GRAPHON CORP/DE, S-1, 1999-12-23

GRAPHON CORP/DE
S-1, 1999-12-23
PREPACKAGED SOFTWARE

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<PAGE>

As filed with the Securities and Exchange Commission on December 23, 1999
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________________

Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

______________________

GraphOn Corporation
(Exact name of Registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 7372 13-3899021
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

150 Harrison Avenue
Campbell, California 95008
(408) 370-4080
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)

______________________

Walter Keller
President
GraphOn Corporation
150 Harrison Avenue
Campbell, California 95008
(408) 370-4080
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

Copies to:
----------
Ira Roxland, Esq.
Joseph H. Schmitt, Esq.
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 Third Avenue
New York, New York 10022
(212) 688-7000
Fax: (212) 755-2839

______________________

Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Each Class of Amount to Price Per Offering Registration
Securities to be Registered be Registered Share (1) Price (1) Fee (1)
--------------------------- ------------- --------- -------- -------
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock............... 300,000 shs. $ 20.00 $6,000,000.00 $1,584.00
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

- --------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933.

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

Pursuant to Rule 429, promulgated under the Securities Act of 1933, the
prospectus forming a part of this registration statement also relates to
(1)(i)(A) 1,250,000 shares of common stock issuable upon the exercise of
1,250,000 Class A redeemable common stock purchase warrants and (B) 1,250,000
shares of common stock issuable upon the exercise of 1,250,000 Class B
redeemable common stock purchase warrants (collectively, the "IPO Securities"),
(ii)(A) 125,000 shares of common stock, (B) 125,000 shares of common stock
issuable upon the exercise of 125,000 Class A common stock purchase warrants and
(C) 125,000 shares of common stock issuable upon the exercise of 125,000 Class B
common stock purchase warrants, issuable to the managing underwriters of the IPO
Securities upon the exercise of the managing underwriters' unit purchase option,
and (iii)(A) 200,000 shares of common stock issuable upon the exercise of
200,000 Class A common stock purchase warrants and (B) 200,000 shares of common
stock issuable upon the exercise of 200,000 Class B common stock purchase
warrants issued to officers and directors of registrant, all initially included
in the registrant's registration statement on Form S-1 (File No. 333-11165)
declared effective on December 12, 1996 and (2)(i) 876,790 shares of common
stock issuable upon the exercise of common stock purchase warrants assumed by
registrant pursuant to a merger on July 12, 1999 and (ii) 250,000 shares of
common stock issuable upon the exercise of 250,000 Class A common stock purchase
warrants issued in consideration for consulting services performed in connection
with the merger, all initially included in the registrant's registration
statement on Form S-4 (File No. 333-76333) declared effective on June 15, 1999.

______________________

The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>

The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.

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

Subject to Completion - Dated December 23, 1999

Prospectus

GRAPHON CORPORATION

300,000 shares of Common Stock

The person named on page 62 of this prospectus, whom we call the "selling
stockholder," may use this prospectus to offer and sell up to 300,000 shares of
our common stock from time to time. We are registering these shares for offer
and sale as required under the terms of a certain registration rights agreement
between us and the selling stockholder. Our registration of the offered shares
does not mean that the selling stockholder will offer or sell any of these
shares. We will receive no proceeds of any sales of the offered shares by the
selling stockholder, but we will incur expenses in connection with the offering.

The selling stockholder may sell the offered shares in public or private
transactions, on or off the Nasdaq SmallCap Market, at prevailing market prices
or at privately negotiated prices. The selling stockholder may sell the offered
shares directly or through agents or broker-dealers acting as principal or
agent, or in a distribution by underwriters.

Our common stock is quoted on The Nasdaq SmallCap Market under the symbol
"GOJO." The closing price of our common stock on December ___, 1999 was $_____
per share.

Please read the Risk Factors beginning on page 7 of this prospectus before
making a decision to invest in our common stock.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. It is illegal for any person to tell you
otherwise.

___________, 1999
<PAGE>

Table of Contents

Page
----

Summary................................................... 3
Risk Factors.............................................. 7
Price Ranges of Securities................................ 19
Selected Historical Financial Data........................ 20
Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 22
Business.................................................. 32
Management................................................ 45
Certain Relationships and Transactions.................... 55
Principal Stockholders.................................... 59
Selling Stockholder....................................... 62
Description of Securities................................. 64
Legal Matters............................................. 69
Experts................................................... 69
Available Information..................................... 69
Index to Financial Statements............................. F-1

2
<PAGE>

SUMMARY

The following summary highlights selected information from this prospectus
and may not contain all the information that is important to you. To understand
our business and this offering fully, you should read this entire prospectus
carefully, including the Risk Factors and the financial statements and
accompanying notes. Unless otherwise indicated, all share and per share amounts
give effect to our merger on July 12, 1999 with GraphOn Corporation, a
California corporation.

Our Business

We develop, market, sell and support server-based software for the
enterprise computing environment. Server-based computing, sometimes referred to
as thin-client computing, is a computing model where traditional desktop
software applications are relocated to run entirely on a server or host
computer. Our technology uses a small software program at each desktop, which
allows the user to interface with an application as if it were running on the
user's desktop computer. This centralized deployment and management of
applications reduces the complexity and total costs associated with enterprise
computing. In addition, the ability to access such applications over the
Internet creates new operational models and sales channels. We provide the
technology to access applications over the Internet. Our server-based technology
works on today's most powerful personal computer or low-end network computer,
without application rewrites or changes to the corporate computing
infrastructure.

We have established strategic alliances with technology leaders such as Sun
Microsystems, Compuware and Corel, who have licensed our technology. Using our
technology, Sun Microsystems provides its network computers access to UNIX
applications. Compuware has expressed its intention to use our technology to
provide access over the Internet to applications built with its UNIFACE product.
Corel currently plans to use our technology to provide access to some of its
applications, such as WordPerfect(TM), over the Internet.

We are headquartered in Campbell, California with offices in Bellevue,
Washington, Concord, New Hampshire, and Reading, United Kingdom.

The Offering

Common stock offered for sale
by the selling stockholder 300,000 shares (1)
Common stock to be outstanding after offering 11,566,302 shares (1)(2)

__________
(1) Assumes the exercise by the selling stockholder of warrants to purchase a
like number of shares of our common stock.

3
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(2) Excludes 811,723 shares of our common stock issuable upon exercise of
outstanding warrants and options under our stock option plans. An
additional 1,418,677 shares are reserved for future grants under our stock
option plans.

Use of Proceeds

We will not receive any proceeds from the sale of the common stock offered
by the selling stockholder. We will receive the proceeds from the exercise of
the selling stockholder's warrants, which will amount to $2,550,000 if all of
these warrants are exercised. We intend to use any such monies, net of our
expenses in preparing this prospectus, for working capital and other general
corporate purposes.

4
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Summary Historical Financial Data

You should read the following summary consolidated financial data in
conjunction with the audited financial statements and the unaudited financial
statements, and their accompanying notes, which are contained elsewhere in this
prospectus. You should also read "Selected Historical Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," which are both contained elsewhere in this prospectus. The results
of operations for the nine months ending September 30, 1999 and 1998 are not
necessarily indicative of results that may be expected for the full year.

Statements of Operations Data
(dollars in thousands, except per share amounts):
<TABLE>
<CAPTION>

Nine Months Ended
September 30, Year Ended December 31,
----------------------- -----------------------------------------------------------------
1999 1998 1998 1997 1996 (1) 1995 (1) 1994 (1)

<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................. $ 2,450 $ 1,499 $ 2,124 $ 1,926 $ 595 $ 588 $ 1,097
Costs of revenues........ 291 251 344 463 336 214 350
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit............. 2,159 1,248 1,780 1,463 259 375 747
Operating expenses:
Selling and.............. 2,359 860 1,440 827 193 - -
marketing
General and.............. 3,725 783 1,119 325 219 389 647
administrative
Research and
development.............. 1,772 634 840 191 42 59 67
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses................. 7,856 2,277 3,399 1,343 453 448 714
---------- ---------- ---------- ---------- ---------- ---------- ----------

(Loss) income from
operations............... (5,697) (1,029) (1,619) 120 (194) (73) 33

Other income
(expense):
Interest and other
income................... 77 9 10 7 6 - -

Interest expense......... ( 9) (368) (522) (2) - - -

Other expense............ - - (17) - - - -
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Loss) income
before provision
for income taxes......... (5,630) (1,389) (2,148) 125 (188) (73) 33
Provision for
income taxes............. 1 1 1 1 1 - 15
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income........ $ (5,631) $ (1,390) $ (2,149) $ 124 $ (189) $ (73) $ 18
========== ========== ========== ========== ========== ========== ==========
Basic and diluted
(loss) income
per share................ $ ( 0.59) $ ( 0.39) $ (0.32) $ 0.02 $ (0.03) $ - $ -
========== ========== ========== ========== ========== ========== ==========
Weighted average
common shares
outstanding.............. 9,540,148 3,583,798 6,762,669 6,000,000 6,000,000 3,345,600 3,345,600
========== ========== ========== ========== ========== ========== ==========
</TABLE>

<PAGE>

Balance Sheet Data
(in thousands):

September 30, 1999 December 31, 1998 December 31, 1997
------------------ ----------------- -----------------
Working capital....... $4,719 $1,193 $ 23
Total assets.......... 8,199 7,110 733
Total liabilities..... 952 1,202 615
Stockholders' equity.. 7,248 5,908 118
___________

(1) During the years ended December 31, 1996, 1995 and 1994, we were engaged in
the business of manufacturing, marketing and selling computer terminal
hardware in an industry significantly different from that in which we
presently do business. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

6
<PAGE>

RISK FACTORS

Before you invest in our common stock, you should be aware that there are
various risks, including those described below. You should carefully consider
these risk factors together with all other information included in this
prospectus, before you decide whether or not to purchase our shares.

We recently changed our corporate strategy and have a limited history operating
under our current business model

Although we were founded in 1982, we have a relatively brief operating
history as a provider of server-based software. We changed our strategic focus
in early 1996 from manufacturing and selling computer terminal hardware to
developing server-based software. This change in strategic focus required us to
make changes to our business processes and to make a number of significant
personnel changes, including changes and additions to our engineering and
management teams. As a result of our relatively brief operating history as a
provider of server-based software, you must consider the risks and difficulties
frequently encountered by early stage companies in new and rapidly evolving
markets. These risks include our:

. substantial dependence on products with only limited market acceptance;

. need to expand our sales and support organizations;

. competition with established and emerging companies;

. need to manage changing operations;

. reliance upon strategic relationships; and

. dependence upon key personnel.

We also depend to a significant degree on the continued growing use of the
Internet for commerce and communication. We cannot be certain that our business
strategy will be successful or that we will successfully address these risks.

We have a history of operating losses and we expect these losses to continue
and to increase, at least for the near future

We have experienced significant losses since we began operations. We expect
to continue to incur significant losses for the foreseeable future. We incurred
net losses of approximately

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$5,630,500 and $2,148,500 for the nine months ended September 30, 1999 and for
the year ended December 31, 1998. We expect our expenses to increase as we
expand our business but we cannot assure you that our revenues will increase as
a result of increased spending. If revenues grow more slowly than anticipated,
or if operating expenses exceed expectations, we may not become profitable. Even
if we become profitable, we may be unable to sustain profitability.

Our operating results in one or more future periods are likely to fluctuate
significantly and may fail to meet or exceed the expectations of securities
analysts or investors

Our operating results are likely to fluctuate significantly in the future
on a quarterly and on an annual basis due to a number of factors, many of which
are outside our control. Factors that could cause our revenues to fluctuate
include the following:

. the degree of success of our recently introduced products;

. variations in the timing of and shipments of our products;

. variations in the size of orders by our customers;

. increased competition;

. the proportion of overall revenues derived from different sales
channels such as distributors, OEMs and others;

. changes in our pricing policies or those of our competitors;

. the financial stability of major customers;

. new product introductions or enhancements by us or by competitors;

. delays in the introduction of products or product enhancements by us
or by competitors;

. the degree of success of new products;

. any changes in operating expenses; and

. general economic conditions and economic conditions specific to the
software industry.

8
<PAGE>

In addition, our royalty and license revenues are impacted by fluctuations
in OEM licensing activity from quarter to quarter which may involve one-time
royalty payments and license fees. Our expense levels are based, in part, on
expected future orders and sales. Therefore, if orders and sales levels are
below expectations, our operating results are likely to be materially adversely
affected. Additionally, because a significant portion of our expenses are fixed,
a reduction in sales levels may disproportionately affect our net income. Also,
we may reduce prices or increase spending in response to competition or to
pursue new market opportunities. Because of these factors, our operating results
in one or more future periods may fail to meet or exceed the expectations of
securities analysts or investors. In that event, the trading price of our common
stock would likely decline.

Our failure to adequately protect our proprietary rights may adversely affect us

Our commercial success is dependent, in large part, upon our ability to
protect our proprietary rights. We rely on a combination of patent, copyright
and trademark laws, and on trade secrets and confidentiality provisions and
other contractual provisions to protect our proprietary rights. These measures
afford only limited protection. We cannot assure you that measures we have taken
will be adequate to protect us from misappropriation or infringement of our
intellectual property.

We license essential components of our core technology from one party to
whom we pay royalties, although we hold an option, which is exercisable in the
year 2001, to purchase the technology under such license. This license may be
terminated upon material breach of the agreement, and if it is terminated our
business will be harmed.

Despite our efforts to protect proprietary rights, it may be possible for
unauthorized third parties to copy aspects of our products or obtain and use
information that we regard as proprietary. In addition, the laws of some foreign
countries do not protect our intellectual property rights as fully as do the
laws of the United States. Furthermore, we cannot assure you that the existence
of any proprietary rights will prevent the development of competitive products.
The infringement upon or loss of any proprietary rights, or the development of
competitive products despite such proprietary rights, could have a material
adverse effect on our business.

We face risks of claims from third parties for intellectual property
infringement that could adversely affect our business

At any time, we may receive communications from third parties asserting
that features or content of our products may infringe upon their intellectual
property rights. Any such claims, with or without merit, and regardless of their
outcome, may be time consuming and costly to defend. We may not have sufficient
resources to defend such claims and they could divert management's attention and
resources, cause product shipment delays or require us to enter into

9
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new royalty or licensing agreements. New royalty or licensing agreements may not
be available on beneficial terms, and may not be available at all. If a
successful infringement claim is brought against us and we fail to license the
infringed or similar technology, our business could be materially adversely
affected.

Our business significantly benefits from strategic relationships and there can
be no assurance that such relationships will continue in the future

Our business and strategy relies to a significant extent on our strategic
relationships with other companies. There is no assurance that we will be able
to maintain or develop any of these relationships or to replace them in the
event any of these relationships are terminated. In addition, any failure to
renew or extend any licenses between us and any third party may adversely affect
our business.

Because our market is new and emerging, we cannot accurately predict its future
growth rate or its ultimate size, and widespread acceptance of our products is
uncertain

The market for server-based software, which enables programs to be accessed
and run with minimal memory resident on a desktop computer or remote user
device, still is emerging, and we cannot assure you that our products will
receive broad-based market acceptance or that this market will continue to grow.
Additionally, we cannot accurately predict our market's future growth rate or
its ultimate size. Even if server-based software products achieve market
acceptance and the market for these products grows, we cannot assure you that we
will have a significant share of that market. If we fail to achieve a
significant share of the server-based software market or if such market does not
grow as anticipated, our business, results of operations and financial condition
may be adversely affected.

We may need additional capital in the future and may not be able to secure
adequate funds on terms acceptable to us

In the future, we may need to raise additional funds to meet our
obligations, cover operating expenses, pursue business strategies, respond to
financial, technological or marketing hurdles or take advantage of new
opportunities. However, we cannot assure you that any additional funds required
will be available at the time or times needed, or available on terms acceptable
to us. If adequate funds are not available, or are not available on acceptable
terms, we may not be able to meet our obligations, pursue business strategies,
take advantage of market opportunities, develop new products or otherwise
respond to competitive pressures. Such inability could have a material adverse
effect on our business, financial condition and results of operations.

10
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We rely on indirect distribution channels for our products and may not be able
to retain existing reseller relationships or to develop new reseller
relationships

Our products primarily are sold through several distribution channels. An
integral part of our strategy is to strengthen our relationships with resellers
such as value-added resellers, distributors, OEMs, systems integrators and other
vendors to encourage these parties to recommend or distribute our products and
to add resellers both domestically and internationally. We currently invest in
and intend to continue to invest significant resources to expand our sales and
marketing capabilities. We cannot assure you that we will be able to attract
and/or retain resellers to market our products effectively. Our inability to
attract resellers and the loss of any current reseller relationships could have
a material adverse effect on our business, results of operations and financial
condition. Additionally, we cannot assure you that resellers will devote enough
resources to provide effective sales and marketing support to our products.

Our future success will depend in part upon our ability to enhance our existing
products and to develop and introduce, on a timely basis, new products and
features that meet changing customer requirements and emerging industry
standards

The server-based software market still is emerging and characterized by
rapid technological change, evolving industry standards, changes in end-user
requirements and frequent new product introductions and enhancements. The
introduction of new technological products and the emergence of new industry
standards could render our products obsolete and unmarketable. From time to
time, we may develop new products, capabilities or technologies that have the
potential to replace or shorten the life cycle of our existing products.
Additionally, we cannot assure you that announcements of currently planned or
newly introduced product offerings will not cause customers to defer purchasing
our existing products.

In addition, we cannot assure you that we will be able to develop products
that keep pace with new technology, or that new technology will not obviate the
need for our products. If any new or enhanced technology gains widespread
acceptance and we fail to develop and provide compatible products on a timely
basis, our competitive position, business, results of operations and financial
condition could be adversely affected. Our future success depends in large part
upon:

. our ability to enhance our current products;

. our ability to develop and successfully introduce new products that
keep pace with technological developments; and

. our ability to respond to evolving end-user requirements.

11
<PAGE>

We cannot assure you that we will successfully develop and market new
products or product enhancements on a timely basis, or that new products or
product enhancements we develop will achieve market acceptance.

We filed for bankruptcy on November 15, 1991 and may be required to pay up to
$2.23 million and interest, if any, to creditors.

On November 15, 1991, we filed for reorganization under Chapter 11 of the
United States Bankruptcy Code and, later, submitted a Debtor's Proposed Amended
Plan of Reorganization. The plan was confirmed by order of the bankruptcy court
on July 11, 1994 and the court established a plan of payment for the benefit of
our creditors. Under the bankruptcy court order, we established a disbursement
account into which 50% of the ongoing terminal royalties we receive from OEMs
with whom we had a current relationship must be deposited to pay named
creditors. See "Business -- Corporate History" for a more complete description
of these OEMs. For all but one unsecured creditor, payments from the
disbursement account were ordered to continue up to the earlier of:

. the limit of our liability to each unsecured creditor or

. through the year 2000.

However, the largest unsecured creditor's claim, which currently totals
approximately $964,000, must be paid from available funds, if any, in the
disbursement account until such amount is fully paid. Our potential total
remaining liability under the bankruptcy, as of September 30, 1999, is limited
to the lesser of:

. approximately $2,230,000 or
. 50% of future ongoing terminal royalties we receive from the OEMs.

To date, only royalties received pursuant to some of our license agreements
existing at the time of the bankruptcy have been deposited into the disbursement
account, and we have not deposited into such account or paid creditors out of
royalties received or currently received on our subsequently developed and
licensed server-based technology. We believe that our royalty payment
obligations under the bankruptcy court order relate only to licenses in place as
of July 11, 1994, and no payments to creditors have been made since November 14,
1997. We cannot assure you that a court will not interpret our obligation to
include payments to the disbursement account from royalties earned from
subsequent licenses of the server-based technology or licenses that we secure in
the future, or that our current technology will not be deemed derivative of our
technology existing at July 11, 1994. Consequently, we cannot assure you that we
will not be required to repay creditors referenced in the bankruptcy proceedings
the full amount of our liability, which is approximately $2,230,000, and
interest on any payments

12
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that a court deems to be owed based upon a ruling that our interpretation is
wrong. In addition, we cannot guarantee you that a creditor will not assert a
claim for payment out of the royalties from subsequent licenses of the server-
based technology. Such claims could be costly and time-consuming for us. If any
of these events takes place, it could have a material adverse effect on our
business, financial condition and results of operations. See Note 6 to our
Financial Statements.

Our failure to manage expanding operations could adversely affect us

To exploit the emerging server-based software market, we must rapidly
execute our business strategy and further develop products while managing our
anticipated growth in operations. To manage our growth, we must:

. continue to implement and improve our operational, financial and
management information systems;

. hire and train additional qualified personnel;

. continue to expand and upgrade core technologies; and

. effectively manage multiple relationships with various licensees,
consultants, strategic and technological partners and other third
parties.

We cannot assure you that our systems, procedures, personnel or controls
will be adequate to support our operations or that management will be able to
execute strategies rapidly enough to exploit the market for our products and
services. Our failure to manage growth effectively or execute strategies rapidly
could have a material adverse effect on our business, financial condition and
results of operations.

Competition for key management and other personnel in our industry is intense,
and we may not be successful in attracting and retaining these personnel

Our success and business strategy is dependent in large part on our ability
to attract and retain key management and other personnel. Such individuals are
in high demand and often have competing employment offers. In particular, our
success depends on our ability to retain the services of Mr. Walter Keller, our
President and Ms. Robin Ford, our Executive Vice President, Marketing and Sales.
We have entered into employment agreements with these individuals that each
contain non-competition and confidentiality covenants. We currently anticipate
the need to attract additional sales, marketing, financial and software engineer
personnel in the near future. Competition for such personnel in the computer
software and services industry is intense,

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and therefore, we cannot assure you we will be able to attract or retain such
personnel. The loss of the services of one or more members of our management
group or the inability to retain or hire additional personnel as needed may have
a material adverse effect on our business.

Our planned expansion into international markets makes us susceptible to risks
from international operations

As part of our long term strategy we intend to address the global needs of
our customers and expand our business to commit resources to international
market expansion. In order to execute this strategy, we will need to hire and
train additional personnel and recruit additional international resellers to
successfully expand our international sales. We cannot assure you that we will
be able to increase or maintain international sales of our products or that
international reseller channels will be willing or able to adequately service
and support our products. Our international operations will be subject to a
number of risks including:

. difficulties in staffing and managing foreign operations;

. variability of foreign economic conditions and changing restrictions
imposed by United States export laws;

. unexpected changes in regulatory requirements;

. tariffs and other trade barriers;

. lack of acceptance of products in foreign countries;

. the burdens of complying with a wide variety of foreign laws; and

. foreign restrictions on the transfer of currency and variability of
foreign currency exchange rates.

We cannot assure you that these factors will not have a material adverse
effect on our future international sales and, consequently, our business,
results of operations and financial condition.

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<PAGE>

The market in which we participate is highly competitive and has more
established competitors

The market we participate in is intensely competitive, rapidly evolving and
subject to technological changes. We expect competition to increase as other
companies introduce additional competitive products. In order to compete
effectively, we must continually develop and market new and enhanced products
and market those products at competitive prices. As markets for our products
continue to develop, additional companies, including companies in the computer
hardware, software and networking industries with significant market presence,
may enter the markets in which we compete and further intensify competition. A
number of our current and potential competitors have longer operating histories,
greater name recognition and significantly greater financial, sales, technical,
marketing and other resources than we do. We cannot assure you that our
competitors will not develop and market competitive products that will offer
superior price or performance features or that new competitors will not enter
our markets and offer such products. We believe that we will need to invest
increasing financial resources in research and development to remain competitive
in the future. Such financial resources may not be available to us at the time
or times that we need them or upon terms acceptable to us. We cannot assure you
that we will be able to establish and maintain a significant market position in
the face of our competition and our failure to do so would adversely affect our
business.

We are subject to risk of undetected errors which could substantially reduce the
effectiveness of our products and adversely affect us

Our complex software products may contain undetected errors or failures
when first introduced or as new versions are released. We cannot assure you that
errors will not be found in our products after commencement of commercial
shipments. In addition, third-party products that our products depend upon,
including current and future versions of operating systems and application
programs provided by companies such as Sun Microsystems, IBM and Microsoft, may
contain defects which could reduce the performance of our products or render
them useless. Because we do not develop our own application programs and depend
upon third party applications, errors in any application utilized by our
customers could adversely impact the marketability of our products. Similarly,
we cannot assure you that errors or defects in our products will not be
discovered, causing delays in product introductions and shipments or requiring
design modifications that could adversely affect our reputation, competitive
position, business, results of operations and financial condition.

Our management are able to exert significant control over us

Our executive officers, directors and their affiliates own or have voting
control over approximately 38.47% of the outstanding shares of common stock. As
a result, if they act as a

15
<PAGE>

group, the executive officers and directors may exercise significant influence
over such matters as amendments to our charter and fundamental corporate
transactions such as mergers, asset sales and our sale. In addition, they will
be able to influence the direction of our business and the election of members
to the board of directors.

We have agreed to contractual provisions that could discourage acquisition bids

A number of our agreements contain express provisions that do not allow us
to assign them without written consent. These provisions could deter third
parties from making bids to acquire us. These provisions could also limit the
price future investors are willing to pay for shares of our common stock.

Our failure to be Year 2000 compliant would negatively impact our business

Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field and therefore are not
designed to handle any dates beyond the year 1999. These date code fields will
need to accept four digit entries to distinguish 21st century dates from 20th
century dates. As a result, in a relatively short time, computer systems and/or
software used by many companies may need to be upgraded to comply with such year
2000 requirements to remain functional. Significant uncertainty exists in the
software industry concerning the potential effects associated with such
compliance. Although we currently offer software products that are designed and,
in certain circumstances, are warranted to be year 2000 compliant, there can be
no assurance that our software products contain all necessary date code changes.
In addition, there may be a significant amount of litigation arising out of year
2000 compliance issues. Because of the unprecedented nature of such litigation,
it is uncertain whether or to what extent we may be affected by it.

We believe that the purchasing patterns of customers and potential
customers may be affected by year 2000 issues in a variety of ways. Many
companies are expending significant resources to purchase new software or
correct their current software systems for year 2000 compliance. These
expenditures may result in reduced funds available to purchase our products. In
addition, many potential customers may choose to defer purchasing year 2000
compliant products until they believe it is absolutely necessary, thus resulting
in potentially stalled market sales within the server-based software industry.
Conversely, year 2000 issues may cause other companies to accelerate purchases,
causing an increase in short-term demand and a consequent decrease in long-term
demand for our year 2000 compliant products. There can be no assurance that year
2000 issues will not affect us in one or more of a number of possible ways, and
will not result in a material adverse effect on our business, operating results
and financial condition.

16
<PAGE>

Potential public sales of a significant number of shares of our common stock
could reduce the market price of our common stock

We cannot predict the effect, if any, that future sales of shares, or the
availability of shares for future sale, will have on the market price of our
common stock. Sales of substantial amounts of common stock, or the perception
that such sales could occur, may adversely affect prevailing market prices for
our common stock.

As of the date of this prospectus, there are 11,266,302 shares of our
common stock outstanding and 5,004,125 shares issuable upon exercise of
outstanding options and warrants. Restrictions under the securities laws and
lock-up agreements prevent the immediate sale in the public market of 811,723 of
such shares of common stock. However, all of these restricted shares will become
available for sale on January 12, 2000.

No dividends will be paid in the foreseeable future

We have never paid cash dividends on our common stock and do not anticipate
paying cash dividends for the foreseeable future. We intend to reinvest any
funds that might otherwise be available for the payment of dividends in further
development of our business.

The price of our securities may fluctuate

The market price of our securities is likely to be highly volatile as the
stock market in general, and the market for technology companies in particular,
has been highly volatile. Stockholders may have difficulty selling our common
stock following periods of volatility because of the market's adverse reaction
to such volatility.

Factors which could cause such volatility may include, among others:

. conditions or trends in the computer software industry;

. changes in the market valuations of other computer software companies;

. actual or anticipated variations in quarterly operating results;

. announcements of technological innovations;

. capital commitments and expenditures;

17
<PAGE>

. departures of key employees; and

. announcements by us or our competitors of strategic alliances, joint
ventures and significant acquisitions.

Many of these factors are beyond our control and may materially adversely affect
the market price of our common stock, regardless of our future operating
results.

The trading prices of many technology companies' stocks have reached
historical highs within the last 12 months and have reflected valuations
substantially above historical levels. During the same period, such companies'
stocks have also been highly volatile and have recorded lows well below such
historical highs. We cannot assure you that our securities will trade at the
same levels of other technology companies or that technology stocks in general
will sustain their current levels.

