amendments set forth in paragraph 2 above , each outstanding Note shall be amended so that, in lieu of being payable “to the order of the Lender and/or to the order of any subsequent holder” (or words to similar effect), such Note shall be payable “to the Lender or registered assigns” (or words to similar effect). Upon request of the Lender, the Borrower shall execute and deliver to the Lender an amended and restated Note (giving effect to such amendment) in replacement of each currently outstanding Note, and upon receipt thereof, the Lender shall promptly return to the Borrower the original Note for which such replacement has been executed and delivered.

     4. No Novation. The Borrower hereby acknowledges, confirms and agrees that none of the amendments effected by this Agreement constitutes or shall constitute a novation of any of the Obligations.

5. Ongoing Force and Effect.

          Except as and to the extent expressly provided in this Agreement, all covenants, terms and conditions of the Loan Documents shall remain unchanged and in full force and effect. All references to the Loan Agreement contained in the Loan Documents shall hereafter mean and refer to the Loan Agreement as amended by this Agreement.

4

6. Miscellaneous.

          (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except by means of a written agreement signed by the party to be charged therewith, and then only in the specific instance and for the specific purpose stated therein.

          (c) This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns, except that the Borrower shall have no right to assign any of its rights or obligations hereunder or any interest herein without the prior written consent of the Lender.

          (d) The paragraph headings in this Agreement are included for convenience of reference only, and shall not affect the construction or interpretation of any of the provisions hereof.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers as of the date first set forth above.

COMVEST CAPITAL LLC
By:	/s/ LARRY E. LENIG, JR.
	Name:  Larry E. Lenig, Jr.
	Title:    Senior Partner / Portfolio Manager
UNIFY CORPORATION
By:	/s/ TODD E. WILLE
	Name:  Todd E. Wille
	Title:    President and CEO

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EX-4.3

EXHIBIT 4.3

$1,000,000 May 4, 2007

AMENDED AND RESTATED
CONVERTIBLE TERM NOTE

(Tranche 1)

     This Note and the Common Stock issuable upon conversion hereof (until such time, if any, as such Common Stock is registered with the Securities and Exchange Commission pursuant to an effective registration statement) have not been registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws, and may not be sold, offered for sale of otherwise transferred unless registered or qualified under the Act and applicable state securities laws or unless the Maker receives an opinion, in form and from counsel reasonably acceptable to the Maker, that registration, qualification or other such actions are not required under any such laws.

     FOR VALUE RECEIVED, UNIFY CORPORATION, a Delaware corporation (the “Maker”), hereby promises to pay to ComVest Capital LLC, a Delaware limited liability company (“ComVest”), or registered assigns (collectively, the “Payee”), the sum of One Million ($1,000,000) Dollars (the “Principal”), with interest thereon, on the terms and conditions set forth herein and in the Revolving Credit and Term Loan Agreement dated as of November 20, 2006 between the Maker and ComVest (as same may be amended, modified, supplemented and/or restated from time to time, the “Loan Agreement”). Terms defined in the Loan Agreement and not otherwise defined herein shall have the meanings assigned thereto in the Loan Agreement.

     Payments of principal of, interest on and any other amounts with respect to this Convertible Promissory Note (this “Note”) are to be made in lawful money of the United States of America.

     Principal and accrued interest of this Note may or shall be convertible into common stock of the Maker as provided in Section 3 below.

1. Payments.

          (a) Interest. This Note shall bear interest (“Interest”) on Principal amounts outstanding from time to time from the date hereof at the rate of eleven and one-quarter (11.25%) percent per annum; provided, however, that during the continuance of any Event of Default, the Interest rate hereunder shall be increased to fifteen and one-quarter (15.25%) percent per annum. All Interest shall be computed on the daily unpaid Principal balance of this Note based on a three hundred sixty (360) day year, and shall be payable monthly in arrears on the last day of each calendar month commencing November 30, 2006 and on the maturity hereof.

          (b) Principal. The Principal of this Note shall be payable in forty-two (42) equal monthly installments of $23,809.53 each, due and payable on the last day of each calendar month commencing May 31, 2007 through and including October 31, 2010.

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          (c) If any scheduled payment date as aforesaid is not a business day in either the State of Florida or the State of California, then the payment to be made on such scheduled payment date shall be due and payable on the next succeeding business day, with additional interest on any Principal amount so delayed for the period of such delay.

2. Prepayment.

          (a) Optional Prepayment of Principal. The unpaid Principal balance of this Note may, at the Maker’s option, be prepaid in whole or in part, at any time or from time to time when this Note is convertible by its terms, upon fifteen (15) days’ prior written notice to the Payee, provided that the Payee shall retain the right to convert all or any portion of such Principal amount called for prepayment, together with any or all Interest accrued thereon, at any time prior to the date fixed for prepayment, and thereafter until such prepayment is actually made. Any optional prepayment of Principal hereunder shall require the simultaneous payment of a prepayment premium as provided in Section 2.03(c) of the Loan Agreement.

          (b) Mandatory Prepayment of Principal. The Principal of this Note may be required to be prepaid, in whole or in part, at any time and from time to time in accordance with Section 2.02(b) of the Loan Agreement.

          (c) Interest. Except to the extent that such Interest is converted as herein provided, each prepayment of Principal shall be accompanied by all accrued Interest on the Principal amount prepaid or converted accrued to the date of prepayment or conversion.

          (d) Application of Payments. Any and all prepayments hereunder shall be applied first to any prepayment premium required under Section 2(a) above, then to unpaid accrued Interest on the Principal amount being prepaid, and finally to the remaining Principal installments in inverse order of maturity.

3. Conversion.

          (a) Optional and Mandatory Conversion. The Payee may, at its option, upon written notice to the Maker given at any time and from time to time from the date on which the Maker has sufficient authorized, unissued and unreserved shares of its Common Stock to issue upon such conversion until the payment or prepayment of this Note in full, convert all or any portion of the unpaid Principal balance of this Note, and/or any accrued Interest thereon, into shares of common stock of the Maker (“Common Stock”), at a price of Fifty ($.50) Cents per share of Common Stock (as same may be adjusted from time to time in accordance herewith, the “Conversion Price”). In addition, if (i) there is not then continuing any Default or Event of Default under and as defined in the Loan Agreement, (ii) the Common Stock is then traded or listed for trading on any national securities exchange or current quotations for the Common Stock are then reported on the OTC Bulletin Board, (iii) there is then in effect a valid registration statement under the Securities Act of 1933, as amended, in respect of the Common Stock issued and issuable upon conversion of this Note and upon exercise of the Warrants issued pursuant to the Loan Agreement, such that all such shares of Common Stock will be freely tradable immediately upon issuance at such time, (iv) the Maker is current in all of its required filings with the Securities and Exchange Commission, and (v) the reported Trading Price (as hereinafter

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defined) of the Common Stock for each of the twenty (20) consecutive trading days immediately prior thereto has been equal to or greater than 160% of the Conversion Price in effect on each such trading day, then the Maker may, upon five (5) business days’ prior written notice to the Payee, require the Payee to convert all or any portion of the Principal of this Note into shares of Common Stock at the Conversion Price then in effect; and in the event of any such conversion at the option of the Maker, the Maker shall give written notice thereof to the Payee certifying as to the satisfaction of the foregoing conditions (including a detailed schedule of Trading Prices for purposes of the foregoing clause (v)), and shall pay to the Payee, simultaneously with the delivery of stock certificates in accordance with Section 3(c), all unpaid accrued Interest on the Principal amount so converted. As used herein, the term “Trading Price” on any relevant date means (A) if the Common Stock is listed for trading on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market, the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Common Stock (regular way), or (B) if the Common Stock is not so listed but quotations for the Common Stock are reported on the OTC Bulletin Board, the most recent closing price as reported on the OTC Bulletin Board. The effective date of any conversion hereunder is herein referred to as the “Conversion Date.” To the extent that this Note is converted only in part, then such conversion shall be treated as a prepayment of the Principal amount converted in accordance with Section 2(d) above, provided that no prepayment premium shall be required in respect of any conversion.

          (b) Mechanics of Conversion. Upon notice to the Maker of the Payee’s conversion election as provided in Section 3(a), or upon notice to the Payee of the Maker’s conversion election as provided in Section 3(a), the Maker shall, in accordance with Section 3(c), issue to the Payee (or to the Payee’s designee(s) set forth in the Payee’s conversion election, or in any direction given to the Maker in response to the Maker’s conversion election) the number of shares of Common Stock to which the Payee shall be entitled upon such conversion, and shall deliver or cause to be delivered to the Payee or such designee(s) the certificates representing such shares of Common Stock. All shares of Common Stock issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid and nonassessable. In lieu of any fractional shares to which the Payee would otherwise be entitled, the Maker shall pay cash equal to such fraction multiplied by the per share Conversion Price.

          (c) Issuance of Common Stock Upon Conversion. Within a reasonable time, not exceeding ten (10) days after the Conversion Date, the Maker shall deliver or cause to be delivered, to or upon the written order of the Payee of this Note so converted, certificates representing the number of fully paid and nonassessable shares of Common Stock into which this Note has been converted in accordance with the provisions of this Section 3. If so requested by the Maker, the Payee shall, within a reasonable time (not exceeding ten (10) days after receipt by the Payee of such certificates), surrender this Note to the Maker for cancellation, against delivery of a replacement Note representing the remaining balance (if any) of this Note which has not been converted. Subject to the following provisions of this Section 3, such conversion shall be deemed to have occurred on the Conversion Date, so that the Payee of this Note or such Payee’s designee(s) shall be treated for all purposes as having become the record Payee of such shares of Common Stock at such time.

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          (d) Taxes on Conversion. The issuance of certificates for shares for Common Stock upon the conversion of this Note shall be made without charge by the Maker to the converting Payee for any tax in respect of the issuance of such certificates and such certificates shall be issued in the name of, or in such names as may be directed by, the Payee of this Note; provided, however, that the Maker shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any such certificate in a name other than that of the Payee of this Note, and the Maker shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Maker the amount of any such tax or shall have established to the satisfaction of the Maker that any such tax has been paid.

(e) Adjustment of Shares.

               (i) Stock Dividends, Distributions or Subdivisions. In the event that, at any time and from time to time from and after the date of this Note, the Maker shall issue additional shares of Common Stock (or securities convertible into Common Stock) in a stock dividend, stock distribution or subdivision paid with respect to Common Stock, or declare any dividend or other distribution payable in additional shares of Common Stock (or securities convertible into Common Stock) or effect a split or subdivision of the outstanding shares of Common Stock, then, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, the then-effective Conversion Price shall be proportionately decreased, and the number of shares of Common Stock issuable upon conversion of this Note shall thus be proportionately increased.

               (ii) Combinations or Consolidations. In the event that, at any time and from time to time from and after the date of this Note, the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then, concurrently with the effectiveness of such combination or consolidation, the then-effective Conversion Price shall be proportionately increased, and the number of shares of Common Stock issuable upon conversion of this Note shall thus be proportionately decreased.

               (iii) Other Dividends or Distributions. If the Maker, at any time or from time to time after the issuance of this Note, makes a distribution to the holders of Common Stock which is payable in securities of the Maker other than Common Stock, then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note, in addition to the number of shares of Common Stock, the amount of such securities of the Maker which would have been received if the portion of this Note so converted had been exercised for Common Stock on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iii) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iii) shall be deemed to permit the payment of any distribution in violation of the Loan Agreement.

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(iv) Merger, Consolidation or Exchange. If, at any time or from time to time after the date of this Note, there occurs any merger, consolidation, arrangement or statutory share exchange of the Maker with or into any other person or entity, then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note the kind and amount of shares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory share exchange by the Payee if the portion of this Note so converted had been exercised for shares of Common Stock immediately prior to such merger, consolidation, arrangement or statutory share exchange, subject to adjustments for events subsequent to the effective date of such merger, consolidation, arrangement or statutory share exchange with respect to such shares and other securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iv) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iv) shall be deemed to permit any such transaction in violation of the Loan Agreement.

               (v) Recapitalization or Reclassification. If, at any time or from time to time after the date of this Note, the shares of Common Stock issuable upon conversion of this Note are changed into the same or a different number of securities of any class of the Maker, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory share exchange provided for elsewhere in this Section 3(e)), then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Payee if the portion of this Note so converted had been converted immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(v) and all other adjustments under this Section 3(e).

               (vi) Extraordinary Dividends or Distributions. If, at any time or from time to time after the date of this Note, the Maker shall declare a dividend or any other distribution upon the Common Stock payable otherwise than out of current earnings, retained earnings or earned surplus and otherwise than in shares of Common Stock, then the Conversion Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a dividend or distribution in cash, to the amount thereof payable per share of Common Stock or, in the case of any other dividend or distribution, to the value thereof per share of Common Stock at the time such dividend or distribution was declared, as determined by the Board of Directors of the Maker in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject dividend or distribution, or, if a record is not taken, the date as of which the holders of record of Common Stock entitled to such dividend or distribution are to be determined. Nothing contained in this Section 3(e)(vi) shall be deemed to permit the payment of any dividend in violation of the Loan Agreement.

