SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC  20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                               __________________


  For  the  Quarter  Ended                            Commission  File  Number
     November  30,  2003                                   0-10665

                                  SOFTECH, INC.

      State  of  Incorporation                          IRS  Employer
                                                       Identification
         Massachusetts                                   04-2453033

                      2 Highwood Drive, Tewksbury, MA 01876
                            Telephone (978) 640-6222

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 _____
                                   ---

The  number  of  shares outstanding of registrant's common stock at December 31,
2003  was  12,205,236  shares.




                                  SOFTECH, INC.
                                  -------------

                                      INDEX
                                      -----




PART  I.  Financial  Information                                    Page  Number
                                                                    ------------

   Item  1.  Financial  Statements

     Consolidated  Condensed  Balance  Sheets  -
        November  30,  2003  (unaudited)  and  May 31, 2003 (audited)          3

     Consolidated  Condensed  Statements  of  Operations  (unaudited)  -
        Three  Months  Ended  November  30,  2003  and  2002                   4

     Consolidated  Condensed  Statements  of  Operations  (unaudited)  -
        Six  Months  Ended  November  30,  2003  and  2002                     5

     Consolidated  Condensed  Statements  of  Cash  Flows  (unaudited)  -
        Six  Months  Ended  November  30,  2003  and  2002                     6

     Notes  to  Consolidated  Condensed  Financial  Statements              7-13

   Item  2.  Management's  Discussion  and  Analysis  of  Operations       14-19

   Item  3.  Controls  and  Procedures                                        20


PART  II.  Other  Information

   Item  6.  Exhibits  and  Reports  on  Form  8-K                            20

                              PART I.  FINANCIAL INFORMATION
                              ITEM 1. FINANCIAL STATEMENTS



                                                                                           

                                     SOFTECH, INC. AND SUBSIDIARIES
                               ---------------------------------------
                                CONSOLIDATED CONDENSED BALANCE SHEETS
                                       (dollars in thousands)
                                                                             November 30,         May 31,
                                                                                 2003              2003
                                                                              (unaudited)      (audited)
                                                                        ------------------  -------------

                                                   ASSETS
                                         -----------------------

Cash and cash equivalents                                               $          306   $        654

Restricted cash                                                                      -             65

Accounts receivable, net                                                         1,731          2,052

Prepaid expenses and other assets                                                  142            235
                                                                        ----------------  -------------

Total current assets                                                             2,179          3,006
                                                                        ----------------  -------------

Property and equipment, net                                                        242            306

Capitalized software costs, net                                                  8,078          9,114

Identifiable intangible assets, net                                                733            917

Goodwill, net                                                                    4,598          4,598

Notes receivable                                                                   134            134

Other assets                                                                       159            160
                                                                        ---------------  -------------

TOTAL ASSETS                                                            $       16,123   $     18,235
                                                                        ===============  =============


                                  LIABILITIES AND STOCKHOLDERS' DEFICIT
                                 ---------------------------------------

Accounts payable                                                        $          251   $        474

Accrued expenses                                                                 1,591          2,048

Deferred maintenance revenue                                                     3,433          4,074

Current portion of capital lease obligations                                        17             30

Current portion of long term debt                                                2,100          1,095
                                                                        ---------------  -------------

Total current liabilities                                                        7,392          7,721
                                                                        ---------------  -------------



Non-current deferred revenue                                                         -            204

Long-term debt, net of current portion                                          12,282         13,058
                                                                        ---------------  -------------

Total long-term debt                                                            12,282         13,262
                                                                        ---------------  -------------

Stockholders' deficit                                                           (3,551)        (2,748)
                                                                        ---------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                             $       16,123   $     18,235
                                                                        ===============  =============


See accompanying notes to consolidated condensed financial statements.





                                                  SOFTECH, INC. AND SUBSIDIARIES
                                                  ------------------------------
                                          CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                          -----------------------------------------------
                                                            (Unaudited)
                                              (in thousands, except for per share data)


                                                                                 

                                                                           Three Months Ended
                                                                          --------------------

                                                                        November 30,     November 30,
                                                                            2003            2002
                                                                        -------------  --------------

Revenue

  Products                                                              $         868   $         837

  Services                                                                      2,442           1,389
                                                                        -------------  --------------

Total revenue                                                                   3,310           2,226

Cost of products sold                                                              11              24

Cost of services provided                                                         491              70
                                                                        --------------  --------------

Gross margin                                                                    2,808           2,132

Research and development expenses                                                 768             362

Selling, general and administrative                                             1,427           1,307

Amortization of capitalized software and other intangible assets                  610             385
                                                                        --------------  --------------

Income from operations before interest expense and income taxes                     3              78

Interest expense                                                                  249             291
                                                                        --------------  --------------

Loss from operations before income taxes                                         (246)           (213)

Provision for income taxes                                                          -               -
                                                                        --------------  --------------

Net loss                                                                $        (246)  $        (213)
                                                                        ==============  ==============

Basic and diluted net loss per common share                              $       (0.02)  $       (0.02)
Weighted average common shares outstanding                                      12,205          12,205



See accompanying notes to consolidated condensed financial statements.





                                                  SOFTECH, INC. AND SUBSIDIARIES
                                                  ------------------------------
                                          CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                          -----------------------------------------------
                                           (in thousands, except for per share data)
                                                            (Unaudited)



                                                                                   

                                                                                Six Months Ended
                                                                        -----------------------------

                                                                          November 30,      November 30,
                                                                               2003             2002
                                                                        ---------------  --------------

Revenue

  Products                                                              $         1,451   $       1,135

  Services                                                                        4,802           2,812
                                                                        ----------------  --------------

Total revenue                                                                     6,253           3,947

Cost of products sold                                                                19              33

Cost of services provided                                                           984             137
                                                                        ----------------  --------------

Gross margin                                                                      5,250           3,777

Research and development expenses                                                 1,541             696

Selling, general and administrative                                               2,706           2,480

Amortization of capitalized software and other intangible assets                  1,225             770
                                                                        ----------------  --------------

Loss from operations before interest expense and income taxes                      (222)           (169)

Interest expense                                                                    502             576
                                                                        ----------------  --------------

Loss from operations before income taxes                                           (724)           (745)

Provision for income taxes                                                            -               -
                                                                        ----------------  --------------

Net loss                                                                $          (724)  $        (745)
                                                                        ================  ==============

Basic and diluted net loss per common share                             $         (0.06)  $       (0.06)
Weighted average common shares outstanding                                        12,205          12,205



See accompanying notes to consolidated condensed financial statements.