Our certificate of incorporation and bylaws could make it difficult for a third
party to acquire us

Our amended and restated certificate of incorporation and bylaws could have
the effect of delaying, deferring or preventing an acquisition of us. For
example, our board may issue preferred stock without stockholder approval.
Additionally, such certificate of incorporation provides for a classified board,
with each member having a staggered three year term, prohibits the stockholders
from taking action by written consent and limits their ability to call special
meetings and make proposals at such meetings. These provisions could make it
more difficult for a third party to remove or replace our management or to
acquire us.

Forward-looking statements found in this prospectus may not be accurate
indicators of our future performance

This prospectus contains certain forward-looking statements and information
relating to our business. We have identified forward-looking statements in this
prospectus using words such as "believes," "intends," "expects," "predicts,"
"may," "will," "should," "contemplates," "anticipates," or similar statements.
These statements are based on our beliefs as well as assumptions we made using
information currently available to us. Because these statements reflect our
current views concerning future events, these statements involve certain risks,
uncertainties and assumptions. Actual future results may differ significantly
from the results discussed in the forward-looking statements.

18
<PAGE>

PRICE RANGES OF SECURITIES

Since August 26, 1999, our common stock, Class A redeemable warrants and
Class B redeemable warrants have been quoted on The Nasdaq SmallCap Market under
the symbols GOJO, GOJOW and GOJOZ, respectively. Prior to such date, such
securities were quoted on the OTC Bulletin Board The following table sets forth
the range of the high and low bid quotations of such securities on The Nasdaq
SmallCap Market and the OTC Bulletin Board for the periods indicated:

<TABLE>
<CAPTION>
Class A Class B
Common Stock Redeemable Warrants Redeemable Warrants
----------------------- ------------------------- -------------------------
Quarter Ended High Low High Low High Low
- -------------------- ----------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1997 $ 5-1/8 $ 4-3/8 $ 1-5/16 $ 5/8 $ 1-1/4 $ 5/8
June 30, 1997 5-1/8 4-7/16 1 3/8 1 5/16
September 30, 1997 5-1/8 4-9/16 3/4 1/4 9/16 1/8
December 31, 1997 5-3/8 4-5/8 1-1/16 5/16 3/4 3/16
March 31, 1998 5-1/2 4-3/4 1-1/4 7/16 3/4 1/4
June 30, 1998 5-5/16 4-3/4 1-1/4 3/8 1/2 3/16
September 30, 1998 5-3/8 4-3/4 1-3/8 1/32 1/2 1/4
December 31, 1998 5-7/16 4-11/16 15/16 11/16 5/8 1/16
March 31, 1999 5-3/8 5 1-17/32 1-1/16 1 7/16
June 30, 1999 7-15/16 5-1/8 2-13/16 1-1/16 1-3/4 11/16
September 30, 1999 9-1/2 3 4-5/16 1-1/8 3-9/16 3/4
December 31, 1999 14-5/16 6-1/8 8-3/4 3-1/8 6-3/4 2-1/6
(through December 3)
</TABLE>

The above quotations represent prices between dealers and do not include
retail markup, markdown or commission. They do not necessarily represent actual
transactions.

On December 3, 1999, the last reported closing bid prices of our common
stock, Class A redeemable warrants and Class B redeemable warrants were $13, $7-
3/4 and $5-7/8. On that date, there were 257 recordholders of our common stock,
although we believe that there are other persons who are beneficial owners of
shares of our common stock held in street name.

19
<PAGE>

SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data should be read in
conjunction with our historical financial statements and the notes thereto
beginning on page F-1 of this prospectus. Our selected financial data as of
December 31, 1998 and 1997 and for the years ended December 31, 1998, 1997 and
1996 have been derived from our financial statements which have been audited by
BDO Seidman LLP, independent public accountants. The data as of September 30,
1999 and for the nine months ended September 30, 1999 and 1998 and for the years
ended December 31, 1995 and 1994 have been derived from our unaudited condensed
financial statements which, in the opinion of management, include all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair presentation of the information set forth in such financial statements. The
results of operations for the nine months ended September 30, 1999 are not
necessarily indicative of results that may be expected for the full year.

Statements of Operations Data
(dollars in thousands, except per share amounts):

<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
----------------------- ----------------------------------------------------------------------
1999 1998 1998 1997 1996 (1) 1995 (1) 1994 (1)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................... $ 2,450 $ 1,499 $ 2,124 $ 1,926 $ 595 $ 588 $ 1,097
Costs of revenues.......... 291 251 344 463 336 214 350
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross profit............... 2,159 1,248 1,780 1,463 259 375 747
Operating expenses:
Selling and
marketing............ 2,359 860 1,440 827 193 - -
General and
administrative....... 3,725 783 1,119 325 219 389 647
Research and
development.......... 1,772 634 840 191 42 59 67
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total operating
expenses........ 7,856 2,277 3,399 1,343 453 448 714
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Loss) income from
operations.............. (5,697) (1,029) (1,619) 120 (194) (73) 33

Other income
(expense):
Interest and other
income............ 77 9 10 7 6 - -
Interest expense........ ( 9) (368) (522) (2) - - -
Other expense........... - - (17) - - - -
---------- ---------- ---------- ----------- ---------- ---------- ----------
(Loss) income
before provision
for income taxes........ (5,630) (1,389) (2,148) 125 (188) (73) 33
</TABLE>

20
<PAGE>

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Provision for
income taxes........... 1 1 1 1 1 - 15
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net (loss) income......... $ (5,631) $ (1,390) $ (2,149) $ 124 $ (189) $ (73) $ 18
========== ========== ========== ========== ========== ========== ==========
Basic and diluted
(loss) income
per share.............. $ ( 0.59) $ ( 0.39) $ (0.32) $ 0.02 $ (0.03) $ - $ -
========== ========== ========== ========== ========== ========== ==========
Weighted average
common shares
outstanding............ 9,540,148 3,583,798 6,762,669 6,000,000 6,000,000 3,345,600 3,345,600
========== ========== ========== ========== ========== ========== ==========
</TABLE>

Balance Sheet Data
(in thousands):

September 30, 1999 December 31, 1998 December 31, 1997
------------------ ----------------- -----------------

Working capital........ $4,719 $1,193 $ 23

Total assets........... 8,199 7,110 733

Total liabilities...... 952 1,202 615

Stockholders' equity... 7,248 5,908 118

___________

21
<PAGE>

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

The following description of our financial condition and results of
operations should be read in conjunction with the information included in this
prospectus. The description contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ significantly from the
results discussed in the forward-looking statements as a result of the risk
factors set forth below and elsewhere in this prospectus.

Overview

We develop, market, sell and support server-based software that is designed
to enable a diverse range of desktop computers to access server-based Windows
and UNIX applications from any location, over fast or slow Internet connections.
We were incorporated in May 1982 and engaged in the development and manufacture
of hardware computer terminals. In 1996, we started to transition from a
hardware to a software manufacturer by working with three independent software
developers, with whom we entered into exclusive license agreements calling for
royalties aggregating 16.4%, 9.7%, 4.8% and 2.9% of net revenues from sales of
software products which contain the licensed technology for the years 1997,
1998, 1999 and 2000. After December 31, 2000, we have the option, under
particular circumstances, to purchase the licensed technology or exclusive
rights to it. We purchased most of the licensed technology from two of the
software developers for an aggregate purchase price of $378,000 in the third
quarter of 1999.

Before October 1996, while we were developing our server-based software
products, our revenue was derived principally from the sale and repair of
hardware computer terminals. We discontinued selling hardware products in 1996
and now provide only return-to-factory repair for the installed customer base.
Software licensing revenue in 1996 was $72,900, representing only 12.3% of our
revenue. Software revenue consists of licensing fees for products sold and
revenues from OEM license agreements relating to our software products called
GO-Global, GO-Joe and GO-Between, in addition to fees for training and software
maintenance. Consequently, we do not consider comparisons between 1997 and 1996
fiscal performance to be meaningful.

In October 1996, Sun Microsystems licensed GO-Joe for distribution with its
network computers, our server software for distribution with its UNIX operating
systems and GO-Global for use by its employees. GO-Global was released for sale
to customers other than Sun Microsystems in March 1997. In April 1998, IBM
licensed GO-Joe for distribution with its network computers and our server
software for distribution with computers using its UNIX operating systems. GO-
Joe was released for sale to customers other than IBM in July 1998. In December
1998, Corel licensed our software for distribution with its WordPerfect Office
Suite products.

22
<PAGE>

During 1997 and part of 1998, we concentrated our efforts on OEM
opportunities and strategic alliances to establish product acceptance. OEM
licensing revenue from the Sun Microsystems agreement accounted for
approximately 70.0% of revenue in 1997 and licensing revenue from the Sun
Microsystems, IBM and Corel agreements accounted for approximately 18.8%, 16.5%
and 20.6% of revenues in 1998. We intend to continue to commit significant
financial and other resources toward our objective of expanding our strategic
OEM relationships and developing reseller channels. In pursuit of this
objective, in August 1998, we hired a Vice President of Sales and two sales
directors to create and develop our reseller channel.

In May 1998, we hired eight software engineers based in Bellevue,
Washington and in December 1998 added eight engineers in Concord, New Hampshire
in connection with the acquisition of Corel's jBridge technology. In February
1999, we hired a Chief Financial Officer. We have increased our headcount from
12 at December 31, 1997 to 49 at September 30, 1999.

Product license revenues are recognized upon shipment only if we have no
significant obligations and collection of the resulting receivable is deemed
probable. When product licenses require product engineering development by us,
recognition of revenue is after delivery and customer acceptance of contract
milestones. Revenues for training are recognized when the services are
performed. Revenue from customer yearly maintenance fees, for ongoing customer
support and product updates are recognized equally over the term of the
contract, which typically is 12 months.

Our limited operating history as a software developer and manufacturer
makes the prediction of future operating results difficult and unreliable.
Future operating results may fluctuate due to many factors, including our
ability to attract and retain strategic partners, the degree and rate of growth
of the markets in which we compete and accompanying demand for our products, the
level of product and price competition, and our ability to establish and build
our software product reseller channels.

Nine Months Ended September 30, 1999 Versus Nine Months Ended September 30, 1998

Revenues. Software revenues have been derived primarily from two sources:
GO-Global product sales and OEM licensing revenues for GO-Joe, GO-Global and our
server software. Total revenues for the nine-month period ended September 30,
1999 increased by $950,500, or 63.4%, to $2,449,500 from $1,499,000 for the same
period in 1998. The most important contributing factor was an increase in OEM
license sales in 1999 as compared to 1998.

23
<PAGE>

revenue, for the nine months ended September 30, 1999 from $860,000, or 57.4% of
revenue, for the same period in 1998. This increase primarily is attributable to
the addition of sales and marketing personnel and a substantial increase in
trade show, promotional and public relations activities.

General and Administrative. General and administrative expenses primarily
consist of salaries and legal and professional services. In addition, our
corporate rent, utilities and administrative employee benefits are included in
general and administrative expenses. General and administrative expenses
increased by $2,942,700, or 375.9%, to $3,725,500, or 152.1% of revenue, for the
nine months ended September 30, 1999 from $782,800, or 52.2% of revenue, for the
same period in 1998. This increase is primarily due to:

. amortization and depreciation expense recorded in connection with the
acquisition of technology and assets from Corel Corporation in the
approximate amount of $2,400,000 for the nine months ended September
30, 1999, respectively;

. an increase in legal services;

. hiring additional administrative personnel; and

. increased utilities expenses necessary to support expanding
operations.

In addition, we recognized non-cash compensation charges in 1999 due to the
recognition of deferred compensation charges in the latter part of 1998.

Research and Development. Research and development expenses consist
primarily of salaries and benefits to software engineers, supplies and payments
to contract programmers and rent on facilities. Research and development
expenses increased by $1,137,400, or 179.3%, to $1,771,800, or 72.3% of revenue,
for the nine months ended September 30, 1999 from $634,400, or 42.3% of revenue,
for the same period in 1998. The increase was primarily due to the addition of
software engineers and the rent on new facility locations. As of September 30,
1999, we had 28 software engineers compared to 13 as of September 30, 1998.

Interest Expense. Interest expense decreased in 1999 as compared to 1998
due to the repayment of a convertible note payable in January 1999.

24
<PAGE>

Year Ended December 31, 1998 Versus Year Ended December 31, 1997

Revenues. Total revenues for the year ended December 31, 1998 were
$2,124,200, an increase of 10.3% over the same period in 1997. The most
important contributing factor was a 10.4% increase in software-related revenues
to $1,971,000 in 1998 as compared to $1,785,000 in 1997. Our software revenues
have been derived primarily from two sources: GO-Global product sales and OEM
licensing revenues for GO-Joe, GO-Global and our server software. Revenues from
the Sun Microsystems OEM licensing agreement represented 70.0% of total revenue
in 1997 and from OEM license agreements with Sun Microsystems, IBM and Corel,
collectively, represented 67.0% of revenues in 1998.

Revenues also include service fees from maintenance contracts and training
services. The maintenance program was started in June 1997 to provide product
updates and support from the time of purchase. It is expected that many of the
maintenance programs will be renewed by customers to assure continued product
updates and support. Service revenue was $116,000 in 1998, or 5.5% of revenue,
as compared to a nominal amount of revenue in 1997.

Cost of Goods Sold. Cost of goods sold consists primarily of royalties,
materials such as manuals, media and packaging, expenses associated with product
maintenance and enhancements such as software corrections and updates, and
amortization of capitalized research and development expenses. Research and
development costs for new product development, after technological feasibility
is established, are treated as "capitalized software" on our balance sheet and
subsequently expensed as cost of goods sold over the shorter of three years or
the remaining estimated life of the products, whichever produces the higher
expense for the period.

Cost of goods sold was reduced to 16.2% of revenue in 1998, as compared to
24.1% in 1997. This primarily is attributed to the reduction in the royalty rate
paid to outside software developers under our exclusive licensing agreements.

Sales and Marketing Expenses. Sales and marketing expenses primarily
consist of salaries, sales commissions, travel expenses, trade show related
activities and promotional costs. Sales and marketing expenses increased 74.1%
to $1,440,300, or 67.8% of revenue, in 1998 from $827,300, or 43.0% of revenue,
in 1997. This increase primarily is attributable to the addition of sales and
marketing personnel and a substantial increase in trade show, promotional and
public relations activities. We expect that sales and marketing expenses will
continue to increase in dollar amounts, but decline as a percentage of total
revenues, as we continue to hire additional sales and marketing personnel,
establish reseller channels and expand promotional activities.

General and Administrative. General and administrative expenses primarily
consist of salaries and legal and professional services. In addition, our rent,
utilities and administrative employee benefits are included in general and
administrative expenses. General and

25
<PAGE>

administrative expenses increased 244.5% to $1,118,600, or 52.7% of revenue, in
1998, from $324,700, or 16.9% of revenue, in 1997. This increase primarily is
attributed to legal services, hiring additional administrative personnel and
increased rent, utilities and benefit expenses necessary to support expanding
operations.

Interest Expense. Interest expense increased in the amount of $519,800 in
1998 primarily due to the recording of interest expense in the amount of
$475,000 on the convertible note payable as a result of the issuance of 278,800
shares of common stock at $.09 per share in connection with such note.

Research and Development. Research and development expenses consist
primarily of salaries and benefits to software engineers, supplies and payments
to contract programmers. Research and development expenses increased by 341.1%
to $840,200, or 39.6% of revenue, in 1998, from $190,500, or 9.9% of revenue, in
1997. We believe that a significant level of investment for research and
development is required to remain competitive and that such expenses are
expected to continue to increase over the foreseeable future.

Provision for Income Taxes. At December 31, 1998, we had approximately
$2.8 million in federal net operating loss carryforwards. The federal net
operating loss carryforwards will expire through 2018, if not utilized. In
addition, the Tax Reform Act of 1986 contains provisions that may limit the net
operating loss carryforwards available for use in any given period upon the
occurrence of various events, including a significant change in ownership
interests. In 1998, we experienced a "change of ownership" as defined by the
provisions of the Tax Reform Act of 1986. As such, our utilization of our net
operating loss carryforwards will be limited to approximately $400,000 per year
until such carryforwards are fully utilized. To date, we have utilized a portion
of our net operating loss carryforwards to reduce our overall income tax
liability.

Year Ended December 31, 1997 Versus Year Ended December 31, 1996

Before October 1996, while we were developing our server-based software
products, our revenue was derived principally from the sale and repair of
hardware computer terminals. We discontinued selling hardware products in 1996
and now provide only return-to-factory repair for the installed customer base.
Software licensing revenue in 1996 was $72,900, representing only 12.3% of
revenue as compared to 92.7% in 1997. Accordingly, the comparison of the year
ended December 31, 1997 to the year ended December 31, 1996 is considered not
meaningful by management.

Revenues. Total revenues for the year ended December 31, 1997 were
$1,926,100, an increase of 223.8% over the same period in 1996. We believe the
most important contributing factor was a $1,712,000 increase in software-
related revenues to $1,785,000 in 1997 versus

26
<PAGE>

$72,900 in 1996 due to our change from selling hardware products in 1996 to
software products in 1997.

Cost of Goods Sold. Cost of goods sold was reduced to 24.1% of revenue in
1997, versus 50.4% in 1996. This reduction primarily is attributable to our
change in products from hardware to software as discussed above.

Sales and Marketing Expenses. Sales and marketing expenses increased
329.3% to $827,300, or 43.0% of revenue, in 1997 from $192,700, or 32.4% of
revenue, in 1996. This increase primarily is attributable to the addition of
sales and marketing personnel and a substantial increase in trade show,
promotional and public relations activities.

General and Administrative. General and administrative expenses increased
by 48.4% to $324,700, or 16.9% of revenue, in 1997 from $218,900, or 36.8% of
revenue, in 1996. This increase primarily is attributed to hiring additional
administrative personnel, legal services and benefit expenses necessary to
support expanding operations.

Research and Development. Research and development expenses increased by
356.8% to $190,500, or 9.9% of revenue, in 1997 from $41,700, or 7.0% of
revenue, in 1996 due to the change in our products as discussed above.

Liquidity and Capital Resources

Prior to 1998, we funded our operations, working capital needs and capital
expenditures primarily through cash flow from operations. In 1998, we received
$775,000 from the issuance of notes convertible into shares of our common stock
and in October and December of 1998 received aggregate net proceeds of
$2,697,400 in connection with the first and second closings of a private
placement offering.

On December 31, 1998, a $200,000 note converted into 111,520 shares of our
common stock and a note in the amount of $100,000 was repaid by us.

In January 1999, the above $475,000 convertible note was repaid from the
net proceeds of the final closing of our private placement of securities whereby
we received additional net proceeds of $1,708,600 in consideration of 1,095,053
shares of our common stock and warrants to purchase an additional 219,010 shares
of our common stock.

In February 1999, we sold 62,525 shares of our common stock and warrants to
purchase an additional 676 shares of our common stock for gross proceeds of
$97,200.

27
<PAGE>

On July 12, 1999, we completed a merger with GraphOn Corporation, a
California corporation ("GraphOn-CA"). By reason of the merger, each share of
GraphOn-CA's common stock was exchanged for 0.5576 shares of our common stock
and each outstanding option and warrant to purchase GraphOn-CA's common stock
was exchanged for options or warrants to purchase 0.5576 shares of our common
stock. We were the surviving corporation and changed our name, which was then
Unity First Acquisition Corp., to GraphOn Corporation. Each of GraphOn-CA's
officers is continuing in such role with us. The merger provided us with
$5,425,000 in net cash proceeds which was previously held in trust for us until
we consummated a merger with an operating business.

As of September 30, 1999, we had and cash equivalents of $2,795,200 as well
as $999,000 in available-for-sale securities compared to total liabilities of
$876,500, exclusive of deferred revenue of $75,400.

We anticipate that cash balances as of September 30, 1999, as well as
anticipated revenue from operations, will be sufficient to meet our working
capital and capital expenditure needs through the next twelve months. We have no
material capital expenditure commitments for the next twelve months.

Year 2000 Compliance

We are aware of problems associated with computer systems as the year 2000
approaches. Many existing computer systems and applications and other control
devices use only two digits to identify a year in the date field, without
considering the impact of the upcoming change in the century. Others do not
correctly process "leap year" dates. As a result, such systems and applications
could fail or create erroneous results unless corrected so that they can
correctly process data related to the year 2000 and beyond. These problems are
expected to increase in frequency and severity as the year 2000 approaches, and
are commonly referred to as the "year 2000 problem."

We are continuing to assess the impact that the year 2000 problem may have
on our operations and have identified the following three key areas of our
business that may be affected:

. Products. We have evaluated each of our most current products and
older versions and believe that each is substantially year 2000
compliant. However, we believe that it is not possible to determine
whether all of our customers' products into which our products are
incorporated or connected will be year 2000 complaint because we have
little or no control over the design, production and testing of our
customers' products.

28
<PAGE>

. Internal Infrastructure. The year 2000 problem could affect the
systems, transaction processing computer applications and devices used
by us to operate and monitor all major aspects of our business,
including financial systems, customer services, infrastructure,
materials requirement planning, master production scheduling, networks
and telecommunications systems. We believe that we have identified
substantially all of the major systems, software applications and
related equipment used in connection with our internal operations that
must be modified or upgraded in order to minimize the possibility of a
material disruption to our business. We have modified and upgraded all
affected systems. Because most of the software applications used by us
are recent versions of vendor supported, commercially available
products, we have not incurred, and do not expect in the future to
incur, significant costs to upgrade these applications as year 2000
complaint versions are released by the respective vendors.

. Facility Systems. Systems such as heating, sprinklers, test equipment
and security systems at our facilities also may be affected by the
year 2000 problem. We currently are assessing the potential effect of
and costs of remediating the year 2000 problem on our facility
systems. We estimate that our total cost of completing any required
modifications, upgrades or replacements of these systems will not have
a material adverse effect on our business or results of operations.

We presently estimate that the total cost of addressing our year 2000
issues will be less than approximately $10,000. This estimate was derived
utilizing numerous assumptions, including the assumption that we already have
identified our most significant year 2000 issues. However, there can be no
guarantee that these assumptions are accurate, and actual results could differ
materially from those anticipated.

We currently are developing contingency plans to address the year 2000
issues that may pose a significant risk to our on-going operations. Such plans
could include accelerated replacement of affected equipment or software,
temporary use of back-up equipment or software or the implementation of manual
procedures to compensate for system deficiencies. However, there can be no
assurance that any contingency plans that we implement would be adequate to meet
our needs without materially impacting our operations, that any such plan would
be successful or that our results of operations would not be materially and
adversely affected by the delays and inefficiencies inherent in conducting
operations in an alternative manner.

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<PAGE>

Quantitative and Qualitative Disclosures about Market Risk

We are not exposed to financial market risks from changes in foreign
currency exchange rates or changes in interest rates and do not use derivative
financial instruments. A substantial majority of our revenue and capital
spending is transacted in U.S. dollars. However, in the future, we may enter
into transactions in other currencies. An adverse change in exchange rates would
result in a decline in income before taxes, assuming that each exchange rate
would change in the same direction relative to the U.S. dollar. In addition to
the direct effects of changes in exchange rates, such changes typically affect
the volume of sales or foreign currency sales price as competitors' products
become more or less attractive.

Adoption of New Accounting Pronouncements

In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 132, "Employer's Disclosure about Pensions
and Other Postretirement Benefits," which standardizes the disclosure
requirements for pension and other post-retirement benefits. The adoption of
SFAS No. 132 did not impact our disclosures.

Recently Issued Accounting Standards and Pronouncements Not Yet Adopted

In June 1998, FASB issued Statement of Financial Accounting Standard No.
133, "Accounting for Derivative Instruments and Hedging Activities." This
standard requires that every derivative instrument, including derivative
instruments embedded in other contracts, be

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<PAGE>

recorded on the balance sheet as either an asset or liability measured at its
fair value. The standard is effective for all fiscal years beginning after June
15, 2000. As we currently are not a party to any derivative financial
instruments and do not anticipate becoming a party to any derivative
instruments, management does not expect this standard to have a significant
impact on our financial statements.

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<PAGE>

BUSINESS

General

We develop, market, sell and support server-based software for the
application service providers, independent software vendors, and the enterprise
computing environment. Server-based computing, sometimes referred to as thin-
client computing, is a computing model where traditional desktop software
applications are relocated to run entirely on a server or host computer. Our
technology uses a small software program at each desktop, which allows the user
to interface with an application as if it where running on the user's desktop
computer. This centralized deployment and management of applications reduces the
complexity and total costs associated with desktop computing. The ability to
access such applications over computer networks and the Internet creates new
computing and operational models, in addition to new sales channels. Our server-
based technology works on today's most powerful personal computer or low-end
network computer, without application rewrites or changes to the corporate
computing infrastructure.

Industry Background

History

In the 1970's, software applications were executed on central mainframes
and typically accessed by low-cost display terminals. Information technology
departments were responsible for deploying, managing and supporting the
applications to create a reliable environment for users. In the 1980's, the PC
became the desktop of choice, empowering the user with flexibility, a graphical
user interface, and a multitude of productive and inexpensive applications. In
the 1990's, the desktop was provided access to mainframe applications and
databases, which run on large server computers. Throughout this computing
evolution, the modern desktop has become increasingly complex and costly to
administer and maintain. This is further exacerbated as organizations become
more dispersed with remote employees, and the desire increases to become more
closely connected with vendors and customers through the Internet.

Lowering Total Cost of Ownership

PC software in general has grown dramatically in size and complexity in
recent years. As a result, the cost of supporting and maintaining PC desktops
has increased substantially. A leading research firm estimates the annual cost
of operating a corporate PC was as much as $9,382 in 1997 and will increase to
as much as $13,485 by 2001. Industry analysts and enterprise users alike have
begun to recognize that the total cost of ownership of a PC, taking into account
the recurring cost of technical support, administration and end-user down time,
has become high both in absolute terms and relative to the initial hardware
purchase price.

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With increasing demands to better control corporate computing costs,
industry leaders are developing technology to address total cost of ownership
issues. One approach, led by Sun Microsystems and IBM, utilizes Java-based
network computers, which operate by downloading small Java programs to the
desktop, which in turn are used for accessing server-based applications. The
other approach is Microsoft's Windows NT(TM), terminal server edition,
introduced in June 1998, which permits server-based Windows applications to be
accessed from the new Windows-based network computers. Both initiatives are
examples of server-based computing, which simplifies the desktop by moving the
responsibility of running applications to a central server, with the promise of
lowering total cost of ownership.

Cross-Platform Computing

Today's enterprises contain a diverse collection of desktop computers, each
with its particular operating system, processing power and connection type.
Consequently, it is becoming increasingly difficult to provide universal desktop
access to business-critical applications across the enterprise. As a result,
organizations resort to desktop emulation software, new hardware or costly
application rewrites.

A common cross-platform problem is the need to access UNIX or Linux
applications from a PC desktop. While UNIX-based computers dominate the
enterprise applications market, Microsoft Windows-based PCs are used on the
majority of enterprise desktops. Since the early 1990's, organizations have been
striving to connect desktop PCs to UNIX applications over all types of
connections, including networks and standard phone lines. This effort, however,
is complex and costly. The primary solution to date is known as PC X Server
software, large software programs that require substantial memory and processing
resources on the desktop. Typically, PC X Server software is difficult to
install, configure and maintain. Enterprises are looking for an effective UNIX
connectivity software for PCs and non-PC desktops that is easier and less
expensive to administer and maintain.

Application Service Providers

The nature of the Internet has led to the emergence of new operational
models and sales channels. Traditional high-end software packages that were once
too expensive for many companies are now available for rent over the Internet.
By servicing customers through a centralized operation rather than installing
and maintaining applications at each customer site, we expect that application
service providers quickly will play an important role in addressing an
enterprise's computing requirements. Today, application service providers are
faced with the difficult task of creating or rewriting applications to entertain
the broader market. Though the application service provider industry is just
beginning to emerge, we expect it to develop rapidly, due to application
vendors' desire to expand their markets.

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<PAGE>

Remote Computing

The cost and complexity of contemporary enterprise computing has been
further complicated by the growth in remote access requirements. As business
activities become physically distributed, computer users have looked to portable
computers with remote access capabilities to stay connected in a highly
dispersed work environment. One problem facing remote computing over the
Internet or direct telephone connections is the slow speed of communication in
contrast to the high speed of internal corporate networks. Today, applications
requiring remote access must be tailored to the limited speed and lower
reliability of remote connections, further complicating the already significant
challenge of connecting desktop users to business-critical applications.

The GraphOn Approach

Our server-based software deploys, manages, supports and executes
applications entirely on the server computer and distributes them efficiently
and instantaneously to virtually any desktop device. Our technology consists of
three key components:

. The server component runs alongside the server-based application and
is responsible for intercepting user-specific information for display
at the desktop.