               (vii) Dilutive Issuances. (A) If the Maker, at any time or from time to time, issues or sells any Additional Shares of Common Stock (as defined below), other than as provided in the foregoing subsections of this Section 3(e), for a price per share (which, in the case of options, warrants, convertible securities or other rights, includes the amounts paid therefor plus the exercise price, conversion price or other such amounts payable thereunder) that is less than the Conversion Price then in effect, then and in each such case, the then applicable Conversion Price shall automatically be reduced as of the opening of business on the date of such issue or sale, to a price determined by multiplying the Conversion Price then in effect by a

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fraction (i) the numerator of which shall be (A) the number of share of Common Stock deemed outstanding (as determined below) immediately prior to such issue or sale, plus (B) the number of shares of Common Stock which the aggregate consideration received by the Maker for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price, and (ii) the denominator of which shall be the number of shares of Common Stock deemed outstanding (as defined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued; provided, however, that upon the expiration or other termination of options, warrants or other rights to purchase or acquire Common Stock which triggered any adjustment under this Section 3(e)(vii), and upon the expiration or termination of the right to convert or exchange convertible or exchangeable securities (whether by reason of redemption or otherwise) which triggered any adjustment under this Section 3(e)(vii), if any thereof shall not have been exercised, converted or exchanged, as applicable, the number of shares of Common Stock deemed to be outstanding pursuant to this Section 3(e)(vii) shall be reduced by the number of shares as to which options, warrants and rights to purchase or acquire Common Stock shall have expired or terminated unexercised, and as to which conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be outstanding; and the Conversion Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares of Common Stock actually issued. For purposes of the preceding sentence, the number of shares of Common Stock deemed to be outstanding as of a given date shall be the sum of (x) the number of shares of Common Stock actually outstanding, (y) the number of shares of Common Stock into which this Note could be converted on the day immediately preceding the given date, and (z) the number of shares of Common Stock which could be obtained through the exercise or conversion of all other rights, options and convertible securities outstanding on the day immediately preceding the given date. “Additional Shares of Common Stock” shall mean all shares of Common Stock, and all options, warrants, convertible securities or other rights to purchase or acquire Common Stock, issued by the Maker other than (i) shares of Common Stock issued pursuant to the exercise of options, warrants or convertible securities outstanding on November 20, 2006 (including, without limitation, all of the Warrants issued pursuant to the Loan Agreement), or thereafter issued from time to time pursuant to and in accordance with stock purchase or stock option plans as in effect on November 20, 2006, (ii) shares of Common Stock issued to fulfill purchase agreement obligations owed by the Company to Daniel Romine and Carrie Romine which were outstanding on November 20, 2006, provided that such shares are not valued, for purposes of such issuance, at less than $0.27 per share (such minimum value to be subject to adjustment in a manner consistent with Sections 3(c)(i) and 3(c)(ii) above), and (iii) shares of Common Stock and/or options, warrants or other Common Stock purchase rights issued subsequent to November 20, 2006 for up to an aggregate of 850,000 shares of Common Stock (such number to be subject to adjustment in accordance with Sections 3(e)(i) and 3(e)(ii) above), where such options, warrants or other rights are issued both (x) with exercise prices per share of Common Stock at the then-current fair market value of a share of Common Stock, as determined in good faith by the Board of Directors of the Maker or the Compensation Committee thereof, and (B) to employees, officers or directors of, or consultants to, the Maker or any Subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved by the Maker’s Board of Directors or the Compensation Committee thereof, and by the Maker’s stockholders.

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               (B) In the event that the exercise price, conversion price, purchase price or other price at which shares of Common Stock are purchasable pursuant to any options, warrants, convertible securities or other rights to purchase or acquire Common Stock is reduced at any time or from time to time (other than under or by reason of provisions designed to protect against dilution), then, upon such reduction becoming effective, the Conversion Price then in effect hereunder shall forthwith be decreased to such Conversion Price as would have been obtained had the adjustments made and required under this Section 3(e)(vii) upon the issuance of such options, warrants, convertible securities or other rights been made upon the basis of (and the total consideration received therefor) (i) the issuance of the number of shares of Common Stock theretofore actually delivered upon the exercise, conversion or exchange of such options, warrants, convertible securities or other rights, (ii) the issuance of all of the Common Stock and all other options, warrants, convertible securities and other rights to purchase or acquire Common Stock issued after the issuance of the modified options, warrants, convertible securities or other rights, and (iii) the original issuance at the time of the reduction of any such options, warrants, convertible securities or other rights then still outstanding.

               (C) In no event shall an adjustment under this Section 3(e)(vii) be made if it would result in an increase in the then applicable Conversion Price.

               (viii) Certificate of Adjustment. Whenever the Conversion Price and/or the number of share of Common Stock receivable upon conversion of this Note is adjusted, the Maker shall promptly deliver to the Payee a certificate of adjustment, setting forth the Conversion Price and/or shares of Common Stock issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

               (ix) Successive Application. The provisions of this Section 3(e) shall be applicable successively to each event described herein which may occur subsequent to the date of this Note and prior to the conversion in full of this Note.

               (x) Fractional Shares. No fractional shares of Common Stock shall be issuable by reason of any adjustments made pursuant to this Section 3(e); and in lieu of any such fractional shares, the Maker shall pay cash therefor in accordance with Section 3(b) above.

          (f) No Impairment. The Maker will not, by amendment of its incorporation documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Payee of this Note against impairment. In the event of any merger or consolidation in which the Maker is not the surviving entity, the Maker shall make appropriate arrangements in order that, upon any subsequent conversion of this Note, the Payee shall become entitled to receive the same securities or other consideration that such Payee would have received had such conversion been made immediately prior to the consummation of such merger or consolidation, subject to further adjustments, of the type provided in this Note, with respect to any events relating to any such securities occurring subsequent to the consummation of such merger or consolidation.

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          (g) Common Stock Reserved. At such time as the Maker has sufficient authorized, unissued and unreserved shares of its Common Stock (determined as provided in Section 5.13 of the Loan Agreement) to issue upon conversion of this Note, the Maker shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect the full conversion of this Note into Common Stock.

          (h) Restricted Securities. The shares of Common Stock issuable to the Payee hereunder (the “Shares”) may not, at the time of issuance, have been registered under any federal or state securities laws, and may constitute “restricted securities” within the meaning of federal and state securities laws. By its receipt of Shares, if the Shares are not then the subject of an effective registration statement under the Securities Act, the Payee will be deemed to acknowledge and confirm that it is receiving such Shares for its own account for investment, and not with a view to the resale or distribution thereof in violation of any federal or state securities laws.

     4. Events of Default. The occurrence and continuance of an Event of Default under the Loan Agreement shall constitute a default under this Note and shall entitle the Payee to accelerate the entire indebtedness hereunder and take such other action as may be provided for in the Loan Agreement and/or in any and all other instruments evidencing and/or securing the indebtedness under this Note, or as may be provided under the law.

5. Communications and Notices. Except as otherwise specifically provided herein, all communications and notices provided for in this Note shall be sent by post-paid first class mail, reputable overnight courier or facsimile to the Payee at the Payee’s address as provided to the Secretary of the Maker from time to time and, if to the Maker, at 2101 Arena Blvd., Suite 100, Sacramento, California 95834, Attention: Chief Financial Officer. Any first-class mail notice provided pursuant to this Section 5 shall be deemed given three (3) business days after being sent by first-class mail. Any notice sent by overnight courier shall be deemed given on the next business day after being deposited with the courier with all charges prepaid or billed to the account of the sender. Notices sent by facsimile shall be deemed received upon delivery. The Maker and the Payee may from time to time change their respective addresses, for purposes of this Section 5, by written notice to the other parties; provided, however, that notice of such change shall be effective only upon receipt.

6. Governing Law. This Note shall be construed in accordance with and governed by the laws of the State of New York, except to the extent superseded by Federal enactments.

7. Assignment. This Note shall be binding upon and shall inure to the benefit of the respective successors and permitted assigns of the parties hereto, provided that the Maker may not assign any of its rights or obligations hereunder without the prior written consent of the Payee.

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     8. Waiver and Amendment. No waiver of a right in any instance shall constitute a continuing waiver of successive rights, and any one waiver shall govern only the particular matters waived. Neither any provision of this Note nor any performance hereunder may be amended or waived except pursuant to an agreement in writing signed by the party against whom enforcement thereof is sought. Except as otherwise expressly provided in this Note, the Maker hereby waives diligence, demand, presentment for payment, protest, dishonor, nonpayment, default, notice of any and all of the foregoing, and any other notice or action otherwise required to be given or taken under the law in connection with the delivery, acceptance, performance, default, enforcement or collection of this Note, and expressly agrees that this Note, or any payment hereunder, may be extended, modified or subordinated (by forbearance or otherwise) from time to time, without in any way affecting the liability of the Maker. The Maker further waives the benefit of any exemption under the homestead exemption laws, if any, or any other exemption, appraisal or insolvency laws, and consents that the Payee may release or surrender, exchange or substitute any personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note.

     9. Usury Savings Clause. All agreements between the Maker and the Payee are hereby expressly limited to provide that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Payee for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum amount which the Payee is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Agreement or any Loan Document thereunder, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipsofacto, the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if from any circumstance the Payee shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance of any of the Maker’s Obligations (as such term is defined in the Loan Agreement) to the Payee, and not to the payment of interest hereunder. To the extent permitted by applicable law, all sums paid or agreed to be paid for the use, forbearance or detention of the indebtedness evidenced by this Note shall be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full, to the end that the rate or amount of interest on account of such indebtedness does not exceed any applicable usury ceiling. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between the Maker and the Payee.

     10. Collection Costs. In the event that the Payee shall place this Note in the hands of an attorney for collection during the continuance of any Event of Default, the Maker shall further be liable to the Payee for all costs and expenses (including reasonable attorneys’ fees) which may be incurred by the Payee in enforcing this Note, all of which costs and expenses shall be obligations under and part of this Note; and the Payee may take judgment for all such amounts in addition to all other sums due hereunder.

     11. Prior Note. This Note amends, restates and supersedes in its entirety the Convertible Term Note (Tranche 1) dated November 20, 2006 issued by the Maker to ComVest, provided that this Note does not effect a novation of any obligations under such prior Convertible Term Note (Tranche 1) (al of which obligations shall henceforth be evidenced by this Note).

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     IN WITNESS WHEREOF, the Maker has executed this Note on the date first above written.

UNIFY CORPORATION
By:	/S/ TODD E. WILLE
	Name: Todd E. Wille
	Title: President and CEO

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EX-4.4

EXHIBIT 4.4

$3,250,000 May 4, 2007

AMENDED AND RESTATED
CONVERTIBLE TERM NOTE

(Tranche 2)

     This Note and the Common Stock issuable upon conversion hereof (until such time, if any, as such Common Stock is registered with the Securities and Exchange Commission pursuant to an effective registration statement) have not been registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws, and may not be sold, offered for sale of otherwise transferred unless registered or qualified under the Act and applicable state securities laws or unless the Maker receives an opinion, in form and from counsel reasonably acceptable to the Maker, that registration, qualification or other such actions are not required under any such laws.

     FOR VALUE RECEIVED, UNIFY CORPORATION, a Delaware corporation (the “Maker”), hereby promises to pay to ComVest Capital LLC, a Delaware limited liability company (“ComVest”), or registered assigns (collectively, the “Payee”), the sum of Three Million Two Hundred Fifty Thousand ($3,250,000) Dollars (the “Principal”), with interest thereon, on the terms and conditions set forth herein and in the Revolving Credit and Term Loan Agreement dated as of November 20, 2006 between the Maker and ComVest (as same may be amended, modified, supplemented and/or restated from time to time, the “Loan Agreement”). Terms defined in the Loan Agreement and not otherwise defined herein shall have the meanings assigned thereto in the Loan Agreement.

     Payments of principal of, interest on and any other amounts with respect to this Convertible Promissory Note (this “Note”) are to be made in lawful money of the United States of America.

     Principal and accrued interest of this Note may or shall be convertible into common stock of the Maker as provided in Section 3 below.

1. Payments.

          (a) Interest. This Note shall bear interest (“Interest”) on Principal amounts outstanding from time to time from the date hereof at the rate of eleven and one-quarter (11.25%) percent per annum; provided, however, that during the continuance of any Event of Default, the Interest rate hereunder shall be increased to fifteen and one-quarter (15.25%) percent per annum. All Interest shall be computed on the daily unpaid Principal balance of this Note based on a three hundred sixty (360) day year, and shall be payable monthly in arrears on the last day of each calendar month commencing November 30, 2006 and on the maturity hereof.

          (b) Principal. The Principal of this Note shall be payable in forty-two (42) equal monthly installments of $77,380.96 each, due and payable on the last day of each calendar month commencing May 31, 2007 through and including October 31, 2010.

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          (c) If any scheduled payment date as aforesaid is not a business day in either the State of Florida or the State of California, then the payment to be made on such scheduled payment date shall be due and payable on the next succeeding business day, with additional interest on any Principal amount so delayed for the period of such delay.

2. Prepayment.

(a) Optional Prepayment of Principal. The unpaid Principal balance of this Note may, at the Maker’s option, be prepaid in whole or in part, at any time or from time to time when this Note is convertible by its terms, upon fifteen (15) days’ prior written notice to the Payee, provided that the Payee shall retain the right to convert all or any portion of such Principal amount called for prepayment, together with any or all Interest accrued thereon, at any time prior to the date fixed for prepayment, and thereafter until such prepayment is actually made. Any optional prepayment of Principal hereunder shall require the simultaneous payment of a prepayment premium as provided in Section 2.03(c) of the Loan Agreement.

(b) Mandatory Prepayment of Principal. The Principal of this Note may be required to be prepaid, in whole or in part, at any time and from time to time in accordance with Section 2.02(b) of the Loan Agreement.

(c) Interest. Except to the extent that such Interest is converted as herein provided, each prepayment of Principal shall be accompanied by all accrued Interest on the Principal amount prepaid or converted accrued to the date of prepayment or conversion.

(d) Application of Payments. Any and all prepayments hereunder shall be applied first to any prepayment premium required under Section 2(a) above, then to unpaid accrued Interest on the Principal amount being prepaid, and finally to the remaining Principal installments in inverse order of maturity.

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3. Conversion.