                              SOFTECH, INC. AND SUBSIDIARIES
                       CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                           (Unaudited)
                                     (dollars in thousands)

                                                                                        
                                                                                   Six Months Ended
                                                                         ------------------------------------
                                                                               November 30,     November 30,
                                                                                   2003             2002
                                                                         -------------------  --------------

Cash flows from operating activities:
  Net loss                                                               $              (724)  $        (745)
                                                                         --------------------  --------------

Adjustments to reconcile net loss to
  net cash used by operating activities:
    Depreciation and amortization                                                      1,311             977
Change in current assets and liabilities:
    Accounts receivable                                                                  321             276
    Prepaid expenses and other assets                                                     77             (65)
    Accounts payable and accrued expenses                                               (680)           (180)
    Deferred maintenance revenue                                                        (845)           (744)
                                                                         --------------------  --------------

Total adjustments                                                                        184             264
                                                                         --------------------  --------------


Net cash used by operating activities                                                   (540)           (481)
                                                                         --------------------  --------------

Cash flows used by investing activities:
     Purchase of marketable securities                                                     -             (29)
    Capital expenditures                                                                 (24)            (33)
                                                                         --------------------  --------------

Net cash used by investing activities                                                    (24)            (62)
                                                                         --------------------  --------------

Cash flows from financing activities:
    Principal payments under capital lease obligations                                   (13)            (31)
    Proceeds from line of credit agreements, net                                         229           3,345
                                                                         --------------------  --------------

Net cash provided by financing activities                                                216           3,314
                                                                         --------------------  --------------

Increase (decrease) in cash and cash equivalents                                        (348)          2,771

Cash and cash equivalents, beginning of period                                           654             708
                                                                         --------------------  --------------

Cash and cash equivalents, end of period                                 $               306   $       3,479
                                                                         ====================  ==============


See accompanying notes to consolidated condensed financial statements.



                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------

(A)     The  consolidated  condensed  financial  statements  have  been prepared
pursuant  to the rules and regulations of the Securities and Exchange Commission
from  the  accounts  of  SofTech,  Inc.  and  its wholly owned subsidiaries (the
"Company") without audit; however, in the opinion of management, the information
presented  reflects  all  adjustments which are of a normal recurring nature and
elimination  of  intercompany transactions which are necessary to present fairly
the  Company's  financial position and results of operations.  It is recommended
that  these  consolidated  condensed financial statements be read in conjunction
with  the  financial  statements and the notes thereto included in the Company's
fiscal  year  2003  Annual  Report  on  Form  10-KSB.

(B)     SIGNIFICANT  ACCOUNTING  POLICIES

REVENUE  RECOGNITION:

The  Company  has  adopted  the  provisions  of  Statement of Position No. 97-2,
"Software  Revenue  Recognition"  (SOP  97-2)  as  amended  by  SOP No. 98-9, in
recognizing  revenue  from  software transactions. Revenue from software license
sales are recognized when persuasive evidence of an arrangement exists, delivery
of  the  product  has  been  made,  and  a fixed fee and collectibility has been
determined. To the extent that obligations exist for other services, the Company
allocates revenue between the license and the services based upon their relative
fair value. Revenue from customer maintenance support agreements is deferred and
recognized  ratably  over  the term of the agreements. Revenue from engineering,
consulting  and  training services is recognized as those services are rendered.

CAPITALIZED  SOFTWARE  COSTS  AND  RESEARCH  AND  DEVELOPMENT:

The  Company  capitalizes  certain  costs  incurred to internally develop and/or
purchase  software  that  is licensed to customers. Capitalization of internally
developed  software  begins upon the establishment of technological feasibility.
Costs  incurred  prior  to  the  establishment  of technological feasibility are
expensed  as  incurred.  The Company evaluates the realizability and the related
periods  of  amortization  on  a  regular  basis.  Such costs are amortized over
estimated  useful  lives  ranging  from  three to ten years. The Company did not
capitalize  any  internally  developed  software  during the three and six month
periods  ended  November  30,  2003  or  2002.

ACCOUNTING  FOR  GOODWILL  AND  OTHER  INTANGIBLE  ASSETS

Effective  June  1,  2002,  the  Company adopted the provisions of SFAS No. 142,
Goodwill  and  Other  Intangible  Assets.  This  statement affects the Company's
treatment  of goodwill and other intangible assets. This statement requires that
goodwill  existing  at  the date of adoption be reviewed for possible impairment
and that impairment tests be periodically repeated, with impaired assets written
down  to  fair value. Additionally, existing goodwill and intangible assets must
be  assessed  and  classified within the statement's criteria. Intangible assets
with  finite  useful  lives  will  continue  to be amortized over those periods.
Amortization  of  goodwill  ceased  as  of  May  31,  2002.

The  Company  completed  the  first step of the transitional goodwill impairment
test  during  the  three  months  ended November 30, 2002 based on the amount of
goodwill  as  of the beginning of fiscal year 2003, as required by SFAS No. 142.
Based  on  the results of the first step of the transitional goodwill impairment
test,  the  Company  has determined that the fair value of each of the reporting
units  exceeded  their  carrying  amounts and, therefore, no goodwill impairment
existed  as  of  June  1,  2002.

The Company tested the goodwill for impairment as of May 31, 2003 and concluded,
based  on  actual  results for fiscal 2003 and projected cash flows from each of
the  reporting  units,  that  no  impairment  existed  as  of  May  31,  2003.



                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------

LONG-LIVED  ASSETS:

The  Company  periodically  reviews  the carrying value of all intangible assets
with  a  finite life (primarily capitalized software costs) and other long-lived
assets. If indicators of impairment exist, the Company compares the undiscounted
cash  flows  estimated  to  be  generated  by  those assets over their estimated
economic  life to the related carrying value of those assets to determine if the
assets  are  impaired.  If  the  carrying value of the asset is greater than the
estimated  undiscounted  cash  flows,  the carrying value of the assets would be
decreased  to  their fair value through a charge to operations. The Company does
not  have  any  long-lived  assets  it considers to be impaired. The Company has
determined  that  all of its intangible assets (other than goodwill) have finite
lives  and,  therefore,  the  Company  has  continued to amortize its intangible
assets.