. The desktop component is responsible only for sending keystrokes and
mouse motion to the server, as well as presenting the application
interface to the desktop user. This keeps the desktop simple, or thin,
as well as independent of application requirements for resources,
processing power and operating systems.

. Our protocol enables efficient communication over fast networks or
slow dial-up connections and allows applications to be accessed from
virtually any location with network-like performance and
responsiveness.

The major benefits of our approach are as follows:

. Lowers Total Cost of Ownership. Shrinking recurring costs is a primary
goal of our products. Today, installing enterprise applications
typically is time-consuming, complex and expensive, requiring
administrators to manually install and support diverse desktop
configurations and interactions. Our server-based software simplifies
application management by enabling deployment, administration and
support from a central location. Installation and updates are made
only at the server, avoiding desktop software and operating system
conflicts and minimizing at-the-desk support. According to a leading
research firm, server-based computing strategies, such as those
offered by us, may achieve as

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<PAGE>

much as a 30% savings by, among other things, simplifying the desktop
and moving application processing and management from individual
desktops to a centralized server-based infrastructure. For example, in
a 2,500-PC computing environment, a leading research firm has
calculated that a server-based approach would have saved approximately
$4.5 million in 1997 and, as computing complexity continues to grow,
could save approximately $16 million in 2001.

. Connects Diverse Computing Platforms. Today's computing
infrastructures are a mix of desktop devices, network connections and
operating systems. Enterprise-wide communication often requires costly
and complex emulation software or application rewrites. For example,
Windows PCs typically may not access a company's UNIX applications
without installing complex PC X Server software on each PC. Typical PC
X Servers are large and require an information technology professional
to properly install and configure each desktop. For Macintosh, the
choices are even fewer, requiring the addition of yet another vendor
product. For the newer desktop technologies, such as Sun Microsystems'
and IBM's network computers, access to UNIX is impractical without
server-based products. To rewrite an application for each different
desktop and their many diverse operating systems is often a difficult
and time-consuming task. In addition to the development expense,
issues of desktop performance, data compatibility and support costs
often make this option prohibitive. Our products provide organizations
the ability to access applications from virtually all desktops,
utilizing their existing computing infrastructure, without rewriting a
single line of code or changing or reconfiguring desktop hardware.
This means that enterprises can maximize their investment in existing
technology and allow users to work in their preferred desktop
environment.

. Application Service Providers. Many large enterprises have made
significant investments in developing, marketing and selling
enterprise-wide software solutions. Our server-based technology is
designed to allow Windows, Linux and UNIX access from any desktop
connected to the Internet. Today's packaged applications can be
accessed quickly, easily and without modification.

. Leverages Existing PCs and Deploys New Desktop Hardware. Our software
brings the benefits of server-based computing to users of existing PC
hardware, while simultaneously enabling enterprises to begin to take
advantage of and deploy less complex network computers. This assists
organizations in maximizing their current investment in hardware and
software while, at the same time, facilitating a manageable and cost
effective transition to newer desktop devices.

. Efficient Protocol. Applications typically are designed for network-
connected desktops, which can put tremendous strain on congested
networks and may yield

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<PAGE>

poor, sometimes unacceptable, performance over remote connections. For
application service providers, bandwidth typically is the top
recurring expense when web-enabling or renting access to applications
over the Internet. Our highly efficient protocol sends only
keystrokes, mouse clicks and display updates over the network
resulting in minimal impact on bandwidth for application deployment,
thus lowering cost on a per user basis. Within the enterprise, our
protocol can extend the reach of business- critical applications to
all areas, including branch offices, telecommuters and remote users,
over the Internet, phone lines or wireless connections. This concept
may be extended further to include vendors and customers for increased
manufacturing flexibility, time-to-market and customer satisfaction.

Products

Our products are designed to allow enterprises to access UNIX, Linux and
Windows, applications from centrally managed servers without modification.
Currently, our products provide the UNIX and Linux server-based software. With
the integration of the WinBridge (formerly jBridge) technology in early 2000,
our current product line will be extended to access Windows applications from
centrally managed servers, widening our product offering and opportunities.

. GO-Global is a server-based software product for high performance
access to UNIX and Linux applications from any Windows PC located
virtually anywhere on an organization's network, the Internet or even
over a phone line. We began selling GO-Global in March 1997.

. GO-Joe is a server-based software product for accessing Unix and Linux
applications, from virtually any Java-enabled desktop or device,
including the Sun Microsystems and IBM network computers, desktops and
hand-held devices with web browsers such as Microsoft Internet
Explorer(TM) or Netscape Navigator(TM). We began selling GO-Joe in
July 1998. Sun Microsystems began shipping GO-Joe for distribution
with its network computers in July 1998.

. GO-Between is a server-based software product for accessing UNIX and
Linux applications from Microsoft's Windows NT, terminal server
edition. GO-Between minimizes the impact on server resources over
traditional emulator solutions for accessing UNIX and Linux
applications from Microsoft's terminal server edition products. This
increases the number of simultaneous users that may access UNIX from
any one terminal server edition server. Microsoft has released a
technical

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<PAGE>

whitepaper describing the UNIX access benefits of GO-Between for
terminal server edition users. We began shipping GO-Between in October
1998.

. WinBridge (formerly jBridge) is a technology we acquired from Corel in
December 1998. It will enable GO-Global, GO-Between and GO-Joe to
access server-based Windows applications. With the anticipated
integration of the WinBridge technology in early 2000, we will offer
complete cross platform access to Windows applications from virtually
any desktop. Since the applications are not running on the desktop,
even a non-Windows desktop will be able to access Windows
applications. Windows applications can be accessed from desktop
computers using various operating systems such as Macintosh, UNIX,
Linux and OS/2, which will appear and function as if they were running
locally on the desktop.

Target Markets

The market for our products comprises all organizations that need to access
UNIX, Linux and Windows applications from a wide variety of desktops from any
location, including over the Internet and dial-up lines. This includes large
organizations, such as Fortune 1000 companies, government and educational
institutions. Our software is designed to allow these enterprises to use the
best desktop for a particular purpose, rather than following a "one PC fits
all," high total cost of ownership model. Our opportunity within the marketplace
is more specifically broken down as follows:

. Enterprises Employing a Mix of Unix and Windows. Most major
enterprises employ a mix of UNIX computers and Windows PCs. Companies
that utilize a mixed computing environment require cross-platform
connectivity solutions like GO-Global that will allow users to access
UNIX applications from desktop PCs. It has been estimated that PCs
represent over 90% of enterprise desktops. We believe that our
products are well positioned to exploit this opportunity and that our
server-based software products will significantly reduce the cost and
complexity of connecting PCs to UNIX applications.

. Enterprises That Employ Microsoft's Terminal Server Edition. A leading
research firm estimates that the Microsoft terminal server market will
start to accelerate rapidly, with more than 390,000 host servers
installed by the end of 2000. Each terminal server edition server
supports a minimum of 10 users, such that the estimated user base for
terminal server editions will be at least 3.9 million in 2000. A
leading research firm reports that 38% of surveyed terminal server
edition users will require access to UNIX applications. Our management
believes the terminal server edition market to be a significant
opportunity for GO-Between.

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. Enterprises With Remote Computer Users. Remote computer users comprise
one of the fastest growing market segments in the computing industry.
Efficient remote access to applications has become an important part
of many enterprise computing strategies. A leading research firm
projects that approximately 25 million business users access computing
resources remotely in 1998 and that this number will grow to
approximately 137 million worldwide in 2003, with 60% of these users
still connecting via low-bandwidth modems. Our protocol is designed to
enable highly efficient low-bandwidth connections.

. Application Service Providers. High-end software applications in the
fields of human resources, enterprise resource planning, enterprise
relationship management and others historically only have been
available to organizations able to make large investments in capital
and personnel. The Internet has opened up global and mid-tier markets
to vendors of this software who may now offer it to a broader market
on a rental basis. Our products enable the vendors to provide Internet
access to their applications with minimal additional investment in
development implementation.

. Extended Enterprise Software Market. Extended enterprises allow access
to their computing resources to their customers, suppliers,
distributors and other partners, gaining flexibility in manufacturing
and increasing speed-to-market and customer satisfaction. For example,
extended enterprises may maintain decreased inventory via just-in-
time, vendor-managed inventory and related techniques. The Internet
has facilitated this development and a leading research firm has
predicted the extended enterprise software market will grow to an
estimated $5.76 billion in 2002. The early adoption of extended
enterprise solutions may be driven in part by enterprises' need to
exchange information over a wide variety of computing platforms. We
believe that our server-based software products, along with our low-
impact protocol, are well positioned to provide enabling solutions for
extended enterprise computing.

Strategic Relationships

We believe it is important to maintain our current strategic alliances and
intend to seek suitable new alliances in order to improve our technology and/or
enhance our ability to penetrate relevant target markets. The alliances that we
currently are focusing on are those that have immediate revenue generating
potential, strengthen our position in the server-based software market, add
complementary capabilities and/or raise awareness of our products.

Sun MicroSystems. In October 1996, Sun MicroSystems licensed our GO-Joe
for distribution within its network computers and our server component for
distribution with its

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UNIX computers and operating system. Pursuant to the Sun Microsystems agreement,
Sun has a perpetual, non-exclusive, world-wide and fully paid up license to,
among other things, distribute and sell GO-Joe with its network computers and to
distribute our server component with its UNIX computers and operating systems.
The license to Sun also allows Sun employees to use GO-Global internally and
remotely. In addition to what is provided for in the Sun agreement, Sun's
network computers currently display the GO-Joe logo, our name and our website
address each time GO-Joe is started, further increasing company and product
awareness. We plan to work with Sun's sales force and resellers to sell and
promote GO-Global and GO-Between as UNIX access solutions for users of PCs and
multi-user NT. As of September 30, 1999, Sun paid us a $2,500,000 one-time
royalty payment for completion of product delivery requirements and for a site
license for GO-Global. The Sun agreement is expected to terminate in December
2000, although Sun will continue to have rights to our products licensed
pursuant to the agreement after its termination.

Compuware. In September 1999, we entered into a three year, non-
exclusive agreement with Compuware, an international software and services
company. Pursuant to this agreement, we will license our WinBridge
(formerlyjBridge) server-based software for inclusion with Compuware's UNIFACE
software, a powerful development and deployment environment for enterprise
customer-facing applications. Compuware customers will use GraphOn's server-
based solution to provide enterprise-level UNIFACE applications over the
Internet. Compuware will private label and completely integrate WinBridge into
its UNIFACE deployment architecture as UNIFACE Jti.

Corel Corporation. In December 1998, we acquired Corel's jBridge
technology and its jBridge development team, in exchange for our securities. See
"Description of Securities-Corel Warrant and Similar Warrant." jBridge is
designed to allow any device running Java to access 32-bit Windows applications
remotely and unmodified. When combined with our UNIX products, we believe that
jBridge will provide our customers with a complete enterprise solution, linking
any of such platforms to virtually any desktop over virtually any connection.

In addition, we entered into a strategic alliance with Corel. We intend
through this alliance to promote our products to Corel's Windows, UNIX and Linux
customers. The alliance has a one year term ending in July 2000 which is
renewable by mutual consent for successive one year periods, and is terminable
at will by either party.

In October 1999, we entered into an agreement with Corel pursuant to
which we licensed to Corel the right to include our WinBridge technology with
any of Corel's applications. Under this non-exclusive perpetual license, Corel
will bundle our WinBridge software with certain of its applications, beginning
with its WordPerfect Office 2000 suite and, in the future, will fully
integrate our software into these applications. We are to receive $1,000,000
for this license, of which $600,000 has been recognized to date, with the
balance scheduled to be paid prior to the end of calendar year 2000.

Alcatel Italia. In July 1999, we entered into a five-year non-exclusive
agreement with Alcatel Italia, the Italian Division of Alcatel, the
telecommunications, network systems and services company. Pursuant to this
agreement, Alcatel will license our GO-Global thin-client server software for
inclusion with Alcatel's Turn-key Solution software, an optical networking
system. Alcatel customers are expected to use GraphOn's server-based solution
to access Alcatel's UNIX/X Network Management Systems applications from T-
based PCs. In addition,

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<PAGE>

Alcatel will deploy GO-Global internally to provide Alcatel employees with high-
speed network access to Alcatel's own server-based software over dial-up, LANs
and WANs.

Sales, Marketing and Support

Our customers, to date, are primarily Fortune 1000 companies and large
government organizations. Among our current customers are the following:

<TABLE>
<S> <C>
Alcatel Johnson & Johnson
Ameritech Corporation Lucent Technologies, Inc.
Amoco Corporation Motorola, Inc.
AT&T Corporation Nortel Technology
Canadian Meteorological Centre National Semiconductor Corp.
Cisco Systems, Inc. Pfizer Inc.
Corel Corporation Shell Oil Company
Ericsson Telecommunicatie B.V. Sun Microsystems, Inc.
Hewlett-Packard Company United States Geological Survey
IBM
</TABLE>

While previously most of our revenues were from direct sales and OEM
agreements, we currently are developing and expanding relationships with a
select number of resellers. We expect to benefit from these relationships by
availing ourselves of their established customer-base, co-marketing programs and
marketing and sales capabilities. Such resellers include value-added resellers,
system integrators and OEM licensees. Our sales and marketing efforts will be
focused on increasing product awareness and demand among large enterprises and
developing formal distribution relationships with UNIX and Windows-oriented
resellers. Current marketing activities include a targeted direct mail campaign,
tradeshows, production of promotional materials, public relations and
maintaining an Internet presence for marketing and sales purposes. In August
1998, we hired three senior level sales professionals to develop our reseller
channels.

Due to the nature of our products, remote access via telephone lines or the
Internet can be used to troubleshoot and diagnose problems. We provide technical
support and training to OEMs and resellers that function as the first line of
support for their own customers. We provide 90-day online Internet, e-mail, fax
and telephone-based services for technical support and software upgrades at no
charge. Additionally, purchasers of our products can choose to purchase an
annual extended maintenance program, which currently costs 15% of the product
purchase price per year.

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Research and Development

Our research and development efforts currently are focused on developing
new products and further enhancing the functionality, performance and
reliability of existing products. We invested $840,200 and $1,771,800 in
research and development in 1998 and in the first nine months of 1999. We expect
increased expenditures in 2000. We have made significant investments in our
protocol and in the performance and development of our server-based software.

In May 1998, we hired a group of eight software engineers located in
Bellevue, Washington. They have experience in Java, protocol technology and
various Microsoft Windows operating systems. They are working to enhance our
existing software products as well as beginning to conceptualize and architect
future products. In December 1998, we hired nine additional software engineers
located in Concord, New Hampshire in connection with the acquisition of the
jBridge technology from Corel. This group has substantial Windows and Java
experience. We plan to continue to add software engineers in order to expand our
research and development capabilities, although there can be no assurances that
qualified personnel will be available to us as needed.

Operations

We control all purchasing, inventory, order processing and shipping of our
products and accounting functions related to our operations. Production of
software masters, development of documentation, packaging designs, quality
control and testing also are performed by us. CD-ROM and floppy disk
duplication, printing of documentation and packaging are accomplished through
outside vendors. We generally ship products upon receipt of order. As a result,
we have relatively little backlog at any given time, and do not consider backlog
a significant indicator of future performance.

Competition

The server-based software market in which we participate is highly-
competitive, although we believe we have significant advantages over our
competitors, both in product performance and market positioning. This market
ranges from remote access for a single PC user to server-based software for
large numbers of users over many different types of desktop hardware and
connections. Our competitors include manufacturers of conventional PC X Server
software and competition is expected from these and other companies in the
server-based software market. Competitive factors in the market in which we
compete include price, product quality, functionality, product differentiation
and breadth.

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We believe our principal competitors for our current products include
Citrix Systems, Inc., Hummingbird Communications, Ltd., SCO, WRQ, Network
Computing Devices and NetManage. Hummingbird is the established market leader in
PC X Servers, believed to have over 50% of that market. WRQ, Network Computing
Devices and NetManage also offer traditional PC X Server software and have
minority positions within that market.

SCO introduced Tarantella, a server-based Java-to-Unix connectivity product
which competes with GO-Joe. However, SCO's principal product is a UNIX operating
system that competes with UNIX vendors like Sun Microsystems and IBM. We believe
that SCO, as a competitor to the other UNIX vendors, will have difficulty in
penetrating enterprises who utilize other vendors' UNIX operating systems, such
as Sun Microsystems and IBM.

Proprietary Technology

We license key components of our server-based technology from one
software developer to whom we pay royalties pursuant to an exclusive license
agreement. Minor elements of our server-based technology also are licensed
pursuant to a non-exclusive agreement, which calls for royalty payments by us.
Such royalty payments are based on a percentage of net revenues received by us
for sales of our products that contain the licensed technology. The royalty
rate under all of these agreements is an aggregate of 4.8% and 2.9% for 1999
and 2000. We hold options to purchase the developed technology and to purchase
a perpetual license to some of the non-exclusively licensed technology which
are exercisable beginning in December 2000. If we do not exercise our options
under the exclusive license agreements, the applicable royalty rate would
continue at 2% in 2001 and beyond. The exclusive license agreement, unless
terminated earlier pursuant to its terms, will terminate on September 6, 2006.
The non-exclusive agreement continues unless terminated for material breach.
We purchased most of the licensed technology for an aggregate purchase price
of $378,000 in the third quarter of 1999.

We rely primarily on trade secret protection, copyright law,
confidentiality and proprietary information agreements to protect our
proprietary technology and registered trademarks. The loss of any material trade
secret, trademark, trade name or copyright could have a material adverse effect
on our results of operations and financial condition. There can be no assurance
that our efforts to protect our proprietary technology rights will be
successful. Despite our precautions it may be possible for unauthorized third
parties to copy portions of our products, or to obtain information we regard as
proprietary. See "Legal Proceedings." We do not believe our products infringe on
the rights of any third parties, but there can be no assurance that third
parties will not assert infringement claims against us in the future, or that
any such assertion will not result in costly litigation or require us to obtain
a license to proprietary technology rights of such parties.

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<PAGE>

In November 1999, we acquire a U.S. patent for the remote display of
Microsoft Windows applications on UNIX and Linux desktops with X Windows. As a
result, we believe that we have acquired patent protection and licensing rights
for the deployment of all Windows applications remoted, or displayed, over a
network or any other type of connection to any X Window systems, This patent,
which covers our WinBridge (formerly jBridge) technology, was originally
developed by a team of engineers formerly with Exodus Technology and hired by us
in May 1998.

Employees and Facilities

As of September 30, 1999, we had a total of 49 employees, including 14 in
marketing, sales and support, 28 in research and development and 7 in
administration and finance. No employees are covered by a collective bargaining
agreement.

We currently occupy approximately 7,200 square feet of office space in
Campbell, California pursuant to a lease which expires in April 2000, but is
renewable each year at our option until April 2006. We are required to vacate
these premises by the end of February 2000 as the City of Campbell has acquired
the building for redevelopment. We anticipate no particular difficulty in
locating and moving to new facilities in a timely fashion. The City of Campbell
has agreed to pay us $85,000 to facilitate our relocation.

We also occupy leased facilities in Bellevue, Washington, Concord, New
Hampshire, and Reading, United Kingdom pursuant to leases expiring at varying
dates through 2003. Annual lease payments currently are approximately $310,000.
We believe our current facilities, other that those in Campbell, will be
adequate to accommodate our needs until the end of 2000.

Legal Proceedings

In late 1996, we disclosed numerous aspects of our proprietary technology
on a confidential basis to Insignia Solutions plc, some of whose assets were
later acquired by Citrix Systems, Inc. When we learned of that acquisition in
January 1998, we made inquiry of Citrix and Insignia seeking assurances that
there had been no potential misuse of our confidential information.

On November 23, 1998, Citrix instituted litigation in the United States
District Court for the Southern District of Florida seeking a judicial
declaration that neither Citrix nor Insignia had misappropriated or infringed
upon our proprietary technology or breached the non-disclosure agreement. We
responded by filing a motion to dismiss the action for lack of jurisdiction. On
May 14, 1999, the court granted our motion and dismissed the case. Essentially,
the Florida court held there was no existing dispute between us and Citrix.
Citrix has appealed the dismissal of its case to the United States Court of
Appeals for the Eleventh Circuit, where the matter is awaiting oral argument.

On October 4, 1999, Insignia filed a complaint against us in the Superior
Court of the State of California, Santa Clara County, alleging that we had
attempted to disrupt Insignia's sale to Citrix, on February 5, 1998, of assets
related to Insignia's NTRIGUE software product line.

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<PAGE>

The complaint alleges that, as a result of such efforts, Insignia was required
by Citrix to place $8.75 million in escrow to enable Citrix to deal with
potential claims by us of proprietary rights in the assets being sold. The
complaint seeks unspecified general and punitive damages. On December 13, 1999
we filed an answer denying the material allegations in Insignia's complaint.

Insignia's complaint also names Citrix and its UK subsidiary as defendants,
alleging that these companies have breached their February 5, 1998 contract with
Insignia by refusing to release money from the escrow. The complaint seeks
compensatory damages from Citrix related to that company's refusal to release
purchase money from escrow for payment to Insignia and other unspecified
damages.

44
<PAGE>

MANAGEMENT

General

The following table sets forth information regarding our executive
officers, directors and other key employees:

<TABLE>
<CAPTION>
Name Age Position
----- --- --------
<S> <C> <C>
Executive Officers and Directors
Robert Dilworth .................. 58 Chairman of the Board of Directors
Walter Keller .................... 49 President and Director
Robin Ford ....................... 49 Executive Vice President, Marketing and Sales and Director
Vince Pfeifer .................... 34 Vice President, Product Development
Eric Lefebvre .................... 33 Vice President, Business Development
Edmund Becmer .................... 41 Chief Financial Officer and Secretary
Lawrence Burstein ................ 57 Director
August P. Klein .................. 63 Director
Michael P. O'Reilly .............. 46 Director
Marshall C. Phelps, Jr. .......... 55 Director

Key Employees
Russann Keller ................... 30 Director of Marketing and Public Relations
Prakash Jadeja .................. 44 Director of Engineering
Robert Currey ................... 33 Principal Architect
William Tidd ..................... 37 Director of Software Development
</TABLE>

The members of our board of directors are classified into three classes,
one of which is elected at each annual meeting of stockholders to hold office
for a three-year term and until successors of such class have been elected and
qualified. The respective members of each class are set forth below:

. Class III: Walter Keller and Robin Ford (terms expire 2002)
. Class II: Robert Dilworth and August Klein (terms expire 2001)

45
<PAGE>

. Class I: Michael O'Reilly, Lawrence Burstein and Marshall C. Phelps,
Jr. (terms expire 2000)

Robert Dilworth was appointed our Chairman in December 1999. He previously
served as one of our directors since July 1999 and of GraphOn-CA between July
1998 and July 1999. Mr. Dilworth has served as Chairman of the Board of
Metricom, Inc. since 1996, and as a director since 1987. He served as Metricom's
CEO from 1987 to 1998. Metricom is a leading provider of wireless data
communication and network solutions. Prior to joining Metricom, from 1985 to
1987, Mr. Dilworth served as President of Zenith Data Systems Corporation, a
microcomputer manufacturer. Earlier positions include CEO at Morrow Designs, CEO
at Ultramagnetics, Division Manager at Varian Associates, Director of
Minicomputer Systems at Sperry Univac and Vice President of Finance and
Administration at Varian Data Machines. Mr. Dilworth is also a director of VLSI
Technology, Inc., Data Technology Corporation, Cortelco Systems, Inc. and
Photonics Corp. Mr. Dilworth holds a B.S. in Business and Mathematics from L.A.
State University.

Walter Keller has served as our President since July 1999 and of GraphOn-CA
between 1982 and July 1999. Mr. Keller, who previously served as our Chairman
from July 1999 until succeeded by Mr. Dilworth in December 1999 and as Chairman
of GraphOn-CA between 1982 and July 1999, was Chief Financial Officer of
GraphOn-CA from 1991 until February 8, 1999. Prior to the founding of GraphOn-CA
in 1992, Mr. Keller's experience included executive staff and senior level
management, sales and engineering positions at United Technologies Corporation
and Honeywell Inc. Mr. Keller is a member of the Society of Professional
Engineers and holds a B.S. in Mechanical Engineering and a M.S. in Electrical
Engineering from Santa Clara University in Santa Clara, CA. Mr. Keller is the
husband of Ms. Ford.

Robin Ford has served as our Executive Vice President, Marketing and
Sales since July 1999 and of GraphOn-CA between 1996 and July 1999. She was
elected as one of our directors in December 1999. Ms Ford was Vice President,
Marketing and Sales of GraphOn-CA from 1991 to 1996 and held various positions
in sales and marketing at GraphOn-CA from 1983 to 1991. Ms. Ford was a
director of GraphOn-CA from October 1991 to June 1998. Prior to joining
GraphOn-CA, Ms. Ford held various sales management and technical positions at
Intel Corporation, National Semiconductor Corporation and Grid Systems
Corporation. Ms. Ford's responsibilities with GraphOn and GraphOn-CA have
included building and maintaining GraphOn's and GraphOn-CA's sales and
marketing operations and obtaining major government and OEM contracts. Ms.
Ford is the wife of Mr. Keller.

Vince Pfeifer has served as our Vice President, Product Development since
July 1999 and of GraphOn-CA between October 1998 and July 1999. Mr. Pfeifer was
General Manager and Director of Product Development of GraphOn-CA from June 1998
to August 1998. From June 1995 to May 1998, Mr. Pfeifer served as the Vice-
President of Product Development for Exodus Technologies and ConnectSoft
Communication Corporation and has nine years of experience in designing,
developing, testing and supporting commercial grade software.

46
<PAGE>

Eric Lefebvre has served as our Vice President, Business Development since
July 1999 and of GraphOn-CA between June 1999 and July 1999. From April 1997
through June 1999, he served as Director of Strategic Business and Alliances at
Corel Corporation where he was responsible for developing strategic alliances
and seeking new areas of business. From April 1996 to May 1997, Mr. Lefebvre
served as International Corporate Communications Manager at Corel. From November
1991 to April 1996, her served at Corel as Communication and Market Development
Manager and Marketing Manager (Europe). Mr. Lefebvre holds a Masters of
International Affairs from Carleton University and an Honours B.Sc. in
Government and Politics and Business Management from the University of Maryland.

Edmund Becmer has served as our Chief Financial Officer and Vice President
of Finance & Administration since July 1999 and of GraphOn-CA between February
1999 and July 1999. From May 1998 until December 1998, Mr. Becmer was Chief
Financial Officer of TMCI Electronics, Inc., a publicly-traded company, based in
San Jose, CA, with subsidiaries involved in the manufacturing of semiconductor
equipment. In February, 1999, TMCI Electronics filed for reorganization under
Chapter 11 of the United States Bankruptcy Code. Prior to joining TMCI
Electronics, from March 1996 to May 1998, Mr. Becmer was a member of the
accounting firm of Moore Stephens, P.C., where he was responsible for SEC
audits, mergers and acquisitions and business consulting. From August 1993 to
June 1995, Mr. Becmer was controller of First City Industries, Inc. in New York,
NY, a holding company with subsidiaries in manufacturing, commercial real estate
and residential real estate. From June 1987 to June 1993, Mr. Becmer was
CFO/Controller of Lincorp Holdings, Inc., a public investment holding company in
New York, NY, with investments in banking and commercial real estate and a
Fortune Service 500 company. Mr. Becmer also was with the accounting firms of
BDO Seidman, LLP and Deloitte and Touche LLP. Mr. Becmer holds a B.S.B.A. from
San Diego State University and is a Certified Public Accountant.

Lawrence Burstein has served as one of our directors since May 1996. Mr.
Burstein was President and Treasurer between May 1996 and July 1999. For
approximately ten years prior to 1996, Mr. Burstein was the President, a
director and principal stockholder of Trinity Capital Corporation, a private
investment banking concern. Trinity ceased operations upon the formation of
Unity Venture Capital Associates Ltd. ("Unity VCA"). Since March 1996, Mr.
Burstein has been President and a principal stockholder of Unity VCA. Mr.
Burstein is a director of the following four public companies: T-HQ Inc., which
designs and markets Nintendo and Sega

47
<PAGE>

games; Brazil Fast Food Corp., the owner and operator of the second largest fast
food restaurant chain in Brazil; CAS Medical Systems, Inc., engaged in the
manufacture and marketing of blood pressure monitors and other medical products
principally for the neonatal market; and The MNI Group Inc., engaged in the
marketing of specially formulated medical foods. Mr. Burstein received an L.L.B.
from Columbia Law School.

