INFINITY FINANCIAL TECHNOLOGY INC, 424B4, 1996-10-25

INFINITY FINANCIAL TECHNOLOGY INC
424B4, 1996-10-25
PREPACKAGED SOFTWARE

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<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
Registration Statement No. 333-8647

LOGO 2,690,000 SHARES

INFINITY FINANCIAL TECHNOLOGY, INC.
COMMON STOCK
(PAR VALUE $.001 PER SHARE)
----------------------

Of the 2,690,000 shares of Common Stock offered, 2,152,000 shares are being
offered hereby in the United States and 538,000 shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and the aggregate underwriting discount per share are identical
for both offerings. See "Underwriting."

Of the 2,690,000 shares of Common Stock offered, 2,000,000 shares are being
sold by the Company and 690,000 shares are being sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
shares being sold by the Selling Stockholders. See "Principal and Selling
Stockholders."

Prior to the offerings, there has been no public market for the Common
Stock of the Company. For factors considered in determining the initial public
offering price, see "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "INFN."
----------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------

<TABLE>
<CAPTION>
PROCEEDS TO
INITIAL PUBLIC UNDERWRITING PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) COMPANY(2) STOCKHOLDERS
---------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
Per Share................. $16.00 $1.12 $14.88 $14.88
Total(3).................. $43,040,000 $3,012,800 $29,760,000 $10,267,200
</TABLE>

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

(1) The Company and the Selling Stockholders have agreed to indemnify the
Several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933.

(2) Before deducting estimated expenses of $900,000 payable by the Company.

(3) Certain Selling Stockholders have granted the U.S. Underwriters an option
for 30 days to purchase up to an additional 322,800 shares at the initial
public offering price per share, less the underwriting discount, solely to
cover over-allotments. Additionally, certain Selling Stockholders have
granted the International Underwriters a similar option with respect to an
additional 80,700 shares as part of the concurrent international offering.
If such options are exercised in full, the total initial public offering
price, underwriting discount and proceeds to Selling Stockholders will be
$49,496,000, $3,464,720 and $16,271,280, respectively. See "Underwriting."
----------------------

The shares offered hereby are offered severally by the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about October 30, 1996, against payment therefor in immediately available
funds.

GOLDMAN, SACHS & CO.

DEUTSCHE MORGAN GRENFELL

ROBERTSON, STEPHENS & COMPANY
----------------------

The date of this Prospectus is October 25, 1996.
<PAGE> 2

[INSIDE FRONT COVER]

The Company intends to furnish to its stockholders annual reports
containing audited financial statements and quarterly reports containing
unaudited interim financial information for the first three fiscal quarters of
each fiscal year of the Company.
------------------------

IN CONNECTION WITH THE OFFERINGS, THE U.S. UNDERWRITERS AND THE
INTERNATIONAL UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A LEVEL ABOVE
THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Infinity(R) and FIN++(R) are registered trademarks of the Company. This
Prospectus contains other product names and trade names and trademarks of the
Company and of other organizations.
<PAGE> 3

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements and the Notes thereto
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus (i) gives effect to the reincorporation of the
Company in Delaware effected in September 1996, (ii) reflects the conversion of
all outstanding shares of Preferred Stock into shares of Common Stock effective
automatically upon the closing of the Offerings, (iii) assumes no exercise of
the U.S. Underwriters' or International Underwriters' over-allotment options and
(iv) has been adjusted to reflect a 2-for-1 stock split effected in September
1996.

THE COMPANY

Infinity Financial Technology, Inc. ("Infinity" or the "Company") develops,
markets and supports object-oriented, client/server platform and solutions
software for financial trading and risk management. Founded in 1989, Infinity
currently has more than 35 customers around the world, consisting primarily of
large banks and other financial institutions with sophisticated trading
operations and risk management needs.

Infinity's primary product is the Infinity Platform, which provides
customers with a foundation to rapidly develop, deploy and modify trading and
risk management systems in response to the changing requirements of the
marketplace. The Infinity Platform allows financial institutions and
corporations to build applications to process, store, integrate and analyze
their traded instrument portfolios. Infinity also offers Infinity Derivatives,
solutions software for derivatives trading, which enables the customer to
integrate "front-office" trading activities such as pricing, deal capture and
position-keeping with "back-office" operations such as trade confirmations,
payments processing and general ledger accounting. Infinity has introduced and
plans to release in the second half of 1996 Infinity RiskView, which is designed
to facilitate customers' development of risk management systems. These solutions
are built with the Infinity Platform and are designed to work together with the
Infinity Platform to automate a range of transaction processing and decision
support activities. The Infinity Platform is characterized by an open systems,
client/server architecture running on the UNIX and Windows NT operating systems
and on leading relational database management systems from Oracle Corporation
("Oracle") and Sybase, Inc. ("Sybase").

The demand for trading and risk management systems has grown significantly
over the past several years. Increases in trading volumes and the complexity of
financial instruments have led to a fundamental shift in how financial assets
are managed: a shift to value management, in which mark-to-market accounting and
value at risk methodologies are used to value traded instrument portfolios and
quantify their associated risks. At the same time, various regulators worldwide
are adopting more stringent reporting requirements. Often, within a single
institution, several different computer systems capture and process trading
portfolios. These systems frequently are located in multiple trading centers,
use different data sets and database technologies and run on a variety of
hardware platforms and operating systems. Integrating these data is a difficult
technological and operational undertaking. A number of high profile financial
crises -- Orange County, California, Baring Brothers and Sumitomo
Corporation -- have highlighted the importance of effective risk management
systems, as well as rigorous management and oversight of trading operations.
These factors, among others, are presenting significant challenges that need to
be met in order to process high volumes of complex financial instruments in a
secure environment and to achieve comprehensive, firmwide risk management.

In response to these challenges, financial institutions worldwide are
investing financial and other resources in the development and acquisition of
trading and risk management technology. The Tower Group, a market research and
consulting firm, estimates that worldwide internal and external expenditures on
hardware, software and services for risk management systems totaled more than
$3.0 billion in 1994 and are expected to grow to $4.3 billion by 2000.
Traditionally, financial

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institutions have licensed off-the-shelf solutions where they exist and have
internally developed those systems that are not readily available or that
require a unique understanding of the institution's needs. The Company believes
that its strategy and products uniquely position it to take advantage of these
trends.

The Company's objective is to establish itself worldwide as the leading
provider of trading and risk management platform and solutions software. In
order to meet this goal, Infinity's strategy is to establish the Infinity
Platform as an industry standard, expand the Company's product offerings, target
initial sales of new products to sophisticated customers, broaden its customer
base geographically and beyond the banking industry, develop and leverage
strategic business partners and integrate sophisticated financial engineering
with advanced information technology. The Company sells its products through a
direct sales force located in offices in New York, London, Paris and Tokyo as
well as its headquarters in Mountain View, California. The Company also has
full-time support personnel in Frankfurt, Sydney and Toronto. Infinity has
focused on developing strategic third-party relationships with companies that
provide consulting, software development and implementation services. These
relationships enable the Company to leverage the technical expertise of its
strategic partners, access an additional sales and marketing channel and further
enhance its efforts to establish the Infinity Platform as an industry standard.

The Company was incorporated in California in 1989 and was reincorporated
in Delaware in 1996. The Company's headquarters are located at 640 Clyde Court,
Mountain View, California 94043, and its telephone number is (415) 940-6100.

RISK FACTORS

For a discussion of considerations relevant to an investment in the Common
Stock, see "Risk Factors."

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<PAGE> 5

THE OFFERINGS

<TABLE>
<S> <C>
Common Stock offered by the Company.................. 2,000,000 shares
Common Stock offered by the Selling Stockholders..... 690,000 shares
Common Stock to be outstanding after the Offerings... 18,008,608 shares(1)
Nasdaq National Market symbol........................ INFN
Use of proceeds...................................... For general corporate purposes,
including primarily working capital
and possible acquisitions.
</TABLE>

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
------------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
INCOME DATA:
Revenues...................... $ 1,246 $ 2,597 $ 5,783 $12,595 $24,738 $11,292 $17,947
Income from operations........ 261 43 980 2,124 5,676 2,940 4,061
Net income.................... 207 46 717 1,641 3,449 1,789 2,483
Series B preferred stock
redemption.................. -- -- -- -- (1,276) -- --
Net income attributable to
common stockholders......... 207 46 717 1,641 2,173 1,789 2,483
Net income
per share(2)................ $ 0.01 $ 0.00 $ 0.06 $ 0.10 $ 0.12 $ 0.10 $ 0.13
Net income per share before
Series B preferred stock
redemption.................. $ 0.01 $ 0.00 $ 0.06 $ 0.10 $ 0.19 $ 0.10 $ 0.13
Shares used to compute
net income per share(3)..... 15,852 15,649 13,008 16,354 18,312 17,853 18,831
</TABLE>

<TABLE>
<CAPTION>
JUNE 30, 1996
--------------------------
CONSOLIDATED BALANCE SHEET DATA: ACTUAL AS ADJUSTED(4)
------- --------------
<S> <C> <C>
Cash and cash equivalents........................................ $ 1,905 $ 30,765
Working capital.................................................. 6,053 34,913
Total assets..................................................... 17,999 46,859
Long-term portion of capital lease obligations................... 155 155
Stockholders' equity............................................. 8,387 37,247
</TABLE>

- ---------------
(1) Based on the number of shares of Common Stock outstanding (on a pro forma
basis to give effect to the conversion of all shares of Preferred Stock upon
completion of the offerings) as of June 30, 1996. Excludes (i) 3,478,284
shares issuable upon exercise of options outstanding as of June 30, 1996
having a weighted average exercise price of $1.69 per share under the
Company's 1989 Stock Option Plan and 1993 Stock Incentive Plan, (ii) 353,000
shares issuable upon exercise of options granted from July 1, 1996 to
October 24, 1996 and (iii) 1,145,630 additional shares authorized for
issuance under the Company's 1993 Incentive Stock Plan, 1996 Stock Incentive
Plan and 1996 Employee Stock Purchase Plan (collectively the "Stock Plans").
See "Management -- Stock Plans" and Notes 6 and 8 of Notes to Consolidated
Financial Statements.

(2) Net income per share for 1995 reflects a decrease in net income attributable
to common stockholders as a result of the redemption of the Series B
Preferred Stock in November 1995. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

(3) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing net
income per share.

(4) Adjusted to reflect the sale of 2,000,000 shares offered by the Company
hereby and the application of the estimated net proceeds therefrom.

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RISK FACTORS

In addition to the other information contained in this Prospectus,
investors should carefully consider the following risk factors in evaluating an
investment in the Common Stock offered hereby. This Prospectus contains certain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from the results discussed in the
forward-looking statements as a result of certain of the risk factors set forth
below and elsewhere in this Prospectus.

SIGNIFICANT POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

Although the Company has experienced increased revenues and has been
profitable in each of its last five fiscal years, the Company does not believe
prior growth rates are sustainable or indicative of future operating results,
and there can be no assurance that the Company will be able to sustain revenue
growth or maintain profitability in the future. In addition, the Company intends
to commit substantial financial resources to expanding its business, including
its sales and support operations and product development infrastructure. As a
result, the Company does not expect to sustain the current level of operating
margins in future periods.

Individual licenses of the Company's products typically account for large
dollar amounts relative to quarterly revenues, so that the timing of one license
can cause substantial shifts of revenue and profits between accounting periods.
Because of the large dollar commitment and the mission critical function that
the Company's products address, approval at senior levels within customer
organizations is frequently required for a purchase of the Company's products.
The Company's quarterly revenues are dependent upon a small number of new
individual product sales, and any downturn in a potential customer's business,
or any loss or delay of individual orders for any other reason, would have a
significant impact on the Company's revenues and profitability on a quarterly
and annual basis. For example, in the quarter ended June 30, 1996, revenues
included sales to existing customers and six new customers. The Company
historically has operated with little backlog because its products are generally
shipped as orders are received. As a result, license revenues in any quarter
depend on the volume and timing of, and the Company's ability to fill, orders
received in that quarter. In addition, a relatively high percentage of the
Company's expenses is fixed in the short term because the Company's expense
levels are based, in part, on its expectations as to future revenues. As a
result, if revenues fall below expectations, operating margins will be adversely
affected. In addition, historically the Company has experienced significant
renewal rates of maintenance contracts; however, many customers have licensed
the source code of the Company's products and certain customers have chosen to
terminate the maintenance contracts with the Company due to their ability to
maintain the Company's products. Furthermore, the Company's service revenues
have been dependent upon a relatively small number of new and existing customers
in each quarter. Based on these and other factors, there can be no assurance
that previous renewal rates and prices charged by the Company for maintenance,
and corresponding revenues, will continue in the future. See "-- Lengthy Sales
Cycle."

The Company's revenues and operating results have fluctuated significantly
in the past, and are likely to continue to fluctuate significantly in the
future, on an annual and quarterly basis. Fluctuations in the Company's revenues
and results of operations may result from a number of factors, many of which are
beyond the Company's control, including (i) the relatively long sales cycle of
three months to over one year for the Company's software products, (ii) the
timing and size of the Company's individual license transactions, and, in
particular, the dependence of the Company's revenues in any quarter on the sale
of a limited number of large dollar licenses, (iii) the Company's typical
recognition of a significant portion of its quarterly revenues in the last
month, weeks or days of the quarter, (iv) the relatively high percentage of
total revenues derived from product revenues versus service revenues, (v) the
timing of the introduction of new products or product enhancements by the
Company and its competitors, (vi) the deferral of significant revenues until
completion or acceptance of certain customized portions of software required by
any individual license transaction, (vii) changes in customer budgets, (viii)
seasonality of technology purchases

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by customers, (ix) the mix of revenues derived from the Company's direct sales
force and various distribution and marketing channels and between domestic and
international customers, (x) currency exchange rate fluctuations, (xi) changes
in applicable government regulations, (xii) the untimely loss of key sales
personnel, (xiii) changes in relationships with strategic partners and (xiv)
general economic conditions, particularly those which affect the Company's
targeted customer base.

The Company's quarterly revenues are also subject to certain seasonal
fluctuations, particularly in the third quarter when reduced economic activity
outside North America during the summer months can negatively affect the
Company's licensing revenues. This and other seasonal factors, which the Company
believes are common to the software industry, could cause the Company's revenues
and profitability to fluctuate between quarters.

Due to the foregoing and other factors, the Company believes that its
quarterly and annual revenues, expenses and operating results could vary
significantly in the future and that period-to-period comparisons should not be
relied upon as indications of future performance. Because of the above factors,
it is possible that the Company's operating results will be below the
expectations of stock market analysts and investors in some future quarter,
which would have a severe adverse effect on the price of the Company's stock.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

DEPENDENCE ON EVOLVING MARKET FOR FINANCIAL TRADING AND RISK MANAGEMENT
SOFTWARE; NO ASSURANCE OF MARKET ACCEPTANCE.

To date, the Company has derived substantially all of its revenue from the
sale of software products for financial trading and risk management. The Company
expects that revenues from such sales will account for substantially all of its
revenues for the foreseeable future. The market for financial trading and risk
management software is rapidly evolving, and the Company's operating results and
opportunity for growth in the future are highly dependent on acceptance of its
products in and the continued growth of this market. As is the case in new and
evolving industries, demand and market acceptance for recently introduced
products are subject to a high level of uncertainty and risk. A decline or
slow-down in growth in the market for, or market acceptance of, such products as
a result of increased competition, technological or regulatory change, a banking
and financial services industry downturn or other factors would have a material
adverse effect on the Company's business, financial condition and results of
operations. In particular, because the Company's customer base has historically
been limited to larger commercial banks and financial institutions, the Company
would be particularly vulnerable to a downturn in the banking and financial
services industries.

The Company currently markets and sells its products primarily to large
banks and other financial institutions, many of which rely on internally
developed software to fulfill their financial trading and risk management needs.
Demand for and acceptance of the Company's products by this customer base
depends on a number of factors, which include the products' functionality and
performance characteristics, the ability of these clients to achieve cost
savings by using third-party software, the time and cost required to internally
develop software, the willingness of these institutions to rely on third-party
software to fulfill mission critical financial trading and risk management needs
and their assessment of the Company's ability to support these products. Many of
these banks and financial institutions have made significant investments in
time, capital and human resources in developing and implementing these internal
systems and are highly dependent upon the continued use of internally developed
systems. The legacy nature of many of these internally developed systems
combined with the substantial financial costs to shift to third-party products
for these applications generally constitute the principal factors inhibiting
migration to third-party products in financial trading and risk management, such
as those offered by the Company. No assurance can be made that these factors
will not inhibit growth in the market for third-party financial trading and risk
management software and, as a consequence, materially adversely affect

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the Company's business, financial condition and results of operations. See
"Business -- Markets and Customers."

The Company is attempting to develop the Infinity Platform as an industry
standard for financial trading and risk management. No assurance can be given
that this attempt to establish an industry standard will be successful, even if
a significant market for third-party financial trading and risk management
software continues to develop. If the Company is unsuccessful in establishing
the Infinity Platform as an industry standard, widespread acceptance of its
products and its ability to market additional application programs for financial
trading and risk management will be adversely affected, and, as a consequence,
the Company's future growth, business, financial condition and results of
operations will be materially adversely affected.

LENGTHY SALES CYCLE

Because of the mission critical functions performed by the Company's
products, the purchase of such products is a strategic decision which generally
requires approval at senior levels of customers' organizations. In addition, the
purchase of the Company's products involves a significant commitment of
customers' financial resources. For these and other reasons, the sales cycle
associated with the purchase of the Company's products is typically complex,
lengthy and subject to a number of significant risks, including changes in
customers' budgetary constraints and approval at senior levels of customers'
organizations, over which the Company has no control. The Company's sales cycle
can range from three months to over one year. Because of the lengthy sales cycle
and the dependence of the Company's quarterly revenues upon a small number of
new individual product sales for large dollar amounts, the loss or delay of a
single sale could have a material adverse effect on the Company's business,
financial condition and results of operations.

RAPID TECHNOLOGICAL CHANGE AND DEPENDENCE ON NEW PRODUCTS

The market for the Company's products is characterized by rapid
technological advances, evolving industry standards in computer hardware and
software technology, changes in customer requirements and frequent new product
introductions and enhancements. The Company's future success will depend upon
its ability to continue to enhance its current product line and to develop and
introduce new products that address technological developments, satisfy
increasingly sophisticated customer requirements and achieve market acceptance.
In particular, the failure of the Company to develop new products or enhance
existing products to (i) timely adapt to the rapidly developing computer
hardware and software technology upon which its products are based, (ii)
incorporate new functionality reflecting rapidly evolving types of derivative
securities and other financial instruments and risk management methodologies and
(iii) incorporate new functionality to facilitate customers' compliance with
changing applicable governmental regulations could cause customers to delay
their purchase of the Company's products, or to decide not to purchase such
products. In September 1995, the Company introduced its back-office modules for
Infinity Derivatives, which have been implemented on a limited basis to date by
Infinity's customers. The Company further intends to release prior to the end of
1996 a risk management product called Infinity RiskView, designed to extend the
Infinity Platform for certain risk management functions, and a Windows NT
version of its Infinity Derivatives product. No assurance can be given that
development of Infinity RiskView or the Windows NT version of Infinity
Derivatives will be successfully completed or that either of these new products
will be accepted in the marketplace. The anticipated release of these products
also could cause customers to delay purchase decisions for existing products of
the Company. The Company has in the past experienced delays in the introduction
of product enhancements and new products, including a delay in introducing the
back-office modules for Infinity Derivatives. There can be no assurance that the
Company will not experience such delays in the future, or be successful in
developing and marketing, on a timely and cost-effective basis, product
enhancements or new products, including Infinity RiskView and the Windows NT
version of Infinity Derivatives, and the failure to do so could have a material
adverse effect on the Company's

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business, financial condition and results of operations. See "-- Risks of
Product Defects; Product Liability" and "Business -- Product Development."

SMALL DIRECT SALES FORCE AND RELIANCE ON IBM CORPORATION AND OTHER STRATEGIC
RELATIONSHIPS

The Company has a small direct sales force, which consisted of 16 persons
at June 30, 1996. Historically, most of the Company's sales have been derived
through its direct sales force, and the Company's business strategy depends on
significantly expanding this sales force. The Company has previously experienced
substantial difficulty in hiring sales personnel with expertise in sophisticated
financial instruments and is likely to experience similar difficulty as it
attempts to hire other qualified staff who have the required experience levels.
In the past, the Company has also experienced difficulty in adequately staffing
a sales force for its principal United States sales office located in New York.
There can be no assurance that the Company will be able to recruit, train and
retain additional qualified sales personnel with the requisite experience and
knowledge, particularly those with experience in both finance and software
development. The failure to successfully expand the Company's sale force would
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company has established strategic relationships with a number of
organizations that are complementary to its direct sales force and which it
believes are important to its worldwide sales, marketing and support activities
and the implementation of its products. The Company believes that its
relationships with such organizations provide an additional sales and marketing
channel and further promote the Infinity Platform to become an industry
standard. Due in part to the current small size of its direct sales force, the
Company believes such relationships are particularly important to its sales
efforts and efforts to establish an industry standard. In particular, the
Company has developed a non-exclusive strategic relationship with IBM
Corporation ("IBM"). IBM acts as a solution provider and markets the Company's
products on a worldwide basis as part of IBM information management solutions,
although IBM is under no contractual obligation to market the Company's
products. During the quarter ended June 30, 1996, license revenues facilitated
by IBM accounted for 42% of license revenues and 33% of total revenues. Any
deterioration of the Company's relationship with IBM could have a material
adverse effect on the Company's business, financial condition and results of
operations. The Company also has relationships with key third-party developers,
including Axime Integration de Systemes ("Axime") and Diagram S.A. ("Diagram"),
and service providers, including Price Waterhouse LLP ("Price Waterhouse").
Third-party developers constitute a key component of Infinity's strategy in
developing products and applications for the Infinity Platform for specific
markets that Infinity does not currently address. In addition, Infinity has
established the Infinity Certified Engineering program which qualifies various
software development firms to work as consultants with Infinity customers in
implementing and customizing the Infinity Platform and other products. The
failure by the Company to maintain its existing relationships, or to establish
new relationships in the future, could have a material adverse effect on the
Company's business, financial condition and results of operations. The Company's
customers and potential customers frequently rely on these third-party service
providers to extend, deploy and/or manage Infinity's products. If the Company is
unable to train adequately a sufficient number of service providers or, if for
any reason such service providers do not have or choose not to devote the
resources necessary to facilitate implementation of the Company's products or if
such service providers adopt a product or technology other than Infinity's, the
Company's business, financial condition and results of operations could be
materially adversely affected. See "Business -- Sales, Marketing and Support."

MANAGEMENT OF GROWTH

The Company's business has grown rapidly in recent years. This growth has
placed, and may continue to place, a significant strain on the Company's
management and operations. The Company's future operating results will depend on
its ability to continue to broaden the Company's

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senior management group, and its ability to attract, hire and retain skilled
employees. The Company's success will also depend on the ability of its officers
and key employees to continue to implement and improve its operational and
financial control systems and to expand, train and manage its employee base. The
Company's future operating results will also depend on its ability to expand its
sales and marketing organizations, further implement a reseller and partner
channel to penetrate different and broader markets than those addressed by its
existing direct sales force and expand its support organization commensurate
with growth in its installed base. The Company's inability to effectively manage
growth could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

COMPETITION

The market for transaction processing and risk management systems for
financial institutions is intensely competitive. It is characterized by rapidly
changing technological requirements, as new instruments and new strategies are
developed and implemented, and a high degree of technological progress, as new
software and hardware technologies are applied to the challenge of trading and
risk management. The rapid pace of innovation and change in the market Infinity
serves necessitates an ongoing research and development effort to enhance the
features and functionality of the Infinity Platform and Infinity products.

Many of the Company's competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
greater name recognition and a larger installed base of customers than the
Company. The Company's competitors are diverse and offer a variety of solutions
directed at the financial trading and risk management information system
marketplace. These competitors include companies offering and developing
financial trading or risk management software products that compete with
products offered by the Company. Certain of such competitors provide point
solutions for particular elements of the financial trading marketplace,
including, for example, the front-office derivative trading market, which
constitutes a significant portion of the Company's business. Certain of such
point-solutions may provide greater off-the-shelf functionality than the
Company's customizable integrated system. To the extent customers elect to
pursue such point solutions targeted at the front-office derivatives market or
other elements of the financial trading marketplace, as opposed to the Company's
integrated solutions, the Company's business, financial condition and results of
operations may be materially adversely affected. In addition, potential
customers may select such a competitor's product where they believe it is easier
to integrate such product with a product previously purchased from such
competitor or where they prefer the user interface of such product. The Company
may also face competition from other business application software vendors who
may broaden their product offering by internally developing or acquiring
financial trading and risk management software products. In addition to
competition from such third-party companies, the Company frequently faces
substantial sales resistance from the internal development groups of potential
customers that have developed or may develop systems that may substitute for
those offered by the Company. In particular, the Company has experienced
significant difficulties in persuading potential customers to purchase its
products where their internal development groups have already progressed
significantly toward completion of systems which the Company's products would
augment or replace and where the underlying technologies, such as the
programming language, utilized by such groups differ fundamentally from the
Company's.

In order to be successful in the future, the Company must respond promptly
and effectively to the challenges of technological change and competitors'
innovations. There can be no assurance that the Company will be able to compete
successfully with existing or new competitors or that competition will not have
a material adverse effect on the Company's business, financial condition and
results of operation. See "Business -- Competition."

10
<PAGE> 11

RISKS ASSOCIATED WITH INTERNATIONAL SALES

In the six months ended June 30, 1996 and for the 1995, 1994 and 1993
fiscal years, the Company derived 70%, 53%, 25% and 27% of its total revenues,
respectively, from sales outside North America and anticipates that a majority
of its revenues for the foreseeable future will be derived from sources outside
North America. The Company sells its products through a direct sales force
located in offices in New York, London, Paris and Tokyo as well as its
headquarters in Mountain View, California. The Company also has full-time
support personnel in Frankfurt, Sydney and Toronto. The Company intends to
continue to expand its sales and support operations outside North America and to
enter additional international markets, which will require significant
management attention and financial resources. International operations are
generally subject to a number of risks, including costs of customizing products
for foreign countries, dependence on local resellers, multiple, conflicting and
changing government regulations regarding financial transactions, longer payment
cycles, import and export restrictions, tariffs, difficulties in staffing and
managing foreign operations, greater difficulty or delay in accounts receivable
collection, potentially adverse tax consequences, the burdens of complying with
a variety of foreign laws, the impact of possible recessionary environments in
economies outside North America and political and economic instability. The
Company's total revenue is also substantially affected by seasonal fluctuations
resulting from lower sales that typically occur during the summer months in
Europe and other parts of the world.

Until 1996, the Company's international sales were generally denominated
and collected in U.S. dollars. In the first half of 1996, international sales
were denominated in both U.S. dollars and foreign currencies. The Company
believes that an increasing portion of the Company's cost of revenues and
operating expenses will be incurred in foreign currencies. Although it is
impossible to predict future exchange rate movements between the U.S. dollar and
other currencies, it can be anticipated that to the extent the U.S. dollar
strengthens or weakens against other currencies, a substantial portion of the
Company's revenues, cost of revenues and operating expenses will be
commensurately lower or higher than would be the case in a more stable foreign
currency environment. Although the Company from time to time undertakes foreign
exchange hedging transactions to cover a portion of its foreign currency
transaction exposure, the Company does not attempt to cover all potential
foreign currency exposure.

In the past, the Company has benefited from increased international demand
for its risk management solutions resulting from the imposition of new capital
adequacy and regulatory reporting requirements. For example, a significant
portion of the Company's 1995 and first quarter 1996 international revenues were
attributable to new European customers who began to respond to the requirements
of the European Capital Adequacy Directive in late 1994 through implementation
of risk management systems. If regulatory requirements remain unchanged or are
eased, the demand for risk management solutions will likely be reduced, which
would materially adversely affect the Company's business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business -- Sales, Marketing
and Support."

DEPENDENCE ON KEY EMPLOYEES

11
<PAGE> 12

operations. The Company is currently recruiting a Vice President of Products and
Technology, who would oversee all product development and engineering activities
of the Company and would assume many of Mr. Hospers' prior responsibilities. The
Company is experiencing difficulty in recruiting a qualified individual for this
position and would expect similar difficulty in replacing its Vice President for
Client Services if the current individual in that position chooses not to return
to the Company following completion of his one-year educational leave. Further,
given the critical role of the Company's limited engineering staff in executing
the Company's product strategies, the loss of any additional significant part of
its engineering staff would also have a material adverse effect on the Company.
The Company generally does not have long-term employment contracts with Mr.
Lang, its engineering staff or any other employees. The Company believes that
its future success also will depend in part on its ability to attract and retain
highly-skilled engineering, managerial, sales and marketing personnel.
Competition for such personnel in the software industry is intense, and there
can be no assurance that the Company will be successful in attracting and
retaining such personnel. The Company has previously experienced substantial
difficulty in hiring sales and engineering personnel with expertise in
sophisticated financial instruments and may experience similar difficulty as it
attempts to hire other qualified staff who have the required experience levels.
In particular, the Company has experienced difficulty competing for such
personnel with large financial institutions with substantially greater financial
resources. Failure to attract and retain key personnel could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Business -- Employees" and "Management -- Executive Officers
and Directors."