STOCK  BASED  COMPENSATION

On  December  31, 2002, the Financial Accounting Standards Board ("FASB") issued
FASB  Statement  No.  148 (SFAS 148), Accounting for Stock-Based Compensation --
Transition  and  Disclosure,  amending  FASB  Statement  No.  123  (SFAS  123),
Accounting  for  Stock-Based  Compensation.  This  Statement  amends SFAS 123 to
provide alternative methods of transition for an entity that voluntarily changes
to  the  fair  value  based  method  of  accounting  for  stock-based  employee
compensation.  It  also  amends  the  disclosure provisions of that Statement to
require  prominent  disclosure  about  the  effects on reported net income of an
entity's  accounting  policy  decisions  with  respect  to  stock-based employee
compensation.  Finally,  SFAS  148  amends APB Opinion No. 28, Interim Financial
Reporting,  to  require  disclosure  about  those  effects  in interim financial
information.  The  Company  has complied with the disclosure provisions in these
financial  statements.

The Company has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board Opinion No.
25  (APB  25),  "Accounting  for  Stock  Issued  to  Employees" and provides the
required  pro  forma  disclosures  prescribed  by  SFAS  123  and  SFAS  148.

The  Company  has  adopted  the  disclosure-only  provisions  of  SFAS  123.  In
accordance  with  those  provisions,  the  Company  applies  APB  25 and related
interpretations  in accounting for its stock option plans and, accordingly, does
not  recognize  compensation cost if the exercise price is not less than market.
No  compensation  expense  was recognized during the three and six month periods
ended  November  30,  2003  or  2002.

The Company applies Accounting Principles Board Opinion No. 25,  "Accounting for
Stock  Issued  to  Employees," and related interpretations in accounting for its
stock option plans. Because the number of shares is known and the exercise price
of  options  granted  has  been  equal  to  fair  value  at  date  of  grant, no
compensation  expense  has  been recognized in the statements of operations. The
Company  has adopted the disclosure-only provisions of SFAS No. 123, "Accounting
for  Stock-Based  Compensation."  Had  compensation cost for the Company's stock
option  plans  been  determined  based  on  the fair value at the grant date for
awards  under these plans, consistent with the methodology prescribed under SFAS
123,  the  Company's net loss and loss per share would have approximated the pro
forma  amounts  indicated  below:






                                                                                
                                                                 Three Month Periods Ended November 30,
 (in thousands, except per share data)                                        2003      2002
---------------------------------------                                      ------   -------
Net income (loss) - as reported                                               $(246)  $(213)
Net income (loss) - pro forma                                                  (254)   (218)
Loss per share - diluted - as reported                                         (.02)   (.02)
Loss per share - diluted - pro forma                                           (.02)   (.02)







                                                                          
                                   SOFTECH, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                    ------------------------------------------------------

                                                            Six Month Periods Ended November 30,
 (in thousands, except per share data)                                2003         2002
--------------------------------------                               -------    --------
Net income (loss) - as reported                                     $(724)      $(745)
Net income (loss) - pro forma                                        (740)       (753)
Loss per share - diluted - as reported                               (.06)       (.06)
Loss per share - diluted - pro forma                                 (.06)       (.06)


FOREIGN  CURRENCY  TRANSLATION:

The functional currency of the Company's foreign operations (France, Germany and
Italy) is the local currency. As a result, assets and liabilities are translated
at  period-end  exchange  rates  and revenues and expenses are translated at the
average exchange rates. Adjustments resulting from translation of such financial
statements  are  classified  in  accumulated  other comprehensive income (loss).
Foreign  currency gains and losses arising from transactions are included in the
statement  of  operations.

USE  OF  ESTIMATES:

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and  disclosure of contingent assets and liabilities at the date of
the  financial  statements  and  the  reported  amounts of revenues and expenses
during  the  reporting  period.  The  most significant estimates included in the
financial statements are the valuation of long term assets including intangibles
(goodwill,  capitalized  software  and  other  intangible  assets), deferred tax
assets and the allowance for doubtful accounts. Actual results could differ from
those  estimates.

(C)     LIQUIDITY

The Company ended the first half of fiscal 2004 with cash of $306,000. Operating
activities  utilized  $540,000 of cash during the first six months of the fiscal
year.  The  net  loss adjusted for non-cash expenditures related to amortization
and  depreciation  together  with  a  decrease  in accounts receivable and other
assets generated cash of $985,000. The reduction in accounts payable and accrued
expenses  used  cash  of $680,000 and the cyclical reduction in deferred revenue
utilized  cash  of  $845,000  during  the  first  half  of  the  fiscal  year.

Although  the  Company  believes  its  current  cost  structure  together  with
reasonable  revenue  run  rates  based  on  historical performance will generate
positive  cash  flow in fiscal 2004, the current economic environment especially
in the manufacturing sector makes forecasting revenue based on historical models
difficult  and  somewhat  unreliable.

The  Company  believes  that  the  cash  on  hand  together  with cash flow from
operations  and  its  available  borrowings  under  its  credit facility will be
sufficient  for  meeting  its  liquidity and capital resource needs for the next
year.  At  November  30,  2003, the Company had available borrowings on its debt
facilities  of  approximately  $3.3  million.

(D)     Details  of  certain  balance  sheet  captions  are  as follows (000's):






                                             
                                November 30, 2003    May 31, 2003
                                   (unaudited)        (audited)
                                  -----------      ---------------

Property and equipment            $    3,851       $  3,827
Accumulated depreciation
  and amortization                    (3,609)        (3,521)
Property and equipment, net       $      242       $    306
                                  -----------      ---------

                         SOFTECH, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------

Common stock, $.10 par value      $    1,274       $  1,274
Capital in excess of par value        19,544         19,544
Accumulated deficit                  (22,495)       (21,771)
Cumulative translation adjustment       (313)          (234)
Less treasury stock                   (1,561)        (1,561)
Stockholders' deficit             $   (3,551)      $ (2,748)
                                  ---------       -----------


The  changes  from  May  31,  2003  in stockholders equity are due solely to the
changes  in  the  accumulated  deficit resulting from the first half net loss of
$724  and  the  first  half  foreign  currency  translation  adjustment  of $79.