August P. Klein has served as one of our directors since July 1999 and of
GraphOn-CA between August 1998 and July 1999. Mr. Klein has been, since 1995,
the Founder, CEO and Chairman of the Board of JSK Corporation and, since 1997,
of APJK Corporation, general contractors and service providers for the insurance
industry. From 1989 to 1993, Mr. Klein was founder and CEO of Uniquest, Inc., an
object oriented application software company. From 1984 to 1988, Mr. Klein
served as CEO of Masscomp, Inc., a developer of high performance real time
mission critical systems and UNIX-based applications. Mr. Klein has served as
Group Vice President, Serial Printers at Data Products Corporation and President
and CEO at Integral Data Systems, a manufacturer of personal computer printers.
From 1957 to 1982, he was General Manager of the Retail Distribution Business
Unit and Director of Systems Marketing at IBM. Mr. Klein is a director of
QuickSite Corporation and serves as a trustee of the Computer Museum in Boston,
Massachusetts. Mr. Klein holds a B.S. in Mathematics from St. Vincent's College.

Michael P. O'Reilly has served as one of our directors since July 1999 and
of GraphOn-CA between December 1998 and July 1999. Mr. O'Reilly has served as
Executive Vice President, Finance, Chief Financial Officer and Treasurer of
Corel Corporation since December, 1997. Prior to joining Corel, from 1988 until
1997, Mr. O'Reilly was a senior tax partner in the Ottawa practice of KPMG, the
international professional advisory services firm. Mr. O'Reilly is a Chartered
Accountant. He holds a B.A. from the University of Western Ontario and an Hons.
B. Comm from the University of Windsor. Mr. O'Reilly is a nominee of Corel.

Marshall C. Phelps, Jr. has served as one of our directors since November
1999. From 1980 until August 1999, Mr. Phelps was employed by IBM in a series of
executive positions, most recently as IBM's Vice President, Intellectual
Property and Licensing, with responsibility for IBM's worldwide intellectual
property activities, licensing, standards and telecommunications policy. He is a
director of CommercialWare Inc., a developer of order processing and fulfillment
sofware for direct marketing concerns. Mr. Phelps holds a BA from Muskingum
College, an MS in Advanced Management from Stanford Graduate School of Business,
and a JD from Cornell University School of Law.

Russann Keller has served as our Director of Marketing Communications and
Public Relations since early 1999 and previously held various sales, marketing,
and technical positions with us since 1990, including MarCom Manager, Corporate
Communications Manager and Support Manager. Ms. Kelley has also held various
technical, editorial, and marketing positions at Knight-Ridder, Boole and
Babbage, Elan Software, and was co-founder and Vice President at

48
<PAGE>

Syber Sonic, Inc. Ms. Keller holds a degree in Environmental Biology. Ms. Keller
is the daughter of Mr. Keller.

Prakash Jadeja has served as our Director of Engineering since July 1999
and of GraphOn-CA between September 1997 and July 1999. From February 1996 to
August 1997, Mr. Jadeja led the Digital Video Disc and Compact Disc Recordable
System software group at Apple Computer. From February 1992 to January 1996, Mr.
Jadeja was Vice President of Engineering at Workstation, Inc. Prior to that, Mr.
Jadeja held a number of technical and management positions at Insignia
Solutions, Inc., which he co-founded. Mr. Jadeja holds a B.S. in Applied
Computer Science from De Montford University in England.

Robert Currey has served as our Principal Architect and developer since
July 1999 and of GraphOn-CA between June 1998 and July 1999. Prior to joining
GraphOn-CA, beginning in November 1996, Mr. Currey served as team leader at
Exodus Technologies. Mr. Currey was Senior Engineer at Connectsoft Corp. from
January 1994 until November 1996. Previously, Mr. Currey was Senior Engineer at
Attachmate Corp. from June 1992 to January 1994. Mr. Currey has an M.S. in
computer science and a B.S. in applied mathematics from Oregon State University.

William Tidd has served as our Director of Software Development since July
1999 and of GraphOn-CA between January 1999 and July 1999. Prior to joining
GraphOn-CA, from 1996 to 1998, Mr. Tidd served on the jBridge development team
for Corel Corporation. Mr. Tidd owned and operated Tirel Corporation, a software
development company, from 1994 to 1996 after co-founding Atlantic Design
Systems, which became Tirel Corporation in 1994. Mr. Tidd holds a Master of
Engineering Degree in mechanical engineering from Carnegie Mellon University.

Board of Directors and Committees

Our board of directors consists of seven individuals. Corel has a
contractual right to designate one individual to be a nominee to serve as a
director until Corel controls less than 17% of the voting power of our capital
stock. We also agreed not to reduce the size of the our board below six without
Corel's prior written consent, until the date which is two years after the date
of the initial public offering of our equity securities or the closing of the
sale of all or substantially all of our assets or of any merger or consolidation
with any other entity. The non-employee directors are eligible to participate in
our stock option plan.

We have established an audit committee which reviews and supervises our
financial controls, including selection of our auditors, reviewing the books and
accounts, meeting with our officers regarding our financial controls, acting
upon recommendations of auditors and taking further actions as the audit
committee deems necessary to complete an audit of our books and accounts. The
audit committee also evaluates potential conflicts of interest between us and
our

49
<PAGE>

executive officers and directors and serves to evaluate any transactions or
events which could be deemed to be improper, as well as other matters which may
come before it or as directed by the board. The audit committee currently
consists of two directors, Messrs. O'Reilly and Phelps.

We have established a compensation committee, which reviews and approves
the compensation and benefits for our executive officers, administers our stock
plans and performs other duties as may from time to time be determined by the
board. The compensation committee currently consists of two directors, Messrs.
Dilworth and Klein.

Executive Compensation and Employment Agreements

The compensation for our key management is determined from time to time by
our board or compensation committee. In addition, our board or compensation
committee may, in our discretion, award these individuals cash bonuses, options
to purchase shares of our common stock under the Stock Option Plan, and such
other compensation, including equity-based compensation, as our board or
compensation committee shall approve from time to time.

The following table sets forth information with respect to the compensation
of our Chief Executive Officer and each of the two other executive officers who
were serving as our executive officers during fiscal year 1998 and whose total
annual salary and bonus during such fiscal year exceeded $100,000:

Summary Compensation
<TABLE>
<CAPTION>
Annual Compensation
-------------------
All Other
Year Salary Bonus Compensation
---- --------- ------ ------------
<S> <C> <C> <C> <C>
Walter Keller ............................. 1998 $135,181 0 $ 0
President and Chief Executive Officer
Robin Ford ................................ 1998 $141,960 0 $ 0
Executive Vice President,
Marketing and Sales
Zdravko Podolski(1) ....................... 1998 $ 94,750 0 $75,000
Vice President, Strategic
Sales and Alliances
</TABLE>
___________
(1) Mr. Podolski's employment with us was terminated on September 1, 1998.
Pursuant to a severance agreement with Mr. Podolski, we paid him $75,000 in
consideration for the release of any and all claims he may have had against
us.

50
<PAGE>

Employment Agreements

On October 22, 1998, we entered into employment agreements with Mr. Keller
and Ms. Ford which provide for a term of two years, annual base salaries of
$140,000 and $130,000, respectively, and eligibility to receive bonuses at the
discretion of our board. Such agreements contain provisions for bonuses upon
achievement of milestones set forth in such agreements, non-competition for the
term of each agreement and confidentiality. The base salaries are subject to
change at the discretion of our board. Mr. Keller and Ms. Ford also are entitled
to participate in any of our pension, insurance or benefit plans, including our
stock option plans. Each employment agreement also provides for a severance
payment in the amount of one year's compensation in the event that the employee
is terminated by us without cause, or the employee resigns for Good Reason (as
defined in the agreement) during the employment term. Good Reason includes,
among other things, the failure of a successor to us to assume the employment
agreements in connection with change in control transactions such as a merger,
consolidation or a sale of all or substantially all of our assets. Good Reason
also includes substantial changes in the duties, position, compensation and
location of the employment.

On February 8, 1999, we entered into an employment agreement with Mr.
Becmer providing for employment at-will, an annual base salary of $125,000 and
options to purchase up to 69,700 shares of common stock under our Stock
Option/Stock Issuance Plan. Options to purchase 4,356 shares vested on May 8,
1999 and the remaining options will vest monthly in 45 equal installments. The
base salary is subject to annual review by our board. The agreement provides for
eligibility to receive additional options to purchase up to 13,940 shares of our
common stock upon meeting quarterly management objectives during his first year
of employment. Mr. Becmer also is entitled to participate in any of our pension,
insurance or benefit plans, including our stock option plans. The agreement
provides for a severance payment in the amount of six months' compensation in
the event of a termination due to a merger or acquisition where Mr. Becmer's
duties substantially change, a reduction in his compensation, a relocation or
the failure of any successor to us to assume the agreement.

1998 Stock Option/Stock Issuance Plan

Our 1998 Stock Option/Stock Issuance Plan is intended to promote our
interests by providing eligible persons with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in us as
an incentive for them to remain in our service. The plan was adopted by our
board on June 23, 1998 and was approved by our stockholders on June 23, 1998.

Pursuant to the terms of the plan, 2,230,400 shares of common stock may be
issued to our officers and other employees, our non-employee board members and
independent consultants in our service. However, in no event may any one
participant in the plan receive option grants or

51
<PAGE>

direct stock issuances for more than 278,000 shares of common stock in the
aggregate per calendar year.

The shares of common stock reserved for issuance under the plan are made
available from authorized but unissued common stock or from shares of common
stock reacquired by us, including shares repurchased on the open market. Should
an option expire or terminate for any reason prior to exercise in full, the
shares subject to the portion of the option not so exercised will be available
for subsequent issuance under the plan. Unvested shares issued under the plan
and subsequently repurchased by us will be added back to the share reserve and
will accordingly be available for subsequent issuance under the plan.

The compensation committee of the board will have exclusive authority to
administer the plan with respect to option grants and stock issuances made to
our executive officers and non-employee board members. The compensation
committee and a secondary committee of one or more board members will each have
separate but concurrent authority to make option grants and stock issuances
under those programs to all other eligible individuals. The term "plan
administrator," as used in this description of the plan, will mean either the
compensation committee or the secondary committee, to the extent each such
entity is acting in its capacity as administrator of the plan.

The plan is divided into two separate components:

. the option grant program under which eligible individuals may, at the
discretion of the plan administrator, be granted options to purchase
shares of common stock at an exercise price not less than 85% of their
fair market value on the grant date and

. the stock issuance program under which such individuals may, in the
discretion of the plan administrator, be issued shares of common stock
directly, through the purchase of vested or unvested shares at a price
not less than 85% of their fair market value at the time of issuance
or as a fully-vested bonus for past services rendered to us.

The shares subject to each option granted under the option grant program
and unvested shares issued under the stock issuance program will vest in one or
more installments over the recipient's period of service with us. However, no
vesting schedule will be at a rate less than 20% per year, with the initial
vesting to occur no later than one year after the grant date of the option or
the issue date of the unvested shares. No granted option may have a term in
excess of ten years, and each granted option will be subject to earlier
termination within a designated period following the optionee's cessation of
service with us.

52
<PAGE>

The exercise price may be paid in cash or in shares of common stock.
Options may also be exercised for vested shares through a same-day sale program,
pursuant to which a designated brokerage firm effects the immediate sale of
those shares and pays over to us, out of the sale proceeds available on the
settlement date, sufficient funds to cover the exercise price for the purchased
shares. In addition, the plan administrator may provide financial assistance to
one or more participants in connection with the exercise of their outstanding
options or the purchase of their unvested shares by allowing such individuals to
deliver a full-recourse, interest-bearing promissory note in payment of the
exercise or purchase price and any associated withholding taxes incurred in
connection with such exercise or purchase.

In the event that we are acquired by merger or sale of substantially all of
our assets, each outstanding option under the option grant program which is not
to be assumed by the successor corporation or otherwise continued in effect will
automatically accelerate in full, and all unvested shares under the plan will
immediately vest, except to the extent our repurchase rights with respect to
those shares are assigned to the successor corporation or otherwise continued in
effect. The plan administrator will have complete discretion to grant one or
more options under the option grant program which will become exercisable on an
accelerated basis for all of the option shares upon either:

. an acquisition of us, whether or not those options are assumed or
otherwise continued in effect or

. the termination of the optionee's service within a designated period
following an acquisition in which those options are assumed or
continued in effect.

The vesting of outstanding shares under the stock issuance program may be
accelerated upon similar terms and conditions.

The plan administrator also is authorized under the option grant and stock
issuance programs to grant options and to structure repurchase rights so that
the shares subject to those options or repurchase rights will immediately vest
in connection with a change in ownership or control of us, whether by successful
tender offer for more than 50% of the outstanding voting stock or by a change in
the majority of the board by reason of one or more contested elections for board
membership. Such accelerated vesting may occur either at the time of such change
in ownership or control or upon the subsequent involuntary termination of the
individual's service within a designated period, not to exceed 18 months,
following such change in ownership or control.

In the event any change is made to the outstanding shares of common stock
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or

53
<PAGE>

other change in corporate structure effected without our receipt of
consideration, appropriate adjustments will be made to:

. the maximum number and/or class of securities issuable under the plan;

. the number and/or class of securities for which any one person may be
granted stock options and direct stock issuances under the plan per
calendar year; and

. the number and/or class of securities and the exercise price per share
in effect under each outstanding option.

Such adjustments will be designed to preclude any dilution or enlargement of
benefits under the plan or the outstanding options granted pursuant to the plan.

The plan administrator has the authority to effect the cancellation of
outstanding options under the option grant program in return for the grant of
new options for the same or different number of option shares with an exercise
price per share based upon the fair market value of the common stock on the new
grant date.

The board may amend or modify the plan at any time. The plan will terminate
on June 22, 2007, unless sooner terminated by the board or in connection with an
acquisition of us in which the plan is not assumed by the acquiring entity.

1996 Stock Option Plan

Our 1996 Stock Option Plan was adopted by both our board and a majority in
interest of our stockholders on May 30, 1996. The plan provides for the granting
of options which are intended to qualify either as incentive stock options
within the meaning of Section 422 of the Internal Revenue Code or as
nonstatutory stock options which are not intended to meet the requirements of
such section. The total number of shares of our common stock reserved for
issuance under the plan is 187,500. Options to purchase shares may be granted
under the plan to persons who, in the case of incentive stock options, are our
employees, including officers, or, in the case of nonstatutory stock options,
are our employees, including officers, or our non-employee directors.

The plan provides for its administration by our board or a committee chosen
by our board, which has discretionary authority, subject to restriction, to
determine the number of shares issued pursuant to incentive stock options and
nonstatutory stock options and the individuals to whom, the times at which and
the exercise price for which options will be granted.

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<PAGE>

The exercise price of all incentive stock options granted under the plan
must be at least equal to the fair market value of such shares on the date of
the grant or, in the case of incentive stock options granted to the holder of
more than 10% of our common stock, at least 110% of the fair market value of
such shares on the date of the grant. The maximum exercise period for which
incentive stock options may be granted is ten years from the date of grant or
five years in the case of an individual owning more than 10% of our common
stock. The aggregate fair market value of shares with respect to which incentive
stock options are exercisable for the first time by the holder of the option
during any calendar year shall not exceed $100,000. The aggregate fair market
value is determined at the date of the option grant.

As of September 30, 1999, options for 811,723 shares of common stock were
outstanding under our 1998 and 1996 plans, no options had been exercised and
1,418,677 shares remained available for future issuance under these plans.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

Mr. Keller, our Chairman and President, sold to Mr. Thomas A. Bevilacqua:

. on January 1, 1998, 19,518 shares of our common stock for an aggregate
purchase price of $700 and

. on August 20, 1998, 38,049 shares of our common stock for an aggregate
purchase price of $5,118.

Mr. Bevilacqua, who was one of our directors until his resignation in December
1999, is a former partner in the law firm of Brobeck, Phleger & Harrison LLP,
which firm we have retained from time to time for legal services. The 38,049
shares originally were subject to Mr. Keller's right of repurchase which lapses
monthly in a series of equal monthly installments upon Mr. Bevilacqua's
completion of each month of service on our board until May 2000. In addition,
Mr. Keller has a right of first refusal exercisable in connection with any
proposed transfer of such shares for which the repurchase right has lapsed.

As of August 20, 1998, Mr. Keller sold 55,760 shares of our common stock to
Mr. Bradlee, one of our former executive officers, for an aggregate purchase
price of $7,500 evidenced by a full-recourse note secured by the shares
purchased. The note bore interest at the rate of 5.41% per annum, compounded
semi-annually. The 55,760 shares originally were subject to Mr. Keller's right
of repurchase which began to lapse November 20, 1998 in a series of 45
successive, equal monthly installments upon Mr. Bradlee's completion of each
month of service with us. In addition, Mr. Keller had a right of first refusal
exercisable in connection with any proposed transfer of such shares for which
the repurchase right has lapsed. Upon the end of

55
<PAGE>

Mr. Bradlee's employment with us in May 1999, Mr. Keller repurchased 48,324 of
such shares paid for by forgiving $6,500 of the note.

As of August 20, 1998, Mr. Keller sold 13,940 shares of our common stock to
Mr. Klein, one of our directors, for an aggregate purchase price of $1,875. The
13,940 shares are subject to Mr. Keller's right of repurchase which began to
lapse November 20, 1998 in a series of 21 successive, equal monthly installments
upon Mr. Klein's completion of each month of consulting services to us. In
addition, Mr. Keller has a right of first refusal exercisable in connection with
any proposed transfer of such shares for which the repurchase right has lapsed.

As of August 20, 1998, Eric Kim, then one of our directors, and Messrs.
Dilworth and Klein, each one of our directors, were each issued 41,820 shares of
our common stock under our stock option plan at a purchase price of $0.135 per
share. Such shares are subject to our right of repurchase which began to lapse
November 20, 1998 in a series of 45 successive, equal monthly installments upon
completion of each month of service on our board until May 2000. On September
30, 1999, Mr. Kim resigned as a director and we purchased 30,668 shares of our
common stock from Mr. Kim for $4,294.

In March 1998, Spencer Trask Investors, an affiliate of Spencer Trask,
purchased 278,800 shares of our common stock from us for an aggregate purchase
price of $25,000. Concurrently with such transaction, Spencer Trask Investors
loaned us $475,000 evidenced by a convertible promissory note, bearing interest
at a rate of 10% per annum. The convertible promissory note was redeemed by us
on January 27, 1999.

In March 1998, Spencer Trask Investors, entered into a sale arrangement
with Mr. Keller and Ms. Ford, our Executive Vice President, Marketing and Sales,
with respect to the sale of an aggregate of 1,951,600 shares of our common stock
for aggregate consideration of $3,500,000, comprised of $200,000 cash, a non-
recourse promissory note in the principal amount of $800,000 which became due on
January 20, 1999, a non-recourse promissory note in the principal amount of
$1,000,000 which became due on July 20, 1999, and a non-recourse promissory note
in the principal amount of $1,500,000 which becomes due on January 20, 2000.
Each of the foregoing notes bears interest at the rate of 6% per annum, payable
quarterly, and each note is secured by a pledge of the shares purchased, with
one share pledged for each $1.79 of principal amount. The shares of our common
stock pledged with respect to each note were placed in escrow until payment in
full of the principal and accrued interest of the note representing the purchase
price of such shares. The $800,000 note was paid by Spencer Trask Investors and
the 446,080 shares pledged with respect to such note were released from escrow
on January 20, 1999. The $1,000,000 note was paid by Spencer Trask Investors and
the 557,600 shares pledged with respect to such note were released from escrow
on July 20, 1999. In the event that a note is not paid, the shares securing it
will be released to Mr. Keller and Ms. Ford, who also maintain voting control
over such pledged shares unless and until the related notes are fully paid and
the shares are released to Spencer Trask Investors.

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<PAGE>

In connection with the issuance and sale by us of an aggregate of
2,878,815 shares of our common stock for an aggregate purchase price of
$5,162,868 in three separate closings, the final such closing occurring January
27, 1999, in connection with and pursuant to the terms of a private placement
memorandum and related agreements (the "private placement"), we entered into a
placement agency agreement, dated September 2, 1998, with Spencer Trask.
Pursuant to the placement agency agreement, Spencer Trask received a fee equal
to 10% of the aggregate offering price for our common stock sold in the private
placement. In addition, we issued to Spencer Trask the Spencer Trask Warrants.
See "Description of Securities-Spencer Trask Warrants and Similar Warrants."
Spencer Trask, together with its affiliates, holds an aggregate of 1,686,461
shares of our common stock and warrants to purchase 880,427 shares of our common
stock.

Mr. Bevilacqua, together with his wife, Therese Mrozek, currently a partner
in the law firm of Brobeck, Phleger & Harrison LLP, purchased 2,788 shares of
our common stock in the private placement for an aggregate purchase price of
$5,000 and Brobeck, Phleger & Harrison LLP purchased 27,880 shares for an
aggregate purchase price of $50,000.

Spencer Trask Investors and Mr. Keller, upon the commencement of the
private placement, loaned $200,000 and $100,000, respectively, to us pursuant to
convertible promissory notes which bore interest at 8% per annum and matured at
the earlier of the first closing of the private placement or 12 months from the
date of the notes. Spencer Trask converted the $200,000 note into 111,520 shares
of our common stock on December 31, 1998 and we paid the $100,000 note held by
Mr. Keller on that same date. In addition, Spencer Trask Investors was issued,
upon the commencement of the private placement, a warrant to purchase 55,760
shares of our common stock at $1.79 per share, and Mr. Keller was issued a
warrant to purchase 27,880 shares of our common stock at $1.79 per share. See
"Description of Securities - Spencer Trask Warrants and Similar Warrants."

On December 31, 1998, in consideration of tangible and intangible assets,
we sold to Corel Corporation 2,167,114 shares of our common stock and a warrant
to purchase up to 216,711 shares of our common stock. We also granted Corel the
right to appoint a nominee to our board and registration. See "Management of
Directors" and "Description of Securities-Corel Warrant and Similar Warrant."

In consideration of consulting services performed in connection with the
merger between us and GraphOn-CA, we issued to Spencer Trask Class A redeemable
common stock purchase warrants to purchase an aggregate of up to 250,000 shares
of our common stock at an exercise price of $5.50 per share, and pay Spencer
Trask up to $575,000.

In June 1996, we issued an aggregate of 625,000 shares of our common stock
at a price of $.0001 per share, as follows: 150,000 shares to Lawrence Burstein,
one of our directors, 25,000

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<PAGE>

shares to Unity VCA, an affiliate of Mr. Burstein, 136,500 shares to the three
other then directors of GraphOn and their affiliates, and 313,500 shares to
various other persons.

In June 1996, we issued 58,334 and 141,666 Class A and a like number of
Class B warrants to Mr. Burstein and the three other then directors of GraphOn
in consideration for future services to be rendered by such persons on behalf of
us. Such warrants are identical to our Class A and Class B redeemable warrants
offered and sold in our initial public offering but are not redeemable by us.

We paid Unity VCA between June 1996 and July 1999 a monthly fee of $7,500
for general and administrative services. Such fee included the use of
approximately 500 square feet of office space in premises occupied by Unity VCA.
Dalessio Miliner & Leben ("DML"), an accounting firm which is an affiliate of a
then director of us, affords Unity VCA the use of such space at a monthly rental
of $2,000. Mr. Burstein and two other then directors of GraphOn are each
directors and stockholders of Unity VCA. The agreement with Unity VCA has been
terminated.

Unity VCA had made non-interest demand loans aggregating approximately
$50,000 to us as of the November 12, 1996 to cover expenses incurred by us in
connection with our initial public offering. We repaid these loans out of the
proceeds of our initial public offering.

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<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth information known to us as of December 3,
1999, based on information obtained from the persons named below, with respect
to the beneficial ownership of shares of our common stock held by

. each person known by us to be the owner of 5% or more of the
outstanding shares of our common stock;

. each of our directors; and

. all of our executive officers and directors as a group.

Unless otherwise indicated, the address for each stockholder is c/o GraphOn
Corporation, 150 Harrison Avenue, Campbell, CA 95008.
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned (1) Percent of Class
------------------------- -----------------
<S> <C> <C>
Corel Corporation (2)................................ 2,383,825 20.76%
1600 Carling Avenue
Ottawa, Ontario
K1Z 8R7, Canada
Spencer Trask Holdings, Inc. (3)...................... 1,686,461 19.48%
535 Madison Avenue
New York, NY 10022
Walter Keller (4) ................................... 1,005,582 9.15%
Robert Dilworth .................................... 41,820 *
August P. Klein .................................... 55,760 *
Michael O'Reilly (2) ................................ 2,383,825 20.76%
Robin Ford (5) ...................................... 641,240 5.69%
Vince Pfeifer (6) ................................... 19,143 *
Edmund Becmer (7) ................................... 9,293 *
Eric Lefebvre(8) ................................... 3,666 *
Lawrence Burstein(9)................................. 291,668 2.56%
Marshall C. Phelps, Jr...............................
All executive officers and directors as a group 4,479,877 38.47%
(10 persons) (10)..................................
</TABLE>
___________
* Denotes less than 1% of our outstanding common stock

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<PAGE>

(1) As used in this prospectus, beneficial ownership means the sole or shared
power to vote, or direct the voting of, a security, or the sole or shared
power to invest or dispose, or direct the investment or disposition, of a
security. Except as otherwise indicated, all persons named in this
prospectus have sole voting power and investment power with respect to
their respective shares of our common stock, except to the extent that
authority is shared by spouses under applicable law, and record and
beneficial ownership with respect to their respective shares of our common
stock. With respect to each stockholder, any shares issuable upon exercise
of all options and warrants held by such stockholder that are currently
exercisable or will become exercisable within 60 days of December 3, 1999
are deemed outstanding for computing the percentage of the person holding
such options but are not deemed outstanding for computing the percentage of
any other person. Percentage ownership of our common stock is based on
11,266,302 shares of our common stock outstanding as of December 3, 1999.

(2) Includes 2,167,114 shares of common stock and a warrant exercisable for up
to 216,711 shares of our common stock at an exercise price of $1.79 per
share held by Corel. Mr. O'Reilly is the Executive Vice President, Finance,
Chief Financial Officer and Treasurer of Corel and a director of us.
However, Mr O'Reilly disclaims beneficial ownership of all of these shares.

(3) Includes 94,792 shares held by Spencer Trask, 717,631 shares held by Kevin
Kimberlin Partners, L.P. ("KKP"), an affiliate of Spencer Trask Holdings,
Inc., the 100% owner of Spencer Trask, 37,638 shares and warrants
exercisable for up to an aggregate of 66,900 shares of our common stock at
an exercise price of $1.79 per share held by William P. Dioguardi, the
President of the Spencer Trask, three warrants exercisable for up to an
aggregate of 58,971 shares of our common stock at an exercise price of
$1.79 per share held by KKP, a warrant exercisable for up to an aggregate
of 12,261 shares of our common stock at an exercise price of $1.79 per
share held by Kevin Kimberlin, a general partner of KKP and a majority
holder of Spencer Trask Holdings, four warrants exercisable for up to an
aggregate of 242,293 shares of our common stock at an exercise price of
$1.79 per share held by Spencer Trask Holdings and 250,000 warrants
exercisable for up to an aggregate of 250,000 shares of our common stock at
an exercise price of $5.50 held by Spencer Trask. Excludes 324,667 shares
of our common stock issuable upon exercise of the Spencer Trask Warrants in
which Spencer Trask has no beneficial interest. See "Description of
Securities-Spencer Trask Warrants and Similar Warrants."

(4) Includes 418,200 shares of our common stock placed in escrow with Brobeck,
Phleger & Harrison LLP ("BPH"), as escrow agent, to be sold to Spencer
Trask Investors on January 20, 2000. During the escrow period, Mr. Keller
cannot sell or otherwise transfer such shares but retains all other
stockholder rights, including, without limitation, the right to vote such
shares. Also includes a warrant exercisable for up to 27,880 shares of our

60
<PAGE>

common stock at an exercise price of $1.79 per share and 22,304 shares of
our common stock held by relatives of Mr. Keller who, at the option of
Spencer Trask, can be required to enter into a voting agreement granting
Mr. Keller the right to vote such shares. Mr. Keller and Ms. Ford are
husband and wife. See footnote 5 below.

(5) Includes 418,200 shares of our common stock placed in escrow with BPH, as
escrow agent, to be sold to Spencer Trask Investors on January 20, 2000.
During the escrow period, Ms. Ford cannot sell or otherwise transfer such
shares but retains all other stockholder rights, including, without
limitation, the right to vote such shares. Also includes 16,728 shares
held by relatives of Ms. Ford who, at the option of Spencer Trask, can be
required to enter into a voting agreement granting Ms. Ford the right to
vote such shares. Mr. Keller and Ms. Ford are husband and wife. See
footnote 4 above.