(a) Optional and Mandatory Conversion. The Payee may, at its option, upon written notice to the Maker given at any time and from time to time from the date on which the Maker has sufficient authorized, unissued and unreserved shares of its Common Stock to issue upon such conversion until the payment or prepayment of this Note in full, convert all or any portion of the unpaid Principal balance of this Note, and/or any accrued Interest thereon, into shares of common stock of the Maker (“Common Stock”), at a price of One ($1.00) Dollar per share of Common Stock (as same may be adjusted from time to time in accordance herewith, the “Conversion Price”). In addition, if (i) there is not then continuing any Default or Event of Default under and as defined in the Loan Agreement, (ii) the Common Stock is then traded or listed for trading on any national securities exchange or current quotations for the Common Stock are then reported on the OTC Bulletin Board, (iii) there is then in effect a valid registration statement under the Securities Act of 1933, as amended, in respect of the Common Stock issued and issuable upon conversion of this Note and upon exercise of the Warrants issued pursuant to the Loan Agreement, such that all such shares of Common Stock will be freely tradable immediately upon issuance at such time, (iv) the Maker is current in all of its required filings with the Securities and Exchange Commission, and (v) the reported Trading Price (as hereinafter defined) of the Common Stock for each of the twenty (20) consecutive trading days immediately prior thereto has been equal to or greater than 160% of the Conversion Price in effect on each such trading day, then the Maker may, upon five (5) business days’ prior written notice to the Payee, require the Payee to convert all or any portion of the Principal of this Note into shares of Common Stock at the Conversion Price then in effect; and in the event of any such conversion at the option of the Maker, the Maker shall give written notice thereof to the Payee certifying as to the satisfaction of the foregoing conditions (including a detailed schedule of Trading Prices for purposes of the foregoing clause (v)), and shall pay to the Payee, simultaneously with the delivery of stock certificates in accordance with Section 3(c), all unpaid accrued Interest on the Principal amount so converted. As used herein, the term “Trading Price” on any relevant date means (A) if the Common Stock is listed for trading on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market, the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Common Stock (regular way), or (B) if the Common Stock is not so listed but quotations for the Common Stock are reported on the OTC Bulletin Board, the most recent closing price as reported on the OTC Bulletin Board. The effective date of any conversion hereunder is herein referred to as the “Conversion Date.” To the extent that this Note is converted only in part, then such conversion shall be treated as a prepayment of the Principal amount converted in accordance with Section 2(d) above, provided that no prepayment premium shall be required in respect of any conversion.

(b) Mechanics of Conversion. Upon notice to the Maker of the Payee’s conversion election as provided in Section 3(a), or upon notice to the Payee of the Maker’s conversion election as provided in Section 3(a), the Maker shall, in accordance with Section 3(c), issue to the Payee (or to the Payee’s designee(s) set forth in the Payee’s conversion election, or in any direction given to the Maker in response to the Maker’s conversion election) the number of shares of Common Stock to which the Payee shall be entitled upon such conversion, and shall deliver or cause to be delivered to the Payee or such designee(s) the certificates representing such shares of Common Stock. All shares of Common Stock issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid and nonassessable. In lieu of any fractional shares to which the Payee would otherwise be entitled, the Maker shall pay cash equal to such fraction multiplied by the per share Conversion Price.

(c) Issuance of Common Stock Upon Conversion. Within a reasonable time, not exceeding ten (10) days after the Conversion Date, the Maker shall deliver or cause to be delivered, to or upon the written order of the Payee of this Note so converted, certificates representing the number of fully paid and nonassessable shares of Common Stock into which this Note has been converted in accordance with the provisions of this Section 3. If so requested by the Maker, the Payee shall, within a reasonable time (not exceeding ten (10) days after receipt by the Payee of such certificates), surrender this Note to the Maker for cancellation, against delivery of a replacement Note representing the remaining balance (if any) of this Note which has not been converted. Subject to the following provisions of this Section 3, such conversion shall be deemed to have occurred on the Conversion Date, so that the Payee of this Note or such Payee’s designee(s) shall be treated for all purposes as having become the record Payee of such shares of Common Stock at such time.

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          (d) Taxes on Conversion. The issuance of certificates for shares for Common Stock upon the conversion of this Note shall be made without charge by the Maker to the converting Payee for any tax in respect of the issuance of such certificates and such certificates shall be issued in the name of, or in such names as may be directed by, the Payee of this Note; provided, however, that the Maker shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any such certificate in a name other than that of the Payee of this Note, and the Maker shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Maker the amount of any such tax or shall have established to the satisfaction of the Maker that any such tax has been paid.

(e) Adjustment of Shares

               (i) Stock Dividends, Distributions or Subdivisions. In the event that, at any time and from time to time from and after the date of this Note, the Maker shall issue additional shares of Common Stock (or securities convertible into Common Stock) in a stock dividend, stock distribution or subdivision paid with respect to Common Stock, or declare any dividend or other distribution payable in additional shares of Common Stock (or securities convertible into Common Stock) or effect a split or subdivision of the outstanding shares of Common Stock, then, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, the then-effective Conversion Price shall be proportionately decreased, and the number of shares of Common Stock issuable upon conversion of this Note shall thus be proportionately increased.

               (ii) Combinations or Consolidations. In the event that, at any time and from time to time from and after the date of this Note, the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then, concurrently with the effectiveness of such combination or consolidation, the then-effective Conversion Price shall be proportionately increased, and the number of shares of Common Stock issuable upon conversion of this Note shall thus be proportionately decreased.

               (iii) Other Dividends or Distributions. If the Maker, at any time or from time to time after the issuance of this Note, makes a distribution to the holders of Common Stock which is payable in securities of the Maker other than Common Stock, then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note, in addition to the number of shares of Common Stock, the amount of such securities of the Maker which would have been received if the portion of this Note so converted had been exercised for Common Stock on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iii) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iii) shall be deemed to permit the payment of any distribution in violation of the Loan Agreement.

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(iv) Merger, Consolidation or Exchange. If, at any time or from time to time after the date of this Note, there occurs any merger, consolidation, arrangement or statutory share exchange of the Maker with or into any other person or entity, then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note the kind and amount of shares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory share exchange by the Payee if the portion of this Note so converted had been exercised for shares of Common Stock immediately prior to such merger, consolidation, arrangement or statutory share exchange, subject to adjustments for events subsequent to the effective date of such merger, consolidation, arrangement or statutory share exchange with respect to such shares and other securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iv) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iv) shall be deemed to permit any such transaction in violation of the Loan Agreement.

               (v) Recapitalization or Reclassification. If, at any time or from time to time after the date of this Note, the shares of Common Stock issuable upon conversion of this Note are changed into the same or a different number of securities of any class of the Maker, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory share exchange provided for elsewhere in this Section 3(e)), then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Payee if the portion of this Note so converted had been converted immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(v) and all other adjustments under this Section 3(e).

               (vi) Extraordinary Dividends or Distributions. If, at any time or from time to time after the date of this Note, the Maker shall declare a dividend or any other distribution upon the Common Stock payable otherwise than out of current earnings, retained earnings or earned surplus and otherwise than in shares of Common Stock, then the Conversion Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a dividend or distribution in cash, to the amount thereof payable per share of Common Stock or, in the case of any other dividend or distribution, to the value thereof per share of Common Stock at the time such dividend or distribution was declared, as determined by the Board of Directors of the Maker in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject dividend or distribution, or, if a record is not taken, the date as of which the holders of record of Common Stock entitled to such dividend or distribution are to be determined. Nothing contained in this Section 3(e)(vi) shall be deemed to permit the payment of any dividend in violation of the Loan Agreement.

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(vii) Dilutive Issuances. (A) If the Maker, at any time or from time to time, issues or sells any Additional Shares of Common Stock (as defined below), other than as provided in the foregoing subsections of this Section 3(e), for a price per share (which, in the case of options, warrants, convertible securities or other rights, includes the amounts paid therefor plus the exercise price, conversion price or other such amounts payable thereunder) that is less than the Conversion Price then in effect, then and in each such case, the then applicable Conversion Price shall automatically be reduced as of the opening of business on the date of such issue or sale, to a price determined by multiplying the Conversion Price then in effect by a fraction (i) the numerator of which shall be (A) the number of share of Common Stock deemed outstanding (as determined below) immediately prior to such issue or sale, plus (B) the number of shares of Common Stock which the aggregate consideration received by the Maker for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price, and (ii) the denominator of which shall be the number of shares of Common Stock deemed outstanding (as defined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued; provided, however, that upon the expiration or other termination of options, warrants or other rights to purchase or acquire Common Stock which triggered any adjustment under this Section 3(e)(vii), and upon the expiration or termination of the right to convert or exchange convertible or exchangeable securities (whether by reason of redemption or otherwise) which triggered any adjustment under this Section 3(e)(vii), if any thereof shall not have been exercised, converted or exchanged, as applicable, the number of shares of Common Stock deemed to be outstanding pursuant to this Section 3(e)(vii) shall be reduced by the number of shares as to which options, warrants and rights to purchase or acquire Common Stock shall have expired or terminated unexercised, and as to which conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be outstanding; and the Conversion Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares of Common Stock actually issued. For purposes of the preceding sentence, the number of shares of Common Stock deemed to be outstanding as of a given date shall be the sum of (x) the number of shares of Common Stock actually outstanding, (y) the number of shares of Common Stock into which this Note could be converted on the day immediately preceding the given date, and (z) the number of shares of Common Stock which could be obtained through the exercise or conversion of all other rights, options and convertible securities outstanding on the day immediately preceding the given date. “Additional Shares of Common Stock” shall mean all shares of Common Stock, and all options, warrants, convertible securities or other rights to purchase or acquire Common Stock, issued by the Maker other than (i) shares of Common Stock issued pursuant to the exercise of options, warrants or convertible securities outstanding on November 20, 2006 (including, without limitation, all of the Warrants issued pursuant to the Loan Agreement), or thereafter issued from time to time pursuant to and in accordance with stock purchase or stock option plans as in effect on November 20, 2006, (ii) shares of Common Stock issued to fulfill purchase agreement obligations owed by the Company to Daniel Romine and Carrie Romine which were outstanding on November 20, 2006, provided that such shares are not valued, for purposes of such issuance, at less than $0.27 per share (such minimum value to be subject to adjustment in a manner consistent with Sections 3(c)(i) and 3(c)(ii) above), and (iii) shares of Common Stock and/or options, warrants or other Common Stock purchase rights issued subsequent to November 20, 2006 for up to an aggregate of 850,000 shares of Common Stock (such number to be subject to adjustment in accordance with Sections 3(e)(i) and 3(e)(ii) above), where such options, warrants or other rights are issued both (x) with exercise prices per share of Common Stock at the then-current fair market value of a share of Common Stock, as determined in good faith by the Board of Directors of the Maker or the Compensation Committee thereof, and (B) to employees, officers or directors of, or consultants to, the Maker or any Subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved by the Maker’s Board of Directors or the Compensation Committee thereof, and by the Maker’s stockholders.

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               (B) In the event that the exercise price, conversion price, purchase price or other price at which shares of Common Stock are purchasable pursuant to any options, warrants, convertible securities or other rights to purchase or acquire Common Stock is reduced at any time or from time to time (other than under or by reason of provisions designed to protect against dilution), then, upon such reduction becoming effective, the Conversion Price then in effect hereunder shall forthwith be decreased to such Conversion Price as would have been obtained had the adjustments made and required under this Section 3(e)(vii) upon the issuance of such options, warrants, convertible securities or other rights been made upon the basis of (and the total consideration received therefor) (i) the issuance of the number of shares of Common Stock theretofore actually delivered upon the exercise, conversion or exchange of such options, warrants, convertible securities or other rights, (ii) the issuance of all of the Common Stock and all other options, warrants, convertible securities and other rights to purchase or acquire Common Stock issued after the issuance of the modified options, warrants, convertible securities or other rights, and (iii) the original issuance at the time of the reduction of any such options, warrants, convertible securities or other rights then still outstanding.

               (C) In no event shall an adjustment under this Section 3(e)(vii) be made if it would result in an increase in the then applicable Conversion Price.

               (viii) Certificate of Adjustment. Whenever the Conversion Price and/or the number of share of Common Stock receivable upon conversion of this Note is adjusted, the Maker shall promptly deliver to the Payee a certificate of adjustment, setting forth the Conversion Price and/or shares of Common Stock issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

               (ix) Successive Application. The provisions of this Section 3(e) shall be applicable successively to each event described herein which may occur subsequent to the date of this Note and prior to the conversion in full of this Note.

               (x) Fractional Shares. No fractional shares of Common Stock shall be issuable by reason of any adjustments made pursuant to this Section 3(e); and in lieu of any such fractional shares, the Maker shall pay cash therefor in accordance with Section 3(b) above.

          (f) No Impairment. The Maker will not, by amendment of its incorporation documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Payee of this Note against impairment. In the event of any merger or consolidation in which the Maker is not the surviving entity, the Maker shall make appropriate arrangements in order that, upon any subsequent conversion of this Note, the Payee shall become entitled to receive the same securities or other consideration that such Payee would have received had such conversion been made immediately prior to the consummation of such merger or consolidation, subject to further adjustments, of the type provided in this Note, with respect to any events relating to any such securities occurring subsequent to the consummation of such merger or consolidation.

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          (g) Common Stock Reserved. At such time as the Maker has sufficient authorized, unissued and unreserved shares of its Common Stock (determined as provided in Section 5.13 of the Loan Agreement) to issue upon conversion of this Note, the Maker shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect the full conversion of this Note into Common Stock.

          (h) Restricted Securities. The shares of Common Stock issuable to the Payee hereunder (the “Shares”) may not, at the time of issuance, have been registered under any federal or state securities laws, and may constitute “restricted securities” within the meaning of federal and state securities laws. By its receipt of Shares, if the Shares are not then the subject of an effective registration statement under the Securities Act, the Payee will be deemed to acknowledge and confirm that it is receiving such Shares for its own account for investment, and not with a view to the resale or distribution thereof in violation of any federal or state securities laws.

     4. Events of Default. The occurrence and continuance of an Event of Default under the Loan Agreement shall constitute a default under this Note and shall entitle the Payee to accelerate the entire indebtedness hereunder and take such other action as may be provided for in the Loan Agreement and/or in any and all other instruments evidencing and/or securing the indebtedness under this Note, or as may be provided under the law.