(E)     LOSS  PER  SHARE

Basic  net  loss  per  share  is  computed  by  dividing  the  net  loss  by the
weighted-average number of common shares outstanding. Diluted net loss per share
is  computed  by  dividing net loss by the weighted-average number of common and
equivalent  dilutive  common  shares  outstanding. Options to purchase shares of
common  stock  have  been  excluded  from the denominator for the computation of
diluted  earnings  per  share  for all periods presented in fiscal 2004 and 2003
because their inclusion would be antidilutive. There were a total of 493,000 and
413,000  options  outstanding  at  November  30,  2003  and  2002, respectively.

(F)     COMPREHENSIVE  LOSS

The  Company's  comprehensive  loss  includes  accumulated  foreign  currency
translation adjustments and unrealized gain (loss) on marketable securities. For
the  three  and  six  month  periods  ended  November  30,  2003  and  2002, the
comprehensive  loss  was  as  follows  (000's):






                                                                        
                                                         Three Month Periods Ended November 30,
                                                              2003                2002
                                                          (unaudited)         (unaudited)
                                                         --------------       -------------

Net loss                                                  $   (246)            $   (213)
Changes in:
Foreign currency translation adjustment                        (45)                 (12)
Unrealized gain on marketable securities                        --                   97
                                                            --------             -------
Comprehensive loss                                        $   (291)            $   (128)
                                                           =========             =======


                                                           Six Month Periods Ended November 30,
                                                              2003                 2002
                                                           (unaudited)          (unaudited)
                                                         --------------       -------------

Net loss                                                  $   (724)             $  (745)
Changes in:
Foreign currency translation adjustment                        (79)                  12
Unrealized gain on marketable securities                        --                  119
                                                            --------            ---------
Comprehensive loss                                        $   (803)             $  (614)
                                                          ==========            =========


                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------

(G)     SEGMENT  INFORMATION

The  Company  operates  in  one  reportable  segment  and  is  engaged  in  the
development,  marketing,  distribution  and  support of CAD/CAM and Product Data
Management  computer  solutions.  The  Company's  operations  are  organized
geographically with foreign offices in France, Germany and Italy.  Components of
revenue  and  long-lived  assets  (consisting  primarily  of  intangible assets,
capitalized  software and property, plant and equipment) by geographic location,
are  as  follows  (000's):






                                    
                    Three Months Ended    Three Months Ended
                    November 30, 2003     November 30,  2002
Revenue:               (unaudited)            (unaudited)
                    --------------------   -------------------
North America       $              2,595  $            1,251
Asia                                 260                 279
Europe                               698                 904
Eliminations                        (243)               (208)
                    --------------------  -------------------
Consolidated Total  $              3,310  $             2,226
                    --------------------  -------------------







                                  
                    Six Months Ended    Six Months Ended
                       November 30,        November 30,
Revenue:                  2003                  2002
                      (unaudited)           (unaudited))
                    ------------------    -------------------
North America       $            4,906  $               2,300
Asia                               449                    469
Europe                           1,170                  1,409
Eliminations                      (272)                  (231)
                    ------------------  ---------------------
Consolidated Total  $            6,253  $               3,947
                    ------------------  ---------------------











                              
                      November 30,    May 31,
                         2003          2003
Long Lived Assets:   (unaudited)    (audited)
                    --------------  ----------
North America       $       13,752  $   15,017
Europe                         192         212
                                    ----------
Consolidated Total  $       13,944  $   15,229
                                    ----------






(H)     NEW  ACCOUNTING  PRONOUNCEMENTS:

In  August  2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations.  SFAS  No.  143  requires  entities  to  record the fair value of a
liability  for  an  asset  retirement  obligation  in  the period in which it is
incurred. When the liability is initially recorded, an entity capitalizes a cost
by  increasing  the  carrying  amount  of  the  long-lived asset. Over time, the
liability  is accreted to its present value each period and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability,  an  entity  either settles the obligation for its recorded amount or
incurs  a  gain  or  loss  upon settlement. The standard is effective for fiscal
years beginning after June 15, 2002. The adoption of SFAS No. 143 effective June
1,  2003  did not have a material effect on the financial position or results of
operations  of  the  Company.

In  April  2003,  FASB  issued Statement No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", which is effective for contracts
entered  into  or  modified  after  June  30,  2003.  This  Statement amends and
clarifies  financial accounting and reporting for derivative instruments and for
hedging activities for the purpose of improving financial reporting by requiring
contracts  with  comparable  characteristics  to be accounted for similarly. The
adoption  of  SFAS No. 149 effective July 1, 2003 did not have a material impact
on  the  Company's  financial  position  or  results  of  operations.

                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------

In  May  2003,  FASB issued Statement No. 150, "Accounting for Certain Financial
Instruments  with  Characteristics  of  both  Liabilities  and Equity", which is
effective  for financial instruments entered into or modified after May 31, 2003
and  otherwise  is  effective  at  the  beginning  of  the  first interim period
beginning  after  June 15, 2003. This Statement establishes standards for how an
issuer  classifies  and  measures  certain  financial  instruments  with
characteristics of both liabilities and equity. The adoption of SFAS No. 150 did
not  have  a  material  impact on the Company's financial position or results of
operations.

(I)     ACQUISITION

On December 18, 2002, the Company closed its all cash tender offer ("Offer") for
all  of  the  outstanding  shares  of  common  stock  of  Workgroup  Technology
Corporation,  a Delaware corporation ("WTC"), at a price of $2.00 per share. WTC
was a publicly traded company listed on the Over the Counter Bulletin Board. WTC
develops,  supports  and markets a software product to mechanical CAD ("Computer
Aided Design") users that allows them to manage their design models. Its product
offerings  are  compatible  with  SofTech's.

A  total  of  1,505,958 shares of WTC's common stock were tendered in the Offer,
which,  together with shares beneficially owned by SofTech prior to commencement
of the Offer, represented approximately 88.8% of WTC's outstanding common stock.