(6) Includes options exercisable for up to 5,203 shares of our common stock at
an exercise price of $1.52 per share.

(7) Includes options exercisable for up to 9,293 shares of our common stock at
an exercise price of $1.52 per share.

(8) Includes options exercisable for up to 3,666 shares of our common stock at
an exercise price of $1.52 per share.

(9) Includes 25,000 shares of our common stock owned by Unity VCA, over which
shares Mr. Burstein shares voting and investment power. Also includes
58,334 shares issuable upon exercise of Class A warrants and 58,334 shares
issuable upon exercise of Class B warrants.

(10) See footnotes 3 through 7 above. Includes warrants held by Mr. Keller and
Corel exercisable for up to 244,591 shares of our common stock at an
exercise price of $1.79 per share and options exercisable for up to 18,162
shares of our common stock held by three of our officers.

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<PAGE>

SELLING STOCKHOLDER

The registration statement, of which this prospectus forms a part, relates
to our registration, for the account of the selling stockholder, of an aggregate
of 300,000 shares of our common stock underlying warrants issued to the selling
stockholder in October 1999. These shares are being registered pursuant to
registration rights granted by us to the selling stockholder in connection with
its acquisition of these warrants.

We believe, based on information supplied by the selling stockholder, that
except as noted, it has sole voting and investment power with respect to all
shares of common stock which it beneficially owns. The last column in this table
assumes the sale of all of our shares offered by this prospectus.

<TABLE>
<CAPTION>
Number of Number of
Shares Shares
Beneficially Offered by Number of Shares Beneficially
Owned Prior Selling Owned After Offering
----------------------------
Name of Selling Stockholder to Offering Stockholder Number Percent
- ------------------------------ -------------- -------------- ------------ ----------
<S> <C> <C> <C> <C>
Super Tech Holdings Limited..... 300,000 300,000 -- --%
</TABLE>

The sale of the selling stockholder's shares may be effected from time to
time in transactions, which may include block transactions by or for the account
of the selling stockholder, in the over-the-counter market or in negotiated
transactions, or through the writing of options on the selling stockholder's
shares, a combination of these methods of sale, or otherwise. Sales may be made
at fixed prices which may be changed, at market prices prevailing at the time of
sale, or at negotiated prices.

The selling stockholder may effect the transactions by selling its shares
directly to purchasers, through broker-dealers acting as agents for the selling
stockholder, or to broker-dealers who may purchase shares as principals and
thereafter sell the selling stockholders's shares from time to time in the over-
the-counter market, in negotiated transactions, or otherwise. In effecting
sales, brokers and dealers engaged by the selling stockholder may arrange for
other broker-dealers to participate in the resales. The selling stockholder may
enter into hedging transactions with broker-dealers, and in connection with
these transactions, broker-dealers may engage in short sales of the shares. The
selling stockholder may also sell shares short and deliver these shares to close
out their short positions. Selling stockholder may also enter into option or
other transactions with broker-dealers that involve the delivery of these shares
to the broker-dealers, who may then resell or otherwise transfer such shares.
The selling stockholder may also pledge these shares to a broker-dealer who,
upon a default, may sell or otherwise transfer these shares.

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<PAGE>

These broker-dealers, if any, may receive compensation in the form of
discounts, concessions or commissions from the selling stockholder and/or the
purchaser for whom such broker-dealers may act as agents or to whom they may
sell as principals or both, which compensation as to a particular broker-dealer
may be in excess of customary commissions.

The selling stockholder and broker-dealers, if any, acting in connection
with these sales might be deemed to be "underwriters" within the meaning of
section 2(11) of the Securities Act of 1933. Any commission they receive and any
profit upon the resale of the securities might be deemed to be underwriting
discounts and commissions under the Securities Act.

We have advised the selling stockholder that during such time as it may be
engaged in a distribution of the common stock covered by this prospectus it will
be required to comply with Regulation M promulgated under the Securities
Exchange Act of 1934. With certain exceptions, Regulation M precludes any
selling stockholder, any affiliated purchasers, and any broker-dealer or other
person who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. All of
the foregoing may affect the marketability of our common stock.

Sales of any shares of our common stock by the selling stockholder may
depress the market price of our common stock.

Any securities covered by this prospectus that qualify for sale pursuant to
SEC Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this prospectus.

There can be no assurance that the selling stockholder will sell any or all
of the shares of common stock covered by this prospectus.

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<PAGE>

DESCRIPTION OF SECURITIES

General

We are authorized to issue 45,000,000 shares of common stock, par value
$.0001 per share, and 5,000,000 shares of "blank check" preferred stock, par
value $.01 per share. As of December 3, 1999, 11,266,302 shares of our common
stock were outstanding, held of record by 257 persons. No shares of our
preferred stock currently are outstanding.

Common Stock

The holders of our common stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted for the election of
directors can elect all of the directors. The holders of our common stock are
entitled to receive dividends when, as and if declared by our board of directors
out of funds legally available therefor. In the event of our liquidation,
dissolution or winding up, the holders of our common stock are entitled to share
ratably in all assets remaining available for distribution to them after payment
of liabilities and after provision has been made for each class of stock, if
any, having preference over our common stock. Holders of our common stock, as
such, have no conversion, redemption, preemptive or other subscription rights.
All of the outstanding shares of our common stock are fully paid and
nonassessable.

Preferred Stock

Our certificate of incorporation authorizes the issuance of 5,000,000
shares of preferred stock with such designation, rights and preferences as may
be determined from time to time by our board of directors. Accordingly, our
board is empowered, without stockholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting or other rights which could adversely
affect the voting power or other rights of the holders of our common stock. Our
preferred stock could be utilized as a method of discouraging, delaying or
preventing a change in control of us subsequent to the effective time. Although
we do not currently intend to issue any shares of preferred stock, there can be
no assurance that we will not do so in the future.

Dividends

We do not presently intend to pay any cash dividends as all available cash
will be utilized to further the growth of our business for the proximate future
thereafter. The payment of any cash dividends will be in the discretion of our
board and will be dependent upon our results of operations, financial condition,
contractual restrictions and other factors deemed relevant by our board.

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<PAGE>

Transfer Agent

The transfer agent for the our common stock is American Stock Transfer &
Trust Company, 40 Wall Street, New York, New York 10005.

IPO Warrants

As of December 3, 1999, there were 1,056,949 Class A redeemable warrants
and 1,249,799 Class B redeemable warrants (collectively, the "IPO warrants")
outstanding, held of record by 6 and 7 persons.

Each Class A redeemable warrant entitles the registered holder to purchase
one share of our common stock at a price of $5.50 per share, subject to
adjustment, for a period of five years commencing on July 12, 1999. Each Class B
redeemable warrant entitles the registered holder to purchase one share of our
common stock at a price of $7.50 per share, subject to adjustment, for a period
of five years commencing on July 12, 1999.

We may call the Class A redeemable warrants and the Class B redeemable
warrants for redemption, each as a class, in whole and not in part, at our
option, at a price of $.05 per IPO warrant at any time upon not less than 30
days' prior written notice, provided that the reported high bid price of our
common stock equals or exceeds $8.50 per share with respect to the Class A
warrants, and $10.50 per share with respect to the Class B warrants, for the 20
consecutive trading days immediately prior to the notice of redemption to
warrantholders. The warrantholders shall have exercise rights until the close of
business on the date fixed for redemption. On December 21, 1999, we called the
warrants for redemption as the price of our common stock had satisfied the
redemption criteria. We fixed January 24, 2000 as the redemption date.

The IPO warrants are issued in registered form under a warrant agreement
between us and American Stock Transfer & Trust Company, as warrant agent.

The exercise price and number of shares of our common stock issuable on
exercise of the IPO warrants are subject to adjustment, including in the event
of a stock dividend, recapitalization, reorganization, merger or consolidation
of us. However, the IPO warrants are not subject to adjustment for issuances of
our common stock at a price below their respective exercise prices.

We have the right, in our sole discretion, to decrease the exercise price
of the IPO warrants for a period of not less than 30 days on not less than 30
days' prior written notice to the warrantholders. In addition, we have the
right, in our sole discretion, to extend the expiration date of the IPO warrants
on five business days' prior written notice to the warrantholders.

The IPO warrants may be exercised upon surrender of the warrant certificate
on or prior to the expiration date at the offices of the warrant agent, with the
exercise form on the reverse side of the warrant certificate completed and
executed as indicated, accompanied by full payment

65
<PAGE>

of the exercise price to the warrant agent for the number of IPO warrants being
exercised. Payment of the exercise price is by certified check, payable to us.
The warrantholders do not have the rights or privileges of holders of our common
stock.

No IPO warrants will be exercisable unless at the time of exercise we have
filed with the SEC a current prospectus covering the shares of our common stock
issuable upon exercise of IPO warrants and such shares have been registered or
qualified or deemed to be exempt under the securities laws of the state of
residence of the holder of such IPO warrants. We will use our best efforts to
have all shares so registered or qualified on or before the exercise date and to
maintain a current prospectus relating thereto until the expiration of the IPO
warrants, subject to the terms of the warrant agreement. While it is our
intention to do so, there is no assurance that we will be able to do so.

No fractional shares will be issued upon exercise of the IPO warrants.
However, if a warrantholder exercises all IPO warrants then owned of record by
him, we will pay to such warrantholder, in lieu of the issuance of any
fractional share which otherwise is issuable to such warrantholder, an amount in
cash based on the market value of our common stock on the last trading day prior
to the exercise date.

Upon consummation of our merger with GraphOn-CA, we issued to Spencer Trask
250,000 Class A redeemable common stock purchase warrants exercisable for an
aggregate of up to 250,000 shares of our common stock at an exercise price of
$5.50 per share. The terms of the warrants are substantially the same as the
terms of the Class A redeemable warrants described above, except that the
warrants will not be redeemable until the reported high bid price of our common
stock equals or exceeds $15.00 per share for the 20 consecutive trading days
immediately prior to the notice of redemption to the warrantholders.

Underwriters' IPO Securities

In connection with our initial public offering, we sold to GKN Securities
Corp. and Gaines, Berland Inc., the underwriters of our initial public offering,
for nominal consideration, the right to purchase up to an aggregate of 125,000
units (the "Underwriters' IPO Securities"). Each unit issuable upon exercise of
the Underwriters' IPO Securities consists of one share of our common stock, one
Class A warrant and one Class B warrant (the Class A warrants and the Class B
warrants are collectively referred to in this prospectus as the "Warrants"). The
Warrants are identical to the IPO warrants described above except that the
Warrants cannot be redeemed. The Underwriters' IPO Securities are exercisable
initially at $6.60 per unit (the "Exercise Price") for a period of five years
commencing on November 12, 1996. The Underwriters' IPO Securities contain anti-
dilution provisions providing for adjustment of the exercise price upon the
occurrence of certain events including the issuance of shares of our common
stock or other securities convertible into or exercisable for shares of our
common stock at a price per share less

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<PAGE>

than the exercise price, or in the event of any recapitalization,
reclassification, stock dividend, stock split, stock combination or similar
transaction.

We also agreed at the time of the issuance of the Underwriters' IPO
Securities to use our best efforts to maintain an effective registration
statement with respect to the Underwriters' IPO Securities and the underlying
units. In addition, the Underwriters' IPO Securities grant to the holders of the
securities "piggy back" and "demand" rights for periods of seven and five years
from November 12, 1996 with respect to the registration under the Securities Act
of the securities directly and indirectly issuable upon exercise of the
Underwriters' IPO Securities.

As of December 3, 1999, 34,125 of the Underwriters' IPO Securities remained
outstanding and unexercised.

Directors' Warrants

In June 1996, we issued 58,334 and 141,666 Class A and a like number of
Class B warrants to Mr. Burstein and the three other then directors of GraphOn
in consideration for future services to be rendered by such persons on our
behalf. Such warrants are identical to our Class A and Class B redeemable
warrants offered and sold in our initial public offering but are not redeemable
by us.

Spencer Trask Warrants and Similar Warrants

We issued 575,763 warrants to Spencer Trask to purchase up to an aggregate
of 575,763 shares of our common stock in January 1999. Spencer Trask
subsequently transferred its interests in 324,667 of such warrants to
nonaffiliated parties. The exercise price of such warrants is $1.79 per share.
The Spencer Trask warrants are exercisable until January 27, 2006. The exercise
price and number of shares of our common stock issuable on exercise of the
warrants are subject to adjustment in particular circumstances, including in the
event of a stock dividend, recapitalization, subdivision or consolidation of us,
or issuance of our common stock, or options, rights or warrants to subscribe for
shares of our common stock, or securities convertible into or exchangeable for
shares of our common stock, at a price below their respective exercise prices.

The Spencer Trask warrants may be exercised upon surrender of the
certificate evidencing the respective warrant on or prior to the expiration date
at the offices of us, with the annexed exercise form completed and executed as
indicated, accompanied by full payment of the exercise price to us for the
number of warrant shares being exercised. The exercise price may be paid by
certified or official bank check, in shares of our common stock or by the "net
issuance" method. The holders of Spencer Trask warrants do not have the rights
or privileges of holders of our common stock. No fractional shares will be
issued upon exercise of such warrants. However, we will pay to such
warrantholder, in lieu of the issuance of any fractional share which otherwise

67
<PAGE>

is issuable to such warrantholder, an amount in cash based on the fair market
value of our common stock as determined in good faith by our board.

Spencer Trask Investors, an affiliate of Spencer Trask, and Mr. Keller hold
warrants exercisable for up to 55,760 and 27,880 shares of our common stock, the
terms of which are substantially the same as those of the Spencer Trask
warrants.

Corel Warrant and Similar Warrant

Corel and one additional stockholder holding less than 1% of the
outstanding shares of our common stock hold an aggregate of two warrants to
purchase up to 216,711 and 676 shares of our common stock. The exercise price of
such warrants is $1.79 per share, and they are exercisable until December 18,
2003. The exercise price and number of shares of our common stock issuable on
exercise of such warrants are subject to adjustment in particular circumstances,
including in the event of a stock dividend, subdivision or combination of our
capital stock, reclassification, capital reorganization or change in our capital
stock, or consolidation, merger or sale of all or substantially all of our
assets. Such warrants may be exercised upon surrender of the certificates
evidencing them, with the annexed exercise form completed and executed as
indicated, accompanied by full payment of the exercise price to us for the
number of warrant shares being exercised. The exercise price may be paid by cash
or check or by the "net issuance" method. Holders of the warrants, as such, are
not entitled to the rights or privileges of holders of our common stock. No
fractional shares will be issued upon exercise of such warrants. However, we
will pay to such warrantholders, in lieu of the issuance of any fractional share
which otherwise is issuable to such warrantholders, an amount in cash based on
the fair market value of our common stock as determined in good faith by the our
board.

Shares Eligible for Future Sale

As of the date of this prospectus, there are 11,266,302 shares of our
common stock outstanding and 5,004,125 shares issuable upon exercise of
outstanding options and warrants. Restrictions under the securities laws and
lock-up agreements prevent the immediate sale in the public market of 9,435,383
of such shares of common stock. However, 7,268,269 of these restricted shares
will become available for sale on January 12, 2000.

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<PAGE>

Legal Matters

The validity of the shares of our common stock covered by this prospectus
has been passed upon by Cooperman Levitt Winikoff Lester & Newman, P.C., New
York, New York. Certain members of this firm own shares of our common stock.

Experts

Our financial statements as of December 31, 1998, 1997 and for the years
ended December 31, 1998, 1997 and 1996 and related schedules included in this
prospectus have been audited by BDO Seidman, LLP, independent certified public
accountants, to the extent and for the periods set forth in their reports
appearing elsewhere herein and in this prospectus, and are included in reliance
upon such reports given upon the authority of said firm as experts in auditing
and accounting.

Available Information

We have filed with the SEC a registration statement on Form S-1, including
all amendments, exhibits, schedules and supplements thereto, under the
Securities Act and the rules and regulations thereunder for the regulations
thereunder, for the registration of the our common stock offered hereby.
Although this prospectus, which forms a part of the registration statement,
contains all material information included in the registration statement, parts
of the registration statement have been omitted as permitted by the rules and
regulations of the SEC. For further information about us and the common stock
offered in this prospectus, you should refer to the registration statement and
its exhibits. You may read and copy any document we file with the Securities and
Exchange Commission at the public reference facilities maintained by the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices at 3475 Lenox Road, N.E., Suite 1000, Atlanta, Georgia 30326-
1232. Copies of such material may be obtained from the Public Reference Section
of the SEC at 450 Fifth Street, NW, Washington, D.C. 20549, at prescribed rates.
You can also review such material by accessing the SEC's Internet web site at
http://www.sec.gov. This site contains reports, proxy and information statements
and other information regarding issuers that file electronically with the SEC.

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<PAGE>

INDEX TO FINANCIAL STATEMENTS

Independent Auditors' Report................................. F-2

Balance Sheets as of December 31, 1998 and 1997.............. F-3

Statements of Operations and Comprehensive Income
as of December 31, 1998 and 1997............................. F-4

Statements of Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996............................. F-5

Statements of Cash Flows as of December 31, 1998 and 1997.... F-6

Summary of Accounting Policies............................... F-7

Notes to Financial Statements................................ F-10

Balance Sheets as of September 30, 1999 (unaudited) and
December 31, 1998............................................ F-20

Statements of Operations and Comprehensive Income
as of September 30, 1999 and September 30, 1998 (unaudited).. F-21

Statements of Stockholders' Equity for the nine months
ended September 30, 1999 (unaudited)......................... F-22

Statements of Cash Flows as of September 30, 1999 and
September 30, 1998 (unaudited)............................... F-23

Notes to Financial Statements (unaudited).................... F-24

F-1
<PAGE>

Independent Auditors' Report

Stockholders and Board of Directors
GraphOn Corporation
Campbell, California

We have audited the accompanying balance sheets of GraphOn Corporation as
of December 31, 1998 and 1997 and the related statements of operations and
comprehensive income, stockholders' equity and cash flows for each of the three
years in the period ended December 31, 1998. 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. These standards require that we plan and perform our audits 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 presentation of the financial
statements. We believe 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 financial position of GraphOn Corporation as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.

/s/ BDO Seidman, LLP
BDO Seidman, LLP

San Jose, California
February 25, 1999, except with respect to matters discussed
in Note 6 as to which the date is May 30, 1999.

F-2
<PAGE>

GraphOn Corporation
Balance Sheets

<TABLE>
<CAPTION>
December 31,
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents (Note 8).......................................... $ 1,798,400 $ 302,800
Accounts receivable, net of allowance for doubtful accounts of
$25,000, $25,000 and $0, respectively (Notes 8 and 9)...................... 564,700 308,100
Available-for-sale securities (Notes 1 and 8)............................... -- 8,600
Prepaid expenses and other assets........................................... 32,100 18,300
------------ ----------
Total Current Assets......................................................... 2,395,200 637,800
------------ ----------
Property and Equipment, net (Notes 2 and 3).................................. 423,300 50,300

Purchased Technology, net (Note 3)........................................... 3,645,400 --

Capitalized Software, net.................................................... 74,200 43,200

Deferred Compensation Expense (Note 6)....................................... 566,000 --

Other Assets................................................................. 6,400 2,000
------------ ----------
$ 7,110,500 $ 733,300
============ ==========

Liabilities And Stockholders' Equity

Current Liabilities:
Convertible note payable (Notes 5, 6 and 13)................................ $ 475,000 $ --
Accounts payable............................................................ 115,700 28,400
Accrued expenses (Note 4)................................................... 498,900 142,900
Deferred revenue............................................................ 112,600 443,800
------------ ----------
Total Current Liabilities..................................................... 1,202,200 615,100

Commitments, Contingencies and Subsequent Events (Notes 5, 6, 10, 11,
and 13).....................................................................
Stockholders' Equity (Notes 5, 6, and 13).....................................
Preferred stock, no par value, 5,000,000 shares authorized, no
shares issued and outstanding............................................. -- --
Common stock, no par value, 50,000,000 shares authorized,
16,363,959, 14,294,003 and 6,000,000 shares issued and
outstanding............................................................... 8,431,500 505,000
Accumulated other comprehensive income (Notes 1 and 8)...................... -- (12,100)
Accumulated deficit......................................................... (2,523,200) (374,700)
------------ ----------
Stockholders' Equity.......................................................... 5,908,300 118,200
------------ ----------

$ 7,110,500 $ 733,300
============ ==========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-3
<PAGE>

GraphOn Corporation

Statements of Operations and Comprehensive Income

For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues (Notes 8 and 9):
Product sales........................................... $ 608,700 $ 480,000 $ 505,000
Maintenance............................................. 320,300 8,200 75,000
OEM licenses............................................ 1,184,800 1,437,900 14,800
Training................................................ 10,400 -- --
----------- ----------- -----------
Total Revenues........................................... 2,124,200 1,926,100 594,800

Cost of Revenues (Note 10):
Product sales........................................... 28,500 43,500 261,300
Maintenance............................................. 22,200 16,600 12,800
OEM licenses............................................ 293,500 403,200 61,500
----------- ----------- -----------
Total Cost of Revenues................................... 344,200 463,300 335,600

Gross Profit............................................. 1,780,000 1,462,800 259,200
----------- ----------- -----------
Operating Expenses:
Selling and marketing................................... 1,440,300 827,300 192,700
General and administrative (Notes 6 and 10)............. 1,118,600 324,700 218,900
Research and development................................ 840,200 190,500 41,700
----------- ----------- -----------
Total Operating Expenses................................. 3,399,100 1,342,500 453,300
----------- ----------- -----------
(Loss) Income From Operations............................ (1,619,100) 120,300 (194,100)

Other Income (Expense):
Interest and other income............................... 9,800 7,200 6,400
Interest expense (Note 6)............................... (521,900) (2,100) --
Loss on sale of available-for-sale securities
(Note 1)............................................... (16,500) -- --
----------- ----------- -----------
(Loss) Income Before Provision for Income
Taxes ................................................ (2,147,000) 125,400 (187,700)
Provision for Income Taxes (Note 7) ..................... 800 900 800
----------- ----------- -----------
Net (Loss) Income........................................ (2,148,500) 124,500 (188,500)
----------- ----------- -----------

Other Comprehensive Income (Loss), net of tax
Unrealized holding gain (loss) on investment
(Note 1) .............................................. 12,100 (8,100) 7,500
----------- ----------- -----------
Comprehensive (Loss) Income.............................. $(2,136,400) $ 116,400 $ (181,000)
=========== =========== ===========
Basic and Diluted (Loss) Earnings per
Common Share............................................ $ (0.32) $ 0.02 $ (0.03)
=========== =========== ===========
Weighted Average Common Shares Outstanding............... 6,762,667 6,000,000 6,000,000
=========== =========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements

F-4
<PAGE>

GraphOn Corporation

Statements of Stockholders' Equity

For the Years Ended December 31, 1998, 1997 and 1996

(Notes 1,2,3,6 and 13)

Common Stock Accumulated
------------------------ Comprehensive Accumulated
Shares Amount Income Deficit Total
---------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1995................... 6,000,000 $ 505,000 $ (11,500) $ (310,700) $ 182,800
Change in market value of available-for-
sale securities............................. -- -- 7,500 -- 7,500
Net loss...................................... -- -- -- (188,500) (188,500)
---------- ---------- ------------ ----------- -----------
Balances, December 31, 1996................... 6,000,000 505,000 (4,000) (499,200) 1,800
Change in market value of available-for-
sale securities............................ -- -- (8,100) -- (8,100)
Net income.................................... -- -- -- 124,500 124,500
---------- ---------- ------------ ----------- -----------
Balances, December 31, 1997................... 6,000,000 505,000 (12,100) (374,700) 118,200
Change in market value of available-for-
sale securities............................ -- -- 12,100 -- 12,100
Compensation expense related to
issuance of common stock and granted
options.................................... -- 667,600 -- -- 667,600
Interest expense related to issuance of
common stock............................... -- 475,000 -- -- 475,000
Proceeds from employee stock purchase......... 508,500 38,100 -- -- 38,100
Proceeds from sale of common stock,
net of offering costs of $564,700.......... 3,699,000 2,659,300 -- -- 2,659,300
Issuance of common stock and warrants
for property and equipment and
purchased technology....................... 3,886,503 3,886,500 -- -- 3,886,500
Exchange of convertible notes payable......... 200,000 200,000 -- -- 200,000
Net loss...................................... -- -- -- (2,148,500) (2,148,500)
---------- ---------- ------------ ----------- -----------
Balances, December 31, 1998................... 14,294,003 $8,431,500 $ -- $(2,523,200) $ 5,908,300
========== ========== ============ =========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-5
<PAGE>

Graphon Corporation

Statements Of Cash Flows

For The Years Ended December 31, 1998, 1997 and 1996

(Note 12)

<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Increase (Decrease) In Cash and Cash Equivalents

Cash Flows From Operating Activities:
Net (loss) income........................................... $(2,148,500) $ 124,500 $(188,500)
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
Depreciation and amortization............................... 65,200 31,000 1,100
Allowance for doubtful accounts............................. 25,000 -- --
Loss (gain) on sale of available-for-sale
securities................................................. 16,500 -- (4,400)
Compensation expense (Note 6)............................... 101,600 -- --
Interest expense (Note 6)................................... 475,000 -- --
Changes in operating assets and liabilities:
Accounts receivable........................................ (281,600) 232,000 (461,700)
Related party receivable................................... -- 34,400 (8,500)
Prepaid expenses and other assets.......................... (13,900) (400) 28,900
Accounts payable........................................... 87,300 12,900 (1,800)
Accrued expenses........................................... 356,000 137,000 (19,500)
Deferred revenue........................................... (331,200) (358,300) 802,100
----------- --------- ---------
Net Cash (Used In) Provided By Operating Activities.......... (1,648,600) 213,100 147,700
----------- --------- ---------
Cash Flows From Investing Activities:
Proceeds from sale of available-for-sale
securities................................................. 4,300 -- 40,500
Purchase of available-for-sale securities................... -- -- (20,700)
Capitalization of software development costs................ (53,100) (24,000) (35,900)
Capital expenditures........................................ (179,400) (39,300) (28,500)
Other assets................................................ -- -- --
----------- --------- ---------
Net Cash Used In Investing Activities........................ (228,200) (63,300) (44,600)
----------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from convertible notes payable..................... 775,000 -- --
Repayment of convertible notes payable...................... (100,000) -- --
Net proceeds from issuance of common stock.................. 2,697,400 -- --
Purchase and retirement of stock............................ -- -- --
----------- --------- ---------
Net Cash Provided By Financing Activities.................... 3,372,400 -- --
----------- --------- ---------
Net Increase in Cash and Cash Equivalents.................... 1,495,600 149,800 103,100

Cash and Cash Equivalents, beginning of the period........... 302,800 153,000 49,900
----------- --------- ---------
Cash and Cash Equivalents, end of the period................. $ 1,798,400 $ 302,800 $ 153,000
=========== ========= =========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-6
<PAGE>

GraphOn Corporation
Summary of Accounting Policies

Organization and Business

GraphOn Corporation (the Company) was incorporated in the state of
California in May 1982 and has headquarters in Campbell, California. The Company
develops, markets, sells and supports server-based software that empowers a
diverse range of desktop computing devices (desktops) to access server-based
Windows and UNIX applications from any location, over network or Internet
connections.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.

Marketable Securities

The Company accounts for investments in marketable securities under the
provisions of Statements of Financial Accounting Standards (SFAS) No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Under SFAS No.
115, securities are classified and accounted for as follows:

- Debt securities that the enterprise has the positive intent and ability
to hold to maturity are classified as held-to-maturity securities and
reported at amortized cost.

- Debt and equity securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and losses
included in earnings.

- Debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available-for-sale
securities and reported at fair value, with unrealized gains and losses
excluded from earnings and reported in a separate component of
shareholders' equity.

Property and Equipment

Property and equipment are stated at cost. Depreciation is calculated using
the straight-line method over the estimated useful lives of the respective
assets, generally three to seven years. Amortization of leasehold improvements
is calculated using the straight-line method over the lesser of the lease term
or useful lives of the respective asset, generally seven years.

Purchased Technology

Purchased technology is to be amortized on a straight-line basis over the
life of the related technology or five years, whichever is less.

Capitalized Software Costs

Costs incurred internally in creating computer software products to be
sold, leased, or otherwise marketed are charged to expense when incurred as
research and development until technological feasibility has been established
for the product. Thereafter, such costs are capitalized until the product is
available for general release to customers and amortized based on either
estimated current and future

F-7
<PAGE>

revenue for each product or straight-line amortization over the shorter of three
years or the remaining estimated life of the product, whichever produces the
higher expense for the period. As of December 31, 1998 and 1997, capitalized
costs aggregated $113,000 and $59,800, with accumulated amortization of $38,800
and $16,600. For the three months ended March 31, 1999, no additional costs had
been capitalized and accumulated amortization aggregated $48,200.