     5. Communications and Notices. Except as otherwise specifically provided herein, all communications and notices provided for in this Note shall be sent by post-paid first class mail, reputable overnight courier or facsimile to the Payee at the Payee’s address as provided to the Secretary of the Maker from time to time and, if to the Maker, at 2101 Arena Blvd., Suite 100, Sacramento, California 95834, Attention: Chief Financial Officer. Any first-class mail notice provided pursuant to this Section 5 shall be deemed given three (3) business days after being sent by first-class mail. Any notice sent by overnight courier shall be deemed given on the next business day after being deposited with the courier with all charges prepaid or billed to the account of the sender. Notices sent by facsimile shall be deemed received upon delivery. The Maker and the Payee may from time to time change their respective addresses, for purposes of this Section 5, by written notice to the other parties; provided, however, that notice of such change shall be effective only upon receipt.

     6. Governing Law. This Note shall be construed in accordance with and governed bythe laws of the State of New York, except to the extent superseded by Federal enactments.

     7. Assignment. This Note shall be binding upon and shall inure to the benefit of the respective successors and permitted assigns of the parties hereto, provided that the Maker may not assign any of its rights or obligations hereunder without the prior written consent of the Payee.

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8. Waiver and Amendment. No waiver of a right in any instance shall constitute a continuing waiver of successive rights, and any one waiver shall govern only the particular matters waived. Neither any provision of this Note nor any performance hereunder may be amended or waived except pursuant to an agreement in writing signed by the party against whom enforcement thereof is sought. Except as otherwise expressly provided in this Note, the Maker hereby waives diligence, demand, presentment for payment, protest, dishonor, nonpayment, default, notice of any and all of the foregoing, and any other notice or action otherwise required to be given or taken under the law in connection with the delivery, acceptance, performance, default, enforcement or collection of this Note, and expressly agrees that this Note, or any payment hereunder, may be extended, modified or subordinated (by forbearance or otherwise) from time to time, without in any way affecting the liability of the Maker. The Maker further waives the benefit of any exemption under the homestead exemption laws, if any, or any other exemption, appraisal or insolvency laws, and consents that the Payee may release or surrender, exchange or substitute any personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note.

     9. Usury Savings Clause. All agreements between the Maker and the Payee are hereby expressly limited to provide that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Payee for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum amount which the Payee is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Agreement or any Loan Document thereunder, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipsofacto, the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if from any circumstance the Payee shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance of any of the Maker’s Obligations (as such term is defined in the Loan Agreement) to the Payee, and not to the payment of interest hereunder. To the extent permitted by applicable law, all sums paid or agreed to be paid for the use, forbearance or detention of the indebtedness evidenced by this Note shall be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full, to the end that the rate or amount of interest on account of such indebtedness does not exceed any applicable usury ceiling. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between the Maker and the Payee.

     10. Collection Costs. In the event that the Payee shall place this Note in the hands of an attorney for collection during the continuance of any Event of Default, the Maker shall further be liable to the Payee for all costs and expenses (including reasonable attorneys’ fees) which may be incurred by the Payee in enforcing this Note, all of which costs and expenses shall be obligations under and part of this Note; and the Payee may take judgment for all such amounts in addition to all other sums due hereunder.

     11. Prior Note. This Note amends, restates and supersedes in its entirety the Convertible Term Note (Tranche 2) dated November 20, 2006 issued by the Maker to ComVest, provided that this Note does not effect a novation of any obligations under such prior Convertible Term Note (Tranche 2) (all of which obligations shall henceforth be evidenced by this Note).

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     IN WITNESS WHEREOF, the Maker has executed this Note on the date first above written.

UNIFY CORPORATION 

By: /S/ TODD E. WILLE 

       Name: Todd E. Wille

       Title: President and CEO 

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EX-4.5

EXHIBIT 4.5

$1,100,000  May 4, 2007 

AMENDED AND RESTATED
CONVERTIBLE TERM NOTE

(Tranche 3)

     This Note and the Common Stock issuable upon conversion hereof (until such time, if any, as such Common Stock is registered with the Securities and Exchange Commission pursuant to an effective registration statement) have not been registered under the Securities Act of 1933, as amended (the “Act”), or any state securities laws, and may not be sold, offered for sale of otherwise transferred unless registered or qualified under the Act and applicable state securities laws or unless the Maker receives an opinion, in form and from counsel reasonably acceptable to the Maker, that registration, qualification or other such actions are not required under any such laws.

     FOR VALUE RECEIVED, UNIFY CORPORATION, a Delaware corporation (the “Maker”), hereby promises to pay to ComVest Capital LLC, a Delaware limited liability company (“ComVest”), or registered assigns (collectively, the “Payee”), the sum of One Million One Hundred Thousand ($1,100,000) Dollars (the “Principal”), with interest thereon, on the terms and conditions set forth herein and in the Revolving Credit and Term Loan Agreement dated as of November 20, 2006 between the Maker and ComVest (as same may be amended, modified, supplemented and/or restated from time to time, the “Loan Agreement”). Terms defined in the Loan Agreement and not otherwise defined herein shall have the meanings assigned thereto in the Loan Agreement.

     Payments of principal of, interest on and any other amounts with respect to this Convertible Promissory Note (this “Note”) are to be made in lawful money of the United States of America.

     Principal and accrued interest of this Note may or shall be convertible into common stock of the Maker as provided in Section 3 below.

1. Payments.

          (a) Interest. This Note shall bear interest (“Interest”) on Principal amounts outstanding from time to time from the date hereof at the rate of eleven and one-quarter (11.25%) percent per annum; provided, however, that during the continuance of any Event of Default, the Interest rate hereunder shall be increased to fifteen and one-quarter (15.25%) percent per annum. All Interest shall be computed on the daily unpaid Principal balance of this Note based on a three hundred sixty (360) day year, and shall be payable monthly in arrears on the last day of each calendar month commencing November 30, 2006 and on the maturity hereof.

          (b) Principal. The Principal of this Note shall be payable in forty-eight (48) equal monthly installments of $22,916.67 each, due and payable on the last day of each calendar month commencing November 30, 2007 through and including October 31, 2011.

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          (c) If any scheduled payment date as aforesaid is not a business day in either the State of Florida or the State of California, then the payment to be made on such scheduled payment date shall be due and payable on the next succeeding business day, with additional interest on any Principal amount so delayed for the period of such delay.

2. Prepayment.

          (a) Optional Prepayment of Principal. The unpaid Principal balance of this Note may, at the Maker’s option, be prepaid in whole or in part, at any time or from time to time when this Note is convertible by its terms, upon fifteen (15) days’ prior written notice to the Payee, provided that the Payee shall retain the right to convert all or any portion of such Principal amount called for prepayment, together with any or all Interest accrued thereon, at any time prior to the date fixed for prepayment, and thereafter until such prepayment is actually made. Any optional prepayment of Principal hereunder shall require the simultaneous payment of a prepayment premium as provided in Section 2.03(c) of the Loan Agreement.

          (b) Mandatory Prepayment of Principal. The Principal of this Note may be required to be prepaid, in whole or in part, at any time and from time to time in accordance with Section 2.02(b) of the Loan Agreement.

          (c) Interest. Except to the extent that such Interest is converted as herein provided, each prepayment of Principal shall be accompanied by all accrued Interest on the Principal amount prepaid or converted accrued to the date of prepayment or conversion.

          (d) Application of Payments. Any and all prepayments hereunder shall be applied first to any prepayment premium required under Section 2(a) above, then to unpaid accrued Interest on the Principal amount being prepaid, and finally to the remaining Principal installments in inverse order of maturity.

3. Conversion.

          (a) Optional and Mandatory Conversion. The Payee may, at its option, upon written notice to the Maker given at any time and from time to time from the date on which the Maker has sufficient authorized, unissued and unreserved shares of its Common Stock to issue upon such conversion until the payment or prepayment of this Note in full, convert all or any portion of the unpaid Principal balance of this Note, and/or any accrued Interest thereon, into shares of common stock of the Maker (“Common Stock”), at a price of One ($1.00) Dollar per share of Common Stock (as same may be adjusted from time to time in accordance herewith, the “Conversion Price”). In addition, if (i) there is not then continuing any Default or Event of Default under and as defined in the Loan Agreement, (ii) the Common Stock is then traded or listed for trading on any national securities exchange or current quotations for the Common Stock are then reported on the OTC Bulletin Board, (iii) there is then in effect a valid registration statement under the Securities Act of 1933, as amended, in respect of the Common Stock issued and issuable upon conversion of this Note and upon exercise of the Warrants issued pursuant to the Loan Agreement, such that all such shares of Common Stock will be freely tradable immediately upon issuance at such time, (iv) the Maker is current in all of its required filings with the Securities and Exchange Commission, and (v) the reported Trading Price (as hereinafter defined) of the Common Stock for each of the twenty (20) consecutive trading days immediately prior thereto has been equal to or greater than 160% of the Conversion Price in effect on each such trading day, then the Maker may, upon five (5) business days’ prior written notice to the Payee, require the Payee to convert all or any portion of the Principal of this Note into shares of Common Stock at the Conversion Price then in effect; and in the event of any such conversion at the option of the Maker, the Maker shall give written notice thereof to the Payee certifying as to the satisfaction of the foregoing conditions (including a detailed schedule of Trading Prices for purposes of the foregoing clause (v)), and shall pay to the Payee, simultaneously with the delivery of stock certificates in accordance with Section 3(c), all unpaid accrued Interest on the Principal amount so converted.

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As used herein, the term “Trading Price” on any relevant date means (A) if the Common Stock is listed for trading on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market, the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Common Stock (regular way), or (B) if the Common Stock is not so listed but quotations for the Common Stock are reported on the OTC Bulletin Board, the most recent closing price as reported on the OTC Bulletin Board. The effective date of any conversion hereunder is herein referred to as the “Conversion Date.” To the extent that this Note is converted only in part, then such conversion shall be treated as a prepayment of the Principal amount converted in accordance with Section 2(d) above, provided that no prepayment premium shall be required in respect of any conversion.

          (b) Mechanics of Conversion. Upon notice to the Maker of the Payee’s conversion election as provided in Section 3(a), or upon notice to the Payee of the Maker’s conversion election as provided in Section 3(a), the Maker shall, in accordance with Section 3(c), issue to the Payee (or to the Payee’s designee(s) set forth in the Payee’s conversion election, or in any direction given to the Maker in response to the Maker’s conversion election) the number of shares of Common Stock to which the Payee shall be entitled upon such conversion, and shall deliver or cause to be delivered to the Payee or such designee(s) the certificates representing such shares of Common Stock. All shares of Common Stock issued or delivered upon any conversion hereunder shall, when issued or delivered, be duly authorized, validly issued, fully paid and nonassessable. In lieu of any fractional shares to which the Payee would otherwise be entitled, the Maker shall pay cash equal to such fraction multiplied by the per share Conversion Price.

          (c) Issuance of Common Stock Upon Conversion. Within a reasonable time, not exceeding ten (10) days after the Conversion Date, the Maker shall deliver or cause to be delivered, to or upon the written order of the Payee of this Note so converted, certificates representing the number of fully paid and nonassessable shares of Common Stock into which this Note has been converted in accordance with the provisions of this Section 3. If so requested by the Maker, the Payee shall, within a reasonable time (not exceeding ten (10) days after receipt by the Payee of such certificates), surrender this Note to the Maker for cancellation, against delivery of a replacement Note representing the remaining balance (if any) of this Note which has not been converted. Subject to the following provisions of this Section 3, such conversion shall be deemed to have occurred on the Conversion Date, so that the Payee of this Note or such Payee’s designee(s) shall be treated for all purposes as having become the record Payee of such shares of Common Stock at such time.

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          (d) Taxes on Conversion. The issuance of certificates for shares for Common Stock upon the conversion of this Note shall be made without charge by the Maker to the converting Payee for any tax in respect of the issuance of such certificates and such certificates shall be issued in the name of, or in such names as may be directed by, the Payee of this Note; provided, however, that the Maker shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any such certificate in a name other than that of the Payee of this Note, and the Maker shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Maker the amount of any such tax or shall have established to the satisfaction of the Maker that any such tax has been paid.

(e) Adjustment of Shares.

               (i) Stock Dividends, Distributions or Subdivisions. In the event that, at any time and from time to time from and after the date of this Note, the Maker shall issue additional shares of Common Stock (or securities convertible into Common Stock) in a stock dividend, stock distribution or subdivision paid with respect to Common Stock, or declare any dividend or other distribution payable in additional shares of Common Stock (or securities convertible into Common Stock) or effect a split or subdivision of the outstanding shares of Common Stock, then, concurrently with the effectiveness of such stock dividend, stock distribution or subdivision, the then-effective Conversion Price shall be proportionately decreased, and the number of shares of Common Stock issuable upon conversion of this Note shall thus be proportionately increased.

               (ii) Combinations or Consolidations. In the event that, at any time and from time to time from and after the date of this Note, the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, then, concurrently with the effectiveness of such combination or consolidation, the then-effective Conversion Price shall be proportionately increased, and the number of shares of Common Stock issuable upon conversion of this Note shall thus be proportionately decreased.

               (iii) Other Dividends or Distributions. If the Maker, at any time or from time to time after the issuance of this Note, makes a distribution to the holders of Common Stock which is payable in securities of the Maker other than Common Stock, then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note, in addition to the number of shares of Common Stock, the amount of such securities of the Maker which would have been received if the portion of this Note so converted had been exercised for Common Stock on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iii) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iii) shall be deemed to permit the payment of any distribution in violation of the Loan Agreement.

               (iv) Merger, Consolidation or Exchange. If, at any time or from time to time after the date of this Note, there occurs any merger, consolidation, arrangement or statutory share exchange of the Maker with or into any other person or entity, then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note the kind and amount of shares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory share exchange by the Payee if the portion of this Note so converted had been exercised for shares of Common Stock immediately prior to such merger, consolidation, arrangement or statutory share exchange, subject to adjustments for events subsequent to the effective date of such merger, consolidation, arrangement or statutory share exchange with respect to such shares and other securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3(e)(iv) and all other adjustments under this Section 3(e). Nothing contained in this Section 3(e)(iv) shall be deemed to permit any such transaction in violation of the Loan Agreement.