Subsequent  to  the  2003  fiscal  year  end, the Company exercised an option to
purchase  an  additional 220,000 shares of WTC thereby bringing its ownership of
WTC  to 90.02%. On June 18, 2003, the Company filed a short-form merger with the
State  of  Delaware  thereby  acquiring the 205,662 WTC shares that had not been
tendered  in  the  Offering. This action provides the beneficial owners of those
205,662 shares the right to present them to the Company and to receive $2.00 per
share  in  cash.

The  operating  results of WTC have been included in the Company's results since
the  acquisition  date.  Therefore the results of operations shown below for the
three  and  six  month  periods  ended  November 30, 2003 are the actual results
reported  in this Form 10-QSB. The unaudited pro forma results of operations for
the  three  and  six  month  periods ended November 30, 2002 assume that the WTC
acquisition  had  occurred  as  of  the  beginning  of  each  of  those periods.

The  following  unaudited  pro  forma  comparative  information is presented for
illustrative purposes only and is not necessarily indicative of the consolidated
results  of  operations  for  future  periods  or  that actually would have been
realized  had the Company and WTC been a consolidated entity as of the beginning
of the three and six month periods ended November 30, 2002 (in thousands, except
per  shared  data). The results of WTC for the three and six month periods ended
December   31,  2002 were combined with the results of SofTech for the three and
six month periods ended November 30, 2002 in the preparation of this comparative
information:






                                    
                       Three Months Ended November 30,
                               (unaudited)
                              2003     2002
                       -----------    -------
  Revenue              $      3,310   $3,932

  Net loss                     (246)    (574)

  Net loss per share:
  Basic                        (.02)    (.05)
  Diluted                      (.02)    (.05)





                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              ----------------------------------------------------




                                 
                       Six Months Ended November 30,
                              (unaudited)
                               2003      2002
                       -------------  --------
  Revenue              $      6,253   $ 7,209

  Net loss                     (724)   (1,817)

  Net loss per share:
  Basic                        (.06)     (.15)
  Diluted                      (.06)     (.15)


                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

ITEM 2         MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
               --------------------------------------------------

The  statements made below with respect to SofTech's outlook for fiscal 2004 and
beyond  represent "forward looking statements" within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act
of  1934  and are subject to a number of risks and uncertainties. These include,
among  other  risks and uncertainties, general business and economic conditions,
generating  sufficient  cash flow from operations to fund working capital needs,
continued  integration  of  acquired  entities,  potential  obsolescence  of the
Company's  technologies,  maintaining  existing relationships with the Company's
lenders,  successful  introduction and market acceptance of planned new products
and the ability of the Company to attract and retain qualified personnel both in
our  existing  markets  and  in  new  territories  in  an  extremely competitive
environment.

Critical  Accounting  Policies  and  Significant  Judgments  and  Estimates
---------------------------------------------------------------------------

The  Securities  and  Exchange Commission ("SEC") issued disclosure guidance for
"critical  accounting  policies." The SEC defines "critical accounting policies"
as those that require the application of management's most difficult, subjective
or  complex judgments, often as a result of the need to make estimates about the
effect  of  matters  that  are inherently uncertain and may change in subsequent
periods.

The  Company's  significant accounting policies are described in Note B to these
financial  statements.  The  Company  believes  that  the  following  accounting
policies  require  the application of management's most difficult, subjective or
complex  judgments:

     Valuation  of  Long-lived  and  Intangible  Assets
     --------------------------------------------------

We assess the recoverability of long-lived assets and intangible assets whenever
we  determine  that  events  or  changes  in  circumstances  indicate that their
carrying  amount  may not be recoverable. Our assessment is primarily based upon
our estimate of future cash flows associated with these assets. These valuations
contain  certain  assumptions  concerning  estimated  future revenues and future
expenses  for  each of our two reporting units. We have determined that there is
no  indication of impairment of any of our assets. However, should our operating
results deteriorate, we may determine that some portion of our long-lived assets
or  intangible  assets are impaired. Such determination could result in non-cash
charges to income that could materially affect our financial position or results
of  operations  for  that  period.

     Valuation  of  Goodwill
     -----------------------
Effective  June  1,  2002,  the  Company adopted the provisions of SFAS No. 142,
Goodwill  and  Other  Intangible  Assets.  This  statement affects the Company's
treatment  of goodwill and other intangible assets. This statement requires that
goodwill  existing  at  the date of adoption be reviewed for possible impairment
and that impairment tests be periodically repeated, with impaired assets written
down  to  fair value. Additionally, existing goodwill and intangible assets must
be  assessed  and  classified within the statement's criteria. Intangible assets
with  finite  useful  lives  will  continue  to be amortized over those periods.
Amortization  of goodwill and intangible assets with indeterminable lives ceased
as  of  June  1,  2002

The  Company  completed  the  first step of the transitional goodwill impairment
test  during  the  three  months  ended November 30, 2002 based on the amount of
goodwill  as  of the beginning of fiscal year 2003, as required by SFAS No. 142.
Based  on  the results of the first step of the transitional goodwill impairment
test,  the  Company  has determined that the fair value of each of the reporting
units  exceeded  their  carrying  amounts and, therefore, no goodwill impairment
existed  as  of  June  1, 2002. As a result, the second step of the transitional
goodwill  impairment  test  was not required to be completed. The Company tested
the  goodwill  for  impairment  at  May  31,  2003 and concluded based on actual
results  for  fiscal  2003  and  projected cash flows from each of the reporting
units  that  no  impairment  existed  as  of  May  31, 2003. The Company will be
required  to  continue to perform a goodwill impairment test on an annual basis.


                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
               --------------------------------------------------

     Estimating  Allowances  for  Doubtful  Accounts  Receivable
     -----------------------------------------------------------

We  perform ongoing credit evaluations of our customers and adjust credit limits
based  upon  payment  history  and  the customer's current credit worthiness, as
determined  by  our  review of their current credit information. We continuously
monitor collections and payments from our customers and maintain a provision for
estimated  credit  losses  based upon our historical experience and any specific
customer  collection  issues  that  we have identified. While such credit losses
have  historically  been within our expectations and the provisions established,
we  cannot  guarantee  that  we will continue to experience the same credit loss
rates  that  we  have  in  the  past.  A  significant change in the liquidity or
financial  position  of  any  of our significant customers could have a material
adverse  effect  on the collectibility of our accounts receivable and our future
operating  results.