PROTECTION OF INTELLECTUAL PROPERTY

The Company's success is heavily dependent upon its proprietary technology.
The Company relies primarily on a combination of copyright, trade secret and
trademark laws, nondisclosure and other contractual provisions and technical
measures to protect its proprietary rights. The Company seeks to protect its
software, documentation and other written materials through trade secret and
copyright laws, which provide only limited protection. As part of its
confidentiality procedures, the Company generally enters into nondisclosure
agreements with its employees, consultants, distributors and corporate partners.
Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use the Company's products
or technology independently. In particular, the Company customarily provides its
existing and potential distribution partners with access to its product
architecture and other proprietary information underlying the Company's licensed
software, including source code. An unauthorized publication or proliferation of
the Company's source code could materially adversely affect the Company's
business, financial condition and results of operations. Policing unauthorized
use of the Company's products is difficult, and the Company is unable to
determine the extent to which unauthorized use of its software products exists.
In addition, effective protection of intellectual property rights may be
unavailable or limited in certain countries in which the Company currently sells
products, such as Japan, and countries the Company may target to expand its
sales efforts such as Brazil, Hong Kong, Mexico, South Africa and Thailand.
Accordingly, there can be no assurance that the Company's means of protecting
its proprietary rights will be adequate or that the Company's competitors will
not independently develop similar technology.

RISKS OF PRODUCT DEFECTS; PRODUCT LIABILITY

As a result of their complexity, software products may contain undetected
errors or failures. Despite testing by the Company and use by current and
potential customers, when first introduced or as new versions are released,
there can be no assurance that errors will not be found in new products after
commencement of commercial shipments. The most recent release of Infinity
Derivatives, which included new features and functionality, contained a number
of errors and defects which the Company is correcting in the normal course of
post-release development support. Although the Company has not experienced
material adverse effects resulting from any such

12
<PAGE> 13

defects and errors to date, there can be no assurance that defects and errors
will not be found in new versions or enhancements after commencement of
commercial shipments, resulting in loss of revenues, delay in market acceptance
or damage to the Company's reputation, which could have a material adverse
effect upon the Company's business, financial condition and results of
operations.

The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure for potential claims based
on errors or malfunctions of its products. It is possible, however, that the
limitation of liability provisions contained in the Company's license agreements
may not be effective under the laws of certain jurisdictions. Although the
Company has not experienced any product liability claims to date, the sale and
support of the Company's products entails the risk of such claims. The Company
currently does not have insurance against product liability risks, and, if the
Company were to elect to obtain such insurance, there can be no assurance that
such insurance will be available to the Company on commercially reasonable terms
or at all. A product liability claim brought against the Company could have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business -- Product Development."

BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS

The Company currently has no specific plan for using substantially all of
the proceeds of the Offerings. As a consequence, the Company will have the
discretion to allocate a large percentage of such proceeds to uses which the
stockholders may not deem desirable, and there can be no assurance that the
proceeds can or will yield a significant return. See "Use of Proceeds."

BENEFITS OF THE OFFERINGS TO CURRENT SECURITYHOLDERS

The proposed Offerings will provide significant benefits to the current
securityholders of the Company, including the creation of a public market for
the Company's Common Stock, the receipt of proceeds from the sale of shares in
the Offerings by current securityholders who are selling shares in the
Offerings, and the unrealized gain of $302,223,000 in the value of the total
equity interest of all current securityholders in the Company.

CONTROL BY PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS

Upon completion of the Offerings, the Company's officers, directors and
their affiliates will, in the aggregate, beneficially own approximately 57% of
the Company's outstanding Common Stock, assuming no exercise of options
outstanding (55% if the Underwriters' over-allotment options are exercised in
full). As a result, such persons, acting together, will have the ability to
control the vote on matters submitted to stockholders of the Company for
approval (including election of directors and any merger, consolidation or sale
of all or substantially all of the Company's assets) and to control the
management and affairs of the Company. Accordingly, such concentration of
ownership may have the effect of delaying, deferring or preventing a change in
control of the Company, impede a merger, consolidation, takeover or other
business combination involving the Company or discourage a potential acquiror
from making a tender offer or otherwise attempting to obtain control of the
Company. See "Management" and "Principal and Selling Stockholders."

NO PRIOR MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF SHARE PRICE

Prior to the Offerings, there has been no public market for the Common
Stock of the Company, and there can be no assurance that an active trading
market will develop upon completion of the Offerings or, if it does develop,
that such market will be sustained. The initial public offering price of the
Common Stock was determined by negotiation among the Company, the Selling
Stockholders and the representatives of the Underwriters, and may not be
representative of the price that will prevail in the open market. See
"Underwriting" for a discussion of the factors considered in determining the
initial public offering price.

The market price of the Common Stock after the Offerings may be
significantly affected by factors such as quarterly variations in the Company's
results of operations, the announcement of

13
<PAGE> 14

new products or product enhancements by the Company or its competitors,
technological innovation by the Company or its competitors and general market
conditions specific to particular industries. In particular, the stock prices
for many companies in the technology and emerging growth sectors have
experienced wide fluctuations which have often been unrelated to the operating
performance of such companies. Such fluctuations may adversely affect the market
price of the Common Stock.

ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation, as amended (the "Charter"), and
Bylaws, as amended (the "Bylaws"), contain certain provisions that may have the
effect of discouraging, delaying or preventing a change in control of the
Company or unsolicited acquisition proposals that a stockholder might consider
favorable, including provisions authorizing the issuance of "blank check"
preferred stock, limiting the persons who may call special meetings of
stockholders, prohibiting stockholder action by written consent, establishing
advance notice requirements for nominations for election to the Board of
Directors or for proposing matters that can be acted upon at stockholders
meetings and, commencing at the first annual meeting of stockholders following
the earlier of the date the Company is no longer subject to the California
Corporations Code or the date of the annual meeting of stockholders when the
Company shall have had at least 800 stockholders, providing for a Board of
Directors with staggered, three-year terms requiring super-majority voting to
effect certain amendments to the Charter and Bylaws. Certain provisions of
Delaware law may also have the effect of discouraging, delaying or preventing a
change in control of the Company or unsolicited acquisition proposals. See
"Description of Capital Stock -- Anti-Takeover Effects of Provisions of the
Company's Charter and Bylaws" and "Description of Capital Stock -- Section 203
of the Delaware General Corporation Law."

POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON MARKET PRICE OF THE
COMMON STOCK

Sales of a substantial number of shares of Common Stock after the Offerings
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through the sale of equity securities. Upon
completion of the Offerings, the Company will have 18,069,938 shares of Common
Stock outstanding based on shares outstanding as of August 31, 1996. Of these
shares, the 2,690,000 shares sold in the Offerings will be freely transferable
without restriction under the Securities Act, unless they are held by
"affiliates" of the Company as that term is used under the Securities Act and
the Regulations promulgated thereunder.

The remaining 15,379,938 outstanding shares were sold by the Company in
reliance on exemptions from the registration requirements of the Securities Act
and are restricted securities within the meaning of Rule 144 under the
Securities Act. Approximately 2,000 of these shares of Common Stock will be
eligible for sale in the public market immediately upon the effective date of
the Registration Statement of which this Prospectus is a part (the "Effective
Date") in reliance on Rule 144(k) under the Securities Act. Beginning 90 days
after the Effective Date, an additional approximately 4,100 of these shares will
become eligible for sale subject to the provisions of Rule 144 and Rule 701.
Beginning 180 days after the date of this Prospectus, approximately 14,274,314
additional shares will become eligible for sale subject to the provisions of
Rule 144 or Rule 701 upon the expiration of agreements not to sell such shares
entered into between the U.S. Underwriters and the International Underwriters
and such stockholders or the Company and such stockholders. Beginning 180 days
after the date of this Prospectus, approximately 1,741,388 additional shares
subject to vested options as of the date of this Prospectus will be available
for sale subject to compliance with Rule 701 and upon the expiration of
agreements not to sell such shares entered into between the U.S. Underwriters
and the International Underwriters and such stockholders or the Company and such
stockholders. In addition, the Commission has proposed revisions to Rule 144 and
Rule 144(k), the effect of which would be to shorten the holding period under
Rule 144 from two years to one year and to shorten the holding period under Rule
144(k) from

14
<PAGE> 15

three years to two years. If enacted, these proposed revisions would increase,
potentially substantially, the number of shares that would be available for sale
in the public market 90 days after the Effective Date and 180 days after the
date of this Prospectus. Any shares subject to lock-up agreements may be
released at any time without notice by the U.S. Underwriters and the
International Underwriters. See "Underwriting."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
restricted shares for at least two years is entitled to sell, within any
three-month period commencing 90 days after the Effective Date, a number of
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of Common Stock (approximately 180,000 shares immediately after the Offerings)
or (ii) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding such sale, subject to the filing of a Form 144 with
respect to such sale and certain other limitations and restrictions. In
addition, a person who is not deemed to have been an affiliate of the Company at
any time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least three years, would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above.

Any employee, officer or director of or consultant to the Company who
purchased his or her shares prior to the Effective Date or who holds vested
options as of that date pursuant to a written compensatory plan or contract is
entitled to rely on the resale provisions of Rule 701, which permits
non-affiliates to sell their Rule 701 shares without having to comply with the
public information, holding period, volume limitation or notice provisions of
Rule 144 and permits affiliates to sell their Rule 701 shares without having to
comply with Rule 144's holding period restrictions, in each case commencing 90
days after the Effective Date. However, the Company and certain officers,
directors and other stockholders of the Company have agreed not to sell or
otherwise dispose of any shares of Common Stock of the Company for the 180-day
period after the date of this Prospectus without the prior written consent of
the U.S. Underwriters and the International Underwriters. See "Underwriting."

As soon as practicable after the Effective Date, the Company intends to
file a registration statement on Form S-8 under the Securities Act to register
shares of Common Stock reserved for issuance under the 1989 Stock Option Plan,
the 1993 Stock Incentive Plan, the 1996 Stock Option Plan and the 1996 Employee
Stock Purchase Plan, thus permitting the resale of such shares by non-affiliates
in the public market without restriction under the Securities Act. Such
registration statements will become effective immediately upon filing.

Prior to the Offerings, there has been no public market for the Common
Stock of the Company, and any sale of substantial amounts in the open market may
adversely affect the market price of the Common Stock offered hereby. See
"Shares Eligible for Future Sale."

PROPOSITION 211

A pending initiative on the November 1996 California ballot would, if
passed by voters and upheld against potential court challenges, subject
corporations and their directors and officers to increased risk of becoming
defendants in class action lawsuits. This initiative may also limit the ability
of corporations to indemnify their officers and directors and expose directors
and officers of corporations to increased risk of personal liability.
Proposition 211, if passed and upheld, could increase litigation expenses and
the cost of related insurance and materially adversely affect the business,
financial condition and results of operations of the Company. In addition, the
increased risk of personal liability could interfere with the ability of the
Company to attract and retain directors and officers, which in turn could
adversely affect the Company's competitive position.

15
<PAGE> 16

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
being offered by the Company hereby are estimated to be approximately $28.9
million. The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders. See "Principal and Selling Stockholders."

The principal purposes of the Offerings are to obtain additional working
capital, to create a public market for the Company's Common Stock and to
facilitate future access by the Company to public equity markets. The net
proceeds to the Company are expected to be used for general corporate purposes,
including primarily working capital. The Company may also use a portion of the
net proceeds to fund acquisitions of complementary businesses, products or
technologies. Although the Company has in the past reviewed potential
acquisition opportunities, there are no current agreements or negotiations with
respect to any such transactions. Pending such uses, the net proceeds of the
Offerings will be invested in investment grade, interest-bearing instruments.

DIVIDEND POLICY

The Company has never declared or paid dividends on its capital stock,
although the Company has in the past repurchased shares of its capital stock
from certain of its stockholders. The Company currently does not intend to pay
dividends in the foreseeable future so that it may reinvest its earnings, if
any, in the development of its business. In addition, the Company's existing
line of credit prohibits the Company from paying cash dividends without the
lender's consent. See Note 4 of Notes to Financial Statements and "Certain
Transactions."

16
<PAGE> 17

CAPITALIZATION

The following table sets forth the capitalization of the Company at June
30, 1996 and the capitalization of the Company on a pro forma basis to give
effect to the conversion into Common Stock of all outstanding shares of
Preferred Stock and the capitalization of the Company as adjusted to give effect
to the sale by the Company of 2,000,000 shares of Common Stock offered by the
Company and the receipt of estimated net proceeds therefrom. This table should
be read in conjunction with the consolidated financial statements and notes
thereto and "Selected Consolidated Financial Data" included elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------
ACTUAL PRO FORMA AS ADJUSTED
------ --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Long-term portion of capital lease obligations............ $ 155 $ 155 $ 155
Stockholders' equity:
Preferred Stock, $.001 par value; 5,000,000 shares
authorized, 3,083,334 shares issued and outstanding,
actual; no shares issued and outstanding, pro forma
or as adjusted....................................... 1,053 -- --
Common Stock, $.001 par value; 50,000,000 shares
authorized, 12,925,274 shares issued and outstanding,
actual; 16,008,608 shares issued and outstanding pro
forma; 18,008,608 shares issued and outstanding, as
adjusted(1).......................................... 2,340 3,393 32,253
Deferred stock compensation............................. (586) (586) (586)
Notes receivable from stockholders...................... (1,071) (1,071) (1,071)
Retained earnings....................................... 6,651 6,651 6,651
------ --------- -----------
Total stockholders' equity........................... 8,387 8,387 37,247
------ --------- -----------
Total capitalization............................ $8,542 $ 8,542 $37,402
====== ======== ==========
</TABLE>

- ---------------
(1) Excludes (i) 3,478,284 shares issuable upon exercise of options outstanding
as of June 30, 1996 having a weighted average exercise price of $1.69 per
share under the Company's 1989 Stock Option Plan and 1993 Stock Incentive
Plans, (ii) 353,000 shares issuable upon exercise of options granted from
July 1, 1996 to October 24, 1996 and (iii) 1,145,630 additional shares
issuable under the Company's Stock Plans. See "Management -- Stock Plans"
and Notes 6 and 8 of Notes to Consolidated Financial Statements.

17
<PAGE> 18

DILUTION

At June 30, 1996, the Company's pro forma net tangible book value was $8.4
million or approximately $0.52 per share. Pro forma net tangible book value per
share represents the amount of the Company's stockholders' equity divided by
16,008,608 shares of Common Stock (on a pro forma basis to give effect to the
conversion of all shares of Preferred Stock upon completion of the Offerings)
outstanding at June 30, 1996. Net tangible book value dilution per share
represents the difference between the amount per share paid by purchasers of
shares of Common Stock in the Offerings made hereby and the pro forma net
tangible book value per share of Common Stock immediately after completion of
the Offerings. After giving effect to the sale by the Company of 2,000,000
shares of Common Stock offered by the Company hereby and the application of the
estimated net proceeds therefrom, the pro forma net tangible book value of the
Company as of June 30, 1996 would have been $37.2 million or $2.07 per share.
This represents an immediate increase in net tangible book value of $1.55 per
share to existing stockholders and an immediate dilution in net tangible book
value of $13.93 per share to the purchasers of Common Stock in the Offerings, as
illustrated in the following table:

<TABLE>
<S> <C> <C>
Initial public offering price per share................................... $16.00
Pro forma net tangible book value per share as of June 30, 1996........ $0.52
Increase attributable to new investors................................. 1.55
Pro forma net tangible book value per share after the Offerings........... 2.07
------
Dilution per share to new investors....................................... $13.93
======
</TABLE>

The following table sets forth, on a pro forma basis as of June 30, 1996,
the differences between the existing stockholders and the purchasers of shares
in the Offerings with respect to the number and percent of shares purchased from
the Company, the total consideration and percent of total consideration paid and
the average price per share paid:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
---------------------- ----------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).... 16,008,608 89% $ 3,586,000 10% $ 0.22
New investors(1)............ 2,000,000 11 32,000,000 90 16.00
------ ----- ------ ---- -
Total..................... 18,008,608 100% $35,586,000 100%
====== ===== ====== =====
</TABLE>

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

(1) Sales by Selling Stockholders in the Offerings will reduce the number of
shares held by existing stockholders to 15,318,608 shares, or approximately
85% (14,915,108 shares or approximately 83%, if the U.S. Underwriters' and
International Underwriters' overallotment options are exercised in full) of
the total number of shares of Common Stock to be outstanding after the
Offerings and will increase the number of shares held by new investors to
2,690,000, or approximately 15% (3,093,500 shares, or approximately 17%, if
the U.S. Underwriters' and International Underwriters' overallotment options
are exercised in full) of the total shares of Common Stock to be outstanding
after the Offerings. See "Principal and Selling Stockholders."

The foregoing tables and discussion assume no exercise of options after
June 30, 1996. Excludes (i) 3,478,284 shares issuable upon exercise of options
outstanding as of June 30, 1996 having a weighted average exercise price of
$1.69 per share under the Company's 1989 Stock Option Plan and 1993 Stock
Incentive Plan, (ii) 353,000 shares issuable upon exercise of options granted
from July 1, 1996 to October 24, 1996 and (iii) 1,145,630 additional shares
authorized for issuance under the Company's Stock Plans. To the extent that
outstanding options are exercised, there will be further dilution to new
investors. See "Capitalization," "Management -- Executive Compensation,"
"Management -- Stock Plans," and Notes 6 and 8 of Notes to Consolidated
Financial Statements.

18
<PAGE> 19

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data of the Company should be
read in conjunction with the consolidated financial statements and the notes
thereto and Management's Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere herein. The consolidated statement of
income data for the years ended December 31, 1993, 1994 and 1995 and the
consolidated balance sheet data as of December 31, 1994 and 1995 are derived
from the Company's consolidated financial statements which have been audited by
Ernst & Young LLP, independent auditors, and included elsewhere in this
Prospectus. The consolidated statement of income data for the years ended
December 31, 1991 and 1992 and the consolidated balance sheet data as of
December 31, 1991, 1992 and 1993 are derived from audited consolidated financial
statements not included herein. The Company's consolidated statement of income
data for the six months ended June 30, 1995 and 1996 and the consolidated
balance sheet data as of June 30, 1996 are derived from the Company's unaudited
consolidated financial statements which are included elsewhere herein. The
unaudited financial statements have been prepared by the Company on a basis
consistent with the Company's audited consolidated financial statements, and in
the opinion of management, include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the results of
operations and financial position for such periods. Operating results for the
six-months ended June 30, 1996 are not necessarily indicative of the results of
operations to be expected in the future.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------------------- -----------------
1991 1992 1993 1994 1995 1995 1996
------ ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME DATA:
Revenues................................................. $1,246 $ 2,597 $ 5,783 $12,595 $24,738 $11,292 $17,947
Cost of revenues......................................... 241 457 1,507 2,660 2,915 1,125 1,865
Selling, general and administrative...................... 228 898 1,722 4,471 10,049 4,327 7,883
Research and development................................. 516 800 1,574 3,340 6,098 2,900 4,138
Nonrecurring charge...................................... -- 399 -- -- -- -- --
----- ----- ----- ------ ------ ------ ------
Total costs and expenses........................... 985 2,554 4,803 10,471 19,062 8,352 13,886
----- ----- ----- ------ ------ ------ ------
Income from operations................................... 261 43 980 2,124 5,676 2,940 4,061
Other income (expense), net............................ 40 3 (43) 15 31 21 (57)
----- ----- ----- ------ ------ ------ ------
Income before income taxes............................... 301 46 937 2,139 5,707 2,961 4,004
Provision for income taxes............................... 94 -- 220 498 2,258 1,172 1,521
----- ----- ----- ------ ------ ------ ------
Net income............................................... 207 46 717 1,641 3,449 1,789 2,483
Series B preferred stock redemption...................... -- -- -- -- (1,276) -- --
----- ----- ----- ------ ------ ------ ------
Net income attributable to common stockholders........... $ 207 $ 46 $ 717 $ 1,641 $ 2,173 $ 1,789 $ 2,483
===== ===== ===== ====== ====== ====== ======
Net income per share attributable to common stockholders:
Primary(1)............................................. $ 0.01 $ 0.00 $ 0.06 $ 0.10 $ 0.12 $ 0.10 $ 0.13
===== ===== ===== ====== ====== ====== ======
Fully diluted(1)....................................... $ 0.01 $ 0.00 $ 0.05 $ 0.09 $ 0.12 $ 0.09 $ 0.13
===== ===== ===== ====== ====== ====== ======
Shares used in per share calculations:
Primary(2)............................................. 15,852 15,649 13,008 16,354 18,312 17,853 18,831
===== ===== ===== ====== ====== ====== ======
Fully diluted(2)....................................... 15,852 15,649 14,516 17,866 18,382 19,364 18,849
===== ===== ===== ====== ====== ====== ======
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------- AT JUNE 30,
1991 1992 1993 1994 1995 1996
------ ------- ------- ------- ------- -----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................................. $ 199 $ 751 $ 800 $ 3,235 $ 3,517 $ 1,905
Working capital (deficiency)............................... (209) 30 199 2,010 4,272 6,053
Total assets............................................... 508 1,719 3,027 8,885 12,848 17,999
Long-term portion of capital lease obligations............. 39 17 6 107 303 155
Stockholders' equity (deficit)............................. (8) (144) 600 3,114 5,766 8,387
</TABLE>

- ---------------
(1) Net income per share attributable to common stockholders for 1995 reflects
the decrease in net income attributable to common stockholders as a result
of the redemption of the Series B Preferred Stock in November 1995. Net
income per share before redemption was $0.19.

(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing net
income per share.

19
<PAGE> 20

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 should be read in conjunction with the Consolidated
Financial Statements and the Notes thereto included elsewhere in this
Prospectus. This discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in the forward-looking statements as a result of certain
factors, including, but not limited to those discussed in "Risk Factors" and
elsewhere in this Prospectus.

OVERVIEW

The Company was founded in 1989 to develop, market and support
object-oriented, client/server software solutions for financial trading and risk
management. In February 1990, the Company commercially introduced its initial
product, the Infinity Data Model, and in 1992, the Company commenced marketing
the Infinity Fin++ Class Library (collectively, the "Infinity Platform"). In
addition, the Company commenced marketing Infinity Derivatives in 1992. The
Company's revenues have increased each year since inception, and Infinity has
been profitable on an annual basis since the year ended December 31, 1991.

The Company's total revenues consist of license revenues and service
revenues. License revenues are derived primarily from license fees for the
Infinity Platform and Infinity Derivatives and accounted for 79%, 77%, 72% and
71% of total revenues in the first six months of 1996 and for the 1995, 1994 and
1993 fiscal years, respectively. Service revenues are primarily derived from a
full range of services complementing the Company's products, including software
maintenance and support, training, consulting and co-development projects, and
accounted for 21%, 23%, 28% and 29% of total revenues in the first six months of
1996 and for the 1995, 1994 and 1993 fiscal years, respectively. Gross margin on
service revenues has been, and the Company expects that in the future it will
continue to be, significantly lower than gross margin on license revenues.
International revenues, which the Company defines as revenues derived from sales
outside of North America, accounted for 70%, 53%, 25% and 27% of total revenues
in the first six months of 1996 and for the 1995, 1994 and 1993 fiscal years,
respectively.

Although the Company has experienced increased revenue and been profitable
in each of its last five fiscal years, the Company does not believe prior growth
rates are sustainable or indicative of future operating results, and there can
be no assurance that the Company will be able to sustain revenue growth or
maintain profitability in the future. In addition, the Company intends to commit
substantial financial resources to expanding its business, including its sales
and support operations and product development infrastructure. As a result, the
Company does not expect to sustain the current level of operating margins in
future periods.

License revenues in any period are typically dependent upon licensing of
the Company's products for relatively large dollar amounts to a small number of
new or existing customers. The Company expects that licenses of its products to
a limited number of customers will continue to account for a large percentage of
revenues for the foreseeable future. Because of the mission critical role
addressed by the Company's products, the purchase of such products is a
strategic decision that generally requires approval at senior levels of
customers' organizations. In addition, the purchase of the Company's products
involves a significant commitment of customers' financial resources. For these
and other reasons, the sales cycle associated with the purchase of the Company's
products is typically complex, lengthy and subject to a number of significant
risks, including changes in customers' budgeting constraints and approval at
senior levels of customers' organizations, over which the Company has no
control.

Historically, the Company's revenues have been primarily generated through
its direct sales force. However, to provide marketing and sales opportunities
for the Company's direct sales force, and to expand the distribution of its
products, the Company has recently developed strategic

20
<PAGE> 21

relationships with a number of organizations, including systems integrators such
as IBM, third-party developers such as Axime and Diagram and service providers
such as Price Waterhouse. For example, two of the Company's six new customers
signed during the quarter ended June 30, 1996 were facilitated through the
Company's relationship with IBM. For their sales and marketing efforts, these
organizations are typically granted a discount off of the Company's standard
list price of products licensed by such organization or are paid a commission on
sales of licenses by Infinity. Product revenues and operating margins may
fluctuate in any period due to the mix of license revenues derived from sales
for which a discount is granted or for which commissions are paid.

License revenues less deferrals for warranty are recognized upon shipment
only if no significant vendor obligations remain and collection of the resulting
receivable is deemed probable. The license warranty revenues are recognized
ratably over the warranty period, generally 30 to 90 days. Service revenues from
customer maintenance fees for ongoing customer support and product updates are
recognized ratably over the maintenance term, which is typically twelve months.
Payments for maintenance fees are generally received in advance. Service
revenues from training and consulting are recognized when the services are
performed. Revenues from development agreements are recognized upon achievement
of contractual milestones or on a percentage of completion basis.

During the first half of 1996, the Company recorded deferred compensation
of $625,000 in connection with certain stock options granted in 1996. Of that
amount, approximately $39,000 was expensed during the six months ended June 30,
1996 and the balance will be expensed ratably over the next four years as the
options vest.

21
<PAGE> 22

CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth, as a percentage of total revenues,
consolidated statement of income data for the periods indicated:

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER ENDED
31, JUNE 30,
---------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues:
License revenues.................................... 71 % 72 % 77 % 78 % 79 %
Service revenues.................................... 29 28 23 22 21
---- ---- ---- ---- ----
Total revenues.............................. 100 100 100 100 100
Costs and expenses:...................................
Cost of revenues.................................... 26 21 12 10 10
Sales and marketing................................. 20 26 31 30 34
Research and development............................ 27 27 25 25 23
General and administrative.......................... 10 9 9 9 10
---- ---- ---- ---- ----
Total costs and expenses.................... 83 83 77 74 77
---- ---- ---- ---- ----
Income from operations................................ 17 17 23 26 23
Other income (expense), net........................... (1 ) -- -- -- (1 )
---- ---- ---- ---- ----
Income before provision for income taxes.............. 16 17 23 26 22
Provision for income taxes............................ 4 4 9 10 8
---- ---- ---- ---- ----
Net income............................................ 12 % 13 % 14 % 16 % 14 %
==== ==== ==== ==== ====
</TABLE>

REVENUES

The Company's revenues are derived from two sources, license revenues and
service revenues, including software maintenance and support, training,
consulting and co-development contracts. Total revenues were $17.9 million and
$11.3 million for the six months ended June 30, 1996 and June 30, 1995,
respectively, representing an increase of 58%. Total revenues increased to $24.7
million in 1995 from $12.6 million in 1994 and from $5.8 million in 1993,
representing increases of 96% and 117% in 1995 and 1994, respectively.

International revenues, which are defined by the Company as sales outside
North America, accounted for 70% and 45% of total revenues for the six months
ended June 30, 1996 and 1995, respectively. International revenue accounted for
53%, 25% and 27% of total revenues in 1995, 1994 and 1993, respectively. For
fiscal year 1995 and thereafter, the majority of international sales were made
in either Europe or Japan with significant additional sales in Australia and New
Zealand. The more recent increases in international revenues are primarily
attributable to an increase in the Company's international sales and marketing
efforts and opportunities resulting from the imposition of new regulatory
reporting requirements. In particular, a significant portion of the Company's
1995 and first quarter 1996 international revenues were attributable to new
European customers who began to respond to the requirements of the European
Capital Adequacy Directive in late 1994 through implementation of risk
management systems. In the second quarter of 1996, the Company's international
revenues from licensing were derived primarily from trading systems related
sales. In the future, the Company believes that demand for risk management
solutions will be significantly influenced by changes in capital adequacy and
regulatory reporting requirements. See "Risk Factors -- Risks Associated with
International Sales." The Company currently maintains international sales
offices in London, Paris and Tokyo, and intends to continue to expand its
international operations and enter additional international markets.

22
<PAGE> 23

LICENSE REVENUES. License revenues were $14.1 million and $8.8 million for
the six months ended June 30, 1996 and 1995, respectively, representing an
increase of 60%. License revenues increased to $19.0 million in 1995 from $9.0
million in 1994 and from $4.1 million in 1993, representing increases of 111%
and 120% in 1995 and 1994, respectively. The increases were primarily due to
growing sales to new customers and increased follow-on sales to existing
customers of the Company's new and existing products.

SERVICE REVENUES. Service revenues were $3.8 million and $2.5 million for
the six months ended June 30, 1996 and 1995, respectively, representing an
increase of 55%. Service revenues increased to $5.7 million in 1995 from $3.6
million in 1994 and from $1.7 million in 1993, representing increases of 60% and
112% in 1995 and 1994, respectively. The increases were primarily attributable
to a larger installed base, partially offset by a decrease in co-development
revenues in 1995. From time to time, the Company has entered into, and may in
the future enter into, co-development contracts whereby the Company collaborates
in the development of a new product and generally owns the technology developed
from these efforts. Co-development revenues were $510,000 and $420,000 in 1994
and 1993, respectively, with no co-development revenues in 1995 or the first
half of 1996. The Company historically has experienced significant renewal rates
of maintenance contracts; however, some customers have licensed the source code
of the Company's products and have, on occasion, chosen to terminate the
maintenance contracts with the Company due to their in-house expertise.
Furthermore, the Company's service revenues have been dependent upon a
relatively small number of new and existing customers in each quarter. Based on
these and other factors, there can be no assurance that previous renewal rates
and prices charged by the Company for maintenance, and corresponding revenues,
will continue in the future.