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               (v) Recapitalization or Reclassification. If, at any time or from time to time after the date of this Note, the shares of Common Stock issuable upon conversion of this Note are changed into the same or a different number of securities of any class of the Maker, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory share exchange provided for elsewhere in this Section 3(e)), then, in each such event, provision shall be made so that the Payee shall receive upon conversion of this Note the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Payee if the portion of this Note so converted had been converted immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 (e)(v) and all other adjustments under this Section 3(e).

               (vi) Extraordinary Dividends or Distributions. If, at any time or from time to time after the date of this Note, the Maker shall declare a dividend or any other distribution upon the Common Stock payable otherwise than out of current earnings, retained earnings or earned surplus and otherwise than in shares of Common Stock, then the Conversion Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a dividend or distribution in cash, to the amount thereof payable per share of Common Stock or, in the case of any other dividend or distribution, to the value thereof per share of Common Stock at the time such dividend or distribution was declared, as determined by the Board of Directors of the Maker in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject dividend or distribution, or, if a record is not taken, the date as of which the holders of record of Common Stock entitled to such dividend or distribution are to be determined. Nothing contained in this Section 3(e)(vi) shall be deemed to permit the payment of any dividend in violation of the Loan Agreement.

               (vii) Dilutive Issuances. (A) If the Maker, at any time or from time to time, issues or sells any Additional Shares of Common Stock (as defined below), other than as provided in the foregoing subsections of this Section 3(e), for a price per share (which, in the case of options, warrants, convertible securities or other rights, includes the amounts paid therefor plus the exercise price, conversion price or other such amounts payable thereunder) that is less than the Conversion Price then in effect, then and in each such case, the then applicable Conversion Price shall automatically be reduced as of the opening of business on the date of such

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issue or sale, to a price determined by multiplying the Conversion Price then in effect by a fraction (i) the numerator of which shall be (A) the number of share of Common Stock deemed outstanding (as determined below) immediately prior to such issue or sale, plus (B) the number of shares of Common Stock which the aggregate consideration received by the Maker for the total number of Additional Shares of Common Stock so issued would purchase at such Conversion Price, and (ii) the denominator of which shall be the number of shares of Common Stock deemed outstanding (as defined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued; provided, however, that upon the expiration or other termination of options, warrants or other rights to purchase or acquire Common Stock which triggered any adjustment under this Section 3(e)(vii), and upon the expiration or termination of the right to convert or exchange convertible or exchangeable securities (whether by reason of redemption or otherwise) which triggered any adjustment under this Section 3(e)(vii), if any thereof shall not have been exercised, converted or exchanged, as applicable, the number of shares of Common Stock deemed to be outstanding pursuant to this Section 3(e)(vii) shall be reduced by the number of shares as to which options, warrants and rights to purchase or acquire Common Stock shall have expired or terminated unexercised, and as to which conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be outstanding; and the Conversion Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the shares of Common Stock actually issued. For purposes of the preceding sentence, the number of shares of Common Stock deemed to be outstanding as of a given date shall be the sum of (x) the number of shares of Common Stock actually outstanding, (y) the number of shares of Common Stock into which this Note could be converted on the day immediately preceding the given date, and (z) the number of shares of Common Stock which could be obtained through the exercise or conversion of all other rights, options and convertible securities outstanding on the day immediately preceding the given date. “Additional Shares of Common Stock” shall mean all shares of Common Stock, and all options, warrants, convertible securities or other rights to purchase or acquire Common Stock, issued by the Maker other than (i) shares of Common Stock issued pursuant to the exercise of options, warrants or convertible securities outstanding on November 20, 2006 (including, without limitation, all of the Warrants issued pursuant to the Loan Agreement), or thereafter issued from time to time pursuant to and in accordance with stock purchase or stock option plans as in effect on November 20, 2006, (ii) shares of Common Stock issued to fulfill purchase agreement obligations owed by the Company to Daniel Romine and Carrie Romine which were outstanding on November 20, 2006, provided that such shares are not valued, for purposes of such issuance, at less than $0.27 per share (such minimum value to be subject to adjustment in a manner consistent with Sections 3(c)(i) and 3(c)(ii) above), and (iii) shares of Common Stock and/or options, warrants or other Common Stock purchase rights issued subsequent to November 20, 2006 for up to an aggregate of 850,000 shares of Common Stock (such number to be subject to adjustment in accordance with Sections 3(e)(i) and 3(e)(ii) above), where such options, warrants or other rights are issued both (x) with exercise prices per share of Common Stock at the then-current fair market value of a share of Common Stock, as determined in good faith by the Board of Directors of the Maker or the Compensation Committee thereof, and (B) to employees, officers or directors of, or consultants to, the Maker or any Subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved by the Maker’s Board of Directors or the Compensation Committee thereof, and by the Maker’s stockholders.

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               (B) In the event that the exercise price, conversion price, purchase price or other price at which shares of Common Stock are purchasable pursuant to any options, warrants, convertible securities or other rights to purchase or acquire Common Stock is reduced at any time or from time to time (other than under or by reason of provisions designed to protect against dilution), then, upon such reduction becoming effective, the Conversion Price then in effect hereunder shall forthwith be decreased to such Conversion Price as would have been obtained had the adjustments made and required under this Section 3(e)(vii) upon the issuance of such options, warrants, convertible securities or other rights been made upon the basis of (and the total consideration received therefor) (i) the issuance of the number of shares of Common Stock theretofore actually delivered upon the exercise, conversion or exchange of such options, warrants, convertible securities or other rights, (ii) the issuance of all of the Common Stock and all other options, warrants, convertible securities and other rights to purchase or acquire Common Stock issued after the issuance of the modified options, warrants, convertible securities or other rights, and (iii) the original issuance at the time of the reduction of any such options, warrants, convertible securities or other rights then still outstanding.

               (C) In no event shall an adjustment under this Section 3(e)(vii) be made if it would result in an increase in the then applicable Conversion Price.

               (viii) Certificate of Adjustment. Whenever the Conversion Price and/or the number of share of Common Stock receivable upon conversion of this Note is adjusted, the Maker shall promptly deliver to the Payee a certificate of adjustment, setting forth the Conversion Price and/or shares of Common Stock issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

               (ix) Successive Application. The provisions of this Section 3(e) shall be applicable successively to each event described herein which may occur subsequent to the date of this Note and prior to the conversion in full of this Note.

               (x) Fractional Shares. No fractional shares of Common Stock shall be issuable by reason of any adjustments made pursuant to this Section 3(e); and in lieu of any such fractional shares, the Maker shall pay cash therefor in accordance with Section 3(b) above.

          (f) No Impairment. The Maker will not, by amendment of its incorporation documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder but will at all times in good faith assist in the carrying out of all the provisions of this Section 3 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Payee of this Note against impairment. In the event of any merger or consolidation in which the Maker is not the surviving entity, the Maker shall make appropriate arrangements in order that, upon any subsequent conversion of this Note, the Payee shall become entitled to receive the same securities or other consideration that such Payee would have received had such conversion been made immediately prior to the consummation of such merger or consolidation, subject to further adjustments, of the type provided in this Note, with respect to any events relating to any such securities occurring subsequent to the consummation of such merger or consolidation.

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          (g) Common Stock Reserved. At such time as the Maker has sufficient authorized, unissued and unreserved shares of its Common Stock (determined as provided in Section 5.13 of the Loan Agreement) to issue upon conversion of this Note, the Maker shall reserve and keep available out of its authorized but unissued Common Stock such number of shares of Common Stock as shall from time to time be sufficient to effect the full conversion of this Note into Common Stock.

          (h) Restricted Securities. The shares of Common Stock issuable to the Payee hereunder (the “Shares”) may not, at the time of issuance, have been registered under any federal or state securities laws, and may constitute “restricted securities” within the meaning of federal and state securities laws. By its receipt of Shares, if the Shares are not then the subject of an effective registration statement under the Securities Act, the Payee will be deemed to acknowledge and confirm that it is receiving such Shares for its own account for investment, and not with a view to the resale or distribution thereof in violation of any federal or state securities laws.

     4. Events of Default. The occurrence and continuance of an Event of Default under the Loan Agreement shall constitute a default under this Note and shall entitle the Payee to accelerate the entire indebtedness hereunder and take such other action as may be provided for in the Loan Agreement and/or in any and all other instruments evidencing and/or securing the indebtedness under this Note, or as may be provided under the law.

     5. Communications and Notices. Except as otherwise specifically provided herein, all communications and notices provided for in this Note shall be sent by post-paid first class mail, reputable overnight courier or facsimile to the Payee at the Payee’s address as provided to the Secretary of the Maker from time to time and, if to the Maker, at 2101 Arena Blvd., Suite 100, Sacramento, California 95834, Attention: Chief Financial Officer. Any first-class mail notice provided pursuant to this Section 5 shall be deemed given three (3) business days after being sent by first-class mail. Any notice sent by overnight courier shall be deemed given on the next business day after being deposited with the courier with all charges prepaid or billed to the account of the sender. Notices sent by facsimile shall be deemed received upon delivery. The Maker and the Payee may from time to time change their respective addresses, for purposes of this Section 5, by written notice to the other parties; provided, however, that notice of such change shall be effective only upon receipt.

     6. Governing Law. This Note shall be construed in accordance with and governed bythe laws of the State of New York, except to the extent superseded by Federal enactments.

     7. Assignment. This Note shall be binding upon and shall inure to the benefit of the respective successors and permitted assigns of the parties hereto, provided that the Maker may not assign any of its rights or obligations hereunder without the prior written consent of the Payee.

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8. Waiver and Amendment. No waiver of a right in any instance shall constitute a continuing waiver of successive rights, and any one waiver shall govern only the particular matters waived. Neither any provision of this Note nor any performance hereunder may be amended or waived except pursuant to an agreement in writing signed by the party against whom enforcement thereof is sought. Except as otherwise expressly provided in this Note, the Maker hereby waives diligence, demand, presentment for payment, protest, dishonor, nonpayment, default, notice of any and all of the foregoing, and any other notice or action otherwise required to be given or taken under the law in connection with the delivery, acceptance, performance, default, enforcement or collection of this Note, and expressly agrees that this Note, or any payment hereunder, may be extended, modified or subordinated (by forbearance or otherwise) from time to time, without in any way affecting the liability of the Maker. The Maker further waives the benefit of any exemption under the homestead exemption laws, if any, or any other exemption, appraisal or insolvency laws, and consents that the Payee may release or surrender, exchange or substitute any personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note.

     9. Usury Savings Clause. All agreements between the Maker and the Payee are hereby expressly limited to provide that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Payee for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum amount which the Payee is permitted to receive under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Agreement or any Loan Document thereunder, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipsofacto, the obligation to be fulfilled shall automatically be reduced to the limit of such validity, and if from any circumstance the Payee shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance of any of the Maker’s Obligations (as such term is defined in the Loan Agreement) to the Payee, and not to the payment of interest hereunder. To the extent permitted by applicable law, all sums paid or agreed to be paid for the use, forbearance or detention of the indebtedness evidenced by this Note shall be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full, to the end that the rate or amount of interest on account of such indebtedness does not exceed any applicable usury ceiling. As used herein, the term “applicable law” shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between the Maker and the Payee.

     10. Collection Costs. In the event that the Payee shall place this Note in the hands of an attorney for collection during the continuance of any Event of Default, the Maker shall further be liable to the Payee for all costs and expenses (including reasonable attorneys’ fees) which may be incurred by the Payee in enforcing this Note, all of which costs and expenses shall be obligations under and part of this Note; and the Payee may take judgment for all such amounts in addition to all other sums due hereunder.

     11. Prior Note. This Note amends, restates and supersedes in its entirety the Convertible Term Note (Tranche 3) dated November 20, 2006 issued by the Maker to ComVest, provided that this Note does not effect a novation of any obligations under such prior Convertible Term Note (Tranche 3) (all of which obligations shall henceforth be evidenced by this Note).

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     IN WITNESS WHEREOF, the Maker has executed this Note on the date first above written.

UNIFY CORPORATION 

By: /S/ TODD E. WILLE 

       Name: Todd E. Wille

       Title: President and CEO 

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EX-4.7

EXHIBIT 4.7

FORM OF 2006 WARRANTS

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AND MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION, IN REASONABLY ACCEPTABLE FORM AND SCOPE, OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, THAT REGISTRATION, QUALIFICATION OR OTHER SUCH ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS.

UNIFY CORPORATION

WARRANT TO PURCHASE SHARES OF COMMON STOCK
(Expires October 31, 2012)

Warrant No._____  __________Shares of Common Stock 

     FOR VALUE RECEIVED, subject to the provisions set forth below, the undersigned, UNIFY CORPORATION, a Delaware corporation (the “Company”), hereby certifies that ComVest Capital LLC, a Delaware limited liability company, or its registered assigns (the “Holder”), is entitled to purchase from the Company up to ____________ fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s common stock, $.001 par value per share (the “Common Shares”), for cash at a price of $____ per share (the “Exercise Price”) at any time and from time to time from and after the date hereof and until 5:00 p.m. (Pacific time) on October 31, 2012 (the “Expiration Date”) upon surrender to the Company at its principal office (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with the Notice of Exercise attached hereto duly filled in and signed and, if applicable, upon payment in cash or by check of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Exercise Price and the number of shares purchasable hereunder are subject to adjustment as provided in Section 3 of this Warrant.

1. Exercise of Warrant.

          1.1. Exercise. This Warrant shall be exercisable from the date hereof until the Expiration Date, and this Warrant shall expire on the Expiration Date. Upon exercise of this Warrant, the Exercise Price shall be payable in cash or by check. This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional Warrant Shares. If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form to this Warrant, in the name of the Holder, evidencing the right to purchase the number of Warrant Shares as to which this Warrant has not been exercised, which new Warrant shall be signed by an appropriate officer of the Company. The term “Warrant” as used herein shall include any subsequent Warrant issued as provided herein.