     Valuation  of  Deferred  Tax  Assets
     ------------------------------------

We regularly evaluate our ability to recover the reported amount of our deferred
income  taxes  considering  several  factors,  including  our  estimate  of  the
likelihood  of  the Company generating sufficient taxable income in future years
during  the  period  over  which  temporary  differences  reverse. The Company's
deferred  tax  assets  are  currently  fully  reserved.

     Results  of  Operations
     -----------------------
On December 18, 2002, the Company closed its all cash tender offer ("Offer") for
all  of  the  outstanding  shares  of  common  stock  of  Workgroup  Technology
Corporation  as  more fully described above and in our previous SEC filings. The
operating  results  of WTC have been included in the Company's results since the
acquisition  date.  This  acquisition  had  a  material  positive  impact on the
Company's  operating  results  and the acquisition  is  the  primary  reason for
the  changes  in revenue and cash flow for the three and six month periods ended
November  30,  2003  (which  include WTC) as compared to the three and six month
periods  ended  November  30,  2002  (which  exclude  WTC).

Revenue  for  the  three  and six month periods ended November 30, 2003 was $3.3
million  and  $6.3  million,  respectively, as compared to $2.2 million and $3.9
million  for  the  same  periods  in  the  prior fiscal year. This represents an
increase  of  $1.1  million  or 48.7% for fiscal 2004 Q2 as compared to the same
period  in  fiscal  2003  and an increase of $2.3 million or 58.4% for the first
half  of  fiscal  2004 compared to the same period in fiscal 2003. WTC generated
approximately  $1.5  million  and $2.8 million of revenue, respectively, for the
three  and  six  month  periods  ended  November  30,  2003 thereby offsetting a
decrease  in  the revenue of the Company's CAD and CAM products of about 17% and
22%  for  the three and six month periods ended November 30, 2003 as compared to
the  same  periods  in  the  prior  year.  This  decrease was due primarily to a
depressed  capital  spending  environment  especially  for  the  manufacturing
marketplace  that  uses  the  Company's  software  products.

Product  revenue for the three and six month periods ended November 30, 2003 was
approximately  $868,000  and $1.5 million, respectively, as compared to $837,000
and  $1.1 million for the same periods in the prior fiscal year. This represents
an increase of $31,000 or 3.7% for fiscal 2004 Q2 as compared to the same period
in  fiscal  2003  and  an increase of $.3 million or 27.8% for the first half of
fiscal  2004  compared  to  the  same  period  in  fiscal  2003.  WTC  generated
approximately  $.4 million and $.7 million of product revenue, respectively, for
the three and six month periods ended November 30, 2003. The product revenue for
SofTech's  non-WTC  product  offerings declined by approximately 46.8% and 33.8%
for  the  three and six month periods ended November 30, 2003 as compared to the
same  periods  in  2002  due  to  the  aforementioned depressed capital spending
market. In this kind of environment, orders for new product are often delayed or
reduced  significantly  as  companies  adjust  their  capital  expenditures.

Service  revenue for the three and six month periods ended November 30, 2003 was
$2.4  million  and  $4.8  million, respectively, as compared to $1.4 million and
$2.8  million for the same period in fiscal 2003. This represents an increase of
$1.1  million  or  75.8%  for  fiscal  2004 Q2 as compared to the same period in
fiscal  2003  and  an  increase  of  $2.0 million or 70.8% for the first half of
fiscal  2004  compared  to  the  same  period  in  fiscal  2003.  WTC  generated
approximately  $1.1  million  and $2.0 million of service revenue, respectively,
for  the  three and six month periods ended November 30, 2003 thereby accounting
for  all  of  the  increase  in  service revenue. Despite the difficult economic
situation  noted above, generally our customers continue to purchase maintenance
support  contracts.  This  is  the  reason


                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
               --------------------------------------------------

that  SofTech's non-WTC service revenue remained flat despite the declines noted
above  for  product  revenue.

Revenue generated in the U.S. accounted for 71% and 74% of total revenue for the
three  and  six month periods ended November 30, 2003, respectively, up from 47%
and  52%  of  total  revenue  for the same periods in the previous year. Revenue
generated  in Europe for the three and six month periods ended November 30, 2003
was  21%  and  19% of total revenue, respectively, as compared to 40% and 36% of
total  revenue for the same period in fiscal 2003. Revenue generated in Asia for
the  three  and six month periods ended November 30, 2003 was 8% and 7% of total
revenue,  respectively, as compared to 13% and 12% of total revenue for the same
period  in fiscal 2003. Revenue generated in the U.S. increased by 107% and 113%
for  the  three and six month periods ended November 30, 2003 as compared to the
same  periods in the prior fiscal year. Revenue generated in Europe decreased by
23%  and  17%  while  revenue generated in Asia decreased 7% and 4% for the same
periods.  WTC's  products  are sold primarily in the U.S. The acquisition of WTC
was  responsible  for  the  increases  in  the  U.S.  revenue  noted  above.

Gross  margin  as a percentage of revenue was 84.8% and 84.0 % for the three and
six  month  periods  ended November 30, 2003, respectively, as compared to 95.8%
and  95.7% for the same periods in fiscal 2003. This decrease in gross margin as
a  percent  of  revenue  in fiscal 2004 as compared to the same period in fiscal
2003 is due to WTC's consulting services which make up approximately 6% of total
revenue.  The  consulting  revenue  generated  is  a  labor intensive effort and
therefore  has  a  much  lower  margin  as  compared  to  the margin on software
maintenance  revenue.  It  is  the Company's expectation that consulting revenue
will  be  an  important element of our business in the future and that the gross
margin  experience  of  the  current  quarter  will  be  the  norm.

Research and development expenses ("R&D") were $768,000 and $1.5 million for the
three  and  six month periods ended November 30, 2003, respectively, as compared
to  $362,000  and  $696,000  for the same periods in the prior fiscal year. This
represents  an  increase of $406,000 or 112.2% for fiscal 2004 Q2 as compared to
the  same  period  in  fiscal 2003 and an increase of $845,000 or 121.4% for the
first  half  of  fiscal  2004  compared  to  the same period in fiscal 2003. The
increase  in  R&D  expenditures  is  due  primarily  to  the  addition  of WTC's
development  engineering  group  which  has  increased  our R&D staff from 14 in
fiscal  2003  to  28  in  fiscal  2004.