COST OF REVENUES

Cost of revenues consists primarily of personnel-related costs, including
facility and other overhead allocations incurred in providing on-site and
telephone support, consulting services and training to customers and personnel
costs attributable to co-development contracts in 1994 and 1993. Costs directly
attributable to license revenues are not material. Cost of revenues increased to
$1.9 million compared to $1.1 million, or 10% and 10% of total revenues, for the
six months ended June 30, 1996 and 1995, respectively. In 1995, 1994 and 1993,
cost of revenues were $2.9 million, $2.7 million and $1.5 million, or 12%, 21%
and 26% of total revenues, respectively. The increases in dollar amounts in each
subsequent period were primarily due to the increase in the number of customer
support personnel and related overhead costs necessary to support a larger
installed base. The decreases as a percentage of total revenues relate to the
completion of relatively low margin co-development contracts in 1994, as well as
high margin license revenues comprising a larger portion of total revenues in
each subsequent period. In addition, the Company intends to commit substantial
financial resources to expand its support operations. As a result, the Company
expects its cost of revenues to increase in the future, both in absolute dollar
amounts and possibly as a percentage of total revenues. All development costs
incurred in the research and development of software products and enhancements
to existing software products have been expensed as incurred. See Note 1 of
Notes to Consolidated Financial Statements.

OPERATING EXPENSES

SALES AND MARKETING. Sales and marketing expenses consist primarily of
salaries, commissions and bonuses for sales and marketing personnel, travel and
entertainment, facilities and equipment costs and periodic third-party
commission expenses. Sales and marketing expenses increased to $6.2 million
compared to $3.3 million, or 34% and 30% as a percentage of total revenues, for
the six months ended June 30, 1996 and 1995, respectively. In 1995, 1994 and
1993, sales and marketing expenses were $7.7 million, $3.3 million and $1.1
million, or 31%, 26% and 20% of total revenues, respectively. The increases in
dollar amounts and as a percentage of total revenues in each subsequent period
were primarily attributable to costs associated with additional

23
<PAGE> 24

sales and marketing personnel, facilities expansion, higher sales commissions
associated with increased total revenues and increased marketing activities
domestically and internationally. The Company believes that such expenses will
increase in dollar amounts and possibly as a percentage of total revenues in the
future as the Company expands its sales and marketing staff at its corporate
headquarters and each major location in which the Company chooses to do
business. Commissions paid to third parties have varied significantly in the
past, and the Company believes these expenses will continue to be incurred from
time to time in varying amounts in the future.

RESEARCH AND DEVELOPMENT. Research and development expenses consist
primarily of costs associated with development of new products and enhancement
of existing products, particularly salaries and other personnel-related
expenses, as well as facility and equipment costs. Research and development
expenses were $4.1 million and $2.9 million, or 23% and 25% as a percentage of
total revenues, for the six months ended June 30, 1996 and 1995, respectively.
In 1995, 1994, and 1993, research and development expenses were $6.1 million,
$3.3 million and $1.6 million, or 25%, 27% and 27% as a percentage of total
revenues, respectively. The increases in dollar amounts in each subsequent
period were primarily attributable to increases in the number of software
engineers and other personnel-related costs required to expand and enhance the
Company's product offerings. The Company believes that research and development
expenses will increase in dollar amounts and possibly as a percentage of total
revenues in the future.

GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of personnel costs for finance, human resources and general
management, as well as professional fees and facility and equipment costs.
General and administrative expenses were $1.7 million and $1.0 million, or 10%
and 9% of total revenues, for the six months ended June 30, 1996 and 1995,
respectively. In 1995, 1994 and 1993, general and administrative expenses were
$2.4 million, $1.2 million and $580,000, or 9%, 9% and 10% as a percentage of
total revenues, respectively. The increases in dollar amounts were due to
increased staffing and professional fees necessary to manage and support the
Company's growth. The Company believes general and administrative expenses will
increase in dollar amounts, and possibly as a percentage of total revenues, in
the future as it expands its staffing to support the Company's anticipated
growth.

PROVISION FOR INCOME TAXES

The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." The
effective tax rates for the years ended December 31, 1995, 1994 and 1993, were
40%, 23% and 24%, respectively. The Company expects its effective tax rate in
1996 to decrease to 38% and has accrued its income tax liability at that rate
through the first six months of 1996. This reduction is primarily attributable
to benefits received after establishing a foreign sales corporation. The 1995
effective tax rate of 40% differs from the federal statutory rate primarily due
to state income taxes, partially offset by certain research and development tax
credits. The lower effective tax rates in 1994 and 1993 are attributable
primarily to the utilization of tax credits and a reduction in the valuation
allowance in 1994.

SELECTED QUARTERLY OPERATING RESULTS

The following tables set forth certain unaudited statement of income data
for each of the six quarters in the period beginning January 1, 1995 and ending
June 30, 1996, as well as such data expressed as a percentage of the Company's
total revenues for the periods indicated. This data has been derived from
unaudited financial statements that, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such information. Such data should be read in conjunction
with the Company's annual audited consolidated financial statements and the
notes thereto.

24
<PAGE> 25

<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30,
1995 1995 1995 1995 1996 1996
-------- -------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues:
License revenues.......................... $ 3,984 $ 4,832 $ 4,805 $ 5,412 $ 6,435 $ 7,683
Service revenues.......................... 1,155 1,321 1,682 1,547 1,769 2,060
------ ------ ------ ------ ------ ------
Total revenues..................... 5,139 6,153 6,487 6,959 8,204 9,743
Costs and expenses:.........................
Cost of revenues.......................... 512 613 905 885 791 1,074
Sales and marketing....................... 1,580 1,757 2,156 2,200 2,625 3,549
Research and development.................. 1,456 1,444 1,512 1,686 1,895 2,243
General and administrative................ 448 542 640 726 826 883
------ ------ ------ ------ ------ ------
Total costs and expenses........... 3,996 4,356 5,213 5,497 6,137 7,749
------ ------ ------ ------ ------ ------
Income from operations...................... 1,143 1,797 1,274 1,462 2,067 1,994
Other income (expense), net................. 7 14 (18) 28 (79) 22
------ ------ ------ ------ ------ ------
Income before provision for income taxes.... 1,150 1,811 1,256 1,490 1,988 2,016
Provision for income taxes.................. 455 717 496 590 756 765
------ ------ ------ ------ ------ ------
Net income.................................. 695 1,094 760 900 1,232 1,251
Series B preferred stock redemption......... -- -- -- (1,276) -- --
------ ------ ------ ------ ------ ------
Net income (loss) attributable to common
stockholders.............................. $ 695 $ 1,094 $ 760 $ (376) $ 1,232 $ 1,251
====== ====== ====== ====== ====== ======
Net income (loss) per share attributable to
common stockholders(1).................... $ 0.04 $ 0.06 $ 0.04 $ (0.02) $ 0.06 $ 0.07
Shares used to compute net income (loss) per
share(2).................................. 17,308 18,398 18,727 16,774 18,863 18,799
AS A PERCENTAGE OF REVENUES:
Revenues:
License revenues.......................... 78% 79% 74% 78% 78% 79%
Service revenues.......................... 22 21 26 22 22 21
------ ------ ------ ------ ------ ------
Total revenues..................... 100 100 100 100 100 100
Costs and expenses:
Cost of revenues.......................... 10 10 14 13 10 11
Sales and marketing....................... 31 29 33 32 32 36
Research and development.................. 28 23 23 24 23 23
General and administrative................ 9 9 10 10 10 9
------ ------ ------ ------ ------ ------
Total costs and expenses........... 78 71 80 79 75 79
------ ------ ------ ------ ------ ------
Income from operations...................... 22 29 20 21 25 21
Other income (expense), net................. -- -- -- -- (1) --
------ ------ ------ ------ ------ ------
Income before provision for income taxes.... 22 29 20 21 24 21
Provision for income taxes.................. 8 11 8 8 9 8
------ ------ ------ ------ ------ ------
Net income.................................. 14% 18% 12% 13% 15% 13%
====== ====== ====== ====== ====== ======
</TABLE>

- ---------------
(1) The following table sets forth the net income per share before the Series B
preferred stock redemption:

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net income per share before Series B
preferred stock redemption........... $ 0.04 $ 0.06 $ 0.04 $ 0.05 $ 0.06 $ 0.07
Shares used to compute net income per
share before Series B preferred stock
redemption........................... 17,308 18,398 18,727 18,815 18,863 18,799
</TABLE>

(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing net
income per share.

25
<PAGE> 26

REVENUES. Total revenues have increased each consecutive quarter during
the last six quarters to $9.7 million in the second quarter of 1996 from $5.1
million in the first quarter of 1995. The increase was primarily attributable to
increased sales of new and existing products to new customers and increased
follow-on sales to existing customers. License revenues were relatively flat in
the quarter ended September 30, 1995 from the previous quarter due to seasonal
fluctuations the Company has typically experienced and expects it will continue
to experience. During the quarter ended June 30, 1996, license revenues
facilitated by IBM accounted for 42% of license revenues and 33% of total
revenues. Additionally, the Company's growth in its installed base has
contributed to increased maintenance service revenues in each consecutive
quarter. The decrease in service revenues in the quarter ended December 31, 1995
as compared to the prior quarter relates to lower revenues recognized on
consulting contracts completed during that period.

COST OF REVENUES. Cost of revenues decreased in the quarter ended March
31, 1996 from the previous two quarters due to the completion of low-margin
consulting contracts in the quarter ended December 31, 1995. The increases in
cost of revenues as a percentage of total revenues in the quarters ended
September 30, 1995 and December 31, 1995 related to increased consulting
activity in such periods.

OPERATING EXPENSES. Operating expenses increased in absolute dollars in
each consecutive quarter over the last six quarters primarily as a result of
increased staffing and other personnel-related expenses to support the Company's
growth. In the quarter ended June 30, 1996, sales and marketing expenses
increased in dollar amount and as a percentage of total revenues due to
additional sales and marketing personnel and increased sales commissions. Sales
and marketing expenses in the last half of 1995 increased as a percentage of
total revenues due to third-party commissions on certain sales and, to a lesser
extent, an increase in sales and marketing personnel. Between the first and
second quarter of 1995, research and development staff levels were unchanged and
sales and marketing staff levels declined slightly, while total revenues grew.
This resulted in a decline in these expenses as a percentage of total revenues.
However, the Company expects operating expenses to increase in total dollar
amounts and possibly as a percentage of total revenues in the future.

OTHER INCOME (EXPENSE), NET. Other income (expense), net consists
primarily of interest income earned on the Company's cash and cash equivalents,
interest expense on capital equipment lease lines and, in the quarter ended
March 31, 1996, a loss on disposal of furniture and equipment under capital
lease obligations related to the Company's headquarters facility relocation.

RECENT FINANCIAL RESULTS

The following table summarizes the Company's operating results for the
three and nine months ended September 30, 1995 and 1996. The summary data for
the periods presented are derived from the Company's unaudited consolidated
statements of income.

<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- ---------------------
1995 1996 1995 1996
-------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues........................ $ 6,487 $ 10,617 $ 17,779 $ 28,564
Income from operations.......... 1,274 2,013 4,214 6,074
Net income...................... 760 1,294 2,549 3,778
Net income per share............ 0.04 0.07 0.14 0.20
Shares used in per share 18,727 18,763 18,145 18,808
calculations(1)...............
</TABLE>

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

(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in per share
calculations.

26
<PAGE> 27

VARIABILITY OF QUARTERLY RESULTS

The Company historically has operated with little backlog because its
products are generally shipped as orders are received. As a result, license
revenues in any quarter depend on the volume and timing of, and the Company's
ability to fill, orders received in that quarter. In addition, a relatively high
percentage of the Company's expenses is fixed in the short term because the
Company's expense levels are based, in part, on its expectations as to future
revenues. As a result, if revenues fall below expectations, operating margins
are likely to be adversely affected.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations to date primarily by cash generated
from operations and through private sales of preferred equity securities. For
the six months ended June 30, 1996 approximately $506,000 of cash was used in
operations and in the 1995, 1994 and 1993 fiscal years approximately $2.0
million, $2.9 million, and $604,000, respectively, of cash was generated from
operations. Cash used in operations in the six months ended June 30, 1996 was
primarily due to increases in accounts receivable offset by net income and
increases in deferred revenue and accounts payable. In 1995, cash generated from
operations was primarily attributable to net income, partially offset by an
increase in accounts receivable. In 1994 and 1993, cash generated from
operations was primarily attributable to net income and increases in deferred
revenues, partially offset by increases in accounts receivable.

For the six months ended June 30, 1996 and in the 1995, 1994 and 1993
fiscal years, investing activities consisted primarily of purchases of property
and equipment. In those periods, the Company used approximately $1.0 million,
$650,000, $569,000 and $271,000, respectively, of cash to purchase property and
equipment, primarily consisting of personal computers, furniture and other
office equipment. While the Company has no material capital equipment
commitments, the Company anticipates that its planned purchases of capital
equipment and facilities expansion in the last half of

27
<PAGE> 28

1996 will require additional expenditures of approximately $850,000.
Additionally, the Company expects that the rate of purchases of property and
equipment will increase as the Company's employee base grows. As of June 30,
1996, the Company's principal commitments consisted primarily of borrowings
under a lease line of credit for equipment purchases and its obligations under
leases for office facilities. See Note 5 of Notes to Consolidated Financial
Statements.

In 1995, financing activities included the repurchase of preferred stock
from a former employee and founder of the Company for $1.3 million. See Note 6
of Notes to Consolidated Financial Statements.

At June 30, 1996, the Company had $1.9 million in cash and cash equivalents
and $6.1 million of working capital. The Company also had available a $3.0
million working capital line of credit agreement, secured by accounts
receivable. The line of credit bears interest at 30-day commercial paper plus
2.9% and drawings are available up to 80% of eligible receivables. There were no
borrowings under the line of credit at June 30, 1996 or August 31, 1996.

Due to the relatively large dollar size of individual sales, the fact that
the Company's accounts receivable from license revenues have been generated
within the last month, weeks and days of the quarter and the significant
international component of sales, the Company has experienced significant
fluctuations in its average days sales outstanding, and Company believes that
such fluctuations will continue in the future and will continue to affect its
liquidity, working capital and financial condition. The Company calculates its
quarterly days sales outstanding as the average monthly accounts receivables
divided by total revenue plus the net change in deferred revenue in the period
multiplied by the number of days in the quarter. The Company believes this
method of computing days sales outstanding and the fluctuations experienced
period to period accurately reflects its business operations. Days sales
outstanding according to this method at June 30, 1996 and December 31, 1995 were
79 days and 70 days, respectively.

The Company believes that the net proceeds from the sale of the Common
Stock offered hereby, together with its current cash balances and cash available
under its lines of credit, will be sufficient to meet its working capital and
capital expenditure requirements for at least the next twelve months. Management
expects that, in the future, cash in excess of current requirements will
continue to be invested in investment grade, interest bearing securities.
However, future operations may require the Company to obtain additional equity
or debt financing. There can be no assurance that additional financing will be
available when needed on terms favorable to the Company, or at all. If adequate
funds are not available or are not available on acceptable terms, the Company
may be unable to fund its anticipated expansion, take advantage of acquisition
opportunities, develop or enhance services or products or respond to competitive
pressures, which could have a material adverse effect on the Company's business,
financial condition and results of operations.

28
<PAGE> 29

BUSINESS

Infinity develops, markets and supports object-oriented, client/server
platform and solutions software for financial trading and risk management.
Founded in 1989, Infinity currently has more than 35 customers around the world,
consisting primarily of large banks and other financial institutions with
sophisticated trading operations and risk management needs.

INDUSTRY BACKGROUND

A number of factors have contributed to the increased demand for trading
and risk management systems:

INCREASES IN TRADING VOLUME AND COMPLEXITY

In recent years, global financial markets have been transformed by
significant increases in trading volumes. For example, the Bank for
International Settlements (BIS) estimates that the current daily turnover in the
foreign exchange market is $1.2 trillion, almost double the daily volume in
1989. Moreover, approximately $6.0 trillion in funds pass through the world's
payment and settlement networks each day. In addition to these increasing
volumes, today's global trading environment is characterized by the common use
of derivatives and other complex financial instruments. A survey of the
over-the-counter (OTC) derivatives market published by the BIS estimated the
total value of outstanding OTC contracts at $41.0 trillion as of March 31, 1995.
Financial institutions use derivative instruments in their own businesses to
generate profits and to hedge the risks they incur in connection with their own
trading and asset/liability activities. These institutions also use derivatives
on behalf of clients who face similar risks in the management of their
businesses. This significant increase in trading volume and complexity has led
to a fundamental shift in how financial assets are managed.

FUNDAMENTAL SHIFT IN MANAGEMENT OF FINANCIAL ASSETS

Traditionally, financial assets were held to maturity, but in today's
environment of abundant data flow and low transaction costs, many assets are
actively traded and are thus assigned a market value. By shifting their focus to
market value, leading financial institutions have changed their approach to
understanding and managing risk and return. These firms have adopted a value
management approach using "mark-to-market" accounting to value their traded
instrument portfolios and "value at risk" methodologies to quantify the risks
associated with those portfolios. The value management approach originated in
the sophisticated derivatives trading operations of leading banks and is
increasingly being viewed as critical by institutions seeking to remain
competitive in today's financial markets by effectively balancing risk and
return.

FINANCIAL CRISES INVOLVING DERIVATIVES AND OTHER COMPLEX FINANCIAL INSTRUMENTS

A number of well-publicized financial crises have illustrated the growing
importance of more rigorous management and oversight of traded instrument
portfolios for both financial and non-

29
<PAGE> 30

financial institutions. The 1994 bankruptcy of Orange County, California
resulted from over $1.6 billion in losses associated with complex financial
instruments. The 1995 collapse of the British merchant bank Baring Brothers
resulted from a derivatives and futures trading strategy which cost the bank
$1.2 billion. More recently, the Japanese trading house Sumitomo Corporation
lost a reported $1.8 billion in copper trades, including options and futures
trades. A lack of both operational controls and risk management oversight are
significant contributing factors to the losses incurred in connection with the
use of these complex financial instruments. These events have caused financial
institutions to focus on risk management and operational controls, and have also
resulted in closer regulatory scrutiny of trading activities.

CHANGING REGULATORY REPORTING REQUIREMENTS

Regulatory bodies worldwide are moving toward more stringent reporting
requirements for traded instrument portfolios. Mark-to-market accounting and
value at risk methodologies are being widely adopted by regulators as a
reporting standard for traded instrument portfolios. The American Banker
Association estimates that the current cost of compliance with regulatory
reporting requirements for member banks is $14.0 billion per year, an amount
which could increase in response to emerging reporting requirements. For
example, commercial banks in the United States are now required to use
mark-to-market accounting, and European banks must use value at risk
methodologies to quantify the risks in their portfolios.

SIGNIFICANT SOFTWARE AND SYSTEMS CHALLENGE

Increases in trading volume and complexity, a shift to value management and
changing regulatory requirements are imposing heavy demands on the systems
infrastructures of many financial institutions. Many existing trading systems
cannot support the higher trading volumes and the constant innovation in the
derivatives markets. Banks are seeking to replace their existing trading systems
with more robust, adaptable technology that can process high volumes of complex
instruments in a secure environment. At the same time, financial institutions
face the need to implement firmwide risk management systems that provide a
comprehensive view of the aggregated positions and risks of trading portfolios.
The software and systems challenges that need to be met in order to achieve
these objectives are significant. To the Company's knowledge, only a few of the
most sophisticated banks and trading houses have successfully implemented fully
operational firmwide risk management systems.

NEED TO INTEGRATE DATA FROM MULTIPLE, DISPARATE SYSTEMS

One of the most significant challenges in building a firmwide risk
management system is to standardize and consolidate the transaction data of
trading activities in order to aggregate exposures and quantify risk. Typically,
different systems have been put in place for managing different trading "books."
Each book can represent a different asset class, currency or trading center.
Risk must be aggregated first for the trading book, which can contain thousands
of positions, and then across all trading books to generate a comprehensive,
easily understandable picture of firmwide risks and exposures. Often, within a
single institution, dozens of different computer systems capture and process
trading books. These systems range from internally developed spreadsheets to
centralized MIS systems to point solutions from third-party vendors. They
frequently are located in multiple trading centers, use different data sets,
database technologies and data dictionaries, and run on a variety of hardware
platforms and operating systems. Integrating these data is a significant
technological and operational challenge that must be met in order to develop
effective risk management and regulatory reporting systems.

INCREASED INVESTMENT IN TRADING AND RISK MANAGEMENT TECHNOLOGY

In response to these challenges, financial institutions worldwide are
investing financial and other resources in the development and acquisition of
trading and risk management technology. In a

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Tower Group study, worldwide internal and external expenditures for hardware,
software and services for risk management systems were estimated at over $3.0
billion in 1994 and are projected to grow to $4.3 billion by the year 2000.
According to other Tower Group Research, nearly two thirds of all banks were in
the process of implementing an enterprise-wide risk management system, or
considered implementation a high priority. In addition, a recent Ernst & Young
LLP bank survey indicated that a majority of the top 100 U.S. banks plan to
increase their investment in risk management technology.

INADEQUACY OF MANY IN-HOUSE AND VENDOR SYSTEMS

Traditionally, financial institutions have licensed off-the-shelf solutions
where they exist and have internally developed those systems that are not
readily available or that require a unique understanding of the firm's needs.
Internally-developed systems, while able to accommodate proprietary techniques,
are often costly, time-consuming and difficult to complete. Large-scale in-house
development projects risk not being completed successfully despite years of
effort and millions of dollars of investment. Third-party vendor solutions,
although generally less costly and faster to deploy, often provide only a subset
of required functionality, lacking one or more of front-to-back office
integration, cross-instrument processing or data warehousing capabilities. In
addition, they are typically closed, black box solutions that cannot readily
accommodate changing market requirements or proprietary instruments and pricing
methodologies.

THE FINANCIAL TRADING AND RISK MANAGEMENT SOFTWARE MARKET OPPORTUNITY

These challenges create an opportunity for an open, flexible technology
platform that can support the rapid deployment of trading and risk management
functionality without sacrificing flexibility, customizability or control. To
address fully the requirements of financial institutions and other organizations
with sophisticated trading operations and risk management needs, the Company
believes that this technology platform must:

- provide a framework for integrating data from multiple, disparate trading
systems into a centralized data warehouse for internal risk management
and regulatory reporting requirements;

- accommodate financial innovation on the trading desk while ensuring
proper financial and operational controls;

- support evolving, proprietary approaches to pricing financial instruments
and quantifying the associated risks; and

- accelerate the delivery time for new applications while preserving an
integrated trading, processing and risk management environment.

THE INFINITY SOLUTION

Infinity believes that its product family provides market-proven,
industry-leading platform and solutions software to meet the challenges of
trading and risk management that have not been adequately addressed by either
internally developed or commercially available systems. The Infinity Platform,
consisting of the Infinity Data Model and the Infinity Fin++ Class Library,
provides customers with an object-oriented foundation for developing a wide
variety of client/server financial applications, from front-to-back office
trading systems to global market and credit risk management systems. Infinity
Derivatives is a real-time derivatives trading system that provides support for
the entire life cycle of a trade. Infinity RiskView, expected to be released in
the second half of 1996, in conjunction with the Infinity Platform, is designed
to provide a robust infrastructure that facilitates the construction of firmwide
risk management systems.

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Infinity's product family provides the following benefits:

ROBUST PLATFORM FOR APPLICATION DEVELOPMENT

The Infinity Platform's high degree of flexibility, which results primarily
from its object-oriented design and the ready availability of a large set of
market-tested C++ classes, enables customers to build and modify applications
and systems quickly and efficiently in order to keep pace with financial
innovation while preserving data integrity and compatibility. This robust
platform enables in-house developers to focus on applications, without the
expense and burden of developing and maintaining foundation technology. In
addition, customers may choose to implement a variety of third-party and
custom-built applications with confidence that they will be fully compatible
with the Infinity Platform. The Infinity Platform is also highly extensible,
designed to expand readily to accommodate new financial instruments, new
analytics or new reports with little or no impact on existing processes or
applications.

CONSOLIDATED AND INTEGRATED DATA FOR FIRMWIDE RISK MANAGEMENT

Firmwide risk management requires a comprehensive data source, aggregated
from the many disparate pools of data that a financial institution typically
generates through its trading activities. The Infinity Platform consolidates
trading and market data from a firm's separate, legacy computer systems located
throughout the world and generates an integrated data set that provides the
basis for informed decision-making. The Company intends to enhance these
capabilities with the release of Infinity RiskView, which will include Infinity
RiskView Objects, a C++ class library designed specifically for the development
of risk management applications, and Infinity RiskView Mapper, which will
facilitate transfer and aggregation of data from existing trading and operations
systems.

IMPROVED TIME TO MARKET FOR NEW SYSTEMS AND APPLICATIONS

Customers can use the Infinity Platform and Infinity Derivatives as an
off-the-shelf derivatives trading system that can be quickly implemented from
front-to-back office, while maintaining the flexibility to add new applications
as market requirements change. The Infinity Platform accelerates the development
process and improves developer productivity, largely due to the benefits of the
C++ object-oriented programming language and the large library of market-tested,
ready-to-use C++ classes that can be used to build new customized applications.
By accelerating the pace of application development, customers can reduce the
time to market for new derivative products, new trading processes and new
pricing or risk management methodologies.

REDUCED COSTS THROUGH ENHANCED EFFICIENCY, PRODUCTIVITY AND SECURITY

The Infinity Platform and Infinity Derivatives can enhance the efficiency,
productivity and security of a trading operation. By eliminating duplicative
data entry and paperwork normally associated with such activities as deal entry,
confirmations, settlement, reconciliation and accounting, Infinity's products
improve operational efficiency while reducing costs. In addition, the automation
of many tasks that were previously done by hand increases back-office
productivity and greatly reduces the opportunity for error and its attendant
costs. Finally, a customer's ability to monitor trading activities on a
real-time basis contributes to enhanced security, and the system's ability to
generate an audit trail can help detect and minimize losses associated with
trading positions that exceed authorized limits.

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THE INFINITY STRATEGY

Infinity's objective is to establish itself as the leading worldwide
provider of trading and risk management platform and solutions software.
Infinity's strategy includes the following key elements:

ESTABLISH THE INFINITY PLATFORM AS AN INDUSTRY STANDARD

Infinity seeks to establish the Infinity Platform as a standard for the
development of trading and risk management systems. To achieve this objective,
Infinity licenses its Infinity Data Model and Infinity Fin++ Class Library to
banks and other financial institutions, as well as to independent software
development companies and systems integrators who use it as a foundation for
developing trading and risk management systems and products. Infinity has
established its Business Partners Program to attract and support third-party
development and consulting partners, as well as a network of trained consulting
engineers who provide custom development using the Infinity Platform. The
Infinity Platform was designed to be easily adopted as a standard through its
use of widely accepted technologies including the C++ programming language,
relational database management systems from Oracle and Sybase, and the UNIX and
Windows NT operating systems. This approach typically means the Infinity
Platform is compatible with its customers' internal information technology
standards, and enables customers and partners to leverage a large pool of
engineers trained in these technologies.

EXPAND INFINITY PRODUCT OFFERINGS

Infinity seeks to increase its penetration of the market for trading and
risk management software through selected new product offerings that target
rapidly expanding or technically challenging segments of the market. For
example, through its introduction and scheduled release of Infinity RiskView in
the second half of 1996, Infinity is seeking to respond to the increased demand
from its customer base for scaleable, flexible development platforms designed
specifically for firmwide risk management systems. In addition, the Company
believes that there are significant opportunities for high volume trading
systems in fixed income, equities and foreign exchange.

TARGET INITIAL SALES OF NEW PRODUCTS TO SOPHISTICATED CUSTOMERS

The Company has adopted a strategy of directing initial sales of its new
products at those more demanding and sophisticated customers as a means of
obtaining the most rigorous and challenging evaluation of new product
performance and functionality. These more sophisticated institutions generally
trade and manage the most diverse and complex set of financial instruments and
have very high trading volumes, which provide the greatest opportunity for the
Company to evaluate, obtain feedback and subsequently enhance its products. The
Company also establishes its ability to provide tested solutions by
demonstrating that its products can meet the needs of the most sophisticated and
demanding users in a particular market or for a specific application. Successful
development of the Company's products with selected leaders in particular
markets is intended to better enable the Company to subsequently penetrate such
markets through sales to other customers, who the Company believes often follow
market leaders in selecting systems solutions for their trading and risk
management needs.

BROADEN CUSTOMER BASE

The Company is seeking to broaden its customer and installed product base
by targeting new geographic markets and industries and through the sale of
additional and new products to different groups within existing customer
organizations. The Company intends to leverage its expertise and reputation in
the banking industry into organizations in other industries, such as insurance
companies, investment management companies, treasury departments of large
corporations and domestic and foreign government entities. In addition to
commercial centers located in North

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America, Western Europe, Japan and Australia, where the Company has initially
targeted its sales and marketing efforts, the Company believes that there are a
number of other geographical regions throughout the world that represent
significant opportunities to broaden its customer base. Once Infinity has made
an initial product sale within an organization, Infinity seeks to expand this
initial relationship through licensing of additional seats and sites, as well as
sales of products to other functional groups within the organization.