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1.2. Exercise Procedures; Delivery of Certificate. Upon surrender of this Warrant with a duly executed Notice of Exercise in the form of Annex A attached hereto, together with payment of the Exercise Price for the Warrant Shares purchased, at the Company’s principal executive offices (the “Designated Office”), the Holder shall be entitled to receive a certificate or certificates for the Warrant Shares so purchased. The Company agrees that the Warrant Shares shall be deemed to have been issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered together with the Notice of Exercise and payment for such Warrant Shares.

1.3. Cashless Exercise. At any time when either (x) there exists an Event of Default under the Revolving Credit and Term Loan Agreement dated as of November 20, 2006 by and between the Company and ComVest Capital LLC (the “Loan Agreement”) or (y) the principal of all of the Term Loans under such Loan Agreement has been repaid in full, then, in lieu of payment of the Exercise Price, a Holder may exercise this Warrant, in whole or in part, by presentation and surrender of this Warrant to the Company, together with a Cashless Exercise Form in the form attached hereto as Annex B (or a reasonable facsimile thereof) duly executed (a “Cashless Exercise”). Acceptance by the Company of such presentation and surrender shall be deemed a waiver of the Holder's obligation to pay all or any portion of the Exercise Price, as the case may be. In the event of a Cashless Exercise, the Holder shall exchange this Warrant for that number of Common Shares determined by multiplying the number of Common Shares for which this Warrant is being exercised by a fraction, (a) the numerator of which shall be the difference between (i) the then current market price per Common Share, and (ii) the Exercise Price, and (b) the denominator of which shall be the then current market price per Common Share. For purposes of any computation under this Section l.3, the then current market price per Common Share at any date shall be deemed to be the average of the daily trading price for the ten (10) consecutive trading days immediately prior to the Cashless Exercise. If, during such measuring period, there shall occur any event which gives rise to any adjustment of the Exercise Price, then a corresponding adjustment shall be made with respect to the closing prices of the Common Shares for the days prior to the Effective Date of such adjustment event. As used herein, the term “trading price” on any relevant date means (A) if the Common Stock is listed for trading on the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market, or the NASDAQ Capital Market, the closing sale price (or, if no closing sale price is reported, the last reported sale price) of the Common Stock (regular way), or (B) if the Common Stock is not so listed but quotations for the Common Stock are reported on the OTC Bulletin Board, the most recent closing price as reported on the OTC Bulletin Board.

2. Transfer; Issuance of Stock Certificates; Restrictive Legends.

2.1. Transfer. Each transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with a written assignment of this Warrant in the form of Annex C attached hereto duly executed by the Holder or its agent or attorney. Upon such surrender and delivery, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified

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in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, if any. A Warrant may be exercised by the new Holder for the purchase of Warrant Shares without having a new Warrant issued. Prior to due presentment for registration of transfer thereof, the Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary. All Warrants issued upon any assignment of Warrants shall be the valid obligations of the Company, evidencing the same rights and entitled to the same benefits as the Warrants surrendered upon such registration of transfer or exchange.

2.2. Stock Certificates. Certificates for the Warrant Shares shall be delivered to the Holder within five (5) business days after the rights represented by this Warrant shall have been exercised pursuant to Section 1, and a new Warrant representing the right to purchase the Common Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder within such time. The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the Holder hereof including, without limitation, any documentary, stamp or similar tax that may be payable in respect thereof; provided, however, that the Company shall not be required to pay any income tax to which the Holder hereof may be subject in connection with the issuance of this Warrant or the Warrant Shares.

2.3. Restrictive Legend. Except as otherwise provided in this Section 2, each certificate for Warrant Shares initially issued upon the exercise of this Warrant and each certificate for Warrant Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION IN FORM AND FROM COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

Notwithstanding the foregoing, the legend requirements of this Section 2.3 shall terminate as to any particular Warrant Shares when (i) such Warrant Shares are transferred pursuant to an effective resale registration statement, as contemplated in the Registration Rights Agreement between the Company and the Holder of even date herewith, or (ii) the Company shall have received from the Holder thereof an opinion of counsel in form and substance reasonably acceptable to the Company that such legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by this Section 2.3 shall terminate, the Holder or subsequent transferee, as the case may be, shall be entitled to receive from the Company without cost to such Holder or transferee a certificate for the Warrant Shares without such restrictive legend.

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3. Adjustment of Number of Shares; Exercise Price; Nature of Securities Issuable Upon Exercise of Warrants.

3.1. Exercise Price; Adjustment of Number of Shares. The Exercise Price and the number of shares purchasable hereunder shall be subject to adjustment from time to time as hereinafter provided; provided, however, that, notwithstanding the below, in no case shall the Exercise Price be reduced to below the par value per share of the class of stock for which this Warrant is exercisable at such time.

3.2. Adjustments Upon Distribution, Subdivision or Combination. If the Company, at any time or from time to time after the issuance of this Warrant, shall (a) make a dividend or distribution on its Common Shares payable in Common Shares, (b) subdivide or reclassify the outstanding Common Shares into a greater number of shares, or (c) combine or reclassify the outstanding Common Shares into a smaller number of shares, the Exercise Price in effect at that time and the number of Warrant Shares into which the Warrant is exercisable at that time shall be proportionately adjusted effective as of the record date for the dividend or distribution or the effective date of the subdivision, combination or reclassification.

3.3. Adjustment Upon Other Distributions. If the Company, at any time or from time to time after the issuance of this Warrant, makes a distribution to the holders of Common Shares which is payable in securities of the Company other than Common Shares, then, in each such event, provision shall be made so that the Holder shall receive upon exercise of this Warrant, in addition to the number of Warrant Shares, the amount of such securities of the Company which would have been received if the portion of the Warrant so exercised had been exercised for Warrant Shares on the date of such event, subject to adjustments subsequent to the date of such event with respect to such distributed securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 and all other adjustments under this Section 3.

3.4. Adjustment Upon Merger, Consolidation or Exchange. If at any time or from time to time after the issuance of this Warrant there occurs any merger, consolidation, arrangement or statutory share exchange of the Company with or into any other person or company, then, in each such event, provision shall be made so that the Holder shall receive upon exercise of this Warrant the kind and amount of shares and other securities and property (including cash) which would have been received upon such merger, consolidation, arrangement or statutory share exchange by the Holder if the portion of this Warrant so exercised had been exercised for Warrant Shares immediately prior to such merger, consolidation, arrangement or statutory share exchange, subject to adjustments for events subsequent to the effective date of such merger, consolidation, arrangement or statutory share exchange with respect to such shares and other securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 and all other adjustments under this Section 3.

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3.5. Adjustments for Recapitalization or Reclassification. If, at any time or from time to time after the issuance of this Warrant, the Warrant Shares issuable upon exercise of this Warrant are changed into the same or a different number of securities of any class of the Company, whether by recapitalization, reclassification or otherwise (other than a merger, consolidation, arrangement or statutory share exchange provided for elsewhere in this Section 3), then, in each such event, provision shall be made so that the Holder shall receive upon exercise of this Warrant the kind and amount of securities or other property which would have been received in connection with such recapitalization, reclassification or other change by the Holder if the portion of this Warrant so exercised had been exercised immediately prior to such recapitalization, reclassification or change, subject to adjustments for events subsequent to the effective date of such recapitalization, reclassification or other change with respect to such securities which shall be on terms as nearly equivalent as practicable to the adjustments provided in this Section 3 and all other adjustments under this Section 3.

3.6. Extraordinary Dividends or Distributions. If, at any time or from time to time after the issuance of this Warrant, the Company shall declare a dividend or any other distribution upon the Common Shares payable otherwise than out of current earnings, retained earnings or earned surplus and otherwise than in Common Shares, then the Exercise Price in effect immediately prior to such declaration shall be reduced by an amount equal, in the case of a dividend or distribution in cash, to the amount thereof payable per Common Share or, in the case of any other dividend or distribution, to the value thereof per Common Share at the time such dividend or distribution was declared, as determined by the Board of Directors of the Company in good faith. Such reductions shall take effect as of the date on which a record is taken for the purposes of the subject dividend or distribution, or, if a record is not taken, the date as of which the holders of record of Common Shares entitled to such dividend or distribution are to be determined.

3.7 Adjustment Upon Certain Issuances of Common Stock.

(a) If the Company, at any time or from time to time, issues or sells any Additional Shares of Common Stock (as defined below), other than as provided in the foregoing subsections of this Section 3, for a price per share (which, in the case of options, warrants, convertible securities or other rights, includes the amounts paid therefor plus the exercise price, conversion price or other such amounts payable thereunder) that is less than the Exercise Price then in effect, then and in each such case, the then applicable Exercise Price shall automatically be reduced as of the opening of business on the date of such issue or sale, to a price determined by multiplying the Exercise Price then in effect by a fraction (i) the numerator of which shall be (A) the number of Common Shares deemed outstanding (as determined below) immediately prior to such issue or sale, plus (B) the number of Common Shares which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at such Exercise Price, and (ii) the denominator of which shall be the number of Common Shares deemed outstanding (as defined below) immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued; provided, however, that upon the expiration or other termination of options, warrants or other rights to purchase or acquire Common Shares which triggered any adjustment under this Section 3.7, and upon the expiration or termination of the right to convert or exchange convertible or exchangeable securities (whether by reason of redemption or otherwise) which triggered any adjustment under this Section 3.7, if any thereof shall not have been exercised, converted or exchanged, as applicable, the number of Common Shares deemed to be outstanding pursuant to this Section 3.7(a) shall be reduced by the number of shares as to which options, warrants, and rights to purchase or acquire Common Shares shall have expired or terminated unexercised, and as to which conversion or exchange rights shall have expired or terminated unexercised, and such number of shares shall no longer be deemed to be outstanding; and the Exercise Price then in effect shall forthwith be readjusted and thereafter be the price that it would have been had adjustment been made on the basis of the issuance only of the Common Shares actually issued.

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For purposes of the preceding sentence, the number of Common Shares deemed to be outstanding as of a given date shall be the sum of (x) the number of Common Shares actually outstanding, (y) the number of Common Shares for which this Warrant could be exercised on the day immediately preceding the given date, and (z) the number of Common Shares which could be obtained through the exercise or conversion of all other rights, options and convertible securities outstanding on the day immediately preceding the given date. “Additional Shares of Common Stock” shall mean all Common Shares, and all options, warrants, convertible securities or other rights to purchase or acquire Common Shares, issued by the Company other than (i) Common Shares issued pursuant to the exercise of options, warrants or convertible securities outstanding on the date hereof (including, without limitation, all of the Warrants issued pursuant to the Loan Agreement), or hereafter issued from time to time pursuant to and in accordance with stock purchase or stock option plans as in effect on the date hereof, (ii) Common Shares issued to fulfill purchase agreement obligations owed by the Company to Daniel Romine and Carrie Romine which are outstanding on the date of issuance hereof, provided that such Common Shares are not valued, for purposes of such issuance, at less than $0.27 per share (such minimum value to be subject to adjustment in a manner consistent with Section 3.2 above), and (iii) Common Shares and/or options, warrants or other Common Share purchase rights for up to an aggregate of 850,000 Common Shares (such number to be subject to adjustment in accordance with Section 3.2 above), where such options, warrants or other rights are issued both (A) with exercise prices per Common Share at the then-current fair market value of a Common Share, as determined in good faith by the Board of Directors of the Company or the Compensation Committee thereof, and (B) to employees, officers or directors of, or consultants to, the Company or any subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved by the Company’s Board of Directors or the Compensation Committee thereof, and by the Company’s stockholders.

(b) In the event that the exercise price, conversion price, purchase price or other price at which Common Shares are purchasable pursuant to any options, warrants, convertible securities or other rights to purchase or acquire Common Shares is reduced at any time or from time to time (other than under or by reason of provisions designed to protect against dilution), then, upon such reduction becoming effective, the Exercise Price then in effect hereunder shall forthwith be decreased to such Exercise Price as would have been obtained had the adjustments made and required under this Section 3.7 upon the issuance of such options, warrants, convertible securities or other rights been made upon the basis of (and the total consideration received therefor) (i) the issuance of the number of Common Shares theretofore actually delivered upon the exercise, conversion or exchange of such options, warrants, convertible securities or other rights, (ii) the issuance of all of the Common Shares and all other options, warrants, convertible securities and other rights to purchase or acquire Common Shares issued after the issuance of the modified options, warrants, convertible securities or other rights, and (iii) the original issuance at the time of the reduction of any such options, warrants, convertible securities or other rights then still outstanding.

(c) In no event shall an adjustment under this Section 3.7 be made if it would result in an increase in the then applicable Exercise Price.

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3.8. Certificate of Adjustment. Whenever the Exercise Price and/or the number of Warrant Shares receivable upon exercise of this Warrant is adjusted, the Company shall promptly deliver to the Holder a certificate of adjustment, setting forth the Exercise Price and/or Warrant Shares issuable after adjustment, a brief statement of the facts requiring the adjustment and the computation by which the adjustment was made. The certificate of adjustment shall be prima facie evidence of the correctness of the adjustment.

3.9. Successive Adjustments. The provisions of this Section 3 shall be applicable successively to each event described herein which may occur subsequent to the issuance of this Warrant and prior to the exercise in full of this Warrant.

4. Registration; Exchange and Replacement of Warrant; Reservation of Shares. The Company shall keep at the Designated Office a register in which the Company shall provide for the registration, transfer and exchange of this Warrant. The Company shall not at any time, except upon the dissolution, liquidation or winding-up of the Company, close such register so as to result in preventing or delaying the exercise or transfer of this Warrant.

The Company may deem and treat the person in whose name this Warrant is registered as the Holder and owner hereof for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration or transfer as provided in this Section 4.

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and (in case of loss, theft or destruction) of the Holder’s indemnity in form satisfactory to the Company, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will (in the absence of notice to the Company that the Warrant has been acquired by a bona fide purchaser) make and deliver a new Warrant of like tenor in lieu of this Warrant, without requiring the posting of any bond or the giving of any security.