Selling, general and administrative ("SG&A") expenses were $1.4 million and $2.7
million,  respectively,  for  the three and six month periods ended November 30,
2003  as compared to $1.3 million and $2.5 million for the same period in fiscal
2003.  This represents an increase of $.1 million  or 9.2% for fiscal 2004 Q2 as
compared  to  the  same  period in fiscal 2003 and an increase of $.2 million or
9.1%  for  the  first  half of fiscal 2004 compared to the same period in fiscal
2003.  While  the acquisition of WTC has increased the headcount in sales, sales
support,  marketing  and  administration  by  approximately 30%, the Company has
taken  cost  cutting actions throughout fiscal 2003 and into the current year to
reduce  its  infrastructure  costs  and  gain  synergies  in combining these two
businesses.  These  actions  have  offset  the  increased  headcount.

The  non-cash  expenses  related to the amortization of capitalized software and
other  intangible assets were $.6 million and $1.2 million for the three and six
month periods ended November 30, 2003 as compared to $.4 million and $.8 million
for  the  same periods in fiscal 2003. The increase of approximately $.2 million
per quarter in fiscal 2004 compared to fiscal 2003 is related to the capitalized
software  and other identifiable intangible assets of WTC totaling approximately
$2.7  million  that are being written off on a straight line basis over 3 years.

Interest  expense  for  the  three and six month periods ended November 30, 2003
were  approximately $249,000 and $502,000, respectively, as compared to $291,000
and  $576,000 for the same periods in fiscal 2003. This represents a decrease of
$42,000  or  14.4%  for  the  second quarter of fiscal 2004 compared to the same
period  in  the  previous fiscal year and a decrease of $74,000 or 12.8% for the
six  month  period  ended  November  30, 2003 compared to the same period in the
prior  fiscal  year.  The  average  borrowings  increased to approximately $14.3
million  during  the  current  quarter as compared to $12.1 million for the same
period  in  fiscal  2003, however, the average interest rate on those borrowings
decreased  to about 7.0% in the current quarter from 9.6% for the same period in
fiscal  2003.  The  average  borrowings increased to approximately $14.3 million
during  the  first half of fiscal 2004 as compared to $11.7 million for the same
period  in  fiscal  2003,  however,  average  the  interest  rate  on  those

                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
               --------------------------------------------------

borrowings  decreased  to  about  7.0%  during  the first half of fiscal 2004 as
compared  to  9.8%  for  the same period in fiscal 2003. The increase in average
borrowings  is  a  direct  result  of  the  funds  borrowed  to complete the WTC
acquisition.

The  net  loss  for the three and six month periods ended November 30, 2003 were
$(246,000) and $(724,000), respectively, as compared to a net loss of $(213,000)
and  $(745,000) for the same period in the prior fiscal year. The loss per share
for  each of the three month periods ended November 30, 2003 and 2002 was $(.02)
and  for  each  of  the  six  month periods ended November 30, 2003 and 2002 was
$(.06).

Capital  Resources  and  Liquidity
----------------------------------
The Company ended the first half of fiscal 2004 with cash of $306,000. Operating
activities  utilized  $540,000 of cash during the first six months of the fiscal
year.  The  net  loss adjusted for non-cash expenditures related to amortization
and  depreciation  together  with  a  decrease  in accounts receivable and other
assets generated cash of $985,000. The reduction in accounts payable and accrued
expenses  used  cash  of $680,000 and the cyclical reduction in deferred revenue
utilized  cash  of  $845,000  during  the  first  half  of  the  fiscal  year.

Although  the  Company  believes  its  current  cost  structure  together  with
reasonable  revenue  run  rates  based  on  historical performance will generate
positive  cash  flow in fiscal 2004, the current economic environment especially
in the manufacturing sector makes forecasting revenue based on historical models
difficult  and  somewhat  unreliable.

The  Company  believes  that  the  cash  on  hand  together  with cash flow from
operations  and  its  available  borrowings  under  its  credit facility will be
sufficient  for  meeting  its  liquidity and capital resource needs for the next
year.  At  November  30,  2003, the Company had available borrowings on its debt
facilities  of  approximately  $3.3  million.

FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS

The  Company's  business  is  subject to many uncertainties and risks. This Form
10-QSB  also  contains  certain forward-looking statements within the meaning of
the  Private  Securities  Reform  Act  of 1995. The Company's future results may
differ  materially  from  its  current  results  and actual results could differ
materially from those projected in the forward looking statements as a result of
certain  risk factors, including but not limited to those set forth below, other
one-time  events  and other important factors disclosed previously and from time
to  time  in  the  Company's  other  filings  with  the  SEC.

Our  quarterly  results  may  fluctuate.
---------------------------------------

The  Company's  quarterly revenue and operating results are difficult to predict
and  may  fluctuate significantly from quarter to quarter. Our quarterly revenue
may  fluctuate  significantly  for  several  reasons,  including: the timing and
success of introductions of our new products or product enhancements or those of
our  competitors;  uncertainty  created  by changes in the market; difficulty in
predicting  the  size  and timing of individual orders; competition and pricing;
and  customer  order  deferrals  as  a  result  of  general  economic  decline.
Furthermore,  the  Company  has  often  recognized  a substantial portion of its
product  revenues in the last month of a quarter, with these revenues frequently
concentrated  in  the  last  weeks  or  days  of a quarter. As a result, product
revenues in any quarter are substantially dependent on orders booked and shipped
in  the latter part of that quarter and revenues from any future quarter are not
predictable  with  any  significant  degree  of  accuracy.  We  typically do not
experience  order  backlog.  For these reasons, we believe that period-to-period
comparisons  of  its  results  of  operations are not necessarily meaningful and
should  not  be  relied  upon  as  indications  of  future  performance.

We  may not generate positive cash flow in the future.
------------------------------------------------------

During  fiscal years 1998 through 2001 we generated significant cash losses from
operations.  The  Company took aggressive cost cutting steps and reorganized its
operations  at  the beginning of fiscal 2002. These actions have greatly reduced
our  fixed costs and resulted in positive cash flow from operations for the last
two  fiscal  years. It is our expectation that we can continue to improve on our
recent  success,  however,  there  can  be  no  assurances that the Company will
continue  to  generate  positive  cash  in  the  future.