Revenue Recognition and Deferred Revenue

In October 1997, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 97-2, Software Revenue Recognition,
which generally requires revenue earned on software arrangements involving
multiple elements to be allocated to each element arrangement based on the
relative fair values of the elements. If there is no evidence of the fair value
for all the elements in a multiple element arrangement all revenue from the
arrangement is deferred until such evidence exists or until all elements are
delivered. In accordance with SOP 97-2, the Company recognizes revenue from the
sale of software licenses when all the following conditions are met: the
software has been shipped to the customer, no significant obligations remain,
and collection is probable. Revenue from sale of maintenance agreements is
recognized ratably over the term of the agreement. OEM (Original Equipment
Manufacturer) licenses revenue is generally recognized as deliveries are made or
at the completion of contractual billing milestones. Deferred revenue, resulting
from maintenance and license agreements, aggregated $112,600 and $443,800 as of
December 31, 1998 and 1997.

Advertising Costs

The cost of advertising is expensed as incurred. Advertising costs for the
years ended December 31, 1998, 1997 and 1996 and for the three month period
ended March 31, 1999, were approximately $58,400, $60,000, $0, and $109,600,
respectively.

Income Taxes

Income taxes are calculated using the liability method of accounting for
income taxes specified by SFAS No. 109, Accounting for Income Taxes. Deferred
income taxes are recognized for the tax consequences of temporary differences
between the financial statements and income tax bases of assets, liabilities and
carryforwards using enacted tax rates. Valuation allowances are established when
necessary, to reduce deferred tax assets to the amount expected to be realized.
Realization is dependent upon future pre-tax earnings, the reversal of temporary
differences between book and tax income, and the expected tax rates in effect in
future periods.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

Cash and cash equivalents:

The carrying amount reported in the balance sheet for cash and cash
equivalents approximate fair value.

Investment securities:

The fair values of marketable debt and equity securities are based on
quoted market prices.

Short-term debt:

The fair value of short-term debt is estimated based on current interest
notes available to the Company for debt instruments with similar terms and
maturities.

F-8
<PAGE>

As of December 31, 1998 and 1997, the fair values of the Company's
financial instruments approximate their historical carrying amounts.

Long-Lived Assets

Long-lived assets are assessed for possible impairment whenever events or
changes in circumstances indicate that the carrying amounts may not be
recoverable, or whenever management has committed to a plan to dispose of the
assets. Such assets are carried at the lower of book value or fair value as
estimated by management based on appraisals, current market value, comparable
sales value, and undiscounted future cash flows as appropriate. Assets to be
held and used affected by such impairment loss are depreciated or amortized at
their new carrying amount over the remaining estimated life; assets to be sold
or otherwise disposed of are not subject to further depreciation or
amortization.

Stock-Based Incentive Programs

SFAS No. 123, Accounting for Stock-Based Compensation, encourages entities
to recognize compensation costs for stock-based employee compensation plans
using the fair value based method of accounting defined in SFAS No. 123, but
allows for the continued use of the intrinsic value based method of accounting
prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees. The Company continues to use the accounting
prescribed by APB Opinion No. 25 and as such is required to disclose pro forma
net income and earnings per share as if the fair value based method of
accounting had been applied.

Adoption of New Accounting Pronouncements

In February 1998, the Financial Accounting Standards Board (FASB) issued
SFAS No. 132, Employer's Disclosure about Pensions and Other Postretirement
Benefits, which standardizes the disclosure requirements for pension and other
postretirement benefits. The adoption of SFAS No. 132 did not have a material
impact the Company's current disclosures.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires companies to recognize
all derivatives contracts as either assets or liabilities in the balance sheet
and to measure them at fair value. If certain conditions are met, a derivative
may be specifically designated as a hedge, the objective of which is to match
the timing of gain or loss recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the earnings effect
of the hedged forecasted transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized in income in the period of
change. SFAS No. 133 is effective for all fiscal years beginning June 15, 2000.

Historically, the Company has not entered into derivatives contracts either
to hedge existing risks or for speculative purposes. Accordingly, the Company
does not expect adoption of the new standard on July 1, 1999 to affect its
financial statements.

Earnings Per Common Share

In February 1997, the FASB issued SFAS No. 128, Earnings Per Share, which
was effective December 28, 1997. Conforming to SFAS No. 128, the Company changed
its method of computing earnings per share and restated all prior periods
included in the financial statements. Under SFAS No. 128, the dilutive effect of
stock options is excluded from the calculation of basic earnings per share.

Reclassifications

Certain amounts in the 1997 financial statements have been reclassified to
conform with the 1996 and 1998 presentation.

F-9
<PAGE>

GraphOn Corporation

Notes to Financial Statements

1. Available-For-Sale Securities

As of December 31, 1997, the Company held 4,000 shares of common stock in a
publicly traded company. In 1998, the Company sold these shares and recorded a
loss on the sale of $16,500. A summary of available-for-sale securities follows:

December 31,
---------------------
1998 1997
--------- --------
<S> <C> <C>
Cost of securities....................................... $ -- $ 20,700
Less unrealized loss..................................... -- 12,100
-------- --------
$ -- $ 8,600
======== ========
</TABLE>

2. Property and Equipment

Property and equipment consisted of the following:

December 31,
-----------------------
1998 1997
--------- ---------
<S> <C> <C>
Equipment................................................ $292,800 $61,700
Furniture and fixtures................................... 175,600 2,300
Leasehold improvements................................... 13,500 1,900
--------- ---------
481,900 65,900

Less accumulated depreciation and amortization........... 58,600 15,600
--------- ---------
$423,300 $50,300
========= =========
</TABLE>

3. Purchased Technology

In December 1998, the Company issued 3,886,503 shares of common stock and
388,650 warrants to Corel Corporation in exchange for certain fixed assets and
technology for the deployment of Windows NT applications through server based
computing (Note 6). Based on the fair market value of the securities issued, as
determined by the prices associated with the Private Placement Offering (Note
6), the aggregate purchase price was $3,886,500, which was allocated to the
following respective assets based on their fair market value at the time of the
transaction:

<TABLE>
<S> <C>
Equipment................................................................... $ 77,100
Furniture................................................................... 164,000
Purchased technology........................................................ 3,645,400
----------
$3,886,500
==========
</TABLE>

F-10
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

3. Purchased Technology (Continued)

December 31,
1998
--------------
<S> <C>
Purchased technology........................... $3,645,400
Less accumulated amortization.................. --
----------
$3,645,400
==========
</TABLE>

4. Accrued Expenses

Accrued expenses consisted of the following:

<TABLE>
<CAPTION>
December 31,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Payroll and related expenses................... $ 140,600 $ 34,400
Professional fees.............................. 180,000 35,000
Accrued payroll taxes.......................... 76,700 --
Royalties...................................... 65,300 46,100
Other.......................................... 36,300 27,400
---------- ----------
$ 498,900 $ 142,900
========== ==========
</TABLE>

5. Convertible Note Payable

In March 1998 the Company issued a convertible note payable for $475,000 to
an affiliate (the Agent Affiliate) of the placement agent dated September 2,
1998 for the Company's subsequent private placement offering of common stock
(the Offering). The convertible note bears interest at 10% and is due upon the
earlier date of the Company raising between $2,500,000 and $3,000,000 in the
Offering or six months after its commencement. The note is convertible into
shares of common stock at $1.00 per share at the option of the note holder (Note
13).

In September 1998, the Agent Affiliate and the Company's CEO loaned $200,000
and $100,000, respectively, to the Company pursuant to convertible promissory
notes bearing interest at 8% per annum, which mature at the earlier of the first
closing of the Offering or 12 months from the date of the notes. Such notes, at
the option of the lender, may be converted into shares of common stock at $1.00
per share. In connection with this transaction, the Agent Affiliate and CEO were
issued warrants to purchase 100,000 and 50,000 shares, respectively, at $1.00
per share (Note 6).

On December 31, 1998, the loan by the Agent Affiliate was converted into
200,000 shares of common stock. Also on December 31, 1998, the Company repaid
the $100,000 loan from the CEO, plus accrued interest.

F-11
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

6. Stockholders' Equity

Prior Bankruptcy

In November 1991, the Company filed a Voluntary Petition for Relief under
Chapter 11 of the Bankruptcy Code. At that time, the Company had indebtedness in
excess of $2.3 million and had 1,624,940 voting shares of common stock
outstanding. In July 1994, the Company's plan of reorganization under Chapter 11
(the Reorganization Plan) was confirmed.

At the time of the confirmation of the Reorganization Plan, all shares of
stock, options, and warrants outstanding were canceled. In addition, the
Reorganization Plan provided for the issuance of 100 shares of the Company's
reorganized common stock in exchange for waiver of certain unsecured claims
against the Company by its then, and current, CEO.

In addition, all administrative claims, priority claims, and allowed claims
in the administrative convenience class (generally, those under $200) were paid
in full. Unsecured creditors are to receive payment of 50% of the gross
royalties received by the Company from certain licensees up to the amount of
their total liability, through the year 2000. However, the largest unsecured
creditor will receive payments of 50% of the gross royalties received by the
Company from the revenue from certain licensees until its claim is paid in full.
The remaining 50% of the gross royalties received by the Company from these
certain licensees was available to the Company to conduct its ongoing
operations. As of December 31, 1998, the Company does not expect to pay any
additional significant amounts under the Reorganization Plan. Accordingly, the
amounts are treated as included in the relief of debt as part of the bankruptcy
confirmed in 1994.

The Company believes that its royalty payment obligations under the
bankruptcy court order relate only to licenses in place as of July 11, 1994.
However, there is no assurance that the court will not interpret the obligation
of the Company to include making payments from royalties earned from subsequent
licenses or licenses that it may secure in the future, or that its current
technology will not be deemed derivative of its technology existing at July 11,
1994.

Consequently, there can be no assurance that the Company will not be
required to repay the creditors referenced in the bankruptcy proceedings to the
full amount of its liability of approximately $2,230,000. In addition, there is
no guarantee that a creditor will not attempt to assert a claim for royalties
from subsequent licenses, which could be costly and could have a material
adverse effect on the Company's business, financial condition, and/or results of
operations.

Common Stock

In January 1998, the CEO personally sold 440,016 shares of his stock to
various employees and directors of the Company at a price of $0.02, the then
fair market value of the stock, and in May and August, 193,238 additional shares
at $0.075. The ownership of these shares vest over approximately four years with
the CEO having the right to repurchase non-vested shares upon termination of
employment. In May 1998, the Company issued and sold 508,500 shares under the
Stock Grant Program, at $0.075 and granted 20,000 options, under Stock Option
Plan, at $0.075 to employees of the Company which also vest over a four year
period. The shares sold and options granted from March 1998 forward were
ascribed a fair market value of $1.00 per share, the price at which the Company
offered its shares through a private placement stock offering in September 1998.

The Company recognized $667,600 in deferred compensation expense associated
with the sale of the above securities, to be amortized over the vesting period
of the underlying securities.

F-12
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

6. Stockholders' Equity (Continued)

In accordance with APB Opinion No. 25, Accounting for Stock Issued to
Employees, the Company recorded, in General and Administrative expense, $101,600
of compensation costs for the year ended December 31, 1998 and $41,700 for the
three months period ended March 31, 1999.

In March 1998, the Company sold 500,000 shares of common stock for cash
proceeds of $25,000 to the Agent Affiliate, concurrent with the issuance of
convertible notes for $475,000. During 1998, the Company recognized interest
expenses of $475,000 relating to this transaction.

In July 1998, the Company's Board of Directors declared a 60,000 to 1 stock
split. All references to number of shares and per share data in the financial
statements have been adjusted to reflect the stock split on a retroactive basis.

In September 1998, the Company offered shares of its common stock through a
private placement stock offering (the Offering). The Offering established a
minimum and maximum offering of 2,500,000 and 4,500,000 shares of common stock,
respectively, at $1.00 per share, plus an additional 675,000 shares in the event
of over-subscriptions. As part of the Offering, the placement agent received
warrants to purchase 20,000 shares of common stock at $1.00 per share for each
100,000 shares sold through the Offering.

Pursuant to a Subscription Agreement, executed by each investor who
purchased shares of the Company's common stock in connection with the first
closing of the Offering (the First Closing Investors), each First Closing
Investor holds the right to purchase his pro rata portion of any securities
issued by the Company for cash at an amount equal to the price, or other
consideration, for which such securities were issued until such time as there is
an initial public offering of the Company's securities. Such preemptive rights
do not apply to any securities issued pursuant to options, warrants and rights
and option plans existing at the time of the first closing. The investors who
purchased common stock in connection with the second closing of the Offering, as
well as certain of the First Closing Investors who agreed to amend their rights,
hold the same right except that such right does not apply to securities issued
by the Company in connection with, or in consideration of, (i) the Company's
acquisition of another corporation or entity by consolidation, merger, purchase
of all or substantially all of the assets or other business combination in which
the Company is the surviving entity, provided such issuance is approved by a
majority of the Board of Directors or (ii) any equipment or real property lease,
loan, credit line, guaranty of indebtedness or acquisition of assets, other than
cash but including intellectual property or other intangible assets.

Additionally, in March 1998, the CEO and Executive Vice President of the
Company entered into a contingent sale arrangement with respect to the sale of
3,500,000 shares of their common stock in the Company to the Agent Affiliate
under non-recourse installment notes. Under the terms of the notes, $200,000 was
due and paid with the commencement of the Offering, with $800,000; $1,000,000;
and $1,500,000 being due and payable January 1999, July 1999 and January 2000,
respectively (Note 13). The notes bear interest at 6%, payable quarterly, and
are secured by the underlying pledged shares. The CEO and Executive Vice
President retained voting privilege on these shares until fully paid for, and
said shares revert back to the CEO and Executive Vice President in case of
default by the Agent Affiliate.

In December 1998, the Company issued 3,886,503 shares of common stock with
an ascribed value of $3,886,500, and granted warrants to purchase 388,650 shares
of common stock at $1.00 in exchange for certain fixed assets and technology.
The terms of this purchase agreement also require that the

F-13
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

6. Stockholders' Equity (Continued)

Company shall issue an additional 1,607,000 shares of common stock, for no
additional consideration, on June 30, 2000, if the Company at that date has not
completed an initial public offering of any of its equity securities or a merger
or sale of all, or substantially all, of its assets. Should these contingent
shares be issued, they will be valued at their fair market value at the time of
such issuance with a resulting charge to the statement of operations.

Stock Purchase Warrants

As of December 31, 1998, the following common stock warrants were issued
and outstanding:

<TABLE>
<CAPTION>
Shares Subject Exercise Expiration
Issued with respect to: to Warrant Price Date
----------------------- -------------- -------- ------------
<S> <C> <C>
Convertible notes............................ 150,000 $1.00 (A)
Private placement............................ 639,800 $1.00 (A)
Purchased technology......................... 388,650 $1.00 12/2003
======= ===== =======
</TABLE>

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

(A) The warrants issued with respect to the convertible notes and the private
placement expire upon earlier of three years after the closing date of a
merger (Note 13), three years after the closing date of an IPO, or January
2006.

Stock Grant Program

In July 1998, the Company adopted a stock grant program (Stock Grant
Program), which is restricted to employees, officers, and consultants of the
Company. The Company has authorized the issuance of up to 1,300,000 shares of
the Company's common stock in connection with the Stock Grant Program and the
Stock Option Plan, discussed below. In May 1999, the number of shares authorized
under the plan was increased by 2,700,000 shares to 4,000,000 shares.

Under the Stock Grant Program, eligible individuals may, at the Plan
Administrator's discretion, be issued shares of common stock directly, either
through (a) the purchase of shares at a price not less than 85% of the estimated
fair market value of the stock at the time of the issuance, or (b) as a bonus
for past services rendered. Ownership of such shares generally vest over a four
year period. During August 1998, the Company issued 508,500 shares under the
Stock Grant Program.

Stock Option Plan

In July 1998, the Company adopted a Stock Option Plan (The Plan). The Plan
is restricted to employees, officers, and consultants of the Company. Options
granted under the Plan generally vest over four years and are exercisable over
ten years. Non-satutory options are granted at prices not less than 85% of the
estimated fair value of the stock on the date of grant as determined by the
Board of Directors. Incentive options are granted at prices not less than 100%
of the estimated fair value of stock on the date of grant. However, options
granted to shareholders who own greater than 10% of the outstanding stock are
established at no less than 110% of the estimated fair value of the stock on the
date of grant.

F-14
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

6. Stockholders' Equity (Continued)

A summary of status of the Company's Stock Option Plan as of December 31,
1998, and changes during the year then ended is presented in the following
table:

<TABLE>
<CAPTION>
Options Outstanding
--------------------
Weighted-
Average
Exercise
Shares Price
-------- ---------
<S> <C> <C>
Balances, December 31, 1997..................................... -- $ --
Shares reserved................................................. 791,500 --
Granted......................................................... (20,000) 0.075
------- ---------
Balances, December 31, 1998..................................... 771,500 $0.075
======= =========
Exercisable at year-end......................................... 2,664 $0.075
======= =========

Weighted-average fair value of options granted during the period: $0.075
=========
</TABLE>

During the three months ended March 31, 1999, the Company granted 748,500
stock options at an average exercise price of $0.85 per share, which represented
85% of the estimated fair market value of the stock.

The following table summarizes information about stock options outstanding
as of December 31, 1998:

<TABLE>
<CAPTION>
Options Outstanding Options Exerccisable
- ---------------------------------------------------------------------------- --------------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Exercise Number Contractual Life Exercise Price Number Exercise Price
Price Outstanding (Years) per Share Exercisable per Share
- ------------------- ------------- ------------------ ----------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$0.075 - $1.00 20,000 9.67 $0.075 2,664 $0.075
</TABLE>

SFAS No. 123, Accounting for Stock-based Compensation, requires the Company
to provide pro forma information regarding net (loss) income and (loss) earnings
per share as if compensation cost for the Company's stock option plan had been
determined in accordance with the fair value based method prescribed in SFAS
No.123. The Company estimates the fair value of stock options at the grant date
by using the Black-Scholes option pricing-model with the following weighted
average assumptions used for grants in 1998: dividend yield of 0; expected
volatility of 112%; risk-free interest rate of 5.7%; and expected lives of three
years for all plan options. Under the accounting provisions of SFAS No. 123, the
Company's pro forma net loss would have been $2,137,900, and the basic net loss
per common share would have remained unchanged at $0.32.

7. Income Taxes

The provision for income taxes for the years ended December 31, 1998, 1997
and 1996 and for the three months ended March 31, 1999 and 1998 consist of
minimum state taxes.

F-15
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

7. Income Taxes (Continued)

The following summarizes the differences between income tax expense and the
amount computed applying the federal income tax rate of 34%:

<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997 1996
-------- ----------- --------
<S> <C> <C> <C>
Federal income tax at
statutory rate............................................................ $(599,400) $ 41,600 $(63,800)
State income taxes, net of
federal benefit........................................................... (102,400) 7,700 (11,500)
Utilization of net operating
loss carryforwards........................................................ -- (51,400) --
Tax benefit not currently
recognizable.............................................................. 697,700 -- 75,300
Other....................................................................... 4,900 3,000 800
--------- ----------- --------
Provision for income taxes.................................................. $ 800 $ 900 $ 800
========= =========== ========
</TABLE>

Deferred income taxes and benefits result from temporary timing differences
in the recognition of certain expenses and income items for tax and financial
reporting purposes, as follows:

<TABLE>
<CAPTION>
December 31,
----------------------
1998 1997
---------- ---------
<S> <C> <C>
Net operating loss carryforward.................................................. $ 1,038,800 $ 452,900
Tax credit carryforward.......................................................... 112,100 22,800
Capitalized software............................................................. (29,600) (17,200)
Depreciation and amortization.................................................... (6,000) (2,500)
Accrued compensation and benefits................................................ 37,500 4,200
Reserves not currently deductible................................................ 35,800 17,900
---------- ---------
Total deferred tax asset......................................................... 1,188,600 478,100
Valuation allowance (1,188,600) (478,100)
---------- ---------
Net deferred tax asset $ -- $ --
========== =========

</TABLE>

The Company has net operating loss carryforwards available to reduce future
taxable income, if any, of approximately $2,780,800 for Federal income tax
purposes. The benefits from these carryforwards expire through 2018. As of
December 31, 1998, management believes it cannot be determined that it is more
likely than not that these carryforwards and its other deferred tax assets will
be realized, and accordingly, fully reserved for these deferred tax assets.

In 1998 the Company experienced a "change of ownership" as defined by the
provisions of the Tax Reform Act of 1986. As such, the Company's utilization of
its net operating loss carryforwards will be limited to approximately $400,000
per year until such carryforwards are fully utilized.

F-16
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

8. Concentration of Credit Risk

Financial instruments, which potentially subject the Company to
concentration of credit risk, consist principally of cash and cash equivalents,
investments and trade receivables. The Company places its cash and cash
equivalents with high quality financial institutions and, by policy, limits the
amounts of credit exposure to any one financial institution. Available-for-sale
securities are held in public companies for which there is a ready market.

The Company's accounts receivable are derived from many customers in
various industries. The Company believes any risk of accounting loss is
significantly reduced due to the diversity of its end-customers and geographic
sales areas. The Company performs credit evaluation of its customers' financial
condition whenever necessary, and generally does not require cash collateral or
other security to support customer receivables.

9. Major Customers

For the year ended December 31, 1998, three customers accounted for
approximately 29%, 21% and 17% of revenues, respectively with related accounts
receivable as of December 31, 1998 of $0, $500,000 and $0, respectively.

For the year ended December 31, 1997, one customer accounted for
approximately 70% of revenues, with related accounts receivable at December 31,
1997 of $62,500.

In 1996, no one customer accounted for greater than 10% of revenues.

10. Commitments

Operating Leases

In April 1995, the Company entered into an operating lease for its current
headquarters facility, which is renewable in one-year increments for ten years.
In June 1998, the Company entered into a three-year non-cancelable operating
lease for a facility in Washington. In December 1998, the Company entered into a
five-year operating lease for a facility in New Hampshire, which is cancelable
as of October 31, 2001.

The facility leases require the Company to pay certain maintenance and
operating expenses, such as taxes, insurance, and utilities. Rent expense for
the years ended December 31, 1998, 1997 and 1996 aggregated $48,300, $17,120 and
$14,900, respectively. Rent expense for the three months ended March 31, 1999
and 1998 aggregated $76,400 and $12,100, respectively.

Future minimum annual lease payments for these leases are as follows:

<TABLE>
Year Ending December 31,
------------------------
<S> <C>
1999.......................................................... $261,600
2000.......................................................... 256,900
2001.......................................................... 194,000
--------
$712,500
========
</TABLE>

F-17
<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

10. Commitments (Continued)

Royalty Agreements

The Company licenses essential components (Developed Technology) of its
core technology from three different parties (collectively, Software Developers)
to whom it pays royalties pursuant to three different exclusive license
agreements (Technology Agreements). Certain minor elements of the Company's
technology (Nonexclusive Technology) are also licensed from the Software
Developers pursuant to non-exclusive agreements (Nonexclusive Agreements). The
Technology Agreements and the Nonexclusive Agreements call for royalty payments
to the Software Developers. Such royalty payments are based on a percentage of
net revenues (Royalty Rate) received by the Company for sales of the Company's
products that contain the Developed Technology. The Royalty Rate is 4.8% and
2.9% for 1999 and 2000, respectively. The Company also holds an option to
purchase the Developed Technology, and to purchase a perpetual license to the
Nonexclusive Technology from the Software Developers, which is exercisable
beginning in December 2000, for an aggregate of $6,000 plus the difference
between royalties paid to date and certain minimum royalty payments. If the
Company does not exercise its option, the Royalty Rate would continue at 2.0%
with respect to the Developed Technology.

The Technology Agreements and the Nonexclusive Agreements also call for
lump sum payments by the Company in the event of a change in control
transaction, defined as a sale of all or substantially all of the Company's
assets or a merger or reorganization with another business entity after which
the shareholders of the Company hold 50% or less of the total equity or voting
power of the surviving entity. The payments are based upon a percentage of the
total consideration received by the Company or payable to its shareholders in
such a transaction (Transaction Rate). The Transaction Rate would be 4.8% and
2.9% if the change in control transaction occurs in 1999 or 2000, respectively.
Each of the Technology and Nonexclusive Agreements, unless terminated earlier
pursuant to the terms of the Agreements, will terminate on September 6, 2006
(Note 13).

11. Employee 401(k) Plan

In December 1998, the Company adopted a 401(k) Plan ("the Plan") to provide
retirement benefit for its employees. As allowed under Section 401(k) of the
Internal Revenue Code, the Plan provides tax-deferred salary deductions for
eligible employees.

Employees may contribute up to 15% of their annual compensation to the
Plan, limited to a maximum annual amount as set periodically by the Internal
Revenue Service. The Company made no contributions to the Plan in 1998.

F-18

<PAGE>

GraphOn Corporation

Notes to Financial Statements (Continued)

12. Supplemental Disclosure of Cash Flow Information

The following is supplemental disclosure for the statements of cash flows.

<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------
1998 1997 1996
---------- -------- --------
<S> <C> <C> <C>
Cash Paid:
Income taxes................................................................. $ 900 $ 800 $ 800
Interest..................................................................... $ 11,300 $ 2,100 $ --
Noncash Investing Activities:
Stock and warrants issued for
purchased technology and other
assets...................................................................... $3,886,500 $ -- $ --

Noncash Financing Activities:
Issuance of common stock for
convertible note payable.................................................... $ 200,000 $ -- $ --

</TABLE>

13. Subsequent Events

In January 1999, the Company completed the third and final closing of the
Offering, in which it sold 1,963,868 shares of common stock at $1.00 per share,
for net proceeds of $1,708,600, and granted additional warrants to purchase
392,774 shares of common stock.

In January 1999, the convertible note payable for $475,000 to the Agent
Affiliate was retired from proceeds from the third closing of the Offering.

In January 1999, the CEO and Executive Vice President received $800,000 for
the sale of 800,000 shares of their common stock of the Company to the Agent
Affiliate.

In February 1999, the Company and its shareholders entered into a merger
agreement with Unity First Acquisition Corporation (UFAC), a publicly-traded
holding company in New York, under which GraphOn will exchange all its
outstanding common stock for UFAC shares at the rate of 0.5576 UFAC shares for
every 1.00 GraphOn shares. The transaction will be a forward merger, with UFAC
surviving the merger and changing its name to GraphOn Corporation. The merger is
expected to close in June 1999 and is subject to approval of the respective
shareholders of UFAC and GraphOn Corporation.

In March 1999, the Company entered into a non-binding agreement with the
Software Developers of the Technology Agreements (Note 10) whereby on the
successful consumation of the UFAC merger, the Company would pay the Software
Developers a lump sum of $520,400 in settlement of all future royalties due
under the Technology Agreements.

In May 1999, the Company granted 50,000 stock options at an average
exercise price of $3.26 per share, which represented the estimated fair market
value of the stock.