The Company shall at all times reserve and keep available out of its authorized shares of capital stock, solely for the purpose of issuance upon the exercise of this Warrant, such number of Common Shares as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Exercise Price therefor, if applicable, all Warrant Shares issuable upon such exercise shall be duly and validly authorized and issued, fully paid and non-assessable.

5. Investment Representations. The Holder, by accepting this Warrant, covenants and agrees that, at the time of exercise of this Warrant, if the Warrant Shares shall not then be the subject of an effective registration statement under the Act, the securities acquired by the Holder upon exercise hereof are for the account of the Holder or are being acquired for its own account for investment and are not acquired with a view to, or for sale in connection with, any distribution thereof (or any portion thereof) and with no present intention (at such time) of offering and distributing such securities (or any portion thereof), except in compliance with applicable federal and state securities laws.

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6. Fractional Warrants and Fractional Shares. If the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted pursuant to Section 3 hereof, the Company shall nevertheless not be required to issue fractions of shares upon exercise of this Warrant or otherwise, or to distribute certificates that evidence fractional shares. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a Common Share (determined in accordance with the last sentence of Section 1.3).

7. Warrant Holders Not Deemed Stockholders. No Holder of this Warrant shall, as such, be entitled to vote or to receive dividends or be deemed the holder of Warrant Shares that may at any time be issuable upon exercise of this Warrant, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue or reclassification of stock, change of par value or change of stock to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings, or subscription rights, until such Holder shall have exercised this Warrant and been issued Warrant Shares or deemed to have been issued Warrant Shares in accordance with the provisions hereof.

8. Notices. Any notice which is required to be given by this Warrant must be in writing, and shall be given or served, unless otherwise expressly provided herein, by depositing the same in the United States Mail, postpaid and certified and addressed to the party to be notified, with return receipt requested, or by delivering the same by courier or in person to such party (or, if the party or parties to be notified be incorporated, to an officer of such party). Notice deposited in the mail, postpaid and certified with return receipt requested, shall be deemed received and effective upon the deposit in a proper United States depository. Notice given in any other manner shall be effective only if and when received by the party to be notified. For the purposes of notice, the addresses of the parties for the receipt of notice hereunder are:

If to the Company:
Unify Corporation
2101 Arena Blvd., Suite 100
Sacramento, CA 95834
Attention: Chief Financial Officer
Telephone: (916) 928-6400
Fax No.: (916) 928-6408

If to the Holder:
ComVest Capital LLC
One North Clematis, Suite 300
West Palm Beach, Florida 33401
Attention: Chief Financial Officer
Telephone: (281) 468-0434
e-mail: larryl@comvest.com

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Any party shall have the right from time to time, and at any time, to change its address for the receipt of notice by giving at least five (5) days’ prior written notice of the change of its address to the other parties in the manner specified herein.

9. Successors. All the covenants, agreements, representations and warranties contained in this Warrant shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors, assigns and transferees.

10. Law Governing. THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.

11. Entire Agreement; Amendments and Waivers. This Warrant, together with the Registration Rights Agreement of even date herewith executed by the Company for the benefit of the Holder, sets forth the entire understanding of the parties with respect to the subject matter hereof. The failure of any party to seek redress for the violation or to insist upon the strict performance of any term of this Warrant shall not constitute a waiver of such term and such party shall be entitled to enforce such term without regard to such forbearance. This Warrant may be amended, and any breach of or compliance with any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or written waiver of the Holder, and then such consent or waiver shall be effective only in the specific instance and for the specific purpose for which given.

12. Severability; Headings. If any term of this Warrant as applied to any person or to any circumstance is prohibited, void, invalid or unenforceable in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without in any way affecting any other term of this Warrant or affecting the validity or enforceability of this Warrant or of such provision in any other jurisdiction. The Section headings in this Warrant have been inserted for purposes of convenience only and shall have no substantive effect.

[The remainder of this page is intentionally blank]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the ____ day of November, 2006.

UNIFY CORPORATION
By:
	Name: Todd E. Wille
	Title: President and CEO

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ANNEX A

NOTICE OF EXERCISE

(To be executed upon partial or full
exercise of the within Warrant)

The undersigned hereby irrevocably elects to exercise the right to purchase __________ shares of Common Stock of Unify Corporation covered by the within Warrant according to the conditions hereof and herewith makes payment of the Exercise Price of such shares in full in the amount of $______________.

By:
	(Signature of Registered Holder)

Dated:____________________________________

ANNEX B

CASHLESS EXERCISE FORM

 (To be executed upon partial or full
exercise of Warrants pursuant to Section 1.3 of the Warrant)

The undersigned hereby irrevocably elects to surrender ____________ shares of Common Stock of Unify Corporation purchasable under the Warrants for such shares of Common Stock issuable in exchange therefor pursuant to the Cashless Exercise provisions of the within Warrants, as provided for in Section 1.3 of such Warrant.

Please issue a certificate or certificates for such Common Stock in the name of, and pay cash for fractional shares in the name of:

(Please print name, address, and social security number/tax identification number:)

and, if said number of shares of Common Stock shall not be all the shares of Common Stock purchasable thereunder, that a new Warrant for the balance remaining of the shares of Common Stock purchasable under the within Warrants be registered in the name of the undersigned Holder or its transferee as below indicated and delivered to the address stated below.

Dated:____________________________

Name of Warrant Holder or transferee:
	(Please print)

Address:

Signature:

 

NOTICE:      The signature on this form must correspond with the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever.

ANNEX C

ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Common Stock set forth below:

Name and Address of Assignee	No. of Shares of
	Common Stock

and does hereby irrevocably constitute and appoint _______________________ attorney-in-fact to register such transfer onto the books of Unify Corporation maintained for the purpose, with full power of substitution in the premises.

Dated:	Print Name:
	Signature:
	Witness:

NOTICE:      The signature on this assignment must correspond with the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever.

EX-4.12

EXHIBIT 4.12

FORM OF 2004 WARRANT

THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144(K), OR (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.

SUBJECT TO THE PROVISIONS OF SECTION 10 HEREOF, THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. EASTERN TIME ON ______________, 2009 (the “EXPIRATION DATE”).

No. __________

UNIFY CORPORATION

WARRANT TO PURCHASE SHARES OF
COMMON STOCK, PAR VALUE $0.001 PER SHARE

For VALUE RECEIVED, ____________________ (“Warrantholder”), is entitled to purchase, subject to the provisions of this Warrant, from Unify Corporation, a Delaware corporation (“Company”), at any time not later than 5:00 P.M., Eastern time, on the Expiration Date (as defined above), at an initial exercise price per share equal to $0.90 (the exercise price in effect being herein called the “Warrant Price”), ______ shares (“Warrant Shares”) of the Company’s Common Stock, par value $0.001 per share (“Common Stock”). The number of Warrant Shares purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time as described herein.

Section 1. Registration. The Company shall maintain books for the transfer and registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and register the Warrant in the name of the Warrantholder.

Section 2. Transfers. As provided herein, this Warrant may be transferred only pursuant to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”), or an exemption from such registration. Subject to such restrictions, the Company shall transfer this Warrant from time to time upon the books to be maintained by the Company for that purpose, upon surrender thereof for transfer properly endorsed or accompanied by appropriate instructions for transfer and such other documents as may be reasonably required by the Company, including, if required by the Company, an opinion of its counsel to the effect that such transfer is exempt from the registration requirements of the Securities Act, to establish that such transfer is being made in accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the surrendered Warrant shall be canceled by the Company.

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Section 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may exercise this Warrant in whole or in part at any time prior to its expiration upon surrender of the Warrant, together with delivery of the duly executed Warrant exercise form attached hereto as Appendix A (the “Exercise Agreement”) and payment by cash, certified check or wire transfer of funds for the aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company during normal business hours on any business day at the Company’s principal executive offices (or such other office or agency of the Company as it may designate by notice to the Warrantholder). The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or the Warrantholder’s designee, as the record owner of such shares, as of the close of business on the date on which this Warrant shall have been surrendered (or evidence of loss, theft or destruction thereof and security or indemnity satisfactory to the Company), the Warrant Price shall have been paid and the completed Exercise Agreement shall have been delivered. Certificates for the Warrant Shares so purchased, representing the aggregate number of shares specified in the Exercise Agreement, shall be delivered to the Warrantholder within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been so exercised. The certificates so delivered shall be in such denominations as may be requested by the Warrantholder and shall be registered in the name of the Warrantholder or such other name as shall be designated by the Warrantholder. If this Warrant shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at its expense, at the time of delivery of such certificates, deliver to the Warrantholder a new Warrant representing the number of shares with respect to which this Warrant shall not then have been exercised. As used herein, “business day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of business. Each exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and warranties contained in Section 5 of the Purchase Agreement (as defined below) are true and correct in all material respects with respect to the Warrantholder as of the time of such exercise.

Section 4. Compliance with the Securities Act of 1933. Except as provided in the Purchase Agreement (as defined below), the Company may cause the legend set forth on the first page of this Warrant to be set forth on each Warrant or similar legend on any security issued or issuable upon exercise of this Warrant, unless counsel for the Company is of the opinion as to any such security that such legend is unnecessary.

Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant; provided, however, that the Company shall not be required to pay any tax or taxes which may be payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant Shares in a name other than that of the Warrantholder in respect of which such shares are issued, and in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company’s reasonable satisfaction that such tax has been paid. The Warrantholder shall be responsible for income taxes due under federal, state or other law, if any such tax is due.

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Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and substitution of and upon cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable indemnity or bond with respect thereto, if requested by the Company.

Section 7. Reservation of Common Stock. The Company hereby represents and warrants that there have been reserved, and the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated by this Section 7, out of the authorized and unissued shares of Common Stock, sufficient shares to provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and non-assessable shares of Common Stock of the Company.

Section 8. Adjustments. Subject and pursuant to the provisions of this Section 8, the Warrant Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time to time as set forth hereinafter.

  (a) If the Company shall, at any time or from time to time while this Warrant is outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification of its outstanding shares of Common Stock any shares of its capital stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), then the number of Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in effect immediately prior to the date upon which such change shall become effective, shall be adjusted by the Company so that the Warrantholder thereafter exercising the Warrant shall be entitled to receive the number of shares of Common Stock or other capital stock which the Warrantholder would have received if the Warrant had been exercised immediately prior to such event upon payment of a Warrant Price that has been adjusted to reflect a fair allocation of the economics of such event to the Warrantholder. Such adjustments shall be made successively whenever any event listed above shall occur.

  (b) If any capital reorganization, reclassification of the capital stock of the Company, consolidation or merger of the Company with another corporation in which the Company is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock, securities or assets as would have been issuable or payable with respect to or in exchange for a number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale, transfer or other disposition not taken place, and in any such case appropriate provision shall be made with respect to the rights and interests of each Warrantholder to the end that the provisions hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the last address of the Warrantholder appearing on the books of the Company, such shares of stock, securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph (b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales, transfers or other dispositions.

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  (c) In case the Company shall fix a payment date for the making of a distribution to all holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation) of evidences of indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding multiplied by the Market Price (as defined below) per share of Common Stock immediately prior to such payment date, less the fair market value (as determined by the Company’s Board of Directors in good faith) of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants, and the denominator of which shall be the total number of shares of Common Stock outstanding multiplied by such Market Price per share of Common Stock immediately prior to such payment date. “Market Price” as of a particular date (the “Valuation Date”) shall mean the following: (a) if the Common Stock is then listed on a national stock exchange, the closing sale price of one share of Common Stock on such exchange on the last trading day prior to the Valuation Date; (b) if the Common Stock is then quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”) or the Over-the-Counter Bulletin Board (“OTC/BB”), the closing sale price of one share of Common Stock on Nasdaq on the last trading day prior to the Valuation Date or, if no such closing sale price is available, the average of the high bid and the low asked price quoted on Nasdaq or OTC/BB on the last trading day prior to the Valuation Date; or (c) if the Common Stock is not then listed on a national stock exchange or quoted on Nasdaq, the fair market value of one share of Common Stock as of the Valuation Date, shall be determined in good faith by the Board of Directors of the Company and the Warrantholder. If the Common Stock is not then listed on a national securities exchange or quoted on Nasdaq, the Board of Directors of the Company shall respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise hereunder as to the fair market value of a share of Common Stock as determined by the Board of Directors of the Company. In the event that the Board of Directors of the Company and the Warrantholder are unable to agree upon the fair market value in respect of subpart (c) hereof, the Company and the Warrantholder shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne equally by the Company and the Warrantholder. Such adjustment shall be made successively whenever such a payment date is fixed.

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  (d) An adjustment to the Warrant Price shall become effective immediately after the payment date in the case of each dividend or distribution and immediately after the effective date of each other event which requires an adjustment.

  (e) In the event that, as a result of an adjustment made pursuant to this Section 8, the Warrantholder shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, the number of such other shares so receivable upon exercise of this Warrant shall be subject thereafter to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Warrant Shares contained in this Warrant.

  (f) Except as provided in subsection (g) hereof, if and whenever the Company shall issue or sell, or is, in accordance with any of subsections (f)(l) through (f)(7) hereof, deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share less than the Warrant Price in effect immediately prior to the time of such issue or sale, then and in each such case (a “Trigger Issuance”) the then-existing Warrant Price, shall be reduced, as of the close of business on the effective date of the Trigger Issuance, to a price determined as follows:

Adjusted Warrant Price = (A x B) + D 

                                             A+C 

    where

    “A” equals the number of shares of Common Stock outstanding, including Additional Shares of Common Stock (as defined below) deemed to be issued hereunder, immediately preceding such Trigger Issuance;

    “B” equals the Warrant Price in effect immediately preceding such Trigger Issuance;

    “C” equals the number of Additional Shares of Common Stock issued or deemed issued hereunder as a result of the Trigger Issuance; and

    “D” equals the aggregate consideration, if any, received or deemed to be received by the Company upon such Trigger Issuance;

provided, however, that in no event shall the Warrant Price after giving effect to such Trigger Issuance be greater than the Warrant Price in effect prior to such Trigger Issuance.