DEVELOP AND LEVERAGE STRATEGIC BUSINESS RELATIONSHIPS

Infinity has focused on developing strategic third-party relationships with
companies that provide consulting, software development and implementation
services. These relationships enable Infinity to leverage the technical
expertise of its partners, to access an additional sales and marketing channel
and to further enhance its efforts to establish the Infinity Platform as a
standard. Infinity has developed its Business Partner Program to pursue and
coordinate its activities with these strategic partners. Participants in the
Company's Business Partner Program include IBM and Price Waterhouse. For
Infinity customers, these relationships provide a network of consultants,
professional developers, and system integrators who can address specialized
market needs with directly relevant expertise. In addition, Infinity customers
can select from several third-party applications developed using the Infinity
Platform.

INTEGRATE SOPHISTICATED FINANCIAL ENGINEERING WITH ADVANCED INFORMATION
TECHNOLOGIES

By leveraging its core competencies in financial engineering and
information technology, Infinity seeks to provide solutions to its customer base
that embody the most current state of the market for financial instruments and
that utilize the most advanced information technologies. For example, the
Company's products integrate a distributed N-tier architecture and C++
object-oriented programming with advanced instrument pricing algorithms and risk
management methodologies. To maintain its leadership position, Infinity has
built a professional development and marketing staff that combines highly
advanced technological skills with experience in complex financial instruments.

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MARKETS AND CUSTOMERS

Infinity currently markets its products primarily to large banks and other
financial institutions located throughout the world. Within each of these
organizations, Infinity seeks to identify and approach several different groups
of potential customers: trading, accounting and operations professionals, risk
managers and information technology professionals.

Infinity has licensed its products to more than 35 financial institutions
and corporations worldwide. Because the Company generally does not have
long-term sales contracts with its customers, there can be no assurance that
relationships with these or other customers will continue. The following is a
list of the Company's customers with active licenses or contracts as of June 30,
1996:

<TABLE>
<S> <C>
ABN-AMRO Bank, N.V. Hitachi Information Systems
Bank Gesellschaft IBM Corporation
Bank of Montreal ING/Barings
Berliner Hannoversche J. Henry Schroders Wagg & Co., Ltd.
Softwareentwicklungsgesellschaft OHG J.P. Morgan & Company Inc.
Canadian Imperial Bank of Mitsubishi Trust & Banking Corp.
Commerce/Wood Gundy F.P. National Australia Bank
Chase Manhattan Bank New Zealand Treasury
Commerzbank AG Norddeutsche Landesbank Girozentrale
Compagnie Parisienne de Reescompte Price Waterhouse LLP
(CPR) Informatique Royal Bank of Canada
Credit Lyonnais Santander Investment SA
DePfa - Bank of Europe Plc Sanwa Financial Products Co., L.P.
Deutsche Bank Smith Barney, Inc.
Deutsche Genossenschaftsbank SunTrust Bank
Diagram SA The Sumitomo Bank, Ltd.
Enron, Corp. The Tokai Bank
Fleet Services Corp. Unibank
Fuji Bank Westdeutsche Landesbank Girozentrale
Greenwich Capital Markets
</TABLE>

During fiscal year 1995, ABN-AMRO Bank accounted for 15% of the Company's
total revenues, and during fiscal year 1994, Canadian Imperial Bank of
Commerce/Wood Gundy F.P., National Australia Bank and Chase Manhattan Bank
accounted for 18%, 15% and 10%, respectively. For the six months ended June 30,
1996, no single customer accounted for greater than 10% of the Company's total
revenues.

The following examples illustrate the use of Infinity's products by its
customers:

INTEGRATED TREASURY SYSTEM IMPROVES RISK MANAGEMENT

A diversified banking group based in the Asia Pacific region standardized
on the Infinity Platform and Infinity Derivatives as the foundation for its
global treasury operation. The system, first announced in March 1995, will
ultimately support 500 users worldwide, and will allow the bank to achieve
integrated trading and risk management for both high volume and derivatives
instruments. The bank is currently completing a development of a foreign
exchange trading system based on the Infinity Platform, and has used the
Infinity Platform to develop a risk management data warehouse to be used in
conjunction with in-house developed and third-party analytic packages for risk
management. The new integrated system will help the bank manage market, credit
and liquidity risks, and will support the bank's initiatives to become a leader
in derivatives trading.

EXOTICS PROCESSING SYSTEM FACILITATES INNOVATION WHILE ENABLING FINANCIAL
CONTROL

One of the largest commercial banks in the world entered into a license for
the Infinity Platform, first announced in September 1994, to manage processing
of exotic transactions, such as ratchet swaps and cumulative caps, for its
global derivatives business. The system developed by the bank

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using the Infinity Platform enables it to offer customized derivatives that
respond to its customers' changing risk management requirements. This system is
used to capture the details of these exotic products and allows the bank to
automate its processing requirements in a secure, integrated environment.

AUTOMATED DERIVATIVES PROCESSING REDUCES COSTS AND IMPROVES EFFICIENCY

A large North American commercial bank entered into a license for Infinity
Derivatives, first announced in May 1993, which it used together with work flow
management software from a third party to automate its derivatives trading
operation from front to back office. The bank expects the system to reduce
costs, enhance the bank's flexibility in back office management, lower
operational risks and improve financial control. It will eliminate paper-based
deal entry, confirmation and payments. The bank plans to extend the new
architecture to provide back-office support for its foreign exchange and money
markets treasury groups.

FOREIGN EXCHANGE NETTING SYSTEM ASSISTS IN ACHIEVING IMPROVED CREDIT RATING

A commercial bank with one of the largest foreign exchange trading
operations entered into a license for the Infinity Platform, first announced in
March 1994, to build a global netting system that helped the bank comply with
the Financial Accounting Standards Board accounting rules, reduce the capital
held against its foreign exchange exposures, and ultimately improve its credit
rating. The system collects hundreds of thousands of trades daily from dozens of
sites in which the bank trades foreign exchange. Due to its successful
implementation for foreign exchange, the system has been extended to include
derivatives and other financial instruments.

INFINITY PRODUCTS AND TECHNOLOGY

The Company's products currently include the Infinity Platform, comprising
the Infinity Data Model and the Infinity Fin++ Class Library, and Infinity
Derivatives. The Company has also introduced Infinity RiskView, which is
scheduled to be released in the second half of 1996. The following diagram
illustrates the relationship of the Company's products:

Diagram of Relationship of Infinity Products

THE INFINITY PLATFORM

The Infinity Platform is the foundation of the Infinity family of products
and enables users to model new financial products, evaluate market and credit
risk, ensure regulatory compliance, and integrate legacy systems. The Infinity
Platform includes the Infinity Data Model, a relational database schema that
models financial information and allows users to build and maintain a financial
data warehouse, and the Fin++ Class Library, a set of C++ classes that
encapsulate the definitions and behavior of financial instruments. The data
warehousing capabilities of the Infinity Data Model along with the reusable
financial software components provided in the Fin++ Class Library form a robust
infrastructure for developing trading and risk management systems.

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INFINITY DATA MODEL. The Infinity Data Model is a technology foundation
supporting the development of data warehouses for firmwide risk management, as
well as front- to back-office trading systems. The product is a relational
database schema that includes over 500 tables describing the securities,
transactions, trades, cash flows, portfolios and organization structures that
represent a firm's trading activities. The product supports derivative products
such as swaps, futures and options, as well as more traditional traded products
such as foreign exchange, money markets, bonds and equities. In addition, it can
easily be extended to incorporate new financial instruments. The Infinity Data
Model is used to build data warehouses that can be accessed by multiple users
within a financial institution, including trading managers, risk managers and
senior managers for a variety of decision-support activities. Working in
conjunction with relational database management systems offered by Oracle and
Sybase, the Infinity Data Model integrates data from disparate trading systems
into a centralized, cross-instrument repository. By consolidating transaction
data into a consistent, easily accessible data warehouse, the Infinity Data
Model preserves a firm's investment in legacy systems and technologies.

The Infinity Data Model also supports the development of front- to
back-office trading systems by capturing the events associated with each trade
throughout its life cycle, from initial trade pricing through to general ledger
postings. It models and organizes customer information, including settlement
instructions and legal agreements, and it allows an institution to create a
detailed model of its organizational structure for processing and reporting
purposes.

INFINITY FIN++ CLASS LIBRARY. The Fin++ Class Library is an
object-oriented C++ class library that provides reusable software components for
building trading and risk management applications. The Library consists of over
350 classes that provide the basic building blocks of a trading or risk
management application that can be easily assembled into a complex application.
The library takes advantage of object-oriented design techniques such as
encapsulation, inheritance, aggregation and polymorphism to provide an
easy-to-use tool for in-house and third-party developers. The Fin++ Class
Library works in conjunction with the Infinity Data Model to provide an
infrastructure for automating trading operations, from front to back office, and
for managing firmwide risk.

The building blocks required for financial applications -- securities,
transactions, trades, cash flows, portfolios, and analytics -- are furnished as
Fin++ Class Library objects that are combined into applications. The Fin++ Class
Library also provides a framework for incorporating new financial instruments
and proprietary or third-party analytical models without extensive code changes.
The Fin++ Class Library includes a database layer that provides transparent,
intelligent, fast access to the Infinity Data Model, as well as distribution
classes that provide a simple mechanism for distributing objects across a
network through a publish and subscribe protocol. Fin++ CalcEngines, an add-on
library to the Fin++ Class Library, enables developers to build applications for
real-time pricing and position-keeping in an N-tier client/server architecture.

INFINITY DERIVATIVES

Based on the Infinity Platform, Infinity Derivatives provides real-time
trading for derivatives and handles the entire life cycle of a trade. Trading
desks can quickly implement their front- to back-office functionality without
sacrificing the flexibility to add products, models and processes over time.
Infinity Derivatives offers many potential benefits to its users, including
lower per trade processing costs, improved ability to respond to market
conditions, enhanced client service, better risk management and improved
security. Infinity Derivatives includes a suite of front office applications for
pricing, hedging, position-keeping, portfolio management and risk reporting as
well as back office applications for confirmations and advices, payments, rate
resets and accounting.

Infinity Derivatives handles a wide range of complex financial products,
including swaps, caps, floors and swaptions; it also supports hedging activities
using bonds, futures, foreign exchange and

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money market instruments. While Infinity Derivatives incorporates a wide variety
of industry standard pricing models, its open, flexible architecture allows
users to incorporate proprietary and third-party analytical models. Infinity
Derivatives also provides derivatives risk management capabilities, including
hedging at a trade and portfolio level, sensitivity analysis and profit and loss
reporting.

In the back-office environment, Infinity Derivatives automates the many
steps required for operations and financial control. Once a trade has been
booked in the system, Infinity Derivatives automatically generates
confirmations, payments and accounting entries, interfacing directly with the
customer's general ledger system.

Throughout the life of a trade, Infinity Derivatives ensures streamlined
and secure trade processing. It provides a single database for all trade
information, thereby eliminating redundant data entry and costly
reconciliations. It offers a high level of security, with authorizations and
permissions based on trading book, currency, financial instrument type and
function. It provides an audit trail of transactions and operations, and it
enables trade and market data to be secured against unauthorized or accidental
changes.

INFINITY RISKVIEW

Infinity RiskView, which is currently under development and scheduled for
release in the second half of 1996, is based on the Infinity Platform and will
initially focus on management of firmwide trading risk. Together, Infinity
RiskView and the Infinity Platform are designed to provide a robust
infrastructure for constructing firmwide market and credit risk management
systems associated with trading operations.

Infinity RiskView is designed to significantly reduce the cost and
implementation risk associated with data warehousing, which is rapidly emerging
as the preferred approach to a firmwide risk management solution. Infinity
RiskView is designed to address, in conjunction with the Infinity Platform, the
four major challenges of data warehousing: data mapping, data storage, data
access, and analysis and reporting. Infinity RiskView includes RiskView Objects,
a C++ class library for developing risk management applications, and RiskView
Mapper, a graphical application that facilitates transfer and aggregation of
data from existing trading and operations systems. Infinity RiskView is designed
to provide transaction or portfolio level risk analysis, including mark-to-
market, sensitivities, profit and loss reporting and cash flow projections. For
firmwide risk analysis, Infinity RiskView is designed to provide analysis and
reporting capabilities based on value at risk methodologies and historical
simulation. Infinity RiskView also is designed to provide a framework for
integrating proprietary and third-party analytics. There can be no assurance
that the Company will not experience any delay in the timely release of Infinity
RiskView and that it will achieve market acceptance. See "Risk Factors -- Rapid
Technological Change and Dependence on New Products."

TECHNOLOGY

The Infinity Platform, Infinity Derivatives and Infinity RiskView are
client/server software products that operate on the Sun Microsystems,
Hewlett-Packard and IBM versions of the UNIX operating system. In addition, the
Infinity Platform operates on the Windows NT operating system. The Infinity
Platform uses industry-standard relational database management systems from
Oracle and Sybase. Infinity uses the standard TCP/IP protocol for its publish
and subscribe and point-to-point communications infrastructure. This
infrastructure is utilized in the Company's N-tier client/server architecture.
The Company believes that the combination of these open, standards-based
technologies with the extensive financial engineering that is at the core of the
Infinity product family provides customers with significant advantages relative
to both proprietary third-party solutions and comprehensive in-house systems
development.

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SALES, MARKETING AND SUPPORT

The Company's sales and marketing efforts are directed at large banks and
other financial institutions through its worldwide direct sales force,
complemented by its network of third-party business partners. The Company
provides product support for customers through its field support offices and its
headquarters-based Client Services Group.

DIRECT SALES

Infinity markets and sells its products through a worldwide direct sales
force located in New York, London, Paris, Tokyo and its Mountain View,
California headquarters. The Company's combined sales and support organizations
totaled 48 people on June 30, 1996, and the Company plans to add additional
staff to this organization during the balance of 1996, emphasizing field sales
and pre-sales activities. See "Risk Factors -- Small Direct Sales Force and
Reliance on IBM Corporation and Other Strategic Relationships."

Typically, the Company generates initial leads through inquiries from
prospective customers based on references from existing customers and contacts
made through seminars, conferences, trade shows and an ongoing public relations
program. The sales process then generally involves multiple presentations to
information technology and business professionals within the prospect
institution as well as trial evaluations of the Infinity software. In addition,
Infinity derives a substantial number of follow-on sales from new customers who
purchase licenses for additional users and products to augment their
Infinity-based system.

During the first half of 1996, the revenue recognized from products
licensed to new and existing customers in single significant transactions ranged
from $250,000 to $1.7 million, based on the number and type of products
licensed, the number of seats and sites in the customer's system and other
factors. During the same period, a small portion of the Company's revenue was
derived from products and upgrades of products licensed to new and existing
customers in single transactions involving less than $250,000. The Company
charges customers an annual maintenance fee based on a percentage of the then
current list price or contract value of the product licensed.

The Company's sales backlog is not significant, and the Company believes
backlog is not a meaningful indicator of the Company's future performance. See
"Risk Factors -- Lengthy Sales Cycle."

BUSINESS PARTNER PROGRAM

Infinity has established the Business Partner Program to obtain additional
sales and marketing channels, to further promote the Infinity Platform as an
industry standard and to leverage the marketing organizations, geographical
locations and technical expertise of its partners. Infinity's Business Partner
Program supports three types of partners:

- Licensed Infinity Developer: These developers are authorized to create
and market products and/or services using the Infinity Platform. This
program has fostered the development of third-party applications that are
seamlessly integrated into the Infinity Platform and meet specific market
requirements. These developers are developing and have commenced
marketing applications based on the Infinity Platform for real-time risk
monitoring, Monte Carlo simulation, limits management and data mapping.

- Licensed Infinity Solution Provider: These companies are authorized to
offer a range of services to Infinity clients, including consulting,
planning, installation, implementation support, training, project
management, systems integration, or custom software development. As
licensed Infinity Platform users, these companies may develop and deploy
tools, utilities, and applications used in providing these services to
Infinity clients. Infinity's Licensed Solution Providers include large
global organizations such as IBM and Price Waterhouse.

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- Infinity Certified Engineering Partners ("ICEs"): ICEs provide custom
application development and knowledge transfer on the Infinity Platform
to Infinity's customers. A growing number of ICEs are available for
short- or long-term consulting engagements. Infinity provides
certification, education and matching services for ICEs for a nominal
annual fee. By building this third-party engineering capability, Infinity
has been able to maintain its product focus while still meeting customer
needs for specialized development and customization services.

INTERNATIONAL SALES

International revenues outside of North America accounted for 70%, 53%, 25%
and 27% of total revenues for the six-month period ended June 30, 1996, and for
the 1995, 1994 and 1993 fiscal years, respectively. The Company has sales
personnel located in three financial centers outside of North America. See "Risk
Factors -- Risks Associated with International Sales."

SUPPORT SERVICES

Support services, covering technical support, implementation and
installation, are a key element of the Company's product offerings. Infinity
customers can access a global field support staff of professionals located in
New York, London, Tokyo, Paris, Frankfurt, Sydney and Toronto. In addition,
Infinity maintains a Client Services Group in its headquarters in Mountain View,
California. The Client Services Group is responsible for supporting the needs of
customers and of the global field support staff and is a gathering point of
valuable customer feedback for the Infinity marketing and product development
teams. The group includes professionals devoted to training, telephone support,
technical publications, production and distribution.

PRODUCT DEVELOPMENT

The market for the Company's products is characterized by rapid
technological advances, evolving industry standards in computer hardware and
software technology, changes in customer requirements and frequent new product
introductions and enhancements. The Company's future success will depend upon
its ability to continue to enhance its current product line and to develop and
introduce new products that address technological developments, satisfy
increasingly sophisticated customer requirements and achieve market acceptance.
In particular, the failure of the Company to enhance its products to (i) timely
adapt to the rapidly developing computer hardware and software technology upon
which its products are based, (ii) incorporate new functionality reflecting
rapidly evolving types of derivative securities and other financial instruments
and risk management methodologies and (iii) incorporate new functionality to
facilitate customers' compliance with changing regulatory reporting requirements
could cause customers to delay their purchase of the Company's products, or
decide not to purchase such products. In September 1995, the Company introduced
its back-office modules for Infinity Derivatives, which have been implemented on
a limited basis by Infinity customers. The Company further intends to release
prior to the end of 1996 a risk management product called Infinity RiskView,
designed to extend the Infinity Platform for certain risk management functions,
and a Windows NT version of its Infinity Derivatives product. No assurance can
be given that development of Infinity RiskView or the Windows NT version of
Infinity Derivatives will be successfully completed or that either of these new
products will be accepted in the marketplace. The anticipated release of these
products also could cause customers to delay purchase decisions for existing
products of the Company. The Company has in the past experienced delays in the
introduction of product enhancements and new products, including a delay in
introducing the back-office modules for Infinity Derivatives. There can be no
assurance that the Company will not experience such delays in the future, or be
successful in developing and marketing, on a timely and cost-effective basis,
product enhancements or new products, including Infinity RiskView and a Windows
NT version of Infinity Derivatives, and the

40
<PAGE> 41

failure to do so could have a material adverse effect on the Company's business,
financial condition and results of operations.

Infinity believes that strong product development capabilities are
essential to its strategy of building a platform that can become an industry
standard, to maintaining the competitiveness of its current product suite, and
to adding new features and functionality to the Infinity Platform and other
products. The Company's product development team comprises professionals with
expertise in software development and professionals with expertise in
derivatives or other financial instruments or risk management methodologies.
From its founding, the Company has believed that this assembly of diverse
technical and financial expertise contributes to the highly integrated
functionality of its software products and thereby provides the Company with a
significant competitive advantage.

The Company's research and development expenses totaled $4.1 million, $6.1
million, $3.3 million and $1.6 million for the six-month period ended June 30,
1996 and for the 1995, 1994 and 1993 fiscal years, respectively. The Company
expects to continue to allocate significant resources to future product
development. To date, all internally developed software costs have been expensed
as incurred.

The Company's current product development efforts are directed toward
maintaining and enhancing Infinity Derivatives, extending the Infinity Platform
and developing Infinity RiskView. A Windows NT version of the Infinity
Derivatives product is under development for testing and release in the second
half of 1996. Infinity has already delivered a version of the Infinity Platform
that operates on Windows NT. The Windows NT operating system is increasingly
popular with financial institutions, and the Company believes that providing a
version of its product for this environment is strategically important. The
Company's newest product, Infinity RiskView, was announced in June 1996 and is
currently scheduled for field testing and production release in the second half
of 1996.

COMPETITION

41
<PAGE> 42

acquiring financial trading and risk management software products. In addition
to competition from such third-party companies, the Company frequently faces
substantial sales resistance from the internal development groups of potential
customers that have developed or may develop systems that may substitute for
those offered by the Company. In particular, the Company has experienced
significant difficulties in persuading potential customers to purchase its
products where their internal development groups have already progressed
significantly toward completion of systems which the Company's products would
augment or replace and where the underlying technologies, such as the
programming language, utilized by such groups differ fundamentally from the
Company's.

The Company believes that the principal competitive factors in the market
for its products are the adaptability of the products to new financial
instruments, the ability of products to be integrated into customers existing
and emerging operations on a firmwide basis, cost, time to implementation,
robustness and support services. Based on these factors, the Company believes
its products compete favorably, although there can be no assurance that the
Company can maintain its competitive position against current and potential
competitors. See "Business -- Industry Background -- Inadequacy of Many In-House
and Vendor Systems."

In order to be successful in the future, the Company must continue to
respond promptly and effectively to the challenges of technological change and
competitors' innovations. There can be no assurance that the Company will be
able to compete successfully with existing or new competitors or that
competition will not have a material adverse effect on the Company's business,
financial condition and results of operations.

INTELLECTUAL PROPERTY

The Company's success is heavily dependent upon its proprietary technology.
The Company relies primarily on a combination of copyright, trade secret and
trademark laws, nondisclosure and other contractual provisions and technical
measures to protect its proprietary rights. The Company seeks to protect its
software, documentation and other written materials through trade secret and
copyright laws, which provide only limited protection. As part of its
confidentiality procedures, the Company generally enters into nondisclosure
agreements with its employees, consultants, distributors and corporate partners.
Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use the Company's products
or technology independently. In particular, the Company customarily provides its
existing and potential distribution partners with access to its product
architecture and other proprietary information underlying the Company's licensed
software, including source code. An unauthorized publication or proliferation of
the Company's source code could materially adversely affect the Company's
business, financial condition and results of operations. Policing unauthorized
use of the Company's products is difficult, and the Company is unable to
determine the extent to which unauthorized use of its software products exists.
In addition, effective protection of intellectual property rights may be
unavailable or limited in certain countries including countries in which the
Company currently sells its products, such as Japan, and countries the Company
may target to expand its sales efforts such as Brazil, Hong Kong, Mexico, South
Africa, and Thailand. Accordingly, there can be no assurance that the Company's
means of protecting its proprietary rights will be adequate or that the
Company's competitors will not independently develop similar technology.

EMPLOYEES

At June 30, 1996, Infinity had 133 employees of whom 45 were primarily
engaged in research and development, 70 in sales, support and marketing and 18
in finance and administration. None of the Company's employees is represented by
a collective bargaining agreement and the Company has never experienced any work
stoppage. The Company considers its relations with its employees to be good. The
Company also employs a number of temporary and contract employees, and at June
30, 1996, the Company employed approximately nine temporary and contract
employees.

42
<PAGE> 43

The Company's success depends to a significant extent on the performance of
a number of senior management and sales and engineering personnel, including
Roger A. Lang, a founder of the Company and its President and Chief Executive
Officer. The Company's Vice President of Software Engineering, Keith Hospers, is
currently on long-term disability leave from the Company for medical reasons,
which leave is expected to continue for the indefinite future. The Company's
Vice President of Client Services will commence a one-year educational leave in
August 1996. The absence of these two key employees has placed and continues to
place a significant additional burden on the other members of the Company's
management team and could materially adversely affect the development of the
Company's products and the Company's business, financial condition and results
of operations. The Company is currently recruiting a Vice President of Products
and Technology, who would oversee all product development and engineering
activities of the Company and would assume many of Mr. Hospers' prior
responsibilities. The Company is experiencing difficulty in recruiting a
qualified individual for this position and would expect to experience similar
difficulty in replacing its Vice President for Client Services if the current
individual in that position chooses not to return to the Company following
completion of his one-year educational leave. Further, given the critical role
of the Company's limited engineering staff in executing the Company's product
strategies, the loss of any additional significant part of its engineering staff
would also have a material adverse effect on the Company. The Company generally
does not have long-term employment contracts with Mr. Lang, its engineering
staff or any other employees. The Company believes that its future success also
will depend in part on its ability to attract and retain highly-skilled
engineering, managerial, sales and marketing personnel. Competition for such
personnel in the software industry is intense, and there can be no assurance
that the Company will be successful in attracting and retaining such personnel.
The Company has previously experienced substantial difficulty in hiring sales
and engineering personnel with expertise in sophisticated financial instruments
and may experience similar difficulty as it attempts to hire other qualified
staff who have the required experience levels. In particular, the Company has
experienced difficulty competing for such personnel with large financial
institutions with substantially greater financial resources. Failure to attract
and retain key personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Employees" and "Management -- Executive Officers and Directors."

FACILITIES

The Company's primary offices are located in approximately 40,000 square
feet of space in Mountain View, California under a lease expiring in February
2001. The Company also leases space for its sales and support offices in New
York, Paris, London, Tokyo and Toronto.

43
<PAGE> 44

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the executive
officers and directors of the Company as of August 31, 1996:

<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ----------------------------------- --- -------------
<S> <C> <C>
Roger A. Lang...................... 37 President,
Chief
Executive
Officer and
Director
Till M. Guldimann.................. 47 Executive
Vice
President and
Director
Terry H. Carlitz................... 45 Chief
Financial
Officer and
Vice
President,
Finance
Keith Hospers...................... 49 Vice
President,
Software
Engineering
Michael Laven...................... 48 Vice
President,
Worldwide
Field
Operations
Tejbir S. Sidhu.................... 30 Vice
President,
Client
Services
Charles H. Marston................. 46 Chairman of
the Board
Douglas M. Leone(1)(2)............. 40 Director
John C. Lewis(2)................... 60 Director
James A. Dorrian(1)................ 43 Director
</TABLE>

- ---------------
(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

Mr. Lang has been Chief Executive Officer and a Director of the Company
since he co-founded the Company in June 1989. In May 1996, he was named
President of the Company. Prior to founding the Company, Mr. Lang was Vice
President, Global Client Services at C-ATS Software Inc., a provider of software
products for the financial services industry, from September 1986 until June
1989. Mr. Lang holds a B.A. and an M.A. from Stanford University.

Mr. Guldimann has been Executive Vice President and a Director of the
Company since he joined the Company in September 1995. From June 1974 to June
1995, Mr. Guldimann was employed by J.P. Morgan, where he served as Head of
Global Research from March 1990 to June 1995 and as Chairman of J.P. Morgan's
Market Risk Committee from February 1991 to October 1992. Mr. Guldimann holds an
M.S. from the Swiss Federal Institute of Technology and an M.B.A. from Harvard
University.

Ms. Carlitz has been Chief Financial Officer and Vice President, Finance
since she joined the Company in February 1995. From September 1987 to February
1995, she was employed by Apple Computer, Inc. where she held the positions of
Director, Strategic Investments and Business Development, Director and European
Controller and Director, Corporate Planning and Analysis. Ms. Carlitz holds a
B.S. from San Jose State University and an M.B.A. from Stanford University.

Mr. Hospers joined the Company as its Vice President, Software Engineering
in November 1995. From February 1993 to October 1995, Mr. Hospers was employed
by Informix Corporation, a database software company, in a variety of positions
and most recently as Executive Director of Tools Development. From January 1988
to January 1993, Mr. Hospers was employed by Independence Technologies, Inc.
where he was Director of Transaction Processing. Mr. Hospers is currently on
long-term disability leave from the Company for medical reasons, which leave is
expected to continue for the indefinite future. The Company is currently
recruiting a Vice President of Products and Technology, who would oversee all
product development and engineering activities of the Company and would assume
many of Mr. Hospers' prior responsibilities. Mr. Hospers holds a B.S. degree
from Cornell University and an M.S. degree from the University of Utah.

44
<PAGE> 45

Mr. Laven is Vice President, Worldwide Field Operations. Prior to joining
the Company in May 1996, he was employed by Scopus Technology, Inc., a customer
information management software company, where he served as Vice President,
International since June 1995. From April 1994 to May
1995, he was Chief Executive Officer of CoroNet Systems, a network management
company. From May 1990 to March 1994, Mr. Laven held various positions at Ask
Computer, a relational database management systems and applications company,
most recently serving as Executive Vice President, Worldwide Operations. From
June 1982 to April 1990, Mr. Laven held various positions at Dun and Bradstreet
Software, a software development company, most recently serving as Vice
President, Europe. Mr. Laven holds a B.A. degree from Wesleyan College, an M.A.
degree from the School of International Training and an M.Ed. from Harvard
University.

Mr. Sidhu co-founded the Company in June 1989 and is currently Vice
President, Client Services. Prior to founding Infinity, Mr. Sidhu was with
Everex Systems, a manufacturer of PC-based workstations and peripherals from
July 1988 until May 1989. Mr. Sidhu commenced a one-year educational leave in
August 1996. Mr. Sidhu holds a B.A. from the University of Pennsylvania.