F-19
<PAGE>

PART I--FINANCIAL INFORMATION

ITEM I Financial Statements

GRAPHON CORPORATION

BALANCE SHEETS

<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents....................... $ 2,795,200 $ 1,798,400
Accounts receivable, net of allowance for
doubtful accounts of $25,000 and $25,000....... 1,322,800 564,700
Available for sale securities................... 999,000 --
Prepaid expenses and other assets............... 554,100 32,100
----------- -----------
Total Current Assets........................ 5,671,100 2,395,200
----------- -----------
Property and Equipment, net....................... 548,200 423,300
Purchased Technology , net........................ 1,301,400 3,645,400
Capitalized Software, net......................... 231,500 74,200
Deferred Compensation Expense..................... 440,800 566,000
Other Assets...................................... 6,400 6,400
----------- -----------
$ 8,199,400 $ 7,110,500
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Convertible note payable........................ $ -- $ 475,000
Accounts payable................................ 382,000 115,700
Accrued expenses................................ 494,500 498,900
Deferred revenue................................ 75,400 112,600
----------- -----------
Total Current Liabilities................... 951,900 1,202,200
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.01 par value, 5,000 shares
authorized, no shares issued and outstanding... -- --
Common stock, $0.0001 par value, 20,000,000
shares authorized, 10,969,471 and 7,970,336
shares issued and outstanding.................. 1,100 800
Additional paid in capital...................... 15,399,800 8,430,700
Accumulated other comprehensive income........ 300 --
Accumulated deficit........................... (8,153,700) (2,523,200)
----------- -----------
Stockholders' Equity........................ 7,247,500 5,908,300
----------- -----------
$ 8,199,400 $ 7,110,500
=========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-20
<PAGE>

GRAPHON CORPORATION

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------ -----------------------
1999 1998 1999 1998
----------- ----------- ----------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues
Product sales.............. $ 602,600 $ 447,700 $ 225,700 $ 207,400
Maintenance................ 131,900 76,300 36,900 28,400
OEM license................ 1,115,000 964,600 240,000 100,000
OEM license--related
party..................... 600,000 -- 600,000 --
Training................... -- 10,400 -- --
----------- ----------- ----------- ----------
Total Revenues......... 2,449,500 1,499,000 1,102,600 335,800
Cost of Revenues
Product sales.............. 10,400 20,900 3,600 5,100
Maintenance................ 28,200 15,000 9,400 5,000
OEM license................ 251,900 215,500 79,300 60,000
----------- ----------- ----------- ----------
Total Cost of
Revenues.............. 290,500 251,400 92,300 70,100
Gross Profit........... 2,159,000 1,247,600 1,010,300 265,700
----------- ----------- ----------- ----------
Operating Expenses:
Selling and marketing...... 2,359,200 860,000 783,800 335,600
General and
administrative............ 3,725,500 782,800 1,340,500 441,700
Research and development... 1,771,800 634,400 517,000 299,500
----------- ----------- ----------- ----------
Total Operating
Expenses.............. 7,856,500 2,277,200 2,641,300 1,076,800
----------- ----------- ----------- ----------
Loss From Operations....... (5,697,500) (1,029,600) (1,631,000) (811,100)
Other Income (Expense):
Interest and other
income.................. 76,900 8,800 49,900 1,700
Interest expense......... (9,100) (368,000) (1,700) (166,600)
----------- ----------- ----------- ----------
Loss Before Provision for
Income Taxes.............. (5,629,700) (1,388,800) (1,582,800) (976,000)
Provision for Income
Taxes..................... 800 800 -- --
----------- ----------- ----------- ----------
Net Loss................... $(5,630,500) $(1,389,600) $(1,582,800) $ (976,000)
=========== =========== =========== ==========
Basic and Diluted Loss per
Common Share.............. $ (0.59) $ (0.39) $ (0.15) $ (0.26)
=========== =========== =========== ==========
Weighted Average Common
Shares Outstanding........ 9,540,148 3,583,798 10,712,629 3,750,418
=========== =========== =========== ==========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-21
<PAGE>

GRAPHON CORPORATION

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1999 September 30, 1998
------------------ ------------------
(Unaudited)
<S> <C> <C>
Cash Flows From Operating Activities:
Net (loss) income....................... $(5,630,500) $(1,389,600)
Adjustments to reconcile net (loss)
income to net cash (used in) provided
by operating activities:
Depreciation and amortization......... 2,473,900 41,700
Loss on available-for-sale
securities........................... -- 16,500
Non-cash compensation expense......... 125,200 59,900
Interest expense...................... -- 323,100
Changes in operating assets and
liabilities:
Accounts receivable................. (758,100) 149,900
Available for sale securities....... (998,700) --
Prepaid expenses and other assets... (522,000) (31,600)
Accounts payable.................... 266,300 204,000
Accrued expenses.................... (4,400) 202,100
Deferred revenue.................... (37,200) (398,100)
----------- -----------
Net Cash Used In Operating
Activities....................... (5,085,500) (822,100)
----------- -----------
Cash Flows From Investing Activities:
Other assets............................ -- (4,500)
Capital expenditures.................... (412,100) (158,600)
----------- -----------
Net Cash Used In Investing
Activities....................... (412,100) (163,100)
----------- -----------
Cash Flows From Financing Activities:
Proceeds from convertible notes
payable................................ -- 775,000
Repayment of convertible notes payable.. (475,000) --
Net proceeds from issuance of common
stock.................................. 6,975,100 63,100
Purchase and retirement of common
stock.................................. (5,700) --
----------- -----------
Net Cash Provided By Financing
Activities....................... 6,494,400 838,100
----------- -----------
Net Increase (Decrease) in Cash and Cash
Equivalents............................ 996,800 (147,100)
Cash and Cash Equivalents, beginning of
period................................. 1,798,400 302,800
----------- -----------
Cash and Cash Equivalents, end of
period................................. $ 2,795,200 $ 155,700
=========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to financial
statements.

F-22
<PAGE>

GRAPHON CORPORATION

STATEMENT OF EQUITY

<TABLE>
<CAPTION>
Common Stock Unrealized
------------------ Additional Paid Gain on Accumulated
Shares Amount in Capital Securities Deficit Total
---------- ------ --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31,
1998................... 7,970,336 $ 800 $ 8,430,700 $ -- $(2,523,200) $ 5,908,300
Balance of information
is unaudited through
September 30,1999:
Proceeds from sale of
common stock.......... 62,525 -- 97,200 -- -- 97,200
Net proceeds from sale
of common stock, net
of offering costs of
$255,300.............. 1,095,053 100 1,708,500 -- -- 1,708,600
Repurchase and
retirement of common
stock................. (40,952) -- (5,700) -- -- (5,700)
Recapitalization of
company through
merger, net of merger
costs of $255,700..... 1,875,000 200 5,169,100 -- -- 5,169,300
Unrealized gain on
available for sale
securities............ -- -- -- 300 -- 300
Issuance of common
stock due to the
exercise of warrants.. 7,509 -- -- -- -- --
Net loss............... -- -- -- -- (5,630,500) (5,630,500)
---------- ------ ----------- ----- ----------- -----------
Balances, September 30,
1999.................. 10,969,471 $1,100 $15,399,800 $ 300 $(8,153,700) $ 7,247,500
========== ====== =========== ===== =========== ===========
</TABLE>

F-23
<PAGE>

GRAPHON CORPORATION

NOTES TO FINANCIAL STATEMENTS

1. Merger with Unity First Acquisition Corp. and Basis of Presentation

On July 12, 1999, GraphOn Corporation, a California corporation ("GraphOn-
CA"), merged with and into Unity First Acquisition Corp., a Delaware
corporation ("Unity"). Unity, as the surviving entity to the merger and the
Registrant, then changed its name to GraphOn Corporation ("GraphOn"), and the
GraphOn-CA management team continued in their existing roles at GraphOn.
Pursuant to the merger, each outstanding share of GraphOn-CA common stock was
exchanged for 0.5576 shares of Unity common stock and each outstanding option
and warrant to purchase shares of GraphOn-CA common stock was exchanged for
0.5576 options or warrants to purchase shares of Unity common stock.
Additionally, GraphOn received $5,425,000 in cash which was placed into trust
upon Unity's initial public offering in November 1996 and released from trust
upon consummation of the merger. As of July 12, 1999, GraphOn-CA had
outstanding 16,296,559 shares of common stock. As a result of the merger, the
GraphOn-CA shareholders acquired approximately 9,086,961 shares of Unity common
stock, or approximately 82.9% of the then outstanding Unity common stock. The
merger was accounted for as a capital transaction which is equivalent to the
issuance of stock by GraphOn-CA for Unity's net monetary assets of
approximately $5,425,000, accompanied by a recapitalization of GraphOn-CA.

The unaudited historical financial statements of GraphOn-CA included herein
have been prepared in accordance with the instructions for Form 10-Q and,
therefore, do not include all information and footnotes necessary for a
complete presentation of GraphOn-CA's results of operations, financial position
and cash flows. We filed audited financial statements that included all
information and footnotes necessary for a complete presentation for each of the
years in the two-year period ended December 31, 1998 in the Unity Registration
Statement on Form S-4 filed on June 15, 1999.

The unaudited financial statements included herein reflect all adjustments
(which include only normal, recurring adjustments) which are, in the opinion of
management, necessary to state fairly the results for the three and nine months
ended September 30, 1999. The results for the three and nine months ended
September 30, 1999 are not necessarily indicative of the results expected for
the full fiscal year.

2. Earnings Per Share

Basic earnings per share is calculated using the weighted average number of
shares outstanding during the period. Dilutive earnings per share is computed
on the basis of the weighted average number of common shares outstanding plus
the dilutive effect of outstanding stock options and warrants using the
"treasury stock" method and are not included since they are antidilutive.

As noted above, in July 1999, GraphOn-CA merged with and into Unity. All
references to share and per-share data for all periods presented have been
adjusted to give effect to the .5576 exchange of GraphOn-CA stock (See Note 3).

3. Stockholders' Equity

In January 1999, GraphOn-CA completed the third and final closing of a
private placement offering, in which it sold 1,095,053 shares of its common
stock at $1.79 per share and granted warrants to purchase an additional 219,010
shares of common stock for net proceeds of $1,708,600.

In January 1999, a convertible note payable for $475,000 to Spencer Trask
Investors, an affiliate of GraphOn-CA, was retired from proceeds from the third
closing of the private placement offering.

In February 1999, GraphOn-CA sold 62,525 shares of its common stock and
warrants to purchase an additional 676 shares for gross proceeds of $97,200.

F-24
<PAGE>

GRAPHON CORPORATION

NOTES TO FINANCIAL STATEMENTS--(Continued)

In July 1999, GraphOn-CA merged with and into Unity. As discussed above,
each share of GraphOn-CA common stock was exchanged for .5576 shares of Unity
common stock and each outstanding GraphOn-CA option and warrant was exchanged
for .5576 options and warrants of Unity. Additionally, GraphOn received
$5,425,000 in cash and the merger was accounted for as a capital transaction
giving effect to the 1,875,000 shares of Unity. All references to share and
per-share data for all periods presented have been adjusted to give effect to
this .5576 exchange of GraphOn-CA stock.

4. Recent Accounting Pronouncements

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires companies to
recognize all derivative contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain conditions are met,
a derivative may be specifically designated as a hedge, the objective of which
is to match the timing of gain or loss recognition on the hedging derivative
with the recognition of (i) the changes in the fair value of the hedged assets
or liability that are attributable to the hedged risk or (ii) the earnings
effect of the hedged forecasted transaction. For a derivative not designated as
a hedging instrument, the gain and loss is recognized in income in the period
of change. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative instruments and Hedging Activities--Deferring the Effective Date of
FASB Statement No. 133," which amends SFAS No. 133 to be effective for all
fiscal quarters of all fiscal years beginning after June 15, 2000.

Historically, the Company has not entered into derivative contracts either
to hedge existing risks or for speculative purposes. Accordingly, the Company
does not expect adoption of the new standard to have a material impact on the
Company's results of operations, financial position or cash flows.

5. Litigation

On October 4, 1999, Insignia Solutions plc, a British company with a
California subsidiary, filed a complaint against GraphOn Corporation in the
Superior Court of the State of California, Santa Clara County, alleging the
GraphOn intentionally disrupted Insignia's sale to Citrix Systems, Inc., on
February 5, 1998, of assets related to Insignia's NTRIGUE software product
line. The complaint alleges that, as a result of GraphOn's conduct in
connection with that sale of assets, Insignia was required by Citrix to place
$8.75 million in escrow to enable Citrix to deal with potential claims by
GraphOn of proprietary rights in the assets being sold. The complaint seeks
unspecified damages from GraphOn.

The complaint also names Citrix and its subsidiary in the United Kingdom
("Citrix UK") as defendants, alleging that these companies breached the
February 5, 1998 contract with Insignia. The complaint seeks compensatory
damages from Citrix related to that company's refusal to release purchase money
from escrow for payment to Insignia.

Insignia's California state court complaint makes reference to a declaratory
judgment lawsuit that Citrix filed against GraphOn, on November 23, 1998, in
the United States District Court for the Southern District of Florida, seeking
a declaration of Citrix's right to use software purchased from Insignia, free
and clear of any claim by GraphOn that such software may incorporate
proprietary information owned by GraphOn. On May 14, 1999, Citrix's Florida-
based lawsuit against GraphOn was dismissed for lack of subject matter
jurisdiction. Essentially, the Florida court held that GraphOn has not
threatened Citrix with litigation, and there is no existing dispute between
GraphOn and Citrix. Citrix has filed an appeal from this ruling, which is
presently pending.

At the request of Citrix and Insignia, GraphOn has agreed to participate in
mediation aimed at resolving the dispute. In light of that effort, the parties
to the California state court case have agreed to extend GraphOn's time to
respond to the complaint until early December. GraphOn has not yet filed an
answer or other responsive pleading in the California state court action, but
GraphOn presently intends to deny the principal allegations made by Insignia in
the complaint. GraphOn views the matter as a dispute between Citrix and
Insignia, in which GraphOn is not directly involved.

F-25
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table sets forth various expenses, other than underwriting
discounts, which will be incurred in connection with this offering:

SEC registration fee...................... $ 1,584.00

Printing and engraving expenses........... 12,500.00

Legal fees and expenses................... 35,000.00

Accounting fees and expenses.............. 10,000.00

Miscellaneous expenses.................... 916.00
----------
Total $60,000.00
==========

Item 14. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person is made a party by reason of such person being
or having been a director, officer, employee of or agent to the Registrant. The
statute provides that it is not exclusive of other rights to which those seeking
indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors or otherwise. The Registrant's by-laws
provides for indemnification by the Registrant of any director or officer (as
such term is defined in the by-laws) of the Registrant who is or was a director
of any of its subsidiaries, or, at the request of the Registrant, is or was
serving as a director or officer of, or in any other capacity for, any other
enterprise, to the fullest extent permitted by law. The by-laws also provide
that the Registrant shall advance expenses to a director or officer and, if
reimbursement of such expenses is demanded in advance of the final disposition
of the matter with respect to which such demand is being made, upon receipt of
an undertaking by or on behalf of such director or officer to repay such amount
if it is ultimately determined that the director or

II-1
<PAGE>

officer is not entitled to be indemnified by the Registrant. To the extent
authorized from time to time by the board of directors of the Registrant, the
Registrant may provide to any one or more employees of the Registrant, one or
more officers, employees and other agents of any subsidiary or one or more
directors, officers, employees and other agents of any other enterprise, rights
of indemnification and to receive payment or reimbursement of expenses,
including attorneys' fees, that are similar to the rights conferred in the by-
laws of the Registrant on directors and officers of the Registrant or any
subsidiary or other enterprise. The by-laws do not limit the power of the
Registrant or its board of directors to provide other indemnification and
expense reimbursement rights to directors, officers, employees, agents and other
persons otherwise than pursuant to the by-laws. The Registrant intends to enter
into agreements with certain directors, officers and employees who are asked to
serve in specified capacities at subsidiaries and other entities.

Section 102(b)(7) of the Delaware General Corporation Law permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
payments of unlawful dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. The Registrant's certificate of incorporation provides for such
limitation of liability.

The Registrant maintains policies of insurance under which its directors
and officers are insured, within the limits and subject to the limitations of
the policies, against certain expenses in connection with the defense of, and
certain liabilities which might be imposed as a result of, actions, suits or
proceedings to which they are parties by reason of being or having been such
directors or officers.

Item 15. Recent Sales of Unregistered Securities

On July 12, 1999, the Registrant issued to Spencer Trask 250,000 Class A
common stock purchase warrants exercisable at $5.50 per share into 250,000
shares of common stock in consideration for consulting services performed in
connection with the merger of GraphOn Corporation, a California corporation,
with and into the Registrant that was consummated on that date.

On October 14, 1999, the Registrant issued to SuperTech Holdings Ltd.
common stock purchase warrants exercisable at $8.50 per share into 300,000
shares of common stock in consideration for consulting services related to the
generation of business opportunities for the Registrant in the People's Republic
of China.

II-2
<PAGE>

Each of these transactions were exempt from registration under the
Securities Act of 1933 by reason of the provisions of Section 4(2) thereof.

Item 21. Exhibits and Financial Statement Schedules.

(a) Exhibits

The following exhibits are filed as part of this Registration Statement:

Exhibit Description of Exhibit
Number ----------------------
- -------

2.1 Agreement and Plan of Merger and Reorganization dated as of February 1,
1999, between Registrant and GraphOn Corporation, a California
corporation(1)
3.1 Amended and Restated Certificate of Incorporation of Registrant(1)
3.2 Amended and Restated Bylaws of Registrant(1)
4.1 Form of certificate evidencing shares of common stock of Registrant(2)
4.2 Form of certificate evidencing Class A Redeemable Warrants of
Registrant(2)
4.3 Form of certificate evidecing Class B Redeemable Warrants of
Registrant(2)
4.4 Warrant Agreement dated November 12, 1996 between Registrant and GKN
Securities Corp. and Gaines, Berland, Inc.(2)
4.5 Redeemable Warrant Agreement dated November 12, 1996 between Registrant
and American Stock Transfer & Trust Company(2)
4.6 Registration Rights Agreement dated October 28, 1998 between
Registrant, Spencer Trask Investors, Walter Keller and the investors
purchasing units in Registrant's private placement(1)
4.7 Amendment to Registration Rights Agreement(1)
4.8 Amendment to Registration Rights Agreement(1)
4.9 Common Stock Purchase Warrant dated October 14, 1999 issued to
SuperTech Holdings Limited
5.1 Opinion of Cooperman Levitt Winikoff Lester & Newman, P.C.
10.1 1996 Stock Option Plan of Registrant(2)
10.2 1998 Stock Option/Stock Issuance Plan of Registrant(1)
10.3 Placement Agency Agreement by and between Registrant and Spencer Trask
Securities, Inc., dated as of September 2, 1998(1)
10.4 Asset Purchase Agreement by and among Registrant, Corel Corporation,
Corel Corporation Limited and Corel, Inc. (collectively, "Corel"),
dated as of December 18, 1998(1)

II-3
<PAGE>

10.5 Securities Purchase Agreement by and among Registrant and Corel, dated
as of December 18, 1998(1)
10.6 Standard Industrial Lease between Registrant and Mildred K. Dibona,
dated April 14, 1995, as amended on October 2, 1998(1)
10.7 Hidden Valley Office Park Lease Agreement between Registrant and ASA
Properties, Inc., dated June 5, 1998(1)
10.8 Lease Agreement between Corel Inc. and CML Realty Corp., dated
September, 1998 and assumed by Registrant on December 31, 1998(1)
10.9 Consulting Agreement dated October 14, 1999 between Registrant and
SuperTech Holdings Limited
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Cooperman Levitt Winikoff Lester & Newman, P.C. (included in
Exhibit 5.1)
24.1 Power of Attorney (included on the Signature Page of Part II of this
Registration Statement)

___________
(1) Incorporated by reference from Registrant's Form S-4, file number 333-
76333, filed with the SEC on April 15, 1999.

(2) Incorporated by reference from Registrant's Form S-1, file number 333-
11165, filed with the SEC on August 30, 1996.

(b) Financial Statement Schedules.

None.

Item 17. Undertakings

The undersigned registrant hereby undertakes:

(1) That for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.

(2) That for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new

II-4
<PAGE>

registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(3) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in "Calculation of Registration Fee" table in the
effective registration statement;

(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

(4) That for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(5) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.

(6) To provide to the representatives at the closing specified in the
underwriting agreement, certificates in such denominations and registered in
such names as required by the representatives to permit prompt delivery to each
purchaser.

(7) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
Registrant pursuant to Item 14 of this Part II to the registration statement, or
otherwise, Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act, and is, therefore, unenforceable. In the event that a
claim for

II-5
<PAGE>

indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a director, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.

II-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Campbell, State of
California, on December 21, 1999.

GRAPHON CORPORATION

By: /s/ Walter Keller
-------------------------------------------
Walter Keller, President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Walter Keller and Edmund Becmer as such person's
true and lawful attorney-in-fact and agent, acting alone, with full powers of
substitution and revocation, for such person and in such person's name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, acting alone, full power and authority to do and perform each and every
act and thing requisite and necessary to be done, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Robert Dilworth Chairman of the Board December 21, 1999
- -------------------------
Robert Dilworth

/s/ Walter Keller President (Principal Executive Officer) December 21, 1999
- ------------------------- and Director
Walter Keller

/s/ Edmund Becmer Chief Financial Officer (Principal December 21, 1999
- ------------------------- Financial and Accounting Officer)
Edmund Becmer

/s/ Robin Ford Executive Vice President, December 21, 1999
- ------------------------- Marketing and Sales
Robin Ford and Director

/s/ Lawrence Burstein Director December 21, 1999
- -------------------------
Lawrence Burstein

/s/ August P. Klein Director December 21, 1999
- -------------------------
August P. Klein

_________________________ Director
Michael P. O'Reilly

_________________________ Director
Marshall C. Phelps, Jr.
</TABLE>

II-7

<PAGE>

EXHIBIT 4.9

GRAPHON CORPORATION

(Incorporated under the laws of the State of Delaware)

Void after 5:00 p.m., New York City time, on December 31, 2000

Dated: October 12, 1999 Warrant to Purchase
300,000 Shares of
STH-1 Common Stock

FOR VALUE RECEIVED, GRAPHON CORPORATION, a Delaware corporation (the
"Corporation"), hereby certifies that SUPER TECH HOLDINGS LIMITED (the "Holder")
is entitled, subject to the provisions of this warrant (the "Warrant"), to
purchase from the Corporation during the period commencing on the day hereof and
expiring at 5:00 p.m. New York City local time, on December 31, 2000 up to
300,000 fully paid and non-assessable shares of Common Stock of the Corporation
at a price of U.S.$8.50 per share (such exercise price per share being
hereinafter referred to as the "Exercise Price").

The term "Common Stock" means shares of Common Stock, par value $0.0001 per
share, of the Corporation as constituted on October 12, 1999 (the "Base Date"),
together with any other equity securities that may be issued by the Corporation
in addition thereto or in substitution therefor. The number of shares of Common
Stock to be received upon the exercise of this Warrant may be adjusted from time
to time as hereinafter set forth. The shares of Common Stock deliverable upon
such exercise, and as adjusted from time to time, are hereinafter sometimes
referred to as "Warrant Stock".

Upon receipt by the Corporation of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Corporation
shall execute and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional contractual
obligation on the part of the Corporation, whether or not this Warrant so lost,
stolen, destroyed or mutilated shall be at any time enforceable by anyone.

The Holder agrees with the Corporation that this Warrant is issued, and all
the rights hereunder shall be held, subject to all of the conditions,
limitations and provisions set forth herein.

1. Exercise of Warrant.
-------------------

1.1 Manner of Exercise. Subject to the provisions of Section 1.2,
------------------
this Warrant may be exercised in whole, or in part from time to time, to the
extent of 300,000 shares of Common Stock, prior to adjustment as herein
provided, up to and through 5:00
<PAGE>

p.m. New York City local time on December 31, 2000 or, if any such day is a day
on which banking institutions in the City of New York are authorized by law to
close, then on the next succeeding day that shall not be such a day, by
presentation and surrender hereof to the Corporation at its principal office, or
at the office of its stock transfer agent, if any, with the Warrant Exercise
Form attached hereto duly executed and accompanied by payment (either in cash or
by certified or official bank check, payable to the order of the Corporation) of
the Exercise Price for the number of shares specified in such Form and
instruments of transfer, if appropriate, duly executed by the Holder or its duly
authorized attorney. If this Warrant should be exercised in part only, the
Corporation shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder. Upon receipt by the Corporation
of this Warrant, together with the Exercise Price, at its office, or by the
stock transfer agent of the Corporation at its office, in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Corporation shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. The Corporation shall pay any and all documentary stamp or similar
issue taxes payable in respect of the issue or delivery of shares of Common
Stock on exercise of this Warrant.

1.2 Limitations Upon Exercise. The Warrant, together with all other
--------------------------
warrants of the same series as this Warrant, may not be exercised at any one
time with respect to less than an aggregate of 100,000 shares of Common Stock
(or that lesser number of shares of Common Stock then subject to purchase under
all then outstanding Warrants, if less than 100,000 shares) or for any
fractional shares.

2. Reservation of Shares. The Corporation will at all times reserve for
---------------------
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Corporation (and other securities and
property) from time to time receivable upon exercise of this Warrant. All such
shares (and other securities and property) shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and non-
assessable and free of all preemptive rights.

3. Registration under Securities Act of 1933.
-----------------------------------------

3.1 No Registration of Warrant. This Warrant is not and will not be
--------------------------
registered under the Act.

3.2 Restrictions Upon Transferability. The Warrant Stock and the
---------------------------------
Warrant may be sold or otherwise disposed only in accordance with the provisions
of Sections 4 and 5 of the Registration Rights Schedule.

3.3 Registration Commitment. The shares of Common Stock issuable
------------------------
upon exercise of this Warrant shall be registered under the Securities Act of
1933, as amended (the "Act"), as soon as practicable after the date hereof in
accordance with the

2
<PAGE>

provisions of Schedule 3.1 attached hereto (the "Registration Rights Schedule").

4. Fractional Shares. No fractional shares or scrip representing
-----------------
fractional shares shall be issued upon the exercise of this Warrant, but the
Corporation shall issue one additional share of its Common Stock in lieu of each
fraction of a share otherwise called for upon any exercise of this Warrant.

5. Exchange, Transfers, Assignment of Warrant. This Warrant is not
------------------------------------------
registered under the Act nor under any applicable state securities law or
regulation. This Warrant cannot be exchanged, transferred or assigned, except in
accordance with the provisions of Sections 3.2 and 10 hereof. Upon such event
and upon surrender of this Warrant to the Corporation, with the Assignment Form
annexed hereto duly executed and funds sufficient to pay any transfer tax, the
Corporation shall, without charge, execute and deliver a new Warrant in the name
of the assignee named in such instrument of assignment and this Warrant shall
promptly be cancelled.

6. Rights of the Holder. The Holder shall not, by virtue hereof, be
--------------------
entitled to any rights of a stockholder of the Corporation, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.

7. Redemption. This Warrant is not redeemable by the Corporation.
----------

8. Anti-Dilution Provisions.
------------------------

8.1 Adjustment for Dividends in Other Securities, Property, Etc.;
--------------------------------------------- ---------------
Reclassification, Etc. In case at any time or from time to time after the Base
- ---------------------
Date the holders of Common Stock (or any other securities at the time receivable
upon the exercise of this Warrant) shall have received, or on or after the
record date fixed for the determination of eligible stockholders, shall have
become entitled to receive without payment therefor: (a) other or additional
securities or property (other than cash) by way of dividend, (b) any cash paid
or payable except out of earned surplus of the Corporation at the Base Date as
increased (decreased) by subsequent credits (charges) thereto (other than
credits in respect of any capital or paid-in surplus or surplus created as a
result of a revaluation of property) or (c) other or additional (or less)
securities or property (including cash) by way of stock-split, spin-off, split-
up, reclassification, combination of shares or similar corporate rearrangement,
then, and in each such case, the Holder of this Warrant, upon the exercise
thereof as provided in Section 1, shall be entitled to receive the amount of
securities and property (including cash in the cases referred to in clauses (b)
and (c) above) which such Holder would hold on the date of such exercise if on
the Base Date it had been the holder of record of the number of shares of Common
Stock (as constituted on the Base Date) subscribed for upon such exercise as
provided in Section 1 and had thereafter, during the period from the Base Date
to and including the date of such exercise, retained such shares and/or all
other additional (or less) securities and property (including

3
<PAGE>

cash in the cases referred to in clauses (b) and (c) above) receivable by it as
aforesaid during such period, giving effect to all adjustments called for during
such period by Section 8.2.

8.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In
---------------------------------------------------------
case of any reorganization of the Corporation (or any other corporation, the
securities of which are at the time receivable on the exercise of this Warrant)
after the Base Date or in case after such date the Corporation (or any such
other corporation) shall consolidate with or merge into another corporation or
convey all or substantially all of its assets to another corporation, then, and
in each such case, the Holder of this Warrant upon the exercise thereof as
provided in Section 1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities or property to which such Holder would have
been entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
Section 8.1; in each such case, the terms of this Warrant shall be applicable to
the securities or property receivable upon the exercise of this Warrant after
such consummation.

8.3 Impairment. The Corporation will not, by amendment of its
----------
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
while any Warrant is outstanding, the Corporation (a) will not permit the par
value, if any, of the shares of stock receivable upon the exercise of this
Warrant to be above the amount payable therefor upon such exercise, (b) will
take all such action as may be necessary or appropriate in order that the
Corporation may validly and legally issue or sell fully-paid and non-assessable
stock upon the exercise of all Warrants at the time outstanding, (c) will not
issue or sell any stock of any class which is preferred as to dividends or as to
the distribution of assets upon voluntary or involuntary dissolution,
liquidation or winding-up, unless the rights of the holders thereof shall be
limited to a fixed sum or percentage of par value in respect to participation in
dividends and in any such distribution of assets and (d) will take no action to
amend its Certificate of Incorporation which would change to the detriment of
the holders of Common Stock the dividend or voting rights of the Corporation's
Common Stock (as constituted on the Base Date).