                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
               --------------------------------------------------

Continued  decline  in  business  conditions  and  Information  Technology  (IT)
--------------------------------------------------------------------------------
spending  could  cause  further  decline  in  revenue.
------------------------------------------------------

The level of future IT spending remains very uncertain as does the prognosis for
an  economic  recovery  in the manufacturing sector. If IT spending continues to
decline  and  the  manufacturing  sector  continues  to  experience  economic
difficulty,  the  Company's  revenues  could  be  adversely  impacted.

The  Company  is  dependent  on its lender for continued support.
-----------------------------------------------------------------

We have a very strong relationship with our sole lender, Greenleaf Capital. They
currently  represent  our  sole source of financing and it is our belief that it
would  be  difficult  to find alternative financing sources in the event whereby
the  relationship  with  Greenleaf  changed.

The  continued integration of WTC may experience difficulty.
------------------------------------------------------------

Since acquiring WTC in December 2002, much progress has been made in integrating
our  operations,  reducing redundant functions and consolidating our facilities.
The strategy includes more closely integrating our technologies and offering our
combined  customer  base these solutions. The strategy also includes translating
ProductCenter  for  users other than the U.S. English speaking market. There can
be  no assurance that this continued integration of our technologies or offering
ProductCenter  outside  the  U.S.  will  be  successful.

NEW  ACCOUNTING  PRONOUNCEMENTS:

On  December  31, 2002, the Financial Accounting Standards Board ("FASB") issued
FASB  Statement  No.  148 (SFAS 148), Accounting for Stock-Based Compensation --
Transition  and  Disclosure,  amending  FASB  Statement  No.  123  (SFAS  123),
Accounting  for  Stock-Based  Compensation.  This  Statement  amends SFAS 123 to
provide alternative methods of transition for an entity that voluntarily changes
to  the  fair  value  based  method  of  accounting  for  stock-based  employee
compensation.  It  also  amends  the  disclosure provisions of that Statement to
require  prominent  disclosure  about  the  effects on reported net income of an
entity's  accounting  policy  decisions  with  respect  to  stock-based employee
compensation.  Finally,  SFAS  148  amends APB Opinion No. 28, Interim Financial
Reporting,  to  require  disclosure  about  those  effects  in interim financial
information.  The  Company  has complied with the disclosure provisions in these
financial  statements.

The Company has chosen to continue to account for stock-based compensation using
the intrinsic value method prescribed in Accounting Principles Board Opinion No.
25  (APB  25),  "Accounting  for  Stock  Issued  to  Employees" and provides the
required  pro  forma  disclosures  prescribed  by  SFAS  123  and  SFAS  148.

The  Company  has  adopted  the  disclosure-only  provisions  of  SFAS  123.  In
accordance  with  those  provisions,  the  Company  applies  APB  25 and related
interpretations  in accounting for its stock option plans and, accordingly, does
not  recognize  compensation cost if the exercise price is not less than market.
No  compensation  expense  was recognized during the three and six month periods
ended  November  30,  2003  or  2002.

In  August  2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations.  SFAS  No.  143  requires  entities  to  record the fair value of a
liability  for  an  asset  retirement  obligation  in  the period in which it is
incurred. When the liability is initially recorded, an entity capitalizes a cost
by  increasing  the  carrying  amount  of  the  long-lived asset. Over time, the
liability  is accreted to its present value each period and the capitalized cost
is depreciated over the useful life of the related asset. Upon settlement of the
liability,  an  entity  either settles the obligation for its recorded amount or
incurs  a  gain  or  loss  upon settlement. The standard is effective for fiscal
years beginning after June 15, 2002. The adoption of SFAS No. 143 effective June
1,  2003  did not have a material effect on the financial position or results of
operations  of  the  Company.

In  April  2003,  FASB  issued Statement No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities", which is effective for contracts
entered  into  or  modified  after  June  30,  2003.  This  Statement amends and
clarifies  financial accounting and reporting for derivative instruments and for
hedging activities for the purpose of improving financial reporting by requiring
contracts  with  comparable  characteristics  to be accounted for similarly. The
adoption  of  SFAS No. 149 effective July 1, 2003 did not have a material impact
on  the  Company's  financial  position  or  results  of  operations.

                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
               --------------------------------------------------

In  May  2003,  FASB issued Statement No. 150, "Accounting for Certain Financial
Instruments  with  Characteristics  of  both  Liabilities  and Equity", which is
effective  for financial instruments entered into or modified after May 31, 2003
and  otherwise  is  effective  at  the  beginning  of  the  first interim period
beginning  after  June 15, 2003. This Statement establishes standards for how an
issuer  classifies  and  measures  certain  financial  instruments  with
characteristics of both liabilities and equity. The adoption of SFAS No. 150 did
not  have  a  material  impact on the Company's financial position or results of
operations.


                         SOFTECH, INC. AND SUBSIDIARIES
                         ------------------------------


Item  3.  Controls  and  Procedures
-----------------------------------

The  Company's  Chief  Operating  Officer  is  responsible  for establishing and
maintaining disclosure controls and procedures for the Company. Such officer has
concluded  (based  upon  his evaluation of these controls and procedures as of a
date  within 90 days of the filing of this report) that the Company's disclosure
controls  and procedures are effective to ensure that information required to be
disclosed  by  the Company in this report is accumulated and communicated to the
Company's management, including its principal executive officers as appropriate,
to  allow  timely  decisions  regarding  required  disclosure.

The Certifying Officer also has indicated that there were no significant changes
in  the  Company's  internal  controls or other factors that could significantly
affect  such controls subsequent to the date of their evaluation, and there were
no  corrective  actions  with  regard  to  significant deficiencies and material
weaknesses.


PART  II.  OTHER  INFORMATION
-----------------------------

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


(b)     Reports  on  Form  8-K

                 None.

                                   SIGNATURES

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

                                           SOFTECH,  INC.

Date:   January  14,  2004                /s/  Joseph  P.  Mullaney
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                                          Joseph  P.  Mullaney
                                          President
                                          Chief  Operating  Officer