Mr. Marston joined Infinity in July 1991, and has previously served as
Director of Financial Engineering, Vice President of Product Development and
President prior to being elected to the position of Chairman of the Board in May
1996. Prior to joining Infinity, Mr. Marston led the design and development
effort for large-scale trading systems from May 1989 until March 1991 at
Berkeley Research and Trading, a financial software company. From February 1985
until April 1989, he served as an analyst in the Public Finance department and a
designer and manager of derivatives product systems in the Capital Markets
Research and Development department at Bank of America. Mr. Marston holds a B.A.
from the University of California at San Diego and a Ph.D. from the University
of California at Berkeley.

Mr. Leone has served as a Director of the Company since January 1994. He is
a partner of Sequoia Capital, which he joined in 1988. Prior to joining Sequoia,
he spent seven years in the electronics industry and held sales and sales
management positions at Sun Microsystems, Hewlett-Packard and Prime Computer.
Mr. Leone is also a director of Arbor Software and International Network
Services, Inc., and is the Chairman of Shomiti Systems. He holds a B.A. from
Cornell University, an M.A. from Columbia University and an M.A. from MIT.

Mr. Lewis has served as a Director of the Company since March 1995. He has
been Chairman of the Board of Amdahl Corporation since May 1987. He also served
as Amdahl's Chief Executive Officer from May 1983 to May 1992. He presently
serves on the Board of Directors of Vitesse Semiconductor Corporation, Cypress
Semiconductor Corporation and Pinnacle Systems, is a member of the Board of
Trustees of Santa Clara University and is a director of the California Chamber
of Commerce. He holds a B.S. from California State University at Fresno.

Mr. Dorrian has served as a Director of the Company since July 1996. In
April 1991, he co-founded Arbor Software and has served as its President and
Chief Executive Officer. Prior to co-founding Arbor Software, Mr. Dorrian was
the President of Solutions Technology, Inc., a software consulting firm
specializing in financial software systems development. Previously, Mr. Dorrian
was Western States Director for Thorn EMI Computer Software, a developer of
Executive Information Systems software. Mr. Dorrian holds a B.A. from Indiana
University.

45
<PAGE> 46

Currently all directors hold office until the next annual meeting of
stockholders or until their successors have been duly elected and qualified.
However, following the reincorporation of the Company in Delaware and commencing
at the first annual meeting of stockholders following the annual meeting of
stockholders when the Company shall have had at least 800 stockholders, the
Restated Certificate of Incorporation of the Company will provide for the Board
of Directors to be divided into three classes, each with staggered three-year
terms. As a result, only one class of directors will be elected at each annual
meeting of stockholders of the Company, with the other classes continuing for
the remainder of their respective three-year terms. Upon the division of the
Board of Directors into three classes, stockholders shall no longer have
cumulative voting rights and the Company's stockholders representing a majority
of the shares of Common Stock outstanding will be able to elect all of the
directors. See "Description of Capital Stock -- Anti-Takeover Effects of
Provisions of the Company's Charter and Bylaws."

Officers are elected by and serve at the discretion of the Board of
Directors. There are no family relationships among the directors or officers of
the Company.

BOARD COMMITTEES

Audit Committee. The Audit Committee of the Board of Directors reviews the
results and scope of the annual audit and other services provided by the
Company's independent auditors. The Audit Committee also reviews and evaluates
the Company's system of internal controls as well as monitors transactions
between the Company and its employees, officers and directors. Mr. Dorrian and
Mr. Leone serve as members of the Audit Committee.

Compensation Committee. The Compensation Committee of the Board of
Directors administers the 1996 Stock Incentive Plan, the 1996 Employee Stock
Purchase Plan, the 1993 Stock Incentive Plan and the 1989 Stock Option Plan and
reviews and approves the compensation and benefits for the Company's executive
officers. Mr. Lewis and Mr. Leone serve as members of the Compensation
Committee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Company's Compensation Committee was formed in July 1996 to review and
approve the compensation and benefits for the Company's executive officers,
administer the Company's stock option and stock incentive plans and Employee
Stock Purchase Plan and make recommendations to the Board of Directors regarding
such matters. The committee is currently composed of Mr. Lewis and Mr. Leone,
neither of whom is an officer of the Company. No interlocking relationship
exists between any member of the Company's Board of Directors or Compensation
Committee and any member of the board of directors or compensation committee of
any other company, nor has any such interlocking relationship existed in the
past.

In February 1995 and September 1995, the Company granted Mr. Lewis
immediately exercisable, non-qualified stock options for 80,000 shares of Common
Stock at an exercise price of $0.35 per share and 20,000 shares of Common Stock
at an exercise price of $1.50 per share, respectively. Mr. Lewis exercised
options to purchase 80,000 shares in March 1995 and options to purchase 20,000
shares in September 1995. In addition, in September 1995 the Company entered
into an agreement with Mr. Lewis whereby Mr. Lewis had the right to purchase
40,000 shares of Common Stock at a purchase price of $1.50 per share, which
right Mr. Lewis exercised concurrently with the execution and delivery of such
agreement. In February 1995, the Company granted Mr. Leone immediately
exercisable, non-qualified stock options for 50,000 shares of Common Stock at an
exercise price of $0.35 per share. Mr. Leone exercised such options to purchase
50,000 shares in March 1995.

46
<PAGE> 47

DIRECTOR COMPENSATION

The Company's outside directors are reimbursed for expenses incurred in
connection with attending Board and committee meetings but are not compensated
for their services as Board members. The Company may also grant to directors
options to purchase Common Stock of the Company pursuant to the terms of the
1996 Stock Incentive Plan. See "Stock Plans -- 1996 Stock Incentive Plan."

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning compensation
of the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company whose aggregate cash compensation
exceeded $100,000 during the year ended December 31, 1995 (collectively, the
"Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------------------------------ -------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($)(1) COMPENSATION($) OPTIONS COMPENSATION
- ------------------------------ -------- ----------- --------------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Roger A. Lang................. $146,764 $45,000 -- -- --
President, Chief Executive
Officer and Director
Till M. Guldimann............. 66,899(2) -- -- 700,000 --
Executive Vice President
and Director
Keith Hospers................. 25,891(3) 30,000 -- 250,000 --
Vice President, Software
Engineering
Charles H. Marston............ 147,196 30,000 -- -- --
Chairman of the Board
Terry H. Carlitz.............. 126,410 40,000 -- 200,000 --
Chief Financial Officer
and Vice President,
Finance
</TABLE>

- ---------------
(1) Includes bonus amounts earned in 1995 and paid in 1996; excludes bonuses
earned in 1994 and paid in 1995.

(2) Mr. Guldimann joined the Company in September 1995. His base annual salary
for 1995 was $200,000.

(3) Mr. Hospers joined the Company in October 1995. His base annual salary for
1995 was $155,000.

47
<PAGE> 48

OPTION GRANTS DURING 1995

The following table sets forth for each of the Named Executive Officers
certain information concerning stock options granted during the year ended
December 31, 1995:

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(5)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
GRANTED(1) 1995(2) PER SHARE(3) DATE(4) 5%($) 10%($)
---------- ---------------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Lang........... -- -- -- -- -- --
Till M. Guldimann....... 500,000 27.0% $ 1.50 08/31/05 $471,671 $1,195,307
200,000 10.8 1.50 08/31/05 188,668 478,123
Keith Hospers........... 250,000 13.5 1.50 10/03/05 235,835 597,653
Charles H. Marston...... -- -- -- -- -- --
Terry H. Carlitz........ 200,000 10.8 0.35 02/26/05 44,023 111,562
</TABLE>

- ---------------
(1) Options granted under the Company's 1993 Stock Incentive Plan.
(2) In 1995, the Company granted options to employees to purchase an aggregate
of 1,855,500 shares.
(3) In determining the fair market value of the Company's Common Stock, the
Board of Directors considered various factors, including the Company's
financial condition and business prospects, its operating results, the
absence of a market for its Common Stock and the risks normally associated
with high technology companies. The exercise price may be paid in cash,
check, promissory note, shares of the Company's Common Stock, through a
cashless exercise procedure involving same-day sale of the purchased shares
or any combination of such methods.
(4) Options may terminate before their expiration dates if the optionee's status
as an employee or consultant is terminated or upon the optionee's death or
disability.
(5) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent the Company's estimate or projection of the Company's future
Common Stock prices.

AGGREGATE OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES.

The following table sets forth certain information with respect to stock
options held by the Named Executive Officers during 1995.

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
SECURITIES UNDERLYING IN-THE-MONEY
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS OPTIONS AT DECEMBER 31,
ON EXERCISE (#) REALIZED ($) AT DECEMBER 31, 1995(#) 1995($)(1)
-------------------------------------------------------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Roger A. Lang......... -- -- -- --
Till M. Guldimann..... 500,000 -- -- 200,000 -- $ 200,000
Keith Hospers......... -- -- -- 250,000 -- 250,000
Charles H. Marston.... 200,000 $ 45,209 -- -- -- --
Terry H. Carlitz...... 200,000 -- -- -- -- --
</TABLE>

- ---------------
(1) The value of "in-the-money" stock options represents the positive spread
between the exercise price of stock options and the fair market value for
the Company's Common Stock of $2.50 per share as of December 31, 1995, as
determined by the Company's Board of Directors.

48
<PAGE> 49

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement dated September 1,
1995 with
Till M. Guldimann, its Executive Vice President. The agreement provides that Mr.
Guldimann shall receive a yearly salary of $200,000 and reimbursement for
certain expenses. Mr. Guldimann is also entitled to participate in any pension,
bonus, retirement, insurance, medical reimbursement or other employee benefit
plan adopted by the Company. Under an option agreement executed in connection
with his employment agreement, Mr. Guldimann was granted incentive stock options
to purchase 200,000 shares of the Company's Common Stock at an exercise price of
$1.50 per share. Mr. Guldimann was also granted immediately exercisable,
non-qualified options to purchase 500,000 shares of the Company's Common Stock
at an exercise price of $1.50 per share. In addition, on the same date, Mr.
Guldimann purchased 200,000 shares of Common Stock of the Company pursuant to a
Restricted Stock Purchase Agreement. See "Certain Transactions."

The employment agreement continues until Mr. Guldimann's employment is
terminated (i) by the Board of Directors for cause at any time upon ten days
written notice, or without cause upon six months written notice; (ii) by death;
(iii) by Mr. Guldimann for good reason upon 20 days written notice, or at will
upon three months written notice; or (iv) due to disability. Upon termination of
employment without cause by the Company, or for good reason by the employee, the
Company will hire Mr. Guldimann as a consultant for a period of six months
following termination. During the consultancy period, Mr. Guldimann is required
to be available at least ten hours per month in return for which he will be
entitled to receive a monthly salary, bonus and benefits equal to the amount
that he received immediately prior to his termination of employment. During this
period his options will continue to vest.

The Company has entered into an employment agreement dated October 24, 1995
with Keith Hospers, its Vice President, Software Engineering. The agreement
provides that Mr. Hospers shall receive a yearly salary of $155,000 and
reimbursement for certain expenses. For the first 12 month period of his
employment, Mr. Hospers is entitled to receive a bonus in the amount of $45,000,
$30,000 of which is payable upon commencement of his employment, and the
remaining $15,000 is payable in three equal installments six, nine and 12 months
after commencement of his employment. After the first 12 months of employment,
Mr. Hospers is eligible to participate in the Company's regular bonus plans. Mr.
Hospers is also entitled to participate in any pension, retirement, insurance,
medical reimbursement or other employee benefit plan adopted by the Company and
was granted in October 1995 incentive stock options to purchase 250,000 shares
of the Company's Common Stock at an exercise price of $1.50 per share. See
"Certain Transactions."

The agreement continues until Mr. Hospers' employment is terminated (i) by
the Board of Directors for cause at any time upon ten days written notice, or
without cause upon one month notice; (ii) by death; (iii) by Mr. Hospers for
good reason upon 20 days written notice, or at will upon six weeks written
notice; or (iv) at the option of the Board of Directors after 120 consecutive
days of disability. If the employment agreement is terminated by Mr. Hospers for
good reason or by either party at will, Mr. Hospers will receive severance
benefits consisting of six months salary, certain benefits, unpaid bonuses and
the vesting and right to exercise any stock options held by Mr. Hospers at the
time of termination. Mr. Hospers is currently on long-term disability leave from
the Company for medical reasons, which leave is expected to continue for the
indefinite future.

In May 1996, Michael Laven, the Company's Vice President, Worldwide Field
Operations, entered into a letter agreement with the Company. The letter
agreement provides for an annual salary of $150,000 plus a guaranteed bonus of
$30,000 per annum. Mr. Laven is also eligible for the Company's annual incentive
bonus and executive incentive bonus of up to $120,000, provided certain targets
are met by the Company. Mr. Laven is also eligible to participate in all of the
Company's benefit plans and was granted in May 1996 incentive stock options to
purchase 100,000 shares of the Company's Common Stock at an exercise price of
$4.00 per share, and immediately exercisable, nonqualified stock options to
purchase 140,000 shares of the Company's Common Stock at an exercise price of
$4.00 per share. Mr. Laven's employment is at will and may be terminated by
either party with or without cause. See "Certain Transactions."

49
<PAGE> 50

STOCK PLANS

1989 STOCK OPTION PLAN

The Company's 1989 Stock Option Plan (the "1989 Option Plan") was adopted
by the Board of Directors in December 1989, and approved by the Company's
stockholders in May 1990. The 1989 Option Plan provides for the granting to
employees of the Company and of its subsidiaries or parent corporations of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and for the granting to employees
and independent contractors of non-qualified stock options. As of June 30, 1996,
the Board of Directors and the stockholders have authorized a total of 3,000,000
shares of Common Stock for issuance pursuant to the 1989 Option Plan, of which
options to purchase 281,018 shares are currently outstanding, options to
purchase 2,671,182 shares have been exercised and options to purchase 304,356
shares have been transferred to the 1993 Stock Incentive Plan. With certain
exceptions, the options terminate upon termination of employment, disability or
death of the optionee. There are no further options available for grant under
the 1989 Option Plan.

The 1989 Option Plan may be administered by the Board of Directors or a
committee of the Board (the "Committee"). The Committee has the power to
determine the terms of the options granted, including the exercise price, number
of shares subject to the option and the exercisability thereof, and the form of
consideration payable upon exercise. Options granted under the 1989 Option Plan
are not transferable by the optionee other than by will or the laws of descent
or distribution, and each option is exercisable during the lifetime of the
optionee only by such optionee. The exercise price of all incentive stock
options granted under the 1989 Option Plan must be at least equal to the fair
market value, as determined by the Board of Directors, of the Common Stock on
the date of grant. The exercise price of all non-qualified stock options granted
under the 1989 Option Plan must be at least 85% of the fair market value, as
determined by the Board of Directors, of the Common Stock on the date of grant.
With respect to any participant who owns stock possessing more than 10% of the
voting power or value of all classes of the Company's outstanding capital stock,
the exercise price of any incentive or non-qualified stock option granted must
equal at least 110% of the fair market value of the Common Stock on the grant
date and the term of the option must not exceed five years. The term of all
other options granted under the 1989 Option Plan may not exceed ten years. The
consideration for exercising any option may consist of cash, check, shares of
Common Stock, a promissory note, the assignment of part of the proceeds from the
sale of shares acquired upon exercise of the options or any combination thereof.

The 1989 Option Plan provides that in the event of a merger of the Company
with or into another corporation or a consolidation, sale of substantially all
of the Company's assets or like transaction involving the Company in which the
Company's stockholders before the transaction do not retain a majority interest
in the Company, each option may be assumed or an equivalent option may be
substituted by a successor corporation. If the successor corporation chooses not
to assume the options under the 1989 Option Plan, the Optionee may immediately
exercise all options not otherwise exercisable with such exercise conditioned
upon consummation of the transaction.

Unless terminated sooner, the 1989 Option Plan will terminate automatically
in 1999. The Board has the authority to amend, suspend or terminate the 1989
Option Plan, subject to stockholder approval of certain amendments and provided
no such action may affect any share of Common Stock previously issued and sold
or any option previously granted under the 1989 Option Plan without the
optionees consent.

1993 STOCK INCENTIVE PLAN

The Company's 1993 Stock Incentive Plan (the "1993 Incentive Plan") was
adopted by the Board of Directors in February 1993 and approved by the Company's
stockholders in May 1993. The 1993 Incentive Plan provides for the granting to
employees of the Company and of its subsidiaries or parent corporations of
incentive stock options within the meaning of Section 422 of the Code, and

50
<PAGE> 51

for the granting to employees and independent contractors of nonstatutory stock
options. As of June 30, 1996, the Board of Directors and the stockholders have
authorized a total of 6,104,356 shares of Common Stock for issuance pursuant to
the 1993 Incentive Plan, which includes 304,356 shares of Common Stock that were
transferred from the 1989 Stock Option Plan in October 1995, of which options to
purchase 3,197,266 shares are currently outstanding and options to purchase
2,804,092 shares have been exercised. Subsequent to June 30, 1996 the Board of
Directors approved a 250,000 share increase of the shares issuable upon exercise
of options granted under the 1993 Stock Incentive Plan. With certain exceptions,
the options terminate upon termination of employment, disability or death of the
optionee.

The 1993 Incentive Plan may be administered by the Board of Directors or a
committee of the Board (the "Committee"). The Committee has the power to
determine the terms of the options granted, including exercise price, transfer
restrictions on shares acquired upon option exercise, repurchase rights of the
Company, number of shares subject to the option and the exercisability thereof,
and the form of consideration payable upon exercise. Options granted under the
1993 Incentive Plan are not transferable by the optionee other than by will or
the laws of descent or distribution, and each option is exercisable during the
lifetime of the optionee only by such optionee. The exercise price of all
incentive stock options granted under the 1993 Incentive Plan must be at least
equal to the fair market value of the Common Stock on the date of grant. The
exercise price of all nonstatutory stock options granted under the 1993
Incentive Plan must be at least 85% of the fair market value of the Common Stock
on the date of grant. With respect to any participant who owns stock possessing
more than 10% of the voting power of all classes of the Company's outstanding
capital stock, the exercise price of any incentive stock option granted must
equal at least 110% of the fair market value of the Common Stock on the grant
date and the term of the option must not exceed five years. The term of all
other options granted under the 1993 Incentive Plan may not exceed ten years.
The consideration for exercising any option may consist of cash, check, Company
shares of Common Stock, a promissory note, the assignment of part of the
proceeds from the sale of shares acquired upon exercise of the options, such
other consideration as determined by the Committee, or any combination thereof.

Unless terminated sooner, the 1993 Incentive Plan will terminate
automatically in 2003. The Board has authority to amend, suspend or terminate
the 1993 Incentive Plan subject to stockholder approval of certain amendments
and provided no such action may affect any share of Common Stock previously
issued and sold or any option previously granted under the 1993 Incentive Plan
except in the event an employee is terminated for cause.

1996 STOCK INCENTIVE PLAN

The Company's 1996 Stock Incentive Plan (the "1996 Stock Incentive Plan")
was adopted by the Board of Directors in July 1996 and was approved by the
Company's stockholders in September 1996. The purpose of the 1996 Stock
Incentive Plan is to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to
employees, directors and consultants of the Company and its subsidiaries and to
promote the success of the Company's business. The 1996 Stock Incentive Plan
provides for the granting to employees of incentive stock options within the
meaning of Section 422 of the Code and the granting of nonstatutory stock
options, stock appreciation rights, dividend equivalent rights, restricted
stock, performance units, performance shares, and other equity-based rights
("Awards") to employees, directors and consultants of the Company. Initially,
800,000 shares of Common Stock are reserved for issuance under the plan.
Commencing January 2, 1997, the number of shares of Stock reserved for issuance
under the 1996 Stock Incentive Plan will be increased by a number equal to one
and one half percent (1.5%) of the number of shares of Common Stock outstanding
as of December 31 of the immediately preceding calendar year, provided that the
number of shares of Common Stock available for grant of incentive stock options
shall be 800,000 shares, and such number shall not be subject to adjustment as
described above. Where the Award agreement permits the exercise or

51
<PAGE> 52

purchase of the Award for a certain period of time following the recipient's
termination of service with the Company, disability, or death, the Award will
terminate to the extent not exercised or purchased on the last day of the
specified period or the last day of the original term of the Award, whichever
occurs first. To date, no Awards have been granted under the 1996 Stock
Incentive Plan.

With respect to Awards granted to directors or officers, the 1996 Stock
Incentive Plan is administered by the Board of Directors or a committee
designated by the Board of Directors constituted to permit such Awards to be
exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, in
accordance with Rule 16b-3 thereunder. With respect to Awards granted to other
participants, the 1996 Stock Incentive Plan is administered by the Board of
Directors or a committee designated by the Board of Directors. In each case, the
Board of Directors or such committees (the "Plan Administrator") shall determine
the provisions, terms and conditions of each Award, including, but not limited
to, the Award vesting schedule, repurchase provisions, rights of first refusal,
forfeiture provisions, form of payment (cash, shares of Common Stock, or other
consideration) upon settlement of the Award, payment contingencies and
satisfaction of any performance criteria. Incentive stock options are not
transferable by the optionee other than by will or the laws of descent or
distribution, and each incentive stock option is exercisable during the lifetime
of the optionee only by such optionee. Other Awards shall be transferable to the
extent provided in the agreement evidencing the Award. The exercise price of
incentive stock options must be at least equal to the fair market value of the
Common Stock on the date of grant, and the term of the option must not exceed
ten years. The term of other Awards will be determined by the Plan
Administrator. With respect to an employee who owns stock possessing more than
10% of the voting power of all classes of the Company's outstanding capital
stock, the exercise price of any incentive stock option must equal at least 110%
of the fair market value of the Common Stock on the grant date and the term of
the option must not exceed five years. The exercise or purchase price of other
Awards will be such price as determined by the Plan Administrator. The
consideration to be paid for the shares of Common Stock upon exercise or
purchase of an Award will be determined by the Plan Administrator and may
include cash, check, shares of Common Stock, a promissory note, or the
assignment of part of the proceeds from the sale of shares acquired upon
exercise or purchase of the Award.

In the event of an acquisition of the Company through the sale of all or
substantially all of its assets, a merger or other business combination, the
Plan Administrator has the discretion to accelerate vesting restrictions with
respect to any outstanding Awards under the 1996 Stock Incentive Plan.

Unless terminated sooner, the 1996 Stock Incentive Plan will terminate
automatically in 2006. The Board has the authority to amend, suspend or
terminate the 1996 Stock Incentive Plan subject to stockholder approval of
certain amendments and provided no such action may affect Awards previously
granted under the 1996 Stock Incentive Plan.

1996 EMPLOYEE STOCK PURCHASE PLAN

The Company's 1996 Employee Stock Purchase Plan (the "Stock Purchase
Plan"), which was approved by the Board of Directors in July 1996 and was
approved by the Company's stockholders in September 1996, is intended to qualify
as an "employee stock purchase plan" under Section 423 of the Code and to
provide employees of the Company with an opportunity to purchase Common Stock
through payroll deductions. An aggregate of 300,000 shares of the Company's
Common Stock are reserved for issuance under the Stock Purchase Plan and
available for purchase thereunder, subject to adjustment in the event of a stock
split, stock dividend or other similar change in the Common Stock or the capital
structure of the Company. All employees of the Company and its subsidiaries
(including officers) whose customary employment is for more than five months in
any calendar year and more than 20 hours per week are eligible to participate in
the Stock Purchase Plan. Outside directors, consultants, and employees subject
to the rules or laws of a foreign

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<PAGE> 53

jurisdiction that prohibit or make impractical the participation of such
individuals in the Stock Purchase Plan are not eligible to participate in the
Stock Purchase Plan.

The Stock Purchase Plan designates Purchase Periods, Accrual Periods and
Exercise Dates. Purchase Periods are generally overlapping periods of 24 months.
A Purchase Period will initiate on the effective date of the Registration
Statement applicable to the Offerings and additional Purchase Periods will
commence each subsequent May 1 and November 1. The initial Purchase Period will
end on October 31, 1998. Accrual Periods are generally six month periods, the
first such commencing on the effective date of the Offerings and ending on April
30, 1997. Thereafter, Accrual Periods will commence each May 1 and November 1.
The Exercise Dates are the last days of each Accrual Period.

On the first day of each Purchase Period, a participating employee is
granted a purchase right which is a form of option to be automatically exercised
on the forthcoming Exercise Dates within the Purchase Period during which
deductions are to be made from the pay of participants (in accordance with their
authorizations) and credited to their accounts under the Stock Purchase Plan.
When the purchase right is exercised, the participant's withheld salary is used
to purchase shares of Common Stock of the Company. The price per share at which
shares of Common Stock are to be purchased under the Stock Purchase Plan during
any Accrual Period is the lesser of (a) 85% of the fair market value of the
Common Stock on the date of the grant of the purchase right (the commencement of
the Purchase Period) or (b) 85% of the fair market value of the Common Stock on
the Exercise Date (the last day of an Accrual Period). The participant's
purchase right is exercised in this manner on all four Exercise Dates arising in
the Purchase Period unless, on the first day of any Accrual Period, the fair
market value of the Common Stock is lower than the fair market value of the
Common Stock on the first day of the Purchase Period. If so, the participant's
participation in the original Purchase Period is terminated, and the participant
is automatically enrolled in the new Purchase Period effective the same date.

Payroll deductions may range from 1% to 10% (in whole percentage
increments) of a participant's regular base pay, overtime, bonuses,
shift-premiums or commissions. Participants may not make direct cash payments to
their accounts. The maximum number of shares of Common Stock which any employee
may purchase under the Stock Purchase Plan during an Accrual Period is 500
shares. Certain additional limitations on the amount of Common Stock which may
be purchased during any calendar year are imposed by the Code.

The Stock Purchase Plan will be administered by the Board of Directors or a
committee designated by the Board, which will have the authority to administer
the Stock Purchase Plan and to resolve all questions relating to its
administration.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

The Company's Bylaws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by Delaware law. The Company is also
empowered under its Bylaws to enter into indemnification agreements with its
directors and officers and to purchase insurance on behalf of any person whom it
is required or permitted to indemnify. The Company has entered into
indemnification agreements with each of its directors and executive officers and
intends to obtain a policy of directors' and officers' liability insurance that
insures such persons against the cost of defense, settlement or payment of a
judgment under certain circumstances.

In addition, the Company's Certificate of Incorporation provides that the
liability of the Company's directors for monetary damages shall be eliminated to
the fullest extent permissible under Delaware law. This provision in the
Certificate of Incorporation does not eliminate a director's duty of care, and
in appropriate circumstances equitable remedies such as an injunction or other
forms of non-monetary relief would remain available. Each director will continue
to be subject to liability for breach of the director's duty of loyalty to the
Company, for acts or omissions not in good faith or

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<PAGE> 54

involving intentional misconduct or knowing violations of law, for acts or
omissions that the director believes to be contrary to the best interests of the
Company or its stockholders, for any transaction from which the director derived
an improper personal benefit, for improper transactions between the director and
the Company and for improper distributions to stockholders and loans to
directors and officers. This provision also does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.

There is no pending litigation or proceeding involving a director or
officer of the Company as to which indemnification is being sought, nor is the
Company aware of any pending or threatened litigation that may result in claims
for indemnification by any director or officer.

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<PAGE> 55

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of August
31, 1996 as adjusted to reflect the sale of shares offered hereby, by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (ii) each of the Company's directors, (iii) each Named
Executive Officer (See "Management -- Executive Compensation"), (iv) the Selling
Stockholders and (v) all current executive officers and directors as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED OWNED AFTER
5% BENEFICIAL OWNERS, DIRECTORS, PRIOR TO OFFERING(1) OFFERING(1)(2)
NAMED EXECUTIVE OFFICERS ---------------------- NUMBER OF ----------------------
AND OTHER SELLING STOCKHOLDERS NUMBER PERCENT SHARES OFFERED NUMBER PERCENT
- --------------------------------------------------- ---------- ------- -------------- ---------- -------
<S> <C> <C> <C> <C> <C>
Roger A. Lang(3)................................... 4,898,000 30.6% 4,898,000 27.1%
Douglas M. Leone(4)................................ 2,791,334 17.4 2,791,334 15.4
Sequoia Capital(5)................................. 2,783,334 17.4 2,783,334 15.4
Robin Vasan(6)..................................... 1,200,000 7.5 1,200,000 6.6
Charles H. Marston................................. 1,000,000 6.2 100,000 900,000 5.0
Till M. Guldimann(7)............................... 854,166 5.3 854,166 4.7
Kishore K. Bopardikar.............................. 800,000 5.0 287,000 513,000 2.8
Tejbir S. Sidhu(8)................................. 647,083 4.0 167,000 480,083 2.6
Craig Duling....................................... 400,000 2.5 22,000 378,000 2.1
Warren Reier(9).................................... 227,166 1.4 21,000 206,166 1.1
Terry H. Carlitz................................... 200,000 1.2 200,000 1.1
Jan Ellison(10).................................... 193,749 1.2 20,000 173,749 1.0
Kwong Li(11)....................................... 190,624 1.2 12,000 178,624 1.0
Anthony Chiu(12)................................... 171,041 1.1 15,000 156,041 *
John C. Lewis...................................... 140,000 * 140,000 *
Keith Hospers(13).................................. 62,800 * 38,000 24,800 *
James Dorrian(14).................................. 12,024 * 12,024 *
All executive officers and directors as a
group (10 persons)(15)........................... 10,605,407 65.4 305,000 10,300,407 56.5
Other Selling Stockholders, each beneficially
owning less than 1% of the outstanding Common
Stock prior to the Offerings(16)................. 144,686 * 8,000 136,686 *
</TABLE>

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

* Less than 1%

(1) To the Company's knowledge, except as set forth in the footnotes to this
table and subject to applicable community property laws, each person named
in the table has sole voting and investment power with respect to the
shares set forth opposite such person's name. The address of each of Roger
A. Lang, Charles H. Marston, Till M. Guldimann and Kishore K. Bopardikar is
as follows: c/o Infinity Financial Technology, Inc., 640 Clyde Court,
Mountain View, California 94043.