8.4 Certificate as to Adjustments. In each case of an adjustment in
-----------------------------
the number of shares of Common Stock (or other securities or property)
receivable on the exercise of the Warrant, the Corporation at its expense will
promptly compute such adjustment in accordance with the terms of the Warrant and
prepare a certificate setting forth such adjustment and showing in detail the
facts upon which such adjustment is based. The Corporation will forthwith mail a
copy of each such certificate to each holder of the Warrant.

4
<PAGE>

8.5 Notices of Record Date, Etc.
---------------------------

In case:

(a) the Corporation shall take a record of the holders of its
Common Stock (or other securities at the time receivable upon the exercise of
the Warrant) for the purpose of entitling them to receive any dividend (other
than a cash dividend) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities, or to receive any other right; or

(b) of any capital reorganization of the Corporation (other than
a stock split or reverse stock split), any reclassification of the capital stock
of the Corporation, any consolidation or merger of the Corporation with or into
another corporation (other than a merger for purposes of change of domicile) or
any conveyance of all or substantially all of the assets of the Corporation to
another corporation; or

(c) of any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation, then, and in each such case, the Corporation
shall mail or cause to be mailed to each holder of the Warrant at the time
outstanding a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
twenty (20) days prior to the date therein specified and the Warrant may be
exercised prior to said date during the term of the Warrant no later than five
days prior to said date.

9. Applicable Law. This Warrant is issued under and shall for all
--------------
purposes be governed by and construed in accordance with the laws of the State
of New York.

10. Assignment. This Warrant is not assignable without the prior consent
----------
of the Corporation, except to executive officers, directors or other principals
of the Holder.

11. Notice. Notices and other communications to be given to the Holder of
------
the Warrant evidenced by this certificate shall be deemed to have been
sufficiently given, if delivered or mailed, addressed in the name and at the
address of such owner appearing on the records of the Corporation, and if
mailed, sent registered or certified mail, postage prepaid. Notices or other
communications to the Corporation shall be deemed to have been sufficiently
given if delivered by hand or mailed, by registered or certified mail, postage
prepaid, to the Corporation at 150 Harrison Avenue, Campbell, California 95008,
Attn: President, or at such other address as the Corporation shall have
designated by

5
<PAGE>

written notice to such registered owner as herein provided. Notice by mail shall
be deemed given when deposited in the United States mail as herein provided.

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.

GRAPHON CORPORATION

By:__________________________________
Name: Walter Keller
Title: President

6
<PAGE>

WARRANT EXERCISE FORM

The undersigned hereby irrevocably elects to exercise the within Warrant to
the extent of purchasing ________________________ Common Shares of GRAPHON
CORPORATION and hereby makes payment at the rate of U.S.$8.50 per share, or an
aggregate of $__________________, in payment therefor.

--------------------------------------------------
Name of Registered Holder

--------------------------------------------------
Signature

--------------------------------------------------
Date

INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered Holder of the within Warrant)

Name
(Please typewrite or print in block letters)

Address

Social Security or Taxpayer Identification Number

ASSIGNMENT FORM
(See Sections 5 and 11 for terms of Assignment)

The Holder hereby assigns and transfers unto

Name
(Please typewrite or print in block letters)

Address

the right to purchase Common Shares of GRAPHON CORPORATION represented by this
Warrant to the extent of _________________________ shares as to which such
right is exercisable and does hereby irrevocably constitute and appoint
__________________________________________________ Attorney, to transfer the
same on the books of GRAPHON CORPORATION with full power of substitution in the
premises.

DATED:______________________,
--------------------------------------------
Name of Registered Holder

--------------------------------------------
Signature

7
<PAGE>

Schedule 3.1

REGISTRATION RIGHTS, PROCEDURES

AND

RESTRICTIONS UPON TRANSFER

1. Restriction on Transfer. The Restricted Securities (as hereinafter
-----------------------
defined), and any shares of capital stock received in respect thereof, whether
by reason of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise, shall not be transferable except upon the conditions
specified in this Schedule, which conditions are intended to insure compliance
with the provisions of the Securities Act in respect of the transfer thereof.

2. Definitions. As used in this Schedule, the following terms shall have
-----------
the following respective meanings:

"Commission" shall mean the Securities and Exchange Commission, or any
other Federal agency at the time administering the Securities Act.

"Corporation" shall mean GRAPHON CORPORATION, a Delaware corporation,
and its successors and assigns.

"Person" shall mean and include an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.

"Purchaser" shall mean the registered holder of the Warrants, or such
Purchaser's permitted successors or assigns.

"Restricted Securities" shall mean (i) the Warrants, and (ii) the
shares of Common Stock of the Corporation issuable upon exercise of the
Warrants.

"Restricted Shares" shall mean the shares of Common Stock of the
Corporation constituting Restricted Securities.

"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

"Transfer" shall include any disposition of Restricted Securities or
of any interest therein which would constitute a sale thereof within the meaning
of the Securities Act.
<PAGE>

"Warrant" shall mean that common stock purchase warrant to which this
Schedule is attached, initially pertaining to the purchase of up to an aggregate
of 300,000 shares of Common Stock of the Corporation, and any common stock
purchase warrants issued in replacement or substitution therefor.

3. Restrictive Legend. Each certificate evidencing Restricted Shares and
------------------
any shares of capital stock received in respect thereof, whether by reason of a
stock split or share reclassification thereof, a stock dividend thereon or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Sections 4 or 11 hereof) be stamped or otherwise imprinted with
the following legend:

"The shares of common stock represented by this certificate
have not been registered under the Securities Act of 1933,
as amended, and may not be sold, offered for sale, assigned,
transferred or otherwise disposed of, unless registered
pursuant to the provisions of that Act or an opinion of
counsel to the Corporation is obtained stating that such
disposition is in compliance with an available exemption
from such registration."

4. Notice of Transfer. The holder of any Restricted Securities, by
------------------
acceptance thereof, agrees, prior to any transfer of any Restricted Securities,
to give written notice to the Corporation of such holder's intention to effect
such transfer and to comply in all other respects with the provisions of this
Section 4, and with those provisions of Section 3.2 and 10 of the Warrant to
which this Schedule refers. Each such notice shall describe the manner and
circumstances of the proposed transfer and shall be accompanied by (a) the
written opinion, addressed to the Corporation, of counsel for the holder of
Restricted Securities, as to whether in the opinion of such counsel (which
opinion shall be satisfactory to counsel for the Corporation) such proposed
transfer involves a transaction requiring registration of such Restricted
Securities under the Securities Act, and (b) in the case of Restricted Shares,
if in the opinion of such counsel such registration is required, a written
request addressed to the Corporation by the holder of Restricted Securities,
describing in detail the proposed method of disposition and requesting the
Corporation to effect the registration of such Restricted Shares pursuant to the
terms and provisions of Section 5 hereof; provided, however, that no such
opinion shall be required in connection with a transaction complying with the
requirements of Rule 144 (as amended from time to time) promulgated under the
Securities Act (or successor Rule thereto). If in the opinion of such counsel
(if such opinion is required hereunder) and counsel for the Corporation, the
proposed transfer of Restricted Securities may be effected without registration
under the Securities Act, the holder of Restricted Securities shall thereupon be
entitled to transfer Restricted Securities in accordance with the terms of the
notice delivered by it to the Corporation. Each certificate or other instrument
evidencing the securities issued upon the transfer of any Restricted Securities
(and each certificate or other instrument evidencing any untransferred balance
of such securities) shall bear the legend
<PAGE>

described in Section 3 hereof unless (a) in the opinion of such counsel and
counsel for the Corporation registration of future transfer is not required by
the applicable provisions of the Securities Act or (b) the Corporation shall
have waived the requirement of such legend; provided, however, that such legend
shall not be required on any certificate or other instrument evidencing the
securities issued upon such transfer in the event such transfer shall be made in
compliance with the requirements of Rule 144 (as amended from time to time)
promulgated under the Securities Act (or successor Rule thereto). The holder of
Restricted Securities shall not transfer such Restricted Securities until such
opinion of counsel has been given to the Corporation (unless waived by the
Corporation or unless such opinion is not required in accordance with the
provisions of this Section 4) or until registration of the Restricted Shares
involved in the above-mentioned request has become effective under the
Securities Act.

5. Registration. (a) As soon as practicable after the issuance date of
------------
the Warrant to which this Schedule refers, the Corporation shall file a
registration statement on Form S-1 under the Securities Act covering the
Restricted Shares and shall thereafter use its best efforts to cause such
registration statement to be declared effective by the Commission at the
earliest practicable date so as to permit offer and the sale or other
disposition by the prospective seller or sellers of the Restricted Shares so
registered.

(b) Anything contained herein to the contrary notwithstanding, with
respect to the registration statement contemplated by this Section 5, the
Corporation may include in such registration statement for its own account any
authorized but unissued securities of the Corporation and/or for the account of
others any issued and outstanding securities of the Corporation.

6. Preparation and Filing. The Corporation shall, as expeditiously as
----------------------
practicable:

(a) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least nine months and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all Restricted Shares covered by such registration statement
and will furnish to each selling stockholder prior to the filing thereof a
copy of any amendment or supplement to such registration statement or
prospectus and shall not file any such amendment or supplement to which any
such selling stockholder shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects with
the requirements of the Securities Act or the rules and regulations
thereunder;

(b) furnish to each selling stockholder such number of copies of the
registration statement and of each such amendment or supplement thereto (in
each case including all exhibits) a summary prospectus or other prospectus,
<PAGE>

including a preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents as such seller may reasonably
request in order to facilitate the public sale or other disposition of such
Restricted Shares;

(c) use its best efforts to register or qualify the Restricted Shares
covered by such registration statement under the securities or blue sky
laws of such jurisdictions as each such seller shall reasonably request but
in no event more than three states in the aggregate (provided, however,
that the Corporation shall not be required to consent to general service of
process for all purposes in any jurisdiction where it is not then
qualified) and do any and all other acts or things which may be necessary
or advisable to enable such seller to consummate the public sale or
disposition in such jurisdictions of such securities;

(d) notify each seller of Restricted Shares covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered under
the Securities Act, of the happening of any event as a result of which the
registration statement, the prospectus or any document incorporated therein
by reference, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and at the request of such seller,
prepare and furnish to such seller a post-effective amendment or supplement
to the registration statement or the related prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of such shares, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading;

(e) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to its
securities holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month of the first fiscal quarter
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act; and

(f) notify each selling stockholder, promptly, and confirm such advice
in writing;

(A) when the registration statement, any pre-effective amendment,
the prospectus or any prospectus supplement or post-effective
amendment to the registration statement has been filed, and, with
respect to the registration statement or any post-effective amendment,
when the same has become effective;
<PAGE>

(B) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose;

(C) of the receipt by the Corporation of any qualification of the
Restricted Shares for sale under the securities or "Blue Sky" laws of
any jurisdiction or the initiation or threatening of any proceeding
for such purpose; and

(D) of the existence of any fact which results in the
registration statement, the prospectus or any document incorporated
therein by reference containing an untrue statement of material fact
or omitting to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.

(g) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of the registration statement at the earliest
possible moment; and

(h) use its best efforts to cause all Restricted Shares covered by the
registration statement to be listed on each securities exchange on which
the Corporation's Common Stock is listed, if any.

7. Underwritten Offerings. [Intentionally Omitted].
----------------------

8. Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of the registration statement contemplated by Section 5
hereof, the Corporation will give the holders of Restricted Shares on whose
behalf such Restricted Shares are to be so registered and their respective
counsel and accountants the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, each document incorporated by reference therein and each amendment
thereof or supplement thereto, and will give each of them such opportunities to
discuss the business of the Corporation with its officers as shall be necessary,
in the opinion of such holders or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.

9. Expenses. All expenses incurred by the Corporation in complying with
--------
Sections 5 and 6 hereof, including, without limitation, all registration and
filing fees, fees and expenses of complying with securities and blue sky laws,
printing expenses and fees and disbursements of both counsel and the independent
certified public accountants of the Corporation shall be paid by the
Corporation; provided, however, that all underwriting discounts and selling
commissions and stock transfer taxes applicable to the Restricted Shares covered
by the registration effected pursuant to Section 5 hereof shall be borne by the
seller or sellers thereof, in proportion to the number of Restricted Shares sold
by such seller or sellers shall be borne by such holders.
<PAGE>

10. Indemnification.
----------------

(a) In the event of any registration of any Restricted Shares under
the Securities Act pursuant to this Schedule or registration or qualification of
any Restricted Shares pursuant to Section 6(c) hereof, the Corporation shall
indemnify and hold harmless the seller of such shares, each underwriter of such
shares, if any, each broker or any other person acting on behalf of such seller
and each other person, if any, who controls any of the foregoing persons, within
the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which any of the foregoing persons may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any registration statement under which such Restricted Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, any document incorporated by reference therein or
any amendment or supplement thereto, or any document prepared and/or furnished
by the Corporation incident to the registration or qualification of any
Restricted Shares pursuant to Section 6(d) hereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
or, with respect to any prospectus, necessary to make the statements therein in
light of the circumstances under which they were made, not misleading, or any
violation by the Corporation of the Securities Act or state securities or blue
sky laws applicable to the Corporation and relating to action or inaction
required of the Corporation in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
such seller, such underwriter, broker or other person acting on behalf of such
seller and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Corporation shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus or said prospectus or said
amendment or supplement or any document incident to the registration or
qualification of any Restricted Shares pursuant to Section 6(d) hereof in
reliance upon and in conformity with written information furnished to the
Corporation through an instrument duly executed by such seller or such
underwriter specifically for use in the preparation thereof.

(b) Before Restricted Shares held by any prospective seller shall be
included in any registration pursuant to this Schedule, such prospective seller
and any underwriter acting on its behalf shall have agreed to indemnify and hold
harmless (in the same manner and to the same extent as set forth in the
preceding paragraph (a) of this Section 10) the Corporation, each director of
the Corporation, each officer of the Corporation who shall sign such
registration statement and any person who controls the Corporation within the
meaning of the Securities Act, with respect to any untrue statement or omission
from such registration statement, any preliminary prospectus or
<PAGE>

final prospectus contained therein, or any amendment or supplement thereto, if
such untrue statement or omission was made in reliance upon and in conformity
with written information furnished to the Corporation through an instrument duly
executed by such seller or such underwriter specifically for use in the
preparation of such registration statement, preliminary prospectus, final
prospectus or amendment or supplement; provided, however, that the maximum
amount of liability in respect of such indemnification shall be limited, in the
case of each prospective seller of Restricted Shares, to an amount equal to the
gross proceeds actually received by such prospective seller from the sale of
Restricted Shares effected pursuant to such registration.

(c) Promptly after receipt by an indemnified party of notice of the
commencement of any actions involving a claim referred to in paragraph (a) or
(b) of this Section 10, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any legal or other
expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall have
reasonably concluded that there may be one or more legal defenses available to
such indemnified party which are differed from or additional to those available
to the indemnifying party, or that such claim or litigation involves or could
have an effect upon matters beyond the scope of the indemnity agreement provided
in this Section 10, the indemnifying party shall reimburse such indemnified
party for that portion of the fees and expenses of any counsel retained by the
indemnified party which are reasonably related to the matters covered by the
indemnity agreement provided in this Section 10.

(d) The failure to notify an indemnifying party promptly of the
commencement of any such action, if materially prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party
of any liability to the indemnified party under this Section 10, but the
omission so to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party otherwise than
under this Schedule.

The indemnifying party shall not make any settlement of any claims
indemnified against hereunder without the written consent of the indemnified
party or parties, which consent shall not be unreasonably withheld.

(e) If the indemnification provided for in Section 10 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, each indemnifying party shall
contribute to the amount paid or
<PAGE>

payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received from the offering by the Corporation,
the holders of Restricted Shares and any underwriter; but if such allocation is
not permitted by applicable law or if the indemnified party failed to give the
notice required under paragraph (c) above, each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportions as are appropriate to reflect not only such relative benefits but
also relative fault of the Corporation, the holders of Restricted Securities and
any underwriter in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The parties agree that the
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged untrue statement of a material fact relates to information supplied by
the Corporation, the holders of Restricted Shares or underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; that it would not be just and
equitable if contribution pursuant to such agreement were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable consideration referred to above in this paragraph (e); that the
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof), referred to
above in this paragraph (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim; that the holders of
Restricted Shares shall not be required to contribute any amount in excess of
the dollar amount by which the proceeds to be received by such holders from the
sale of their respective Restricted Shares exceeds the amount of damages such
holders of Restricted Shares would have otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission, and
no underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the shares or securities underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission; and that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.

11. Removal of Legends, Etc. Notwithstanding anything to the contrary
-----------------------
herein, the restrictions imposed by this Schedule upon the transferability of
any Restricted Shares shall cease and terminate when any such Restricted Shares
are registered under the Act as contemplated by Section 5 hereof. Whenever the
restrictions imposed by this Schedule shall terminate, as herein provided, the
holder of any Restricted Shares as to which such restriction has terminated
shall be entitled to receive from the Corporation, without expense, a new
certificate not bearing the restrictive legend referred to in Section 3 hereof
and not containing any other reference to the restrictions imposed by this
Schedule.

<PAGE>

EXHIBIT 5.1

[Letterhead of Cooperman Levitt Winikoff Lester & Newman, PC]

December 21, 1999

GraphOn Corporation
150 Harrison Avenue
Campbell, California 95008

Re: Registration Statement on Form S-1
Under the Securities Act of 1933

Ladies and Gentlemen:

In our capacity as counsel to GraphOn Corporation, a Delaware corporation
(the "Company"), we have been asked to render this opinion in connection with a
Registration Statement on Form S-1 (File No. 333- ), being contemporaneously
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"), covering
300,000 shares of common stock, par value $.0001 per share, of the Company
("Warrant Shares") that are issuable upon future exercises of certain common
stock purchase warrants heretofore issued by the Company, which are exercisable
at $8.50 per share and will expire on December 31, 2000 (the "Warrants"), which
have been included in the Registration Statement for the account of the person
identified as the Selling Stockholder therein.

In that connection, we have examined the Certificate of Incorporation and
the By-Laws of the Company, both as amended to date, the Warrants, the
Registration Statement, corporate proceedings of the Company relating to the
issuance of each of, respectively, the Warrants and the Warrant Shares and such
other instruments and documents as we have deemed relevant under the
circumstances.

In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the
corporate records furnished to us by the Company include all corporate
proceedings taken by the Company to date.

Based upon the subject to the foregoing, we are of the opinion that:

(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
<PAGE>

(2) The Warrant Shares have been duly and validly authorized and, when
issued and paid for in accordance with the terms of the Warrants and
as described in the Registration Statement, will be duly and validly
issued fully paid and non-assessable.

We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.

Very truly yours,

COOPERMAN LEVITT WINIKOFF
LESTER & NEWMAN, P.C.

By: /s/Ira Roxland
A Member of the Firm

<PAGE>

EXHIBIT 10.9

CONSULTING SERVICES AGREEMENT
-----------------------------

The following confirms the non-exclusive agreement (the "Agreement")
between Super Tech Holdings Limited (the "Consultant") and GraphOn Corporation
(the "Company") with respect to the provision of consulting services to the
Company.

1. Term of Agreement. This Agreement is effective as of October 12, 1999,
-----------------
(the "Effective Date") continuing for a period of three (3) years, and will
terminate October 12, 2002, (the "Termination Date") at the close of business
unless terminated earlier pursuant to Paragraph 8 of this Agreement. This
Agreement may be renewed for an additional similar term at any time upon the
mutual written consent of the parties.

2. Independent Contractor Status. It is the express intention of the
-----------------------------
parties to this Agreement that the Consultant is an independent contractor, and
is classified by the Company as such for all employee benefit purposes, and is
not an employee, agent, joint venturer, or partner of the Company. Nothing in
this Agreement shall be interpreted or construed as creating or establishing an
employment relationship between the Company and the Consultant.

3. Services. Consultant agrees to render consulting services (the
--------
"Services") to the Company for the term of this Agreement. The Services shall
include, but are not limited to, those duties set forth in Exhibit A attached
---------
hereto. Consultant shall have the sole discretion to determine the method,
means, and location of performing the Services, and that the Company has no
right to, and will not, control or determine the method, means, or place of the
performance of the Services.

4. Employment of Assistants. Should the Consultant, in its sole
------------------------
discretion, deem it necessary to employ assistants to aid it in the performance
of the Services, the parties agree that the Company will not direct, supervise,
or control such assistants to the Consultant in their performance of Services.
The parties further agree that such assistants are employed solely by the
Consultant, and that Consultant alone is responsible for providing workers'
compensation insurance for its employees, for paying the salaries and wages of
his employees, and for making all required tax withholdings. Consultant further
represents and warrants that it maintains workers' compensation insurance
coverage for its employees and acknowledges that it alone has responsibility for
such coverage. Any and all sales generated by such assistants shall be counted
as sales generated by Consultant.

5. Covenants of the Consultant.
---------------------------

a. Consultant shall pay all taxes, withholdings and any other fees or
payments required; and Consultant agrees to defend, indemnify and hold Company
harmless from any and all claims made by any person, governmental or non-
governmental entity alleging failure by Consultant to satisfy any such tax or
withholding obligations.

1
<PAGE>

b. Consultant shall supply all equipment necessary to perform the
Services and shall pay all of its expenses incurred in connection with this
Agreement.

c. Consultant shall indemnify and hold the Company harmless from, and
shall defend the Company against, any and all loss, liability, damage, claims,
demands, or suits and related costs and expenses that arise, directly or
indirect]y, from acts or omissions of the Consultant, or from the breach of any
term or condition of this Agreement by Consultant or its agents.

6. Compensation. Upon signing of the agreement, Consultant will be
------------
granted options according to Exhibit B upon completion of Services as per
---------
Exhibit A. Completion of Services is determined upon actual receipt of cash
- ---------
payment to Company. The foregoing payments are Consultant's sole compensation
for rendering Services to the Company. The parties agree that the Company shall
not be required to pay or reimburse any costs or expenses incurred by Consultant
in performing the Services. Compensation is based on revenue derived from China.

7. Confidential Information. Consultant understands that the Company
------------------------
possesses Proprietary Information as defined below which is important to its
business and that this Agreement creates a relationship of confidence and trust
between Consultant and the Company with regard to Proprietary Information.

a. For purposes of this Agreement, "Proprietary Information" is
information that was or will be developed, created, or discovered by or on
behalf of the Company, or is developed, created or discovered by Consultant
while performing Services, or which became or will become known by, or was or is
conveyed to the Company which has commercial value in the Company's business.
"Proprietary Information" includes, but is not limited to, trade secrets,
computer programs, ideas, techniques, inventions (whether patentable or not),
business and product development plans, customers and other information
concerning the Company's actual or anticipated business, research or
development, personnel information, Inventions (as defined in subsection e
below), or which is received in confidence by or for the Company from any other
person.

b. At all times, both during the term of this Agreement and after its
termination, Consultant will keep in confidence and trust, and will not use or
disclose, any Proprietary Information without the prior written consent of an
officer of the Company, except as may be necessary in the ordinary course of
performing the Services under this Agreement.

c. Consultant understands that the Company possesses or will possess
"Company Documents" which are important to its business. For purposes of this
Agreement, "Company Documents" are documents or other media that contain or
embody Proprietary Information or any other information concerning the business,
operations or plans of the Company, whether such documents have been prepared by
Consultant or by others. "Company Documents" include, but are not limited to,
blueprints, drawings, photographs, charts, graphs, notebooks, customer lists,
computer disks, personnel files, tapes or printouts, sound recordings and other
printed, typewritten or handwritten documents. All Company Documents are and
shall

2
<PAGE>

remain the sole property of the Company. Consultant agrees not to remove any
Company Documents from the business premises of the Company or deliver any
Company Documents to any person or entity outside the Company, except as
required to do in connection with performance of the Services under this
Agreement. Consultant further agrees that, immediately upon the Company's
request and in any event upon completion of the Services, Consultant shall
deliver to the Company all Company Documents, apparatus, equipment and other
physical property or any reproduction of such properly, excepting only
Consultant's copy of this Agreement.

d. Consultant represents that performance of all the terms of this
Agreement will not breach any agreement and to keep in confidence any
confidential or proprietary information of a third party acquired by Consultant
in confidence or in trust prior to the execution of this Agreement. Consultant
has not entered into, and Consultant agrees not to enter into, any agreement
either written or oral that conflicts or might conflict with Consultant's
performances of the Services under this Agreement.

8. Termination of Agreement. This Agreement may be terminated by mutual
------------------------
consent of the parties at any time prior to the Termination Dale for any reason,
with or without cause.

a. Any pending sale that closes within six (6) months after the
termination of this Agreement may be deemed a sale, if Consultant clearly
identifies the potential client with either a signed letter of intent or through
written correspondence indicating a potential client's good-faith intention to
enter into a business relationship.

b. Company shall continue to pay commissions due and owing to
Consultant for a period of no more than two (2) years after the termination of
this Agreement.

9. Enforceability of Agreement. Consultant agrees that any dispute in the
---------------------------
meaning, effect, or validity of this Agreement shall be resolved in accordance
with the laws of the State of New York without regard to the conflict of laws
provisions thereof. Consultant further agrees that if one or more provisions of
this Agreement are held to be unenforceable under applicable New York law, such
provision(s) shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.

10. Assignment. This Agreement shall not be assignable by either
----------
Consultant or Company without the express written consent of the other party.

11. Arbitration. Consultant and Company agree that any and all disputes
-----------
between the parties, which arise out of this Agreement shall be resolved through
final and binding arbitration in Santa Clara County, California in accordance
with the rules and regulations of the American Arbitration Association then in
effect. Both parties understand and agree that the arbitration shall be in lieu
of any civil litigation and that the arbitrator's decision shall be final and
binding to the fullest extent permitted by law and enforceable by any court
having jurisdiction thereof.

3
<PAGE>

12. Entire Understanding. This Agreement contains the entire
--------------------
understanding of the parties regarding its subject matter and can only be
modified by a subsequent written agreement executed by Consultant and Company.

13. Notices. All notices required or given herewith shall be addressed to
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the Company or Consultant at the designated addresses shown below by registered
mail, special delivery, or by certified courier service:

a. To Company:
GraphOn Corporation
150 Harrison Avenue
Campbell, California, USA 95008

b. To Super Tech Holdings Limited:
11/F. Prosperity Centre, 77-81 Container Port Road,
Kwai Chung, N.T. Hong Kong.

14. Attorneys' Fees. If any action at law or in equity is necessary to
---------------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs, and necessary disbursements, in
addition to any other relief to which the party may be entitled.

Super Tech Holdings Limited

Dated: Nov 11, 1999 By: /s/ Bailing Xia
------ -----------------------------

Name: Bailing Xia
--------------------------

Title: President
------------------------

GraphOn Corporation

Dated: Nov 11, 1999 By: /s/ Eric Lefebvre
------ -----------------------------

Name: Eric Lefebvre
-------------------------

Title: VP Business Development
------------------------

4
<PAGE>

EXHIBIT A
---------

DUTIES AND SERVICES OF CONSULTANT
---------------------------------

1. Consultant shall generate sales opportunities in China and contacts with new
clients in China and promote the sale of Company's products.

2. Consultant shall actively participate throughout the negotiation of any
potential agreement between Company and new clients up to and including the
closing of a sale in China.

3. Consultant shall present names to Company of potential new clients it wishes
to pursue for the purpose of generating sales revenue in China.

4. Company shall have the right to approve the names of potential new clients
Consultant shall pursue. Company reserves the right to disapprove any
potential opportunity with a new client at its sole discretion.

5. At the request of Company, Consultant shall pursue opportunities with one or
more named accounts for the purpose of generating sales in China. Consultant
shall receive a commission for sales to such named accounts as specified in
Exhibit B.

5
<PAGE>

EXHIBIT B
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COMPENSATION SCHEDULE FOR COMPLETION OF CONSULTANT'S SERVICES
-------------------------------------------------------------

1. Upon execution of this Agreement:

Company agrees to grant Consultant the option to purchase 300,000 (GOJO:
NASDAQ) shares of Company's common stock at an exercise price of $8.50. Such
right to purchase said options shall expire on December 31, 2000. A
restriction on volume sale of stock will apply at the rate of 60,000 shares a
month until December 31, 2000.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
GraphOn Corporation

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement on Form S-1, of our report dated February 25, 1999,
except with respect to matters discussed in Note 6 as to which the date is May
30, 1999, relating to the balance sheets of GraphOn Corporation as of December
31, 1998 and 1997, and the related statements of operations and comprehensive
income, stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1998.

We also consent to the reference to our firm under the heading "Experts" in the
Registration Statement on Form S-1.

/s/ BDO Seidman, LLP
BDO Seidman, LLP
San Jose, California
December 21, 1999