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  For purposes of this subsection (f), “Additional Shares of Common Stock” shall mean all shares of Common Stock issued by the Company or deemed to be issued pursuant to this subsection (f), other than Excluded Issuances (as defined in subsection (g) hereof).

  For purposes of this subsection (f), the following subsections (f)(l) to (f)(7) shall also be applicable:

 (f)(1) Issuance of Rights or Options. In case at any time the Company shall in any manner grant (directly and not by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called “Options” and such convertible or exchangeable stock or securities being called “Convertible Securities”) whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus (y) the aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less than the Warrant Price in effect immediately prior to the time of the granting of such Options, then the total number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options or the issuance of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Warrant Price. Except as otherwise provided in subsection 8(f)(3), no adjustment of the Warrant Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities.

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 (f)(2) Issuance of Convertible Securities. In case the Company shall in any manner issue (directly and not by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of (x) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus (y) the aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (ii) the total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Warrant Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Warrant Price, provided that (a) except as otherwise provided in subsection 8(f)(3), no adjustment of the Warrant Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities and (b) no further adjustment of the Warrant Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Warrant Price have been made pursuant to the other provisions of subsection 8(f).

 (f)(3) Change in Option Price or Conversion Rate. Upon the happening of any of the following events, namely, if the purchase price provided for in any Option referred to in subsection 8(f)(l) hereof, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subsections 8(f)(l) or 8(f)(2), or the rate at which Convertible Securities referred to in subsections 8(f)(l) or 8(f)(2) are convertible into or exchangeable for Common Stock shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect against dilution), the Warrant Price in effect at the time of such event shall forthwith be readjusted to the Warrant Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. On the termination of any Option for which any adjustment was made pursuant to this subsection 8(f) or any right to convert or exchange Convertible Securities for which any adjustment was made pursuant to this subsection 8(f) (including without limitation upon the redemption or purchase for consideration of such Convertible Securities by the Company), the Warrant Price then in effect hereunder shall forthwith be changed to the Warrant Price which would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination, never been issued.

 (f)(4) Stock Dividends. Subject to the provisions of this Section 8(f), in case the Company shall declare a dividend or make any other distribution upon any stock of the Company (other than the Common Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration.

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 (f)(5) Consideration for Stock. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor, before deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors of the Company, before deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any Options shall be issued in connection with the issue and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board of Directors of the Company. If Common Stock, Options or Convertible Securities shall be issued or sold by the Company and, in connection therewith, other Options or Convertible Securities (the “Additional Rights”) are issued, then the consideration received or deemed to be received by the Company shall be reduced by the fair market value of the Additional Rights (as determined using the Black-Scholes option pricing model or another method mutually agreed to by the Company and the Warrantholder). The Board of Directors of the Company shall respond promptly, in writing, to an inquiry by the Warrantholder as to the fair market value of the Additional Rights. In the event that the Board of Directors of the Company and the Warrantholder are unable to agree upon the fair market value of the Additional Rights, the Company and the Warrantholder shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne evenly by the Company and the Warrantholder.

 (f)(6) Record Date. In case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

 (f)(7) Treasury Shares. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company or any of its wholly-owned subsidiaries, and the disposition of any such shares (other than the cancellation or retirement thereof) shall be considered an issue or sale of Common Stock for the purpose of this subsection (f).

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  (g) Anything herein to the contrary notwithstanding, the Company shall not be required to make any adjustment of the Warrant Price in the case of the issuance of (A) capital stock, Options or Convertible Securities issued to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company pursuant to an equity compensation program approved by the Board of Directors of the Company or the compensation committee of the Board of Directors of the Company, (B) shares of Common Stock issued upon the conversion or exercise of Options or Convertible Securities issued prior to the date hereof, (C) securities issued pursuant to that certain Purchase Agreement dated April 23, 2004, among the Company and the Investors named therein (the “Purchase Agreement”) and securities issued upon the exercise or conversion of those securities, and (D) shares of Common Stock issued or issuable by reason of a dividend, stock split or other distribution on shares of Common Stock (but only to the extent that such a dividend, split or distribution results in an adjustment in the Warrant Price pursuant to the other provisions of this Warrant) (collectively, “Excluded Issuances”).

  (h) Upon any adjustment to the Warrant Price pursuant to Section 8(f) above, the number of Warrant Shares purchasable hereunder shall be adjusted by multiplying such number by a fraction, the numerator of which shall be the Warrant Price in effect immediately prior to such adjustment and the denominator of which shall be the Warrant Price in effect immediately thereafter.

 Section 9. Fractional Interest. The Company shall not be required to issue fractions of Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would, except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise, the Company, in lieu of delivering such fractional share, shall pay to the exercising Warrantholder an amount in cash equal to the Market Price of such fractional share of Common Stock on the date of exercise.

 Section 10. Extension of Expiration Date. If the Company fails to cause any Registration Statement covering Registrable Securities (unless otherwise defined herein, capitalized terms are as defined in the Registration Rights Agreement relating to the Warrant Shares (the “Registration Rights Agreement”)) to be declared effective prior to the applicable dates set forth therein, or if any of the events specified in Section 2(c)(ii) of the Registration Rights Agreement occurs, and the Blackout Period or Allowed Delay (whether alone, or in combination with any other Blackout Period or Allowed Delay) continues for more than 60 days in any 12 month period, or for more than a total of 90 days, then the Expiration Date of this Warrant shall be extended one day for each day beyond the 60-day or 90-day limits, as the case may be, that the Blackout Period continues.

 Section 11. Benefits. Nothing in this Warrant shall be construed to give any person, firm or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company and the Warrantholder.

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 Section 12. Notices to Warrantholder. Upon the happening of any event requiring an adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant Price and the adjusted number of Warrant Shares resulting from such event and setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or validity of the subject adjustment.

 Section 13. Identity of Transfer Agent. The Transfer Agent for the Common Stock is American Stock Transfer & Trust Company. Upon the appointment of any subsequent transfer agent for the Common Stock or other shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a statement setting forth the name and address of such transfer agent.

 Section 14. Notices. Unless otherwise provided, any notice required or permitted under this Warrant shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or facsimile, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed given one business day after delivery to such carrier. All notices shall be addressed as follows: if to the Warrantholder, at its address as set forth in the Company’s books and records and, if to the Company, at the address as follows, or at such other address as the Warrantholder or the Company may designate by ten days’ advance written notice to the other:

If to the Company: 

                   Unify Corporation 

                   201 Arena Blvd., Suite 100

                   Sacramento, CA 95834 

                   Attention: Pete DiCorti 

                   Fax: (916) 928-6408 

With a copy to: 

                   Gray Cary Ware & Freidenrich LLP 

                   400 Capitol Mall, Suite 2400

                   Sacramento, CA 95814 

                   Attention: Kevin A. Coyle, Esq. 

                   Fax: (916) 930-3201 

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 Section 15. Registration Rights. The initial Warrantholder is entitled to the benefit of certain registration rights with respect to the shares of Common Stock issuable upon the exercise of this Warrant as provided in the Registration Rights Agreement, and any subsequent Warrantholder may be entitled to such rights.

 Section 16. Successors. All the covenants and provisions hereof by or for the benefit of the Warrantholder shall bind and inure to the benefit of its respective successors and assigns hereunder.

 Section 17. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant shall be governed by, and construed in accordance with, the internal laws of the State of New York, without reference to the choice of law provisions thereof. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Warrant and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Warrant. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS WARRANT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 Section 18. Call Provision. Notwithstanding any other provision contained herein to the contrary, in the event that the closing bid price of a share of Common Stock as reported by such exchange, stock market or over-the-counter quotation system on which the Common Stock may then be listed or by such reporting service on which such quotations may be published, equals or exceeds $1.80 (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of the Common Stock occurring after the date hereof) for twenty (20) consecutive trading days commencing after the Registration Statement (as defined in the Registration Rights Agreement) has been declared effective (the “Call Conditions”), the Company, upon twenty (20) days’ prior written notice (the “Notice Period”) given to the Warrantholder within one business day immediately following the end of such twenty (20) trading day period, may call this Warrant for 25% of the shares of Common Stock initially purchasable pursuant hereto (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of the Common Stock occurring after the date hereof), at a redemption price equal to $0.01 per share of Common Stock then purchasable pursuant to this Warrant; provided that (i) the Company simultaneously calls all Company Warrants (as defined below) on the same terms and on a pro rata basis and (ii) all of the shares of Common Stock issuable hereunder either (A) are registered pursuant to an effective Registration Statement (as defined in the Registration Rights Agreement) which has not been suspended and for which no stop order is in effect, and pursuant to which the Warrantholder is able to sell such shares of Common Stock at all times during the Notice Period or (B) no longer constitute Registrable Securities (as defined in the Registration Rights Agreement).

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On each such occasion, if any, that the Call Conditions are once again met during the thirty (30) day period immediately after consummation of a previous call, the Company may once again call this Warrant for an additional increment of 25% of the shares of Common Stock initially purchasable pursuant to this Warrant (appropriately adjusted for any stock split, reverse stock split, stock dividend or other reclassification or combination of the Common Stock occurring after the date hereof), or such lesser number as shall then remain purchasable hereunder, and in the same manner and subject to the same notice requirements as the initial call, until all of the shares purchasable hereunder have been called; provided that (i) the Company simultaneously calls all Company Warrants (as defined below) on the same terms and on a pro rata basis and (ii) all of the shares of Common Stock issuable hereunder either (A) are registered pursuant to an effective Registration Statement (as defined in the Registration Rights Agreement) which has not been suspended and for which no stop order is in effect, and pursuant to which the Warrantholder is able to sell such shares of Common Stock at all times during the Notice Period or (B) no longer constitute Registrable Securities (as defined in the Registration Rights Agreement). Notwithstanding any notice by the Company, the Warrantholder shall have the right to exercise this Warrant prior to the end of any Notice Period.

 Section 19. No Rights as Stockholder. The Warrantholder shall not have or exercise any rights as a stockholder of the Company solely by virtue of its ownership of this Warrant.

 Section 20. Amendment; Waiver. This Warrant is one of a series of Warrants of like tenor issued by the Company pursuant to the Purchase Agreement and initially covering an aggregate of 2,253,560 shares of Common Stock (collectively, the “Company Warrants”). Any term of this Warrant may be amended or waived (including the adjustment provisions included in Section 8 of this Warrant) upon the written consent of the Company and the holders of Company Warrants representing at least 50% of the number of shares of Common Stock then subject to all outstanding Company Warrants (the “Majority Holders”); provided, that (x) any such amendment or waiver must apply to all Company Warrants; and (y) the number of Warrant Shares subject to this Warrant, the Warrant Price and the Expiration Date may not be amended, and the right to exercise this Warrant may not be altered or waived, without the written consent of the Warrantholder.

 Section 21. Section Headings. The section headings in this Warrant are for the convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or restrict the provisions hereof.

[signature page follows]

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 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the ______day of ___________, 2004.

UNIFY CORPORATION 

By:___________________________ 

Name: 

Title: 

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APPENDIX A
UNIFY CORPORATION
WARRANT EXERCISE FORM

To Unify Corporation:

 The undersigned hereby irrevocably elects to exercise the right of purchase represented by the within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price and surrender of the Warrant, ____________ shares of Common Stock (“Warrant Shares”) provided for therein, and requests that certificates for the Warrant Shares be issued as follows:

Name 

Address 

Federal Tax ID or Social Security No. 

	and delivered by	(certified mail to the above address, or
		(electronically (provide DWAC Instructions:_________________),
or		(other (specify):  ________________________________________).

and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s Assignee as below indicated and delivered to the address stated below.

Dated: ________________, _____
Note: The signature must correspond with  the name of the Warrant holder as written on the first page of the Warrant in every particular, without alteration or enlargement or any change whatever, unless the Warrant has been assigned.	Signature:
	Name (please print)
	Address
	Federal Identification or
	Social Security No.
	Assignee:

EX-21.1

Exhibit 21.1

Subsidiaries of the Registrant

Unify Corporation France S.A.
Gupta Technologies, LLC
Gupta Technologies Ltd
Gupta Technologies GmbH

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EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We have issued our report dated July 17, 2007, accompanying the consolidated financial statements of Unify Corporation on Form 10-K for the years ended April 30, 2007, 2006 and 2005. We hereby consent to the incorporation by reference of said report in the Registration Statements of Unify Corporation on Forms S-2 (File No. 333-117628, effective April 29, 2005 and File No. 333-124488, effective July 29, 2005) and on Forms S-8 (File No. 333-13203, effective October 1, 1996, File No. 333-61705, effective August 18, 1998, File No. 333-92973, effective December 17, 1999, File No. 333-71814, effective October 18, 2001, File No. 333-98633, effective August 23, 2002, and File No. 333-120750, effective November 24, 2004).

/s/ GRANT THORNTON LLP
Reno, Nevada
July 19, 2007 

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Todd E. Wille, Chief Executive Officer of Unify Corporation, certify that:

1.	I have reviewed this annual report on Form 10-K of Unify Corporation (“registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 20, 2007

/s/ TODD E. WILLE 

Todd E. Wille 

President and Chief Executive Officer 

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EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven D. Bonham, Chief Financial Officer of Unify Corporation, certify that:

1.	I have reviewed this annual report on Form 10-K of Unify Corporation (“registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors:

(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 20, 2007

/s/ STEVEN D. BONHAM 

Steven D. Bonham 

Chief Financial Officer 

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EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report on Form 10-K of Unify Corporation (the “Company”) for the fiscal year ended April 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Todd E. Wille, President and Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

July 20, 2007

/s/ TODD E. WILLE 

Todd E. Wille 

President and Chief Executive Officer 

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification accompanies this Report pursuant to Section 906 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 

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EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Annual Report on Form 10-K of Unify Corporation (the “Company”) for the fiscal year ended April 30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Steven D. Bonham, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), that, to the best of my knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

July 20, 2007

/s/ STEVEN D. BONHAM 

Steven D. Bonham 

Chief Financial Officer 

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. This certification accompanies this Report pursuant to Section 906 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. 

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