(2) Assumes no exercise of the Underwriters' over-allotment options. If the
Underwriters' over-allotment options are exercised in full, certain
stockholders will sell an aggregate of 403,500 shares of Common Stock. In
such event, (i) Roger A. Lang will sell 70,000 shares and beneficially own
4,828,000 shares, or 26.7% of the Company's outstanding Common Stock, after
completion of the Offerings, (ii) Robin Vasan will sell 60,000 shares and
beneficially own 1,140,000 shares, or 6.3% of the Company's outstanding
Common Stock, after completion of the Offerings, (iii) Charles H. Marston
will sell 100,000 shares and beneficially own 800,000 shares, or 4.4% of
the Company's outstanding Common Stock, after completion of the Offerings,
(iv) Kishoe Bopardikar will sell 15,500 shares and beneficially own
497,500, or 2.8% of the Company's outstanding Common Stock, (v) Tejbir S.
Sidhu will sell 80,500 shares and beneficially own 399,583 shares, or 2.2%
of the Company's outstanding Common Stock, after completion of the
Offerings, (vi) Denny Paul will sell 16,000 shares and beneficially own
224,000 shares, or 1.2% of the Company's outstanding Common Stock, after
completion of the Offerings, (vii) David Mael will sell 10,000 shares and
beneficially own 211,874 shares, or 1.2% of the Company's outstanding
Common Stock, after completion of the Offerings, (viii) Jagtar and Shivtej
Sandhu will sell 17,000 shares and beneficially own 183,000 shares, or 1.0%
of the Company's outstanding Common Stock, after completion of the
Offerings, (ix) Jan Ellison will sell 7,500 shares and beneficially own
166,249 shares, or 1.0% of the Company's outstanding Common Stock, after
completion of the Offerings. In addition, eight (8) other stockholders,
each beneficially owning less than one percent of the Company's outstanding
Common Stock, will sell an aggregate of approximately 27,000 shares in the
event the over-allotment options are exercised.

(3) Includes (a) 57,142 shares held by Roger Allen Lang Jr and Cynthia Hunter
Lang, Trustees 1996 Generation Skipping Trust fbo Roger Lloyd Lang and (b)
57,142 shares held by Roger Allen Lang Jr and Cynthia Hunter Lang, Trustees
1996 Generation Skipping Trust fbo Christopher Allen Lang.

(4) Includes (a) 2,741,334 shares owned by Sequoia Capital Growth Fund. Mr.
Leone is a partner of Sequoia Capital Growth Fund. Sequoia Capital Growth
Fund and Sequoia Technology Partners III, c/o Sequoia Capital, 3000 Sand
Hill Road, Bldg. 4, Suite 280, Menlo Park, California 94025. Mr. Leone
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.

(5) Includes (a) 2,741,334 shares owned by Sequoia Capital Growth Fund and (b)
42,000 shares owned by Sequoia Technology Partners III. Sequoia Capital
Growth Fund, c/o Sequoia Capital, 3000 Sand Hill Road, Bldg. 4, Suite 280,
Menlo Park, California 94025.

(6) Robin Vasan, c/o RMS 149 Commonwealth Drive, Menlo Park, California 94025.

(7) Includes 54,166 shares subject to options exercisable within 60 days of
August 31, 1996.

(8) Includes 64,981 shares subject to options exercisable within 60 days of
August 31, 1996.

(9) Includes 16,668 shares subject to options exercisable within 60 days of
August 31, 1996.

(10) Includes 18,343 shares subject to options exercisable within 60 days of
August 31, 1996.

(11) Includes 65,624 shares subject to options exercisable within 60 days of
August 31, 1996.

(12) Includes 110,641 shares subject to options exercisable within 60 days of
August 31, 1996.

(13) Includes 62,800 shares subject to options exercisable within 60 days of
August 31, 1996.

(14) Includes 2,500 shares subject to options exercisable within 60 days of
August 31, 1996.

(15) Includes 184,447 shares subject to options exercisable within 60 days of
August 31, 1996.

(16) Includes 3,854 shares subject to options exercisable within 60 days of
August 31, 1996.

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<PAGE> 56

CERTAIN TRANSACTIONS

In January 1994, the Company entered into a Series C Preferred Stock
Purchase Agreement with Sequoia Capital Growth Fund and Sequoia Technology
Partners III (collectively "Sequoia") pursuant to which Sequoia agreed to
purchase an aggregate of 2,083,334 shares of Series C Preferred Stock for a
total consideration of $1,756,667. In connection with this agreement, the
Company and Sequoia entered into a stockholders agreement under the terms of
which Sequoia is granted a right of first refusal and a right of participation
in certain secondary sales of stock by the Company and certain members of
management. The shareholders agreement terminates upon the closing of the
Offerings. In addition, in January 1994 the Company entered into an investors'
rights agreement with the Company's founders and the holders of 12,505,436
shares of Common Stock. See "Description of Capital Stock -- Registration
Rights."

In February 1995 and September 1995, the Company granted Mr. Lewis, a
Director of the Company, immediately exercisable, nonqualified stock options for
80,000 shares of Common Stock at an exercise price of $0.35 per share and 20,000
shares of Common Stock at an exercise price of $1.50 per share, respectively.
Mr. Lewis exercised options to purchase 80,000 shares in March 1995 and options
to purchase 20,000 shares in September 1995. In addition, in September 1995 the
Company entered into an agreement with Mr. Lewis whereby Mr. Lewis had the right
to purchase 40,000 shares of Common Stock at a purchase price of $1.50 per
share, which right Mr. Lewis exercised concurrently with the execution and
delivery of such agreement.

In February 1995, the Company granted Mr. Leone, a Director of the Company,
immediately exercisable, non-qualified stock options for 50,000 shares of Common
Stock at an exercise price of $0.35 per share. Mr. Leone exercised options to
purchase all 50,000 shares in March 1995.

In April 1995, the Company granted Ms. Carlitz, the Company's Chief
Financial Officer and Vice President, Finance, immediately exercisable,
incentive stock options for 200,000 shares of Common Stock at an exercise price
of $0.35 per share. Ms. Carlitz paid for the shares with $17,500 in cash and a
promissory note in the original principal amount of $52,500 payable to the
Company. The shares are subject to repurchase by the Company upon termination of
Ms. Carlitz's employment on the terms and conditions set forth in the option
agreement. The promissory note bears interest at 5.88% per annum and is payable
in full by April 17, 2000. The unpaid balance of the promissory note at June 30,
1996 was $35,000. The option agreement was amended in May 1996 to provide for
acceleration of Ms. Carlitz's options upon the occurrence by a change in control
and certain other stockholder approved transactions. In June 1996, the Company
granted Ms. Carlitz incentive stock options for 40,000 shares of Common Stock at
an exercise price of $6.00 per share.

In September 1995, the Company entered into an employment agreement with
Mr. Guldimann, its Executive Vice President. Under an option agreement executed
in connection with his employment agreement, Mr. Guldimann was granted incentive
stock options to purchase 200,000 shares of the Company's Common Stock at an
exercise price of $1.50 per share. Mr. Guldimann was also granted immediately
exercisable, non-qualified options to purchase 500,000 shares of the Company's
Common Stock at an exercise price of $1.50 per share. Mr. Guldimann exercised
his options for 500,000 shares in September 1995 by delivering a promissory note
in the original principal amount of $750,000 to the Company. Such promissory
note bears interest at 6.04% per annum and is payable as follows: (i) $187,500
on September 1, 1996 and (ii) $15,627 each month thereafter until fully paid.

In addition, in September 1995, Mr. Guldimann purchased 200,000 shares of
the Company's Common Stock pursuant to a Restricted Stock Purchase Agreement. In
payment of such shares, Mr. Guldimann delivered to the Company $100,000 in cash
and a promissory note in the original principal amount of $200,000. Such
promissory note bears interest at 6.04% per annum and is payable in full on
February 1, 1997.

The vesting of Mr. Guldimann's options was amended in December 1995 such
that 25% of such options vest one year from the grant date, and the remainder of
the options vest ratably at the end of each month thereafter. The option
agreement was again amended in May 1996 to provide for

56
<PAGE> 57

acceleration of Mr. Guldimann's options upon the occurrence of a change in
control and certain other stockholder approved transactions.

In July 1996, upon his election to the Board, the Company granted Mr.
Dorrian immediately exercisable non-qualified stock options for 40,000 shares of
the Company's Common Stock at an exercise price of $10.50 per share. In
addition, in August 1996, Mr. Dorrian purchased 9,524 shares of Common Stock
from the Company at $10.50 per share.

In October 1995, the Company entered into an employment agreement with Mr.
Hospers, Vice President, Software Engineering. Under the agreement, Mr. Hospers
was granted incentive stock options to purchase 250,000 shares of the Company's
Common Stock at an exercise price of $1.50 per share. The agreement was amended
in May 1996 to provide for acceleration of Mr. Hospers's options upon the
occurrence of a change in control and certain other stockholder approved
transactions. See "Management -- Employment Agreements."

In May 1996, the Company entered into a letter agreement with Mr. Laven,
its Vice President, Worldwide Field Operations, under the terms of which he will
receive $180,000 per annum in salary and bonus. See "Management -- Employment
Agreements." In addition, Mr. Laven was granted incentive stock options to
purchase 100,000 shares of the Company's Common Stock at an exercise price of
$4.00 per share and a non-qualified stock option to purchase 140,000 shares of
the Company's Common Stock at an exercise price of $4.00 per share. Both option
agreements provide for acceleration of Mr. Laven's options upon the occurrence
of a change in control and certain other stockholder approved transactions.

In April, 1994, Sequoia entered into an option agreement with Mr. Lang and
Mr. Vasan, under the terms of which Sequoia acquired the right to purchase
300,000 shares from Mr. Lang and 400,000 shares from Mr. Vasan. In connection
with this agreement, Mr. Lang and Mr. Vasan executed promissory notes payable to
Sequoia in the original principal amounts of $228,150 and $304,200,
respectively. The promissory notes are repayable in two years and bear interest
at the rate of 6% per annum. The notes are secured with 300,000 and 400,000
shares of Common Stock, respectively. In May 1995, Sequoia exercised its option
to purchase the 300,000 and 400,000 shares from Mr. Lang and Mr. Vasan,
respectively. Sequoia paid $25,293.04 and cancelled the outstanding promissory
notes as payment to Mr. Lang for his shares and paid $33,797.61 and cancelled
the outstanding promissory notes as payment to Mr. Vasan for his shares.

Effective December 31, 1992, the Company and Mr. Harpal Sandhu, a former
director and founder of the Company, entered into a stock purchase and
settlement agreement in settlement of claims resulting from Mr. Sandhu's
termination of employment with the Company. Under the terms of the agreement,
the Company repurchased 2,608,320 shares of Common Stock from Mr. Sandhu.
Aggregate consideration relating to this agreement was approximately $993,120,
consisting of a cash payment of $75,000 and issuance of a promissory note in the
original principal amount of $918,120. The promissory note bore interest at a
rate between 6% and 12% per annum. In addition, the Company exchanged 1,400,000
shares of Common Stock held by Mr. Sandhu for 1,400,000 shares of Series B
Preferred Stock. The Company was granted an option to repurchase the Series B
Preferred Stock at a later date. In connection with the settlement, the Company
and Mr. Sandhu entered into several ancillary agreements including a co-sale
agreement, a stock pledge agreement, an indemnity agreement and a security
agreement. In January 1994, the Company paid to Mr. Sandhu $1,493,333 as payment
in full for the promissory note and as settlement for all other outstanding
claims, and entered into a release agreement, releasing any and all claims. In
November 1995, the Company exercised its option to repurchase the 1,400,000
shares of Series B Preferred Stock from Mr. Sandhu for a total consideration of
$1,276,297. All amounts due under the agreements between Mr. Sandhu and the
Company have been paid and no amounts are outstanding.

57
<PAGE> 58

DESCRIPTION OF CAPITAL STOCK

Following the closing of the sale of the shares offered hereby, the Company
will be authorized to issue up to 50,000,000 shares of Common Stock, $.001 par
value per share, and 5,000,000 shares of Preferred Stock, $.001 par value per
share.

COMMON STOCK

As of June 30, 1996, there were 16,008,608 shares of Common Stock
outstanding that were held of record by approximately 89 stockholders. There
will be 18,008,608 shares of Common Stock outstanding (assuming no exercise of
the U.S. Underwriters' or International Underwriters' over-allotment options and
no exercise of outstanding options) after giving effect to the sale of Common
Stock offered to the public by the Company hereby.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Commencing at the
first annual meeting of stockholders following the annual meeting of
stockholders when the Company shall have had at least 800 stockholders, the
Company will not have cumulative voting rights in the election of directors, and
accordingly, holders of more than 50% of the shares voting will be able to elect
all of the directors. Subject to preferences that may be granted to any then
outstanding Preferred Stock, holders of Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors out of funds
legally available therefor as well as any distributions to the stockholders. See
"Dividend Policy." In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in all assets
of the Company remaining after payment of liabilities and the liquidation
preference of any then outstanding Preferred Stock. Holders of Common Stock have
no preemptive or other subscription or conversion rights. There are no
redemption or sinking fund provisions applicable to the Common Stock.

PREFERRED STOCK

Effective upon the closing of the Offerings and pursuant to the Company's
Certificate of Incorporation, the Board of Directors will have the authority,
without further action by the stockholders, to issue up to 5,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the designation
of such series, any or all of which may be greater than the rights of Common
Stock, without any further vote or action by stockholders. The issuance of
Preferred Stock could adversely affect the voting power of holders of Common
Stock and the likelihood that such holders will receive dividend payments and
payments upon liquidation and could have the effect of delaying, deferring or
preventing a change in control of the Company. The Company has no present plan
to issue any shares of Preferred Stock after consummation of the Offerings.

REGISTRATION RIGHTS

Pursuant to an investor rights agreement (the "Rights Agreement") entered
into in January 1994 between the Company and holders (the "Holders") of
approximately 12,505,436 shares of the Company's Common Stock, including Roger
A. Lang, Charles H. Marston, Kishore K. Bopardikar and Tejbir S. Sidhu, the
Holders are entitled to certain rights with respect to the registration of such
shares under the Securities Act of 1933, as amended (the "Securities Act"). If
the Company proposes to register any of its securities under the Securities Act,
either for its own account or the account of other security holders, the Company
is required to notify such Holders and to use its best efforts to effect the
registration, and such Holders are entitled to include at the Company's expense
their Registrable Securities (as such term is defined in the Rights Agreement)
in such registration, subject to certain conditions and limitations. In
addition, at any time Sequoia Capital Growth Fund

58
<PAGE> 59

and Sequoia Technology Partners II may require the Company to file a limited
number of registration statements under the Securities Act at the Company's
expense, and the Company is required to use its best efforts to effect such
registration, subject to certain conditions and limitations.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE COMPANY'S CHARTER AND BYLAWS

Commencing at the first annual meeting of stockholders following the
earlier of the date of the Company is no longer subject to the California
Corporations Code or the date of the annual meeting of stockholders when the
Company shall have had at least 800 stockholders, the Certificate of
Incorporation of the Company provides for the Board of Directors to be divided
into three classes, with staggered three-year terms. As a result, only one class
of directors will be elected at each annual meeting of stockholders of the
Company, with the other classes continuing for the remainder of their respective
three-year terms. Thereafter, stockholders shall no longer have cumulative
voting rights and the Company's stockholders representing a majority of the
shares of Common Stock outstanding will be able to elect all of the directors.
The Company's Bylaws also provide that all stockholder action must be effected
at a duly called meeting of stockholders and not by a consent in writing; the
Bylaws provide that only the Company's Chief Executive Officer and a majority of
the members of the Company's Board of Directors may call a special meeting of
stockholders.

The classification of the Board of Directors and elimination of cumulative
voting will make it more difficult for the Company's existing stockholders to
replace the Board of Directors as well as for another party to obtain control of
the Company by replacing the Board of Directors. Since the Board of Directors
has the power to retain and discharge officers of the Company, these provisions
could also make it more difficult for existing stockholders or another party to
effect a change in management.

These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of the Company. These
provisions are intended to enhance the likelihood of continued stability in the
composition of the Board of Directors and in the policies furnished by the Board
of Directors and to discourage certain types of transactions that may involve an
actual or threatened change of control of the Company. These provisions are
designed to reduce the vulnerability of the Company to an unsolicited
acquisition proposal. The provisions also are intended to discourage certain
tactics that may be used in proxy fights. However, such provisions could have
the effect of discouraging others from making tender offers for the Company's
shares and, as a consequence, they also may inhibit fluctuations in the market
price of the Company's shares that could result from actual or rumored takeover
attempts. Such provisions also may have the effect of preventing changes in the
management of the Company. See "Risk Factors -- Anti-Takeover Provisions."

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

The Company is subject to Section 203 of the Delaware General Corporation
Law ("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the Board of
Directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested holder, (ii)
upon consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (a) by persons who are directors and also
officers and (b) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or

59
<PAGE> 60

special meeting of the stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock that is not
owned by the interested stockholder.

Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder, (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder, (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder, (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder or (v) the receipt by the
interested stockholder of the benefit of any loss, advances, guarantees, pledges
or other financial benefits by or through the corporation. In general, Section
203 defines an interested stockholder as an entity or person beneficially owning
15% or more of the outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by such entity or person.
See "Risk Factors -- Anti-takeover Provisions."

LISTING

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "INFN."

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock of the Company is
Boston EquiServe. Its address is 150 Royall Street, Canton, Massachusetts 02021,
and its telephone number is (617) 579-2000.

60
<PAGE> 61

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offerings, the Company will have 18,069,938 shares
of Common Stock outstanding based on 16,031,938 shares outstanding as of August
31, 1996. Of these shares, the 2,690,000 shares sold in the Offerings will be
freely transferable without restriction under the Securities Act, unless they
are held by "affiliates" of the Company as that term is used under the
Securities Act and the Regulations promulgated thereunder.

The remaining 15,379,938 outstanding shares were sold by the Company in
reliance on exemptions from the registration requirements of the Securities Act
and are restricted securities within the meaning of Rule 144 under the
Securities Act. Approximately 2,000 of these shares of Common Stock will be
eligible for sale in the public market immediately upon the effective date of
the Registration Statement of which this Prospectus is a part (the "Effective
Date") in reliance on Rule 144(k) under the Securities Act. Beginning 90 days
after the Effective Date, an additional approximately 4,100 of these shares will
become eligible for sale subject to the provisions of Rule 144 and Rule 701.
Beginning 180 days after the date of this Prospectus, approximately 14,274,314
additional shares will become eligible for sale subject to the provisions of
Rule 144 or Rule 701 upon the expiration of agreements not to sell such shares
entered into between the U.S. Underwriters and the International Underwriters
and such stockholders or the Company and such stockholders. Beginning 180 days
after the date of this Prospectus, approximately 1,741,388 additional shares
subject to vested options as of the Effective Date will be available for sale
subject to compliance with Rule 701 and upon the expiration of agreements not to
sell such shares entered into between the U.S. Underwriters and the
International Underwriters and such stockholders. In addition, the Commission
has proposed revisions to Rule 144 and Rule 144(k), the effect of which would be
to shorten the holding period under Rule 144 from two years to one year and to
shorten the holding period under Rule 144(k) from three years to two years. If
enacted, these proposed revisions would increase, potentially substantially, the
number of shares that would be available for sale in the public market 90 days
after the Effective Date and 180 days after the date of this Prospectus. Any
shares subject to lock-up agreements may be released at any time without notice
by the U.S. Underwriters and the International Underwriters. See "Risk
Factors -- Shares Eligible for Future Sale."

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
restricted shares for at least two years is entitled to sell, within any
three-month period commencing 90 days after the Effective Date, a number of
shares that does not exceed the greater of (i) 1% of the then outstanding shares
of Common Stock (approximately 180,000 shares immediately after the Offerings)
or (ii) the average weekly trading volume in the Common Stock during the four
calendar weeks preceding such sale, subject to the filing of a Form 144 with
respect to such sale and certain other limitations and restrictions. In
addition, a person who is not deemed to have been an affiliate of the Company at
any time during the 90 days preceding a sale and who has beneficially owned the
shares proposed to be sold for at least three years would be entitled to sell
such shares under Rule 144(k) without regard to the requirements described
above.

Any employee, officer or director of or consultant to the Company who
purchased his or her shares prior to the Effective Date or who holds vested
options as of that date pursuant to a written compensatory plan or contract is
entitled to rely on the resale provisions of Rule 701, which permits
non-affiliates to sell their Rule 701 shares without having to comply with the
public-information, holding-period, volume-limitation or notice provisions of
Rule 144 and permits affiliates to sell their Rule 701 shares without having to
comply with Rule 144's holding-period restrictions, in each case commencing 90
days after the Effective Date. However, the Company and certain officers,
directors and other stockholders of the Company have agreed not to sell or
otherwise dispose of any shares of Common Stock of the Company for the 180-day
period after the date of this Prospectus without the prior written consent of
the U.S. Underwriters and the International Underwriters. See "Underwriting."

61
<PAGE> 62

As soon as practicable after the Effective Date, the Company intends to
file a registration statement on Form S-8 under the Securities Act to register
shares of Common Stock reserved for issuance under the 1989 Stock Option Plan,
the 1993 Stock Incentive Plan, the 1996 Stock Option Plan and the Stock Purchase
Plan, thus permitting the resale of such shares by non-affiliates in the public
market without restriction under the Securities Act. Such registration
statements will become effective immediately upon filing.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Morrison & Foerster LLP, Palo Alto, California. Michael C. Phillips,
a partner at Morrison & Foerster LLP, is Secretary of the Company and owns
15,000 shares of Common Stock of the Company. Certain U.S. legal matters in
connection with the Offerings will be passed upon for the U.S. Underwriters and
the International Underwriters by Venture Law Group, A Professional Corporation,
Menlo Park, California.

EXPERTS

The consolidated financial statements and schedule of Infinity Financial
Technology, Inc. at December 31, 1994 and 1995 and for each of the three years
in the period ended December 31, 1995 appearing in this prospectus and the
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing herein and elsewhere in
the Registration Statement, and is included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.

62
<PAGE> 63

GLOSSARY OF TERMS

Abstraction................ The principle of generalizing a problem so that
part of the solution can be reused for other
similar problems. When combined with inheritance,
abstraction allows the user of a library to
interact with similar objects in the same way,
without having to know the differences between the
objects.

Advanced instrument pricing
algorithms............... A formula or set of rules used to solve a problem.

Aggregation................ When financial distress leads to early termination
of a number of swaps between two counterparties,
some master swap agreements call for the
aggregation or netting of the positive and negative
values of the swaps affected by the early
termination.

Centralized MIS systems.... Systems in which all of the processing occurs on
one machine usually a mainframe.

C++ class.................. Description of a set of similar objects. The class
defines the behavior and attributes of a set of
objects.

C++ objects................ Reusable software components which form the
building blocks of complex software systems. Many
different types of objects are used within the
system to perform the desired functions. Objects
are instances of C++ classes.

Client/server
Architecture............... A software architecture which separates technical
infrastructure from the business application. The
storage of data is handled by a database server,
which takes requests from the client application.
See also N-tier Architecture, Three-tier
architecture.

Encapsulation.............. A software engineering principle which consists of
shielding the user of a software building block
from the complexities of its implementation. This
allows the building blocks to be extended without
changing the user's code.

Inheritance................ An object-oriented principle allowing classes to be
extended without rewriting existing functionality.

Mark-to-market
accounting................. To price a position or portfolio at current market
prices and reflect the new valuation in the
accounting records.

N-tier architecture........ A software architecture which separates business
logic from technical infrastructure in multiple
layers, allowing greater flexibility in software
development. Typical N-tier architectures include
client/server and three-tier architectures.

Object-oriented............ A design methodology, designed to speed development
and increase programming leverage which involves
analyzing problems by breaking them into a set of
objects, each of which contains data and functions
on the data. Object-oriented methodologies enable
Encapsulation, Abstraction and Inheritance.

Off-the-shelf solutions.... Solutions which are packaged in a ready-to-use
form. Systems which require no development before
they can be implemented.

Point-to-point
infrastructure............. Direct connection of two applications, where one
application (the client) initiates a connection
with another (the server).

63
<PAGE> 64

Polymorphism............... A component of object-oriented design, polymorphism
is the principle that software building blocks,
which are similar, can be used in the same way. See
also Abstraction.

Publish and subscribe...... Interconnection of applications that produce data
(publishers) with those that consume data (the
subscribers). The publishers do not know which
subscribers will consume the data, and the
subscribers do not know which publisher produced
the data.

Risk management
methodologies............ The application of financial analysis and diverse
financial techniques to control the reduction of
selected types of risk.

Robust..................... Richness; fullness.

Sensitivity analysis....... A measurement, description or graph of the
relationship between or among two or more
variables.

TCP/IP protocol............ Transmission Control Protocol/Internet Protocol.
The basic protocol on which Internet and Intranet
systems are based. This specifies the mechanism
used to send messages from one application to
another.

Three-tier architecture.... A software architecture similar to client/server
architecture which further separates components of
the client application to provide more flexibility
in configuring business logic. See also client/
server architecture, N-tier architecture.

Value at risk
methodologies.............. A measurement of the maximum potential loss a
portfolio can incur over a specific time interval
at a specific confidence level.

64
<PAGE> 65

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act of 1933, as amended, with respect to the Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
Certain items are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules filed as a part thereof. Statements contained in this
Prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and, in each instance, if such contract or
document is filed as an exhibit, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference to such exhibit. The
Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at the North Western Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, NY 10048, and copies of all or any part
thereof may be obtained from such office after payment of fees prescribed by the
Commission. The Securities and Exchange Commission maintains a web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Securities and Exchange Commission.

65
<PAGE> 66

(This page intentionally left blank)
<PAGE> 67

INFINITY FINANCIAL TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors..................................... F-2
Consolidated Balance Sheets........................................................... F-3
Consolidated Statements of Income..................................................... F-4
Consolidated Statement of Stockholders' Equity........................................ F-5
Consolidated Statements of Cash Flows................................................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 68

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Infinity Financial Technology, Inc.

We have audited the accompanying consolidated balance sheets of Infinity
Financial Technology, Inc. as of December 31, 1994 and 1995, and the related
consolidated statements of income, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1995. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
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 financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Infinity
Financial Technology, Inc. at December 31, 1994 and 1995, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP
Ernst & Young LLP

Palo Alto, California
March 7, 1996, except for Note 8 as
to which the date is September 23, 1996

F-2
<PAGE> 69

INFINITY FINANCIAL TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, PRO FORMA
------------------- JUNE 30, STOCKHOLDERS'
1994 1995 1996 EQUITY AT
------- ------- ----------- JUNE 30, 1996
(UNAUDITED) -------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 3,235 $ 3,517 $ 1,905
Receivables, less allowance for doubtful
accounts of $195 and $120 at December
31, 1995 and June 30, 1996,
respectively (none at December 31,
1994)................................. 4,068 6,667 12,191
Deferred tax asset....................... 172 569 1,025
Prepaid expenses and other current
assets................................ 199 231 322
------ ------- -------
Total current assets............. 7,674 10,984 15,443
Furniture and equipment, net............... 896 1,449 2,144
Other assets............................... 315 415 412
------ ------- -------
$ 8,885 $12,848 $17,999
====== ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 100 $ 218 $ 1,234
Accrued compensation..................... 906 1,533 1,873
Payable to former stockholder............ -- 1,277 --
Other accrued liabilities................ 846 665 1,165
Deferred revenue......................... 3,703 2,806 4,947
Current portion of capital lease
obligations........................... 109 213 171
------ ------- -------
Total current liabilities........ 5,664 6,712 9,390
Long-term portion of capital lease
obligations.............................. 107 303 155
Other long-term liabilities................ -- 67 67
Commitments
Stockholders' equity:
Preferred stock, $0.001 par value,
issuable in series, 5,000,000 shares
authorized:
4,483,334, 3,083,334 and 3,083,334
shares issued and outstanding at
December 31, 1994 and 1995 and June
30, 1996, respectively (none issued
and outstanding pro forma)
(liquidation preference of $1,960,417
at December 31, 1995 and June 30,
1996)................................. 1,054 1,053 1,053 $ --
Common stock, $0.001 par value,
50,000,000 shares authorized,
9,751,642 and 12,486,200 and
12,925,274 shares issued and
outstanding at December 31, 1994 and
1995 and June 30, 1996, respectively
(16,008,608 shares issued and
outstanding pro forma)................ 96 1,570 2,340 3,393
Deferred stock compensation -- -- (586) (586)
Notes receivable from stockholders....... (31) (1,025) (1,071) (1,071)
Retained earnings........................ 1,995 4,168 6,651 6,651
------ ------- -------
Total stockholders' equity................. 3,114 5,766 8,387 $ 8,387
------ ------- -------
$ 8,885 $12,848 $17,999
====== ======= =======
</TABLE>

See accompanying notes.

F-3
<PAGE> 70

INFINITY FINANCIAL TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
License revenues................... $ 4,094 $ 9,021 $19,033 $ 8,816 $14,118
Service revenues................... 1,689 3,574 5,705 2,476 3,829
------ ------- ------- ------- -------
Total revenues............. 5,783 12,595 24,738 11,292 17,947
Costs and expenses:
Cost of revenues................... 1,507 2,660 2,915 1,125 1,865
Sales and marketing................ 1,142 3,296 7,693 3,337 6,174
Research and development........... 1,574 3,340 6,098 2,900 4,138
General and administrative......... 580 1,175 2,356 990 1,709
------ ------- ------- ------- -------
Total costs and expenses... 4,803 10,471 19,062 8,352 13,886
------ ------- ------- ------- -------
Income from operations............... 980 2,124 5,676 2,940 4,061
Interest and other income............ 33 63 191 120 85
Interest and other expense........... (76) (48) (160) (99) (142)
------ ------- ------- ------- -------
Income before provision for income
taxes.............................. 937 2,139 5,707 2,961 4,004
Provision for income taxes........... 220 498 2,258 1,172 1,521
------ ------- ------- ------- -------
Net income........................... $ 717 $ 1,641 $ 3,449 $ 1,789 $ 2,483
Series B preferred stock
redemption......................... -- -- (1,276) -- --
------ ------- ------- ------- -------
Net income attributable to common
stockholders....................... $ 717 $ 1,641 $ 2,173 $ 1,789 $ 2,483
====== ======= ======= ======= =======
Net income per share attributable to
common stockholders:
Primary............................ $ 0.06 $ 0.10 $ 0.12 $ 0.10 $ 0.13
====== ======= ======= ======= =======
Fully diluted...................... $ 0.05 $ 0.09 $ 0.12 $ 0.09 $ 0.13
====== ======= ======= ======= =======
Shares used in per share
calculations:
Primary............................ 13,008 16,354 18,312 17,853 18,831
====== ======= ======= ======= =======
Fully diluted...................... 14,516 17,866 18,382 19,364 18,849
====== ======= ======= ======= =======
</TABLE>

See accompanying notes.

F-4
<PAGE> 71

INFINITY FINANCIAL TECHNOLOGY, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
NOTES
CONVERTIBLE DEFERRED RECEIVABLE RETAINED TOTAL
PREFERRED COMMON STOCK FROM EARNINGS STOCKHOLDERS'
STOCK STOCK COMPENSATION STOCKHOLDERS (DEFICIT) EQUITY
------------ ------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1992........... $ 200 $ 19 $ -- $ -- $ (363) $ (144)
Issuance of 1,450,916 shares of common
stock............................... -- 58 -- (31) -- 27
Issuance of 1,400,000 shares of Series
B preferred stock in exchange for
1,400,000 shares of common stock.... 1 (1 ) -- -- -- --
Net income............................ -- -- -- -- 717 717
---- ------ ---- ----- ------- ------
Balances at December 31, 1993........... 201 76 -- (31) 354 600
Issuance of 679,164 shares of common
stock under stock option plan....... -- 32 -- -- -- 32
Repurchase of 290,000 shares of common
stock............................... -- (12 ) -- -- -- (12)
Issuance of 2,083,334 shares of Series
C preferred stock, net of issuance
costs of $904....................... 853 -- -- -- -- 853
Net income............................ -- -- -- -- 1,641 1,641
---- ------ ---- ----- ------- ------
Balances at December 31, 1994........... 1,054 96 -- (31) 1,995 3,114
Issuance of 2,494,558 shares of common
stock under stock option plan....... -- 1,028 -- (803) -- 225
Issuance of 240,000 shares of common
stock............................... -- 360 -- (200) -- 160
Compensation recorded for accelerated
vesting of options.................. -- 86 -- -- -- 86
Repurchase of 1,400,000 shares of
Series B preferred stock............ (1) -- -- -- (1,276) (1,277)
Repayment of stockholder note......... -- -- -- 9 -- 9
Net income............................ -- -- -- -- 3,449 3,449
---- ------ ---- ----- ------- ------
Balances at December 31, 1995........... 1,053 1,570 -- (1,025) 4,168 5,766
Issuance of 439,074 shares of common
stock under stock option plan
(unaudited)......................... -- 145 -- (60) -- 85
Deferred stock compensation related to
grants of stock options
(unaudited)......................... -- 625 (625) -- -- --
Amortization of deferred stock
compensation (unaudited)............ -- -- 39 -- -- 39
Repayment of stockholder note
(unaudited)......................... -- -- -- 14 -- 14
Net income (unaudited)................ -- -- -- -- 2,483 2,483
---- ------ ---- ----- ------- ------
Balances at June 30, 1996 (unaudited)... $1,053 $2,340 $(586) $(1,071) $ 6,651 $ 8,387
==== ====== ==== ===== ======= ======
</TABLE>

See accompanying notes.

F-5
<PAGE> 72

INFINITY FINANCIAL TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
--------------------------- -------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................... $ 717 $ 1,641 $ 3,449 $ 1,789 $ 2,483
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization...................... 287 417 761 129 359
Compensation due to accelerated vesting of
options......................................... -- -- 86 -- --
Changes in assets and liabilities:.................
Receivables..................................... (1,239) (2,809) (2,599) (2,876) (5,524)
Deferred tax asset.............................. 82 (1) (397) (456)
Prepaid expenses and other current assets....... (101) (189) (332) (97) (88)
Accounts payable................................ 56 (16) 118 84 1,016
Accrued compensation............................ 54 634 627 (36) 340
Payable to former stockholder................... -- -- 1,277 -- (1,277)
Other accrued liabilities and long-term
liabilities................................... 335 595 (114) 497 500
Deferred revenue................................ 413 2,578 (897) (1,804) 2,141
------- ------- ------- ------- -------
Net cash provided by (used in) operating
activities......................................... 604 2,850 1,979 (2,314) (506)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Capital expenditures................................. (271) (569) (650) (248) (1,015)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of notes payable............................ (283) (635) -- -- --
Payment of stockholder notes payable................. -- -- 9 5 14
Principal payments of capital lease obligations...... (28) (84) (164) (137) (190)
Proceeds from issuance of common stock............... 27 32 385 203 85
Repurchase of preferred stock........................ -- (12) (1,277) -- --
Net proceeds from issuance of Series C
preferred stock.................................... -- 853 -- -- --
------- ------- ------- ------- -------
Net cash provided by (used in) financing
activities......................................... (284) 154 (1,047) 71 (91)
------- ------- ------- ------- -------
Net increase (decrease) in cash and cash
equivalents........................................ 49 2,435 282 (2,491) (1,612)
Cash and cash equivalents at beginning of the
period............................................. 751 800 3,235 3,235 3,517
------- ------- ------- ------- -------
Cash and cash equivalents at end of the period....... $ 800 $ 3,235 $ 3,517 $ 744 $ 1,905
======= ======= ======= ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid............................... $ 76 $ 223 $ 2,793 $ 847 $ 1,710
======= ======= ======= ======= =======
Interest paid................................... $ 76 $ 48 $ 79 $ 28 $ 33
======= ======= ======= ======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Equipment acquired under capital lease.......... $ 17 $ 272 $ 464 $ 242 $ --
======= ======= ======= ======= =======
Issuance of common stock in exchange for notes
receivable.................................... $ 31 $ -- $ 1,003 $ 53 $ 60
======= ======= ======= ======= =======
</TABLE>

See accompanying notes.

F-6
<PAGE> 73

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

Infinity Financial Technology, Inc. (the "Company") develops, markets and
supports object-oriented, client/server software solutions for financial trading
and risk management. The Company provides a comprehensive range of customer
support services, including maintenance, training, and consulting. The Company
was incorporated in California in 1989 and was reincorporation in Delaware in
1996.

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All intercompany account balances and
transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates, and such
differences could affect the results of operations reported in future periods.

FOREIGN CURRENCY TRANSLATION

In 1996, the Company established subsidiaries in the United Kingdom and
Japan. The functional currency of the United Kingdom subsidiary is the U.S.
dollar and the functional currency of the Japan subsidiary is the local
currency. Gains and losses on the translation into U.S. dollars of amounts
denominated in foreign currencies are included in net income for those
operations whose functional currency is the U.S. dollar. The cumulative
translation adjustment for those operations whose functional currency is the
local currency was immaterial as of June 30, 1996.

In order to reduce the effect of foreign currency fluctuations on its
results of operations, the Company hedges its exposure on certain intercompany
and customer receivables that are denominated in foreign currencies through the
use of foreign currency forward exchange contracts. The contracts do not subject
the Company to significant market risk from exchange rate movements because the
contracts offset foreign currency balances and transactions being hedged.
Realized and unrealized gains and losses on foreign currency contracts and the
underlying transactions being hedged are included in interest and other income
(expense), net.

INTERIM FINANCIAL INFORMATION

In the opinion of management, the interim financial statements have been
prepared on the same basis as the annual financial statements and include all
adjustments (consisting only of normal recurring adjustments) necessary to state
fairly the financial information set forth therein, in accordance with generally
accepted accounting principles.

The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of results to be expected for the full fiscal year.

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

The Company's revenues consist primarily of license and product revenues
from financial institutions in the United States, Canada, Japan, Australia,
Germany, France and the U.K. The Company sells primarily to large institutions,
and therefore does not obtain collateral against its

F-7
<PAGE> 74

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

outstanding receivables. The Company maintains reserves for potential credit
losses and historically such losses have been immaterial. No customer accounted
for more than 10% of revenues during the six months ended June 30, 1996. Three
customers accounted for 24%, 11% and 10% of revenues during the six months ended
June 30, 1995. During fiscal 1995, one customer accounted for 14% of revenues;
during fiscal 1994, three customers accounted for 18%, 15% and 10% of revenues,
respectively, and during fiscal 1993, four customers accounted for 22%, 18%, 15%
and 12% of revenues, respectively.

The Company markets and sells its products and services in three primary
geographic areas categorized as North America (United States and Canada), Europe
(principally Germany, France and United Kingdom) and Asia/Pacific (principally
Japan and Australia). Export sales to unaffiliated customers for significant
countries within these geographic areas are summarized in the following table:

<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
---------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
North America (Canada Only)........... 27% 23% 12% 6% 11%
Europe:
France.............................. -- -- 15 10 3
Germany............................. -- -- 19 21 19
United Kingdom...................... 22 8 5 7 4
Asia/Pacific:
Australia........................... -- 15 4 2 5
Japan(1)............................ 5 2 7 5 12
</TABLE>

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

(1) During the six month period ended June 30, 1996, the Company established a
subsidiary in Japan. An additional 20% of the period's revenues was
generated by the Company's Japanese subsidiary but is not included in export
sales in the above table.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The Company maintains
deposits with a bank and an investment manager and invests its excess cash in
money market funds which bear minimal risk. Cash equivalents consist of money
market instruments at December 31, 1994 and 1995, and June 30, 1996.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and depreciated on a
straight-line basis over estimated useful lives, generally three to five years.
Leasehold improvements are amortized over the lesser of the term of the lease or
the estimated useful life of the asset. Assets under capital lease obligations
are amortized over the shorter of the term of the lease or their useful lives on
a straight-line basis, and such amortization is included with depreciation.

REVENUE RECOGNITION

The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position 91-1 ("SOP 91-1"), "Software
Revenue Recognition." License revenues less deferrals for warranty are
recognized upon shipment only if no significant vendor obligations remain and
collection of the resulting receivable is deemed probable. License warranty

F-8
<PAGE> 75

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

revenues are recognized ratably over the warranty period, generally 30 to 90
days. When the Company receives payment on licenses prior to shipment and
fulfillment of significant vendor obligations, such payments are recorded as
deferred revenue. Service revenues consist primarily of maintenance and support,
training, consulting and co-development projects. Service revenues from customer
maintenance fees for ongoing customer support and product updates are recognized
ratably over the maintenance term, which is typically 12 months. Service
revenues from customer training and consulting services are recognized as the
service is performed. Service revenues from co-development agreements are
recognized upon achievement of contractual milestones or on a
percentage-of-completion basis.

COST OF REVENUES

Cost of revenues, which primarily relate to costs of service revenues,
include materials, sublicense royalties, a portion of development costs
associated with joint product development agreements, and a portion of technical
support costs. Costs of license revenues were immaterial for all periods
presented.

RESEARCH AND DEVELOPMENT

Research and development expenditures are charged to operations as
incurred. Statement of Financial Accounting Standard No. 86 "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed," requires
capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon completion of
a working model. Costs incurred by the Company between completion of the working
model and the point at which the product is ready for general release have been
insignificant.

NET INCOME PER SHARE

Net income per share is computed using the weighted average number of
common shares outstanding and common equivalent shares arising from the assumed
exercise of stock options using the treasury stock method and the conversion of
Series A and Series C convertible preferred stock on the as-converted method.
Pursuant to the Securities and Exchange Commission Staff Accounting Bulletins,
common and common equivalent shares issued during the period commencing 12
months prior to the initial filing of an initial public offering at prices below
the assumed public offering price have been included in the calculation as if
they were outstanding for all periods presented (using the treasury stock
method). Fully diluted net income per share is computed using the weighted
average common and common equivalent shares outstanding plus other dilutive
shares outstanding which are not common equivalent shares. Other dilutive shares
which are not common equivalent shares include Series B convertible preferred
stock during the period such shares were outstanding.

In November 1995, the Company redeemed the Series B Preferred Shares for
$1,277,000. The redemption decreased the income applicable to common
shareholders in the calculation of net income per share in 1995.

NEW ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board (FASB) issued FAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed

F-9
<PAGE> 76

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

Of," which requires the Company to review for impairment long-lived assets,
certain identifiable intangibles, and goodwill related to those assets whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. In certain situations, an impairment loss would be
recognized. FAS 121 is effective for the Company's 1996 fiscal year. The impact
of the new standard is immaterial.

In October 1995, the FASB issued Statement of Financial Accounting Standard
123 "Accounting for Stock-Based Compensation" ("FAS 123") which also is
effective for the Company's 1996 fiscal year. FAS 123 allows companies which
have stock-based compensation arrangements with employees to adopt a new
fair-value basis of accounting for stock options and other equity instruments,
or to continue to apply the existing accounting rules under APB Opinion 25
"Accounting for Stock Issued to Employees" but with additional financial
statement disclosure. The Company has continued to account for stock-based
compensation arrangements under APB Opinion 25, therefore FAS 123 did not have a
material impact on its financial position, results of operations or cash flows.

2. OTHER FAIR VALUE DISCLOSURES

At June 30, 1996, the Company had foreign currency forward exchange
contracts, all with maturities of 45 days or less, to exchange Japanese Yen for
U.S. dollars in the amount of $3,456,000. The difference between the fair value
and the carrying amount of these foreign currency forward exchange contracts is
immaterial. One major Japanese multinational bank is counterparty to these
contracts. There were no foreign currency forward exchange contracts outstanding
at December 31, 1994 and 1995.

At December 31, 1995 and 1994, and June 30, 1996, the carrying value of
notes receivable from stockholders approximates their fair value. The fair
values of notes receivable from stockholders are estimated using discounted cash
flow analyses, based on interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality.

3. FURNITURE AND EQUIPMENT

Furniture and equipment consist of (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1994 1995 1996
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Furniture and office equipment.............. $ 472 $ 699 $ 1,293
Computer equipment.......................... 1,018 1,672 2,093
------ ------ -------
1,490 2,371 3,386
Accumulated depreciation and amortization... (594) (922) (1,242)
------ ------ -------
Furniture and equipment, net................ $ 896 $1,449 $ 2,144
====== ====== =======
</TABLE>

4. LINE OF CREDIT

The Company has a revolving line of credit which provides for $3,000,000 in
borrowings and expires December 31, 1996. Borrowings under the line are secured
and bear interest at the 30-day commercial paper rate plus 2.9%. The line of
credit agreement requires the Company to maintain certain financial covenants
and prohibits the Company from paying cash dividends without the

F-10
<PAGE> 77

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

lender's consent. For all periods presented, the Company was in compliance with
such covenants. As of December 31, 1994 and 1995 and June 30, 1996, no amounts
were outstanding under the line of credit.

5. LEASE OBLIGATIONS AND OTHER COMMITMENTS

Assets acquired under noncancelable capital leases consist of computer and
office equipment with an aggregate cost basis of approximately $327,000,
$749,000 and $595,000 at December 31, 1994 and 1995, and June 30, 1996,
respectively, and accumulated amortization of approximately $118,000, $257,000
and $292,000 at December 31, 1994 and 1995, and June 30, 1996, respectively.

In February 1996, the Company entered into an equipment financing line,
under which the Company can finance $1,000,000 of capital expenditures. As of
June 30, 1996, the Company had drawn $375,000 under this line. The unused
portion of the line expires on July 31, 1996.

The Company leases office space under operating leases which expire
beginning in January 1997 through March 2004. Under one lease, the Company has a
two-year renewal option. The Company also rents certain property and equipment
under operating leases. Rent expense for all operating leases for the years
ended December 31, 1993, 1994 and 1995 and for the six months ended June 30,
1995 and 1996 was approximately $268,000, $705,000, $1,207,000, $630,000, and
$862,000, respectively.

Minimum future lease payments under all operating and capital lease
obligations as of December 31, 1995 are as follows:

<TABLE>
<CAPTION>
OPERATING LEASE CAPITAL LEASE
OBLIGATIONS OBLIGATIONS
--------------- -------------
(IN THOUSANDS)
<S> <C> <C>
1996................................................. $ 1,396 $ 288
1997................................................. 1,306 231
1998................................................. 948 101
1999................................................. 905 --
2000 and thereafter.................................. 1,276 --
------ -----
Total minimum lease payments........................... $ 5,831 620
======
Less amount representing interest...................... (104)
-----
Present value of net minimum lease payments............ 516
Less current portion................................... (213)
-----
Long-term portion...................................... $ 303
=====
</TABLE>

6. STOCKHOLDERS' EQUITY

PREFERRED STOCK

The board of directors has the authority to issue 5,000,000 shares of
preferred stock, of which 1,000,000 shares have been designated as Series A,
1,400,000 shares have been designated as Series B and 2,083,334 shares have been
designated as Series C. Conversion of all preferred stock is automatic upon the
closing of an underwritten public offering of the Company's common stock if the
aggregate offering proceeds exceed $5,000,000 and the offering price is at least
$2.50 per share.

F-11
<PAGE> 78

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

Preferred stock consists of:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1994 1995 1996
------ ------ -----------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C>
Preferred Stock:
Series A convertible, 1,000,000 shares authorized, issued
and outstanding........................................ $ 200 $ 200 $ 200
Series B convertible, 1,400,000 shares authorized,
1,400,000 shares issued and outstanding at December
31,1994 and no shares issued and outstanding at
December 31, 1995 and June 30, 1996.................... 1 -- --
Series C convertible, 2,083,334 shares authorized, issued
and outstanding........................................ 853 853 853
------ ------ ------
$1,054 $1,053 $ 1,053
====== ====== ======
</TABLE>

Series A and C preferred stock are senior to Series B preferred stock and
common stock. Series A and C preferred stock are convertible, at the
stockholders' option, at any time into common stock on a one-for-one basis and
have voting rights equal to the voting rights of the common shares into which
they are convertible.

In the event of a liquidation or winding up of the Company, holders of
Series A and C preferred stock shall have a liquidation preference of $0.20 and
$0.845 per share, respectively, plus accrued and unpaid dividends, if any,
before distributions to the Series B and common stockholders.

The preferred stockholders are entitled to noncumulative dividends in such
amounts and at such time as the board of directors deems appropriate. No
dividend shall be paid on common stock unless an equal dividend has first been
paid on the Series A, B and C preferred stock. The Series C preferred stock has
a dividend preference of $0.0676 over the Series A and B preferred stockholders
and common stockholders, and Series A has a $0.02 dividend preference over the
Series B preferred stockholders and common stockholders. No dividends have been
declared or are payable at June 30, 1996.

On January 31, 1994, the Company completed an offering of Series C
preferred stock for gross proceeds of $1,757,000. As a condition to the stock
purchase, the investors required the Company to terminate certain continuing
covenants including certain cash payments due upon subsequent rounds of
financing imposed on the Company in the 1992 settlement and buy-out of a former
common stockholder. As a result, the Company paid $876,000 to the former common
stockholder as consideration for his agreement to terminate these contractual
covenants and restrictions and for his approval of the Series C preferred stock
financing. These costs have been accounted for as issuance costs associated with
the sale of the Series C preferred stock.

In November 1995, the Company exercised its right to repurchase all of the
outstanding Series B preferred shares for $1,277,000. The excess of the
repurchase cost over the stated value of the shares at the time of issuance to
the stockholder has been recorded as a reduction of retained earnings in the
statement of stockholders' equity.

F-12
<PAGE> 79

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

COMMON STOCK

The Company issues shares of common stock which are subject to the
Company's right to repurchase at the original issuance price upon the occurrence
of certain events as defined in the agreements. This right expires ratably over
48 months. At June 30, 1996, 717,778 shares are subject to repurchase (there
were 824,792 and 87,501 of such shares subject to repurchase at December 31,
1995 and December 31, 1994, respectively).

In 1995, the Company issued 200,000 shares under a stock purchase
agreement. In connection with this agreement, the Company received a secured
promissory note for $200,000. The note bears interest at 6.04% and is due and
payable in March 1997.

At June 30, 1996 and December 31, 1995, the total number of shares of
common stock reserved for future issuances under all option plans and conversion
of Series A and C convertible preferred stock was 6,664,616 and 7,135,776,
respectively.

STOCK OPTIONS

The Company's 1989 Stock Option Plan (the "1989 Plan") authorizes the board
of directors to grant incentive stock options or nonqualified stock options for
up to 3,000,000 common stock shares to employees, consultants, officers and
directors of the Company. The 1989 Plan is administered by the board of
directors with the terms and conditions of options being generally left to the
discretion of the board.

Under the 1989 Plan, options may be granted at a price not less than fair
value at the date of grant as determined by the board of directors or committee
thereof, except for options granted to a person owning greater than 10% of the
total combined voting power of all classes of stock of the Company, for which
the exercise price of the options must not be less than 110% of the fair value
at the time of grant as determined by the board of directors or committee
thereof. Options generally become exercisable over a period of four years with
1/4 of the options vesting on the first anniversary of the option grant, and
the remainder vesting ratably over the following 36 months. Options are
exercisable for a term of five years after the date of grant.

The Company's 1993 Incentive Stock Option Plan (the "1993 Plan") authorizes
the board of directors to grant incentive stock options or nonqualified stock
options for up to 6,104,356 common shares to employees, consultants, officers
and directors of the Company. The terms of the 1993 Plan are generally similar
to the 1989 Plan, except that nonqualified stock options may be granted at a
price not less than 85% of the fair market value at the date of grant and
options are exercisable for a term of ten years after the date of grant.

In the event of termination of employment or consulting services, the
employee or consultant shall have the right to exercise any unexercised vested
options within 30 or 90 days of the date of termination.

Under the 1989 Plan and 1993 Plan, employees may exercise options in
exchange for a secured promissory note. In 1996, the Company received a note for
$60,000 bearing interest at 6.58% and due and payable beginning in June 1997
through June 2000. In 1995, the Company received two notes for $750,000 and
$52,500 bearing interest at 6.04% and 5.88%, respectively, which are due and
payable from September 1996 through September 2000. As of June 30, 1996, $17,500
of principal had been repaid on these notes.

F-13
<PAGE> 80

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

Activity under the 1989 Plan and the 1993 Plan is as follows:

<TABLE>
<CAPTION>
OUTSTANDING OPTIONS
OPTIONS --------------------------
AVAILABLE NUMBER OF PRICE PER
FOR GRANT SHARES SHARE
---------- ---------- -----------
<S> <C> <C> <C>
Balance at December 31, 1992...................... 9,646 2,578,792 $0.01-$0.04
Additional authorized........................... 3,000,000 -- --
Granted......................................... (2,307,000) 2,307,000 $0.04-$0.10
Exercised....................................... -- (1,450,916) $0.02-$0.08
Canceled........................................ 308,876 (308,876) $0.02-$0.08
---------- ---------- ------------
Balance at December 31, 1993...................... 1,011,522 3,126,000 $0.02-$0.10
Additional authorized........................... 1,100,000 -- --
Granted......................................... (1,832,000) 1,832,000 $0.10-$0.23
Exercised....................................... -- (679,164) $0.02-$0.18
Repurchased..................................... 290,000 -- --
Canceled........................................ 447,836 (447,836) $0.04-$0.18
---------- ---------- ------------
Balance at December 31, 1994...................... 1,017,358 3,831,000 $0.02-$0.23
Additional authorized........................... 1,700,000 -- --
Granted......................................... (2,020,500) 2,020,500 $0.35-$2.50
Exercised....................................... -- (2,494,558) $0.02-$1.50
Canceled 1989 Plan.............................. -- (1,358) $0.04-$0.08
Canceled........................................ 415,030 (415,030) $0.04-$1.50
---------- ---------- ------------
Balance at December 31, 1995...................... 1,111,888 2,940,554 $0.02-$2.50
Granted......................................... (1,221,000) 1,221,000 $3.00-$6.00
Exercised....................................... -- (439,074) $0.02-$6.00
Canceled 1989 Plan.............................. -- (32,086) $0.04-$0.35
Canceled........................................ 212,110 (212,110) $0.08-$3.00
---------- ---------- ------------
Balance at June 30, 1996.......................... 102,998 3,478,284 $0.04-$6.00
========== ========== ============
</TABLE>

At December 31, 1994 and 1995, and June 30,1996 options to purchase
1,218,929, 740,852 and 808,241 shares, respectively, were exercisable.

The Company has recorded deferred compensation expense of $625,000 to
reflect the difference between the grant price and the deemed fair value of
certain of the Company's common stock options granted in 1996. This amount is
being amortized over a 48-month period consistent with the vesting period of the
individual options. Deferred compensation expense recognized in the six months
ended June 30, 1996 totaled $39,000.

UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY

Unaudited pro forma stockholders' equity at June 30, 1996 gives effect to
the conversion of 3,083,334 shares of preferred stock into common stock upon the
close of the Company's initial public offering of shares of its common stock.

F-14
<PAGE> 81

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

7. INCOME TAXES

The components of the provisions for income taxes for the years ending
December 31, 1993, 1994 and 1995 and for the six months ended June 30, 1996
consist of the following:

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------ JUNE 30,
1993 1994 1995 1996
---- ---- ------ ----------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C>
Current:
Federal..................................... $ 24 $112 $1,786 $1,127
State....................................... 36 72 515 368
Foreign..................................... 126 330 354 482
---- ---- ------ ------
186 514 2,655 1,977
Deferred (prepaid):
Federal..................................... 30 (31) (328) (26)
State....................................... 4 15 (69) (3)
Foreign..................................... -- -- -- (427)
---- ---- ------ ------
220 $498 $2,258 $1,521
==== ==== ====== ======
</TABLE>

The Company's foreign tax provisions for the years ending December 31,
1993, 1994 and 1995 consist of foreign withholding tax. The Company's foreign
tax provision for the six months ended June 30, 1996 consists of foreign
withholding tax net of a benefit from foreign losses. Foreign pretax losses for
the six months ended June 30, 1996 are approximately $750,000.

The provision for income taxes differs from the amount computed by applying
the statutory federal income tax rate to income before income taxes. The source
and tax effects of the differences are as follows:

<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
--------------------------- JUNE 30,
1993 1994 1995 1996
----- ------ ------ ----------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C> <C>
Income before income taxes................. $ 937 $2,139 $5,707 $4,004
===== ====== ====== ======
Expected tax at 34%........................ $ 318 $ 727 $1,940 $1,361
Foreign provision.......................... 126 330 354 482
State income tax, net of federal benefit... 26 57 294 241
Tax credits................................ (225) (388) (401) (482)
Reduction in valuation allowance........... -- (225) -- --
Foreign sales corporation benefit.......... -- -- (106) (138)
Other...................................... (25) (3) 177 57
----- ------ ------ ------
$ 220 $ 498 $2,258 $1,521
===== ====== ====== ======
</TABLE>

F-15
<PAGE> 82

INFINITY FINANCIAL TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(INFORMATION AS OF JUNE 30, 1996 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1996 IS UNAUDITED)

Significant components of the Company's current deferred tax assets and
liabilities for federal and state income taxes are as follows at:

<TABLE>
<CAPTION>
DECEMBER
31,
----------- JUNE 30,
1994 1995 1996
---- ---- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Foreign tax credit.......................................... $ -- $ -- $ 203
Foreign net operating loss carryforward..................... -- -- 427
Reserves and accruals....................................... 105 324 343
Other, net.................................................. 67 245 205
---- ----
Total deferred tax asset.......................... 172 569 1,178
---- ----
Unremitted earnings of foreign subsidiary................... -- -- (153)
---- ----
Total deferred tax liability...................... -- -- (153)
---- ----
Net deferred tax asset............................ $172 $569 $1,025
==== ====
</TABLE>

8. SUBSEQUENT EVENTS

In July 1996, the board of directors authorized management of the Company
to file a Registration Statement with the Securities and Exchange Commission
permitting the Company to sell shares of its common stock to the public. In
addition, the Company's board of directors approved a two-for-one stock split.
In conjunction with this split, the Company's board of directors approved an
increase in the number of authorized common shares to 50,000,000. Accordingly,
all the share and per share data has been retroactively adjusted to reflect
these changes.

In July 1996, the Company's board of directors adopted the 1996 Employee
Stock Purchase Plan (the "Purchase Plan") which provides for the issuance of
300,000 shares of common stock and the 1996 Stock Incentive Plan (the "Incentive
Plan"), which provides for the issuance of options to purchase up to 800,000
shares of Common Stock. Shares may be purchased under the Purchase Plan at 85%
of the lesser of the fair market value of the common stock on the grant or
purchase date. In addition, the board of directors also approved an increase of
250,000 in the number of shares authorized for issuance under the 1993 Plan.

In September 1996, the Company reincorporated in the State of Delaware. In
conjunction with the reincorporation in Delaware, the par value of the Company's
preferred and common stock was changed to $0.001. The Company's financial
statements have been retroactively adjusted to reflect this change.

F-16
<PAGE> 83

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholders have agreed to sell to each of the U.S.
Underwriters named below ( the "U.S. Underwriters"), and each of such U.S.
Underwriters, for whom Goldman, Sachs & Co., Deutsche Morgan Grenfell Inc. and
Robertson, Stephens & Company LLC are acting as representatives, has severally
agreed to purchase from the Company and the Selling Stockholders, the respective
number of shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERWRITER OF COMMON STOCK
-------------------------------------------------------------------- ----------------
<S> <C>
Goldman, Sachs & Co................................................. 491,334
Deutsche Morgan Grenfell Inc. ...................................... 491,333
Robertson, Stephens & Company LLC................................... 491,333
Bear, Stearns & Co. Inc. ........................................... 54,000
William Blair & Company, L.L.C. .................................... 32,000
Alex. Brown & Sons Incorporated..................................... 54,000
Cowen & Company..................................................... 32,000
Donaldson, Lufkin & Jenrette Securities Corporation................. 54,000
A.G. Edwards & Sons, Inc. .......................................... 54,000
First Albany Corporation............................................ 32,000
Hambrecht & Quist LLC............................................... 54,000
Montgomery Securities............................................... 54,000
J.P. Morgan Securities Inc.......................................... 54,000
Morgan Stanley & Co. Incorporated................................... 54,000
Needham & Company, Inc.............................................. 32,000
SoundView Financial Group, Inc. .................................... 32,000
UBS Securities LLC.................................................. 54,000
Wessels, Arnold & Henderson, L.L.C. ................................ 32,000
----------------
Total..................................................... 2,152,000
==============
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby
(other than those covered by the U.S. Underwriters' over-allotment option
described below), if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $0.65 per share. The U.S. Underwriters may allow, and
such dealers may re-allow, a concession not in excess of $0.10 per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the representatives.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the Underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 538,000 shares in an international offering outside
of the United States. The offering price and aggregate underwriting discounts
and commissions per share for the two offerings are identical. The closing of
the United States offering made hereby is a condition to the closing of the
international offering, and vice versa. The representatives of the International
Underwriters are Goldman Sachs International, Morgan Grenfell & Co., Limited and
Robertson, Stephens & Company LLC.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the Offerings, each of the U.S.
Underwriters named herein has agreed that, as a part of the distribution of the
shares offered hereby and subject to certain

U-1
<PAGE> 84

exceptions, it will offer, sell or deliver the shares offered hereby and any
other shares of Common Stock, directly or indirectly, only in the United States
of America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction (the "United
States") and to U.S. Persons, which term shall mean, for purposes of this
paragraph: (i) any individual who is a resident of the United States or (ii) any
corporation, partnership or other entity organized in or under the laws of the
United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States (including
any such entity constituting an investment advisor acting with discretionary
authority for a non-U.S. Person or Persons). Each of the International
Underwriters has agreed or will agree pursuant to the Agreement Between that, as
part of the distribution of the shares offered as a part of the international
offering, and subject to certain exceptions, it will (i) not, directly or
indirectly, offer, sell or deliver shares of Common Stock (a) in the United
States or to any U.S. person or (b) to any person whom it believes intends to
reoffer, resell or deliver the shares in the United States or to any U.S. person
and (ii) cause any dealer to whom it may sell such shares at any concession to
agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.

Certain Selling Stockholders have granted to the U.S. Underwriters an
option exercisable for 30 calendar days after the date of this Prospectus to
purchase up to an aggregate of 322,800 additional shares of Common Stock solely
to cover over-allotments, if any, at the initial public offering price less the
underwriting discount as set forth on the cover of the Prospectus. If the U.S.
Underwriters exercise their over-allotment option, the U.S. Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by them, as
shown in the foregoing table, bears to the 2,152,000 shares of Common Stock
offered hereby. Certain Selling Stockholders have granted the International
Underwriters a similar option to purchase up to an aggregate of 80,700
additional shares of Common Stock.

The Company's officers and directors, and certain other holders of shares
of Common Stock and options therefor, including the Selling Stockholders, have
agreed that, during the period beginning from the date of this Prospectus and
continuing to and including the date 180 days after the date of the Prospectus,
they will not offer, sell, contract to sell, grant any option to sell, transfer
or otherwise dispose of, directly or indirectly shares of Common Stock or
securities exchangeable for or convertible into shares of Common Stock or any
substantially similar securities without the prior written consent of a
designated representative of the U.S. and International Underwriters, except for
the shares of Common Stock offered in connection with the concurrent United
States and international offerings. The Company has agreed, with certain limited
exceptions, that, during the period beginning from the date of this Prospectus
and continuing to and including the date 180 days after the date of the
Prospectus, it will not offer, sell, contract to sell, grant any option to sell,
transfer or otherwise dispose of, directly or indirectly shares of Common Stock
or securities exchangeable for or convertible into shares of Common Stock or any
substantially similar securities without the prior written consent of the
designated representative of the U.S. and International Underwriters, except for
the shares of Common Stock offered in connection with the concurrent a United
States and international offerings and except that the Company may issue
securities pursuant to the stock option, incentive or purchase plans existing on
the date hereof.

The representatives of the Underwriters have informed the Company that they
do not expect sales to discretionary accounts by the Underwriters to exceed five
percent of the total number of shares of Common Stock offered by them.

U-2
<PAGE> 85

price of the Common Stock, in addition to prevailing market conditions, was the
Company's historical performance, estimates of the business potential and
earnings prospects of the Company, an assessment of the Company's management and
the consideration of the above factors in relation to market valuations of
companies in similar businesses.

The Common Stock will be quoted on the Nasdaq National Market under the
symbol "INFN."

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

The Company entered into in March 1995 a license agreement for a single
evaluation site for certain of its products with Deutsche Bank, an affiliate of
Deutsche Morgan Grenfell Inc. and Morgan Grenfell & Co., Limited, which license
was amended in September 1996 to include the global licensing by Deutsche Bank
of the Infinity Data Model, Infinity Fin++ Class Library and Infinity RiskView
products.

U-3
<PAGE> 86

(This page intentionally left blank)
<PAGE> 87

APPENDIX -- DESCRIPTION OF GRAPHICS

[INSIDE FRONT COVER]

The inside front cover graphics are contained on three gate-fold pages as
follows:

Gate-Fold Page One

Set forth at the top of the page is a large rectangular box containing the
title "Infinity provides object oriented, client/server platform and solutions
software for financial trading and risk management." Set forth below this box is
the Infinity logo, which logo consists of a circle containing two smaller shaded
circles positioned side-by-side such that their perimeters form the mathematical
symbol for infinity and the Infinity name (the "Infinity Logo"). To the left and
below of the logo are two graphical depictions of computer screen images used in
the Infinity Derivatives. To the right of the computer screen images is a
caption heading "Infinity Derivatives." Below this caption heading is the
following text:

"Infinity Derivatives" is a suite of applications which enables
customers to integrate "front-office" trading activities such as pricing,
deal capture and position-keeping, with "Back-office" operations such as
trade confirmations, payments processing and general ledger accounting.

Below the Infinity Derivative computer screen images is a graphical
depiction of a computer screen image used in the RiskView product. To the right
of the computer screen image is a caption heading "Infinity RiskView." Below
this caption heading is the following text:

"Infinity has introduced and plans to release in the second half of
1996 its Infinity RiskView product, which is designed to facilitate
customers' development of firmwide risk management systems covering both
market and credit risk. Infinity RiskView provides a foundation for
decision support applications for the trading desk, business unit or
financial instruction."

Below the RiskView computer screen image is a caption heading "Infinity
Platform." Below this caption heading is the following text:

"Infinity's primary product is the Infinity Platform, which provides
customers and partners with a foundation to rapidly develop, deploy and
modify trading and risk management systems in response to the changing
requirements of the marketplace."

To the right of this text is large three-dimensional depiction of several
vertical rectangular blocks of various sizes stacked on top of three thin
horizontal rectangular boxes.

Gate-Fold Page Two

Set forth at the top of the page and extending over to Gate-Fold Page Three
is a long rectangular box containing the title "The Infinity Solution is
designed to provide Infinity customers with a competitive advantage in trading
and risk management." In the center of the page is a collage comprised of four
photos depicting six persons working in generic office environments with
computer screens in the background. To the left of the collage is a caption
heading "One of the world's largest commercial banks is using Infinity Platform
to facilitate innovation while enabling financial control." Below this caption
heading is the following text:

"The bank is using the Infinity Platform to manage processing of
exotic transactions for its global derivatives business. The system enables
the bank to offer customized derivatives that respond to its customers'
changing risk management requirements, while processing these transactions
in a secure integrated environment."

Below the collage is a large rectangular box divided into two equal sized
vertical rectangular boxes titled, from left to right, "Trading" and "Risk
Management." Superimposed and centered over the large rectangular box is a large
box labeled "Infinity Fin++ Class Library." Inside this box is a smaller box
labeled "Infinity Data Model." Inside this smaller box is a box split into two
parts, one labeled "Oracle," the other "Sybase." To the left of the large box
are four smaller boxes, with two-way arrows connecting them to the large box.
These boxes are labeled
<PAGE> 88

"Derivatives," "Foreign Exchange," "Equities" and "Bonds." To the right of the
large box are four smaller boxes, with two-way arrows connecting them to the
large box. These boxes are labeled "Market Risk," "Credit Risk" and "Liquidity
Risk."

Below the large rectangular box is the caption heading "A diversified
banking group based in the Asia-Pacific region improves risk management with
Infinity Derivatives and the Infinity Platform." Below this caption heading is
the following text:

"The bank has standardized on the Infinity Platform and Infinity
Derivatives as the foundation for its global treasury operation. The system
will allow the bank to achieve integrated trading and risk management for
both high volume and derivatives instruments, and will help the bank manage
market, credit and liquidity risks."

Gate-fold Page Three

Set forth near the top of the page is a box containing an arrow pointing
upward labeled "Improved Credit Rating" and an arrow pointing downward labeled
"Decreased Capital Held Against Foreign Exchange." To the right of the box is
the caption heading, "One of the world's largest foreign exchange dealers is
using the Infinity Platform to build a global netting system that helped the
bank comply with the Financial Accounting Standards Board accounting rules,
reduce the capital held against its foreign exchange exposure, and ultimately
improve its credit rating. Based on its success in the bank's foreign exchange
operations, the system has been extended to include derivatives and other
financial instruments.

Set forth below the box containing the arrows are three graphical
depictions of a computer screen image for each of Infinity's front-office, risk
management and back-office Infinity Derivatives products. Set forth to the right
of the computer screen images is the caption heading "A large North American
commercial bank implemented Infinity Derivatives in order to reduce costs, lower
operational risks and improve financial control." Set forth below this caption
heading is the following text:

The bank used Infinity Derivative together with third-party workflow
management software to automate its derivatives trading operation from
front- to back-office. The system eliminates paper -based deal entry,
confirmations and payments. The bank plans to extend the new architecture
to provide back-office support for its foreign exchange and money markets
treasury groups.

[PAGE 36]

<TABLE>
<S> <C>
Graphic: Set forth are three stacked rectangular boxes, the bottom box contains the words
"Sybase/Oracle," the middle box contains the words "Infinity Data Model," the top box contains
the words "Infinity Fin++ Class Library." The words "Infinity Platform" appear to the left of
the top and middle boxes. On top of the top box is a row of four smaller boxes. The boxes
contain, from left to right, the following words: the first box, "Infinity Derivatives;" the
second box, "Infinity Data Model;" the third box, "Infinity Fin++ Class Library;" and the
fourth box, "Third Party Applications." The word "solution" appears to the left of the row of
four smaller boxes.
</TABLE>
<PAGE> 89

[INSIDE BACK COVER]

<TABLE>
<S> <C>
Graphic: Set forth are three stacked three-dimensional rectangular boxes. The front of the bottom box
contains the words "Sybase/Oracle," the front of the middle box contains the words "Infinity
Data Model," the front of the top box contains the words "Infinity Fin++ Class Library"; the
side of the bottom box contains the letters "RDBMS"; the side of the middle and lower boxes
contain the words "Infinity Platform." On top of the top box is a larger three-dimensional
rectangular box, the top of which is divided into two equal halves, containing, from left to
right, the following words: the left half: "Trading"; the right half "Risk Management." The
box contains three other boxes decreasing in size from bottom to top. The boxes contain from
bottom to top the following words: the bottom box: "Infinity Applications"; the middle box:
"Customer-built Applications"; the top box: "Partner's Applications." Above the graphic
appears the Infinity Logo and the following text: "The Infinity Platform is used by Infinity
third-party and in-house developers for building a wide range of software applications for the
financial industry. With the Infinity Platform, financial institutions can leverage a
market-proven technology infrastructure for building both front to back office,
cross-instrument trading systems, as well as firmwide risk management systems. Designed to be
open, flexible and extensible, the Infinity Platform is used by Infinity and by its customers
and partners for building a wide range of software applications for the financial industry."
</TABLE>

Infinity develops, markets and supports object-oriented, client/server
platform and solutions software for financial trading and risk management.
Infinity's primary product is the Infinity Platform, which provides customers
with a foundation to rapidly develop, deploy and modify trading and risk
management systems in response to the changing requirements of the marketplace.
Infinity also offers Infinity Derivatives, solutions software for derivatives
trading, which enables customers to integrate "front-office" trading activities
such as pricing, deal capture and position-keeping, with "back-office"
operations such as trade confirmations, payments processing and general ledger
accounting. Infinity has introduced and plans to release in the second half of
1996 its Infinity RiskView product, which is designed to facilitate customers'
development of risk management systems. Built with the Infinity Platform, these
solutions, along with third party and internally developed applications,
automate a range of transaction processing and decision support activities.
<PAGE> 90

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 6
Use of Proceeds....................... 16
Dividend Policy....................... 16
Capitalization........................ 17
Dilution.............................. 18
Selected Consolidated Financial
Data................................ 19
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 20
Business.............................. 29
Management............................ 44
Principal and Selling Stockholders.... 55
Certain Transactions.................. 56
Description of Capital Stock.......... 58
Shares Eligible for Future Sale....... 61
Legal Matters......................... 62
Experts............................... 62
Glossary of Terms..................... 63
Additional Information................ 65
Index to Consolidated Financial
Statements.......................... F-1
Underwriting.......................... U-1
</TABLE>

THROUGH AND INCLUDING NOVEMBER 19, 1996 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK OFFERED
HEREBY, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

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

- -------------------------------------------------------
- -------------------------------------------------------
2,690,000 SHARES

INFINITY FINANCIAL
TECHNOLOGY, INC.

COMMON STOCK

(PAR VALUE $.001 PER SHARE)
------------------------------

LOGO
------------------------------

GOLDMAN, SACHS & CO.
DEUTSCHE MORGAN GRENFELL
ROBERTSON, STEPHENS & COMPANY
REPRESENTATIVES OF THE UNDERWRITERS
- -------------------------------------------------------
- -------------------------------------------------------
<PAGE> 91

LOGO 2,690,000 SHARES

INFINITY FINANCIAL TECHNOLOGY, INC.
COMMON STOCK
(PAR VALUE $.001 PER SHARE)
----------------------

Of the 2,690,000 shares of Common Stock offered, 538,000 shares are being
offered hereby in an international offering outside the United States and
2,152,000 shares are being offered in a concurrent United States offering. The
initial public offering price and the aggregate underwriting discount per share
are identical for both offerings. See "Underwriting."

Prior to the offerings, there has been no public market for the Common
Stock of the Company. For factors considered in determining the initial public
offering price, see "Underwriting."

SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE COMMON STOCK.

The Common Stock has been approved for quotation on the Nasdaq National
Market under the symbol "INFN."

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

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

(1) The Company and the Selling Stockholders have agreed to indemnify the
Several Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933.

(2) Before deducting estimated expenses of $900,000 payable by the Company.

(3) Certain Selling Stockholders have granted the International Underwriters an
option for 30 days to purchase up to an additional 80,700 shares at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, certain Selling Stockholders
have granted the U.S. Underwriters a similar option with respect to an
additional 322,800 shares as part of the concurrent United States offering.
If such options are exercised in full, the total initial public offering
price, underwriting discount and proceeds to Selling Stockholders will be
$49,496,000, $3,464,720 and $16,271,280, respectively. See "Underwriting."

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

The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that certificates for the shares will be ready for delivery in New York, New
York, on or about October 30, 1996, against payment therefor in immediately
available funds.

GOLDMAN SACHS INTERNATIONAL

DEUTSCHE MORGAN GRENFELL
ROBERTSON, STEPHENS & COMPANY

ABN AMRO ROTHSCHILD CREDIT LYONNAIS SECURITIES

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

The date of this Prospectus is October 25, 1996.

<PAGE> 92

[ALTERNATE PAGE]

[INSIDE FRONT COVER]

In this Prospectus, references to "dollars," "U.S.$" and "$" are to United
States dollars.
------------------------

Infinity(R) and FIN++(R) are registered trademarks of the Company. This
Prospectus contains other product names and trade names and trademarks of the
Company and of other organizations.
<PAGE> 93

PROSPECTUS SUMMARY

THE COMPANY

3
<PAGE> 94

RISK FACTORS

For a discussion of considerations relevant to an investment in the Common
Stock, see "Risk Factors."

4
<PAGE> 95

THE OFFERINGS

SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

(3) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing net
income per share.

(4) Adjusted to reflect the sale of 2,000,000 shares offered by the Company
hereby and the application of the estimated net proceeds therefrom.

5
<PAGE> 96

RISK FACTORS

SIGNIFICANT POTENTIAL FLUCTUATIONS IN OPERATING RESULTS

6
<PAGE> 97

DEPENDENCE ON EVOLVING MARKET FOR FINANCIAL TRADING AND RISK MANAGEMENT
SOFTWARE; NO ASSURANCE OF MARKET ACCEPTANCE.

7
<PAGE> 98

the Company's business, financial condition and results of operations. See
"Business -- Markets and Customers."

LENGTHY SALES CYCLE

RAPID TECHNOLOGICAL CHANGE AND DEPENDENCE ON NEW PRODUCTS

8
<PAGE> 99

business, financial condition and results of operations. See "-- Risks of
Product Defects; Product Liability" and "Business -- Product Development."

SMALL DIRECT SALES FORCE AND RELIANCE ON IBM CORPORATION AND OTHER STRATEGIC
RELATIONSHIPS

MANAGEMENT OF GROWTH

9
<PAGE> 100

COMPETITION

10
<PAGE> 101

RISKS ASSOCIATED WITH INTERNATIONAL SALES

DEPENDENCE ON KEY EMPLOYEES

11
<PAGE> 102

PROTECTION OF INTELLECTUAL PROPERTY

RISKS OF PRODUCT DEFECTS; PRODUCT LIABILITY

12
<PAGE> 103

BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS

BENEFITS OF THE OFFERINGS TO CURRENT SECURITYHOLDERS

CONTROL BY PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS

NO PRIOR MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF SHARE PRICE

The market price of the Common Stock after the Offerings may be
significantly affected by factors such as quarterly variations in the Company's
results of operations, the announcement of

13
<PAGE> 104

ANTI-TAKEOVER PROVISIONS

POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON MARKET PRICE OF THE
COMMON STOCK

14
<PAGE> 105

PROPOSITION 211

15
<PAGE> 106

USE OF PROCEEDS

DIVIDEND POLICY

16
<PAGE> 107

CAPITALIZATION

17
<PAGE> 108

DILUTION

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

18
<PAGE> 109

SELECTED CONSOLIDATED FINANCIAL DATA

(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing net
income per share.

19
<PAGE> 110

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

20
<PAGE> 111

21
<PAGE> 112

CONSOLIDATED RESULTS OF OPERATIONS

The following table sets forth, as a percentage of total revenues,
consolidated statement of income data for the periods indicated:

REVENUES

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COST OF REVENUES

OPERATING EXPENSES

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PROVISION FOR INCOME TAXES

SELECTED QUARTERLY OPERATING RESULTS

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- ---------------
(1) The following table sets forth the net income per share before the Series B
preferred stock redemption:

(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing net
income per share.

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RECENT FINANCIAL RESULTS

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

(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in per share
calculations.

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VARIABILITY OF QUARTERLY RESULTS

LIQUIDITY AND CAPITAL RESOURCES

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In 1995, financing activities included the repurchase of preferred stock
from a former employee and founder of the Company for $1.3 million. See Note 6
of Notes to Consolidated Financial Statements.

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BUSINESS

INDUSTRY BACKGROUND

A number of factors have contributed to the increased demand for trading
and risk management systems:

INCREASES IN TRADING VOLUME AND COMPLEXITY

FUNDAMENTAL SHIFT IN MANAGEMENT OF FINANCIAL ASSETS

FINANCIAL CRISES INVOLVING DERIVATIVES AND OTHER COMPLEX FINANCIAL INSTRUMENTS

A number of well-publicized financial crises have illustrated the growing
importance of more rigorous management and oversight of traded instrument
portfolios for both financial and non-

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CHANGING REGULATORY REPORTING REQUIREMENTS

SIGNIFICANT SOFTWARE AND SYSTEMS CHALLENGE

NEED TO INTEGRATE DATA FROM MULTIPLE, DISPARATE SYSTEMS

INCREASED INVESTMENT IN TRADING AND RISK MANAGEMENT TECHNOLOGY

In response to these challenges, financial institutions worldwide are
investing financial and other resources in the development and acquisition of
trading and risk management technology. In a

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INADEQUACY OF MANY IN-HOUSE AND VENDOR SYSTEMS

THE FINANCIAL TRADING AND RISK MANAGEMENT SOFTWARE MARKET OPPORTUNITY

- provide a framework for integrating data from multiple, disparate trading
systems into a centralized data warehouse for internal risk management
and regulatory reporting requirements;

- accommodate financial innovation on the trading desk while ensuring
proper financial and operational controls;

- support evolving, proprietary approaches to pricing financial instruments
and quantifying the associated risks; and

- accelerate the delivery time for new applications while preserving an
integrated trading, processing and risk management environment.

THE INFINITY SOLUTION

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Infinity's product family provides the following benefits:

ROBUST PLATFORM FOR APPLICATION DEVELOPMENT

CONSOLIDATED AND INTEGRATED DATA FOR FIRMWIDE RISK MANAGEMENT

IMPROVED TIME TO MARKET FOR NEW SYSTEMS AND APPLICATIONS

REDUCED COSTS THROUGH ENHANCED EFFICIENCY, PRODUCTIVITY AND SECURITY

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THE INFINITY STRATEGY

Infinity's objective is to establish itself as the leading worldwide
provider of trading and risk management platform and solutions software.
Infinity's strategy includes the following key elements:

ESTABLISH THE INFINITY PLATFORM AS AN INDUSTRY STANDARD

EXPAND INFINITY PRODUCT OFFERINGS

TARGET INITIAL SALES OF NEW PRODUCTS TO SOPHISTICATED CUSTOMERS

BROADEN CUSTOMER BASE

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DEVELOP AND LEVERAGE STRATEGIC BUSINESS RELATIONSHIPS

INTEGRATE SOPHISTICATED FINANCIAL ENGINEERING WITH ADVANCED INFORMATION
TECHNOLOGIES

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MARKETS AND CUSTOMERS

The following examples illustrate the use of Infinity's products by its
customers:

INTEGRATED TREASURY SYSTEM IMPROVES RISK MANAGEMENT

EXOTICS PROCESSING SYSTEM FACILITATES INNOVATION WHILE ENABLING FINANCIAL
CONTROL

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AUTOMATED DERIVATIVES PROCESSING REDUCES COSTS AND IMPROVES EFFICIENCY

FOREIGN EXCHANGE NETTING SYSTEM ASSISTS IN ACHIEVING IMPROVED CREDIT RATING

INFINITY PRODUCTS AND TECHNOLOGY

Diagram of Relationship of Infinity Products

THE INFINITY PLATFORM

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INFINITY DERIVATIVES

Infinity Derivatives handles a wide range of complex financial products,
including swaps, caps, floors and swaptions; it also supports hedging activities
using bonds, futures, foreign exchange and

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INFINITY RISKVIEW

TECHNOLOGY

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SALES, MARKETING AND SUPPORT

DIRECT SALES

The Company's sales backlog is not significant, and the Company believes
backlog is not a meaningful indicator of the Company's future performance. See
"Risk Factors -- Lengthy Sales Cycle."

BUSINESS PARTNER PROGRAM

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INTERNATIONAL SALES

SUPPORT SERVICES

PRODUCT DEVELOPMENT

The market for the Company's products is characterized by rapid
technological advances, evolving industry standards in computer hardware and
software technology, changes in customer requirements and frequent new product
introductions and enhancements. The Company's future success will depend upon
its ability to continue to enhance its current product line and to develop and
introduce new products that address technological developments, satisfy
increasingly sophisticated customer requirements and achieve market acceptance.
In particular, the failure of the Company to enhance its products to (i) timely
adapt to the rapidly developing computer hardware and software technology upon
which its products are based, (ii) incorporate new functionality reflecting
rapidly evolving types of derivative securities and other financial instruments
and risk management methodologies and (iii) incorporate new functionality to
facilitate customers' compliance with changing regulatory reporting requirements
could cause customers to delay their purchase of the Company's products, or
decide not to purchase such products. In September 1995, the Company introduced
its back-office modules for Infinity Derivatives, which have been implemented on
a limited basis by Infinity customers. The Company further intends to release
prior to the end of 1996 a risk management product called Infinity RiskView,
designed to extend the Infinity Platform for certain risk management functions,
and a Windows NT version of its Infinity Derivatives product. No assurance can
be given that development of Infinity RiskView or the Windows NT version of
Infinity Derivatives will be successfully completed or that either of these new
products will be accepted in the marketplace. The anticipated release of these
products also could cause customers to delay purchase decisions for existing
products of the Company. The Company has in the past experienced delays in the
introduction of product enhancements and new products, including a delay in
introducing the back-office modules for Infinity Derivatives. There can be no
assurance that the Company will not experience such delays in the future, or be
successful in developing and marketing, on a timely and cost-effective basis,
product enhancements or new products, including Infinity RiskView and a Windows
NT version of Infinity Derivatives, and the

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failure to do so could have a material adverse effect on the Company's business,
financial condition and results of operations.

COMPETITION

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INTELLECTUAL PROPERTY

The Company's success is heavily dependent upon its proprietary technology.
The Company relies primarily on a combination of copyright, trade secret and
trademark laws, nondisclosure and other contractual provisions and technical
measures to protect its proprietary rights. The Company seeks to protect its
software, documentation and other written materials through trade secret and
copyright laws, which provide only limited protection. As part of its
confidentiality procedures, the Company generally enters into nondisclosure
agreements with its employees, consultants, distributors and corporate partners.
Despite the Company's efforts to protect its proprietary rights, unauthorized
parties may attempt to copy or otherwise obtain and use the Company's products
or technology independently. In particular, the Company customarily provides its
existing and potential distribution partners with access to its product
architecture and other proprietary information underlying the Company's licensed
software, including source code. An unauthorized publication or proliferation of
the Company's source code could materially adversely affect the Company's
business, financial condition and results of operations. Policing unauthorized
use of the Company's products is difficult, and the Company is unable to
determine the extent to which unauthorized use of its software products exists.
In addition, effective protection of intellectual property rights may be
unavailable or limited in certain countries including countries in which the
Company currently sells its products, such as Japan, and countries the Company
may target to expand its sales efforts such as Brazil, Hong Kong, Mexico, South
Africa, and Thailand. Accordingly, there can be no assurance that the Company's
means of protecting its proprietary rights will be adequate or that the
Company's competitors will not independently develop similar technology.

EMPLOYEES

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FACILITIES

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth certain information concerning the executive
officers and directors of the Company as of August 31, 1996:

- ---------------
(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

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Officers are elected by and serve at the discretion of the Board of
Directors. There are no family relationships among the directors or officers of
the Company.

BOARD COMMITTEES

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

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DIRECTOR COMPENSATION

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

- ---------------
(1) Includes bonus amounts earned in 1995 and paid in 1996; excludes bonuses
earned in 1994 and paid in 1995.

(2) Mr. Guldimann joined the Company in September 1995. His base annual salary
for 1995 was $200,000.

(3) Mr. Hospers joined the Company in October 1995. His base annual salary for
1995 was $155,000.

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OPTION GRANTS DURING 1995

The following table sets forth for each of the Named Executive Officers
certain information concerning stock options granted during the year ended
December 31, 1995:

AGGREGATE OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES.

The following table sets forth certain information with respect to stock
options held by the Named Executive Officers during 1995.

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EMPLOYMENT AGREEMENTS

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STOCK PLANS

1989 STOCK OPTION PLAN

1993 STOCK INCENTIVE PLAN

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1996 STOCK INCENTIVE PLAN

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1996 EMPLOYEE STOCK PURCHASE PLAN

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jurisdiction that prohibit or make impractical the participation of such
individuals in the Stock Purchase Plan are not eligible to participate in the
Stock Purchase Plan.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

53
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